RETALIX LTD.

The Companies Law and Nasdaq listing requirements require us to appoint an audit committee of the board and permit the creation of other
committees. Currently, the audit committee and an investment committee are our only board committees.
The board of directors has determined that all of the members of our board of directors except Mr. Shaked – the Chairman, and all of the members of
our audit committee are “independent directors,” as defined under the rules of Nasdaq.
Alternate Directors
Our articles of association provide that any director may appoint, by written notice to the Company, an alternative director for himself, provided that
such person satisfies the applicable requirements of the Companies Law. A person may not act as an alternate director for more than one director, and a
person serving as a director may not serve as an alternate director. Notwithstanding the foregoing, a member of the board may be appointed as an alternate
member of any committee of our board, provided that such alternate member is not already a member of such committee. Any alternate director shall have
all of the rights and obligations of the director appointing him or her, except the power to appoint an alternate. The alternate director may not act at any
meeting at which the director appointing him or her is present. Unless the time period or scope of any such appointment is limited by the appointing
director, such appointment is effective for all purposes and for an indefinite time, but expires upon the expiration of the appointing director’s term. To our
knowledge, no director currently intends to appoint any person as an alternate director, except if the director is unable to attend a meeting of the board of
directors.
External Directors
Under the Companies Law, companies incorporated under the laws of Israel whose shares have been offered to the public in or outside of Israel are
required to appoint at least two individuals as external directors. Any individual who is eligible to be appointed as a director may be appointed as an
external director, provided that such person, or the person’s relative, partner, employer or any entity under the person’s control does not have at the date of
appointment, or has not had during the two years preceding the date of appointment, any affiliation with:
• the company;
• any person or entity controlling the company at the time of appointment; or
• any entity controlled by the company or by its controlling entity on the date of the appointment or during the two years preceding such date.
The term affiliation means any of:
• an employment relationship;
• a business or professional relationship maintained on a regular basis;
• control; and
• service as an office holder.
No person can serve as an external director if the person’s position or other business creates or may create a conflict of interest with the person’s
responsibilities as an external director, or if it may adversely affect his ability to serve as a director. Until the lapse of two years from termination of office,
a company may not engage an external director to serve as an office holder, employee or service provider, either directly or indirectly, including through a
corporation controlled by that person.
External directors are elected by a majority vote at a shareholders’ meeting, provided that either:
• the majority of shares voted on the matter, including at least one-third of the shares of non-controlling shareholders voted on the matter,
vote in favor of election; or
• the total number of shares of non-controlling shareholders that voted against the election of the director does not exceed one percent of the
aggregate voting rights in the company.
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