AMPAL-AMERICAN ISRAEL CORPORATION
1177 Avenue of the Americas
New York, New York 10036
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 22, 1994
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of the
Class A Stock and Common Stock of Ampal-American Israel Corporation (the
"Company" or "Ampal") will be held at the offices of Bank Hapoalim B.M.,
1177 Avenue of the Americas, 14th Floor, New York, New York 10036, on
Thursday, September 22, 1994, at 9:00 a.m. local time, to consider and act
upon the following matters:
1. The election of a Board of Directors for the ensuing year, 4 of
whom will be Class A directors, elected solely by the holders of
the Class A Stock, and 9 of whom will be Common/Class A directors,
elected by the holders of the Class A Stock and Common Stock, to
serve until their successors shall be elected and qualified; and
2. Approval of the Company's 1993 Stock Option Plan; and
3. The transaction of such other business as may properly come before
said meeting or any adjournment thereof.
Information regarding the matters to be acted upon at the Annual
Meeting is contained in the accompanying Proxy Statement.
The close of business on August 8, 1994, has been fixed as the record
date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting or any adjournment thereof.
Please vote, date, sign and mail the enclosed Proxy in the return
envelope. You will need no postage if you mail it in the United States. A
prompt response will be helpful and appreciated.
By Order of the Board of
Directors,
MICHAEL K. MARKS
Secretary
New York, New York
August 11, 1994
Regardless of whether you expect to be present at the Annual
Meeting, please complete, date, sign and mail the enclosed proxy
card for the shares held by you. An addressed envelope is
enclosed for your convenience.
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 22, 1994
This Proxy Statement is furnished to the holders of Class A
Stock of Ampal-American Israel Corporation (the "Company" or
"Ampal") in connection with the solicitation of proxies on behalf
of the Board of Directors for use at the Annual Meeting of
Shareholders of the Company to be held on September 22, 1994, for
the purposes set forth in the accompanying Notice of Annual
Meeting. The cost of preparing, assembling and mailing the Notice
of Annual Meeting, this Proxy Statement and the proxies is to be
borne by the Company. The Company will also reimburse brokers who
are holders of record of shares of the Company for their expenses
in forwarding proxies and proxy soliciting material to the
beneficial owners of the shares held by them. The approximate
mailing date of this Proxy Statement is August 11, 1994.
The accompanying proxy is being solicited by the Board of
Directors of the Company and, if properly executed by a
shareholder entitled to vote, the shares represented by the
proxies received will be voted at the Annual Meeting. A proxy may
be revoked at any time before its exercise. A shareholder may
revoke his proxy by filing with the Secretary of the Company an
instrument of revocation or a duly executed proxy bearing a later
date, or by attendance at the annual meeting and voting in person.
Attendance at the Annual Meeting will not in and of itself
constitute the revocation of a proxy.
The close of business on August 8, 1994 has been fixed by the
Board of Directors as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual
Meeting. At such date, the Company had outstanding 20,752,020
shares of Class A Stock. Each share of Class A Stock outstanding
on the record date will be entitled to one vote on all matters to
come before the Meeting. As of the record date, the Company had
outstanding 3,000,000 shares of Common Stock. Holders of the
Common Stock of the Company will also be eligible to vote at the
Meeting. Other than in the election of Class A directors, where
only the holders of the Class A Stock, voting as a separate class,
are entitled to vote, the holder of the Common Stock, voting as a
separate class, is entitled to cast as many votes as shall equal
the aggregate number of votes to which all holders of Class A
Stock attending the meeting in person or by proxy shall be
entitled, but in no event more than ten votes per share of Common
Stock. The shares of Common Stock and Class A Stock do not have
cumulative voting rights, which means that any holder of more than
50% of the Common Stock can, if such person owns at least one
share of Class A Stock, elect all of the Common/Class A directors
if that person chooses to do so. Accordingly, since Bank Hapoalim
B.M., the Company's parent ("Hapoalim"), is the holder of 100% of
the outstanding Common Stock of the Company and approximately
49.7% of the Class A Stock, it can cause the election of all of
the directors of the Company other than the Class A Directors and
can determine the outcome of other matters requiring a majority
vote, if it chooses to do so, and will likely be able to cause the
election of all of the Class A Directors. Bank Hapoalim has
advised the Company that it intends to vote in favor of the
nominees named herein as directors and to approve the Company's
1993 Stock Option Plan.
Under the law of New York, Ampal's state of incorporation,
"votes cast" at a meeting of stockholders by the holders of shares
entitled to vote are determinative of the outcome of the election
of directors. Abstentions and broker non-votes will not be
considered "votes cast" based on Ampal's understanding of state
law requirements and Ampal's Certificate of Incorporation and By-
laws.
A copy of the Annual Report to the Shareholders for the year
1993 containing financial statements of the Company has been
mailed to you previously.
<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
The Company's By-Laws provide that the entire Board shall be
constituted of not less than 3 nor more than 29 persons, with the
actual number serving set by the Board of Directors or the
shareholders. The Board has set the number of directors at 13.
Pursuant to the terms of the Company's Certificate of
Incorporation, as amended, the holders of the Class A Stock have
the right to elect 25% of the Board of Directors, with the
remaining directors to be elected by both the holders of the
Common Stock and Class A Stock. Proxies of the holders of Class A
Stock, unless otherwise specified, will be voted for the election
of the 4 Class A nominees named below, constituting more than 25%
of the Board of Directors, and the 9 Common/Class A nominees named
below, each to hold office for the term of one year and until his
or her successor shall be elected and qualified. In case any
nominee should become unavailable for election to the Board of
Directors for any reason, which is presently neither known nor
contemplated, the persons named in the proxy will have
discretionary authority in that instance to vote the proxies for a
substitute. Proxies cannot be voted for a greater number of
persons than the number of nominees set forth herein.
All nominees except Mr. Abend, Mr. Hochberg and Mr. Kronish are
members of the present Board of Directors of the Company.
Directors of Ampal who are not employees of the Company or of its
parent company receive $500 per board meeting attended. Such
persons also receive $500 for attendance at meetings of committees
of the Board of Directors, provided that such meetings are held on
separate days.
The following is a description of the nominees, their ages,
their principal occupations for the past five years and their
tenure on the Board of Directors. An explanation of the symbols
following the names of the nominees appears at the conclusion of
this list.
CLASS A DIRECTORS
HARRY B. HENSHEL, (2) 75, has been Chairman of the Board of
Bulova Corporation since 1974. He also has served as Chairman of
the Chief Executives Council of Omega Group since 1990 and as a
Director of the Ponce Hotel Corporation for more than 20 years and
the Universal Holdings Corp. since 1993. He has been a member of
the advisory Board of the New York State Business Partnership for
more than 5 years and a Trustee of the New York Backstretch
Employees Pension Trust for more than 10 years. He served on the
Board of Directors of Ampal Industries, Inc. from 1982 until 1990.
He became a director of Ampal in September 1993.
HERBERT KRONISH, 68, has been a Senior Partner of Kronish,
Lieb, Weiner & Hellman and its predecessor partnerships ("KLWH")
since 1958. KLWH has been legal counsel to Ampal since 1982.
LEON RIEBMAN, 74*, has been Chairman and Chief Executive
Officer and a director of AEL Industries, Inc., an electronic
defense system manufacturer for more than five years. He is also
a director of the Bank and Trust Company of Old York Road. He
became a director of Ampal in 1979.
EVELYN SOMMER, 55 (2)(3), has been President of Women's
International Zionist Organization-USA, and a representative of
Women's International Zionist Organization to the United Nations
for more than five years, and has been Chairman, American Section
of the World Jewish Congress since December 1990. She became a
director of Ampal in 1982.
COMMON/CLASS A DIRECTORS
ARIE ABEND, 57, has been a Joint Managing Director of Hapoalim
since February 1994. From 1986 until February 1994, he was a
Senior Deputy Managing Director of Hapoalim. From 1984 until
1985, and in 1991, he served as a director of Ampal.
MICHAEL ARNON, (1) 69, was Chairman of the Board of Directors of
Ampal from November 1990 to July 1994. From July 1986 until
November 1990, he was President and Chief Executive Officer of
Ampal. From March 1983 until April 1990 he also served as a
director of Israel Continental Bank Ltd., a partially-owned
subsidiary of Hapoalim, where he had been an Alternative Chairman
of the Board until 1987. He became a director of Ampal in 1986.
