ELECTRONICS LINE 3000 LIMITED Re: Purchase of Electronics Line 3000 Shares by RISCO Ltd.
MAKE SURE YOU READ THE INSTRUCTIONS ACCOMPANYING THIS NOTICE CAREFULLY BEFORE COMPLETING THIS LETTER. IF APPLICABLE TO YOU, MAKE SURE YOU COMPLETE ACCURATELY THE DECLARATION FORM ('DECLARATION OF STATUS FOR ISRAELI INCOME TAX PURPOSES') INCLUDED HEREIN TO PREVENT A FINAL ISRAELI WITHHOLDING TAX OF 26.5% COMING DECEMBER 28, 2015 (SEE INSTRUCTIONS 2 AND 4 TO THIS NOTICE FOR MORE DETAILS).Dear shareholder,
Pursuant to the Merger Agreement dated as of June 26, 2015 (the 'Merger Agreement'), by and among RISCO Ltd. ('RISCO'), Risco Line Ltd. ('Risco Line') and Electronics Line 3000 Ltd. (the 'Company'), RISCO purchased the entire issued share capital of the Company, such that the Company shall became a wholly-owned subsidiary of RISCO and its controlling shareholders (the 'Merger').
Under the Merger Agreement, RISCO agreed to purchase all of the Company's outstanding share capital, which is held by shareholders of the public against a consideration of EUR 0.46 per share, such that the total consideration paid in cash by RISCO for the Shares will be approximately EUR 2.3 million (the 'Total Merger Consideration').
The Merger was completed and came into effect following the issuance of a Certificate of Merger by the Companies Registrar in accordance with the Israeli Companies Law. Consequently, the shares formerly held by the public have been transferred to RISCO by virtue of law. Such former shareholders of the public are entitled to receive the Total Merger Consideration in accordance with the outline detailed below.
102 Capital Management has been appointed by the Company as an Israeli sub paying agent, who will be responsible for the remittance of the Israeli taxes to the Israeli Tax Authority (respectively, the 'Sub Paying Agent' and the 'ITA'). The Sub Paying Agent will withhold at source 26.5% of the Total Merger Consideration to be paid to the Shareholders (the 'Withheld Tax Amount'). The payment of the Total Merger Consideration less the Withheld Tax Amount to the former shareholders of the public will be made by RISCO through biw Bank für Investments und Wertpapiere AG, Willich, Germany (the 'Paying Agent'), who will be responsible for transferring the Total Merger Consideration less the Withheld Tax Amount from RISCO to the shareholders of the Company via the systems of Clearstream Banking AG, Frankfurt (Germany).
All authority herein conferred or agreed to be conferred is irrevocable and shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, estates, successors and assigns of the undersigned. The undersigned hereby represents and warrants that the undersigned (i) has full power and authority to submit, sell, assign and transfer the Company's shares, and (ii) as of immediately prior to the effective date of the consummation of the Merger, had good and unencumbered title thereto, free and clear of all liens, restrictions, charges (including taxes) and encumbrances and not subject to any adverse claims.
The undersigned agrees that the sole right that the undersigned has in respect of the undersigned's ownership interest in the Company's shares held by the undersigned set forth above, if any, shall be the undersigned's right to receive payment for the Company shares owned by the undersigned in accordance with, and subject to, the terms and provisions of the Merger Agreement. By delivery of this Notice, the undersigned accepts the Merger Consideration and, other than payment thereof, acknowledges and confirms that he/she/it forever withdraws any and all objections to the Merger, and releases all claims against RISCO and/or the Company, that the undersigned may have, if any, in his/her/its capacity as a holder of Company Ordinary Shares.
Number of shares held: | Securities Account Number: |
YOU MUST SIGN IN THE BOX BELOW
SIGNATURE(S) REQUIRED
Signature(s) of Beneficial Holder(s) or Agent
Must be signed by the beneficial holder(s) EXACTLY as name(s) appear(s) in the books of the Depositary Bank. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer for a corporation acting in a fiduciary or representative capacity, or other person, please set forth full title. See Instructions 1 and 2.
Beneficial Holder
Beneficial Holder
Title, if any
Number or Registration Number
Date:
Phone No.:
(Please see instructions regarding signature guarantee.)
