{"url_path":"/sec/eltk/10-k/2026/item-6","section_key":"item-6","section_title":"Item 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-03-26","source_url":"https://www.sec.gov/Archives/edgar/data/1024672/0001178913-26-001768-index.html","accession_number":"0001178913-26-001768","cik":"0001024672","ticker":"ELTK","issuer_name":"ELTEK LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1024672/0001178913-26-001768-index.html","primary_entity_key":"0001024672","primary_entity_name":"ELTEK LTD"},"word_count":11480,"has_tables":true,"body_markdown":"ITEM 6.\n\nDIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES\n\n \n\nA.          Directors and Senior Management\n\n \n\nDirectors\n\n \n\nSet forth below are the name, age, principal position and a biographical description of each of our directors:\n\n \n\nName\n\nAge\n\nPosition\n\nYitzhak Nissan (3)\n\n76\n\nChairman of the Board of Directors\n\nMordechai Marmorstein (1)(2)\n\n79\n\nDirector\n\nDavid Rubner(4)\n\n85\n\nDirector\n\nErez Meltzer(4)\n\n68\n\nDirector\n\nRevital Cohen-Tzemach\n\n42\n\nDirector\n\nGad Dovev(1)(2)(3)(4)\n\n79\n\nExternal Director\n\nIlana Lurie (1)(2)(3)(4)\n\n53\n\nExternal Director\n\n__________________________\n\n(1) Member of our audit committee\n\n(2) Member of our compensation committee\n\n(3) Member of our banking committee\n\n(4) Member of the Special Independent Committee for M&A purposes\n\n \n\nAt our 2025 annual general meeting held on September 18, 2025,\nour shareholders re-elected Messrs. Yitzhak Nissan, Mordechai Marmorstein, David Rubner, Erez Meltzer and Ms. Revital Cohen-Tzemach, to\nserve as  directors until our 2025 annual general meeting of shareholders. Mr. Gad Dovev was elected to serve as an external director\nfor a fourth three-year term at our 2023 meeting of shareholders. Ms. Ilana Lurie was elected to serve as an external director for a third\nthree-year term at our 2024 meeting of shareholders. On August 13, 2025, our audit committee and board of directors determined that Mordechai\nMarmorstein has the accounting and financial expertise required under the Israeli Companies Law and the Relief Regulations in order to\ncontinue serving as an independent director beyond the maximal three three-year periods set forth in the Israeli Companies Law, and therefore\nMr. Marmorstein was nominated as an independent director for an additional three-year term.\n\n \n\nYitzhak Nissan\nhas served as the Chairman of our board of directors since November 2013, and is a member of our banking committee. From October 2014\nto July 2018, Mr. Nissan also served as our Chief Executive Officer. Mr. Nissan is the founder of Nistec Group and has served as its chief\nexecutive officer since 1985. Mr. Nissan served as a member of ILTAM (Israeli Users’ Association of Advanced Technologies in Hi-Tech\nIntegrated Systems) Presidential Board between 2008 and 2009, and as a Presiding Member of the Israeli Association of Electronics and\nSoftware Industries between 2012 and 2022. Mr. Nissan also established the VPs Operations Forum, which brings thought leadership to 200\nVPs of operations from diverse hi-tech companies in Israel.  In 2008, Mr. Nissan received the Distinguished Industry Award from the\nmayor of Petach Tikva Municipality.  In 2019, Mr. Nissan was awarded a “notable person” award by the city of Petach Tikva.\nMr. Nissan holds a B.Sc. degree in Electronic Engineering from the University of Buffalo, New York.\n\n34\n\n \n\nDr. Mordechai\nMarmorstein has served on our board of directors since October 2013 and is a member of our audit and compensation committees. From\n1992 to 2001, Dr. Marmorstein was the chief financial officer of Pazchim Co. Ltd.  Dr. Marmorstein was also an internal auditor and\naccountant at Negev Phosphate Works. Dr. Marmorstein served as the chairman of Teshet (Tourist Enterprises and Aviation Services Co. Ltd.),\na subsidiary of El-Al, the Israeli national airline, from 1999 to 2000.  Dr. Marmorstein holds a B.A. degree in Economics, an M.A.\ndegree in Contemporary Jewry Studies and a Ph.D. in Jewish History Studies, all from Bar-Ilan University.\n\n \n\nDavid Rubner\nhas served on our board of directors since October 2013. Mr. Rubner is the chairman and chief executive officer of Rubner Technology Ventures\nLtd. Previously, he was a partner in Hyperion Israel Advisors Ltd., a venture capital firm. During the years 1991 to 2000, Mr. Rubner\nwas the president and chief executive officer of ECI Telecom Ltd. (“ECI”). Prior to that, Mr. Rubner held several senior positions\nwithin ECI. Before joining ECI, Mr. Rubner was a senior engineer in the Westinghouse Research Laboratories in Pittsburgh, Pennsylvania.\nMr. Rubner served on the boards of Check Point Software Ltd., Radware Ltd., Telemessage International Ltd., Koor Industries Ltd., Lipman\nIndustries Ltd.  and a number of private companies. He also serves on the boards of trustees and executive councils of Shaare Zedek\nHospital and Jerusalem College of Technology. Mr. Rubner holds a B.Sc. (Hons) degree in engineering from Queen Mary College, University\nof London and an M.S. degree from Carnegie Mellon University. Mr. Rubner was awarded 14 U.S. Patents and was the recipient of the Israeli\nIndustry Prize for 1995.\n\n \n\nErez Meltzer\nhas served as on the Board since 2009, including as its chairman from 2011 to 2013. Mr. Meltzer was the Executive Chairman of Hadassah\nMedical Center from 2014 until the end of 2020. He is currently the CEO and a member of the board of directors of Nano-x Imaging Ltd.\nMr. Meltzer also serves as a director of Hadasit Bio Holding (HBL) Ltd., Mentfield Ltd., Capital Nature Ltd., GEM Pharma Ltd., Atlasense\nLtd., Supplant Ltd., Tevel Aerobotics Technologies Ltd., Xenia Ltd. and Rivulis (Plastro) Ltd. From 2008 to 2013, Mr. Meltzer served as\nthe Chief Executive Officer of Gadot Chemical Tankers & Terminals Ltd. From 2006 to 2007, Mr. Meltzer served as the Chief Executive\nOfficer of Africa Israel Group. From 2002 to 2006, Mr. Meltzer served as the President and Chief Executive Officer of Netafim Ltd. From\n1999 to 2001, Mr. Meltzer served as the President and Chief Executive Officer of CreoScitex. Mr. Meltzer is a teaching Professor on Crisis\nManagement at Tel Aviv University since 2008. Mr. Meltzer served as a colonel in the Israeli Defense Forces – Armored Corps (reserve).\nMr. Meltzer serves as the Chairman of the Lowenstein Hospital Friends Association since 1999. Mr. Meltzer studied Economics and Business\nat the Hebrew University of Jerusalem and Boston University and is a graduate of the Advanced Management Program at Harvard Business School.\n\n \n\nMs. Revital\nCohen-Tzemach has served on our board of directors since 2023 and had previously attended board meetings as a non-voting observer\n(since 2022). From 2015 to 2023, Ms. Cohen-Tzemach was employed by the Company, first as a trainee in the office of the CEO, then as an\nassistant to the CEO, and finally as a special project manager; currently Ms. Cohen-Tzemach is not engaged by the Company outside of her\nposition on the Board. From 2008 until 2014, Ms. Cohen-Tzemach served as a branch manager for Halperin Optics Ltd., a major Israeli optics\nsupplier. Ms. Cohen-Tzemach holds a B.Sc. degree in Optometry and an Executive M.B.A. degree from Bar-Ilan University.\n\n \n\nGad Dovev was\nre-elected to serve as an external director in September 2023 and is a member of our audit, compensation and banking committees. \nMr. Dovev retired from the Israeli Ministry of Defense in August 2012.  He served as head of the Israeli Ministry of Defense Mission\nto the United States from August 2008 to August 2011.  From August 2005 to August 2008, Mr. Dovev served as head of the Israeli Ministry\nof Defense Mission to Germany.  Prior to that, from 2001 to 2005, Mr. Dovev acted as Deputy General Manager of the Israeli Ministry\nof Defense and Head of the Rehabilitation Department.  From 1993 to 2001, Mr. Dovev served as Director of the Finance Department\nand the Financial Comptroller of the Israeli Ministry of Defense. Mr. Dovev served as member of the board of birectors of Bank Otsar Ha-Hayal\nLtd., IMI-Israel Military Industries Ltd., Shekem Ltd. and Gapim Ltd.  Mr. Dovev holds a BSc. degree in Financial and Agricultural\nAdministration from the Hebrew University of Jerusalem.\n\n \n\nMs. Ilana Lurie\nwas re-elected to serve as an external director in July 2024 and is a member of our audit and compensation committees. Ms. Lurie\nhas served as a CFO, COO and director with significant experience in international finance and operations, within both large technology\ncompanies as well as start-ups. In the course of the last 10 years, Ilana led significant financing rounds, as well as debt restructuring\nprocesses. Ms. Lurie played a critical role in transition from R&D to production in NovelSat and she is currently leading this activity\nin IO Tech, in her capacity as CFO & COO and serving as External Director in Wearable devices (NASDAQ:WLDS). Ms. Lurie earned her\nB.A. degree and an MBA degree with a specialization in Finance and Marketing from Hebrew University of Jerusalem.