SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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F O R M 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2005
ELTEK LTD.
(Name of Registrant)
Sgoola Industrial Zone, Petach Tikva, Israel
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82-__________
This Form 6-K is being incorporated by reference into the Registrant's Form S-8
Registration Statements File Nos. 333-12012 and 333-123559.
ELTEK LTD.
6-K Items
1. Eltek Ltd. Proxy Statement for Annual General Meeting to be held
December 11, 2005.
2. Form of Proxy Card.
3. Letter to Shareholders.
ITEM 1
ELTEK LTD.
4 Drezner Street, Sgoola Industrial Zone, P.O. Box 159
Petach Tikva 49101, Israel
November 4, 2005
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NOTICE OF 2005 ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 11, 2005
--------------------------
Eltek Ltd. Shareholders:
We cordially invite you to attend our 2005 Annual General Meeting of
Shareholders of Eltek Ltd., to be held at 10 a.m. (Israeli time) on Sunday,
December 11, 2005, at our offices at 4 Drezner Street, Sgoola Industrial Zone,
Petach Tikva, Israel, for the following purposes:
1. To elect two Class III directors for terms expiring in 2008;
2. To approve the adoption of the Eltek Ltd. 2005 Stock Option Plan;
3. To approve the grant of options to Mr. Nissim Gilam, the Chairman
of our Board of Directors;
4. To approve new terms of compensation for Mr. Nissim Gilam, the
Chairman of our Board of Directors;
5. To appoint Somekh Chaikin, a Member Firm of KPMG International,
as our independent auditors for the year ending December 31,
2005;
6. To review and discuss our Auditor's Report, Directors' Report and
Consolidated Financial Statements for the fiscal year ended
December 31, 2004; and
7. To transact any other business that may properly come before the
meeting.
The Board of Directors recommends that you vote in favor of all of the
proposals, which are described in the attached Proxy Statement.
You can vote by proxy either by mail or in person. If voting by mail,
the proxy must be received by our transfer agent or at our registered office in
Israel at least 48 hours prior to the meeting to be validly included in the
tally of ordinary shares voted at the meeting. Detailed proxy voting
instructions are provided both in the Proxy Statement and on the enclosed proxy
card.
Sincerely,
/s/Nissim Gilam
Nissim Gilam
Chairman of the Board of Directors
BY ORDER OF THE BOARD OF DIRECTORS
Arieh Reichart, Chief Executive Officer and Secretary
ELTEK LTD.
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PROXY STATEMENT
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2005 ANNUAL GENERAL MEETING OF SHAREHOLDERS
This Proxy Statement is being furnished to the shareholders of Eltek
Ltd. in connection with the solicitation of proxies on behalf of the Board of
Directors of Eltek Ltd. to be voted at the 2005 Annual General Meeting of
Shareholders, or the Meeting, pursuant to the accompanying Notice of 2005 Annual
General Meeting of Shareholders. The Meeting will be held at 10 a.m. (Israeli
time) on Sunday, December 11, 2005, at our offices at 4 Drezner Street, Sgoola
Industrial Zone, Petach Tikva, Israel.
This Proxy Statement and attached Notice of Annual Meeting, and the
enclosed 2004 Annual Report, including our audited financial statements for the
fiscal year ended December 31, 2004, and proxy card are being mailed to
shareholders on or about November 10, 2005.
Purpose of the Annual General Meeting
At the Meeting, shareholders will be asked to vote upon the: (i)
election of two Class III directors for terms expiring in 2008; (ii) adoption of
the Eltek Ltd. 2005 Stock Option Plan; (iii) approval of the grant of options to
Mr. Nissim Gilam, the Chairman of our Board of Directors; (iv) approval of new
terms of compensation for Mr. Nissim Gilam, the Chairman of our Board of
Directors; and (v) appointment of Somekh Chaikin, a Member Firm of KPMG
International, as our independent auditors for the year ending December 31,
2005. In addition, our Auditor's Report, Directors' Report and Consolidated
Financial Statements for the fiscal year ended December 31, 2004 will be
reviewed and discussed at the Meeting.
Proxy Procedure
Only holders of record of our ordinary shares, par value of NIS 0.6 per
share, as of the close of business on November 4, 2005, are entitled to notice
of, and to vote in person or by proxy at, the Meeting.
Shares eligible to be voted and for which a proxy card is properly
signed and returned at least 48 hours prior to the beginning of the Meeting will
be voted as directed. If directions are not given or directions are not in
accordance with the options listed on a signed and returned proxy card, such
shares will be voted FOR the nominees for director and each proposal for which
the Board of Directors recommends a vote FOR. Unsigned or unreturned proxies,
including those not returned by banks, brokers, or other record holders, will
not be counted for quorum or voting purposes.
Abstentions and broker "non-votes" are not counted in determining
outcomes of matters being acted upon; however, they are counted for determining
a quorum at the Meeting. A broker "non-vote" occurs when a nominee holding
ordinary shares of our company for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that proposal and has not received instructions from the
beneficial owner.
We will bear the cost of soliciting proxies from our shareholders.
Proxies will be solicited by mail and may also be solicited personally or by
telephone by our directors, officers and employees. We will reimburse brokerage
houses and other custodians, nominees and fiduciaries for their expenses in
accordance with the regulations of the Securities and Exchange Commission
concerning the sending of proxies and proxy material to the beneficial owners of
our stock.
You may vote by submitting your proxy with voting instructions by mail
if you promptly complete, sign, date and return the accompanying proxy card in
the enclosed self-addressed envelope to our transfer agent or to our registered
office in Israel at least 48 hours prior to the Meeting. You may revoke your
proxy at any time prior to the exercise of authority granted in the proxy by
giving a written notice of revocation to our Corporate Secretary, by submitting
a subsequently dated, validly executed proxy, or by voting in person.
Quorum and Voting
As of November 4, 2005, the record date for determination of
shareholders entitled to vote at the Meeting, there were outstanding 5,602,511
ordinary shares. Each ordinary share entitles the holder to one vote.
In accordance with our articles of association, the presence of two
shareholders holding, in the aggregate, at least forty percent of our share
capital voting rights, represented in person or by proxy at the Meeting, will
constitute a quorum. If within half an hour from the time appointed for the
Meeting a quorum is not present, the Meeting shall stand adjourned by three
business days, at the same time and place as the original Meeting. In such case,
the adjourned meeting will be held at 10 a.m. on Wednesday, December 14, 2005 at
the same place as the original Meeting. The presence of one or more
shareholders, in person or by proxy, holding at least one ordinary share, will
constitute a quorum for the adjourned Meeting.
An affirmative vote of the holders of a majority of the ordinary shares
represented at the Meeting, in person or by proxy, entitled to vote and voting
thereon, is required to elect the Class III directors and to approve all of the
other Proposals to be presented at the Meeting.
We have received indications from several of our principal shareholders
(including Joseph A. Maiman, Merhav M.N.F. Ltd. and Integral International Inc.)
and directors and officers, who together hold approximately 12.2% of our issued
and outstanding ordinary shares, that they presently intend to vote for all of
the nominees for director and in favor of all of the other Proposals to be acted
upon at the Meeting.
