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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 December 2004
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-____________
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ELTEK LTD.
6-K Items
1. Eltek Ltd. Proxy Statement for Annual General Meeting to be held December
30, 2004.
2. Form of Proxy Card.
ITEM 1
ELTEK LTD.
4 Drezner Street, Sgoola Industrial Zone, P.O. Box 159
Petach Tikva 49101, Israel\
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NOTICE OF 2004 ANNUAL GENERAL MEETING OF SHAREHOLDERS
--------------------------
November 30, 2004
Eltek Ltd. Shareholders:
We cordially invite you to our 2004 Annual General Meeting of Shareholders.
It will be held at 10 a.m. on Thursday, December 30, 2004, at our offices at 4
Drezner Street, Sgoola Industrial Zone, Petach Tikva, Israel, for the following
purposes:
1. To extend the election of a Class I director for an additional two
year term expiring in 2006 and to elect two Class II directors for
terms expiring in 2007;
2. To approve our entering into an indemnification letter agreement with
each of our current and future directors;
3. To approve terms of procurement of a directors and officers' liability
insurance policy;
4. To appoint Somekh Chaikin, a Member Firm of KPMG, as our independent
auditors for the year ending December 31, 2004;
5. To review and discuss our Auditor's Report, Directors' Report and
Consolidated Financial Statements for the fiscal year ended December
31, 2003; and
6. 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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2004 ANNUAL GENERAL MEETING OF SHAREHOLDERS
This Proxy Statement is being furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Eltek Ltd. to be voted at the
2004 Annual General Meeting of Shareholders, or the Meeting, to be held on
Thursday, December 30, 2004 and any adjournment thereof. Shareholders will be
asked to vote upon the: (i) extension of the election of a Class I director for
an additional two year term expiring in 2006 and election of two Class II
directors for terms expiring in 2007; (ii) approval of our entering into an
indemnification letter agreement with each of our current and future directors;
(iii) approval of terms of procurement of a directors and officers' liability
insurance policy; and (iv) appointment of Somekh Chaikin, a Member Firm of KPMG,
as our independent auditors for the year ending December 31, 2004. Additionally,
our Auditor's Report, Directors' Report and Consolidated Financial Statements
for the fiscal year ended December 31, 2003 will be reviewed and discussed. Our
2003 Annual Report, including our audited financial statements for the fiscal
year ended December 31, 2003, and the proxy card enclosed with this Proxy
Statement are being mailed to shareholders on or about November 30, 2004.
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. 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.
As of November 23, 2004, the record date for determination of shareholders
entitled to vote at the Meeting, there were outstanding 5,491,711 ordinary
shares. Each ordinary share entitles the holder to one vote. The ordinary shares
have a par value of NIS 0.6 per share. The presence of two shareholders, holding
at least forty percent of our share capital voting rights, represented in person
or by proxy at the Meeting, will constitute a quorum. 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 I and Class II directors and to approve Proposal 4 to be presented at
the Meeting. The approval of Proposals 2 and 3 require 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, provided that with
respect to Mr. Joseph A. Maiman, a director who is a controlling shareholder,
either (i) at least one third of the non-interested shareholders with respect to
such proposal are included in the majority (excluding the vote of abstaining
shareholders); or (ii) the total shareholdings of the non-interested
shareholders who vote against such proposal do not represent more than 1% of the
voting rights in our company. Under the Israeli Companies Law, Proposals 2 and 3
require that our shareholders notify us prior to the vote at the Meeting, or if
such vote is made by proxy on the proxy card, whether or not they have a
personal interest with respect to the subject matter of this proposal. The term
"personal interest" is defined as "a person's personal interest in an act or
transaction of the company, including the personal interest of his relatives (or
spouse thereof) and of any other corporation in which he or his relatives is an
interested party, and exclusive of personal interest that stems from the fact of
holding shares in the company." There will be a specific place on the proxy card
to indicate if you have a personal interest in Proposals 2 and 3. Shareholders
are asked to indicate "yes" or "no." If a shareholder fails to notify us as to
whether or not he or she has a personal interest in Proposals 2 and 3, the
shareholder may not vote and his or her vote will not be counted with respect to
Proposals 2 and 3.