\n\n35\n\n \n\nExecutive Officers\n\n \n\nSet forth below are the name, age, principal position and a biographical\ndescription of each of our executive officers:\n\n \n\nName\n\nAge\n\nPosition\n\nEli Yaffe\n\n71\n\nChief Executive Officer\n\nRon Freund\n\n61\n\nChief Financial Officer\n\nYitzhak Zemach\n\n50\n\nDirector of Operations\n\nTomer Segev\n\n56\n\nVP Sales and Marketing\n\nRaviv Segev\n\n48\n\nVP Technology & Process Engineering\n\nYaniv Luria\n\n51\n\nChief Information Officer\n\nEli Yaffe\njoined us in July 2018 as our Chief Executive Officer. Prior to joining our company, Mr. Yaffe was the President of Carmel Forge Ltd.\n(Aerospace) for almost 16 years.  Prior thereto Mr. Yaffe served as the President of Urdan Industries Ltd. (Defense). Previously,\nMr. Yaffe served as VP of Business Development & Strategic Planning, responsible for strategy, M&A, and business development at\nOrmat Industries Ltd., including 5 years in the USA. Mr. Yaffe holds a B.Sc. degree (with distinction) from the Technion- Israel Institute\nof Technology, M.Sc. degree in Mechanical Engineering from Tel Aviv University and an MBA degree (with distinction) in Finance & Marketing\nfrom Bar Ilan University.\n\n \n\nRon Freund\njoined us in January 2022 as our Chief Financial Officer. Mr. Freund served as the CFO of Ophir Tours Ltd. from 2015 to 2021. From 2011\nto2014, Mr. Freund served as the CFO of Middle East Tube Company Ltd., an Israeli public company, traded on the Tel Aviv Stock Exchange\n(TASE). In previous roles, Mr. Freund served as Deputy CEO and CFO of Soltam Systems LTD. and as a Senior Partner at Ernst & Young\nIsrael. Mr. Freund holds a B.A. degree in Accounting and Economics from the Hebrew University, Jerusalem, and is a licensed CPA (Israel).\n\n \n\nYitzhak Zemach\njoined us in September 2018 as Vice President of Operations. Previously, Mr. Zemach served as the Plant Manager of Kahane Group Ltd.\nfrom February 2011 to September 2018 and prior thereto he served as the VP Operations of Bental Electronics Systems Ltd. Previously, Mr.\nZemach served as Plant Manager of Aladdin Knowledge Systems and prior thereto he served as the Production Manager of the Nistec group.\nMr. Zemach holds a B.Sc. degree in Electronic Engineering from Ariel University and an MBA degree with distinction in IT from Bar Ilan\nUniversity.\n\n \n\nTomer Segev joined\nus in June 2024 as Vice President of Sales and Marketing. Mr. Segev has more than 20 years of experience in executive positions of sales\n& marketing, business management and business development in various leading global technology companies. Mr. Segev holds a B.Sc degree\nin Physics and Materials Engineering from the Technion- Israel Institute of Technology and an MBA degree from the Kellogg-Recanati International\nExecutive MBA program, Tel-Aviv University.\n\n \n\nRaviv Segev\njoined us in November 2025 as Vice President of Technology & Process Engineering. Dr. Segev has extensive experience in the\nindustrial sector, having previously served in several senior positions in leading industrial companies in Israel. Dr. Segev holds a Ph.D.\nin Chemical Engineering from the Technion- Israel Institute of Technology and an MBA degree from Ono Academic College.\n\n \n\nYaniv Luria\njoined us in July 2024 as Chief Information Officer. From 2000 to 2021, Mr. Luria served as Director of IT at Nova Ltd. (Nasdaq: NVMI).\nBetween 2022 and 2023, Mr. Luria was Head of IT for R&D and Corporate Functions at Adama, and also worked with a startup company.\nMr. Luria holds a B.Sc. degree in Industrial Engineering with a specialization in Information Systems and an MBA degree, both from Ben-Gurion\nUniversity.\n\n \n\nMs. Revital Cohen-Tzemach is Yitzhak Nissan’s daughter. There\nare no other family relationships among any of our directors and executive officers.\n\n36\n\n \n\nB.          Compensation\n\n \n\nThe following table sets forth all compensation we paid with respect\nto all of our directors and executive officers as a group for the year ended December 31, 2025.\n\n \n\n \n\nSalaries, fees,\n\ncommissions and bonuses\n\n \n\nPension, retirement\n\nand similar benefits\n\nAll directors and executive officers as a group (consisting of 12 persons)\n\n$2.2 million (1)\n\n \n\n$0.4 million (2)\n\n(1)\n\nDuring the year ended December 31, 2025, we paid each of our directors an annual fee of approximately $16,000 and an attendance\nfee of $400 per meeting. These fees are included in the above amount.\n\n(2)\n\nThe benefits amount includes expenses for automobiles and other benefits that we provide to certain of our executive officers.\n\n \n\nAs of December 31, 2025, options to purchase 376,272 ordinary shares\ngranted to our current directors and executive officers were outstanding under our equity incentive plans at a weighted average exercise\nprice of $8.26 per share.\n\n \n\nFor as long as we qualify as a foreign private issuer, we are not\nrequired to comply with the proxy rules applicable to U.S. domestic companies, including the requirement to disclose information concerning\nthe amount and type of compensation paid to the chief executive officer, chief financial officer and the three other most highly compensated\nexecutive officers, rather than on an aggregate basis. Nevertheless, a recent amendment to the regulations promulgated under the Israeli\nCompanies Law requires us to disclose the annual compensation of our five most highly compensated officers (or all the named executive\nofficers if there are less than five) on an individual basis, rather than on an aggregate basis, as was previously permitted for Israeli\npublic companies listed overseas.  Under the regulations, this disclosure is required to be included in the notice of our annual\nmeeting of shareholders each year or in a public document that accompanies such notice, which we furnish to the SEC under cover of a Report\nof Foreign Private Issuer on Form 6-K. The Israeli Companies Law regulations permit us to refer to a report filed pursuant to the laws\nof the country in which our shares are listed for trading that includes the required information in lieu of its inclusion in the notice\nof annual meeting. Because of that disclosure requirement under Israeli law, we are including such information in this annual report,\npursuant to the disclosure requirements of Form 20-F.\n\n \n\nThe table below reflects the compensation granted to our five most\nhighly compensated office holders during or with respect to the year ended December 31, 2025. All amounts reported in the table reflect\nthe cost to the company, as recognized in our financial statements for the year ended December 31, 2025.\n\n \n\nName of Officer\n\nPosition of Officer\n\n \n\nCompensation for services (USD)(1)\n\n \n \n \n \n\n \n  \n \n\nBase salary\n\n \n \n\nBenefits and Perquisites\n(2)\n\n \n \n\nEquity-\n\nBased (3)\n\n \n \n\nTotal compensation\n\n \n\nYitzhak Nissan (4)\n\nChairman of the Board\n\n \n \n\n417,162\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n417,162\n\n \n\nEli Yaffe\n\nChief Executive Officer\n\n \n \n\n324,806\n\n \n \n \n\n300,767\n\n \n \n \n\n81,329\n\n \n \n \n\n706,901\n\n \n\nRon Freund\n\nChief Financial Officer\n\n \n \n\n196,796\n\n \n \n \n\n58,410\n\n \n \n \n\n53,529\n\n \n \n \n\n308,735\n\n \n\nYitzhak Zemach\n\nVP Operations\n\n \n \n\n189,519\n\n \n \n \n\n92,945\n\n \n \n \n\n39,831\n\n \n \n \n\n322,295\n\n \n\nYaniv Luria\n\nChief Information Officer\n\n \n \n\n142,299\n\n \n \n \n\n69,663\n\n \n \n \n\n20,678\n\n \n \n \n\n232,639\n\n \n\n \n\n(1)\n\nCash compensation amounts denominated\nin NIS were converted into U.S. dollars at the rate of NIS 3.45 per $1.00 (the average exchange rate in 2025).\n\n \n\n(2)\n\n Amounts reported in this column\ninclude benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites may include, to the extent\napplicable, bonuses, car related expenses, managers’ insurance and pension funds, payments to the National Insurance Institute,\nadvanced education funds, medical insurance, vacation allowance and other customary benefits. Bonuses represent accrued but not yet paid\nbonus payments for 2025, based on several criteria, including revenues, profit, employees’ safety, yield and on time deliveries.\n\n \n\n(3)\n\nRepresents the equity-based\ncompensation expenses recorded in the company’s consolidated financial statements for the year ended December 31, 2025 based on\nthe options’ grant date fair value in accordance with accounting guidance for equity-based compensation.\n\n \n\n(4)\n\nPaid to Nistec as\nmanagement fees.\n\n37\n\nC.          Board Practices\n\n \n\nIntroduction\n\n \n\nAccording to the Israeli Companies Law, the role of the board of\ndirectors is to formulate a company’s policy and to supervise the chief executive officer’s exercise of his roles and operations.\nAccording to our articles of association, our chief executive officer has the power to appoint our other executive officers who, together\nwith our chief executive officer, are responsible for our day-to-day management. The board of directors may exercise any power of the\ncompany which was not assigned to another organ of the company by law or by the articles of association.  The executive officers\nhave individual duties as determined by our chief executive officer and board of directors.\n\n \n\nElection of Directors\n\n \n\nOur articles of association provide for a board of directors consisting\nof no less than three and no more than nine members or such other number as may be determined from time to time at a general meeting of\nshareholders.  