Form F-1/A Medigus Ltd.

As filed with the Securities and Exchange Commission on July 16, 2018

Registration No. 333-225610

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

AMENDMENT NO. 1

TO

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

Medigus Ltd.

(Exact Name of Registrant as Specified in its Charter)

 

State of Israel		3841		Not Applicable
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

 

Oded Yatzkan

7A Industrial Park, P.O. Box 3030

Omer, 8496500, Israel

Tel: +972-72-260-2200

Fax: +972-72-260-2237

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

Medigus USA LLC

140 Town & Country Dr., Suite C

Danville, CA 94526, USA

Tel: +1 925-217-4677

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

 

Shachar Hadar Meitar Liquornik Geva Leshem Tal 16 Abba Hillel Silver Rd. Ramat Gan 52506, Israel Tel: +972-3-610-3100

Oded Har-Even, Esq. Robert V. Condon, III, Esq. Zysman, Aharoni, Gayer and Sullivan & Worcester LLP 1633 Broadway New York, NY 10019 Tel: 212-660-5000

Gary Emmanuel, Esq. McDermott Will & Emery LLP 340 Madison Ave. New York, NY 10173 Tel: 212-547-5400

Zvi Gabbay Barnea & Co. Electra City Tower 58 HaRakevet St. Tel Aviv 6777016, Israel Tel: +972-3-640-0600

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after effectiveness of this registration statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

 

Emerging growth company ☒

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

 

 

CALCULATION OF REGISTRATION FEE

  

Title of each Class of Securities to be Registered		Proposed Maximum Aggregate Offering Price(1)(2)				Amount of Registration Fee(3)
Units consisting of:(4)		$	14,375,000			$	1,789.69
(i) Ordinary shares, par value NIS 1.00 per share represented by American Depositary Shares			Included with the Units above				---
(ii) Series C Warrants to purchase American Depositary Shares(5)			---				---
Pre-funded Units consisting of:(4)			Included with the Units above				---
(i) Pre-funded Warrants to purchase American Depositary Shares			Included with the Units above				---
(ii) Series C Warrants to purchase American Depositary Shares(5)			---				---
Ordinary shares underlying the American Depositary Shares issuable upon exercise of Series C Warrants		$	14,375,000			$	1,789.69
Ordinary shares underlying the American Depositary Shares issuable upon exercise of Pre-funded Warrants			Included with the Units above				---
Underwriter warrants to purchase American Depositary Shares(6)			---				---
Ordinary shares underlying the American Depositary Shares issuable upon exercise of Underwriter warrants(7)		$	1,257,813			$	156.60
Total(8)		$	30,007,813			$	3,735.98

 

(1)	The ordinary shares registered hereby may be represented by American depositary shares (ADSs). ADSs evidenced by American depositary receipts issuable upon deposit of the ordinary shares registered hereby have been registered pursuant to a separate registration statement on Form F-6 (File No. 333-203937). Each ADS represents twenty ordinary shares.
(2)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”).
(3)	Calculated pursuant to Rule 457(o) under the Securities Act based on an estimate of the proposed maximum aggregate offering price.
(4)	The proposed maximum aggregate offering price of the Units proposed to be sold in the offering will be reduced on a dollar-for-dollar basis based on the aggregate offering price of any Pre-funded Units offered and sold in the offering, and the proposed maximum aggregate offering price of the Pre-funded Units to be sold in the offering will be reduced on a dollar-for-dollar basis based on the aggregate offering price of any Units sold in the offering. Accordingly, the proposed maximum aggregate offering price of the Units and the Pre-funded Units (including the ADSs issuable upon exercise of the Pre-funded Warrants included in the Pre-funded Units), if any, is $14,375,000.
(5)	No separate fee is required pursuant to Rule 457(i) of the Securities Act.
(6)	No separate fee is required pursuant to Rule 457(g) of the Securities Act.
(7)	Represents warrants to purchase a number of ADSs equal to 7% of the ADSs sold in this offering (including the number of ADSs issuable upon exercise of the Pre-funded Warrants) at an exercise price equal to 125% of the exercise price of the offering price per unit.
(8)	$934 previously paid on June 13, 2018.

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.

 

 

 

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

 

Subject to Completion, dated July 16, 2018

 

Preliminary Prospectus

 

Up to 2,422,480 Units (each consisting of one American Depositary Share

and one Series C Warrant to purchase one American Depositary Share)

 

and

 

Up to 2,422,480 Pre-funded Units (each consisting of one Pre-Funded Warrant to purchase one American Depositary Share
and one Series C Warrant to purchase one American Depositary Share)

 

American Depositary Shares Underlying the Pre-funded Warrants and

 

American Depositary Shares Underlying the Warrants

 

 

We are offering up to 2,422,480 Units, with each Unit consisting of (i) one American Depositary Share, or ADS, and (ii) a Series C warrant to purchase one ADS, or a Series C Warrant. The Series C Warrants will have an exercise price of $          per full ADS (which may be adjusted as set forth in this prospectus) will be exercisable immediately and will expire five years from the date of issuance. The Units will not be issued or certificated. The ADSs and Series C Warrants part of a Unit are immediately separable and will be issued separately, but will be purchased together in this offering. Each ADS represents twenty ordinary shares, par value NIS 1.00 per share.

 

We are also offering to those purchasers, if any, whose purchase of Units in this offering would result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or at the election of the purchaser, 9.99%) of our outstanding ordinary shares immediately following the consummation of this offering, the opportunity to purchase, if they so choose, up to 2,422,480 Pre-funded Units, in lieu of the Units that would otherwise result in ownership in excess of 4.99% (or at the election of the purchaser, 9.99%) of our outstanding ordinary shares, with each Pre-funded Unit consisting of (i) a pre-funded warrant to purchase one ADSs, or a Pre-funded Warrant, and (ii) one Series C Warrant. The purchase price of each Pre-funded Unit will equal the price per unit being sold to the public in this offering, minus $0.01, and the exercise price of each Pre-funded Warrant included in the Pre-funded Unit will be $0.01 per ADS. The Pre-funded Warrants will be immediately exercisable and may be exercised at any time until exercised in full. The Series C Warrants contained in the Pre-funded Units will have an exercise price of $          per full ADS (which may be adjusted as set forth in this prospectus) and will be exercisable immediately and will expire five years from the date of issuance. The Pre-funded Units will not be issued or certificated. The Pre-funded Warrants and the Series C Warrants part of a Pre-funded Unit are immediately separable and will be issued separately, but will be purchased together in this offering. There can be no assurance that we will sell any of the Pre-funded Units being offered.

 

For each Pre-funded Unit we sell, the number of Units we are offering will be decreased on a one-for-one basis. Because we will issue a Series C Warrant as part of each Unit or Pre-funded Unit, the number of Series C Warrants sold in this offering will not change as a result of a change in the mix of the Units and Pre-funded Units sold.

 

The ADSs issuable from time to time upon exercise of the Series C Warrants and the Pre-funded Warrants and the ordinary shares underlying the ADSs and ADSs issuable upon exercise of the Series C Warrants and the Pre-funded Warrants are also being offered by this prospectus. We refer to the ADSs, the Series C Warrants, the Pre-funded Warrants, the ADSs issued or issuable upon exercise of the Series C Warrants and Pre-funded Warrants, and the underlying ordinary shares being offered hereby, collectively, as the securities. See “Description of the Offered Securities” for more information.

 

Our ADSs trade on The Nasdaq Capital Market, or Nasdaq, under the symbol “MDGS.” On July 13, 2018, the last reported sale price of our ADSs on Nasdaq was $5.16 per ADS (after giving effect to the reverse share split and ADS ratio change as further described below). Our ordinary shares trade on the Tel Aviv Stock Exchange Ltd., or TASE, under the symbol “MDGS.” On July 15, 2018, the last reported sale price of our ordinary shares on the TASE was NIS 1.00, or $0.27 per share (based on the exchange rate reported by the Bank of Israel on July 13, 2018). There is currently no market for the warrants offered in this offering. We have assumed a public offering price of $5.16 per Unit, the last reported sale price for our ADSs as reported on the Nasdaq on July 13, 2018 (after giving effect to the reverse share split and ADS ratio change as further described below), and $5.15 per Pre-funded Unit. The actual offering price per Unit or Pre-funded Unit, as the case may be, will be negotiated between us and the underwriter based on the trading of our ADSs prior to the offering, among other things, and may be at a discount to the current market price. Therefore, the assumed public offering price used throughout this prospectus may not be indicative of the final offering price.

 

 

We have applied to list the Series C Warrants on the Nasdaq Capital Market under the symbol “MDGSW.” There can be no assurance that Nasdaq will approve the listing of the Series C Warrants. We do not intend to apply for listing of the Pre-funded Warrants on any securities exchange or other nationally recognized trading system. There is no established public trading market for the Pre-funded Warrants, and we do not expect a market to develop. Without an active trading market, the liquidity of the Pre-funded Warrants will be limited.

 

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 and will be subject to reduced public company reporting requirements.

 

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 13 of this prospectus and other risk factors contained in the documents incorporated by reference herein for a discussion of information that should be considered in connection with an investment in our securities.

 

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

 

Per Unit

Per Pre-Funded Unit

Total

Public offering price

$

$

$

Underwriting discounts and commissions (1)

$

$

$

Proceeds to us (before expenses)

$

$

$

 

(1) We have also agreed to pay the underwriter a management fee equal to 1.0% of the gross proceeds raised in this offering, a non-accountable expense allowance of $40,000 and reimbursement for legal fees and expenses in the amount of up to $120,000 and to issue the underwriter or its designees warrants to purchase a number of ADSs equal to 7% of the aggregate number of shares of ADSs sold in this offering (including the number of ADSs issuable upon exercise of the Pre-funded Warrants), at an exercise price of $            per share, which represents 125% of the public offering price per Unit. For a description of the additional compensation to be received by the underwriter, see “Underwriting” beginning on page 31 for additional information regarding the underwriter compensation.

 

The offering is being underwritten on a firm commitment basis. The underwriter has an option exercisable within 30 days from the date of this prospectus to purchase up to 363,372 additional ADSs and/or 363,372 Series C Warrants to purchase up to an additional 363,372 ADSs from us at the public offering price, less the underwriting discounts and commissions. If the underwriter exercises this option in full, the total underwriting discounts and commissions payable by us will be $          , and the total proceeds to us, before expenses, will be $        , excluding potential proceeds from the exercise of the Series C Warrants included in such option.

 

Delivery of the securities offered hereby is expected to be made on or about July      , 2018.

 

H.C. Wainwright & Co.

 

The date of this prospectus is July      , 2018

 

 

Table of Contents

 

Prospectus Summary	1
Summary Financial Data	11
Risk Factors	13
Special Note Regarding Forward-Looking Statements	16
Trademarks, Service Marks and Trade Names	16
Exchange Rate Information	17
Price Range of our Ordinary Shares	18
Price Range of our ADSs	19
Use of Proceeds	20
Dividend Policy	20
Capitalization	21
Dilution	22
Description of the Offered Securities	23
Underwriting	31
Expenses Related to Offering	35
Legal Matters	35
Experts	35
Enforceability of Civil Liabilities	35
Where You Can Find Additional Information	37
Incorporation of Certain Information by Reference	37

 

Neither we nor the underwriter has authorized anyone to provide information different from that contained in this prospectus, any amendment or supplement to this prospectus or in any free writing prospectus, if any, prepared by us or on our behalf. When you make a decision about whether to invest in our securities, you should not rely upon any information other than the information in this prospectus and any free writing prospectus, if any, prepared by us or on our behalf. Neither the delivery of this prospectus nor the sale of our ordinary shares means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy these ordinary shares in any circumstances under which the offer or solicitation is unlawful.

 

Market data and certain industry data and forecasts used throughout this prospectus were obtained from sources we believe to be reliable, including market research databases, publicly available information, reports of governmental agencies, and industry publications and surveys. We have relied on certain data from third-party sources, including internal surveys, industry forecasts, and market research, which we believe to be reliable based on our management’s knowledge of the industry. While we are not aware of any misstatements regarding the industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” and elsewhere in this prospectus.

 

For investors outside of the United States: Neither we nor the underwriter has done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RISK FACTORS

 

You should carefully consider the risks described below and the risks described in our 2017 Annual Report which are incorporated by reference herein, as well as the financial or other information included in this prospectus or incorporated by reference in this prospectus, including our consolidated financial statements and the related notes, before you decide to buy our securities. The risks and uncertainties described below are not the only risks facing us. We may face additional risks and uncertainties not currently known to us or that we currently deem to be immaterial. Any of the risks described below, and any such additional risks, could materially adversely affect our business, financial condition or results of operations. In such case, you may lose all or part of your original investment.

 

Risks Related to an Investment in Our Securities and this Offering

 

Our management team will have immediate and broad discretion over the use of the net proceeds from this offering and may not use them effectively.

 

We currently intend to use the net proceeds of this offering for general corporate purposes, including marketing, production, and research and development related purposes. See “Use of Proceeds.” However, our management will have broad discretion in the application of the net proceeds. Our shareholders may not agree with the manner in which our management chooses to allocate the net proceeds from this offering. The failure by our management to apply these funds effectively could have a material adverse effect on our business, financial condition and results of operation. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income. The decisions made by our management may not result in positive returns on your investment and you will not have an opportunity to evaluate the economic, financial or other information upon which our management bases its decisions.

 

We will need additional capital in the future. If additional capital is not available, we may not be able to continue to operate our business pursuant to our business plan or we may have to discontinue our operations entirely.

 

Regardless of the success of this offering, we will require additional capital in the future. We have incurred losses in each year since our inception. If we continue to use cash at our historical rates of use we will need significant additional financing, which we may seek through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest will be diluted, and the terms of any such offerings may include liquidation or other preferences that may adversely affect the then existing shareholders rights. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt or making capital expenditures. If we raise additional funds through collaboration, strategic alliance or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that are not favorable to us.

 

You will experience immediate dilution in book value of any ADSs you purchase. 

 

Because the price per ADS being offered is substantially higher than our net tangible book value per ADS, you will suffer substantial dilution in the net tangible book value of any ADSs you purchase in this offering. Therefore, if you purchase ADSs in this offering, you will suffer immediate and substantial dilution of our as adjusted net tangible book value. To the extent outstanding options, warrants or offered warrants are exercised, you will incur further dilution. See “Dilution” on page 22 for a more detailed discussion of the dilution you will incur in connection with this offering.

 

 

ADSs and warrants representing a substantial percentage of our outstanding shares may be sold in this offering, which could cause the price of our ADSs and ordinary shares to decline.

 

Pursuant to this offering, we may sell 2,422,480 ADSs representing 48,449,600 ordinary shares (assuming no sale of Pre-funded Units), or approximately 253%, of our outstanding ordinary shares as of July 13, 2018. In addition, the investors in this offering will be issued Series C Warrants to purchase up to 2,422,480 ADSs representing 48,449,600 ordinary shares, and the underwriter will receive warrants to purchase up to 169,574 ADSs representing 3,391,480 ordinary shares. This sale and any future sales of a substantial number of ADSs in the public market, or the perception that such sales may occur, could materially adversely affect the price of our ADSs and ordinary shares. We cannot predict the effect, if any, that market sales of those ADSs or the availability of those ADSs for sale will have on the market price of our ADSs and ordinary shares.

  

Raising additional capital by issuing securities may cause dilution to existing shareholders.

 

We may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest will be diluted, and the terms of any such offerings may include liquidation or other preferences that may adversely affect the then existing shareholders rights. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt or making capital expenditures. If we raise additional funds through collaboration, strategic alliance or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that are not favorable to us.

 

We may not be able to raise additional funds unless we increase our authorized share capital.

 

As of the date of this prospectus, we have 160,000,000 authorized ordinary shares, out of which 19,178,579 ordinary shares are issued and outstanding, 15,691,823 are reserved for future issuance under outstanding options and warrants and under our 2013 Share Option and Incentive Plan. Immediately following consummation of offering, any additional equity financing in order to fund our operations will require us to increase our authorized share capital prior to initiating any such financing transaction. Increasing our share capital is subject to the approval of our shareholders. In the event we fail to obtain the approval of our shareholders to such increase in our authorized share capital, our ability to raise sufficient funds, if at all, might be adversely effected.

 

We do not know whether a market for our securities will be sustained or what the trading price of our securities will be and as a result it may be difficult for you to sell our securities held by you.

 

Although our ADSs now trade on Nasdaq and our ordinary shares trade on TASE, an active trading market for the ADSs or ordinary shares may not be sustained. It may be difficult for you to sell your ADSs or ordinary shares without depressing the market price for the ADSs or ordinary shares. As a result of these and other factors, you may not be able to sell your ADSs. Further, an inactive market may also impair our ability to raise capital by selling ADSs and ordinary shares and may impair our ability to enter into strategic partnerships or acquire companies or products by using our ordinary shares as consideration. 

 

On July 15, 2018, we effected a reverse share split of our ordinary shares at a ratio of 10:1. Concurrently with the reverse share split we effected on July 16, 2018, a change in the ratio of ordinary shares to each of our ADSs, such that after the reverse share split was implemented each ADS represents 20 post-reverse share split ordinary shares, instead of 50 pre-reverse share split ordinary shares. The reverse share split and the ADS ratio change were made in order to make our ordinary shares and ADSs more attractive to a broader range of investors, including professional investors, institutional investors and the general investing public. We believe that the increased price resulting from the reverse share split and ADS ratio change may generate additional interest and trading in our ADSs or ordinary shares. There can be no assurance that the reverse share spit and ADS ratio change will result in an increase in the price of our ordinary shares or ADS, make our ordinary shares and ADSs more attractive, or generate additional interest and trading in our ADSs or ordinary shares. The market price of our ADSs and ordinary shares will also be based on our performance and other factors, some of which are unrelated to the number of ADSs and ordinary shares outstanding. These factors include the status of the market for our ADSs and ordinary shares at the time, our reported results of operations in future periods, and general economic, market and industry conditions.

 

There is no public market for the warrants being offered by us in this offering.

 

There is no established public trading market for the Series C Warrants being offered in this offering. In addition, we do not intend to apply to list the Pre-funded Warrants on any national securities exchange or other nationally recognized trading system, including Nasdaq. Without an active market, the liquidity of the Series C Warrants and Pre-funded Warrants will be limited. Further, even though we intend to list the Series C Warrant on a national exchange, there is no assurance that a market will be developed or maintain a high enough per warrant trading price to maintain the national exchange listing requirements in the future.

 

The warrants are speculative in nature.

 

The Series C Warrants and Pre-funded Warrants offered by us in this offering do not confer any rights of ownership of ordinary shares or ADSs on their holders, such as voting rights or the right to receive dividends, but only represent the right to acquire ADSs at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the Series C Warrants may exercise their right to acquire ADSs and pay an assumed exercise price per share of $    , equal to      % of the per share public offering price of the ADSs, subject to adjustment upon certain events, prior to five years from the date of issuance, after which date any unexercised warrants will expire and have no further value. Specifically, commencing on the date of issuance, holders of the Pre-funded Warrants may exercise their right to acquire ADSs and pay an exercise price per share of $0.01, subject to adjustment upon certain events.

 

Holders of our Series C Warrants or Pre-funded Warrants will have no rights as shareholders until such holders exercise their Series C Warrants or Pre-funded Warrants and acquire our ADSs.

 

Until holders of the Series C Warrants or Pre-funded Warrants acquire our ADSs upon exercise of the Series C Warrants or Pre-funded Warrants, holders of the Series C Warrants or Pre-funded Warrants will have no rights with respect to our ADSs or ordinary shares underlying such warrants. Upon exercise of the Series C Warrants or Pre-funded Warrants, the holders thereof will be entitled to exercise the rights of a holder of ADSs only as to matters for which the record date occurs after the exercise date.