A broker who is the record owner of ordinary shares beneficially owned by a
customer will have discretionary authority to vote such ordinary shares in the
election of directors and all other proposals
herein if the broker has not received voting instructions from the beneficial
owner by the tenth day before the Meeting, provided that this Proxy Statement
was transmitted to the beneficial owner at least 15 days before the Meeting.
Abstentions and broker "non-votes" are not counted in determining outcomes of
matters being acted upon. They are counted only 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 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 39.6% 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.
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.
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
Pursuant to our articles of association, our board of directors shall
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 (other than outside
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.
The NASDAQ Stock Market currently requires us to have at least two
independent directors on our board of directors. In general, under NASDAQ rules
promulgated pursuant to the Sarbanes-Oxley Act of 2002, effective 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 the SEC and
NASDAQ.
Ms. Revital Degani and Mr. Eliyaho Tov, directors of our company, both
qualify as independent directors under the NASDAQ Stock Market and SEC
requirements and as outside directors under the Israeli Companies Law
requirements. Ms. Degani and Mr. Tov will serve as outside directors until our
2006 annual general meeting of shareholders, following which the service of Ms.
Degani as an outside director may not be extended and the service of Mr. Tov as
an outside director may be renewed for only one additional three-year term. Mr.
David Banitt, a Class II director, qualifies as an independent director under
the NASDAQ Stock Market and SEC requirements.
The term of office of our two Class II directors, Messrs. David Banitt and
Leo Malamud, expire as of the Meeting. Mr. Banitt will be standing for
reelection to serve as a Class II director for a term of three years. Mr.
Malamud will not be standing for reelection to serve as a director due to other
commitments. The Board of Directors proposes that Mr. Jack Bigio, a Class III
director, who was elected at our 2003 annual meeting of shareholders for a term
of three years until 2006, be transferred to serve as a Class II
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director for a term of three years, such that he will hold office until our
annual general meeting of shareholders to be held in 2007. Accordingly, the
Board of Directors proposes the election of Messrs. David Banitt and Jack Bigio,
to serve as Class II directors, to hold office for three years until our annual
general meeting of shareholders to be held in 2007, and until their successors
are elected and qualified.
Additionally, at our annual meeting of shareholders held in 2003, Mr.
Joseph Yerushalmi was elected to serve as a Class I director for a term of one
year until the annual general meeting of shareholders to be held in 2004,
whereas under our articles of association such appointment should have been for
a term of three years. Accordingly, the Board of Directors proposes the
extension of the election of Mr. Yerushalmi to serve as a Class I director for
an additional two year term, such that he will hold office until our annual
general meeting of shareholders to be held in 2006, and until his successor is
elected and qualified.
In order to timely comply with the new NASDAQ rules, our Board of Directors
will convene an extraordinary meeting of shareholders before July 31, 2005 for
the purpose of the election of an additional director, who, if elected, will
qualify as an independent director under the NASDAQ Stock Market and SEC
requirements, and in order to maintain a Board of Directors with an odd number
of directors, as required by our Articles of Association, one of our
non-independent directors will resign.
All of the director nominees were recommended to our Board of Directors by
a majority of our independent directors.
Should any of the nominees be unavailable for election, the proxies will be
voted for a substitute nominee designated by our Board of Directors. Each of the
nominees are expected to be available.
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 the extension of the election of a Class I director for
an additional two year term and the election as directors of the Class II
nominees for a term of three years.
Set forth below is information about the director nominees, including their
age, position held with our company, principal occupation and business history.
Nominee for Extension of Election as a Class I Director for a Term Expiring in
2006
Joseph Yerushalmi, (66) has served as a director since December 2003. Since
January 1996, Mr. Yerushalmi has served as a senior vice president in charge of
the projects of Merhav M.N.F Ltd. From 1992 to 1996, Mr. Yerushalmi served as
vice president for projects of Israel Chemicals Ltd. (ICL). During such time he
also served as chairman and director for several of ICL's subsidiaries. From
1989 to 1992, Mr. Yerushalmi was a visiting Professor at the University of
Pittsburgh and a consultant to industry in energy related projects. Mr.
