Incredimail 2009 Annual Report Download - page 22

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A small number of existing shareholders hold a significant percentage of our outstanding ordinary shares and can exercise significant
influence over our actions.
As of March 24, 2010, our directors and officers beneficially owned (including shares issuable upon exercise of options exercisable
within 60 days of such date) approximately 21.6% of our outstanding ordinary shares in the aggregate. The interests of these shareholders may
differ from your interests. These shareholders, acting together, could exercise significant influence over our operations and business strategy and
will have sufficient voting power to influence all matters requiring approval by our shareholders, including the ability to elect or remove
directors, to approve or reject mergers or other business combination transactions, the raising of future capital and the amendment of our articles
of association, which govern the rights attached to our ordinary shares. In addition, this concentration of ownership may delay, prevent or deter a
change in control, or deprive you of a possible premium for your ordinary shares as part of a sale of our Company.
The rights and responsibilities of our shareholders are governed by Israeli law and differ in some respects from the rights and
responsibilities of shareholders under U.S. law.
We are incorporated under Israeli law. The rights and responsibilities of holders of our ordinary shares are governed by our
memorandum of association, our articles of association and by Israeli law. These rights and responsibilities differ in some respects from the
rights and responsibilities of shareholders in typical U.S. corporations. See "Item 16.G Corporate Governance." In particular, a shareholder of an
Israeli company has a duty to act in good faith toward the company and other shareholders and to refrain from abusing his power in the
company, including, among other things, in voting at the general meeting of shareholders on certain matters. See “
Item 10.B Memorandum and
Articles of Association — Approval of Related Party Transactions”
for additional information concerning this duty. Our shareholders generally
may find it difficult to comply with the provisions of Israeli law.
Provisions of our articles of association and Israeli law may delay, prevent or make difficult an acquisition of our Company, which could
prevent a change of control and, therefore, depress the price of our shares.
Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special
approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types
of transactions. In addition, our articles of association contain provisions that may make it more difficult to acquire our Company, such as
provisions establishing a classified board. Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to some
of our shareholders. See “Item 10.B Memorandum and Articles of Association — Approval of Related Party Transactions” and “Item 10.E
–
Taxation — Israeli Taxation” for additional discussion about some anti-takeover effects of Israeli law.
These provisions of Israeli law may delay, prevent or make difficult an acquisition of our Company, which could prevent a change of
control and therefore depress the price of our shares.
Future sales of our ordinary shares could reduce our stock price.
Sales by shareholders of substantial amounts of our ordinary shares, or the perception that these sales may occur in the future, could
materially and adversely affect the market price of our ordinary shares. In addition, our executive officers, directors and certain large
shareholders are no longer subject to contractual restrictions on the sale by them of shares, resulting in a substantial number of shares held by
them or issuable upon exercise of options currently eligible for sale in the public market. Furthermore, the market price of our ordinary shares
could drop significantly if our executive officers, directors, or certain large shareholders sell their shares, or are perceived by the market as
intending to sell them.
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