Rafael Holdings, Inc. (Form: 10-12G/A, Received: 03/27/2018 09:19:56)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

POST-EFFECTIVE AMENDMENT NO. 3 TO

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934

RAFAEL HOLDINGS, inc.

(Exact name of registrant as specified in its charter)

Delaware		82-2296593
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

520 Broad Street, Newark, NJ 07102

(Address of principal executive offices, zip code)

(973) 438-1000

(Registrant’s telephone number, including area code)

With copies to:

Rafael Holdings, Inc.

Dov T. Schwell, Esq.

520 Broad Street

Newark, New Jersey 07102

Attention: Menachem Ash

c/o Schwell Wimpfheimer & Associates LLP

1430 Broadway, Suite 1615

New York, NY 10018

(646) 328-0795

Securities to be registered pursuant to Section 12(b) of the Act:

Title of each class to be registered		Name of each exchange on which registered
N/A		N/A

Securities registered pursuant to section 12(g) of the Act:

Class B common stock, par value $0.01 per share

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging Growth Company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act. ☐

INFORMATION INCLUDED IN INFORMATION STATEMENT

AND INCORPORATED BY REFERENCE IN FORM 10

CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10

This registration statement on Form 10 (the “Form 10”) incorporates by reference information contained in the information statement filed as exhibit 99.1 hereto (the “information statement”). The cross-reference table below identifies where the items required by Form 10 can be found in the information statement.

Item No.	Item Caption	Location in Information Statement
1.	Business	“Executive Summary” and “Business”
1A.	Risk Factors	“Risk Factors”
2.	Financial Information	“Unaudited Pro Forma Condensed Combined Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
3.	Properties	“Executive Summary” and “Business”
4.	Security Ownership of Certain Beneficial Owners and Management	“Security Ownership by Certain Beneficial Owners and Management”
5.	Directors and Executive Officers	“Management”
6.	Executive Compensation	“Executive Compensation”
7.	Certain Relationships and Related Transactions, and Director Independence	“Our Relationship with IDT After the Spin-Off and Related Person Transactions”
8.	Legal Proceedings	“Legal Proceedings”
9.	Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters	“Executive Summary;” “Risk Factors;” “The Spin-Off;” “Dividend Policy;” and “Description of Our Capital Stock”
10.	Recent Sale of Unregistered Securities	“Recent Sale of Unregistered Securities”
11.	Description of Registrant’s Securities to be Registered	“Description of Our Capital Stock”
12.	Indemnification of Directors and Officers	“Description of Our Capital Stock;” and “Our Relationship with IDT After the Spin-Off and Related Person Transactions”
13.	Financial Statements and Supplementary Data including the Combined Financial Statements	“Unaudited Pro Forma Condensed Combined Financial Data;” “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” and “Index to Combined Financial Statements”
14.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	None
15.	Financial Statements and Exhibits	“Unaudited Pro Forma Condensed Combined Financial Data”; “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; and “Index to Combined Financial Statements” and the combined financial statements referenced therein

(a)

List of Financial Statements

The following historical and pro forma combined financial statements of Rafael Holdings, Inc. are included in the information statement and filed as part of this registration statement on Form 10:

(1)

Audited Combined Financial Statements, including Report of Independent Registered Public Accounting Firm, as of July 31, 2017 and 2016, and for each of the years in the three-year period ended July 31, 2017; and

(2)

Audited Combined Financial Statements as of October 31, 2017 and July 31, 2017, and for the three months ended October 31, 2017 and 2016.

(b)

Exhibits

The following exhibits are filed herewith unless otherwise indicated:

Exhibit Number		Exhibit Description
2.1		Separation and Distribution Agreement between IDT Corporation and Rafael Holdings, Inc.
3.1		Amended and Restated Certificate of Incorporation of Rafael Holdings, Inc.
3.2		Amended and Restated By-Laws of Rafael Holdings, Inc.
4.1		Specimen common stock certificate of Rafael Holdings, Inc.#
10.1		2018 Equity Incentive Plan*
10.2		Transition Services Agreement
10.3		Tax Separation Agreement
10.4		Form of ISO Stock Option Agreement*
10.5		Form of Nonqualified Stock Option Agreement*
10.6		Form of Restricted Stock Agreement*
21.01		Subsidiaries of Rafael Holdings, Inc.
99.1		Definitive Information Statement of IDT Corporation, dated March 26, 2018
99.2		Consent of Director – Stephen Greenberg#
99.3		Consent of Director – Boris C. Pasche#
99.4		Consent of Director – Michael J. Weiss#

# Previously filed.

* Management contract or compensatory plan or arrangement

SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	RAFAEL HOLDINGS, Inc.

	By:	/s/ David Polinsky
		Name: David Polinsky
		Title: Chief Financial Officer

Dated: March 26, 2018

INDEX TO EXHIBITS

Exhibit Number		Exhibit Description
2.1		Separation and Distribution Agreement between IDT Corporation and Rafael Holdings, Inc.
3.1		Amended and Restated Certificate of Incorporation of Rafael Holdings, Inc.
3.2		Amended and Restated By-Laws of Rafael Holdings, Inc.
4.1		Specimen common stock certificate of Rafael Holdings, Inc.#
10.1		2018 Equity Incentive Plan*
10.2		Transition Services Agreement#
10.3		Tax Separation Agreement#
10.4		Form of ISO Stock Option Agreement*
10.5		Form of Nonqualified Stock Option Agreement*
10.6		Form of Restricted Stock Agreement*
21.01		Subsidiaries of Rafael Holdings, Inc.
99.1		Definitive Information Statement of IDT Corporation, dated March 26, 2018
99.2		Consent of Director – Stephen Greenberg#
99.3		Consent of Director – Boris C. Pasche#
99.4		Consent of Director – Michael J. Weiss#

# Previously filed.

* Management contract or compensatory plan or arrangement

Exhibit 2.1

SEPARATION AND DISTRIBUTION AGREEMENT

by and between

IDT CORPORATION

And

RAFAEL HOLDINGS, INC.

Dated as of March 26, 2018

This SEPARATION AND DISTRIBUTION AGREEMENT (this “Agreement”), dated as of March 26, 2018, by and between IDT Corporation, a Delaware corporation (“IDT”), and Rafael Holdings, Inc., a Delaware corporation (“Rafael”; and together with IDT, the “Parties”, and each individually, a “Party”).

RECITALS

WHEREAS, the Boards of Directors of IDT and Rafael and IDT as the sole- stockholder of Rafael have determined that it is in the best interests of IDT, Rafael and their respective stockholders to effect a split (the “Stock Split”) of the then outstanding shares of common stock of Rafael into the number of shares necessary to effect the Distribution (as defined below)

WHEREAS, the Board of Directors of IDT has determined that it is in the best interests of IDT and its stockholders to make a distribution (the “Distribution”) to the holders of IDT Common Stock of all of the outstanding shares of post-stock split Rafael Common Stock held by IDT at the rate of (i) one (1) share of Rafael Class A Common Stock for every two (2) shares of IDT Class A Common Stock and (ii) one (1) share of Rafael Class B Common Stock for every two (2) shares of IDT Class B Common Stock, in the case of shares of IDT Common Stock, each outstanding as of the Record Date; and

WHEREAS, the Parties have determined that it is necessary and desirable to set forth the principal corporate transactions required to effect the Distribution and to set forth other agreements that will govern certain other matters related to and following the Distribution.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements and covenants contained in this Agreement and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Definitions. As used herein, the following terms have the following meaning:

“Action” means any claim, suit, arbitration, inquiry, proceeding, or investigation by or before any court, governmental or other regulatory or administrative agency or commission or any other tribunal.

“Affiliate” means, when used with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such specified Person. For the purposes of this definition, “control”, when used with respect to any specified Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract or otherwise.

“Amended Financial Report” is defined in Section 4.03(b).

“Ancillary Agreements” means all of the written agreements, instruments, understandings, assignments and other arrangements (other than this Agreement) entered into in connection with the transactions contemplated hereby, including, but not limited to, the Tax Separation Agreement and the Transition Services Agreement.

“Assets” means all properties, rights, contracts, leases and claims, of every kind and description, wherever located, whether tangible or intangible, and whether real, personal or mixed.

“Audited Party” is defined in Section 4.03(a)(ii).

“Benefit Plan” means, with respect to an entity, each plan, program, arrangement, agreement or commitment that is an employment, change in control/severance, consulting, non-competition or deferred compensation agreement, or an executive compensation, incentive bonus or other bonus, employee pension, profit-sharing, savings, retirement, supplemental retirement, stock option, stock purchase, stock appreciation rights, restricted stock, other equity-based compensation, severance pay, salary continuation, life, health, hospitalization, sick leave, vacation pay, disability or accident insurance plan, corporate-owned or key-man life insurance or other benefit plan, program, arrangement, agreement or commitment, including any “employee benefit plan” (as defined in Section 3(3) of ERISA), sponsored or maintained by such entity (or to which such entity contributes or is required to contribute).

“Code” means the Internal Revenue Code of 1986, as amended.

“Commission” means the United States Securities and Exchange Commission.

“Confidential Information” means all business or operational information concerning a Party and/or its subsidiaries (the disclosing party) (including (i) earnings reports and forecasts, (ii) macro-economic reports and forecasts, (iii) business and strategic plans, (iv) general market evaluations and surveys, (v) litigation presentations and risk assessments, (vi) budgets, (vii) financing and credit-related information, (viii) specifications, ideas and concepts for products and services, (ix) quality assurance policies, procedures and specifications, (x) customer information, (xi) Software, (xii) training materials and information, and (xiii) all other know-how, methodology, procedures, techniques and trade secrets related to design, development and operational processes) which, prior to or following the Effective Time, has been disclosed by the disclosing party to the other Party or its subsidiaries (the receiving party), in written, oral (including by recording), electronic, or visual form to, or otherwise has come into the possession of, the other (except to the extent that such information can be shown to have been (i) in the public domain through no action of the receiving party, (ii) lawfully acquired from other sources by the receiving party or (iii) independently developed by the receiving party; provided, however, in the case of clause (ii) that, to the receiving party’s knowledge, such sources did not provide such information in breach of any confidentiality obligations).

“Distribution” is defined in the recitals to this Agreement.

“Distribution Agent” means American Stock Transfer & Trust Company, in its capacity as agent for IDT in connection with the Distribution.

“Distribution Date” means the date upon which the Distribution shall be effective, as determined by the Board of Directors of IDT, or such committee of such Board of Directors as shall be designated by the Board of Directors of IDT.

“Effective Time” means 11:59 p.m., New York City time, on the Distribution Date.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Force Majeure” means, with respect to a Party, an event beyond the reasonable control of such Party (or any Person acting on its behalf), which by its nature could not have been foreseen by such Party (or such Person), or, if it could have been foreseen, was unavoidable, and includes acts of G-d, storms, floods, earthquakes, hurricanes, riots, pandemics, fires, sabotage, strikes, lockouts, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism.

“Governmental Entity” means any nation or government, any state, municipality or other political subdivision thereof and any entity, body, agency, commission, department, board, bureau or court, whether domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any official thereof.

“Group” means an entity and its subsidiaries, affiliates, joint ventures and partnerships.

“IDT” is defined in the Preamble to this Agreement.

“IDT Accounts” is defined in Section 4.01(a).

“IDT Business” means the business now or formerly conducted by IDT and its present and former subsidiaries, joint ventures and partnerships, other than the Rafael Business.

“IDT Class A Common Stock” means the outstanding shares of Class A common stock, $0.01 par value per share, of IDT.

“IDT Class B Common Stock” means the outstanding shares of Class B common stock, $0.01 par value per share, of IDT.

“IDT Common Stock” means the IDT Class A Common Stock and the IDT Class B Common Stock.

“IDT Group” means IDT and its subsidiaries, affiliates, joint ventures and partnerships, excluding Rafael.

“IDT Group Employee” means an active employee or an employee on vacation or on approved leave of absence (including maternity, paternity, family, sick leave, salary continuation, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, and leave under the Family Medical Leave Act and other approved leaves) who, after the Effective Time, is employed by or will be employed by any member of the IDT Group.

“IDT Indemnitees” is defined in Section 6.01.

“IDT Liabilities” means:

(i) the Liabilities listed or described on Schedule 1.01(a) and any and all Liabilities that are expressly contemplated by this Agreement, the Tax Separation Agreement or any other Ancillary Agreement as Liabilities to be retained, assumed or retired by IDT; and

(ii) except as otherwise expressly provided in this Agreement or any Ancillary Agreement, any and all Liabilities of IDT, or any of its respective affiliates primarily relating to, arising out of or resulting from the operation or conduct of any business or asset owned by IDT other than the Rafael Business (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative of IDT, or any of its respective Affiliates (whether or not such act or failure to act is or was within such Person’s authority)).

Notwithstanding the foregoing, the IDT Liabilities shall in any event not include any Liabilities that (i) are expressly contemplated by this Agreement or any Ancillary Agreement as Liabilities to be retained or assumed by Rafael or (ii) are set forth on Schedule 1.01(b).

FOR THE AVOIDANCE OF DOUBT, NO LIABILITY SHALL BE AN IDT LIABILITY SOLELY AS A RESULT OF IDT OR ANY OTHER MEMBER OF THE IDT GROUP BEING NAMED AS PARTY TO, OR IN, ANY ACTION.

“IDT Stock Plan” is defined in Section 7.04(b).

“Indebtedness” means other than any Intercompany Accounts (i) any indebtedness for borrowed money or the deferred purchase price of property as evidenced by a note, bonds or other instruments, (ii) obligations as lessee under capital leases, (iii) obligations secured by any mortgage, pledge, security interest, encumbrance, lien or charge of any kind existing on any asset owned or held by any Person, whether or not such Person has assumed or becomes liable for the obligations secured thereby, (iv) any obligation under any interest rate swap agreement, (v) accounts payable, (vi) reimbursement obligations with respect to surety and performance bonds or letters of credit, and (vii) obligations under direct or indirect guarantees of (including obligations, contingent or otherwise, to assure a creditor against loss in respect of) indebtedness or obligations of the kinds referred to in clauses (i), (ii), (iii), (iv), (v) and (vi) above.

“Indemnifiable Loss” means any and all damage, loss, liability, and expense (including, without limitation, reasonable expenses of investigation and reasonable attorneys’ fees and expenses) in connection with any and all Actions or threatened Actions.

“Indemnified Party” is defined in Section 6.05.

“Indemnifying Party” is defined in Section 6.05.

“Indemnity Payment” is defined in Section 6.04(a).

“Information” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), communications and materials otherwise related to or made or prepared in connection with or in preparation for any legal proceeding, and other technical, financial, employee or business information or data.

“Information Statement” means the information statement required by the Commission to be sent to each holder of IDT Common Stock in connection with the Distribution, and prepared in accordance with the Exchange Act filed as an exhibit to the Registration Statement.

“Insurance Proceeds” means those monies (i) received by an insured from an unaffiliated third-party insurer under any Third Party Policy, or (ii) paid by such third-party insurer on behalf of an insured under any Third Party Policy, in either case net of any applicable premium adjustment, retrospectively-rated premium, deductible, self-insured retentions, or cost of reserve paid or held by or for the benefit of such insured.

“Intercompany Accounts” means any receivable, payable or loan between any member of the IDT Group, on the one hand, and Rafael and its subsidiaries, on the other hand, that exists prior to the Effective Time and is reflected in the Records of the relevant members of the IDT Group and Rafael, except for any such receivable, payable or loan that arise pursuant to this Agreement or any Ancillary Agreement.

“Joint Action” means any current or future Action with respect to which it is unclear at the onset of such Action whether Liabilities will arise primarily in connection with the Rafael Business or the IDT Business, including any of the Actions listed on Schedule 5.01(e).

“Law” means any United States or non-United States federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including common law).

“Liabilities” means any and all claims, debts, liabilities and obligations, absolute or contingent, matured or not matured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, including all costs and expenses relating thereto, and including, without limitation, those debts, liabilities and obligations arising under this Agreement or any Ancillary Agreement, any law, rule, regulation, action, order or consent decree of any Governmental Entity or any award of any arbitrator of any kind, and those arising under any contract, commitment or undertaking.

“Other Party’s Auditors” is defined in Section 4.03(a)(ii).

“Party” is defined in the Preamble to this Agreement.

“Person” means any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership or other organization or entity, whether incorporated or unincorporated, or any Governmental Entity.

“Policies” means insurance policies and insurance agreements or arrangements of any kind (other than life and benefits policies, agreements or arrangements), including primary, excess and umbrella policies, comprehensive general liability policies, director and officer liability, fiduciary liability, automobile, aircraft, property and casualty, business interruption, workers’ compensation and employee dishonesty insurance policies, bonds and self-insurance company arrangements, together with the rights, benefits and privileges thereunder.

“Rafael” is defined in the Preamble to this Agreement.

“Rafael Accounts” is defined in Section 4.01(a).

“Rafael Business” means the business comprised of Rafael, IDT-Rafael Holdings, LLC, the commercial real estate including IDT’s headquarters building and associated public garage in Newark, New Jersey, an office/data center building in Piscataway, New Jersey and a portion of a building in Israel that hosts offices for IDT and its affiliates, the interests in Rafael Pharmaceuticals, Inc., and the interest in Lipomedix Pharmaceuticals Ltd.

“Rafael Business Balance Sheet” means the unaudited condensed combined balance sheet of Rafael as of October 31, 2017 and July 31, 2017, as set forth in the Information Statement.

“Rafael Class A Common Stock” means the outstanding shares of Class A common stock, $0.01 par value per share, of Rafael.

“Rafael Class B Common Stock” means the outstanding shares of Class B common stock, $0.01 par value per share, of Rafael.

“Rafael Common Stock” means the Rafael Class A Common Stock and the Rafael Class B Common Stock.

“Rafael Employee” means an active employee or an employee on vacation or on approved leave of absence (including maternity, paternity, family, sick leave, salary continuation, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, and leave under the Family Medical Leave Act and other approved leaves) who, after the Effective Time, is employed by or will be employed by Rafael.

“Rafael Indemnitee” is defined in Section 6.02.

“Rafael Liabilities” means:

(i) the Liabilities listed or described on Schedule 1.01 and any and all Liabilities that are expressly contemplated by this Agreement, the Tax Separation Agreement or any other Ancillary Agreement as Liabilities to be retained, assumed or retired by Rafael;

(ii) except as otherwise expressly provided in this Agreement or any Ancillary Agreement, any and all Liabilities of IDT, Rafael, or any of their respective Affiliates, primarily relating to, arising out of or resulting from the operation or conduct of the Rafael Business, or the ownership or use of the Assets of Rafael, as conducted at any time prior to or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative of IDT, Rafael, or any of their respective Affiliates (whether or not such act or failure to act is or was within such Person’s authority)); and

(iii) except as otherwise expressly provided in this Agreement or any Ancillary Agreement, Liabilities set forth on the Rafael Business Balance Sheet.

Notwithstanding the foregoing, the Rafael Liabilities shall in any event not include any Liabilities that (i) are expressly contemplated by this Agreement or any Ancillary Agreement as Liabilities to be retained or assumed by any member of the IDT Group or (ii) are set forth on Schedule 1.01(a).

FOR THE AVOIDANCE OF DOUBT, NO LIABILITY SHALL BE A RAFAEL LIABILITY SOLELY AS A RESULT OF RAFAEL BEING NAMED AS PARTY TO, OR IN, ANY ACTION.

“Rafael Stock Plan” means the Rafael, Inc. 2018 Stock Option and Incentive Plan.

“Record Date” means the date designated by or under the authority of IDT’s Board of Directors as the record date for determining the stockholders of IDT entitled to receive the Distribution.

“Record Holder” means the Party or its agent in possession or control of the Shared Record for storage or archival purposes. Each Party shall be deemed to be the Record Holder for any Shared Record that is possessed or controlled by a member of such Party’s respective Group (if applicable).

“Records” means any Information, agreements, documents, books, records or files.

“Registration Statement” means the Exchange Act registration statement on Registration Statement filed by Rafael with the Commission to effect the registration of the Rafael Common Stock pursuant to the Exchange Act, as such registration statement may be amended from time to time.

“Shared Record(s)” means those Records set forth on Schedule 10.02, as amended from time to time by written agreement of the Parties.

“Software” means all computer programs (whether in source code, object code, or other form), algorithms, databases, compilations and data, and technology supporting the foregoing, and all documentation, including flowcharts and other logic and design diagrams, technical, functional and other specifications, and user and training materials related to any of the foregoing.

“Spinoff” means the transaction in which Rafael will be separated from IDT and become a separately-traded public company.

“Stock Split” is defined in the recitals to this Agreement.

“Tax(es)” means all taxes, charges, duties, fees, levies, or other assessments, including income, gross receipts, excise, property, sales, transfer, ad valorem, profits, windfall profits, use, license, payroll, franchise, value-added, production, severance, withholding, payroll, employment, social security, and other taxes, however denominated, imposed by any Governmental Entity, whether disputed or not, and includes any estimated taxes, interest, penalties or additions to tax that are payable or may become payable in respect thereof.

“Tax Separation Agreement” means the Tax Separation Agreement, dated as of the date hereof, entered into by and between IDT and Rafael, substantially in the form of Exhibit B hereto.

“Third Party Claim” means a claim or demand made against an IDT Indemnitee or a Rafael Indemnitee by any Person who is not a Party or an Affiliate of a Party as to which such IDT Indemnitee or Rafael Indemnitee, as applicable, is or may be entitled to indemnification pursuant to this Agreement.

“Third Party Rafael Policies” means all Policies, whether or not in force on the Effective Time, issued by unaffiliated third-party insurers to IDT, Rafael, or any of their respective Affiliates that cover risks that relate to the Rafael Business.

“Third Party Proceeds” is defined in Section 6.04(a).

“Trademarks” means all United States and foreign trademarks, service marks, corporate names, trade names, domain names, logos, slogans, designs, trade dress and other similar identifiers of source or origin, whether registered or unregistered, together with the goodwill connected with the use of and symbolized by any of the foregoing.

“Transferring Party” is defined in Section 11.05(a).

“Transition Services Agreement” means the Transition Services Agreement, dated as of the date hereof, entered into by and between IDT and Rafael, substantially in the form of Exhibit C hereto.

ARTICLE II

LIABILITY

Section 2.01. Limitation of Liability.

(a) Except as provided in Section 9.01 or as set forth in subsection (b) below, (i) neither Party nor any member of such Party’s Group (if applicable) shall have any Liability to any other Party or any member of such other Party’s Group (if applicable) based upon, arising out of or resulting from any agreement, arrangement, course of dealing or understanding existing on or prior to the Effective Time (other than this Agreement or any Ancillary Agreement or any agreement entered into in connection herewith or therewith in order to consummate the transactions contemplated hereby or thereby), and (ii) each Party hereby terminates, and shall cause all members in its Group (if applicable) to terminate, any and all agreements, arrangements, course of dealings or understandings between it or any members in its Group (if applicable) and the other Party, or any members of its Group (if applicable), effective as of the Effective Time (other than this Agreement or any Ancillary Agreement or any agreement entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby), unless such agreement, arrangement, course of dealing or understanding is set forth in any Ancillary Agreement or on Schedule 2.01(b). Any Liability, whether or not in writing, which is not reflected in any Ancillary Agreement or on Schedule 2.01(b), is hereby irrevocably cancelled, released and waived effective as of the Effective Time. All such terminated agreements, arrangements, courses of dealing and understandings (including any provision thereof which purports to survive termination) shall no longer be of any further force or effect after the Effective Time.

(b) The provisions of Section 2.01(a) shall not apply to any agreements, arrangements, course of dealings or understandings (or to any of the provisions thereof), to which any Person other than the Parties and their respective Affiliates is a Party.

ARTICLE III

THE DISTRIBUTION

Section 3.01. Cooperation Prior to the Distribution.

(a) IDT and Rafael have prepared, and IDT shall mail to the holders of IDT Common Stock, the Information Statement, which shall set forth appropriate disclosure concerning Rafael, the Distribution and any other appropriate matters. IDT and Rafael have also prepared, and Rafael has filed with the Commission, the Registration Statement, which shall include the Information Statement. IDT and Rafael shall use commercially reasonable efforts to cause the Registration Statement to become effective under the Exchange Act.

(b) IDT shall, prior to the Distribution, as the majority stockholder of Rafael, approve and adopt the Rafael employee benefit plans listed on Schedule 3.01(c).

Section 3.02. Conditions Precedent to the Distribution. In no event shall the Distribution occur unless the following conditions shall have been satisfied (or waived, other than clause (iii) which shall not be waivable):

(i) the Commission has declared the Registration Statement effective under the Exchange Act and no stop order relating to the Registration Statement is in effect;

(ii) no action, proceeding or investigation shall have been instituted or threatened before any court or administrative body to restrain, enjoin or otherwise prevent the consummation of the Spinoff, and no restraining order or injunction issued by any court of competent jurisdiction shall be in effect restraining the consummation of the Spinoff;

(iii) the receipt by IDT of the opinion by Goulston Storrs PC as to the satisfaction of certain required qualifying conditions for the application of Section 355 of the Code to the Spinoff; and

(iv) the IDT Board of Directors shall not have determined to abandon or modify the Spinoff.

Section 3.03. Recapitalization. Prior to the Distribution Date, IDT as the sole stockholder of Rafael shall effectuate a recapitalization of Rafael in accordance with Schedule 3.03.

Section 3.04. The Stock Split and Distribution. On or before the Distribution Date, subject to satisfaction or waiver of the conditions set forth in this Agreement, IDT shall effect a stock split of the outstanding shares of Rafael Common Stock so that the number of such shares that are outstanding immediately following such stock split and owned by IDT shall equal the amount necessary to effect the distribution described in this Section 3.04, and deliver to the Distribution Agent certificates representing 100% of the then outstanding shares of Rafael Common Stock held by IDT, endorsed in blank, and shall instruct the Distribution Agent to distribute to each holder of record of IDT Class A Common Stock on the Record Date one (1) share of Rafael Class A Common Stock for every two (2) shares of IDT Class A Common Stock, and each holder of record of IDT Class B Common Stock on the Record Date one (1) share of Rafael Class B Common Stock for every two (2) shares of IDT Class B Common Stock, in each case as to the IDT Common Stock, outstanding as of the Record Date, by crediting the holder’s brokerage account. Rafael agrees to provide all certificates for shares of Rafael Common Stock that the Distribution Agent shall require in order to effect the Distribution, including physical certificated to holders of Class A Common Stock and for those holders of Rafael Class B Common stock who request physical certificates.

ARTICLE IV

COVENANTS

Section 4.01. Bank Accounts.

(a) The Parties agree to take, and, in the case of IDT, to cause the members of the IDT Group to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all agreements or arrangements governing each bank and brokerage account owned by Rafael (the “Rafael Accounts”), including all Rafael Accounts listed or described on Schedule 4.01(a), so that such Rafael Accounts, if currently linked (whether by automatic withdrawal, automatic deposit, or any other authorization to transfer funds from or to, hereinafter “linked”) to any bank or brokerage account owned by IDT or any other member of the IDT Group (the “IDT Accounts”) are de-linked from the IDT Accounts. From and after the Effective Time, no current or former employee of any member of the IDT Group shall have any authority to access, control or sign in connection with any Rafael Account other than those who will be authorized Rafael employees.

(b) The Parties agree to take, or cause the respective members of their respective Groups to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all agreements or arrangements governing the IDT Accounts so that such IDT Accounts, if currently linked to a Rafael Account, are de-linked from the Rafael Accounts. From and after the Effective Time, no current or former employee of Rafael shall have any authority to access, control or sign in connection with any IDT Account other than those who will be authorized IDT employees.

(c) With respect to any outstanding checks issued by IDT, Rafael, or any of their respective subsidiaries prior to the Effective Time, such outstanding checks shall be honored following the Effective Time by the entity owning the account on which the check is drawn, provided that if, following the Effective Time, a Party honors a check for an obligation related to the business of the other Party, then the paying Party shall be entitled to reimbursement from the other Party.

(d) As between the two Parties (including, in the case of IDT, members of the IDT Group) all payments and reimbursements received after the Effective Time by any Party (or member of its Group (if applicable)) that relate to a business, Asset or Liability of the other Party (or member of its Group (if applicable)), shall be held by such Party in trust for the use and benefit of the Party entitled thereto (at the expense of the Party entitled thereto) and, promptly upon receipt by such Party of any such payment or reimbursement, such Party shall pay over, or shall cause the applicable member of its Group (if applicable) to pay over to the other Party the amount of such payment or reimbursement without right of set-off.

Section 4.02. Insurance.

(a) Following the cessation of Rafael’s coverage under a Third Party Rafael Policy, if (i) an occurrence for which coverage is available under any such Third Party Rafael Policy happens prior to the Effective Time and (ii) a claim arising therefrom has been or is eventually asserted against Rafael or any of its subsidiaries (including any officer, director, employee or agent thereof), so long as such claim is reported by Rafael to the carrier (with a copy to IDT), in accordance with the reporting provision of the applicable policy, then IDT will, or will cause the members of the IDT Group that are insured thereunder to, (A) continue to provide Rafael and any other member of Rafael with access to and coverage under the applicable Third Party Rafael Policies and (B) reasonably cooperate with Rafael and take commercially reasonable actions as may be necessary or advisable to assist Rafael in submitting such claims under the applicable Third Party Rafael Policies, provided that Rafael shall be responsible for its portion of any deductibles or self-insured retentions or co-payments legally due and owing relating to such claims. For the avoidance of doubt, if an occurrence for which coverage is available under any such Third Party Rafael Policy happens after the Effective Time (and is not attributable and related to an occurrence which occurred prior to the Effective Time), or a claim arising from an occurrence prior to the Effective Time is not reported by Rafael to IDT on or before the date when such occurrence must be reported to the carrier under the applicable Third Party Rafael Policy, then, other than as provided herein, no payment for any damages, costs of defense, or other sums with respect to such claim shall be available to Rafael under such Third Party Rafael Policies.

(b) With respect to all Third Party Rafael Policies, Rafael agrees and covenants (on behalf of itself and each of its subsidiaries) (i) not to make any claim or assert any rights against IDT and any other member of the IDT Group, or the unaffiliated third-party insurers of such Third Party Rafael Policies, except as expressly provided under this Section 4.02, and (ii) to otherwise reasonably cooperate with IDT and take commercially reasonable actions as may be necessary or advisable to assist IDT in fulfilling its obligations under the applicable Third Party Rafael Policies as set forth in this Section 4.02 .

Section 4.03. Auditors and Audits; Annual and Quarterly Financial Statements and Accounting.

(a) Each Party agrees to the following:

(i) Annual Financial Statements. For the period ending one hundred and twenty (120) days following the Effective Time and in any event solely with respect to the preparation and audit of each of the Party’s financial statements for any of the years ended July 31, 2017, 2016 or 2015, each Party shall provide to the other Party on a timely basis all information reasonably required (A) to meet its schedule for the preparation, printing, filing, and public dissemination of its annual financial statements, (B) to the extent applicable to such Party, for management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with all applicable provisions of Regulation S-K, including, without limitation, Items 307 and 308 of Regulation S-K, and (C) to the extent applicable to such Party, for its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the Commission’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder (such assessments and audit being referred to as the “Internal Control Audit and Management Assessments”). Without limiting the generality of the foregoing, each Party will provide all required financial and other Information with respect to itself and its subsidiaries to its auditors in a sufficient and reasonable time and in sufficient detail to permit its auditors to take all steps and perform all reviews necessary to provide sufficient assistance to the other Party’s auditors with respect to information to be included or contained in the other Party’s annual financial statements and to permit the other Party’s auditors and management to complete the Internal Control Audit and Management Assessments.

(ii) Access to Personnel and Records. With respect to fiscal year 2017, and any future fiscal year of each of IDT and Rafael, each Party (the “Audited Party”) shall authorize its auditors, and use commercially reasonable efforts to cause its auditors, to make available to the other Party’s auditors (the “Other Party’s Auditors”), at the sole cost and expense of the other Party, both the personnel who performed or are performing the annual audits of the Audited Party and work papers related to the annual audits of the Audited Party, in all cases within a reasonable time prior to such Other Audited Party’s auditors’ opinion date, so that the Other Party’s Auditors are able to perform the procedures they consider necessary to take responsibility for, or otherwise to review to the extent deemed required, the work of the Audited Party’s auditors as it relates to the Other Party’s Auditors’ report on or review of such other Party’s financial statements, all within sufficient time to enable such other Party to meet its timetable for the printing, filing and public dissemination of its annual or interim financial statements. In such an event, the Audited Party shall make available to the Other Party’s Auditors and management its personnel and Records, at the sole cost and expense of the other Party, in a reasonable time prior to the Other Party’s Auditors’ opinion or review date and the other Party’s management’s assessment date so that the Other Party’s Auditors and the other Party’s management are able to prepare its annual or interim financial statements or to perform the procedures they consider necessary to conduct the Internal Control Audit and Management Assessments.

(b) In the event a Party (the first party) restates any of its financial statements that include its audited or unaudited financial statements with respect to any balance sheet date or period of operation between August 1, 2014 and July 31, 2017, the first party will deliver to the other Party (the second party) a substantially final draft, as soon as the same is prepared, of any report to be filed by the first party with the Commission that includes such restated audited or unaudited financial statements (the “Amended Financial Report”); provided, however, that the first party may continue to revise its Amended Financial Report prior to its filing thereof with the Commission, which changes will be delivered to the second party as soon as reasonably practicable; provided, further, however, that the first party’s financial personnel will actively consult with the second party’s financial personnel regarding any changes which the first party may consider making to its Amended Financial Report and related disclosures prior to the anticipated filing of such report with the Commission, with particular focus on any changes which would have an effect upon the second party’s financial statements or related disclosures. Each Party will reasonably cooperate with, and permit and make any necessary employees available to, the other Party, in connection with the other Party’s preparation of any Amended Financial Reports.

(c) If any Party or member of its respective Group (if applicable) is required, pursuant to Rule 3-09 of Regulation S-X or otherwise, to include in its Exchange Act filings audited financial statements or other information of the other Party or member of the other Party’s Group (if applicable), the other Party shall use commercially reasonable efforts (i) to provide such audited financial statements or other information, and (ii) to cause its outside auditors to consent to the inclusion of such audited financial statements or other information in the Party’s Exchange Act filings.

(d) Nothing in this Section 4.03 shall require any Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary information relating to that third party or its business; provided, however, that in the event that a Party is required under this Section 4.03 to disclose any such information, such Party shall use commercially reasonable efforts to seek to obtain such third party’s consent to the disclosure of such information.

Section 4.04. No Restrictions on Post-Closing Competitive Activities; Corporate Opportunities. Except as expressly provided herein or in any of the Ancillary Agreements, it is the explicit intent of each of the Parties that this Agreement shall not include any non-competition or other similar restrictive arrangements with respect to the range of business activities that may be conducted by the Parties. Accordingly, each of the Parties acknowledges and agrees that nothing set forth in this Agreement shall be construed to create any explicit or implied restriction or other limitation on (i) the ability of the other Party or any member of its Group (if applicable) to engage in any business or other activity that competes with the business of such Party or any member of its Group (if applicable), or (ii) the ability of the other Party or any member of its Group (if applicable) to engage in any specific line of business or engage in any business activity in any specific geographic area.

Section 4.05. Right of Offset.

(a) To the extent IDT or any other member of the IDT Group has the right to receive any amounts hereunder, including under the provisions of Article VI, or under any Ancillary Agreement or under any other arrangement between any member of the IDT Group and Rafael, then following notice of such proposed offset IDT may satisfy such amounts out of and shall have a right of off-set against any amounts then currently due to Rafael from IDT or any other member of the IDT Group hereunder or thereunder.

(b) To the extent Rafael has the right to receive any amounts hereunder, including under the provisions of Article VI, or under any Ancillary Agreement or under any other arrangement between Rafael and IDT or any other member of the IDT Group, then following notice of such proposed offset Rafael may satisfy such amounts out of and shall have a right of off-set against any amounts then currently due to IDT or any other member of the IDT Group from Rafael hereunder or thereunder.

ARTICLE V

LITIGATION MATTERS

Section 5.01. Litigation cooperation.

(a) Each of IDT and Rafael agrees that at all times from and after the Effective Time, if an Action currently exists or is commenced by a third-party with respect to which a Party (or any member of such Party’s Group (if applicable)) is a named defendant but such Action is otherwise not a Liability allocated to such named Party under this Agreement or any Ancillary Agreement, then the other Party shall use commercially reasonable efforts to cause such named but not liable defendant to be removed from such Action and such defendant shall not be required to make any payments or contribution in connection therewith.

(b) IDT and Rafael shall each use commercially reasonable efforts to make available to the other, upon written request, its officers, directors, employees and agents, and the officers, directors, employees and agents of any member of its Group (if applicable), as witnesses to the extent that such individuals may reasonably be required in connection with any legal, administrative or other proceedings in which the requesting Party or a member of its Group (if applicable) may be involved. The requesting Party shall bear all out-of-pocket expenses in connection therewith. On and after the Effective Time, in connection with any matter contemplated by this Section 5.01(b), the Parties will maintain any attorney-client privilege or work product immunity of any member of any Group (if applicable) as required by this Agreement or any Ancillary Agreement.

ARTICLE VI

INDEMNIFICATION

Section 6.01. Rafael Indemnification of the IDT Group.

On and after the Distribution Date, Rafael shall indemnify, defend and hold harmless each member of the IDT Group, and each of their respective directors, officers, employees and agents (the “IDT Indemnitees”) from and against any and all Indemnifiable Losses incurred or suffered by any of the IDT Indemnitees and arising out of, or due to, (a) the failure of Rafael to pay, perform or otherwise discharge, any of the Rafael Liabilities, and (b) any breach by Rafael of this Agreement.

Section 6.02. IDT Indemnification of Rafael.

On and after the Distribution Date, IDT shall indemnify, defend and hold harmless Rafael and its subsidiaries and each of their respective directors, officers, employees and agents (the “Rafael Indemnitees”) from and against any and all Indemnifiable Losses incurred or suffered by any of the Rafael Indemnitees and arising out of, or due to, (a) the failure of IDT or any member of the IDT Group to pay, perform or otherwise discharge, any of the IDT Liabilities, and (b) any breach by IDT or any member of the IDT Group of this Agreement.

Section 6.03. Contribution.

In circumstances in which the indemnity agreements provided for in Sections 6.01 and 6.02 are unavailable or insufficient, for any reason, to hold harmless an Indemnified Party in respect of any Indemnifiable Losses arising thereunder, each Indemnifying Party, in order to provide for just and equitable contribution, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Indemnifiable Losses, in proportion to the relative fault of the Indemnifying Party or Parties on the one hand and the Indemnified Party or Parties on the other in connection with the statements or omissions or alleged statements or omissions that resulted in such Indemnifiable Losses, as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by Rafael or IDT, the Parties’ relative intents, knowledge, access to information and opportunity to correct or prevent such statement or omission, and any other equitable considerations appropriate in the circumstances.

Section 6.04. Insurance and Third Party Obligations. No insurer or any other third party shall be, by virtue of the foregoing indemnification provisions, (a) entitled to a benefit it would not be entitled to receive in the absence of such provisions, (b) relieved of the responsibility to pay any claims to which it is obligated, or (c) entitled to any subrogation rights with respect to any obligation hereunder.

Section 6.05. Indemnification Obligations Net of Insurance Proceeds and Other Amounts on a Net Tax Benefit Basis.

(a) Any Liability subject to indemnification or contribution pursuant to this Article VI, will (i) be net of Insurance Proceeds that actually reduce the amount of the Liability, (ii) be net of any proceeds received by an Indemnified Party from any third party for indemnification for such Liability that actually reduce the amount of the Liability (“Third Party Proceeds”), (iii) be reduced by any Tax benefit actually realized by the Indemnified Party (calculated on a with and without basis) arising from the incurrence or payment of any such Liability and (iv) be increased by any Tax detriment actually incurred by the Indemnified Party (calculated on a with and without basis) as a result of the receipt or accrual of the Indemnity Payment in respect of such Liability. Accordingly, the amount which any Indemnifying Party is required to pay pursuant to this Article VI to any Indemnified Party will be reduced by any Insurance Proceeds, Tax benefits actually realized or Third Party Proceeds theretofore actually recovered by or on behalf of the Indemnified Party in respect of the related Liability, and shall be increased by any Tax detriments actually incurred. If an Indemnified Party receives a payment required by this Agreement from an Indemnifying Party in respect of any Liability (an “Indemnity Payment ”) and subsequently receives Insurance Proceeds or Third Party Proceeds, then the Indemnified Party will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds or Third Party Proceeds had been received, realized or recovered before the Indemnity Payment was made.

If a Tax benefit or Tax detriment is actually realized or incurred after the payment of any Indemnity Payment hereunder, the Indemnified or Indemnifying Party, as the case may be, shall pay to the other the amount of any such Tax benefit or Tax detriment when actually realized or incurred. Adjustments will made if any such Tax benefits are disallowed or such Tax detriments are not ultimately incurred

(b) An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification and contribution provisions hereof, have any subrogation rights with respect thereto. The Indemnified Party shall use commercially reasonable efforts to seek to collect or recover any third-party Insurance Proceeds and any Third Party Proceeds to which the Indemnified Party is entitled in connection with any Liability for which the Indemnified Party seeks contribution or indemnification pursuant to this Article VI; provided that the Indemnified Party’s inability to collect or recover any such Insurance Proceeds or Third Party Proceeds shall not limit the Indemnifying Party’s obligations hereunder.

Section 6.06. Notice and Payment of Claims.

If any IDT or Rafael Indemnitee (the “Indemnified Party”) determines that it is or may be entitled to indemnification by a Party (the “Indemnifying Party”) under this Article VI (other than in connection with any Action or claim subject to Section 6.07), the Indemnified Party shall deliver to the Indemnifying Party a written notice specifying, to the extent reasonably practicable, the basis for its claim for indemnification and the amount for which the Indemnified Party reasonably believes it is entitled to be indemnified. After the Indemnifying Party shall have been notified of the amount for which the Indemnified Party seeks indemnification, the Indemnifying Party shall, within thirty (30) days after receipt of such notice, pay the Indemnified Party such amount in cash or other immediately available funds (or reach agreement with the Indemnified Party as to a mutually agreeable alternative payment schedule) unless the Indemnifying Party objects to the claim for indemnification or the amount thereof. If the Indemnifying Party does not give the Indemnified Party written notice objecting to such claim and setting forth the grounds therefor within the same thirty (30) day period, the Indemnifying Party shall be deemed to have acknowledged its liability for such claim and the Indemnified Party may exercise any and all of its rights under applicable law to collect such amount.

Section 6.07. Notice and Defense of Third Party Claims.

Promptly following the earlier of (a) receipt of notice of the commencement by a third party of any Action against or otherwise involving any Indemnified Party or (b) receipt of information from a third party alleging the existence of a claim against an Indemnified Party, in either case, with respect to which indemnification may be sought pursuant to this Agreement (a “Third Party Claim”), the Indemnified Party shall give the Indemnifying Party written notice thereof. The failure of the Indemnified Party to give notice as provided in this Section 6.07 shall not relieve the Indemnifying Party of its obligations under this Agreement, except to the extent that the Indemnifying Party is materially prejudiced by such failure to give notice. Within thirty (30) days after receipt of such notice, the Indemnifying Party shall, by giving written notice thereof to the Indemnified Party, (a) acknowledge, as between the parties hereto, liability for, and at its option elect to assume the defense of such Third Party Claim at its sole cost and expense or (b) object to the claim of indemnification set forth in the notice delivered by the Indemnified Party pursuant to the first sentence of this Section 6.07 setting forth the grounds therefor; provided that if the Indemnifying Party does not within the same thirty (30) day period give the Indemnified Party written notice acknowledging liability or objecting to such claim and setting forth the grounds therefor, the Indemnifying Party shall be deemed to have acknowledged, as between the parties hereto, its liability to the Indemnified Party for such Third Party Claim. Any contest of a Third Party Claim as to which the Indemnifying Party has elected to assume the defense shall be conducted by attorneys employed by the Indemnifying Party and reasonably satisfactory to the Indemnified Party; provided that the Indemnified Party shall have the right to participate in such proceedings and to be represented by attorneys of its own choosing at the Indemnified Party’s sole cost and expense. If the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnifying Party may settle or compromise the claim without the prior written consent of the Indemnified Party if such settlement or compromise is solely for monetary damages for which the Indemnifying Party shall be responsible for; in all other events, the Indemnifying Party may not agree to any settlement or compromise without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed. If the Indemnifying Party does not assume the defense of a Third Party Claim for which it has acknowledged liability for indemnification under Article VI, the Indemnified Party may require the Indemnifying Party to reimburse it on a current basis for its reasonable expenses of investigation, reasonable attorney’s fees and reasonable out-of-pocket expenses incurred in defending against such Third Party Claim, and the Indemnifying Party shall be bound by the result obtained with respect thereto by the Indemnified Party; provided that the Indemnifying Party shall not be liable for any settlement effected without its consent, which consent shall not be unreasonably withheld or delayed.

The Indemnifying Party shall pay to the Indemnified Party in cash the amount for which the Indemnified Party is entitled to be indemnified (if any) within 15 days after the final resolution of such Third Party Claim (whether by the final nonappealable judgment of a court of competent jurisdiction or otherwise), or, in the case of any Third Party Claim as to which the Indemnifying Party has not acknowledged liability, within 15 days after such Indemnifying Party’s objection has been resolved by settlement, compromise or the final nonappealable judgment of a court of competent jurisdiction.

ARTICLE VII

EMPLOYEE MATTERS

Section 7.01. General Principles.

(a) On or before the Distribution Date, IDT shall transfer, or caused to be transferred, the Rafael Employees to Rafael.

(b) Rafael Employee Participation in IDT Benefit Plans. Except as otherwise expressly provided for in this Agreement, as provided for under the Transition Service Agreement or as otherwise expressly agreed to in writing between the Parties, effective as of the Effective Time (i) Rafael and its subsidiaries shall cease to be Participating Companies in any IDT Benefit Plan, and (ii) each Rafael Employee and any other Rafael service provider (including any individual who is an independent contractor, consultant, leased employee, on-call worker, or non-payroll worker of Rafael or in any other employment, non-employment, or retainer arrangement, or relationship with Rafael) shall cease to actively participate in, be covered by, accrue benefits under, be eligible to contribute to or have any rights as an active participant under any IDT Benefit Plan (except to the extent of obligations that accrued on or before the Effective Time, including benefits that are not otherwise addressed herein or to the extent such participation relates solely to services provided to the IDT Group by an IDT Group Employee or IDT Group service provider), and IDT and Rafael shall take all necessary action to effectuate each such cessation.

Section 7.02. IDT 401(k) Plan; Vesting and Distribution of Rafael Employees’ Account Balances. As of the Effective Time, Rafael Employees participating in the IDT 401(k) Plan shall become vested in their entire account balances under the IDT 401(k) Plan. As of the Effective Time, Rafael and its subsidiaries shall cease to be participating companies in the IDT 401(k) Plan, each Rafael Employee shall cease to accrue any benefits under the IDT 401(k) Plan, and each Rafael Employee shall be treated as having incurred a severance from employment under the IDT 401(k) Plan as of the Effective Time, making each Rafael Employee eligible for a distribution under the IDT 401(k) Plan of his or her entire account balance. As soon as reasonably practicable, Rafael shall permit each Rafael Employee to elect a direct rollover of cash from the IDT 401(k) Plan into one or more IRA accounts established by such Rafael Employee.

Section 7.03. Service Recognition. Rafael shall give each Rafael Participant full credit for purposes of eligibility, vesting, determination of level of benefits, and, to the extent applicable, benefit accruals under any Rafael Benefit Plan, respectively, for such Rafael Participant’s service with any member of the IDT Group to the same extent such service was recognized by the applicable IDT Benefit Plans; provided, that such service shall not be recognized to the extent that such recognition would result in the duplication of benefits.

Section 7.04. Rafael Stock Option Plan. (a) On March 26, 2018, Rafael adopted the Rafael Stock Plan, which shall permit the issuance of equity based awards that have material terms and conditions substantially similar to those awards that may be issued under the IDT Stock Plan. The Rafael Stock Plan shall be approved prior to the Distribution Date by IDT as the majority stockholder of Rafael.

(b) Within thirty (30) days following the Effective Time, Rafael shall cause to be issued to each holder of unvested restricted stock of IDT issued pursuant to the IDT 2015 Stock Option and Incentive Plan, as amended, or any predecessor plan thereto (collectively, the “IDT Stock Plan”), an award pursuant to the Rafael Stock Plan and a Restricted Stock Agreement thereunder (which shall constitute shares to be issued in the Distribution, without duplication) of a similar number of shares of Rafael Class B common stock with restrictions and lapse thereof corresponding to the restrictions and lapse thereof as apply to the IDT Restricted Stock in respect of which such Rafael Restricted Stock is being issued (including, without limitation as to continued service with IDT or Rafael, as the case may be).

(c) Upon the vesting of Deferred Stock Units granted under the IDT Stock Plan, Rafael shall cause to be issued to the holder(s) thereof, shares of Rafael Class B common stock as would have been issued to such holder(s) in the Distribution were they holder(s) of the underlying shares on the record date for the Distribution.

ARTICLE VIII

TAX MATTERS

Section 8.01. Tax Separation Agreement. All matters relating to Taxes shall be governed exclusively by the Tax Separation Agreement, except as may be expressly stated herein. In the event of any inconsistency with respect to such matters between the Tax Separation Agreement and this Agreement or any Ancillary Agreement, the Tax Separation Agreement shall govern to the extent of the inconsistency.

ARTICLE IX

ACCOUNTING MATTERS

Section 9.01. Intercompany Accounts. Each Intercompany Account outstanding immediately prior to the Effective Time, in any general ledger account of IDT, Rafael or any of their respective Affiliates, shall be satisfied and/or settled by the relevant members of the IDT Group and Rafael no later than the Effective Time.

ARTICLE X

INFORMATION; SEPARATION OF DATA

Section 10.01. Provision of Corporate Records. As soon as practicable following the Effective Time, IDT and Rafael shall each arrange for the provision to the other of a copy of existing Records in its possession significantly relating to the other Party or its business and affairs or to any other entity that is part of such other Party’s respective Group or to the business and affairs of such other entity; provided that each Party may redact such information that it deems reasonably necessary to protect its interests prior to the delivery of a copy such Records.

Section 10.02. Access to Information. From and after the Effective Time, IDT and Rafael shall each afford the other and its accountants, counsel and other designated representatives reasonable access (including using commercially reasonable efforts to give access to Persons possessing information) and duplicating rights, upon prior reasonable notice during normal business hours, to all Records in its possession relating to the business and affairs of the other Party or a member of its Group (if applicable) (other than data and information subject to an attorney/client or other privilege), including, but not limited to, the Shared Records, insofar as such access is reasonably required by the other including, without limitation, for audit, accounting, regulatory and litigation purposes; provided that each Party may redact such information that it deems reasonably necessary to protect its interests prior to granting access or duplicating rights to such other Party.

Section 10.03. Retention of Records. Except as otherwise required by law or agreed to in writing, each Party shall, and shall cause the members of its Group (if applicable) to, retain all information relating to the other Party’s business and affairs in accordance with the past practice of such Party. Notwithstanding the foregoing, either Party may destroy or otherwise dispose of any information at any time in accordance with the corporate record retention policy maintained by such Party with respect to its own records. Notwithstanding anything herein to the contrary, the Parties agree that in the event of a conflict or inconsistency between the provisions of this Section10.03 or Section 10.02 and the provisions of Section 3.6 of the Tax Separation Agreement, then the provisions of such Section 3.6 of the Tax Separation Agreement shall prevail to the extent of such conflict or inconsistency.

Section 10.04. Confidentiality.

(a) Notwithstanding any termination of this Agreement, the Parties (the receiving party) shall hold, and shall cause each of the members of their Group (if applicable) to hold, and shall cause each of their respective officers, employees, agents, consultants and advisors to hold, in strict confidence, and not to disclose or release or use, without the prior written consent of the other Party (the disclosing party), any and all Confidential Information of the disclosing party; provided, that the receiving party may disclose, or may permit disclosure of, Confidential Information of the disclosing party (i) to its auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such information for the receiving party’s auditing and other non-commercial purposes and are informed of their obligation to, and agree to, hold such information confidential to the same extent as is applicable to the receiving party and in respect of whose failure to comply with such obligations, the receiving party will be responsible, (ii) if the receiving party or any member of its Group (if applicable) are required or compelled to disclose any such Confidential Information by judicial or administrative process or by other requirements of Law or stock exchange rule, or (iii) as reasonably necessary in order to permit the receiving party to prepare and disclose its financial statements under the applicable requirements of Law or stock exchange rule, or other disclosures required under applicable Law or stock exchange rule; provided, further, that the receiving party (and members of its Group (if applicable) as necessary) may use, or may permit use of, Confidential Information of the disclosing party in connection with the receiving party performing its obligations, or exercising its rights, under this Agreement or any Ancillary Agreement. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (iii) above, the receiving party, to the extent not prohibited by any applicable Laws, shall promptly notify the disclosing party of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which the receiving party will cooperate in obtaining. In the event that such appropriate protective order or other remedy is not obtained, the receiving party shall furnish only that portion of the Confidential Information that is legally required to be disclosed and shall take commercially reasonable steps, at the sole cost and expense of the disclosing party, to ensure that confidential treatment is accorded such information.

(b) Notwithstanding anything to the contrary set forth herein, (i) the Parties shall be deemed to have satisfied their obligations hereunder with respect to Confidential Information if they exercise the same degree of care (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar information and (ii) confidentiality obligations provided for in any agreement between each Party or members of its Group (if applicable) and their respective employees shall remain in full force and effect. Notwithstanding anything to the contrary set forth herein, Confidential Information of any Party in the possession of and used by any other Party as of the Effective Time may continue to be used by such Party in possession of the Confidential Information in and only in the operation of the IDT Business or the Rafael Business, as the case may be; provided, such Confidential Information may be used only so long as the Confidential Information is maintained in confidence and not disclosed in violation of this Section 10.04(a) . Such continued right to use may not be transferred (directly or indirectly) to any third party without the prior written consent of the applicable Party, except pursuant to Section 11.05(b).

(c) Each Party acknowledges that it and the other members of its Group (if applicable) may have in their possession confidential or proprietary information of third parties that was received under confidentiality or non-disclosure agreements with such third party prior to the Effective Time. Such Party will hold, and will cause the other members of its Group (if applicable) and their respective representatives to hold, in strict confidence the confidential and proprietary information of third parties to which they or any other member of their respective Groups has access, in accordance with the terms of any agreements entered into prior to the Effective Time between one or more members of the such Party’s Group (if applicable) (whether acting through, on behalf of, or in connection with, the separated businesses) and such third parties.

(d) Upon the written request of a Party, the other Party shall promptly (i) deliver to such requesting Party all original Confidential Information (whether written or electronic) concerning such requesting Party and/or members of its Group (if applicable), and (ii) if specifically requested by such requesting Party, destroy any copies of such Confidential Information (including any extracts there from). Upon the written request of such requesting Party, the other Party shall cause one of its duly authorized officers to certify in writing to such requesting Party that the requirements of the preceding sentence have been satisfied in full.

Section 10.05. Privileged Matters.

(a) The Parties recognize that legal and other professional services that have been and will be provided prior to the Effective Time have been and will be rendered for the collective benefit of each of the members of the IDT Group and Rafael, and that each of the members of the IDT Group and Rafael should be deemed to be the client with respect to such pre-separation services for the purposes of asserting all privileges which may be asserted under applicable Law.

(b) The Parties recognize that legal and other professional services will be provided following the Effective Time which will be rendered solely for the benefit of IDT or Rafael, as the case may be. With respect to such post-separation services, the Parties agree as follows:

(i) IDT shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information which relates solely to the IDT Business, whether or not the privileged information is in the possession of or under the control of IDT or Rafael. IDT shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the subject matter of any claims constituting IDT Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by IDT, whether or not the privileged information is in the possession of or under the control of IDT or Rafael; and

(ii) Rafael shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information which relates solely to the Rafael Business, whether or not the privileged information is in the possession of or under the control of IDT or Rafael. Rafael shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the subject matter of any claims constituting Rafael Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by Rafael, whether or not the privileged information is in the possession of or under the control of IDT or Rafael.

(c) The Parties agree that they shall have a shared privilege, with equal right to assert or waive, subject to the restrictions in this Section 10.05, with respect to all privileges not allocated pursuant to the terms of Section 10.05(b). All privileges relating to any claims, proceedings, litigation, disputes, or other matters which involve both IDT and Rafael in respect of which both Parties retain any responsibility or Liability under this Agreement shall be subject to a shared privilege among them.

(d) No Party may waive any privilege which could be asserted under any applicable Law, and in which any other Party has a shared privilege, without the consent of the other Party, which shall not be unreasonably withheld or delayed or as provided in subsections (e) or (f) below. Consent shall be in writing, or shall be deemed to be granted unless written objection is made within twenty (20) days after notice upon the other Party requesting such consent. Each Party shall use its reasonable best efforts to preserve any privilege held by the other Party if that privilege is a shared privilege or has been allocated to the other Party pursuant to Section 10.05(b).

(e) In the event of any litigation or dispute between or among any of the Parties, or any members of their respective Groups, either such Party may waive a privilege in which the other Party or member of such other Party’s Group (if applicable) has a shared privilege, without obtaining the consent of the other Party; provided, that such waiver of a shared privilege shall be effective only as to the use of information with respect to the litigation or dispute between the relevant Parties and/or the applicable members of their respective Group (if applicable)s, and shall not operate as a waiver of the shared privilege with respect to third parties.

(f) If a dispute arises between the Parties or members of their Group (if applicable) regarding whether a privilege should be waived to protect or advance the interest of either Party, each Party agrees that it shall negotiate in good faith, shall endeavor to minimize any prejudice to the rights of the other Party, and shall not unreasonably withhold consent to any request for waiver by the other Party. Each Party specifically agrees that it will not withhold consent to waiver for any purpose except to protect its own legitimate interests.

(g) Upon receipt by either Party or by any member of its Group (if applicable) of any subpoena, discovery or other request which arguably calls for the production or disclosure of information subject to a shared privilege or as to which the other Party has the sole right hereunder to assert a privilege, or if either Party obtains knowledge that any of its or any member of its Group (if applicable)’s current or former directors, officers, agents or employees have received any subpoena, discovery or other requests which arguably calls for the production or disclosure of such privileged information, such Party shall promptly notify the other Party of the existence of the request and shall provide the other Party a reasonable opportunity to review the information and to assert any rights it or they may have under this Section 10.05 or otherwise to prevent the production or disclosure of such privileged information.

(h) The transfer of all Information pursuant to this Agreement is made in reliance on the agreement of IDT and Rafael as set forth in Section 10.04 and this Section 10.05, to maintain the confidentiality of privileged information and to assert and maintain all applicable privileges. Nothing provided for herein or in any Ancillary Agreement shall be deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise.

Section 10.06. Ownership of Information. Any Information owned by one Party or any member of its Group (if applicable) that is provided to a requesting Party pursuant to Article VI, this Article X, or Article XI shall be deemed to remain the property of the providing party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such information.

Section 10.07. Separation of Data. Rafael acknowledges and agrees that IDT may, after the Effective Time, delete or cause to be deleted any Information which does not relate to the Rafael Business which is contained in, stored in or accessible through any Software provided to Rafael by IDT. The foregoing will not be deemed to be a violation of any provision of this Agreement. The provisions of Section 10.04 apply to Rafael’s use of any such Information prior to its deletion.

ARTICLE XI

MISCELLANEOUS

Section 11.01. Expenses. The parties shall pay the expenses relating to the Spinoff as set forth on Schedule 11.01.

Section 11.02. Notices. All notices and communications under this Agreement shall be in writing and shall be deemed to have been given (a) when received, if such notice or communication is delivered by facsimile, hand delivery or overnight courier, and (b) three (3) business days after mailing if such notice or communication is sent by United States registered or certified mail, return receipt requested, first class postage prepaid. All notices and communications, to be effective, must be properly addressed to the Party to whom the same is directed at its address as follows:

If to IDT, to:

IDT Corporation

520 Broad Street

Newark New Jersey 07102

Fax: 973-438-1010

Attention: Marcelo Fischer

With copies to:

IDT Corporation

520 Broad Street

Newark, New Jersey 07102

Fax: 973-438-1456

Attention: Legal Department

If to Rafael, to:

Rafael Holdings, Inc.

520 Broad Street

Newark New Jersey 07102

Fax: 973-438- FAX NUMBER]

Attention: Menachem Ash

Either Party may, by written notice delivered to the other Party in accordance with this Section 11.02, change the address to which delivery of any notice shall thereafter be made.

Section 11.03. Amendment and Waiver. This Agreement may not be altered or amended, nor may any rights hereunder be waived, except by an instrument in writing executed by the Party or Parties to be charged with such amendment or waiver. No waiver of any terms, provision or condition of or failure to exercise or delay in exercising any rights or remedies under this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, provision, condition, right or remedy or as a waiver of any other term, provision or condition of this Agreement.

Section 11.04. Entire Agreement. This Agreement, together with the Ancillary Agreements, constitutes the entire understanding of the Parties with respect to the subject matter hereof, superseding all negotiations, prior discussions and prior agreements and understandings relating to such subject matter. To the extent that the provisions of this Agreement are inconsistent with the provisions of any Ancillary Agreement with respect to the subject matter thereof, the provisions of such Ancillary Agreement shall prevail to the extent of the inconsistency.

Section 11.05. Consolidation, Merger, Etc.; Parties in Interest; Termination.

(a) Neither Party (referred to in this Section 11.05(a) as a “Transferring Party”) shall consolidate with or merge into any other entity or convey, transfer or lease all or any substantial portion of its Assets to any entity, unless, in each case, the other party to such transaction expressly assumes, by a written agreement, executed and delivered to the other Party, in form reasonably satisfactory to such other Party, all of the Liabilities of the Transferring Party under this Agreement and the Ancillary Agreements and the due and punctual performance or observance of every agreement, obligation and covenant of this Agreement and Ancillary Agreements on the part of the Transferring Party to be performed or observed.

(b) Neither of the Parties may assign its rights nor delegate any of its duties under this Agreement without the prior written consent of the other Party. This Agreement shall be binding upon, and shall inure to the benefit of, the Parties and their respective successors and permitted assigns. Nothing contained in this Agreement, express or implied, is intended to confer any benefits, rights or remedies upon any Person other than members of the IDT Group and Rafael and the IDT Indemnitees and Rafael Indemnitees under Article VI hereof.

(c) This Agreement (including Article VI hereof) may be terminated and the Distribution may be amended, modified or abandoned at any time prior to the Distribution by and in the sole discretion of IDT without the approval of Rafael or the stockholders of IDT. In the event of such termination, neither Party shall have any liability of any kind arising from such termination to the other Party or any other Person. After the Distribution, this Agreement may not be terminated except by an agreement in writing signed by the Parties; provided, however, that Article VI shall not be terminated or amended after the Distribution in respect of any IDT Indemnitee or Rafael Indemnitee without the consent of such Person.

Section 11.06. Further Assurances and Consents. In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties will use commercially reasonable efforts to (a) execute and deliver such further instruments and documents and take such other actions as the other Party may reasonably request in order to effectuate the purposes of this Agreement and to carry out the terms hereof and (b) take, or cause to be taken, all actions, and do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable laws, regulations and agreements or otherwise to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, using commercially reasonable efforts to obtain any consents and approvals, make any filings and applications and remove any liens, claims, equity or other encumbrance on an Asset of the other Party necessary or desirable in order to consummate the transactions contemplated by this Agreement; provided that no Party shall be obligated to pay any consideration therefor (except for filing fees and other similar charges) to any third party from whom such consents, approvals and amendments are requested or to take any action or omit to take any action if the taking of or the omission to take such action would be unreasonably burdensome to the Party or its Group (if applicable) or the business thereof.

Section 11.07. Severability. In the event that any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, and the Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 11.08. Governing Law; Jurisdiction. This Agreement shall be construed in accordance with, and governed by, the laws of the State of New Jersey, without regard to the conflicts of law rules of such state. Each of the Parties (a) consents to submit itself to the personal jurisdiction of the courts of the State of New Jersey or any federal court with subject matter jurisdiction located in the District of New Jersey (and any appeals court therefrom) in the event any dispute arises out of this Agreement or any Ancillary Agreement or any transaction contemplated hereby or thereby, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (c) agrees that it will not bring any action relating to this Agreement or any Ancillary Agreement or any transaction contemplated hereby or thereby in any court other than such courts.