 

 

Holders of ADSs may not receive the same distributions or dividends as those we make to the holders of our ordinary shares, and, in some limited circumstances, you may not receive dividends or other distributions on our ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.

 

The Depositary for the ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities underlying the ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the Depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act of 1933, as amended, or the Securities Act, but that are not properly registered or distributed under an applicable exemption from registration. In addition, conversion into U.S. dollars from foreign currency that was part of a dividend made in respect of deposited ordinary shares may require the approval or license of, or a filing with, any government or agency thereof, which may be unobtainable. In these cases, the Depositary may determine not to distribute such property and hold it as “deposited securities” or may seek to effect a substitute dividend or distribution, including net cash proceeds from the sale of the dividends that the Depositary deems an equitable and practicable substitute. We have no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. In addition, the Depositary may withhold from such dividends or distributions its fees and an amount on account of taxes or other governmental charges to the extent the Depositary believes it is required to make such withholding. This means that you may not receive the same distributions or dividends as those we make to the holders of our ordinary shares, and, in some limited circumstances, you may not receive any value for such distributions or dividends if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of the ADSs.

 

Holders of ADSs must act through the Depositary to exercise their rights as shareholders of our company.

        

Holders of our ADSs do not have the same rights of our shareholders and may only exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the Deposit Agreement. Under Israeli law and our articles of association, the minimum notice period required to convene a shareholders meeting is no less than 21 or 35 calendar days, depending on the proposals on the agenda for the shareholders meeting. When a shareholder meeting is convened, holders of ADSs may not receive sufficient notice of a shareholders’ meeting to permit them to withdraw their ordinary shares to allow them to cast their vote with respect to any specific matter. In addition, the Depositary and its agents may not be able to send voting instructions to holders of ADSs or carry out their voting instructions in a timely manner. We will make all reasonable efforts to cause the Depositary to extend voting rights to holders of the ADSs in a timely manner, but we cannot assure holders that they will receive the voting materials in time to ensure that they can instruct the Depositary to vote their ordinary shares underlying the ADSs. Furthermore, the Depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, holders of our ADSs may not be able to exercise their right to vote and they may lack recourse if their ordinary shares underlying the ADSs are not voted as they requested. In addition, in the capacity as a holder of ADSs, they will not be able to call a shareholders’ meeting.

  

Risk Related to Our Business

 

If patients suffer adverse events while using the MUSE^TM system, our business, results of operations and financial condition may be materially and adversely affected.

 

Any medical procedure, including the MUSE^TM system, may expose patients to risk of suffering adverse events of varying severity. The risk of an adverse event while using the MUSE^TM system may be exacerbated when used on patients who, based on their medical history, meet certain exclusion criteria as well as when used in conjunction with components produced by other companies. From time to time, certain adverse events have occurred following use of our MUSE^TM system and we cannot guarantee that they will not occur in the future. Most recently, two serious adverse events in Israel were experienced during a post-marketing study using the MUSE^TM system on patients that experienced a pleural effusion following insertion of the system, one of whom was outside the recommended selection criteria. Currently the trial is on a voluntary hold and we received a claim from one of the patients requesting that we compensate her for damages incurred in connection with the procedure and recovery process. We maintain insurance that is intended to cover, among others, such claims, and we believe that this particular claim falls within the scope of our insurance. However, there is no assurance that our insurance will cover such claim or that our existing insurance coverage is sufficient to cover any existing or future claims. A successful claim against us with respect to uninsured liabilities or in excess of insurance coverage and not subject to any indemnification or contribution could have a material adverse effect on our business, results of operation and financial condition. Concerns about safety may result in potential liability for us and prevent us from growing our business. Any undesirable adverse events that may be discovered could result in voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action, suspension of any clinical trials, delay, make it more difficult and expensive for us to receive and/or prevent us from receiving, or prevent us from maintaining, regulatory approvals, including FDA approval or our CE mark, limit marketability of our products and subject us to lawsuits or claims, any of which could have a material adverse effect on our business, results of operation and financial condition.

 

 

Special Note Regarding Forward-Looking Statements

 

We make forward-looking statements in this prospectus that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

 

●

the overall global economic environment;

 

●

insufficient coverage or reimbursement from medical insurers;

 

●

the impact of competition and new technologies;

 

●

general market, political and economic conditions in the countries in which we operate;

 

●

our ability to continue as a going concern;

 

●

our projected capital expenditures and liquidity;

 

●

government regulations and approvals;

 

●

changes in customers’ budgeting priorities; and

 

●

litigation and regulatory proceedings.

 

You should review carefully the risks and uncertainties described under the heading “Risk Factors” in this prospectus and other risk factors contained in the documents incorporated by reference herein, for a discussion of these and other risks that relate to our business and investing in our ordinary shares. The forward-looking statements contained in this prospectus are expressly qualified in their entirety by this cautionary statement. Except as required by law, we undertake no obligation to update publicly any forward-looking statements after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

 

Trademarks, Service Marks and Trade Names

 

Solely for convenience, some of the trademarks, service marks, and trade names referred to in this prospectus are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This prospectus contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

  

 

Exchange Rate Information

 

The following table sets forth information regarding the exchange rates of NIS per U.S. dollar for the periods indicated. Average rates are calculated by using the daily representative rates as reported by the Bank of Israel on the last day of each month during the periods presented.

 

		NIS per U.S. dollars
Annual		High				Low				Average				Period End
2017			3.860				3.467				3.599				3.467
2016			3.983				3.746				3.841				3.845
2015			4.053				3.761				3.884				3.902
2014			3.994				3.402				3.577				3.889
2013			3.728				3.471				3.610				3.471
Monthly
July 2018(1)			3.661				3.618				3.643				3.643
June 2018			3.650				3.565				3.604				3.650
May 2018			3.632				3.564				3.592				3.566
April 2018			3.597				3.503				3.538				3.588
March 2018			3.514				3.431				3.468				3.514
February 2018			3.535				3.427				3.494				3.485
January 2018			3.460				3.388				3.423				3.405

  

(1)

Through July 13, 2018.

 

On July 13, 2018, the daily representative rate was $1.00 to NIS 3.643, as reported by the Bank of Israel. 

 

 

Price Range of our Ordinary Shares

  

Our ordinary shares have been trading on the TASE under the symbol “MDGS” since February 2006. The following table sets forth, for the periods indicated, the reported high and low sale prices of our ordinary shares on the TASE in NIS and U.S. dollars. U.S. dollar per ordinary share amounts are calculated using the U.S. dollar representative rate of exchange on the date for which the high or low market price is applicable, as reported by the Bank of Israel.

 

		NIS Price Per Ordinary Share*								US$ Price Per Ordinary Share*
		High				Low				High				Low
Annual:
2018 (until July 15, 2018)			1.68				0.86				0.46				0.24
2017			7.00				0.90				2.24				0.26
2016			22.30				4.65				5.81				1.21
2015			27.50				2.59				7.01				0.67
2014			6.730				2.50				1.93				0.64
2013			11.30				5.61				3.00				1.58
Quarterly:
Third Quarter 2018 (until July 15, 2018)			1.68				0.86				0.46				0.24
Second Quarter 2018			1.42				0.89				0.27				0.24
First Quarter 2018			1.24				0.92				0.30				0.26
Fourth Quarter 2017			2.14				0.90				0.61				0.26
Third Quarter 2017			2.12				1.38				0.59				0.39
Second Quarter 2017			2.60				1.49				0.72				0.43
First Quarter 2017			7.00				2.24				1.90				0.62
Fourth Quarter 2016			11.87				4.65				3.07				1.21
Third Quarter 2016			22.30				6.50				5.81				1.68
Second Quarter 2016			14.20				7.38				3.75				1.92
First Quarter 2016			18.70				12.60				4.79				3.23
Most Recent Six Months:
July 2018 (until July 15, 2018)			1.68				0.86				0.46				0.24
June 2018			1.42				0.89				0.39				0.26
May 2018			1.20				0.86				0.33				0.29
April 2018			0.95				0.86				0.27				0.24
March 2018			1.04				0.90				0.30				0.26
February 2018			1.06				0.91				0.30				0.26
January 2018			1.24				0.92				0.36				0.27

 

*	price per ordinary share adjusted to reflect the 10:1 reverse share split effected on November 6, 2015 and the 10:1 reverse share split effected on July 15, 2018.

 

On July 15, 2018, the last reported sale price of our ordinary shares on the TASE was NIS 1.00 per share, or approximately $0.27 per share (based on the exchange rate reported by the Bank of Israel for July 13, 2018). On July 13, 2018, the exchange rate of the NIS to the dollar was $1.00 = NIS 3.643, as reported by the Bank of Israel. 

 

 

Price Range of our ADSs

 

Our ADSs commenced trading on the Nasdaq under the symbol “MDGS” on August 5, 2015.

 

The following table sets forth, for the periods indicated, the reported high and low sale prices of our ADSs on the Nasdaq in U.S. dollars. 

  

		US$ Price Per ADS*
		High				Low
Yearly:
2018 (until July 13, 2018)			10.20				4.20
2017			42.80				2.20
2016			130.00				2.54
2015 (commencing August 5, 2015)			206.80				10.04
Quarterly:
Third Quarter 2018 (until July 13, 2018)			10.20				4.85
Second Quarter 2018			7.08				4.20
First Quarter 2018			9.60				4.48
Fourth Quarter 2017			12.70				5.00
Third Quarter 2017			11.76				7.36
Second Quarter 2017			13.40				8.12
First Quarter 2017			42.80				2.20
Fourth Quarter 2016			71.20				2.54
Third Quarter 2016			130.00				3.73
Second Quarter 2016			76.00				4.32
First Quarter 2016			107.20				6.40
Most Recent Six Months:
July 2018 (until July 13, 2018)			10.20				4.85
June 2018			6.72				4.20
May 2018			7.08				4.48
April 2018			6.40				4.32
March 2018			9.60				4.48
February 2018			6.00				5.76
January 2018			6.84				5.28

 

*

price per ADS adjusted to reflect retroactively (i) the 10:1 reverse share split and the change in the ratio of ordinary shares per ADS to five deposited ordinary shares per ADS effected on November 6, 2015, (ii) the change in the ratio of ordinary shares per ADS from five deposited ordinary shares per ADS to 50 deposited ordinary shares per ADS effected on March 15, 2017, and (iii) the 10:1 reverse share split effected on July 15, 2018 and the change in the ratio of ordinary shares per ADS to twenty deposited ordinary shares per ADS effected on July 16, 2018.

 

On July 13, 2018, the last reported sale price of our ADS on Nasdaq was $5.16 per share.

 

 

Use of Proceeds

 

We estimate that the net proceeds from this offering will be approximately $11.1 million, based upon an assumed public offering price of $5.16 per Unit, the last reported sales price of our ADSs on Nasdaq on July 13, 2018, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, and excluding the proceeds, if any, from the exercise of the Series C Warrants or the Pre-funded Warrants issued pursuant to this offering.

 

A $0.10 increase (decrease) in the assumed aggregate public offering price of $5.16 per Unit would increase (decrease) the net proceeds we receive from this offering by $0.2 million, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

A 100,000 increase in the number of Units offered by us would increase the net proceeds we receive from this offering by $0.5 million, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Conversely, a 100,000 decrease in the number of Units offered by us would decrease the net proceeds we receive from this offering by $0.5 million, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

  

We intend to use the net proceeds from the sale of our securities in this offering for general corporate purposes, including marketing, production and research and development related purposes. However, we have no present binding commitments or agreements to enter into any acquisitions. The amounts and timing of our actual expenditures will depend upon numerous factors, including the progress of our development and commercialization efforts, whether or not we enter into strategic collaborations or partnerships, and our operating costs and expenditures. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering.

 

Dividend Policy

 

We have never declared or paid any cash dividends to our shareholders. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.

 

The distribution of dividends may also be limited by the Companies Law, which permits the distribution of dividends only out of retained earnings or earnings derived over the two most recent fiscal years, whichever is higher, provided that there is no reasonable concern that payment of a dividend will prevent a company from satisfying its existing and foreseeable obligations as they become due.

 

Payment of dividends may be subject to Israeli withholding taxes. See “Taxation—Israeli Tax Considerations and Government Programs” for additional information.

 

 

Capitalization

 

The following table sets forth our capitalization as of March 31, 2018, on:

 

●

an actual basis;

 

●

on an as adjusted basis, to give further effect to the issuance and sale in this offering of  2,422,480 Units at the assumed public offering price of $5.16 per Unit, the last reported sales price of our ADSs on Nasdaq on July 13, 2018, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, and assuming no sale of any Pre-funded Units in this offering and excluding the proceeds, if any, from the exercise of the Series C Warrants issued in this offering.

 

The financial data in the following table should be read in conjunction with our interim condensed consolidated financial statements as of March 31, 2018, which are incorporated by reference herein.

 

		As of March 31, 2018
		Unaudited
		Actual				As Adjusted
		(U.S. Dollars, in thousands)
Cash and cash equivalents		$	1,520				12,602
Total debt(1)			1,396				9,276
Shareholders’ equity:
Ordinary shares, par value NIS 1.00 per share: 160,000,000 ordinary shares authorized (actual and as adjusted); 19,178,579 ordinary shares outstanding (actual), 67,628,179 ordinary shares outstanding (as adjusted)			5,292				19,080
Share premium			55,040				45,576
Other reserves			368				368
Receipts on account of warrants			730				730
Accumulated deficit			(56,961	)			(58,083	)
Total shareholders’ equity			4,469				7,671
Total capitalization and indebtedness		$	5,865				16,947

 

(1)	Includes $0.72 million which are classified as current liabilities.

 

A $0.10 increase (decrease) in the assumed aggregate public offering price of $5.16 per Unit, would increase (decrease) the as adjusted amount of each of cash and cash equivalents by approximately $0.2 million and increase (decrease) total shareholders’ equity by approximately $0.1 million, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. A 100,000 Unit increase (decrease) in the number of Units offered by us would increase (decrease) our as adjusted cash and cash equivalents by approximately $0.5 million and increase (decrease) total shareholders’ equity by approximately $0.15 million, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

The preceding table excludes as of March 31, 2018: (i) 1,266,580 ordinary shares issuable upon the exercise of outstanding options at a weighted average exercise price of NIS 5.80 per share or $1.65 per share (based on the exchange rate reported by the Bank of Israel on such date), equivalent to 63,329 ADSs at a weighted average exercise price of $33.04 per ADS, and (ii) 14,374,448 ordinary shares issuable upon the exercise of warrants to purchase 718,723 ADSs at a weighted average exercise price of $20.89 per ADS.

 

 

Dilution

 

If you invest in our securities in this offering, your ownership interest will be immediately diluted to the extent of the difference between the public offering price per ADS and the as adjusted net tangible book value per ADS after this offering.

 

Our net tangible book value (deficit) as of March 31, 2018, was approximately $4.5 million, or approximately $4.64 per ADS. Net tangible book value per ADS represents the amount of our total tangible assets less total liabilities divided by the total number of our ordinary shares outstanding as of March 31, 2018, and multiplying such amount by twenty (one ADS represents twenty ordinary shares).

 

After giving effect to the issuance and sale in this offering of 2,422,480 Units at an assumed public offering price of $5.16 per Unit, the last reported sales price of our ADSs on Nasdaq on July 13, 2018, and assuming no sale of any Pre-funded Units, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value on March 31, 2018, would have been approximately $7.7 million, or $2.26 per ADS. This represents an immediate dilution in the as adjusted net tangible book value of $2.38 per ADS to investors purchasing our Units in this offering.

 

The following table illustrates the immediate dilution to new investors:

 

Assumed public offering price per Unit		$	5.16
Net tangible book value per ADS as of March 31, 2018			4.64
Decrease in net tangible book value per ADS attributable to this offering			(2.38	)
As adjusted net tangible book value per ADS as of March 31, 2018, after giving effect to this offering			2.26
Dilution per ADS to investors purchasing our securities in this offering		$	2.90

 

The preceding table excludes as of March 31, 2018: (i) 1,266,580 ordinary shares issuable upon the exercise of outstanding options at a weighted average exercise price of NIS 5.80 per share or $1.65 per share (based on the exchange rate reported by the Bank of Israel on such date), equivalent to 63,329 ADSs at a weighted average exercise price of $33.04 per ADS, and (ii) 14,374,448 ordinary shares issuable upon the exercise of warrants to purchase 718,723 ADSs at a weighted average exercise price of $20.89 per ADS.

 

To the extent outstanding options or warrants or offered warrants are exercised, you will incur further dilution.

 

A $0.10 increase in the assumed aggregate public offering price of $5.16 per Unit would increase our as adjusted net tangible book value per ADS after this offering by $0.02 and the dilution per ADS to investors purchasing Units by $0.08, assuming the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. A $0.10 decrease in the assumed aggregate public offering price of $5.16 per Unit would decrease our as adjusted net tangible book value per ADS after this offering by $0.02 and the dilution per ADS to investors purchasing Units by $0.08, assuming the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of Units we are offering. A 100,000 Unit increase in the number of Units offered by us would decrease our as adjusted net tangible book value per ADS after this offering by $0.02 and would increase the dilution per ADS to investors purchasing Units by $0.02, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Conversely, a 100,000 Unit decrease in the number of Units would increase our as adjusted net tangible book value per ADS after this offering by $0.03 and would decrease the dilution per ADS to investors purchasing Units by $0.03, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

  

 

DESCRIPTION OF THE OFFERED SECURITIES

 

AMERICAN DEPOSITARY SHARES TO BE ISSUED AS PART OF THIS OFFERING

 

General

 

The following is a summary description of our ADSs and does not purport to be complete. Each of our ADSs represents twenty ordinary shares (or a right to receive twenty ordinary shares) deposited with the principal Tel Aviv office of either of Bank Hapoalim or Bank Leumi, as custodian for the Bank of New York Mellon as the Depositary. Each ADS also represents any other securities, cash or other property which may be held by the Depositary. The Depositary’s office at which the ADSs will be administered is located at 101 Barclay Street, New York, New York 10286. The Bank of New York Mellon’s principal executive office is located at One Wall Street, New York, New York 10286.

 

You may hold ADSs either (A) directly (i) by having an American Depositary Receipt, or ADR, which is a certificate evidencing a specific number of ADSs, registered in your name, or (ii) by having uncertificated ADSs registered in your name, or (B) indirectly by holding a security entitlement in ADSs through your broker or other financial institution. If you hold ADSs directly, you are a registered ADS holder, also referred to as an ADS holder. This description assumes you are an ADS holder. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

 

Registered holders of uncertificated ADSs will receive statements from the Depositary confirming their holdings. As an ADS holder, we will not treat you as one of our shareholders and you will not have shareholder rights. Israeli law governs shareholder rights. The Depositary will be the holder of the shares underlying your ADSs. As a registered holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the Depositary, ADS holders and all other persons indirectly or beneficially holding ADSs sets out ADS holder rights as well as the rights and obligations of the Depositary. New York law governs the deposit agreement and the ADSs.

 

The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of ADR.

 

Dividends and Other Distributions

 

How will you receive dividends and other distributions on the shares?

 

The Depositary has agreed to pay to ADS holders the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, after deducting its fees and expenses. You will receive these distributions in proportion to the number of shares your ADSs represent.

 

Cash. The Depositary will convert any cash dividend or other cash distribution we pay on the shares into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If that is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the Depositary to distribute the NIS only to those ADS holders to whom it is possible to do so. It will hold the NIS it cannot convert for the account of the ADS holders who have not been paid. It will not invest the NIS and it will not be liable for any interest.

 

Before making a distribution, any withholding taxes, or other governmental charges that must be paid will be deducted. For more information see “Item 10. – Additional Information – E. Taxation – Israeli Tax Considerations and Government Programs” in our 2017 Annual Report incorporated by reference herein. The Depositary will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the Depositary cannot convert the NIS, you may lose some or all of the value of the distribution.