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
The term of office of our two Class III directors, Messrs. Joseph A.
Maiman and Nissim Gilam, expire as of the Meeting, and they will both be
standing for reelection to serve as Class III directors for a new term of three
years.
Pursuant to our articles of association, our Board of Directors may
consist of no less than three and no more than nine members and the number of
directors must be odd. Our Board of Directors, other than outside directors, is
divided into three classes, Class I, Class II and Class III, which consist of
one director, two directors and the remaining directors, respectively.
Generally, at each annual general meeting of shareholders one class of directors
is elected for a term of three years. All the members of our Board of Directors
(except the outside directors) may be reelected upon completion of their term of
office. In addition to these three classes of directors, we have two "outside
directors," as defined and required by the Israeli Companies Law. Under the
Israeli Companies Law, an outside director is elected for a term of three years
and may be reelected as an outside director for one additional term of three
years.
In general, under NASDAQ Stock Market Rules promulgated pursuant to the
Sarbanes-Oxley Act of 2002, as of July 31, 2005, a majority of our Board of
Directors must qualify as independent directors within the meaning of the NASDAQ
Marketplace Rules and our audit committee must have at least three members and
be comprised only of independent directors, each of whom satisfies the
respective "independence" requirements of NASDAQ and the Securities and Exchange
Commission, or the SEC. However, under a recent amendment to the NASDAQ
Marketplace Rules, foreign private issuers, such as our company, may follow
certain home country corporate governance practices without the need to seek
individual exemptions from NASDAQ. Pursuant to this amendment, a foreign private
issuer must provide NASDAQ with a letter from outside counsel in its home
country certifying that the issuer's corporate governance practices are not
prohibited by home country law. On June 9, 2005, we provided NASDAQ with a
notice of non-compliance with respect to (among other things) the requirement to
maintain a majority of independent directors, as defined under the NASDAQ
Marketplace Rules. Instead, we follow Israeli law and practice which requires
that we appoint at least two outside directors, within the meaning of the
Israeli Companies Law, to our board of directors. In addition, in accordance
with SEC rules, we have the mandated three independent directors, as defined by
the SEC and NASDAQ rules, on our audit committee.
2
We also do not follow the NASDAQ requirement regarding the process for
the nomination of directors; instead, we follow Israeli law and practice in
accordance with which directors are elected by the shareholders, unless
otherwise provided in a company's articles of association. Our articles of
association do not provide otherwise. Our practice has been that our director
nominees are presented in our proxy statement for election at our annual
meetings of shareholders.
Accordingly, our Board of Directors has proposed the election of Joseph
A. Maiman and Nissim Gilam, to serve as Class III directors, to hold office for
three years until our annual general meeting of shareholders to be held in 2008,
and until their successors are elected and qualified.
Should either of the nominees be unavailable for election, the proxies
will be voted for a substitute nominee designated by our Board of Directors.
Both of the nominees are expected to be available.
The nominees, their present principal occupation or employment, the
year in which each first became a director of our company and a brief biography
are set forth below.
Nissim Gilam , age 67, has served as chairman of our board of directors
since December 1, 1998, he has served as a director since January 1996 and
previously held office as a director and our chief executive officer during the
period January 1990 through March 1991. Since April 2002, Mr. Gilam is
self-employed. From September 1993 until March 2002, Mr. Gilam served as
managing director of Ney Agencies Ltd., an Israeli company engaged as a sales
agent of raw materials and machinery sold by trading companies. From September
1987 through September 1993, Mr. Gilam served as vice president-finance of
Merhav M.N.F. Ltd., an Israeli company that constructs turnkey projects in,
among other fields, refineries, energy and agriculture.
Joseph Maiman, age 59, has served as a director since July 1988. Mr.
Maiman has served as president of Merhav M.N.F. Ltd. since August 1972. Since
January 2002, Mr. Maiman has served as the chairman of the board of directors of
Israel 10 Channel Ltd. and since April 2002 Mr. Maiman has served as the
chairman of the board of directors of Ampal American Israel Corporation, a
public holding company that trades on the NASDAQ National Market. Mr. Maiman
holds a B.A. degree in Economics from University of Texas and an M.A. degree in
Economics from Cornell University.
Under the Israeli Companies Law, the affirmative vote of the holders of
a majority of the ordinary shares represented at the Meeting, in person or by
proxy, entitled to vote and voting on the matter, will be necessary for
shareholder approval of election of the Class III nominees for a term of three
years.
The Board of Directors recommends a vote FOR the election of the two
Class III director nominees named herein.
Directors Continuing in Office
Expiration
Name Age Position Class of Director of Term
---- --- -------- ----------------- -------
David Banitt 54 Independent Director Class II 2007
Jack Bigio...................... 41 Director Class II 2007
Revital Degani.................. 49 Director Outside Director 2006
Eliyaho Tov..................... 62 Director Outside Director 2006
Joseph Yerushalmi ..................67 Director Class I 2006
Audit Committee
Our audit committee, which was established in accordance with Section
114 of the Israeli Companies Law and Section 3(a)(58)(A) of the Securities
Exchange Act of 1934, assists our board of directors in overseeing the
accounting and financial reporting processes of our company and audits of our
financial statements, including the integrity of our financial statements,
compliance with legal and regulatory requirements, our independent registered
public accountants' qualifications and independence, the performance of our
internal audit function and independent registered public accountants, finding
any defects in the business management of our company for which purpose the
audit committee may consult
3
with our independent auditors and internal auditor, proposing to the board of
directors ways to correct such defects, approving related-party transactions as
required by Israeli law, and such other duties as may be directed by our board
of directors.
The responsibilities of the audit committee also include approving
related-party transactions as required by law. Under Israeli law an audit
committee may not approve an action or a transaction with a controlling
shareholder, or with an office holder, unless at the time of approval two
outside directors are serving as members of the audit committee and at least one
of the outside directors was present at the meeting in which an approval was
granted.
Our audit committee consists of three board members who satisfy the
respective "independence" requirements of the Securities and Exchange
Commission, NASDAQ and Israeli Law for audit committee members. Our audit
committee is currently composed of Ms. Revital Degani and Messrs. David Banitt
and Eliyaho Tov. The audit committee meets at least once each quarter.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of October 31,
2005 regarding the beneficial ownership by (i) all shareholders known to us to
own beneficially more than 10% of our ordinary shares, (ii) each director and
(iii) all directors and executive officers as a group:
Number of Percentage of
Ordinary Shares Outstanding
Name Beneficially Owned (1) Ordinary Shares(1)(2)
---- ---------------------- ---------------------
Joseph A. Maiman........................................ 1,778,332 (3) 26.2%
Merhav M.N.F. Ltd. ..................................... 1,178,588 (4) 17.4%
Integral International Inc.............................. 599,744 (5) 10.7%
Nissim Gilam............................................ -- --
David Banitt............................................ -- --
Jack Bigio.............................................. -- --
Revital Degani.......................................... -- --
Eliyaho Tov............................................. -- --
Joseph Yerushalmi....................................... -- --
All directors and executive officers as a group (12 persons) 1,870,509 27.6%
---------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Ordinary shares relating
to options or convertible notes currently exercisable or convertible,
or exercisable or convertible within 60 days of this table, are deemed
outstanding for computing the ownership percentage of the person
holding such securities but are not deemed outstanding for computing
the percentage of any other person. Except as indicated by footnote,
and subject to community property laws where applicable, the persons
named in the table above have sole voting and investment power with
respect to all shares shown as beneficially owned by them.
