Annex A
Trust Agreement
Executed in Tel-Aviv on the 11th day of May, 2003
BETWEEN
Elron Electronic Industries Ltd. an Israeli company (the "Company")
Of 3 Azrieli Center, 00xx Xxxxx, Xxxxxxxx Xxxxxxxx, Xxx Xxxx, Xxxxxx
Attn: Xx. Xxxxx Xxxxxx
Tel. No. (+)000-0-0000000
Fax No. (+)000-0-0000000
On the one part
AND
Employees Remuneration Trust Company, (the "Trustee")
an unlimited company of advocates
of 1 Azrieli Center, Xxx Xxxx 00000, Xxxxxx
Attn. Xxxxxx Xxxxx Machlav, Adv.
Tel. No. (+) 000-0-0000000
Fax No. (+) 000-0-0000000
On the other part
RECITALS
WHEREAS
The Company has adopted an Option Plan dated as of May 11, 2003 as amended,
the "Plan" (capitalized terms and herein and not otherwise defined shall
have the meanings given to them in the Plan);
WHEREAS
Pursuant to the Plan, the Company from time to time may grant options
("Options") to employees as defined in Section 102 of the Israeli Income
Tax Ordinance [New Version], 1961 (respectively: each an "Employee" and
collectively "Employees", "Section 102" and the "Tax Ordinance");
WHEREAS
According to the Plan the Options may be allotted to a trustee for the
benefit of one or more employees designated by the Company ("Designated
Employees") so that the trustee shall hold the Options in trust for such
Employees until the end of the holding period, as defined in the Tax
Ordinance and the Income Tax Rules (Tax Relief for Issuance of Shares to
Employees), 2003 (the "Rules") and restated in the Plan (the "Holding
Period");
WHEREAS
The Company wishes to appoint the Trustee as the trustee for the Plan and
the Trustee has agreed to act as trustee for the Company and its Affiliates
(as defined in Section 102) under the terms and conditions set forth
herein.
THEREFORE IT IS HEREBY AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. The Recitals to this Trust Agreement form an integral part of this Trust
Agreement.
2. In accordance with the Plan, Options shall not be allotted to Employees but
shall be allotted to the Trustee for the benefit of one or more Designated
Employees and shall be held by the Trustee, subject to the provisions of
Section 102 and the Rules, until the end of the applicable Holding Period.
3. Until all taxes have been paid in accordance with Section 7 of the Rules,
Options and Shares issuable upon the exercise of such Options (the
"Underlying Shares") may not be sold, transferred, assigned, pledged,
encumbered, or otherwise willfully hypothecated or disposed of and no power
of attorney or deed of transfer, whether for immediate or future use may be
validly given. Notwithstanding the foregoing, the Options and Underlying
Shares may be validly transferred in a transfer made by will or by laws of
descent provided that the transferee thereof shall be subject to the
provisions of Section 102 and the Rules as would have been applicable to
the deceased Designated Employee were he or she to have survived.
In the event that any Designated Employee's Options and the Option Shares
are transferred by will or by laws of descent, the provisions of the Trust
Agreement shall apply to the heirs or transferees of such Designated
Employee.
4. Subject to section 7 of the Rules, the Trustee hereby undertakes to hold
the Options in trust for the benefit of the Designated Employees until the
end of the applicable Holding Period as provided in the Plan and shall
continue to hold the Options and the Underlying Shares after the end of the
Holding Period until their release at the request of the Designated
Employee, subject to this Trust Agreement and the Program.
5. During the applicable Holding Period and applicable vesting period (as set
forth in the Grant Letter of such Option) the Designated Employee shall be
entitled to exercise the Options allocated on his/her behalf to the
Trustee, i.e. pay the Company the exercise price of the Options, pursuant
to a procedure that shall be determined by the parties, and instruct the
Trustee to hold the Option Shares on his/her behalf until the end of the
applicable Holding Period and applicable vesting period.
6. At any time after the end of the applicable Holding Period (and subject to
Section 7 of the Rules) and applicable vesting period (as set forth in the
Grant Letter of such Option) the Designated Employee shall be entitled to
instruct the Trustee, pursuant to a procedure that shall be determined by
the parties, to exercise the Options and/or release and/or sell the Option
Shares that are held by the Trustee for the benefit of such Designated
Employee. The Trustee will comply with the instruction of such Designated
Employee, provided that if the Designated Employee instructs the Trustee to
transfer (not sell) the Option Shares to him/her, the Trustee has received
prior to such transfer, an approval from the Tax Authorities confirming
that all required taxes according to Section 102 and the Rules have been
paid by such Designated Employee.
The Options and the Option shares shall be held by the Trustee until their
exercise or their expiration date according to the Program, whichever shall
be earlier; provided, however, that subject to the provisions of Section 7
of the Rules, in no event may the Options or any Option Shares be released
from the Trust prior to the expiration of the applicable Holding Period.
7. In the event of a distribution of rights, including an issuance of bonus
shares, in connection with Options originally allocated (the "Additional
Rights"), all such Additional Rights shall be allocated and/or issued to
the Trustee for the benefit of Designated Employees, and shall be held by
the Trustee for the remainder of the applicable Holding Period for the
Options originally allocated. Such Additional Rights shall be treated in
accordance with the provisions of the applicable Tax Track. The provisions
of this Trust Agreement shall also apply to the Additional Rights.
8. The Company undertakes to refrain from allotting Options to any Employee
unless such Employee agrees in writing with the Company (1) to comply with
all the provisions set forth in Section 102, the Rules, this Trust
Agreement, the Plan and the Grant Letter; and (2) subject to the provisions
of Section 102 and the Rules, undertakes not to exercise the Options nor
sell or release the Underlying Shares from trust prior to the expiration of
the Holding Period.
9. The Company hereby instructs the Trustee to act, in the event that a matter
regarding the actions of the Trustee is not detailed in this Trust
Agreement, in accordance with the provisions of the Plan and in the absence
of a provision in the Plan, to act in accordance with it's sole discretion
and in any event in accordance with Section 102 and the Rules.
10. So long as Options, Option Shares or any other Additional Rights
transferred to the Trustee or registered in the Trustee's name in
accordance with this Agreement ("Other Security") are held in trust, the
Company shall pay the Trustee an annual fee per allotment, per Employee, as
shall be determined by the parties in a separate agreement ("Fees").
11. All commissions, expenses taxes and obligatory payments (if applicable)
arising from or pertaining to the holding of Shares and/or any Other
Security by the Trustee shall be born on the Company who shall also pay any
stamp duty if due in respect of this Trust Agreement. All commissions and
expenses, tax or obligatory payments (if applicable) including stamp duty,
arising from or in connection with the Options, the exercise of rights to
Shares, the transfer of Shares or any Other Security, receipt of dividends
and/or exercise of rights shall be borne by the Employees.
12. The Trustee will not be obliged to carry out any act that may cause the
Trustee to incur an out of pocket expense, unless the payment of such
expense, by the Company and/or Employees, is guaranteed to the Trustee's
reasonable satisfaction.
13. The Trustee will not be obliged to hold any Options, Underlying Shares or
any Additional Rights in trust after the date, hereof, unless agreed
otherwise by the Company and the Trustee.
14. The Trustee shall be entitled to resign from its position as trustee at
such time as it sees fit by giving 90 days prior written notice to the
Company. Not later than 30 days after the receipt of the notice of
resignation, the Company shall appoint another trustee and the required
notifications shall be filed by the Company, the Trustee and the newly
appointed trustee with the Tax Authorities.
15. The Trustee undertakes to fulfill its duties under this Trust Agreement in
good faith and with reasonable care. The Trustee shall not be liable for
any damage or loss incurred by the Company, its Affiliates or Employees as
a result of any action or omission on its part (other than a breach of this
Trust Agreement) in connection with this Trust Agreement or the
implementation thereof, provided that it acted in a reasonable manner and
in good faith.
16. The Company shall immediately indemnify the Trustee upon its request,
against any loss, damage or expense of any kind (including lawyer's fees
and other expert's fess) that the Trustee shall incur as a result of or in
connection with the performance of its duties pursuant to the terms and
provisions of this Trust Agreement or the performance of a trustee's duties
required by law, unless such loss, damage or expense results from the gross
negligence, bad faith or willful misconduct of the Trustee or from a breach
of this Trust Agreement. The Company shall indemnify the Trustee for any
payment it shall have to make to the Company or any third party including
Employees, as a result of a court sentence or a compromise that the Company
has agreed
to, filed in connection with (directly or indirectly) this Trust Agreement
or the Trust services.