2
<PAGE>
STANLEY I. BATKIN, (1)(3) 78, served on the Board of Directors of
Ampal Industries, Inc. from 1983 until 1990, and was a member of
its Executive Committee from 1986 until 1990. He became a
director of Ampal in 1991. During 1993, Mr. Batkin filed, not on
a timely basis, one Initial Statement of Beneficial Ownership of
Securities and one Statement of Changes in Beneficial Ownership of
Securities regarding one transaction.
YAACOV ELINAV, (1)(4) 49, has been a Member of the Board of
Management of Hapoalim since October 1991 and a Senior Deputy
Managing Director of Hapoalim since August 1992. From October
1991 to August 1992, he was a Deputy Managing Director of
Hapoalim. From October 1988 to October 1991 he was head of the
Corporate Division of Hapoalim. From 1983 to October 1988 he was
Manager of the New York Branches of Hapoalim. He became a
director of Ampal in 1992.
IRWIN HOCHBERG, 66, has been a Senior Partner and President of
Bloom Hochberg & Co., P.C., CPA's, at which he provides
professional and consulting services to investment banking firms,
for more than five years. He also serves as a director of
Transmedia Network, Inc.
LAWRENCE LEFKOWITZ, (1) 56, has been President and Chief
Executive Officer of Ampal since November 1990. Until then he was
Vice President-Legal and Secretary of Ampal for more than five
years. In August 1990 he also became Counsel to Hapoalim in
charge of the Legal Department for the United States Branches. He
became a director of Ampal in 1990.
EITAN RAFF, (3) 52, has been Alternate Chairman of the Board of
Maritime Bank since November 1992, where he had been Chairman of
the Board from August 1988 until November 1992. He also serves as
a Director of Wolfson Clore Mayer Ltd., a diversified investment
company, where he had been Managing Director from July 1987 until
April 1992 and as Chairman of Mirage Development Ltd., Yozma
Venture Capital Ltd. and Karta Jerusalem Development Centre. He
became a director of Ampal in 1987.
SHIMON RAVID, (4)* 58, has been a Joint Managing Director of
Hapoalim since February 1994. From October 1989 until February
1994, he was a Senior Deputy Managing Director of Hapoalim. From
February 1988 until June 1989 he was Chief Financial and Operating
Officer of Koor Industries Ltd. He became a director of Ampal in
1990.
SHLOMO RECHT, (1) 52, has been Chairman of the Board of Directors
of Ampal since July 1994. From March 1994 until July 1994, he was
Vice Chairman of the Board of Directors of Ampal. From April 1990
until March 1994, he was Managing Director of Poalim Capital
Markets and Investments Ltd. From October 1988 until March 1990,
he was Assistant Managing Director of Hapoalim. From 1988 until
1989,and since March 1994, he has served as a director of Ampal.
The symbols described below, which follow the names of some of
the foregoing nominees, designate committee membership or
committee attendance:
(1) Member of the Executive Committee of the Board of Directors
which meets as necessary between regularly scheduled Board of
Directors meetings and, consistent with certain statutory
limitations, exercises all the authority of the Board of
Directors.
(2) Member of the Audit Committee of the Board of Directors which
reviews functions of the outside auditors, auditors' fees, and
related matters.
(3) Member of the Related Party Transactions Committee of the Board
of Directors which reviews and passes upon the fairness of
business transactions between the Company and Bank Hapoalim or
other related parties.
(4) Members of the Stock Option Committee of the Board of Directors
which administers the Company's 1993 Stock Option Plan.
3
<PAGE>
* The Board of Directors met 3 times, the Executive Committee met
1 time, the Audit Committee met 2 times, the Related Party
Transactions Committee met 1 time and the Stock Option
Committee did not meet during 1993. An asterisk (*) denotes
that such individual attended fewer than 75% of the aggregate
of (1) the total number of Board of Directors meetings held
during the period in 1993 for which such individual was a
director and (2) the total number of meetings held by all
committees of the Board on which such individual served in 1993
(during the period of such service).
EXECUTIVE OFFICERS
Executive officers are elected annually by the Board of Directors
of Ampal and its subsidiaries. The following is a description of
the executive officers who are not nominees, their ages, their
positions and offices with Ampal or its subsidiaries and their
principal occupations and employment during the past five years.
ALLA KANTER, 36, has been Controller of Ampal since August 1990.
From January 1986 to August 1990, she served as Assistant
Controller of Ampal.
MIRI LENT, 37, has been Assistant Vice President-Israel
Operations of Ampal since July 1988 and has been employed by Ampal
(Israel) Ltd. for more than five years.
MICHAEL K. MARKS, 30, has been Secretary of Ampal since
December 1992 and has been employed by Ampal since August 1992.
From January 1992 until July 1992, he was an attorney for the law
firm of Weitz and Luxenberg, P.C. From August 1988 until May
1991, he attended Emory University School of Law.
MOSHE MOR, 58, has been Vice President-Israel Operations of
Ampal for more than five years.
SUSAN ROSENBERG, 50, has been Assistant Treasurer of Ampal
since November 1990, and has been employed by Ampal for more than
five years.
ALAN L. SCHAFFER, 51, has been Vice President-Finance and
Treasurer since August 1990. From December 1988 until then, he
was Vice President-Accounting and Controller of Ampal. Prior
thereto he was Controller of Ampal, and has been employed by Ampal
for more than five years.
EXECUTIVE COMPENSATION
The table below presents information regarding remuneration
paid or accrued for services to Ampal and its subsidiaries by the
executive officers named below during the three fiscal years ended
December 31, 1993.
<TABLE> <CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
Name and Principal Other Annual All Other
Position Year Salary(1) Compensation Compensation
------------------------ ---- ------ ------------ ------------
<S> <C> <C> <C> <C>
Lawrence Lefkowitz(2) 1993 $193,351 $8,141 $22,862(3)
(President and 1992 191,961 6,382 21,856(3)
Chief Executive Officer) 1991 174,851 20,652(3)
Moshe Mor 1993 130,213 12,981(4)
(Vice President-Israel 1992 92,763 11,713(4)
Operations) 1991 81,879 9,606(4)
Alan L. Schaffer 1993 130,000 13,839(3)
(Vice President-Finance 1992 127,212 13,277(3)
and Treasurer) 1991 116,000 12,000(3)
4
<PAGE>
Miri Lent 1993 105,842 14,756(4)
(Assistant Vice President-Israel 1992 84,107 11,503(4)
Operations) 1991 59,996 5,922(4)
</TABLE>
---------------------
(1) There were 27 pay periods in 1992 and 26 pay periods in
each of 1993 and 1991.
(2) Services of Mr. Lefkowitz are shared by Ampal and Hapoalim
and Hapoalim reimburses Ampal $100,000 per year under an
arrangement begun in August 1990. Mr. Lefkowitz is employed
pursuant to an employment agreement expiring September 12,
1997, renewable thereafter automatically for successive
one-year terms unless one year's prior notice is given,
providing for the payment of salary which shall not be less
than the salary paid to him in 1992 and which salary is subject
to annual review.
(3) Comprised of Ampal's contribution pursuant to Ampal's
Savings Plan of $500 per year and the remainder pursuant to
Ampal's Pension Plan, described below.
(4) Comprised of Ampal (Israel) Ltd.'s contribution to a
pension plan on behalf of Mr. Mor and Ms. Lent.
Other Benefits
Ampal maintains a defined contribution pension plan for its
eligible employees ("Pension Plan"). Eligible employees are all
full-time employees of Ampal except non-resident aliens. In 1990,
the Pension Plan was amended so that Ampal's contribution was
equal to 7% of each employee's basic wages plus 5.4% of the
employee's basic wages for that year in excess of the Social
Security taxable wage base for that year. In 1994, the Pension
Plan was amended so that Ampal's contribution was equal to 7% of
each employee's basic wages plus any amount permissible under law,
which in 1994 was 5.7%, of the employee's basic wages for that
year in excess of the Social Security taxable wage base for that
year.
Employees become vested in amounts contributed by Ampal
depending on the number of years of service worked, as provided in
the following table:
Vested
Years of Service Percentage:
---------------- -----------
less than 2 years 0%
2 but less than 3 years 20%
3 but less than 4 years 40%
4 but less than 5 years 60%
5 but less than 6 years 80%
6 or more years 100%
Benefits under the Pension Plan are usually paid either in a
lump sum or as an annuity.