(2) Based on 5,602,511 ordinary shares issued and outstanding as of October
31, 2005.
(3) Includes 1,178,588 ordinary shares currently issuable upon exercise of
a convertible note at $0.33 per share, by Merhav M.N.F. Ltd., an
Israeli private company controlled by Mr. Maiman. Also includes 571,993
ordinary shares held of record by Integral International Inc., a Panama
corporation, and 27,751 ordinary shares held of record by Integral
International Inc.'s wholly owned subsidiary, A. Sariel Ltd. Mr.
Maiman, a director, is the controlling shareholder of Integral
International Inc. and its wholly owned subsidiary, A. Sariel Ltd. Mr.
Maiman may be deemed to be the beneficial owner of the aggregate
599,744 ordinary shares held directly by Integral International Inc.
and A. Sariel Ltd.
(4) Issuable upon exercise of a currently convertible note at $0.33 per
share, by Merhav M.N.F. Ltd., an Israeli private company controlled by
Mr. Maiman.
4
(5) Includes 571,993 ordinary shares held of record by Integral
International Inc., a Panama corporation, and 27,751 ordinary shares
held of record by Integral International Inc.'s wholly owned
subsidiary, A. Sariel Ltd. Mr. Maiman, a director, is the controlling
shareholder of Integral International Inc. and its wholly owned
subsidiary, A. Sariel Ltd. Mr. Maiman may be deemed to be the
beneficial owner of the aggregate 599,744 ordinary shares held directly
by Integral International Inc. and A. Sariel Ltd.
Directors and Executive Compensation
The following table sets forth all compensation we paid with respect to
all of our directors and executive officers as a group for the fiscal year ended
December 31, 2004.
Salaries, fees,
commissions Pension, retirement
and bonuses and similar benefits
----------- --------------------
All directors and executive officers
as a group, consisting of twelve persons $889,000 $137,000
During the fiscal year ended December 31, 2004, we paid each of our
outside and independent directors an annual fee of NIS 15,760 ($3,658) and a per
meeting attendance fee of NIS 1,000 ($232). During such period we paid Nissim
Gilam, chairman of our board of directors, a management fee of $3,500 per month,
and reimbursed him for various expenses that he incurred in connection with his
service as chairman of the board of directors in an annual amount of NIS 13,800
($3,200).
As of December 31, 2004, our directors and executive officers as a
group, consisting of twelve persons, held options to purchase an aggregate of
128,000 ordinary shares. Of such options, options to purchase 24,500 ordinary
shares were exercised at an exercise price of $4.375 prior to their expiration
on July 31, 2005, options to purchase 83,500 ordinary shares expired on July 31,
2005, and options to purchase 20,000 ordinary shares having an exercise price of
$1.14 will expire in November 2009. The outstanding options vest over a
three-year period. These options were issued under our 2000 Stock Option Plan.
Related Party Transactions
In 2003, we negotiated a new financing plan with our banks and
controlling shareholder. As part of this financing plan, we issued a convertible
note in the principal amount of $500,000 to Merhav M.N.F. Ltd., or Merhav, an
Israeli private company controlled by our controlling shareholder, Mr. Joseph A.
Maiman. In January 2004, pursuant to the terms of the note, Merhav converted
$200,000 of the amounts due and payable under the note into 606,060 ordinary
shares of our company, and we issued a replacement convertible note to Merhav
for the amount that remained outstanding under the original note at such date,
in the principal amount of $325,312.5. Such note will become due on May 15,
2007. The note bears interest at the rate of 10% per year, compounded on a
quarterly basis. Under the terms of the note, Merhav has the right, at any time,
to convert the note and any accrued interest thereon into ordinary shares of our
company at a price of $0.33 per ordinary share. We may, at our sole discretion,
repay the accrued interest on the principal amount of the convertible note to
Merhav. During 2004, we recorded interest and exchange rate expenses of NIS
150,000 ($35,000) on the convertible note.
ADOPTION OF THE ELTEK LTD. 2005 STOCK OPTION PLAN
(Item 2 on the Proxy Card)
At the Meeting, the shareholders will be asked to approve the Eltek
Ltd. 2005 Stock Option Plan, or the 2005 Plan, which authorizes the grant of
options to purchase up to 284,500 ordinary shares to Israeli employees, officers
and directors of our company.
In August 2000, our company granted options under the Eltek Ltd. 2000
Stock Option Plan, or the 2000 Plan, to certain of our employees, officers and
the Chairman of our Board of Directors. The exercise price of such options was
$4.375, which, except for limited periods of time, exceeded the market price of
our ordinary shares and the majority of the grantees did not exercise these
options prior to their expiration on July 31, 2005. Of the options to purchase
496,400 ordinary shares granted in August 2000, options to purchase 390,600
ordinary shares expired unexercised. Our Audit Committee and Board of
5
Directors believe that it is in the best interest of our company to maintain the
interest of such individuals in our company, in a manner that would defer the
optionees' tax liability (if any) to the date that the options are exercised and
such that the underlying shares issued upon exercise of the options will not be
subject to a minimum lock-up period prior to the disposition thereof, as
provided under new Section 102(c) of the Israeli Income Tax Ordinance that came
into effect on January 1, 2003. Accordingly, our Audit Committee and Board of
Directors have approved, subject to shareholder approval, the adoption of the
2005 Plan, which is designed to reflect the provisions of such new Section
102(c). Under the 2005 Plan options will be granted to those optionees who did
not exercise their August 2000 options prior to the expiration, to the extent
not exercised, and a few additional employees. We do not intend to grant any
additional options in the future under the 2000 Plan.
NASDAQ Stock Market rules require that a NASDAQ-listed company obtain
shareholder approval for the adoption of, and material amendments to, most stock
option plans.
A general description of the principal terms of the 2005 Plan is set
forth below. This description is qualified in its entirety by the terms of the
2005 Plan, a copy of which is attached to this Proxy Statement as Appendix A and
is incorporated by reference herein.
General Description
Shares subject to the 2005 Plan. An aggregate of 284,500 ordinary
shares may be issued under the 2005 Plan. Ordinary shares that are forfeited
under the terms of the 2005 Plan or that are the subject of options that expire
unexercised or which are otherwise surrendered by the holder without receiving
any payment or other benefit with respect to such options may again be subject
to new awards under the 2005 Plan.
Awards under the 2005 Plan. Awards under the 2005 Plan may be granted
only in accordance with Section 102(c) of the Israeli Tax Ordinance. No awards
may be made under the 2005 Plan after December 31, 2005.
Term of the 2005 Plan. The 2005 Plan has a term of two years commencing
on the date of the Meeting.