Section 11.09. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same Agreement.

Section 11.10. Third Party Beneficiaries. Except as provided in Article VI and except as specifically provided in any Ancillary Agreement, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

Section 11.11. Specific Performance. The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to provisional or temporary injunctive relief in accordance therewith in any court of the United States, this being in addition to any other remedy or relief to which they may be entitled.

Section 11.12. Limitations of Liability. Notwithstanding anything in this Agreement to the contrary, no Indemnifying Party shall be liable to an Indemnified Party for any special, indirect, incidental, punitive, consequential, exemplary, statutorily-enhanced or similar damages in excess of compensatory damages (provided that any such liability with respect to a Third Party Claim shall be considered direct damages) arising in connection with the transactions contemplated by this Agreement or the Ancillary Agreements.

Section 11.13. Force Majeure. No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement, so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other Party of the nature and extent of any such Force Majeure condition, and (b) use due diligence to remove any such causes in its control and resume performance under this Agreement as soon as reasonably practicable.

Section 11.14. Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

Section 11.15. Disputes.

The Parties shall use good faith efforts to resolve any disputes arising out of this Agreement within fifteen (15) days of receipt of a Party’s written notice of a dispute. All disputes under this Agreement shall be referred to the SVP – Finance or his/her designee of IDT and the General Counsel or his/her designee of Rafael. The executives shall meet as required for the purpose of resolving any pending dispute referred to them under this Agreement and shall consider the disputes in the order such disputes are brought before them. In the event that such executives are unable to resolve a dispute within thirty (30) business days (or such longer period as the executives may mutually determine), they shall submit the matter to binding arbitration according to the rules of the American Arbitration Association for commercial disputes. The arbitration shall be conducted by one arbitrator, expert in matters relating to commercial law, mutually selected by the Parties. If the Parties fail to mutually agree upon one arbitrator within ten (10) days of submission of the dispute to arbitration, one will be appointed in accordance with the commercial rules and practices of the American Arbitration Association. Any award, order or judgment pursuant to such arbitration shall be deemed final and binding and may be enforced in any court of competent jurisdiction. The Parties agree that the arbitrator shall only have the power and authority to make awards and issue orders as expressly permitted herein and shall not, in any event, make any award that provides for punitive damages. The schedule and rules for the arbitration proceedings shall be as set by the arbitrator and the arbitration proceedings shall be held in Newark, New Jersey. Each Party shall bear its own costs of participating in the arbitration proceedings, but shall share the costs of the arbitrator.

[Signatures appear on following page.]

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written.

	RAFAEL HOLDINGS, INC.

	By:	/s/ David Polinsky
		David Polinsky
		Chief Financial Officer

	IDT CORPORATION

	By:	/s/ Marcelo Fischer
		Marcelo Fischer
		Senior Vice President of Finance

EXHIBIT A

[Tax Separation Agreement]

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

RAFAEL HOLDINGS, INC.

Rafael Holdings, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

FIRST: That the name of the Corporation is Rafael Holdings, Inc., and the original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on July 27, 2017 (the “Certificate”).

SECOND: That pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”), this Amended and Restated Certificate of Incorporation restates and integrates and further amends the Certificate.

THIRD: That the board of directors of the Corporation (the “Board”) duly adopted, in accordance with the provisions of Section 242 of the DGCL and the By-laws of the Corporation, the proposed amendment and restatement of the Certificate by written consent in lieu of a meeting, declaring such amendment and restatement to be advisable and directing that such amendment and restatement be submitted to the stockholders of the Corporation for approval.

FOURTH: That thereafter, pursuant to the resolution of the Board, the stockholders of the Corporation duly adopted the proposed amendment and restatement by written consent in lieu of a special meeting, all in accordance with the provisions of Sections 242 and 245 of the DGCL.

FIFTH: Upon the filing and effectiveness (the “Effective Time”), pursuant to the General Corporation Law of the State of Delaware, of this Amended and Restated Certificate of Incorporation, each share of the Corporation’s common stock, par value $0.01 per share (“Common Stock”), issued and outstanding immediately prior to the Effective Time shall automatically be converted and/or split into (i) 7,871.63 shares of Class A Common Stock, par value $0.01 per share, and (ii) 116,399.01 shares of Class B Common Stock, par value $0.01 per share, respectively, without any further action by the Corporation or the holder thereof. Upon the Effective Time, there will no longer be any shares of Common Stock issued and outstanding and all authorized shares of Common Stock will be eliminated.

SIXTH: That this Amended and Restated Certificate of Incorporation shall become effective upon filing.

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

RAFAEL HOLDINGS, INC.

EIGHTH: That the Certificate of Incorporation, as amended and restated hereby, reads in its entirety as follows:

FIRST: The name of the corporation is Rafael Holdings, Inc. (the “Corporation”).

SECOND: The address of the registered office of the Corporation in the State of Delaware is 251 Little Falls Drive in the City of Wilmington, County of New Castle 19808-1674. The name of its registered agent at such address is Corporation Service Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).

FOURTH: The aggregate number of shares of all classes of capital stock which the Corporation shall have the authority to issue is two hundred forty-five million (245,000,000) shares, consisting of (a) 35,000,000 shares of Class A Common Stock, par value $0.01 per share (“Class A Stock”), (b) 200,000,000 shares of Class B Common Stock, par value $0.01 per share (“Class B Stock”; the Class A Stock and the Class B Stock are referred to herein as the “Common Shares”), and (c) 10,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”).

1. Preferred Stock

The Board of Directors is hereby expressly authorized, by resolution or resolutions, to provide, out of the unissued and undesignated shares of Preferred Stock, for one or more series of Preferred Stock. Before any shares of any such series are issued, the Board of Directors shall fix, and hereby is expressly empowered to fix, by resolution or resolutions, the following provisions of the shares thereof:

(a) the designation of such series, the number of shares to constitute such series, and the stated value thereof if different from the par value thereof;

(b) whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be general or limited;

(c) the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any shares of stock of any other class or any other series of this class;

(d) whether the shares of such series shall be subject to redemption by the Corporation, and, if so, the terms and conditions of such redemption, including the manner of selecting shares for redemption if less than all shares of such series are to be redeemed, the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;

(e) the amount or amounts payable upon shares of such series upon, and the rights of the holders of such series in, the voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Corporation, and whether such rights shall be in preference to, or in another relation to, the comparable rights of any other class or classes or series of stock;

(f) whether the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;

(g) whether the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other series of this class or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange;

(h) the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payments of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation of the Common Shares or shares of stock of any other class or any other series of this class;

(i) the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issue of any additional stock, including additional shares of such series or of any other series of this class or of any other class; and

(j) any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof.

The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations of restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. All shares of any one series of Preferred Stock shall be identical in all respects with all other shares of such series, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon shall accrue and/or be cumulative.

2. Common Shares

(a) General . Except as hereinafter expressly set forth in this Section 2, and subject to the rights and preferences of the holders of Preferred Stock at any time outstanding, the Class A Stock and the Class B Stock, both of which are classes of common stock, shall have the same rights and privileges and shall rank equally, share ratably and be identical in respects as to all matters, including rights in liquidation.

(b) Voting Rights . Except as otherwise provided in this Amended and Restated Certificate of Incorporation or as expressly provided by law, and subject to any voting rights provided to holders of Preferred Stock at any time outstanding, the Common Shares have exclusive voting rights on all matters requiring a vote of the Corporation.

The holders of Class A Stock shall be entitled to three votes per share on all matters to be voted on by the stockholders of the Corporation. The holders of Class B Stock shall be entitled to one-tenth (1/10) of a vote per share on all matters to be voted on by the stockholders of the Corporation.

Except as otherwise provided in this Amended and Restated Certificate of Incorporation or as required by law, and subject to any voting rights provided to holders of Preferred Stock at any time outstanding, the holders of Class A Stock and the holders of Class B Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(c) Dividends and Distributions . Subject to the rights of the holders of Preferred Stock, and subject to any other provisions of this Amended and Restated Certificate of Incorporation, as it may be amended from time to time, holders of Class A Stock and holders of Class B Stock shall be entitled to receive such dividends and other distributions in cash, in property or in shares of the Corporation as may be declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefor; provided , however , that no cash, property or share dividend or distribution may be declared or paid on the outstanding shares of any of the Class A Stock or the Class B Stock unless an identical per share dividend or distribution is simultaneously declared and paid on the outstanding shares of the other class of common stock; provided further , however , that (i) a dividend of shares may be declared and paid in Class A Stock to holders of Class A Stock and in Class B Stock to holders of Class B Stock if the number of shares paid per share to holders of Class A Stock and to holders of Class B Stock shall be the same (ii) a dividend or distribution by the Corporation of the securities of another entity may be declared and paid to holders of Common Shares, if the securities distributed to the holders of differing classes of Common Shares have disparate voting and conversion rights, so long as (A) such shares bear the same relative equity rights in the entity whose securities are being distributed, and (B) the disparate voting and conversion rights of the securities being distributed to the Class A Stock and the Class B Stock are not materially different than the relative voting and conversion rights of the Class A Stock and Class B Stock. If the Corporation shall in any manner subdivide, combine or reclassify the outstanding shares of Class A Stock or Class B Stock, the outstanding shares of the other class of common stock shall be subdivided, combined or reclassified proportionately in the same manner and on the same basis as the outstanding shares of Class A Stock or Class B Stock, as the case may be, have been subdivided, combined or reclassified.

(d) Optional Conversion .

(1) The shares of Class B Stock are not convertible into or exchangeable for shares of Class A Stock.

(2) Each share of Class A Stock may be converted, at any time and at the option of the holder thereof, into one fully paid and nonassessable share of Class B Stock.

(e) Mandatory Conversion .

(1) Upon a Transfer by a Holder other than (i) the initial transfer by IDT Corporation within ninety (90) days following the Effective Date in connection with the distribution of the shares of the Corporation to IDT Corporation’s stockholders; or (ii) to a “Permitted Transferee” of such Holder, shares of Class A Stock so transferred shall, effective on the date of such Transfer, be automatically converted, without further act on anyone’s part, into an equal number of shares of Class B Stock, and the stock certificates formerly representing such shares of Class A Stock shall thereupon and thereafter be deemed to represent the like number of shares of Class B Stock.

(2) For purposes of this Section 2(e):

A “Permitted Transferee” of a Holder shall mean the following:

(i) In the case of any Holder, the Corporation or any one or more of its directly or indirectly wholly owned subsidiaries;

(ii) In the case of a Holder who is a natural person:

(A) The spouse of such Holder (the “Spouse”), any lineal ancestor of such Holder or of the Spouse, and any person who is a lineal descendant of a grandparent of such Holder or of the Spouse, or a spouse of any such lineal descendent or such lineal ancestor (collectively, the “Family Members”);

(B) A trust (including a voting trust) exclusively for the benefit of one or more of (x) such Holder, (y) one or more of his or her Family Members or (z) an organization to which contributions are deductible under 501(c)(3) of the internal Revenue Code of 1986, as amended, or any successor provision (the “Internal Revenue Code”) or for estate or gift purposes (a “Charitable Organization”); provided that such trust may include a general or special power of appointment for such Holder or Family Members (a “Trust”); provided, further, that if by reason of any change in the beneficiaries of such Trust, such Trust would not have qualified, at the time of the Transfer of Class A Stock to such Trust (for purposes of this sub-paragraph (B), the “Transfer Date”), as a Permitted Transferee, all shares of Class A Stock so transferred to such Trust shall, effective on the date of such change of beneficiary, be automatically converted, without further act on anyone’s part, into an equal number of shares of Class B Stock, and the stock certificates formerly representing such shares of Class A Stock shall thereupon and thereafter be deemed to represent the like number of shares of Class B Stock;

(D) An Individual Retirement Account, as defined in Section 408(a) of the Internal Revenue Code, of which such Holder is a participant or beneficiary, provided that such Holder has the power to direct the investment of funds deposited into such Individual Retirement Account and to control the voting of securities held by such Individual Retirement Account (an “IRA”);

(E) A pension, profit sharing, stock bonus or other type of plan or trust of which such Holder is a participant or beneficiary and which satisfies the requirements for qualification under Section 401(k) of the Internal Revenue Code, provided that such Holder has the power to direct the investment of funds deposited into such plan or trust and to control the voting of securities held by such plan or trust (a “Plan”);

(F) Any corporation or partnership directly or indirectly controlled, individually or as a group, only by such Holder and/or any of his Permitted Transferees as determined under this clause (ii); provided that if by reason of any change in the direct or indirect control of such corporation or partnership, such corporation or partnership would not have qualified, at the time of the Transfer of Class A Stock to such corporation or partnership, as a Permitted Transferee of such Holder, all shares of Class A Stock so transferred to such corporation or partnership shall, effective on the date of such direct or indirect change in control, be automatically converted, without further act on anyone’s part, into an equal number of shares of Class B Stock, and the stock certificates formerly representing such shares of Class A Stock shall thereupon and thereafter be deemed to represent the like number of shares of Class B Stock; and

(G) The estate, executor, executrix or other personal representative, custodian, administrator or guardian of such Holder.

(iii) In the case of a Holder holding shares of Class A Stock in question as trustee of an IRA, a Plan or a Trust, “Permitted Transferee” means (x) the person who transferred Class A Stock to such IRA, such Plan or such Trust, (y) any Permitted Transferee of any such person determined pursuant to this Section 2(e) and (z) any successor trustee or trustees in such capacity of such IRA, such Plan or such Trust;

(iv) In the case of a Holder which is a partnership, “Permitted Transferee” means any other person, directly or indirectly controlling, controlled by or under direct or indirect common control with such partnership, provided that, if by reason of any change in the direct or indirect control of such person, such person would not have qualified, at the time of the Transfer of the Class A Stock to such person, as a Permitted Transferee of such partnership, all shares of Class A Stock so transferred to such person shall, effective on the date of such direct or indirect change in control, be automatically converted, without further act on anyone’s part, into an equal number of shares of Class B Stock, and the stock certificates formerly representing such shares of Class A Stock shall thereupon and thereafter be deemed to represent the like number of shares of Class B Stock;

(v) In the case of a Holder which is a corporation (other than a Charitable Organization) “Permitted Transferee” means any other person directly or indirectly controlling, controlled by or under direct or indirect common control with such corporation; provided that if by reason of any change in the direct or indirect control of such person, such person would not have qualified, at the time of the Transfer of the Class A Stock to such person, as a Permitted Transferee of such corporation, all shares of Class A Stock so transferred to such person shall, effective on the date of such direct or indirect change in control be automatically converted, without further act on anyone's part, into an equal number of shares of Class B Stock, and the stock certificates formerly representing such shares of Class A Stock shall thereupon and thereafter be deemed to represent the like number of shares of Class B Stock; and

(vi) In the case of a Holder which is the estate of a deceased Holder or who is the executor, executrix or other personal representative, custodian or administrator of such Holder, or guardian of a disabled or adjudicated incompetent Holder or which is the estate of a bankrupt or insolvent Holder, which owns the shares of Class A Stock in question, “Permitted Transferee” means a Permitted Transferee of such deceased, or adjudicated incompetent, disabled, bankrupt or insolvent Holder as otherwise determined pursuant to this Section 2(e).

As used in this Section 2(e), the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the controlled person or entity.

As used in this Section 2(e), the term “Holder” means any holder of Class A Stock or a proxy to vote shares of Class A Stock.

As used in this Section 2(e), the term “person” shall mean both natural persons and legal entities, unless otherwise specified. The relationship of any person that is derived by or through legal adoption shall be considered a natural relationship.

Each joint owner of, or owner of a community property interest in, shares of Class A Stock shall be considered a “Holder” of such shares. A minor for whom shares of Class A Stock are held pursuant to a Uniform Transfer to Minors Act or similar law shall be considered a Holder of such shares.

As used in this Section 2(e), a “Transfer” shall mean any type of transfer of shares of Class A Stock, whether by sale, exchange, gift, operation of law, pledge, or otherwise, and shares of Class A Stock shall refer to either (i) such shares of Class A Stock so transferred, (ii) the power to vote such shares so transferred or (iii) shares of Class A Stock for which the power to vote was so transferred, as the case may be.

(3) Notwithstanding anything to the contrary set forth herein, any Holder may pledge shares of Class A Stock belonging to such Holder to a pledgee pursuant to a bona tide pledge of such shares as collateral security for indebtedness due to the pledgee, provided that such pledgee does not have the power to vote such shares and such shares remain subject to the provisions of this Section. In the event of foreclosure or other similar action by the pledgee, such shares, at midnight on the thirtieth day after delivery of notice by the Corporation to the pledgor of such foreclosure or other similar action (for purposes of this paragraph (3) the “Conversion Time”), shall be automatically converted, without further act on anyone's part, into an equal number of shares of Class B Stock and the stock certificates formerly representing such shares of Class A Stock shall thereupon and thereafter be deemed to represent the like number of shares of Class B Stock; provided, however, that such automatic conversion of such shares of Class A Stock shall not occur if, prior to the Conversion Time, (x) such pledged shares of Class A Stock are transferred to a Permitted Transferee of the pledgor or (y) such foreclosure or other similar action is cancelled or annulled so that the pledgor retains the right to vote such shares.

(4) A good faith determination by the Board of Directors of the Corporation (x) that a transferee of shares of Class A Stock is or is not a Permitted Transferee of the transferor of such shares to such transferee on the date of Transfer, or (y) that, by reason of any change in the direct or indirect control of such transferee subsequent to such Transfer, such person would have or have not qualified at the time of the Transfer of the Class A Stock to such person as a Permitted Transferee, shall be conclusive and binding upon all the stockholders of the Corporation.

(5) The Corporation may, as a condition to the transfer or the registration of transfer of shares of Class A Stock to a purported Permitted Transferee, require the furnishing of such affidavits or other proof as it deems necessary to establish that such transferee is a Permitted Transferee. Each certificate representing shares of Class A Stock shall be endorsed with a legend that states that shares of Class A Stock are not transferable other than to certain transferees and are subject to certain restrictions as set forth in this Amended and Restated Certificate of Incorporation of the Corporation.

(6) This Section 2(e) may not be amended without the affirmative vote of holders of the majority of the shares of the Class A Stock and the affirmative vote of holders of the majority of the shares of the Class B Stock, each voting separately as a class.

(f) Conversion Procedures .

(1) The conversion of shares pursuant to Section 2(d)(2) hereof will be effected by the surrender of the certificate or certificates, duly endorsed, representing the shares to be converted at the principal office of the transfer agent of the Class A Stock at any time during normal business hours, together with a written notice by the holder stating the number of shares that such holder desires to convert and the names or name in which he wishes the certificate or certificates for the Class B Stock to be issued. Such conversion shall be deemed to have been effected as of the close of business on the date on which such certificate or certificates have been surrendered, and at such time, the rights of any such holder with respect to the converted shares of such holder will cease and the person or persons in whose name or names the certificate or certificates for shares are to be issued upon such conversion will be deemed to have become the holder or holders of record of such shares represented thereby.

Promptly after such surrender, the Corporation will issue and deliver in accordance with the surrendering holder's instructions the certificate or certificates for the Class B Stock issuable upon such conversion and a certificate representing any Class A Stock, in the case of conversion pursuant to Section 2(d)(2) which was represented by the certificate or certificates delivered to the Corporation in connection with such conversion, but which was not converted.

(2) The issuance of certificates upon conversion of shares pursuant to Section 2(d) hereto will be made without charge to the holder or holders of such shares for any issuance tax (except stock transfer tax) in respect thereof or other costs incurred by the Corporation in connection therewith.

(3) The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class B Stock or its treasury shares, solely for the purpose of issuance upon the conversion of the Class A Stock, such number of shares of Class B Stock as may be issued upon conversion of all outstanding Class A Stock.

(4) Shares of the Class A Stock surrendered for conversion as above provided or otherwise acquired by the Corporation shall be canceled according to law and shall not be reissued.

(5) All shares of Class B Stock which may be issued upon conversion of shares of Class A Stock will, upon issue, be fully paid and nonassessable.

FIFTH: The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors consisting of not less than two and not more than seventeen directors, the exact number of which shall be fixed from time to time by the Board of Directors; provided, however, that at any time the Corporation shall have any class of stock registered under the Securities Exchange Act of 1934, as amended, the Board of Directors shall consist of not less than three and not more than seventeen directors.

A director shall hold office until the next occurring annual meeting of stockholders following his or her election and until his or her successor shall be elected and shall qualify, subject, however, to prior death or incapacity, resignation, retirement, disqualification or removal from office.

The directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, this Amended and Restated Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted.

Subject to the terms of any one or more classes or series of Preferred Stock, newly created directorships resulting from any increase in the number of directors and any vacancies in the Board of Directors resulting from death or incapacity, resignation, retirement, disqualification or removal from office may be filled only by the affirmative vote of a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and directors so elected shall hold office until the next occurring annual meeting of stockholders following appointment and until their successors are duly elected and qualified, or until their earlier death or incapacity, resignation, retirement, disqualification or removal from office.

SIXTH: No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for any breach of fiduciary duty as a director, except for liability (i) for breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. Any alteration, amendment or repeal of this Article SIXTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such alteration, amendment or repeal with respect to acts or omissions occurring prior to such alteration, amendment or repeal.

SEVENTH: The Corporation is to have perpetual existence.

EIGHTH: The By-Laws of the Corporation may be altered, amended or repealed in whole or in part, or new By-Laws may be adopted, by the stockholders or by the affirmative vote of the directors of the Corporation as provided therein.

NINTH: Special meetings of stockholders may be called by any of (i) the Chairman of the Board of Directors, (ii) the President, (iii) the Chief Executive Officer, (iv) the Chief Financial Officer, (v) any Vice President, (vi) the Secretary, or (vii) any Assistant Secretary, and shall be called by any such officer at the request in writing of a majority of the entire Board of Directors or at the request in writing of stockholders owning a majority of the capital stock of the Corporation issued and outstanding and entitled to vote. As used in this Amended and Restated Certificate of Incorporation, the term “entire Board of Directors” means the total number of directors which the Corporation would have if there were no vacancies.

TENTH: The Corporation elects not to be governed by Section 203 of the DGCL.

ELEVENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, and all rights conferred upon stockholders hereby are granted subject to this reservation.

IN WITNESS WHEREOF , the Corporation has caused this Amended and Restated Certificate of Incorporation to be executed on its behalf this 21st day of March 2018.

RAFAEL HOLDINGS, INC.

By:	/s/ David Polinsky
	Name:	David Polinsky
	Title:	Chief Financial Officer

	Address:	520 Broad Street
		Newark, NJ 07102

Exhibit 3.2

AMENDED AND RESTATED BY-LAWS

RAFAEL HOLDINGS, INC.

(hereinafter called the “Corporation”)

ARTICLE I.

OFFICES

Section 1. Registered Office . The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 2. Other Offices . The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine.

ARTICLE II.

MEETINGS OF STOCKHOLDERS

Section 1. Place of Meetings . Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof.

Section 2. Annual Meetings . The Annual Meetings of Stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which meetings the stockholders shall elect, by a plurality vote, a Board of Directors, and transact such other business as may properly be brought before the meeting.

Section 3. Special Meetings . Unless otherwise prescribed by law or by the Amended and Restated Certificate of Incorporation of the Corporation (as the same has been and may be further amended from time to time, the “Certificate of Incorporation”), Special Meetings of Stockholders, for any purpose or purposes, may be called by either (i) the Chairman, (ii) the Chief Executive Officer, (iii) the President, (iv) the Corporate Secretary, or (v) any Assistant Secretary, and shall be called by any such officer at the request in writing of a majority of the Board of Directors or at the request in writing of stockholders owning issued and outstanding capital stock of the Corporation representing not less than a majority of the voting power of all issued and outstanding capital stock of the Corporation. Such request shall state the purpose or purposes of the proposed meeting.

Section 4. Notice of Meetings .

Written notice of stockholders’ meetings, stating the place, date, and hour thereof, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given to each stockholder entitled to vote thereat by or at whose direction the notice is being issued. A copy of the notice of any meeting shall be delivered in accordance with the provisions of Article VI below, not less than ten days but not more than sixty days before the date of such meeting, unless a different period is prescribed by law.

Section 5. Quorum . Except as otherwise provided by law or by the Certificate of Incorporation, the holders of issued and outstanding capital stock of the Corporation representing not less than a majority of the voting power of all issued and outstanding capital stock of the Corporation entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting.

Section 6. Voting . Unless otherwise required by law, the Certificate of Incorporation or these By-Laws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of issued and outstanding capital stock of the Corporation representing not less than a majority of the voting power of all issued and outstanding capital stock of the Corporation present or represented by proxy and entitled to vote thereat. Each stockholder represented at a meeting of stockholders shall be entitled, for each share of the capital stock entitled to vote thereat held by such stockholder, such number of votes as are set forth for such share in the Certificate of Incorporation as in effect from time to time. Such votes may be cast in person or by proxy but no proxy shall be voted on or after three years from its date, unless such proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in his or her discretion, may require that any votes cast at such meeting shall be cast by written ballot.

Section 7. Consent of Stockholders in Lieu of Meeting . Unless otherwise provided in the Certificate of Incorporation, any action required or permitted to be taken at any Annual or Special Meeting of Stockholders of the Corporation, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. An electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed, and dated for the purposes of these By-Laws, provided that any such electronic transmission sets forth or is delivered with information from which the Corporation can determine (1) that the electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (2) the date on which such stockholder or proxyholder or authorized person or persons transmitted such electronic transmission. Any consent by means of electronic transmission shall be deemed to have been signed on the date on which such electronic transmission was transmitted. No consent given by electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book or books in which proceedings of meetings of stockholders are recorded.

Delivery made to the Corporation's registered office shall be made by hand or by certified or registered mail, return receipt requested. Notwithstanding the foregoing limitations on delivery, consents given by telegram, cablegram or other electronic transmission, may be otherwise delivered to the principal place of business of the Corporation or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded if, to the extent and in the manner provided by resolution of the Board of Directors.

Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.

Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

Section 8. List of Stockholders Entitled to Vote . The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number and class of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present.

Section 9. Stock Ledger . The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 8 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

ARTICLE III.

DIRECTORS

Section 1. Number and Election of Directors . The Board of Directors shall consist of not less than three nor more than seventeen members, the exact number of which shall be fixed from time to time by the Board of Directors.

Except as provided in Section 2 of this Article, directors shall be elected if the votes cast at the Annual Meeting of Stockholders for each nominee’s election exceed the votes cast against such nominee’s election; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the General Counsel and Corporate Secretary and/or any Assistant Secretary of the Corporation receive a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for stockholder proposals set forth in the Proxy Statement relating to the meeting and (ii) such nomination has not been withdrawn by such stockholder on or prior to the day next preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee. Each director so elected shall hold office until the expiration of the term of such director (as set forth in the Certificate of Incorporation) and until his or her successor is duly elected and qualified, or until his or her earlier death or incapacity, resignation, retirement, disqualification or removal from office. Any director may resign at any time upon notice to the Corporation. Directors need not be Stockholders.

Section 2. Vacancies . Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next occurring annual meeting of stockholders following their election and until their successors are duly elected and qualified, or until their earlier death or incapacity, resignation, retirement, disqualification or removal from office.

Section 3. Duties and Powers . The business of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders.

Section 4. Meetings . The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the board of Directors may be called by the Chief Executive Officer, the President, the Corporate Secretary, any Assistant Secretary or any two directors, acting jointly. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone or telegram on twenty-four (24) hours’ notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.

Section 5. Quorum . Except as may be otherwise specifically provided by applicable law, the Certificate of Incorporation or these By-Laws, at all meetings of the Board of Directors, a majority of the members of the Board of Directors then in office shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 6. Actions of Board . Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 7. Meetings by Means of Conference Telephone . Unless otherwise provided by the Certificate of Incorporation or these By-Laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting.

Section 8. Committees . The Board of Directors may, by resolution passed by a majority of the directors then in office, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Each committee shall keep regular minutes and report to the Board of Directors when required. The Chairman of the Board of Directors may appoint one or more ex-officio Directors as ex-officio members of a committee.

Section 9. Compensation . The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors or special or standing committee thereof, and may be paid a fixed sum for attendance at each meeting of the Board of Directors or special or standing committee thereof or a stated salary as director and/or member of committee of the Board of Directors, in each case in cash and/or securities (including options and convertible securities) of the Corporation or any of its subsidiaries or affiliates. Except as otherwise prohibited by applicable law, no such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation for such services.

Section 10. Interested Directors . No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of the Corporation’s directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer of the Corporation is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his, her or their votes are counted for such purpose if (i) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

Section 11. Removal . A director or the entire Board of Directors may be removed at any time, with or without cause, by the holders of issued and outstanding capital stock of the Corporation representing not less than a majority of the voting power of all issued and outstanding capital stock of the Corporation entitled to vote at an election of directors.

ARTICLE IV.

OFFICERS

Section 1. General . The officers of the Corporation shall be chosen by the Board of Directors and shall include a Chief Executive Officer, a Chief Financial Officer, a President, a Corporate Secretary and a Treasurer. The Board of Directors, in its discretion, may also choose a Chairman of the Board (who may or may not be designated as an officer of the Company and shall be empowered to preside at meetings of the Board of Directors), one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation or these By-Laws. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of the Chairman of the Board, need such officers be directors of the Corporation.

Section 2. Election . The Board of Directors at its first meeting held after each Annual Meeting of Stockholders shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal. Any officer elected by the Board of Directors may be removed at any time by the affirmative vote of a majority of the members of the Board of Directors then in office. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors.

Section 3. Voting Securities Owned by the Corporation . Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chief Executive Officer the President the Corporate Secretary or an Assistant Secretary and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.

Section 4. Chief Executive Officer . The Chief Executive Officer shall, subject to the control of the Board of Directors, have general supervisory responsibility over the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He or she shall be the primary executive officer of the Corporation and shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these By-Laws, the Board of Directors or the Chief Executive Officer. In the absence or disability of the Chairman of the Board, the Chief Executive Officer shall preside at all meetings of the stockholders and the Board of Directors. The Chief Executive Officer shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these By-Laws or by the Board of Directors.

Section 5. Chief Financial Officer . The Chief Financial Officer shall, subject to the control of the Board of Directors, have the responsibility for maintaining the financial records of the Corporation. He or she shall render from time to time an account of the financial condition of the Corporation. The Chief Financial Officer shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these By-Laws or by the Board of Directors.

Section 6. President . The President shall be an executive officer of the Corporation, with responsibility, together with the other officers of the Corporation, for carrying out the policies of the Board of Directors and the Chief Executive Officer. He or she shall report directly to the Chief Executive Officer. At the request of the Chief Executive Officer, or during the absence or disability of the Chief Executive Officer, the President shall exercise all the powers and discharge all the duties of the Chief Executive Officer. The President shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these By-Laws or by the Board of Directors.

Section 7. Vice Presidents . The Board of Directors, the Chairman of the Board and the Chief Executive Officer shall have the power to appoint one or more Vice Presidents with such powers and responsibilities as shall be designated in the resolutions or designations appointing the same, as modified from time to time by actions of the Board of Directors or the Chief Executive Officer. Such Vice Presidents may be given titles (e.g. Senior Vice President or Executive Vice President) to indicate their relative seniority as to one another, and/or descriptive titles to delineate their relative areas of responsibility. Each Vice President shall perform such duties and have such other powers as the Board of Directors from time to time may prescribe. If there shall be no Chairman of the Board, the Board of Directors shall designate the officer of the Corporation who, in the absence of the Chief Executive Officer and the President or in the event of the inability or refusal of the Chief Executive Officer and the President to act, shall perform the duties of the Chief Executive Officer or the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer and President.

Section 8. Corporate Secretary . The Corporate Secretary shall attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Corporate Secretary shall also perform like duties for the standing committees when required. The Corporate Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chief Executive Officer or the President. If the Corporate Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then any of the Board of Directors, the Chief Executive Officer or the President may choose another officer to cause such notice to be given. The Corporate Secretary shall have custody of the seal of the Corporation and the Corporate Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Corporate Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature. The Corporate Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

Section 9. Treasurer . The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chief Executive Officer, Chief Financial Officer the President and the Board of Directors, at its regular meetings, or when the Chief Executive Officer, Chief Financial Officer, the President or the Board of Directors so requires, an account of all his or her transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his or her office and for the restoration to the Corporation, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the Corporation.

Section 10. Assistant Secretaries . Except as may be otherwise provided in these By-Laws, the Board of Directors may choose one or more Assistant Secretaries, who shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, and in the absence of the Corporate Secretary or in the event of his or her disability or refusal to act, one or more of the Assistant Secretaries may be designated to perform the duties of the Corporate Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Corporate Secretary.

Section 11. Assistant Treasurers . Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, the President or the Treasurer, and in the absence of the Treasurer or in the event of his or her disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his or her office and for the restoration to the Corporation, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the Corporation.

Section 12. Other Officers . Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, including, without limitation, a Chairman of the Board of Directors, a Chief Operating Officer and a Chief Accounting Officer. The Chairman of the Board may or may not be an officer of the Corporation, and if an officer, in that role shall be subject to the control of the Board of Directors, and shall report directly to the Board of Directors. The Chairman of the Board shall preside at all meetings of the stockholders and at all meetings of the Board of Directors. The Chairman of the Board shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these By-Laws or by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.

ARTICLE V.

STOCK

Section 1. Form of Certificates . Subject to Section 5 below, every holder of stock in the Corporation shall be entitled to have a certificate signed, in the name of the Corporation (i) by the Chief Executive Officer, the President or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the Corporate Secretary or an Assistant Secretary of the Corporation, certifying the number and class of shares owned by him, her or it in the Corporation.

Section 2. Signatures . Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

Section 3. Lost Certificates . The Board of Directors, the Chief Executive Officer, the President or any Vice President may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to, have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors, the Chief Executive Officer, the President or any Vice President may, in its, his or her discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his, her or its legal representative, to advertise the same in such manner as the Board of Directors, the Chief Executive Officer, the President or any Vice President shall require and/or to give the Corporation a bond in such sum as it or he or she may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 4. Transfers . Stock of the Corporation shall be transferable in the manner prescribed by law and in these By-Laws, including, without limitation, through a “book-entry” system if so prescribed by the Board of Directors. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by his, her or its attorney-in-fact or other representative lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be cancelled before a new certificate shall be issued.

Section 5. Shares Without Certificates. Notwithstanding any other provision in these Bylaws, the Board of Directors may authorize the issuance of any shares of any of its classes or series without certificates. The authorization does not affect shares already represented by certificates until the certificates are surrendered to the Corporation. Within a reasonable time after the issuance or transfer of shares without certificates, the Corporation shall send the stockholder a written statement that includes (1) all of the information required by applicable law on share certificates and (2) any transfer restrictions applicable to the shares.

Section 6. Record Date . In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty days nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 7. Beneficial Owners . The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books bas the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

ARTICLE VI.

NOTICES

Section 1. Notices . Except as otherwise provided in these By-Laws, whenever written notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at his, her or its address as it appears on the records of the Corporation. If mailed, the notice shall be deemed given when deposited in the United States mail, postage prepaid, directed to each stockholder at such stockholder’s address as it appears on the records of the Corporation, unless such stockholder shall have filed with the Corporate Secretary of the Corporation a written request that such notice be mailed to some other address, in which case it shall be directed to such other address. Notice of any meeting of stockholders need not be given to any stockholder who shall submit, either before or after the time stated therein, a written waiver of notice or who shall attend the meeting other than a stockholder who attends the meeting solely for the express purpose of objecting at the beginning thereof to the transaction of any business because the meeting is not lawfully called or convened. Unless the Board of Directors, after an adjournment is taken, shall fix a new record date for an adjourned meeting or unless the adjournment is for more than thirty days, notice of an adjourned meeting need not be given if the place, date and time to which the meeting shall be adjourned are announced at a meeting at which the adjournment is taken.

Without limiting the manner by which notice otherwise may be given effectively to stockholders, unless excepted under Sections 164, 296, 311, 312 or 324 of the Delaware General Corporation Law, any notice to stockholders given by the Corporation under any provision of these By-Laws or the Certificate of Incorporation shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if (1) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent and (2) such inability becomes known to the Corporate Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

Notice given by a form of electronic transmission shall be deemed given: (1) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (2) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (3) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (4) if by any other form of electronic transmission, when directed to the stockholder. An affidavit of the Corporate Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

Electronic transmission includes any form of communication not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

Section 2. Waivers of Notice . Whenever any notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed, by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

ARTICLE VII.

GENERAL PROVISIONS

Section 1. Dividends . Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, and may be paid in cash, in securities or in other property. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.

Section 2. Disbursements . All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

Section 3. Fiscal Year . The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 4. Corporate Seal . The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal” and “Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

ARTICLE VIII.

INDEMNIFICATION

Section 1. Power to Indemnify in Actions, Suits or Proceedings other than those by or in the Right of the Corporation. Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director or officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. For the purposes of this Article VIII, “director or officer of the Corporation” shall mean directors or officers of the Corporation and directors or officers of any corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which the Corporation owns, directly or indirectly, greater than fifty percent (50%).

Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

Section 3. Authorization of Indemnification . Any indemnification under this Article VIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be. Such determination shall be made (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (iii) by the stockholders. To the extent, however, that a director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith, without the necessity of authorization in the specific case.

Section 4. Good Faith Defined . For purposes of any determination under Section 3 of this Article VIII, a person shall be deemed to have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his or her conduct was unlawful, if his or her action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to him or her by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term "another enterprise” as used in this Section 4 shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 1 or 2 of this Article VIII, as the case may be.

Section 5. Indemnification by the Court . Notwithstanding any contrary determination in the specific case under Section 3 of this Article VIII, and notwithstanding the absence of any determination thereunder, any director or officer may apply to any court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 1 and 2 of this Article VIII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because he or she has met the applicable standards of conduct set forth in Sections 1 or 2 of this Article VIII, as the case may be. Neither a contrary determination in the specific case under Section 3 of this Article VIII nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 5 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application.

Section 6. Expenses Payable in Advance . Expenses incurred by a director or officer in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article VIII.

Section 7. Nonexclusivity of Indemnification and Advancement of Expenses . The indemnification and advancement of expenses provided by or granted pursuant to this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any By-Law, agreement, contract, vote of stockholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Sections 1 and 2 of this Article VIII shall be made to the fullest extent permitted by law. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Sections 1 or 2 of this Article VIII but whom the Corporation has the power or obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware, or otherwise.

Section 8. Insurance . The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power or the obligation to indemnify him or her against such liability under the provisions of this Article VIII.

Section 9. Certain Definitions . For purposes of this Article VIII, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article VIII, references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article VIII.

Section 10. Survival of Indemnification and Advancement of Expenses . The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 11. Limitation on Indemnification . Notwithstanding anything contained in this Article VIII to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 5 hereof), the Corporation shall not be obligated to indemnify any director or officer in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors.

Section 12. Indemnification of Employees and Agents . The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article VIII to directors and officers of the Corporation.

ARTICLE IX.

AMENDMENTS

These By-Laws may be altered, amended or repealed, in whole or in part, or new By- Laws may be adopted by the stockholders or by the Board of Directors, provided, however, that notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such meeting of stockholders or Board of Directors as the case may be. All such amendments must be approved by either the holders of issued and outstanding capital stock of the Corporation representing not less than a majority of the voting power of all issued and outstanding capital stock of the Corporation entitled to vote thereon or by a majority of the members of the Board of Directors then in office.

Exhibit 10.1

RAFAEL HOLDINGS, INC.
2018 EQUITY INCENTIVE PLAN

Adopted as of March 8, 2018

1. Purpose; Types of Awards; Construction.

The purpose of the Rafael Holdings, Inc. 2018 Equity Incentive Plan (the “Plan”) is to provide incentives to executive officers, employees, directors and consultants of Rafael Holdings, Inc. (the “Company”), or any subsidiary of the Company which now exists or hereafter is organized or acquired by the Company, to acquire a proprietary interest in the Company, to continue as officers, employees, directors or consultants, to increase their efforts on behalf of the Company and to promote the success of the Company’s business. In addition, the Plan permits the issuance, in connection with the spin-off (the ‘Spin-Off’) of the Company from IDT Corporation (“IDT”) contemplated by the Separation Agreement (as defined below), of awards (“Spin-Off Award”) to holders of restricted shares of Class B common stock (“IDT Class B Stock”), par value $0.01 per share of IDT, options to purchase IDT Class B Stock, deferred stock units related to IDT Class B Stock and other equity awards granted by IDT prior to the date hereof (“IDT Awards) . The provisions of the Plan are intended to satisfy the requirements of Section 16(b) of the Securities Exchange Act of 1934, as amended and shall be interpreted in a manner consistent with the requirements thereof.

2. Definitions.

As used in this Plan, the following words and phrases shall have the meanings indicated:

(a) “Agreement” shall mean a written agreement entered into between the Company and a Grantee in connection with an award under the Plan.

(b) “Board” shall mean the Board of Directors of the Company.

(i) any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than (A) the Company, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, (C) any corporation or other entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of common stock, or (D) any person who, immediately following the spin-off of the Company by way of a pro rata distribution of the Company’s common stock to the stockholders of IDT Corporation, owned more than 25% of the combined voting power of the Company’s then outstanding voting securities), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or any of its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 25% or more of the combined voting power of the Company’s then outstanding voting securities; or

(ii) during any period of not more than two consecutive years, not including any period prior to the initial adoption of this Plan by the Board, individuals who at the beginning of such period constitute the Board, and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including, but not limited to a consent solicitation, relating to the election of directors of the Company) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof.

(d) “Class B Common Stock” shall mean shares of Class B Common Stock, par value $.01 per share, of the Company.

(e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(f) “Committee” shall mean the Compensation Committee of the Board or such other committee as the Board may designate from time to time to administer the Plan.

(g) “Company” shall mean Rafael Holdings, Inc., a corporation incorporated under the laws of the State of Delaware, or any successor corporation.

(h) “Continuous Service” means that the provision of services to the Company or a Related Entity in any capacity of officer, employee, director or consultant is not interrupted or terminated and, with respect to Spin-Off Awards, shall also include services as an employee, director, or consultant of IDT Corporation. Continuous Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers between locations of the Company or among the Company, any Related Entity or any successor in any capacity of officer, employee, director or consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of officer, employee, director or consultant (except as otherwise provided in the applicable Agreement). An approved leave of absence shall include sick leave, maternity leave, military leave (including without limitation service in the National Guard or the Army Reserves) or any other personal leave approved by the Committee. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days unless reemployment upon expiration of such leave is guaranteed by statute or contract.

(i) “Corporate Transaction” means any of the following transactions:

(i) a merger or consolidation of the Company with any other corporation or other entity, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) 80% or more of the combined voting power of the voting securities of the Company or such surviving or parent entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as defined in the Exchange Act) acquired 25% or more of the combined voting power of the Company’s then outstanding securities; or

(ii) a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of its assets (or any transaction having a similar effect).

(j) “Deferred Stock Units” mean a Grantee’s rights to receive shares of Class B Common Stock on a deferred basis, subject to such restrictions, forfeiture provisions and other terms and conditions as shall be determined by the Committee.

(k) “Disability” shall mean a Grantee’s inability to perform his or her duties with the Company or any of its affiliates by reason of any medically determinable physical or mental impairment, as determined by a physician selected by the Grantee and acceptable to the Company.

(l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(m) “Fair Market Value” per share as of a particular date shall mean (i) the closing sale price per share of Class B Common Stock on the national securities exchange on which the Class B Common Stock is principally traded for the last preceding date on which there was a sale of Class B Common Stock on such exchange, or (ii) if the shares of Class B Common Stock are then traded in an over-the-counter market, the average of the closing bid and asked prices for the shares of Class B Common Stock in such over-the-counter market for the last preceding date on which there was a sale of Class B Common Stock in such market, or (iii) if the shares of Class B Common Stock are not then listed on a national securities exchange or traded in an over-the-counter market, such value as the Committee, in its sole discretion, shall determine.

(n) “Grantee” shall mean a person who receives a grant of Options, Stock Appreciation Rights, Limited Rights, Deferred Stock Units or Restricted Stock under the Plan.

(o) “IDT” shall mean IDT Corporation, a corporation incorporated under the laws of the State of Delaware, or any successor corporation.

(p) “Incentive Stock Option” shall mean any option intended to be, and designated as, an incentive stock option within the meaning of Section 422 of the Code.

(q) “Insider” shall mean a Grantee who is subject to the reporting requirements of Section 16(a) of the Exchange Act.

(r) “Insider Trading Policy” shall mean the Insider Trading Policy of the Company, as may be amended from time to time.

(s) “Limited Right” shall mean a limited stock appreciation right granted pursuant to Section 10 hereof.

(t) “Non-Employee Director” means a member of the Board or the board of directors of any Subsidiary (other than any Subsidiary that has either (A) a class of “equity securities” (as defined in Rule 3a11-1 promulgated under the Exchange Act) registered under the Exchange Act or a similar foreign statute or (B) adopted any stock option plan, equity compensation plan or similar employee benefit plan in which non-employee directors of such Subsidiary are eligible to participate) who is not an employee of the Company or any Subsidiary.

(u) “Non-Employee Director Annual Grant” shall mean an award of a number of shares of Restricted Stock as shall be equal to a value of $25,000 determined on the date that is within thirty (30) days following consummation of the Spin-Off.

(v) “Non-Employee Director Grant Date” shall mean January 5 of the applicable year (or the following business day if January 5 is not a business day).

(w) “Nonqualified Stock Option” shall mean any option not designated as an Incentive Stock Option.

(x) “Option” or “Options” shall mean a grant to a Grantee of an option or options to purchase shares of Class B Common Stock.

(y) “Option Agreement” shall have the meaning set forth in Section 6 hereof.

(z) “Option Price” shall mean the exercise price of the shares of Class B Common Stock covered by an Option.

(aa) “Parent” shall mean any company (other than the Company) in an unbroken chain of companies ending with the Company if, at the time of granting an award under the Plan, each of the companies other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain.

(bb) “Plan” means this Rafael Holdings, Inc. 2018 Equity Incentive Plan, as amended or restated from time to time.

(cc) “Related Entity” means any Parent, Subsidiary or any business, corporation, partnership, limited liability company or other entity in which the Company, a Parent or a Subsidiary holds a substantial ownership interest, directly or indirectly.

(dd) “Related Entity Disposition” means the sale, distribution or other disposition by the Company of all or substantially all of the Company’s interest in any Related Entity effected by a sale, merger or consolidation or other transaction involving such Related Entity or the sale of all or substantially all of the assets of such Related Entity.

(ee) “Restricted Period” shall have the meaning set forth in Section 11(b) hereof.

(ff) “Restricted Stock” means shares of Class B Common Stock issued under the Plan to a Grantee for such consideration, if any, and subject to such restrictions on transfer, rights of refusal, repurchase provisions, forfeiture provisions and other terms and conditions as shall be determined by the Committee.

(gg) “Retirement” shall mean a Grantee’s retirement in accordance with the terms of any tax-qualified retirement plan maintained by the Company or any of its affiliates in which the Grantee participates.

(hh) “Rule 16b-3” shall mean Rule 16b-3, as from time to time in effect, promulgated under the Exchange Act, including any successor to such Rule.

(ii) “Separation Agreement” means that certain Separation and Distribution Agreement, by and between IDT and the Company, dated as of March 26, 2018).

(jj) “Stock Appreciation Right” shall mean the right, granted to a Grantee under Section 9 hereof, to be paid an amount measured by the appreciation in the Fair Market Value of a share of Class B Common Stock from the date of grant to the date of exercise of the right, with payment to be made in cash or Class B Common Stock, as specified in the award or determined by the Committee.

(kk) “Subsidiary” shall mean any company (other than the Company) in an unbroken chain of companies beginning with the Company if each of the companies other than the last company in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain.

(ll) “Tax Event” shall have the meaning set forth in Section 17 hereof.

(mm) “Ten Percent Stockholder” shall mean a Grantee who at the time an Incentive Stock Option is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary.

3. Administration.

(a) The Plan shall be administered by the Committee, the members of which may be composed of (i) “non-employee directors” under Rule 16b-3 or (ii) any other members of the Board.

(b) The Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions hereof, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, the authority to grant Options, Stock Appreciation Rights, Limited Rights, Deferred Stock Units and Restricted Stock; to determine which options shall constitute Incentive Stock Options and which Options shall constitute Nonqualified Stock Options; to determine which Options (if any) shall be accompanied by Limited Rights; to determine the purchase price of the shares of Class B Common Stock covered by each Option; to determine the persons to whom, and the time or times at which awards shall be granted; to determine the number of shares to be covered by each award; to interpret the Plan and any award under the Plan; to reconcile any inconsistent terms in the Plan or any award under the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the Agreements (which need not be identical) and to cancel or suspend awards, as necessary; and to make all other determinations deemed necessary or advisable for the administration of the Plan.

(c) All decisions, determination and interpretations of the Committee shall be final and binding on all Grantees of any awards under this Plan. No member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any award granted hereunder.

(d) The Committee may delegate to one or more executive officers of the Company the authority to (i) grant awards under the Plan to employees of the Company and its Subsidiaries who are not officers or directors of the Company, (ii) execute and deliver documents or take such other ministerial actions on behalf of the Committee with respect to awards and (iii) to make interpretations of the Plan. The grant of authority in this Section 3(d) shall be subject to such conditions and limitations as may be determined by the Committee. If the Committee delegates authority to any such executive officer or executive officers of the Company pursuant to this Section 3(d), and such executive officer or executive officers grant awards pursuant to such delegated authority, references in this Plan to the “Committee” as they relate to such awards shall be deemed to refer to such executive officer or executive officers, as applicable.

4. Eligibility.

Awards may be granted to executive officers, employees, directors and consultants of the Company or of any Subsidiary, except that Spin-Off Awards may be granted to any person who holds an IDT Award. In addition to any other awards granted to Non-Employee Directors hereunder, awards shall be granted to Non-Employee Directors pursuant to Section 12 hereof. In determining the persons to whom awards shall be granted and the number of shares to be covered by each award, the Committee shall take into account the duties of the respective persons, their present and potential contributions to the success of the Company and such other factors as the Committee shall deem relevant in connection with accomplishing the purposes of the Plan.

5. Stock.

(a) The maximum number of shares of Class B Common Stock reserved for the grant of awards under the Plan shall be 1,064,048 (which includes 714,851 of shares to be issued in respect of Spin-Off Awards), subject to adjustment as provided below and in Section 13 hereof. Such shares may, in whole or in part, be authorized but unissued shares or shares that shall have been or may be reacquired by the Company.

(b) If any outstanding award under the Plan (including Spin-Off Awards) should, for any reason expire, be canceled or be forfeited (other than in connection with the exercise of a Stock Appreciation Right or a Limited Right), without having been exercised in full, the shares of Class B Common Stock allocable to the unexercised, canceled or terminated portion of such award shall (unless the Plan shall have been terminated) become available for subsequent grants of awards under the Plan, unless otherwise determined by the Committee.

6. Terms and Conditions of Options.

(a) OPTION AGREEMENT. Each Option granted pursuant to the Plan shall be evidenced by a written agreement between the Company and the Grantee (the “Option Agreement”), in such form and containing such terms and conditions as the Committee shall from time to time approve, which Option Agreement shall comply with and be subject to the following terms and conditions, unless otherwise specifically provided in such Option Agreement.

(b) NUMBER OF SHARES. Each Option Agreement shall state the number of shares of Class B Common Stock to which the Option relates.

(c) TYPE OF OPTION. Each Option Agreement shall specifically state that the Option constitutes an Incentive Stock Option or a Nonqualified Stock Option. In the absence of such designation, the Option will be deemed to be a Nonqualified Stock Option.

(d) OPTION PRICE. Each Option Agreement shall state the Option Price, which, in the case of an Incentive Stock Option, shall not be less than one hundred percent (100%) of the Fair Market Value of the shares of Class B Common Stock covered by the Option on the date of grant. The Option Price shall be subject to adjustment as provided in Section 13 hereof.

(e) MEDIUM AND TIME OF PAYMENT. The Option Price shall be paid in full, at the time of exercise, in cash or in shares of Class B Common Stock having a Fair Market Value equal to such Option Price or in a combination of cash and Class B Common Stock including a cashless exercise procedure through a broker-dealer; provided, however, that in the case of an Incentive Stock Option, the medium of payment shall be determined at the time of grant and set forth in the applicable Option Agreement.

(f) TERM AND EXERCISABILITY OF OPTIONS. Each Option Agreement shall provide the exercise schedule for the Option as determined by the Committee, provided, that, the Committee shall have the authority to accelerate the exercisability of any outstanding option at such time and under such circumstances as it, in its sole discretion, deems appropriate. The exercise period will be ten (10) years from the date of the grant of the option unless otherwise determined by the Committee; provided, however, that in the case of an Incentive Stock Option, such exercise period shall not exceed ten (10) years from the date of grant of such Option. The exercise period shall be subject to earlier termination as provided in Sections 6(g) and 6(h) hereof. An Option may be exercised, as to any or all full shares of Class B Common Stock as to which the Option has become exercisable, by written notice delivered in person or by mail to the administrator designated by the Company, specifying the number of shares of Class B Common Stock with respect to which the Option is being exercised.

(g) TERMINATION. Except as provided in this Section 6(g) and in Section 6(h) hereof, an Option may not be exercised unless the Grantee is then in the employ of or maintaining a director or consultant relationship with the Company or a Subsidiary thereof (or a company or a Parent or Subsidiary of such company issuing or assuming the Option in a transaction to which Section 424(a) of the Code applies), and unless the Grantee has remained in Continuous Service with the Company or any Subsidiary since the date of grant of the Option. In the event that the employment or consultant relationship of a Grantee shall terminate (other than by reason of death, Disability or Retirement), all Options of such Grantee that are exercisable at the time of Grantee’s termination may, unless earlier terminated in accordance with their terms, be exercised within one hundred eighty (180) days after the date of termination (or such different period as the Committee shall prescribe).

(h) DEATH, DISABILITY OR RETIREMENT OF GRANTEE. If a Grantee shall die while employed by, or maintaining a director or consultant relationship with, the Company or a Subsidiary thereof, or within thirty (30) days after the date of termination of such Grantee’s employment, director or consultant relationship (or within such different period as the Committee may have provided pursuant to Section 6(g) hereof), or if the Grantee’s employment, director or consultant relationship shall terminate by reason of Disability, all Options theretofore granted to such Grantee (to the extent otherwise exercisable) may, unless earlier terminated in accordance with their terms, be exercised by the Grantee or by the Grantee’s estate or by a person who acquired the right to exercise such Options by bequest or inheritance or otherwise by result of death or Disability of the Grantee, at any time within one hundred eighty (180) days after the death or Disability of the Grantee (or such different period as the Committee shall prescribe). In the event that an Option granted hereunder shall be exercised by the legal representatives of a deceased or former Grantee, written notice of such exercise shall be accompanied by a certified copy of letters testamentary or equivalent proof of the right of such legal representative to exercise such Option. In the event that the employment, director or consultant relationship of a Grantee shall terminate on account of such Grantee’s Retirement, all Options of such Grantee that are exercisable at the time of such Retirement may, unless earlier terminated in accordance with their terms, be exercised at any time within one hundred eighty (180) days after the date of such Retirement (or such different period as the Committee shall prescribe).

(i) OTHER PROVISIONS. The Option Agreements evidencing awards under the Plan shall contain such other terms and conditions not inconsistent with the Plan as the Committee may determine.

7. Nonqualified Stock Options.

Options granted pursuant to this Section 7 are intended to constitute Nonqualified Stock Options and shall be subject only to the general terms and conditions specified in Section 6 hereof.

8. Incentive Stock Options.

Options granted pursuant to this Section 8 are intended to constitute Incentive Stock Options and shall be subject to the following special terms and conditions, in addition to the general terms and conditions specified in Section 6 hereof:

(a) LIMITATION ON VALUE OF SHARES. To the extent that the aggregate Fair Market Value of shares of Class B Common Stock subject to Options designated as Incentive Stock Options which become exercisable for the first time by a Grantee during any calendar year (under all plans of the Company or any Subsidiary) exceeds $100,000, such excess Options, to the extent of the shares covered thereby in excess of the foregoing limitation, shall be treated as Nonqualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the shares of Class B Common Stock shall be determined as of the date that the Option with respect to such shares was granted.

(b) TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock Option granted to a Ten Percent Stockholder, (i) the Option Price shall not be less than one hundred ten percent (110%) of the Fair Market Value of the shares of Class B Common Stock on the date of grant of such Incentive Stock Option, and (ii) the exercise period shall not exceed five (5) years from the date of grant of such Incentive Stock Option.

9. Stock Appreciation Rights.

The Committee shall have authority to grant a Stock Appreciation Right, either alone or in tandem with any Option. A Stock Appreciation Right granted in tandem with an Option shall, except as provided in this Section 9 or as may be determined by the Committee, be subject to the same terms and conditions as the related Option. Each Stock Appreciation Right granted pursuant to the Plan shall be evidenced by a written Agreement between the Company and the Grantee in such form as the Committee shall from time to time approve, which Agreement shall comply with and be subject to the following terms and conditions, unless otherwise specifically provided in such Agreement:

(a) TIME OF GRANT. A Stock Appreciation Right may be granted at such time or times as may be determined by the Committee.

(b) PAYMENT. A Stock Appreciation Right shall entitle the holder thereof, upon exercise of the Stock Appreciation Right or any portion thereof, to receive payment of an amount computed pursuant to Section 9(d) hereof.

(c) EXERCISE. A Stock Appreciation Right shall be exercisable at such time or times and only to the extent determined by the Committee, and will not be transferable. A Stock Appreciation Right granted in connection with an Incentive Stock Option shall be exercisable only if the Fair Market Value of a share of Class B Common Stock on the date of exercise exceeds the purchase price specified in the related Incentive Stock Option. Unless otherwise approved by the Committee, no Grantee shall be permitted to exercise any Stock Appreciation Right during the period beginning two weeks prior to the end of each of the Company’s fiscal quarters and ending on the second business day following the day on which the Company releases to the public a summary of its fiscal results for such period.

(d) AMOUNT PAYABLE. Upon the exercise of a Stock Appreciation Right, the Optionee shall be entitled to receive an amount determined by multiplying (i) the excess of the Fair Market Value of a share of Class B Common Stock on the date of exercise of such Stock Appreciation Right over the exercise or other base price of the Stock Appreciation Right or, if applicable, the Option Price of the related Option, by (ii) the number of shares of Class B Common Stock as to which such Stock Appreciation Right is being exercised.

(e) TREATMENT OF RELATED OPTIONS AND STOCK APPRECIATION RIGHTS UPON EXERCISE. Upon the exercise of a Stock Appreciation Right, the related Option, if any, shall be canceled to the extent of the number of shares of Class B Common Stock as to which the Stock Appreciation Right is exercised. Upon the exercise or surrender of an option granted in connection with a Stock Appreciation Right, the Stock Appreciation Right shall be canceled to the extent of the number of shares of Class B Common Stock as to which the Option is exercised or surrendered.

(f) METHOD OF EXERCISE. Stock Appreciation Rights shall be exercised by a Grantee only by a written notice delivered to the Company in accordance with procedures specified by the Company from time to time. Such notice shall state the number of shares of Class B Common Stock with respect to which the Stock Appreciation Right is being exercised. A Grantee may also be required to deliver to the Company the underlying Agreement evidencing the Stock Appreciation Right being exercised and any related Option Agreement so that a notation of such exercise may be made thereon, and such Agreements shall then be returned to the Grantee.

(g) FORM OF PAYMENT. Payment of the amount determined under Section 9(d) hereof may be made solely in whole shares of Class B Common Stock in a number based upon their Fair Market Value on the date of exercise of the Stock Appreciation Right or, alternatively, at the sole discretion of the Committee, solely in cash, or in a combination of cash and shares of Class B Common Stock as the Committee deems advisable. If the Committee decides to make full payment in shares of Class B Common Stock and the amount payable results in a fractional share, payment for the fractional share will be made in cash.

10. Limited Stock Appreciation Rights.

The Committee shall have authority to grant a Limited Right, either alone or in tandem with any Option. Each Limited Right granted pursuant to the Plan shall be evidenced by a written Agreement between the Company and the Grantee in such form as the Committee shall from time to time approve, which Agreement shall comply with and be subject to the following terms and conditions, unless otherwise specifically provided in such Agreement:

(a) TIME OF GRANT. A Limited Right may be granted at such time or times as may be determined by the Committee.

(b) EXERCISE. A Limited Right may be exercised only (i) during the ninety-day period following the occurrence of a Change in Control or (ii) immediately prior to the effective date of a Corporate Transaction. A Limited Right shall be exercisable at such time or times and only to the extent determined by the Committee, and will not be transferable except to the extent any related Option is transferable or as otherwise determined by the Committee. A Limited Right granted in connection with an Incentive Stock Option shall be exercisable only if the Fair Market Value of a share of Class B Common Stock on the date of exercise exceeds the purchase price specified in the related Incentive Stock Option.

(c) AMOUNT PAYABLE. Upon the exercise of a Limited Right, the Grantee thereof shall receive in cash whichever of the following amounts is applicable:

(i) in the case of the realization of Limited Rights by reason of an acquisition of common stock described in clause (i) of the definition of “Change in Control” (Section 2(c) above), an amount equal to the Acquisition Spread as defined in Section 10(d)(ii) below; or

(ii) in the case of the realization of Limited Rights by reason of stockholder approval of an agreement or plan described in clause (i) of the definition of “Corporate Transaction” (Section 2(i) above), an amount equal to the Merger Spread as defined in Section 10(d)(iv) below; or

(iii) in the case of the realization of Limited Rights by reason of the change in composition of the Board described in clause (ii) of the definition of “Change in Control” or stockholder approval of a plan or agreement described in clause (ii) of the definition of Corporate Transaction, an amount equal to the Spread as defined in Section 10(d)(v) below.

Notwithstanding the foregoing provisions of this Section 10(c) (or unless otherwise approved by the Committee), in the case of a Limited Right granted in respect of an Incentive Stock Option, the Grantee may not receive an amount in excess of the maximum amount that will enable such option to continue to qualify under the Code as an Incentive Stock Option.

(d) DETERMINATION OF AMOUNTS PAYABLE. The amounts to be paid to a Grantee pursuant to Section 10 (c) shall be determined as follows:

(i) The term “Acquisition Price per Share” as used herein shall mean, with respect to the exercise of any Limited Right by reason of an acquisition of common stock described in clause (i) of the definition of Change in Control, the greatest of (A) the highest price per share shown on the Statement on Schedule 13D or amendment thereto filed by the holder of 25% or more of the voting power of the Company that gives rise to the exercise of such Limited Right, (B) the highest price paid in any tender or exchange offer which is in effect at any time during the ninety-day period ending on the date of exercise of the Limited Right, or (C) the highest Fair Market Value per share of common stock during the ninety day period ending on the date the Limited Right is exercised.

(ii) The term “Acquisition Spread” as used herein shall mean an amount equal to the product computed by multiplying (A) the excess of (1) the Acquisition Price per Share over (2) the exercise or other base price of the Limited Right or, if applicable, the Option Price per share of common stock at which the related Option is exercisable, by (B) the number of shares of common stock with respect to which such Limited Right is being exercised.

(iii) The term “Merger Price per Share” as used herein shall mean, with respect to the exercise of any Limited Right by reason of stockholder approval of an agreement described in clause (i) of the definition of Corporate Transaction, the greatest of (A) the fixed or formula price for the acquisition of shares of common stock specified in such agreement, if such fixed or formula price is determinable on the date on which such Limited Right is exercised, (B) the highest price paid in any tender or exchange offer which is in effect at any time during the ninety-day period ending on the date of exercise of the Limited Right, (C) the highest Fair Market Value per share of common stock during the ninety-day period ending on the date on which such Limited Right is exercised.

(iv) The term “Merger Spread” as used herein shall mean an amount equal to the product. computed by multiplying (A) the excess of (1) the Merger Price per Share over (2) the exercise or other base price of the Limited Right or, if applicable, the Option Price per share of common stock at which the related Option is exercisable, by (B) the number of shares of common stock with respect to which such Limited Right is being exercised.