Yerushalmi holds a Ph.D. in Chemical Engineering from the City University of New
York. From 1969 to 1977, he was a member of the Faculty of Chemical Engineering
of the City College of New York rising to the rank of Full Professor in 1976.
Nominees for Election as Class II Directors for Terms Expiring in 2007
David Banitt, (52) an independent director, has served as a director since
March 1997. Since August 2001, Mr. Banitt has served as chief executive officer
of Nano-OR Ltd., an Israeli start-up company engaged in the development of
electro-optics systems. Prior to joining Nano-OR Ltd. and since January 2001,
Mr. Banitt was self-employed. From September 1997 until January 2001, Mr. Banitt
served as President of Exsight Electro Optical Systems Ltd., an Israeli start-up
company engaged in the development of electro-optics systems for the printed
circuit boards industry. From 1993 until 1997, Mr. Banitt served as general
manager of Nitzanim Initiative Center. Prior thereto, Mr. Banitt served as Vice
President of Marketing of Optrotech Ltd., an Israeli company that provides
optical inspection systems to the printed circuit boards industry. Mr. Banitt
holds a B.Sc. degree in Electronics Engineering from Tel Aviv University.
Jack Bigio, (40) has served as a director since May 2000. Since May 2002,
Mr. Bigio has served as chief executive officer of Ampal (Israel) Ltd. From July
1995 until April 2002, Mr. Bigio served as vice
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president-operations and finance of Merhav M.N.F. Ltd, an Israeli company that
constructs turnkey projects in, among other fields, refineries, energy and
agriculture. Prior thereto he served as an economist and executive assistant to
the president of Merhav M.N.F. Ltd. for five years. Mr. Bigio holds a B.A.
degree in Economics and Business Administration and an M.B.A. degree, both from
The Hebrew University of Jerusalem.
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, is required for the election of the Class I and Class II directors.
The Board of Directors recommends a vote FOR the election of the nominees
for Class I and Class II directors.
Directors Continuing in Office
Expiration
Name Age Position Class of Director of Term
---- --- -------- ----------------- -------
Nissim Gilam............... 66 Chairman of the Board Class III 2005
Revital Degani............. 48 Director Outside Director 2006
Joseph A. Maiman........... 58 Director Class III 2005
Eliyaho Tov................ 61 Director Outside Director 2006
Nissim Gilam 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 March 2002 until September 1993, 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.
Revital Degani has served as an outside director since December 2000. Since
January 2003, Ms. Degani has served as the Chief Executive Officer of Bakara
Handasit Ltd., an Israeli company engaged in engineering control and building
inspection and surveying. Ms. Degani was an attorney for 19 years. From January
2000 until December 2002, Ms. Degani was self-employed. From April 1995 until
December 1999, Ms. Degani was in-house counsel of Reved Ltd., an Israeli company
whose shares trade on the Tel Aviv Stock Exchange, that is engaged in
engineering and construction of residential and commercial buildings. Ms. Degani
received her qualification as a lawyer and has been a member of the Israel Bar
since 1981. Ms. Degani holds a B.A. degree in Law from Tel Aviv University.
Joseph Maiman has served as a director since July 1988. Mr. Maiman has
served as president of Merhav M.N.F. Ltd. since August 1972. Since April 2002,
Mr. Maiman has served as the chairman of the board of directors of Ampal
(Israel) Ltd., a public holding company that trades on the Nasdaq Stock Market.
Mr. Maiman holds a B.A. degree in Economics from University of Texas and an M.A.
degree in Economics from Cornell University.
Eliyaho Tov has served as an outside director since December 2003. Since
November 1999, Mr. Tov has been a freelance consultant as an economic advisor
and management advisor. Mr. Tov serves as a director of several other companies.
From 1973 to September 1999, Mr. Tov served as a senior economist of The Israel
Corporation Ltd. and during such period served as a director of several
companies within The Israel Corporation Ltd. group. Mr. Tov holds a B.A. degree
in Economics and Political Science and an M.A. degree in Business Management
from the Hebrew University in Jerusalem.