Administration of the 2005 Plan. The 2005 Plan will be administered by
our Board of Directors. However, where permitted under applicable law, the 2005
Plan may be administered by a Stock Option Committee appointed by our Board of
Directors, in which case, whenever appropriate, all references in the 2005 Plan
and in this description to the Board of Directors will be deemed to refer to the
Stock Option Committee. Subject to the provisions of the 2005 Plan and
applicable law, our Board of Directors has the authority, in its sole
discretion, to:
o grant awards under the 2005 Plan and to determine their terms,
including, without limitation, exercise price;
o determine the form, terms and conditions of the stock option
agreement evidencing the option;
o prescribe the form and provisions of the notice of exercise and
payment of the option;
o interpret the provisions of the 2005 Plan; and
o prescribe, amend, and rescind rules and regulations relating to
the 2005 Plan or any award thereunder as it may deem necessary or
advisable.
Exercise price. The exercise price per share of options granted under
the 2005 Plan will be NIS 21, as determined by our Board of Directors on the
date that the 2005 Plan was approved by the Board of Directors. However, the
2005 Plan further provides that if the NIS value of the closing price of our
ordinary shares on the NASDAQ Capital Market on the date of the Meeting (or if
there was no trading on such date, the last trading day preceding the date of
the Meeting) will be greater than the exercise price determined by the Board of
Directors (determined in accordance with the U.S. dollar representative rate of
exchange as published by the Bank of Israel on the date of the Meeting), the
exercise price per share of options granted under the 2005 Plan will be equal to
such NIS value of the closing price of our ordinary shares on the NASDAQ Capital
Market on the date of the Meeting.
6
Option and exercise period. The term of options granted under the 2005
Plan will be two years from the date of grant. All options will be fully vested
upon their award.
Non-transferability of options. Options are not assignable or
transferable by the optionee, other than by will or the laws of descent and
distribution, and may be exercised during the lifetime of the optionee only by
the optionee or his or her guardian or legal representative. However, during the
optionee's lifetime, the optionee may, with the consent of the Board of
Directors, transfer without consideration all or any portion of his options to
members of the optionee's immediate family (as defined in the 2005 Plan), a
trust established for the exclusive benefit of members of the optionee's
immediate family, or a limited liability company in which all members are
members of the optionee's immediate family.
Termination of Employment or Office. Except as otherwise provided by
our Board of Directors, in the event of the termination of and/or resignation
from employment or office of an optionee with our company:
o If the optionee's cessation of employment or office is for any
reason other than termination for retirement, death, disability
or change of control of our company, all options that have not
previously expired or been exercised will be canceled and
terminated as of the date of the termination of employment or
office.
o If any two members of our Board of Directors determine that the
optionee's cessation of employment or office was not for "cause"
(as defined in the 2005 Plan), outstanding options will be
exercisable by the optionee within the later of 60 days after the
date of such cessation of employment or office and the
determination of the members of the Board of Directors, unless an
option is earlier terminated pursuant to its terms.
o If the optionee retires (as defined in the 2005 Plan),
outstanding options will continue to be exercisable by the
optionee in accordance with the stock option agreement under
which such options were granted.
o If the grantee's cessation of employment or office is by reason
of such grantee's death, outstanding options will be exercisable
by the estate of such optionee or by any person who acquired such
option by bequest or inheritance, at any time within one year
after the date of death of the optionee, unless such option is
earlier terminated pursuant to its terms.
o If the grantee's cessation of employment or office is by reason
of such grantee's total disability (as defined in the 2005 Plan),
the optionee or his guardian or legal representative will have
the right to exercise any options the optionee was eligible to
exercise as of the first date of total disability, at any time
within one year after such termination and/or resignation or
separation, unless such option is earlier terminated pursuant to
its terms.
If the optionee becomes an employee, owner, partner, director, officer,
stockholder, consultant, agent or representative of a competitor (as defined in
the 2005 Plan) of our company or any of its subsidiaries at any time during a
period of six months following the date of termination of an optionee's
employment or services with our company or any of its subsidiaries, and the
optionee has exercised options at any time during a period beginning six months
prior to the termination of employment or service and ending 60 days after such
termination, the optionee will, within 30 days of the date of a notice by our
company to the optionee, surrender to the company all ordinary shares acquired
upon the exercise of such options or, if the optionee no longer holds such
ordinary shares, a cash amount equal to the fair market value of the shares as
of the date that the optionee disposed of such shares, and we will, within 30
days of the surrender of shares or payment, refund the exercise price per share
paid by the optionee upon the exercise of such options.
Change of Control. Except as otherwise provided by our Board of
Directors, upon a change of control of our company (as such term is defined in
the 2005 Plan) outstanding options will be exercisable by the optionee within 60
days after the date of such change of control.
Amendment and termination of the 2005 Plan. Our Board of Directors may,
from time to time, alter, amend, suspend or terminate the 2005 Plan with respect
to options that have not been granted, subject
7
to shareholder approval, if and to the extent required by applicable law. Our
Board of Directors may not, without the consent of the optionee, alter or in any
way impair the rights of such optionee under any award previously granted under
the 2005 Plan. Neither the termination of the 2005 Plan nor the change of
control of our company (except to the extent provided in the 2005 Plan) will
affect any option previously granted.
It is therefore proposed that at the Meeting the following resolution
be adopted:
"RESOLVED, that the Eltek Ltd. 2005 Stock Option Plan, authorizing the
grant of options to purchase up to 284,500 ordinary shares, par value
NIS 0.6 per share, be, and hereby is, adopted and approved."
The affirmative vote of the holders of a majority of the ordinary
shares represented at the Meeting, in person or by proxy, entitled to vote and
voting thereon, will be necessary for shareholder approval of the foregoing
resolution.
The Board of Directors recommends a vote FOR the foregoing resolution.
APPROVAL OF GRANT OF OPTIONS TO THE CHAIRMAN OF
OUR BOARD OF DIRECTORS
(Item 3 on the Proxy Card)
In August 2000, our company granted options under the 2000 Plan to
certain of our employees and officers, as well as to Mr. Nissim Gilam, the
Chairman of our Board of Directors. The options granted to Mr. Gilam entitled
him to purchase 30,000 ordinary shares. The exercise price of the August 2000
options was $4.375, which, except for limited periods of time, exceeded the
market price of our ordinary shares and the majority of the grantees, including
Mr. Gilam, did not exercise these options prior to their expiration on July 31,
2005. Our Audit Committee and Board of Directors believe that it is in the best
interest of our company to maintain the interest of such individuals in our
company, in the manner described in Item 2, and to grant new options to these
individuals, including to Mr. Gilam. With respect to Mr. Gilam, the grant of
options is subject to shareholder approval at the Meeting, due to the
requirements of the Israeli Companies Law, under which the terms of compensation
(including option grants) for directors of a public company, such as our
company, require approval of our Audit Committee, Board of Directors and
shareholders, in that order.
