Incredimail 2008 Annual Report Download - page 56

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Under the Israeli Companies Law, a company may obtain insurance for an office holder against liabilities incurred in his or her capacity as an
office holder, if and to the extent provided for in its articles of association. These liabilities include a breach of duty of care to the company or a
third-party, a breach of duty of loyalty and any monetary liability imposed on the office holder in favor of a third-party.
A company may, in advance only, exculpate an office holder for a breach of the duty of care. However, a company may not so exculpate an
office holder for a breach of the duty of care in connection with a distribution of dividends or a repurchase of the company’s securities. A
company may not exculpate an office holder from a breach of the duty of loyalty towards the company.
Under the Israeli Companies Law, however, an Israeli company may only indemnify or insure an office holder against a breach of duty of
loyalty to the extent that the office holder acted in good faith and had reasonable grounds to assume that the action would not prejudice the
company. In addition, an Israeli company may not indemnify, insure or exculpate an office holder against a breach of duty of care if committed
intentionally or recklessly, or an action committed with the intent to derive an unlawful personal gain, or for a fine or forfeit levied against the
office holder in connection with a criminal offense.
Our board of directors and shareholders have resolved to indemnify our directors and our Chief Financial Officer to the extent permitted by
law and by our articles of association for liabilities not covered by insurance and that are of certain enumerated events, subject to an aggregate
sum equal to 50.0% of the shareholders equity as set forth in the financial report of the preceding year to which a claim for indemnification is
made.
Nasdaq Marketplace Rules and Home Country Practices
In accordance with Israeli law and practice and subject to the exemption set forth in Rule 4350(a)(1) of the NASDAQ Marketplace Rules, we
follow the provisions of the Israeli Companies Law – 1999, rather than the requirements of Marketplace Rule 4350 with respect to the following
requirements:
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company’s behalf or by a third-party, or in connection with criminal proceedings in which the office holder was acquitted, or as a
result of a conviction for a crime that does not require proof of criminal intent.
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Distribution of annual and quarterly reports to shareholders – Under Israeli law we are not required to distribute annual and
quarterly reports directly to shareholders and the generally accepted business practice in Israel is not to distribute such reports to
shareholders. We do however make our audited financial statements available to our shareholders at the Company’s offices and to
mail such reports to shareholders upon request. IncrediMail also files its annual reports with the SEC. As a foreign private issuer,
we are generally exempt from the SEC
’
s proxy solicitation rules.
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Quorum – Under Israeli law a company is entitled to determine in its articles of association the number of shareholders and
percentage of holdings required for a quorum at a shareholders meeting. Our Articles of Association provide that a quorum of two
or more shareholders holding at least 33.3% of the voting rights in person or by proxy is required for commencement of business at
a general meeting. However, the quorum set forth in our Articles of Association with respect to an adjourned meeting, consists of
two or more shareholders in person or by proxy.
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Independence of Directors – Our board contains two independent directors in accordance with the provisions contained in Sections
239-249 of the Israeli Companies Law – 1999 and Rule 10A-
3 of the general rules and regulations promulgated under the Securities
Act of 1933, rather than a majority of independent directors. Israeli law does not require, nor do our independent directors conduct,
regularly scheduled meetings at which only they are present.
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Audit Committee – Our audit committee complies with all of the requirements under Israeli law, and is composed of two
independent directors, which are all of our independent directors, and one other director. Consistent with Israeli law, the
independent auditors are elected at a meeting of shareholders instead of being appointed by the audit committee.
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Nomination of our Directors
– With the exception of our independent directors, our directors are elected for terms of one year or
until the following annual meeting, by a general meeting of our shareholders. The nominations for director which are presented to
our shareholders are generally made by our directors but may be made by one or more of our shareholders. However, any
shareholder or shareholders holding at least 5% of the voting rights in our issued share capital may nominate one or more persons
for election as directors at a general meeting only if a written notice of such shareholder’s intent to make such nomination or
nominations has been given to our secretary and each such notice sets forth all the details and information as required to be
provided under our articles of association.