Incredimail 2010 Annual Report Download - page 51

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. At the extraordinary shareholder meeting held on July 9, 2009, Mr.
Avichay Nissenbaum was appointed as an external director. In addition Mr. David Jutkowitz was appointed as an external director on December
27, 2007 and reappointed on January 6, 2011.
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, are subject to, 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:
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;
-
they violate their duty of loyalty to the company;
-
the director is unable to perform his or her post on a regular basis; or
-
during his or her tenure, the director was convicted in a court outside of the State of Israel on accounts of bribery, deceit,
offenses by managers of a corporate body or offenses involving misuse of inside information; or
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