Accordingly our Audit Committee and Board of Directors approved on
November 1, 2005, subject to shareholder approval of our new 2005 Plan (see Item
2) and of this proposal, the grant to Mr. Gilam of options to purchase a total
30,000 ordinary shares. The exercise price of the options will be NIS 21 per
share. However, if the NIS value of the closing price of our ordinary shares on
the NASDAQ Capital Market on the date of the Meeting (or if there was no trading
on such date, the last trading day preceding the date of the Meeting) will be
greater than NIS 21 (determined in accordance with the Bank of Israel U.S.
dollar representative rate of exchange on the date of the Meeting), the exercise
price per share will be equal to such NIS value of the closing price of our
ordinary shares on the NASDAQ Capital Market on the date of the Meeting. The
options will be fully vested upon grant and will terminate two years from the
date of grant. The options will be granted under the 2005 Plan and in accordance
with its terms (subject to the adoption thereof at the Meeting).
It is therefore proposed that at the Meeting the following resolution
be adopted:
"RESOLVED, that the grant of options to Mr. Nissim Gilam, the Chairman
of the Board of Directors of Eltek Ltd., to purchase 30,000 ordinary
shares, be, and hereby is, approved. The terms of such option grant,
inlcuding the exercise price, shall be as described in the Proxy
Statement for the 2005 Annual Meeting of Shareholders."
The affirmative vote of the holders of a majority of the ordinary
shares represented at the Meeting, in person or by proxy, entitled to vote and
voting thereon, will be necessary for shareholder approval of the foregoing
resolution.
The Board of Directors recommends a vote FOR the foregoing resolution.
8
APPROVAL OF NEW TERMS OF COMPENSATION FOR THE CHAIRMAN OF OUR
BOARD OF DIRECTORS
(Item 4 on the Proxy Card)
Under the Israeli Companies Law, the terms of compensation for
directors of a public company, such as our company, require approval of the
audit committee, board of directors and shareholders, in that order.
Under the current compensation terms of Mr. Gilam, the Chairman of our
Board of Directors, we are authorized to pay him a management fee of $3,500 per
month and to reimburse him for various expenses that he incurs in connection
with his service as Chairman of the Board of Directors in an annual amount up to
NIS 18,000 (approximately $4,000). Our Audit Committee and Board of Directors
believes that it is necessary to amend the terms of Mr. Gilam's compensation, so
that he will be duly compensated for his time and contribution to our company.
Accordingly, subject to shareholder approval at the Meeting, our Audit Committee
and Board of Directors have approved new terms of compensation for Mr. Gilam. In
accordance with these new terms, effective as of October 1, 2005, we will pay
Mr. Gilam a management fee of $5,000 per month and reimburse him for various
expenses that he incurs in connection with his service as Chairman of the Board
of Directors in an annual amount up to NIS 18,000 (approximately $4,000).
Additionally, under the new compensation terms, we will provide Mr. Gilam with a
company car and pay all expenses in connection therewith. Mr. Gilam may receive
this compensation directly or through his personal company, Nissim Gilam Ltd.
It is therefore proposed that at the Meeting the following resolution
be adopted:
"RESOLVED, that Eltek Ltd., be, and hereby is, authorized to pay Mr.
Gilam, the Chairman of the Board of Directors, effective as of October
1, 2005, a management fee of $5,000 per month, to reimburse him for
various expenses that he incurs in connection with his service as
Chairman of the Board of Directors in an annual amount up to NIS
18,000, and to provide him with a company car and pay all expenses in
connection therewith. Mr. Gilam may receive this compensation directly
or through his personal company, Nissim Gilam Ltd."
The affirmative vote of the holders of a majority of the ordinary
shares represented at the Meeting, in person or by proxy, entitled to vote and
voting thereon, will be necessary for shareholder approval of the foregoing
resolution.
The Board of Directors recommends a vote FOR the foregoing resolution.
APPOINTMENT OF AUDITORS
(Item 5 on the Proxy Card)
Our Annual General Meeting of Shareholders first appointed Somekh
Chaikin, an independent registered public accounting firm in Israel, a Member
Firm of KPMG International, as our auditors in 1996 and has reappointed the firm
as our auditors since such time.
At the Meeting, the shareholders will be asked to approve the
re-appointment of Somekh Chaikin as our independent public accountants for the
period ending December 31, 2005, pursuant to the recommendation of our Audit
Committee and Board of Directors. Somekh Chaikin has no relationship with us or
any of our subsidiaries or affiliates except as auditors and, to a limited
extent, as tax consultants and providers of some audit related services. Our
Audit Committee and Board of Directors believe that the independence of Somekh
Chaikin is not affected by such limited non-audit function and that, as a result
of their familiarity with our operations and reputation in the auditing field,
such firm has the necessary personnel, professional qualifications and
independence to act as our auditors.
In accordance with applicable laws, our Board of Directors will ratify
and approve our Audit Committee's determination of the remuneration of Somekh
Chaikin in according to the volume and nature of their services. With respect to
fiscal year 2004, we paid Somekh Chaikin approximately NIS 302,000
(approximately $70,000) for audit services and approximately NIS 13,000
(approximately $3,000) for tax related services.
9
The following resolution will be offered by the Board of Directors at
the Meeting:
"RESOLVED, that Somekh Chaikin, a Member Firm of KPMG International,
be, and hereby is, appointed as the independent auditors of Eltek Ltd.
to conduct the annual audit of our financial statements for the year
ending December 31, 2005."
The affirmative vote of the holders of a majority of the ordinary
shares represented at the Meeting, in person or by proxy, entitled to vote and
voting thereon, will be necessary for shareholder approval of the foregoing
resolution.
The Board of Directors recommends a vote FOR the foregoing resolution.
REVIEW AND DISCUSSION OF THE AUDITOR'S REPORT, DIRECTORS'
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
At the Meeting, our Auditor's Report, Directors' Report and
Consolidated Financial Statements for the year ended December 31, 2004 will be
presented. We will hold a discussion with respect to the financial statements at
the Meeting. This item will not involve a vote of the shareholders.
OTHER MATTERS
The Board of Directors does not intend to bring any matters before the
Meeting other than those specifically set forth in the Notice of the Meeting and
knows of no matters to be brought before the Meeting by others. If any other
matters properly come before the Meeting, it is the intention of the persons
named in the accompanying proxy to vote such proxy in accordance with the
judgment of the Board of Directors.
By Order of the Board of Directors,
/s/Nissim Gilam
Nissim Gilam
Chairman of the Board of Directors
Dated: November 4, 2005
10
APPENDIX A
ELTEK LTD.
2005 STOCK OPTION PLAN
Eltek Ltd., a corporation formed under the laws of the State of Israel
(the "Company"), hereby establishes and adopts the following Stock Option Plan
(the "Plan"), effective as of and subject to the approval of the Plan, no later
than December 31, 2005, by the majority of the shares entitled to vote at a duly
constituted meeting of the shareholders of the Company (the "Shareholder
Approval").
1. PURPOSE. The purpose of the Plan is to attract and retain
individuals to serve as directors, officers, and employees of the Company who
will contribute to the Company's success and to achieve long-term objectives
which will inure to the benefit of all shareholders of the Company through the
additional incentive inherent in the ownership of the Company's Ordinary Shares
("Shares"). For purposes of the Plan, the term "Award" shall mean a grant of an
option to purchase Shares (an "Option") pursuant to the Plan; and the "Date of
Award" shall mean the date stipulated in the resolution of the Board of
Directors of the Company approving the grant of each Option and set forth in
each Stock Option Agreement, as defined herein.