(v) The term “Spread” as used herein shall mean, with respect to the exercise of any Limited Right by reason of a change in the composition of the Board described in clause (ii) of the definition of Change in Control or stockholder approval of a plan or agreement described in clause (ii) of the definition of Corporate Transaction, an amount equal to the product computed by multiplying (i) the excess of (A) the greater of (1) the highest price paid in any tender or exchange offer which is in effect at any time during the ninety-day period ending on the date of exercise of the Limited Right or (2) the highest Fair Market Value per share of common stock during the ninety day period ending on the date the Limited Right is exercised over (B) the exercise or other base price of the Limited Right or, if applicable, the Option Price per share of common stock at which the related Option is exercisable, by (ii) the number of shares of common stock with respect to which the Limited Right is being exercised.

(e) TREATMENT OF RELATED OPTIONS AND LIMITED RIGHTS UPON EXERCISE. Upon the exercise of a Limited Right, the related Option, if any, shall cease to be exercisable to the extent of the shares of Class B Common Stock with respect to which such Limited Right is exercised but shall be considered to have been exercised to that extent for purposes of determining the number of shares of Class B Common Stock available for the grant of future awards pursuant to this Plan. Upon the exercise or termination of a related Option, if any, the Limited Right with respect to such related Option shall terminate to the extent of the shares of Class B Common Stock with respect to which the related Option was exercised or terminated.

(f) METHOD OF EXERCISE. To exercise a Limited Right, the Grantee shall (i) deliver written notice to the Company specifying the number of shares of Class B Common Stock with respect to which the Limited Right is being exercised, and (ii) if requested by the Committee, deliver to the Company the Agreement evidencing the Limited Rights being exercised and, if applicable, the Option Agreement evidencing the related Option; the Company shall endorse thereon a notation of such exercise and return such Agreements to the Grantee. The date of exercise of a Limited Right that is validly exercised shall be deemed to be the date on which there shall have been delivered the instruments referred to in the first sentence of this paragraph (f).

11. Restricted Stock.

The Committee may award shares of Restricted Stock to any eligible employee, director or consultant of the Company or of any Subsidiary. Each award of Restricted Stock under the Plan shall be evidenced by a written Agreement between the Company and the Grantee, in such form as the Committee shall from time to time approve, which Agreement shall comply with and be subject to the following terms and conditions, unless otherwise specifically provided in such Agreement:

(a) NUMBER OF SHARES. Each Agreement shall state the number of shares of Restricted Stock to be subject to an award.

(b) RESTRICTIONS. Shares of Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution, for such period as the Committee shall determine from the date on which the award is granted (the “Restricted Period”). The Committee may also impose such additional or alternative restrictions and conditions on the shares as it deems appropriate including, but not limited to, the satisfaction of performance criteria. Such performance criteria may include sales, earnings before interest and taxes, return on investment, earnings per share, any combination of the foregoing or rate of growth of any of the foregoing, as determined by the Committee. The Company may, at its option, maintain issued shares in book entry form. Certificates, if any, for shares of stock issued pursuant to Restricted Stock awards shall bear an appropriate legend referring to such restrictions, and any attempt to dispose of any such shares of stock in contravention of such restrictions shall be null and void and without effect. During the Restricted Period, any such certificates shall be held in escrow by an escrow agent appointed by the Committee. In determining the Restricted Period of an award, the Committee may provide that the foregoing restrictions shall lapse with respect to specified percentages of the awarded shares on successive anniversaries of the date of such award.

(c) FORFEITURE. Subject to such exceptions as may be determined by the Committee, if the Grantee’s Continuous Service with the Company or any Subsidiary shall terminate for any reason prior to the expiration of the Restricted Period of an award, any shares remaining subject to restrictions (after taking into account the provisions of Subsection (e) of this Section 11) shall thereupon be forfeited by the Grantee and transferred to, and retired by, the Company without cost to the Company or such Subsidiary, and such shares shall become available for subsequent grants of awards under the Plan, unless otherwise determined by the Committee.

(d) OWNERSHIP. During the Restricted Period, the Grantee shall possess all incidents of ownership of such shares, subject to Subsection (b) of this Section 11, including the right to receive dividends with respect to such shares and to vote such shares.

(e) ACCELERATED LAPSE OF RESTRICTIONS. Upon the occurrence of any of the events specified in Section 14 hereof (and subject to the conditions set forth therein), all restrictions then outstanding on any shares of Restricted Stock awarded under the Plan shall lapse as of the applicable date set forth in Section 14. The Committee shall have the authority (and the Agreement may so provide) to cancel all or any portion of any outstanding restrictions prior to the expiration of the Restricted Period with respect to any or all of the shares of Restricted Stock awarded on such terms and conditions as the Committee shall deem appropriate.

12. Non-Employee Director Restricted Stock.

The provisions of this Section 12 shall apply only to certain grants of Restricted Stock to Non-Employee Directors, as provided below. Except as set forth in this Section 12, the other provisions of the Plan shall apply to grants of Restricted Stock to Non-Employee Directors to the extent not inconsistent with this Section.

(a) GENERAL . Non-Employee Directors shall receive Restricted Stock in accordance with this Section 12. Restricted Stock granted pursuant to this Section 12 shall be subject to the terms of such section and shall not be subject to discretionary acceleration of vesting by the Committee. Unless determined otherwise by the Committee, Non-Employee Directors shall not receive separate and additional grants hereunder for being a Non-Employee Director of (i) the Company and a Subsidiary or (ii) more than one Subsidiary.

(b) INITIAL GRANTS OF RESTRICTED STOCK . A Non-Employee Director who first becomes a Non-Employee Director shall receive a pro-rata amount (based on projected quarters of service to the following Non-Employee Director Grant Date) of a Non-Employee Director Annual Grant on his date of appointment as a Non-Employee Director.

(c) ANNUAL GRANTS OF RESTRICTED STOCK . On each Non-Employee Director Grant Date, each Non-Employee Director shall receive a Non-Employee Director Annual Grant.

(d) VESTING OF RESTRICTED STOCK . Restricted Stock granted under this Section 12 shall be fully vested on the date of grant.

13. Deferred Stock Units.

The Committee may award Deferred Stock Units to any outside director, eligible employee or consultant of the Company or of any Subsidiary. Each award of Deferred Stock Units under the Plan shall be evidenced by a written Agreement between the Company and the Grantee, in such form as the Committee shall from time to time approve, which Agreement shall comply with and be subject to the following terms and conditions, unless otherwise specifically provided in such Agreement:

(a) NUMBER OF SHARES. Each Agreement for Deferred Stock Units shall state the number of shares of Class B Common Stock to be subject to an award.

(b) RESTRICTIONS. Deferred Stock Units may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution, until shares of Class B Common Stock are payable with respect to an award. The Committee may impose such vesting restrictions and conditions on the payment of shares as it deems appropriate including the satisfaction of performance criteria. Such performance criteria may include sales, earnings before interest and taxes, return on investment, earnings per share, any combination of the foregoing or rate of growth of any of the foregoing, as determined by the Committee.

(c) FORFEITURE. Subject to such exceptions as may be determined by the Committee, if the Grantee’s Continuous Service with the Company or any Subsidiary shall terminate for any reason prior to the Grantee becoming fully vested in the award, then the Grantee’s rights under any unvested Deferred Stock Units shall be forfeited without cost to the Company or such Subsidiary.

(d) OWNERSHIP. Until shares are delivered with respect to Deferred Stock Units, the Grantee shall not possess any incidents of ownership of such shares, including the right to receive dividends with respect to such shares and to vote such shares.

(e) ACCELERATED LAPSE OF RESTRICTIONS. Upon the occurrence of any of the events specified in Section 15 hereof (and subject to the conditions set forth therein), all restrictions then outstanding on any Deferred Stock Units awarded under the Plan shall lapse as of the applicable date set forth in Section 15. The Committee shall have the authority (and the Agreement may so provide) to cancel all or any portion of any outstanding restrictions prior to the expiration of any restricted period with respect to any or all of the shares of Deferred Stock Units awarded on such terms and conditions as the Committee shall deem appropriate.

14. Effect of Certain Changes.

(a) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any extraordinary dividend, stock dividend, recapitalization, merger, consolidation, stock split, warrant or rights issuance, or combination or exchange of such shares, or other similar transactions, the Committee shall equitably adjust (i) the maximum number of Options or shares of Restricted Stock that may be awarded to a Grantee in any calendar year (as provided in Section 5 hereof), (ii) the number of shares of Class B Common Stock available for awards under the Plan, (iii) the number and/or kind of shares covered by outstanding awards and (iv) the price per share of Options or the applicable market value of Stock Appreciation Rights or Limited Rights, in each such case so as to reflect such event and preserve the value of such awards; provided, however, that any fractional shares resulting from such adjustment shall be eliminated.

(b) CHANGE IN CLASS B COMMON STOCK. In the event of a change in the Class B Common Stock as presently constituted that is limited to a change of all of its authorized shares of Class B Common Stock, into the same number of shares with a different par value or without par value, the shares resulting from any such change shall be deemed to be the Class B Common Stock within the meaning of the Plan.

15. Corporate Transaction; Change in Control; Related Entity Disposition.

(a) CORPORATE TRANSACTION. In the event of a Corporate Transaction, each award which is at the time outstanding under the Plan shall automatically become fully vested and exercisable and, in the case of an award of Restricted Stock or an award of Deferred Stock Units, shall be released from any restrictions on transfer (except with regard to the Insider Trading Policy and such other agreements between the Grantee and the Company) and repurchase or forfeiture rights, immediately prior to the specified effective date of such Corporate Transaction. Effective upon the consummation of the Corporate Transaction, all outstanding awards of Options, Stock Appreciation Rights and Limited Rights under the Plan shall terminate, unless otherwise determined by the Committee. However, all such awards shall not terminate if the awards are, in connection with the Corporate Transaction, assumed by the successor corporation or Parent thereof.

(b) CHANGE IN CONTROL. In the event of a Change in Control (other than a Change in Control which is also a Corporate Transaction), each award which is at the time outstanding under the Plan automatically shall become fully vested and exercisable and, in the case of an award of Restricted Stock or an award of Deferred Stock Units, shall be released from any restrictions on transfer and repurchase or forfeiture rights, immediately prior to the specified effective date of such Change in Control.

(c) RELATED ENTITY DISPOSITION. The Continuous Service of each Grantee (who is primarily engaged in service to a Related Entity at the time it is involved in a Related Entity Disposition) shall terminate effective upon the consummation of such Related Entity Disposition, and each outstanding award of such Grantee under the Plan shall become fully vested and exercisable and, in the case of an award of Restricted Stock or an award of Deferred Stock Units, shall be released from any restrictions on transfer (except with regard to the Insider Trading Policy and such other agreements between the Grantee and the Company). Unless otherwise determined by the Committee, the Continuous Service of a Grantee shall not be deemed to terminate (and each outstanding award of such Grantee under the Plan shall not become fully vested and exercisable and, in the case of an award of Restricted Stock or an award of Deferred Stock Units, shall not be released from any restrictions on transfer) if (i) a Related Entity Disposition involves the spin-off of a Related Entity, for so long as such Grantee continues to remain in the service of such entity that constituted the Related Entity immediately prior to the consummation of such Related Entity Disposition (“SpinCo”) in any capacity of officer, employee, director or consultant or (ii) an outstanding award is assumed by the surviving corporation (whether SpinCo or otherwise) or its parent entity in connection with a Related Entity Disposition.

(d) SUBSTITUTE AWARDS. The Committee may grant awards under the Plan in substitution of stock-based incentive awards held by employees, consultants or directors of another entity who become employees, consultants or directors of the Company or any Subsidiary by reason of a merger or consolidation of such entity with the Company or any Subsidiary, or the acquisition by the Company or a Subsidiary of property or equity of such entity, upon such terms and conditions as the Committee may determine, and such awards shall not count against the share limitation set forth in Section 5 hereof.

16. Period During which Awards May Be Granted.

Awards may be granted pursuant to the Plan, from time to time, until March 8, 2028 which is within a period of ten (10) years from the date the Board adopted the Plan.

17. Transferability of Awards.

(a) Incentive Stock Options and Stock Appreciation Rights may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by the laws of descent and distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee or his or her guardian or legal representative.

(b) Nonqualified Stock Options shall be transferable in the manner and to the extent acceptable to the Committee, as evidenced by a writing signed by the Company and the Grantee. Nonqualified Stock Options (together with any Stock Appreciation Rights or Limited Rights related thereto) shall be transferable by a Grantee as a gift to the Grantee’s “family members” (as defined in Form S-8) under such terms and conditions as may be established by the Committee; provided that the Grantee receives no consideration for the transfer. Notwithstanding the transfer by a Grantee of a Nonqualified Stock Option, the transferred Nonqualified Stock Option shall continue to be subject to the same terms and conditions as were applicable to the Nonqualified Stock Option immediately before the transfer (including, without limitation, the Insider Trading Policy) and the Grantee will continue to remain subject to the withholding tax requirements set forth in Section 18 hereof.

(c) The terms of any award granted under the Plan, including the transferability of any such award, shall be binding upon the executors, administrators, heirs and successors of the Grantee.

(d) Restricted Stock shall remain subject to the Insider Trading Policy after the expiration of the Restricted Period. Deferred Stock Units shall remain subject to the Insider Trading Policy after payment thereof.

18. Agreement by Grantee regarding Withholding Taxes.

If the Committee shall so require, as a condition of exercise of an Option, Stock Appreciation Right or Limited Right, the expiration of a Restricted Period or payment of a Deferred Stock Unit (each, a “Tax Event”), each Grantee shall agree that no later than the date of the Tax Event, the Grantee will pay to the Company or make arrangements satisfactory to the Committee regarding payment of any federal, state or local taxes of any kind required by law to be withheld upon the Tax Event. Unless determined otherwise by the Committee, a Grantee shall permit, to the extent permitted or required by law, the Company to withhold federal, state and local taxes of any kind required by law to be withheld upon the Tax Event from any payment of any kind due to the Grantee. Unless otherwise determined by the Committee, any such above-described withholding obligation may, in the discretion of the Company, be satisfied by the withholding by the Company or delivery to the Company of Class B Common Stock.

19. Rights as a Stockholder.

Except as provided in Section 11(d) hereof, a Grantee or a transferee of an award shall have no rights as a stockholder with respect to any shares covered by the award until the date of the issuance of such shares to him or her. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distribution of other rights for which the record date is prior to the date such shares are issued, except as provided in Section 14(a) hereof.

20. No Rights to Employment; Forfeiture of Gains.

Nothing in the Plan or in any award granted or Agreement entered into pursuant hereto shall confer upon any Grantee the right to continue as a director of, in the employ of, or in a consultant relationship with, the Company or any Subsidiary or to be entitled to any remuneration or benefits not set forth in the Plan or such Agreement or to interfere with or limit in any way the right of the Company or any such Subsidiary to terminate such Grantee’s employment or consulting relationship. Awards granted under the Plan shall not be affected by any change in duties or position of a Grantee as long as such Grantee continues to be employed by, or in a consultant relationship with, or a director of the Company or any Subsidiary. The Agreement for any award under the Plan may require the Grantee to pay to the Company any financial gain realized from the prior exercise, vesting or payment of the award in the event that the Grantee engages in conduct that violates any non-compete, non-solicitation or non-disclosure obligation of the Grantee under any agreement with the Company or any Subsidiary, including, without limitation, any such obligations provided in the Agreement.

21. Beneficiary.

A Grantee may file with the Committee a written designation of a beneficiary on such form as may be prescribed by the Committee and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Grantee, the executor or administrator of the Grantee’s estate shall be deemed to be the Grantee’s beneficiary.

22. Approval; Amendment and Termination of the Plan.

(a) APPROVAL. The Plan initially became effective when adopted by the Board on March 8, 2018 and shall terminate on the tenth anniversary of such date. The Plan was ratified by the Company’s sole stockholder on March 8, 2018.

(b) AMENDMENT AND TERMINATION OF THE PLAN. The Board, or the Committee if so delegated by the Board, at any time and from time to time may suspend, terminate, modify or amend the Plan; however, unless otherwise determined by the Board, or the Committee if applicable, an amendment that requires stockholder approval in order for the Plan to continue to comply with any law, regulation or stock exchange requirement shall not be effective unless approved by the requisite vote of stockholders. Except as provided in Section 14(a) hereof, no suspension, termination, modification or amendment of the Plan may adversely affect any award previously granted, unless the written consent of the Grantee is obtained.

23. Governing Law.

The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Delaware.

24. Section 409A of the Code.

It is the intention of the Company that no award shall be “deferred compensation” subject to Section 409A of the Code, unless and to the extent that the Committee specifically determines otherwise as provided in this Section 24, and the Plan and the terms and conditions of all awards shall be interpreted accordingly. The terms and conditions governing any awards that the Committee determines will be subject to Section 409A of the Code shall be set forth in the applicable award Agreement and shall comply in all respects with Section 409A of the Code. Notwithstanding any provision of this Plan to the contrary, if one or more of the payments or benefits received or to be received by a Grantee pursuant to an award would cause the Grantee to incur any additional tax or interest under Section 409A of the Code, the Committee may reform such provision to maintain to the maximum extent practicable the original intent of the applicable provision without violating the provisions of Section 409A of the Code. Although the Company intends to administer the Plan so that Awards will be exempt from, or will comply with, the requirements of Section 409A of the Code, the Company does not warrant that any Award under the Plan will qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Grantee for any tax, interest, or penalties that Grantee might owe as a result of the grant, holding, vesting, exercise, or payment of any award under the Plan.

25. Spin-Off Awards

(a) In connection with the Spin-Off, certain Spin-Off Awards may be issued under this Plan in respect of outstanding IDT Awards and in connection with the equitable adjustment by IDT of IDT Awards. Notwithstanding any other provision of the Plan to the contrary and subject to the terms of the Separation Agreement, (i) the number of shares to be subject to each Spin-Off Award shall be determined by the Compensation Committee of the Board of Directors of IDT (the “IDT Committee”), and (ii) the other terms and conditions of each Spin-Off Award, including option exercise price, shall be determined by the IDT Committee, provided that such determinations are made prior to the “Distribution” (as such term is defined in the Separation Agreement). Solely for purposes of any Spin-Off Award, the term “Grantee” shall also include any person who holds an “IDT Option” or “IDT Restricted Share” (as those terms are defined in the Separation Agreement) that remains outstanding immediately prior to the Separation Date and receives a Spin-Off Award under the Plan.

(b) With respect to any Spin-Off Award held by an employee, consultant, or director in the employ or service of IDT (an “IDT Holder”), the Committee shall, upon written notification from IDT, provide that any such Spin-Off Award shall vest upon the terms and conditions set forth in such notification, to the extent permitted by the Plan.

(c) IDT shall be an intended third party beneficiary of, and shall have standing to enforce the terms of, this Section 25 as if it were a party hereto.

Exhibit 10.2

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT, dated as of March 26, 2018 (this “ Agreement ”), is entered into by and between Rafael Holdings, Inc., a Delaware corporation (“ Rafael ”), and IDT Corporation, a Delaware corporation (“ IDT ”). For purposes of this Agreement, “Party” or “Parties” shall mean either Rafael or IDT, individually or collectively.

BACKGROUND

WHEREAS, IDT is executing a spin-off of its equity interest in Rafael (which, prior to the date hereof, was a majority-owned subsidiary of IDT), to IDT’s stockholders, and has agreed to provide certain corporate, tax and accounting support, administrative and other services to Rafael on the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the foregoing, the mutual agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

AGREEMENT

1. Representations and Warranties .

As an inducement to enter into this Agreement, Rafael and IDT each hereby represents and warrants to the other as follows:

(a) It is an entity duly organized, validly existing and in good standing under the laws of the state of Delaware. Such Party has all necessary corporate power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by such Party of this Agreement, the performance by such Party of its obligations hereunder and the consummation by such Party of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of such Party.

(b) The execution and delivery by such Party of this Agreement, the performance by such Party of its obligations hereunder and the consummation by such Party of the transactions contemplated hereby do not and will not (i) violate, conflict with or result in the breach of any provision of the certificate of incorporation or bylaws of such Party, (ii) conflict with or violate any law or governmental order applicable to such Party, or (iii) conflict with, or result in any breach of, constitute a default (or event which, with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which such Party is a party, which would adversely affect the ability of such Party to carry out its obligations under, and to consummate the transactions contemplated by, this Agreement.

2. Provision and Term of Services; Termination .

(a) IDT agrees to provide, directly or via one or more of its affiliates, to Rafael the services (collectively, the “ Services ”) as set forth on each Schedule A that is appended hereto from time to time. The Services shall be provided in accordance with the terms and provisions of this Agreement and the applicable Schedule A.

(b) IDT shall, and where appropriate shall ensure that any officer, employee, agent or sub-contractor providing Services on behalf of IDT shall, use reasonable care, skill and diligence in providing the Services.

(c) IDT shall maintain accurate records and accounts of all transactions relating to the Services performed by it or its affiliates pursuant to this Agreement. Such records and accounts shall be maintained separately from IDT’s own records and accounts and shall reflect such information as would normally be examined by an independent accountant in performing a complete audit pursuant to U.S. generally accepted auditing standards for the purpose of certifying financial statements, and to permit verification thereof by governmental agencies. Rafael shall have the right to inspect and copy, upon reasonable notice and at reasonable intervals during IDT’s regular office hours, the separate records and accounts maintained by IDT relating to the Services.

(d) All of the Services shall be provided during the term of this Agreement. The term of this Agreement shall commence on the date hereof and continue until the twelve (12) month anniversary of the date hereof, and shall automatically renew for additional six-month terms unless, no later than ninety (90) days prior to the end of the then-current term of this Agreement, IDT or Rafael notifies the other of its intent to terminate this Agreement, in which case this Agreement shall terminate effective as of the end of the then-current term, provided that Services may terminate earlier by Rafael upon thirty (30) days prior written notice.

(e) In the event of a termination of this Agreement, all outstanding sums due hereunder shall be paid immediately following the date of termination and any rights or obligations to which any of the Parties may be entitled or be subject prior to its termination shall remain in full force and effect. IDT shall cooperate fully in the transition back to Rafael of any and all matters related to the terminated Services such that Rafael shall not be prejudiced by such termination (but IDT shall not be required to bear any out-of-pocket costs for such transition unless Rafael shall agree to reimburse it for the same).

3. Compensation for Services .

(a) Rafael shall pay IDT for the Services in accordance with the fee schedule or fee structure or calculation methodology set forth on an applicable Schedule A.

(b) Unless otherwise specified on a Schedule A, such fees shall be paid by Rafael within thirty (30) days of the delivery of an appropriate invoice related thereto (which, unless otherwise provided for in a Schedule A, shall be issued no more frequently than monthly). Such invoice must comply with all applicable tax requirements and separately describe the amount for fees, expenses and value added tax, if any. Failure to provide an invoice for fees for any given month shall not be deemed a waiver of such fees, and such fees may be included, without prejudice, in a later invoice delivered to Rafael.

(c) If not specified on the applicable Schedule A, the fees payable for a specific Service shall be equal to the actual costs of IDT in providing such Service, including a reasonable and good faith allocation of overhead expenses of IDT, which shall include an implied profit margin thereon not to exceed three percent (3%). Upon request of Rafael, IDT shall deliver to Rafael, on a monthly basis, such reasonable and relevant information and supporting documentation with respect to the actual allocation of each of IDT’s employees delivering the actual Service.

(d) Unless otherwise specified on a Schedule A, Rafael shall reimburse IDT for third-party, out-of-pocket, incidental travel, lodging and food expenses incurred by IDT in providing the Services in accordance with IDT’s customary travel policy provided that Rafael approves such expenses in advance and in writing. Such reimbursement shall be within thirty (30) days of receipt of an invoice from IDT for such incidental expenses accompanied by such additional documentation reasonably required by Rafael to verify the amount of the expense and that such expense was incurred in connection with providing the Services.

(e) All amounts payable by Rafael to IDT shall be paid by wire transfer in accordance with the wire transfer instructions provided by IDT to Rafael from time to time.

4. Force Majeure .

The obligation of IDT to provide Services shall be suspended during the period and to the extent that IDT is prevented or hindered from complying therewith by any law or governmental order, rule, regulation or direction, whether domestic or foreign, or by any cause beyond the reasonable control of IDT, including, but not limited to, acts of nature, strikes, lock outs and other labor and industrial disputes and disturbances, civil disturbances, accidents, acts of terrorism, acts of war or conditions arising out of or attributable to war (whether declared or undeclared), shortage of necessary equipment, materials or labor, or restrictions thereon or limitations upon the use thereof, and delays in transportation. In such event, IDT shall give notice of suspension as soon as reasonably practicable to Rafael stating the date and extent of such suspension and the cause thereof and IDT’s best estimate of the date on which it will be able to resume the performance of its obligations. In addition, IDT will use commercially reasonable efforts during any such suspension to keep Rafael informed as to the progress of removal of the cause of such suspension. IDT shall resume the performance of such obligations as soon as reasonably practicable after the removal of the cause and IDT shall so notify Rafael. Rafael shall not be liable for payment of fees for any Service for the period in which such Service could not be provided pursuant to this Section 4.

5. Compliance with Law .

IDT and Rafael shall undertake to provide and utilize the Services in accordance with and adhere to all laws and governmental rules, regulations and orders applicable at the place where Services are rendered, including without limitation, data protection regulations.

6. Confidentiality .

(a) Each Party agrees to hold in confidence, and to use reasonable efforts to cause its employees, representatives and affiliates performing Services to hold in confidence (at least to the extent that such Party keeps its own confidential information in confidence, but in no event less than commercially reasonable given the nature of the confidential information), all confidential information concerning the other Party and its affiliates furnished to or obtained by such Party in the course of providing the Services (except to the extent that such information has been (i) in the public domain through no fault of such Party or (ii) lawfully acquired on a non-confidential basis by such Party from sources other than Rafael); and shall not disclose or release any such confidential information to any person, except its employees, representatives and agents who have a need to know such information in connection with such Party’s performance under this Agreement, unless (A) such disclosure or release is compelled by the judicial or administrative process or (B) in the opinion of counsel to IDT, such disclosure or release is necessary pursuant to requirements of law or the requirements of any governmental entity including, without limitation, disclosure requirements under the Securities Act of 1933 or the Securities Exchange Act of 1934, in each case as amended.

(b) Each Party shall supervise its personnel and establish systems to assure that Rafael’s information is made available to such Party’s employees on an “as needed” basis only. Each Party shall use such information only for purposes of providing the Services and for no other purpose. In particular, the department of a Party providing the Services shall in no way make any information concerning Rafael available to any other management or operational department or division of such Party or to personnel associated with such divisions or departments except to the extent approved in writing by the other Party.

7. Indemnification .

(a) Rafael and its affiliates, officers, directors, employees, agents, successors and assigns shall be indemnified and held harmless by IDT for and against any and all liabilities, losses, damages (excluding special, incidental, punitive, indirect and consequential damages), claims, costs and expenses, interest, awards, judgments and penalties (including attorneys’ and consultants’ fees and expenses) actually suffered or incurred by them (including any action brought or otherwise initiated by any of them), arising out of or resulting from:

(i) the breach of any representation or warranty made by IDT contained in this Agreement;

(ii) the breach of any covenant or agreement by IDT contained in this Agreement;

(iii) the gross negligence, fraud, willful defaults or willful misconduct of IDT or any of its employees, agents, contractors, successors, assigns or affiliates; and

(iv) the enforcement of the indemnification rights of Rafael and its affiliates provided for in this Agreement.

(b) IDT and its affiliates, officers, directors, employees, agents, successors and assigns shall be indemnified and held harmless by Rafael for and against any and all liabilities, losses, damages (excluding special, incidental, punitive, indirect and consequential damages), claims, costs and expenses, interest, awards, judgments and penalties (including attorneys’ and consultants’ fees and expenses) actually suffered or incurred by them (including any action brought or otherwise initiated by any of them), arising out of or resulting from:

(i) the breach of any representation or warranty made by Rafael contained in this Agreement;

(ii) the breach of any covenant or agreement by Rafael contained in this Agreement;

(iii) the gross negligence, fraud, willful defaults or willful misconduct of Rafael; and

(iv) the enforcement of the indemnification rights of IDT and its affiliates provided for in this Agreement.

8. Liability .

Neither Party nor its affiliates shall have any liability whatsoever to any other Party for any error, act or omission in connection with the Services to be rendered by IDT to Rafael hereunder in excess of the Liability Limitation, unless any such error, act or omission derives from the willful misconduct or gross negligence of such Party (or its affiliates). IN NO EVENT SHALL EITHER PARTY (OR AFFILIATE THEREOF) BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS, REVENUES OR DATA), WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. THE LIABILITY OF A PARTY (AND ITS AFFILIATES) FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER, WHETHER IN CONTRACT, TORT OR ANY OTHER LEGAL THEORY, IS LIMITED TO, AND WILL NOT EXCEED, THE OTHER PARTY’S DIRECT DAMAGES. EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE PARTIES DISCLAIM ALL WARRANTIES WITH RESPECT TO THE SERVICES, INCLUDING ALL WARRANTIES AS TO SUITABILITY OR FITNESS FOR A SPECIFIC PURPOSE.

As used herein, the term “Liability Limitation” shall mean, (i) all fees for Services billed hereunder during the term of this Agreement up to the date on which such determination is made, plus (ii) without duplication, the anticipated fees for Services to be paid during the six (6) month period (starting on the date hereof or a six (6) month or annual anniversary thereof) during which such determination is made.

9. Notices .

Any legal notice, demand or other communication required or permitted to be given by any provision of this Agreement (each a “ Notice ”) shall be in writing and shall be deemed to have been properly given or served only if addressed to a Party at its address set forth on Schedule A attached hereto, and if delivered (i) by hand, (ii) by certified mail, return receipt requested, (iii) by overnight commercial carrier, (iv) by facsimile transmission with confirmation of receipt or (v) by email. All such communications shall be deemed to have been properly given or served (i) if by hand, when received, (ii) if by mail, on the date of receipt or of refusal to accept shown on the return receipt, (iii) if by overnight commercial carrier, on the date that is one (1) business day after the date upon which the same shall have been delivered to such overnight commercial carrier, addressed to the recipient, with all shipping charges prepaid, provided that the same is actually received (or refused) by the recipient in the ordinary course (iv) if by facsimile, on the date sent with transmission confirmed and (v) if by email, on the date such email is received by such party.

10. No Third Party Beneficiaries .

This Agreement shall be binding upon and inure solely to the benefit of the Parties and their permitted successors and assigns, and IDT and Rafael shall be entitled to enforce its respective rights under this Agreement against the other Party. Rafael may not assign this Agreement without the prior written consent of IDT.

11. Governing Law .

This Agreement shall be governed by, and construed in accordance with the laws of the state of New Jersey. The Parties submit to the jurisdiction of any state or federal court sitting in New Jersey for the purpose of any suit, action or proceeding arising out of this Agreement.

12. Dispute Resolution .

It is the intention of the Parties that IDT shall act in the best interests of Rafael. If, in the course of providing or arranging for Services hereunder, IDT identifies a conflict of interest that would lead a reasonable person to conclude that IDT cannot act in the best interests of Rafael while also acting in the best interests of IDT, such conflict shall immediately be reported to Rafael so that it may be addressed without prejudice to either Party.

Rafael and IDT shall each use good faith efforts to resolve any disputes arising out of this Agreement within fifteen (15) days of receipt of a Party’s written notice of a dispute. All disputes under this Agreement shall be referred to the Chief Financial Officer (or the most senior financial executive of a Party) or his/her designee of each of IDT and Rafael. The executives shall meet as required for the purpose of resolving any pending dispute referred to them under this Agreement and shall consider the disputes in the order such disputes are brought before them. In the event that such executives are unable to resolve a dispute within thirty (30) business days (or such longer period as the executives may mutually determine), they shall submit the matter to binding arbitration according to the rules of the American Arbitration Association for commercial disputes. The arbitration shall be conducted by one arbitrator, expert in matters relating to commercial law, mutually selected by the Parties. If the Parties fail to mutually agree upon one arbitrator within ten (10) days of submission of the dispute to arbitration, one will be appointed in accordance with the commercial rules and practices of the American Arbitration Association. Any award, order or judgment pursuant to such arbitration shall be deemed final and binding and may be enforced in any court of competent jurisdiction. The Parties agree that the arbitrator shall only have the power and authority to make awards and issue orders as expressly permitted herein and shall not, in any event, make any award that provides for punitive damages. The schedule and rules for the arbitration proceedings shall be as set by the arbitrator and the arbitration proceedings shall be held in Newark, New Jersey. Each Party shall bear its own costs of participating in the arbitration proceedings.

13. Entire Agreement .

This Agreement and the Schedules hereto set forth all of the promises, covenants, agreements, conditions, and undertakings between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written. The Schedules to this Agreement constitute an integral part of this Agreement.

14. Binding .

This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

15. Waiver .

No provision of this Agreement may be waived except by an instrument in writing signed by the Party sought to be charged with the effect of such waiver. The failure of a Party to this Agreement to assert a right or exercise a remedy hereunder shall not waive such right or remedy or any future rights or remedies.

16. Status; Other Activities .

(a) For purposes of this Agreement, IDT is, and will be deemed to be, an independent contractor only and not an agent, joint venturer, partner, or representative of Rafael. Neither IDT nor a Rafael may create any obligations or responsibilities on behalf of or in the name of the other Party.

(b) Notwithstanding the amount of time, or percentage of business hours, spent by any employee of IDT in the provision of Services hereunder, no such employee shall, by reason of such provision, become an employee of, or have any direct rights against, Rafael, or be deemed to have any relationship with Rafael other than as a provider of Services hereunder.

(c) Nothing in this Agreement shall limit or restrict the right of any Party, or its affiliates, directors, officers or employees to engage in any other business or devote their time and attention in part to the management or other aspects of any other business, whether of a similar nature, or to limit or restrict the right of such parties to engage in any other business or to render services of any kind to any corporation, firm, individual, trust or association.

17. Amendment .

This Agreement may not be amended or modified except by an instrument in writing signed by the Parties.

18. Severability .

This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the Parties intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be valid and enforceable, so as to effect the original intent of the Parties to the greatest extent possible.

19. Counterparts .

This Agreement may be executed in one or more counterparts, and by the Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

RAFAEL HOLDINGS, INC.

By:	/s/ David Polinsky
	David Polinsky
	Chief Financial Officer

IDT CORPORATION

By:	/s/ Marcelo Fischer
	Marcelo Fischer
	Senior Vice President of Finance

[FORM OF SCHEDULE A]

Start Date:

[INSERT DATE]

Term:

[Exception to early termination provision:]

Description of Service: [DESCRIBE] . This includes, but is not limited to, the following service elements:

●

[INSERT ELEMENTS]

Fee (other than allocated cost basis):

Rafael Contacts:

[INSERT CONTACTS]

Acknowledgement:

RAFAEL HOLDINGS, INC.	IDT COPORATION:

By:	By:	[NAMER NAME]
Name:	Name:
Title:	Title:

Exhibit 10.3

TAX SEPARATION AGREEMENT

This TAX SEPARATION AGREEMENT (this “Agreement”) is dated as of March 26, 2018, by and between IDT Corporation, a Delaware corporation (“IDT”), and Rafael Holdings, Inc., a Delaware corporation (“Rafael”); and together with IDT, the “Parties, and each individually, a “Party”).

WHEREAS, as of the date hereof, IDT is the common parent of an affiliated group of domestic corporations within the meaning of Section 1504(a) of the Code, and the members of the affiliated group have heretofore joined in filing consolidated federal income Tax returns (the “Affiliated Group”);

WHEREAS, IDT intends to effect a spinoff of Rafael whereby IDT will distribute to the holders of IDT Common Stock of all of the outstanding shares of Rafael Common Stock held by IDT at the rate of (i) one (1) share of Rafael Class A Common Stock for every two (2) shares of IDT Class A Common Stock and (ii) one (1) share of Rafael Class B Common Stock for every two (2) shares of IDT Class B Common Stock, each outstanding as of the Record Date (the “Spinoff ”);

WHEREAS, for United States federal income tax purposes, it is intended that the Spinoff will qualify as tax-free under Section 355 of the Code; and

WHEREAS, as a result of the Spinoff, the Parties desire to enter into this Tax Separation Agreement to provide for certain Tax matters, including the assignment of responsibility for the preparation and filing of Tax Returns, the payment of and indemnification for Taxes, entitlement to refunds of Taxes, and the prosecution and defense of any Tax controversies.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

ARTICLE I. DEFINITIONS

SECTION 1.1. General. Capitalized terms used in this Agreement and not defined herein shall have the meanings that such terms have in the Separation and Distribution Agreement between the Parties of even date herewith. As used in this Agreement, the following terms shall have the following meanings:

“Affiliated Group” shall have the meaning specified in the preamble.

“Agreement” shall have the meaning specified in the preamble.

“Business Day” shall mean a day which is not a Saturday, Sunday or a day on which banks in New York City are authorized or required by law to close.

“Closing of the Books Method” shall mean the apportionment of items between portions of a taxable period based on a closing of the books and records on the Distribution Date (as if the Distribution Date was the end of the taxable period), provided that any items not susceptible to such apportionment (such as real or personal property taxes imposed on a periodic basis) shall be apportioned on the basis of elapsed days during the relevant portion of the taxable period.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Combined Group” shall mean a combined, unitary, or consolidated tax group that includes IDT or any of its subsidiaries, not including Rafael or any of its subsidiaries.

“Consolidated Return” shall mean any Tax Return relating to Income Taxes filed pursuant to Section 1502 of the Code, or any comparable combined, consolidated, or unitary group Tax Return relating to Income Taxes filed under state or local tax law which, in each case, includes IDT and at least one subsidiary.

“Final Determination” shall mean the final resolution of liability for any Tax for any taxable period, including any related interest or penalties, by or as a result of: (i) a final and unappealable decision, judgment, decree or other order by any court of competent jurisdiction; (ii) a closing agreement or accepted offer in compromise under Section 7121 or 7122 of the Code, or comparable agreement under the laws of other jurisdictions which resolves the entire Tax liability for any taxable period; or (iii) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered by the jurisdiction imposing the Tax.

“IDT” shall have the meaning specified in the preamble.

“IDT Class A Common Stock” means the outstanding shares of Class A common stock, $0.01 par value per share, of IDT.

“IDT Class B Common Stock” means the outstanding shares of Class B common stock, $0.01 par value per share, of IDT.

“IDT Common Stock” means the IDT Class A Common Stock and the IDT Class B Common Stock.

“Income Tax” shall mean any income, franchise or similar Taxes imposed on (or measured by) net income or net profits.

“Income Tax Returns” shall mean all Tax Returns relating to Income Taxes.

“Indemnification Tax Benefit” shall have the meaning specified in Section 2.4(b).

“Indemnified Tax” shall have the meaning specified in Section 2.4(b).

“IRS” shall mean the Internal Revenue Service.

“Other Tax” shall mean any Tax other than an Income Tax.

“Payment Period” shall have the meaning specified in Section 2.4(c).

“Proceeding” shall mean any audit, examination or other proceeding brought by a Taxing Authority with respect to Taxes.

“Rafael” shall have the meaning set forth in the preamble.

“Rafael Class A Common Stock” means the outstanding shares of Class A common stock, $0.01 par value per share, of Rafael.

“Rafael Class B Common Stock” means the outstanding shares of Class B common stock, $0.01 par value per share, of Rafael.

“Rafael Common Stock” means the Rafael Class A Common Stock and the Rafael Class B Common Stock.

“Refund” shall have the meaning specified in Section 2.2.

“Retained Liabilities” shall have the meaning specified in the Separation Agreement.

“Retained Liability Payment” shall have the meaning specified in Section 2.5.

“Retained Liability Tax Benefit” shall have the meaning specified in Section 2.5.

“Spinoff Taxes” shall mean all Taxes attributable to the failure of the Spinoff to have tax free status.

“Straddle Period” shall mean any taxable period commencing prior to, and ending after, the Distribution Date.

“Tax” or “Taxes” shall mean any federal, state, local or foreign income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add on minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, imposed by any Taxing Authority.

“Tax Returns” shall mean all reports or returns (including information returns and amended returns) required to be filed or that may be filed for any period with any Taxing Authority in connection with any Tax or Taxes (whether domestic or foreign).

“Taxing Authority” shall mean any governmental authority (whether United States or non-United States, and including, any state, municipality, political subdivision or governmental agency) responsible for the imposition of any Tax.

SECTION 1.2. References; Interpretation. References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. The words “include,” “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation.” Unless the context otherwise requires, references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, such Agreement. Unless the context otherwise requires, the words “hereof,” “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement.

ARTICLE II. ALLOCATION OF TAX ASSETS AND LIABILITIES

SECTION 2.1. Indemnity.

(a) IDT shall indemnify Rafael from all liability for Taxes of any member of the Affiliated Group or any Combined Group, other than Rafael or any of its subsidiaries, for any taxable period.

(b) Rafael shall indemnify IDT from all liability for Taxes of Rafael or its subsidiaries or relating to the Rafael Business for any taxable period.

(d) In no event shall IDT have any responsibility for Taxes or penalties for any entity in which Rafael holds a direct or indirect interest as of the Distribution Date that was not included in the Affiliated Group or IDT Combined Group prior to the Distribution Date.

SECTION 2.2. Refunds.

(a) Subject to Section 3.5, if a Party receives a refund, offset, credit, or other benefit (including interest received thereon) (a “Refund”) of Tax which the other Party would have been obligated to indemnify had the Refund been a payment, then the Party receiving the Refund shall promptly pay the amount of the Refund to the other Party, less reasonable costs and expenses incurred in connection with such Refund, including any Taxes on such Refund or interest thereon (net of any tax benefit actually realized for paying over such Refund).

(b) Each Party shall, if reasonably requested by the other Party, cause the relevant entity to file for and use its reasonable best efforts to obtain and expedite the receipt of any Refund to which such requesting Party is entitled under this Section 2.2.

SECTION 2.3. Contests.

(a) In the case of any Proceeding that relates to Taxes for which IDT is responsible under Section 2.1, IDT shall have the right to control, in its sole discretion, the conduct of such Proceeding. Subject to the foregoing, Rafael shall have the right to participate jointly, at its own expense, in any Proceeding if the consequences of the resolution of such Proceeding could reasonably be expected to affect the tax liability of Rafael for any tax period to the extent such tax liability of Rafael is not subject to an indemnification by IDT hereunder.

(b) In the case of any Proceeding that relates to Taxes for which Rafael is responsible under Section 2.1, Rafael shall have the sole right to control the conduct of such Proceeding. Subject to the foregoing, IDT shall have the right to participate jointly, at its own expense, in any Proceeding if the consequences of the resolution of such Proceeding could reasonably be expected to affect the tax liability of IDT for any tax period to the extent such tax liability of IDT is not subject to an indemnification by Rafael hereunder.

(c) In the case of any Proceeding that relates to Taxes that are both the responsibility of IDT and Rafael under Section 2.1, the parties shall use reasonable efforts to cause such Proceeding to be bifurcated between the period ending on the Distribution Date and the period beginning after the Distribution Date. If the parties are able to cause the audit to be so bifurcated, then Sections 2.3(a) and (b) shall govern the control of such Proceedings. To the extent that the parties are unable to cause such bifurcation, IDT and Rafael shall jointly control such Proceeding.

(d) After the Distribution Date, each Party shall within 15 days notify the other Party in writing upon receipt of written notice of the commencement of any Proceeding or of any demand or claim upon it, which, if determined adversely, would be grounds for indemnification from such other Party pursuant to Section 2.1 or could reasonably be expected to have an adverse Tax effect on the other Party. The failure of one Party to forward such notification in accordance with the immediately preceding sentence shall not relieve the other Party of any obligation under this Agreement, except to the extent that the failure to forward such notification within the time frame prescribed herein actually prejudices the ability of the other Party to contest such Proceeding. Each Party shall, on a timely basis, keep the other Party informed of all developments in the Proceeding and provide such other Party with copies of all pleadings, briefs, orders, and other correspondence pertaining thereto.

SECTION 2.4. Treatment of Payments; After Tax Basis.

(a) IDT and Rafael agree to treat any indemnification payments (other than payments of interest pursuant to Section 2.4(c)) pursuant to this Agreement, including any payments made pursuant to Section 2.5, as either a capital contribution or a distribution, as the case may be, between IDT and Rafael occurring immediately prior to the Distribution, and to challenge in good faith any other characterization of such payments by any Taxing Authority. If, notwithstanding such good faith efforts, the receipt or accrual of any such payment (other than payments of interest pursuant to Section 2.4(c)) results in taxable income to the indemnified Party, such payment shall be increased so that, after the payment of any Taxes with respect to the payment, the indemnified Party shall have realized the same net amount it would have realized had the payment not resulted in taxable income.

(b) To the extent that any liability for Taxes that is subject to indemnification under Section 2.1 (an “Indemnified Tax”) gives rise to an Indemnification Tax Benefit to the indemnified Party in any taxable period, the indemnified Party will promptly remit to the indemnifying Party the amount of any such Indemnification Tax Benefit actually realized. For purposes of this Agreement, “ Indemnification Tax Benefit ” means a reduction in the amount of Taxes that are required to be paid or increase in refund due, whether resulting from a deduction, from reduced gain or increased loss from disposition of an asset, or otherwise. For purposes of this Agreement, an indemnified Party will be deemed to have actually realized an Indemnification Tax Benefit at the time the amount of Taxes such indemnified Party is required to pay is reduced or the amount of any refund due is increased. The amount of any Indemnification Tax Benefit in this Section 2.4(b) shall be calculated by comparing (i) the indemnified Party’s actual Tax liability taking into account any Indemnified Tax with (ii) what the indemnified Party’s Tax liability would have been without taking into account any Indemnified Tax. If, pursuant to this Agreement, the indemnified Party makes a remittance to the indemnifying Party of any Indemnification Tax Benefit and all or part of such Indemnification Tax Benefit is subsequently disallowed, the indemnifying Party will promptly pay to the indemnified Party that portion of such remittance equal to the portion of the Indemnification Tax Benefit that is disallowed.

(c) Payments made pursuant to this Agreement that are not made within the period prescribed in this Agreement or, if no period is prescribed, within thirty (30) days after demand for payment is made (the “Payment Period”) shall bear interest for the period from and including the date immediately following the last date of the Payment Period through and including the date of payment at a rate equal to the monthly average of the “prime rate” as published in the Wall Street Journal, compounded semi-annually. Such interest will be payable at the same time as the payment to which it relates and shall be calculated on the basis of a year of 365 days and the actual number of days for which due; provided, however, that this provision for interest shall not be construed to give the Party responsible for such payment the right to defer payment beyond the due date hereunder.

SECTION 2.5. Retained Liabilities. To the extent that any payments made by IDT in respect of the Retained Liabilities (a “Retained Liability Payment”) gives rise to a Retained Liability Tax Benefit to Rafael in any taxable period, Rafael will promptly remit to IDT the amount of any such Retained Liability Tax Benefit actually realized. For purposes of this Agreement, “Retained Liability Tax Benefit” means a reduction in the amount of Taxes that are required to be paid or increase in refund due, whether resulting from a deduction, credit, increased basis, or otherwise. For purposes of this Agreement, Rafael will be deemed to have actually realized a Retained Liability Tax Benefit at the time the amount of Taxes Rafael is required to pay is reduced or the amount of any refund due is increased. The amount of any Retained Liability Tax Benefit in this Section 2.5 shall be calculated by comparing (i) Rafael’s actual Tax liability taking into account any Retained Liability Payment with (ii) what Rafael’s Tax liability would have been without taking into account any Retained Liability Payment. If, pursuant to this Agreement, Rafael makes a remittance to IDT of any Retained Liability Tax Benefit and all or part of such Retained Liability Tax Benefit is subsequently disallowed, IDT will promptly pay to Rafael that portion of such remittance equal to the portion of the Retained Liability Tax Benefit that is disallowed.

SECTION 2.6. Transfer Taxes. Notwithstanding anything to the contrary herein, IDT shall bear any and all stamp, duty, transfer, sales and use or similar Taxes incurred in connection with the Spinoff or the Distribution.

SECTION 2.7 Tax Assets. All tax assets, including operating losses, capital losses and credits, attributed to Rafael’s assets or operations, in existence as of the effective date of the Spinoff shall remain with Rafael for Rafael to utilize in its discretion and in accordance with the terms hereof. IDT shall not have right or access to any such tax assets, and Rafael shall not have any right or access to any tax assets of IDT or any other member of IDT’s Affiliated Group (other than Rafael and its subsidiaries.

Nothing in this Agreement shall impact the ownership or use of tax assets held by entities in which Rafael holds a direct or indirect interest as of the Distribution Date.

ARTICLE III. RETURNS AND TAXES ATTRIBUTABLE TO RAFAEL

SECTION 3.1. IDT’s Responsibility for the Preparation of Tax Returns and for the Payment of Taxes.

(a) IDT shall prepare and file or cause to be prepared and filed all Tax Returns of Rafael or any of its subsidiaries or relating to the Rafael Business that are due on or before the Distribution Date (taking into account any valid extensions thereof), all Income Tax Returns relating to taxable periods ending on or before the Distribution Date and all Income Tax Returns of the Affiliated Group or any Combined Group.

(b) To the extent that Rafael or any of its subsidiaries or the Rafael Business is included in any Consolidated Return for a taxable period that includes the Distribution Date, IDT shall include in such Consolidated Return the results of Rafael and the Rafael Business on the basis of the Closing of the Books Method. To the extent permitted by law or administrative practice with respect to other Income Tax Returns, the taxable period relating to Rafael or the Rafael Business shall be treated as ending on the Distribution Date, and if the taxable period does not, in fact, end on the Distribution Date, the Parties shall apportion all tax items between the portions of the taxable period before and after the Distribution Date on the Closing of the Books Method.

SECTION 3.2. Rafael’s Responsibility for the Preparation of Tax Returns and for the Payment of Taxes. Rafael shall prepare and file or cause to be prepared and filed all Tax Returns relating to Other Taxes of Rafael or any of its subsidiaries or the Rafael Business that have not been filed before the Distribution Date. Rafael shall prepare and file or cause to be prepared and filed all Income Tax Returns relating to taxable periods of Rafael and its subsidiaries after the Distribution Date, except for Income Tax Returns of the Affiliated Group or any Combined Group and Income Tax Returns of Rafael for any Straddle Period as described in Sections 3.1 and 3.3.

SECTION 3.3. Responsibility for the Preparation of Straddle Period Income Tax Returns and for the Payment of Straddle Period Income Taxes. IDT shall prepare and file or cause to be prepared and filed all Income Tax Returns of Rafael for any Straddle Period. All such Income Tax Returns that are to be prepared and filed by IDT pursuant to this paragraph shall be submitted to Rafael not later than thirty (30) days prior to the due date for filing of such Tax Returns (including extensions of time to file) (or if such due date is within forty-five (45) days following the Distribution Date, as promptly as practicable following the Distribution Date). Rafael shall have the right to review such Tax Returns and to review all work papers and procedures used to prepare any such Tax Return. If Rafael, within ten (10) Business Days after delivery of any such Tax Return, notifies IDT in writing that it objects to any of the items in such Tax Return, IDT and Rafael shall attempt in good faith to resolve the dispute and, if they are unable to do so, the disputed items shall be resolved (within a reasonable time, taking into account the deadline for filing such Tax Return) by an internationally recognized independent accounting firm chosen by both IDT and Rafael. Upon resolution of all such items, the relevant Straddle Period Tax Return shall be filed on that basis. The costs, fees and expenses of such accounting firm shall be borne equally by IDT and Rafael.

SECTION 3.4. Manner of Preparation. All Income Tax Returns filed on or after the Distribution Date shall be prepared and filed on a timely basis (including extensions of time to file) by the Party responsible for such filing under this Agreement. In the absence of a Final Determination to the contrary, a controlling change in law or circumstances, or accounting method changes pursuant to applications that are approved by the Internal Revenue Service, all Income Tax Returns of Rafael for tax periods commencing prior to the Distribution Date shall be prepared on a basis consistent with the elections, accounting methods, conventions, assumptions and principles of taxation used with respect to the Rafael Business for the most recent taxable periods for which Tax Returns of the Affiliated Group have been filed.

SECTION 3.5. Carrybacks. Rafael agrees and will cause its subsidiaries not to carry back any net operating losses, capital losses or credits attributable to an entity that was included in a consolidated or combined group with IDT for any taxable period ending after the Distribution Date to a taxable period, or portion thereof, ending on or before the Distribution Date. To the extent that Rafael or any of its subsidiaries is required by applicable law to carry back any such net operating losses, capital losses or credits, any refund of Taxes attributable to such carryback shall be for Rafael’s account.

SECTION 3.6. Retention of Records; Cooperation; Access.

(a) IDT and Rafael shall, and shall cause each of their subsidiaries to retain adequate records, documents, accounting data and other information (including computer data) necessary for the preparation and filing of all Tax Returns required to be filed by IDT or Rafael and for any Tax matter covered by this Agreement, including any Proceeding relating to such Tax Returns or to any Taxes payable by IDT or Rafael or any of their subsidiaries.

(b) Subject to the provisions of Section 3.8, IDT and Rafael shall reasonably cooperate with one another in a timely manner with respect to any Tax matter covered by this Agreement, including any Proceeding described in Section 2.3. IDT and Rafael shall, and shall cause each of their subsidiaries to, cooperate and provide reasonable access to (i) all records, documents, accounting data and other information (including computer data) necessary for the preparation and filing of all Tax Returns required to be filed by IDT or Rafael and for any Proceeding relating to such Tax Returns or to any Taxes payable by IDT or Rafael and (ii) its personnel and premises, for the purpose of the preparation, review or audit of such Tax Returns, or in connection with any Tax matter covered by this Agreement, including any Proceeding described in Section 2.3 as reasonably requested by either IDT or Rafael. The Party requesting or otherwise entitled to any books, records, information, officers or employees pursuant to this Section 3.6(b) shall bear all reasonable out-of-pocket costs and expenses (except reimbursement of salaries, employee benefits and general overhead) incurred in connection with providing such books, records, information, officers or employees; provided, however, that any costs (including but not limited to attorneys’ fees and expenses) arising from the requested Party’s failure to cooperate under this Section 3.6(b) shall be payable by such Party.

(c) The obligations set forth above in Sections 3.6(a) and 3.6(b) shall continue until the longer of (i) the time of a Final Determination or (ii) expiration of all applicable statutes of limitations, to which the records and information relate. For purposes of the preceding sentence, each Party shall assume that no applicable statute of limitations has expired unless such Party has received notification or otherwise has actual knowledge that such statute of limitations has expired.

SECTION 3.7. Tax Treatment. The Parties intend that:

(A) the Spinoff as a whole, will qualify as (i) a reorganization described in Sections 355(a) and 368(a)(1)(D) of the Code and (ii) a transaction in which the stock distributed thereby is “qualified property” for purposes of Sections 355(d), 355(e) and 361(c) of the Code, in which IDT, Rafael and the stockholders of IDT recognize no income or gain for U.S. Federal income tax purposes pursuant to Sections 355, 361 and 1032 of the Code. For the avoidance of doubt, recognition of income or gain by IDT or Rafael as a result of taking into account intercompany items or excess loss accounts pursuant to the Treasury Regulations promulgated pursuant to Section 1502 of the Code shall not mean that the Spinoff does not have tax-free status.

SECTION 3.8. Confidentiality; Ownership of Information; Privileged Information. The provisions of Article X of the Separation Agreement relating to confidentiality of information, ownership of information, privileged information and related matters shall apply with equal force to any records and information prepared and/or shared by and among the Parties in carrying out the intent of this Agreement.

ARTICLE IV. MISCELLANEOUS

SECTION 4.1. Complete Agreement; Construction. This Agreement shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter, including, without limitation, any tax sharing agreement previously entered into by the Parties.

SECTION 4.2. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by both Parties.

SECTION 4.3. Survival of Agreements. Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Distribution Date.

SECTION 4.4. Notices. All notices and other communications hereunder shall be in writing and hand delivered or mailed by registered or certified mail (return receipt requested) or sent by any means of electronic message transmission with delivery confirmed (by voice or otherwise) to the Parties at the following addresses (or at such other addresses for a Party as shall be specified by like notice) and will be deemed given on the date on which such notice is received:

To IDT:

IDT Corporation

520 Broad Street

Newark New Jersey 07102

Fax: 973-438-1010

Attention: Marcelo Fischer

With copies to:

IDT Corporation

520 Broad Street

Newark New Jersey 07102

Fax: 973-438-1456

Attention: Legal Department

To Rafael:

Rafael Holdings, Inc.

520 Broad Street

Newark New Jersey 07102

Fax: 973-438-[FAX NUMBER]

Attention: Menachem Ash

SECTION 4.5. Waivers. The failure of any Party to require strict performance by the other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof.

SECTION 4.6. Amendments. This Agreement may not be modified or amended except by an agreement in writing signed by the Parties hereto.

SECTION 4.7. Assignment. This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party hereto without the prior written consent of the other Party hereto, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void.

SECTION 4.8. Successors and Assigns. The provisions to this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.

SECTION 4.9. Additional Members. Any new members of the Affiliated Group shall automatically become a Party to this Agreement upon becoming members.

SECTION 4.10. Third Party Beneficiaries. This Agreement is solely for the benefit of the Parties hereto and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

SECTION 4.11. Title and Headings. Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

SECTION 4.12. Exhibits. The Exhibits to this Agreement shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

SECTION 4.13. Governing Law; Jurisdiction. This Agreement shall be construed in accordance with, and governed by, the laws of the State of New Jersey, without regard to the conflicts of law rules of such state. Each of the Parties (a) consents to submit itself to the personal jurisdiction of the courts of the State of New Jersey or any federal court with subject matter jurisdiction located in the District of New Jersey (and any appeals court therefrom) in the event any dispute arises out of this Agreement or any Ancillary Agreement or any transaction contemplated hereby or thereby, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (c) agrees that it will not bring any action relating to this Agreement or any Ancillary Agreement or any transaction contemplated hereby or thereby in any court other than such courts.

SECTION 4.14. Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written.

	RAFAEL HOLDINGS, INC.

	By:	/s/ David Polinsky
		David Polinsky
		Chief Financial Officer

	IDT CORPORATION

	By:	/s/ Marcelo Fischer
		Marcelo Fischer
		Senior Vice President of Finance

Exhibit 10.4

RAFAEL HOLDINGS, INC.
2018 EQUITY INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT

This INCENTIVE STOCK OPTION AGREEMENT (this “Agreement”) is entered into as of [ INSERT DATE ], by and between Rafael Holdings, Inc., a Delaware corporation (the “Company”), and [NAME OF GRANTEE] (the “Grantee”).

WHEREAS, the Company desires to grant to the Grantee options to acquire an aggregate of [INSERT NUMBER OF SHARES] shares of Class B Common Stock of the Company, par value $.01 per share (the “Stock”), on the terms set forth herein.

NOW, THEREFORE, the parties hereby agree as follows:

1. Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Rafael Holdings, Inc. 2018 Equity Incentive Plan, as the same may be amended, modified or restated from time to time (the “Plan”).

2. Grant of Options . The Grantee is hereby granted an Incentive Stock Option (the “Options”) to purchase an aggregate of [INSERT NUMBER OF SHARES] Shares of Stock, pursuant to the terms of this Agreement. Though the Option is granted as an Incentive Stock Option, the Company does not represent or warrant that the Option qualifies as such. If the Option (or any part thereof) does not qualify for Incentive Stock Option treatment for any reason, then, to the extent of such non-qualification, the Option (or portion thereof) shall be treated as a nonqualified stock option granted under the Plan, provided that the Option (or portion thereof) otherwise satisfies the terms and conditions of the Plan generally relating to Nonqualified Stock Options.

3. Term . The term of the Options (the “Option Term”) shall be for shall be for ten (10) years [a five-year period if Grantee is a 10% shareholder within the meaning of Code Section 422(c)(5)] commencing on «OPTIONDATE» and terminating on «TERMINATIONDATE» .

4. Option Price . The initial exercise price per share of the Options shall be $ [INSERT EXERCISE PRICE] , said exercise price not being less than the Fair Market Value of the Stock at the time this Option is granted (or not less than 110% of the Fair Market Value of the Stock on the date of grant if the Grantee is a 10% shareholder within the meaning of Code Section 422(c)(5)); provided, however, subject to adjustment as provided herein (the “Option Price”).

5. Conditions to Exercisability . The Options shall vest and become exercisable as follows:

[INSERT VESTING SCHEDULE]

if the Grantee continues to be employed by the Company or any of its Subsidiaries on such date or dates.

6. Method of Exercise . An Option may be exercised, as to any or all full shares of the Stock as to which the Option has become exercisable, by written notice delivered in person or by mail to the Company’s transfer agent or other administrator designated by the Company, specifying the number of shares of Stock with respect to which the Option is being exercised.

7. Medium and Time of Payment . The Option Price shall be paid in full, at the time of exercise, in cash or in shares of Stock (whether then owned by the Grantee or issuable upon exercise of the Option) having a Fair Market Value equal to such Option Price or in a combination of cash and Stock, including a cashless exercise procedure through a broker dealer.

8. Termination . Except as provided in this Section 8 or in Section 9 hereof, an Option may not be exercised unless the Grantee is then in the employ of the Company or a Subsidiary thereof (or a company or a Parent or Subsidiary of such company issuing or assuming the Option in a transaction to which Section 424(a) of the Code applies), and unless the Grantee has remained in Continuous Service as such an employee since the date of grant of the Option. In the event that the Continuous Service of a Grantee as such an employee shall terminate (other than by reason of death, Disability or Retirement), all Options of such Grantee that are exercisable at the time of Grantee’s termination may, unless earlier terminated in accordance with their terms, be exercised within ninety (90) days after the date of such termination (or such different period as the Committee shall prescribe).

9. Death, Disability or Retirement of Grantee . If the Grantee shall die while employed by the Company or a Subsidiary thereof, or if the Grantee’s Continuous Service as an employee shall terminate by reason of Disability, all Options theretofore granted to the Grantee (to the extent otherwise exercisable) may, unless earlier terminated in accordance with their terms, be exercised by the Grantee or by the Grantee’s estate or by a person who acquired the right to exercise such Options by bequest or inheritance or otherwise by result of death or Disability of the Grantee, at any time within one hundred eighty (180) days after the death or Disability of the Grantee (or such different period as the Committee shall prescribe). In the event that an Option granted hereunder shall be exercised by the legal representatives of a deceased or former Grantee, written notice of such exercise shall be accompanied by a certified copy of letters testamentary or equivalent proof of the right of such legal representative to exercise such Option. In the event that the employment of a Grantee shall terminate on account of such Grantee’s Retirement, all Options of the Grantee that are exercisable at the time of such Retirement may, unless earlier terminated in accordance with their terms, be exercised at any time within ninety (90) days after the date of such Retirement (or such different period as the Committee shall prescribe).

10. Withholding Taxes; Disqualifying Disposition . The award or other transfer of the Option, and the exercise of the Option, shall be conditioned further on any applicable withholding taxes being paid by you. Such taxes may be paid by one or more of the following methods, at the Company’s sole discretion: (i) deducting the amount so required to be withheld from any other amount (or Shares of Stock issuable upon exercise of the Option) then or thereafter to be provided to you, including by deducting any such amount from your salary or other amounts payable to you, to the maximum extent permitted under law and/or (ii) requiring you to pay to the Company, the amount so required to be withheld as a condition of the issuance, delivery, distribution or release of any Shares of Stock upon exercise of the Option and/or (iii) causing the sale of any Shares of Stock held by you to cover such liability, up to the amount required to satisfy minimum statutory withholding requirements or by the withholding by the Company of, or delivery to the Company of, Shares, including Shares otherwise issuable to you upon exercise of the Option. In addition, you will be required to pay any amount due in excess of the tax withheld and transferred to the tax authorities, pursuant to applicable tax laws, regulations and rules. One or more of these methods may not be available upon exercise of the Option. If the Grantee disposes of Stock acquired upon exercise of this option within two years from the date of grant or one year after such Stock was acquired pursuant to exercise of the Option, the Grantee shall notify the Company in writing of such disposition within ten (10) days thereof.