 

 

Shares. The Depositary may distribute additional ADSs representing any shares we distribute as a dividend or free distribution. The Depositary will only distribute whole ADSs. It will sell shares which would require it to deliver a fraction of an ADS (or ADSs representing those shares) and distribute the net proceeds in the same way as it does with cash. If the Depositary does not distribute additional ADSs, the outstanding ADSs will also represent the new shares. The Depositary may sell a portion of the distributed shares sufficient to pay its fees and expenses in connection with that distribution (or ADSs representing those shares).

 

Rights to purchase additional shares. If we offer holders of our securities any rights to subscribe for additional shares or any other rights, the Depositary may make these rights available to ADS holders. If the Depositary decides it is not legal and practical to make the rights available but that it is practical to sell the rights, the Depositary will use reasonable efforts to sell the rights and distribute the proceeds in the same way as it does with cash. The Depositary will allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them.

 

If the Depositary makes rights available to ADS holders, it will exercise the rights and purchase the shares on your behalf. The Depositary will then deposit the shares and deliver ADSs to the persons entitled to them. It will only exercise rights if you pay it the exercise price and any other charges the rights require you to pay.

 

U.S. securities laws may restrict transfers and cancellation of the ADSs represented by shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the Depositary may deliver restricted depositary shares that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place.

  

Other Distributions. The Depositary will send to ADS holders anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, the Depositary has a choice. It may decide to sell what we distributed and distribute the net proceeds, in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case ADSs will also represent the newly distributed property. However, the Depositary is not required to distribute any securities (other than ADSs) to ADS holders unless it receives satisfactory evidence from us that it is legal to make that distribution. The Depositary may sell a portion of the distributed securities or property sufficient to pay its fees and expenses in connection with that distribution. 

 

The Depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions we make on our shares or any value for them if it is illegal or impractical for us to make them available to you.

 

Deposit, Withdrawal and Cancellation

 

How are ADSs issued?

 

The Depositary will deliver ADSs if you or your broker deposits shares or evidence of rights to receive shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the Depositary will register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons that made the deposit.

 

 

How can ADS holders withdraw the deposited securities?

 

You may surrender your ADSs at the Depositary’s office. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the Depositary will deliver the shares and any other deposited securities underlying the ADSs to the ADS holder or a person the ADS holder designates at the office of the custodian. Or, at your request, risk and expense, the Depositary will deliver the deposited securities at its office, if feasible.

 

 How do ADS holders interchange between certificated ADSs and uncertificated ADSs?

 

You may surrender your ADR to the Depositary for the purpose of exchanging your ADR for uncertificated ADSs. The Depositary will cancel that ADR and will send to the ADS holder a statement confirming that the ADS holder is the registered holder of uncertificated ADSs. Alternatively, upon receipt by the Depositary of a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the Depositary will execute and deliver to the ADS holder an ADR evidencing those ADSs.

 

Voting Rights 

 

How do you vote?

 

ADS holders may instruct the Depositary how to vote the number of deposited shares their ADSs represent. The Depositary will notify ADS holders of shareholders’ meetings and arrange to deliver our voting materials to them if we ask it to. Those materials will describe the matters to be voted on and explain how ADS holders may instruct the Depositary how to vote. For instructions to be valid, they much reach the Depositary by a date set by the Depositary. Otherwise, you won’t be able to exercise your right to vote unless you withdraw the shares. However, you may not know about the meeting enough in advance to withdraw the shares.

 

The Depositary will try, as far as practical, subject to the laws of Israel, and of our articles of association or similar documents, to vote or to have its agents vote the shares or other deposited securities as instructed by ADS holders. The Depositary will only vote or attempt to vote as instructed.

 

We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the Depositary to vote your shares. In addition, the Depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and there may be nothing you can do if your shares are not voted as you requested.

 

In order to give you a reasonable opportunity to instruct the Depositary as to the exercise of voting rights relating to deposited securities, if we request the Depositary to act, we agree to give the Depositary notice of any such meeting and details concerning the matters to be voted upon at least 30 days in advance of the meeting date.

 

Each of our American Depositary Shares, or ADSs, represents 20 of our ordinary shares. The ADSs trade on Nasdaq.

 

The form of the deposit agreement for the ADSs and the form of American Depositary Receipt (ADR) that represents an ADS as filed as exhibits to the Company’s registration statement on Form F-6 with the SEC on May 7, 2015. Copies of the deposit agreement are available for inspection at the principal office of the Bank of New York Mellon, located at 101 Barclay Street, New York, New York 10286, and at the principal office of our custodians Bank Hapoalim B.M., 104 Hayarkon Street, Tel Aviv 63432, Israel. 

 

Fees and Expenses

 

Persons depositing or withdrawing shares or ADS holders must pay:			For:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)		●	Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
		●	Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
$.05 (or less) per ADS		●	Any cash distribution to ADS holders
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs		●	Distribution of securities distributed to holders of deposited securities which are distributed by the Depositary to ADS holders
$.05 (or less) per ADS per calendar year		●	Depositary services
Registration or transfer fees		●	Transfer and registration of shares on our share register to or from the name of the Depositary or its agent when you deposit or withdraw shares
Expenses of the Depositary		●	Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)
		●	converting foreign currency to U.S. dollars
Taxes and other governmental charges the Depositary or the custodian has to pay on any ADSs or shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes		●	As necessary
Any charges incurred by the depositary or its agents for servicing the deposited securities		●	As necessary

 

 

The Depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The Depositary may collect any of its fees by deduction from any cash distribution payable to ADS holders that are obligated to pay those fees. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

 

From time to time, the Depositary may make payments to us to reimburse and/or share revenue from the fees collected from ADS holders, or waive fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and maintenance of the ADS program. In performing its duties under the deposit agreement, the Depositary may use brokers, dealers or other service providers that are affiliates of the Depositary and that may earn or share fees or commissions.

 

Payment of Taxes

 

You will be responsible for any taxes or other governmental charges payable on your ADSs or on the deposited securities represented by any of your ADSs. The Depositary may refuse to register any transfer of your ADSs or allow you to withdraw the deposited securities represented by your ADSs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your ADSs to pay any taxes owed and you will remain liable for any deficiency. If the Depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any proceeds, or send to ADS holders any property, remaining after it has paid the taxes. 

 

Reclassifications, Recapitalizations and Mergers

 

If we:		Then:
● Change the nominal or par value of our ordinary shares   ● Reclassify, split up or consolidate any of the deposited securities   ● Distribute securities on the shares that are not distributed to you   ● Recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action		The cash, shares or other securities received by the Depositary will become deposited securities. Each ADS will automatically represent its equal share of the new deposited securities.   The Depositary may distribute new ADSs representing the new deposited securities or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities.

 

Amendment and Termination

 

How may the deposit agreement be amended? 

 

We may agree with the Depositary to amend the deposit agreement and the ADRs without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the Depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the Depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended. 

 

 

How may the deposit agreement be terminated? 

 

The Depositary will terminate the deposit agreement at our direction by mailing notice of termination to the ADS holders then outstanding at least 30 days prior to the date fixed in such notice for such termination. The Depositary may also terminate the deposit agreement by mailing notice of termination to us and the ADS holders if 60 days have passed since the Depositary told us it wants to resign but a successor depositary has not been appointed and accepted its appointment.

 

After termination, the Depositary and its agents will do the following under the deposit agreement but nothing else: collect distributions on the deposited securities, sell rights and other property, and deliver shares and other deposited securities upon cancellation of ADSs. Four months after termination, the Depositary may sell any remaining deposited securities by public or private sale. After that, the Depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement for the pro rata benefit of the ADS holders that have not surrendered their ADSs. It will not invest the money and has no liability for interest. The Depositary’s only obligations will be to account for the money and other cash. After termination our only obligations will be to indemnify the Depositary and to pay fees and expenses of the Depositary that we agreed to pay. 

 

Limitations on Obligations and Liability

 

Limits on our Obligations and the Obligations of the Depositary; Limits on Liability to Holders of ADSs

 

The deposit agreement expressly limits our obligations and the obligations of the Depositary. It also limits our liability and the liability of the Depositary. We and the Depositary: 

 

	●	are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;
	●	are not liable if we are or it is prevented or delayed by law or circumstances beyond our or its control from performing our or its obligations under the deposit agreement;
	●	are not liable if we or it exercises discretion permitted under the deposit agreement;
	●	are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the deposit agreement, or for any special, consequential or punitive damages for any breach of the terms of the deposit agreement;
	●	have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit agreement on your behalf or on behalf of any other person;
	●	are not liable for the acts or omissions of any securities depository, clearing agency or settlement system; and
	●	may rely upon any documents we believe or it believes in good faith to be genuine and to have been signed or presented by the proper person.

 

In the deposit agreement, we and the Depositary agree to indemnify each other under certain circumstances.

 

 

Requirements for Depositary Actions

 

Before the Depositary will deliver or register a transfer of ADSs, make a distribution on ADSs, or permit withdrawal of shares, the Depositary may require: 

 

	●	payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any shares or other deposited securities;
	●	satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and
	●	compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.

 

The Depositary may refuse to deliver ADSs or register transfers of ADSs when the transfer books of the Depositary or our transfer books are closed or at any time if the Depositary or we think it advisable to do so.

 

Right to Receive the Shares Underlying your ADSs

 

ADS holders have the right to cancel their ADSs and withdraw the underlying shares at any time except:

 

	●	when temporary delays arise because: (i) the Depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of shares is blocked to permit voting at a shareholders’ meeting; or (iii) we are paying a dividend on our shares;
	●	when you owe money to pay fees, taxes and similar charges; or
	●	when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares or other deposited securities.

 

This right of withdrawal may not be limited by any other provision of the deposit agreement.

 

Pre-release of ADSs

 

The deposit agreement permits the Depositary to deliver ADSs before deposit of the underlying shares. This is called a pre-release of the ADSs. The Depositary may also deliver shares upon cancellation of pre-released ADSs (even if the ADSs are canceled before the pre-release transaction has been closed out). A pre-release is closed out as soon as the underlying shares are delivered to the Depositary. The Depositary may receive ADSs instead of shares to close out a pre-release. The Depositary may pre-release ADSs only under the following conditions: (1) before or at the time of the pre-release, the person to whom the pre-release is being made represents to the Depositary in writing that it or its customer owns the shares or ADSs to be deposited; (2) the pre-release is fully collateralized with cash or other collateral that the Depositary considers appropriate; and (3) the Depositary must be able to close out the pre-release on not more than five business days’ notice. In addition, the Depositary will limit the number of ADSs that may be outstanding at any time as a result of pre-release, although the Depositary may disregard the limit from time to time if it thinks it is appropriate to do so.

 

Direct Registration System

 

In the deposit agreement, all parties to the deposit agreement acknowledge that the Direct Registration System, or DRS, and Profile Modification System, or Profile, will apply to uncertificated ADSs upon acceptance thereof to DRS by the Depository Trust Company, or DTC. DRS is the system administered by DTC that facilitates interchange between registered holding of uncertificated ADSs and holding of security entitlements in ADSs through DTC and a DTC participant. Profile is a required feature of DRS that allows a DTC participant, claiming to act on behalf of a registered holder of ADSs, to direct the Depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the Depositary of prior authorization from the ADS holder to register that transfer.

 

 

In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the Depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an ADS holder in requesting registration of transfer and delivery described in the paragraph above has the actual authority to act on behalf of the ADS holder (notwithstanding any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the Depositary’s reliance on and compliance with instructions received by the Depositary through the DRS/Profile System and in accordance with the deposit agreement will not constitute negligence or bad faith on the part of the Depositary.

 

Shareholder communications; inspection of register of holders of ADSs

 

The Depositary will make available for your inspection at its office all communications that it receives from us as a holder of deposited securities that we make generally available to holders of deposited securities. The Depositary will send you copies of those communications if we ask it to. You have a right to inspect the register of holders of ADSs, but not for the purpose of contacting those holders about a matter unrelated to our business or the ADSs.

 

WARRANTS TO BE ISSUED AS PART OF THIS OFFERING

 

Series C Warrants

 

The following summary of certain terms and provisions of the Series C Warrants offered hereby is not complete and is subject to, and qualified in its entirety by the provisions of the Warrant Agent Agreement, also referred to as the warrant agreement, and form of Series C Warrant which is filed as an exhibit to the registration statement of which this prospectus is a part. Prospective investors should carefully review the terms and provisions set forth in the Warrant Agent Agreement and form of Series C Warrant. The Series C Warrants issued in connection with this offering will be administered by Computershare Inc., as warrant agent.

  

Exercisability

 

The Series C Warrants are exercisable immediately upon issuance and at any time up to the date that is five years from the date of issuance. The Series C Warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us and the warrant agent a duly executed exercise notice accompanied by payment in full for the number of ADSs purchased upon such exercise (except in the case of a cashless exercise as discussed below). Unless otherwise specified in the warrant, the holder will not have the right to exercise the warrants, in whole or in part, if the holder (together with its affiliates and any persons acting as a group together with the holder or any of the holder’s affiliates) would beneficially own in excess of 4.99% of the number of our ordinary shares outstanding immediately after giving effect to the exercise, as such percentage is determined in accordance with the terms of the Series C Warrant. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon at least 61 days’ prior notice from the holder to us.

  

Cashless Exercise 

 

In the event that a registration statement covering the ADSs underlying the Series C Warrants is not effective, and an exemption from registration is not available for the resale of ADSs underlying the Series C Warrants, the holder may, in its sole discretion, exercise the Series C Warrants and, in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, elect instead to receive upon such exercise the net number of ADSs determined according to the formula set forth in the warrant agreement. 

 

Exercise Price 

 

The initial exercise price per ADS purchasable upon exercise of the Series C Warrants is equal to $           and is subject to adjustments for stock splits, reclassifications, subdivisions, and other similar transactions.

 

Fundamental Transaction

 

If, at any time while the Series C Warrants are outstanding, (1) we consolidate or merge with or into another corporation whether or not the Company is the surviving corporation, (2) we sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of our assets, or any of its significant subsidiaries (as defined in Rule 1-02 of Regulation S-X) (3) any purchase offer, tender offer or exchange offer (whether by us or another individual or entity) is completed pursuant to which holders of the ordinary shares are permitted to sell, tender or exchange their ordinary shares for other securities, cash or property and has been accepted by the holders of 50% or more of the ordinary shares, (4) we consummate a securities purchase agreement or other business combination with another person or entity whereby such other person or entity acquires at least 50% of the outstanding ordinary shares, (5) we effect any reclassification or recapitalization of the ordinary shares or any compulsory exchange pursuant to which the ordinary shares are converted into or exchanged for other securities, cash or property, or each, a “Fundamental Transaction,” then upon any subsequent exercise of Series C Warrants, the holders thereof will have the right to receive the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of ordinary shares then issuable upon exercise of those Series C Warrants, and any additional consideration payable as part of the Fundamental Transaction.

 

In the event of an Fundamental Transaction (other than a Fundamental Transaction not approved by the Company’s Board of Directors), we or any successor entity shall, subject to any applicable law, at the option of a registered holder of a Warrant, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase the Warrants of that holder from that holder by paying to that holder an amount of cash equal to the Black Scholes value of the remaining unexercised Warrants of that holder on the date of the consummation of such Fundamental Transaction.

 

Transferability

 

Subject to applicable laws, the Series C Warrants may be transferred at the option of the holders upon surrender of the Series C Warrants to the warrant agent, together with the appropriate instruments of transfer.

 

 

Warrant Agent and Listing

 

The Series C Warrants will be issued in registered form under the warrant Agreement between us and the warrant agent. We have applied to list the Series C Warrants on the Nasdaq Capital Market under the symbol “MDGSW.” There can be no assurance that Nasdaq will approve the listing of the Series C Warrants.

 

Rights as a Shareholder

 

Except as otherwise provided in the warrant agreement or by virtue of such holder’s ownership of ADSs or ordinary shares, the holder of Series C Warrants does not have rights or privileges of a holder of ADSs or ordinary shares, including any voting rights, until the holder exercises the warrants.

 

Pre-Funded Warrants

 

The following summary of certain terms and provisions of the Pre-funded Warrants offered hereby is not complete and is subject to, and qualified in its entirety by the provisions of the form of Pre-Funded Warrant, which is filed as an exhibit to the registration statement of which this prospectus is a part. Prospective investors should carefully review the terms and provisions set forth in the form of Pre-funded Warrant.

 

The purpose of the Pre-funded Warrants is to enable investors that may have restrictions on their ability to beneficially own more than 4.99% (or at the election of the investor, 9,99%) of our outstanding ordinary shares following the consummation of this offering the opportunity to invest capital into the Company without triggering such ownership restrictions. By receiving Pre-funded Warrants in lieu of the ADSs contained in the Units which would result in such holders’ ownership exceeding 4.99% (or at the election of the investor, 9,99%), such holders will have the ability to exercise their options to purchase the ADSs underlying the Pre-funded Warrants for nominal consideration of $0.01 per ADS at a later date. Pre-funded Warrants that expire unexercised will have no further value and the holders of such warrants will lose the pre-funded amount.

  

Exercisability

 

The Pre-Funded Warrants are exercisable until fully exercised. The Pre-funded Warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice accompanied by payment in full for the number of ADSs purchased upon such exercise (except in the case of a cashless exercise as discussed below). Unless otherwise specified in the Pre-funded Warrant, a holder (together with its affiliates and any persons acting as a group together with the holder or any of the holder’s affiliates) may not exercise any portion of the Pre-funded Warrants to the extent that the holder would own more than 4.99% of the outstanding ordinary shares after exercise, except that upon at least 61 days’ prior notice from the holder to us, the holder may increase or decrease the amount of ownership of outstanding shares after exercising the holder’s warrants, as applicable, up to 9.99% of the number of our ordinary shares outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrants.

 

Cashless Exercise

 

In the event that at any time a registration statement covering the resale of the ordinary shares underlying the Pre-funded Warrants is not effective, or no current prospectus is available for the resale of the ordinary shares underlying the Pre-funded Warrants, the holder may, in its sole discretion, exercise Pre-funded Warrants and, in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, elect instead to receive upon such exercise the net number of ADSs determined according to the formula set forth in the Pre-funded Warrant.

 

Exercise Price 

 

The initial exercise price per ADS purchasable upon exercise of the Pre-funded Warrants is equal to $0.01.

 

Listing

 

We do not plan on applying to list the Pre-funded Warrants on The Nasdaq Capital Market, any other national securities exchange or any other nationally recognized trading system.

 

Fundamental Transaction

 

If, at any time while the Pre-funded Warrants are outstanding, (1) we consolidate or merge with or into another corporation whether or not the Company is the surviving corporation, (2) we sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of our assets, or any of its significant subsidiaries (3) any purchase offer, tender offer or exchange offer (whether by us or another individual or entity) is completed pursuant to which holders of the ordinary shares are permitted to sell, tender or exchange their ordinary shares for other securities, cash or property and has been accepted by the holders of 50% or more of the ordinary shares, (4) we consummate a securities purchase agreement or other business combination with another person or entity whereby such other person or entity acquires more than 50% of the outstanding ordinary shares, (5) we effect any reclassification or recapitalization of the ordinary shares or any compulsory exchange pursuant to which the ordinary shares are converted into or exchanged for other securities, cash or property, or each, a “Fundamental Transaction,” then upon any subsequent exercise of Pre-funded Warrants, the holders thereof will have the right to receive the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of ordinary shares then issuable upon exercise of those Pre-funded Warrants, and any additional consideration payable as part of the Fundamental Transaction.

  

Rights as a Shareholder

 

Except as otherwise provided in the Form of Pre-funded Warrant or by virtue of such holder’s ownership of ADSs or ordinary shares, the holder of Pre-funded Warrants does not have rights or privileges of a holder of ADSs or ordinary shares, including any voting rights, until the holder exercises the warrants.