Important Tax Information Important notice: You will receive 73.5% out of the Merger Consideration after a preliminary withholding of Israeli taxes at source at a rate of 26.5%. The Sub Paying Agent will remit such Israeli taxes to the Israeli Tax Authority in NIS unless before December 28, 2015, 18:00 (CET)] you:- Complete and send to the Company the enclosed 'Declaration of Status for Israeli Income Tax Purposes' certifying that you (1) are not, and at the date of purchase of your Company shares were not, an Israeli resident, (2) acquired all the Company Shares held by you on or after December 11, 2005 (the date of the initial public offering of the Company), (3) hold less than 5% (directly or indirectly) of the Company shares; and (4) comply with the requirements of the Israeli Tax Authority, as further detailed in Instruction 4, 'Important Israeli Tax Withholding Information' or
- Complete and return the enclosed 'Declaration of Status for Israeli Income Tax Purposes' certifying that you (1) are an Israeli financial institution, and (2) hold the Company Ordinary Shares solely on behalf of beneficial shareholder(s); or
- Provide a valid certificate from the Israeli Tax Authority providing full exemption from such withholding tax (or the right to a lower rate of withholding) to the Sub Paying Agent's reasonable satisfaction. (See Instruction 4, 'Important Israeli Tax Withholding Information')
INSTRUCTIONS FOR EXCHANGE PROCEDURES
(Please read carefully the instructions below)
Payment in the Same Name: The payment of a refund of Israeli withholding tax will be made to the cash account associated to the securities account in which the shares were held and the Notice should be completed and signed exactly as such person's name appears thereon. If any of the shares are owned by two or more joint owners, all such owners must sign this Notice exactly as recorded on the books of the depositary bank. Notices executed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary capacity who are not identified as such in the registration must be accompanied by proper evidence of the signer's authority to act.
Description of Payment Tranches: 73.5% of the Total Merger Consideration shall be paid by the Paying Agent to the former shareholders of the public in accordance with the instructions of the Israeli withholding tax ruling. The remaining 26.5% out of the Merger Consideration shall be paid to the former shareholders of the public by the Company in accordance with the instructions set forth in Section 4 below and to the extent that all applicable documents shall be sent to the Company by December 28, 2015 18.00 (CET). Otherwise, such amount shall be remitted to the Israeli Tax Authority (the 'ITA') and you will be required to approach the ITA in order to obtain a refund of such Israeli taxes withheld at source, as further detailed below.
Time Limit: If you do not return the Notice and a duly completed Declaration of Status for Israeli Income Tax Purposes to the Company by December 28, 2015, 18.00 (CET), the Sub Paying Agent will remit 26.5% of the Merger Consideration pursuant to Israeli withholding tax rules, and such amount will be paid on your behalf to the ITA. After such time it might be practically challenging to reclaim all or parts of the amount paid to the ITA should you be entitled to a lower withholding amount or no withholding at all. You will then have to engage with ITA on your own initiative, and on your own cost and risk. Therefore, we would urge you to hand in your Notice, including the Declaration Regarding Israeli Withholding and any other Required Documents to the Company as soon as possible. Please note in addition that if you do not return a duly completed Declaration of Status for Israeli Income Tax Purposes in time, the Sub Paying Agent will also not be able to issue a statement to you evidencing the withheld tax amount.
The tax information set forth above is for informational purposes only, shareholders are not entitled to (and should not) rely on such information and each shareholder should consult an independent tax advisor and/or consultant as such shareholder deems necessary. None of RISCO, the Company or any of their respective affiliates, subsidiaries, directors, officers, equity holders, members, managers, partners, employees and representatives shall have any liability to a shareholder with respect to any of the foregoing tax information.
Important Israeli Tax Withholding Information: According to Israeli law, any shareholder, including a shareholder who is not a resident of the State of Israel, is subject to withholding at source of Israeli tax in accordance with the rates prescribed by Israeli law from the payment of the Merger Consideration in respect of any shares surrendered herewith. Such withheld tax amount may be refunded wholly or partially to shareholders who provide the Sub Paying Agent (via the Company) prior to or concurrently with submitting this Notice in accordance with the terms hereof, with a valid certificate issued by the Israel Tax Authority exempting such shareholder from Israeli withholding tax on the payment of the Merger Consideration or entitling such shareholder to a reduced rate of Israeli withholding tax on such payment in form and substance reasonably acceptable to the Sub Paying Agent (a 'Valid Certificate'). Please note that the withholding of tax at source and remittance of funds to the ITA, as relevant, shall be made in NIS and that the Sub Paying Agent, acting as withholding agent, shall be required to convert the relevant portion of Euros to be paid to the ITA into NIS according to the applicable Euro/NIS exchange rate at the time of such conversion and as required under Israeli law.