11. Terms Incorporated by Reference Herein . Each of the terms of the Plan, as in effect as of the date hereof, shall govern the Options granted hereunder. To the extent that there is any inconsistency between this Agreement and the terms of the Plan, the terms of this Agreement shall govern. To the extent that there is any inconsistency between this Agreement and the terms of any employment agreement between the Grantee and the Company during the period when such employment agreement is in force, the terms of an effective employment agreement shall govern.

12. Transferability of Options . Stock Options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than to a designated beneficiary upon the Grantee’s death or by will or the laws of descent and distribution, and are exercisable only by Grantee during the Grantee’s lifetime.

13. Entire Agreement . This Agreement contains all of the understandings between the parties hereto pertaining to the matters referred to herein, and supersedes all undertakings and agreements, whether oral or in writing, previously entered into by them with respect thereto. The Grantee represents that, in executing this Agreement, the Grantee does not rely and has not relied upon any representation or statement not set forth herein made by the Company with regard to the subject matter of this Agreement or otherwise.

14. Amendment or Modification, Waiver . No provision of this Agreement may be amended or waived unless such amendment or waiver is agreed to in writing, signed by the Grantee and by a duly authorized officer of the Company. No waiver by any party hereto of any breach by another party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a similar of dissimilar condition or provision at the same time, any prior time or any subsequent time.

15. Notices . Each notice relating to this Agreement shall be in writing and delivered in person or by certified mail to the proper address. All notices to the Company shall be addressed to it at:

Rafael Holdings, Inc.

520 Broad Street

Newark, NJ 07102

Fax: 973-453-8200

Attention: Options Administrator

All notices to the Grantee or other person or persons then entitled to exercise the Options shall be addressed to the Grantee or such other person or persons at:

[INSERT NAME OF GRANTEE AND ADDRESS]

Anyone to whom a notice may be given under this Agreement may designate a new address by notice to such effect.

16. Severability . If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision hereof shall be validated and shall be enforced to the fullest extent permitted by law.

17. Governing Law . This Agreement shall be construed and governed in accordance with the laws of the state of Delaware, without regard to principles of conflicts of laws.

18. Headings . All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.

19. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by an authorized officer and the Grantee has hereunto set his hand all as of the date first above written.

RAFAEL HOLDINGS, INC.

By:
	Name:	David Polinsky
	Title:	Chief Financial Officer

By:
	Grantee

Exhibit 10.5

RAFAEL HOLDINGS, INC.
2018 EQUITY INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

This STOCK OPTION AGREEMENT (this “Agreement”) is entered into as of [ INSERT DATE ], by and between Rafael Holdings, Inc., a Delaware corporation (the “Company”), and [NAME OF GRANTEE] (the “Grantee”).

NOW, THEREFORE, the parties hereby agree as follows:

1. Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Rafael Holdings, Inc. 2018 Equity Incentive Plan as the same may be amended, modified or restated from time to time (the “Plan”).

2. Grant of Options . The Grantee is hereby granted Nonqualified stock options (the “Options”) to purchase an aggregate of [INSERT NUMBER OF SHARES] Shares of Stock, pursuant to the terms of this Agreement.

3. Term . The term of the Options (the “Option Term”) shall be for [INSERT TERM] .

4. Option Price . The initial exercise price per share of the Options shall be $ [INSERT EXERCISE PRICE] subject to adjustment as provided herein.

5. Conditions to Exercisability . The Options shall vest and become exercisable as follows:

[INSERT VESTING SCHEDULE]

If the Grantee remains in Continuous Service through and on such date or dates (or if otherwise set forth in an employment agreement between the Grantee and the Company that is in effect at the relevant time).

8. Termination . Except as provided in this Section 8 or in Section 9 hereof, or as set forth in any employment agreement between the Grantee and the Company that may be in effect at the relevant time, an Option may not be exercised unless the Grantee is then in the employ of or maintaining a director or consultant relationship with the Company or a Subsidiary thereof (or a company or a Parent or Subsidiary of such company issuing or assuming the Option in a transaction to which Section 424(a) of the Code applies), and unless the Grantee has remained in Continuous Service since the date of grant of the Option. In the event that the Continuous Service of a Grantee shall terminate (other than by reason of death, Disability or Retirement), all Options of such Grantee that are exercisable at the time of Grantee’s termination may, unless earlier terminated in accordance with their terms or as otherwise provided for in an effective employment agreement between the Grantee and the Company , be exercised within one hundred eighty (180) days after the date of such termination (or such different period as the Committee shall prescribe).

9. Death, Disability or Retirement of Grantee . To the extent that there is in place, at the relevant time, an agreement between the Grantee and the Company that provides for treatment of granted options, then the terms of that agreement shall control. If there is no such effective agreement in place, if the Grantee shall die while employed by, or maintaining a director or consultant relationship with, the Company or a Subsidiary thereof, or if the Grantee’s Continuous Service shall terminate by reason of Disability, all Options theretofore granted to the Grantee (to the extent otherwise exercisable) may, unless earlier terminated in accordance with their terms, be exercised by the Grantee or by the Grantee’s estate or by a person who acquired the right to exercise such Options by bequest or inheritance or otherwise by result of death or Disability of the Grantee, at any time within one hundred eighty (180) days after the death or Disability of the Grantee (or such different period as the Committee shall prescribe). In the event that an Option granted hereunder shall be exercised by the legal representatives of a deceased or former Grantee, written notice of such exercise shall be accompanied by a certified copy of letters testamentary or equivalent proof of the right of such legal representative to exercise such Option. In the event that the employment or consultant relationship of a Grantee shall terminate on account of such Grantee’s Retirement, all Options of the Grantee that are exercisable at the time of such Retirement may, unless earlier terminated in accordance with their terms, be exercised at any time within one hundred eighty (180) days after the date of such Retirement (or such different period as the Committee shall prescribe).

10. Withholding Taxes . The award or other transfer of the Option, and the exercise of the Option, shall be conditioned further on any applicable withholding taxes being paid by you. Such taxes may be paid by one or more of the following methods, at the Company’s sole discretion: (i) deducting the amount so required to be withheld from any other amount (or Shares of Stock issuable upon exercise of the Option) then or thereafter to be provided to you, including by deducting any such amount from your salary or other amounts payable to you, to the maximum extent permitted under law and/or (ii) requiring you to pay to the Company, the amount so required to be withheld as a condition of the issuance, delivery, distribution or release of any Shares of Stock upon exercise of the Option and/or (iii) causing the sale of any Shares of Stock held by you to cover such liability, up to the amount required to satisfy minimum statutory withholding requirements or by the withholding by the Company of, or delivery to the Company of, Shares, including Shares otherwise issuable to you upon exercise of the Option. In addition, you will be required to pay any amount due in excess of the tax withheld and transferred to the tax authorities, pursuant to applicable tax laws, regulations and rules. One or more of these methods may not be available upon exercise of the Option. If the Grantee disposes of Stock acquired upon exercise of this option within two years from the date of grant or one year after such Stock was acquired pursuant to exercise of the Option, the Grantee shall notify the Company in writing of such disposition within ten (10) days thereof.

12. Transferability of Options . Stock Options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than to an immediate family member of Grantee or to a trust or other estate planning entity created for the benefit of the Grantee or one or more members of his immediate family as provided for under the Plan, provided that, in all cases, such transferee executes a written consent to be bound by the terms of this Agreement.

13. Entire Agreement . This Agreement contains all of the understandings between the parties hereto pertaining to the matters referred to herein, and supersedes all undertakings and agreements, whether oral or in writing, previously entered into by them with respect thereto. The Grantee represents that, in executing this Agreement, that the Grantee does not rely and has not relied upon any representation or statement not set forth herein made by the Company with regard to the subject matter of this Agreement or otherwise.

15. Notices . Each notice relating to this Agreement shall be in writing and delivered in person or by certified mail to the proper address. All notices to the Company shall be addressed to it at:

Rafael Holdings, Inc.

520 Broad Street

Newark, NJ 07102

Fax: 973-453-8200

Attention: Options Administrator

All notices to the Grantee or other person or persons then entitled to exercise the Options shall be addressed to the Grantee or such other person or persons at:

[INSERT NAME OF GRANTEE AND ADDRESS]

Anyone to whom a notice may be given under this Agreement may designate a new address by notice to such effect.

17. Governing Law . This Agreement shall be construed and governed in accordance with the laws of the state of Delaware, without regard to principles of conflicts of laws.

19. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by an authorized officer and the Grantee has hereunto set his hand all as of the date first above written.

RAFAEL HOLDINGS, INC.

By:
	Name:	David Polinsky
	Title:	Chief Financial Officer

By:
	Grantee

Exhibit 10.6

RAFAEL HOLDINGS, INC.
2018 EQUITY INCENTIVE PLAN

EMPLOYEE
RESTRICTED STOCK AGREEMENT

«FIRSTNAME» «LASTNAME»

Rafael Holdings, Inc.
520 Broad Street

Newark, NJ 07102

This Agreement confirms the grant of Restricted Stock to you effective as of «RESTRICTED_DATE» (the “Effective Date”) under the Rafael Holdings, Inc. 2018 Equity Incentive Plan, as the same may be amended, modified or restated from time to time (the “Plan”), upon the terms and conditions described herein.

1. Grant of Restricted Stock . Pursuant to action of the Compensation Committee of the Board of Directors, Rafael Holdings, Inc. (the “Company”) hereby grants you under the Plan an aggregate of «RESTRICTED_SHARES_» shares of Restricted Stock of the Company’s Class B Common Stock (the “Restricted Shares”), subject to the terms and conditions hereinafter set forth. This grant is a matter of separate inducement and is not in lieu of salary or other compensation for your services.

2. Closing . The transfer of the Restricted Shares shall occur simultaneously with the execution of this Agreement. Concurrently with the execution of this Agreement, the Company may issue one or more certificates representing the Restricted Shares (which shall be held by the Company pursuant to paragraph 6 below until the applicable Restrictions (as defined in paragraph 3 below) have lapsed).

3. Restrictions . The Restricted Shares are being awarded to you subject to (i) the transfer and forfeiture restrictions set forth in this paragraph 3 below (the “Restrictions”), which shall lapse after the expiration of the vesting periods described in paragraph 4 below, (ii) satisfaction of the tax withholding requirements set forth in paragraph 8 below, and (iii) compliance with the Company’s Insider Trading Policy.

(a) Transfer . You may not directly or indirectly, by operation of law or otherwise, voluntarily or involuntarily, alienate, attach, sell, assign, pledge, encumber, charge or otherwise transfer any of the Restricted Shares still subject to Restrictions, except for such assignments as are allowed under the Plan, provided that, in all cases, such transferee executes a written consent to be bound by the terms of this Agreement.

(b) Forfeiture . Subject to exceptions as may be determined by the Compensation Committee of the Board of Directors, if your continuous employment or consulting relationship with the Company or any majority-owned subsidiary of the Company shall terminate for any reason or you cease for any reason to be a Non-Employee Director of the Company or any majority-owned subsidiary of the Company, all Restricted Shares for which the Restrictions have not lapsed at such time shall be returned to or canceled by the Company, and shall be deemed to have been forfeited by you. Upon a forfeiture of your Restricted Shares, the Company will not be obligated to pay you any consideration whatsoever for the forfeited Restricted Shares.

4. Lapse of Restrictions.

(a) The Restrictions shall lapse to the extent the Restricted Shares have become vested, as follows: «VESTING ».

(b) All of the Restricted Shares shall become vested and the Restrictions shall lapse with respect to any unvested Restricted Shares upon a Change in Control (as defined in the Plan).

(c) To the extent the Restrictions shall have lapsed under this paragraph 4 with respect to any portion of the Restricted Shares, those shares (“Vested Shares”) will be free of the terms and conditions of this Agreement except those terms and conditions contained in paragraph 8 below; provided, however, that such Vested Shares shall remain subject to the terms and conditions of the Company’s Insider Trading Policy.

5. Adjustments . The terms “Restricted Shares” and “Vested Shares” shall include any shares or other securities that you receive or become entitled to receive under the Plan as a result of your ownership of the original Restricted Shares.

6. Custody . Any certificates representing the Restricted Shares (other than Vested Shares) shall be deposited with the Company. The Company is hereby authorized to effectuate the transfer into its name of all certificates representing the Restricted Shares that are forfeited or otherwise transferred to the Company pursuant to either paragraph 3 above or paragraph 8 below.

7. Voting and Other Rights.

(a) Upon the registration of the Restricted Shares in your name, you shall have all of the rights and status as a stockholder of the Company with respect to the Restricted Shares, including the right to vote such shares and to receive dividends or other distributions thereon. All such rights and status as a stockholder of the Company with respect to the Restricted Shares shall terminate if the Restricted Shares are forfeited pursuant to either paragraph 3 above or paragraph 8 below.

(b) The grant of the Restricted Shares to you does not confer upon you any right to continue in the employ of the Company.

8. Withholding Taxes . The award or other transfer of the Restricted Shares, and the lapse of Restrictions on the Restricted Shares, shall be conditioned further on any applicable withholding taxes being paid by you. Such taxes may be paid by one or more of the following methods, at the Company’s sole discretion: (i) deducting the amount so required to be withheld from any other amount (or Restricted Shares issuable) then or thereafter to be provided to you, including by deducting any such amount from your salary or other amounts payable to you, to the maximum extent permitted under law and/or (ii) requiring you to pay to the Company, the amount so required to be withheld as a condition of the issuance, delivery, distribution or release of any Restricted Shares and/or (iii) causing the sale of any Restricted Shares held by you to cover such liability, up to the amount required to satisfy minimum statutory withholding requirements or by the withholding by the Company of, or delivery to the Company of, Restricted Shares, including Restricted Shares otherwise issuable to you. In addition, you will be required to pay any amount due in excess of the tax withheld and transferred to the tax authorities, pursuant to applicable tax laws, regulations and rules. One or more of these methods may not be available upon vesting.

9. Incorporation of Plan Provisions . This Agreement is made pursuant to the Plan and is subject to all the terms and provisions of the Plan as if the same were fully set forth herein. Capitalized terms not otherwise defined herein shall have the meanings set forth for such terms in the Plan. To the extent that there is any inconsistency between this Agreement and the terms of the Plan, the terms of this Agreement shall govern.

10. Stock Power . At the Company’s request, you hereby agree to promptly execute any document, including a stock power endorsed in blank, that is necessary to comply with the terms of this Agreement.

11. Successors . This Agreement shall be binding upon and inure to the benefit of any successor of the Company and your successors, assigns and estate, including your executors, administrators and trustees.

12. Amendment or Modification, Waiver . No provision of this Agreement may be amended or waived unless such amendment or waiver is agreed to in writing and signed by each party hereto. No waiver by either party hereto of any breach by another party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a similar of dissimilar condition or provision at the same time, any prior time or any subsequent time.

13. Notices . Each notice relating to this Agreement shall be in writing and delivered in person or by certified mail or overnight delivery to the proper address. Notices to employees sent via e-mail shall be deemed to satisfy the requirements of this paragraph 13. All notices to the Company shall be addressed to it at:

Rafael Holdings, Inc.

520 Broad Street

Newark, NJ 07102

Fax: 973-453-8200

Attention: Options Administrator

14. Severability . If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision hereof shall be validated and shall be enforced to the fullest extent permitted by law.

15. Governing Law . This Agreement shall be construed and governed in accordance with the laws of the state of Delaware, without regard to principles of conflicts of laws.

16. Headings . All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.

17. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same instrument.

To confirm your acceptance of the foregoing, please sign and date below under “Accepted and Agreed” and return one copy of this Agreement to the Human Resources Department, Rafael Holdings, Inc., 520 Broad Street, Newark, NJ 07102.

RAFAEL HOLDINGS, INC.

By:
	Name:	David Polinsky
	Title:	Chief Financial Officer

ACCEPTED AND AGREED:


Name: «FIRSTNAME» «LASTNAME»

Date:

Exhibit 21.01

DOMESTIC SUBSIDIARIES

Name

Broad-Atlantic Associates, LLC (DE)

Broad-Atlantic Realty, LLC (DE)

CS Pharma Holdings, LLC (f/k/a Mort2Chai Partners, LLC) (DE)

Hillview Avenue Realty, LLC (DE)

Hillview Avenue Realty JV, LLC (DE)

IDT 225 Old NB Road, LLC (DE)

IDT Capital, Inc. (DE)

IDT Capital Real Estate Holdings, LLC (DE)

IDT-Rafael Holdings LLC (DE)

IDT Realty, LLC (NJ)

Exhibit 99.1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14(c) of the

Securities Exchange Act of 1934

Check the appropriate box:

☐	Preliminary Information Statement

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))

☒	Definitive Information Statement

☐	Definitive Additional Materials

RAFAEL HOLDINGS, INC.

(Name of Registrant as Specified In Charter)

Payment of Filing Fee (Check the appropriate box):

☒	No fee required.

☐	Fee computed on table below per Exchange Act Rule 14c-5(g), and 0-11.

	(1)	Title of each class of securities to which transaction applies:

	(2)	Aggregate number of securities to which transaction applies:

	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

	(4)	Proposed maximum aggregate value of transaction:

	(5)	Total fee paid:

☐	Fee paid previously with preliminary materials.

☐	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:

Howard S. Jonas

Chairman of the Board of Directors

	IDT Corporation
	520 Broad Street
	Newark, NJ 07102

March 26, 2018

Dear IDT Corporation Stockholder:

We are pleased to inform you that the Board of Directors of IDT Corporation (“IDT”) has approved the spin-off of Rafael Holdings, Inc. (“Rafael”), a wholly-owned subsidiary of IDT, to IDT’s stockholders. IDT is distributing its entire interest in Rafael to IDT’s stockholders. Following the spin-off, IDT’s business will consist principally of IDT Telecom’s core telecommunications, payment services, and related businesses. Rafael will consist of certain non-core businesses and assets of IDT, specifically real estate and IDT’s pharmaceutical industry holdings.

The spin-off of Rafael is occurring by way of a pro rata distribution of Rafael Class A common stock and Class B common stock to IDT’s stockholders. On the distribution date, which is March 26, 2018, each IDT stockholder will receive one share of Rafael Class A common stock for every two shares of IDT Class A common stock and one share of Rafael Class B common stock for every two shares of IDT Class B common stock, held at 5:00 p.m., New York City time, on March 13, 2018, which was the record date for the spin-off. The distribution of shares of our Class B common stock will be issued in book-entry form and physical certificates of Rafael will be issued only to holders of IDT Class A common stock and, upon request, to holders of IDT Class B common stock.

Stockholder approval of the spin-off is not being sought, and you are not required to take any action to receive your Rafael common stock.

Rafael will focus on the development of its assets – which are not closely related to the operation of IDT’s telecom and payment services businesses. The spin-off will allow both Rafael and IDT to focus on their respective operations and facilitate industry-centric strategic activities, incentive compensation and other operational advantages intended to create value for our stockholders. By spinning-off a separate entity with management focused on the Rafael businesses, we expect to unlock greater value in Rafael than would have been possible had these businesses and assets remained within IDT.

Following the spin-off, you will own shares in both IDT and Rafael. Rafael’s Class B common stock will be listed for trading on the NYSE American LLC (“NYSE American”) under the symbol “RFL”. We expect that listing to commence on March 27, 2018. IDT Class B common stock will continue to trade on the New York Stock Exchange under the symbol “IDT.”

We intend for the spin-off to be tax-free for stockholders. To that end, we have received a favorable legal opinion as to the spin-off’s tax-free status from Goulston & Storrs PC. You should, of course, consult your own tax advisor to determine the spin-off’s implications for your particular tax situation.

The enclosed Information Statement, which is being mailed to all IDT stockholders as of the record date, describes the spin-off in detail and contains important information about Rafael including its financial statements.

We look forward to your continued support as a stockholder of IDT. We remain committed to working on your behalf to build long-term stockholder value.

	Sincerely,

	/s/ Howard S. Jonas
	Howard S. Jonas Chairman of the Board of Directors

520 Broad Street

Newark, New Jersey 07102

Tel: (973) 438-2000

Fax: (973) 438-2001

March 26, 2018

Dear Rafael Stockholder:

It is my pleasure to welcome you as a stockholder of our newly independent company, Rafael Holdings, Inc. We look forward to working with you to build long term shareholder value following our planned spin-off to the stockholders of IDT Corporation.

Rafael will own certain commercial real estate assets and interests in clinical and early stage pharmaceutical companies. The assets will be operated as separate lines of business. The commercial real estate holdings consist of IDT’s headquarters building and its associated public garage in Newark, New Jersey, an office/data center building in Piscataway, New Jersey and a portion of a building in Israel that hosts offices for IDT and its affiliates. The pharmaceutical holdings include debt interests and warrants in Rafael Pharmaceuticals, Inc. (“Rafael Pharmaceuticals”), which is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and a majority equity interest in Lipomedix Pharmaceuticals Ltd., an early stage pharmaceutical development company based in Israel. All of these assets were non-core assets - outside of IDT’s telecom and payment services businesses.

Our interest in Rafael Pharmaceuticals includes convertible notes issued by Rafael Pharmaceuticals, and a warrant (held by us and certain minority holders) to purchase a majority equity stake in Rafael Pharmaceuticals at our discretion in accordance with the terms of the convertible note and the warrant.

As an independent publicly held company, we will have the ability to focus exclusively on the development of our businesses to unlock the potential of our assets, and, in so doing, we expect to create value for our stockholders.

Following the spin-off, you will own shares in both IDT and Rafael. Rafael’s Class B common stock will be listed for trading on the NYSE American LLC (“NYSE American”) under the symbol “RFL” starting March 27, 2018. IDT Class B common stock will continue to trade on the New York Stock Exchange under the symbol “IDT.”

We invite you to learn more about us by reviewing the enclosed Information Statement.

I am excited about the opportunities that the spin-off will create for our company and for our stockholders.

	Sincerely,

	/s/ Howard S. Jonas
	Howard S. Jonas Chief Executive Officer and Chairman of the
	Board of Directors

DATED March 26, 2018

DEFINITIVE INFORMATION STATEMENT

RAFAEL HOLDINGS, INC.

Class A Common Stock

and

Class B Common Stock

(each, par value $0.01 per share)

This Information Statement is being furnished by IDT Corporation, or IDT, to its stockholders in connection with the distribution to holders of its Class A common stock and Class B common stock, each par value $0.01 per share, of all the outstanding shares of Class A common stock and Class B common stock, each par value $0.01 per share, of Rafael Holdings, Inc., or Rafael.

Rafael will own certain commercial real estate assets and interests in clinical and early stage pharmaceutical companies. The assets will be operated as separate lines of business. The commercial real estate holdings consist of IDT’s headquarters building and its associated public garage in Newark, New Jersey, an office/data center building in Piscataway, New Jersey and a portion of a building in Israel that hosts offices for IDT and its affiliates. The pharmaceutical holdings include debt interests and warrants in Rafael Pharmaceuticals, Inc., or Rafael Pharmaceuticals, which is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and a majority equity interest in Lipomedix Pharmaceuticals Ltd., an early stage pharmaceutical development company based in Israel. All of these assets were non-core assets - outside of IDT’s telecom and payment services businesses.

At the time of the spin-off, Rafael will also hold approximately $43.8 million in cash, cash equivalents and liquid marketable securities, $1.2 million in current notes receivable, approximately $4.0 million in interests in hedge funds and approximately $2.0 million in securities in another entity that are not liquid.

The 20-story office building at 520 Broad Street in Newark, New Jersey houses the headquarters of IDT, Genie Energy Ltd. (Genie) and Rafael. There are also leases with three unrelated parties for space in the building that have commenced. The associated public parking garage has in excess of 800 parking spaces and is located across the street from the building.

Rafael Pharmaceuticals is a clinical-stage, oncology-focused, pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells. Rafael Pharmaceuticals’ primary objective is to develop highly selective and effective oncology agents with minimal toxicity to normal cells and tissues. Rafael Pharmaceuticals’ proprietary approach to targeting cancer metabolism has led to two distinct technology platforms: its altered energy metabolism directed, or AEMD compounds, and a lipid nanoemulsion-based drug delivery system.

The spin-off will separate our businesses from the remainder of IDT’s operations and holdings. Following the spin-off, IDT’s business will consist of IDT Telecom’s core telecommunications, payment services, and related businesses.

We believe that the spin-off will more effectively deploy Rafael’s assets and operations and will allow for the realization of greater value to you with the creation of an entity with management and resources that are focused on Rafael’s businesses rather than having those assets remain within IDT. Separating the two entities will allow management of Rafael to design and implement corporate strategies and policies that are based solely on the business characteristics of Rafael and to maintain a sharper focus on execution of its business model. In addition, the spin-off will separate business units with different risk profiles and performance characteristics from one another and allow stockholders to choose to invest or remain invested in a company that meets their investment criteria and goals. Rafael will primarily be engaged in operating its businesses and expanding its business operations and activities. Accordingly, we believe the spin-off will build long-term stockholder value.

Our business will consist of one reportable segment consisting of our real estate assets, and our pharmaceutical industry holdings will be included with all other assets under “all other”.

The spin-off of Rafael is occurring by way of a pro rata distribution of the Rafael Class A common stock and Class B common stock held by IDT to IDT’s stockholders. On the distribution date, which is March 26, 2018, each IDT stockholder will receive one share of Rafael Class A common stock for every two shares of IDT Class A common stock and one share of Rafael Class B common stock for every two shares of IDT Class B common stock, held at 5:00 p.m., New York City time, on March 13, 2018, which was the record date for the spin-off. The distribution of shares of our Class B common stock will be paid in book-entry form and physical stock certificates will be issued only to holders of Class A common stock and, upon request, to holders of Class B common stock.

No stockholder approval of the spin-off is required or sought and you are not required to take any action to receive your Rafael common stock.

We are not asking you for a proxy and you are requested not to send us a proxy. IDT stockholders will not be required to pay for the shares of our Class A common stock or Class B common stock to be received by them in the spin-off or to surrender or exchange shares of IDT Class B common stock or Class A common stock in order to receive our Class A common stock and Class B common stock or to take any other action in connection with the spin-off.

Currently, there is no trading market for our Class A common stock or Class B common stock. Rafael Class B common stock will be listed for trading on NYSE American under the symbol “RFL” starting March 27, 2018. IDT Class B common stock will continue to trade on the NYSE under the symbol “IDT”.

We do not intend to list our Class A common stock for trading on any exchange or trading system.

In reviewing this Information Statement, you should carefully consider the matters described under “Risk Factors” beginning on page 7 for a discussion of certain factors that should be considered by recipients of our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this Information Statement is truthful or complete. Any representation to the contrary is a criminal offense.

This Information Statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

This Information Statement is first being mailed to IDT stockholders on or about March 27, 2018.

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF

EXECUTIVE SUMMARY	5
RISK FACTORS	7
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS	27
THE SPIN-OFF	28
DIVIDEND POLICY	34
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA	35
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	40
BUSINESS	52
MANAGEMENT	67
CORPORATE GOVERNANCE	69
DIRECTOR COMPENSATION	72
EXECUTIVE COMPENSATION	73
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	75
OUR RELATIONSHIP WITH IDT AFTER THE SPIN-OFF AND RELATED PERSON TRANSACTIONS	77
LEGAL PROCEEDINGS	78
DESCRIPTION OF OUR CAPITAL STOCK	79
WHERE YOU CAN FIND MORE INFORMATION	81
INDEX TO COMBINED FINANCIAL STATEMENTS RAFAEL HOLDINGS, INC. AND SUBSIDIARIES	F-1

This Information Statement is being furnished solely to provide information to IDT stockholders who will receive shares of our common stock in the distribution. This Information Statement is not, and is not to be construed as, an inducement or encouragement to buy or sell any of our or IDT’s securities. This Information Statement describes our business, our relationship with IDT, and how the spin-off affects IDT and its stockholders, and provides other information to assist you in evaluating the benefits and risks of holding or disposing of our common stock that you will receive in the distribution. You should be aware of certain risks relating to the spin-off, our business and ownership of our common stock, which are described under the heading “Risk Factors.”

You should not assume that the information contained in this Information Statement is accurate as of any date other than the date set forth on the cover, except as otherwise set forth herein. Changes to the information contained in this Information Statement may occur after that date, and we undertake no obligation to update the information, except in the normal course of our public disclosure obligations and practices.

Unless the context indicates otherwise, all references in this Information Statement:

●

to “Rafael,” “us,” “we,” or “our” are to Rafael Holdings, Inc. and its subsidiaries; and

●

to “IDT” are to IDT Corporation and its subsidiaries, and, with respect to periods following the spin-off, IDT Corporation and its subsidiaries other than Rafael.

The transaction in which we separated from IDT and become a separately-traded public company is referred to in this Information Statement as the “separation,” the “distribution” or the “spin-off.”

	QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF

Q:	Why am I receiving this document?

A:	IDT is delivering this document to you because you were a holder of IDT’s Class A common stock or Class B common stock on the record date for the distribution of shares of our Class A common stock and Class B common stock to IDT’s stockholders. You are entitled to receive one share of our Class A common stock for every two shares of IDT Class A common stock that you held on the record date and one share of our Class B common stock for every two shares of IDT Class B common stock that you held on the record date. No action is required for you to participate in the distribution.

Q:	What is the spin-off?

A:	The spin-off is the overall transaction of separating our company from IDT resulting in Rafael being owned by the public and continuing to own and operate its assets and businesses. The final step of the spin-off is the pro rata distribution by IDT of our Class A common stock and Class B common stock held by IDT to holders of IDT’s Class A common stock and Class B common stock, as set forth in the answer to the previous question. We refer to this last step as the “distribution.” For additional information regarding these transactions, see “The Spin-Off--Manner of Effecting the Spin-Off” beginning on page 30.

Q:	What is Rafael?

A:	Up to the time of the spin-off, we will be a wholly-owned subsidiary of IDT. Following the spin-off, we will be a separate publicly-traded company. Rafael will own certain commercial real estate assets and interests in clinical and early stage pharmaceutical companies. The assets will be operated as separate lines of business. The commercial real estate holdings consist of IDT’s headquarters building and its associated public garage in Newark, New Jersey, an office/data center building in Piscataway, New Jersey and a portion of a building in Israel that hosts offices for IDT and its affiliates. The pharmaceutical holdings include debt interests and warrants in Rafael Pharmaceuticals, Inc., which is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and a majority equity interest in Lipomedix Pharmaceuticals Ltd., an early stage pharmaceutical development company based in Israel. All of these assets were non-core assets outside of IDT’s telecom and payment services businesses. Prior to the spin-off, IDT transferred assets to Rafael such that, at the time of the spin-off, we will have approximately $43.8 million in cash, cash equivalents and liquid marketable securities, $1.2 million in current notes receivable, approximately $4.0 million in interests in hedge funds and approximately $2.0 million in securities in another entity that are not liquid. The cash, cash equivalents and marketable securities figures include $10 million to be held in a controlled entity of which we will effectively be an effective 45% owner, at the time of the spin-off. Our interests in Rafael Pharmaceuticals are held through a 90%-owned non-operating subsidiary, IDT-Rafael Holdings, LLC (“IDT-Rafael Holdings”). IDT-Rafael Holdings holds a warrant (the “Warrant”) to purchase a significant stake in Rafael Pharmaceuticals, as well as other equity and governance rights in Rafael Pharmaceuticals, and owns 50% of CS Pharma Holdings, LLC (“CS Pharma”), which holds the convertible debt and other rights to purchase equity interests in Rafael Pharmaceuticals. Accordingly, we hold an effective 45% stake in the interests held by CS Pharma. As of the date hereof and based on the current shares issued and outstanding of Rafael Pharmaceuticals, we, and our affiliates that hold interests in Rafael Pharmaceuticals would need to pay in the aggregate approximately $71 million to exercise the Warrant in full and approximately $56 million to purchase a 51% controlling stake in Rafael Pharmaceuticals. On an as-converted fully diluted basis (for all convertible securities of Rafael Pharmaceuticals outstanding), we and our affiliates that hold interests in Rafael Pharmaceuticals would need approximately $122 million to exercise the Warrant in full and approximately $98 million to purchase a 51% controlling stake in Rafael Pharmaceuticals as more fully discussed below on page 53. Following that exercise, a portion of our interest in Rafael Pharmaceuticals would continue to be held for the benefit of the other equity holders in IDT-Rafael Holdings and CS Pharma.

Q:	Why is IDT separating our businesses and distributing our stock?

A:	IDT’s Board of Directors and management believe the separation will provide the benefits set forth below under the caption “The Spin-Off – Reasons for the Spin-Off” beginning on page 28, which are being undertaken to unlock greater value for Rafael and thus for stockholders than was the case as part of IDT. Management also considered the other factors set forth below under the caption “The Spin-Off – Other Benefits of the Spin-Off” on page 29.

Q:	Why is the separation of the two companies structured as a spin-off?

A:	IDT’s Board of Directors believes that a spin-off of our shares is a cost-effective and tax efficient way to separate the companies.

Q:	What was the record date for the distribution?

A:	The record date was March 13, 2018 and ownership was determined as of 5:00 p.m., New York City time, on that date. When we refer to the “record date,” we are referring to that time and date.

Q:	When will the spin-off be completed?

A:	Shares of our common stock will be distributed at 11:59 p.m. on March 26, 2018. We refer to this date as the “distribution date.”

Q:	What will be our relationship with IDT after the spin-off?

A:	Following the spin-off, IDT and Rafael each will be independent publicly-traded companies and legally separate entities. We expect to contract with IDT for certain corporate services including administrative, legal, financial, internal audit, corporate tax assistance, and that agreement will cover the allocation of costs for officers and other personnel who dedicate time and effort to both companies. We also lease to IDT 80,000 square feet of office space and two parking spots for each thousand square feet of space leased. The annual base rent is $1,498,400. We will also enter into a separate lease with IDT’s affiliate, Genie, covering 8,631 square feet of space in 520 Broad Street. In addition, we expect to cooperate with IDT with respect to certain matters related to periods prior to the spin-off. Relationships among management of Rafael and IDT are described below under the caption “Our Relationship with IDT After the Spin-Off and Related Person Transactions.”

Q:	What will happen to the listing of IDT’s Class B common stock?

A:	IDT Class B common stock will continue to be traded on the New York Stock Exchange under the symbol “IDT.”

Q:	Will the spin-off affect the market price of my IDT shares?

A:	Possibly. As a result of the spin-off, the trading price of IDT shares immediately following the distribution may be lower than immediately prior to the distribution because the trading price will no longer reflect the value of our assets. In addition, until the market has fully analyzed the value of IDT without these assets, the price of IDT shares may fluctuate more than it has historically. Furthermore, the combined trading prices of IDT’s Class B common stock and, if and when outstanding, our Class B common stock, after the distribution may be higher or lower than the trading price of IDT Class B common stock prior to the distribution. See the Risk Factor entitled “There may not be an active trading market for shares of our common stock and Rafael stockholders may find it difficult to transfer our securities.” on page 23.

Q:	What will IDT stockholders receive in the spin-off?

A:	In the spin-off, IDT stockholders will receive one share of our Class A common stock for every two shares of IDT Class A common stock and one share of our Class B common stock for every two share of IDT Class B common stock that they own as of the record date, and compensation in lieu of fractional shares as set forth below. Immediately after the spin-off, IDT stockholders will still own all of IDT’s businesses and assets, but they will own them as two separate investments rather than as a single investment. Holders of our Class A common stock will be entitled to three votes per share and holders of our Class B common stock will be entitled to one tenth of one vote per share. After the spin-off, the certificates and book-entry interests representing IDT Class A common stock and Class B common stock will represent such stockholders’ interests in the businesses and assets that will continue to be held by IDT following the spin-off, and the certificates and book-entry interests representing our Class A common stock and Class B common stock that IDT stockholders receive in the spin-off will represent their interest in Rafael’s businesses and assets only.

Q:	If an IDT stockholder owns unvested restricted stock or deferred stock units of IDT, what will that stockholder receive in the spin-off?

A :	Holders of unvested restricted stock of IDT will receive, in respect of those unvested restricted shares, one share of our Class B common stock for every two unvested restricted shares of IDT Class B common stock that they own as of the record date for the spin-off. Those particular unvested restricted shares of our stock that you will receive will be restricted under the same terms as the IDT unvested restricted shares in respect of which they were issued. This means that unvested restricted shares of our stock received in the spin-off are subject to forfeiture on the same terms, and their restrictions lapse at the same time, as the corresponding IDT shares. Holders of deferred stock units or DSUs with respect to Class B common stock of IDT will receive, upon vesting, in addition to the shares of IDT Class B common stock, one share of our Class B common stock for every two shares of IDT Class B common stock subject to the DSU. Vesting of the DSUs will not be impacted by the spin-off.

Q:	I own options to purchase shares of IDT stock that have been issued by IDT, what will happen to my IDT options and what will I receive in respect of that option in the spin-off?

A :	In the spin-off, the exercise price of each outstanding option to purchase IDT Class B common stock that was issued by IDT will be proportionately reduced based on the relative trading prices of IDT and Rafael following the spin-off. In addition, holders of options to purchase shares of IDT Class B common stock issued by IDT will receive an option to purchase one share of our Class B common stock for every option to purchase two shares of IDT Class B common stock held as of the distribution date for the spin-off. The granted options will have a term of five years from the distribution date and will have an exercise price based on the trading price of our Class B common stock after the spin-off.

Q:	What does an IDT stockholder need to do now?

A:	IDT stockholders do not need to take any action, although we urge you to read this entire document carefully. The approval of IDT stockholders is not required or sought to effect the spin-off, and IDT stockholders have no appraisal rights in connection with the spin-off. IDT is not seeking a proxy from any stockholders, and you are requested not to send us a proxy. IDT stockholders will not be required to pay anything for our shares distributed in the spin-off or to surrender any shares of IDT Class A common stock or Class B common stock. IDT stockholders should not send in their IDT share certificates. IDT stockholders will automatically receive their shares of our Class A common stock and Class B common stock when the spin-off is executed.

Q:	Are there risks associated with owning Rafael common stock?

A:	Yes. Our business is subject to both general and specific risks relating to our operations. In addition, our spin-off from IDT presents risks relating to our becoming a separately-traded public company as well as risks relating to the nature of the spin-off transaction itself. See “Risk Factors” beginning on page 7.

Q:	What are the U.S. Federal income tax consequences of the spin-off to IDT stockholders?

A:	IDT stockholders should not recognize a gain or loss on the receipt of shares of our common stock in the spin-off other than with respect to fractional shares of our common stock for which cash is received. IDT stockholders should apportion their tax basis in IDT common stock between such IDT common stock and our common stock received in the spin-off in proportion to the relative fair market values of such stock at the time of the spin-off. An IDT stockholder’s holding period for our common stock received in the spin-off should include the period for which that stockholder’s IDT common stock was held. See “The Spin-Off--Material U.S. Federal Income Tax Consequences of the Spin-Off” beginning on page 31. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES OF THE SPIN-OFF TO YOU .

Q:	What if I want to sell my IDT common stock or my Rafael common stock?

A:	You should consult with your own financial advisors, such as your stockbroker, bank or tax advisor. We do not make any recommendations on the purchase, retention or sale of shares of IDT common stock or our common stock. If you decide to sell any shares after the record date, but before the spin-off, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your IDT common stock, or your Rafael common stock after it is distributed, or both.

Q:	Where will I be able to trade shares of Rafael common stock?

A:	There is no current public market for our common stock. Rafael’s Class B common stock will be listed for trading on NYSE American under the symbol “RFL” starting March 27, 2018. Trading in shares of our Class B common stock began on a “when-issued” basis on the day before the record date, and “regular way” trading will begin on March 27, 2018, then “when-issued” trading with respect to our Class B common stock will end.

Q:	Do you intend to pay dividends on your common stock?

A:	We do not anticipate paying dividends on our common stock in the foreseeable future. Our current intent is to retain earnings, if any, to finance the working capital needs and potential expansion of our businesses. The payment of dividends in the future will be at the sole discretion of Rafael’s Board of Directors and will depend on, among other things, Rafael’s results of operations, financial condition, capital expenditures and other cash obligations. We and IDT will be separate entities after the spin-off. As such, our decision to pay (or not pay) dividends in the future will not impact IDT’s decision of whether to pay (or not pay) dividends in the future. See “Dividend Policy” on page 34 for additional information on our dividend policy following the spin-off.

Q:	Where can IDT stockholders get more information?

A:	If you have any questions relating to the distribution, you should contact: IDT Corporation 520 Broad Street Newark, New Jersey 07102 Attention: Bill Ulrey, Vice President–Investor Relations and External Affairs (973) 438-3838

Q:	Who will be the distribution agent for the spin-off?

A:	American Stock Transfer & Trust Company is the distribution agent for the spin-off. The distribution agent can be contacted at: 59 Maiden Lane Plaza Level New York, New York 10038 Telephone (800) 937-5449

EXECUTIVE SUMMARY

Rafael will own the following non-core businesses and assets: (i) commercial real estate including IDT’s headquarters building and associated public garage in Newark, New Jersey, an office/data center building in Piscataway, New Jersey and a portion of a building in Israel that hosts offices for IDT and its affiliates; (ii) interests in Rafael Pharmaceuticals, Inc., or Rafael Pharmaceuticals, which is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and (iii) a majority equity interest in Lipomedix Pharmaceuticals Ltd. or Lipomedix, an early stage pharmaceutical development company based in Israel. All of these assets were non-core assets - outside of IDT’s telecom and payment services businesses.

Summary of the Spin-Off

The following is a summary of the terms of the spin-off. Please see “The Spin-Off” beginning on page 28 for a more detailed description of the matters described below.

Distributing company	IDT Corporation, a Delaware corporation.

Distributed company	Rafael Holdings, Inc., a Delaware corporation. Rafael’s principal executive offices are located at 520 Broad Street, Newark, New Jersey 07102.

Distribution ratio	Each holder of IDT Class A will receive a distribution of one share of Rafael Class A common stock for every two shares of IDT Class A common stock held on the record date and each holder of IDT Class B common stock will receive a distribution of one share of Rafael Class B common stock for every two shares of IDT Class B common stock held on the record date. For additional information regarding how holders of IDT common stock will receive cash in lieu of fractional shares of our common stock, see “The Spin-Off-Manner of Effecting the Spin-Off on page 30.

Securities to be distributed	Approximately 0.8 million shares of Rafael Class A common stock, which will constitute all of the outstanding shares of Rafael Class A common stock immediately after the spin-off (based on approximately 1.6 million shares of IDT Class A common stock that were outstanding on the record date). Approximately 11.63 million shares of Rafael Class B common stock, which will constitute all of the outstanding shares of Rafael Class A common stock immediately after the spin-off (based on approximately 23.27 million shares of IDT Class B common stock that were outstanding on the record date).
Record date	The record date was 5:00 p.m., New York City time, on March 13, 2018. In order to be entitled to receive shares of Rafael Class A common stock and/or Class B common stock in the spin-off, holders of shares of IDT Class A common stock and Class B common stock must have been stockholders as of 5:00 p.m., New York City time, on the record date.

Distribution date	The distribution date will be March 26, 2018.

Relationship between Rafael and IDT after the spin-off	Following the spin-off, IDT and Rafael each will be independent, publicly-traded companies. We entered into a Services Agreement with IDT, to allow us to utilize certain personnel of, and obtain administrative, legal, financial, internal audit, corporate, tax and other services from IDT unless we develop those capabilities internally or arrange for such services from other vendors, and that agreement covers the allocation of costs for officers and other personnel who dedicate time and effort to both companies. We also lease to IDT 80,000 square feet of office space and two parking spots for each thousand square feet of space leased. The annual base rent is $1,498,400. We will also enter into a separate lease with IDT’s affiliate, Genie covering 8,631 square feet of space in 520 Broad Street.

Dividend policy	We do not anticipate paying dividends on our common stock in the foreseeable future. Our current intent is to retain earnings, if any, to finance the potential expansion of our businesses. The payment of dividends in the future will be at the sole discretion of our Board of Directors and will depend on our results of operations, financial condition, capital expenditure plans and other cash obligations.

Payment of intercompany indebtedness	Any intercompany debt between IDT and Rafael as of the distribution date was capitalized to equity prior to the completion of the spin-off and there is currently no indebtedness owing from Rafael to IDT. The only contemplated obligations from Rafael to IDT arising after the spin-off would be obligations that arise under the Separation and Distribution Agreement between Rafael and IDT (the “Separation Agreement”), the Services Agreement between Rafael and IDT (the “Services Agreement”), the Tax Separation Agreement between Rafael and IDT (the “Tax Separation Agreement”), or the Lease.

Corporate Information and Structure

Pursuant to the spin-off, we separated from IDT and become a separate publicly-traded company. The spin-off and our resulting separation from IDT involve the following steps:

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As part of the spin-off, we amended our certificate of incorporation to increase our authorized capital stock and effectuate a stock split. The rights of the various classes of capital stock are described below under the heading “Description of Our Capital Stock” beginning on page 79.

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We entered into the Separation Agreement and Tax Separation Agreement with IDT to effect the separation and provide a framework for our relationship with IDT after the spin-off. For more information on these agreements, see “Our Relationship with IDT After the Spin-Off and Related Person Transactions” beginning on page 77.

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The registration statement on Form 10, as amended under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of which this Information Statement is a part, became effective, and IDT will mail this Information Statement to its stockholders.

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Following the separation, we will operate as a separate publicly-traded company, and Rafael’s Class B common stock will be listed for trading on the NYSE American under the symbol “RFL”. We expect that trading for Rafael’s Class B common stock will commence on a regular way basis on March 27, 2018.

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IDT transferred assets to Rafael such that, at the time of the spin-off, we have approximately $43.8 million in cash, cash equivalents and liquid marketable securities, $1.2 million in current notes receivable, approximately $4.0 million in interests in hedge funds and approximately $2.0 million in securities in another entity that are not liquid. The cash, cash equivalents and marketable securities figures include $10 million to be held at CS Pharma at the time of the spin-off for additional investments in the pharmaceutical industry companies in which we own interests.

For a further explanation of the spin-off, see “The Spin-Off” beginning on page 28.

RISK FACTORS

Our business, operating results or financial condition could be materially adversely affected by any of the following risks associated with any one of our businesses, as well as the other risks highlighted elsewhere in this document, particularly the discussions about competition. The trading price of our common stock could decline due to any of these risks. Note that references to “our”, “us”, “we”, “the Company”, etc. used in each risk factor below refers to the business about which such risk factor is provided.

Risks Related to the Business

Risk Related to our Real Estate Assets

Economic, regulatory, and socio-economic changes that impact the real estate market generally, or that could affect patterns of use of commercial office space, may cause our operating results to suffer and decrease the value of our real estate properties.

If our properties do not generate income sufficient to meet operating expenses, including debt service and capital expenditures, it may cause our operating results to suffer and decrease the value of our real estate properties. The following factors, among others, may adversely affect the operating performance and long- or short-term value of our properties:

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changes in the national, regional, and local economic climates, particularly in markets in which we have our properties;

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local office submarket conditions such as changes in the supply of, or demand for, space in properties similar to those that we own within a particular area;

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changes in the patterns of office use due to technological advances which may make telecommuting more prevalent;

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the attractiveness of our properties to potential tenants;

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changes in interest rates and availability of permanent mortgage funds that may render the sale of a property difficult or unattractive;

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the financial stability of our tenants, including bankruptcies, financial difficulties or lease defaults by our tenants;

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changes in operating costs and expenses, including costs for maintenance, insurance and real estate taxes, and our ability to control rents in light of such changes;

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the need to periodically fund the costs to repair, renovate and re-lease space;

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earthquakes, tornadoes, hurricanes and other natural disasters, civil unrest, terrorist acts or acts of war, which may result in uninsured or underinsured losses;

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changes in, or increased costs of compliance with, governmental regulations, including those governing usage, zoning, the environment and taxes; and

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changes in accounting standards.

Any of these factors may prevent us from maintaining the value of our real estate properties.

The geography of our real estate holdings may make us particularly susceptible to adverse economic developments in the real estate markets of those areas.

In addition to general, regional and national economic conditions, our operating results are impacted by the economic conditions in New Jersey and Israel. Any adverse economic or real estate developments in New Jersey or Israel, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect our property revenue, and hence net operating income.

Our real estate is all commercial property and may leave our profitability vulnerable to a downturn in that sector.

All of our properties are commercial real estate. As a result, we are subject to risks inherent in operating a single type of property. The impact of the downturn in demand for office properties has been more pronounced than if we owned a more fully diversified portfolio of real estate properties.

An increase in real estate taxes may decrease our net operating income from properties.

Generally, from time to time our property taxes may increase as property values or assessment rates change or for other reasons deemed relevant by the assessors. An increase in the assessed valuation of a property for real estate tax purposes results in an increase in the related real estate taxes on that property. Although some tenant leases may permit us to pass through the tax increases to the tenants for payment, there is no assurance that renewal leases or future leases will be negotiated on the same basis and we may be responsible for these increases as well as unleased portions of the properties. Increases not passed through to tenants will adversely affect our net operating income and our cash available to pay distributions, if any.

We may suffer uninsured losses relating to real property or pay excessively expensive premiums for insurance coverage.

Although we attempt to ensure that all of our properties are adequately insured to cover casualty losses, there are certain types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters, which are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with potential terrorist acts could sharply increase the premiums we pay for coverage against property and casualty claims. Mortgage lenders generally insist that specific coverage against terrorism be purchased by commercial property owners as a condition for providing mortgage, bridge or mezzanine loans. We cannot be certain that this coverage will continue to be available, or available at reasonable cost, if at all, which could inhibit our ability to finance or refinance our properties. We may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We cannot assure you that we will have adequate coverage for any losses we may suffer. In addition, other than any capital reserve we may establish, we will have limited sources of funding to repair or reconstruct any uninsured damaged property, and we cannot assure you that those reserves will be sufficient.

We are dependent on IDT, Genie and their other affiliates for a large portion of our revenue and the loss of, or a significant reduction in revenue from IDT and its affiliates would reduce our revenue and adversely impact our results of operations.

We have generated majority of our revenue from IDT and its affiliates. In the six months ended January 31, 2018, IDT and its affiliates accounted for approximately 48% of our revenue and in the Fiscal year ended July 31, 2017, IDT and its affiliates accounted for approximately 65% of our revenue. This decrease in concentration was primarily the result of a decrease in revenues from IDT and its affiliates due to modification of the terms of the leases. The loss of, or a significant reduction in, revenue from IDT and its affiliates would materially and adversely affect our revenue and results of operations.

The cost of complying with environmental and other governmental laws and regulations may adversely affect us.

All real property and the operations conducted on real property are subject to federal, state and local laws and regulations (including those of foreign jurisdictions) relating to environmental protection and human health and safety. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, and the remediation of contamination associated with disposals. We also are required to comply with various local, state and federal fire, health, life-safety and similar regulations. Some of these laws and regulations may impose joint and several liability on tenants or owners for the costs of investigating or remediating contaminated properties. These laws and regulations often impose liability whether or not the owner knew of, or was responsible for, the presence of the hazardous or toxic substances. The cost of removing or remediating could be substantial. In addition, the presence of these substances, or the failure to properly remediate these substances, may adversely affect our ability to sell or rent a property or to use the property as collateral for borrowing.

Environmental laws and regulations also may impose restrictions on the manner in which properties may be used or businesses may be operated, and these restrictions may require substantial expenditures by us. Environmental laws and regulations provide for sanctions in the event of noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Third parties may seek recovery from owners of real properties for personal injury or property damage associated with exposure to released hazardous substances. Compliance with new or more stringent laws or regulations or stricter interpretations of existing laws may require material expenditures by us. For example, various federal, regional and state laws and regulations have been implemented or are under consideration to mitigate the effects of climate change caused by greenhouse gas emissions. Among other things, “green” building codes may seek to reduce emissions through the imposition of standards for design, construction materials, water and energy usage and efficiency, and waste management. We are not aware of any such existing requirements that we believe will have a material impact on our current operations. However, future requirements could increase the costs of maintaining or improving our existing properties or developing new properties.

Our costs associated with complying with the Americans with Disabilities Act may affect cash available for our operations or to pay distributions or make additional investments.

Our real properties are generally subject to the Americans with Disabilities Act of 1990, as amended. Under this Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The Act has separate compliance requirements for “public accommodations” and “commercial facilities” generally requiring that buildings and services be made accessible and available to people with disabilities. The Act’s requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages. We attempt to acquire properties that comply with the Act or any relevant law or regulation of a foreign jurisdiction or place the burden on the seller or other third-party, such as a tenant, to ensure compliance with those laws or regulations. However, we cannot assure you that we will be able to acquire properties or allocate responsibilities in this manner.

Risks Related to our Pharmaceutical Industry Investments

Our pharmaceutical investments may not be able to develop any medicines of commercial value.

Any drug that companies develop in preclinical and clinical studies, may not be able to succeed in demonstrating safety and efficacy of the product candidate in human clinical trials. Screening for and identifying product candidates may not result in the discovery and development of commercially viable medicines to treat cancer and other illnesses the failure of which would harm to our pharmaceutical investments.

The pharmaceutical investment companies may not be successful in their efforts to identify or discover potential product candidates.

The key elements of Rafael Pharmaceuticals’ and Lipomedix’s (collectively, referred to as “the Pharmaceutical Investment Companies”) strategy are for Rafael Pharmaceuticals to identify and test compounds that target alterations found in the enzymes of cancer cells related to its production of energy widely known as cancer metabolism, and for Lipomedix to find drug carrier systems such as liposomes or other nanoparticles to deliver effectively and safely powerful anticancer compounds for which minimizing toxicity is critical. A significant portion of the research that the Pharmaceutical Investment Companies are conducting involves new compounds and drug discovery methods and suitable drug delivery systems, including the Pharmaceutical Investment Companies’ proprietary technology. The drug discovery that the Pharmaceutical Investment Companies are conducting using the Pharmaceutical Investment Companies’ proprietary technology may not be successful in identifying compounds that are useful in treating cancer. The Pharmaceutical Investment Companies’ research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons, including:

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the research methodology used may not be successful in identifying appropriate biomarkers, potential product candidates or effective carrier systems to confer a drug delivery advantage.

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potential product candidates may, on further study, be shown to not be effective, have harmful side effects or other characteristics that indicate that they are unlikely to be medicines that will receive marketing approval and achieve market acceptance.

Research programs to identify new product candidates require substantial technical, financial and human resources. The Pharmaceutical Investment Companies may choose to focus the Pharmaceutical Investment Companies’ efforts and resources on a potential product candidate that ultimately proves to be unsuccessful.

If the Pharmaceutical Investment Companies are unable to identify suitable compounds for preclinical and clinical development, the Pharmaceutical Investment Companies will not be able to obtain product revenue in future periods, which likely would result in significant harm to the Pharmaceutical Investment Companies’ financial position and adversely impact the Pharmaceutical Investment Companies’ valuation.

If clinical trials of the Pharmaceutical Investment Companies’ product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, the Pharmaceutical Investment Companies may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of the Pharmaceutical Investment Companies’ product candidates.

The Pharmaceutical Investment Companies, and any collaborators, are not permitted to commercialize, market, promote or sell any product candidate in the United States without obtaining marketing approval from the United States Food and Drug Administration (FDA). Foreign regulatory authorities, such as the European Medicines Agency, or the EMA, impose similar requirements. The Pharmaceutical Investment Companies have not previously submitted a new drug application, or NDA, to the FDA or similar drug approval filings to comparable foreign regulatory authorities for any of the Pharmaceutical Investment Companies’ product candidates. Before obtaining marketing approval from regulatory authorities for the sale of the Pharmaceutical Investment Companies’ product candidates, the Pharmaceutical Investment Companies must conduct extensive clinical trials to demonstrate the safety and efficacy of the Pharmaceutical Investment Companies’ lead product candidates in humans as well as extensive preclinical development followed by extensive human clinical trials for any future candidates.

Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. The Pharmaceutical Investment Companies cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. The clinical development of the Pharmaceutical Investment Companies’ product candidates is susceptible to the risk of failure inherent at any stage of product development, including failure to demonstrate efficacy in a clinical trial or across a broad population of patients, the occurrence of adverse events that are severe or medically or commercially unacceptable, failure to comply with protocols or applicable regulatory requirements and determination by the FDA or any comparable foreign regulatory authority that a product candidate may not continue development or is not approvable. It is possible that even if one or more of the Pharmaceutical Investment Companies’ product candidates has a beneficial effect, that effect will not be detected during clinical evaluation as a result of one or more of a variety of factors, including the size, duration, design, measurements, conduct or analysis of the Pharmaceutical Investment Companies’ clinical trials. Conversely, as a result of the same factors, the Pharmaceutical Investment Companies’ clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any. Similarly, in the Pharmaceutical Investment Companies’ clinical trials the Pharmaceutical Investment Companies may fail to detect toxicity of or intolerability caused by the Pharmaceutical Investment Companies’ product candidates, or mistakenly believe that the Pharmaceutical Investment Companies’ product candidates are toxic or not well tolerated when that is not in fact the case.

Any inability to successfully complete preclinical and clinical development could result in additional costs to the Pharmaceutical Investment Companies, or any future collaborators, and impair the Pharmaceutical Investment Companies’ ability to generate revenue from product sales, regulatory and commercialization milestones and royalties. Moreover, if the Pharmaceutical Investment Companies or the Pharmaceutical Investment Companies’ collaborators are required to conduct additional clinical trials or other testing of the Pharmaceutical Investment Companies’ product candidates beyond those that the Pharmaceutical Investment Companies currently contemplate, if the Pharmaceutical Investment Companies or the Pharmaceutical Investment Companies’ collaborators are unable to successfully complete clinical trials of the Pharmaceutical Investment Companies’ product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, the Pharmaceutical Investment Companies or the Pharmaceutical Investment Companies’ collaborators may:

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be delayed in obtaining marketing approval for the Pharmaceutical Investment Companies’ product candidates;

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not obtain marketing approval at all;

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obtain approval for indications or patient populations that are not as broad as intended or desired;

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obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed warnings;

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be subject to additional post-marketing testing requirements; or

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have the medicine removed from the market after obtaining marketing approval.

The Pharmaceutical Investment Companies’ failure to successfully complete clinical trials of the Pharmaceutical Investment Companies’ product candidates and to demonstrate the efficacy and safety necessary to obtain regulatory approval to market any of the Pharmaceutical Investment Companies’ product candidates would significantly harm our investment.

If the Pharmaceutical Investment Companies, or any collaborators, experience any of a number of possible unforeseen events in connection with clinical trials of the Pharmaceutical Investment Companies’ product candidates, potential clinical development, marketing approval or commercialization of the Pharmaceutical Investment Companies’ product candidates could be delayed or prevented.

The Pharmaceutical Investment Companies or their collaborators may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent the Pharmaceutical Investment Companies’ ability to receive marketing approval or commercialize the Pharmaceutical Investment Companies’ product candidates, including:

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regulators or institutional review boards may not authorize the Pharmaceutical Investment Companies or their collaborators or investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

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the Pharmaceutical Investment Companies or their collaborators may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;

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clinical trials of the Pharmaceutical Investment Companies’ product candidates may produce negative or inconclusive results, and the Pharmaceutical Investment Companies or their collaborators may decide, or regulators may require them, to conduct additional clinical trials or abandon product development programs;

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the number of patients required for clinical trials of the Pharmaceutical Investment Companies’ product candidates may be larger than they anticipate; enrollment in these clinical trials, which may be particularly challenging for some of the orphan diseases the Pharmaceutical Investment Companies target in their programs, may be slower than the Pharmaceutical Investment Companies anticipate; or participants may drop out of these clinical trials at a higher rate than they anticipate;

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third-party contractors used by the Pharmaceutical Investment Companies’ or their collaborators may fail to comply with regulatory requirements or meet their contractual obligations in a timely manner, or at all;

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the Pharmaceutical Investment Companies or their collaborators might have to suspend or terminate clinical trials of the Pharmaceutical Investment Companies’ product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks;

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regulators, institutional review boards, or the data safety monitoring board for such trials may require that the Pharmaceutical Investment Companies, their collaborators or their investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

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the cost of clinical trials of the Pharmaceutical Investment Companies’ product candidates may be greater than anticipated;

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the supply or quality of the Pharmaceutical Investment Companies’ product candidates or other materials necessary to conduct clinical trials of the Pharmaceutical Investment Companies’ product candidates may be insufficient or inadequate;

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the Pharmaceutical Investment Companies’ product candidates may have undesirable side effects or other unexpected characteristics, causing the Pharmaceutical Investment Companies, their collaborators or their investigators, regulators or institutional review boards to suspend or terminate the trials; and

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the Pharmaceutical Investment Companies’ may be unable to meet the endpoints established by the FDA for approval.

Product development costs for the Pharmaceutical Investment Companies, or any collaborators, will increase if the Pharmaceutical Investment Companies, or they, experience delays in testing or pursuing marketing approvals and the Pharmaceutical Investment Companies may be required to obtain additional funds to complete clinical trials and prepare for possible commercialization of the Pharmaceutical Investment Companies’ product candidates. The Pharmaceutical Investment Companies do not know whether any preclinical tests or clinical trials will begin as planned, will need to be restructured or will be completed on schedule or at all. Significant preclinical study or clinical trial delays also could shorten any periods during which the Pharmaceutical Investment Companies, or any future collaborators, may have the exclusive right to commercialize the Pharmaceutical Investment Companies’ product candidates or allow the Pharmaceutical Investment Companies’ competitors, or the competitors of any collaborators, to bring products to market before the Pharmaceutical Investment Companies, or any collaborators do and impair the Pharmaceutical Investment Companies’ ability, or the ability of any collaborators, to successfully commercialize the Pharmaceutical Investment Companies’ product candidates and may harm the Pharmaceutical Investment Companies’ business and results of operations. In addition, many of the factors that lead to clinical trial delays may ultimately lead to the denial of marketing approval of any of the Pharmaceutical Investment Companies’ product candidates. The occurrence of any of these events would negatively impact the value of our investments.

If the Pharmaceutical Investment Companies experience delays or difficulties in the enrollment of patients in clinical trials, the Pharmaceutical Investment Companies’ receipt of necessary regulatory approvals could be delayed or prevented.

The Pharmaceutical Investment Companies or their collaborators may not be able to initiate or continue clinical trials for the Pharmaceutical Investment Companies’ product candidates if the Pharmaceutical Investment Companies or they are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or analogous regulatory authorities outside the United States. Enrollment may be particularly challenging for some of the orphan diseases the Pharmaceutical Investment Companies target in the Pharmaceutical Investment Companies’ programs. In addition, some of the Pharmaceutical Investment Companies’ competitors may have ongoing clinical trials for product candidates that would treat the same indications as the Pharmaceutical Investment Companies’ product candidates, and patients who would otherwise be eligible for the Pharmaceutical Investment Companies’ clinical trials may instead enroll in clinical trials of the Pharmaceutical Investment Companies’ competitors’ product candidates.

Patient enrollment is also affected by other factors including:

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severity of the disease under investigation;

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availability and efficacy of approved medications for the disease under investigation;

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eligibility criteria for the study in question;

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perceived risks and benefits of the product candidate under study;

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efforts to facilitate timely enrollment in clinical trials;

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patient referral practices of physicians;

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the ability to monitor patients adequately during and after treatment; and

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proximity and availability of clinical trial sites for prospective patients.

Rafael Pharmaceuticals focuses its development activities on patients with rarer or more difficult to treat forms of cancer. As a result, the potential patient populations for Rafael Pharmaceuticals’ clinical trials are narrowed, and Rafael Pharmaceuticals may experience difficulties in identifying and enrolling a sufficient number of patients in Rafael Pharmaceuticals’ clinical trials.

In addition, other companies are conducting clinical trials, or may in the future conduct clinical trials, which may have similar eligibility criteria as the Pharmaceutical Investment Companies’ current or future clinical trials and which could implicate enrollment of patients and selection of clinical trial sites.

Furthermore, the Pharmaceutical Investment Companies rely on contract research organizations, or CROs, and clinical trial sites to ensure the proper and timely conduct of the Pharmaceutical Investment Companies’ clinical trials and while the Pharmaceutical Investment Companies have agreements governing their committed activities, the Pharmaceutical Investment Companies have limited influence over their actual performance. The Pharmaceutical Investment Companies’ or their collaborators’ inability to enroll a sufficient number of patients for the Pharmaceutical Investment Companies’ clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays in the Pharmaceutical Investment Companies’ clinical trials may result in increased development costs for the Pharmaceutical Investment Companies’ product candidates, which would cause the value of the Pharmaceutical Investment Companies’ to decline and limit the Pharmaceutical Investment Companies’ ability to obtain additional financing. The occurrence of any of these events would negatively impact the value of our investments.