 

  

Underwriting

 

We have entered into an underwriting agreement dated        , 2018 with H.C. Wainwright & Co., LLC, as underwriter, with respect to the securities being offered hereby. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriter and the underwriter has agreed to purchase from us, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus,       Units and        Pre-funded Units.

 

A copy of the form of underwriting agreement has been filed as an exhibit to the registration statement of which this prospectus is a part. The Units and Pre-funded Units we are offering are being offered by the underwriter subject to certain conditions specified in the underwriting agreement.

 

We have been advised by the underwriter that it proposes to offer the Units and Pre-funded Units, as the case may be, directly to the public at the public offering prices set forth on the cover page of this prospectus. Any Units and Pre-funded Units sold by the underwriter to securities dealers will be sold at the public offering price less a selling concession not in excess of $        per Unit or Pre-funded Unit.

 

The underwriting agreement provides that the underwriter’s obligation to purchase the securities we are offering is subject to conditions contained in the underwriting agreement. The underwriter is obligated to purchase and pay for all of the Units and/or Pre-funded Units offered by this prospectus, if any of these Units and/or Pre-funded are purchased, other than those ADSs and/or Series C Warrants to purchase ADSs covered by the option to purchase additional securities described below.

 

No action has been taken by us or the underwriter that would permit a public offering of the Units or Pre-funded Units in any jurisdiction where action for that purpose is required. None of the securities included in this offering may be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sales of any of the securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons who receive this prospectus are advised to inform themselves about and to observe any restrictions relating to this offering of Units and Pre-funded Units and the distribution of this prospectus. This prospectus is neither an offer to sell nor a solicitation of any offer to buy the Units or Pre-funded Units in any jurisdiction where that would not be permitted or legal.

 

Underwriting Discounts, Commissions and Expenses

 

The following table shows the public offering price, underwriting discounts and commissions and proceeds, before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriter’s option to purchase additional ADSs and/or Series C Warrants to purchase ADSs.

 

Per Unit

Per Pre-funded Unit

Total Without Option

Total With Option

Public offering price

$

$

$

$

Underwriting discounts and commissions

$

$

$

$

Proceeds before expenses

$

$

$

$

 

We have also agreed to pay to the underwriter a management fee equal to 1.0% of the aggregate gross proceeds raised in this offering. We estimate the total expenses payable by us for this offering, excluding the underwriting discounts and commissions, to be approximately $         , which includes (i) $40,000 non-accountable expense allowance payable to the underwriter, (ii) reimbursement of the accountable expenses of the underwriter equal to $120,000, including the legal fees of the underwriter being paid by us, and (iii) other estimated expenses of approximately $              which include legal, accounting, printing costs and various fees associated with the registration and listing of our securities sold in this offering.

 

 

We have paid an advance of $25,000 to the underwriter, which will be applied against accountable expenses that will be paid by us to the underwriter in connection with this offering, which advance will be refunded to us to the extent not actually incurred by the underwriter in the event this offering is terminated.

 

 In addition, we have agreed to issue to the underwriter warrants to purchase up to              ADSs, which represents 7% of the aggregate number of ADSs sold in this offering (including the number of shares of ADSs issuable upon exercise of the Pre-funded Warrants), at an exercise price of $       per share (representing 125% of the public offering price for a Unit to be sold in this offering). The underwriter warrants will be exercisable immediately and for five years from the date of the underwriting agreement. Pursuant to FINRA Rule 5110(g), the underwriter warrants and any shares issued upon exercise of the underwriter warrants shall not be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales of this offering, except the transfer of any security: (i) by operation of law or by reason of our reorganization; (ii) to any FINRA member firm participating in the offering and the officers or partners thereof, if all securities so transferred remain subject to the lock-up restriction set forth above for the remainder of the time period; (iii) if the aggregate amount of our securities held by the underwriter or related persons do not exceed 1% of the securities being offered; (iv) that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member manages or otherwise directs investments by the fund and the participating members in the aggregate do not own more than 10% of the equity in the fund; or (v) the exercise or conversion of any security, if all securities remain subject to the lock-up restriction set forth above for the remainder of the time period.

 

Option to Purchase Additional Securities

 

We have granted to the underwriter an option, exercisable not later than 30 days after the date of this prospectus, to purchase up to additional ADSs at a purchase price of $               per ADS and/or up to additional Series C Warrants to purchase ADSs at a purchase price of $              per Series C Warrant, less the underwriting discounts and commissions of $ per share and $           per Series C Warrant. If any additional shares of ADSs and/or Series C Warrants are purchased pursuant to such option, the underwriter will offer these securities on the same terms as those on which the securities are being offered hereby.

 

Right of First Refusal

 

We have also granted the underwriter certain rights of first refusal for a period of twelve months to act as sole book-running manager, sole underwriter or sold placement agent for each and every future public or private equity or debt offering in the U.S. by us or any of our successors or subsidiaries, under certain circumstances.

 

Tail Financing Payments

 

We have also agreed to pay the underwriter a tail fee equal to the cash and warrant compensation in this offering, if any investor, who was contacted in writing in connection with this offering or introduced to us in connection with this offering by the underwriter during the term of the underwriter’s engagement, provides us with capital in any public or private offering or other financing or capital raising transaction, subject to certain conditions and exceptions, during the twelve month period following expiration or termination of our engagement of the underwriter.

 

Lock-up Agreements

 

Our officers and directors have agreed with the underwriter to be subject to a lock-up period of 90 days following the date of this prospectus. This means that, during the applicable lock-up period, such persons may not offer for sale, contract to sell, sell, distribute, grant any option, right or warrant to purchase, pledge, hypothecate or otherwise dispose of, directly or indirectly, any of our ADSs or any securities convertible into, or exercisable or exchangeable for, ADSs. Certain limited transfers are permitted during the lock-up period if the transferee agrees to these lock-up restrictions. We have also agreed, in the underwriting agreement, to similar lock-up restrictions on the issuance and sale of our ADSs for 90 days following the closing of this offering, although we will be permitted to issue stock options or stock awards to directors, officers, employees and consultants under our existing plans. The underwriter may, in its sole discretion and without notice, waive the terms of any of these lock-up agreements.

 

 

Stabilization, Short Positions and Penalty Bids

 

The underwriter may engage in syndicate covering transactions, stabilizing transactions and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of our ADSs:

 

	●	Syndicate covering transactions involve purchases of securities in the open market after the distribution has been completed in order to cover syndicate short positions. Such a naked short position would be closed out by buying securities in the open market. A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the price of the securities in the open market after pricing that could adversely affect investors who purchase in the offering.
	●	Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specific maximum.
	●	Penalty bids permit the underwriter to reclaim a selling concession from a syndicate member when the securities originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

 

These syndicate covering transactions, stabilizing transactions and penalty bids may have the effect of raising or maintaining the market prices of our securities or preventing or retarding a decline in the market prices of our securities. As a result, the price of our ADSs may be higher than the price that might otherwise exist in the open market. Neither we nor the underwriter make any representation or prediction as to the effect that the transactions described above may have on the price of our ADSs. These transactions may be effected on the Nasdaq Capital Market, in the over-the-counter market or on any other trading market and, if commenced, may be discontinued at any time.

 

In connection with this offering, the underwriter also may engage in passive market making transactions in our ADSs in accordance with Regulation M during a period before the commencement of offers or sales of our ADSs in this offering and extending through the completion of the distribution. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for that security. However, if all independent bids are lowered below the passive market maker’s bid that bid must then be lowered when specific purchase limits are exceeded. Passive market making may stabilize the market price of the securities at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.

 

Neither we nor the underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the prices of our securities. In addition, neither we nor the underwriter make any representation that the underwriter will engage in these transactions or that any transactions, once commenced, will not be discontinued without notice.

 

Indemnification

 

We have agreed to indemnify the underwriter against certain liabilities, including certain liabilities arising under the Securities Act, or to contribute to payments that the underwriter may be required to make for these liabilities.

 

Determination of Offering Price

 

The actual offering price of the securities we are offering will be negotiated between us and the underwriter based on the trading of our ADSs prior to the offering, among other things, and may be at a discount to the current market price.

 

 

Electronic Offer, Sale and Distribution of Securities

 

A prospectus in electronic format may be made available on the websites maintained by the underwriter, if any, participating in this offering and the underwriter may distribute prospectuses electronically. Other than the prospectus in electronic format, the information on these websites is not part of this prospectus or the registration statement of which this prospectus form a part, has not been approved or endorsed by us or the underwriter, and should not be relied upon by investors.

 

Other Relationships

 

The underwriter and its respective affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. The underwriter acted as our underwriter in connection with our public offering in March 2017 and our placement agent in connection with a registered direct offering in November 2017, for which it received compensation.

 

Listing

 

Our ADSs are listed on the Nasdaq Capital Market under the symbol “MDGS.” We have applied to list the Series C Warrants on the Nasdaq Capital Market under the symbol “MDGSW.” There can be no assurance that Nasdaq will approve the listing of the Series C Warrants. We do not intend to apply for listing of the Pre-funded Warrants on any securities exchange or other nationally recognized trading system.

 

Notice to Non-U.S. Investors

 

Israel

 

This document does not constitute a prospectus under the Israeli Securities Law, 5728-1968, or the Securities Law, and has not been filed with or approved by the Israel Securities Authority. In the State of Israel, this document is being distributed only to, and is directed only at, and any offer of the securities being offered pursuant to this prospectus is directed only at, investors listed in the first addendum, or the Addendum, to the Israeli Securities Law, consisting primarily of joint investment in trust funds, provident funds, insurance companies, banks, portfolio managers, investment advisors, members of the Tel Aviv Stock Exchange, underwriters, venture capital funds, entities with equity in excess of NIS 50 million and “qualified individuals”, each as defined in the Addendum (as it may be amended from time to time), collectively referred to as qualified investors (in each case purchasing for their own account or, where permitted under the Addendum, for the accounts of their clients who are investors listed in the Addendum). Qualified investors will be required to submit written confirmation that they fall within the scope of the Addendum, are aware of the meaning of same and agree to it.

 

 

Expenses Related to Offering

 

The following table sets forth the costs and expenses, other than underwriting discounts, commissions and expenses, payable by us in connection with the offer and sale of ordinary shares in this offering. All amounts listed below are estimates except the SEC registration fee and the Financial Industry Regulatory Authority, Inc., or FINRA, filing fee.

 

Itemized expense		Amount
SEC registration fee		$	3,736
FINRA filing fee		$	5,001
Legal fees and expenses		$	155,000
Transfer agent and registrar fees		$	39,225
Accounting fees and expenses		$	45,000
Miscellaneous		$	10,038
Total		$	258,000

 

Legal Matters

 

The validity of the securities offered hereby and certain matters of Israeli law will be passed upon for us by Meitar Liquornik Geva Leshem Tal, Ramat Gan, Israel. Certain matters of United States federal securities law relating to this offering will be passed upon for us by Zysman, Aharoni, Gayer and Sullivan & Worcester, LLP, New York, New York. Certain legal matters of United States federal securities law related to the offering will be passed upon for the underwriter by McDermott, Will & Emery LLP, New York, New York. Certain matters of Israeli law relating to this offering will be passed upon for the underwriter by Barnea & Co., Tel-Aviv, Israel.

 

Experts

 

The financial statements incorporated in this Prospectus by reference to the Annual Report on Form 20-F for the year ended December 31, 2017 have been so incorporated in reliance on the report (which contains an explanatory paragraph relating to the Company’s ability to continue as a going concern as described in Note 1b to the consolidated financial statements) of Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

 

Enforceability of Civil Liabilities

 

We are incorporated under the laws of the State of Israel. Service of process upon us and upon our directors and officers and the Israeli experts named in this prospectus, substantially all of whom reside outside the United States, may be difficult to obtain within the United States. Furthermore, because substantially all of our assets and substantially all of our directors and officers are located outside the United States, any judgment obtained in the United States against us or any of our directors and officers may not be collectible within the United States

 

We have irrevocably appointed Medigus USA LLC as our agent to receive service of process in any action against us in any U.S. federal or state court arising out of this offering or any purchase or sale of securities in connection with this offering. The address of our agent is 140 Town & Country Dr., Suite C Danville, CA 94526, USA.

 

We have been informed by our legal counsel in Israel, Meitar Liquornik Geva Leshem Tal, that it may be difficult to initiate an action with respect to U.S. securities law in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum to hear such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact by expert witnesses which can be a time-consuming and costly process. Certain matters of procedure may also be governed by Israeli law.

 

 

Subject to certain time limitations and legal procedures, Israeli courts may enforce a U.S. judgment in a civil matter which, subject to certain exceptions, is non-appealable, including judgments based upon the civil liability provisions of the Securities Act and the Exchange Act and including a monetary or compensatory judgment in a non-civil matter, provided that:

 

●

the judgment was rendered by a court which was, according to the laws of the state of the court, competent to render the judgment;

 

●

the judgment may no longer be appealed;

 

●

the obligation imposed by the judgment is enforceable according to the rules relating to the enforceability of judgments in Israel and the substance of the judgment is not contrary to public policy; and

 

●

the judgment is executory in the state in which it was given.

 

Even if these conditions are met, an Israeli court will not declare a foreign civil judgment enforceable if:

 

●

the judgment was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases);

 

●

the enforcement of the judgment is likely to prejudice the sovereignty or security of the State of Israel;

 

●

the judgment was obtained by fraud;

 

●

the opportunity given to the defendant to bring its arguments and evidence before the court was not reasonable in the opinion of the Israeli court;

 

●

the judgment was rendered by a court not competent to render it according to the laws of private international law as they apply in Israel;

 

●

the judgment is contradictory to another judgment that was given in the same matter between the same parties and that is still valid; or

 

●

at the time the action was brought in the foreign court, a lawsuit in the same matter and between the same parties was pending before a court or tribunal in Israel.

 

If a foreign judgment is enforced by an Israeli court, it generally will be payable in Israeli currency, which can then be converted into non-Israeli currency and transferred out of Israel. The usual practice in an action before an Israeli court to recover an amount in a non-Israeli currency is for the Israeli court to issue a judgment for the equivalent amount in Israeli currency at the rate of exchange in force on the date of the judgment, but the judgment debtor may make payment in foreign currency. Pending collection, the amount of the judgment of an Israeli court stated in Israeli currency ordinarily will be linked to the Israeli consumer price index plus interest at the annual statutory rate set by Israeli regulations prevailing at the time. Judgment creditors must bear the risk of unfavorable exchange rates.

 

  

Where You Can Find Additional Information

 

We are subject to the informational requirements of the United States Securities Exchange Act of 1934, as amended, and in accordance therewith file annual and special reports with, and furnish other information to, the SEC. You may read and copy the registration statement and any other documents we have filed at the SEC, including any exhibits and schedules, at the SEC’s public reference room at 100 F Street N.E., Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 for further information on this public reference room. In addition, the SEC maintains a web site that contains reports and other information regarding issuers that file electronically with the SEC. You may access the SEC’s website at http://www.sec.gov. These SEC filings are also available to the public on the Israel Securities Authority’s Magna website at www.magna.isa.gov.il and from commercial document retrieval services.

 

This prospectus is part of the registration statement on Form F-1 filed with the SEC in connection with this offering and does not contain all of the information included in the registration statement. Whenever a reference is made in this prospectus to any of our contracts or other documents, the reference may not be complete and, for a copy of the contract or document, you should refer to the exhibits that are a part of the registration statement.

 

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

 

The SEC allows us to incorporate by reference information into this document. This means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be a part of this document, except for any information superseded by information that is included directly in this prospectus or incorporated by reference subsequent to the date of this prospectus.

 

We incorporate by reference the following documents or information that we have filed with the SEC:

 

	●	the description of our ordinary shares, par value NIS 1.00 per share, and the American Depositary Shares representing the ordinary shares, contained in our Registration Statement on Form 20-F filed with the SEC on May 7, 2015, including any subsequent amendment or any report filed for the purpose of updating such description;
	●	our Annual Report on Form 20-F for the fiscal year ended December 31, 2017, filed on March 22, 2018; and
	●	our reports on Form 6-K furnished to the SEC on April 17, 2018 (with respect to the first paragraph of Form 6-K and the first paragraph of exhibit 99.1), May 14, 2018 (with respect to the first paragraph of Form 6-K and the first paragraph of exhibit 99.1), June 4, 2018 (with respect to exhibit 99.1), June 11, 2018 (with respect to exhibits 99.2 and 99.3), June 26, 2018 (other than Exhibit 99.1), June 28, 2018 and July 9, 2018.

 

Documents incorporated by reference in this prospectus are available from us without charge upon written or oral request, excluding any exhibits to those documents that are not specifically incorporated by reference into those documents. You can obtain documents incorporated by reference in this document by requesting them from us in writing or at our principal executive offices at Omer Industrial Park No. 7A, P.O. Box 3030, 8496500.

 

  

 

 

 

 

 

 

 

 

 

 

 

 

MEDIGUS LTD.

 

 

Up to 2,422,480 Units (each consisting of one American Depositary Share and one Series C Warrant

to purchase one American Depositary Share)

 

and

 

Up to 2,422,480 Pre-funded Units (each consisting of one Pre-Funded Warrant to purchase one American Depositary Share
and one Series C Warrant to purchase one American Depositary Share)

 

American Depositary Shares Underlying the Pre-funded Warrants and

 

American Depositary Shares Underlying the Warrants

  

	H.C. Wainwright & Co.
	PRELIMINARY PROSPECTUS

 

 

 

 

 

 

 

 

 

 

 

 

Part II

 

Information Not Required in Prospectus

 

Item 6. Indemnification of Office Holders (including Directors).

 

Under the Companies Law, a company may not exculpate an office holder from liability for a breach of a fiduciary duty. An Israeli company may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of duty of care but only if a provision authorizing such exculpation is included in its articles of association. Our articles of association include such a provision. The company may not exculpate in advance a director from liability arising out of a prohibited dividend or distribution to shareholders.

 

Under the Companies Law and the Securities Law, 5738-1968 (the “Securities Law”) a company may indemnify an office holder in respect of the following liabilities, payments and expenses incurred for acts performed by him or her as an office holder, either in advance of an event or following an event, provided its articles of association include a provision authorizing such indemnification:

 

●

a monetary liability incurred by or imposed on the office holder in favor of another person pursuant to a court judgment, including pursuant to a settlement confirmed as judgment or arbitrator’s decision approved by a competent court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned foreseen events and amount or criteria;

 

●

reasonable litigation expenses, including reasonable attorneys’ fees, which were incurred by the office holder as a result of an investigation or proceeding filed against the office holder by an authority authorized to conduct such investigation or proceeding, provided that such investigation or proceeding was either (i) concluded without the filing of an indictment against such office holder and without the imposition on him of any monetary obligation in lieu of a criminal proceeding; (ii) concluded without the filing of an indictment against the office holder but with the imposition of a monetary obligation on the office holder in lieu of criminal proceedings for an offense that does not require proof of criminal intent; or (iii) in connection with a monetary sanction;

 

●

reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or which were imposed on the office holder by a court (i) in a proceeding instituted against him or her by the company, on its behalf, or by a third party, (ii) in connection with criminal indictment of which the office holder was acquitted, or (iii) in a criminal indictment which the office holder was convicted of an offense that does not require proof of criminal intent;

 

●

a monetary liability imposed on the office holder in favor of a payment for a breach offended at an Administrative Procedure (as defined below) as set forth in Section 52(54)(a)(1)(a) to the Securities Law;

 

●

expenses expended by the office holder with respect to an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees; and

 

●

any other obligation or expense in respect of which it is permitted or will be permitted under applicable law to indemnify an office holder, including, without limitation, matters referenced in Section 56H(b)(1) of the Securities Law.

