Incredimail 2008 Annual Report Download - page 44

regulations, meeting these requirements of Rule 10A-3, in that our audit committee complies with the requirements under Israeli law. We are
currently have scheduled a extraordinary general meeting to elect an external director in place of one whose term has expired. See Item 4.A. –
“Recent Developments”.
Israeli Companies Law Requirements
Under the Israeli Companies Law, the board of directors of a public company must establish an audit committee. The audit committee must
consist of at least three directors and must include all of the external directors. The audit committee may not include the chairman of the board,
any director employed by the company or providing services to the company on an ongoing basis, a controlling shareholder or any of the
controlling shareholder’s relatives.
The audit committee provides assistance to the board of directors in fulfilling its legal and fiduciary obligations in matters involving our
accounting, auditing, financial reporting, internal control and legal compliance functions by approving the services performed by our independent
accountants and reviewing their reports regarding our accounting practices and systems of internal accounting controls. The audit committee also
oversees the audit efforts of our independent accountants and takes those actions as it deems necessary to satisfy itself that the accountants are
independent of management. Under the Israeli Companies Law, the audit committee is also required to monitor and approve remedial actions with
respect to deficiencies in the administration of the company, including by consulting with the internal auditor and recommend remedial actions
with respect to such deficiencies, and to review and approve related party transactions.
Compensation Committee
As a foreign private issuer, we comply with our home country regulations with respect to compensation committee. Under Israeli Companies
Law, independent members of our board are not required to determine the compensation of an executive officer, provided that the executive
officer does not serve on our board. Therefore our practices differ from those under Nasdaq Marketplace Rules applicable to domestic issuer
which require a determination by a majority of the independent directors on the board or a compensation committee comprised solely of
independent directors. Our compensation committee is comprised of Tamar Gottlieb and Yair M. Zadik, and operates pursuant to a written charter.
The compensation committee will make recommendations to the board of directors regarding the issuance of employee share options under our
share option and benefit plans and will determine salaries and bonuses for our chief executive officer and our other executive officers and
incentive compensation for our other employees.
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Nominating and Governance Committee
Our nominating and governance committee is comprised of Tamar Gottlieb and Yair M. Zadik, and operates pursuant to a written charter. It
is responsible for making recommendations to the board of directors regarding candidates for directorships and the size and composition of the
board. In addition, the committee is responsible for overseeing our corporate governance guidelines and reporting and making recommendations
to the board concerning corporate governance matters. Under Israeli Companies Law, the nominations for director are generally made by our
directors but may be made by one or more of our shareholders. However, any shareholder or shareholders holding at least 5% of the voting rights
in our issued share capital may nominate one or more persons for election as directors at a general meeting only if a written notice of such
shareholder’s intent to make such nomination or nominations has been given to our secretary and each such notice sets forth all the details and
information as required to be provided under our articles of association.
Internal Auditor
Under the Israeli Companies Law, the board of directors of a public company must appoint an internal auditor nominated by the audit
committee. The role of the internal auditor is to examine whether a company’s actions comply with the law and proper business procedure. The
internal auditor may be an employee of the company employed specifically to perform internal audit functions but may not be an interested party
or office holder, or a relative of any interested party or office holder, and may not be a member of the company’s independent accounting firm or
its representative. The Israeli Companies Law defines an interested party as a holder of 5% or more of the shares or voting rights of a company,
any person or entity that has the right to nominate or appoint at least one director or the general manager of the company or any person who serves
as a director or as the general manager of a company. The internal auditor shall not be terminated without his or her consent, nor shall he or she be
suspended from such position unless the board of directors has so resolved after hearing the opinion of the audit committee and after giving him or
her opportunity to present his or her case to the board and to the audit committee. In August 2006 the Board of Directors approved the
appointment of the firm of Yardeni-Gelfand as internal auditor of the Company, and they have been acting as such since.
Certain Employment Agreements with Directors
We have entered into employment agreements, effective February 3, 2006, with our co-founder, Chief Executive Officer and Chief Product
Officer, Ofer Adler, and our co-founder and President, Yaron Adler, to retain their continuing services. The employment agreements do not
provide for a specified term and may be terminated by either party upon ninety days’ prior notice. Upon termination by us of the employment of
either of these executives other than for “cause” (as set forth in the agreements), we are required to continue to pay the terminated executive his
salary, benefits and bonus until the end of the 90 day notice period. However, we will have the option to pay the terminated executive a lump sum