Our board of directors is currently composed of seven directors.\n\n \n\nGenerally, at each annual meeting of shareholders, directors are\nelected by a vote of the holders of a majority of the voting power represented and voting at such meeting. All the members of our board\nof directors (except the external directors as detailed below) may be reelected upon completion of their term of office. Directors (other\nthan external directors) may be removed earlier from office by a resolution passed at a general meeting of our shareholders.  Our\nboard of directors may temporarily fill vacancies in the board or add to their body until the next annual meeting of shareholders, provided\nthat the total number of directors will not exceed the maximum number permitted under our articles of association.\n\n \n\nThe board of directors of an Israeli public company is required\nto determine that at least one or more directors will have “accounting and financial expertise,” as defined by Israeli Companies\nLaw regulations. Our board of directors determined, accordingly, that at least one director must have “accounting and financial\nexpertise.”  Our board of directors has further determined that our external directors, Mr. Gad Dovev and Ms. Ilana Lurie,\nhave the requisite “accounting and financial expertise.”\n\n \n\nWe do not follow the requirements of the NASDAQ Stock Market Rules\nwith regard to the nomination process of directors, and instead, we follow Israeli law and practice, in accordance with which our board\nof directors is authorized to recommend to our shareholders director nominees for election. See Item 16G. “Corporate Governance.”\n\n \n\nExternal and Independent Directors\n\n \n\nExternal directors. \nUnder the Israeli Companies Law, Israeli companies whose shares have been offered to the public are required to appoint at least two external\ndirectors.  A person may not be appointed as an external director if (i) the person is a relative of a controlling shareholder; (ii)\nthe person, or the person’s relative, partner, employer or an entity under that person’s control, has or had during the two\nyears preceding the date of appointment any affiliation with the company, or the controlling shareholder or its relative; (iii) in a company\nthat does not have a controlling shareholder, such person has an affiliation (as such term is defined in the Israeli Companies Law), at\nthe time of his appointment, to the chairman of the board of directors, chief executive officer, a shareholder holding at least 5% of\nthe share capital of the company or the chief financial officer; (iv) such person is an employee of the Israeli Securities Authority or\nan Israeli stock exchange; and (v) such person’s relative, partner, employer, supervisor, or an entity he controls, has other than\nnegligible business or professional relations with any of the persons mentioned in subsection (ii) above, even if such relations are not\nmaintained on a regular basis. The term “relative” means a spouse, sibling, parent, grandparent, child or child, sibling or\nparent of spouse or spouse of any of the above. The term “affiliation” includes an employment relationship, a material business\nor professional relationship maintained on a regular and continuous basis, control and service as an office holder excluding service as\nan external director of a company that is offering its shares to the public for the first time.  In addition, no person may serve\nas an external director if the person’s position or other activities create or may create a conflict of interest with the person’s\nresponsibilities as director or may otherwise interfere with the person’s ability to serve as director. If, at the time an external\ndirector is appointed all members of the board of directors who are not the controlling shareholders or their relatives, are of the same\ngender, then that external director must be of the other gender.  A director of one company may not be appointed as an external director\nof another company if a director of the other company is acting as an external director of the first company at such time.\n\n38\n\n \n\nAt least one of the external directors elected must have “accounting\nand financial expertise” and any other external director must have “accounting and financial expertise” or “professional\nqualification,” as such terms are defined by Israeli Companies Law regulations. We have determined that our external directors,\nMr. Gad Dovev and Ms. Ilana Lurie, have the requisite “accounting and financial expertise.” \n\n \n\nExternal directors are elected by shareholders. The shareholders\nvoting in favor of their election must include at least a majority of the shares of the non-controlling shareholders (and those who do\nnot have a personal interest in the matter as a result of their relationship with the controlling shareholders) of the company voting\non the matter (not including abstaining votes). This majority approval requirement need not be met if the total shareholdings of those\nnon-controlling shareholders (and those who do not have a personal interest in the matter as a result of their relationship with the controlling\nshareholders) voting against their election represent 2% or less of all of the voting rights in the company.\n\n \n\nExternal directors serve for a three-year term, which may be renewed\nfor two additional three-year periods through one of the following mechanisms:\n\n \n\n(i)\n\nthe board of directors proposed the nominee and his appointment was approved by the shareholders in the manner required to appoint\nexternal directors for their initial term;\n\n \n\n(ii)\n\na shareholder holding 1% or more of the voting rights proposed the nominee, and the nominee is approved by a majority of the votes\ncast by the shareholders of the company on the matter, excluding the votes of controlling shareholders and those who have a personal interest\nin the matter as a result of their relationship with any controlling shareholder and excluding abstentions, provided that the aggregate\nvotes cast by shareholders who are not controlling shareholders and do not have a personal interest in the matter as a result of their\nrelationship with the controlling shareholders voted in favor of the reelection of the nominee constitute more than 2% of the voting rights\nin the company, and provided further that at the time of such nomination or in the two years preceding such nomination, such external\ndirector or his relative are neither the shareholder who proposed such nomination, or a shareholder holding 5% or more of the company's\nissued share capital or voting power, in each case who, or whose controlling shareholder or any entity controlled by them (i) has business\nrelations with the company, or (ii) is a competitor of the company; or\n\n \n\n(iii)\n\nsuch external director nominates himself or herself for each such additional term and his or her election is approved at a shareholders\nmeeting by the same disinterested majority as required for the election of an external director nominated by a 1% or more shareholder\n(as described above).\n\n \n\nWithout derogating from the foregoing, under the Companies Regulations\n(Relief for Companies Listed in a Foreign Stock Exchange), 5760-2000 (the “Relief Regulations”), a company whose shares are\ntraded on any of the foreign stock exchanges listed in Section 5A(c) of the Relief Regulations, such as the Company, may extend an external\ndirector’s term of office for one or more additional three (3) year terms, if: (i) the company’s audit committee and board\nof directors confirm that such extension is in the company’s best interest, given the external director’s expertise and special\ncontribution to the work of the board of directors and its committees; (ii) the extension is approved by the special vote required under\nthe  Israeli Companies Law; and (iii) the external director’s overall term of office and the reasons of the audit committee\nand board of directors for extending it are presented to the shareholders prior to their approval of such extension. In August 2023, the\naudit committee and the board of directors have confirmed that extending Mr. Dovev’s term of office for an additional, fourth, three\n(3) year term, is in the best interest of the Company and its shareholders, for the following reasons: Mr. Dovev’s deep knowledge\nof the Company, gained over his many years of service as an external director, such that he is intimately familiar with both the Company’s\npast practices as well as its present strategy and affairs; Mr. Dovev’s extensive prior experience as a senior official of the Israeli\nMinistry of Defense, specifically in charge of different aspects of procurement, by virtue of which he offers unique guidance for Board-level\ndecision-making with respect to one of the Company’s main type of clients – the defense sector, in Israel and abroad; and\nMr. Dovev’s faithful attendance and participation in the meetings of our audit committee, the compensation committee and the board\nof directors since his appointment as an external director.