 

An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Securities Law.

 

 

Under the Companies Law and the Securities Law, a company may insure an office holder against the following liabilities incurred for acts performed by him or her as an office holder if and to the extent provided in the company’s articles of association:

 

●

a breach of a fiduciary duty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;

 

●

a breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder;

  

●

a monetary liability imposed on the office holder in favor of a third party;

 

●

a monetary liability imposed on the office holder in favor of an injured party at an Administrative Procedure pursuant to Section 52(54)(a)(1)(a) of the Securities Law; and

 

●

expenses incurred by an office holder in connection with an Administrative Procedure, including reasonable litigation expenses and reasonable attorneys’ fees.

 

Under the Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following:

 

●

a breach of fiduciary duty, except for indemnification and insurance for a breach of the fiduciary duty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;

 

●

a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder;

 

●

an act or omission committed with intent to derive illegal personal benefit; or

 

●

a civil or administrative fine or forfeit levied against the office holder.

 

Under the Companies Law, exculpation, indemnification and insurance of office holders must be approved by the compensation committee and the board of directors and, with respect to directors or controlling shareholders, their relatives and third parties in which such controlling shareholders have a personal interest, also by the shareholders.

 

Our articles of association permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted or to be permitted by law. Our office holders are currently covered by a directors’ and officers’ liability insurance policy. As of the date of this registration statement on Form F-1, no claims for directors’ and officers’ liability insurance have been filed under this policy and we are not aware of any pending or threatened litigation or proceeding involving any of our office holders, including our directors, in which indemnification is sought.

 

We have entered into agreements with each of our current director and officers exculpating them from a breach of their duty of care to us to the fullest extent permitted by law, subject to limited exceptions, and undertaking to indemnify them to the fullest extent permitted by law, to the extent that these liabilities are not covered by insurance. This indemnification is limited, with respect to any monetary liability imposed in favor of a third party, to events determined as foreseeable by the board of directors based on our activities. The maximum aggregate amount of indemnification that we may pay to our directors and officers based on such indemnification agreement is equal to 25% of our shareholders’ equity pursuant to our latest audited or unaudited consolidated financial statements, as applicable, as of the date of the indemnification payment. Such indemnification amounts are in addition to any insurance amounts. Each director or officer who agrees to receive this letter of indemnification also gives his approval to the termination of all previous letters of indemnification that we have provided to him or her in the past, if any. However, in the opinion of the SEC, indemnification of office holders for liabilities arising under the Securities Act is against public policy and therefore unenforceable.

 

 

Item 7. Recent Sales of Unregistered Securities.

 

Set forth below are the sales of all securities by the Company during the three years preceding this offering, which were not registered under the Securities Act.

  

In November 2017, we issued investors warrants to purchase up to a total of 101,250 ADSs representing 2,025,000 ordinary shares at an exercise price of $9.00 per ADS.

 

In November 2017, we issued H.C. Wainwright & Co. warrants to purchase up to a total of 14,175 ADSs representing 283,500 ordinary shares at an exercise price of $10.00 per ADS as part of the consideration for its services as placement agent.

 

In December 2016, we issued investors warrants to purchase of 9,968 ADSs representing 199,360 ordinary shares at an exercise price of $36.00 per ADS.

 

In December 2016, we issued Rodman & Renshaw a unit of H.C. Wainwright & Co. warrants to purchase up to a total of 997 ADSs representing 19,940 ordinary shares at an exercise price of $29.48 per ADS as part of the consideration for its services as placement agent.

 

In December 2016, we issued Roth Capital Partners and Maxim Group LLC warrants to purchase up to a total of 498 ADSs representing 9,965 ordinary shares at an exercise price of $36.00 per ADS as part of a “tail” fee consideration for its services as placement agent.

 

In September 2016, we issued to Roth Capital Partners and Maxim Group LLC warrants purchase up to 989 ADSs representing 19,780 ordinary share at an exercise price of $57.50 per ADS as part of the consideration for its services as placement agent.

 

In July 2015, pursuant to a public offering under our shelf prospectus in Israel, we raised approximately NIS 26.8 million (gross) (approximately $7 million) through the issuance of a total of 705,250 of our ordinary shares at a price of NIS 38.00 per share and warrants exercisable into additional 352,625 of our ordinary shares. The warrants expired on July 8, 2018.

 

The foregoing issuances of warrants to purchase ADSs in 2016 and 2017 were offered pursuant to Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act.

 

The foregoing issuances in 2015 were all made outside of the United States pursuant to Regulation S or to U.S. entities pursuant to Section 4(a)(2) of the Securities Act.

 

The foregoing issuances were (i) adjusted retroactively to reflect the 10:1 reverse share split effected on July 15, 2018 and the change in the ratio of ordinary shares per ADS to twenty deposited ordinary shares per ADS effected on July 16, 2018, (ii) adjusted retroactively to reflect the change in the ratio of ordinary shares per ADS from five deposited ordinary shares per ADS to 50 deposited ordinary shares per ADS effected on March 15, 2017, and (iii) adjusted retroactively to reflect the 10:1 reverse share split and the change in the ratio of ordinary shares per ADS to five deposited ordinary shares per ADS effected on November 6, 2015.

 

Item 8. Exhibits and Financial Statement Schedules.

 

	(a)	The Exhibit Index is hereby incorporated herein by reference.
	(b)	Financial Statement Schedules.

 

All Financial Statement Schedules have been omitted because either they are not required, are not applicable or the information required therein is otherwise set forth in the Registrant’s consolidated financial statements and related notes thereto.

 

 

Item 9. Undertakings.

 

(a)

The undersigned Registrant hereby undertakes:

 

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

i.

To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

 

ii.

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

 

iii.

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

 

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

(4)

To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.

 

(5)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

 

i.

If the registrant is relying on Rule 430B:

 

A.

Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

 

 

B.

Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness of the date of the first contract or sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

 

ii.

If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

(6)

That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell securities to such purchaser:

 

	i.	Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
	ii.	Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
	iii.	The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
	iv.	Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

 

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6 hereof, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 

(c) The undersigned registrant hereby undertakes that:

 

(1) That for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

 

(2) That for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

  

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Omer, State of Israel on July 16, 2018.

 

	Medigus Ltd.
	By:	/s/ Christopher Rowland
	Name:	Christopher Rowland
	Title:	Chief Executive Officer

   

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

    

Signatures		Title		Date
/s/ Christopher Rowland		Chief Executive Officer and Director		July 16, 2018
Christopher Rowland
/s/ Oded Yatzkan		Chief Financial Officer		July 16, 2018
Oded Yatzkan
*		Chairman of the Board of Directors		July 16, 2018
Doron Birger
*		Director		July 16, 2018
Eitan Machover
*		Director		July 16, 2018
Efrat Venkert
*		Director		July 16, 2018
Yuval Yanai

 

*	/s/ Christopher Rowland
	Christopher Rowland
	Attorney-in-fact

 

 

Signature of authorized representative in the United States

 

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant’s duly authorized representative has signed this registration statement on Form F-1 in on this 16th day of July 2018.

 

	Medigus USA LLC
	By:	/s/ Christopher Rowland
	Name:	Christopher Rowland
	Title:	Chief Executive Officer

  

  

EXHIBIT INDEX

 

Exhibit No.		Description
1.1		Form of Underwriting Agreement(1)
3.1		Articles of Association of Medigus Ltd., as amended(9)
4.1		Form of Warrant Agent Agreement between Medigus Ltd. and Computershare Inc., as warrant agent, dated July          , 2018, including the Form of Series C Warrant (1)
4.2		Form of Pre-Funded Warrant(1)
4.3		Form of Underwriter Warrant(1)
4.4		Form of Series A Warrant to purchase Ordinary Shares Represented by American Depositary Shares issued in connection with the March 2017 Securities Purchase Agreement(6)
4.5		Form of Placement Agent Warrant to purchase Ordinary Shares Represented by American Depositary Shares issued in connection with the March 2017 Securities Purchase Agreement(6)
4.6		Form of Deposit Agreement between Medigus Ltd., The Bank of New York Mellon as Depositary, and owners and holders from time to time of ADSs issued thereunder, including the Form of American Depositary Shares(2)
5.1		Form of Opinion of Meitar Liquornik Geva Leshem Tal, Israeli counsel to the Registrant, as to the validity of the ordinary shares(1)
5.2		Form of Opinion of Zysman, Aharoni, Gayer and Sullivan & Worcester, LLP, U.S. counsel to the Registrant, as to the validity of the warrants(1)
10.1		Form of Deposit Agreement between Medigus Ltd., The Bank of New York Mellon as Depositary, and owners and holders from time to time of ADSs issued thereunder, including the Form of American Depositary Shares.(2)
10.2		2013 Share Option and Incentive Plan(2)
10.3		Series A Option Plan(2)¥
10.4		Series B Option Plan(2)¥
10.5		Compensation Policy of Medigus Ltd.(3)
10.6		Summary of Lease Agreement between Medigus Ltd. and Tefen Yazamut Ltd. regarding main offices in Omer Industrial Park dated January 6, 2004, as amended.(8) ∞
10.7		Form of Indemnification and Exculpation Undertaking(2)
10.8		Securities Purchase Agreement by and between the Registrant and the purchasers named therein, dated September 8, 2016(4)
10.9		Securities Purchase Agreement by and between the Registrant and the purchasers named therein, dated November 30, 2016.(5)
10.10		Form of Warrant to purchase Ordinary Shares Represented by American Depositary Shares issued in connection with the November 2016 Securities Purchase Agreements(6)
10.11		Securities Purchase Agreement by and between the Registrant and the purchasers named therein, dated March 24, 2017.(6)
10.12		Securities Purchase Agreement by and between the Registrant and the purchasers in the registered direct offering dated November 24, 2017.(7)
10.13		Form of Warrant to purchase Ordinary Shares Represented by American Depositary Shares issued in connection with the November 24, 2017, Securities Purchase Agreement.(7)
21.1		List of Subsidiaries(2)
23.1		Consent of Kesselman and Kesselman, Member Firm of PricewaterhouseCoopers International Limited(9)
23.2		Consent of Meitar Liquornik Geva Leshem Tal, Israeli counsel to the Registrant (included in Exhibit 5.1)(1)
23.3		Consent of Zysman, Aharoni, Gayer and Sullivan & Worcester, LLP, U.S. counsel to the Registrant (included in Exhibit 5.2)(1)
24.1		Power of Attorney (included in the signature page of the Registration Statement)

   

(1)	To be filed by amendment.
(2)	Previously filed with the Securities and Exchange Commission on May 7, 2015, as an exhibit to the Registrant’s annual report on Form 20-F (File No 001-37381) and incorporated by reference herein.
(3)	Previously filed with the Securities and Exchange Commission on March 30, 2016, as an exhibit to the Registrant’s annual report on Form 20-F (File No 001-37381) and incorporated by reference herein.
(4)	Previously filed with the Securities and Exchange Commission on September 8, 2016, as exhibit to the Registrant’s report on Form 6-K (File No 001-37381) and incorporated by reference herein.
(5)	Previously filed with the Securities and Exchange Commission on December 1, 2016, as exhibit to the Registrant’s report on Form 6-K (File No 001-37381) and incorporated by reference herein.
(6)	Previously filed with the Securities and Exchange Commission on March 23, 2017, as an exhibit to the Registrant’s registration statement on Form F-1 (File 333-216155) and incorporated by reference herein.
(7)	Previously filed with the Securities and Exchange Commission on November 24, 2017, as an exhibit to the Registrant’s report on Form 6-K (File No 001-37381) and incorporated by reference herein.
(8)	Previously filed with the Securities and Exchange Commission on March 22, 2018, as an exhibit to the Registrant’s annual report on Form 20-F (File No 001-37381) and incorporated by reference herein.
(9)	Filed herewith.
∞	English translation of original Hebrew document.

 

 

Exhibit 3.1

 

Medigus Ltd.

 

Articles of Association

 

In accordance with The Companies Law, 5759-1999

 

Contents

 

Interpretation	2
The Company’s Name	3
The Company’s Objectives	3
The Company’s Purpose	3
The Registered Share Capital	3
Liability of Shareholders	4
Public Company	4
Shares	4
Share Certificate; Share deed	5
Calls on Shares	6
Forfeiture and Lien of Shares	7
Transfer of Shares	8
Redeemable Securities	10
Alteration of Share Capital	10
General Meetings of the Company’s Shareholders	12
Voting Rights	14
Discussions and Adoption of Resolutions in the General Meetings	15
The Board of Directors	17
The Board of Directors’ Powers and Duties	19
Board Meetings	19
Board Committees	21
The General Manager	22
The Company’s Office Holders	22
Internal Auditor	23
The Auditor	23
Validity of Acts and Approval of Non-Extraordinary Transactions	23
Distribution of Dividends	24
Dividends and Bonus Shares	24
Merger	25
Minutes	25
Register of Shareholders	26
Notices	27
Winding Up and Liquidation	28
Exemption of Liability	28
Insurance	28
Indemnity	28
Signatory Rights	29
Amendment to these Articles of Association	29

 

 

Interpretation

 

Article 1:

 

In these Articles the following terms shall bear the meaning ascribed to them below:

 

“Person”	shall include a corporation;
“Shareholder”	shall mean a Registered Shareholder or Unregistered Shareholder. Where an effective date, as defined in Section 182 of the Companies Law, is in effect, a Shareholder shall mean such Registered Shareholder or Unregistered Shareholder as of the Effective Date;
“Registered Shareholder”	shall mean a Person registered in the Register;
“Unregistered Shareholder”	shall mean a Person in whose favor a share is registered with a stock exchange member, and such share is also registered in the Register under a nominee company’s name;
“Stock Exchange”	shall mean the Tel Aviv Stock Exchange Ltd.
The “Board”	shall mean the Company’s Board of Directors as appointed in accordance with the Law and these Articles;
“Director”	shall mean a member of the Board, or any other person or entity serving, de-facto, as a Director, even if referred to otherwise;
The “Companies Law”	shall mean the Israeli Companies Law, 5759 – 1999, as amended from time to time, and all the rules and regulations promulgated thereunder;
The “Law”	shall mean the Companies Law, the Israeli Securities Law, 5728-1968, as amended from time to time and its regulations or regulation prescribed by Law, and any other companies-related law applicable to the company at the time;
The “Company”	shall mean the company referred to above;
“Administrative Enforcement Proceeding”	shall mean administrative enforcement proceeding under Chapter 8-C, 8-D or 9-1 to the Israeli Securities Law, 5728-1968, and proceeding under Article D, Chapter 4 of part 9 of the Companies Law, 5759-1999;
“Register”	shall mean a register of shareholders as required under Section 127 of the Companies Law, and any additional register of shareholders maintained by the Company outside of Israel;
The “Office”	shall mean the registered office of the Company, as shall be from time to time in accordance with the Board’s discretion;
“In Writing”	shall mean print, lithography, photo, telegram, telex, facsimile, electronic mail, or any other visual expression or imprinting of words;
“Securities”	shall include shares, debentures, capital notes, certificates and other documents granting the right to sell or convert them as such;
The “Companies Ordinance”	shall mean the Israeli Companies Ordinance [New Version], 5743- 1983;
The “Articles”	shall mean the articles of association contained in the Articles, as originally registered and as may be amended from time to time;

 

Article 2:

 

Sections 2, 3, 4, 5, 6, 7, 8 and 10 of the Interpretation Law, 5741-1981, shall apply, mutatis mutandis, to the interpretation of these Articles herein, unless otherwise provided herein or unless the matter at hand, or its context, does not conform to such application.

 

 

Article 3:

 

Except for this Article 3 herein, all terms and expressions used in these Articles herein shall have the same meaning as provided in the Companies Law, unless such meaning is in contradiction to the relevant matter at hand or its context.

 

Article 4:

 

Provisions which may be conditioned shall apply the Company, unless otherwise provided in these Articles herein, and in any contradiction between the provisions of these Articles herein and those of the Companies Law, the provisions of these Articles herein shall prevail.

 

Article 5:

 

Where these Articles refer to provisions of the Companies Law which were amended or canceled, such provision shall apply as if already stipulated in these Articles herein, unless otherwise prohibited by law.

 

Article 6:

 

Unless otherwise stipulated in these Articles herein, resolutions shall be adopted by the Company’s general meeting of its shareholders or by the Board by an ordinary majority.

 

The Company’s Name

 

Article 7:

 

The name of the Company shall be as follows:

 

In Hebrew: מדיגוס בע”מ

 

In English: Medigus Ltd.

 

The Company’s Objectives

 

Article 8:

 

The Company may undertake any lawful activity, subject to the provisions stipulated in its Memorandum of Association.

 

The Company’s Purpose

 

Article 9:

 

The purpose of the Company is to operate in accordance with commercial considerations with the intention of generating profits. However, the Company may donate reasonable amounts for any suitable purpose even if such contributions do not fall within the business considerations of the Company, as the Board may determine in its discretion.

 

The Registered Share Capital

 

Article 10:

 

A)	The Company’s registered share capital is NIS 160,000,000 divided into 160,000,000 ordinary shares of the Company, par value NIS 1.00 each (hereinafter: the “Shares”).

 

B)	All ordinary Shares shall have equal rights for any matter or purpose, and holders of fully paid ordinary shares shall be entitled to the following rights with respect to each such ordinary share held by them:

 

 

1)

A right to be invited to and participate in, all the general meetings of the Company’s shareholders, and a right to one vote per each ordinary share he holds, in every voting, in every general meeting of the Company’s shareholders he participates in.

 

2)

A right to participate in dividends’ distribution, if and when distributed, and a right to be granted with bonus shares, if and when granted.

 

3)

A right to participate in the Company’s liquidation distribution in the event of its liquidation.

 

Liability of Shareholders

 

Article 11:

 

The shareholders’ liability is limited. Every shareholder’s liability is limited to the payment of the par value of his Shares. Where the Company allocated Shares for less than their par value, the liability of every shareholder so allocated shall be limited to the lower par value of such Shares.

 

Public Company

 

Article 12:

 

Subject to the Companies Law, and for as long as the Shares are listed for trade in the Stock Exchange or have been offered to the public under a prospectus, as such term is defined in the Securities Law, 1968, or have been offered to the public outside of Israel under an applicable public offer instrument as required by applicable law outside of Israel, and are held by the public, the Company shall qualify as a Public Company. Prior to the date of becoming a Public Company and upon the date the date of ceasing to be a Public Company (if at all), the Company shall then be a Private Company.¹

 

Shares

 

Article 13:

 

Without prejudice to any special rights previously granted to holders of existing Shares, the Company may issue or allot Shares or other Securities consisting preference or deferred rights, or to issue from its unissued share capital redeemable Securities, or to issue shares consisting other special limited rights or limitations regarding dividend distribution rights, voting rights, or other matters, as shall be resolved from time to time by a special majority resolution of the general meeting of the Company’s shareholders.

 

Article 14:

 

If at any time, the Company’s share capital shall be divided into different classes, the general meeting of the Company’s shareholders may resolve by an ordinary majority, unless otherwise stipulated by the issuance terms of the relevant class of shares, to convert, extend, add or to otherwise amend the rights, privileges, benefits, limitations and provisions related or unrelated at that time to the relevant class of shares, or as shall otherwise be resolved by an ordinary majority of the Company’s shareholders holding the relevant class of shares, at the general meeting of the Company’s shareholders.

 

Article 15:

 

The special rights attached to issued shares or classes of shares, including preference rights shares or other special rights shares, shall not be considered to be amended by creating or issuing additional shares of an equal rank, unless otherwise stipulated by the issuing terms of such shares. The provisions regarding general meetings of the Company’s shareholders stipulated in these Articles herein shall apply, mutatis mutandis, on any class meetings.

