Incredimail 2013 Annual Report Download - page 27

As a foreign private issuer whose shares are listed on NASDAQ, we follow certain home country corporate governance practices instead
of certain NASDAQ requirements.
As a foreign private issuer whose shares are listed on NASDAQ, we are permitted to follow certain home country corporate governance
practices instead of certain requirements contained in the NASDAQ listing rules. We follow the requirements of the Companies Law in Israel,
rather than comply with the NASDAQ requirements, in certain matters, including with respect to the quorum for shareholder meetings, sending
annual reports to shareholders, and shareholder approval with respect to certain issuances of securities. See "Item 16.G –
Corporate Governance"
in this Annual Report for a more complete discussion of the NASDAQ Listing Rules and the home country practices we follow. As a foreign
private issuer listed on NASDAQ, we may also elect in the future to follow home country practice with regard to other matters as
well. Accordingly, our shareholders may not be afforded the same protection as provided under NASDAQ’
s corporate governance rules to
shareholders of U.S. domestic companies.
Provisions of our articles of association and Israeli law may delay, prevent or make an acquisition of our Company difficult, 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.
At the closing of the ClientConnect Acquisition on January 2, 2014, we issued 54.75 million of our ordinary shares to the
ClientConnect shareholders and granted options to purchase 2.82 million of our ordinary shares to the ClientConnect employees. The ordinary
shares were issued pursuant to an exception from registration under the Securities Act and are not subject to any resale restrictions under U.S.
law, except for the volume limitations under Rule 144 applicable to our affiliates. Such shareholders are entitled to registration rights, as
described in Item 10.C "Material Contracts—Agreements Relating to the ClientConnect Acquisition—
Registration Rights Undertaking". While
the resale of such ordinary shares are subject to the Contractual Lock-up, such lock-
up restrictions could be relaxed in certain circumstances, as
described in Item 10.C "Material Contracts—Agreements Relating to the ClientConnect Acquisition—Lock-up Arrangements". The Tax Lock-
up applicable to our three largest individual shareholders, as described in Item 10.C "Material Contracts—
Agreements Relating to the
ClientConnect Acquisition—Tax-related Restrictions", might be insufficient to protect the market price of our ordinary shares.
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. 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.
Our ordinary shares are traded on more than one market and this may result in price variations.
Our ordinary shares are traded on the NASDAQ Global Select Market and on the TASE. Trading in our ordinary shares on these
markets is effected in different currencies (U.S. dollars on NASDAQ and NIS on the TASE) and at different times (resulting from different time
zones, different trading days and different public holidays in the United States and Israel). Consequently, the trading prices of our ordinary
shares on these two markets often differ, resulting from the factors described above as well as differences in exchange rates and from political
events and economic conditions in the United States and Israel. Any decrease in the trading price of our ordinary shares on one of these markets
could cause a decrease in the trading price of our ordinary shares on the other market.
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