Incredimail 2008 Annual Report Download - page 42

meeting in his or her place, but an alternate director so appointed must be approved by the board prior to the relevant meeting.
Pursuant to the requirements of the Israeli Companies Law, our board has determined that at least one of our directors must have accounting
and financial expertise (in addition to the external director that must have accounting and finance expertise). In determining such number of
directors, the board considered, among other things, the business of our Company, our size and the scope and complexity of our operations. Such
determination also took into account our total number of directors as set forth in the articles of association in accordance with the Israeli
Companies Law.
We have agreed to permit a designee of Maxim Group, the lead underwriter of our initial public offering, for a period of no less than three
years following the completion of the Company’s public offering and subject to certain exceptions, to be an observer on our board of directors.
The observer may attend meetings of the board and shall receive all notices and other correspondence and communications sent by us to members
of our board of directors. Such observer shall be entitled to reimbursement for costs as provided to the other members of our board of directors.
Maxim Group has not yet designated an observer.
Each of our executive officers serves at the discretion of our board of directors and holds office until his or her successor is elected or his or
her earlier resignation or removal.
External Directors
Under the Israeli Companies Law, Israeli companies whose shares have been offered to the public in or outside of Israel are required to
appoint at least two external directors to serve on their board of directors for a three year term. Mr. James H. Lee was appointed as an external
director on March 30, 2006 and his term expired on March 30, 2009. In addition Mr. David Jutkowitz was appointed as an external director on
December 27, 2007, in for three years. The Company has scheduled an extraordinary shareholder meeting for approving the nomination of another
director that qualifies as an external director in place of Mr. Lee. See Item 4.A. – “Recent Developments”.
Each committee of the board of directors entitled to exercise any powers of the board is required to include at least one external director. The
audit committee must include all the external directors.
An amendment to the Israeli Companies Law in January 2006 provides that a person may be appointed as an external director if he or she has
professional qualifications or if he or she has accounting and financial expertise. In addition, at least one of the external directors must have
accounting and financial expertise. A person may not serve as an external director if at the date of his or her appointment or within the prior two
years, that person, or his or her relatives, partners, employers or entities under his or her control, have or had any affiliation with us or any entity
or person controlling us at the time of appointment or an entity that is controlled, at the time of appointment or the prior two years, by us or by the
person or entity controlling us. Under the Companies Law, “affiliation” is defined in this context to include an employment relationship, a
business or professional relationship maintained on a regular basis, control or service as an office holder. However, the service of a director who
was appointed for the purpose of being an external director in a company that intends to first offer its shares to the public is not considered a
prohibited affiliation. An office holder is defined in the Companies Law as any director, general manager, chief business manager, deputy general
manager, vice general manager, other manager directly subordinate to the general manager or any other person assuming the responsibilities of
any of these positions regardless of that person’s title.
A person may not serve as an external director if that person’s position or other activities create, or may create, a conflict of interest with the
person’s service as a director or may otherwise interfere with the person’s ability to serve as a director. If at the time any external director is
appointed, all members of the board are the same gender, then the external director to be appointed must be of the other gender.
External directors are elected by a majority vote at a shareholders’ meeting, as long as either:
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The Israeli Companies Law provides for an initial three-year term for an external director, which may be extended for one additional three-
year term. Thereafter (with respect to companies whose securities are listed on certain designated stock exchange, including the Nasdaq Global
Market), he or she may be reelected by our shareholders for additional periods of up to three years each, in each case provided that the audit
committee and the board of directors confirm that, in light of the external director’s expertise and special contribution to the work of the board of
directors and its committees, the reelection for such additional period(s) is beneficial to the company. External directors may be removed only:
—
the majority of shares voted for the election includes at least one-third of the shares of non-controlling shareholders voted at the
meeting (excluding abstaining votes); or
—
the total number of shares of non-controlling shareholders voted against the election of the external director does not exceed one
percent of the aggregate voting rights in the company.
—
by a court, and then only if
–
the external directors cease to meet the statutory qualifications for their appointment;