\n\n39\n\n \n\nExternal directors cannot be dismissed from office unless: (i)\nthe board of directors determines that the external director no longer meets the statutory requirements for holding the office, or that\nthe external director has breached the external director’s fiduciary duties and the shareholders vote, by the same majority required\nfor the appointment, to remove the external director after the external director has been given the opportunity to present his or her\nposition; (ii) a court determines, upon a request of a director or a shareholder, that the external director no longer meets the statutory\nrequirements of an external director or that the external director has breached his or her fiduciary duties to the company; or (iii) a\ncourt determines, upon a request of the company or a director, shareholder or creditor of the company, that the external director is unable\nto fulfill his or her duty or has been convicted of specified crimes.  Each committee that is authorized to exercise powers that\nare usually vested in the board of directors must include at least one external director and the audit committee and compensation committee\nmust each include all of the external directors.  An external director is entitled to compensation as provided pursuant to Israeli\nCompanies Law regulations and is otherwise prohibited from receiving any other compensation, directly or indirectly, in connection with\nsuch service.\n\n \n\nAt the 2024 annual general meeting of shareholders, held on July\n8, 2024, Ms. Ilana Lurie was re-elected, for a third three-year term as an external director. At our 2023 meeting of shareholders held\non September 8, 2023, our shareholders re-elected Mr. Gad Dovev for a fourth three-year term as an external director.\n\n \n\nIndependent Directors. \nIn general, NASDAQ Stock Market Rules require that the board of directors of a NASDAQ-listed company have a majority of independent directors\nand its audit committee must have at least three members and be comprised only of independent directors, each of whom satisfies the respective\n“independence” requirements of NASDAQ and the SEC. As permitted by NASDAQ home country rules, we do not maintain a majority\nof independent directors on our Board, but instead we choose to follow Israeli law and practice which requires that we appoint at least\ntwo external directors, as discussed above. Our audit committee however is comprised of three directors, all of whom are independent directors\nunder the requirements of the Israeli Companies Law, the NASDAQ and the SEC rules.\n\n \n\nChairman of the Board\n\n \n\nOur articles of association provide that the chairman of the\nboard is appointed by the members of the board of directors. The chief executive officer (referred to as a “general manager”\nunder the Israeli Companies Law) or a relative of the chief executive officer may not serve as the chairman of the board of directors,\nand the chairman or a relative of the chairman may not be vested with authorities of the Chief Executive Officer without shareholder approval\nconsisting of a majority vote of the shares present and voting at a shareholders meeting, provided that either (i) such majority includes\nat least two-thirds of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in\nsuch appointment, present and voting at such meeting; or (ii) the total number of shares of non-controlling shareholders and shareholders\nwho do not have a personal interest in such appointment voting against such appointment does not exceed two percent of the aggregate voting\nrights in the company. Abstaining shareholders shall not be counted as part of the non-controlling shareholders, or shareholders with\nno personal interest.\n\n \n\nIn addition, a person subordinated, directly or indirectly, to\nthe Chief Executive Officer may not serve as the chairman of the board of directors; the chairman of the board may not be vested with\nauthorities that are granted to those subordinated to the Chief Executive Officer; and the chairman of the board may not serve in any\nother position in the company or a controlled company, but he may serve as a director or chairman of a subsidiary.\n\n \n\nOn December 29, 2016, our shareholders approved that our Chairman\nof the Board would also serve as our Chief Executive Officer. In July 2018, Mr. Eli Yaffe was appointed Chief Executive Officer and Mr.\nNissan continues to serve as the Chairman of our board of directors of our company.\n\n40\n\n \n\nCommittees of the Board of Directors\n\n \n\nAudit Committee\n\n \n\nUnder the Israeli Companies Law, the board of directors of any\npublic company must establish an audit committee.  The audit committee must consist of at least three directors, must include all\nof the external directors and must have a majority of independent directors.\n\n \n\nThe audit committee may not include the chairman of the board of\ndirectors, the controlling shareholder (or any of the controlling shareholder’s relatives), any director employed by the company\nor by its controlling shareholder or by an entity controlled by the controlling shareholder, any director who regularly provides services\nto the company or to its controlling shareholder or to an entity controlled by the controlling shareholder, and any director who derives\nmost of his or her income from the controlling shareholder.  The chairman of the audit committee must be an external director. A\nmajority of the members of the audit committee constitutes a quorum, provided that the majority of the members present at the meeting\nare independent directors (within the meaning of the Israeli Companies Law) and at least one external director is present at the meeting.\n\n \n\nIn addition, the NASDAQ Stock Market Rules require us to establish\nan audit committee comprised of at least three members, all of whom must be independent directors, each of whom is financially literate\nand satisfies the respective “independence” requirements of the SEC and NASDAQ and one of whom has accounting or related financial\nmanagement expertise at senior levels within a company.\n\n \n\nOur audit committee meets at least once each quarter. Under the\nIsraeli Companies Law, the roles of the  audit committee are (i) to identify deficiencies in the management of our business, including\nin consultation with the internal auditor and our independent auditors, and to suggest appropriate courses of action to amend such deficiencies;\n(ii) to define whether certain acts and transactions that involve conflicts of interest are material or and to define whether transactions\nthat involve interested parties are extraordinary or not, and to approve such transactions (which may be approved according to certain\ncriteria set out by our audit committee on an annual basis); (iii) to establish procedures to be followed in respect of related party\ntransactions with a controlling shareholder (where such are not extraordinary transactions), which may include, where applicable, the\nestablishment of a competitive process for such transaction, under the supervision of the audit committee, or individual, or other committee\nor body selected by the audit committee, in accordance with criteria determined by the audit committee; (iv) to determine whether to approve\nrelated party transactions, that are subject to the audit committee’s approval according to the Israeli Companies Law; (v) to determine\nprocedures for approving certain related party transactions with a controlling shareholder, which having been determined by the audit\ncommittee not to be extraordinary transactions, were also determined by the audit committee not to be negligible transactions; (vi) in\ncompanies where the internal auditor’s work plan is subject to board of directors’ approval, to examine and propose revisions\nto the internal auditor's work plan before it is presented to the board of directors; (vii) to examine the performance of our internal\nauditor and whether he is provided with the required resources and tools necessary for him to fulfill his role, considering, among others,\nthe company’s size and special needs, and to review his annual plan and approve it should the company's articles of association\nrequire the approval of the Board for such plan; (viii) to oversee and approve the retention, performance and compensation of our independent\nauditors and to establish and oversee the implementation of procedures concerning our systems of internal accounting and auditing control;\nand (ix) to set procedures for handling of complaints made by company’s employees in connection with management deficiencies and\nthe protection to be provided to such employees.\n\n \n\nThe audit committee may consult from time to time with our independent\nauditors and internal auditor with respect to matters involving financial reporting and internal accounting controls.\n\n \n\nIn the event the audit committee has discovered a material deficiency\nin the company’s business operations, it must hold at least one meeting regarding such deficiency, at which the internal auditor\nor the independent accountants must be present and in which office holders who are not members of the audit committee may not participate,\nexcept for the presentation of their position.\n\n \n\nOur audit committee consists of three members of our board of directors\nwho satisfy the respective requirements of the SEC, NASDAQ and Israeli law for the composition of the audit committee. Our audit committee\nis currently composed of Messrs. Dovev (Chairman), Marmorstein and Ms. Lurie.