2. SHARES SUBJECT TO AWARDS.
(a) Awards under the Plan may only be granted in accordance with
Section 102 (c) of the Israeli Tax Ordinance ("Section 102 (c) Options").
(b) Subject to the adjustment provisions of Section 13 hereof, the
aggregate number of Shares which may be issued under all Awards will not exceed
284,500 Shares. Shares delivered under the Plan may be authorized and unissued
Shares or Shares reacquired by the Company, or both. The Shares that are
forfeited under the terms of the Plan and Shares that are the subject of Options
that expire unexercised or which are otherwise surrendered by the holder of such
Option (the "Optionee") without receiving any payment or other benefit with
respect thereto may again be subject to new Awards under the Plan.
3. TERM OF THE PLAN. The term of the Plan will be two years commencing
on the date of the Shareholder Approval. No Award shall be made under the Plan
after December 31, 2005.
4. ADMINISTRATION OF THE PLAN. The Plan will be administered by the
Board of Directors of the Company (the "Board"). Notwithstanding the foregoing,
where permitted under applicable law, the Plan may be administered by a Stock
Option Committee appointed by the Board (the "Stock Option Committee"), in which
case, whenever appropriate, all references herein to the Board shall be deemed
to refer to the Stock Option Committee.
The Board is authorized, subject to the provisions of the Plan, to
establish such rules and regulations as it may deem appropriate for the conduct
of meetings and proper administration of the Plan. All actions of the Board will
be taken by majority vote of its members, except that the members thereof may
authorize any one or more of their number or any officer of the Company to
execute and deliver documents on behalf of the Board. Subject to the provisions
of the Plan, the Board will have authority, in its sole discretion, to grant
Awards under the Plan and to determine their terms, to interpret the provisions
of the Plan and, subject to the requirements of applicable law, to prescribe,
amend, and rescind rules and regulations relating to the Plan or any Award
thereunder as it may deem necessary or advisable. All decisions made by the
Board pursuant to the provisions of the Plan will be final, conclusive and
binding on all persons. No member of the Board will be liable for anything done
or omitted to be done by him or by any other member of the Board in connection
with the Plan, except for his own willful misconduct or as expressly provided by
statute.
5. ELIGIBILITY. Awards will be made to such Israeli directors, officers
and employees of the Company as the Board will select from time to time.
6. STOCK OPTION AGREEMENTS. Each Option granted pursuant to the Plan
will be evidenced in writing by a stock option agreement ("Stock Option
Agreement") in such form and containing such terms and conditions as the Board
will determine which are not inconsistent with the provisions of the Plan,
including the provisions below. No Option may be exercised unless a Stock Option
Agreement evidencing the Option grant has been executed by the Company and the
Optionee. In the event of any contradiction between the Stock Option Agreement
and the Board resolution authorizing the Option grant, the Board resolution will
prevail.
(a) Type of Option; Number of Shares. Each Option will be designated as
a Section 102(c) option. Each Stock Option Agreement will state the total number
of Shares to which it pertains;
(b) Option Price. The Option exercise price per Share (the "Exercise
Price") will be NIS 21, as determined by the Board on the date of adoption of
this Plan and such Exercise Price will be stated in the Stock Option Agreement;
provided, however, that if the NIS value of the closing price of the Shares on
the NASDAQ Capital Market on the date of the Shareholder Approval (or if there
was no trading on such date, the last trading day preceding the date of the
Shareholder Approval) shall be greater than the Exercise Price determined by the
Board (determined in accordance with the U.S. dollar representative rate of
exchange as published by the Bank of Israel on the date of the Shareholder
Approval or the last trading day preceding the date of the Shareholder Approval,
as applicable), the Exercise Price will be equal to such NIS value of the
closing price of the Shares on the NASDAQ Capital Market on the date of the
Shareholder Approval (or the last trading day preceding the date of the
Shareholder Approval, if applicable).
(c) Option and Exercise Period. The period for which the Option is
granted will be two (2) years. No Option may be exercised after the expiration
of its term.
Options granted under the Plan shall be fully vested upon their Award.
(d) Time and Manner of Payment. Each Stock Option Agreement will
provide that Options granted under the Plan will be exercised by the Optionee
(or by his executors, administrators, guardian or legal representative) as to
all or part of the Shares covered thereby, at any time from time to time prior
to the expiration thereof, by the giving of written notice of exercise to the
Company, in such form and containing such further provisions consistent with the
provisions of the Plan, as the Board may from time to time prescribe, specifying
the number of Shares to be purchased. Such notice shall be accompanied by the
full payment of such purchase price made: (i) in cash or by check, bank draft or
money order payable to the order of the Company; or (ii) to the extent permitted
by law, by the delivery of irrevocable instructions by the Optionee to a broker
reasonably acceptable to the Board instructing the broker to deliver promptly to
the Company an amount equal to the purchase price. No Shares shall be issued
until the payment therefor, as provided herein, has been made or provided for.
Such notice of exercise and full payment, will be delivered to the Company at
its principal business office or such other office as the Board may from time to
time direct. In no event may any Option granted hereunder be exercised for a
fraction of a Share. The Company will effect the transfer of Shares purchased
pursuant to an Option as soon as practicable, and, within a reasonable time
thereafter, such transfer will be evidenced on the books of the Company. No
person exercising an Option will have any of the rights of a holder of Shares
subject to an Option until certificates for such Shares shall have been issued
following the exercise of such Option. No adjustment will be made for cash
dividends or other rights for which the record date is prior to the date of such
issuance.
(e) Tax Witholding. Each Stock Option Agreement will provide that the
Company may withhold from the Optionee such withholding taxes as may be required
by law, or to otherwise require the Optionee to pay such withholding taxes. Each
Stock Option Agreement will provide that if the Optionee will fail to make such
tax payments as are required, the Company will, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind, including
a payment of Shares, otherwise due to such Optionee or to take such other action
as may be necessary to satisfy such withholding obligations.
(f) Other Provisions. A Stock Option Agreement may contain any other
terms and conditions that the Board, in its sole discretion, deems appropriate;
provided, that no such term or condition will be inconsistent with the terms of
the Plan. Each Stock Option Agreement may condition the exercise of any Option
upon the attainment of specified productivity goals by a Company group or
division or an individual Optionee.
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7. NON-TRANSFERABILITY OF OPTIONS. No Option will be assignable or
transferable by the Optionee, other than by will or the laws of descent and
distribution, and may be exercised during the lifetime of the Optionee only by
the Optionee or his or her guardian or legal representative; provided, however,
that during the Optionee's lifetime, the Optionee may, with the consent of the
Board, transfer without consideration all or any portion of his Options to (i)
one or more members of the Optionee's immediate family, (ii) a trust established
for the exclusive benefit of one or more members of the Optionee's immediate
family, or (iii) a limited liability company in which all members are members of
the Optionee's immediate family. For purposes of this Section 7, "immediate
family" means the Optionee's spouse, children, stepchildren, grandchildren,
parents, stepparents, grandparents, siblings (including half-brothers and
half-sisters), in-laws, and all such relationships arising because of legal
adoption; provided, however, that any such immediate family, and any such trust,
partnership and limited liability company, will agree to be and will be bound by
the terms and provisions of the Plan and any applicable Stock Option Agreement
or other agreements covering the Options or the Shares.