In addition, the Israel Tax Authority issued a withholding tax ruling providing, among others, that (i) non-Israeli shareholders that purchased their shares on or after December 11, 2005 (the date of the initial public offering of the shares in the Regulated Market of the Frankfurt Stock Exchange) and hold less than 5% of the issued and outstanding Company's shares will also be exempt from withholding taxes to the extent that such shareholders will provide the Sub Paying Agent (via the Company in the manner specified below) with a completed and signed 'DECLARATION OF STATUS FOR ISRAELI INCOME TAX PURPOSES', attached as Addendum A hereto ('Declaration Regarding Israeli Withholding') and in accordance with the requirements set forth on the Israeli withholding tax ruling, as further detailed below, and (ii) Israeli financial institutions that hold shares solely on behalf of beneficial shareholder(s) will also be exempt from withholding taxes to the extent that such Israeli financial institutions will provide the Sub Paying Agent (via the Company in the manner specified below) with a completed and signed Declaration Regarding Israeli Withholding. Make sure you review the enclosed letter to shareholders and complete the Declaration Regarding Israeli Withholding included herein, to avoid a deduction of Israeli withholding tax if you are entitled to any of the exemptions stated above.
Under the Israeli withholding tax ruling dated September 8, 2015, non-Israeli resident Shareholders must apply to the Sub Paying Agent (via the Company) in order to refund the Withheld Tax Amount. All applications must be filed with the Company until and no later than December 28, 2015, 18.00 CET. Shareholders who fail to do so, will have to handle their tax issues by themselves and deal with the ITA directly.
In order to satisfy the terms of the Israeli withholding tax ruling, non-Israeli resident shareholders shall be required to provide the Sub Paying Agent (via the Company) the following documents (collectively, the 'Required Documents'):
Sold note of the Bank regarding the payment of the Merger Consideration / the squeeze out ('Wertpapierabrechnung') or a confirmation to be made by the relevant bank to which the Merger Consideration was remitted to detailing at least the following:
the bank details (bank name, branch, BIC)
account numbers (IBAN)
the account holder's name
number of shares associated with that bank account and for which payment of the Merger Consideration was received at the day of the settlement of the squeeze out.
A declaration, in the form attached as Addendum A, stating the following:
The shareholder is not an Israeli resident (if applicable).
The applicant is the beneficial owner of the shares.
The Shareholder's investment was not made through a 'permanent establishment' in Israel.
A copy of the shareholder's identifying documents as follows:
For a person: a copy of a passport or an identity card from such person's country of residence.
For a company: a certificate of incorporation / excerpt of the commercial register of its country of residency.
A shareholder whose portion of the Total Merger Consideration exceeds $100,000 and/or has indicated in his declaration that he has an Israeli citizenship, shall provide a residency certificate, signed by the tax authorities in his country of residence.
All Required Documents must be sent to the offices of the Company by the end of the Tax Drop Date, via email to Tax.Declarations@electronics-line.com or to fax number +972-3-9637775. Upon receiving the Required Documents which indicate, to the Israeli Sub Paying Agent's satisfaction, that the Shareholder is a resident of a country other than Israel, it will transfer the Withheld Tax Amount to the bank account indicated in the Required Documents.
The portion of the Withheld Tax Amount, which is held by the Israeli Sub Paying Agent for a Shareholder, who has not provided the Required Documents by the end of the day on the Tax Drop Date, will be remitted to the ITA on December 31, 2015.
Any shareholder whose portion of the Withheld Tax Amount has been remitted to the ITA, as a result of failure to produce the Required Documents, will then be required to apply to the ITA and request a tax refund independently.
A complete copy of the original Israeli withholding tax ruling in the Hebrew language is available for download at the Company´s website in the investor relations section.
Sincerely yours, Electronics Line 3000 Ltd.
Addendum A
DECLARATION OF STATUS FOR ISRAELI INCOME TAX PURPOSES
Read this form together with the INSTRUCTIONS FOR EXCHANGE PROCEDURESYou are receiving this form 'Declaration of Status For Israeli Income Tax Purposes' as a holder of ordinary shares, NIS 5 par value per share (the 'Shares') of ELECTRONICS LINE 3000 LTD. ('ELECTRONICS LINE' or the 'Company'), in connection with the Merger of ELECTRONICS LINE with RISCO LINE LTD., (the 'Merger Sub'), a company incorporated under the laws of Israel and a wholly-owned subsidiary of RISCO LTD., a company organized under the laws of Israel (the 'Parent' and the 'Merger', respectively).
Who may use this form and why?
