SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission file number 0-538
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AMPAL-AMERICAN ISRAEL CORPORATION
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(Exact name of registrant as specified in its charter)
New York 13-0435685
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1177 Avenue of the Americas, New York, New York 10036
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 782-2100
----------------------
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
The number of shares outstanding of the issuer's Class A Stock, its only
authorized common stock, is 23,764,879 (as of July 31, 1997).
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION
---------------------------------
Index to Form 10-Q
Page
----
Part I Financial Information
Consolidated Statements of Income
Six Months Ended June 30.............................. 1
Three Months Ended June 30............................ 2
Consolidated Balance Sheets............................ 3
Consolidated Statements of Cash Flows.................. 5
Consolidated Statements of Changes in Shareholders'
Equity................................................ 7
Notes to the Consolidated Financial Statements......... 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations......... 10
Part II Other Information...................................... 13
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1997 1996
- --------------------------------------------------------------------------------
(Dollars in thousands, except per share data) (Unaudited) (Unaudited)
(Note 2)
REVENUES
Equity in earnings of affiliates ..................... $ 9,211 $ 1,348
Manufacturing (Note 6) ............................... 6,286 5,204
Interest:
Related parties ..................................... 4,325 6,205
Others .............................................. 1,228 1,130
Rental income ........................................ 3,707 5,726
Realized and unrealized gains on investments ......... 4,046 2,131
Other ................................................ 1,037 944
------- --------
Total revenues .................................. 29,840 22,688
------- --------
EXPENSES
Manufacturing (Note 6) ............................... 6,735 5,455
Interest:
Related parties ..................................... 1,292 2,114
Others .............................................. 3,765 5,884
Rental property operating expenses ................... 2,083 2,883
Other ................................................ 4,161 3,442
------- --------
Total expenses .................................. 18,036 19,778
------- --------
Income from continuing operations before
income taxes ........................................ 11,804 2,910
Provision for income taxes ........................... 4,514 1,358
------- --------
Income from continuing operations .................... 7,290 1,552
Loss from discontinued operations (Note 2) ........... -- (2,575)
------- --------
NET INCOME (LOSS) ............................... $ 7,290 $ (1,023)
======= ========
Earnings (loss) per Class A share (Note 4):
Earnings from continuing operations ................. $ .26 $ .05
Loss from discontinued operations ................... -- (.09)
------- --------
Earnings (loss) per Class A share .................... $ .26 $ (.04)
======= ========
Weighted average number of Class A and
equivalent shares outstanding (in thousands) ........ 27,614 24,613
The accompanying notes are an integral part of the consolidated financial
statements.
1
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1997 1996
- --------------------------------------------------------------------------------
(Dollars in thousands, except per share data) (Unaudited)(Unaudited)
(Note 2)
REVENUES
Equity in earnings of affiliates ....................... $ 6,630 $ 2,428
Manufacturing (Note 6) ................................. 3,274 2,594
Interest:
Related parties ....................................... 1,822 3,323
Others ................................................ 748 581
Rental income .......................................... 1,656 2,852
Realized and unrealized gains on investments ........... 2,682 2,445
Other .................................................. 558 467
------- --------
Total revenues .................................... 17,370 14,690
------- --------
EXPENSES
Manufacturing (Note 6) ................................. 3,714 2,733
Interest:
Related parties ....................................... 577 1,095
Others ................................................ 1,712 3,225
Rental property operating expenses ..................... 1,098 1,504
Other .................................................. 2,301 1,681
------- --------
Total expenses .................................... 9,402 10,238
------- --------
Income from continuing operations before income
taxes ................................................. 7,968 4,452
Provision for income taxes ............................. 3,199 1,499
------- --------
Income from continuing operations ...................... 4,769 2,953
Loss from discontinued operations (Note 2) ............. -- (1,074)
------- --------
NET INCOME ........................................ $ 4,769 $ 1,879
======= ========
Earnings per Class A share (Note 4):
Earnings from continuing operations ................... $ .17 $ .10
Loss from discontinued operations ..................... -- (.03)
------- --------
Earnings per Class A shares ............................ $ .17 $ .07
======= ========
Weighted average number of Class A and
equivalent shares outstanding (in thousands) .......... 27,614 24,613
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS AS AT 1997 1996
- --------------------------------------------------------------------------------