Audit Committee
Our audit committee, which was established in accordance with Sections 114
- 118 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
4
regulatory requirements, our independent public accountants' qualifications and
independence, the performance of our internal audit function and independent
public accountants, finding any defects in the business management of our
company for which purpose the audit committee may consult 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.
Our audit committee consist 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. Our board
of directors has determined that Mr. Eliyaho Tov meets the definition of an
audit committee financial expert, as defined in Item 401(h) of Regulation S-K.
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.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of November 14, 2004
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 Ordinary Shares Percentage of Outstanding
Name Beneficially Owned (1) Ordinary Shares(1)(2)
---- ---------------------- ---------------------
Joseph A. Maiman........................................ 3,085,747 (3) 47.0%
Merhav M.N.F. Ltd. ..................................... 1,675,851 (3) 25.5%
Integral International Inc.............................. 1,068,396 (3) 19.5%
Nissim Gilam............................................ 51,590 (4) *
David Banitt............................................ -- --
Jack Bigio.............................................. -- --
Revital Degani.......................................... -- --
Leo Malamud............................................. -- --
Eliyaho Tov............................................. -- --
Joseph Yerushalmi....................................... -- --
All directors and executive officers as a group (13 persons) 3,389,379 (5) 50.8%
---------------------
* Less than 1%
(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 issuable upon
exercise of 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 5,491,711 ordinary shares issued and outstanding as of October 14,
2004.
(3) Of such shares, 341,500 ordinary shares are held directly by Mr. Maiman,
1,040,645 ordinary shares are held of record by Integral International
Inc., or Integral, a Panama corporation controlled by Mr. Maiman, and
27,751 ordinary shares are held of record by Integral's wholly owned
subsidiary, A.
5
Sariel Ltd. Mr. Maiman may be deemed to be the beneficial owner of the
1,068,396 ordinary shares held directly by Integral and A. Sariel Ltd. Also
includes 606,060 ordinary shares held of record by Merhav M.N.F. Ltd., or
Merhav, an Israeli private company controlled by Mr. Maiman, and 1,069,791
ordinary shares currently issuable upon exercise of a convertible debenture
note at $0.33 per share, by Merhav. Mr. Maiman disclaims beneficial
ownership of the 205,000 ordinary shares held by his son, Ohad Maiman.
(4) Includes 30,000 ordinary shares subject to currently exercisable options
granted under our 2000 Stock Option Plan, at an exercise price of $4.375
per share, which options expire in July 2005.
(5) Includes 6,000 ordinary shares issuable upon exercise of currently
exercisable stock options granted under our 1996 Stock Option Plan, and
108,000 ordinary shares issuable upon exercise of currently exercisable
stock options granted under our 2000 Stock Option Plan, and 1,069,791
ordinary shares currently issuable upon exercise of a convertible debenture
note at $0.33 per share, by Merhav.
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 year ended December
31, 2003:
Salaries, fees, Pension, retirement
commissions and bonuses and similar benefits
----------------------- --------------------
All directors and executive officers as a group, then
consisting of twelve persons(1)......................... $671,000 $129,000
_______
(1) Does not include one director and one outside director who were appointed
at the annual general meeting of shareholders held on December 31, 2003.
During the fiscal year ended December 31, 2003, we paid each of our outside
and independent directors an annual fee of NIS 18,960 ($4,330) and a per meeting
attendance fee of NIS 949 ($217). During such period we paid Nissim Gilam,
chairman of our board of directors, a management fee ranging from $3,150 to
$3,500 per month, and reimbursed him for various expenses that he incurred in
connection with his service as Chairman of our board of directors in an annual
amount of NIS 13,300 ($3,030).
As of December 31, 2003, our directors and executive officers as a group,
then consisting of twelve persons, held options to purchase an aggregate of
129,000 ordinary shares. Of such options, 6,000 options have an exercise price
of $1.75 per shares and 123,000 options have an exercise price of $4.375 per
share. The options vest over a three-year period. Of such options, options to
purchase 6,000 ordinary shares will expire in November 2004 and options to
purchase 123,000 ordinary shares will expire in July 2005. All of the options
were issued under our 1996 and 2000 Employee Stock Option Plans.