If serious adverse side effects or unexpected characteristics are identified during the development of the Pharmaceutical Investment Companies’ product candidates, the Pharmaceutical Investment Companies may need to abandon or limit the Pharmaceutical Investment Companies’ development of some of the Pharmaceutical Investment Companies’ product candidates.

All of the Pharmaceutical Investment Companies’ lead product candidates are still in clinical stage development and their risk of failure is high. It is impossible to predict when or if any of the Pharmaceutical Investment Companies’ product candidates will prove effective or safe in humans or will receive marketing approval. Adverse events or undesirable side effects caused by, or other unexpected properties of, the Pharmaceutical Investment Companies’ product candidates could cause us, any future collaborators, an institutional review board or regulatory authorities to interrupt, delay or halt clinical trials of one or more of the Pharmaceutical Investment Companies’ product candidates and could result in a more restrictive label, or the delay or denial of marketing approval by the FDA or comparable foreign regulatory authorities. If adverse effects were to arise in patients being treated with any of the Pharmaceutical Investment Companies’ product candidates, it could require them to halt, delay or interrupt clinical trials of such product candidate or adversely affect the Pharmaceutical Investment Companies’ ability to obtain requisite approvals to advance the development and commercialization of such product candidate. If any of the Pharmaceutical Investment Companies’ product candidates is associated with adverse events or undesirable side effects or has properties that are unexpected, the Pharmaceutical Investment Companies, or any future collaborators, may need to abandon development or limit development of that product candidate to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially show promise in earlier stage testing for treating cancer, or other diseases have later been found to cause side effects that prevented further development of the compound. If the Pharmaceutical Investment Companies are unable to develop any of their product candidates, it would negatively impact the value of our investments.

Results of preclinical studies and early clinical trials may not be predictive of results of future clinical trials.

The outcome of preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of clinical trials do not necessarily predict success in future clinical trials. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in earlier development, and the Pharmaceutical Investment Companies could face similar setbacks. The design of a clinical trial can determine whether its results will support approval of a product and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. The Pharmaceutical Investment Companies have limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support marketing approval. In addition, preclinical and clinical data are often susceptible to varying interpretations and analyses. Many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for the product candidates. Even if the Pharmaceutical Investment Companies, or future collaborators, believe that the results of clinical trials for the Pharmaceutical Investment Companies’ product candidates warrant marketing approval, the FDA or comparable foreign regulatory authorities may disagree and may not grant marketing approval of the Pharmaceutical Investment Companies’ product candidates.

In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the dosing regimen and other clinical trial protocols and the rate of dropout among clinical trial participants. If the Pharmaceutical Investment Companies fail to receive positive results in clinical trials of the Pharmaceutical Investment Companies’ product candidates, the development timeline and regulatory approval and commercialization prospects for the Pharmaceutical Investment Companies’ most advanced product candidates, and, correspondingly, the Pharmaceutical Investment Companies’ business and financial prospects would be negatively impacted.

The Pharmaceutical Investment Companies may expend their limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because the Pharmaceutical Investment Companies have limited financial and managerial resources, their focus on research programs and product candidates that they may or will identify for specific indications. As a result, the Pharmaceutical Investment Companies may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. The Pharmaceutical Investment Companies’ resource allocation decisions may cause them to fail to capitalize on viable commercial medicines or profitable market opportunities. The Pharmaceutical Investment Companies’ spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable medicines. If the Pharmaceutical Investment Companies do not accurately evaluate the commercial potential or target market for a particular product candidate, they may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for them to retain sole development and commercialization rights to such product candidate.

The Pharmaceutical Investment Companies have never obtained marketing approval for a product candidate and may be unable to obtain, or may be delayed in obtaining, marketing approval for any of their product candidates.

The Pharmaceutical Investment Companies have never obtained marketing approval for a product candidate. It is possible that the FDA or foreign regulatory authorities may refuse to accept for substantive review, any NDAs that the Pharmaceutical Investment Companies submit or may conclude after review of the Pharmaceutical Investment Companies’ data that the relevant application is insufficient to obtain marketing approval of the relevant product candidates. If the FDA, or foreign regulatory authorities, does not accept or approve the Pharmaceutical Investment Companies’ NDAs for any of their product candidates, those authorities may require that the Pharmaceutical Investment Companies conduct additional clinical trials, preclinical studies or manufacturing validation studies and submit that data before they will reconsider the applications. Depending on the extent of these or any other FDA-required trials or studies, approval of any NDA or application that the Pharmaceutical Investment Companies submit may be delayed by several years, or may require them to expend more resources than they have available. It is also possible that additional trials or studies, if performed and completed, may not be considered sufficient by the FDA to approve the Pharmaceutical Investment Companies’ NDAs. Any delay in obtaining, or an inability to obtain, marketing approvals would prevent commercialization of the Pharmaceutical Investment Companies’ product candidates, generating revenue and achieving and sustaining profitability. If any of these outcomes occur, the Pharmaceutical Investment Companies may be forced to abandon their development efforts, which could significantly harm the Pharmaceutical Investment Companies’ business and the value of our investments.

Even if any of the Pharmaceutical Investment Companies’ product candidates receives marketing approval, the Pharmaceutical Investment Companies or others may later discover that the product is less effective than previously believed or causes undesirable side effects that were not previously identified, which could compromise the Pharmaceutical Investment Companies’ ability, or that of any future collaborators, to market the product.

Clinical trials of the Pharmaceutical Investment Companies’ product candidates are conducted in carefully defined sets of patients who have agreed to enter into clinical trials. Consequently, it is possible that the Pharmaceutical Investment Companies’ clinical trials, or those of any future collaborator, may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable side effects. If, following approval of a product candidate, the Pharmaceutical Investment Companies, or others, discover that the product is less effective than previously believed or causes undesirable side effects that were not previously identified, any of the following adverse events could occur:

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regulatory authorities may withdraw their approval of the product or seize the product;

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the Pharmaceutical Investment Companies, or any future collaborators, may be required to recall the product, change the way the product is administered or conduct additional clinical trials;

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additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the particular product;

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the Pharmaceutical Investment Companies may be subject to government fines, seizures, injunctions or the imposition of civil or criminal penalties;

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regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;

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the Pharmaceutical Investment Companies, or any future collaborators, may be required to create a Medication Guide outlining the risks of the previously unidentified side effects for distribution to patients;

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the Pharmaceutical Investment Companies, or any future collaborators, could be sued and held liable for harm caused to patients;

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the product may become less competitive; and

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the Pharmaceutical Investment Companies’ reputation may suffer.

Should any of these events occur, the value of our pharmaceutical investments may be negatively impacted.

Even if any of the Pharmaceutical Investment Companies’ product candidates receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community necessary for commercial success.

If any of the Pharmaceutical Investment Companies’ product candidates receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, healthcare payors and others in the medical community. For example, current cancer treatments like chemotherapy and radiation therapy are well established in the medical community, and doctors may continue to rely on these treatments. If the Pharmaceutical Investment Companies’ product candidates do not achieve an adequate level of acceptance, the Pharmaceutical Investment Companies may not generate significant product revenue and may not become profitable. The degree of market acceptance of the Pharmaceutical Investment Companies’ product candidates, if approved for commercial sale, will depend on a number of factors, including:

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efficacy and potential advantages compared to alternative treatments;

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the approval, availability, market acceptance and reimbursement for the companion diagnostic;

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the ability to offer the Pharmaceutical Investment Companies’ medicines for sale at competitive prices;

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convenience and ease of administration compared to alternative treatments;

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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

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ensuring uninterrupted product supply;

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the strength of marketing and distribution support;

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sufficient third-party coverage or reimbursement; and

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the prevalence and severity of any side effects.

The failure to achieve market acceptance could significantly harm the Pharmaceutical Investment Companies’ business and the value of our investments.

If, in the future, the Pharmaceutical Investment Companies are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market the Pharmaceutical Investment Companies’ product candidates, the Pharmaceutical Investment Companies may not be successful in commercializing their product candidates if and when they are approved.

The Pharmaceutical Investment Companies do not have a sales or marketing infrastructure and have little experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for any approved medicine for which the Pharmaceutical Investment Companies retain sales and marketing responsibilities, they must either develop a sales and marketing organization or outsource these functions to other third parties. In the future, the Pharmaceutical Investment Companies may choose to build a focused sales and marketing infrastructure to sell, or participate in sales activities with their collaborators for, some of the their product candidates if and when they are approved.

There are risks involved with both establishing the Pharmaceutical Investment Companies’ own sales and marketing capabilities and entering into arrangements with third parties to perform these services. For example, recruiting and training a sales force is expensive and time consuming and could delay any product launch. If the commercial launch of a product candidate for which the Pharmaceutical Investment Companies recruit a sales force and establishes marketing capabilities is delayed or does not occur for any reason, they would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if the Pharmaceutical Investment Companies cannot retain or reposition their sales and marketing personnel.

Factors that may inhibit the Pharmaceutical Investment Companies’ efforts to commercialize their medicines on their own include:

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the Pharmaceutical Investment Companies’ inability to recruit and retain adequate numbers of effective sales and marketing personnel;

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the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future medicines;

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the lack of complementary medicines to be offered by sales personnel, which may put them at a competitive disadvantage relative to companies with more extensive product lines; and

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unforeseen costs and expenses associated with creating an independent sales and marketing organization.

If the Pharmaceutical Investment Companies enter into arrangements with third parties to perform sales, marketing and distribution services, their product revenue or the profitability of product revenue to them are likely to be lower than if the Pharmaceutical Investment Companies were to market and sell any medicines that they develop themselves. In addition, the Pharmaceutical Investment Companies may not be successful in entering into arrangements with third parties to sell and market their product candidates or may be unable to do so on terms that are favorable. The Pharmaceutical Investment Companies likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market the Pharmaceutical Investment Companies’ medicines effectively. If the Pharmaceutical Investment Companies do not establish sales and marketing capabilities successfully, either on their own or in collaboration with third parties, the Pharmaceutical Investment Companies will not be successful in commercializing their product candidates.

The Pharmaceutical Investment Companies face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than they do.

The development and commercialization of new drug products is highly competitive. The Pharmaceutical Investment Companies face competition with respect to their current product candidates, and the Pharmaceutical Investment Companies and their collaborators will face competition with respect to any product candidates that they or their collaborators may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which the Pharmaceutical Investment Companies are developing their product candidates, such as pancreatic cancer, and, acute myelogenous leukemia amongst others. Some of these competitive products and therapies are based on scientific approaches that are similar to the Pharmaceutical Investment Companies’ approach. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

The Pharmaceutical Investment Companies are developing most of their initial product candidates for the treatment of cancer. There are a variety of available drug therapies marketed for cancer. In many cases, these drugs are administered in combination to enhance efficacy, and cancer drugs are frequently prescribed off-label by healthcare professionals. Some of the currently approved drug therapies are branded and subject to patent protection, and others are available on a generic basis. Many of these approved drugs are well established therapies and are widely accepted by physicians, patients and third-party payors. Insurers and other third-party payors may also encourage the use of generic products. The Pharmaceutical Investment Companies expect that if their product candidates are approved, they will be priced at a significant premium over competitive generic products. This may make it difficult for them to achieve their business strategy of using their product candidates in combination with existing therapies or replacing existing therapies with their product candidates.

Rafael Pharmaceutical is focused on an area known as cancer metabolism and there are also a number of product candidates in preclinical or clinical development by third parties to treat cancer by targeting cancer metabolism. These companies include large pharmaceutical companies, including, but not limited to, AstraZeneca plc, Eli Lilly and Company, Roche Holdings Inc. and its subsidiary Genentech, Inc., GlaxoSmithKline plc, Merck & Co., Novartis, Pfizer, Inc., and Genzyme, a Sanofi company. There are also biotechnology companies of various sizes that are developing therapies to target cancer metabolism, including, but not limited to, 3V Biosciences, Threshold Pharmaceuticals, Eleison Pharmaceuticals, Forma Therapeutics, Alexion Pharmaceuticals, Inc., BioMarin Pharmaceutical Inc., Calithera Biosciences, Inc., Agios Pharmaceuticals, Inc., Forma Therapeutics Holdings LLC, Shire Biochem Inc., Raze Therapeutics, Inc. and Selvita S.A.

Lipomedix faces competition from (i) other liposome and nanomedicine products in solid tumors (for example, Doxil (Janssen), Onivyde (Ipsen), Abraxane (Celgene)); (ii) other non-liposomal chemotherapeutic drugs in gastrointestinal malignancies recently developed or under development (for example, TAS-102 (Taiho) in colorectal cancer); (iii) biological therapy (including small molecule kinase inhibitors) recently developed or under development for colon cancer (for example Regorafenib (Bayer)); and (iv) immunotherapy approaches in gastrointestinal malignancies (for example Merck USA), antibodies and/or vaccinations; and (v) other large companies such as Roche.

The Pharmaceutical Investment Companies’ competitors may develop products that are more effective, safer, more convenient or less costly than any that they are developing or that would render their product candidates obsolete or non-competitive. In addition, the Pharmaceutical Investment Companies’ competitors may discover biomarkers that more efficiently measure metabolic pathways than the Pharmaceutical Investment Companies’ methods, which may give them a competitive advantage in developing potential products. The Pharmaceutical Investment Companies’ competitors may also obtain marketing approval from the FDA or other regulatory authorities for their products more rapidly than the Pharmaceutical Investment Companies may obtain approval, which could result in the Pharmaceutical Investment Companies’ competitors establishing a strong market position before they are able to enter the market.

Many of the Pharmaceutical Investment Companies’ competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than the Pharmaceutical Investment Companies do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of the Pharmaceutical Investment Companies’ competitors. Smaller and other clinical stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with the Pharmaceutical Investment Companies’ in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, the Pharmaceutical Investment Companies’ programs.

Even if the Pharmaceutical Investment Companies or their collaborators are able to commercialize any product candidates, such products may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which would harm the Pharmaceutical Investment Companies’ business.

The commercial success of the Pharmaceutical Investment Companies’ product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of the Pharmaceutical Investment Companies’ product candidates will be paid by third-party payors, including government health administration authorities and private health coverage insurers. If coverage and reimbursement is not available, or reimbursement is available only to limited levels, the Pharmaceutical Investment Companies, or any future collaborators, may not be able to successfully commercialize the Pharmaceutical Investment Companies’ product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us, or any future collaborators, to establish or maintain pricing sufficient to realize a sufficient return on the Pharmaceutical Investment Companies’ or their investments. In the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors and coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require the Pharmaceutical Investment Companies’ to provide scientific and clinical support for the use of their products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved drugs. Marketing approvals, pricing and reimbursement for new drug products vary widely from country to country. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, the Pharmaceutical Investment Companies, or any future collaborators, might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay commercial launch of the product, possibly for lengthy time periods, which may negatively impact the revenue the Pharmaceutical Investment Companies are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder the Pharmaceutical Investment Companies’ ability or the ability of any future collaborators to recoup the Pharmaceutical Investment Companies’ or their investment in one or more product candidates, even if the Pharmaceutical Investment Companies’ product candidates obtain marketing approval.

Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Therefore, the Pharmaceutical Investment Companies’ ability, and the ability of any future collaborators, to commercialize any of the Pharmaceutical Investment Companies’ product candidates will depend in part on the extent to which coverage and reimbursement for these products and related treatments will be available from third-party payors. Third-party payors decide which medications they will cover and establish reimbursement levels. The healthcare industry is acutely focused on cost containment, both in the United States and elsewhere. Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, which could affect the Pharmaceutical Investment Companies’ ability or that of any future collaborators to sell the Pharmaceutical Investment Companies’ product candidates profitably. These payors may not view the Pharmaceutical Investment Companies’ products, if any, as cost-effective, and coverage and reimbursement may not be available to the Pharmaceutical Investment Companies’ customers, or those of any future collaborators, or may not be sufficient to allow the Pharmaceutical Investment Companies’ products, if any, to be marketed on a competitive basis. Cost-control initiatives could cause us, or any future collaborators, to decrease the price the Pharmaceutical Investment Companies, or they, might establish for products, which could result in lower than anticipated product revenue. If the prices for the Pharmaceutical Investment Companies’ products, if any, decrease or if governmental and other third-party payors do not provide coverage or adequate reimbursement, the Pharmaceutical Investment Companies’ prospects for revenue and profitability will suffer.

There may also be delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the indications for which the drug is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers the Pharmaceutical Investment Companies’ costs, including research, development, manufacture, sale and distribution. Reimbursement rates may vary, by way of example, according to the use of the product and the clinical setting in which it is used. Reimbursement rates may also be based on reimbursement levels already set for lower cost drugs or may be incorporated into existing payments for other services.

In addition, increasingly, third-party payors are requiring higher levels of evidence of the benefits and clinical outcomes of new technologies and are challenging the prices charged. The Pharmaceutical Investment Companies cannot be sure that coverage will be available for any product candidate that they, or any future collaborator, commercializes and, if available, that the reimbursement rates will be adequate. Further, the net reimbursement for drug products may be subject to additional reductions if there are changes to laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. An inability to promptly obtain coverage and adequate payment rates from both government-funded and private payors for any of the Pharmaceutical Investment Companies’ product candidates for which they, or any future collaborator, obtain marketing approval could significantly harm the Pharmaceutical Investment Companies’ operating results, the Pharmaceutical Investment Companies’ ability to raise capital needed to commercialize products and the Pharmaceutical Investment Companies’ overall financial condition.

Product liability lawsuits against the Pharmaceutical Investment Companies or their collaborators could cause substantial liabilities and could limit commercialization of any medicines that the Pharmaceutical Investment Companies or their collaborators may develop.

The Pharmaceutical Investment Companies and their collaborators face an inherent risk of product liability exposure related to the testing of the Pharmaceutical Investment Companies’ product candidates in human clinical trials and will face an even greater risk if the Pharmaceutical Investment Companies or they commercially sell any medicines that the Pharmaceutical Investment Companies or they may develop. If the Pharmaceutical Investment Companies or their collaborators cannot successfully defend ourselves or themselves against claims that the Pharmaceutical Investment Companies’ product candidates or medicines caused injuries, the Pharmaceutical Investment Companies could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

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decreased demand for any product candidates or medicines that the Pharmaceutical Investment Companies may develop;

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injury to the Pharmaceutical Investment Companies’ reputation and significant negative media attention;

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withdrawal of clinical trial participants;

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significant costs to defend the related litigation;

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substantial monetary awards to trial participants or patients;

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loss of revenue;

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reduced resources of the Pharmaceutical Investment Companies’ management to pursue the Pharmaceutical Investment Companies’ business strategy; and

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the inability to commercialize any medicines that the Pharmaceutical Investment Companies may develop.

Although the Pharmaceutical Investment Companies maintain product liability insurance coverage, it may not be adequate to cover all liabilities that the Pharmaceutical Investment Companies may incur. The Pharmaceutical Investment Companies anticipate that they will need to increase their insurance coverage when the Pharmaceutical Investment Companies continues clinical trials and if the Pharmaceutical Investment Companies successfully commercializes any medicine. Insurance coverage is increasingly expensive. The Pharmaceutical Investment Companies may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. In addition, if one of their collaboration partners were to become subject to product liability claims or were unable to successfully defend themselves against such claims, any such collaboration partner could be more likely to terminate such relationships and therefore substantially limit the commercial potential of the Pharmaceutical Investment Companies’ products.

If the Pharmaceutical Investment Companies fail to comply with environmental, health and safety laws and regulations, they could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of their businesses.

The Pharmaceutical Investment Companies are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. The Pharmaceutical Investment Companies’ operations involve the use of hazardous and flammable materials, including chemicals and biological and radioactive materials. The Pharmaceutical Investment Companies’ operations also produce hazardous waste products. The Pharmaceutical Investment Companies generally contract with third parties for the disposal of these materials and wastes. The Pharmaceutical Investment Companies cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from their use of hazardous materials, the Pharmaceutical Investment Companies could be held liable for any resulting damages, and any liability could exceed their resources. The Pharmaceutical Investment Companies also could incur significant costs associated with civil or criminal fines and penalties.

Although the Pharmaceutical Investment Companies maintain workers’ compensation insurance to cover them for costs and expenses they may incur due to injuries to their employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. The Pharmaceutical Investment Companies do not maintain insurance for environmental liability or toxic tort claims that may be asserted against them in connection with their storage or disposal of biological, hazardous or radioactive materials.

In addition, the Pharmaceutical Investment Companies may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair the Pharmaceutical Investment Companies’ research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

The Pharmaceutical Investment Companies rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cyber security incidents, could harm the Pharmaceutical Investment Companies’ ability to operate their businesses effectively.

Despite the implementation of security measures, the Pharmaceutical Investment Companies’ internal computer systems and those of third parties with which the Pharmaceutical Investment Companies contract are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. System failures, accidents or security breaches could cause interruptions in the Pharmaceutical Investment Companies’ operations, and could result in a material disruption of their clinical and commercialization activities and business operations, in addition to possibly requiring substantial expenditures of resources to remedy. The loss of clinical trial data could result in delays in the Pharmaceutical Investment Companies’ regulatory approval efforts and significantly increase their costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, the Pharmaceutical Investment Companies’ data or applications, or inappropriate disclosure of confidential or proprietary information, the Pharmaceutical Investment Companies could incur liability and their product research, development and commercialization efforts could be delayed.

Even if the Pharmaceutical Investment Companies complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent them from obtaining approvals for the commercialization of some or all of our product candidates. If the Pharmaceutical Investment Companies or their collaborators are not able to obtain, or if there are delays in obtaining, required regulatory approvals, they will not be able to commercialize, or will be delayed in commercializing, their product candidates, and their ability to generate revenue will be materially impaired.

The Pharmaceutical Investment Companies’ product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, export and import, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by the EMA and comparable regulatory authorities in other countries. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. The Pharmaceutical Investment Companies and their collaborators have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction. The Pharmaceutical Investment Companies have only limited experience in filing and supporting the applications necessary to gain marketing approvals and expects to rely on third-party contract research organizations to assist in this process.

Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. The Pharmaceutical Investment Companies’ product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude the Pharmaceutical Investment Companies obtaining marketing approval or prevent or limit commercial use.

The process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate. Any marketing approval the Pharmaceutical Investment Companies or their collaborators ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved medicine not commercially viable.

Accordingly, if the Pharmaceutical Investment Companies or their collaborators experience delays in obtaining approval or if the Pharmaceutical Investment Companies or they fail to obtain approval of their product candidates, the commercial prospects for their product candidates may be harmed and their ability to generate any revenue will be materially impaired.

Current and future legislation may increase the difficulty and cost for the Pharmaceutical Investment Companies and any future collaborators to obtain marketing approval of the Pharmaceutical Investment Companies’ other product candidates and affect the prices obtained.

In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could, among other things, prevent or delay marketing approval of the Pharmaceutical Investment Companies’ other product candidates, restrict or regulate post-approval activities and affect the Pharmaceutical Investment Companies’ ability, or the ability of any future collaborators, to profitably sell any products for which the Pharmaceutical Investment Companies, or they, obtain marketing approval. The Pharmaceutical Investment Companies expects that current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the price that the Pharmaceutical Investment Companies, or any future collaborators, may receive for any approved products.

For example, in March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively the PPACA. Among the provisions of the PPACA of potential importance to the Pharmaceutical Investment Companies’ business and the Pharmaceutical Investment Companies’ product candidates are the following:

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an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents;

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an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;

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a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;

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expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance;

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a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

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extension of manufacturers’ Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations;

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expansion of eligibility criteria for Medicaid programs;

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expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

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new requirements to report certain financial arrangements with physicians and teaching hospitals;

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a new requirement to annually report drug samples that manufacturers and distributors provide to physicians;

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a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;

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a new Independent Payment Advisory Board, or IPAB, which has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs; and

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a Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models.

Other legislative changes have been proposed and adopted since the PPACA was enacted. These changes include the Budget Control Act of 2011, which, among other things, led to aggregate reductions to Medicare payments to providers of up to 2% per fiscal year that started in 2013 and, due to subsequent legislation, will continue until 2025. In addition, the American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding and may otherwise affect the prices the Pharmaceutical Investment Companies may obtain for any of their product candidates for which regulatory approval is obtained.

The Pharmaceutical Investment Companies expect that the PPACA, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that the Pharmaceutical Investment Companies receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our medicines. Moreover, legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. They cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of the Pharmaceutical Investment Companies’ product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject the Pharmaceutical Investment Companies’ and any future collaborators to more stringent product labeling and post-marketing testing and other requirements. Similar acts imposed by other countries may adversely affect the Company.

Risk Related to Business Generally

The reporting requirements associated with our being a public company could subject us to significant expenses.

As a result of the spin-off, we will become a public reporting company and will be required to file with the Securities and Exchange Commission reports required by the Exchange Act of 1934. Specifically, among other requirements, we will need to file quarterly reports on Form 10-Q, annual reports on Form 10-K and under some circumstances, current reports on Form 8-K, in accordance with strict timelines. We will also be required to file annual proxy materials. In addition, as part of those filings, we will be required to provide annual audited financial statements. Also, we will need to establish an internal audit function. We anticipate that compliance with such requirements will significantly increase our legal and accounting costs and will demand significant attention from management. The resources and time required to comply with rules applicable to public companies could divert financial and human resources from focusing on our business, and we can provide no assurance that the benefits of our being public outweigh the disadvantages and costs associated with compliance. We currently anticipate our total costs to be between $2,000,000 to $2,300,000 a year as a result of being a public reporting company. Several of the costs included in this estimated range are preliminary, subject to negotiation, and may vary from the estimates when finalized.

If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud.

Upon the completion of the spin-off, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, a newly public company is not required to comply with either the management or the auditor reporting requirements related to internal control over financial reporting until its second annual report, if applicable.

Further, we intend to qualify as an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

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an extended transition period to comply with new or revised accounting standards applicable to public companies; and

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an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002.

We may take advantage of these provisions until the end of the fiscal year ending after the fifth anniversary of our initial registration statement filed related to our spin-off from IDT, or such earlier time that we are no longer an emerging growth company and, if we do, the information that we provide stockholders may be different than you might receive from other public companies in which you hold equity. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our shares of common stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.

In addition, if we no longer qualify as an emerging growth company, as an accelerated filer, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our stock.

Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

There may not be an active trading market for shares of our Class B common stock and stockholders may find it difficult to transfer our securities.

Prior to the spin-off, there is no public trading market for shares of our common stock. We have been authorize to list our Class B common stock for trading on the NYSE American under the symbol “RFL,” subject to our being in compliance with applicable requirements on the date of the spin-off. We intend to satisfy all the requirements for that listing. We cannot predict the extent to which investor interest in us will lead to the development of an active trading market in our common stock, how liquid such a market might become, or, as to the price at which our Class B common stock will trade. The initial share price of our Class B common stock may not be indicative of prices that will prevail in any future trading market.

In addition, because of the significant changes that will take place as a result of the spin-off, the trading market for our Class B common stock and IDT’s Class B common stock after the spin-off may be significantly different from that for IDT’s Class B common stock prior to the spin-off.

We cannot predict the price range or volatility of our Class B common stock after it is listed, and sales of a substantial number of shares of our Class B common stock may adversely affect the market price of our Class B common stock.

Investors may suffer dilution.

We may engage in equity financing to fund our future operations and growth. If we raise additional funds by issuing equity securities, stockholders may experience significant dilution of their ownership interest (both with respect to the percentage of total securities held, and with respect to the book value of their securities) and such securities may have rights senior to those of the holders of our common stock.

We are controlled by our principal stockholder, which limits the ability of other stockholders to affect the management of the Company.

Following the spin-off, Howard S. Jonas will control a majority of the voting power of our capital stock and will serve as Chairman of our Board of Directors and our Chief Executive Officer. Mr. Jonas will have voting power over 787,163 shares of our Class A common stock (which are convertible into shares of our Class B common stock on a 1-for-1 basis) and 1,863,213 shares of our Class B common stock, representing approximately 70.9% of the combined voting power of our outstanding capital stock. Mr. Jonas will be able to control matters requiring approval by our stockholders, including the election of all of the directors and the approval of significant corporate matters, including any merger, consolidation or sale of all or substantially all of our assets. As a result, the ability of any of our other stockholders to influence our management is limited.

The relationships between Howard S. Jonas and IDT Corporation, Genie Energy and Rafael Pharmaceuticals, Inc. could conflict with our stockholders’ interests.

Following the spin-off, Howard S. Jonas will be our controlling stockholder, Chairman of our Board of Directors and our Chief Executive Officer. Mr. Jonas is also the chairman and controlling stockholder of IDT Corporation, chairman of the board and controlling stockholder of Genie and is chairman of the board of Rafael Pharmaceuticals and holds certain direct and indirect interests in Rafael Pharmaceuticals in addition to his interests through ownership of our common stock. These relationships may cause a conflict of interest with our stockholders.

Prior to and after the spin-off, several members of our executive management team are serving as officers of IDT.

In light of the foregoing roles and relationships, the Separation and Distribution Agreement, the Tax Separation Agreement and Transition Services Agreement will not result from arm’s length negotiations.

We intend to exercise our option for the “controlled company” exemption under NYSE American rules with respect to our Nominating Committee.

Following the spin-off, we will be a “controlled company” as defined in section 801(a) of the NYSE American Company Guide because more than 50% of the combined voting power of all of our outstanding common stock will be beneficially owned by a single stockholder. As a “controlled company,” we will be exempt from certain NYSE American rules requiring a board of directors with a majority of independent members, a compensation committee composed entirely of independent directors and a nominating committee composed entirely of independent directors. These independence standards are intended to ensure that directors who meet those standards are free of any conflicting interest that could influence their actions as directors. We intend to apply this “controlled company” exemption for our corporate governance practices only with respect to the independence requirements of our Nominating Committee. Accordingly, with respect to our Nominating Committee you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE American, and if we were to apply the controlled company exemption to other independence requirements, you would not have the protection afforded by those requirements either.

We have limited resources and could find it difficult to raise additional capital.

As a result of the spin-off, we will be independent from IDT. We have no operating history as an independent company, and no current sources of financing. Any financing formerly provided to any of our businesses by IDT will no longer be available. We may need to raise additional capital in order for stockholders to realize increased value on our securities. Given the current global economy, there can be no assurance that we will be able to obtain the necessary funding on commercially reasonable terms in a timely fashion. Failure to receive the funding could have a material adverse effect on our business, prospects, and financial condition.

We hold a warrant to purchase a significant stake in Rafael Pharmaceuticals, as well as other equity and governance rights in Rafael Pharmaceuticals, which we can’t exercise, in full, at this time and may never be able to exercise.

As of the date hereof and based on the current shares issued and outstanding of Rafael Pharmaceuticals, we, and our affiliates that hold interests in Rafael Pharmaceuticals would need to pay in the aggregate approximately $71 million to exercise the Warrant in full and approximately $56 million to purchase a 51% controlling stake in Rafael Pharmaceuticals. On an as-converted fully diluted basis (for all convertible securities of Rafael Pharmaceuticals outstanding), we and our affiliates that hold interests in Rafael Pharmaceuticals would need approximately $122 million to exercise the Warrant in full and approximately $98 million to purchase a 51% controlling stake in Rafael Pharmaceuticals as more fully discussed below on page 53. Following that exercise, a portion of our interest in Rafael Pharmaceuticals would continue to be held for the benefit of the other equity holders in IDT-Rafael Holdings and CS Pharma. Given the Company’s anticipated available cash upon the spin-off, we would not be able to exercise the warrant in its entirety and we may never be able to exercise the warrant in full.

Our historical and pro forma financial information may not be indicative of our future results as an independent company.

The historical and pro forma financial information we have included in this Information Statement may not reflect what our results of operations, financial position and cash flows would have been had we been an independent company during the periods presented or be indicative of what our results of operations, financial position and cash flows may be in the future when we are an independent company. Our pro forma information should not be assumed to be indicative of what our results of operations, cash flows or financial condition actually would have been as a stand-alone public company nor to be a reliable indicator of what our results of operations, cash flows and financial condition actually may be in the future.

Risks Related to the Separation from IDT

The combined post-separation value of IDT and Rafael common stock may not equal or exceed the pre-separation value of IDT common stock.

As a result of the distribution, IDT expects the trading price of IDT common stock immediately following the distribution to be lower than the “regular-way” trading price of such common stock immediately prior to the distribution because the trading price will no longer reflect Rafael’s value. The aggregate market value of the IDT common stock and Rafael common stock following the separation may be higher or lower than the market value of IDT common stock immediately prior to the separation.

If the spin-off were to fail to qualify as a reorganization for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, our stockholders and/or IDT might be subject to significant tax liability.

If the spin-off fails to qualify for tax-free treatment, IDT would be treated as if it had sold the common stock of our company for its fair market value, resulting in a taxable gain to the extent of the excess of such fair market value over its tax basis in our stock. In general, our initial public stockholders would be treated as if they had received a taxable distribution equal to the fair market value of our common stock that was distributed to them. For additional information, see “Material U.S. Federal Income Tax Consequences of the Spin-Off” beginning on page 31.

An active trading market for our common stock may not develop.

Prior to the spin-off, there has been no public market for our common stock. Although our Class B common stock has been approved for listing on the NYSE American, an active trading market for our shares may never develop or be sustained following the spin-off. If an active market for our common stock does not develop, it may be difficult to sell shares you receive in the spin-off without depressing the market price for the shares or to sell your shares at all.

The trading price of the shares of our common stock is likely to be volatile, and purchasers of our common stock could incur substantial losses.

Our stock price is likely to be volatile. The stock market in general and the market for similarly situated companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their common stock at or above the price paid for the shares. The market price for our common stock may be influenced by many factors, including:

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actual or anticipated variations in quarterly operating results;

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changes in financial estimates by us or by any securities analysts who might cover our stock;

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conditions or trends in our industry;

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stock market price and volume fluctuations of other publicly traded companies and, in particular, those that operate in the real estate or pharmaceutical industries;

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announcements by us or our competitors of new product or service offerings, significant acquisitions,

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strategic partnerships or divestitures;

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announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;

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capital commitments;

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additions or departures of key personnel; and

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sales of our common stock, including sales by our directors and officers or specific stockholders. In addition, in the past, stockholders have initiated class action lawsuits against companies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources.

If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will rely in part on the research and reports that equity research analysts publish about us and our business. We do not currently have and may never obtain research coverage by equity research analysts. Equity research analysts may elect not to provide research coverage of our common stock after the completion of the spin-off, and such lack of research coverage may adversely affect the market price of our common stock. In the event we do have equity research analyst coverage, we will not have any control over the analysts or the content and opinions included in their reports. The price of our stock could decline if one or more equity research analysts downgrade our stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.

We may not achieve some or all of the expected benefits of the separation, and the separation could harm our business.

We may not be able to achieve the full strategic and financial benefits expected to result from the separation, or such benefits may be delayed or not occur at all. The separation and distribution is expected to provide the following benefits, among others: enhanced strategic and management focus; better ability to form strategic partnerships and relationships; faster decision-making; more efficient allocation of capital; alignment of incentives with performance objectives; direct access to the capital markets; and a distinct investment identity.

We may not achieve these and other anticipated benefits for a variety of reasons, including, among others:

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the separation will require significant amounts of management’s time and effort, which may divert management’s attention from operating and growing our business;

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following the separation, we may be more susceptible to market fluctuations and other adverse events than if we were still a part of IDT;

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following the separation, our business will be less diversified than IDT’s business prior to the separation; and

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the other actions required to separate the respective businesses could disrupt our operations.

If we fail to achieve some or all of the benefits expected to result from the separation, or if such benefits are delayed, our business could be harmed.

Our limited operating history makes it difficult to evaluate our business and prospects and may increase your investment risk.

We have only a limited operating history upon which you can evaluate our business and prospects. We expect to encounter risks and difficulties frequently encountered by early-stage companies in the industries in which we operate.

All of the Pharmaceutical Investment Companies product candidates are still in preclinical development. We have not yet demonstrated our ability to initiate or successfully complete any clinical trials, including large-scale, pivotal clinical trials, obtain marketing approvals, manufacture a commercial scale medicine, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful commercialization. Typically, it takes about ten to fifteen years to develop one new medicine from the time it is discovered to when it is available for treating patients. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history.

In addition, as a new business in general, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors.

If we do not successfully address these risks, our revenue could decline and our ability to pursue our growth strategy and attain profitability could be compromised.

Risks Related to Our Financial Condition

We will hold significant cash, cash equivalents, marketable securities and investments that are subject to various market risks.

IDT will transfer assets to Rafael such that, at the time of the spin-off, we will have approximately $43.8 million in cash, cash equivalents and liquid marketable securities, $1.2 million in current notes receivable, approximately $4.0 million in interests in hedge funds and approximately $2.0 million in securities in another entity that are not liquid. The cash, cash equivalents and marketable securities figures include $10 million currently held in a controlled entity of which we will effectively be an effective 45% owner, at the time of the spin-off. Investments in marketable securities and hedge funds carry a degree of risk, as there can be no assurance that we will be able to redeem any hedge fund investments at any time or that our investment managers will be able to accurately predict the course of price movements of securities and other instruments and, in general, the securities markets have in recent years been characterized by great volatility and unpredictability. Our passive interests in other entities are not currently liquid and we cannot assure that they we will be able to liquidate them when we desire, or ever. As a result of these different market risks, our holdings of cash, cash equivalents, marketable securities and investments could be materially and adversely affected.

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Information Statement and other materials filed or to be filed by us and IDT, as well as information in oral statements or other written statements made or to be made by us and IDT, contain statements, including in this document under the captions “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “foresees” or the negative version of those words or other comparable words and phrases. Any forward-looking statements contained in this Information Statement are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved.

We believe that the factors that could cause our actual results to differ materially include but are not limited to the factors we describe in this Information Statement, including under “Risk Factors,” “The Spin-off” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The following list represents some, but not necessarily all, of the factors that could cause actual results to differ from historical results or those anticipated or predicted by these forward-looking statements:

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Fluctuations in our financial results;

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Acts of terrorism or war;

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State of the real estate market

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Development of products

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Difficulty in developing, preserving and protecting our intellectual property;

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Adequacy of our internal controls;

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Loss of key management and other personnel;

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Our ability to comply with laws governing our operations and industries;

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Increases in tax liabilities;

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Difficulty in implementing our business strategies;

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Availability and access to financial and other resources;

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Failure to qualify as a tax-free reorganization; and

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Our ability to obtain financing;

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Information Statement. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Consequently, actual events and results may vary significantly from those included in or contemplated or implied by our forward-looking statements. The forward-looking statements included in this Information Statement are made only as of the date of this Information Statement, and we undertake no obligation to publicly update or review any forward-looking statement made by us or on our behalf, whether as a result of new information, future developments, subsequent events or circumstances or otherwise.

THE SPIN-OFF

Rafael’s businesses will focus on its real estate assets and investments in clinical and early stage pharmaceutical companies. After a strategic review of IDT’s operations and costs, IDT determined that separating Rafael’s businesses from its other operations would best facilitate the growth and exploitation of Rafael’s position and presence under its own management focus and long-term growth plans and allow Rafael to create more long-term value than to continue to have Rafael controlled by IDT. In addition, by separating from the remaining IDT businesses, the separate entities may avoid exposure to the risks associated with the other company’s businesses.

The transaction is intended to be in the form of a tax-free distribution to IDT’s stockholders. IDT’s Board of Directors established a record date of March 13, 2018 and established a distribution date for the spin-off. You should consult your own tax advisor concerning the tax impact of the spin-off on you.

Reasons for the Spin-Off

IDT’s Board of Directors believes that the spin-off will allow Rafael to better focus on its strategic mission and that its prospects will be better served as an independent entity. The spin-off will allow each of IDT and Rafael to better focus on their respective operations and permit industry-centric activities, enhanced incentive compensation and other operational advantages. By creating a separate entity with management focused on the Rafael businesses, we expect to unlock greater value in Rafael than was possible as part of IDT.

Management believes that separating Rafael from the remaining IDT businesses will allow management of each of IDT and Rafael to design and implement corporate strategies and policies that are based solely on the business characteristics of that company and the industries in which it competes, to maintain a sharper focus on core business and growth opportunities, and to concentrate its financial resources wholly on its own operations. The companies will be able to reinvest the proceeds from their operations into their businesses, find other ways to deploy those resources or distribute value to that company’s shareholders.

Management believes that Rafael as a smaller entity with fewer diverse business interests and focus on its real estate assets and investments in clinical and early stage pharmaceutical companies will best position Rafael for continued growth. This structure will allow Rafael to better position itself, create greater transparency, and facilitate its ability to prioritize opportunities that may not align with IDT’s core telecom and payments business priorities. Management believes that this will be better accomplished as part of an independent Rafael and not as a controlled subsidiary of IDT. Because of the need of having management with complete decision making authority to achieve the full strategic and financial benefits that they believe possible for Rafael, this is not practicable in a non-taxable transaction that did not result in a full separation from IDT.

In addition, IDT and Rafael also believe that management of Rafael may better be able to enhance the value of Rafael under the proposed structure more so than was possible as part of IDT or as a standalone entity, due to Rafael’s ability to attract talent and new business partners.

IDT initially announced its intent to spin-off Rafael as part of larger strategic restructuring in August 2015.

In August 2015, the IDT Board of Directors determined that a spin-off of Rafael independent of the spin-off of the other proposed entities, presented an opportunity to realize synergies from the overlap of the nature and approach to generate value from those businesses and eliminate restrictions on those efforts that resulted from being part of IDT, and authorized the spin-off of Rafael in its current form. The determination is based on the belief that it is the plan with the greatest likelihood of realizing the greatest value to IDT shareholders.

On August 2, 2017, the IDT Board of Directors gave its final approval for the spin-off in the form described in this Information Statement.

IDT’s Board of Directors weighed the reasons for the spin-off and the other benefits the spin-off is expected to bring against the negative impacts thereof, including the one-time costs of effecting the spin-off, the increased costs of maintaining IDT and Rafael as separate public companies, the possibility of reduced liquidity in the market for the Rafael common stock as a smaller company and the disruption on operations caused by the separation. The Board of Directors concluded that the reasons and benefits outweighed the negative impacts and elected to proceed with the spin-off.

Other Benefits of the Spin-Off

The Board of Directors of IDT considered the following potential benefits in making the determination to effect the spin-off:

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Reduce internal competition for capital. Instead of having limited access to resources, Rafael will now be able to invest its resources and cash flow exclusively into its business. In addition, it will have direct access to capital markets to allow it to seek to finance its operations and growth without having to compete with IDT’s other businesses with respect to financing. As an independent entity, it will be in a position to pursue strategies our Board of Directors and management believe will create long-term stockholder value, including organic and acquisition growth opportunities, provided it continues to have access to capital.

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Provide both companies heightened strategic flexibility to form strategic business alliances in their target markets, unencumbered by considerations of the potential impact on the other business.

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Provide for a market for Rafael equity, including options and restricted shares, in order to provide the appropriate incentive mechanisms to motivate and reward its management and employees. The common stock of the independent, publicly-traded Rafael will have a value that reflects the efforts and performance of its management and employees. As a result, we will be able to develop better incentive programs to attract and retain key employees through the use of stock-based and performance-based incentive plans that more directly link their compensation with Rafael’s financial performance. These programs will be designed to more directly reward employees based on Rafael’s performance.

●

Allow Rafael to effect future acquisitions utilizing its common stock for all or part of the consideration and to issue a security more directly tied to the performance of its business.

●

Increase transparency and clarity into the different businesses of IDT and Rafael. The investment community will be better able to evaluate the merits and future prospects of each company. This will enhance the likelihood that each company will receive an appropriate market valuation.

Neither Rafael nor IDT can assure you that, following the spin-off, any of these benefits will be realized to the extent anticipated or at all. For a description of the factors that might impact our ability to achieve these benefits, see “Risk Factors.”

Negative Factors

In evaluating the spin-off, the IDT Board of Directors also considered a number of other factors that may have weighed against proceeding, including:

●

The one-time costs of the spin-off, and the ongoing costs of having us operate as an independent public company, including legal, auditing and other costs of compliance with laws and regulations applicable to public companies, that are estimated to be between $2,000,000 and $2,300,000 annually;

●

IDT’s capital structure and the need to replicate that structure in Rafael;

●

The possibility that disruptions in normal business may result, including as we are compelled to independently perform functions that previously were provided by IDT;

●

The risk that the combined trading prices of our common stock and IDT common stock after the distribution may be lower than the trading price of IDT common stock before the distribution; and

●

IDT Telecom’s need for capital to support its business.

IDT’s Board of Directors concluded, however, that the potential long-term benefits of the spin-off outweigh these factors, and that separating us from IDT in the form of a tax-free distribution is appropriate and advisable.

Manner of Effecting the Spin-Off

The general terms and conditions relating to the spin-off are set forth in the Separation and Distribution Agreement between us and IDT. The spin-off will be effective at 11:59 p.m., New York City time on the distribution date, which is March 26, 2018. As a result of the spin-off, each IDT stockholder will receive one share of our Class A common stock for every two shares of IDT Class A common stock and one share of our Class B common stock for every two shares of IDT Class B common stock held as of the record date. The distribution agent will first convert shares of our Class A common stock into Class B common stock and then aggregate fractional shares of our Class B common stock into whole shares, sell the respective whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds of the respective sales pro rata to each holder of our Class A common stock and Class B common stock, respectively, who otherwise would have been entitled to receive a fractional share in the distribution. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of payment made in lieu of fractional shares. The receipt of cash in lieu of fractional shares generally will be taxable to the recipient stockholders as described in “Material U.S. Federal Income Tax Consequences of the Spin-Off” beginning on page 31. In order to be entitled to receive shares of our common stock in the spin-off, IDT stockholders must have been stockholders as of the record date. The distribution of shares of our Class B common stock will be paid in book-entry form and physical stock certificates will be issued only to holders of our Class A common stock and, upon request, to holders of our Class B common stock. Each share of our Class A common stock and Class B common stock that is distributed will be validly issued, fully paid and non-assessable and free of preemptive rights. See “Description of Our Capital Stock” beginning on page 79.

IDT stockholders will not be required to pay for shares of our Class A common stock and Class B common stock received in the spin-off or to surrender or exchange shares of IDT Class A common stock and/or Class B common stock in order to receive our common stock or to take any other action in connection with the spin-off. No vote of IDT stockholders is required or sought in connection with the spin-off, and IDT stockholders will have no appraisal rights in connection with the spin-off.

If any stockholder of IDT on the record date sells shares of IDT common stock after the record date but on or before the spin-off date, the buyer of those shares, and not the seller, will become entitled to receive the shares of our common stock issuable in respect of the shares sold. See “Trading Between the Record Date and Spin-Off Date” below for more information.

Trading Between the Record Date and Distribution Date

Beginning on the day before the record date and continuing up to and including through the distribution date, there were two markets in IDT Class B common stock: a “regular-way” market and an “ex-distribution” market. Shares of IDT Class B common stock that trade on the regular-way market traded with an entitlement to receive shares of Rafael Class B common stock to be distributed in the distribution. Shares that trade on the ex-distribution market traded without an entitlement to receive shares of Rafael Class B common stock to be distributed in the distribution. Therefore, if you sold shares of IDT Class B common stock in the “regular-way” market after the close of business on the record date and up to and including through the distribution date, you sold your right to receive shares of Rafael Class B common stock in the distribution. If you own shares of IDT Class B common stock at the close of business on the record date and sold those shares on the “ex-distribution” market, up to and including through the distribution date, you will still receive the shares of Rafael Class B common stock that you would be entitled to receive pursuant to your ownership of the shares of IDT Class B common stock.

Furthermore, beginning on or shortly before the record date and continuing up to and including through the distribution date, there has been a “when-issued” market in our Class B common stock. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The “when-issued” trading market has been a market for shares of Rafael Class B common stock that will be distributed to IDT stockholders on the distribution date. If you owned shares of IDT Class B common stock at the close of business on the record date, you would be entitled to shares of our common stock distributed pursuant to the distribution. You could have traded this entitlement to shares of Rafael Class B common stock, without trading the shares of IDT Class B common stock you own, on the “when-issued” market. Trading in shares of our Class B common stock began on a “when-issued” basis on the day before the record date, and “regular-way” trading will begin on March 27, 2018, then “when-issued” trading with respect to our Class B common stock will end.

Results of the Spin-Off

After the spin-off, we will be a separately traded, public company. Immediately following the spin-off, we expect to have approximately 2 record holders of our Class A common stock and 490 record holders of shares of our Class B common stock based on the number of beneficial and record holders, respectively, of shares of IDT Class A common stock and Class B common stock on March 20, 2018 and non-IDT holders of shares prior to the spin-off. These numbers do not include the number of persons whose shares are in nominee or in “street name” accounts through brokers. The actual number of shares to be distributed will be determined on the record date and will reflect any exercise of IDT stock options between the date the Board of Directors of IDT declares the distribution for the spin-off and the record date for the spin-off.

We and IDT will be parties to a number of agreements that govern the spin-off and the future relationship between the two companies. For a more detailed description of these agreements, please see “Our Relationship with IDT After the Spin” beginning on page 77.

Treatment of Stock Options Issued by IDT in the Spin-Off

In the spin-off, the exercise price of each outstanding option to purchase IDT Class B common stock that was issued by IDT will be proportionately reduced based on the relative trading prices of IDT and Rafael following the spin-off. In addition, holders of options to purchase shares of IDT Class B common stock issued by IDT will receive an option to purchase one share of our Class B common stock for every option to purchase two shares of IDT Class B common stock held as of the distribution date for the spin-off. The granted options will have a term of five years from the distribution date and will have an exercise price based on the trading price of our Class B common stock after the spin-off

Interest of Rafael Officers and Directors

The interest of our officers and board of directors in the spin-off is reflected in their stock ownership as set forth in the Security Ownership and Certain Beneficial Owners and Management table as certain of them will be receiving shares of our common stock as a result of the distribution.

Material U.S. Federal Income Tax Consequences of the Spin-Off

The following is a summary of the material U.S. federal income tax consequences to IDT, the holders of IDT Class A common stock and Class B common stock, us and the holders of our common stock after the spin-off as of the date hereof. This summary does not discuss all tax considerations that may be relevant to stockholders in light of their particular circumstances, nor does it address the consequences to stockholders subject to special treatment under the U.S. federal income tax laws, such as stockholders subject to the alternative minimum tax, tax-exempt entities, non-resident alien individuals, foreign entities, foreign trusts and estates and beneficiaries thereof, stockholders who acquire shares as compensation for services (including holders of IDT restricted stock who did not make a Section 83(b) election), banks, insurance companies, other financial institutions, traders in securities that use mark-to-market accounting, and dealers in securities or commodities. In addition, this summary does not address any state, local or foreign tax consequences. This summary is based upon provisions of the Internal Revenue Code of 1986 (the “Code”), Treasury Regulations promulgated thereunder, pertinent judicial authorities, rulings of the Internal Revenue Service and such other relevant authorities, in effect on the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those summarized below.

This summary is limited to holders of shares of IDT common stock that are U.S. Holders, as defined immediately below. A U.S. Holder is a beneficial owner of IDT common stock that is, for U.S. federal income tax purposes:

●

an individual who is a citizen or a resident of the United States;

●

a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any state thereof or the District of Columbia;

●

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

●

a trust, if (i) a court within the United States is able to exercise primary jurisdiction over its administration and one or more United States persons have the authority to control all of its substantial decisions or (ii) in the case of a trust that was treated as a domestic trust under the law in effect before 1997, a valid election is in place under applicable Treasury Regulations.

This summary does not address the U.S. federal income tax consequences to IDT stockholders who do not hold shares of IDT common stock as a capital asset. Moreover, this summary does not address any state, local or foreign tax consequences or any estate, gift or other non-income tax consequences.

If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds shares of IDT common stock, the tax treatment of a partner in that partnership will generally depend on the status of the partner and the activities of the partnership. Such partner or partnership should consult its own tax advisor as to the tax consequences of the distribution.

YOU SHOULD CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE DISTRIBUTION.

THIS SUMMARY IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PARTICULAR INVESTOR

IDT received a legal opinion from Goulston & Storrs as to the U.S. federal income tax treatment of the distribution. The legal opinion provides that the distribution should qualify as a transaction described in Section 368(a)(1)(D) of the Code and Section 355(a) of the Code. An opinion of independent tax attorneys is not binding on the IRS or the courts. In addition, there is no direct authority on point with respect to some of the conclusions in the opinion and therefore the IRS or the courts may disagree with these conclusions. The opinion is based on, among other things, current tax law and assumptions and representations as to factual matters made by IDT, which if incorrect in certain material respects, would jeopardize the conclusions reached in the opinion. Neither we nor IDT are currently aware of any facts or circumstances that would cause these assumptions and representations to be untrue or incorrect in any material respect or that would jeopardize the conclusions reached by Goulston & Storrs in the opinion.

Assuming the distribution qualifies under Section 355 of the Code, for U.S. federal income tax purposes, we believe that:

●

no gain or loss will be recognized by IDT or us as a result of the distribution;

●

no gain or loss will be recognized by, or be includible in the income of, a holder of IDT common stock, solely as a result of the receipt of our common stock in the distribution;

●

the aggregate tax basis of the shares of IDT common stock and our common stock in the hands of IDT stockholders immediately after the distribution will be the same as the aggregate tax basis of the shares of IDT common stock held by the holder immediately before the distribution, allocated between the shares of IDT common stock and our common stock in proportion to their relative fair market values immediately following the distribution; and

●

the holding period with respect to our common stock received by IDT stockholders will include the holding period of their shares of IDT common stock, provided that such shares of IDT common stock are held as a capital asset on the distribution date.

If, notwithstanding the conclusions included in the opinion, it is ultimately determined that the distribution does not qualify as tax-free for IDT for U.S. federal income tax purposes, then IDT would recognize gain in an amount equal to the excess of the fair market value of our common stock distributed to IDT stockholders over IDT’s tax basis in such shares.

In addition, if the distribution were not to qualify as tax-free for IDT’s stockholders for U.S. federal income tax purposes, each IDT stockholder that is subject to U.S. federal income tax and who receives our common stock in the distribution would be treated as receiving a distribution in an amount equal to the fair market value of our common stock that was distributed to the stockholder, which generally would be taxed as a dividend to the extent of the stockholder’s pro rata share of IDT’s current and accumulated earnings and profits and then treated as a non-taxable return of capital to the extent of the stockholder’s basis in the IDT stock and finally as capital gain from the sale or exchange of IDT stock.

Even if the distribution otherwise qualifies for tax-free treatment under Section 355 of the Code, it may result in corporate level taxable gain to IDT under Section 355(e) of the Code if 50% or more, by vote or value, of our stock or IDT’s stock is acquired or issued as part of a plan or series of related transactions that includes the distribution. For this purpose, any acquisitions or issuances of IDT’s stock within two years before the distribution, and any acquisitions or issuances of our stock or IDT’s stock within two years after the distribution may be presumed to be part of such a plan, although we or IDT may be able to rebut that presumption. We are not aware of any acquisitions or issuances of IDT’s stock within the two years before the distribution that would be considered to occur as part of a plan or series of related transactions that includes the distribution. If an acquisition or issuance of our stock or IDT’s stock triggers the application of Section 355(e) of the Code, IDT would recognize taxable gain as described above and such gain would be subject to U.S. federal income tax.

A merger, recapitalization or acquisition, or issuance or redemption of our common stock after the spin-off, in some circumstances, could be counted toward the 50% change of ownership threshold. As a result, we may be unable to engage in strategic or capital raising transactions that stockholders might consider favorable, or to structure potential transactions in the manner most favorable to us.

If you receive cash in lieu of a fractional share of our common stock, you will be treated as though you first received a distribution of the fractional share in the spin-off and then sold it for the amount of such cash. You will recognize capital gain or loss, provided that the fractional share is considered to be held as a capital asset, measured by the difference between the cash you receive for such fractional share and your tax basis in that fractional share, as determined above.

If you are a “significant distributee” with respect to the spin-off, you are required to attach a statement to your federal income tax return for the year in which the spin-off occurs setting forth our name and IRS employer identification number, IDT’s name and IRS employer identification number, the date of the spin-off, and the fair market value of the shares of our common stock that you receive in the spin-off. Upon request, IDT will provide the information necessary to comply with this reporting requirement to each stockholder of record as of the record date. You are a “significant distributee” with respect to the spin-off if you own at least 5% of the outstanding shares of IDT common stock immediately before the spin-off. You should consult your own tax advisor concerning the application of this reporting requirement in light of your particular circumstances.

Certain State Income Tax Matters

The above discussion does not address any tax consequences of the spin-off other than the material U.S. federal income tax consequences set forth above. IDT stockholders are encouraged to consult their tax advisors concerning all possible state income tax consequences of the spin-off.

Listing and Trading of Common Stock

There is currently no public market for our common stock. Rafael’s Class B common stock will be listed on NYSE American under the ticker symbol “RFL” starting March 27, 2018.

Trading in shares of Rafael’s Class B common stock began on a when-issued basis on the day before the record date, and we expect that “regular way” trading will begin on March 27, 2018. When-issued trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. On March 27, 2016, when-issued trading with respect to our Class B common stock will end and regular way trading will begin. Regular way trading refers to trading after a security has been issued and typically involves a transaction that settles on the third full business day following the date of the transaction.

We cannot predict what the trading price for our Class B common stock will be after the distribution date. We also cannot predict any change that may occur in the trading price of IDT Class B common stock as a result of the spin-off. Until our Class B common stock is fully distributed and an orderly market develops, the prices at which it trades may fluctuate significantly and may be lower or higher than the price that would be expected for a fully distributed issue. See “Risk Factors--Risk Factors Generally Relating to Us and Our Common Stock.”

The shares of our Class B common stock distributed to IDT stockholders will be freely transferable except for shares received by persons who may be deemed to be our “affiliates” under the Securities Act of 1933, as amended (the “Securities Act”). Persons that may be considered affiliates of us after the spin-off generally include individuals or entities that control, are controlled by or are under common control with us. This may include some or all of our officers and directors as well as our principal stockholders. Persons that are our affiliates will be permitted to sell their shares only pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, such as the exemptions afforded by Section 4(1) of the Securities Act or Rule 144 thereunder.

Following the spin-off, the number of shares of each of our Class A common stock and Class B common stock, other than Class B common stock that will be freely transferable, that could be sold pursuant to Securities Act Rule 144 or that we have agreed to register under the Securities Act for sale by resale is 0 and 7,528,192 respectively.

We do not intend to list or quote our Class A common stock on any exchange or trading system.

Reason for Furnishing this Information Statement

This Information Statement is being furnished solely to provide information to IDT stockholders who will receive shares of our common stock in the spin-off. It is not and is not to be construed as an inducement or encouragement to buy or sell any securities. We believe that the information contained in this Information Statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither we nor IDT undertakes any obligation to update the information except in the normal course of our respective public disclosure obligations.

DIVIDEND POLICY

We do not anticipate paying dividends on our common stock until we achieve sustainable profitability (after satisfying all of our operational needs) and retain certain minimum cash reserves. Distributions will be subject to the need to retain earnings for investment in growth opportunities or the acquisition of complementary assets. The payment of dividends in any specific period will be at the sole discretion of our Board of Directors.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The unaudited pro forma condensed combined financial data reported below consist of an unaudited pro forma condensed combined balance sheet as of January 31, 2018 and unaudited pro forma condensed combined statements of comprehensive income for the six months ended January 31, 2018 and the fiscal year ended July 31, 2017. The unaudited pro forma condensed combined financial data reported below should be read in conjunction with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our audited combined financial statements as of July 31, 2017 and 2016 and for the fiscal years then ended and the notes thereto, and the unaudited interim condensed combined financial statements as of January 31, 2018 and for the six months ended January 31, 2018 and 2017 and the notes thereto, all of which are included elsewhere in this Information Statement.

The pro forma combined balance sheet adjustments assume that the spin-off of Rafael Holdings, Inc. (“Rafael Holdings” or “our”) from IDT Corporation (“IDT”) occurred as of January 31, 2018. The pro forma adjustments to the condensed combined statements of comprehensive income for the six months ended January 31, 2018 and for the fiscal year ended July 31, 2017 assume that the spin-off occurred as of August 1, 2016.

The unaudited pro forma condensed combined financial statements assume that the charges for the services that IDT will provide to us will be similar to those currently being charged via inter-company billings for similar services being provided prior to the spin-off. Accordingly, the pro forma condensed combined financial statements assume that future service agreements for those services will not result in a significantly different impact on our results of operations as compared to periods preceding the spin-off. Any intercompany debt between IDT and Rafael Holdings as of the distribution date will be capitalized as contribution of equity prior to the completion of the spin-off and there will be no indebtedness owing from Rafael Holdings to IDT immediately following the spin-off.

In addition, the service agreement entered into between IDT and Rafael Holdings as of the spin-off include additional services to be provided by IDT to Rafael Holdings following the spin-off that will be required by Rafael Holdings, as a separate publicly-traded company. Such services may include assistance with internal audit, periodic reports required to be filed with the SEC, as well as corporate governance matters. Costs for these additional services are not reflected in the historical combined financial statements or in the pro forma adjustments since they were not applicable for periods that we were not a separate public company. The additional costs (including for services that may be provided by IDT and others) related to being a publicly-traded company and being separated from IDT, are currently estimated to be between $2,000,000 and $2,300,000 annually. Several of the costs included in this estimated range are preliminary, subject to negotiation, and may vary from the estimates when finalized.

The unaudited pro forma combined balance sheet and unaudited pro forma combined statements of comprehensive income included in this Information Statement have been derived from our audited and unaudited combined financial statements included elsewhere in this Information Statement and do not purport to represent what our financial position, results of operations or cash flows actually would have been had the spin-off occurred on the dates indicated, or to project financial performance for any future period.