(Dollars in thousands) (Unaudited) (Note 2)
Cash and cash equivalents ............................ $ 17,808 $ 20,633
Deposits, notes and loans receivable ................. 58,012 57,041
Investments .......................................... 125,495 123,084
Real estate rental property, less accumulated
depreciation of $5,455 and $6,215 (Note 3) .......... 28,129 58,199
Property and equipment, less accumulated
depreciation of $2,427 and $4,041 ................... 3,156 5,571
Other assets ......................................... 18,912 19,023
-------- --------
TOTAL ASSETS ......................................... $251,512 $283,551
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND June 30, December 31,
SHAREHOLDERS' EQUITY AS AT 1997 1996
- --------------------------------------------------------------------------------
(Dollars in thousands) (Unaudited) (Note 2)
LIABILITIES
Notes and loans payable:
Related parties ...................................... $ 17,257 $ 34,005
Others ............................................... 5,793 10,538
Debentures ............................................. 43,367 57,871
Accounts and income taxes payable, accrued
expenses and minority interests ....................... 30,078 29,017
--------- ---------
Total liabilities .............................. 96,495 131,431
--------- ---------
SHAREHOLDERS' EQUITY
4% Cumulative, Participating, Convertible Preferred
Stock, $5 par value; authorized 189,287 shares; issued
and outstanding 187,426 and 190,936 shares ............ 937 955
6-1/2% Cumulative, Convertible Preferred Stock,
$5 par value; authorized 988,055 shares; issued and
outstanding 976,783 and 1,002,483 shares .............. 4,884 5,012
Class A Stock, $1 par value; authorized
60,000,000 shares; issued 24,354,070 and
24,256,420 shares; outstanding 23,748,670 and
23,651,020 shares ..................................... 24,354 24,257
Additional paid-in capital ............................. 57,474 57,410
Retained earnings ...................................... 82,233 74,943
Treasury Stock, 605,400 shares of Class A Stock,
at cost ............................................... (3,829) (3,829)
Cumulative translation adjustments ..................... (11,036) (6,530)
Unrealized loss on marketable securities ............... -- (98)
--------- ---------
Total shareholders' equity ..................... 155,017 152,120
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............. $ 251,512 $ 283,551
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 1996
- --------------------------------------------------------------------------------
(Dollars in thousands) (Unaudited)(Unaudited)
(Note 2)
Cash flows from operating activities:
Net income (loss) ....................................... $ 7,290 $ (1,023)
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of affiliates ....................... (9,211) (1,348)
Loss from discontinued operations ...................... -- 2,575
Realized and unrealized gains on investments ........... (4,046) (2,131)
Depreciation expense ................................... 923 1,011
Amortization expense ................................... 979 1,856
Translation (gain) ..................................... (101) (357)
Minority interests ..................................... (211) (225)
(Increase) in other assets .............................. (520) (741)
Increase in accounts and income taxes payable,
accrued expenses and minority interests ................ 1,202 698
Investments made in trading securities .................. (3,376) (858)
Proceeds from sale of trading securities ................ 3,038 1,331
Dividend received from affiliate ........................ 70 --
-------- --------
Net cash (used in) provided by operating activities .... (3,963) 788
-------- --------
Cash flows from investing activities:
Deposits, notes and loans receivable collected .......... 13,336 12,941
Deposits, notes and loans receivable granted ............ (907) (3,385)
Investments made in:
Available-for-sale securities .......................... -- (265)
Affiliates and others .................................. (4,650) (4,332)
Proceeds from sale of investments:
Available for sale ..................................... 1,537 639
Others ................................................. 13,625 3,229
Proceeds from sale of real estate rental
property ............................................... 15,046 --
Purchase of property and equipment ...................... (257) (505)
Purchase of real estate rental property ................. (194) (414)
-------- --------
Net cash provided by investing activities .............. 37,536 7,908
-------- --------
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 1996
- --------------------------------------------------------------------------------
(Dollars in thousands) (Unaudited) (Unaudited)
(Note 2)
Cash flows from financing activities:
Notes and loans payable received:
Related parties .................................... $ 1,244 $ 190
Others ............................................. 580 3,341
Notes and loans payable repaid:
Related parties .................................... (18,168) (2,489)
Others ............................................. (4,813) (691)
Debentures repaid ................................... (13,776) (13,386)
-------- --------
Net cash (used in) financing activities ............ (34,933) (13,035)
-------- --------
Effect of exchange rate changes on cash and
cash equivalents .................................... (1,465) (1,530)
-------- --------
Net (decrease) in cash and cash equivalents .......... (2,825) (5,869)
Cash and cash equivalents at beginning of
period .............................................. 20,633 25,734
-------- --------
Cash and cash equivalents at end of period ........... $ 17,808 $ 19,865
======== ========
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest:
Related parties .................................... $ 684 $ 1,206
Others ............................................. 1,583 1,673
-------- --------
Total interest paid .............................. $ 2,267 $ 2,879
======== ========
Income taxes paid ................................... $ 339 $ 2,160
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1997 1996
- --------------------------------------------------------------------------------
(Dollars in thousands, except share amounts) (Unaudited) (Unaudited)
4% PREFERRED STOCK
Balance, beginning of year ......................... $ 955 $ 995
Conversion of 3,510 and 2,672 shares into
Class A Stock ..................................... (18) (13)
-------- --------
Balance, end of period ............................. $ 937 $ 982
======== ========
6-1/2% PREFERRED STOCK
Balance, beginning of year ......................... $ 5,012 $ 5,263
Conversion of 25,700 and 25,890 shares into
Class A Stock ..................................... (128) (129)
-------- --------
Balance, end of period ............................. $ 4,884 $ 5,134
======== ========
CLASS A STOCK
Balance, beginning of year ......................... $ 24,257 $ 21,066
Issuance of shares upon conversion of
Preferred Stock ................................... 94 91
Issuance of additional shares ...................... 3 --
-------- --------
Balance, end of period ............................. $ 24,354 $ 21,157
======== ========
COMMON STOCK
Balance, beginning of year ......................... $ -- $ 3,000
-------- --------
Balance, end of period ............................. $ -- $ 3,000
======== ========
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year ......................... $ 57,410 $ 57,310
Conversion of Preferred Stock ...................... 52 51
Issuance of additional shares ...................... 12 --
-------- --------
Balance, end of period ............................. $ 57,474 $ 57,361
======== ========
RETAINED EARNINGS
Balance, beginning of year ......................... $ 74,943 $ 85,559
Net income (loss) .................................. 7,290 (1,023)
-------- --------
Balance, end of period ............................. $ 82,233 $ 84,536
======== ========
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance, beginning of year ......................... $ (6,530) $ (4,354)
Foreign currency translation adjustment ............ (4,506) (1,202)
-------- --------
Balance, end of period ............................. $(11,036) $ (5,556)
======== ========
UNREALIZED LOSS ON MARKETABLE SECURITIES
Balance, beginning of year ......................... $ (98) $ (595)
Unrealized gain, net ............................... 98 321
-------- --------
Balance, end of period ............................. $ -- $ (274)
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
7
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
--------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. As used in these financial statements, the term "Company" refers to
Ampal-American Israel Corporation ("Ampal") and its consolidated
subsidiaries.
2. The December 31, 1996 consolidated balance sheet presented herein was
derived from the audited December 31, 1996 consolidated financial
statements of the Company.
Reference should be made to the Company's consolidated financial
statements for the year ended December 31, 1996 for a description of
the accounting policies which have been continued without change. Also,
reference should be made to the notes to the Company's December 31,
1996 consolidated financial statements for additional details of the
Company's consolidated financial condition, results of operations and
cash flows. The details in those notes have not changed except as a
result of normal transactions in the interim. Certain amounts in the
1996 consolidated balance sheet, consolidated statement of cash flows
and consolidated statements of income have been reclassified to conform
with the current period's presentation and to reflect the results of
Pri Ha'emek (Canned and Frozen Food) 88 Ltd. as discontinued
operations. All adjustments (of a normal recurring nature) which are,
in the opinion of management, necessary for a fair presentation of the
results of the interim period have been included.
3. On January 31, 1997, the Company sold to the Government of Israel (the
"Government") for $31 million a condominium unit in the 290,000
square-foot office building located at 800 Second Avenue, New York, New
York which is occupied by the Government. As a result of this
transaction, the Company recorded a loss of $1.1 million ($.6 million
net of taxes) in its December 31, 1996 financial statements.
4. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings
Per Share. This statement establishes standards for computing and
presenting earnings per share ("EPS"), replacing the presentation of
currently required primary EPS with a presentation of Basic EPS. For
entities with complex capital structures, the statement requires the
dual presentation of both Basic EPS and Diluted EPS on the face of the
Statement of Income. Under this new standard, Basic EPS is computed
based on the weighted average number of shares actually outstanding
during the period. Diluted EPS includes the effect of potential
dilution from the conversions of 6-1/2% and 4% Preferred Stocks to
Class A Stock. SFAS No. 128 is effective for financial statements
issued for periods ending after December 15, 1997, and earlier
application in the interim financial statements is not permitted. When
adopted, the Company will be required to restate its EPS data for all
prior periods presented.