Related Party Transactions
In 2003, we negotiated a new financing plan with our banks and controlling
shareholder, Mr. Joseph A. Maiman. As part of this financing plan, we issued a
convertible debenture note in the principal amount of $500,000 to Merhav M.N.F.
Ltd., or Merhav, an Israeli private company controlled by Mr. 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 convertible debenture note to Merhav for the amount
that remained outstanding under the original note at such date, in the principal
amount of $325,312.5. The 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 Note to Merhav. During 2003, we recorded
interest and exchange rate expenses of NIS 112,000 ($26,000) on the convertible
debenture note.
6
APPROVAL OF OUR ENTERING INTO AN INDEMNIFICATION LETTER
AGREEMENT WITH EACH OF OUR DIRECTORS
(Item 2 on the Proxy Card)
Pursuant to the Israeli Companies Law, our articles of association provide
that we may undertake in advance to indemnify an office holder, subject to the
terms and conditions of applicable law, against the liabilities described in the
Israeli Companies Law that he or she may incur in such capacity, provided that
such undertaking is limited to categories of events that our Board of Directors
deems foreseeable at the time of the undertaking and to such amount determined
by our Board of Directors as reasonable in the circumstances. We may also
indemnify any past or present office holder retroactively, subject to applicable
law, whether or not we are obligated under any agreement to indemnify such
office holder.
Under the Israeli Companies Law, we may undertake in advance to indemnify,
or indemnify retroactively, an office holder with respect to an act performed by
the office holder in such capacity against: (i) a financial liability imposed on
such office holder in favor of another person by any judgment, including a
settlement or an arbitrator's award approved by a court; and (ii) reasonable
litigation expenses, including attorneys' fees, expended by such office holder
or charged to him or her by a court, in a proceeding we instituted against the
office holder or instituted on our behalf or by another person, or in a criminal
charge from which the office holder was acquitted or in which the office holder
was convicted of an offense that does not require proof of criminal intent.
These provisions are specifically limited in their scope by the Israeli
Companies Law, which provides that a company may not indemnify an office holder
as a result of a breach of his or her duty of loyalty, a breach of his or her
duty of care if the breach was committed intentionally or recklessly, an act or
omission committed with the intent to unlawfully yield a personal profit, or any
fine imposed on the office holder.
Pursuant to the Israeli Companies Law, an undertaking in advance to
indemnify an office holder must be approved by our Audit Committee and our Board
of Directors, and if the beneficiary is a director, also by our shareholders.
In the past we entered into an indemnification agreement with certain of
our directors. Our Audit Committee and Board of Directors approved our entering
into a new indemnification letter agreement with each of our officers and our
current and future directors (which will replace and supersede each of the
indemnification agreements we entered into in the past with certain of our
directors). Shareholders are being asked to authorize, at the Meeting, the
Company to enter into the new indemnification agreement with each of our current
and future directors. Under the new indemnification agreement, the
indemnification for losses incurred by a director will not exceed the lesser of
US$2,000,000 or 25% of our company's capital. Our Board of Directors believes
that entering into such agreements is in the best interest of our company and
its shareholders.
It is therefore proposed that at the Meeting the shareholders adopt the
following resolution:
"RESOLVED, that Eltek Ltd. is authorized to enter into a new
indemnification agreement with each of its current and future directors,
for losses incurred by a director that will not exceed the lesser of
US$2,000,000 or 25% of our company's capital (which will replace and
supersede any indemnification agreement Eltek Ltd. entered into in the past
with certain of its directors)."
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 thereon, is required for shareholder approval
of the foregoing resolution. In order for this resolution to be effective with
respect to Mr. Joseph A. Maiman, a director who is a controlling shareholder,
the proposal will require the affirmative vote of a majority of the ordinary
shares represented at the Meeting, in person or by proxy, entitled to vote and
voting thereon, provided that one of the following conditions is met: (i) at
least one-third of the non-interested shareholders voting with respect to the
proposal are included in the majority; or (ii) that the total shareholdings of
the non-interested shareholders who vote against the proposal do not represent
more than 1% of the voting rights in our company.
The Board of Directors recommends a vote FOR the foregoing resolution.
