Incredimail 2010 Annual Report Download - page 67

Under the Israeli Companies Law, only if and to the extent provided by its articles of association, a company may indemnify an office
holder against the following liabilities or expenses incurred in his or her capacity as an office holder:
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.
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:
•
any monetary liability whether imposed on him or her in favor of another person pursuant to a judgment, a settlement or an arbitrator
’
s
award approved by a court;
•
reasonable litigation expenses, including attorneys
’
fees, incurred by him or her as a result of an investigation or proceedings instituted
against him or her by an authority empowered to conduct an investigation or proceedings, which are concluded either (i) without the
filing of an indictment against the office holder and without the levying of a monetary obligation in lieu of criminal proceedings upon
the office holder, or (ii) without the filing of an indictment against the office holder but with levying a monetary obligation in
substitute of such criminal proceedings upon the office holder for a crime that does not require proof of criminal intent; and
•
reasonable litigation expenses, including attorneys
’
fees, in proceedings instituted against him or her by the company, on the
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.
• 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 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.
• 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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