Had the Company applied the principles of SFAS No. 128, earnings per
share data on a Pro Forma basis would be as follows:
Six months ended June 30, 1997 1996
---- ----
Basic EPS:
Earnings from continuing operations .................. $ .31 $ .07
Loss from discontinued operations .................... -- (.11)
----- -----
Earnings (loss) per Class A share .................... $ .31 $(.04)
===== =====
8
<PAGE>
Six months ended June 30, 1997 1996
---- ----
Diluted EPS:
Earnings from continuing operations .................. $ .26 $ .05
Loss from discontinued operations .................... -- (.09)
----- -----
Earnings (loss) per Class A share .................... $ .26 $(.04)
===== =====
Shares used in calculation (in thousands):
Basic EPS ............................................ 23,702 23,503
Diluted EPS .......................................... 27,614 27,613
Three months ended June 30, 1997 1996
---- ----
Basic EPS:
Earnings from continuing operations .................. $ .20 $ .13
Loss from discontinued operations .................... -- (.05)
----- -----
Earnings per Class A share ........................... $ .20 $ .08
===== =====
Diluted EPS:
Earnings from continuing operations................... $ .17 $ .10
Loss from discontinued operations..................... -- (.03)
----- -----
Earnings per Class A share............................ $ .17 $ .07
===== =====
Shares used in calculation (in thousands):
Basic EPS ............................................ 23,725 23,526
Diluted EPS .......................................... 27,614 27,613
5. On May 8, 1997, the Company sold all of its direct holdings in Orlite
Industries (1959) Ltd. ("Orlite") and a wholly-owned subsidiary which
holds a separate interest in Orlite to Investment Company of Bank
Hapoalim for an aggregate purchase price of $5.3 million plus interest.
The Company recorded a gain on sale of $.3 million in its June 30, 1997
consolidated financial statements.
6. On June 26, 1997 the main factory of the Company's 85%-owned
subsidiary, Paradise Industries Ltd. ("Paradise"), was heavily damaged
by a fire and has been closed since then. Paradise carries both fire
damage and business interruption insurance covering the factory. It is
too early to determine the amount of loss to be incurred as a result of
the fire, if any, or when Paradise will resume its operations. The 1997
manufacturing revenues and expenses reflect the operations of Paradise
through the date of the fire.
9
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
--------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Six months ended June 30, 1997 compared to six months ended June 30, 1996:
- --------------------------------------------------------------------------
Consolidated income from continuing operations increased to $7.3 million for the
six-month period ended June 30, 1997, from $1.6 million for the same period in
1996. The increase in income resulted primarily from the increases in equity in
earnings of affiliates, realized and unrealized gains on investments and net
interest income in 1997 as compared to net interest expense in 1996.
Equity in earnings of affiliates increased from $1.3 million for the six months
ended June 30, 1996, to $9.2 million for the same period in 1997. The increase
is primarily attributable to the significantly improved earnings of Ophir
Holdings Ltd. ("Ophir"), the Company's 42.5%-owned affiliate, which is a holding
company with interests in high technology and real estate companies, and Coral
World International Ltd. ("CWI"), the Company's 50%-owned affiliate, which owns
and operates marine parks in Eilat (Israel) and Perth and Manly (Australia). The
increase in Ophir's 1997 earnings resulted from gains on sale and issuance of
shares of Teledata Communications Ltd. ("Teledata") as part of a public offering
made by Teledata in May 1997, a gain on sale of office and commercial space
located in Petach Tikva, Israel and lower interest expense which resulted from
repayments of loans.
CWI reported earnings in 1997 as compared to losses it incurred in the first
half of 1996. The losses recorded by CWI in 1996 were primarily attributable to
the company's investments in marine parks in Nassau (Bahamas) and St. Thomas
(U.S. Virgin Islands), which were sold in September 1996 and April 1997,
respectively.
The increases noted above were partially offset by the losses recorded by the
Company's 50%-owned affiliate, Trinet Venture Capital Ltd. ("Trinet"), a
high-technology venture capital fund which recorded unrealized losses on its
investments in the six months ended June 30, 1997 as compared to unrealized
gains in the same period in 1996, and losses of Carmel Container Systems Limited
("Carmel"), the Company's 20.7%-owned affiliate, which is a manufacturer of
paper-board packaging and related products. Carmel recorded losses in the six
months ended June 30, 1997 as compared to earnings in the same period in 1996
primarily because of a decrease in sales volume as a result of the economic
slowdown in Israel, a decrease in sales prices as a result of escalating
competition, an increase in costs which are associated with the running-in of a
new plant and the one-time expenses incurred with respect to the closing of old
plants.
In the six months ended June 30, 1997, the Company recorded $2.7 million of
gains on sale of investments, $1.8 million of which is attributable to its
direct investment in Teledata, as compared to $1.1 million of gains on sale of
investments ($.3 million with respect to Teledata) recorded in the same period
in 1996.