\n\n41\n\n \n\nCompensation Committee\n\n \n\nEffective December 2012, Israeli law requires our board of directors\nto appoint a compensation committee which must be comprised of at least three directors, including all of the external directors, which\nshall be a majority of the members of the compensation committee and one of whom must serve as chairman of the committee. However, subject\nto certain exceptions, Israeli companies whose securities are traded on stock exchanges such as NASDAQ, and who do not have a controlling\nparty, do not have to meet this majority requirement; provided, however, that the compensation committee meets other Israeli Companies\nLaw composition requirements, as well as the requirements of the non-Israeli jurisdiction where the company’s securities are traded. \nOther than the external directors, the rest of the members of the compensation committee shall be directors who will be compensated for\ntheir role as directors only in accordance with Israeli Companies Law regulations applicable to the compensation of external directors,\nor amounts paid pursuant to indemnification and/or exculpation contracts or commitments and insurance coverage.\n\n \n\nOn August 31, 2022, our shareholders approved an amended and restated\ncompensation policy for our company. The compensation policy must be approved every three years by our compensation committee, board of\ndirectors and shareholders, voting with a special majority (in that order). The compensation policy is based on and references certain\nmatters and provisions set forth in the Israeli Companies Law, which include: (i) promoting our company’s goals, work plan and policy\nwith a long-term view; (ii) creating appropriate incentives for our company’s office holders, considering, among other things, our\ncompany’s risk management policy; (iii) our company’s size and nature of operations; and (iv) with respect to variable elements\nof compensation (such as annual cash bonuses), the office holder’s contribution to achieving company objectives and maximization\nof our company’s profits, with a long-term view and in accordance with his or her position.\n\n \n\nOn September 12, 2023, our shareholders approved a second amended\nand restated compensation policy for our company, which policy is consistent with our company’s written policy for recovering incentive-based\ncompensation paid to its current and former executive officers in the event that we must prepare an accounting restatement due to its\nmaterial noncompliance with any financial reporting requirements under securities laws (a “Claw-back Policy”). As required\nunder the SEC’s final rule 10D-1, and the Nasdaq’s corresponding corporate governance listing rule 5608, which came into effect\non October 2, 2023, our board of directors adopted our Claw-back Policy on August 3, 2023.\n\n \n\nOn July 8, 2024, our shareholders approved a third amended and\nrestated compensation policy for our Company, including the following principal amendments: (i) with respect to the monthly based salary,\nthe maximum gross amount payable to the active chairman of our board of directors was increased from NIS 100,000 to NIS 120,000 (approximately\n$32,260) and the gross amount payable to our CEO was increased from NIS 95,000 to NIS 110,000; (ii) with respect to the annual bonus plan,\nthe bonus amounts (and the ceilings applicable thereto) are being calculated according to the applicable officer’s gross monthly\nsalary at the time such bonuses are paid; and (iii) with respect to equity-based compensation, (a) for any equity grant, the exercise\nprice per share shall be no less than the average share price on the stock exchange in the 30 trading days prior to the date on which\nsuch equity grant is made, and (b) the application of “acceleration mechanisms” included in our 2018 share incentive plan\nto any equity grant to any director or officer of our company will be determined at the time any such equity grant us made, or at any\ntime thereafter.\n\n \n\nOn September 18, 2025, our shareholders approved a fourth amended\nand restated compensation policy, including the following principal amendment: with respect to company cars provided for the use of our\nofficers; the maximum amount payable for our chairman of our board’s company car was increased from NIS 300,000 to NIS 330,000,\nincluding 18% VAT (approximately $103,448), the maximum amount payable for our CEO’s company car was increased from NIS300,000 to\nNIS330,000, including 18% VAT (approximately US$103,448),  the maximum amount payable for our vice presidents’ other officers’\ncompany car was increased from NIS220,000 to NIS240,000, including 18% VAT (approximately US$75,235), and the maximum amount payable for\nour other managers’ (non-officers) company car was set at NIS200,000, including 18% VAT (approximately US$62,695).\n\n \n\nOur compensation committee is currently composed of Ms. Lurie and\nMessrs. Dovev and Marmorstein.\n\n42\n\n \n\nBanking Committee\n\n \n\nIn March 2014, our board of directors established a banking committee,\nwhich was authorized to adopt resolutions on behalf of the board of directors in respect of banking activities, including opening of new\naccounts and signing credit agreements of up to $9 million. Our banking committee is currently composed of Mr. Nissan and Mr. Dovev.\n\n \n\nSpecial Independent Committee\n\n \n\nIn November 2017, our board of directors established a Special\nIndependent Committee, separate and independent from our controlling shareholder, Mr. Nissan. The Special Independent Committee received\nthe Board’s mandate to examine and review any issue that may arise with respect to a possible consummation of an M&A transaction,\nat the Special Independent Committee’s sole discretion, including, among other things, the authority to retain and consult with\nfinancial and legal advisors, negotiate such transaction and recommend to our board of directors, which retains the authority on the decision\nof final execution of such agreement. For the avoidance of any doubt, the Special Independent Committee may determine that we will not\nbe party to an M&A Transaction. The Special Independent Committee is currently composed of Mr. Dovev, Ms. Lurie, Mr. Rubner and Mr.\nMeltzer.\n\n \n\nInternal Audit\n\n \n\nThe Israeli Companies Law requires the Board of Directors of a\npublic company to appoint an internal auditor nominated by the audit committee. The internal auditor must meet certain statutory requirements\nof independence.  The role of the internal auditor is to examine, among other things, the compliance of the company’s conduct\nwith applicable law and orderly business practice. Since March 2016, Mr. Doron Cohen of the accounting firm of Fahn Kanne has served as\nour internal auditor.\n\n \n\nDirectors’ Service Contracts\n\n \n\nThere are no arrangements or understandings between us and any\nof our subsidiaries, on the one hand, and any of our directors, on the other hand, providing for benefits upon termination of their employment\nor service as directors of our company or any of our subsidiaries. We note that the vesting of options granted to directors, as described\nbelow, will stop at termination of their service to the Company.\n\n \n\nExculpation, Indemnification and Insurance of Directors and Officers\n\n \n\nExculpation of Office Holders\n\n \n\nThe Israeli Companies Law provides that an Israeli company cannot\nexculpate an office holder from liability with respect to a breach of his or her duty of loyalty. If permitted by its articles of association,\na company may exculpate in advance an office holder from his or her liability to the company, in whole or in part, with respect to a breach\nof his or her duty of care.  However, a company may not exculpate in advance a director from his or her liability to the company\nwith respect to a breach of his duty of care with respect to distributions.\n\n \n\nOur articles of association allow us to exculpate any office holder\nfrom his or her liability to us for breach of duty of care, to the maximum extent permitted by law, before or after the occurrence giving\nrise to such liability. We provided an exemption letter, in the form approved by the Company's shareholders on October 17, 2013 to each\nof our directors and officers, and agreed to provide the same to our future office holders. \n\n \n\nInsurance of Office Holders\n\n \n\nThe Israeli Companies Law provides that a company may, if permitted\nby its articles of association, enter into a contract to insure office holders in respect of liabilities incurred by the office holder\nwith respect to an act or omission performed in his or her capacity as an office holder, as a result of: (i) a breach of the office holder’s\nduty of care to the company or to another person; (ii) a breach of the office holder’s duty of loyalty to the company, provided\nthat the office holder acted in good faith and had reasonable grounds to assume that his or her act would not prejudice the company’s\ninterests; and (iii) a monetary liability imposed upon the office holder in favor of another person.