 

 

¹ For the avoidance of doubt, it is hereby clarified that any Articles specifically referring to a Private Company shall not apply for as long as the Company is as a Public Company.

 

 

Article 16:

 

The Company’s unissued share capital shall be subject to the Board’s supervision, which may allocate it to those Persons for cash or such other consideration, under the same terms and conditions, at a higher par value, equal par value or lower par value (in accordance with the provisions of the Companies Law), and at those dates determined by the Board, and the Board shall be authorized to demand payment for any such shares from any Person, equal, higher or lower than their par value, during such period and for such consideration, terms and conditions as the Board may determine.

 

Article 17:

 

Upon allocation of shares, the Board may distinguish between shareholders regarding payment amounts and payment dates.

 

Article 18:

 

If any allocation terms stipulate that the consideration for the shares so allocated shall be, in whole or in part, in installments, each such installment shall be paid by the Person registered as the shareholder at the time of payment, or by his legal guardians.

 

Article 19:

 

The Company may pay at any time any Person, for providing underwriting services or for his consent to provide underwriting services, either conditionally or unconditionally, for any of the Company’s Securities, including debentures and debentures stock, or for his consent to obtain signatures, either conditionally or unconditionally, for any of the Company’s securities, debentures or debentures stock. Any commission may be paid or removed in cash, Securities, debentures or debentures stock.

 

Share Certificate; Share Deed

 

Article 20:

 

Subject to and in accordance with the provisions of the Companies Law, each share certificate evidencing proprietary right in the Shares shall carry the Company’s seal or its printed name, along with one of the signatures of one of the company’s members of the Board and Company secretary, or as otherwise shall be determined by the Board.

 

Article 21:

 

Every registered shareholder (including a nominee company), is entitled to receive from the Company, as requested, one share certificate evidencing all of the Shares registered under his name, or, if so approved by the Board (upon payment of the amounts determined by the Board from time to time), several share certificates, each for one or more such Shares; each share certificate shall denote the number of Shares represented by such certificate, the serial number of such Shares and their par value, all subject to the Companies Law.

 

Article 22:

 

Share certificate registered jointly under the names of two Persons or more shall be delivered to the Person whose name is listed first among other such Persons in the Register, unless otherwise instructed in writing by such joint registered Persons.

 

Article 23:

 

A)

Where the consideration for Shares is fully paid, the Company may provide a share deed entitling its holder with rights to the Shares denoted in the share deed and the right to transfer it by transferring the Share, and the provisions regarding Share transfers stipulated in these Articles herein shall not apply.

 

 

B)

Shareholder lawfully holding a share deed is entitled to return such share deed to the Company to be cancelled and converted to a registered Share; Such shareholder is further entitled, upon payment of a fee determined by the Board, to be registered in the Register as the holder of the Shares so represented by the share deed returned to the Company, and to receive a share certificate representing such Shares.

 

C)

Holder of a share deed may deposit his share deed in the Office, and for as long as it is so deposited, such depositor shall have the right to request for the general meeting of the Company’s shareholders to convene, in accordance with and subject to the Companies Law and these Articles herein, to attend it, to vote in it and to uphold all further rights granted to a shareholder in a general meeting of the Company’s shareholders convened pursuant to his request 48 hours pursuant to such deposit, as though his name was registered in the Register as the holder of those Shares represented by the deed. Only one Person shall be acknowledged as the share deed depositor, and the Company must return the share deed to its depositor if so requested by him, in writing, at least two days in advance.

 

Where a share deed was not deposited in accordance with the above, its holder shall not have the rights stated in subsection C above, and shall have, subject to these Articles herein, all other rights granted to the Company’s shareholders.

 

Article 24:

 

If a share certificate or share deed are lost, damaged or defected, the Board may issue a new share certificate or share deed to replace them, provided that such share certificate or share deed were not canceled by the Company, or upon proving to the Board’s satisfaction such loss or destruction, and the Company was provided with guarantees against any possible damage to the Board’s satisfaction, all for the consideration determined by the Board. Articles 20-23 above shall apply, mutatis mutandis, in connection with the issuance of a new share certificate.

 

Calls on Shares

 

Article 25:

 

The Board may, from time to time, in its discretion, make calls upon to perform payment of any amount of the consideration of their Shares not yet paid, and which, according to the allocation terms of such Shares are not to be paid in definite dates, and all such shareholder shall pay the calls so made upon him at the time(s) and place(s) designated in such call. A call may contain a demand for payment in installments. The date of the Board’s resolution approving such call shall be deemed as the date of such call.

 

Article 26:

 

A call shall be delivered to the relevant shareholder not less than fourteen (14) days prior to the date of payment stipulated therein, and shall specify the installments and the designated place of payment. Notwithstanding the above, prior to the due date stipulated in the call the Board may, by delivering a written notice to the relevant shareholder, revoke such call or extend the payment period, subject to such revoking being approved prior to the payment of the call.

 

Article 27:

 

The joint holders of a Share shall be bound jointly and severally to pay all calls in respect thereof.

 

Article 28:

 

If, according to the terms of issuance of any Share, any amount is due at a definite date or in installments in definite dates, such amount(s) shall be paid on same date(s) as though due call had been delivered to the shareholder by the Board, and provisions regarding calls provided in these Articles herein shall apply such call.

 

 

Article 29:

 

Any amount not paid by the shareholder of the respective Share, when due or prior to that, shall bear an interest from its due date until its actual payment at a rate determined by the Board from time to time, or as prescribed by law at the date of call,, unless otherwise prescribed by the Board.

 

Article 30:

 

The Board may agree to accept prepayment by any shareholder of any amount yet due with respect to his Shares or any part thereof. The Board may direct the payment of interest for such prepayment or any part thereof, until the date of such prepayment at a rate as may be agreed upon between the Board and the shareholder so prepaying.

 

Forfeiture and Lien of Shares

 

Article 31:

 

The Board may require any shareholder failing to pay any due amount on account of his Shares or any part thereof, to pay the unpaid due amount, including accrued interest and all expenses incurred by the Company with respect to the collection of such payment, on the date and in the terms so prescribed, by delivering a notice to such shareholder.

 

Article 32:

 

The notice shall specify a date, which date shall be not less than 14 days following the delivery date of such notice, and a place(s) where such payment, including the accrued interest and expenses thereon, is to be paid. Same notice shall specify that, in the event of failure to pay the entire amount due within the period stipulated in the notice, same failure may cause, ipso facto, the forfeiture of such Shares.

 

Article 33:

 

By Shareholder’s failure to meet the demands included in the abovementioned, the Board may, at any time thereafter and prior to the payment of all due amounts specified in the notice or payment of all expenses and accrued interest to which the company is entitled with respect to such shareholder’s Shares, resolve to forfeit such Shares. Such forfeiture shall include all dividends declared with respect thereof and not actually paid to the date of forfeiture thereof.

 

Article 34:

 

Any Share so forfeited shall be deemed as the Company’s property, and the Board may resolve, subject to the provisions of these Articles herein, to resell it, reissue it or otherwise transfer it as it deems fit, all subject to the provisions of the Companies Law. 

 

Article 35:

 

Shares so forfeited and yet to be resold shall be deemed dormant Shares, and shall not have any rights attached to them for as long as they are held by the Company.

 

Article 36:

 

The Board may, at any time prior to the resell, reissuance or otherwise disposal of an aforesaid forfeited Share, nullify the forfeiture on such conditions as it deems fit.

 

A)

Any shareholder whose Shares have been so forfeited shall cease to be a holder of such forfeited Shares, but shall nevertheless continue to be obligated to pay the Company all amounts at the time of forfeiture due to the Company with respect thereof, including accrued interest and expenses as aforesaid until actual repayment, and including the interest to be paid for the aforesaid amounts from the time of forfeiture until the actual repayment, at the maximal interest rate prescribed by law, unless such Shares have been resold and the Company received the full amount owed by the shareholder, including all expenses incurred by the Company with respect to the sale of such Shares thereof.

 

 

B)

If the consideration received by the Company for the sale of the forfeited Shares shall exceed the amounts owed by the shareholder of whose Shares have been forfeited, such shareholder shall be entitled to receive the partial consideration paid by him to the Company with respect to such Shares, if so paid, subject to the allocation agreement, provided that the total remaining consideration shall not be less than the total obligations of such shareholder, including any sell-related expenses.

 

Article 37:

 

Provisions of these Articles herein regarding forfeiture of Shares shall also apply to failure to pay due known amounts in accordance with the allocation agreement, as if such amount was due to be repaid in accordance with a duly delivered payment notice.

 

Article 38:

 

The Company shall have a first and paramount lien upon all the Shares registered in the name of each shareholder on the Register, excluding fully paid Shares, and upon proceeds from their sale for repayment of such shareholder’s debts and obligations to the Company, whether joint or several, matured or un-matured, regardless of the origins of such debts and obligations, and no equitable rights for any such Shares shall be constituted. The abovementioned lien shall apply upon all the declared dividends from time to time with respect to such Shares.

 

Article 39:

 

The Board may sell any of the Shares subject to the abovementioned lien, in any manner it deems fit in accordance with its discretion, for the purpose of enforcing the abovementioned lien; however, such sale may be executed only where the period specified in Article 32 thereof has passed and a written notice specifying the Company’s intention to sell such Shares have been delivered to the shareholder in question (or to the one entitled to such notice following his departure or his bankruptcy, liquidation or receivership), and the shareholder or any other Person so entitled to the Share has failed to fully pay his abovementioned debts or obligations within fourteen (14) days following the delivery of such notice. 

 

Article 40:

 

The net proceeds of any such sale, after payment of the sale expenses, shall be used for the full payment of the respective shareholder’s debts and obligations (including the debts, obligations and engagements yet to be due), and the provisions of Article 36(b) herein shall apply, mutatis mutandis.

 

Article 41:

 

Upon the sale of forfeited Shares or enforcement of a lien, the Board may appoint any Person to execute a Share transfer deed of the sold Shares and register the purchaser of such Shares in the Register as the holder of such Shares, and after such registration in the Register, the validity of such sale shall not be rebutted, and any Person damaged by such sale shall be entitled to claim monetary damages solely from the Company.

 

Transfer of Shares

 

Article 42:

 

Any transfers of Shares registered in the Register by a registered shareholder, including transfer by or to the nominee company, shall be executed in writing, provided that the Share transfer deed shall be signed by or on behalf of the transferor and the transferee, or by their respective representatives, and by witnesses to their signatures, and the transferor shall be deemed the holder of such Shares until the registration of the transferee in the Register with respect to the Shares so transferred. Subject to the provisions of the Companies Law, transfer of Shares shall not be registered unless the Company was provided with the Share transfer deed, as described above.

 

 

The Share transfer deed shall be drawn-up and filled as below or in a manner as similar as possible or in an ordinary and accepted manner so approved by the chairman of the Board

 

“I, the undersigned  , of   (the “Transferor”), for consideration of   NIS paid to me by  of  (the “Transferee”) do hereby transfer to the Transferee   Shares  par value NIS _______ each, numbered  through    (inclusive) of __________ Ltd., to be held by the Transferee, the administrators of his estate, his guardians and his representatives, in accordance with the terms and conditions by which they were held by me on the date of signing this Share transfer deed herein, and I, the Transferee, do hereby accept the transfer of these Shares in accordance with those terms and conditions.”

 

In witness whereof we have we have signed this Share transfer deed in this ___ day of __________.

 

The Transferor		The Transferee
Witness to the Transferor’s Signature		Witness to the Transferee’s Signature

 

Article 43:

 

The Company may close the Register for a period as the Board deems fit, provided that such period shall not exceed thirty (30) days per year. The Company shall notify the shareholders of the closing of the Register as stipulated in these Articles herein in connection the delivery of notices to shareholders.

 

Article 44:

 

A)

Every Share transfer deed shall be submitted to the Office for registration along with the Share certificates to be transferred, if such Share certificates have been issued, and all such other evidencing instruments as the Board may deem required. Such registered Share transfer deeds shall remain in the Company’s possession. However, Share transfer deeds which the Board refused to register shall be returned, on demand, to their respective submitter, along with the Share certificates (if submitted). Where the Board refuses to approve Share transfers, it shall notify the transferor no later than thirty (30) days following the date in which it received the Share transfer deed.

 

B)	The Company may require payment of a fee for the registration of the transfer of Share, as shall be determined by the Board from time to time.

 

Article 45:

 

Upon the departure of a registered shareholder, the Company shall recognize the guardians, administrators of the estate, executors of the will, and in the absence of such persons, the inheritors of the deceased shareholder, as the only holders of rights in the deceased shareholder’s registered Shares.

 

Article 46:

 

In the event of the deceased shareholder being a registered shareholder of a Share held jointly with others, the surviving shareholder(s) shall be deemed the sole holder(s) of rights in such Shares, but such rights will not dismiss the deceased shareholder’s estate from any liability relating to such Shares held jointly. Each joint holder or registered Shares may transfer his rights in such Shares.

 

 

Article 47:

 

Any Person acquiring rights in Shares by virtue of a shareholder’s departure, shall be entitled, upon provision of a due will or appointment of legal guardian or issuance of order of probate, evidencing his rights in such Shares, to be registered as a shareholder of the respective Shares, or to transfer such Shares in accordance with the provisions of these Articles herein.

 

Article 48:

 

The Company may recognize an official receiver or liquidator of a shareholder which is a corporate in dissolution proceedings, or trustee in liquidation proceedings, or any receiver of a bankrupt shareholder, as the acquirer of the rights in the registered Shares of such shareholder.

 

Article 49:

 

Subject to the Board’s approval (which may refuse to provide such approval without providing any reason), a Person acquiring a right to a Share by virtue of being an official receiver, liquidator or trustee in liquidation proceedings regarding a corporate shareholder, or any official receiver of a bankrupt shareholder, may be registered as the shareholder of the respective Share or transfer such Share in accordance with the provisions of these Articles herein, subject to the provision of such proof of entitlement as the Board may deem necessary.

 

Article 50:

 

All the abovementioned provisions regarding transfer of Shares shall apply to transfer of any other of the Company’s Securities, mutatis mutandis.

 

Redeemable Securities

 

Article 51:

 

Subject to the provisions of these Articles herein regarding issuance of Securities, the Company may issue or allot redeemable Securities.

 

Article 52:

 

Where the Company had issued redeemable Securities, it may redeem them without being subject to such limitations as prescribed under Chapter Two of Part Seven of the Companies Law.

 

Article 53:

 

Where the Company had issues redeemable Securities, it may attach them with similar rights to those attached to Shares, including voting rights and rights to participate in the distribution of dividends.

 

Alteration of Share Capital

 

Article 54:

 

The Company may, from time to time, by an ordinary majority resolution of the general meeting of the Company’s shareholders, increase the registered share capital of the Company in classes of shares, as it may determine.

 

Article 55:

 

Unless otherwise resolved in the abovementioned resolution approving the increase of registered share capital, all newly issued Shares shall be subject to these Articles herein.

 

 

Article 56:

 

The Company may, by ordinary majority resolution of the general meeting of the Company’s shareholders:

 

A)

Consolidate and redistribute its Share capital, or any part thereof, into Shares par higher value than the par value of its already issued Shares, and if the already issued Shares have no par value - into a Share capital comprised of  a smaller number of Shares, provided that the proportional holdings of the existing shareholders shall not be retained.

 

For the purpose of executing any such resolution, the Board may settle any difficulty arising as it deems fit, including issuance of Share certificates for fractional Shares or issuance of several Share certificates for several shareholders which shall include fractional Shares.

 

Without derogating from the above generality of the Board’s authority, if the consolidation of the Shares results in fractional Shares, the Board may, subject to an ordinary majority approval of the general meeting of the Company’s shareholders:

 

1)

sell all the fractional Shares, and for that purpose, assign to a trustee on whose name Share certificates including the fractional Shares  shall be issued, who will sell them, and the net proceeds of any such sale, after deducting commissions and other sale related expenses, shall be distributed to those eligible; or

  

2)

issue each shareholder holding fractional Shares due to the consolidation, fully paid Shares of the same class of Shares which existed prior to the consolidation, in such number that would constitute one whole Share, and such issuance shall be deemed to take effect immediately prior to the consolidation; or

 

3)

resolve that shareholders shall not be entitled to receive a consolidated Share due to fractional consolidated Shares, resulting from consolidation of half or less of the number of Shares which consolidation results one whole consolidated Share, and shall be entitled to receive one consolidated Share due to fractional consolidated Shares resulting from of more than half of the number of Shares which consolidation constitutes one whole Share;

 

Where actions under paragraphs (2) and (3) above require the additional issuance of Shares, such Shares may be redeemed in the manner by which preferred Shares may be redeemed. The abovementioned consolidation and division shall not change the rights attached to the Shares so consolidated or divided.

 

B)

Redistribute all or any of its Share capital through the redistribution of all or any of its existing Shares into shares of a lower par value, and where its Shares have no par value, into issued Share capital comprised of a larger number of Shares, provided, however, that the proportional holdings of the existing shareholders is retained.

 

C)	Cancel registered Share capital yet to be issued, provided that the Company did not undertake (conditionally or otherwise), to issue such Share capital.

 

D)

Reduce the Shares in its issued Share capital in such manner that the reduced Shares shall be cancelled and any payment made with respect to their par value shall be registered in the Company’s financial statements as a capital fund which shall be treated as a premium paid for the Shares remaining in the Company’s issued  Share capital.

 

E)	Consolidate any or all of its Share capital into one class of Shares, and the Company may resolve to reimburse any or all of its shareholders for such consolidation, by means of issuing preferred Shares to such shareholders.

 

 

General Meetings of the Company’s Shareholders

 

Article 57:

 

An annual meeting of the Company’s shareholders shall be held once in every calendar year, within a period of not more than fifteen (15) months after the previous annual meeting of the Company’s shareholders. All general meetings of the Company’s shareholders other than those annual meetings shall be referred to as “Extraordinary Meetings”.

 

Article 58:

 

The agenda at the annual meeting of the Company’s shareholders shall include the following matters:

 

A)	a discussion on the Company’s audited financial statements and the Board’s report on the state of the Company’s affairs, which shall be submitted to the general meeting of the Company’s shareholders;

 

B)	appointment of directors;

 

C)	appointment of an auditor and receiving the Board’s report on the auditor’s remuneration;

 

D)	other matters brought for discussion and resolution by the Board.

 

Article 59:

 

For as long as the Company is a Private Company, the Board may convene an Extraordinary Meeting at its discretion and following the request of each of the following:

 

A)	a member of the Board;

 

B)	One or more shareholders, holding at least 10 percent (10%) of the Company’s issued Share capital and at least one percent (1%) of the Company’s voting rights, or one or more shareholders holding at least ten percent (10%) of the Company’s voting rights.

 

Article 60:

 

Notwithstanding the above, if the Company becomes a Public Company, the Board may convene an Extraordinary Meeting pursuant to a Board resolution, and must convene such meeting if request is received from two members of the Board or one-fourth of the then serving members of the Board or one or more shareholders holding at least five percent (5%) of the Company’s issued Share capital and at least one percent (1%) of the Company’s voting rights or one or more shareholders holding at least five percent (5%) of the Company’s voting rights.

 

If the Board is requested to convene an Extraordinary Meeting, it shall so convene it within twenty one (21) days pursuant to such request being submitted to it, at such date resolved in the notice of the Extraordinary Meeting, as provided in Article 63(B) therein, provided that if the Company is a Public Company, such meeting shall not be held later than thirty five (35) days from the date such notice was published, all subject to the provisions of the Law.²

 

Article 61:

 

If the Board does not convene a duly requested Extraordinary Meeting  as stipulated in Articles 59 and 60 thereof, the Person so requesting such meeting to be convened, and in the case of shareholders – any of them holding more than one half of their voting rights, may convene the meeting himself, provided that it shall not be held more than three (3) months after the date upon which such was submitted, and it shall be convened, insofar as possible, in the same manner by which meetings are convened by the Board.