Ampal adopted a Severance Plan effective January 1, 1985 for
the benefit of employees of Ampal who were employed as of December
31, 1982 and who continued to be so employed as at December 31,
1985. The purpose of the Severance Plan is to provide certain
severance compensation to eligible employees which will equal the
amount of severance compensation which would have been paid as of
the day prior to the adoption of the Pension Plan. The severance
compensation to be paid pursuant to this Severance Plan will be
adjusted downward to account for any past service amount which has
been allocated to such employees' Pension Plan accounts pursuant
to the terms of the Pension Plan. The severance compensation will
also be adjusted as of December 31 of each year by a percentage
which equals the rate of return on assets in the Pension Plan.
Payment of severance compensation is required to be made in a lump
sum as soon after employment is terminated as practicable unless
the full amount of the severance compensation has been previously
allocated to such employees' Pension Plan accounts.
Ampal maintains a Savings Plan for its eligible employees
pursuant to Section 401(k) of the Internal Revenue Code of 1954.
Eligible employees are all employees of Ampal except non-resident
aliens and night-shift employees. Participation by employees in
the Savings Plan is voluntary. Participating employees may elect
to defer a specific limited percentage of their annual
compensation (up to 15%) and contribute the same to a
self-directed 401(k) savings
5
<PAGE>
account. The amount which any employee could contribute to his or
her 401(k) savings account in 1993 was limited by the Tax Reform
Act of 1986 to $8,994. For each plan year Ampal matches 50% of
each employee's contribution up to a maximum matching contribution
of $500 for each participant. Participating employees are 100%
vested at all times in the account balances maintained in their
401(k) savings account. Benefits under the Savings Plan are
required to be paid in a single, lump-sum distribution. Payment
is usually made upon attainment of retirement age or termination
of employment.
Ampal's 1993 Stock Option Plan, which was adopted by the Board
of Directors on November 5, 1993 and amended on March 23, 1994, is
subject to approval by the Company's stockholders. See "Approval
of 1993 Stock Option Plan."
REPORT OF EXECUTIVE COMMITTEE ON EXECUTIVE COMPENSATION
The Executive Committee of the Board of Directors, whose current
members are listed below, pursuant to authority delegated by the
Board of Directors to create a policy related to executive
compensation, determined that the Company's policy for 1993
regarding executive compensation reflect the following:
1. The assets of the Company are almost entirely located in
Israel, where economic and political factors have a greater
influence on the performance of the Company than is the case of
businesses in the United States. Consequently, while
performance of the Company is a factor in determining
compensation, it is not the principal factor in determining
compensation.
2. The performance of the Company to a large degree reflects the
results of investee companies not controlled by the Company and
these results should also not be a determining factor regarding
compensation.
3. Executives should continue to be compensated on a basis which
reflects their contributions to long-term strategic planning
and management, as this has the most beneficial effect upon the
enhancement of shareholder value.
4. Compensation of executives should reflect factors which
include: (a) changes in the cost of living; (b) the absence of
a bonus or stock option plan; and (c) performance of the
Company to the extent the Committee believes it is unrelated to
general economic conditions in Israel and the performance of
investee companies.
The compensation of Mr. Lefkowitz, the Company's President and
Chief Executive Officer, for the last fiscal year, was
determined based upon the terms of his employment agreement, the
Executive Committee's application of the foregoing policies and
subjective criteria, including its assessment of his performance
and contribution in the short and long term.
Michael Arnon Lawrence Lefkowitz
Stanley I. Batkin Shlomo Recht
Yaacov Elinav
It should be noted that this policy was adopted, and executive
compensation for 1993 was determined, prior to adoption by the
Board of Directors of the 1993 Stock Option Plan and that Mr.
Recht was appointed to the Executive Committee in March 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1993, members of the Executive Committee of the Board of
Directors which functions as the compensation committee of the
Company included: Mr. Arnon, then Chairman of the Board of the
Company; Mr. Lefkowitz, President and Chief Executive Officer of
the Company and Counsel to Hapoalim; Mr. Warren E. Abrams; Mr.
Stanley I. Batkin; Mr. Yaacov Elinav, Senior Deputy Managing
Director of Hapoalim; Mr. Eitan Raff; Ms. Evelyn Sommer and Mr.
Alexander Yuhjtman, then Executive Vice President, Regional
Manager, Western Hemisphere of Hapoalim. For a description of
business transactions between the Company and Hapoalim, see
"Transactions With Related Parties."
6
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative
total return (change in the stock price plus reinvested dividends)
of Ampal Class A Stock, the S&P Composite - 500 Index and a peer
group index composed of American Israeli Paper Mills Limited (an
Israeli industrial company), Etz Lavud Ltd. (an Israeli industrial
company), Israel Land Development Co., Ltd. (an Israeli real
estate development company) and PEC Israel Economic Corporation
(an American holding company that acquires interests in companies
located in Israel or related to Israel) for the period December
30, 1988 through June 30, 1994.*
Ampal 100.00 119.39 103.47 238.79 342.26 732.28 429.82
S&P 500 100.00 131.59 127.49 166.16 178.81 196.74 188.71
Peer Group 100.00 142.08 186.11 319.26 544.77 605.20 464.01
12/30/88 12/29/89 12/31/90 12/31/91 12/31/92 12/31/93 6/30/94
--------------------
* Assumes that the value of the investment in Ampal's Class A
Stock and each index was $100 on December 31, 1988 and that
all dividends were reinvested. Israel Land Development
Co., Ltd. is included in the Peer Group for the period
December 31, 1990 through June 30, 1994. Its shares began
public trading in the United States in 1990. The Peer
Group Index has been weighted based on market
capitalization.
7
<PAGE>
PRINCIPAL SHAREHOLDERS OF THE COMPANY
The following tables set forth information as at August 8, 1994
as to the holders known to Ampal to beneficially own more than 5%
of any class of voting securities of Ampal and, as to all
directors and officers as a group, concerning the beneficial
ownership of any class of equity securities of Ampal. For
purposes of computation of the percentage ownership of Class A
Stock set forth in the table, conversion of any 4% Cumulative
Convertible Preferred Stock (the "4% Preferred") and 6-1/2%
Cumulative Convertible Preferred Stock (the "6-1/2% Preferred")
owned by such beneficial owner has been assumed, without
increasing the number of shares of Class A Stock outstanding by
amounts arising from possible conversions of convertible
securities held by shareholders other than such beneficial owner.
As at August 8, 1994, there were issued and outstanding 20,752,020
shares of Class A Stock of the Company and 3,000,000 shares of
Common Stock. In addition, there were issued and outstanding
1,137,321 non-voting shares of 6-1/2% Preferred (each convertible
into 3 shares of Class A Stock) and 210,870 non-voting shares of
4% Preferred (each convertible into 5 shares of Class A Stock).
Certain Beneficial Owners
<TABLE> <CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner Title of Class of Beneficial Ownership of Class (1)
------------------- -------------- ----------------------- --------
<S> <C> <C> <C>
Bank Hapoalim B.M. Class A Stock 10,500,991 shs. (2) 49.7% (2)
50 Rothschild Blvd. Common Stock 3,000,000 shs. 100%
Tel Aviv, Israel
</TABLE>
-----------
(1) Based upon number of shares outstanding as of August 8,
1994.
(2) As reported by Bank Hapoalim B.M. on Form 4 - Statement of
Changes in Beneficial Ownership filed with the Securities
and Exchange Commission on or about March 5, 1992. Assumes
conversion of 122,536 shares of
6-1/2% Convertible Preferred Stock and 3,350 shares of 4%
Preferred Stock.
8
<PAGE>
Security Ownership Of Management
The following table sets forth information as at August 8, 1994
as to each class of equity securities of Ampal, its parent or any
of its subsidiaries beneficially owned by each director and by all
directors and officers of Ampal as a group. The directors and
officers of Ampal as a group do not own in excess of 1% of the
equity securities of Ampal's parent or any of Ampal's
subsidiaries.