\n\n43\n\n \n\nOur articles of association provide that, subject to any restrictions\nimposed by applicable law, we may procure, and/or undertake to procure, insurance covering any past or present or future office holder\nagainst any liability which he or she may incur in such capacity, including insurance covering us for indemnifying such office holder,\nto the maximum extent permitted by law.\n\n \n\nWithout derogating from the above, we may enter into a contract\nto insure the liability of an office holder for an obligation imposed on such office holder in consequence of an act or omission done\nin such office holder’s capacity as an office holder, in the following case: (i) expenses, including reasonable litigation expenses\nand legal fees, incurred by the office holder as a result of a proceeding instituted against such office holder in relation to (A) infringements\nthat may result in imposition of financial sanction pursuant to the provisions of Chapter H'3 under the Israeli Securities Law, 5728-1968\n(as amended), or the “Israeli Securities Law”, or (B) administrative infringements pursuant to the provisions of Chapter H'4\nunder the Israeli Securities Law or (C) infringements pursuant to the provisions of Chapter I'1 under the Israeli Securities Law; and\n(ii) payments made to the injured parties of such infringement under Section 52ND(a)(1)(a) of the Israeli Securities Law.\n\n \n\nIn August 2024, our compensation committee and board of directors\napproved a new D&O Policy, including the order of payment, for the benefit of our directors and officers (including Mr. Nissan, our\ncontrolling shareholder, in his capacity as chairman of our board of directors), currently serving and as may serve from time to time.\nOur new D&O policy complies with all applicable limitations set forth in our amended and restated compensation policy, which was previously\napproved by our compensation committee, board of directors and shareholders. In accordance with Section 1B1 of the Israeli Companies Regulations\n(Relief Regarding Interested-Party Transactions), 5760-2000, such D&O policy requires only the approval of the Company’s compensation\ncommittee, provided that it is on market terms and would not materially affect the company’s profitability, property or liabilities\n– as was indeed determined by our compensation committee with respect to our new D&O policy. Furthermore, in accordance with\nSections 1A1 and 1B(a)(5), the application of such D&O policy to our CEO, as well as to Mr. Nissan, likewise requires only the approval\nof the Company’s compensation committee and board of directors, provided that its terms are identical for all other directors and\nofficers of our company – as was also determined by our compensation committee and board of directors. In August 2025, our compensation\ncommittee and board of directors approved the extension of the D&O Policy on substantially the same terms.\n\n \n\nIndemnification of Office Holders\n\n \n\nThe Israeli Companies Law provides that a company may, if permitted\nby its articles of association, indemnify an office holder for liabilities or expenses imposed on him or her, or incurred by him or her\nconcerning acts or omissions performed by the office holder in such capacity for: (i) a monetary liability imposed on the office holder\nin favor of another person by any judgment, including a settlement or an arbitrator’s award approved by a court; (ii) reasonable\nlitigation expenses, including attorney’s fees, incurred by the office holder as a result of an investigation or proceeding instituted\nagainst him or her by a competent authority, provided that such investigation or proceeding concluded without the filing of an indictment\nagainst the office holder or the imposition of any monetary liability in lieu of criminal proceedings, or concluded without an indictment\nagainst the office holder but with the imposition of a monetary liability on the office holder in lieu of criminal proceedings with respect\nto a criminal offense that does not require proof of criminal intent; and (iii) reasonable litigation expenses, including attorneys’\nfees, incurred by the office holder or which were imposed on him or her by a court, in an action instituted by the company or on the company’s\nbehalf, or by another person, against the office holder, or in a criminal charge from which the office holder was acquitted, or in a criminal\nproceeding in which the office holder was convicted of a criminal offense which does not require proof of criminal intent.\n\n \n\nThe Israeli Companies Law provides that a company’s articles\nof association may permit the company to indemnify an office holder following a determination to this effect made by the company after\nthe occurrence of the event in respect of which the office holder will be indemnified. It also provides that a company’s articles\nof association may permit the company to undertake in advance to indemnify an office holder, except that with respect to a monetary liability\nimposed on the office holder by any judgment, settlement or court-approved arbitration award, the undertaking must be limited to types\nof events which the company’s board of directors deems foreseeable considering the company’s actual operations at the time\nof the undertaking, and to an amount or standard that the board of directors has determined as reasonable under the circumstances.\n\n44\n\n \n\nOur articles of association provide that we may indemnify an office\nholder retroactively for certain obligations or expenses imposed on such office holder in consequence of an act or omission done in such\noffice holder’s capacity as an officer in our company.  These obligations and expenses include:\n\n \n\ni.\n\na monetary obligation imposed on the office holder in favor of another person pursuant to a judgment, including a judgment given\nin settlement or an arbitrator's award that has been approved by a court;\n\n \n\nii.\n\nreasonable litigation expenses, including advocates’ professional fees, incurred by the office holder pursuant to an investigation\nor a proceeding commenced against the office holder by a competent authority and that was terminated without an indictment and without\nhaving a monetary charge imposed on the office holder in exchange for a criminal procedure (as such terms are defined in the Israeli Companies\nLaw), or that was terminated without an indictment but with a monetary charge imposed on the office holder in exchange for a criminal\nprocedure in a crime that does not require proof of criminal intent or in connection with a financial sanction;\n\n \n\niii.\n\nreasonable litigation expenses, including advocates’ professional fees, incurred by the office holder or which the office holder\nis ordered to pay by a court, in proceedings filed against the office holder by the company or on its behalf or by another person, or\nin a criminal indictment in which the office holder is acquitted, or in a criminal indictment in which the office holder is convicted\nof an offence that does not require proof of criminal intent;\n\n \n\niv.\n\nexpenses, including reasonable litigation expenses and legal fees, incurred by an office holder as a result of a proceeding instituted\nagainst such office holder in relation to (A) infringements that may result in imposition of financial sanction pursuant to the provisions\nof Chapter H'3 under the Israeli Securities Law or (B) administrative infringements pursuant to the provisions of Chapter H'4 under the\nIsraeli Securities Law or (C) infringements pursuant to the provisions of Chapter I'1 under the Israeli Securities Law; and\n\n \n\nv.\n\npayments to an injured party of infringement under Section 52ND(a)(1)(a) of the Israeli Securities Law.\n\n \n\nOur articles of association also provide that we may undertake\nto indemnify in advance an office holder, in accordance with the conditions set under applicable law, in respect of the obligations or\nexpenses specified in (i)-(v) above, provided that such undertaking is limited to types of events which in the board of directors’\nopinion may be anticipated, in light of our company’s activities, at the time of granting the indemnity undertaking, and to an amount\nor criteria which the board of directors determines is reasonable in the circumstances of the case, both of which are to be specified\nin the indemnification undertaking.\n\n \n\nAccording to our compensation policy, the total amount of indemnification\nthat our company undertakes towards all persons whom it has resolved to indemnify, jointly and in the aggregate, shall not exceed an amount\nequal (i) 25% of the net equity of our company according to the audited or reviewed financial statement known at the time the request\nfor indemnification was submitted; or (ii) $3,000,000, whichever is greater.\n\n \n\nLimitations on Exculpation, Insurance and Indemnification\n\n \n\nThe Israeli Companies Law provides that neither a provision of\nthe articles of association permitting the company to enter into a contract to insure the liability of an office holder, nor a provision\nin the articles of association or a resolution of the board of directors permitting the indemnification of an office holder, nor a provision\nin the articles of association exempting an office holder from duty to the company shall be valid, where such insurance, indemnification\nor exemption relates to any of the following: (i) a breach by the office holder of his duty of loyalty, except with respect to insurance\ncoverage or indemnification if the office holder acted in good faith and had reasonable grounds to assume that the act would not prejudice\nthe company; (ii) a breach by the office holder of his duty of care if such breach was committed intentionally or recklessly, unless the\nbreach was committed only negligently; (iii) any act or omission committed with intent to derive an unlawful personal gain; and (iv) any\nfine or forfeiture imposed on the office holder.