 

² Provisions of this Article herein shall not be in effect for as long as the Company is a Private Company, as such term is defined in the Companies Law.

 

 

Article 62:

 

A)	A general meeting’s agenda shall be determined by the Board and will include the matters for which an Extraordinary Meeting is requested to be convened pursuant to Articles 59 and 60 of these Articles herein, as well as matters requested in accordance with sub-Article (b) below.

 

B)	One or more shareholders holding at least one percent (1%) of the Company’s voting rights may request matters to be included on the agenda by the Board, provided that such matters are suitable for discussion at a general meeting of the Company’s shareholders.

 

C)	A request as mentioned in article b) above shall be submitted to the Company in writing no less than seven (7) days prior to the date on which a notice of the convening of the general meeting of the Company’s shareholders is given, and shall include the language of the proposed resolution.

 

Article 63:

 

A)	If the Company is to become a Public Company, notice of a general meeting of the Company’s shareholders shall be made in accordance with applicable law, and the Company shall not be obligated to provide any other notice of such general meeting of its shareholders to any registered shareholders.

 

B)

Notice of a general meeting of the Company’s shareholders shall include the type of meeting and the place, date and time at which such meeting shall convene and shall further include the agenda, a summary of the proposed resolutions, the majority required for the approval of the proposed resolutions and the determining date for the purpose of eligibility to vote in the such general meeting. If a differed general meeting is adjourned at a different day, time or place in the following week, the notice must specify the details of such adjourned meeting.

 

Article 64:

 

Notwithstanding the above, for as long as the Company is a Private Company: (a) a notice of a general meeting of the Company’s shareholders shall be delivered to all those eligible to participate in the meeting no later than seventy two (72) hours prior to the date of the meeting, provided that such notice shall not be delivered earlier than 45 days prior to the date of meeting; (b) the general meeting of the Company’s shareholders may be convened on a shorter notice, if so approved by all those eligible to receive such notice. Waiver may be retroactively submitted in writing even after such general meeting was convened.

 

Article 65:

 

The general meeting of the Company’s shareholders may assume powers conferred on another organ. Where the general meeting assumed powers conferred by law on the Board, the shareholders shall be liable and bound by the liability and duties of Directors regarding the exercise of such powers, mutatis mutandis, including, among other things and taking into consideration their holdings in the Company, their participation in the general meeting and the manner in which they vote, the provisions of Chapters 3, 4 and 5 of Part Six of the Companies Law.

 

Article 66:

 

A bona fide flaw in convening the general meeting of the Company’s shareholders or in the conduct thereof, including a flaw deriving from non-compliance with a provision or condition stipulated by the Law or these Articles herein, including in connection with the manner by which the meeting is to convene or to be conducted, shall not cause any resolutions adopted by such general meeting to be invalid and shall not impair discussions held thereat, subject to the provisions of any law.

 

 

Voting Rights

 

Article 67:

 

A shareholder wishing to vote at a general meeting of the Company’s shareholders shall provide evidence of his ownership in his Shares, as required by any applicable law.

 

Article 68:

 

If, and when, the Company becomes a Public Company, it may set an effective date for the purpose of eligibility to participate and vote at the general meeting of its shareholders, provided that such date will not be less than twenty one (21) days or will exceed four (4) days prior to the date such general meeting is to  convene.

 

Article 69:

 

A Shareholder who is a minor or shareholder who is legally incapacitated by a court of competent jurisdiction may exercise his right to vote by his custodian, and such custodian may vote by proxy.

 

Article 70:

 

Subject to the provisions of any applicable law, where Shares are held jointly, each shareholder so holding the Shares may vote at any meeting, in person or by proxy, in relation to such Shares, as though he were the sole owner of such Shares. If more than one such shareholders attend a meeting, in person or by proxy, the vote shall be made by the joint shareholder whose name appears first in the Register in relation to such Shares, or in an applicable deed or certificate evidencing the ownership of such Shares as determined by the Board for such purpose. Several guardians or administrators of the estate of a deceased registered shareholder shall be deemed as joint shareholders of such Shares for the purposes of this Article herein.

 

Article 71:

 

A Shareholder may vote in the general meeting of the Company’s shareholders in person or by proxy, subject to the conditions stipulated hereunder.

 

Article 72:

 

A corporate body being a shareholder of the Company and entitled to attend and vote at a general meeting of the Company’s shareholders may exercise such rights by authorizing any Person, whether in general or for such specific general meeting, to be present and/or vote on its behalf. Such representative may exercise, on behalf of such corporate body, the rights of the corporate body, as if the corporate body was a single shareholder. Upon the request of the chairman of such general meeting, a reasonable evidence of such authorization and its validity shall be furnished thereto as a requirement for the participation of such representative in such general meeting.

 

It is hereby clarifies that Articles 73 through 77 hereunder with respect to a letter of appointment shall not apply an authorized representative of the corporate body, but shall only apply to its proxy.

 

Article 73:

 

A proxy’s letter of appointment (hereinafter: “Letter of Appointment”) shall be in writing and shall be signed by the appointer or by such other duly authorized Person. If the appointer is a corporate body, the Letter of Appointment shall be in writing and signed by the corporate body’s approved signatory, accompanied by the corporate seal or signed by its authorized representative.

 

Article 74:

 

The Letter of Appointment, or a suitable copy thereof to the Board’s satisfaction, shall be deposited in the Office or in any other place in which the general meeting of the Company’s shareholders is to convene, not less than forty eight (48) hours prior to the commencement of the meeting at which the Person appointed by the Letter of Appointed is to vote. Notwithstanding the aforesaid, the chairman of such meeting may waive such requirement with respect to all the participants in a general meeting and accept a Letter of Appointment upon the commencement of such meeting.

 

 

Article 75:

 

A Shareholder holding more than one Share may appoint more than one proxy, subject to the following provisions:

 

A)	The Letter of Appointment shall specify the class and number of Shares for which it is issued;

 

B)

If the Letter of Appointment specifies a number of Shares higher than the number of Shares held by the relevant shareholder, all Letters of Appointment issued by such shareholder with respect to the excess Shares shall be void, without derogating from the validity of the Letters of Appointment issued with respect to the Shares duly held by such shareholder;

 

C)

If the Letter of Appointment does not specify the number and class of Shares in respect of which it is being issued, such Letter of Appointment shall be deemed to have been given in respect of all the shareholder’s registered Shares as of the date he submitted the Letter of Appointment to the Company or submitted it to the chairman of the general meeting of the Company’s shareholders, as the case may be. If the Letter of Appointment is issued in respect of fewer Shares than the ones held by the shareholder, then the shareholder shall be deemed to have abstained from voting in respect of the remaining Shares held by him and the Letter of Appointment shall be valid only in respect of the number of Shares specified therein.

 

Article 76:

 

The Letter of Appointment shall be drawn up in the following form of wording or in a form of wording as similar thereto as possible:

 

“I ____________, of ____________, as a shareholder of __________ Ltd. (the “Company”), hereby appoint ______________ of _____________ whose identity number is ____________ or in his absence _____________ of  ____________________  whose identity number is _____________ as my proxy, to vote in my name and stead in respect of  ____________number of shares of ______________ class which are held by me, at the annual/Extraordinary Meeting of the Company’s shareholders to be held on the __________  day of __________  year__________  and at any deferred meeting thereof.

 

In witness whereof I have signed this Letter of Appointment in this ___ day of __________. 

 __________

 

Signature”

 

Article 77:

 

Voting by virtue of a Letter of Appointment shall be valid even if prior to such voting the appointer had died or the Letter of Appointment had been cancelled or the Share in respect of which it was given was transferred, unless a written notice regarding such death, cancellation or transfer was received in the Office prior to the respective meeting.

 

Discussions and Adoption of Resolutions in the General Meetings

 

Article 78:

 

Discussions are no to be held unless a quorum is present within half an hour of the time scheduled for the respective meeting. Unless otherwise stipulated by the Companies Law or these Articles herein, a legal quorum is the presence, in person or by proxy, of at least two (2) shareholders holding at least ten percent (10%) of the voting rights in the Company.

 

 

Article 79:

 

If a quorum is not present within half an hour from the time set for the respective meeting’s commencement, the meeting shall be adjourned for the following week, at the same day, time and place, without it being necessary to notify the shareholders of such adjournment, or to another date if such is stated in the notice of the meeting, at which the agenda shall be of the first meeting. If a quorum is not present at the adjourned meeting within half an hour of the time set for its commencement, the adjourned meeting shall then commence at the presence of any number of shareholders (it is hereby clarified that the provisions of this Article 79 are also applicable to meetings convened upon a Shareholder’s request).

 

Article 80:

 

A general meeting chairman shall be appointed at every general meeting of the Company’s shareholders. Such chairman shall be appointed at the commencement of every such general meeting, subject to the presence of the required quorum, by the Company Secretary or by a Shareholder authorized by him for that purpose.

 

Article 81:

 

The chairman of a general meeting of the Company’s shareholders may, with the consent of the respective meeting in which a quorum is present, adjourn the meeting or adjourn the discussion or the adoption of a resolution on a particular matter on the agenda to that time place as resolved by the meeting, and is obliged to so adjourn such meeting, discussion or resolutions at the general meeting’s demand. No matter shall be discussed at an adjourned meeting save for a matter that was on the agenda and which were not discussed or which discussion did not end in the meeting so decided to be adjourned.

 

Article 82:

 

Subject to the provisions of any applicable law, any resolution shall be adopted by a vote in which every Share shall entitle its respective holder to one vote. In case of equal votes, the resolution shall be deemed to have been rejected.

 

Article 83:

 

Resolution in the general meeting of the Company’s shareholders shall be adopted by an ordinary majority, unless otherwise required by Law or these Articles herein.

 

Article 84:

 

In addition to any matters to be resolved by the general meeting of the Company’s shareholders in accordance with the Law and these Articles herein, the following matters shall be resolved by ordinary majority in general meeting of the Company’s shareholders:

 

A)	amending these Articles;

  

B)	exercising the Board’s powers by the general meeting of the Company’s shareholders, if the Board is unable to exercise such powers and the exercise of any of its powers is essential for the Company’s adequate management as stipulated in Section 52(a) of the Companies Law;

 

C)	appointment of the Company’s auditor and the termination of his service;

 

D)	appointment and dismissal of the Company’s directors;

 

E)

reserved;

 

F)	appointment of the Company’s general manager;

 

 

G)	approval of actions and transactions requiring the general meeting of the Company’s shareholders’ approval;

 

H)	increase or reduction of the Companies authorized share capital; and

 

I)

merger.

 

Article 85:

 

Declaration of the chairman of the general meeting of the Company’s shareholder’s that a resolution by the general meeting has been adopted unanimously or in a certain majority or denied, shall constitute evidence prima facie of the minutes of such meeting.

 

Article 86:

 

The Board may, from time to time, determine which of the resolutions of the general meeting of the Company’s shareholders may be adopted by means of voting paper. Unless otherwise determined by the Board and subject to the provisions of the Companies Law and the regulations thereunder, the general meeting of the Company’s shareholders may vote by means of voting paper on the following matters:

 

A)	appointment and removal of Directors;

 

B)	approval of transactions requiring the approval of the general meeting of the Company’s shareholders in accordance with the provisions of Sections 255 and 268 through 275 of the Companies Law;

 

C)	approval of a merger in accordance with Section 320 of the Companies Law;

 

D)	such other matters prescribed by the Minister in accordance with Section 89 of the Companies Law.

 

Article 86A:

 

For as long as the Company is a Private Company, a resolution in writing, signed by all of the Company’s Shareholders, shall be, subject to the provisions of the Law, valid and binding, as any resolution of a duly convened general meeting of the Company’s shareholders in accordance with these Articles herein.

 

Article 86B:

 

For as long as the Company is a Private Company, the Company may hold a general meeting of its shareholders by using any means of communication, provided that all shareholders so participating in the meeting are able hear each other simultaneously.

 

The Board of Directors

 

Article 87:

 

The number of Directors shall be prescribed, from time to time, by an ordinary majority resolution of the general meeting of the Company’s shareholders, or by an ordinary majority resolution of the, provided such number shall not be less than three (3) nor more than twelve (12) Directors (not including external Directors appointed as required under applicable law).

 

Article 88:

 

A)	The Directors shall be appointed by the ordinary majority of the then present shareholders in the annual meeting of the Company’s shareholders. Any Director so appointed shall serve in office until the subsequent annual general meeting of the Company’s shareholders.

 

B)	Director’s term of service shall commence on the date of appointment, but the general meeting of the Company’s shareholders may determine a different date for such commencement of service.

 

 

C)

The general meeting of the Company’s shareholders may resolve, at any time, by an ordinary majority resolution, to remove any Director from office prior to the termination of his respective term of service and it may appoint another Director in his place, provided that the Director is given a reasonable opportunity to state his case before the general meeting.

 

Article 89:

 

A)

Director may, at any time, appoint an alternate director on his behalf (hereinafter:  “Alternate Director”). Person who is not qualified to be appointed as a Director or who is serving as a Director or Alternate Director shall not be appointed to serve as an Alternate Director, unless otherwise permitted by any applicable law. An Alternate Director may be appointed to serve on a committee of the Board, provided that such Alternate Director does not serve as a member of another committee of the Board.

 

B)

For as long as the appointment of the Alternate Director is in effect, the Alternate Director is entitled to receive notices to all of the Board meetings (without such right derogating from the Director’s right to receive such notices) and to participate and vote in every such Board meeting in which the appointing Director is absent.

 

C)	Subject to the provisions of the letter of appointment by which he was appointed, an Alternate Director shall be vested with all of the rights of the appointing Director and shall be deemed a Director for all purposes.

 

D)

Appointing Director may terminate his appointment of an Alternate Director at any time thereafter. The appointment of an Alternate Director shall terminate by delivery of notice regarding the termination of such appointment by the appointing Director to the Company, or by the appointing Director’s resignation, or by termination of service of the appointing Director in any other way.

 

E)	Notice of the appointment or termination of appointment of an Alternate Director must be submitted in writing to the Company.

 

Article 90:

 

Director whose service was terminated may be reappointed to serve as Director.

 

Article 91:

 

Director’s office shall be vacated on the occurrence of any of the following:

 

A)	he resigns or is removed from office, as stipulated in Sections 229 through 231 (inclusive) of the Companies Law.

 

B)	he is convicted in a felony specified in Section 232 of the Companies Law.

 

C)	a competent court orders his termination of service, as stipulated in Section 233 of the Companies Law.

 

D)	he is declared bankrupt, and in the case of a corporation – has declared its voluntary dissolution or was given a dissolution order.

 

E)	upon death.

 

F)	he is declared legally incapacitated.

 

 

Article 92:

 

If a Director’s office becomes vacant, the remaining serving Directors may continue to act in any manner, provided that their number is of the minimal number specified above. If the number of serving Directors is lower than their minimal one, the Board shall not be permitted to act, other than for the purpose of convening a general meeting of the Company’s shareholders for the purpose of appointing additional Directors.

 

Article 93:

 

The Directors may appoint, immediately or of a future date, additional Director(s) to serve until the subsequent annual general meeting of the Company’s shareholders, provided that the number of Directors shall not exceed twelve (12) Directors (not including external Directors).

 

Article 94:

 

Subject to the approvals required by any applicable law, the Directors shall be entitled to remuneration by the Company for their services as Directors. In addition, every Director shall be entitled to reimbursement of his reasonable travel expenses and other expenses related to his participation at the Board’s meetings and the service as a Director.

 

Article 95:

 

If and when so required by any applicable law, not less than 2 external Directors shall serve on the Board, and the provisions stipulated in the Companies Law regarding their qualifications, service and remuneration shall apply.

 

The Board of Directors’ Powers and Duties

 

Article 96:

 

The Board shall set the policy and guidelines for the Company’s operations and shall supervise the performance of the general manager’s position, and shall be vested with residual authority not vested or granted to any other organ.

 

Article 97:

 

Subject to the provisions of the Companies Law, the Board may delegate any of its powers to the general manager or to one of the Board’s committees.

 

Article 98:

 

A)	The Board may resolve by an ordinary majority that powers vested with the general manager shall be transferred to it, for a particular matter or for a particular period of time.

 

B)	Without derogating from the above, the Board may instruct the general manager how to act in a particular matter. Should the general manager fail to follow such instruction, the Board may exercise the power required to execute such instruction in his stead.

 

C)	Should the general manager be unable to exercise his powers, the Board may exercise them in his stead.

  

Board Meetings

 

Article 99:

 

The Board shall convene in accordance with the Company’s needs and not less than once every three (3) months.

 

 

Article 100:

 

The chairman of the Board may convene a meeting of the Board at any time. In addition, any Director may request the Board to convene for the purpose of any matter to be specified.

 

Article 101:

 

A)

Notice of a Board meeting may be delivered  orally, by telephone, in writing (including via e-mail or facsimile) or by telegram, at least twenty four (24) hours prior to the scheduled time of the meeting, or with a shorter prior notice or without notice, if so agreed by all Directors or Alternate Directors (if appointed).

 

B)

Director exiting the borders of Israel (hereinafter: “Absent Director”) who wishes to receive notices during the time of his absence, shall provide the Company corporate secretary with sufficient contact details for such purpose (an Absent Director who provided such contact details as well as any Directors who are present in Israel shall be collectively referred to hereinafter as: “Directors Entitled to Receive Notices”).

 

C)	An Absent Director who did not provide the above contact details, shall not be entitled to receive notices during his absence, unless he requested to deliver the notices to an Alternate Director representing him, who was duly appointed in accordance with these Articles herein.

 

D)	A written memorandum signed by the Company Secretary shall be deemed conclusive evidence of providing notice to the Absent Director which is a Director Entitled to Receive Notices.

 

Article 102:

 

Notice of a Board meeting shall state the time and place of the meeting and reasonable details of the matters to be discussed thereat, pursuant to the agenda.

 

The agenda shall be determined by the chairman of the Board, and shall include such matters so determined by him, as well as any other matter requested from the chairman of the Board to be included, by a Director or the general manager reasonable time prior to the Board meeting.

  

Article 103:

 

The quorum for opening a Board meeting shall be a majority of the Directors Entitled to Receive Notices who are not prohibited from participating and voting in such meeting under any applicable law. The quorum shall be verified at the opening of such meeting.

 

Notwithstanding the above, should the Board convene to resolve termination of the Company’s internal auditor’s service, the quorum shall be the majority of the Board.

 

Article 104:

 

The general meeting of the Company’s Board shall appoint one of the Directors to serve as chairman of the Board. The chairman of the Board shall conduct and administer the Board meetings. Should the chairman of the Board be absent from a Board meeting or should he not wish to conduct and administer such meeting, the Directors present at the meeting shall elect one of them to serve as chairman for such meeting, to conduct and administer it, and to sign the its minutes.

 

Article 105:

 

Board Resolutions shall be adopted by an ordinary majority. Each Director shall have one vote. The chairman of the Board shall not have an additional or casting vote.

 

 

Article 106:

 

Subject to the presence of a due quorum, the Board may exercise all powers and discretion vested in it at the date of meeting, or usually exercised by it, in accordance with these Articles herein.

 

Article 107:

 

The Board may hold meetings using any means of communication, provided that all the participating Directors are able to hear one another at all times.

 

Article 108:

 

The Board may adopt resolutions without actually convening, provided that all Directors Entitled to Receive Notices and those entitled to participate in the discussion and vote have provided their consent for such non–convening for the matter thereof. Should any such meeting not convene, minutes of the resolutions, including the resolution not to convene, shall be prepared, and signed by the chairman of the Board, or shall be drafted by the chairman of the Board and signed by all of the Directors.