8. TERMINATION OF EMPLOYMENT OR OFFICE
(a) Except as otherwise provided by the Board in a Stock Option
Agreement, in the event of the termination of and/or resignation from the
employment or office of an Optionee with the Company for any reason (other than
termination for retirement, death, disability or Change of Control of the
Company as provided below) (collectively for the purposes of this Section 8(a),
"Termination"), Options granted to the Optionee that have not previously expired
or been exercised will terminate upon the Termination Date. For the purposes of
this Section 8(a), "Termination Date" shall be the later of the date of the
"letter of termination" or "letter of resignation"' (as the case may be) and the
effective date of the Termination provided for therein.
(b) Notwithstanding Section 8(a) hereinabove, in the event that any two
members of the Board shall determine that the termination of and/or resignation
from the employment or office of an Optionee was not for "cause" all Options
that have not previously expired or been exercised as of the date of termination
will be exercisable by the Optionee within the later of 60 days after the
effective date of such termination or resignation and the determination of the
members of the Board, unless such Option is earlier terminated pursuant to its
terms; provided, however, that if the Termination date falls within a restricted
period (such as "Quiet Period", as may be determined by the Board, or within a
restricted period due to tax regulations), then the Termination date shall be
determined as the first date following the end of such restricted period. In
such case, Options which are not exercised within 60 days of the Termination
will be deemed canceled and terminated as of the lapse of such 60 days period.
For these purposes, termination for "cause" shall mean the following: the
Optionee's violation of copyright/trademark protection maintained by the
Company, a subsidiary or an affiliate; the Optionee's engaging or assisting in
any business of a Competitor (as defined below) of the Company or any of its
subsidiaries as an employee, owner, partner, director, officer, stockholder,
consultant, agent or representative; the Optionee's dishonesty, or acting in any
manner inconsistent with the utmost good faith and loyalty in the performance of
the Optionee's duties; and failure of the Optionee to perform his duties to the
reasonable satisfaction of the Company or any of its subsidiaries.
(c) In the event that (i) the Optionee becomes an employee, owner,
partner, director, officer, stockholder, consultant, agent or representative of
a Competitor (as defined below) of the Company or any of its subsidiaries at any
time during a period of six months following the date of termination of an
Optionee's employment or office with the Company or any of its subsidiaries, and
(ii) the Optionee has exercised Options at any time during a period beginning
six months prior to termination of employment and ending 60 days after such
termination, the Optionee will, within 30 days of the date of a notice by the
Company to the Optionee, surrender to the Company all Shares acquired upon the
exercise of such Options or, if the Optionee no longer holds such Shares, a cash
amount equal to the Fair Market Value of the Shares as of the date that the
Optionee disposed of such Shares, and the Company will, within 30 days of the
surrender of Shares or payment, refund the Option price per Share paid by the
Optionee upon the exercise of such Options. For purposes of this Section 8,
"Competitor" shall mean any person or entity which is the manufacturer,
producer, or supplier of, or which is engaged in any other manner in the
business of, printed circuit boards ("PCBs") in Israel and other countries in
which the Company or any of its subsidiaries has business activity. Ownership of
5% or less of the equity of publicly-traded
A-3
corporations, partnerships or companies engaged in the business of PCBs pursuant
to the preceding sentence will not be considered competition for purposes of
this Section 8.
9. RETIREMENT. Except as otherwise provided by the Board in a Stock
Option Agreement, in the event that an Optionee retires from employment with the
Company, Options granted to him that have not previously expired or been
exercised will continue to be exercisable by the Optionee in accordance with the
Stock Option Agreement under which such Options were granted. Whether or not an
Optionee has "retired" will be determined by the Board in accordance with
applicable Israeli labor law, provided that the cessation of the Optionee's
employment or office was not for "cause" (as defined in herein), as shall be
determined by the Board, in its sole discretion.
10. DEATH. In the event an Optionee dies while employed by or holding
an office with the Company, any Option granted to him that has not previously
expired or been exercised will be exercisable by the estate of such Optionee or
by any person who acquired such Option by bequest or inheritance, at any time
within one year after the date of death of the Optionee, unless such Option is
earlier terminated pursuant to its terms. All Options which are not exercised
within one year after the date of the Optionee's death will be deemed canceled
and terminated as of such applicable date.
11. DISABILITY. In the event of the termination of and/or resignation
from employment or office of an Optionee due to total disability, the Optionee
or his guardian or legal representative, will have the right to exercise any
Option which has not been previously exercised or expired at any time within one
year after such termination and/or resignation or separation, unless such Option
is earlier terminated pursuant to its terms. All option which are not exercised
within one year of the date of the Optionee's termination and/or resignation
will be deemed canceled and terminated as of the lapse of such period. The term
"total disability" shall, for purposes of this Plan, mean permanent disability
qualifying for tax exemption under Section 9(5) of the Israeli Tax Ordinance
and/or other disability determined as such by the Board.
12. CHANGE OF CONTROL. Except as otherwise provided by the Board in a
Stock Option Agreement, upon a Change of Control of the Company, Options granted
to any Optionee that have not previously expired or been exercised will be
exercisable by the Optionee within 60 days after the date of such Change of
Control as determined by the Board, unless such Option is earlier terminated
pursuant to its terms. A Change of Control will be deemed to have occurred when:
(a) any person directly or indirectly acquires shares from the major
shareholder of the Company as a result of which such person shall acquire 20% or
more of the voting power entitled to be cast at elections for directors of the
Company, unless the Company's major shareholder or another shareholder shall
also have a 20% or greater interest in the Company following such acquisition.
For this purpose, "person" shall mean a natural person, a corporation, a
partnership, a trust, a government or any other organization or entity and any
person acting in concert with such person; or
(b) there occurs any merger or consolidation of the Company, or any
sale, lease or exchange of all or any substantial part of the consolidated
assets of the Company and its subsidiaries to any other person, and (i) in the
case of a merger or consolidation, the holders of outstanding stock of the
Company entitled to vote in elections of directors of the Company immediately
before such merger or consolidation hold less than 50% of the voting power of
the survivor of such merger or consolidation or its parent, or (ii) in the case
of any such sale, lease or exchange, the Company does not own at least 50% of
the voting power of the other person;
provided, that in no event shall a Change of Control of the Company
include a change of control to any person (as defined in this Section 12) that
directly, or through one or more intermediaries, controls, or is controlled by,
or is under common control with, the controlling person immediately prior to
such Change of Control.
