1. Board of Directors Nir Barkat BRM Group November 2000

2. Agenda General BOD roles Types of BOD ’ s Professional BOD at seed stage External BOD ’ s Advisory board Summary

3. BOD Roles & Responsibilities “ The BOD will define the company ’ s policy and monitor the duties of the CEO and his actions …” (article 92 (a) of the Companies Law, 5759 – 1999) Overall Responsibilities, like parents of a child Creating & managing shareholder value In the interest of ALL the shareholders

4. Governance The old economy Power of $$$ Protect shareholder interests Negotiate with CEO Macro/micro manage 10-30 members Board holds the key The new Economy Power of knowledge Increase shareholder value Guide & Build CEO Hire & support or fire 4-7 members (we use 5) CEO holds the key

5. Orientation of Board Member Investment banker FinancialOperational, Entrepreneurial Match makerDeal makerCompany builder

6. Formation of the Company Keep to top tier standards, avoid future problems Push for fast decisions, no arbitration mechanism Is the company best prepared for growth? Common stock, preferred, ESOP When negotiating splitting the pie, think about: Company needs, current & future management Entrepreneurs, Current & future Investors

7. Examples of problems Management vs. Entrepreneur conflict resolutions Negotiating terms & keeping a good partnership Board composition and governance issues Cleaning company from “ bad habits ” Develop team work & company culture Disagree & commit environment Allow CEO to make mistakes

8. Founders leaving the company 4 cases in BRM group (25%), all companies recovered. Only the CEO fires VP ’ s and/or founders, Founders are valuable, make efforts to keep them Example: Founders 40%, ESOP 20%, Investors 40%, $4M investment 4 founders start with 10% each 3.3% immediate, 2.2% per year (0.183% monthly) Fire with cause (legal issues): 0% of unvested Without cause (personal issues): 50% of unvested

9. BOD’s involvement in Seed Stage Help in Hiring process Defining the short term goals & mile stones Open doors to potential customers & 3 rd parties Budget & allocation of cash to build solid BPlan Advise CEO on management & business conflict Guide (& approve) business plan Help prepare & escort next fund raising process

10. External Board Members CEO, XCEO, XChairman of successful companies Industry knowledge with business experience Strong belief & contribution to company vision Good chemistry with CEO & other BOD ’ s Active more important than just brand name Compensation: Become an investor, or option equivalent Helps in resolving shareholder conflicts

11. Advisory Board VP ’ s, XVP ’ s of large companies, CEO ’ s of smaller companies Provide professional domain experience Open doors to relevant customers More upfront help, less frequent than BOD Compensation: Allow to invest in company, option equivalent Usually 10-25% of BOD compensation

12. Summary BOD has clear legal and fiduciary responsibilities Role of BOD has changed with new economy External BOD – diverse background, important!!! Advisory board can boost the company Allow to make some mistakes Keep focused on creating shareholder value