\n\n45\n\n \n\nUnder the Israeli Companies Law, exculpation of, procurement of\ninsurance coverage for, and an undertaking to indemnify or indemnification of, an office holder (other than the chief executive officer)\nmust be approved by the company’s compensation committee and board of directors and, if such office holder is a director, also by\nthe company’s shareholders.  Exculpation of, procurement of insurance coverage for, and an undertaking to indemnify or indemnification\nof, the chief executive officer must be approved by the company’s compensation committee, board of directors and by a special majority\nof the shareholders.\n\n \n\nWe have agreed to indemnify our office holders for certain liabilities\nand expenses that may be imposed on them due to acts performed, or failures to act, in their capacity as office holders, including financial\nliabilities imposed by judgments or settlements in favor of third parties, and reasonable litigation expenses imposed by a court in relation\nto criminal charges from which the indemnitee was acquitted or criminal proceedings in which the indemnitee was convicted of an offense\nthat does not require proof of criminal intent, all subject to Israeli law and certain limitations in the agreements. The aggregate amount\nwe may pay our office holders pursuant to our indemnification undertaking may not exceed, jointly and in the aggregate, $3 million but\nin any event not more than 25% of our company’s net equity.\n\n \n\nWe currently maintain directors’ and officers’ liability\ninsurance with a per-claim and aggregate limits of liability of $10 million. In addition, our policy provides additional limits of liability\nafter exhaustion of the existing limits, including additional limits of liability for directors and officers only, with additional coverage\nof $1 million per claim for each director/officer, and $6 million in the aggregate for all directors and officers combined for the period\nof the policy.\n\n \n\nUnder our current directors and officers liability insurance policy,\nlosses will be paid in accordance with the following order of priority: first, the insurer will pay for loss, investigation costs or mitigation\ncosts to or on behalf of an insured person (director or officer); thereafter, only after such payment and with respect to whatever remaining\namount of the limit of liability is available, the insurer will pay any other loss, investigation costs, mitigation costs, derivative\nshareholder costs or derivative investigations costs due to the company.\n\n \n\nD.          Employees\n\n \n\nWe consider our employees the most valuable asset of our company.\nWe offer competitive compensation and comprehensive benefits to attract and retain our employees. We believe that an engaged workforce\nis key to maintaining our ability to innovate.\n\n \n\nWe are committed to providing a safe work environment for our employees\nin compliance with applicable regulations.\n\n \n\nAs of December 31, 2025, we employed 352 full-time employees in Israel, of which 224\nwere employed in manufacturing services, 45 in process and product engineering, 50 in quality assurance and control, 12 in sales and marketing\nand 21 in finance, accounting, information service and administration.\n\n \n\nAs of December 31, 2024, we employed 329 full-time employees in Israel, of which 231\nwere employed in manufacturing services, 40 in process and product engineering, 26 in quality assurance and control, 14 in sales and marketing\nand 18 in finance, accounting, information service and administration.\n\n \n\nAs of December 31, 2023, we employed 333 full-time employees in Israel, of which 229\nwere employed in manufacturing services, 41 in process and product engineering, 28 in quality assurance and control, 16 in sales and marketing\nand 19 in finance, accounting, information service and administration.\n\n \n\nIn addition, Eltek USA, a wholly-owned Delaware subsidiary, employed\none full-time employee as of December 31, 2025 and 2024, and two full-time employees as of December 31, 2023.\n\n \n\nOur relationships with our employees in Israel are governed by\nIsraeli labor law, extension orders of the Israeli Ministry of Economy and Industry and personal employment agreements.  We are subject\nto various Israeli labor laws, general collective bargaining agreements entered into, from time to time, between the Histadrut and the\nManufacturers Association, as well as specific and local agreements and arrangements. Such laws, agreements, and arrangements cover the\nwages and employment conditions of our employees, including length of the workday, minimum daily wages for professional workers, contribution\nto pension fund, insurance for work related accidents, procedures for dismissing employees, determination of severance pay, benefit programs\nand annual leave. We generally provide our Israeli employees with benefits and working conditions beyond the minimums required by law.\n\n46\n\n \n\nIn the past, our employees have attempted to establish an employees’\nunion committee, which was later terminated.\n\n \n\nCertain of our officers, key employees and other employees are\nparty to individual employment agreements. We have entered into a non-disclosure and non-competition agreement with some of our executive\nofficers. All of our officers and employees are subject to confidential and proprietary information provisions set forth in our Code of\nBusiness Conduct and Ethics.\n\n \n\nPursuant to Israeli law, we are legally required to pay severance\nbenefits upon certain circumstances, including the retirement or death of an employee or the termination of employment of an employee\nwithout due cause, equivalent to a one-month salary for each year of employment with the company. Most of our employees are covered by\npension plans providing customary benefits including retirement and severance benefits. Some of our employees are covered by life and\npension insurance policies providing similar benefits. We contribute 8.33% of base salaries to the employees’ pension funds or life\npension insurance policies to cover our liability for severance pay. Pursuant to Section 14 of the Israeli Severance Pay Law, 5729-1963,\nif a company contributes to an employee’s pension fund or severance fund, then the employee is entitled only to the severance amounts\naccumulated in such fund(s) upon resignation from the company or termination by the company, and the company is not obligated to make\nadditional payments to the employee upon termination of employment with the company.\n\n \n\nWith respect to pension benefits, we contribute between 6.5% to\n7.5% of base salaries to the employees’ pension plans and 7.5% to those employees who have life insurance policies. The employees\nwho have pension plans contribute between 6% to 7% of base salaries to their pension plans, and the employees who have life insurance\npolicies contribute 6% of their base salaries to their policies. In addition, we contribute 8.33% for severance pay into the employees’\nlife insurance policies, pension plans or similar funds of their choice.\n\n \n\nWe also contribute between 1% to 7.5% of base salaries to certain\n“professional advancement” funds for managers, engineers and certain others and such employees have to match one third of\nsuch contribution, up to 2.5% of their base salaries.\n\n \n\nIsraeli employers and employees are required to pay predetermined\nsums to the National Insurance Institute of Israel, which is similar to the United States Social Security Administration. Subject to minimum\nthresholds, the employer contribution to the National Insurance Institute is at the rate of 7.6% of the salary (same in 2024) and the\nemployee contribution to the National Insurance Institute is at the rate of 12% of the salary (of which 5% relates to payments for national\nhealth insurance), both of which are limited to a maximum monthly salary of NIS 51,910 (approximately $16,272) in 2025, NIS 49,030 (approximately\n$13,251) in 2024, and NIS 49,00 (approximately $13,300) in 2023. In the year ended December 31, 2024, our aggregate payments as an employer\nto the National Insurance Institute amounted to approximately 5.7% of the salaries.\n\n47\n\n \n\nE.          