<TABLE> <CAPTION>
Ampal-American Israel Corporation
---------------------------------
Amount and Nature Percent
Title of Class Name of Beneficial Ownership (1) of Class
-------------- ---- --------------------------- --------
<S> <C> <C> <C>
Class A Stock Stanley I. Batkin 10,000 shs. less than 1%
Class A Stock Harry B. Henshel 3,000 shs. less than 1%
Warrants to Purchase 14,000 wts. less than 1%
Class A Stock
Class A Stock Irwin Hochberg 1,000 shs. less than 1%
Class A Stock Herbert Kronish (2) 1,000 shs. less than 1%
Class A Stock Lawrence Lefkowitz (3) 10,700 shs. less than 1%
6-1/2% Preferred 7,225 shs. less than 1%
Class A Stock Michael K. Marks 500 shs. less than 1%
Warrants to Purchase 500 wts. less than 1%
Class A Stock
Class A Stock Leon Riebman 24,600 shs. less than 1%
Class A Stock All Directors and 50,800 shs. less than 1%
6-1/2% Preferred Officers as a Group 7,225 shs. less than 1%
Warrants to Purchase 14,500 wts. less than 1%
Class A Stock
Bank Hapoalim B.M.
------------------
Amount and Nature Percent
Title of Class Name of Beneficial Ownership (1) of Class
-------------- ---- --------------------------- --------
Ordinary Shares Arie Abend 187,720 shs. less than 1%
Ordinary Shares Michael Arnon 83,300 shs. less than 1%
Ordinary Shares Yaacov Elinav 183,970 shs. less than 1%
Ordinary Shares Shimon Ravid 190,610 shs. less than 1%
Ordinary Shares Shlomo Recht 128,810 shs. less than 1%
Ordinary Shares All Directors and 774,410 shs. less than 1%
Officers as a Group
</TABLE>
---------
(1) All ownerships are direct, unless otherwise noted. The
table does not include directors who do not own any shares.
(2) Mr. Kronish and his wife share voting and investment power
over these shares.
(3) Includes 8,700 shares of Class A Stock and 4,800 shares of
6-1/2% Preferred Stock held by a trust under an estate as
to which Mr. Lefkowitz is co-personal representative.
9
<PAGE>
TRANSACTIONS WITH RELATED PARTIES
The Board of Directors of Ampal maintains a Related Party
Transactions Committee comprised of independent directors to
review and pass upon the fairness of any business dealings and
arrangements (other than borrowings on then prevailing market
terms or deposits made in the ordinary course of business) between
the Company and Hapoalim or any other affiliated parties on an
annual basis. If the Committee determines that such dealings are
no longer in the Company's best interests or involve terms less
advantageous to the Company than could be obtained from
unaffiliated third parties, the Company will use its best efforts
to modify or discontinue such arrangements. With certain
exceptions, the Company may not enter into transactions with
Hapoalim or its affiliates, or any officer, director or principal
stockholder of the Company without first obtaining the approval of
the Related Party Transactions Committee. The management of the
Company believes that all of the following transactions were done
on terms which were no less advantageous to the Company than could
have been obtained from unaffiliated third parties.
The Company borrows and receives deposits from Hapoalim and its
subsidiaries. During 1993 the largest amount of such indebtedness
outstanding at any one time was $51,015,000. The amount of
interest expense paid by the Company to Hapoalim was $4,819,000.
Additionally, the Company makes loans to and maintains deposits
with Hapoalim and its subsidiaries. The largest amount of such
loans and deposits at any one time during 1993 was $131,002,000
and interest income thereon was $15,583,000. As of December 31,
1993, the amount of borrowings and deposits from Hapoalim and its
subsidiaries was $40,257,000 and the amount of loans to and
deposits with Hapoalim and its subsidiaries was $104,241,000.
Ampal is the beneficiary of a $10 million committed line of credit
from Hapoalim which expires in October 1994. Borrowings under
this line of credit bear interest at a variable rate of interest
equal to LIBOR plus 1/2%. Such loans and borrowings are made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with unaffiliated third persons and, in the opinion
of the management of the Company, do not involve more than normal
risk of collectibility or present other unfavorable features.
Ampal subleases 2,825 square feet of usable office space leased
by Hapoalim at 1177 Avenue of the Americas, New York City under a
sublease which expires on August 30, 2009 and will pay Hapoalim
base rent of approximately $170,000 per year commencing in
September 1994, subject to escalation.
Ampal has space located at 10 Rockefeller Plaza subleased until
September 30, 1994 from Hapoalim for an annual rental, subject to
escalation. The rental payments for 1993 amounted to
approximately $178,000. Until November, 1990 Ampal occupied the
entire floor, constituting 10,710 square feet. At that time,
Ampal modified the sublease to return 65% of that space to
Hapoalim, which then subleased it to an unrelated party subject to
Ampal's guarantee of total rent payments equivalent to the rent
previously paid under Ampal's sublease in the event the third
party defaults.
The Company leases office space in various locations in the
United States and Israel to Hapoalim and its subsidiaries in
exchange for total annual rental payments of approximately
$3,251,000. These lease transactions consist of the following:
Hapoalim leases a portion of premises owned by Ampal located at
105 Arlozoroff Street, Tel Aviv under a lease which expires March
9, 2003, with annual rental payments based upon 11% of the cost of
the property. In 1993 Ampal received $352,000 as rental payments
for these premises.
Hapoalim leases premises owned by Ampal (Israel) Ltd., an Ampal
subsidiary, located at 111 Arlozoroff Street, Tel Aviv under a
lease which expires on September 30, 2000, with annual rental
payments based upon 10% of the value of the property linked to the
CPI. In 1993, Ampal (Israel) received $220,000 as rental payments
for these premises.
Hapoalim leases two premises owned by Ampal Development (Israel)
Ltd., an Ampal subsidiary, located at 65 Allenby Street and 99 Ben
Yehuda Street, Tel Aviv. These leases expire December 31, 1996
(with options to extend the lease term through December 31, 2002)
with annual rental payments based upon 10% of the value of the
property linked to the CPI. In 1993, Ampal Development (Israel)
received $326,000 as rental payments for these premises.
10
<PAGE>
Hapoalim leases two premises owned by Ampal Development (Israel)
Ltd. located at 39 Shenker Street, Holon and 111 Yaffe Nof Street,
Haifa. These leases expire on September 30, 2000, with annual
rental payments approximately equal to 10% of the cost of the
property linked to the CPI. In 1993, Ampal Development (Israel)
received $705,000 as rental payments for these premises.
Hapoalim leases three premises owned by Mercazim Investments
Ltd., a subsidiary of a company 42.5% owned by Ampal. These
leases expire on May 30, 2000, with the annual rental payments at
market rates. In 1993, Mercazim received $662,000 as rental
payments for these premises.
Hapoalim leases two premises owned by Ampal Financial Services
Ltd., an Ampal subsidiary, in Ramat Hasharon and Rosh Pina. These
leases expire on September 30, 2000, with the annual rental
payments based upon 10% of the cost of the premises, linked to the
CPI. In 1993, Ampal Financial Services received $469,000 as
rental payments for these premises.
Hapoalim leases two premises owned by Nir Ltd., an Ampal
subsidiary, one in Tel Aviv and one in B'nai Brak, with the annual
rental payments based upon 10% of the cost of the premises, linked
to the CPI. The lease on the premises in Tel Aviv expires on
September 30, 2000, and the lease on the premises in B'nai Brak
expires on July 10, 1997 (on June 10, 2002, if an option is
exercised). In 1993, Nir received $377,000 as rental for these
premises.
Hapoalim leases an office building owned by Ampal located at 174
North Michigan Avenue, Chicago, Illinois. This lease expires in
2007 and provides for a net rental of $140,000 per year. At the
conclusion of the term, Ampal has the option of requiring Hapoalim
to purchase the building at its then fair market value. In 1993,
Ampal received $140,000 as rental payments for these premises.
Until November 1993, Ampal owned 60% of the voting shares and
49.4% of the equity interest in Ophir Holdings Ltd., and the
balance was owned by a Hapoalim affiliate. In November 1993, the
two shareholders' interests in Ophir were equalized. In
connection with the equalization, the Company obtained a fairness
opinion from an independent investment consultant. Concurrently,
15% of the shares in Ophir were issued to another Hapoalim
affiliate for approximately $10.2 million. As a result, Ophir is
now 42.5% owned by Ampal and its results have not been
consolidated in the Company's financial statements after September
30, 1993; they are now recorded on the equity method of
accounting.