7
APPROVAL OF TERMS OF PROCUREMENT OF A DIRECTORS AND OFFICERS'
LIABILITY INSURANCE POLICY
(Item 3 on the Proxy Card)
Our current directors and officers' liability insurance policy is due to
expire on January 20, 2005, or a later date if extended in accordance with its
terms, and we intend to enter into a new directors and officers' liability
insurance policy to replace it. The new directors and officers' liability
insurance policy will provide for a maximum coverage of US$10,000,000. We intend
to negotiate with certain insurance companies in order to obtain the most cost
effective policy and expect that the annual premium of the new policy will not
exceed US$190,000. The intention is that under the new directors and officers'
liability insurance policy, a covered loss under the policy will be paid in
accordance with the following order of priority: first, on behalf of officers
and directors, for all loss that they shall be obligated to pay as a result of a
claim made against them; thereafter, on our behalf, for all loss that an officer
or director will be obligated to pay as a result of a claim made against them,
to the extent that we are required or permitted by law to indemnify our officers
and directors; and thereafter, on our behalf, for all loss that we will be
obligated to pay as a result of a securities claim made against us.
The Israeli Companies Law provides that a company may, if permitted by its
articles of association, enter into a contract for the insurance of the
liability of any of its office holders with respect to an act performed by him
or her in his or her capacity as an office holder, for: (i) a breach of his or
her duty of care to us or to another person; (ii) breach of his or her duty of
loyalty to us, provided that the office holder acted in good faith and had
reasonable cause to assume that his or her act would not prejudice our
interests; or (iii) a financial liability imposed upon the office holder in
favor of another person.
The Israeli Companies Law provides that a company may not enter into a
contract for the insurance of its office holders for: (a) a breach by the office
holder of his or her duty of loyalty, unless the office holder acted in good
faith and had a reasonable basis to believe that such act would not prejudice
the company; (b) a breach by the office holder of his or her duty of care if the
breach was committed intentionally or recklessly; (c) any act or omission
committed with the intent to unlawfully yield a personal profit; or (d) any fine
imposed on the office holder.
Our articles of association provide that, subject to any restrictions
imposed by applicable law, we may procure, and/or undertake to procure,
insurance covering any past or present or future office holder against any
liability which he or she may incur in such capacity, including insurance
covering us for indemnifying such office holder, to the maximum extent permitted
by law.
Pursuant to the Israeli Companies Law, the procurement of insurance
coverage for an office holder requires the approval of our Audit Committee and
our Board of Directors, and if the beneficiary is a director, also of our
shareholders.
It is therefore proposed that at the Meeting the shareholders adopt the
following resolution:
"RESOLVED, that the purchase by Eltek Ltd. of a directors and officers'
liability insurance policy, with maximum coverage of US$10,000,000, which
will be paid in the order of priority described in the Proxy Statement for
the 2004 Annual General Meeting of Shareholders, for the benefit of all of
our directors, from time to time, is and hereby be approved; and that the
management of the company be, and it is hereby is, authorized and directed
to negotiate and execute in the name and on behalf of the company,
contracts for such insurance, upon the terms and conditions so negotiated;
provided that the annual premium shall not exceed $190,000; and
"RESOLVED FURTHER, any renewal, extension and/or purchase of a new
insurance policy for all directors and officers of the Eltek Ltd., who may
serve the company from time to time, is hereby approved; and that the
management of the company be, and it is hereby is, authorized and directed
to negotiate and execute in the name and on behalf of the company,
contracts for such renewal, extension and/or purchase of insurance, upon
the terms and conditions so negotiated; provided that any such renewal,
extension or purchase is conditioned upon (i) further approval by the Audit
Committee and the Board of Directors and (ii) the annual premium will not
be more than $190,000; it being hereby clarified that no further approval
of the shareholders of the Company will be required in connection with any
renewal and/or extension and/or the purchase of any such insurance policy
in accordance with these resolutions."
