Incredimail 2011 Annual Report Download - page 71

C. MATERIAL CONTRACTS
Search revenues powered by Google’s AdSense for Search program contribute significantly to the Company’
s results. In 2011 we obtained approximately
72% of our revenues from this venue. On July 1, 2008, we entered into an agreement with Google regarding our participation in Google's AdSense program, which
allows us to receive a portion of the amount paid to Google by advertisers for the activity performed through the Company's applications. Since then this agreement
has been amended and extended numerous times. Most recently, we signed an agreement with Google which was effective as of January 1, 2011 through January 31,
2013. Although, the agreement may be terminated by either side after one year, neither side exercised this right to date. Google also has other limited termination
rights.
On July 27
th
2011, we signed an Agreement and Plan of Merger with Smilebox Inc., Andrew Wright and Shareholders Representative LLC (the “
Acquisition
Agreement”),
according to which we have purchased 100% of the issued and outstanding equity of Smilebox Inc. The closing of that transaction occurred on August
31, 2011. Following the closing, Smilebox Inc. became a wholly owned subsidiary of Perion Network Ltd., through its Delaware Subsidiary.
In September 2011, we signed agreements with both Bank Leumi Le-
Israel and First International Bank of Israel, to secure a credit facility for up to USD 20
million of financing. The credit facility is comprised of USD 12 million provided by Bank Leumi Le-
Israel, and USD 8 million provided by First International Bank
of Israel. The repayment of the debt is structured over three to five years respectively, and we have an option for early repayment.
The employment agreements with our principal officers are described under "Item 6.C Board Practices — Employment Agreements".
D. EXCHANGE CONTROLS
Non-
residents of Israel who hold our ordinary shares are able to receive any dividends, and any amounts payable upon the dissolution, liquidation and
winding up of our affairs, freely repatriable in non-
Israeli currency at the rate of exchange prevailing at the time of conversion. However, Israeli income tax is required
to have been paid or withheld on these amounts. In addition, the statutory framework for the potential imposition of exchange controls has not been eliminated, and
may be restored at any time by administrative action.
E. TAXATION
The following is a general summary only and should not be considered as income tax advice or relied upon for tax planning purposes.
ISRAELI TAXATION
THE FOLLOWING DESCRIPTION IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING
TO THE OWNERSHIP OR DISPOSITION OF OUR ORDINARY SHARES. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR CONCERNING THE
TAX CONSEQUENCES OF YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF
ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION.
The following is a summary of the material Israeli tax laws applicable to us, and some Israeli Government programs benefiting us. This section also contains
a discussion of some Israeli tax consequences to persons acquiring our ordinary shares. This summary does not discuss all the acts of Israeli tax law that may be
relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law.
Examples of this kind of investor include residents of Israel or traders in securities who are subject to special tax regimes not covered in this discussion. Since some
parts of this discussion are based on new tax legislation that has not yet been subject to judicial or administrative interpretation, we cannot assure you that the
appropriate tax authorities or the courts will accept the views expressed in this discussion.
The discussion below should not be construed as legal or professional tax advice and does not cover all possible tax considerations. Potential investors are
urged to consult their own tax advisors as to the Israeli or other tax consequences of the purchase, ownership and disposition of our ordinary shares, including, in
particular, the effect of any foreign, state or local taxes.
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