In March 1993, Ophir and another Hapoalim affiliate
shareholder in the holding company that purchased 51.3% of the
shares in Industrial Buildings Ltd. have together pledged their
shares in the holding company and the holding company's shares in
Industrial Buildings Ltd. to secure borrowings from unaffiliated
lenders to finance the acquisition of an interest in Industrial
Buildings. Moreover, loans from Hapoalim to an unaffiliated
shareholder in this holding company are also collateralized by
shares in Industrial Buildings owned by the holding company and,
under cross-default provisions, a default by any of the
shareholders in the holding company could cause acceleration of
Ophir's obligations, and, potentially, foreclosure on the
Industrial Buildings shares held by the holding company.
Ophir, which has no employees, pays to another Hapoalim
affiliate a management fee of approximately $50,000 per year for
administrative services. Moreover, under a recent agreement among
Ophir's three shareholders, Ophir has agreed to pay annually to
each of Ampal and a Hapoalim affiliate shareholder of Ophir an
additional management fee of approximately $85,300 in NIS linked
to the dollar. In 1993, Ophir paid $78,000 to Ampal and $132,000
to the Hapoalim affiliate for management fees.
Under agreements initially made in 1984 and extended in 1989,
Ophir separately leases a hotel and parking area in Herzelia,
Israel from an unrelated party. Ophir subleases these properties
to Hapoalim on terms identical to those it pays. In 1993, Ophir
received $250,000 as rental payments for these premises.
In connection with Ampal's purchases in 1992 and 1993 of 5.2%
of DSP Group, Inc., the Company granted a Hapoalim subsidiary, an
option to purchase, and the Hapoalim subsidiary granted Ampal an
option to sell, 50% of Ampal's interest in the DSP Group for $1.1
million, the same purchase price the Company paid, plus interest.
In October 1993, the Hapoalim subsidiary exercised its option to
purchase this interest.
11
<PAGE>
In 1991, the Company agreed that its third lien on certain
assets of Pri Ha'emek (Canned and Frozen Food) 88 Ltd., an Ampal
subsidiary, would rank behind the lien of Hapoalim on those
assets.
The services of Mr. Lefkowitz are shared by Ampal and
Hapoalim pursuant to an arrangement renewable semi-annually
whereby Hapoalim reimburses Ampal for a portion of his
compensation. In 1993, Hapoalim reimbursed Ampal $100,000 for the
services of Mr. Lefkowitz under the arrangement.
Ampal owns $2 million of 7% preferred shares of Bank Hapoalim
(Cayman) Ltd. In 1994, an equivalent amount of 7% preferred
shares in Bank Hapoalim (Cayman) Ltd. was issued to Hapoalim for
$2 million.
APPROVAL OF 1993 STOCK OPTION PLAN
The Company's 1993 Stock Option Plan which was adopted by the
Board of Directors on November 5, 1993 and amended on March 23,
1994 (the "1993 Plan"), is subject to approval by the Company's
shareholders. The full text of the 1993 Plan is set forth as
Exhibit A to this Proxy Statement. The purpose of the 1993 Plan
---------
is to increase the incentive to the Company's employees and
directors to exert their utmost efforts to contribute to the
future success and prosperity of the Company. Subject to
adjustment upon certain changes in the Company's capitalization, a
total of 200,000 shares of Class A Stock will be available for
options granted under the 1993 Plan.
The 1993 Plan authorizes the Board to issue incentive stock
options ("ISOs"), as defined in Section 422(b) of the Internal
Revenue Code of 1986 (the "Code"), and stock options that do not
conform to the requirements of that Code section ("Non-qualified
Options"). Officers and directors who are not also employees of
the Company or any subsidiary thereof may only be granted Non-
qualified Options.
The 1993 Plan will be administered by the Board of Directors of
the Company (the "Board") or a committee of at least two
"disinterested" directors of the Board. The Board or the
Committee will have the authority, subject to the terms of the
1993 Plan, to interpret the 1993 Plan; prescribe, amend and
rescind rules and regulations relating to the 1993 Plan; and make
all other determinations and take all other actions necessary or
advisable for the administration of the 1993 Plan. Determinations
of the Board or the Committee under the 1993 Plan will be
conclusive.
The exercise price of each ISO granted under the 1993 Plan may
not be less than 100% of the fair market value of the Class A
Stock at the time of grant. In the case of a grant to an employee
who owns (within the meaning of Code Section 422(b)(6)) 10% or
more of the outstanding capital stock of the Company, however, the
exercise price may not be less than 110% of such fair market
value. For purposes of the 1993 Plan, the fair market value of
shares of Class A Stock on a given date is the mean of the highest
and lowest trading prices per share of Class A Stock on the
American Stock Exchange on such date. The exercise price of each
Non-Qualified Option is determined by the Board at the time of
grant of such option.
The dates on which each option may be exercised and the
conditions precedent to such exercise, if any, will be fixed by
the Board at the time such option is granted. Generally, the 1993
Plan prohibits the exercise of an option prior to the second
anniversary of the date on which it is granted. However, options
granted to directors of Ampal who are not also employees of Ampal
are exercisable immediately upon grant. The expiration of each
option shall be fixed by the Board at the time such option is
granted, provided that no option may be exercisable on and after
the fifth anniversary of its grant.
Payment of the exercise price by optionees upon exercise of an
option may be (as determined by the Board or the Committee) in
cash, by certified check, by delivering shares of Class A Stock
having a fair market value equal to the exercise price, by
cancelling an appropriate portion of the option or pursuant to a
broker-assisted "cashless exercise program", if established by the
Company.
No option granted under the 1993 Plan is transferable by the
optionee other than by will or the laws of descent and
distribution, and each option is exercisable during the lifetime
of the optionee only by such optionee.
12
<PAGE>
New Plan Benefits
Pursuant to the 1993 Plan (and subject to its approval by
shareholders), on January 25, 1994, the Company granted to certain
directors and employees of the Company and its subsidiaries, Non-
qualified Options to purchase a total of 134,900 shares of Class A
Stock at an exercise price per share of $10.91, as follows:
<TABLE> <CAPTION>
Number of
Non-qualified
Name and Position Options
----------------- -------------
<S> <C>
Lawrence Lefkowitz (President, Chief Executive Officer and Director) 16,000
Moshe Mor (Vice President-Israel Operations) 15,150
Alan L. Schaffer (Vice President-Finance and Treasurer) 13,000
Miri Lent (Assistant Vice President-Israel Operations) 11,500
Michael Arnon (Director) 7,500
Stanley I. Batkin (Director) 5,000
Harry B. Henshel (Director) 5,000
Eitan Raff (Director) 5,000
Leon Riebman (Director) 5,000
Evelyn Sommer (Director) 5,000
All Current Executive Officers As A Group 70,150
All Current Directors Who Are Not Executive Officers As A Group 32,500
All Employees, Including Current Officers Who Are Not Executive Officers, As A Group 32,250
</TABLE>
On August 8, 1994, the closing price of the Class A Stock was
$10.25.
Federal Income Tax Consequences. No taxable income will be
recognized by the optionee, and no deduction will be allowed to
the Company, upon the grant of any option under the 1993 Plan.
Upon the exercise of a Non-qualified Option, an optionee will
recognize income in the year in which the option is exercised in
an amount equal to the difference between the fair market value of
the Class A Stock purchased on the date of exercise and the
exercise price of such shares; the amount so recognized as income
will be deductible by the Company (provided the Company
appropriately withholds taxes from the optionee).
Upon any sale of shares of Class A Stock purchased upon exercise
of a Non-qualified Option, the optionee's basis in the shares for
determining gain or loss will be the sum of the exercise price and
any gain recognized upon exercise. If the shares purchased upon
such exercise constitute capital assets in the hands of the
optionee, any gain or loss recognized by the optionee upon the
sale or other disposition of any of these shares will be
characterized as capital gain or loss, either long-term or short-
term, depending upon the holding period of the shares.
No taxable income will be recognized by the optionee upon the
exercise of ISO. However, the difference between the fair market
value of the Class A Stock on the date of exercise and the
exercise price will generally be included in the ISO holder's
alternative minimum taxable income for the year in which the ISO
is exercised. If the shares so purchased are held for a period of
at least two years from the date of the grant of the ISO and one
year from the date the ISO is exercised, any gain recognized on
any subsequent sale will constitute long-term capital gain rather
than ordinary income and the Company will not be entitled to any
deduction. However, if shares acquired pursuant to an ISO are
disposed of by the optionee within one year from the date of
exercise or two years from the date of the grant of the ISO (a
"disqualifying disposition"), the ISO holder will recognize
ordinary income in the year of such sale equal to the lesser of
(a) the excess (per share sold) of the fair market value of the
Class A Stock on the date of exercise over the exercise price and
(b) the excess (if any) of the amount realized on the sale over
the exercise price. Any gain upon such disposition in excess of
the amount treated as ordinary income will generally be treated as
capital gain. The Company will be entitled to a deduction equal
to the amount of ordinary income recognized by the optionee by
virtue of a disqualifying disposition.