RAFAEL HOLDINGS, INC. AND AFFILIATES
PROFORMA CONDENSED COMBINED BALANCE SHEET

AS OF JANUARY 31, 2018
(in thousands, except share data)
(unaudited)

	Historical		Pro Forma Adjustments			Pro Forma
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents	$	12,008	$	28	(A)	$	12,036
Marketable Securities		—		31,744	(A)		31,744
Accounts and Rents Receivable, net of Allowance for Doubtful Accounts of $82 as of January 31, 2018		226					226
Current Notes Receivable		—		1,200	(A)		1,200
Prepaid Expenses and Other Current Assets		191					191
TOTAL CURRENT ASSETS		12,425					45,397
Property and Equipment, net		50,967					50,967
Investments		11,700		2,000	(A)		13,700
Investments in Hedge Funds		—		4,000	(A)		4,000
Deferred Taxes		22					22
Other Assets		2,530					2,530
TOTAL ASSETS	$	77,644				$	116,616
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES:
Trade Accounts Payable	$	89				$	89
Accrued Expenses		423					423
Other Current Liabilities		20					20
TOTAL CURRENT LIABILITIES		532					532
Due to IDT Corporation		24,391		(24,391	)(B)		—
Other Liabilities		95					95
TOTAL LIABILITIES		25,018					627
MEMBERS’/STOCKHOLDERS’ EQUITY:
Rafael Holdings, Inc. Members’/Stockholders’ Equity:
Group Equity		40,554		(40,554	)(B)		—
Class A common stock — historical nil shares, pro forma 787,163 shares issued and outstanding		—		8	(C)		8
Class B common stock — historical nil shares, pro forma 11,639,901 shares issued and outstanding		—		116	(C)		116
Additional Paid in Capital		—		103,793	(C)		103,793
Accumulated Other Comprehensive Income		2,394					2,394
Total Rafael Holdings, Inc. Members’/Stockholders’ Equity		42,948					106,311
Noncontrolling interests		9,678					9,678
TOTAL MEMBERS’/STOCKHOLDERS’ EQUITY		52,626					115,989
TOTAL LIABILITIES AND MEMBERS’/STOCKHOLDERS’ EQUITY	$	77,644				$	115,616

RAFAEL HOLDINGS, INC. AND AFFILIATES
PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JANUARY 31, 2018
(in thousands, except per share data)
(unaudited)

	Historical			Pro Forma Adjustments		Pro Forma

REVENUES
Rental – Third Party	$	685				$	685
Rental – Related Party		994					994
Parking		384					384
TOTAL REVENUES		2,063					2,063

COSTS AND EXPENSES:
Selling, General and Administrative		3,079					3,079
Depreciation and Amortization		853					853
LOSS FROM OPERATIONS		(1,869	)				(1,869	)
Interest Income, net		(4	)				(4	)
Net Gains Resulting from Foreign Exchange Transactions		(118	)				(118	)
Net Loss on Equity Investments		107					107
Gain on Disposal of Bonus Shares		(246	)				(246	)
LOSS BEFORE INCOME TAXES		(1,608	)				(1,608	)
Provision for Income Taxes		8,443					8,443
NET LOSS		(10,051	)				(10,051	)
Net loss attributable to noncontrolling interests		176					176
NET LOSS ATTRIBUTABLE TO RAFAEL HOLDINGS, INC.	$	(9,875	)			$	(9,875	)

Loss per share attributable to Rafael Holdings, Inc. and affiliates common stockholders:
Basic		—			(E)	$	(0.80	)
Diluted		—			(E)	$	(0.80	)

Number of shares used in calculation of earnings per share :
Basic		—			(E)		12,420
Diluted		—			(E)		12,420

RAFAEL HOLDINGS, INC. AND AFFILIATES
PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED JULY 31, 2017
(in thousands, except per share data)
(unaudited)

	Historical			Pro Forma Adjustments			Pro Forma

REVENUES
Rental – Third Party	$	989					$	989
Rental – Related Party		3,705			(1,740	)(D)		1,965
Parking		924						924
TOTAL REVENUES		5,618						3,878

COSTS AND EXPENSES:
Selling, General and Administrative		3,728						3,728
Depreciation and Amortization		1,669						1,669
INCOME (LOSS) FROM OPERATIONS		221						(1,519	)
Interest Income, net		(10	)					(10	)
Net Gains Resulting from Foreign Exchange Transactions		(86	)					(86	)
Other Expenses, net		113						113
INCOME (LOSS) BEFORE INCOME TAXES		204						(1,536	)
Provision for Income Taxes		66						66
NET INCOME (LOSS)	$	138					$	(1,522	)

Loss per share attributable to Rafael Holdings, Inc. and affiliates common stockholders:
Basic		—				(E)	$	(0.13	)
Diluted		—				(E)	$	(0.13	)

Number of shares used in calculation of loss per share :
Basic		—				(E)		12,420
Diluted		—				(E)		12,420

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES AND MANAGEMENT’S ASSUMPTIONS
TO THE PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)

The following is a description of the pro forma adjustments to the condensed combined financial statements:

(A)

In connection with the spin-off, IDT transferred assets to Rafael such that, at the time of the spin-off, we have approximately $43.8 million in cash, cash equivalents and liquid marketable securities, $1.2 million in current notes receivable and approximately $4.0 million in interests in hedge funds. Additionally, IDT transferred approximately $2.0 million in securities in another entity that are not liquid. The cash and cash equivalent figure includes $10 million in cash and marketable securities to be held in CS Pharma Holdings LLC (“CS Pharma”), a controlled entity of which we will effectively be an effective 45% owner, at the time of the spin-off. We hold our interest in CS Pharma through our 90%-owned non-operating subsidiary, IDT-Rafael Holdings, LLC, which holds a 50% interest in CS Pharma. Accordingly, we hold an effective 45% indirect interest in the assets held by CS Pharma, including its cash and cash equivalents. This contribution is reflected as if it were entirely a cash contribution made to Rafael Holdings on January 31, 2018. Any marketable securities and/or investments in hedge funds contributed to Rafael Holdings would reduce the amount of cash contributed resulting in Rafael Holdings holding less cash and cash equivalents at the time of the distribution.

(B)

All intercompany debt owing to IDT by Rafael Holdings as of the distribution date was converted to equity prior to the completion of the spin-off and there is currently no indebtedness owing from Rafael Holdings to IDT.

	(C)	Reflected as the recapitalization of Group Equity into 787,163 shares of Rafael Holdings Class A common stock and 11,639,901 shares of Rafael Holdings Class B common stock.

		The distribution by IDT to its stockholders of (i) 787,163 shares of Rafael Holdings Class A common stock is based on 1,574,326 shares of IDT Class A common stock outstanding on the record date and (ii) 11,639,901 shares of Rafael Holdings Class B common stock is based on 23,279,803 shares of IDT Class B common stock outstanding on the record date. In the distribution, each IDT stockholder will receive one share of Rafael Holdings Class A common stock for every two shares of IDT Class A common stock and one share of Rafael Holdings Class B common stock for every two shares of IDT Class B common stock held on the record date for the spin-off.

(D)

As of August 1, 2017, the Company amended its related party leases to more accurately reflect the space currently being used by IDT and other affiliated companies. Had they been in place for the entirety of fiscal year 2017, these amendments would have resulted in a decrease of Revenues – Rental – Related Party by $1.7 million.

(E)

Loss per share is calculated as if recapitalization of the Group Equity into 787,163 shares of Rafael Holdings Class A common stock and 11,639,901 shares of Rafael Holdings Class B common stock were issued and outstanding as of August 1, 2016. There was no difference in the weighted average number of shares used for the calculation of basic and diluted loss per share as the effect of all potentially dilutive shares outstanding was anti-dilutive.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Rafael will own commercial real estate assets and interests in clinical and early stage pharmaceutical companies. The assets will be operated as two separate lines of business. The commercial real estate holdings consist of the building at 520 Broad Street in Newark, New Jersey that houses IDT’s headquarters and its associated public garage, an office/data center building in Piscataway, New Jersey and a portion of a building in Israel that hosts offices for IDT and certain affiliates. The pharmaceutical holdings include debt interests and warrants in Rafael Pharmaceuticals, Inc., which is a clinical stage, oncology-focused, pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and a majority equity interest in Lipomedix Pharmaceuticals Ltd., an early stage pharmaceutical development company based in Israel. All of these assets were non-core assets - outside of IDT’s telecom and payment services businesses.

Real Estate

520 Broad Street in Newark New Jersey is a 20-story commercial office building containing approximately 496,000 square feet. The building was completed in 1957 and is of steel-frame construction with cast-in-place concrete floors. The facade is constructed of stone and metal framed glass curtain wall sections. The public garage has three levels plus additional surface parking that, in total, can accommodate in excess of 800 parking spaces.

In fiscal 2014, IDT began renovations of the first four floors of the 520 Broad Street building and relocated its Newark-based personnel and offices into the renovated space. Genie Energy, an affiliate of IDT, is also headquartered in the building. Currently, approximately 24.3% of the building is leased, 73.7% of which is leased to IDT and Genie, which are both publicly traded companies. The building was completely vacant when IDT began renovations in fiscal 2014; as such, all third party leases are in their initial term.

The IDT lease expires in April 2025 and is for 80,000 square feet and includes two parking spots per thousand square feet of space leased. The annual base rent is $1,498,400. IDT has the right to terminate the lease upon four months’ notice, and upon early termination, IDT will pay a penalty equal to 25% of the portion of the rent due over the course of the remaining term. IDT has the right to lease an additional 25,000 square feet in the building on the same terms as the base lease, and other rights to a further 25,000 square feet should all available space be leased to other tenants. Upon expiration of the lease, IDT has the right to renew the lease for another 5 years on substantially the same terms, with a 2% increase in the rental payments.

The Genie lease expires in April 2025 and is for 8,631 square feet and includes two parking spots per thousand square feet of space leased. The annual base rent is $198,513. Genie has the right to terminate the lease upon four months’ notice and upon early termination Genie will pay a penalty equal to 25% of the portion of the rent due over the course of the remaining term. Upon expiration of the lease, Genie has the right to renew the lease for another 5 years on substantially the same terms, with a 2% increase in the rental payments.

In addition to the IDT and Genie leases, there are three additional leases for space in the building. The first lease is for a portion of the sixth floor for an eleven-year term, of which the first six years are non-cancellable. The second lease is for a portion of the ground floor and basement for a term of ten years, seven months and the third lease is for another portion of the ground floor for a term of ten years, four months. The leases have all commenced. At July 31, 2017 and 2016, the carrying value of the land, building and improvements at 520 Broad Street was $45.9 million and $45.6 million, respectively.

The building in Piscataway, New Jersey is used partially by IDT Telecom for operations. The portion of a building in Israel hosts offices for IDT and its affiliates. The building in Piscataway is located at 225 Old New Brunswick Road: it is a three-story commercial office building containing approximately 65,000 square feet. The building was completed in 1978. Since its completion, the building has been leased as data space and therefore has ample power, diverse paths of fiber, back-up generators and dedicated HVAC units. Currently, approximately 28% of the building is leased to two data users. Both leases are to tenants who each occupy a portion of the first floor. One lease expires at the end of 2020 and the other lease expires at the end of October 2022. These two tenants have been in the building for over twenty years. While both leases have been renewed, there were not any tenant improvements or leasing commission for either renewal.

The space in Israel is a condominium portion of an office building located in the Har Hotzvim section of Jerusalem, Israel. The condominium, built in 2004, is approximately 12,400 square feet and the space is occupied by IDT and related parties. Har Hotzvim is a high-tech industrial park located in northwest Jerusalem. It is the city's main zone for science-based and technology companies, among them Intel, Teva and Mobileye. The leases associated with this space expire in April 2025, and have an aggregate annual base rent of $100,000. This space has no leases to unrelated parties.

Related parties represented approximately 64% of our total revenue for fiscal year 2017. As of August 1, 2017, we amended our related party leases to more accurately reflect the space currently being used by IDT and other affiliated companies. Had they been in place for the entirety of fiscal year 2017, these amendments would have resulted in a decrease of related party revenues of $1.7 million, with related parties then representing 51% of our adjusted total revenue for fiscal year 2017.

The following table represents a schedule of lease expirations, stating the number of tenants whose leases will expire, the total area in square feet covered by the leases, the annual rent represented by the leases and the percentage of gross annual rent represented by the leases:

Fiscal Year	Number of Tenants		Square Feet		Percentage of Minimum 2018 Rental Income
2018		—		N/A		N/A
2019		—		N/A		N/A
2020		—		N/A		N/A
2021		1		10,216		8.7	%
2022		—		N/A		N/A
2023		2		16,230		9.7	%
2024		—		N/A		N/A
2025		2		101,031		68.2	%
2026		—		N/A		N/A
2027		—		N/A		N/A
Thereafter		2		23,474		13.4	%

Depreciation and amortization expense of property, plant and equipment was $1.7 million, $1.6 million, and $1.2 million in fiscal 2017, fiscal 2016 and fiscal 2015, respectively.

Depending on market conditions and the success of our efforts to lease additional space, we anticipate making significant capital improvements to our real estate portfolio, including but not limited to, renovating common areas such as lobbies and bathrooms as well as building wide HVAC systems. If we are successful in leasing additional space in our buildings, we would likely expend additional funds for improvements to the tenant’s space. We estimate costs of $30-50 per square foot on tenant improvements, which will be determined by our agreement with the tenants and dependent on many factors, including condition of the space, rental amount, lease length and other leasing criteria. The total estimated capital expenditures including building upgrades, tenant improvements and leasing commissions will be approximately $24 to $45 million comprised primarily of tenant improvements.

Pharmaceutical Investments

Rafael Pharmaceuticals’ vision is to be the premier cancer bioenergetics/metabolism firm designing drugs to attack the proteins and enzymes reconfigured, re-regulated, and repurposed in cancer and responsible for the unique metabolic features of tumors. We own our interests/rights in Rafael Pharmaceuticals through a 90%-owned non-operating subsidiary, IDT-Rafael Holdings, LLC. IDT-Rafael Holdings holds a warrant to purchase a significant stake in Rafael Pharmaceuticals, as well as other equity and governance rights in Rafael Pharmaceuticals, and owns 50% of CS Pharma, a non-operating entity which holds convertible debt and other rights to purchase equity interests in Rafael Pharmaceuticals.

Those interests/rights include:

$10,000,000 of Series D Convertible Notes of Rafael Pharmaceuticals held by CS Pharma.

A warrant to purchase up to 56% of the capital stock of Rafael Pharmaceuticals – the right to exercise the first $10,000,000 worth of the warrant is held by CS Pharma; and the remainder is held directly by IDT-Rafael Holdings.

We also have certain governance rights, including appointment of directors.

On September 19, 2017, IDT approved a compensatory arrangement with Howard S. Jonas related to the right held by IDT-Rafael Holdings to receive additional Rafael Pharmaceutical shares (“Bonus Shares”) upon the achievement of certain milestones. Under that arrangement, IDT and the Company transferred to Howard Jonas the contractual right to receive “Bonus Shares” for an additional 10% of the outstanding capital stock of Rafael Pharmaceuticals that was previously held by IDT-Rafael Holdings, which is contingent upon achieving certain milestones. This right was previously held by IDT-Rafael Holdings, of which Howard Jonas is a 10% owner, subject to its right to transfer to recipients that IDT-Rafael Holdings, in its sole discretion, felt merit because of special efforts by such persons in assisting Rafael Pharmaceuticals and its products. IDT-Rafael Holdings distributed the rights to its members and we transferred the portion we received to Howard Jonas. If any of the milestones are met, the Bonus Shares are to be issued without any additional payment. Howard Jonas has the right to transfer the Bonus Shares, in his discretion, to others, including those who are instrumental to the future success of Rafael Pharmaceuticals.

The Company serves as the managing member of IDT-Rafael Holdings and IDT-Rafael Holdings serves as the managing member of CS Pharma, with broad authority to make all key decisions regarding their respective holdings. Any distributions that are made to CS Pharma from Rafael Pharmaceuticals that are in turn distributed by CS Pharma will need to be made pro rata to all members, which would entitle IDT-Rafael Holdings to 50% (based on current ownership) of such distributions. Similarly, if IDT-Rafael Holdings were to distribute proceeds it receives from CS Pharma, it would do so on a pro rata basis, entitled the Company to 90% (based on current ownership) of such distributions.

As of March 26, 2018, IDT had provided Rafael Pharmaceuticals with $1.2 million in working capital financing that remains outstanding. The related receivable from Rafael Pharmaceutical is being transferred by IDT to us prior to the spin-off.

Lipomedix is a development-stage, privately held Israeli company focused on the development of an innovative, safe and effective cancer therapy based on liposome delivery. We own ordinary shares of Lipomedix representing approximately 50.6% of the issued and outstanding ordinary shares, which were purchased in Fiscal 2016-2018 for $2.4 million.

We will operate as an independent public company following the spin-off. While many of the costs of being a public company were already borne by us either directly or by allocation of corporate overhead from IDT, we will need to have the proper infrastructure in place to perform the necessary, legal, treasury, accounting, internal audit and reporting functions. We anticipate our total costs will be between $2,000,000 to $2,300,000 per year as a result of being a public reporting company. Several of the costs included in this estimated range are preliminary, subject to negotiation, and may vary from the estimates when finalized.

Reportable Segments

Our business consists of one reportable segment.

Presentation of financial information

Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. See Note 1 to the combined financial statements in this Information Statement for a complete discussion of our significant accounting policies.

Income Taxes

The accompanying financial statements include provisions for federal, state and foreign income taxes. We join with our Parent and other subsidiaries in filing a federal income tax return on a combined basis. Our income taxes are calculated on a separate tax return basis.

We recognize deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the period in which related temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in its assessment of a valuation allowance. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of such change.

We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. We determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. Tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of tax benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability.

We classify interest and penalties on income taxes as a component of income tax expense.

In November 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-17, “ Balance Sheet Classification of Deferred Taxes .” This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. ASU 2015-17 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016. This update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. Early application is permitted as of the beginning of the interim or annual reporting period. We adopted ASU 2015-17 as of August 1, 2015. The adoption of ASU 2015-17 did not have a material impact on our combined financial statements.

Investments in Uncombined Entities

We consolidate variable interest entities (VIEs) in which we are considered to be the primary beneficiary. VIEs are entities in which the equity investors do not have sufficient equity at risk to finance their endeavors without additional financial support or that the holders of the equity investment at risk do not have a controlling financial interest. The primary beneficiary is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the variable interest entity’s performance, and (2) the obligation to absorb losses and right to receive the returns from the variable interest entity that would be significant to the variable interest entity. Our judgment with respect to our level of influence or control of an entity involves the consideration of various factors including the form of our ownership interest, our representation in the entity’s governance, the size of our investment (including loans), estimates of future cash flows, our ability to participate in policy making decisions and the rights of the other investors to participate in the decision making process and to replace us as manager and/or liquidate the venture, if applicable. Our assessment of our influence or control over an entity affects the presentation of these investments in our combined financial statements. In addition to evaluating control rights, we consolidate entities in which the outside partner has no substantive kick-out rights to remove us as the managing member.

Accounts of the combined entity are included in our accounts and the non-controlling interest is reflected on the combined balance sheets as a component of equity. Investments in uncombined entities are recorded initially at cost, and subsequently adjusted for equity in earnings and cash contributions and distributions. Any difference between the carrying amount of these investments on the balance sheet and the underlying equity in net assets is amortized as an adjustment to equity in earnings of uncombined entity over the life of the related asset. Under the equity method of accounting, our net equity investment is reflected within the combined balance sheets, and our share of net income or loss from the investment is included within the combined statements of operations. Our investments in uncombined entities are reviewed for impairment periodically and we record impairment charges when events or circumstances change indicating that a decline in the fair values below the carrying values has occurred and such decline is other-than-temporary. The ultimate realization of the investment in uncombined entity is dependent on a number of factors, including the performance of each investment and market conditions. We will record an impairment charge if we determine that a decline in the value below the carrying value of an investment in an uncombined entity is other-than-temporary.

To the extent that we contribute assets to an uncombined entity, our investment therein is recorded at our cost basis in the assets that were contributed. To the extent that our cost basis is different than the basis reflected at the entity level, the basis difference is amortized over the life of the related asset and included in our share of equity in net income of the entity.

Other

In March 2016, the FASB issued an ASU to improve the accounting for employee share-based payments. The new standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We adopted the new standard on August 1, 2017. The adoption of this new standard did not have a significant impact on our combined financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (“FASB”), and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard that will supersede most of the current revenue recognition guidance under U.S. GAAP and International Financial Reporting Standards (“IFRS”). The goals of the revenue recognition project were to clarify and converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements. We will adopt this standard on August 1, 2018. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. We are evaluating the impact that the standard will have on our combined financial statements.

In January 2016, the FASB issued an ASU, to provide more information about recognition, measurement, presentation and disclosure of financial instruments. The amendments in the ASU include, among other changes, the following: (1) equity investments (except those accounted for under the equity method or that result in consolidation) will be measured at fair value with changes in fair value recognized in net income, (2) a qualitative assessment each reporting period to identify impairment of equity investments without readily determinable fair values, (3) financial assets and financial liabilities will be presented separately by measurement category and form of financial asset on the balance sheet or the notes to the financial statements, and (4) an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. Entities will no longer be able to recognize unrealized holding gains and losses on equity securities classified as available-for-sale in other comprehensive income. In addition, a practicability exception will be available for equity investments that do not have readily determinable fair values and do not qualify for the net asset value practical expedient. These investments may be measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Entities will have to reassess at each reporting period whether an investment qualifies for this practicability exception. We will adopt the amendments in this ASU on August 1, 2018. We are evaluating the impact that the ASU will have on our combined financial statements.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our combined financial statements.

In June 2016, the FASB issued an ASU that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. We will adopt the new standard on August 1, 2020. We are evaluating the impact that the new standard will have on our combined financial statements.

In November 2016, the FASB issued an ASU that includes specific guidance on the classification and presentation of changes in restricted cash and cash equivalents in the statement of cash flows. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash or restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of the period and end of the period total amounts shown on the statement of cash flows. The ASU will be applied using a retrospective transition method to each period presented. We will adopt the amendments in this ASU on August 1, 2018. The adoption will impact our beginning of the period and end of the period cash and cash equivalents balance in our statement of cash flows, as well as our net cash provided by operating activities.

In January 2017, the FASB issued an ASU to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current guidance, there are three elements of a business—inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs, for example, by integrating the acquired set with their own inputs and processes. The amendments in this ASU provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this ASU (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the FASB has developed more stringent criteria for sets without outputs. Lastly, the ASU narrows the definition of the term output. We will adopt the amendments in this ASU on August 1, 2018. We are evaluating the impact that the new standard will have on our combined financial statements.

In May 2017, the FASB issued an ASU to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Pursuant to this ASU, an entity should account for the effects of a modification unless all the following are met: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified (if the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification); (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. We will adopt the amendments in this ASU prospectively to an award modified on or after on August 1, 2018. We are evaluating the impact that the new standard will have on our combined financial statements.

In August 2017, the FASB issued an ASU intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the ASU includes certain targeted improvements to simplify the application of hedge accounting guidance in U.S. GAAP. The amendments in this ASU are effective for us on August 1, 2019. Early application is permitted. Entities will apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements will be applied prospectively. We are evaluating the impact that this ASU will have on our combined financial statements.

Results of Operations

Our business consists of one reportable segment. We evaluate the performance of our operating business based primarily on income (loss) from operations.

Three and Six Months Ended January 31, 2018 Compared to Three and Six Months Ended January 31, 2017

Our business consists of two reportable segments. We evaluate the performance of our Real Estate segment based primarily on income (loss) from operations and our Pharmaceuticals segment based primarily on research and development efforts and results of clinical trials. Accordingly, the income and expense line items below income (loss) from operations are only included in the discussion of combined results of operations.

Pharmaceuticals Segment

	Three Months Ended January 31,					Change						Six Months Ended January 31,					Change
	2018			2017		$			%			2018			2017		$			%
	(in thousands)											(in thousands)
Selling, general and administrative	$	(357	)	$	—	$	(357	)		100.0	%	$	(357	)	$	—	$	(357	)		100.0	%
Depreciation and amortization		—			—		—			—			—			—		—			—
Income from operations	$	(357	)	$	—	$	(357	)		100.0	%	$	(357	)	$	—	$	(357	)		100.0	%

To date, the Pharmaceuticals segment has not generated any revenues. The entirety of the expenses in the Pharmaceuticals segment relate to the research and development activities of Lipomedix, of which we are a 50.6% owner.

Real Estate Segment

	Three Months Ended January 31,						Change						Six Months Ended January 31,						Change
	2018			2017			$			%			2018			2017			$			%
	(in thousands)												(in thousands)
Rental – Third Party Revenues	$	298		$	396		$	(98	)		(24.7	)%	$	685		$	585		$	100			17.1	%
Rental – Related Party Revenues		489			770			(281	)		(36.5)			994			1,682			(688	)		(40.9	)
Parking Revenues		169			171			(2	)		(1.2	)		384			469			(85	)		(18.1	)
Selling, general and administrative		(986	)		(776	)		(210	)		(27.1	)		(2,722	)		(1,629	)		(1,093	)		(67.1	)
Depreciation and amortization		(429	)		(434	)		5			1.2			(853	)		(822	)		(31	)		(3.8	)
(Loss) income from operations	$	(459	)	$	127		$	(586	)		(461.4	)%	$	(1,512	)	$	285		$	(1,797	)		(630.5	)%

Revenues. Rental and Parking revenues decreased by $381,000 and $673,000, respectively, for the three and six months ended January 31, 2018 as compared to the three and six months ended January 31, 2017. Third Party revenues increased for the six months ended January 31, 2018 due the new tenant taking occupancy in the 520 Broad Street building, partially offset by reduced utility charges. Related Party revenues decreased due to a reduction in space being leased by IDT in the Piscataway facility during three and six months ended January 31, 2018 as compared to the three and six months ended January 31, 2017. Related Party rental revenues decreased due to new lease terms, effective August 1, 2017, being signed during the first quarter of fiscal 2018 for both the 520 Broad Street and Israel buildings. Parking revenues decreased by $2,000 and $85,000 for three and six months ended January 31, 2018 as compared to the prior year period primarily due to a headcount reduction at one customer, as well as several small customers going out of business during the first quarter of fiscal 2018.

Selling, general and administrative expenses . Selling, general and administrative expenses consists mainly of payroll, benefits, facilities and consulting and professional fees. The increase in selling, general and administrative expenses in the six months ended January 31, 2018 compared to the six months ended January 31, 2017 is primarily due to $606,000 in compensation expense related to the assignment of the contingent right to receive Bonus Shares in Rafael Pharmaceuticals to Howard Jonas, as well as increased utility cost of $113,000 due to new tenants in the 520 Broad Street building. The increase in selling, general and administrative expenses in the three months ended January 31, 2018 compared to the three months ended January 31, 2017 is primarily due to $201,000 in legal and professional services fees related to the planned Spin-Off.

Depreciation and amortization expenses . Depreciation and amortization expenses in the three and six months ended January 31, 2018 as compared to the three and six months ended January 31, 2017 remained relatively consistent between periods.

Combined operations

Our combined income and expense line items below income from operations were as follows:

	Three Months Ended January 31,						Change						Six Months Ended January 31,						Change
	2018			2017			$			%			2018			2017			$			%
	(in thousands)												(in thousands)
(Loss) income from operations	$	(816	)	$	127		$	(586	)		(461.4	)%	$	(1,869	)	$	285		$	(2,154	)		(755.8	)%
Interest (income) expense		(2	)		(2	)		—			nm			(4	)		(7	)		3			(42.9	)
Net gains resulting from foreign exchange transactions		(107	)		(52	)		(56	)		nm			(118	)		(32	)		(86	)		268.8
Net loss on equity investments		—			—			—			nm			107			—			107			nm
Gain on disposal of bonus shares		—			—			—			nm			(246	)		—			(246	)		nm
Provision for income taxes		15			14			1			7.1			8,443			30			8,413			nm
Net (loss) income before noncontrolling interest		(722	)		166			(888	)		(534.9	)		(10,051	)		294			(10,345	)		(3518.7	)
Net loss attributable to noncontrolling interest		176			—			176			100.0	%		176			—			176			100.0	%
Net (loss) income	$	(546	)	$	166		$	(712	)		(428.6	)%	$	(9,875	)	$	294		$	(10,169	)		(3,518.7	)%

nm – not meaningful

Interest income, net . Interest income in the three and six months ended January 31, 2018 remained relatively consistent as compared to the three and six months ended January 31, 2018.

Net gain (loss) resulting from foreign exchange transactions . Net losses resulting from foreign exchange transactions are comprised entirely from changes in movements in New Israeli Shekels relative to the U.S. Dollar.

Net loss on Equity Investment . Net loss on Equity Investment relates entirely to our proportionate share of the net loss recorded by Lipomedix, in which we held a 38.9% interest prior to purchasing a majority stake during November 2017.

Gain on disposal of Bonus Shares. The gain on disposal of Bonus Shares relates entirely to the increase in fair value of the contingent right to receive Bonus Shares obtained during fiscal year 2017 from the date of purchase through assigning the rights thereto over to Howard Jonas in September 2017.

Net Income Attributable to Noncontrolling Interests . The change in the net income attributable to noncontrolling interests in the three and six months ended January 31, 2018 compared to the similar periods in fiscal 2017 was due to the net loss attributable to the noncontrolling interests in Lipomedix in the three and six months ended January 31, 2018. We began consolidating Lipomedix in November 2017.

Fiscal Year Ended July 31, 2017 Compared to Fiscal Years Ended July 31, 2016 and July 31, 2015:

	Fiscal Year ended July 31,									2017 change from 2016						2016 change from 2015
	(in thousands)
	2017			2016			2015			$			%			$			%
Rental – Third Party Revenues	$	989		$	746		$	809		$	243			32.6	%	$	(63	)		(7.8	)%
Rental – Related Party Revenues		3,705			3,729			2,118			(24	)		(0.6	)		1,611			76.1
Parking Revenues		924			1,114			1,060			(190	)		(17.1	)		54			5.1
Selling, general and administrative		(3,728	)		(2,754	)		(2,903	)		(974	)		35.4			149			(5.1	)
Depreciation and amortization		(1,669	)		(1,643	)		(1,203	)		(26	)		1.6			(440	)		36.6
Other		—			—			(18	)		—			—			18			(100.0	)
Income (loss) from operations	$	221		$	1,192		$	(137	)	$	(971	)		(81.5	)%	$	1,329			nm

nm—not meaningful

Revenues. Revenues decreased $62,000 in fiscal year 2017 compared to fiscal year 2016. Related party revenues decreased $24,000 due mainly to IDT no longer having any personnel working from the Piscataway building. Parking revenues decreased due to the loss of three third-party customers during fiscal year 2017. Third party revenue increased in fiscal year 2017 compared to fiscal year 2016 due to a new tenant in the 520 Broad Street building and an increase in tenant reimbursed utility expenses for the Piscataway building.

Revenues increased $1.6 million in fiscal year 2016 compared to fiscal year 2015. Related party revenues increased $1.6 million due mainly to a full year of rental income from IDT in the 520 Broad Street building during fiscal year 2016, as compared to three months during fiscal year 2015. IDT had been leasing space in another building and returned all of its Newark-based employees to the 520 Broad Street building during the fourth quarter of fiscal year 2015. Parking revenues increased due to three new customers, as well as a full year of customer revenue for 10 customers obtained during the second half of fiscal year 2015, partially offset by the loss of two third-party customers. Third party revenue decreased in fiscal year 2016 compared to fiscal year 2015 due to a decrease in tenant reimbursed utility expenses for the Piscataway building.

Selling, general and administrative expense . Selling, general and administrative expense consists mainly of payroll, benefits, facilities and consulting and professional fees. The increase in selling, general and administrative expenses in fiscal year 2017 compared to fiscal year 2016 is primarily due to an increase in real estate and parking taxes of $370,000, an increase in allocated expenses from IDT of $270,000 and an increase in consulting fees of $225,000.

The decrease in selling, general and administrative expenses in fiscal year 2016 compared to fiscal year 2015 is primarily due to a decrease in allocated expenses from IDT of $336,000, partially offset by an aggregate increase of bad debt expense from monthly parking customers of $82,000 and building security, repairs and maintenance of $76,000.

Depreciation and amortization expense . Depreciation and amortization expenses remained consistent in fiscal year 2017 compared to fiscal year 2016. The increase in depreciation and amortization expenses in fiscal year 2016 compared to fiscal year 2015 is primarily due to the assets put in service related to the build-out of the 520 Broad Street building during fiscal year 2016 and fiscal year 2015. During fiscal year 2016 and fiscal year 2015, we invested approximately $10.0 million in renovating the first four floors of the 520 Broad Street building to allow for IDT’s return in the fourth quarter of fiscal year 2015.

Our combined income and expense line items below income (loss) from operations were as follows:

	Fiscal Year ended July 31,									2017 change from 2016						2016 change from 2015
	(in thousands)
	2017			2016			2015			$			%			$			%
Income (loss) from operations	$	221		$	1,192		$	(137	)	$	(971	)		(81.5	)%	$	1,329			nm
Interest income (expense), net		10			(20	)		(356	)		30			nm			336			(94.4	)%
Net gains (losses) resulting from foreign exchange transactions		86			(13	)		(236	)		99			nm			223			(94.5	)
(Provision for) benefit from income taxes		(66	)		(449	)		(264	)		(383	)		(85.3	)		(713	)		nm
Other		(113	)		—			(2	)		(113	)		nm			2			(100.0	)
Net income (loss)	$	138		$	710		$	(467	)	$	(572	)		(80.6	%)	$	1,177			nm

nm—not meaningful

Net gains (losses) resulting from foreign exchange transactions . Net losses resulting from foreign exchange transactions are generated entirely from movements in New Israeli Shekels relative to the U.S. Dollar.

Provision for income taxes . Decreases in the provision for income taxes during fiscal year 2017 as compared to fiscal year 2016 directly relate to the decrease in Rafael Holdings’ profitability in fiscal year 2017, and increases in the provision for income taxes during fiscal year 2016 as compared to fiscal year 2015 directly relate to the increase in Rafael Holdings’ profitability in fiscal year 2016.

Liquidity and Capital Resources

General

Historically, we have satisfied our cash requirements primarily through intercompany debt funding from IDT. Prior to the spin-off, we continued to maintain an intercompany balance due to IDT that relates to advances for investments and purchases of fixed assets, as well as charges for services provided to us by IDT and payroll costs for our personnel that are paid by IDT, partially offset by revenue earned from leases to IDT. In connection with the spin-off, any intercompany debt between IDT and Rafael Holdings as of the distribution date was converted to equity and there is no indebtedness owing from Rafael Holdings to IDT. We anticipate our total operating costs will be between $2,000,000 to $2,300,000 per year as a result of being a public reporting company. Several of the costs included in this estimated range are preliminary, subject to negotiation, and may vary from the estimates when finalized.

As of January 31, 2018, we had cash and cash equivalents of $12.0 million. We expect our cash from operations in the next twelve months, the balance of cash and cash equivalents that we held as of January 31, 2018 and the cash and other assets that IDT will contribute to us in connection with and prior to the spin-off to be sufficient to meet our currently anticipated working capital and capital expenditure requirements during the twelve-month period ending January 31, 2019.

(in thousands)	Six Months Ended January 31,						Year Ended July 31,
	2018			2017			2017			2016			2015
	(in thousands)
Cash flows provided by (used in)
Operating activities	$	41		$	(400	)	$	(1,623	)	$	72		$	(571	)
Investing activities		(728	)		(9,446	)		(11,220	)		(3,653	)		(8,844	)
Financing activities		900			19,326			22,260			265			10,029
Effect of exchange rates on cash and cash equivalents		39			42			—			3			(95	)
Increase (decrease) in cash and cash equivalents	$	252		$	9,522		$	9,417		$	(3,313	)	$	519

Operating Activities

Our cash flow from operations varies from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically payments of trade accounts payable. The increase in cash flows provided by operating activities in in the six months ended January 31, 2018 as compared to the six months ended January 31, 2017 related primarily to decreased charges from related parties. The decrease in cash flows provided by operating activities in fiscal year 2017 as compared to fiscal year 2016 relates to decreased net income, as well as a successful appeal of 2012 and 2013 calendar year real estate taxes, generating a refund of $480,000, during fiscal year 2016 and an increase of $480,000 in other assets.

Investing Activities

Cash used in investing activities for the six months ended January 31, 2018 related entirely to fixed asset additions. Cash used in investing activities for the six months ended January 31, 2017, fiscal year 2017, fiscal year 2016, and fiscal year 2015 consisted mostly of investments in Rafael Pharmaceuticals (through CS Pharma) of $8.0 million and $2.0 million during fiscal year 2017 and fiscal year 2016, respectively, and purchases of fixed assets related to the build-out of the building at 520 Broad Street in Newark, NJ of $1.5 million and $8.7 million during fiscal year 2016 and 2015, respectively.

Financing Activities

Cash provided by financing activities for the six months ended January 31, 2018 related to cash advances from IDT of $900,000. Cash provided by financing activities for the six months ended January 31, 2017 related to the sale of member interests in CS Pharma to third parties, as well as cash advances from IDT of $8.4 million, In connection with our investment in Rafael Pharmaceuticals, our subsidiary CS Pharma issued member interests to third parties in exchange for cash investment in CS Pharma of $10 million. We hold a 90% interest in IDT-Rafael Holdings, LLC, which holds a 50% interest in CS Pharma, and we are the managing member of both entities. In fiscal year 2017, CS Pharma received $10.0 million from the sale of its member interests to third parties. It is expected that CS Pharma will use its cash to invest in Rafael Pharmaceuticals. Additionally, during fiscal 2017 we sold 10% of IDT-Rafael Holdings, LLC, in which our direct and indirect interest and rights in Rafael Pharmaceuticals were held, to Howard Jonas for $1.0 million, which represented 10% of the Company’s cost basis in IDT-Rafael Holdings. As we hold our interest in CS Pharma through our 90%-owned non-operating subsidiary, IDT-Rafael Holdings, LLC, which holds a 50% interest in CS Pharma, we will hold an effective 45% indirect interest in the assets held by CS Pharma, including its cash. Cash provided by financing activities related to cash advances from IDT was $11.0 million, $6.5 million, and $10.3 million during fiscal year 2017, fiscal year 2016 and fiscal year 2015, respectively. These increases were offset by repayments on a note payable of $6.4 million in fiscal year 2016 and $271,000 in fiscal year 2015 related to paying off the balance of the note payable on the Piscataway building.

We do not anticipate paying dividends on our common stock until we achieve sustainable profitability and retain certain minimum cash reserves. The payment of dividends in any specific period will be at the sole discretion of our Board of Directors.

CHANGES IN PROPERTY AND EQUIPMENT

Gross Property and Equipment increased to $65.7 million at January 31, 2018, from $65.0 million at July 31, 2017, from $63.1 million at July 31, 2016, and from $62.4 million at July 31, 2015, primarily due fixed asset additions of $728,000, $1.7 million, $1.6 million, and $8.8 million during the six months ended January 31, 2018, and the years ended July 31, 2017, July 31, 2016, and July 31, 2015, respectively, partially offset by depreciation expense of $853,000, $1.7 million, $1.6 million, and $1.2 million during the six months ended January 31, 2018, and the years ended July 31, 2017, July 31, 2016, and July 31, 2015, respectively, and disposals of fully depreciated assets of $765,000 and $172,000 during the years ended July 31, 2016, and July 31, 2015, respectively.

OFF-BALANCE SHEET ARRANGEMENTS

As of January 31, 2018, we did not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

In connection with the spin-off, we and IDT will enter into a tax separation agreement, which sets forth the responsibilities of IDT and us with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the spin-off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. IDT will be generally responsible for our federal, state, local and foreign income taxes for periods before and including the spin-off. We will be generally responsible for all other taxes relating to our business. We and IDT will each generally be responsible for managing those disputes that relate to the taxes for which each of us is responsible and, under certain circumstances, may jointly control any dispute relating to taxes for which both of us are responsible.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

FOREIGN CURRENCY RISK

Revenue from tenants located in Israel represented 2% and 5% of our combined revenues in the three and six months ended January 31, 2018 and in the three and six months ended January 31, 2017, respectively. Revenue from tenants located in Israel represented 5%, 5% and 8% of our combined revenues in fiscal year 2017, fiscal year 2016 and fiscal year 2015, respectively. The entirety of these revenues is in currencies other than the U.S. Dollar. Our foreign currency exchange risk is somewhat mitigated by our ability to offset a portion of these non U.S. Dollar-denominated revenues with operating expenses that are paid in the same currencies. While the impact from fluctuations in foreign exchange rates affects our revenues and expenses denominated in foreign currencies, the net amount of our exposure to foreign currency exchange rate changes at the end of each reporting period is generally not material.

INVESTMENT RISK

In addition to, but separate from our primary business, we will hold a portion of our assets in marketable securities, hedge funds and a passive investment in another entity. Investments in marketable securities and hedge funds carry a degree of risk, and depend to a great extent on correct assessments of the future course of price movements of securities and other instruments. There can be no assurance that our investment managers will be able to accurately predict these price movements. The securities markets have in recent years been characterized by great volatility and unpredictability. Our passive interests in other entities are not currently liquid and we cannot assure that they we will be able to liquidate them when we desire, or ever. Accordingly, the value of our investments may go down as well as up and we may not receive the amounts originally invested upon redemption.

BUSINESS

Overview

Rafael Holdings, Inc. (“Rafael”) will own commercial real estate assets and interests in clinical and early stage pharmaceutical companies. The assets will be operated as two separate lines of business. The commercial real estate holdings consist of the building at 520 Broad Street in Newark, New Jersey that houses IDT’s headquarters, and its associated public garage, an office/data center building in Piscataway, New Jersey and a portion of a building in Israel that hosts offices for IDT and certain affiliates. The pharmaceutical holdings include debt interests and warrants in Rafael Pharmaceuticals, Inc., which is a clinical stage, oncology-focused, pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells, and a majority equity interest in Lipomedix Pharmaceuticals Ltd., an early stage pharmaceutical development company based in Israel. All of these assets were non-core assets outside of IDT’s telecom and payment services businesses.

Real Estate

520 Broad Street in Newark New Jersey is a 20-story commercial office building containing approximately 496,000 square feet. The building was completed in 1957 and is of steel-frame construction with cast-in-place concrete floors. The facade is constructed of stone and metal framed glass curtain wall sections. The public garage has three levels, plus additional surface parking that, in total, can accommodate in excess of 800 parking spaces.

The IDT lease expires in April 2025 and is for 80,000 square feet and includes two parking spots per thousand square feet of space leased. The annual base rent is $1,498,400. IDT has the right to terminate the lease upon four months’ notice and, upon early termination, IDT will pay a penalty equal to 25% of the portion of the rent due over the course of the remaining term. IDT has the right to lease an additional 25,000 square feet in the building on the same terms as the base lease, and other rights to a further 25,000 square feet should all available space be leased to other tenants. Upon expiration of the lease, IDT has the right to renew the lease for another 5 years on substantially the same terms, with a 2% increase in the rental payments.

The Genie lease expires in April 2025 and is for 8,631 square feet and includes two parking spots per thousand square feet of space leased. The annual base rent is $198,513. Genie has the right to terminate the lease upon four months’ notice and, upon early termination, Genie will pay a penalty equal to 25% of the portion of the rent due over the course of the remaining term. Upon expiration of the lease, Genie has the right to renew the lease for another 5 years on substantially the same terms, with a 2% increase in the rental payments.

In addition to the IDT and Genie leases, there are three additional leases for space in the building. The first lease is for a portion of the sixth floor for an eleven-year term, of which the first six years are non-cancellable. The second lease is for a portion of the ground floor and basement for a term of ten years, seven months and the third lease is for another portion of the ground floor for a term of ten years, four months. The leases have all commenced. At January 31, 2018, July 31, 2017 and July 31, 2016, the carrying value of the land, building and improvements at 520 Broad Street was $45.6 million, $45.9 million and $45.6 million, respectively.

Depreciation and amortization expense of property, plant and equipment was $853,000 and $822,000 in the six months ended January 31, 2018 and 2017, respectively. Depreciation and amortization expense of property, plant and equipment was $1.6 million, $1.6 million and $1.2 million in fiscal 2017, fiscal 2016 and fiscal 2015, respectively.

The building in Piscataway, New Jersey is used partially by IDT Telecom for operations. The portion of a building in Israel hosts offices for IDT and its affiliates. The building in Piscataway is located at 225 Old New Brunswick Road: it is a three story commercial office building containing approximately 65,000 square feet. The building was completed in 1978. Since its completion, the building has been leased as data space and therefore has ample power, diverse paths of fiber, back-up generators and dedicated HVAC units. Currently, approximately 28% of the building is leased to two data users. Both leases are to tenants who each occupy a portion of the first floor. One lease expires at the end of 2020 and the other lease expires at the end of October 2022.

The space in Israel is a condominium portion of an office building built in 2004 located in the Har Hotzvim section of Jerusalem, Israel. The condominium is approximately 12,400 square feet and the space is occupied by IDT and related parties. Har Hotzvim is a high-tech industrial park located in northwest Jerusalem. It is the city's main zone for science-based and technology companies, among them Intel, Teva and Mobileye.

Rafael Pharmaceuticals

Rafael Pharmaceuticals is a clinical stage, oncology-focused pharmaceutical company committed to the development and commercialization of therapies that exploit the metabolic differences between normal cells and cancer cells.

We will own our interests/rights in Rafael Pharmaceutical through a 90%-owned non-operating subsidiary, IDT-Rafael Holdings, LLC. IDT-Rafael Holdings holds a warrant to purchase a significant stake in Rafael Pharmaceuticals, as well as other equity and governance rights in Rafael Pharmaceuticals, and owns 50% of CS Pharma, a non-operating entity which holds convertible debt and other rights to purchase equity interests in Rafael Pharmaceuticals.

Those interests/rights include:

1. $10,000,000 of Series D Convertible Notes of Rafael Pharmaceuticals held by CS Pharma.

2. A warrant to purchase up to 56% of the capital stock of Rafael Pharmaceuticals – the right to exercise the first $10,000,000 worth of the warrant is held by CS Pharma; and the remainder is held directly by IDT-Rafael Holdings.

We also have certain governance rights, including appointment of directors.

On September 19, 2017, IDT approved a compensatory arrangement with Howard S. Jonas related to the right held by IDT-Rafael Holdings to receive additional Rafael Pharmaceutical shares (“Bonus Shares”) upon the achievement of certain milestones. Under that arrangement, IDT and the Company transferred to Howard Jonas the contractual right to receive “Bonus Shares” for an additional 10% of the outstanding capital stock of Rafael Pharmaceuticals that was previously held by IDT-Rafael Holdings, which is contingent upon achieving certain milestones. This right was previously held by IDT-Rafael Holdings, subject to its right to transfer to recipients that IDT-Rafael Holdings, in its sole discretion, felt merit because of special efforts by such persons in assisting Rafael Pharmaceuticals and its products. IDT-Rafael Holdings distributed the rights to its members and we transferred the portion we received to Howard Jonas. If any of the milestones are met, the Bonus Shares are to be issued without any additional payment. Howard Jonas has the right to transfer the Bonus Shares, in his discretion, to others, including those who are instrumental to the future success of Rafael Pharmaceuticals.

On March 2, 2017, Howard Jonas, our Chairman of the Board, and Chairman of the Board of Rafael Pharmaceuticals purchased 10% of IDT-Rafael Holdings, LLC, in which the Company’s direct and indirect interest and rights in Rafael Pharmaceuticals were held, for a purchase price of $1 million, which represented 10% of the Company’s cost basis in IDT-Rafael Holdings. We hold our interest in CS Pharma through our 90%-owned non-operating subsidiary, IDT-Rafael Holdings, LLC, which holds a 50% interest in CS Pharma. Accordingly, we will hold an effective 45% indirect interest in the assets held by CS Pharma, including its cash. Separately, Howard Jonas and Deborah Jonas jointly own $525,000 of Series C Convertible Notes of Rafael Pharmaceuticals, and The Howard S. and Deborah Jonas Foundation owns $525,000 of Series C Notes of Rafael Pharmaceuticals.

The Rafael Pharmaceuticals Series D Note earns interest at 3.5% per annum, with principal and accrued interest due and payable on September 16, 2018. The Series D Note is convertible at the holder’s option into shares of Rafael Pharmaceuticals’ Series D Preferred Stock. The Series D Note also includes a mandatory conversion into Rafael Pharmaceuticals common stock upon a qualified initial public offering, and conversion at the holder’s option upon an unqualified financing event. In all cases, the Series D Note conversion price is based on the applicable financing purchase price. We and CS Pharma were issued warrants to purchase shares of capital stock of Rafael Pharmaceuticals representing up to 56% of the then issued and outstanding capital stock of Rafael Pharmaceuticals, on an as-converted and fully diluted basis. The right to exercise warrants as to the first $10 million thereof is owned by CS Pharma and the remainder is owned by IDT. The warrant expires on December 31, 2020. Currently, if IDT desires to raise additional financing from unaffiliated parties in connection with IDT’s exercise of its warrant or other current rights to invest in Rafael Pharmaceuticals (but not including the Rafael Pharmaceuticals rights held by CS Pharma), it first must give the other CS Pharma holders the opportunity to provide such financing on a pro rata basis. The exercise price of the warrant is the lower of 70% of the price sold in an equity financing, or $1.25 per share, subject to certain adjustments. The minimum initial and subsequent exercises of the warrant shall be for such number of shares that will result in at least $5 million of gross proceeds to Rafael Pharmaceuticals, or such lesser amount as represents 5% of the outstanding capital stock of Rafael Pharmaceuticals, or such lesser amount as may then remain unexercised. The warrant will expire upon the earlier of December 31, 2020 or a qualified initial public offering or liquidation event of Rafael Pharmaceuticals.

As of the date hereof and based on the current shares issued and outstanding of Rafael Pharmaceuticals, we, and our affiliates that hold interests in Rafael Pharmaceuticals would need to pay in the aggregate approximately $71 million to exercise the Warrant in full and approximately $56 million to purchase a 51% controlling stake in Rafael Pharmaceuticals. On an as-converted fully diluted basis (for all convertible securities of Rafael Pharmaceuticals outstanding), we and our affiliates that hold interests in Rafael Pharmaceuticals would need approximately $122 million to exercise the Warrant in full and approximately $98 million to purchase a 51% controlling stake in Rafael Pharmaceuticals. Following that exercise, a portion of our interest in Rafael Pharmaceuticals would continue to be held for the benefit of the other equity holders in IDT-Rafael Holdings and CS Pharma. Given the Company’s anticipated available cash upon the spin-off, we would not be able to exercise the warrant in its entirety and we may never be able to exercise the warrant in full.

The Company serves as the managing member of IDT-Rafael Holdings and IDT-Rafael Holdings serves as the managing member of CS Pharma, with broad authority to make all key decisions regarding their respective holdings. Any distributions that are made to CS Pharma from Rafael Pharmaceuticals that are in turn distributed by CS Pharma, will need to be made pro rata to all members, which would entitle IDT-Rafael Holdings to 50% (based on current ownership) of such distributions. Similarly, if IDT-Rafael Holdings were to distribute proceeds it receives from CS Pharma, it would do so on a pro rata basis, entitled the Company to 90% (based on current ownership) of such distributions.

Rafael Pharmaceuticals is a variable interest entity; however, we have determined that we are not the primary beneficiary as we do not have the power to direct the activities of Rafael Pharmaceuticals that most significantly impact Rafael Pharmaceuticals’ economic performance. At January 31, 2018, July 31, 2017 and July 31, 2016, the Company’s investment in Rafael Pharmaceuticals was $11.7 million, $12.1 million and $2.0 million, respectively. In addition to interests issued to IDT, CS Pharma has issued member interests to third parties in exchange for cash investment in CS Pharma of $10.0 million. At January 31, 2018, July 31, 2017 and July 31, 2016, CS Pharma had received $10.0 million, $10.0 million and $8.8 million, respectively, of such investment.

Science & Pre-Clinical:

The lead product of Rafael Pharmaceuticals is CPI-613 (as small molecule). CPI-613 is suitable for intravenous (IV) administration.

In the 1920’s, Nobel Prize Winner Dr. Otto Warburg observed that cancer cells metabolize glucose differently than normal cells. This effect has more recently come to be recognized as a component of a broadly pervasive repurposing and reregulation of metabolism in cancer, including mitochondrial components. This broad, deep reconfiguration of metabolism is now understood to represent one of the defining hallmarks of most or all cancers.

All living cells require a continual input of fuel to survive and reproduce. Adenosine 5-triphosphate (ATP) is the universal energy-carrying molecule generated by consumption of fuels in biological systems. Glucose is the primary source of raw material fuel needed for the generation of ATP in most normal cells. Mutations known to cause cancer engender changes in the processing of fuels as well as the nature of the fuel needed by cancer cells to support their growth and survival. Some of the changes are largely unique to cancer and not typically found among healthy cells in the body. While these changes are not identical in every tumor cell type there is sufficient overlap to suggest that targeting the process of fuel conversion to anabolic intermediates and energy is likely to produce a more durable response than less selective effects of earlier chemotherapeutics. By attacking a process that is unique to cancer and not found in healthy cells an improvement in both potency and safety and quality of life is expected to be achievable (Heiden, M. G. V., & DeBerardinis, R. J. (2017). Understanding the Intersections between Metabolism and Cancer Biology. Cell , 168 , 657-669. doi:10.1016/j.cell.2016.12.039 and Warburg, O. (1956). Origin of Cancer Cells. Science , 123 , 309-314. doi:10.1126/science.123.3191.309).

In addition to exploiting the metabolic regulatory differences between normal and cancerous cells, Altered Energy Metabolism Directed (AEMD) compounds are selectively taken up by cancer cells as opposed to normal cells at cancer cell killing concentrations in cell culture. It is hypothesized that this feature of our AEMD compounds is associated with their structural resemblance to fatty acids, another bioenergetic fuel source and critical cellular component whose uptake is widely upregulated in tumor cells.

In preclinical testing, CPI-613 exhibited 100% growth inhibition against all tested cells derived from human patient tumor biopsies and 100% cell kill against the vast majority of cell lines tested in cell culture from the National Cancer Institute and American Type Tissue Culture Collection library. Several of these tested cell lines are known to be resistant to the more frequently prescribed current chemotherapeutic agents. CPI 613 was tested at levels having no material impact on normal cells. Additional preclinical AEMD/CPI-613 studies demonstrated potent tumor growth inhibition in human tumor animal models in vivo (Zachar, et al., 2011, Journal of Molecular Medicine 89, 1137).

There are many potential advantages to the AEMD platform. Among them, AEMD molecules selectively target altered energy metabolism in cancer cells (more specifically chokepoints in the tricarboxylic cycle) which reregulated in cancer cells resulting in inhibition mitochondrial flux of fuels (glucose, glutamine). This in turn triggers apoptosis or excessive hydrogen peroxide and other radical production leading to cancer cell specific necrosis. High toxicity of many cancer drugs is because of unintended killing healthy cells. It is anticipated that AEMD molecules will have minimal toxic effect on healthy cells and thus, potentially exhibit high safety and tolerability profile. Further, high selectivity of AEMD compounds has potential to treat cancers in multiple clinical settings (metastatic, neoadjuvant and adjuvant) and because of their low toxicity, AEMD molecules may be used in combination with current standard of care.

Preliminary data from pre-clinical trials suggests that Rafael Pharmaceuticals’ strategy of targeting metabolic changes specific to tumor cells has yielded the potential for a very potent and highly selective therapeutic option for patients with difficult to treat malignancies. Such data suggests that the potency results in excellent and unprecedented response rates in several refractory patient populations. The high degree of selectivity for tumor vs. non-tumor cells results in a favorable safety and tolerability profile, such that the drugs may provide low intensity single agent treatment options for patients as Rafael Pharmaceuticals may have the ability to improve the efficacy of standard of care therapies with little or no incremental toxicity.

We believe the probability of improvements in safety is high, by selectively attacking metabolic processes unique to cancer and required for tumor cell survival. Further, by simultaneously attacking multiple processes that are common to the majority of cancer cell types and essential for their survival, the probability of developing local relapse or metastatic progression due to evolved resistance to CPI-613 therapy is believed to be reduced.

In addition, Rafael Pharmaceuticals has demonstrated in laboratory studies and clinical trials:

●

Wide therapeutic potential across multiple tumor types and even late-stage disease: In preclinical studies and Phase I safety clinical trials to date, Rafael Pharmaceuticals’ drugs have demonstrated activity in a spectrum of cancers, including hematological cancers and solid tumors, even in late-stage cancer patients who have failed multiple rounds of chemotherapy, radiation and stem cell transplantation. Assays to predict and characterize responses at the cellular level are being developed.

●

A favorable safety profile.

●

Multiple formulations are being developed in addition to IV infusion including oral delivery, and long-acting sustained release.

●

Low-cost, efficient, and scalable manufacturing.

Clinical Results

Pancreatic Cancer: CPI-613 in Combination with Modified FOLFIRINOX in First-Line Metastatic Pancreatic Cancer .

Twenty patients were enrolled in this study. The maximum tolerated dose of CPI-613 was 500 mg/m². The median number of treatment cycles given at the maximum tolerated dose was 11. Two patients enrolled at a higher dose of 1000 mg/m ² , and both had a dose-limiting toxicity. No deaths due to adverse events were reported. For the 20 patients given the maximum tolerated dose, the most common grade 3–4 non-hematological adverse events were hyperglycaemia, hypokalaemia, peripheral sensory neuropathy, diarrhea, and abdominal pain. The most common grade 3–4 hematological adverse events were neutropenia, lymphopenia, anaemia, and thrombocytopenia. Sensory neuropathy (all grade 1–3) was recorded in 17 out of the 18 patients and was managed with dose de-escalation or discontinuation of oxaliplatin per standard of care. Of the 18 patients given the maximum tolerated dose, 11 (61%) achieved an objective (complete or partial) response. Given that the Phase II clinical trial evaluating the FOLFIRINOX regimen reported an Overall Response Rate (ORR) of 31% and Complete Remission (CR) of <1%, the further evaluation of CPI-613 in pancreatic cancer is warranted.

Acute Myeloid Leukemia: CPI-613 in Combination with High Dose Cytarabine and Mitoxantrone in Elderly Patients with Relapsed or Refractory Acute Myeloid Leukemia (AML).

2 trials were conducted to investigate the safety and efficacy of CPI-613 in combination with high dose cytarabine and mitoxantrone (HAM) in patients with relapsed or refractory Acute Myeloid Leukemia (AML). Overall, the treatment was well tolerated. Total 67 patients dosed in this phase I study and 62 were evaluable for efficacy. The median overall survival (OS) of elderly patients (≥60 years or older, N =32) was 6.9 months, which is substantially higher than historical control of patient treated with HAMA alone. This result is consistent in phase II study (CCCWFU 22215) with median OS of 10 months (N = 21, study is ongoing). CR was also substantially higher in elderly patients (60 years or older) treated with CPI-613 + HAM compared to patients treated with HAM alone (38% in phase I study and 33% in phase II study compared to only 26% in historical cohort).

Peripheral T-cell Lymphoma: Phase I Dose-Escalation Study of CPI-613, in Combination with Bendamustine, in Patients with Relapsed or Refractory T-cell Lymphoma

To date, 10 patients have received at least one dose of CPI-613 in combination with bendamustine. 9 patients are evaluable for safety and 7 patients for efficacy. Overall, the patients exhibited a good safety profile. The most common grade 3 or higher toxicities were lymphopenia and leukopenia, neutropenia, anemia and thrombocytopenia. CPI-613 in combination with bendamustine also exhibited excellent efficacy profile with an ORR of 86% (CR: 43%, PR: 43%). All 3 patients with CR were diagnosed with peripheral T cell lymphoma, not otherwise specified. Although the numbers are small, continued investigation is warranted as these response rates in a poor risk population of patients with relapsed/refractory T Cell Lymphoma is very exciting.

Lipomedix

Lipomedix Pharmaceuticals Ltd. (“Lipomedix”) is a development-stage, privately held, Israeli company focused on the development of an innovative, safe and effective cancer therapy based on liposome delivery.

We own ordinary shares of Lipomedix representing approximately 50.6% of the issued and outstanding ordinary shares, which were purchased in Fiscal 2016-2018 for $2.4 million.

Science and Pre Clinical:

Lipomedix was established in order to advance the pharmaceutical and clinical development of a patented prodrug of mitomycin-C and its efficient delivery in liposomes to cancer-affected target organs. Lipomedix believes that this formulation, known as Promitil® – Pegylated Liposomal Mitomycin-C Prodrug (PL-MLP) – overcomes the problems associated with the mitomycin-C toxicity of certain current treatments and turns it into passively targeted, anti-cancer drug that could potentially become the therapy of choice in a variety of cancers. The inventor and scientific founder, of Lipomedix is Prof. Alberto Gabizon of the Hebrew University – Shaare Zedek Medical Center, Israel who is also the co-inventor and co-developer of Doxil® (doxorubicin hydrochloride liposome injection). Prof. Gabizon is one of the few scientists intimately familiar with the successful development and commercialization process of liposomal drugs.

Promitil is an innovative nanomedicine designed for controlled delivery of a chemotherapeutic agent in a proprietary prodrug form. Lipomedix believes it may have advantages over conventional anticancer agents that have serious adverse side effects, and limited efficacy with resistance to treatment. Promitil is based on an innovative and breakthrough technology that could potentially help cancer patients receive safer therapy with a more potent anti-tumor effect.

In pre-clinical trials, Promitil inhibited a range of cancer types in animal models (pancreatic, colorectal, stomach, breast, ovarian, melanoma) and potentiated the activity of a co-administered cancer drug. The API (MLP), a prodrug of mitomycin C, is carried by a pegylated liposomal delivery system that confers an extended circulation time in vivo and improved delivery to tumors. In pre-clinical trials, Promitil significantly reduced mitomycin-C’s systemic toxicity and mitigated its side-effects. Promitil is a highly stable formulation with prolonged storage shelf life of over 3 years.

Clinical:

A total of 88 patients have been treated with Promitil as a single agent or in combination with other anticancer drugs under the framework of a clinical study. Promitil was well tolerated and safe for use at the tested doses. The majority of the adverse events reported were mild to moderate and unrelated to the study drug.

A Phase IA dose escalation open trial has, Lipomedix believes, demonstrated that Promitil is a conceptually attractive formulation system (by analogy with the success of Doxil) which has successfully and substantially modified the pharmacokinetic characteristics of mitomycin C delivery, resulting in the ability to clinically administer much larger amounts of active drug (approximately 3 times greater mitomycin C-equivalent dose than the maximal tolerated dose of mitomycin C), with an acceptable toxicity profile, and with long circulation time to ensure adequate drug delivery.

A Phase IB continuation trial in advanced colon cancer patients receiving Promitil as 3rd line therapy has confirmed the safety and pharmacokinetic features of Promitil in this patient population, as well as the feasibility of combining Promitil with Bevacizumab and/or Capecitabine. This stage of colon cancer has an ominous prognosis with median survival of approximately 5 months for untreated patients, and 6-7 months using any of the two approved therapies (Regorafenib, TAS-102), and a rate of partial responses (tumor shrinkage) nearly zero.

In an ongoing 1B study, clinical efficacy appears so far to be limited to stabilization of disease based on interim data. Lipomedix believes the survival data, yet immature, of the Promitil-Bevacizumab combination is encouraging, but the lack of a head-to-head comparator for survival and the lack of meaningful tumor shrinkage in treated patients leaves uncertainty as to whether colorectal carcinoma is the optimal indication for Promitil. To clarify this point, and dependent on available funding, Lipomedix believes that the next development step should be to conduct an active comparator Phase 2B trial using as end-points PFS and OS, which will provide information to resolve this issue in colorectal cancer. Lipomedix believes that a 100-patient strong study should suffice to see if it has a significant signal. Given the large number of patients with this condition, Lipomedix anticipates this study can be completed relatively quickly (approximately 18 months) with centers in 3 or 4 countries only.

Additional complementary plans with the Lipomedix flagship product, Promitil, include:

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Conduct exploratory trials of Promitil in combination with radiotherapy. This is a separate avenue of clinical development sprouting from preclinical observations (see Dr. Andrew Wang et al. paper in the Red Journal on Promitil and Radiotherapy, 2016). Lipomedix plans on asking for FDA advice on the best way to maximize clinical information from these exploratory studies for regulatory purposes.

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Explore other indications and combinations of Promitil with other chemotherapeutic or immunotherapeutic agents in small investigator-initiated or company-sponsored clinical studies.

Promitil-based products :

In addition to Promitil, Lipomedix has developed a pipeline of Promitil-based products with potentially important applications:

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Folate-targeted Promitil (Promi-Fol), aimed at local treatment (intravesical) of superficial bladder cancer. Decorating Promitil with folate ligands exploits the frequent overexpression of folate receptors in urothelial cancers for selective and enhanced delivery of Promitil to cancer cells. Promi-Fol could be a safe and effective therapeutic alternative for local treatment of the growing patient population with superficial bladder cancer

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Promi-Dox, a highly potent dual drug liposome with MLP and doxorubicin (“the “SuperDoxil”) for a basket of tumors. If a strong clinical signal can be detected there are several possible cancer settings with substantial patient numbers and significant unmet need where PromiDox could be utilized.

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Promitil-Alendronate (Promi-Ald), a formulation of Promitil loaded with the bisphosphonate Alendronate, which may serve as an optional, companion PET-imaging product of the distribution of Promitil liposomes in the patient body to detect patients in whom cancer targeting of liposomes is most effective. A micro-dose of Promi-Ald can be labeled with the PET-radioemitter Zirconium89 for PET-CT imaging. Because it is used in micro-dosing form, it requires minimal product development.

Non-Promitil based product : PLAD (dual drug liposome with doxorubicin and alendronate), which Lipomedix hopes will soon be licensed by Yissum-Shaare Zedek Scientific to Lipomedix, is a unique chemo-immunotherapeutic tool developed by Dr. Gabizon’s team that provides two therapeutic modalities in one single formulation, that may be effective in breast cancer, ovarian cancer, and Kaposi sarcoma.

Review and Approval of Drugs in the United States

In the United States, the FDA approves and regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and implementing regulations. The failure to comply with requirements under the FDCA and other applicable laws at any time during the product development process, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions, including refusal by the FDA to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and other types of letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and penalties brought by the FDA and the Department of Justice or other governmental entities.