Share Ownership\n\n \n\nBeneficial Ownership of Executive Officers and Directors\n\n \n\nThe following table sets forth certain information as of March\n19, 2026 regarding the beneficial ownership of our ordinary shares by our directors and executive officers and all of our executive officers\nand directors as a group:\n\n \n\nName\n\n \n\nNumber of Ordinary Shares Beneficially Owned\n\n \n \n\nPercentage of Outstanding Ordinary Shares (2)\n\n \n\nPrincipal Shareholders\n\n \n \n \n \n \n \n\nYitzhak Nissan (1)\n\n \n \n\n3,942,462\n\n \n \n \n\n58.7\n\n%\n\n \n \n \n \n \n \n \n \n \n\nSenior Management and Directors\n\n \n \n \n \n \n \n \n \n\nEli Yaffe (1), (3)\n\n \n \n\n62,702\n\n \n \n \n\n*\n\n \n\nRon Freund (4)\n\n \n \n\n42,519\n\n \n \n \n\n*\n\n \n\nYitzhak Zemach (5)\n\n \n \n\n18,039\n\n \n \n \n\n*\n\n \n\nTomer Segev (6)\n\n \n \n\n7,109\n\n \n \n \n\n*\n\n \n\nYaniv Luria (7)\n\n \n \n\n4,141\n\n \n \n \n\n*\n\n \n\nIlana Lurie (8)\n\n \n \n\n15,898\n\n \n \n \n \n \n\nMordechai Marmorstein (9)\n\n \n \n\n15,898\n\n \n \n \n\n*\n\n \n\nDavid Rubner (10)\n\n \n \n\n15,898\n\n \n \n \n\n*\n\n \n\nErez Meltzer (11)\n\n \n \n\n25,898\n\n \n \n \n\n*\n\n \n\nRevital Cohen-Tzemach (12)\n\n \n \n\n8,938\n\n \n \n \n\n*\n\n \n\nGad Dovev (13)\n\n \n \n\n25,898\n\n \n \n \n\n*\n\n \n\nRaviv Segev(14)\n\n \n \n\n938\n\n \n \n \n\n*\n\n \n\nAll executive officers and directors as a group (12 persons)\n(15)\n\n \n \n\n243,877\n\n \n \n \n\n3.6\n\n%\n\n__________\n\n*Less than 1%\n\n(1) The percentages shown are based on 6,719,827 ordinary shares issued and outstanding\nas of March 19, 2026.\n\n(2) Except for Mr. Nissan, Mr. Yaffe and Mr. Freund, none of our directors or executive\nofficers holds any of our ordinary shares. Mr. Nissan is the beneficial owner of 3,777,239 shares held by Nistec Golan, a company controlled\nby him and holds 165,223 shares as an individual. The principal business address of Nistec Golan is 43 Hasivim Street, Petach Tikva, Israel.\nMr. Yaffe is the beneficial owner of 7,250 shares held by himself. Mr. Freund is the beneficial owner of 7,558 shares held by himself.\n\n(3) The number of ordinary shares beneficially owned includes 55,452 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(4) The number of ordinary shares beneficially owned includes 34,961 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(5) The number of ordinary shares beneficially owned includes 18,039 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(6) The number of ordinary shares beneficially owned includes 7,109 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(7) The number of ordinary shares beneficially owned includes 4,141 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(8) The number of ordinary shares beneficially owned includes 15,898 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(9) The number of ordinary shares beneficially owned includes 15,898 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(10) The number of ordinary shares beneficially owned includes 15,898 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(11) The number of ordinary shares beneficially owned includes 25,898 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(12) The number of ordinary shares beneficially owned includes 8,938 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(13) The number of ordinary shares beneficially owned includes 25,898 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(14) The number of ordinary shares beneficially owned includes 938 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n(15) The number of ordinary shares beneficially owned includes 229,069 ordinary shares\nsubject to options that are currently exercisable or exercisable within 60 days of the date of this report.\n\n48\n\n \n\n2018 Share Incentive\nPlan\n\n \n\nOur 2018 share incentive plan authorized the grant of options\nto purchase shares and restricted shares unites to officers, employees, directors and consultants of the company and its subsidiaries.\nAwards granted under the plan to participants in various jurisdictions may be subject to specific terms and conditions for such grants\nas may be approved by our board from time to time.\n\n \n\nEach option granted under the plan is exercisable for a period\nof ten years from the date of the grant of the option or the expiration dates of the option plan. The options primarily vest gradually\nover four years of employment.\n\n \n\nDuring 2023, 151,000 options were granted under the plan, and 171,015\noptions were exercised. During 2024, 87,000 options were granted under the plan, and 68,347 options were exercised. During 2025, 26,000\noptions were granted under the plan, and 5,787 options were exercised. As of December 31, 2025, options to purchase 376,272 ordinary shares\nwere outstanding under the plan, exercisable at an average exercise price of $8.26 per share. As of March 19, 2026, options to purchase\n454,772 ordinary shares were outstanding under the plan, exercisable at an average exercise price of $8.36 per share.\n\n \n\nIn September 2018, our shareholders approved the grant of options\nto purchase 60,857 ordinary shares to Mr. Yaffe, effective as of, and exercisable at a price per share equal to the average daily closing\nprice of the ordinary shares during the 30 calendar days prior to, July 1, 2018. Following the rights’ offerings of March 2019 and\nDecember 2020, these options are effectively exercisable into 78,580 ordinary shares. In June 2021, our shareholders approved an additional\ngrant of options to purchase 100,000 ordinary shares to Mr. Yaffe, effective as of, and exercisable at a price per share equal to the\naverage daily closing price of the ordinary shares during the 30 calendar days prior to, December 29, 2020. In September 2023, our shareholders\napproved an additional grant of options to purchase 25,000 ordinary shares to Mr. Yaffe, effective as of August 3, 2023. In June 2024\nour shareholders approved an additional grant of options to purchase 20,000 ordinary shares to Mr. Yaffe, effective as of March 10, 2024.\n\n \n\nIn June 2021, our shareholders approved the grant of options to\npurchase 20,000 ordinary shares to each of the directors (100,000 in the aggregate), including the external directors but excluding Mr.\nYitzhak Nissan, effective as of, and exercisable at a price per share equal to the average daily closing price of the ordinary shares\nduring the 30 calendar days prior to, September 6, 2021. In September 2023, our shareholders approved an additional grant of options to\npurchase 10,000 ordinary Shares to each of our directors (50,000 in the aggregate), including the external directors, but excluding Mr.\nYitzhak Nissan and Ms. Revital Cohen-Tzemach, effective as of, and exercisable at a price per share equal to the average daily closing\nprice of the ordinary shares during the 30 calendar days prior to, October 6, 2023.\n\n \n\nIn March 2021, our compensation committee and board of directors\napproved the grant of options to purchase 70,200 ordinary shares to our executive officers (other than Mr. Yaffe) and employees. In December\n2021 and December 2022, our compensation committee and board of directors approved the grant of an additional 28,000 options (in the aggregate)\nto Mr. Freund. In August 2023, our compensation committee and board of directors approved the grant of an additional 76,000 options to\nour executive officers (other than the Mr. Yaffe) and employees. In March 2024, our compensation committee and board of directors approved\nthe grant of an additional 10,000 options (in the aggregate) to Mr. Freund. In March, August and November 2024 our compensation committee\nand board approved the grant of an additional 67,000 options to our executive officers (other than Mr. Yaffe) and employees. In March,\nMay and August 2025, our compensation committee and board of directors approved the grant of 55,500 options to our executive officers\n(other than Mr. Yaffe and Mr. Freund) and employees. In November 2025, our compensation committee and board of directors approved the\ngrant of an additional 9,000 options (in the aggregate) to Mr. Freund. In March 2026, our compensation committee and board of directors\napproved the grant of an additional 37,500 options to our executive officers and employees (other than Mr. Yaffe and Mr. Fruend). In March\n2026, our compensation committee and board of directors approved the grant of an additional 2,500 options (in the aggregate) to Mr. Freund.\n\n \n\nIn May 2023, we received a tax ruling from the Israeli tax authorities\nwhich enabled us to reduce the exercise price of options granted before the 2022, 2023 and 2024 dividend distributions, respectively,\nby an amount reflecting the dividend payment per share for each of 2022 ($0.17), 2023 ($0.22) and 2024 ($0.19). The ruling is also relevant\nwith respect to future dividend distributions.\n\n \n\nIn July 2024, following approval by our audit committee and board\nof directors, our shareholders approved an amendment of the terms of all options heretofore granted to each of the Company’s directors\n(including the external directors, but excluding Mr. Yitzhak Nissan, and Ms. Revital Cohen-Tzemach) according to which, effective as of\nSeptember 6, 2024, notwithstanding anything to the contrary in any award letter executed by our company and each director with respect\nto any options granted thereunder, in the event that the Company consummates an M&A Transaction (as defined in the 2018 Equity Share\nIncentive Plan), all unvested options as of such time shall automatically vest and become exercisable in full immediately prior to the\nconsummation of such M&A Transaction. The foregoing amendment is made pursuant the 2018 Equity Share Incentive Plan, and meets the\nterms of the Third Amended and Restated Compensation Policy.\n\n \n\nF.\n\nDisclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation.\n\n \n\nNot applicable.\n\n49"}