8
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 thereon, is required for shareholder approval
of the foregoing resolution. In order for this resolution to be effective with
respect to Mr. Joseph A. Maiman, a director who is a controlling shareholder,
the proposal will require the affirmative vote of a majority of the ordinary
shares represented at the Meeting, in person or by proxy, entitled to vote and
voting thereon, provided that one of the following conditions is met: (i) at
least one-third of the non-interested shareholders voting with respect to the
proposal are included in the majority; or (ii) that the total shareholdings of
the non-interested shareholders who vote against the proposal do not represent
more than 1% of the voting rights in our company.
The Board of Directors recommends a vote FOR the foregoing resolution.
APPOINTMENT OF AUDITORS
(Item 4 on the Proxy Card)
Our Annual General Meeting of Shareholders first appointed Somekh Chaikin,
independent public accountants and a Member Firm of KPMG, as our auditors in
1996. Somekh Chaikin has no relationship with us or any of our affiliates except
as auditors. As a result of Somekh Chaikin's knowledge of our operations and
reputation in the auditing field, our Audit Committee and Board of Directors
believe that such firm has the necessary personnel, professional qualifications
and independence to act as our auditors. The Board of Directors has again
recommended, pursuant to the recommendation of our Audit Committee, that Somekh
Chaikin be selected as our auditors for the period ending December 31, 2004 and
recommends that the shareholders approve the appointment.
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
the fiscal year 2003, we paid Somekh Chaikin approximately NIS 351,000 for audit
and audit-related services and approximately NIS 13,000 for tax related
services.
The following resolution will be offered by the Board of Directors at the
Meeting:
"RESOLVED, that Somekh Chaikin, a Member Firm of KPMG, be, and hereby are,
appointed as the independent auditors of the Company to conduct the annual
audit of our financial statements for the year ending December 31, 2004."
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 the
Consolidated Financial Statements for the year ended December 31, 2003 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.
9
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/Arieh Reichart
Arieh Reichart
Chief Executive Officer and Secretary
Dated: November 30, 2004
10
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 Thursday, December 30, 2004 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 EXTENSION OF THE TERM OF THE CLASS I
DIRECTOR AND THE ELECTION OF THE NOMINEES FOR CLASS II DIRECTOR AND (ii)
PROPOSALS 2 THROUGH 4 SET FORTH ON THE REVERSE. VOTES CANNOT BE CAST FOR
PROPOSALS 2 AND 3 UNLESS YES OR NO HAS BEEN SPECIFIED WITH RESPECT TO WHETHER
THE SHAREHOLDER HAS A PERSONAL INTEREST WITH RESPECT TO THE SUBJECT MATTER OF
THE PROPOSAL (SEE THE PROXY STATEMENT FOR FURTHER CLARIFICATION.)
(Continued and to be signed on the reverse side)
ANNUAL GENERAL MEETING OF SHAREHOLDERS OF
ELTEK LTD.
December 30, 2004
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.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
AND "FOR" PROPOSALS 2, 3 AND 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
--------------------------------------------------------------------------------
1. The extension of the term of a Class I Director until 2006 and the election
of two Class II Directors for terms expiring in 2007.
[ ] FOR ALL NOMINEES
[ ] WITHHOLD AUTHORITY FOR ALL NOMINEES
[ ] FOR ALL EXCEPT (See instructions below)
NOMINEES:
( ) Joseph Yerushalmi - Class I Director
( ) David Banitt - Class II Director
( ) Jack Bigio - Class II Director
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)
Pursuant to Israeli law, in order to ensure specific majority requirements we
are required to ask you if you have a personal interest (as described in the
proxy statement) with respect to the subject matter of Proposals 2 and 3.
2. To approve of the Company's entering into an indemnification letter
agreement with each of its current and future directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Do you have a personal interest with respect to the subject matter of Proposal
2? YES ____ NO _____
3. To approve the Company's procurement of a directors and officers' liability
insurance policy.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Do you have a personal interest with respect to the subject matter of Proposal
3? YES ____ NO _____
4. To appoint Somekh Chaikin, a Member Firm of KPMG, as the Company's
independent auditors for the year ending December 31, 2004.
[ ] 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.
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.
----------
(Registrant)
By:/s/Arieh Reichart
-----------------
Arieh Reichart
President and Chief Executive Officer
Date: December 3, 2004