Each of the Pharmaceuticals Investment Companies product candidates must be approved by the FDA through a New Drug Application, or NDA. An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following:

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completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations;

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submission to the FDA of an Investigational New Drug, or IND, application, which must take effect before human clinical trials may begin;

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approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated;

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performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug product for each indication;

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preparation and submission to the FDA of a NDA requesting marketing for one or more proposed indications;

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review by an FDA advisory committee, where appropriate or if applicable;

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satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current Good Manufacturing Practices, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity;

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satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data;

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payment of user fees and securing FDA approval of the NDA; and

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compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and the potential requirement to conduct post-approval studies.

Before an applicant begins testing a compound with potential therapeutic value in humans, the drug candidate enters the preclinical testing stage. Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, and the purity and stability of the drug substance, as well as in vitro and animal studies to assess the potential safety and activity of the drug for initial testing in humans and to establish a rationale for therapeutic use. The conduct of the preclinical tests must comply with federal regulations and requirements including good laboratory practices. The sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. An IND is an exemption from the FDCA that allows an unapproved drug to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer an investigational drug to humans. Such authorization must be secured prior to interstate shipment and administration of any new drug that is not the subject of an approved NDA, The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA places the clinical trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may also impose clinical holds on a drug candidate at any time before or during clinical trials due to safety concerns or non-compliance.

A sponsor may choose, but is not required, to conduct a foreign clinical study under an IND. When a foreign clinical study is conducted under an IND, all FDA IND requirements must be met unless waived. When the foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with FDA certain regulatory requirements in order to use the study as support for an IND or application for marketing approval. Specifically, on April 28, 2008, the FDA amended its regulations governing the acceptance of foreign clinical studies not conducted under an investigational new drug application as support for an IND or a new drug application. The final rule provides that such studies must be conducted in accordance with GCP, including review and approval by an independent ethics committee, or IEC, and informed consent from subjects. The GCP requirements in the final rule encompass both ethical and data integrity standards for clinical studies. The FDA’s regulations are intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical studies, as well as the quality and integrity of the resulting data. They further help ensure that non-IND foreign studies are conducted in a manner comparable to that required for IND studies.

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include, among other things, the requirement that all research subjects provide their informed consent in writing before their participation in any clinical trial. Clinical trials are conducted under written study protocols detailing, among other things, the objectives of the study, inclusion and exclusion criteria, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND. In addition, an IRB representing each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution, and the IRB must conduct continuing review and reapprove the study at least annually. The IRB must review and approve, among other things, the study protocol and informed consent information to be provided to study subjects.

Human clinical trials are typically conducted in four sequential phases, which may overlap or be combined:

Phase 1. The drug is initially introduced into a small number of healthy human subjects or, in certain indications such as cancer, patients with the target disease or condition (e.g., cancer) and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness and to determine optimal dosage.

Phase 2. The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.

Phase 3. These clinical trials are commonly referred to as “pivotal” studies, which denotes a study which presents the data that the FDA or other relevant regulatory agency will use to determine whether or not to approve a drug. The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product and to provide adequate information for the labeling of the product.

Phase 4 . Post-approval studies may be conducted after initial marketing approval. These studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication.

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur. In addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse reactions; findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the drug; and any clinically important increase in the case of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

Concurrent with clinical trials, companies often complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, must develop methods for testing the identity, strength, quality, purity, and potency of the final drug. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.

If clinical trials are successful, the next step in the drug development process is the preparation and submission to the FDA of a NDA. The NDA is the vehicle through which drug applicants formally propose that the FDA approve a new drug for marketing and sale in the United States for one or more indications. The results of product development, preclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product. The submission of an NDA is subject to the payment of substantial user fees; a waiver of such fees may be obtained under certain limited circumstances.

The FDA reviews all NDAs submitted before it accepts them for filing and may request additional information rather than accepting an NDA filing. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA.

After the NDA submission is accepted for filing, the FDA reviews the NDA to determine, among other things, whether the proposed product is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength, quality and purity. During the approval process, the FDA also will determine whether a risk evaluation and mitigation strategy, or REMS, is necessary to assure the safe use of the drug or biologic. If the FDA concludes that a REMS is needed, the sponsor of the NDA must submit a proposed REMS; the FDA will not approve the NDA without a REMS, if required.

Before approving an NDA, the FDA will inspect the facilities at which the product is to be manufactured. These preapproval inspections may cover all facilities associated with an NDA submission, including drug component manufacturing (e.g., active pharmaceutical ingredients), finished drug product manufacturing, and control testing laboratories. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.

The FDA is required to refer an application for a novel drug to an advisory committee or explain why such referral was not made. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

On the basis of the FDA’s evaluation of the NDA and accompanying information, including the results of the inspection of the manufacturing facilities, the FDA may issue an approval letter or a complete response letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application. If a complete response letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, or withdraw the application. If and when those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

If a product receives regulatory approval, the approval may be limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. In addition, the FDA may require Phase 4 testing which involves clinical trials designed to further assess a product’s safety and effectiveness and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized.

Fast track, breakthrough therapy and priority review designations

The FDA is authorized to designate certain products for expedited review if they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition. These programs are, fast track designation, breakthrough therapy designation, and priority review designation.

Accelerated approval pathway

The FDA may grant accelerated approval to a product for a serious or life-threatening condition that provides meaningful therapeutic advantage to patients over existing treatments based upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant accelerated approval for such a condition when the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality, or IMM, and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. Products granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.

Post-Approval Requirements

Any drug that receives FDA approval is subject to continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.

In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.

Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

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restrictions on the marketing or manufacturing of the product, suspension of the approval, or complete withdrawal of the product from the market or product recalls;

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fines, warning letters or holds on post-approval clinical trials;

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refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals;

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product seizure or detention, or refusal to permit the import or export of products; or

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injunctions or the imposition of civil or criminal penalties.

The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act, or PDMA, and its implementing regulations, as well as the Drug Supply Chain Security Act, or DSCA, which regulate the distribution and tracing of prescription drugs and prescription drug samples at the federal level, and set minimum standards for the regulation of drug distributors by the states. The PDMA, its implementing regulations and state laws limit the distribution of prescription pharmaceutical product samples, and the DSCA imposes requirements to ensure accountability in distribution and to identify and remove counterfeit and other illegitimate products from the market.

Abbreviated new drug applications for generic drugs

In 1984, with passage of the Hatch-Waxman Amendments to the FDCA, Congress established an abbreviated regulatory scheme authorizing the FDA to approve generic drugs that are shown to contain the same active ingredients as, and to be bioequivalent to, drugs previously approved by the FDA pursuant to NDAs. To obtain approval of a generic drug, an applicant must submit an abbreviated new drug application, or ANDA, to the agency. An ANDA is a comprehensive submission that contains, among other things, data and information pertaining to the active pharmaceutical ingredient, bioequivalence, drug product formulation, specifications and stability of the generic drug, as well as analytical methods, manufacturing process validation data and quality control procedures. ANDAs are “abbreviated” because they generally do not include preclinical and clinical data to demonstrate safety and effectiveness. Instead, in support of such applications, a generic manufacturer may rely on the preclinical and clinical testing previously conducted for a drug product previously approved under an NDA, known as the reference-listed drug, or RLD.

505(b)(2) NDAs

As an alternative path to FDA approval for modifications to formulations or uses of products previously approved by the FDA pursuant to an NDA, an applicant may submit an NDA under Section 505(b)(2) of the FDCA. Section 505(b)(2) was enacted as part of the Hatch-Waxman Amendments and permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted by, or for, the applicant. If the 505(b)(2) applicant can establish that reliance on FDA’s previous findings of safety and effectiveness is scientifically and legally appropriate, it may eliminate the need to conduct certain preclinical or clinical studies of the new product. The FDA may also require companies to perform additional studies or measurements, including clinical trials, to support the change from the previously approved reference drug. The FDA may then approve the new product candidate for all, or some, of the label indications for which the reference drug has been approved, as well as for any new indication sought by the 505(b)(2) applicant.

Pediatric studies and exclusivity

Under the Pediatric Research Equity Act, an NDA or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the drug product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. With enactment of FDASIA 2012, sponsors must also submit pediatric study plans prior to the assessment data. Those plans must contain an outline of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, any deferral or waiver requests, and any other information required by regulation. The applicant, the FDA, and the FDA’s internal review committee must then review the information submitted, consult with each other, and agree upon a final plan. The FDA or the applicant may request an amendment to the plan at any time. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements. Additional requirements and procedures relating to deferral requests and requests for extension of deferrals are contained in FDASIA. Unless and until FDA promulgates a regulation stating otherwise, the pediatric data requirements do not apply to products with orphan designation.

Orphan drug designation and exclusivity

Under the Orphan Drug Act, the FDA may designate a drug product as an “orphan drug” if it is intended to treat a rare disease or condition, generally meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost of developing and making a drug product available in the United States for treatment of the disease or condition will be recovered from sales of the product. A company must request orphan drug designation before submitting an NDA for the drug and rare disease or condition. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use. Orphan drug designation does not shorten the PDUFA goal dates for the regulatory review and approval process, although it does convey certain advantages such as tax benefits and exemption from the PDUFA application fee.

Patent term restoration and extension

A patent claiming a new drug product or its method of use may be eligible for a limited patent term extension, also known as patent term restoration, under the Hatch-Waxman Act, which permits a patent restoration of up to five years for patent term lost during product development and the FDA regulatory review. Patent term extension is generally available only for drug products whose active ingredient has not previously been approved by the FDA. The restoration period granted is typically one-half the time between the effective date of an IND and the submission date of an NDA, plus the time between the submission date of an NDA and the ultimate approval date. Patent term extension cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval date. Only one patent applicable to an approved drug product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent in question. A patent that covers multiple drugs for which approval is sought can only be extended in connection with one of the approvals. The United States Patent and Trademark Office reviews and approves the application for any patent term extension in consultation with the FDA.

FDA approval and regulation of companion diagnostics

If safe and effective use of a therapeutic depends on an in vitro diagnostic, then the FDA generally will require approval or clearance of that diagnostic, known as a companion diagnostic, at the same time that the FDA approves the therapeutic product. In August 2014, the FDA issued final guidance clarifying the requirements that will apply to approval of therapeutic products and in vitro companion diagnostics. According to the guidance, for novel drugs, a companion diagnostic device and its corresponding therapeutic should be approved or cleared contemporaneously by the FDA for the use indicated in the therapeutic product’s labeling.

Review and Approval of Drugs in Europe and other Foreign Jurisdictions

In addition to regulations in the United States, a manufacturer is subject to a variety of regulations in foreign jurisdictions to the extent they choose to sell any drug products in those foreign countries. Even if a manufacturer obtains FDA approval of a product, it must still obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries. To obtain regulatory approval of an investigational drug or biological product in the European Union, a manufacturer must submit a marketing authorization application to the European Medicines Agency or EMA. For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, clinical trials are to be conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

Pharmaceutical Coverage, Pricing and Reimbursement

In the United States and markets in other countries, patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products. Significant uncertainty exists as to the coverage and reimbursement status of products approved by the FDA and other government authorities. Even if our product candidate is approved, sales of our products will depend, in part, on the extent to which third-party payors, including government health programs in the United States such as Medicare and Medicaid, commercial health insurers and managed care organizations, provide coverage, and establish adequate reimbursement levels for, such products. The process for determining whether a payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the product once coverage is approved. Third-party payors are increasingly challenging the prices charged, examining the medical necessity, and reviewing the cost-effectiveness of medical products and services and imposing controls to manage costs. Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the approved products for a particular indication.

There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. Such reforms could have an adverse effect on anticipated revenue from product candidates that the Pharmaceutical Investment Companies may successfully develop and for which they may obtain marketing approval and may affect their overall financial condition and ability to develop product candidates.

Healthcare Law and Regulation

In addition to FDA restrictions on marketing of drug products, federal and state fraud and abuse laws restrict business practices in the pharmaceutical industry. Restrictions under applicable federal and state healthcare laws and regulations include the following:

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the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs;

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the federal False Claims Act, which prohibits any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government;

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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

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the civil monetary penalties statute, which imposes penalties against any person who is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent;

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the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, information related to payments and other transfers of value made by that entity to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and

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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to healthcare items or services that are reimbursed by non-governmental third-party payors, including private insurers.

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state laws requiring pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government. State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Our Strategy

Real Estate

Our strategy related to our real estate business includes:

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capitalizing on knowledge of the marketplaces to enhance its leasing and property management capabilities in order to achieve stabilized occupancy.

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attracting additional tenants to its buildings and public parking garage;

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selectively seeking to acquire properties to create incremental cash flow and capital appreciation; and

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executing timely dispositions through sales or joint ventures.

Pharmaceutical Investments

We plan to continue to invest in Rafael Pharmaceuticals and Lipomedix as needed in order for those companies to execute on their plans and continue clinical trials as warranted by results and developments while continuing to seek other opportunities to invest in similar pharmaceutical companies.

Rafael Pharmaceuticals

In February 2017, Rafael Pharmaceuticals successfully completed an End of Phase I meeting with the FDA. The FDA approved the initiation of pivotal / registrational trial of CPI-613 in first-line metastatic pancreatic cancer and elderly patients with relapsed or refractory acute myeloid leukemia. Accordingly, Rafael Pharmaceuticals is preparing to initiate these two registrational trials by mid 2018. With the current plan, if the clinical trials are successful, Rafael Pharmaceuticals anticipates that CPI-613 will get approval for pancreatic cancer and acute myeloid leukemia by 2021, but delays may alter the timeframe. In addition to these above mentioned three indications, Rafael Pharmaceuticals is also investigating CPI-613 in Myelodysplastic Syndrome and Burkitt’s Lymphoma/Double-Hit Lymphoma and investigator sponsored study is underway for these indications.

Lipomedix

The strategy for Lipomedix is as follows:

Continue clinical development of Promitil for colon cancer with phase 2B. This study be done under an IND of the FDA and will take place in Israel, the USA, and optionally in other countries of Europe or Latin-America.

In parallel, conduct exploratory trials of Promitil in combination with radiotherapy in Israel and, possibly, the USA, after consultation with the FDA on the best regulatory path for approval.

Explore other indications and combinations of Promitil with other chemotherapeutic or immunotherapeutic agents in small investigator-initiated or company-sponsored clinical studies.

Consider whether to proceed with Orphan Disease Designation (Pancreatic cancer), another avenue of clinical development to pursue, particularly in combination with Onivyde or taxanes (paclitaxel, Abraxane) given the well-known synergy between mitomycin-C and irinotecan, and Lipomedix’ preclinical results demonstrating synergistic activity when Promitil is combined with paclitaxel. Attempt to engage IPSEN (Onivyde) or Celgene (Abraxane) in cooperative studies with these drug combinations.

Continue research and development, toxicity, and product development of Lipomedix’s pipeline aiming at out-licensing for Folate-targeted Promitil (PromiFol) and PromiDox. Similarly, if and when the PLAD license is transferred to Lipomedix, a similar strategy will be adopted.

Competition

With respect to our real estate business, we compete for commercial tenants in the areas our buildings are located.

The pharmaceutical and biotechnology industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. While Rafael Pharmaceuticals believes that Rafael Pharmaceuticals’ technology, development experience and scientific knowledge provide us with competitive advantages, Rafael Pharmaceuticals faces potential competition from many different companies, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions. Any product candidates that Rafael Pharmaceuticals successfully develops and commercializes will compete with existing therapies and new therapies that may become available in the future.

Rafael Pharmaceuticals competes in the segments of the pharmaceutical, biotechnology and other related markets that address cancer metabolism. There are other companies working to develop therapies in the field of cancer metabolism. These companies include divisions of large pharmaceutical companies and biotechnology companies of various sizes. . These companies include large pharmaceutical companies, including AstraZeneca plc, Eli Lilly and Company, Roche Holdings Inc. and its subsidiary Genentech, Inc., GlaxoSmithKline plc, Merck & Co., Novartis, Pfizer, Inc., and Genzyme, a Sanofi company. There are also biotechnology companies of various sizes that are developing therapies to target cancer metabolism, including: 3V Biosciences, Threshold Pharmaceuticals, Eleison Pharmaceuticals, Forma Therapeutics, Alexion Pharmaceuticals, Inc., BioMarin Pharmaceutical Inc., Calithera Biosciences, Inc., Agios Pharmaceuticals, Inc., Forma Therapeutics Holdings LLC, Shire Biochem Inc., Raze Therapeutics, Inc. and Selvita S.A.

Lipomedix faces competition from (i) other liposome and nanomedicine products in solid tumors (for example, Doxil (Janssen), Onivyde (Ipsen), Abraxane (Celgene)); (ii) other non-liposomal chemotherapeutic drugs in gastrointestinal malignancies recently developed or under development (for example, TAS-102 (Taiho) in colorectal cancer); (iii) biological therapy (mostly small molecule kinase inhibitors) recently developed or under development for colon cancer (for example (Regorafenib (Bayer)); (iv) immunotherapy approaches in gastrointestinal malignancies (for example Merck USA): antibodies (and/or vaccinations); and (v) large companies such as Roche.

Intellectual Property

Licenses

Rafael Pharmaceuticals maintain an exclusive license agreement with the Research Foundation of the State University of New York at Stony Brook, or RF, granting Rafael Pharmaceuticals the exclusive right to make, use and sell products covered under specified RF patents relating to lipoic acid derivatives with the right to grant sublicenses. This license agreement was subsequently amended in 2004, 2007 and 2017 and relates to Rafael’s AEMD class of compounds.

Lipomedix maintains an exclusive license agreement with Yissum Research and Development Company (Yissum), the technology transfer arm of the Hebrew University of Jerusalem granting Lipomedix the exclusive right to make, use and sell products covered under specified patents relating to the mitomycin lipophilic prodrug and its liposomal formulation with the right to grant sublicenses. In addition, Lipomedix is in the process of negotiating the license of a patent application (inventors: Gabizon et al.) from Yissum and Shaare Zedek Scientific on a novel dual drug liposome formulation (PLAD) for chemo-immunotherapy of cancer.

Patents

Rafael Pharmaceuticals patents its technology, inventions, and improvements that it considers important to the development of its business. A patent gives the patent holder the right to exclude any unauthorized use of the subject matter of the patent in those jurisdictions in which a patent is granted. As of December 2017, Rafael Pharmaceuticals owns or in-licenses over ten U.S. patents, over forty foreign patents registered in various countries, five pending U.S. patent applications, and over twenty pending foreign patent applications. Additional patent applications will be filed as studies continue. Patents that Rafael Pharmaceuticals has obtained for its platform technologies and patents that may issue in the future based on Rafael Pharmaceuticals’ currently pending patent applications for its platform technologies are scheduled to expire in years 2028 through 2034. The term of patent protection for certain platform technologies may be eligible for extension by up to five years in countries that permit patent term extension, or similar extensions, to recapture a portion of the patent term consumed as a result of government agency regulatory review of a pharmaceutical product. Thus, patent protection for certain of our platform technologies that would be scheduled to expire in year 2028 could be extended by up to five years to provide patent protection through year 2033 in the U.S. and other countries that permit patent term extension, or similar extensions, to recapture a portion of the patent term consumed as a result of government agency regulatory review of a pharmaceutical product. Rafael Pharmaceuticals has worldwide rights unencumbered with any partnerships, and has obtained U.S. orphan drug designation for CPI-613 in the treatment of MDS, AML and pancreatic carcinoma.

Lipomedix has two granted patents licensed from Yissum each with 20- year expiration terms: 1. Patent WO2000/064484 (filed April 2000: expected 20-year expiry term April 2020) "Conjugate having Cleavable Linkage for use in a Liposome" This patent relates to conjugates of a hydrophobic moiety (such as a lipid) linked through a cleavable dithiobenzyl linkage to a therapeutic agent (such as MMC). 2. Patent WO2004/110497 (filed April 2004: expected 20-year expiry term 2024) "Mitomycin Conjugates Cleavable by Thiols" or "Method for Treating Multi-Drug Resistant Tumors". The US patent relates to a method for administering Mitomycin-C to a multi-drug resistant cell by using a liposome, and a method for reducing the in vivo cytotoxicity of Mitomycin-C using a liposome composition. In addition, Lipomedix has four published international patent applications covering the combination of Promitil with other chemotherapies and with radiotherapy, its application to the treatment of bladder tumors (Folate-targeted Promitil or PromiFol), and its co-encapsulation with doxorubicin (PromiDox, the “SuperDoxil”).

Employees

As of July 31, 2017, we had 12 employees all dedicated to the real estate group while Rafael Pharmaceuticals employs 12 full-time employees as well as part-time employees and consultants who are involved in research and development and Lipomedix employs two full-time employees and two part-time employees.

Manufacturing

The Pharmaceutical Investment Companies do not own or operate, and currently have no plans to establish, any manufacturing facilities. The Pharmaceutical Investment Companies currently rely, and expect to continue to rely, on third parties for the manufacture of their product candidates for preclinical and clinical testing, as well as for commercial manufacture of any products that they may commercialize. The Pharmaceutical Investment Companies obtain our supplies from these manufacturers on a purchase order basis and do not have a long-term supply arrangement in place. The Pharmaceutical Investment Companies do not currently have arrangements in place for redundant supply for bulk drug substance. For all of the product candidates, the Pharmaceutical Investment Companies intend to identify and qualify additional manufacturers to provide the active pharmaceutical ingredient and the formulation and fill-and-finish services prior to submission of a new drug application to the FDA or along the first steps of marketing.

For Rafael Pharmaceuticals, the compounds are organic compounds of low molecular weight, generally called small molecules. They can be manufactured in reliable and reproducible synthetic processes from readily available starting materials. The chemistry is amenable to scale-up and does not require unusual equipment in the manufacturing process. Rafael Pharmaceuticals expects to continue to develop drug candidates that can be produced cost-effectively at contract manufacturing facilities.

Lipomedix’s Promitil and other pipeline candidates, are based on an active pharmaceutical ingredient (API) referred to as MLP (abbreviation of mitomycin-C lipid-based prodrug) that is formulated into customized nanoparticles. These nanoparticles consist of lipids and a polyethylene-glycol (PEG) polymer and are known as pegylated liposomes. MLP is currently synthesized by a third party using a proprietary, reliable and reproducible synthetic process from readily available raw materials. The MLP API is then shipped to another third-party facility specialized in liposome manufacture for clinical use. In principle, a single batch of API can serve for manufacture of several batches of Promitil liposomes.

The Pharmaceutical Investment Companies generally expect to rely on third parties for the manufacture of any companion diagnostics we develop.

Facilities

Our principal executive office is located in 520 Broad Street, Newark, New Jersey.

Rafael Pharmaceuticals leases 10,283 square feet of fully-equipped laboratory and administrative offices in Cranbury, New Jersey. The lease commenced on July 24, 2006 and was renewed for a 7 year term in August 2016 and ending on July 31, 2023. The annual base rent is $217,588 annually increasing to $250,185 commencing on August 1, 2021

Lipomedix has a Research and Services agreement with Shaare Zedek Scientific Ltd. by which laboratory space at Shaare Zedek Medical Center is used for R&D activities. This agreement is conditioned to grant support for the Shaare Zedek Oncology department either directly from Lipomedix or indirectly through the Israel Innovation Authority Fund (Israel Chief Scientist Office). This arrangement has been going on since 2012, and the grant support is negotiable and renewed on an annual basis. However, there can be no guarantees that Shaare Zedek will continue this agreement in the future.

Lipomedix leases a small Administrative Office in Giv’at Ram Hi-Tech Park from the Hebrew University on an annual basis for $3,600. This lease agreement has been extended till 2021.

MANAGEMENT

Directors and Executive Officers

Set forth below is information concerning our executive officers and directors.

Name	Age	Position
Howard S. Jonas	61	Chairman of the Board of Directors and Chief Executive Officer
Menachem Ash	46	President and General Counsel
David Polinsky	47	Chief Financial Officer
Stephen Greenberg	73	Director
Boris C. Pasche	56	Director
Michael J. Weiss	66	Director

Set forth below is biographical information with respect to the Company’s executive officers and directors:

Howard S. Jonas serves as Chairman of the Board of Directors of the Company and Chief Executive Officer. Mr. Jonas has been a director of Rafael Pharmaceuticals since April 2013 and was appointed Chairman of the Board in April 2016. Mr. Jonas founded IDT in August 1990, and has served as Chairman of its Board of Directors since its inception. Mr. Jonas has served as Chief Executive Officer of IDT from October 2009 through December 2013. Mr. Jonas has served as Chairman of the Board of Directors of Genie Energy Ltd. since January, 2011, when it was spun off from IDT, and as Chief Executive Officer of Genie from January 2014 until November 2017. He has served as Co-Vice Chairman of Genie’s subsidiary, Genie Energy International Corporation, since September 2009. He has been a director of IDT Energy since June 2007 and a director of American Shale Oil Corporation LLC since January 2008. Mr. Jonas served as the Chairman of the Board of Zedge, Inc., a former subsidiary of IDT that was spun off to stockholders in June 2016, from June 2016 to November 2016, and as the Vice Chairman of Zedge since November 2016. Mr. Jonas also serves as the Chairman of the Board of IDW Media Holdings, Inc., a former subsidiary of IDT that was spun off to stockholders in September 2009. Mr. Jonas is also the founder and has been President of Jonas Media Group (f/k/a Jonas Publishing) since its inception in 1979. Mr. Jonas received a B.A. in Economics from Harvard University.

Key Attributes, Experience and Skills:

As founder of the Company and Chairman of the Board since its inception, Mr. Jonas brings to the Board extensive and detailed knowledge of all aspects of our Company and each industry in which it is involved. In addition, having Mr. Jonas on the Board provides our Company with effective leadership.

Menachem Ash serves as the Company’s President and General Counsel. He has served as Executive Vice President of Strategy and Legal Affairs of IDT since October 2012. Mr. Ash served as the managing attorney of IDT’s legal department from June 2011 to October 2012. Mr. Ash has served as senior counsel to several IDT divisions since he joined IDT in July 2004, including IDT Telecom and IDT Carmel. Prior to joining IDT, Mr. Ash served as General Counsel to Telstar International, Inc., a telecommunications services provider. Mr. Ash also worked at KPMG as a senior associate in its tax group focusing on financial services and technology companies. He is a graduate of Brooklyn College and the Benjamin N. Cardozo School of Law.

David Polinsky has served as Chief Financial Officer of the Company since December 2017. Mr. Polinsky co-founded Rafael Pharmaceuticals and has served as its Vice President, General Counsel and Corporate Secretary from 2002, and as President, General Counsel and Secretary since 2016. It is anticipated that those relationships with Rafael Pharmaceuticals will terminate upon consummation of the spin-off. He also served on Rafael Pharmaceutical’s Board from 2002 until 2014. Mr. Polinsky also serves as Chairman of the Board of TheGiftBox, a company he co-founded in the technology sector. Prior to co-founding Rafael Pharmaceuticals, he served as Vice President and General Counsel for a New York-based real estate focused investment and management company, Square Management Corp., leading the investment analysis in and management of residential, office, retail and development properties. Previously and in partnership with the Honorable Edward I. Koch, former Mayor of New York City, Mr. Polinsky founded and served as CEO of a company that licensed and developed TheLaw.com. Mr. Polinsky earned his Juris Doctorate from Fordham University School of Law in 1996 and his Bachelor of Arts from Yeshiva University. Mr. Polinsky also earned the CFA Institute’s Investment Foundations certificate.

Stephen Greenberg has served as a director since March 2018 and served as a director of Zedge, Inc. (NYSE American: ZDGE) from May 23, 2016 to January 2018. Mr. Greenberg has been managing member of Pilgrim Mediation Group since May 2012 and managing member of Bento Box Entertainment since January 2013. Mr. Greenberg previously served as Chairman of the Board and Chief Executive Officer of Net2Phone, Inc. and of IDT Spectrum, Inc. from 2002 to 2006. In April 2015, Mr. Greenberg was elected the 29th Chairman of the Board the Conference of Presidents of Major American Jewish Organizations, the central coordinating body on international and national concerns for 50 National Jewish Organizations. Immediately prior to his election, Mr. Greenberg served as Chairman of the National Coalition for Eurasian Jewry. Mr. Greenberg has been a member of the board of American Friends of Beit Hatfusot since 1995 and previously served as the organization’s President and a member of the board of Tel Aviv Foundation since 2005. Mr. Greenberg was also a member of the board of International Hillel from 2006 to 2012. Mr. Greenberg received a B.A. in English Cum Laude from Washington & Jefferson College in 1965 and a J.D. with honors from George Washington University in 1968.

Key Attributes, Experience and Skills:

Mr. Greenberg is a seasoned professional and executive. He has overseen and advised companies as CEO as well as an attorney and in other capacities. Steve’s experience running Net2Phone will bring to the Board the perspective of an executive of a developing company that was newly public and dealing with the challenges of that position. His problem-solving skills, proven through his experience as an attorney, a mediator and a leader in public service, as well as his broad contacts in numerous fields, will also serve our Company well.

Boris C. Pasche, MD, Ph.D., has served as a director since March 2018 and is co-founder, member and Chief Executive Officer of TheraBionic LLC and TheraBionic GmbH, companies focused on the commercialization of its first oncology application: treatment of advanced hepatocellular carcinoma. Since 2014, Dr. Pasche has served as attending physician at Wake Forest Medical Center, director at Wake Forest Baptist Comprehensive Cancer Center and is chairman and holds the Charles L. Spurr Endowed Chair in Cancer Research, Department of Cancer Biology at Wake Forest University. Dr. Pasche is currently a member of the board of The Foundation for Research on Information Technologies in Society USA, Inc. From 2013 until 2016, Dr. Pasche served as associate editor of The Journal of the American Medical Association and prior to 2013 as contributing editor. From 2008 until 2014, Dr. Pasche was director of the Division of Hematology/Oncology of the University of Alabama at Birmingham (UAB) and Professor of Medicine with tenure, Martha Ann and David L. May Chair in Cancer Research. Dr. Pasche was associate director for Translational Research of the UAB Comprehensive Cancer Center between 2008 and 2009 and from 2009 until 2011 was deputy director of the UAB Comprehensive Cancer Center. Dr. Pasche currently serves as an editorial board member of The Journal of Precision Medicine, 4Open and serves as associate editor of The Chinese Journal of Cancer.

Dr. Pasche received his M.D. and Ph.D. degrees from the Karolinska Institute in Stockholm, Sweden and a M.D. degree from the University of Lausanne, Switzerland. Following a postdoctoral fellowship in Dr. Joseph Loscalzo's lab at the Brigham and Women's Hospital, Harvard Medical School, Dr. Pasche did an internship and residency in Internal Medicine at the New York Hospital, Cornell Medical Center. Dr. Pasche received his clinical training in Hematology/Oncology at Memorial Sloan-Kettering Cancer Center and did a second postdoctoral fellowship in the lab of Dr. Joan Massagué, Howard Hughes Medical Institute and Sloan-Kettering Institute for Cancer Research.

Dr. Pasche has served on multiple study sections for NCI, ACS, AACR, DOD and the Komen Foundation. He received the Ohio State University Human Cancer Genetics Program Commemorative Medal. He is an elected member of the American Society for Clinical Investigation (ASCI) and the American Clinical and Climatological Association (ACCA).

Key Attributes, Experience and Skills:

Dr. Pasche’s extensive and broad experience in the pharmaceutical industry, particularly his experience in developing new treatments in oncology, will bring perspective and insight to the Board in overseeing the Company’s pharmaceutical industry investments. His perspective as a practicing physician will also provide useful knowledge to the functioning of the Board. His experience with entities developing new drugs, in clinical trials and in obtaining regulatory approval will be critical in the Board’s oversight function.

Michael J. Weiss, MD, Ph.D., has served as a director since March 2018 and has been on staff as an ophthalmologist with the Edward S. Harkness Eye Institute since 1985 and has served as a director of Uveitis Service since July 1987. Dr. Weiss is a Clinical Professor of Ophthalmology at Columbia University Medical Center and was Board Certified in Ophthalmology in June 1987. Dr. Weiss received a Bachelor of Science from Bar-Ilan University, Israel in 1972, a Ph.D. from Columbia University School of Arts and Sciences in 1976 and a M.D. from Columbia College of Physicians and Surgeons in 1981. Dr. Weiss also did a Post-Graduate Fellowship at Columbia University Institute of Cancer Research from 1976-1977.

Key Attributes, Experience and Skills:

Dr. Weiss as a practicing physician is familiar with medical treatments that will bring perspective and insight to the Board in overseeing the Company’s pharmaceutical investments. Dr. Weiss has also previously served on the boards of public companies his experience in oversight and corporate governance will serve the Company well.

CORPORATE GOVERNANCE

Director Independence

Our Board of Directors has determined that majority of our directors are independent under criteria established by the NYSE American. Specifically, the board determined that Mr. Greenberg and Drs. Pasche and Weiss are independent in accordance with our Corporate Governance Guidelines and the rules of the NYSE American and other applicable laws. Our current Board of Directors also includes Howard Jonas.

Controlled Company Exemption

Following the spin-off, we will be a “controlled company” as defined in section 801(a) of the NYSE American Company Guide because more than 50% of our voting power will be beneficially held by Howard Jonas. As a “controlled company,” we will be exempt from certain NYSE American listing standards As discussed below, we intend to apply the NYSE American “controlled company” exemption only for our corporate governance practices with respect to the independence requirements of our Nominating Committee.

Committees of the Board of Directors

Our Board of Directors has established an Audit Committee, a Nominating Committee, a Compensation Committee, and a Corporate Governance Committee. All members of the Audit, Compensation and Governance Committees will meet the criteria for independence as established by NYSE American and under the Sarbanes-Oxley Act of 2002. Each of the Committees is described in greater detail below. The Board has established written charters for each of the Committees, which will be available on our website located at www.rafaelholdings.com following the spin-off. Following the spin-off, any changes to the charters will be reflected on our website.

Audit Committee

The Audit Committee consists of Mr. Greenberg and Drs. Pasche and Weiss. The principal duties of the Audit Committee under its written charter will include: (i) responsibilities associated with our external and internal audit staffing and planning; (ii) accounting and financial reporting issues associated with our financial statements and filings with the SEC; (iii) financial and accounting organization and internal controls; (iv) auditor independence and approval of non-audit services; and (v) “whistle-blower” procedures for reporting questionable accounting and audit practices.

The Audit Committee charter requires that the Committee be comprised of at least two directors, all of whom must be independent under the NYSE American listing standards and the Sarbanes-Oxley Act of 2002. In addition, each member of the Audit Committee must be financially literate within the meaning of the NYSE American listing standards, and at least one member will have sufficient accounting or financial management expertise to qualify as an “audit committee financial expert,” as determined by the Board of Directors in accordance with SEC rules.

Compensation Committee

The Compensation Committee consists of Mr. Greenberg and Drs. Pasche and Weiss. The principal duties of the Compensation Committee under its charter will include: (i) ensuring that a succession plan for the Chief Executive Officer is in place; (ii) reviewing management’s recommendations as to compensation for executive officers and making recommendations to the Board of Directors; (iii) approving the compensation for the Chief Executive Officer and other executive officers; (iv) reviewing and approving compensation policies and practices for the Company more generally; (v) reviewing and approving major changes in employee benefit plans; (vi) reviewing short and long-term incentive plans and equity grants; (vii) recommending to the full Board of Directors changes to the compensation of the independent members of the Board of Directors; and (viii) administering our Stock Option and Incentive Plan. The Compensation Committee charter will require that the Committee be comprised of at least two directors, both of whom must be independent under our Corporate Governance Guidelines.

Corporate Governance Committee

The Corporate Governance Committee consists of Mr. Greenberg and Drs. Pasche and Weiss. The principal duties of the Corporate Governance Committee under its charter will include: (i) reviewing our Corporate Governance Guidelines and other policies and governing documents and recommending revisions as appropriate; (ii) reviewing any potential conflicts of independent directors and establishing director independence; (iii) reviewing and monitoring related person transactions; and (iv) overseeing the self-evaluations of the Board of Directors, the Audit Committee and the Compensation Committee. The Corporate Governance Committee charter will require that the Committee be comprised of at least two directors, both of whom must be independent under the NYSE American listing standards.

Nominating Committee

The Nominating Committee consists of Howard Jonas and Mr. Greenberg. The principal duties of the Nominating Committee under its charter will include: (i) developing the criteria and qualifications for membership on the Board of Directors; (ii) recommending candidates to fill new or vacant positions on the Board of Directors; and (iii) conducting appropriate inquiries into the backgrounds of potential candidates. We intend to apply the NYSE American exemption related to a controlled company which allows a “controlled company” to be exempted from complying with rules requiring that only independent directors comprise our Nominating Committee.

Governance Practices

Following the spin-off, we will observe corporate governance practices and principal governance documents which are designed to ensure that we maximize stockholder value in a manner that is consistent with both the legal requirements applicable to us and a business model that requires our employees to conduct business with the highest standards of integrity. Prior to the spin-off, our Board of Directors adopted and will adhere to corporate governance principles which the Board and senior management believe promote this purpose, are sound and represent best practices, and will review these governance practices, the corporate laws of the State of Delaware under which we were incorporated, the NYSE American listing standards and the regulations of the SEC, as well as best practices recognized by governance authorities to benchmark the standards under which it operates. Our principal governance documents will be as follows:

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Corporate Governance Guidelines;

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Board of Directors committee charters, including:

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Audit Committee charter;

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Nominating Committee charter;

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Compensation Committee charter;

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Corporate Governance Committee charter; and

●

Code of Business Conduct and Ethics.

Our governance documents will be available following the distribution date on our web site at www.rafaelholdings.com .

Our Board of Directors, with assistance from its Corporate Governance Committee, will regularly assess our governance practices in light of legal requirements and governance best practices.

Director Executive Sessions

Under our Corporate Governance Guidelines, the outside directors will meet in regularly scheduled executive sessions without management. We expect that a lead independent director will be selected by the Board of Directors to serve as the presiding director at these meetings.

Communications with the Board of Directors

After the spin-off, stockholders and other interested persons seeking to communicate directly with the Board of Directors, with the lead independent director or the independent directors as a group, should submit their written comments c/o Lead Independent Director at our principal executive offices set forth on page 5. The lead independent director will review any such communication at the next regularly scheduled Board meeting unless, in his or her judgment, earlier communication to the Board is warranted.

If a stockholder communication raises concerns about the ethical conduct of us or our management, it should be sent directly to our Corporate Secretary at our principal executive offices set forth on page 5. The Corporate Secretary will promptly forward a copy of any such communication to the Chairman of the Audit Committee, and take such actions as they authorize to ensure that the subject matter is addressed by the appropriate committee of the Board of Directors, by management and/or by the full Board.

The Corporate Secretary may filter out and disregard or re-direct (without providing a copy to the directors or advising them of the communication), or may otherwise handle at his or her discretion, any director communication that falls into any of the following categories:

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Obscene materials;

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Unsolicited marketing or advertising material or mass mailings;

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Unsolicited newsletters, newspapers, magazines, books and publications;

●

Surveys and questionnaires;

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Resumes and other forms of job inquiries;

●

Requests for business contacts or referrals;

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Material that is threatening or illegal; or

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Any communications or materials that are not in writing.

In addition, the Corporate Secretary may handle in his or her discretion any director communication that can be described as an “ordinary business matter.” Such matters include the following:

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Routine questions, service and product complaints and comments that can be appropriately addressed by management; and

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Routine invoices, bills, account statements and related communications that can be appropriately addressed by management.

Code of Business Conduct and Ethics

Prior to the distribution date, we will adopt a Code of Business Conduct and Ethics which will apply to our directors, Chief Executive Officer, Chief Financial Officer and all other Rafael employees.

DIRECTOR COMPENSATION

None of the Company’s directors who will serve on the Board following the spin-off received compensation for their service as a director prior to the spin-off. Each non-employee director of the Company who attends at least 75% of the regularly scheduled meetings of the Board of Directors during a calendar year will receive total compensation as will be determined by the Company prior to the spin-off.

Each non-employee director of the Company who attends at least 75% of the regularly scheduled meetings of the Board of Directors during a calendar year will receive an annual cash retainer of $25,000. Such payment is to be made in January of the calendar year following attendance of at least 75% of the regularly scheduled Board meetings during the preceding year, and will be pro-rated based on the quarter for non-employee directors who join the Board of Directors or depart from the Board of Directors during the prior year, if such director attended 75% of the applicable board meetings for such partial year. The Company’s Chief Executive Officer may, in his discretion, waive the requirement of 75% attendance by a director to receive the annual retainer in the case of mitigating circumstances. In addition, each non-employee member of our Board of Directors will receive an annual grant of restricted shares of our Class B common stock (pro rated based on the quarter in which they join the Board). The number of shares in the annual grant will be fixed following the spin-off to have a value of approximately $25,000 based on the thirty-day average closing price of the Company’s shares of Class B Common Stock on the NYSE American following the spin-off. Shares will vest in full immediately upon grant. The Compensation Committee believes that our director compensation is fair and appropriate in light of the responsibilities and obligations of our directors. The Compensation Committee will periodically review our director compensation practices. Directors do not receive any annual fees for committee services, nor are there any additional fees paid to the lead independent director or other board or committee roles.

The equity portion of our non-employee director compensation will be reflected in the Company’s stock option and incentive plan to achieve the advantages of a stockholder-approved compensation plan. The Compensation Committee periodically reviews our director compensation practices.

EXECUTIVE COMPENSATION

Compensation of our Named Executive Officers

Prior to the spin-off, Howard Jonas and Menachem Ash were employees of IDT and all compensation for fiscal year 2017 disclosed in the table below was paid by IDT for services provided by the named executive officers to our business segments and other units of IDT. During fiscal year 2017, Howard Jonas served as chairman of the board of IDT Menachem Ash served as IDT’s Executive Vice President of Strategy and Legal Affairs.

The historical compensation of Howard Jonas and Menachem Ash was set by IDT management.

SUMMARY COMPENSATION TABLE (With respect to IDT Corporation)

Name and Principal Position

Fiscal Year

Salary

Bonus

Stock

Awards

Option

Awards

All

Other

Compensation

Total

Howard Jonas
Chairman of the Board, Chief Executive Officer

2017

250,000

—

1,366,023

⁽¹⁾

3,261,198

⁽²⁾

17,638

⁽³⁾

4,894,859

Menachem Ash
President, General
Counsel

2017

370,000

185,000

—

6,275

⁽⁴⁾

561,275

(1)	Consists of the value of a grant of 69,624 restricted shares of IDT’s Class B Common Stock granted on January 5, 2017 to vest as to 23,208 shares on each of January 5, 2017, January 5, 2018 and January 5, 2019.
(2)	Consists of the value of a grant of an option to purchase up to 1,000,000 shares of IDT’s Class B Common Stock granted on May 2, 2017 with an exercise price of $14.93 per share and with certain repurchase rights by IDT that vested in full immediately upon grant .
(3)	Represents dividends paid on unvested restricted shares of IDT Class B Common Stock.
(4)	Consists of (i) $4,275 in dividends paid on unvested restricted shares of IDT’s Class B Common Stock that were granted to Mr. Ash and (ii) $2,000, which represents the value of IDT’s Class B Common Stock given as a matching contribution to the IDT Corporation 401(k) plan.

Following the spin-off, the compensation of our executive officers will be determined by the Compensation Committee of our Board of Directors after discussions with management about the recommended levels and components of compensation for each of the individuals. We anticipate that following the spin-off, our management will recommend to the Compensation Committee that David Polinsky, the Company’s chief financial officer, receive a compensatory grant of 8,000 restricted shares of Class B common stock and that Mr. Ash receive a compensatory grant of restricted shares of Class B common stock representing 0.5% of the issued and outstanding shares of the Company upon spin-off (approximately 58,200 shares), to vest on the first, second and third anniversaries of grant. If made, such restricted stock grants will be made pursuant to our 2018 Equity Incentive Plan (the “Plan”). Following the spin-off, Mr. Jonas’ annual base salary will be $250,000, Mr. Ash’s annual base salary will be $185,000 and Mr. Polinsky’s annual base salary will be $195,000 and each will have the right to receive annual discretionary bonuses.

In general, it is anticipated that each of our executive officers will receive base compensation that is commensurate with the officer’s duties, responsibilities and compensation levels for similarly situated individuals in comparable positions. In addition, executive officers may receive bonus compensation and compensatory equity-based awards.

Any bonus compensation to executive officers will be determined by our Compensation Committee based on factors it deems appropriate, including the achievement of specific performance targets and our financial and business performance. No such targets have yet been established.

Equity compensation awards will generally be granted pursuant to our Plan described below at levels determined by the Compensation Committee. No grants have been made nor has the Company agreed to any specific grant or level of grants.

Company Long-Term Incentive Plan

Effective as of the distribution date, a long-term incentive plan was approved by IDT as our sole stockholder on March 8, 2018. The following is a general description of the plan.

Objectives. The plan is designed to attract and retain officers, employees and consultants, to encourage the sense of proprietorship of such officers, employees and consultants and to stimulate the active interest of such persons in our development and financial success. These objectives are to be accomplished by making awards under the plan and thereby providing participants with a proprietary interest in our growth and performance.

Eligibility. All of our employees, consultants and directors will be eligible for awards under the plan. Our Compensation Committee will select the participants from time to time by the grant of awards.

Shares Available for Awards. No shares of our Class A common stock and a number of shares of our Class B common stock to be determined upon the spin-off and equal to a percentage of the outstanding shares of our common stock following the spin-off will be available for awards under the plan.

Administration. We intend that the plan will be administered by our Compensation Committee. The Committee will have full and exclusive power to interpret the plan and to adopt such rules, regulations and guidelines for carrying out the plan as they may deem necessary or proper, all of which powers shall be exercised in our best interests and in keeping with the objectives of the plan.

Awards. At the discretion of the Compensation Committee, awards may be in the form of (1) options, representing rights to purchase a specified number of shares Class B common stock at a specified price; (2) stock appreciation rights, representing rights to receive a payment, in cash or common stock, equal to the excess of the fair market value or other specified value of a number of shares of Class B common stock on the rights’ exercise date over a specified strike price; and (3) grants of restricted or unrestricted Class B common stock or deferred stock units denominated in Class B common stock. The Compensation Committee will determine the type or types of awards to be made to each participant under the plan and the terms, conditions and limitations applicable to each such award. Each award will be embodied in an award agreement containing such terms, conditions and limitations as determined by the Compensation Committee in its sole discretion, provided that the Compensation Committee may delegate authority to members of management to approve grants in awards to individuals who are not directors or executive officers.

Payment of Awards. Generally, payment of awards may be made in the form of cash or Class B common stock or combinations thereof and may include such restrictions as the Compensation Committee determines including, in the case of Class B common stock, as applicable, restrictions on transfer and forfeiture provisions.

The following is a brief description of these awards:

Stock Options. An award may consist of a right to purchase a specified number of shares of Class B common stock at a price specified by the Compensation Committee in the award agreement or otherwise. A stock option may be in the form of an incentive stock option to a participant who is an employee, which in addition to being subject to applicable terms, conditions and limitations established by the Committee, complies with Section 422 of the Code, or, in the case of participants who are employees or directors, in the form of a nonqualified option. The plan authorizes the Committee to specify the manner of payment of the option price.

Stock Appreciation Rights. A stock appreciation right (“SAR”), consists of a right to receive a payment, in cash or Class B common stock, as applicable, equal to the excess of the fair market value or other specified valuation of a specified number of shares of Class B common stock on the date the SAR is exercised over a specified strike price as set forth in the award agreement.

Stock Awards. A stock award may consist of Class B common stock, as applicable, or may be denominated in units of Class B common stock, as applicable. All or part of any stock award may be subject to conditions established by the Compensation Committee and set forth in the award agreement. The Committee may permit dividend equivalents with respect to restricted stock units. Such awards may be based on fair market value or other specified valuations.

The plan will have reserved for issuance pursuant to awards made under the plan shares of Class B common stock representing 3% of the anticipated outstanding shares of the Company’s common stock following the spin-off. This does not include approximately an additional 714,851 shares to be reserved and awarded to holders of restricted shares of IDT Class B common stock, options to purchase IDT Class B Stock, deferred stock units related to IDT Class B Stock and other equity awards granted by IDT prior to the date of the spin-off. In connection with the spin-off, we anticipate granting approximately 112,700 shares under the plan to our management, other employees and consultants who assisted in the spin-off.

SECURITY OWNERSHIP BY
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

One hundred percent (100%) of the shares of our common stock, are, and will be, prior to the distribution, held beneficially and of record by IDT. The following table sets forth information concerning shares of our Class A common stock and Class B common stock to be beneficially owned immediately after the distribution date by:

●

each person or entity known by us to be the beneficial owner of 5% or more of the outstanding shares each of IDT’s classes of common stock;

●

each person who is one of our directors at the time of the distribution;

●

each person who we currently anticipate will be one of our named executive officers at the time of the distribution; and

●

all persons who we currently anticipate will be our directors and executive officers at the time of the distribution as a group.

The projected share amounts in the table below are based on the number of shares of IDT’s Class A common stock and Class B common stock owned by each person or entity at March13, 2018, adjusted for the one for two distribution ratio in the spin-off. Percentage ownership information is based on the following projected amount of Rafael outstanding shares: (i) 787,163 shares of Class A common Stock (based on 1,574,326 shares of IDT Class A common stock that were outstanding on 22, 2017), and (ii) 11,639,901 shares of Class B common Stock (based on 23,279,803 shares of IDT Class B common stock that were outstanding on March 13, 2018).

Percentage ownership information assumes the conversion of all 787,163 currently outstanding shares of IDT Class A Common Stock into Class B Common Stock for the percentage ownership information of Howard Jonas and all directors and Named Executive Officers as a group). To our knowledge, except as otherwise indicated in the footnotes below, each person or entity has sole or shared voting and investment power with respect to the shares of common stock set forth opposite such persons or entity’s name. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to the securities.

Name	Number of Shares of Class B Common Stock			Percentage of Ownership of Class B Common Stock			Percentage of Aggregate Voting Power ^δ
Howard S. Jonas		2,650,376	⁽¹⁾		20.5	%		70.9	%
520 Broad Street Newark, NJ 07102

The Vanguard Group Inc.		1,320,668	⁽²⁾		11.3	%		3.7	%
100 Vanguard Blvd. Malvern, PA 19355

Vanguard World Funds		713,536	⁽²⁾		6.1	%		2.0	%
100 Vanguard Blvd. Malvern, PA 19355

Dimensional Fund Advisors LP		779,261	⁽²⁾		6.7	%		2.2	%
Building One 6300 Bee Cave Road Austin, Texas, 78746

Blackrock, Inc.		617,864	⁽²⁾		5.3	%		1.8	%
55 East 52 ^nd Street New York, NY 10055

Renaissance Technologies, LLC		670,249	⁽²⁾		5.8	%		1.9	%
800 Third Avenue New York, NY 10022

Menachem Ash		10,131	⁽³⁾		*			*

All directors, Named Executive Officers and other executive officers as a group (11) persons)		2,649,886	⁽⁴⁾		20.5	% ⁽⁵⁾		70.9	%

Less than 1%.

^δ

Voting power represents combined voting power of Class A Common Stock (three votes per share) and Class B Common Stock (one-tenth of one vote per share). Excludes stock options.

(1)

Consists of an aggregate of: (a) 787,163 shares of Class A Common Stock held by Howard S. Jonas directly; and (b) 1,863,213 shares of Class B Common Stock, consisting of: (i) 141,806 shares held by Howard S. Jonas directly; (ii) 23,208 restricted shares of Class B Common Stock; (iii) 868,138 shares owned by the Howard S. Jonas 2017 Annuity Trust; (iv) an aggregate of 3,890 shares held in custodial accounts for the benefit of certain children of Howard S. Jonas (of which Howard S. Jonas is the custodian); (v) 225,556 shares owned by the Howard S. Jonas 2014 Annuity Trust; (vi) 98,820 shares of Class B Common Stock owned by the Jonas Foundation; (vii) 1,795 shares held by Howard S. Jonas in his 401(k) plan account as of November 30, 2017; and (viii) 500,000 shares of Class B Common Stock of the Company issuable upon the exercise of stock options exercisable within 60 days. Howard S. Jonas is the trustee of the Howard S. Jonas 2014 Annuity Trust and the Howard S. Jonas 2017 Annuity Trust. The foregoing does not include 51,399 shares of Class B Common Stock owned by the Howard S. and Deborah Jonas Foundation, Inc., as Howard S. Jonas does not beneficially own these shares. The foregoing does not include (a) an aggregate of 1,482,697 shares of Class B Common Stock beneficially owned by trusts for the benefit of the children of Howard S. Jonas, as Howard S. Jonas does not exercise or share voting or investment control over these shares, and (b) 80,000 shares of the Company’s Class B Common Stock owned by the 2012 Jonas Family, LLC (Howard S. Jonas is a minority equity holder of such entity).

(2)

According to the applicable Schedule 13G as filed by the applicable beneficial owner.

(3)

Consists of (a) 1,875 restricted shares of Class B Common Stock, (b) 6,933 shares of Class B Common Stock owned directly, and (c) 1,323 shares of Class B Common Stock held by Mr. Ash in his 401(k) plan account as of November 30, 2017.

(4)

Consists of the shares and options set forth above with respect to the Named Executive Officers and directors (including Howard S. Jonas’ shares of Class A Common Stock, which are convertible into Class B Common Stock).

(5)

Assumes conversion of all of the shares of Class A Common Stock into shares of Class B Common Stock.

OUR RELATIONSHIP WITH IDT AFTER THE SPIN-OFF
AND RELATED PERSON TRANSACTIONS

General

In connection with the spin-off, we and IDT have entered into a Separation and Distribution Agreement and a Tax Separation Agreement to complete the separation of our businesses from IDT and to distribute our common stock held by IDT to IDT stockholders. These agreements will also govern portions of the relationship between us and IDT after the distribution and will also provide for the allocation of employee benefits, taxes and other liabilities and obligations attributable to periods prior to the distribution. Along with the Separation Agreement and Tax Agreement, we and IDT have entered into a Transition Services Agreement. These agreements reflect agreement between affiliated parties established without arms-length negotiation. However, we believe that the terms of this agreement will equitably reflect the benefits and costs of our relationship with IDT.

The key provisions of these agreements are summarized below. We may enter into other agreements with IDT prior to or concurrently with the separation that would relate to other aspects of our relationship with IDT following the spin-off to allow us to utilize certain personnel of, and obtain administrative, financial, internal audit, treasury, legal, corporate, tax, payroll processing and other services from IDT until we develop those capabilities internally or arrange for such services from other vendors. Unless amended, the Transition Services Agreement will terminate six months following the spin-off. Following the separation, we may enter into other commercial agreements with IDT from time to time, the terms of which will be determined at those relevant times. In fiscal year 2017 and fiscal year 2016, IDT allocated to Rafael an aggregate of approximately $1.0 million and $0.7 million, respectively, for payroll, benefits, insurance, facilities and other expenses, which were included in “Selling, general and administrative” expense in the combined statements of comprehensive income (loss).

Forms of these agreements described below are filed as exhibits to our Form 10, of which this Information Statement is a part. The summaries of the material agreements are qualified in their entireties by reference to the full text of the agreements. We encourage you to read the full text of these material agreements.

As more fully discussed in the Business section on page 51, we lease space in 520 Broad Street and associated public garage to IDT. The lease will cover 80,000 square feet of office space and two parking spots for each thousand square feet of space leased. The annual base rent is $1,498,400. We will also enter into a separate lease with IDT’s affiliate, Genie, covering 8,631 square feet of space in 520 Broad Street.

Separation and Distribution Agreement

The Separation and Distribution Agreement sets forth the agreements between us and IDT with respect to the principal corporate transactions required to effect our separation from IDT; the distribution of our common shares to IDT stockholders; and other agreements governing the relationship between IDT and us following the separation. IDT will only consummate the spin-off if specified conditions are met or approved by the IDT board. These conditions include, among others, that all actions and filings necessary or appropriate under Federal and state securities laws and state blue sky laws of the United States (and any comparable laws under any foreign jurisdictions) in connection with the distribution shall have been taken and made and, where applicable, become effective or accepted.

The Separation

Following the spin-off, IDT will have no interest in our assets and business and will have no obligation with respect to our liabilities after the distribution other than as described below and set forth in more detail in the Separation and Distribution Agreement. Similarly, we will have no interest in the assets of IDT’s other business segments and will have no obligation with respect to the liabilities of IDT’s retained businesses after the distribution other than as described below and set forth in more detail in the Separation and Distribution Agreement.

The Distribution

IDT delivered to the distribution agent certificates representing all of the outstanding shares of our common stock that IDT owns. IDT instructed the distribution agent to distribute those shares on March 26, 2018 or as soon thereafter as practicable, so that each IDT stockholder will receive one share of our Class A common stock for every two shares of IDT Class A common stock and one share of our Class B common stock for every two shares of IDT Class B common stock, in each case, as such stockholder owns as of the record date of the spin-off.

Termination

The Separation Agreement provides that it may be terminated by IDT at any time prior to the distribution date.

Liabilities and Indemnification

Generally, IDT indemnified us, and we indemnify IDT, for losses related to the failure of the other to pay, perform or otherwise discharge, any of the its liabilities and obligations set forth in the Separation Agreement. All liabilities and obligations related to Rafael will remain Rafael’s obligation whether the liability and or obligation arose pre-spin-off or post spin-off and all liabilities and obligations related to IDT will remain IDT’s obligation whether the liability and or obligation arose pre-spin-off or post spin-off. We have no contractual obligations or other contingencies at this time or any of the periods presented that require disclosure in this Information Statement.

Expenses

Except as expressly set forth in the Separation Agreement, whether or not the separation and distribution are completed, all third party fees, costs and expenses paid or incurred in connection with the transactions contemplated by the Separation Agreement will be paid by Rafael.

Tax Separation Agreement

In connection with the spin-off, we and IDT entered into a tax separation agreement, which sets forth the responsibilities of IDT and us with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the spin-off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. IDT is generally responsible for all federal, state, local and foreign taxes relating to our business. We and IDT are generally responsible for managing those disputes that relate to the taxes for which each of us is responsible and, under certain circumstances, may jointly control any dispute relating to taxes for which both of us are responsible.

Transition Services Agreement

In connection with the spin-off, we and IDT entered into a Transition Services Agreement pursuant to which IDT will provide us, among other things, certain administrative and other services following the distribution date, including services relating to payroll processing and employee benefits administration, finance, accounting, tax, internal audit, investor relations and legal. The agreement will also cover the allocation of costs for officers and other personnel who dedicate time and effort to both companies. For each of these areas, a service schedule will summarize the services to be provided and the responsibilities of IDT and us. The services will be paid for by us as calculated in the Transition Services Agreement.

Related Person Transactions

For a complete list of IDT’s fiscal year 2017 related person transactions, please see IDT’s Proxy Statement for its 2017 Annual Meeting of Stockholders, filed with the SEC on November 6, 2017.

Rafael Pharmaceuticals leases 10,283 square feet of fully-equipped laboratory and administrative offices in Cranbury, New Jersey from Cedar Brook East Corporate Center, L.P., a partnership controlled by two of Rafael Pharmaceuticals largest stockholders and directors. The lease commenced on July 24, 2006 and was renewed for a 7 year term in August 2016 and ending on July 31, 2023. The annual base rent is $217,588 annually increasing to $250,185 commencing on August 1, 2021.

As of March 26, 2017, IDT had provided Rafael Pharmaceuticals with $1.2 million in working capital financing that remains outstanding. The related receivable from Rafael Pharmaceutical is being transferred by IDT to us prior to the spin-off.

LEGAL PROCEEDINGS

The Company may from time to time be subject to other legal proceedings that arise in the ordinary course of business. Although there can be no assurance in this regard, the Company does not expect any of those legal proceedings to have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

In addition to the foregoing, the Company may from time to time be subject to other legal proceedings that arise in the ordinary course of business.

RECENT SALES OF UNREGISTERED SECURITIES;
USE OF PROCEEDS FROM REGISTERED SECURITIES

None.

DESCRIPTION OF OUR CAPITAL STOCK

Our authorized capital stock consists of (i) 35 million shares of Class A common stock, (ii) 200 million shares of Class B common stock, and (iii) 10 million shares of Preferred Stock. We have shares of our Class B common stock under the Securities Exchange Act of 1934, as amended, under our registration statement on Form 10 filed with the SEC.

The following statements set forth the material terms of our classes of authorized stock; however, reference is made to the more detailed provisions of, and such statements are qualified in their entirety by reference to, our Amended Certificate of Incorporation, which has been filed as an exhibit to registration statement on Form 10 of which this Information Statement forms a part.

Class A Common Stock

Holders of shares of our Class A common stock are entitled to three votes for each share on all matters to be voted on by the stockholders. Holders of our Class A common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available therefor. Each share of our Class A common stock may be converted, at any time and at the option of the holder, and automatically converts upon transfers to unaffiliated parties, into one fully paid and non-assessable share of our Class B common stock. In the distribution, on the distribution date, which is March 26, 2018, each IDT stockholder will receive one share of Rafael Class A common stock for every two shares of IDT Class A common stock held on the record date.

As of March 13, 2018, there were 1,574,326 shares of IDT Class A common stock outstanding. Based on those numbers, there was 787,163 shares of our Class A common stock outstanding.

Class B Common Stock

Holders of shares of our Class B common stock are entitled to one tenth of one vote for each share on all matters to be voted on by the stockholders. Holders of our Class B common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available therefor. In the distribution, on the distribution date, each IDT stockholder will receive one share of Rafael Class B common stock for every two shares of IDT Class B common stock held on the record date.

As of March 13, 2018, there were 23,279,803 shares of IDT Class B common stock outstanding. Based on those numbers, there were 11,639,901 shares of our Class B common stock outstanding.

Preferred Stock

The Board of Directors has the authority to fix the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the stockholders.

As of March 13, 2018, no shares of IDT preferred stock were outstanding. There were no shares of our preferred stock outstanding upon the distribution.

Anti-Takeover Effects of Our Charter and By-Laws

Some provisions of Delaware law and our Certificate of Incorporation and By-Laws could make the following more difficult:

●

acquisition of us by means of a tender offer;

●

acquisition of us by means of a proxy contest or otherwise; or

●

removal of our incumbent officers and directors.

These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions also are designed to encourage persons seeking to acquire control of us to first negotiate with our Board of Directors. We believe that the benefits of increased protection give us the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us and outweigh the disadvantages of discouraging those proposals because negotiation of them could result in an improvement of their terms.

Certificate of Incorporation; By-Laws

Our Certificate of Incorporation and By-Laws contain provisions that could make more difficult the acquisition of us by means of a tender offer, a proxy contest or otherwise. These provisions are summarized below.

Undesignated Preferred Stock. The authorization of our undesignated preferred stock makes it possible for our Board of Directors to issue our preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes of control of our management.

Size of Board and Vacancies. Our Certificate of Incorporation provides that the number of directors on our Board of Directors will be between three and seventeen. Newly created directorships resulting from any increase in our authorized number of directors or any vacancies in our Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause will be filled solely by the vote of our remaining directors in office.

Stockholder Meetings. Under our By-Laws, only our (i) Chief Executive Officer, (ii) President or (iii) Corporate Secretary may call special meetings of our stockholders.

Indemnification and Limitation of Liability of Directors and Officers

Our Certificate of Incorporation provides that, to the fullest extent permitted by the Delaware General Corporate Law (“DGCL”), our directors shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Section 102(7) of the DGCL, however, states that such a provision may not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, relating to unlawful dividends, distributions or the repurchase or redemption of stock or (iv) for any transaction from which the director derives an improper personal benefit.

Our By-Laws provide that we shall indemnify and hold harmless, to the fullest extent permitted by the DGCL, any person against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred in connection with any threatened, pending or completed legal proceedings in which such person is involved by reason of the fact that he is or was a director or officer of ours if he acted in good faith and in a manner that he reasonably believed to be in or not opposed to our best interests, and, with respect to any criminal action or proceeding, if he had no reasonable cause to believe that his conduct was unlawful. If the legal proceeding, however, is by or in our right, such director or officer may not be indemnified in respect of any claim, issue or matter as to which he shall have been adjudged to be liable to us unless a court determines otherwise.