17. The Trustee shall be entitled to consider as true and correct any document
it receives, including but not limited to - letters of instructions,
notifications, requests, agreements or confirmations, that appear to be
signed by the appropriate entity and/or person and that the Trustee
believes in good faith to be true.
18. This Agreement and all documents delivered or executed in connection
herewith shall be governed by, and construed and administered in accordance
with Israeli Law.
19. The parties shall also sign the Hebrew form of "Addendum B - Trust
Agreement" that has to be submitted to the tax authorities according to the
Rules (attached to this Trust Agreement as Attachment A).
Unless notified otherwise by one party to the other, the addresses of the
parties shall be as detailed in this Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement
on the day and year first above written:
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s/s Elron Electronic Industries Ltd. s/s Employees
Remuneration Trust
----------------------------------------- Company
--------------------------------------------------------------
The Company The Trustee
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Appendix 1
ELRON ELECTRONIC INDUSTRIES LTD.
THIS PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 30, 2003
The undersigned hereby constitutes and appoints XXXXX XXXXXX and XXXX
XXXXXXXX and each of them, the true and lawful attorneys, agents and proxies of
the undersigned, with full power of substitution, to vote with respect to all of
the Ordinary Shares of ELRON ELECTRONIC INDUSTRIES LTD. (the "Company"),
standing in the name of the undersigned at the close of business on October 28,
2003 at the Annual General Meeting of Shareholders of the Company to be held at
the offices of the Company at 3 Azrieli Center, The Triangle Building, 42nd
Floor, Tel-Aviv, Israel, on November 30, 2003, at 15:00, Israel time and at any
and all adjournments thereof, with all power that the undersigned would possess
if personally present and especially (but without limiting the general
authorization and power hereby given) to vote as follows:
(Continued and to be signed on the reverse side)
ANNUAL GENERAL MEETING OF SHAREHOLDERS OF
ELRON ELECTRONIC INDUSTRIES LTD.
November 30, 2003
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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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE XXXX
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. The Election of Directors:
NOMINEES:
[ ] FOR ALL NOMINEES O Xxx Xxxx
O Avraham Asheri
[ ] WITHHOLD AUTHORITY O Xxxx. Xxxx Xxxxxxx
FOR ALL NOMINEES O Xx. Xxxx Barir
O Xxx Xxxxxx
[ ] FOR ALL EXCEPT O Xxxx Xxxxxx
(See instructions below) O Xxxx Xxxxx
O Xx. Xxxxx Megiddo
O Xxxxxx Xxxxx.
INSTRUCTION: To withhold authority to vote for any individual nominee(s), xxxx
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here:
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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.
2. Approval of Directors' compensation as a group: FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Under the Companies law, 1999 you are required to indicate whether or not you
have a personal interest in the resolution described in this Proposal 2 which
shall include the personal interest of any of your relatives or any entity in
which you or any of your relatives:
o holds 5% or more of the issued and outstanding share capital or voting
rights, or
o has the power to appoint one or more directors or a general manager
(which in Israel is the equivalent of a president in the United States),
or
o is a director or a general manager.
An interest resulting merely from the holding of a company's shares shall not be
deemed to be a personal interest.
YES NO
PLEASE STATE WHETHER OR NOT YOU HAVE A PERSONAL INTEREST IN [ ] [ ]
THE RESOLUTIONS DESCRIBED IN THIS PROPOSAL 2.
IF YOU FAIL TO INDICATE WHETHER OR NOT YOU HAVE A PERSONAL INTEREST IN THE
RESOLUTIONS DESCRIBED IN THIS PROPOSAL 2, YOUR SHARES WILL NOT BE VOTED AND YOUR
VOTE WILL NOT BE COUNTED FOR THIS RESOLUTION.
FOR AGAINST ABSTAIN
3. To approve the Option Plan for Employees, Directors [ ] [ ] [ ]
and Officers - 2003 and certain options heretofore
granted thereunder as more fully described in the
accompanying Proxy statement:
FOR AGAINST ABSTAIN
4. Appointment of Luboshitz Kasierer , Member Firm [ ] [ ] [ ]
Of Ernst & Young International, as the
Company's auditors until the year ended
December 31, 2004 and authorization of the
Audit Committee and the Board of Directors to
determine the audit fees:
The shares represented by the Proxy will be voted in the manner directed, and if
no instructions to the contrary are indicated, will be voted "FOR" in all
Proposals listed above.
Signature of Shareholder Date:
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Signature of Shareholder Date:
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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.
