Incredimail 2008 Annual Report Download - page 49

Generally, Affiliated Transactions which are “extraordinary transactions” (as such term is defined in the Companies Law), must be approved
by a majority of our disinterested directors; nevertheless under Israeli law, under certain circumstances, such transactions (i) must be approved by
the audit committee and the board of directors and, in certain circumstances, the shareholders; or (ii) may be approved by a simple majority of the
board (and by a simple majority of the audit committee if required), and interested directors may participate in the deliberations and the voting
with respect to such transactions if the majority of the members of the board (or the audit committee, if such approval is required) have a personal
interest in the approval of the transaction; provided that in such circumstances the approval of such Affiliated Transaction shall also require the
approval of the shareholders.
See “Item 10.B Memorandum and Articles of Association – Approval of Related Party Transactions” for a discussion of the requirements of
Israeli law regarding special approvals for transactions involving directors, officers or controlling shareholders.
On July 17, 2008, and following approval by our audit committee and board of directors, our shareholders approved a grant to Ms. Tamar
Gottlieb of options to purchase 10,000 Ordinary Shares of the Company, under the following terms: (a) each option shall be exercisable for one
Ordinary Share at an exercise price equal to the closing price of an Ordinary Share on July 17, 2008, as reported by the Nasdaq Global Market;
and (b) the options shall vest in four equal portions on each anniversary of the date of approval of the grant, commencing with the first
anniversary. Any and all other terms and conditions pertaining to the grant of the options hereunder shall be in accordance with, and subject to, the
2003 Israeli Share Option Plan adopted by the Company in 2003 and the Company’s standard Option Agreement. See “Item 6.E Share Ownership
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Employee Benefit Plans – The 2003 Plan” below.
Also on July 17, 2008, following approval by our audit committee and board of directors, our shareholders approved a re-pricing of options
to purchase Ordinary Shares, previously granted to Mr. Yaron Adler, the Company’s President and a member of the board of directors of the
Company, such that the exercise price of any previously granted options that exceeded $3.00 per Ordinary Share were reduced to $3.00 per share.
The Company undertook to re-price Mr. Adler’s options as part of the terms of service of Mr. Yaron Adler as the Company’s President, which
terms were approved at the shareholders meeting of the Company held on April 9, 2008.
On June 2, 2009, we provided notice to our shareholders of an extraordinary general meeting to approve a proposal to elect an external
director of the Company in the place of an external director whose term had expired, and to amend the terms of options granted to the external
directors and the directors of the Company. The meeting is scheduled to be held on July 9, 2009 with such terms as provided in the Notice of
Meeting filed on Form 6-K with the SEC. See Item 4.A – “Recent Developments” for a description of the terms of these amendments.
Not applicable.
Our audited consolidated financial statements for the year ended December 31, 2008 are included in this annual report pursuant to Item 18.
Legal Proceedings
On November 3, 2008, a complaint was filed against the Company in the United States District Court for the Southern District of New York
in a purported class action regarding our IncrediMail Premium product. In the suit, Mark Lucas, on behalf of himself and the purported classes,
seeks injunctive relief, an unspecified amount of damages, plus costs and attorney fees for alleged claims that components of our IncrediMail
Premium product were rendered inoperable by a software update or updates. We believe that the allegations against us are without merit and we
intend to vigorously defend against the plaintiff’s claims. We further believe that the outcome of these claims should not have a significant impact
on the Company’s financial condition.
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Policy on Dividend Distribution
On March 12, 2009 we announced that our board of directors and management determined that the Company’s interest for enhancing
shareholder value is best served by changing our dividend policy and instituting a revised dividend policy whereby at least 50% of annual net
income of the Company will be paid out as a dividend beginning with the net income for 2009. Declaring and issuing the dividend will be subject
to the board’s review of the Company’s financial conditions at the time. See Item 1A – Risk Factors – “Although we have paid dividends in the
past, and we expect to pay certain dividends in the future, our ability to pay dividends may be adversely affected by the risk factors described in
this report; if we fail to pay dividends the return on investment will be limited to the value of our stock.” On March 25, 2009, we announced that
our board of directors had approved a cash dividend of approximately $4.6 million, or $0.50 per share, subject to Israeli court approval and a tax
pre
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ruling from the Israeli Tax Authority as required by Israeli law.
C.
INTERESTS OF EXPERTS AND COUNSEL
ITEM 8.
FINANCIAL INFORMATION
A.
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION