Eltek to sell its share in Kubatronik-Leiterplatten GmbH

Eltek purchased its shares in Kubatronik from Mr. Kubat in 2002, and at that time also granted Mr. Kubat the right to require Eltek to purchase his remaining interests in Kubatronik.

In anticipation of the transaction, Eltek will:

• Pay Mr. Kubat EUR 483’000 on account of such right;
• Provide Kubatronik with a EUR 110’000 advance, to support its cash flow.
• This advance, together with Kubatronik's existing debt to the company in the amount of EUR 1’031’000, will be forgiven as part of the transaction.

In consideration for the sale, Eltek shall be entitled to contingent consideration equal to 20% of Kubatronik’s net profit in 2017, and 10% of Kubatronik’s net profit in each of 2018 and 2019. Eltek and Kubatronik further agreed, that until the end of 2017 they shall offer a 10% discount on sales to one another of their corresponding products and pay a 10% commission on sales each party effects to customers introduced by the other, as applicable. In addition, during this period, Kubatronik shall continue to manage Eltek Europe GmbH, and Mr. Avi Gal shall continue to serve as Kubatronik’s CEO, on a part-time basis. Following consummation of the transaction – expected to happen by the end on 2016 – Eltek will recognise a loss of USD 675’000. Mr. Yitzhak Nissan, Chairman of the Board and Chief Executive Officer, commented: “During the last several years Kubatrunik's [sic] business has failed to pick up and it has drawn significant resources from Eltek. The sale of Kubatronik will allow us to focus on our continued development of advanced technological solutions and is expected, in the long run, to positively impact our financial results.”