Holders of ordinary shares, NIS 5 par value per share (the 'Shares'), of ELECTRONICS LINE may use this form if they are either:
Eligible Non-Israeli Residents: If (A) you certify that you are NOT a 'resident of Israel' (as defined under Section 1 of the Israeli Income Tax Ordinance [New Version], 5721-1961 (the 'Ordinance') (See Instruction
II) for purposes of the Ordinance, (B) you acquired your Shares on or after the Company's initial public offering on the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) ('FSE') (i.e., December 11, 2005), and (C) you hold less than 5% of the outstanding Shares, you may be eligible for a full exemption from Israeli withholding tax with respect to the Merger Consideration payable to you (if any) pursuant to the merger (the 'Merger') of the Company and the Merger Sub. By completing this form in a manner that would substantiate your eligibility for such exemption, you will allow Parent, the Sub Paying Agent or any other withholding agent, or their authorized representatives, to exempt you from such Israeli withholding tax; or
A Bank, Broker or Financial Institution Resident in Israel: If you are a bank, broker or financial institution resident in Israel that (1) is holding the Shares solely on behalf of beneficial shareholder(s) (so-called 'street name' holders), and (2) is subject to the provisions of the Ordinance and regulations promulgated thereunder relating to the withholding of Israeli tax, including with respect to the cash payment (if any) made by you to your beneficial shareholder(s) with respect to Shares cashed-out in the Merger (an 'Eligible Israeli Broker'), you may be eligible for a full exemption from Israeli withholding tax with respect to the cash payment transmitted to you. By completing this form in a manner that would substantiate your eligibility for such exemption, you will allow the Parent, the Sub Paying Agent, your depositary bank, your broker or withholding agent, or their authorized representatives, to exempt you from such Israeli withholding tax. Please note that a 26.5% withholding tax at source will be remitted by the Sub Paying Agent in accordance with the Israeli withholding tax ruling and pursuant to the provisions of the Ordinance and regulations promulgated thereunder, to which you are subject, unless all applicable requirements, as provided for in the Notice and the Israeli withholding tax ruling shall be satisfied at their entirety by December 28, 2015, 18:00 (CET). ] NOTE: AN ELIGIBLE ISRAELI BROKER MAY COMPLETE THIS FORM IF IT IS HOLDING THE SHARES SOLELY ON BEHALF OF HIS CLIENTS, THE BENEFICIAL SHAREHOLDERS.
PLEASE NOTE THAT IF YOU PROVIDE A DECLARATION FORM, YOU ALSO CONSENT TO THE PROVISION OF YOUR DECLARATION FORM TO THE PARENT AND/OR THE PAYING AGENT AND SUB PAYING AGENT AND TO THE ISRAELI TAX AUTHORITY (THE 'ITA'), IN CASE THE ITA SO REQUESTS, FOR PURPOSES OF AUDIT OR OTHERWISE.To whom should you deliver this form?
If you wish to submit this form, duly complete and sign this form and mail or deliver it (together with the INSTRUCTIONS and the Required Documents) to the Company in the manner set forth above.
PART I | Identification and details of Shareholder (including Eligible Israeli Brokers) (see instructions) | |
1. Name: | 2. Type of Shareholder (more than one box may be applicable): | |
(please print full name) |
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3. For individuals only: | 4. For all other Shareholders | |
Date of birth: / / month / day / year | Country of incorporation or organization: | |
Country of residence: | Registration number of corporation (if applicable): | |
Countries of citizenship (name all citizenships): | ||
Taxpayer Identification or Social Security No. (if applicable): | Country of residence: | |
5. Permanent Address (state, city, zip or postal code, street, house number, apartment number): | ||
6. Mailing Address (if different from above): | 7. Contact Details: Name: Capacity: Telephone Number (country code, area code and number): | |
8. I hold the Shares of the Company (mark X in the appropriate place):
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9. I hold less than 5% of the Company's issued shares. Yes No | ||
PART II | Declaration by Non-Israeli Residents (see instructions) Eligible Israeli Brokers should not complete this Part II | |
A. To be completed only by Individuals. I hereby declare that: (if the statement is correct, mark X in the following boxes) | ||
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A.2 I acquired the Shares on or after the initial public offering of ELECTRONICS LINE on the Frankfurt Stock Exchange (i.e., December 11, 2005). | |
B. To be completed by Corporations (except Partnerships and Trusts). I hereby declare that: (if correct, mark X in the following boxes) | |
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C. To be completed by Partnerships. I hereby declare that: (if correct, mark X in the following boxes) | |
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D. To be completed by Trusts. I hereby declare that: (if correct, mark X in the following boxes) | |
Frankfurt Stock Exchange (i.e., December 11, 2005). | |
PART III | Declaration by Israeli Bank, Broker or Financial Institution (see instructions) Non-Israeli Residents should not complete this Part III |
I hereby declare that: (if correct, mark X in the following box)