13. ADJUSTMENTS. In the event that the Board will determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities, the issuance of warrants
or other rights to purchase Shares or other securities, or other similar
corporate transaction or event affects the Shares with respect to which Options
have been or may be issued under the Plan, such that an adjustment is determined
by
A-4
the Board to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Board will, in such manner as the Board may deem equitable, adjust any
or all of (i) the number and type of Shares that thereafter may be made the
subject of Options, (ii) the number and type of Shares subject to outstanding
Options, and (iii) the grant or exercise price with respect to any Option, or,
if deemed appropriate, make provision for a cash payment to the holder of any
outstanding Option; provided, however, that the number of Shares subject to any
Option denominated in Shares will always be a whole number.
14. TAX LIABILITY AND TAX WITHHOLDING. The Optionee will be fully and
solely responsible for any tax resulting from the grant of the Options and/or
from exercise of such Options. The Company will have the right to withhold from
such Optionee such withholding taxes as may be required by law, or to otherwise
require the Optionee to pay such withholding taxes. If the Optionee will fail to
make such tax payments as are required, the Company will, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind, including a payment of Shares, otherwise due to such Optionee or to
take such other action as may be necessary to satisfy such withholding
obligations.
15. RIGHT OF DISCHARGE RESERVED. Nothing in the Plan nor the grant of
an Award hereunder will confer upon any Optionee or other individual the right
to continue in the employment of or office with the Company or any of its
subsidiaries or affect any right that the Company or any subsidiary or affiliate
may have to terminate the employment of (or to demote or to exclude from future
Options under the Plan) any such Optionee at any time for any reason. Except as
specifically provided by the Board, the Company will not be liable for the loss
of existing or potential profit from an Award granted in the event of
termination of employment or office even if the termination is in violation of
an obligation of the Company or any of its subsidiaries to the Optionee.
16. SEVERABILITY. If any provision of the Plan will be held unlawful or
otherwise invalid or unenforceable in whole or in part, such unlawfulness,
invalidity or unenforceability will not affect any other provision of the Plan
or part thereof, each of which remain in full force and effect. If the making of
any payment or the provision of any other benefit required under the Plan will
be held unlawful or otherwise invalid or unenforceable, such unlawfulness,
invalidity or unenforceability will not prevent any other payment or benefit
from being made or provided under the Plan, to the extent that it would not be
unlawful, invalid or unenforceable, and the maximum payment or benefit that
would not be unlawful, invalid or unenforceable will be made or provided under
the Plan.
17. AMENDMENT AND TERMINATION OF THE PLAN. The Board may, from time to
time, alter, amend, suspend or terminate the Plan with respect to Options that
have not been granted, subject to any requirement for shareholder approval
imposed by applicable law or any rule of any stock exchange or quotation system
on which Shares are listed or quoted; provided, however, that the Board may not
amend the Plan in any manner that would result in noncompliance with any
applicable law. The Board may not, without the consent of the Optionee, alter or
in any way impair the rights of such Optionee under any Award previously
granted. Neither the termination of the Plan nor, except as provided in Section
12, the Change of Control of the Company will affect any Option previously
granted.
18. GENDER AND NUMBER. Any masculine terminology used in this Plan
document will also include the feminine, and the definition of any term herein
in the singular will also include the plural except when otherwise indicated by
the context.
19. GOVERNING LAW. The Plan and all determinations made and actions
taken thereunder will be governed by the laws of the State of Israel and
construed accordingly.
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ITEM 2
ELTEK LTD.
4 Drezner Street
Sgoola Industrial Zone
Petach Tikva, 49101 Israel
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Arieh Reichart and Amnon Shemer, or
either of them, attorneys or attorney of the undersigned, for and in the name(s)
of the undersigned, with power of substitution and revocation in each to vote
any and all ordinary shares, par value NIS 0.6 per share, of Eltek Ltd. (the
"Company"), which the undersigned would be entitled to vote as fully as the
undersigned could if personally present at the Annual General Meeting of
Shareholders of the Company to be held on Sunday, December 11, 2005 at 10:00
a.m. at the principal offices of the Company, 4 Drezner Street, Sgoola
Industrial Zone, Petach Tikva, Israel and at any adjournment or adjournments
thereof, and hereby revoking any prior proxies to vote said shares, upon the
following items of business more fully described in the notice of and proxy
statement for such Annual General Meeting (receipt of which is hereby
acknowledged):
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR (i) THE ELECTION OF THE NOMINEES FOR CLASS
III DIRECTOR AND (ii) PROPOSALS 2 THROUGH 5 SET FORTH ON THE REVERSE.
(Continued and to be signed on the reverse side)
ANNUAL GENERAL MEETING OF SHAREHOLDERS OF
ELTEK LTD.
December 11, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSALS 2, 3, 4 AND 5.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
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1. The election of two Class III Directors for terms expiring in 2008.
[ ] FOR ALL NOMINEES NOMINEES:
[ ] WITHHOLD AUTHORITY FOR ALL NOMINEES ( ) Nissim Gilam
[ ] FOR ALL EXCEPT (See instructions below) ( ) Joseph A. Maiman
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
------------ mark "FOR ALL EXCEPT" and fill in the circle next to each
nominee you wish to withhold, as shown here: (X)
2. To approve the adoption of the Eltek Ltd. 2005 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the grant of options to Mr. Nissim Gilam, the Chairman of the
Board of Directors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To approve new terms of compensation for Mr. Nissim Gilam, the Chairman of
the Board of Directors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To appoint Somekh Chaikin, a Member Firm of KPMG International, as the
Company's independent auditors for the year ending December 31, 2005.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. [ ]
Signature of Shareholder__________ Date _____
Signature of Shareholder__________ Date _____
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
ITEM 3
[LETTERHEAD OF ELTEK LTD.]
Dear Shareholders:
Fiscal 2004 was a very important year for our company. We executed
successfully on our plan to reach profitable operations and on our strategy to
broaden our customer base by increasing our sales efforts in Europe and North
America. In 2004, our revenues increased by 15.4% to NIS 125 million, or $29
million. We reached profitable operations in the fourth quarter of 2004 and have
operated on a profitable basis in fiscal 2005.
Our profitability has in great measure been the result of a strategic
decision to focus our activity on the production of high-end flex-rigid PCB
boards. This decision has resulted in our attracting new customers for these
niche products, mainly in the international markets. The increased revenues,
coupled with higher gross margins, increased our profitability. Our margins have
also benefited from our efforts to improve our operating efficiency to
capitalize on orders for long-term projects with recurrent deliveries. In 2005,
we continued our investment in the resources we need to meet the demand for our
flex-rigid boards and the challenges we will face in the future.
As I previously indicated, we have worked hard to develop our
international business. In 2004, we had NIS 57 million ($13 million) of revenues
from international operations. We are continuing our efforts to further
penetrate these export markets and expect that our international sales will
continue to grow in importance to our company.
We continue to be vigilant with respect to market and general economic
trends and are ready to invest in marketing efforts that will allow us to reach
new customers and obtain orders for long-term projects while we continue to fund
and maintain programs that are critical to our long term success.
I offer my sincere appreciation for the continued dedication and hard
work of our valued employees and thank our customers for their continued trust
and confidence.
/s/Arieh Reichart
Arieh Reichart
CEO
November 10, 2005
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ELTEK LTD.
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(Registrant)
By:/s/Arieh Reichart
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Arieh Reichart
President and Chief Executive Officer
Date: November 14, 2005