13
<PAGE>
The foregoing summary does not purport to be a complete summary
of the effect of federal income tax of 1993 Plan transactions upon
participants and the Company. Furthermore, it does not discuss
the tax consequences of an optionee's death or the provisions of
the income tax laws of any municipality, state or foreign country
in which an optionee may reside.
The affirmative vote of a majority of all outstanding shares
entitled to vote at the shareholders meeting is required for
approval of the 1993 Plan.
The Board of Directors recommends a vote FOR this proposal.
SHAREHOLDERS' PROPOSALS
Any holder of Class A Stock or Common Stock who wishes to submit
a proposal to be presented at the next Annual Meeting of
Shareholders must forward such proposal to the Secretary of the
Company at the address in the Notice of Annual Meeting so that it
is received by the Company no later than April 11, 1995, and
comply with such rules as may be prescribed from time to time by
the Securities and Exchange Commission regarding proposals of
security holders.
OTHER MATTERS
Representatives of Arthur Andersen & Co., whom Ampal has
selected to be its independent public accountants, will be present
at the Annual Meeting, will have an opportunity to make a
statement if they desire to do so and will be available to respond
to appropriate questions from shareholders.
The management does not presently know of any other matters
which will be brought before the Annual Meeting. If, however,
other matters requiring the vote of the shareholders, not now
known or contemplated, do properly come before the meeting or any
adjournment thereof, it is the intention of the persons named to
vote the proxies held by them in accordance with their judgment in
such matters.
Effective January 29, 1994 the Company purchased a Directors
and Officers Liability policy in the amount of $5,000,000 issued
by the Reliance Insurance Company of New York. The cost of the
policy, which expires January 29, 1995, was $231,000. On January
29, 1994, the Company purchased an excess Directors and Officers
Liability policy in the amount of $3,000,000 issued by Lexington
Insurance Co. The cost of the policy, which expires January 29,
1995, was $83,200. On January 29, 1994, the Company purchased an
additional excess Directors and Officers Liability policy in the
amount of $2,000,000 issued by the Reliance Insurance Company of
New York. The cost of the policy, which expires January 29, 1995,
was $45,000. Each policy provides coverage to all of the officers
and directors of the Company and those subsidiaries of which the
Company owns more than 50% of the outstanding stock.
By Order of the Board of
Directors,
MICHAEL K. MARKS
Secretary
August 11, 1994
UPON REQUEST, THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY
SHAREHOLDER ENTITLED TO VOTE AT THE MEETING A COPY OF ITS ANNUAL
REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K FOR
ITS MOST RECENT FISCAL YEAR. SUCH REQUEST SHOULD BE MADE TO THE
SECRETARY OF THE COMPANY AT THE ADDRESS SHOWN ON THE ACCOMPANYING
NOTICE OF ANNUAL MEETING.
14
EXHIBIT A
AMPAL-AMERICAN ISRAEL CORPORATION
1993 STOCK OPTION PLAN
1. Purposes.
--------
The 1993 Option Plan (the "Plan") is intended to
attract and retain the best available personnel for Ampal-
American Israel Corporation ("Ampal") or any of its subsidiary
corporations (collectively, the "Company"), and to provide
additional incentive to such employees, officers and directors to
exert their maximum efforts toward the success of the Company.
The above aims will be effectuated through the granting of
certain stock options. Under the Plan, options may be granted
which are intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986 (the "Code")
(such options granted hereunder are referred to as "ISOs") or
which are not intended to qualify as incentive stock options
thereunder (such options granted hereunder are referred to as
"Non-ISOs"). The term "subsidiary corporation" shall, for
purposes of the Plan, be defined in the same manner as such term
is defined in Section 424(f) of the Code and shall include a
subsidiary of any subsidiary.
2. Administration of the Plan.
--------------------------
(a) The Plan shall be administered by the Board of
Directors of Ampal (the "Board of Directors"), as the Board of
Directors may be composed from time to time, except as provided
in subparagraph (b) of this Paragraph 2. The determinations of
the Board of Directors under the Plan, including without
limitation as to the matters referred to in this Paragraph 2,
shall be conclusive. Within the limits of the express provisions
of the Plan, the Board of Directors shall have the authority, in
its discretion, to take the following actions under the Plan:
(i) to determine the individuals to whom, and the time
or times at which, ISOs to purchase Ampal's shares of Class A
Stock, par value $1.00 per share ("Class A Stock"), shall be
granted, and the number of shares of Class A Stock to be subject
to each ISO,
(ii) to determine the individuals to whom, and the
time or times at which, Non-ISOs to purchase shares of Ampal's
Class A Stock, shall be granted, and the number of shares of
Class A Stock to be subject to each Non-ISO,
(iii) to determine the terms and provisions of the
respective stock option agreements granting ISOs and Non-ISOs
(which need not be identical),
(iv) to interpret the Plan,
(v) to prescribe, amend and rescind rules and
regulations relating to the Plan, and
(vi) to make all other determinations and take all
other actions necessary or advisable for the administration of
the Plan. In making such determinations, the Board of Directors
A-1
<PAGE>
may take into account the nature of the services rendered by such
individuals, their present and potential contributions to the
Company's success and such other factors as the Board of
Directors, in its discretion, shall deem relevant. An individual
to whom an option has been granted under the Plan is referred to
herein as an "Optionee."
(b) Notwithstanding anything to the contrary contained
herein, the Board of Directors may at any time, or from time to
time, appoint a committee (the "Committee") of at least two
members of the Board of Directors, and delegate to the Committee
the authority of the Board of Directors to administer the Plan.
Upon such appointment and delegation, the Committee shall have
all the powers, privileges and duties of the Board of Directors,
and shall be substituted for the Board of Directors, in the
administration of the Plan, except that the power to appoint
members of the Committee and to terminate, modify or amend the
Plan shall be retained by the Board of Directors. In the event
that any member of the Board of Directors is at any time not a
"disinterested person," as defined in Rule 16b-3(c)(2)(i)
promulgated pursuant to the Securities Exchange Act of 1934, the
Plan shall not be administered by the Board of Directors, and may
only be administered by a Committee, all the members of which are
disinterested persons, as so defined. The Board of Directors may
from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed,
may fill Committee shall constitute a quorum and all
determinations shall be made by a majority of its members.
Members of the Committee shall not be eligible to participate in
this Plan.
3. Shares Subject to the Plan.
--------------------------
The total number of shares of Class A Stock which shall
be subject to ISOs and Non-ISOs granted under the Plan
(collectively, "Options") shall be 200,000 in the aggregate,
subject to adjustment as provided in Paragraph 8. The shares of
Class A Stock to be issued upon exercise of Options shall in
whole or in part be authorized and unissued or reacquired shares
of Class A Stock. The unexercised portion of any expired,
terminated or canceled Option shall again be available for the
grant of Options under the Plan.
4. Eligibility.
-----------
(a) Options may be granted to employees, officers or
directors of the Company, as determined by the Board of
Directors.
(b) An ISO may be granted, consistent with the other
terms of the Plan, to an employee who owns (within the meaning of
Sections 422(b)(6) and 424(d) of the Code), more than ten (10%)
percent of the total combined voting power or value of all
classes of stock of Ampal or a subsidiary corporation (any such
A-2
<PAGE>
person, a "Principal Shareholder") only if, at the time such ISO
is granted, the purchase price of the shares of Class A Stock
subject to the ISO is an amount which equals or exceeds one
hundred ten percent (110%) of the fair market value of such
shares.
(c) A director or an officer of the Company who is not
also an employee of the Company shall be eligible to receive Non-
ISOs but shall not be eligible to receive ISOs.
(d) Nothing contained in the Plan shall be construed
to limit the right of Ampal to grant options otherwise than under
the Plan for proper corporate purposes.
(e) Nothing contained in the Plan shall be construed
to limit the right of the Board of Directors to grant an ISO and
a Non-ISO concurrently under a single stock option agreement so
long as each Option is clearly identified as to its status.