We may enter into agreements to indemnify our directors and officers in addition to the indemnification provided for in our Certificate of Incorporation. Such agreements, among other things, would indemnify our directors and officers for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts incurred by such person in any action or proceeding, including any action by or in our rights, on account of services as our director or officer or as a director or officer of any subsidiary of ours, or as a director or officer of any other company or enterprise to which the person provides services at our request.

Prior to consummating the spin-off, we intend to obtain directors’ and officers’ liability insurance providing coverage to our directors and officers.

Annual Meeting of Stockholders

Our By-Laws provide that an annual meeting of stockholders will be held each year on a date fixed by resolution of our Board of Directors. The first annual meeting of our stockholders after the spin-off is expected to be held in January 2019.

Pursuant to our By-Laws, in order for a stockholder to bring nominations or other proposals before the 2019 annual stockholders meeting, the stockholder must comply with the requirements for stockholder proposals set forth in the Proxy Statement relating to such meeting and submit such proposals by August 15, 2018. In addition, any stockholder proposal submitted with respect to the Company’s 2019 annual meeting of stockholders, that is submitted outside the requirements of Rule 14a-8 under the Exchange Act, will not be included in the relevant proxy materials. To be considered timely for purposes of Rule 14a-4 and 14a-5, written notice of a proposal must be received by the Company’s Corporate Secretary by September 25, 2018.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form 10 with respect to the shares of our common stock to be received by the stockholders of IDT in the spin-off. This Information Statement does not contain all of the information set forth in the Form 10 registration statement and the exhibits to the Form 10 registration statement. For further information with respect to Rafael and its common stock, reference is hereby made to the Form 10 registration statement, including its exhibits. Statements made in this Information Statement relating to the contents of any contract, agreement or other documents are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document, with each such statement being qualified in all respects by reference to the document to which it refers. You may review a copy of the Form 10 registration statement, including its exhibits, at the SEC’s public reference room, located at 100 F Street, N.E., Washington, D.C. 20549. You may obtain copies of all or any part of these materials from the SEC upon the payment of certain fees prescribed by the SEC. You may obtain further information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. In addition, copies of the Form 10 registration statement and related documents may be obtained through the SEC Internet address at http://www.sec.gov .

As a result of the spin-off and the filing of the Form 10 Registration Statement, we will become subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and, in accordance with the Exchange Act, will file reports, proxy statements and other information with the SEC. After the spin-off, these reports, proxy statements and other information may be inspected and copied at the public reference facilities of the SEC listed above. You also will be able to obtain copies of this material from the public reference facilities of the SEC as described above, or inspect them without charge at the SEC’s website.

In addition, we intend to furnish holders of our common stock with annual reports containing combined financial statements (to change to consolidated once the Company is formed) audited by an independent accounting firm.

INDEX TO COMBINED FINANCIAL STATEMENTS
RAFAEL HOLDINGS, INC. AND AFFILIATES


Report of Independent Registered Public Accounting Firm	F-2

Combined Balance Sheets as of July 31, 2017 and 2016	F-3

Combined Statements of Comprehensive Income (Loss) for the Fiscal Years Ended July 31, 2017, 2016 and 2015	F-4

Combined Statements of Members’ Equity for the Fiscal Years Ended July 31, 2017, 2016 and 2015	F-5

Combined Statements of Cash Flows for the Fiscal Years Ended July 31, 2017, 2016 and 2015	F-6

Notes to Combined Financial Statements	F-7

Combined Balance Sheets as of January 31, 2018 and July 31, 2017	F-19

Combined Statements of Operations for the Three and Six Months Ended January 31, 2018 and 2017	F-20

Combined Statements of Comprehensive Income (Loss) for the Three and Six Months Ended January 31, 2018 and 2017	F-21

Combined Statements of Cash Flows for the Six Months Ended January 31, 2018 and 2017	F-22

Notes to Combined Financial Statements	F-23

F- 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Rafael Holdings, Inc.

We have audited the accompanying combined balance sheets of Rafael Holdings, Inc. and affiliates (“Rafael Holdings” or the “Company”) as of July 31, 2017 and 2016, and the related combined statements of comprehensive income (loss), members’ equity, and cash flows for each of the years in the three-year period ended July 31, 2017. Rafael Holdings’ management is responsible for these combined financial statements. Our responsibility is to express an opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Rafael Holdings as of July 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three-year period ended July 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Zwick & Banyai, PLLC
Southfield, Michigan
October 23, 2017

F- 2

RAFAEL HOLDINGS, INC. AND AFFILIATES
COMBINED BALANCE SHEETS
(in thousands)

July 31,	2017		2016
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents	$	11,756	$	2,339
Accounts and Rents Receivable, net of Allowance for Doubtful Accounts of $82 as of July 31, 2017 and 2016		264		257
Prepaid Expenses and Other Current Assets		147		17
TOTAL CURRENT ASSETS		12,167		2,613
Property and Equipment, net		51,160		50,973
Investments		13,478		2,100
Deferred Taxes		8,859		8,564
Other Assets		540		59
TOTAL ASSETS	$	86,204	$	64,309
LIABILITIES AND MEMBERS EQUITY
CURRENT LIABILITIES:
Trade Accounts Payable	$	115	$	64
Accrued Expenses		213		214
Other Current Liabilities		35		24
TOTAL CURRENT LIABILITIES		363		302
Due to IDT Corporation		23,693		15,145
Other Liabilities		70		49
TOTAL LIABILITIES		24,126		15,496
MEMBERS’ EQUITY:
Group Equity		50,427		48,624
Accumulated Other Comprehensive Income		2,316		189
Total Rafael Holdings, Inc. Members’/Stockholders’ Equity		52,743		48,813
Noncontrolling interests		9,335		—
TOTAL MEMBERS’ EQUITY		62,078		48,813
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	86,204	$	64,309

See accompanying notes to combined financial statements.

F- 3

RAFAEL HOLDINGS, INC. AND AFFILIATES
COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)

Fiscal Years ended July 31,	2017			2016			2015
REVENUES
Rental – Third Party Revenues	$	989		$	746		$	809
Rental – Related Party Revenues		3,705			3,729			2,118
Parking Revenues		924			1,114			1,060
TOTAL REVENUES		5,618			5,589			3,987

COSTS AND EXPENSES:
Selling, General and Administrative		3,728			2,754			2,903
Depreciation and Amortization		1,669			1,643			1,203
Other Operating Expenses		—			—			18
INCOME (LOSS) FROM OPERATIONS		221			1,192			(137	)
Interest (Income) Expense, net		(10	)		20			356
Net (Gains) Losses Resulting from Foreign Exchange Transactions		(86	)		13			236
Other Expenses, net		113			—			2
INCOME (LOSS) BEFORE INCOME TAXES		204			1,159			(731	)
Provision for (Benefit from) Income Taxes		66			449			(264	)
NET INCOME (LOSS)		138			710			(467	)
Unrealized Gain on Available-for-Sale Securities		2,100			—			—
Changes in Foreign Currency Translation Adjustment		27			(7	)		(53	)
TOTAL COMPREHENSIVE INCOME (LOSS)	$	2,265		$	703		$	(520	)

See accompanying notes to combined financial statements.

F- 4

RAFAEL HOLDINGS, INC. AND AFFILIATES
COMBINED STATEMENTS OF MEMBERS’ EQUITY
(in thousands)

	Group Equity			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests		Total Members’ Equity
Balance – July 31, 2014	$	48,381		$	249		$	—	$	48,630
Net Loss		(467	)		—			—		(467	)
Foreign Currency Translation Adjustment		—			(53	)		—		(53	)
Balance – July 31, 2015	$	47,914		$	196		$	—	$	48,110
Net Loss		710			—			—		710
Foreign Currency Translation Adjustment		—			(7	)		—		(7	)
Balance – July 31, 2016	$	48,624		$	189		$	—	$	48,813
Net Income		138			—			—		138
Issuance of member interests in CS Pharma Holdings, LLC (see Note 5)		1,850			—			8,150		10,000
Sale of interest and rights in Rafael Pharmaceuticals, Inc. to Howard S. Jonas (see Note 5)		(185	)		—			1,185		1,000
Unrealized Gain on Available-for-Sale Securities		—			2,100			—		2,100
Foreign Currency Translation Adjustment		—			27			—		27
Balance – July 31, 2017	$	50,427		$	2,316		$	9,335	$	62,078

See accompanying notes to combined financial statements.

F- 5

RAFAEL HOLDINGS, INC. AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
(in thousands)

Fiscal Years ended July 31,	2017			2016			2015
OPERATING ACTIVITIES
Net income (loss)	$	138		$	710		$	(467	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		1,669			1,643			1,203
Provision for doubtful accounts		—			82			—
Deferred taxes		(95	)		368			(264	)
Net gains resulting from foreign exchange transactions		(86	)		13			236
Interest in the equity of investments		113			—			—
Change in assets and liabilities:
Accounts and rents receivable		(7	)		(109	)		70
Other current assets and prepaid expenses		(130	)		323			101
Other assets		(481	)		30			12
Accounts payable and accrued expenses		50			9			(326	)
Other Current Liabilities		11			17			(42	)
Due to IDT Corporation		(2,626	)		(3,041	)		(1,094	)
Other liabilities		21			27			—
Net cash provided by (used in) operating activities		(1,623	)		72			(571	)
INVESTING ACTIVITIES
Purchase of property and equipment		(1,820	)		(1,553	)		(8,844	)
Purchase of investments		(9,400	)		(2,100	)		—
Net cash used in investing activities		(11,220	)		(3,653	)		(8,844	)
FINANCING ACTIVITIES
Repayment of note payable		—			(6,353	)		(271	)
Proceeds from sale of interest and rights in Rafael Pharmaceuticals, Inc. to Howard S. Jonas		1,000			—			—
Proceeds from sale of member interests in CS Pharma Holdings, LLC		10,000
Cash advances from IDT Corporation, net of repayments		11,260			6,618			10,300
Net cash provided by financing activities		22,260			265			10,029
Effect of exchange rates on cash and cash equivalents		—			3			(95	)
Net increase (decrease) in cash and cash equivalents		9,417			(3,313	)		519
Cash and cash equivalents at beginning of year		2,339			5,652			5,133
Cash and cash equivalents at end of year	$	11,756		$	2,339		$	5,652

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments made for taxes	$	63		$	24		$	—
Cash payments made for interest	$	—		$	31		$	368

See accompanying notes to combined financial statements.

F- 6

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS

Note 1—Description of Business and Summary of Significant Accounting Policies

Description of Business

Rafael Holdings, Inc. (“Rafael Holdings”), to be incorporated in Delaware, will, prior to the spin-off, be a wholly-owned subsidiary of IDT Corporation (“IDT” or the “Parent”). The combined financial statements include all of the accounts of the following wholly-owned subsidiaries of IDT, which will be contributed to Rafael Holdings prior to the spin-off: IDT 225 Old NB Road, LLC, a Delaware Limited Liability Company; IDT Realty LLC, a New Jersey Limited Liability Company; IDT Capital Real Estate Holdings LLC, a Delaware Limited Liability Company; Broad Atlantic Associates LLC, a Delaware Limited Liability Company; Broad Atlantic Realty LLC, a Delaware Limited Liability Company; Hillview Avenue Realty, a Delaware Limited Liability Company; Hillview Avenue Realty JV, a Delaware Limited Liability Company; and IDT Capital, Inc., a Delaware Corporation.

The “Company” in these financial statements refers to Rafael Holdings on this combined basis as if Rafael Holdings existed and owned the above interests in these entities in all periods presented.

All significant intercompany accounts and transactions have been eliminated in combination.

Properties

The Company owns commercial real estate located at 520 Broad Street, Newark, New Jersey, which serves as headquarters for IDT, Genie Energy Ltd. and the Company, and a related 800-car public parking garage across the street, as well as a building located at 225 Old New Brunswick Road in Piscataway, New Jersey that is used partially by IDT Telecom, Inc. for certain of its operations. Additionally, the Company owns a portion of the 6 ^th floor of a building located at 5 Shlomo Halevi Street, Har Hotzvim, in Jerusalem, Israel.

Basis of Accounting

The assets and liabilities in these financial statements are recorded at historical cost. Direct expenses historically incurred by IDT on behalf of the entities are reflected in these financial statements. The most significant expenses as covered under a Master Services Agreement with IDT are as follows: legal and professional fees, salaries and employee benefits that have been allocated based on specific identification; certain facility costs, as well as certain salaries consisting of payroll, human resources, purchasing, accounts payable, treasury, network and telephone services, legal, travel, and consulting fees were allocated to these entities based on estimates of the incremental cost incurred by IDT; medical and dental benefits were allocated to these entities based on rates similar to COBRA health benefit provision rates charged to IDT employees. Insurance was allocated to these entities based on a combination of headcount and specific policy identification. Management believes that the assumptions and methods of allocation used were reasonable. However, the costs as allocated are not necessarily indicative of the costs that would have been incurred if these entities operated on a stand-alone basis. Therefore, the combined financial statements included herein may not necessarily be indicative of the financial position, results of operations, changes in stockholders’ equity and cash flows of the Company to be expected in the future or what they would have been had the Company been a separate stand-alone entity during the periods presented.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

Revenue Recognition

Contractual rental revenue is reported on a straight-line basis over the terms of the respective leases. Accrued rental income, included within Accounts and Rents Receivable and Other Assets on the combined balance sheets, represents cumulative rental income earned in excess of rent payments received pursuant to the terms of the individual lease agreements. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required rent payments or parking customers to pay amounts due.

Recoveries from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes and other recoverable costs are recognized as revenue in the period during which the expenses are incurred. Tenant reimbursements are recognized and presented in accordance with guidance in ASC 605-45 “Principal Agent Considerations” (“ASC 605-45”). ASC 605-45 requires that these reimbursements be recorded on a gross basis, as: the Company is generally the primary obligor with respect to purchasing goods and services from third-party suppliers; has discretion in selecting the supplier; and has credit risk.

The Company’s parking revenues are derived from monthly parking and transient parking. The Company recognizes parking revenue as earned.

F- 7

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS — (CONTINUED)

Note 1—Description of Business and Summary of Significant Accounting Policies (cont.)

Concentration of Credit Risk and Significant Customers

The Company routinely assesses the financial strength of its customers. As a result, the Company believes that its accounts receivable credit risk exposure is limited. For the year ended July 31, 2017, related parties represented 64% of the Company's revenue, and as of July 31, 2017, three customers represented 27%, 26% and 24% of the Company’s accounts receivable balance, respectively. For the year ended July 31, 2016, related parties represented 67% of the Company's revenue, and as of July 31, 2016, four customers represented 19%, 14%, 13% and 11% of the Company’s accounts receivable balance, respectively. For the year ended July 31, 2015, related parties and one customer represented 53%, and 6% of the Company's revenue, respectively, and as of July 31, 2015, two customers represented 16% and 11% of the Company’s accounts receivable balance, respectively.

Long-Lived Assets

Equipment, buildings, equipment and furniture and fixtures are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives, which range as follows:

Classification		Years
Building and Improvements		40
Tenant Improvements		7
Other (primarily equipment and furniture and fixtures)		5

The Company tests the recoverability of its long-lived assets with finite useful lives whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such asset. If the projected undiscounted future cash flows are less than the carrying value of the asset, the Company will record an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the asset. The Company generally measures fair value by considering sale prices for similar assets or by discounting estimated future cash flows from such asset using an appropriate discount rate. Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairments in future periods and such impairments could be material.

Cash and Cash Equivalents

The Company considers all liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Investments

The method of accounting applied to long-term investments, whether consolidated, equity or cost, involves an evaluation of the significant terms of each investment that explicitly grant or suggest evidence of control or influence over the operations of the investee and also includes the identification of any variable interests in which the Company is the primary beneficiary. The combined financial statements include the Company’s controlled affiliates. In addition, Rafael Pharmaceuticals (see Note 5) is a variable interest entity; however, the Company has determined that it is not the primary beneficiary as the Company does not have the power to direct the activities of Rafael Pharmaceuticals that most significantly impact Rafael Pharmaceuticals’ economic performance. All significant intercompany accounts and transactions between the combined affiliates are eliminated.

Investments in businesses that the Company does not control, but in which the Company has the ability to exercise significant influence over operating and financial matters, are accounted for using the equity method. Investments in which the Company does not have the ability to exercise significant influence over operating and financial matters are accounted for using the cost method. Equity and cost method investments are included “Investments” in the accompanying combined balance sheets. The Company periodically evaluates its equity and cost method investments for impairment due to declines considered to be other than temporary. If the Company determines that a decline in fair value is other than temporary, then a charge to earnings is recorded in “Other Expenses, net” in the accompanying combined statements of income, and a new basis in the investment is established.

Income Taxes

The accompanying combined financial statements include provisions for Federal, state and foreign income taxes. The Company joins with its Parent and other affiliates in filing a federal income tax return on a combined basis. Income taxes for the Company are calculated on a separate tax return basis.

The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the period in which related temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in its assessment of a valuation allowance. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of such change.

F- 8

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS — (CONTINUED)

Note 1—Description of Business and Summary of Significant Accounting Policies (cont.)

The Company uses a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. The Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the Company presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. Tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of tax benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability.

The Company classifies interest and penalties on income taxes as a component of income tax expense.

In November 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-17, “ Balance Sheet Classification of Deferred Taxes .” This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. ASU 2015-17 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016. This update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. Early application is permitted as of the beginning of the interim or annual reporting period. The Company adopted ASU 2015-17 as of August 1, 2015. The adoption of ASU 2015-17 did not have a material impact on the Company’s combined financial statements.

Contingencies

The Company accrues for loss contingencies when both (a) information available prior to issuance of the financial statements indicates that it is probable that a liability had been incurred at the date of the financial statements and (b) the amount of loss can reasonably be estimated. When the Company accrues for loss contingencies and the reasonable estimate of the loss is within a range, the Company records its best estimate within the range. When no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount in the range. The Company discloses an estimated possible loss or a range of loss when it is at least reasonably possible that a loss may have been incurred.

Fair Value Measurements

Fair value of financial and non-financial assets and liabilities is defined as an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used to measure fair value, which prioritizes the inputs to valuation techniques used to measure fair value, is as follows:

Level 1 –

quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 –

quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

Level 3 –

unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value.

A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Functional Currency

The U.S. Dollar is the functional currency of our entities operating in the United States. The functional currency for our subsidiary operating outside of the United States is the New Israeli Shekel, the currency of the primary economic environment in which the subsidiary primarily expends cash. For combined entities whose functional currency is not the U.S. Dollar, the Company translates their financial statements into U.S. dollars. The Company translates assets and liabilities at the exchange rate in effect as of the financial statement date, and translate accounts from the statements of comprehensive income (loss) using the weighted average exchange rate for the period. The Company reports gains and losses from currency exchange rate changes related to intercompany receivables and payables, currently in non-operating expenses.

F- 9

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS — (CONTINUED)

Note 1—Description of Business and Summary of Significant Accounting Policies (cont.)

Allowance for Doubtful Accounts

The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The allowance is determined based on known troubled accounts, historical experience and other currently available evidence. Doubtful accounts are written-off upon final determination that the trade accounts will not be collected. The computation of this allowance is based on the tenants’ or parking customers’ payment histories and current credit statuses, as well as certain industry or geographic specific credit considerations. If the Company’s estimates of collectability differ from the cash received, then the timing and amount of the Company’s reported revenue could be impacted. The credit risk is mitigated by the high quality of the Company’s existing tenant base, inclusive of IDT, which represented 64%, 67%, and 53% of the Company’s revenue for the years ended July 31, 2017, 2016 and 2015, respectively . The Company recorded bad debt expense of $0, $82,000, and $0 for the years ended July 31, 2017, 2016 and 2015, respectively.

Other

In March 2016, the FASB issued an ASU to improve the accounting for employee share-based payments. The new standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted the new standard on August 1, 2017. The adoption of the new standard did not have a significant impact on the Company’s combined financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (“FASB”), and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard that will supersede most of the current revenue recognition guidance under U.S. GAAP and International Financial Reporting Standards (“IFRS”). The goals of the revenue recognition project were to clarify and converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements. The Company will adopt this standard on August 1, 2018. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company is evaluating the impact that the standard will have on its combined financial statements.

In January 2016, the FASB issued an ASU, to provide more information about recognition, measurement, presentation and disclosure of financial instruments. The amendments in the ASU include, among other changes, the following: (1) equity investments (except those accounted for under the equity method or that result in consolidation) will be measured at fair value with changes in fair value recognized in net income, (2) a qualitative assessment each reporting period to identify impairment of equity investments without readily determinable fair values, (3) financial assets and financial liabilities will be presented separately by measurement category and form of financial asset on the balance sheet or the notes to the financial statements, and (4) an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. Entities will no longer be able to recognize unrealized holding gains and losses on equity securities classified as available-for-sale in other comprehensive income. In addition, a practicability exception will be available for equity investments that do not have readily determinable fair values and do not qualify for the net asset value practical expedient. These investments may be measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Entities will have to reassess at each reporting period whether an investment qualifies for this practicability exception. The Company will adopt the amendments in this ASU on August 1, 2018. The Company is evaluating the impact that the ASU will have on its combined financial statements.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of its pending adoption of the new standard on its combined financial statements.

In June 2016, the FASB issued an ASU that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new provisions will be applied as a cumulative-effect adjustment to retained earnings. The Company will adopt the new standard on August 1, 2020. The Company is evaluating the impact that the new standard will have on its combined financial statements.

F- 10

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS — (CONTINUED)

Note 1—Description of Business and Summary of Significant Accounting Policies (cont.)

In November 2016, the FASB issued an ASU that includes specific guidance on the classification and presentation of changes in restricted cash and cash equivalents in the statement of cash flows. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash or restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of the period and end of the period total amounts shown on the statement of cash flows. The ASU will be applied using a retrospective transition method to each period presented. The Company will adopt the amendments in this ASU on August 1, 2018. The adoption will impact the Company’s beginning of the period and end of the period cash and cash equivalents balance in its statement of cash flows, as well as its net cash provided by operating activities.

In January 2017, the FASB issued an ASU to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current guidance, there are three elements of a business—inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs, for example, by integrating the acquired set with their own inputs and processes. The amendments in this ASU provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this ASU (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the FASB has developed more stringent criteria for sets without outputs. Lastly, the ASU narrows the definition of the term output. The Company will adopt the amendments in this ASU on August 1, 2018. The Company is evaluating the impact that the new standard will have on its combined financial statements.

In May 2017, the FASB issued an ASU to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Pursuant to this ASU, an entity should account for the effects of a modification unless all the following are met: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified (if the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification); (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The Company will adopt the amendments in this ASU prospectively to an award modified on or after on August 1, 2018. The Company is evaluating the impact that the new standard will have on its combined financial statements.

In August 2017, the FASB issued an ASU intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the ASU includes certain targeted improvements to simplify the application of hedge accounting guidance in U.S. GAAP. The amendments in this ASU are effective for the Company on August 1, 2019. Early application is permitted. Entities will apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements will be applied prospectively. The Company is evaluating the impact that this ASU will have on its combined financial statements.

F- 11

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS — (CONTINUED)

Note 2—Fair Value Measurements

The following table presents the balance of assets measured at fair value on a recurring basis:

(in thousands)	Level 1		Level 2		Level 3		Total
July 31, 2017
Available-for-sale securities:
Rafael Pharmaceuticals convertible promissory notes	$	—	$	—	$	6,300	$	6,300
Total	$	—	$	—	$	6,300	$	6,300
July 31, 2016
Available-for-sale securities:
Rafael Pharmaceuticals convertible promissory notes	$	—	$	—	$	2,000	$	2,000
Total	$	—	$	—	$	2,000	$	2,000

At July 31, 2017 and 2016, the Company did not have any liabilities measured at fair value on a recurring basis.

At July 31, 2017, the fair value of the Rafael Pharmaceuticals convertible promissory notes, which were classified as Level 3, was estimated based on a valuation of Rafael Pharmaceuticals by utilizing an option pricing model, with reference to recent transactions in its securities, the September 2016 Series D Convertible Note investment, as well as utilizing a discounted cash flow technique under the Income Approach and other factors that could not be corroborated by the market.

The following tables summarize the change in the balance of the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3). There were no liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) in the years ended July 31, 2017, 2016 or 2015.

Year ended July 31,
(in thousands)	2017		2016		2015
Balance, beginning of period	$	2,000	$	—	$	—
Total gains included in other comprehensive income		2,100		—		—
Purchases		2,200		2,000		—
Balance, end of period	$	6,300	$	2,000	$	—

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the period	$	—	$	—	$	—

The Company’s financial instruments include accounts and rents receivable, accounts payable, and due to IDT Corporation. The recorded carrying amount of accounts and rents receivable, accounts payable and due to IDT Corporation approximates their fair value due to their short-term nature. Other than noted above, the Company did not have any other assets or liabilities that were measured at fair value on a recurring basis as of July 31, 2017 and 2016.

Note 3—Accounts and Rents Receivable

Accounts and Rents Receivable consisted of the following (in thousands):

July 31,	2017			2016
Trade Accounts Receivable	$	336		$	310
Accrued Rental Income		10			29

Less Allowance for Doubtful Accounts		(82	)		(82	)
Accounts and Rents Receivable, net	$	264		$	257

Noncurrent Accrued Rental Income included in Other Assets was approximately $45,000 and $54,000 as of July 31, 2017 and 2016, respectively.

F- 12

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS — (CONTINUED)

Note 4—Property and Equipment

Property and equipment consisted of the following (in thousands):

July 31,	2017			2016
Building and Improvements	$	51,240		$	49,884
Land		10,412			10,412
Tenant Improvements		1,150			1,150
Other		1,374			1,291
Construction in Progress		823			377

Less Accumulated Depreciation		(13,839	)		(12,141	)
Total	$	51,160		$	50,973

Other property and equipment consists of furniture and fixtures, office and other equipment and miscellaneous computer hardware.

Depreciation and amortization expense pertaining to property and equipment was approximately $1.7 million, $1.6 million and $1.2 million for fiscal years 2017, 2016 and 2015, respectively.

Note 5—Investments

Rafael Pharmaceuticals, Inc. (“Rafael Pharmaceuticals”)

On December 7, 2015, IDT approved an investment of up to $10 million in Rafael Pharmaceuticals. $2 million of this investment was funded as of July 31, 2016, as follows: $500,000 funded upon signing the Subscription and Loan Agreement during the second quarter of fiscal year 2016; and $1.5 million funded during the third quarter of fiscal year 2016. The initial $2 million investment was in exchange for Rafael Pharmaceuticals' 3.5% convertible promissory notes due in fiscal year 2018. To date, the Company has not accrued interest on this note, as collection cannot be reasonably assured; however, the Company has received an independent appraisal indicating the fair value of its investment in Rafael Pharmaceuticals exceeds the carrying value. On September 16, 2016, the Company made an additional $8 million investment in exchange for Rafael Pharmaceuticals' 3.5% convertible promissory notes due in fiscal year 2018.

The Company will own, subsequent to July 31, 2017, its interests/rights in Rafael Pharmaceutical through a 90%-owned non-operating subsidiary, IDT-Rafael Holdings, LLC. (“IDT-Rafael Holdings”). IDT-Rafael Holdings holds warrants to purchase a significant stake in Rafael Pharmaceuticals, as well as other equity and governance rights in Rafael Pharmaceuticals, and owns 50% of CS Pharma Holdings, LLC (“CS Pharma”), a non-operating entity which holds the convertible debt and other rights to purchase equity interests in Rafael Pharmaceuticals.

Those interests/rights include:

$10,000,000 of Series D Convertible Notes of Rafael Pharmaceuticals held by CS Pharma.

A warrant to purchase 56% of the capital stock of Rafael Pharmaceuticals – the right to exercise the first $10,000,000 worth of the warrant is held by CS Pharma; and the remainder is held directly by IDT-Rafael Holdings.

Certain governance rights, including appointment of directors.

The contractual right to receive “Bonus Shares” for an additional 10% of the outstanding capital stock of Rafael Pharmaceuticals that was previously held by IDT-Rafael Holdings, which is contingent upon achieving certain milestones. If the milestones are met, Bonus Shares are to be issued without any additional payment and Howard Jonas has the right to designate the Bonus Shares to others, including those who are instrumental to the future success of Rafael Pharmaceuticals.

F- 13

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS — (CONTINUED)

Note 5—Investments (cont.)

On March 2, 2017, Howard Jonas, IDT’s Chairman of the Board, and Chairman of the Board of Rafael Pharmaceuticals, purchased 10% of IDT-Rafael Holdings, LLC, in which the Company’s direct and indirect interest and rights in Rafael Pharmaceuticals were held, for a purchase price of $1 million, which represented 10% of the Company’s cost basis in IDT-Rafael Holdings. We hold our interest in CS Pharma through our 90%-owned non-operating subsidiary, IDT-Rafael Holdings, LLC, which holds a 50% interest in CS Pharma. Accordingly, we will hold an effective 45% indirect interest in the assets held by CS Pharma, including its cash. Separately, Howard Jonas and Deborah Jonas jointly own $525,000 of Series C Convertible Notes of Rafael Pharmaceuticals, and The Howard S. and Deborah Jonas Foundation owns $525,000 of Series C Notes of Rafael Pharmaceuticals.

On September 12, 2017, the Company’s Compensation Committee, Corporate Governance Committee and Board of Directors approved a compensatory arrangement with Howard S. Jonas related to this right to receive additional Rafael shares. In connection with this arrangement, IDT-Rafael Holdings distributed this right to its members such that the Company received the right to 9% of the outstanding capital stock of Rafael and Mr. Jonas received the right to 1% of the outstanding capital stock of Rafael. In addition, as compensation for assuming the role of Chairman of the Board of Rafael, and to create additional incentive to contribute to the success of Rafael, on September 19, 2017, the Company assigned its right to receive 9% of the outstanding capital stock of Rafael to Mr. Jonas. The right is further transferable by Mr. Jonas, in his discretion.

The Rafael Pharmaceuticals Series D Note earns interest at 3.5% per annum, with principal and accrued interest due and payable on September 16, 2018. The Series D Note is convertible at the holder’s option into shares of Rafael Pharmaceuticals’ Series D Preferred Stock. The Series D Note also includes a mandatory conversion into Rafael Pharmaceuticals common stock upon a qualified initial public offering, and conversion at the holder’s option upon an unqualified financing event. In all cases, the Series D Note conversion price is based on the applicable financing purchase price. IDT-Rafael Holdings and CS Pharma were issued warrants to purchase shares of capital stock of Rafael Pharmaceuticals representing up to 56% of the then issued and outstanding capital stock of Rafael Pharmaceuticals, on an as-converted and fully diluted basis. The right to exercise warrants as to the first $10 million thereof is held by CS Pharma and the remainder is owned by IDT-Rafael Holdings. The warrant expires on December 31, 2020. Currently, if IDT desires to raise additional financing from unaffiliated parties in connection with IDT’s exercise of its warrant or other current rights to invest in Rafael Pharmaceuticals (but not including the Rafael Pharmaceuticals rights held by CS Pharma), it first must give the other CS Pharma holders the opportunity to provide such financing on a pro rata basis. The exercise price of the warrant is the lower of 70% of the price sold in an equity financing, or $1.25 per share, subject to certain adjustments. The minimum initial and subsequent exercises of the warrant shall be for such number of shares that will result in at least $5 million of gross proceeds to Rafael Pharmaceuticals, or such lesser amount as represents 5% of the outstanding capital stock of Rafael Pharmaceuticals, or such lesser amount as may then remain unexercised. The warrant will expire upon the earlier of December 31, 2020 or a qualified initial public offering or liquidation event of Rafael Pharmaceuticals.

As of the date hereof and based on the current shares issued and outstanding of Rafael Pharmaceuticals, we, and our affiliates that hold interests in Rafael Pharmaceuticals would need to pay in the aggregate approximately $71 million to exercise the Warrant in full and approximately $56 million to purchase a 51% controlling stake in Rafael Pharmaceuticals. On an as-converted fully diluted basis (for all convertible securities of Rafael Pharmaceuticals outstanding), we and our affiliates that hold interests in Rafael Pharmaceuticals would need approximately $122 million to exercise the Warrant in full and approximately $98 million to purchase a 51% controlling stake in Rafael Pharmaceuticals. Following that exercise, a portion of our interest in Rafael Pharmaceuticals would continue to be held for the benefit of the other equity holders in IDT-Rafael Holdings and CS Pharma.

The Company’s investment in Rafael Pharmaceuticals, which was included in “Investments” in the accompanying combined balance sheets, consists of the following:

July 31 (in thousands)	2017		2016
Convertible promissory note (at fair value)	$	6,300	$	2,000
Warrants (at cost)		5,400		—
Right to receive additional shares (at cost)		400		—
Total investment in Rafael Pharmaceuticals	$	12,100	$	2,000

Rafael Pharmaceuticals is a variable interest entity; however, the Company has determined that it is not the primary beneficiary as is does not have the power to direct the activities of Rafael Pharmaceuticals that most significantly impact Rafael Pharmaceuticals’ economic performance (see Note 1).

Lipomedix

Lipomedix Pharmaceuticals Ltd. (“Lipomedix”) is a development-stage, privately held Israeli company focused on the development of an innovative, safe and effective cancer therapy based on liposome delivery.

F- 14

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS — (CONTINUED)

Note 5—Investments (cont.)

As a result of its initial $100,000 investment, the Company received approximately 3.2% of the common shares outstanding. During the second quarter of fiscal year 2017, the Company made an additional $300,000 investment in Lipomedix, increasing its ownership to 13.95% of the issued and outstanding ordinary shares, as well as providing Lipomedix with an advance of $200,000. During the fourth quarter of fiscal year 2017, the Company made an additional $1.1 million investment, inclusive of the $200,000 advance, in Lipomedix, increasing its ownership to 38.86% of the issued and outstanding ordinary shares. As such, the Company began accounting for this investment under the equity method as of and for the fourth quarter of fiscal year 2017. During the fourth quarter of fiscal year 2017, the Company recognized approximately $113,000 as its proportionate share of Lipomedix's loss. As of July 31, 2017, Lipomedix had assets totaling $1.2 million and liabilities totaling $77,000.

The Company also held options to purchase an additional $900,000 in shares, which would increase its ownership to 50.6% of the issued share capital on a fully diluted basis. The option expires on the earliest of (1) a merger or acquisition transaction, (2) an initial public offering, and (3) November 30, 2017.

Note 6—Income Taxes

The Company is a member of a combined group of entities for which income tax returns are filed for the combined group. Income taxes for the Company are calculated on a separate tax return basis. The current U.S. Federal and State income tax expense is recorded as an increase in the payable amount Due to IDT Corporation.

The Company provides for deferred taxes based on the difference between the basis of assets and liabilities for financial reporting purposes and the basis for income tax purposes, calculated using enacted rates that will be in effect when the differences are expected to reverse.

The components of income (loss) before income taxes are as follows (in thousands):

Year Ended July 31,	2017		2016		2015
Domestic	$	97	$	1,100	$	(571	)
Foreign		107		59		(160	)
Income (Loss) Before Income Taxes	$	204	$	1,159	$	(731	)

Provision for income taxes as presented in the Statement of Comprehensive Income (Loss) consisted of the following (in thousands):

Year Ended July 31,	2017			2016		2015
Current:
Foreign	$	—		$	—	$	—
Federal		(229	)		23		—
State		—			—		—
Total current expense		(229	)		23		—
Deferred:
Foreign		(6	)		17		(44	)
Federal		283			409		(220	)
State		18			—		—
Total deferred expense		295			426		(264	)
Income tax expense	$	66		$	449	$	(264	)

The differences between income taxes expected at the U.S. federal statutory income tax rate and income taxes are reported as follows (in thousands):

Year Ended July 31,	2017			2016			2015
U.S. federal income tax at statutory rate	$	70		$	394		$	(249	)
State income tax		6			52			(26	)
Valuation allowance		—			—			—
Foreign tax rate differential		(11	)		(5	)		11
Permanent differences		1			6			1
Other		—			2			(1	)
Income tax expense	$	66		$	449		$	(264	)

The Company has not recorded U.S. income tax expense for foreign earnings, as such earnings are permanently reinvested outside the United States. The cumulative undistributed foreign earnings are included in accumulated deficit in the Company’s combined balance sheets and consisted of approximately $2.2 million at July 31, 2017. Upon distribution of these foreign earnings to the Company’s domestic entities, the Company may be subject to U.S. income taxes and withholding of foreign taxes; however, it is not practicable to determine the amount, if any, which would be paid.

F- 15

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS — (CONTINUED)

Note 6—Income Taxes (cont.)

Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows (in thousands):

July 31,	2017		2016		2015
Deferred tax assets:
Net operating loss carryforwards	$	7,217	$	6,937	$	7,392
AMT carryforwards		24		24		—
Reserves and accruals		1,618		1,603		1,540
Stock-based compensation		—		—		—
Gross deferred tax assets		8,859		8,564		8,932
Less valuation allowance		—		—		—
Total deferred tax assets		8,859		8,564		8,932
Total deferred tax liabilities		—		—		—
Deferred tax, net	$	8,859	$	8,564	$	8,932

Net deferred tax assets are included in “Deferred Taxes” in the combined balance sheets.

At July 31, 2017 and 2016, the Company has available Federal and State net operating loss ("NOL") carryforwards from domestic operations of approximately $18.0 million to offset future taxable income. The Federal and State NOL carryforwards will begin to expire in 2026. The Company has no available NOLs from foreign operations. The AMT carryforwards do not expire.

The Company has adopted the accounting policy that interest and penalties will be classified as a component of the provision for income taxes. As of the date of adoption of ASC 740 and through July 31, 2017, the Company did not have any interest or penalties associated with unrecognized tax benefits. The Company does not anticipate any significant changes to the unrecognized tax benefits within twelve months of this reporting date.

The Company is a member of IDT's combined group; therefore its income or loss was included in IDT's tax return. IDT currently remains subject to examinations of its combined U.S. federal tax returns for fiscal years 2013 through 2016, and state and local tax returns generally for fiscal years 2012 through 2016. The Company remains subject to examinations of its Israeli tax returns for fiscal years 2013 through 2016.

Note 7—Commitments and Contingencies

Legal Proceedings

The Company may from time to time be subject to legal proceedings that may arise in the ordinary course of business. Although there can be no assurance in this regard, the Company does not expect any of those legal proceedings to have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

Note 8—Related Party Transactions

The Company continues to maintain an intercompany balance Due to IDT that relates to cash advances for investments, loan repayments, charges for services provided to the Company by IDT and payroll costs for the Company's personnel that are paid by IDT, partially offset by rental income paid by various companies under common control to IDT to the Company. IDT advanced $9.4 million to the Company during fiscal year 2017 to invest in Rafael Pharmaceuticals and Lipomedix. IDT advanced $2.1 million to the Company during fiscal year 2016 to invest in Rafael Pharmaceuticals and Lipomedix and $6.4 million to pay off the outstanding note payable on the 225 Old New Brunswick Road building. IDT charges the Company for certain transactions and allocates routine expenses for, among other things: (1) the allocation between the Company and IDT of employee benefits, taxes and other liabilities and obligations; (2) services to be provided by IDT relating to human resources and employee benefits administration; (3) the allocation of responsibilities relating to employee compensation and benefit plans and programs and other related matters; and (4) finance, accounting, tax and legal services to be provided by IDT to the Company. In fiscal years 2017 and 2016, IDT allocated to the Company an aggregate of approximately $993,000 and $688,000, respectively, for payroll, benefits, insurance and other expenses, which were included in “Selling, general and administrative expense” in the combined statements of comprehensive income (loss). In all periods presented, the Company was included in IDT's combined federal income tax return.

F- 16

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS — (CONTINUED)

Note 8—Related Party Transactions (cont.)

The change in the Company’s liability to IDT was as follows:

Years ended July 31, (in thousands)	2017			2016
Balance at beginning of year	$	15,145		$	11,568
Payments by IDT on behalf of the Company		993			688
Rental revenue earned from IDT		(3,705	)		(3,729	)
Cash repayments, net of advances		11,260			6,618
Balance at end of year	$	23,693		$	15,145

Note 9—Future Minimum Rents

The properties are leased to tenants under net operating leases with initial term expiration dates ranging from 2017 to 2025. The future contractual minimum lease payments to be received (excluding operating expense reimbursements) by the Company as of July 31, 2017, under non-cancelable operating leases which expire on various dates through 2025, are as follows:

Year ending July 31:	Related Parties		Other		Total
(in thousands)
2018	$	1,966	$	919	$	2,885
2019		2,006		1,084		3,090
2020		2,046		1,120		3,166
2021		2,087		981		3,068
2022		2,129		885		3,014
Thereafter		6,071		3,048		9,119
Total Minimum Future Rental Income		16,305		8,037	$	24,343

In addition to the aforementioned future minimum rents, the Company entered into two leases for space in the building located at 520 Broad Street in Newark, NJ during the third quarter of fiscal year 2016. The first lease is for a portion of the sixth floor for an eleven-year term, of which the first six years are non-cancellable. The second lease is for a portion of the ground floor and basement for a term of ten years, seven months.

Related parties represented approximately 64%, 67%, and 53% of the Company’s total revenue for the years ended July 31, 2017, 2016 and 2015, respectively. The Company amended all of its related party leases as of August 1, 2017. The related party leases expire in April 2025 and are for 88,631 square feet and include two parking spots per thousand square feet of space leased at 520 Broad Street and for 12,400 square feet in Israel. The annual rent will be approximately $2.0 million. The related parties have the right to terminate theses leases upon four months’ notice, and upon early termination will pay a termination penalty equal to 25% of the portion of the rent due over the course of the remaining term. Related parties will have the right to lease an additional 25,000 square feet in the building located at 520 Broad Street on the same terms as the base lease, and other rights to a further 25,000 square feet should all available space be leased to other tenants. Upon expiration of the lease, these related parties have the right to renew the leases for another 5 years.

F- 17

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS — (CONTINUED)

Note 10—Business Segment Information

The Company conducts business as one operating segment.

Geographic Information

Revenue from customers located outside of the United States was generated entirely from related parties located in Israel. Revenue from these non-United States customers as a percentage of total revenues was as follows (revenues by country are determined based on the location of the related facility):

Year ended July 31,		2017				2016				2015
Revenue from tenants located in Israel			5	%			5	%			8	%

Net long-lived assets and total assets of the Company were located as follows:

(in thousands)	United States		Israel		Total
July 31, 2017
Long-lived Assets, net	$	71,674	$	2,363	$	74,037
Total Assets		83,675		2,529		86,204
July 31, 2016
Long-lived Assets, net	$	59,930	$	1,766	$	61,696
Total Assets		62,366		1,943		64,309

F- 18

RAFAEL HOLDINGS, INC. AND AFFILIATES
COMBINED BALANCE SHEETS
(in thousands)

	January 31, 2018		July 31, 2017
	(Unaudited)		(Note 1)
	(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	12,008	$	11,756
Trade accounts receivable, net of allowance for doubtful accounts of $82 at January 31, 2018 and July 31, 2017		226		264
Prepaid expenses and other current assets		191		147
Total current assets		12,425		12,167
Property and equipment, net		50,967		51,160
Investments		11,700		13,478
Deferred income tax assets, net		22		8,859
Patents		155		—
In Process Research and Development		1,588		—
Other assets		787		540
Total assets	$	77,644	$	86,204

Liabilities and equity
Current liabilities:
Trade accounts payable	$	89	$	115
Accrued expenses		423		213
Other current liabilities		20		35
Total current liabilities		532		363
Due to IDT Corporation		24,391		23,693
Other liabilities		95		70
Total liabilities		25,018		24,126

Commitments and contingencies
Equity:
Rafael Holdings, Inc. members’ equity:
Group equity		40,554		50,427
Accumulated other comprehensive income		2,394		2,316
Total Rafael Holdings, Inc. members’ equity		42,948		52,743
Noncontrolling interests		9,678		9,335
Total equity		52,626		62,078
Total liabilities and equity	$	77,644	$	86,204

See accompanying notes to combined financial statements.

F- 19

RAFAEL HOLDINGS, INC. AND AFFILIATES
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended January 31,						Six Months Ended January 31,
	2018			2017			2018			2017
	(in thousands, except per share data)
Revenues:
Rental – Third Party	$	298			396			685			585
Rental – Related Party		489			770			994			1,682
Parking		169			171			384			469
Total revenues		956			1,337			2,063			2,736
Costs and expenses:
Selling, general and administrative		1,343			776			3,079			1,629
Depreciation and amortization		429			434			853			822
(Loss) income from operations		(816	)		127			(1,869	)		285
Interest income		(2	)		(2	)		(4	)		(7	)
Net gains resulting from foreign exchange transactions		(107	)		(51	)		(118	)		(32	)
Net loss on equity investments		—			—			107			—
Gain on disposal of bonus shares		—			—			(246	)		—
(Loss) income before income taxes		(707	)		180			(1,608	)		324
(Benefit from) provision for income taxes		15			14			8,443			30
Net (loss) income		(722	)		166			(10,051	)		294
Net loss attributable to noncontrolling interests		176			—			176			—
Net (loss) income attributable to Rafael Holdings, Inc.	$	(546	)		166			(9,875	)		294

See accompanying notes to combined financial statements.

F- 20

RAFAEL HOLDINGS, INC. AND AFFILIATES

COMBINED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

	Three Months Ended January 31,					Six Months Ended January 31,
	2018			2017		2018			2017
	(in thousands)
Net (loss) income	$	(722	)	$	166	$	(10,051	)	$	294
Other comprehensive income:
Foreign currency translation adjustments		68			8		78			8
Comprehensive (loss) income		(654	)		174		(9,973	)		302
Comprehensive loss attributable to noncontrolling interests		19			—		19			—
Comprehensive (loss) income attributable to Rafael Holdings, Inc.	$	(673	)	$	174	$	(9,992	)	$	302

See accompanying notes to combined financial statements.

F- 21

RAFAEL HOLDINGS, INC. AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended January 31,
	2018			2017
	(in thousands)
Operating activities
Net (loss) income	$	(10,051	)	$	294
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		853			822
Deferred income taxes		8,837			7
Realized gain on disposal of bonus shares		(246	)		—
Non-cash compensation		606			—
Interest in the equity of investments		439			—
Change in assets and liabilities:
Accounts and rents receivable		38			(79	)
Other current assets and prepaid expenses		(60	)		(252	)
Other assets		(260	)		7
Accounts payable and accrued expenses		77			29
Other current liabilities		(15	)		—
Due to IDT Corporation		(202	)		(1,211	)
Other liabilities		25			15
Net cash provided by (used in) operating activities		41			(368	)

Investing activities
Purchases of property and equipment		(728	)		(1,146	)
Purchase of investments		—			(8,300	)

Net cash used in investing activities		(728	)		(9,446	)

Financing activities
Proceeds from sale of member interests in CS Pharma Holdings, LLC		—			10,000
Cash advances from IDT Corporation, net of repayments		900			9,326

Net cash provided by financing activities		900			19,326
Effect of exchange rate changes on cash and cash equivalents		39			10

Net increase in cash and cash equivalents		252			9,552
Cash and cash equivalents at beginning of period		11,756			2,339

Cash and cash equivalents at end of period	$	12,008		$	11,861

Investing activities
Cash payments made for taxes	$	—		$	—
Cash payments made for interest	$	—		$	—

See accompanying notes to combined financial statements.

F- 22

RAFAEL HOLDINGS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Unaudited)

Note 1—Description of Business and Basis of Presentation

Description of Business

Rafael Holdings, Inc. (“Rafael Holdings”), a Delaware corporation, is a wholly-owned subsidiary of IDT Corporation (“IDT” or the “Parent”). On or about March 26, 2018, IDT expects to complete a tax-free spin-off (the “Spin-Off”) of our capital stock, through a pro rata distribution of our common stock to its stockholders of record as of the close of business on March 13, 2018 (the “Spin-Off record date”). As a result of the Spin-Off, each of IDT’s stockholders will receive: (i) one share of our Class A common stock for every two shares of IDT’s Class A common stock held on the Spin-Off record date; (ii) one share of our Class B common stock for every two shares of IDT’s Class B common stock held on the Spin-Off record date; and (iv) cash in lieu of a fractional share of all classes of our common stock. The combined financial statements include all of the accounts of the following wholly-owned subsidiaries of IDT, which will be contributed to Rafael Holdings prior to the Spin-Off: IDT 225 Old NB Road, LLC, a Delaware Limited Liability Company; IDT Realty LLC, a New Jersey Limited Liability Company; I.D.T. R.E. Holdings, Ltd., an Israeli Company; Broad Atlantic Associates LLC, a Delaware Limited Liability Company; Broad Atlantic Realty LLC, a Delaware Limited Liability Company; Hillview Avenue Realty, a Delaware Limited Liability Company; Hillview Avenue Realty JV, a Delaware Limited Liability Company; IDT Capital Real Estate Holdings LLC, a Delaware Limited Liability Company; and IDT Capital, Inc., a Delaware Corporation. Additionally, it includes the accounts of the majority-owned Lipomedix Pharmaceuticals, Ltd., an Israeli Company.

All significant intercompany accounts and transactions have been eliminated in combination.

Properties

Basis of Presentation

The accompanying unaudited combined financial statements the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended January 31, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2018. The balance sheet at July 31, 2017 has been derived from the Company’s audited financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the combined financial statements and footnotes thereto included elsewhere in the Registration Statement on Form 10-12G filed on February 19, 2018.

The Company’s fiscal year ends on July 31 of each calendar year. Each reference below to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., fiscal year 2017 refers to the fiscal year ending July 31, 2017).

F- 23

Note 2—Acquisition of Lipomedix Pharmaceuticals Ltd. (“Lipomedix”)

Lipomedix is a development-stage, privately held Israeli company focused on the development of an innovative, safe and effective cancer therapy based on liposome delivery.

As a result of its initial $100,000 investment, the Company received approximately 3.2% of the common shares outstanding. During the second quarter of fiscal year 2017, the Company made an additional $300,000 investment in Lipomedix, increasing its ownership to 13.95% of the issued and outstanding ordinary shares, as well as providing Lipomedix with an advance of $200,000. During the fourth quarter of fiscal year 2017, the Company made an additional $1.1 million investment, inclusive of the $200,000 advance, in Lipomedix, increasing its ownership to 38.86% of the issued share capital of the issued and outstanding ordinary shares. As such, the Company began accounting for this investment under the equity method as of and for the fourth quarter of fiscal year 2017. During the fourth quarter of fiscal year 2017, the Company recognized approximately $113,000 as its proportionate share of Lipomedix's loss. As of July 31, 2017, Lipomedix had assets totaling $1.2 million and liabilities totaling $77,000.

On November 16, 2017, the Company exercised its option to purchase additional shares in Lipomedix for $900,000, which increased its ownership to 50.6% of the issued and outstanding ordinary shares. As such, the Company began consolidating this investment as of and for the second quarter of fiscal year 2018.

The impact of the acquisition’s purchase price allocations on the Company’s combined balance sheet and the acquisition date fair value of the total consideration transferred were as follows:

(in thousands)	November 16, 2017
Other current assets	$	16
Property and equipment, net		8
In Process Research and Development		1,575
Patents		155
Accounts payable		(85	)
Accrued expenses		(22	)
Net assets, excluding cash acquired and noncontrolling interest	$	1,647
Supplemental information:
Cash paid	$	2,400
Cash acquired		1,060
Cash paid, net of cash acquired		1,340
Historical loss on investment		(252	)
Noncontrolling interest		559
Total consideration, net of cash acquired and noncontrolling interest	$	1,647

Note 3—Fair Value Measurements

The following table presents the balance of assets measured at fair value on a recurring basis:

(in thousands)	Level 1		Level 2		Level 3		Total
January 31, 2018
Available-for-sale securities:
Rafael Pharmaceuticals convertible promissory notes	$	—	$	—	$	6,300	$	6,300
Total	$	—	$	—	$	6,300	$	6,300
July 31, 2017
Available-for-sale securities:
Rafael Pharmaceuticals convertible promissory notes	$	—	$	—	$	6,300	$	6,300
Total	$	—	$	—	$	6,300	$	6,300

At January 31, 2018 and July 31, 2017, the Company did not have any liabilities measured at fair value on a recurring basis.

At January 31, 2018 and July 31, 2017, the fair value of the Rafael convertible promissory notes, which were classified as Level 3, was estimated based on a valuation of Rafael Pharmaceuticals by reference to recent transactions in its securities, the September 2016 Series D Convertible Note investment, as well as utilizing a discounted cash flow technique under the Income Approach and other factors that could not be corroborated by the market.

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Note 3—Fair Value Measurements (cont.)

	Six Months Ended, January 31
(in thousands)	2018		2017
Balance, beginning of period	$	6,300	$	2,000
Total gains included in other comprehensive income		—		2,200
Purchases		—		—
Balance, end of period	$	6,300	$	4,200

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the period	$	—	$	—

Note 4—Establishment of Valuation Allowance for Deferred Tax Asset

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the amendments to related party leases effective August 1, 2017, which, in comparison to fiscal year 2017, will reduce revenues by approximately $1.7 million annually through 2025. Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections for future growth. On the basis of this evaluation, a valuation allowance of $8.4 million was recorded to reserve for the entirety of the Company’s domestic deferred tax asset during the first quarter of fiscal 2018. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income during the carryforward period are increased, or if additional weight is given to subjective evidence, such as the Company’s projections for growth.

Note 5—Investment in Rafael Pharmaceuticals, Inc. (“Rafael Pharmaceuticals”)

Upon Spin-Off, the Company will own, subsequent to January 31, 2018, its interests/rights in Rafael Pharmaceuticals through a 90%-owned non-operating subsidiary, IDT-Rafael Holdings, LLC. (“IDT-Rafael Holdings”). IDT-Rafael Holdings holds warrants to purchase a significant stake in Rafael Pharmaceuticals, as well as other equity and governance rights in Rafael Pharmaceuticals, and owns 50% of CS Pharma Holdings, LLC (“CS Pharma”), a non-operating entity which holds the convertible debt and other rights to purchase equity interests in Rafael Pharmaceuticals.

Those interests/rights include:

$10,000,000 of Series D Convertible Notes of Rafael Pharmaceuticals held by CS Pharma.

A warrant to purchase 56% of the capital stock of Rafael Pharmaceuticals — the right to exercise the first $10,000,000 worth of the warrant is held by CS Pharma; and the remainder is held directly by IDT-Rafael Holdings.

Certain governance rights, including appointment of directors.

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Note 5—Investments (cont.)

On March 2, 2017, Howard Jonas, IDT’s Chairman of the Board, and Chairman of the Board of Rafael Pharmaceuticals, purchased 10% of IDT-Rafael Holdings for a purchase price of $1 million, which represented 10% of the Company’s cost basis in IDT-Rafael Holdings. Accordingly, we will hold an effective 45% indirect interest in the assets held by CS Pharma, including its cash. Separately, Howard Jonas and Deborah Jonas jointly own $525,000 of Series C Convertible Notes of Rafael Pharmaceuticals, and The Howard S. and Deborah Jonas Foundation owns $525,000 of Series C Notes of Rafael Pharmaceuticals.

Additionally, the Company previously owned the contractual right to receive "Bonus Shares" for an additional 10% of the outstanding capital stock of Rafael Pharmaceuticals that are issued only upon achieving certain milestones. If the milestones are met, Bonus Shares are to be issued without any additional payment.

On September 12, 2017, IDT’s Compensation Committee, Corporate Governance Committee and Board of Directors approved a compensatory arrangement with Howard S. Jonas related to this right to receive additional Rafael Pharmaceutical shares. In connection with this arrangement, IDT-Rafael Holdings distributed this right to its members such that the Company received the right to 9% of the outstanding capital stock of Rafael Pharmaceuticals and Mr. Jonas received the right to 1% of the outstanding capital stock of Rafael Pharmaceuticals. In addition, as compensation for assuming the role of Chairman of the Board of the Company, and to create additional incentive to contribute to its success, on September 19, 2017, the Company assigned its right to receive 9% of the outstanding capital stock of Rafael Pharmaceuticals to Mr. Jonas. The right is further transferable by Mr. Jonas, in his discretion.

The Rafael Pharmaceuticals Series D Note earns interest at 3.5% per annum, with principal and accrued interest due and payable on September 16, 2018. The Series D Note is convertible at the holder’s option into shares of Rafael Pharmaceuticals’ Series D Preferred Stock. The Series D Note also includes a mandatory conversion into Rafael Pharmaceuticals common stock upon a qualified initial public offering, and conversion at the holder’s option upon an unqualified financing event. In all cases, the Series D Note conversion price is based on the applicable financing purchase price. IDT-Rafael Holdings and CS Pharma were issued warrants to purchase shares of capital stock of Rafael Pharmaceuticals representing up to 56% of the then issued and outstanding capital stock of Rafael Pharmaceuticals, on an as-converted and fully diluted basis. The right to exercise warrants as to the first $10 million thereof is held by CS Pharma and the remainder is owned by IDT-Rafael Holdings. The warrant expires on December 31, 2020. Currently, if the Company desires to raise additional financing from unaffiliated parties in connection with its exercise of its warrant or other current rights to invest in Rafael Pharmaceuticals (but not including the Rafael Pharmaceuticals rights held by CS Pharma), it first must give the other CS Pharma holders the opportunity to provide such financing on a pro rata basis. The exercise price of the warrant is the lower of 70% of the price sold in an equity financing, or $1.25 per share, subject to certain adjustments. The minimum initial and subsequent exercises of the warrant shall be for such number of shares that will result in at least $5 million of gross proceeds to Rafael Pharmaceuticals, or such lesser amount as represents 5% of the outstanding capital stock of Rafael Pharmaceuticals, or such lesser amount as may then remain unexercised. The warrant will expire upon the earlier of December 31, 2020 or a qualified initial public offering or liquidation event of Rafael Pharmaceuticals.

As of January 31, 2018, and based on current shares issued and outstanding of Rafael Pharmaceuticals, the Company would need to pay approximately $71 million to exercise the warrant in full and approximately $56 million to purchase a 51% controlling stake. On an as-converted and fully diluted basis (for all convertible securities of Rafael Pharmaceuticals outstanding), the Company would need approximately $122 million to exercise the warrant in full and approximately $98 million to purchase a 51% controlling stake in Rafael Pharmaceuticals. Given the Company’s anticipated available cash upon the Spin-Off, the Company would not be able to exercise the warrant in its entirety and the Company may never be able to exercise the warrant in full.

The Company serves as the managing member of IDT-Rafael Holdings and IDT-Rafael Holdings serves as the managing member of CS Pharma, with broad authority to make all key decisions regarding their respective holdings. Any distributions that are made to CS Pharma from Rafael Pharmaceuticals that are in turn distributed by CS Pharma, will need to be made pro rata to all members, which would entitle IDT-Rafael Holdings to 50% (based on current ownership) of such distributions. Similarly, if IDT-Rafael Holdings were to distribute proceeds it receives from CS Pharma, it would do so on a pro rata basis, entitled the Company to 90% (based on current ownership) of such distributions.

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Note 5—Investments (cont.)

The Company’s investment in Rafael Pharmaceuticals, which was included in “Investments” in the accompanying combined balance sheets, consists of the following:

(in thousands)	(Unaudited) January 31, 2018		July 31, 2017
Convertible promissory note (at fair value)	$	6,300	$	6,300
Warrants (at cost)		5,400		5,400
Right to receive additional shares (at cost)		—		400
Total investment in Rafael Pharmaceuticals	$	11,700	$	12,100

Note 6—Related Party Transactions

The Company continues to maintain an intercompany balance Due to IDT that relates to loan repayments, charges for services provided to the Company by IDT and payroll costs for the Company's personnel that are paid by IDT, partially offset by rental income paid by various companies under common control to IDT to the Company. Historically, this also related to cash advances for investments. IDT advanced $900,000 and $9.4 million to the Company during the six months ended January 31, 2018 and January 31, 2017 to invest in Rafael Pharmaceuticals and Lipomedix. IDT charges the Company for certain transactions and allocates routine expenses for, among other things: (1) the allocation between the Company and IDT of employee benefits, taxes and other liabilities and obligations; (2) services to be provided by IDT relating to human resources and employee benefits administration; (3) the allocation of responsibilities relating to employee compensation and benefit plans and programs and other related matters; and (4) finance, accounting, tax and legal services to be provided by IDT to the Company. In the six months ended January 31, 2018 and January 31, 2017, IDT allocated to the Company an aggregate of approximately $436,000 and $471,000, respectively, for payroll, benefits, insurance and other expenses, which were included in “Selling, general and administrative expense” in the combined statements of comprehensive income (loss). In all periods presented, the Company was included in IDT's combined federal income tax return.

The change in the Company’s liability to IDT was as follows:

	Six Months Ended January 31,
(in thousands)	2018 (unaudited)			2017 (unaudited)
Balance at beginning of period	$	23,693		$	15,145
Payments by IDT on behalf of the Company		436			471
Rental revenues earned from IDT		(994	)		(1,682	)
Cash repayments, net of advances		1,256			9,326
Balance at end of period	$	24,391		$	23,260

The Company amended all of its related party leases as of August 1, 2017. The related party leases expire in April 2025 and are for 88,631 square feet and include two parking spots per thousand square feet of space leased at 520 Broad Street and for 12,400 square feet in Israel. The annual rent will be approximately $2.0 million. The related parties have the right to terminate theses leases upon four months’ notice, and upon early termination will pay a termination penalty equal to 25% of the portion of the rent due over the course of the remaining term. Related parties will have the right to lease an additional 25,000 square feet in the building located at 520 Broad Street on the same terms as the base lease, and other rights to a further 25,000 square feet should all available space be leased to other tenants. Upon expiration of the lease, these related parties have the right to renew the leases for another 5 years.

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Note 7—Business Segment Information

The Company conducts business as two operating segments, Pharmaceuticals and Real Estate. The Company’s reportable segments are distinguished by types of service, customers and methods used to provide their services. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker. Beginning in the second quarter of fiscal 2018, the Pharmaceuticals segment is comprised of debt interests and warrants in Rafael Pharmaceuticals and a majority equity interest in Lipomedix Pharmaceuticals. Comparative results have been reclassified and restated as if the Pharmaceuticals segment existed for all periods presented. To date, the Pharmaceuticals segment has not generated any revenues.

The Real Estate segment includes the Company’s real estate holdings, including the building at 520 Broad Street in Newark, New Jersey that houses IDT’s headquarters and its associated public garage, an office/data center building in Piscataway, New Jersey and a portion of a building in Israel that hosts offices for IDT and certain affiliates.

The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its Real Estate segment based primarily on income (loss) from operations and its Pharmaceuticals segment based primarily on research and development efforts and results of clinical trials. All investments in Rafael Pharmaceuticals and assets, expenses and expenses associated with Lipomedix are tracked separately in the Pharmaceuticals segment. All corporate costs are allocated to the Real Estate segment.

Operating results for the business segments of the Company are as follows:

(in thousands)	Pharmaceuticals			Real Estate			Total
Three Months Ended January 31, 2018
Revenues	$	—		$	956		$	956
(Loss) income from operations		(357	)		(459	)		(816	)

Three Months Ended January 31, 2017
Revenues	$	—		$	1,337		$	1,337
Income (loss) from operations		—			127			127

Six Months Ended January 31, 2018
Revenues	$	—		$	2,063		$	2,063
(Loss) income from operations		(357	)		(1,512	)		(1,869	)

Six Months Ended January 31, 2017
Revenues	$	—		$	2,736		$	2,736
Income (loss) from operations		—			285			285

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Note 7—Business Segment Information (cont.)

Geographic Information

Revenues from customers located outside of the United States were generated entirely from related parties located in Israel. Revenues from these non-United States customers as a percentage of total revenues were as follows (revenues by country are determined based on the location of the related facility):

Six months ended

January 31,
2018

(unaudited)

January 31,
2017

(unaudited)

Revenue from customers located in Israel

Net long-lived assets and total assets held by the Company were located as follows:

(in thousands)	United States		Foreign		Total
January 31, 2018 (unaudited)
Long-lived Assets, net	$	61,449	$	3,728	$	65,177
Total Assets		73,034		4,610		77,644
July 31, 2017
Long-lived Assets, net	$	71,674	$	2,363	$	74,037
Total Assets		83,675		2,529		86,204

Note 8—Commitments and Contingencies

Legal Proceedings

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