 

For the purpose of this Article 108, a “Director’s signature” may be accompanied by his consent, objection or abstention. Instead of a Director’s signature, the chairman of the Board or the Company’s corporate secretary may attach a transcript signed by either of them, specifying such Director’s vote.

 

Article 108A:

 

A resolution adopted without the Board actually convening and signed by the chairman of the Board, provided that all Directors Entitled to Receive Notices and entitled to participate in the discussion and vote on the matter thereof have provided their consent to the above, or a written resolution signed by all Directors Entitled to Receive Notices and entitled to participate in the discussion and vote on the matter thereof, shall be, subject to the provisions of the Law, valid and legally binding as a resolution of a duly convened meeting of the Board in accordance with these Articles herein.

 

Article 109:

 

Subject to the provisions of any applicable law, all acts performed by the Board or pursuant to a Board resolution or by a Board committee or by any Person serving as Director or as a member of a Board committee, shall be valid even if a later defect in the appointment of the Board, the Board committee, the Director, or the committee member is discovered,  or if any or all of them were disqualified from service in their respective positions, as though they were duly nominated for service and have the required skills to serve as Directors or members of the relevant Board committee.

 

Board Committees

 

Article 110:

 

The Board may establish Board committees. Person who is not a member of the Board shall not serve as member of a Board committee to which the Board has delegated any of its powers. Persons who are not Directors may be appointed to serve on a Board Committee designated solely for the purpose of advising and consulting. Subject to the provision of the Companies Law and these Articles herein, the Board may delegate all or any of its powers to a Board committee. Any Board committee shall consist of not less than two (2) Directors.

 

Article 111:

 

Each Board committee must exercise its powers in compliance with all terms and regulations prescribed by the Board. Board committees’ meetings and actions shall comply with the provisions stipulated in these Articled herein relating Board meeting and actions, to the fullest applicable extent, unless otherwise prescribed by the Board.

 

 

Article 112:

 

Board committees shall routinely report to the Board regarding their respective resolutions or recommendations, as prescribed by the Board.

 

Article 113:

 

The Board may cancel any resolution adopted by a Board committee appointed by it. Nevertheless, such cancellation shall not invalidate such resolution by which the Company acted in relation to other Person, who was unaware of the cancellation thereof.

 

All acts made in good faith at a Board meeting or by a Board committee or by any Person acting as a Director shall be valid even if a later defect in the appointment of the Director or such Person serving or acting as such, or if any or all of them were disqualified from service in their respective positions, as though they were duly nominated for service and have the required skills to serve as Directors.

 

The General Manager

 

Article 114:

 

The general manager shall be appointed and dismissed by the general meeting of the Company’s shareholders, which may appoint more than one general manager.

 

Article 115:

 

The general manager shall be responsible for the day-to-day management of the Company’s business within the framework of the policy determined by the Board and subject to its guidelines. The general manager shall have all the management and executive powers of not vested in other organ in accordance with the Law or these Articles herein, and shall be subject to the Board’s supervision.

 

Article 116:

 

A)

The general manager shall notify the chairman of the Board, without delay, of any extraordinary issues material to the Company, and shall provide the Board with reports on such matters, at such times and of such scope as the Board may determine. Should the Company not have an acting chairman of the Board, or should he be unable to exercise his powers, the general manager shall notify or report the aforesaid matters to all members of the Board.

 

B)	The chairman of the Board may, in his own initiative or pursuant to a Board resolution, request the general manager to provide a report on the Company’s businesses.

 

C)	Where a notice or report requires an action by the Board, the chairman of the Board shall convene, without delay, a Board meeting to discuss the notice or the resolution to act as required.

 

The Company’s Office Holders

 

Article 117:

 

The general manager may appoint office holders from time to time (except for Directors and a general manager) for either permanent, temporary or special positions, as he  finds appropriate, and he may terminate the appointment of any of the above officer holder from time to time in his sole discretion.

 

Article 118:

 

The general manager may establish the powers and positions of the officer holders so appointed by him, as well as their respective employment terms, all subject to the provisions of the Companies Law.

 

 

Internal Auditor

 

Article 119:

 

To the extent required by any applicable law, the Board shall appoint an internal auditor in accordance with the recommendation of the audit committee.

 

Article 120:

 

The internal auditor shall examine, among other things, the compliance of the Company’s actions with the provisions of the Law and proper business procedures.

 

Article 121:

 

The internal auditor shall be subject to the chairman of the Board’s supervision.

 

Article 122:

 

The internal auditor shall submit to the Board a proposal for an annual or periodic work program for approval. The Board shall approve such proposal or any modifications it considers necessary.

 

The Accounting Auditor

 

Article 123:

 

One or more accounting auditors shall be appointed by every annual general meeting of the Company’s shareholders, and shall hold office until the end of the following annual general meeting. Notwithstanding the above, accounting auditor may be appointed for a longer period, which shall exceed the end of the third annual general meeting following the annual general meeting in which the auditor was appointed, by an ordinary majority resolution of the general meeting.

 

Article 124:

 

The general meeting of the Company’s shareholders may terminate the accounting auditor’s service, subject to, and in accordance with, the provisions of the Companies Law.

 

Article 125:

 

The accounting auditor’s compensation for performing the audit shall be determined by the Board, which shall report such compensation to the annual general meeting of the Company’s shareholders.

 

Article 126:

 

The accounting auditor’s compensation for additional services which are not related to auditing shall be determined by the Board, which shall report such compensation, including payments and other of the Company’s obligations to the auditor, to every annual general meeting of the Company’s shareholders; the term “auditor” shall include, for the purposes of this Article 126 herein, a partner, an employee related to the accounting auditor and a corporate body under his control.

 

Validity of Acts and Approval of Non-Extraordinary Transactions

 

Article 127:

 

Subject to the provisions of any applicable law, all acts done by the Board or by a Board committee or by any Person acting as a Director or as a member of a Board committee or by the general manager, as the case may be – shall be valid even if later discovered that there was a defect in the appointment of the Board, the Board committee, the Director, the committee member or the general manager, as the case may be, or that any such officer holders does not qualify to serve in his position.

 

 

Article 128:

 

Should an office holder have a personal interest in any of the Company’s transactions, such office holder shall disclose to the Company, reasonable time prior to the discussion on the approval of such transaction, information regarding the nature of his personal interest, including any relevant fact or document.

 

Article 129:

 

A Company’s transaction with an office holder or a Company’s transaction with another Person in which an office holder has personal interest, which is not an extraordinary transaction, shall be approved by the Board. The Board may approve such transaction either by providing a general approval for a particular type of transactions or by approving a particular transaction.

 

Article 130:

 

The Company’s extraordinary transaction with an office holder, the Company’s engagement with a Director of the Company regarding the terms and conditions of his service and/or employment in other positions, the Company’s extraordinary transaction with one of its controlling shareholders, the Company’s extraordinary transaction with another Person in which one of the Company’s office holders or  controlling shareholders have  personal interest and the Company’s engagement with one of its controlling shareholders or any of his relatives (if he also serves as one of the Company’s office holders  – regarding his terms and conditions of services and if he is an employee of the Company who does not serve as an office holder – regarding his terms and conditions of employment), shall be approved in accordance with any applicable law.

 

Distribution of Dividends

 

Article 131:

 

Subject to the provisions of the Companies Law, the Board may resolve to distribute dividends.

 

Dividends and Bonus Shares

 

Article 132:

 

Subject to any special or limited rights attached to any classes of Shares, dividend or bonus shares shall be distributed relatively to the paid par value of the Shares, without consideration to any premium paid on such Shares.

 

Article 133:

 

The Company may set determining date for determining the right to receive dividends, provided that such date shall be later than the date on which the dividend distribution was approved.

 

Article 134:

 

The Board may delay the distribution of any dividend, bonus, benefit, rights or other amounts to be paid on account of Shares which are subject to the Company’s lien, and to use any such amount or exercise any such bonus, benefit or right and to use the consideration received upon such exercise for payment of any debts owed by the holder of such Shares on which the has lien.

 

Article 135:

 

The transfer of Shares shall not provide the transferee with the right to participate in the distribution of dividends or any other distribution declared after such transfer and prior to the registration of the transfer with the Register. Notwithstanding the above, where the transfer of Shares is subject to the Board’s approval, the date of registration of the transfer with the Register shall be replaced by the date of such approval.

 

 

Article 136:

 

Dividends unclaimed within seven (7) years from the date of approving their distribution shall be forfeited and shall be reverted to the Company.

  

Article 137:

 

Unless other instructions were provided, any dividend may be paid by check or payment order which shall be sent via mail to the registered address of the Person entitled to receive such dividend, and if there are two or more joint registered owners, to the registered shareholder whose name appears first in the Register. Any such check shall be in favor of the shareholder entitled to receive it, and its payment shall be used as release of any payments paid in connection with such Share.

 

Article 138:

 

The Board may withhold from any dividend or other distribution in connection with a shareholder’s Shares, whether such shareholder is the sole holder of such Shares or holds them jointly with others, any amounts due from the shareholder, on account of payment demand or other similar demands.

 

Article 139:

 

The Board may, in accordance with its discretion, set aside to special funds any amounts from its profits or from the revaluation of its assets, or from the proportional share in the revaluation of its affiliated companies’ assets, and to determine the purpose of such funds.

 

Merger

 

Article 140:

 

A merger shall be approved by an ordinary majority of the general meeting of the Company’s shareholders, unless otherwise stipulated by the Law.

 

Minutes

 

Article 141:

 

The Company shall maintain a register of the minutes of the general meetings of its shareholders, class meetings, Board meetings and Board committees meetings. All minutes shall be archived at the Office or at such other address in Israel, of which the Company has notified the Registrar of Companies, for the period of seven (7) years following the date of any such meetings.

 

Article 142:

 

The abovementioned minutes shall include the following:

 

A)	the date and location in which the meeting was held;

 

B)	the names of participants, and if they are representatives of an Alternate Directors, the names of their respective appointers, and in meetings of the Company’s shareholders – the number and class of the Shares held by the voters;

 

C)	the summary of the discussions held and the resolutions adopted;

 

 

D)	directives and instructions provided by the Board to its committees or general manager; and

 

E)	documents, reports, approvals, opinions and other information presented, discussed or attached.

 

Article 143:

 

Minutes of the general meeting of the Company’s shareholders signed by the chairman of the general meeting shall constitute a prima facie evidence of its content. Minutes of the meetings of the Board or Board committees, approved and signed by the Director chairing such meeting shall constitute a prima facie evidence of its content.

 

Register of Shareholders

 

Article 144:

 

The company shall maintain a Register which shall include the following:

 

A)	With respect to Shares registered under a Person’s name –

 

1)

the name, identity number and address of the each shareholder, as provided to the Company;

 

2)

the number of Shares and their respective classes held by each shareholder, their par value and if any consideration was yet to be paid – such unpaid consideration;

 

3)

the issuing date of the Shares or the transfer dates to shareholders, as the case may be; and

 

4)

where the Shares include serial numbers, the Company shall note next to the name of each shareholder the numbers of such Shares registered under such shareholder’s name.

 

B)	With respect to bearer shares –

 

1)

note indicating issuance of bearer Shares, their issuance date and the number of bearer Shares issued;

 

2)

the numbering of the bearer Share and of the Share certificates;

 

If a share deed was cancelled following the Shareholder’s request, such Shareholder’s name and number of Shares registered under his name shall be registered in the Register.

 

C)	With respect to Dormant Shares - also their numbers and the date on which they became dormant, all to the Company’s knowledge.

 

D)	With respect to Shares which do not confer any voting rights in accordance with Section 309(b) or 333(b) of the Companies Law - also include their numbers and the date on which they became Shares which do not confer any voting rights, all to the Company’s knowledge.

 

E)	All such other details which required or permitted under the Companies Law or these Articles herein.

 

Article 145:

 

The Company may maintain an additional Register outside of Israel.

 

Article 146:

 

The Register shall be deemed as a prima facie evidence of its contents. In the event of contradiction between the information provided in the Register and the one provided in a Share certificate, the evidentiary weight of the Register shall prevail over that of the Share certificate.

 

 

Notices

 

Article 147:

 

Notice of a general meeting of the Company’s shareholders shall be provided in accordance with Article 63 above.

 

Article 148:

 

A)

Notices which the Company is required to deliver to its registered shareholders in accordance with any applicable law, subject to Article 63 above, shall be delivered to such shareholders by personal delivery shall be delivered to the last addresses they provided the Company. Delivery by mail shall be deemed duly delivered – If delivered to addresses in Israel within seventy two (72) hours from delivery, and to an address outside of Israel, within ten (10) days from delivery.

 

B)	The Company may deliver notices to the registered shareholders, whether they hold Shares registered under their names or bearer Shares, in accordance with applicable law as stipulated in Article 63 above.

 

Sub-section (a) above shall not apply in such cases where the Company shall send notices in accordance with this subsection (b), unless otherwise required by any applicable law.

 

C)	Nothing in sub-Sections (a) and (b) above shall impose upon the Company any obligation to provide notices to shareholders who did not provide it with their addresses in Israel.

 

Article 149:

 

The following Shareholders shall be deemed to have not provided the Company with a mail delivery address in Israel:

 

A)	Shareholder who failed to confirm the receipt of a registered mail sent to the address he provided the Company with requesting such confirmation or an update of a new address, within thirty (30) days from the date the mail was sent.

 

B)	Shareholder whose been sent a registered mail by the Company which was returned to the Company by the postal services or where the postal services sent the Company a notice that such shareholder no longer resides in that address, or any similar notice.

 

Article 150:

 

Where Shares are jointly held, the Company may duly send a notice by sending it to the shareholder whose name is registered first in the Register.

 

Article 151:

 

Any document or notice sent to a shareholder in accordance with the provisions of these Articles herein shall be deemed to have been duly sent despite the departure, bankruptcy or winding up of such shareholder (whether the Company was aware of or not), so long as no other Person was registered as the holder of his Shares, and such delivery shall be deemed for all purposes as adequate with respect to any Person interested in such Shares.

 

 

Winding Up and Liquidation

 

Article 152:

 

Should the Company be wound up and liquidated, either voluntarily or otherwise, the following shall apply, unless otherwise provided in these Articles herein or in the terms and conditions of any Share issued:

 

A)	The liquidator shall first use all of the Company’s assets to discharge its obligations (the Company’s remaining assets following such discharge of all its obligations shall be referred to hereinafter as the “Remaining Assets”).

 

B)	Subject to special rights attached to Shares, the liquidator shall distribute all Remaining Assets amongst the shareholders on a pro rata basis to the par value of their respective Shares.

 

C)

Pursuant to an ordinary majority resolution of the general meeting of the Company’s shareholders, the liquidator may distribute the Remaining Assets or any part thereof amongst the shareholders in specie or transfer any part of them to a trustee who shall hold them for the benefit of the shareholders, as the liquidator deems appropriate.

 

Exemption of Liability

 

Article 153:

 

A)	The Company may exempt an office holder in advance from all or any of his liabilities for damage resulting from breach of his duty of care to it.

 

B)	Notwithstanding the above, the Company may not exempt a Director in advance for his liability for a breach of the duty of care in distribution, as such term is defined in the Companies Law.

 

Insurance

 

Article 154:

 

The Company may enter into an insurance agreement for the insurance of office holders’ liability, in whole or in part, for an obligation imposed upon him in resulting from an act performed in his capacity as an office holder, in any of the following cases:

 

A)	a breach of the duty of care to the Company or to another Person;

 

B)	a breach of the fiduciary duty to the Company, provided that the office holder acted in good faith and had reasonable basis to believe that the act would benefit the Company;

 

C)	a monetary obligation imposed on the office holder in favor of another Person;

 

D)	a payment imposed on the office holder in connection with an Administrative Enforcement Procedure, including reasonable litigation expenses and attorney’s fees; or

 

E)	any other insurable act in accordance with the provisions of the Companies Law.

 

Indemnity

 

Article 155:

 

Subject to the provisions of the Companies Law, the Company may indemnify an office holder for any of the following liabilities and expenses he incurred resulting from an act performed in his capacity as an office holder:

 

A)	a monetary obligation imposed on him in favor of another Person pursuant to a judgment, including a settlement or arbitrator’s award approved by court;

 

 

B)

reasonable litigation expenses, including attorney’s fees, incurred by the office holder pursuant to an investigation or proceeding conducted against him by an competent authority, and which concluded without a criminal indictment being filed against him and without a monetary fine being imposed on him as an alternative to a criminal proceeding, and which does not require proof of criminal thought; in this sub-Article:

 

conclusion of a proceeding without a criminal indictment being filed in a matter in which a criminal investigation has been commenced – shall mean the closing of a file in accordance with Section 62 of the Criminal Procedure Law (Consolidated Version) 5742-1982 (hereinafter in this sub-Article: the “Criminal Procedure Law”), or the stay of proceedings by the Attorney–General in accordance with Section 231 of the Criminal Procedure Law;

 

“Monetary liability as a substitute for legal proceedings” – a monetary liability that has been imposed by any applicable law as a substitute for a legal proceeding, including an administrative fine pursuant to the Administrative Offences Law, 5746-1985, a fine for an offence that has been determined as a finable offence pursuant to the provisions of the Criminal Procedure Law, a financial sanction or penalty;

 

C)

reasonable litigation expenses, including attorney’s fees, incurred by the office holder or which he is ordered to pay by a court in proceedings filed against him by the Company or on its behalf or by another Person, or in a criminal indictment of which he is acquitted, or in a criminal indictment in which he is convicted of an offence not requiring proof of criminal thought or in an Administrative Enforcement Procedure conducted against him;

 

D)	a payment imposed on the office holder in favor of an injured party in connection with an Administrative Enforcement Procedure;

 

E)	any other liability or expense for which it is or shall be permitted to indemnify an office holder in accordance with the Companies Law.

 

Article 156:

 

The Company may indemnify an office holder retroactively, and it may undertake in advance to indemnify an office holder, or to indemnify him retroactively, as stipulated in Article 155(A) above, for a liability or expense imposed on him in resulting from an act performed in his capacity as an office holder, provided that the undertaking shall be limited to events which in the Board’s opinion are to be expected given the Company’s  activities at the time the indemnity undertaking is given, as well as the reasonable amounts or criteria as the Board so determined to be expected given the Company’s activities when the indemnity is given as well as the amount and the criteria that the board of directors determined as reasonable in the circumstances of the case, and it may undertake o indemnify him in advance as stipulated in Article 155 (B)-(E) above.

  

Article 157:

 

In no case shall the total accumulated sum of indemnity to be paid by the Company (in addition to such sums received from the insurance company, if received, for Directors and officer holders’ insurance purchased by the Company) to all office holders, in accordance with all letters of indemnity provided to them by the Company, exceed 25% of the Company’s equity in accordance with the Company’s most recent financial reports as of the indemnity payment date.

 

Signatory Rights

 

Article 158:

 

A)	The signature of any Person duly authorized by the Board from time to time, alone ortogether with others, in general or for a particular matter, accompanied by the Company’s seal or printed name, shall bind the Company.

 

B)	The Board may determine separate signatory rights with regards to the Company’s different operations and with regards to sums for which such Persons are authorized to sign.

 

Amendment to these Articles of Association

 

Article 159:

 

The Company may amend these Articles herein by an ordinary majority resolution adopted by the general meeting of the Company’s shareholders.

 

 

Exhibit 23.1

 

  

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the incorporation by reference in this Registration Statement on Form F-1 of Medigus Ltd. of our report dated March 22, 2018 relating to the financial statements, which appears in Medigus Ltd.’s Annual Report on Form 20-F for the year ended December 31, 2017. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

 

 

 

 

 

 

 

 

Tel-Aviv, Israel	/s/ Kesselman & Kesselman
July 16, 2018	Certified Public Accountants (Isr.)
	A member firm of PricewaterhouseCoopers International Limited

 

 

 

 

 

Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel,

P.O Box 50005 Tel-Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il