Incredimail 2014 Annual Report Download - page 64

Except as indicated in the footnotes to this table, each shareholder in the table has sole voting and investment power for the shares
shown as beneficially owned by them. Percentage ownership is based on 70,944,168 ordinary shares outstanding as of April 13, 2015.
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(1) Based upon information provided to us by Mr. Erez. Includes options to purchase 3,333 ordinary shares, that are vested or will vest
within 60 days of April 13, 2015.
(2) Includes options and RSUs to purchase 654,320 ordinary shares, that are vested or will vest within 60 days of April 13, 2015.
Employee Benefit Plans
The Incentive Plan, our current equity incentive plan, was initially adopted in 2003, providing certain tax benefits in connection with
share-
based compensation under the tax laws of Israel and the United States. The term of the Incentive Plan will expire on December 9, 2022.
Please also see Note 11 to our Financial Statements for information on the options issued under the Incentive Plan.
Under the Incentive Plan, we may grant to our directors, officers, employees, consultants, advisers, service providers and controlling
shareholders options to purchase our ordinary shares, restricted shares and RSUs. As of December 31, 2014, a total of 12,000,000 ordinary
shares were subject to the Incentive Plan. As of April 13, 2015, RSUs and options to purchase a total of 5,607,421 ordinary shares were
outstanding under our Incentive Plan, of which RSUs and options to purchase a total of 2,038,090 ordinary shares were held by our directors and
officers (16 persons) as a group. The outstanding RSUs have a purchase price of ILS 0.01 per share, and outstanding options are exercisable at
purchase prices which range from $0.34 to $13.54 per share. Any expired or cancelled options are available for reissuance under the Incentive
Plan.
Our Israeli employees and directors may be granted awards under Section 102 ("Section 102") of the Israeli Income Tax Ordinance (the
"Tax Ordinance"), which provides them with beneficial tax treatment, and non-
employees (such as service providers, consultants and advisers)
and controlling shareholders may only be granted awards under another section of the Tax Ordinance, which does not provide for similar tax
benefits. To be eligible for tax benefits under Section 102, the securities must be issued through a trustee, and if held by the trustee for the
minimum required period, the employees and directors are entitled to defer any taxable event with respect to the award until the earlier of (i) the
transfer of securities from the trustee to the employee or director or (ii) the sale of securities to a third party. Our board of directors has resolved
to elect the "Capital Gains Route" (under Section 102) for the grant of awards to Israeli grantees under the Incentive Plan. Based on such
election, and subject to the fulfillment of the conditions of Section 102, under the Capital Gains Route, gains realized from the sale of shares
issued pursuant to the Incentive Plan will generally be taxed at the capital gain rate of 25%, provided the trustee holds the securities for 24
months following the date of grant of the award. To the extent that the market price of the ordinary shares at the time of grant exceeds the
exercise price of the award or if the conditions of Section 102 are not met, tax will be payable at the time of sale at the marginal income tax rate
applicable to the employee or director (up to 50% in 2014). We are not entitled to recognize a deduction for Israeli tax purposes on the capital
gain recognized by the award holder upon the sale of shares pursuant to Section 102. The voting rights of any shares held by the trustee under
Section 102 remain with the trustee.
The Incentive Plan contains a U.S. addendum that provides for the grant of awards to U.S. citizens and resident aliens of the United
States for U.S. tax purposes. Pursuant to the approval of our board of directors and shareholders, stock options granted to U.S. citizens and
resident aliens may be either incentive stock options under the U.S. Internal Revenue Code of 1986, as amended (the "Code") or options that do
not qualify as incentive stock options. Subject to the fulfillment of the conditions of the Code, an incentive stock option may provide tax benefits
to the holder in that it converts ordinary income into income taxed at long-
term capital gain rates and defers the tax until the sale of the
underlying share. In that event, we would not recognize a tax deduction with respect to such capital gain.
Our board of directors has the authority to administer, and to grant awards, under the Incentive Plan. However, the compensation
committee appointed by the board provides recommendations to the board with respect to the administration of the plan. Generally, RSUs and
options granted under the Incentive Plan vest in two or three installments on each anniversary of the date of grant.
See "Item 6.B Compensation" for a description of awards granted under the Incentive Plan to our directors and officers in 2013.
Name
Number of
Ordinary
Shares
Beneficially
Owned
Percentage
of Ordinary
Shares
Outstanding
Dror
Erez (1)
9,365,226
13.2
%
All directors and officers as a group (16 persons) (2)
10,239,136
14.3
%
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