Furthermore, if an Option has been granted under the Plan,
additional Options may be granted from time to time to the
Optionee holding such Options, and Options may be granted from
time to time to one or more employees, officers or directors who
have not previously been granted Options.
(f) To the extent that the grant of an Option results
in the aggregate fair market value (determined at the time of
grant) of the shares of Class A Stock (or other capital stock of
the Company or any subsidiary) with respect to which Incentive
Stock Options are exercisable for the first time by an Optionee
during any calendar year (under all plans of the Company and
subsidiary corporations) exceeding $100,000, such Option shall be
treated as an Non-ISO. The provisions of this subparagraph (f)
of Paragraph 4 shall be construed and applied in accordance with
Section 422(d) of the Code and the regulations, if any,
promulgated thereunder.
5. Terms of Options.
----------------
The terms of each Option granted under the Plan shall
be determined by the Board of Directors consistent with the
provisions of the Plan, including the following:
(a) The purchase price of shares of Class A Stock
subject to each ISO shall not be less than the fair market value
(or in the case of the grant of an ISO to a Principal
Shareholder, not less than 110% of fair market value) of such
shares at the time such ISO is granted. Such fair market value
shall be determined by the Board of Directors and, if shares of
Class A Stock are listed on a national securities exchange or
traded on the over-the-counter market, the fair market value
shall be the mean of the highest and lowest trading prices or of
the high bid and low asked prices of shares of Class A Stock on
such exchange, or on the over-the-counter market as reported by
the NASDAQ system or the National Quotation Bureau, Inc., as the
case may be, on the day on which the ISO is granted or, if there
is no trading or bid or asked price on that day, the mean of the
highest and lowest trading or high bid and low asked prices on
A-3
<PAGE>
the most recent day preceding the day on which the ISO is granted
for which such prices are available.
(b) The purchase price of shares of Class A Stock
subject to each Non-ISO shall be fixed by the Board of Directors,
in its discretion, at the time such Non-ISO is granted.
(c) The dates on which each Option (or portion
thereof) shall be exercisable and the conditions precedent to
such exercise, if any, shall be fixed by the Board of Directors,
in its discretion, at the time such Option is granted; provided,
however, Options granted to directors of Ampal who are not also
employees of Ampal shall be exercisable immediately upon grant;
and provided, further, no Option, except to a person described in
the immediately preceding proviso, shall be exercisable prior to
the second anniversary of the date on which it is granted.
(d) The expiration of each Option shall be fixed by
the Board of Directors, in its discretion, at the time such
Option is granted; provided, however, no Option shall be
exercisable after the expiration of five (5) years from the date
of grant. Each Option shall be subject to earlier termination as
expressly provided in Paragraph 6 hereof or as determined by the
Board of Directors, in its discretion, at the date such Option is
granted.
(e) Options shall be exercised by the delivery by the
Optionee thereof to the Company at its principal office, or at
such other address as may be established by the Board of
Directors, of written notice of the number of shares of Class A
Stock with respect to which the Option is being exercised
accompanied by payment in full of the purchase price of such
shares. Payment for such shares of Class A Stock may be made (as
determined by the Board of Directors) (i) in cash, (ii) by
certified check or bank cashier's check payable to the order of
the Company in the amount of such purchase price, (iii) by
delivery of capital stock to the Company having a fair market
value (determined on the date of exercise in accordance with the
provisions of subparagraph (a) of this Paragraph 5) equal to said
purchase price, (iv) pursuant to a broker-assisted "cashless
exercise" program, if established by the Company, or (v) by any
combination of the methods of payment described in (i) through
(iv) above.
(f) An Optionee shall not have any of the rights of a
shareholder with respect to the shares of Class A Stock subject
to his Option until such shares are issued to him upon the
exercise of his Option as provided herein.
(g) No Option shall be transferable, except by will or
the laws of descent and distribution, and any Option may be
exercised during the lifetime of the Optionee only by him. No
Option granted under the Plan shall be subject to execution,
attachment or other process.
A-4
<PAGE>
6. Death or Termination of Employment.
----------------------------------
(a) If the employment or other relationship of an
Optionee with the Company shall be terminated voluntarily by the
employee and without the consent of the Company or for "Cause"
(as hereinafter defined), and immediately after such termination
such Optionee shall not then be employed by the Company, any
Options granted to such Optionee to the extent not theretofore
exercised shall expire forthwith. For purposes of the Plan,
"Cause" shall mean "Cause" as defined in any employment agreement
("Employment Agreement") between Optionee and the Company, and,
in the absence of an Employment Agreement or in the absence of a
definition of "Cause" in such Employment Agreement, "Cause" shall
mean (i) any continued failure by the Optionee to obey the
reasonable instructions of the President or the Board of
Directors, (ii) continued neglect by the Optionee of his duties
and obligations as an employee of the Company, or a failure to
perform such duties and obligations to the reasonable
satisfaction of the President or the Board of Directors, (iii)
willful misconduct of the Optionee or other actions in bad faith
by the Optionee which are to the detriment of the Company
including without limitation conviction of a felony, embezzlement
or misappropriation of funds and conviction of any act of fraud
or (iv) a breach of any material provision of any Employment
Agreement not cured within 10 days after written notice thereof.
(b) If such employment or other relationship shall
terminate other than (i) by reason of death, (ii) voluntarily by
the employee and without the consent of the Company, or (iii) for
Cause, and immediately after such termination such Optionee shall
not then be employed by the Company, any Options granted to such
Optionee may be exercised at any time within three months after
such termination, subject to the provisions of subparagraph (e)
of this Paragraph 6 and subparagraph (c) of Paragraph 5. Any
unexercised Option subject to this subparagraph (b) shall expire
on the day three months after the termination of the Optionee's
employment or other relationship with the Company. For the
purposes of the Plan, the retirement of an Optionee either
pursuant to a pension or retirement plan adopted by the Company
or on the normal retirement date prescribed from time to time by
the Company, and the termination of employment as a result of a
disability (as defined in Section 22(e)(3) of the Code) shall be
deemed to be a termination of such Optionee's employment other
than voluntarily by the Optionee or for Cause.
(c) Notwithstanding the provisions of subparagraph (a)
and (b) of this Paragraph 6, if the Optionee, other than an
Optionee who was an employee of Ampal at the time of the Option
grant, ceases to be a director of Ampal, and immediately
thereafter, such Optionee is not then employed by the Company,
any Options grant to such Optionee may be exercisable at any time
within one year after such Optionee ceases to be a director of
Ampal, subject to the provisions of subparagraph (e) of this
Paragraph 6.
A-5
<PAGE>
(d) If an Optionee dies (i) while employed by, or
engaged in such other relationship with, the Company or (ii)
within three months after the termination of his employment or
other relationship other than voluntarily by the Optionee and
without the consent of the Company or for Cause, any Options
granted to such Optionee may be exercised at any time within six
months after such Optionee's death, subject to the provisions of
subparagraph (e) of this Paragraph 6 and subparagraph (c) of
Paragraph 5. Any unexercised Option subject to this subparagraph
(d) shall expire on the date six months after the Optionee's
death.
(e) An Option may not be exercised pursuant to this
Paragraph 6 except to the extent that the Optionee was entitled
to exercise the Option at the time of termination of employment
or such other relationship, or death, and in any event may not be
exercised after the expiration of five (5) years from the date
the Option was granted.
7. Leave of Absence.
----------------
For purposes of the Plan, an individual who is on
military or sick leave or other bona fide leave of absence (such
as temporary employment by the United States or any state
government) shall be considered as remaining in the employ of the
Company for 90 days or such longer period as shall be determined
by the Board of Directors.
8. Adjustment upon Changes in Capitalization.
-----------------------------------------
(a) In the event that the outstanding shares of Class
A Stock are hereafter changed by reason of reorganization,
merger, consolidation, recapitalization, reclassification, stock
split-up, combination or exchange of shares and the like, or
dividends payable in shares of Class A Stock, an appropriate
adjustment shall be made by the Board of Directors in the
aggregate number of shares available under the Plan and in the
number of shares and price per share subject to outstanding
Options. If Ampal shall be reorganized, consolidated, or merged
with another corporation, or if all or substantially all of the
assets of Ampal shall be sold or exchanged, an Optionee shall at
the time of issuance of the stock under such a corporate event,
be entitled to receive upon the exercise of his Option the same
number and kind of shares of stock or the same amount of
property, cash or securities as he would have been entitled to
receive upon the occurrence of any such corporate event as if he
had been, immediately prior to such event, the holder of the
number of shares covered by his Option; provided, however, that
if any of such events occur, the Board of Directors shall have
the discretionary power to take any action necessary or
appropriate to prevent ISOs granted hereunder from being
disqualified as Incentive Stock Options or to accelerate their
vesting date.