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PART IV | Certification. By signing this form, I also declare that: |
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individual authorized to sign
on your behalf)
APPENDIX A - INSTRUCTIONSForming Part of the Declaration of Status for Israeli Income Tax Purposes
General Instructions: This Declaration Form (Declaration of Status for Israeli Income Tax Purposes), or this Form, should be completed by holders of Shares, and who are either: (i) (A) NOT 'residents of Israel' for purposes of the Ordinance (See Instruction II below), and (B) acquired the Shares on or after the Company's public offering on the FSE (i.e., December 11, 2005), and (C) you hold less than 5% of the outstanding Shares, or (ii) are banks, brokers or financial institutions that are 'residents of Israel' within the meaning of that term in Section 1 of the Ordinance, holding Shares solely on behalf of beneficial shareholder(s), and are subject to the provisions of the Ordinance and the regulations promulgated thereunder relating to the withholding of Israeli tax, including with respect to the cash payment (if any) made by them to such beneficial shareholder(s) with respect to Shares in connection with the Merger.
Part I: (Identification and details of Shareholder). You should complete Item 1, 2 and 5 through 9 and either (i) Item 3, if you are an individual, or (ii) Item 4, if you are a corporation (or limited liability company), trust, partnership or other entity.
Part II: (Declaration by Non-Israeli Shareholder). If you are NOT an Israeli resident and acquired the Shares on or after the Company's public offering on the FSE (i.e., December 11, 2005), you should complete either Section A (for Individuals), Section B (for Corporations), Section C (for Partnerships) or Section D (for Trusts). If you do not mark a box you will be deemed to answer that the corresponding item is not correct with respect to you.
Part III: (Declaration by Israeli Bank, Broker or Financial Institution). If you are an Eligible Israeli Broker, you should complete this Item. Israeli residents who are NOT Eligible Israeli Brokers should not complete this item.
Part IV: (Certification). By signing this Form, you also make the statements in Part IV.
Inadequate Space: If the space provided on this Form is inadequate, you should insert such details on a separate signed schedule and attached to this Form.
Determination of Validity: All questions as to the validity, form or eligibility (including time of receipt) of this Form will be, subject to applicable law, determined by Parent, in its sole discretion, which determination will be final and binding on all parties. None of Parent, the Paying Agent, the Sub Paying Agent or any other person will be under any duty to give notification of any defects or irregularities in any Form or incur any liability for failure to give any such notification.
The method of delivery of this Form is at your option and risk, and the delivery will be deemed made only when actually received by the Company. If delivery is by mail, registered mail with return receipt requested, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. No alternative, conditional or contingent Forms will be accepted.
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Definition of Resident of Israel for Israeli Tax Purposes
Section 1 of the Ordinance, defines a 'resident of Israel' or a 'resident' as follows:
'(A) with respect to an individual - a person whose center of vital interests is in Israel; for this purpose the following provisions will apply:
in order to determine the center of vital interests of an individual, account will be taken of the individual's family, economic and social connections, including, among others:
place of permanent home;
place of residential dwelling of the individual and the individual's immediate family;
place of the individual's regular or permanent occupation or the place of his permanent employment;
place of the individual's active and substantial economic interests;
place of the individual's activities in organizations, associations and other institutions;
the center of vital interests of an individual will be presumed to be in Israel:
if the individual was present in Israel for 183 days or more in the tax year;
if the individual was present in Israel for 30 days or more in the tax year, and the total period of the individual's presence in Israel that tax year and the two previous tax years is 425 days or more.
For the purposes of this provision, 'day' includes a part of a day.
officer;
the presumption in subparagraph (2) may be rebutted either by the individual or by the assessing
with respect to a body of persons - a body of persons which meets one of the following:
it was incorporated in Israel;
the control and management of its business are exercised in Israel; excluding body of persons that are managed and controlled from Israel by individual who became an Israeli resident for the first time or became a veteran returning resident, as aforesaid in section 14(a), or by someone on his behalf, and ten years has not lapsed from the date on which such individual became an Israeli resident, provided that such body of persons was not considered as an Israeli resident, even if the management and control of its business were not exercised by such individual or someone on his behalf, unless the body of persons requested otherwise.'
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