ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" information into
this prospectus. This means that we can disclose important information to you by
referring you to another document filed by us with the Commission. Any
information referenced this way is considered part of this prospectus, and any
information that we file after the date of this prospectus with the Commission
will automatically update and supersede this information. We incorporate by
reference into this prospectus the following documents:
(i) The Company's Report on Form 20-F for the fiscal year ended December
31, 2006, filed with the Commission on May 29, 2007 (File No.
0-30394);
(ii) The Company's Current Reports on Form 6-K (or portions thereof
indicated therein as being incorporated by reference into previously
filed registration statements or any amendments thereof) filed with
the Commission on August 6, 2007; August 8, 2007; October 1, 2007;
October 23, 2007; November 8, 2007; February 4, 2008; and February 25,
2008;
(iii) The description of the Company's ordinary shares contained in the
Company's Registration Statement on Form 8-A, filed with the
Commission on November 29, 1999, including any other amendment or
report filed for the purpose of updating such description; and
In addition, any future filings made by us with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), after the date of this prospectus and prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, and
any future reports on Form 6-K furnished by us to the Commission during such
period or portions thereof that are identified in such forms as being
incorporated into this Registration Statement, shall be considered to be
incorporated in this Registration Statement by reference and shall be considered
a part of this Registration Statement from the date of filing of such documents.
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ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
EXCULPATION OF OFFICE HOLDERS
Under the Israeli Companies Law, an Israeli company may not exempt an
office holder from liability with respect to a breach of his duty of loyalty,
but may exempt in advance an office holder from his liability to the company, in
whole or in part, with respect to a breach of his duty of care (except in
connection with distributions), provided that the articles of association of the
company allow it to do so. Our articles of association allow us to exempt our
office holders to the fullest extent permitted by law.
OFFICE HOLDER INSURANCE
Our articles of association provide that, subject to the provisions of the
Israeli Companies Law, we may enter into a contract for the insurance of the
liability of any of our office holders with respect to an act performed in the
capacity of an office holder for:
o a breach of his duty of care to us or to another person;
o a breach of his duty of loyalty to us, provided that the office holder
acted in good faith and had reasonable cause to assume that his act
would not prejudice our interests; or
o a financial liability imposed upon him in favor of another person.
INDEMNIFICATION OF OFFICE HOLDERS
Subject to certain qualifications, the Israeli Companies Law also permits
us to indemnify an office holder for acts or omissions committed in his or her
capacity as an office holder of the company for:
o a financial liability imposed on him in favor of another person by any
judgment, including a settlement or an arbitrator's award approved by
a court. Such indemnification may be approved (i) after the liability
has been incurred, or (ii) in advance, provided that our undertaking
to indemnify is limited to events that our board of directors believes
are foreseeable in light of our actual operations at the time of
providing the undertaking and to a sum or criterion that our board of
directors determines to be reasonable under the circumstances;
o reasonable litigation expenses, including attorneys' fees, expended by
the office holder as a result of an investigation or proceeding
instituted against him by a competent authority, provided that such
investigation or proceeding concluded without the filing of an
indictment against him and either (i) concluded without the imposition
of any financial liability in lieu of criminal proceedings, or (ii)
concluded with the imposition of a financial liability in lieu of
criminal proceedings but relates to a criminal offense that does not
require proof of criminal intent; and
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o reasonable litigation expenses, including attorneys' fees, expended by
the office holder or charged to him or her by a court, resulting from
the following: proceedings we institute against him or her or
instituted on our behalf or by another person; a criminal indictment
from which he or she was acquitted; or a criminal indictment in which
he or she was convicted for a criminal offense that does not require
proof of intent.
LIMITATIONS ON INSURANCE AND INDEMNIFICATION
The Israeli Companies Law provides that a company may not exculpate or
indemnify an office holder nor enter into an insurance contract, which would
provide coverage for any monetary liability incurred as a result of any of the
following:
o a breach by the office holder of his duty of loyalty unless, with
respect to insurance coverage or indemnification, the office holder
acted in good faith and had a reasonable basis to believe that the act
would not prejudice the company;
o a breach by the office holder of his duty of care if the breach was
done intentionally or recklessly, unless the breach was done
negligently;
o any act or omission done with the intent to derive an illegal personal
benefit; or
o any fine levied against the office holder.
Under the Israeli Companies Law, an undertaking to indemnify or
indemnification of, exculpation of, and procurement of insurance coverage for,
our office holders must be approved by our audit committee and our board of
directors and, in specified circumstances, also by our shareholders.
We have obtained director's and officer's liability insurance with an
aggregate coverage limit of $5 million. In addition we entered into
indemnification and exculpation agreements with our directors and executive
officers in accordance with our articles of association.
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