A-6
<PAGE>
(b) Any adjustment under this Paragraph 8 in the
number of shares of Class A Stock subject to Options shall apply
proportionately to only the unexercised portion of any Option
granted hereunder. If fractions of a share would result from any
such adjustment, the adjustment shall be revised to the next
lower whole number of shares.
9. Further Conditions of Exercise.
------------------------------
(a) Unless prior to the exercise of an Option the
shares of Class A Stock issuable upon such exercise are the
subject of a registration statement filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), and there is then in effect a
prospectus filed as part of such registration statement meeting
the requirements of Section 10(a)(3) of the Securities Act, the
notice of exercise with respect to such Option shall be
accompanied by a representation or agreement of the Optionee to
Ampal to the effect that such shares are being acquired for
investment only and not with a view to the resale or distribution
thereof, or such other documentation as may be required by Ampal,
unless, in the opinion of counsel to Ampal, such representation,
agreement or documentation is not necessary to comply with the
Securities Act.
(b) Anything in the Plan to the contrary
notwithstanding, Ampal shall not be obligated to issue or sell
any shares of Class A Stock until they have been listed on each
securities exchange on which the shares of Class A Stock may then
be listed and until and unless, in the opinion of counsel to
Ampal, Ampal may issue such shares pursuant to a qualification or
an effective registration statement, or an exemption from
registration, under such state and federal laws, rules or
regulations as such counsel may deem applicable. Ampal shall use
reasonable efforts to effect such listing, qualification and
registration, as the case may be.
10. Termination, Modification and Amendment.
---------------------------------------
(a) The Plan (but not Options previously granted under
the Plan) shall terminate ten (10) years from the earlier of the
date of its adoption by the Board of Directors or the date on
which the Plan is approved by the affirmative vote of the holders
of a majority of the outstanding shares of capital stock of Ampal
entitled to vote thereon, and no Option shall be granted after
termination of the Plan.
(b) The Plan may from time to time be terminated,
modified or amended by the affirmative vote of the holders of a
majority of the outstanding shares of the capital stock of Ampal
entitled to vote thereon.
(c) The Board of Directors may at any time terminate
the Plan or from time to time make such modifications or
amendments of the Plan as it may deem advisable; provided,
however, that the Board of Directors shall not (i) modify or
A-7
<PAGE>
amend the Plan in any way that would disqualify any ISO issued
pursuant to the Plan as an incentive stock option within the
meaning of Section 422 of the Code or (ii) without approval by
the affirmative vote of the holders of a majority of the
outstanding shares of the capital stock of Ampal entitled to vote
thereon, increase (except as provided by Paragraph 8) the maximum
number of shares of Class A Stock as to which Options may be
granted under the Plan or change the class of persons eligible to
receive Options under the Plan.
(d) No termination, modification or amendment of the
Plan may adversely affect the rights conferred by any Options
without the consent of the Optionee thereof.
11. Effectiveness of the Plan.
-------------------------
The Plan shall become effective upon adoption by the
Board of Directors. The Plan shall be submitted for the approval
of the shareholders of Ampal at a meeting constituting a quorum
within one year following the adoption of the Plan by the Board
of Directors, and all Options granted prior to such approval
shall be subject thereto. The Plan shall be approved by the
affirmative vote of the holders of a majority of the shares of
the capital stock of Ampal entitled to vote at such meeting.
The Plan is also subject to the adoption by the Board of
Directors and the approval by the holders of a majority of the
outstanding shares of capital stock of Ampal entitled to vote at
a meeting constituting a quorum of an amendment of Ampal's
Certificate of Incorporation to increase the number of authorized
shares of Class A Stock to an amount sufficient to allow Ampal to
reserve the 200,000 shares of Class A Stock which may be subject
to Options granted under the Plan. In the event such adoption or
approvals are withheld, the Plan and all Options which may have
been granted thereunder shall become null and void.
12. Not a Contract of Employment.
----------------------------
Nothing contained in the Plan or in any stock option
agreement executed pursuant hereto shall be deemed to confer upon
any individual to whom an Option is or may be granted hereunder
any right to remain in the employ of, or retain the relationship
with, the Company.
A-8
<PAGE>
AMENDMENT DATED AS OF MARCH 23, 1994 TO
AMPAL-AMERICAN ISRAEL CORPORATION
1993 STOCK OPTION PLAN
1. Subparagraph (e) of Paragraph 5 is amended and restated in its
entirety as follows:
"(e) Options shall be exercised by the delivery by the
Optionee thereof to the Company at its principal office, or at
such other address as may be established by the Board of
Directors, of written notice of the number of shares of Class A
Stock with respect to which the Option is being exercised
accompanied by payment in full of the purchase price of such
shares. Payment for such shares of Class A Stock may be made (as
determined by the Board of Directors) (i) in cash, (ii) by
certified check or bank cashier's check payable to the order of
the Company in the amount of such purchase price, (iii) by
delivery of capital stock to the Company (including, by way of
irrevocable direction to the Company, shares of Class A Stock to
be received upon exercise of the Option) having a fair market
value (determined on the date of exercise in accordance with the
provisions of subparagraph (a) of this Paragraph 5) equal to said
purchase price, (iv) pursuant to a broker-assisted "cashless
exercise" program, if established by the Company, or (v) by any
combination of the methods of payment described in (i) through
(iv) above."
2. The following new subparagraph (h) shall be added to the end
of Paragraph 5:
"(h) The Company's obligation to deliver shares of
Class A Stock upon the exercise of an Option shall be subject to
the payment by the Optionee thereof of any applicable federal,
state and local withholding tax. The Company shall, to the
extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to the Optionee any federal,
state or local taxes required to be withheld with respect to such
payment. Subject to the right of the Board of Directors to
disapprove any such election and require the withholding tax in
cash, an Optionee shall have the right to elect to pay the
withholding tax with shares of Class A Stock to be received upon
exercise of an Option or which are otherwise owned by the
Optionee. Any election to pay withholding taxes with stock shall
be irrevocable once made."
A-9
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION PROXY
This proxy is solicited on behalf of the Board of Directors and will be voted
FOR the nominees listed in the accompanying proxy statement and FOR the
approval of the Company's 1993 Stock Option Plan, if no instructions to
the contrary are indicated.
The undersigned hereby constitutes and appoints SHLOMO RECHT, LAWRENCE LEFKOWITZ
and ALAN L. SCHAFFER, and each of them, as proxies with full power of
substitution in each, to represent the undersigned and vote all shares of Class
A Stock of the undersigned at the Annual Meeting of Shareholders of Ampal-
American Israel Corporation to be held at the offices of Bank Hapoalim B.M.,
1177 Avenue of the Americas, 14th Floor, New York, New York, on Thursday,
September 22, 1994, at 9:00 A.M., and at any adjournments thereof as follows:
(Continued, and to be signed and dated on reverse side)
<PAGE>
/X/ Please mark
your vote
as this
--------------
CLASS A
The Board of Directors recommends a vote FOR Proposals 1 and 2.
FOR all nominess below WITHHOLD AUTHORITY
(except as marked to to vote for
the contrary below) all nominees below
1. THE ELECTION OF
DIRECTORS
CLASS A NOMINEES: H. Henshel, H. Kronish, L. Riebman, E Sommer.
COMMON/CLASS A NOMINEES: A. Abend, M. Arnon, S. Batkin, Y. Elinav,
I. Hochberg, L. Lefkowitz, E. Raff, S. Ravid, S. Recht.
(INSTRUCTION: To withhold authority to vote for any individual
nominee(s), print the name of such nominee(s) below.)
FOR AGAINST ABSTAIN
2. Approval of the Company's / / / / / /
1993 Stock Option Plan
3. In their discretion, upon such other matters as may properly
come before the meeting.
This proxy must be signed exactly as name appears hereon.
Executors, administrators, trustees, etc., should give full title
as such. If stock is held in name of joint holders, each should
sign. If signer is a corporation, please sign full corporate
name by authorized officer.
Signature(s) Dated................ ,1994
Please complete, sign, date and mail this card promptly in the postage
prepaid return envelope provided.
