Incredimail 2014 Annual Report Download - page 75

Under the 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.
We have purchased liability insurance and entered into indemnification and exculpation agreements for the benefit of our office holders
in accordance with the Companies Law and our articles of association.
C. MATERIAL CONTRACTS
Search Services Agreement with Microsoft Online Inc.
On August 1, 2014, we announced the signing of a three-
year agreement with Microsoft, extending our existing partnership, starting
January 1, 2015 through December 31, 2017. Upon mutual agreement, the agreement may be renewed for 2018, as well. The agreement includes
desktop and tablet distribution with limited exclusivity in the United States, as well as mobile distribution. Either party may terminate the
agreement due to the other party’s breach of the agreement. In addition, Microsoft may terminate the agreement upon one year’
s prior written
notice, if Microsoft decides to shut down the Bing site.
Agreements Relating to the ClientConnect Acquisition
Share Purchase Agreement
On September 16, 2013, we entered into a Share Purchase Agreement among Perion, Conduit Ltd. and ClientConnect Ltd. providing for
our acquisition of all the outstanding shares of ClientConnect in exchange for our ordinary shares. On the same date, Conduit and ClientConnect
entered into a Split Agreement pursuant to which, on December 31, 2013, the entire activities and operations, and related assets and liabilities, of
the ClientConnect business were transferred to ClientConnect on a cash-free and debt-
free basis and the Conduit shareholders became the
shareholders of ClientConnect in proportion to their ownership of Conduit. Upon the consummation of the ClientConnect Acquisition, which
took place on January 2, 2014, each ClientConnect ordinary share was exchanged for approximately 0.2387 of our ordinary shares, as a result of
which ClientConnect became a wholly owned subsidiary of ours. In addition, we granted options to purchase our ordinary shares to
ClientConnect employees in exchange for their options to purchase ClientConnect shares that were issued to them upon the consummation of the
Conduit Split as a roll-
over of their then existing options to purchase ordinary shares of Conduit. Accordingly, 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. On November 18, 2013, our shareholders approved the ClientConnect Acquisition and certain related matters, including the increase
of our authorized share capital from 40 million ordinary shares to 120 million ordinary shares and the election of Dror Erez and Roy Gen to our
Board of Directors.
Lock
-up Arrangements
Pursuant to said Share Purchase Agreement, the former ClientConnect shareholders are subject to lock-
up arrangements with respect to
the ordinary shares issued to them in consideration for the ClientConnect Acquisition (the "Contractual Lock-
up") pursuant to which each of
them were not permitted to sell, offer to sell, grant any option to purchase or otherwise transfer or dispose of (each, a "transfer") any of such
shares during an initial period that ended on July 2, 2014 and are subject to conditional transfer restrictions set forth below.
From July 3, 2014 to January 2, 2016, each such shareholder will be permitted to transfer up to 10% of such shareholder's shares that
are subject to the Contractual Lock-up.
The Contractual Lock-
up contains certain relaxations of the restrictions on transfers during such subsequent period, such that each such
shareholder may be able to transfer a greater number of shares based upon the market price of our ordinary shares, as follows:
•
If the prevailing market price of our ordinary shares (defined as the closing price on NASDAQ for any consecutive ten trading
day period) is equal to or greater than $15.00 per share (as appropriately adjusted for any stock splits, cash dividends, stock
dividends, combinations, recapitalizations or the like) for any ten consecutive trading days, then each such shareholder may
transfer up to an aggregate of thirty-
three percent (33%) of the shares issued to such shareholder (including any such shares
previously transferred by such shareholder);
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