The Company also recorded $2.3 million of unrealized gains on investments which
are classified as trading securities and a $1 million loss from impairment of
its investment in a distribution software company in the six-month period ended
June 30, 1997, as compared to $1.1 million of unrealized gains on investments in
trading securities in the same period in 1996. At June 30, 1997 and December 31,
1996, the aggregate fair value of trading securities amounted to approximately
$7.9 million and $4.5 million, respectively.
The Company recorded net interest income in the six months ended June 30, 1997,
as compared to net interest expense in the same period in 1996. The increase in
net
10
<PAGE>
interest income is primarily attributable to debt reduction in connection
with the sale of a condominium unit in an office building ("800 Second Avenue")
located at 800 Second Avenue New York, New York. See Liquidity and Capital
Resources.
On June 26, 1997 the main factory of the Company's 85%-owned subsidiary,
Paradise Industries Ltd. ("Paradise") was heavily damaged by a fire and has been
closed since then. Paradise carries both fire damage and business interruption
insurance covering the factory. It is too early to determine the amount of loss
to be incurred as a result of the fire, if any, or when Paradise will resume its
operations. The 1997 manufacturing revenues and expenses reflect the operations
of Paradise through the date of the fire.
The decreases in rental income and rental property operating expenses are
attributable to the sale of a condominium unit in 800 Second Avenue.
The change in the effective income tax rate in 1997 as compared to 1996 is
mainly attributable to the losses of certain Israeli subsidiaries in 1996 for
which no tax benefits were available.
Three months ended June 30, 1997 compared to three months ended June 30, 1996:
- ------------------------------------------------------------------------------
Consolidated income from continuing operations increased to $4.8 million for the
three-month period ended June 30, 1997, from $3 million for the same period in
1996. The increase in income resulted primarily from the increases in equity in
earnings of affiliates, realized and unrealized gains on investments recorded,
and net interest income in 1997 as compared to net interest expense in 1996.
Equity in earnings of affiliates increased from $2.4 million for the three
months ended June 30, 1996, to $6.6 million for the same period in 1997. The
increase is primarily attributable to the improved earnings of Ophir which
recorded gains on sale and issuance of shares of Teledata and lower interest
expense. This increase was partially offset by losses recorded by Trinet and
Carmel. See Discussion on Results of Operations - Six months ended June 30, 1997
compared to six months ended June 30, 1996.
In the quarter ended June 30, 1997, the Company recorded $1.5 million of gains
on sale of investments, $1.1 million of which is attributable to its direct
investment in Teledata, as compared to $1 million of gains on sale of
investments ($.3 million with respect to Teledata) recorded in the same period
in 1996.
The Company also recorded $2.1 million of unrealized gains on investments which
are classified as trading securities and a $1 million loss from impairment of
its investment in a distribution software company in the three-month period
ended June 30, 1997, as compared to $1.4 million of unrealized gains on
investments in trading securities in the same period in 1996.
The Company recorded net interest income in the three months ended June 30,
1997, as compared to net interest expense in the same period in 1996. See
Discussion on Results of Operations - Six months ended June 30, 1997 compared to
six months ended June 30, 1996.
The decreases in rental income and rental property operating expenses are
attributable to the sale of a condominium unit in 800 Second Avenue.
Liquidity and Capital Resources
- -------------------------------
At June 30, 1997, cash and cash equivalents were approximately $17.8 million as
compared with approximately $20.6 million at December 31, 1996. In addition,
Ampal had approximately $9 million of highly liquid interest bearing securities
included in the investments caption at June 30, 1997 as compared with $14
million at December 31, 1996. The decrease in cash and cash equivalents and
short-term investments is primarily attributable to scheduled debenture
redemptions of approximately $14
11
<PAGE>
million. For the balance of 1997 scheduled debenture redemptions aggregate
approximately $3 million.
The decrease in real estate rental property, and notes and loans payable are
primarily attributable to the sale of a condominium unit in 800 Second Avenue to
the Government of Israel (the "Government") for $31 million on January 31, 1997.
At that time the Government paid $15 million and gave the Company a note for the
remaining $16 million which is payable on January 30, 1998.
The increase in the balance of the cumulative translation adjustments at June
30, 1997, as compared to December 31, 1996, is attributable to the 10.3%
devaluation of the New Israeli Shekel to the U.S. Dollar in the first half of
1997.
In 1997, the Company made several new investments in the high-technology field,
notably (1) a $1 million investment in UNIC View Ltd., a company which
manufactures and markets a liquid screen display projector for video, large
screen television and computer projection systems and is developing a new
projector engine for home use, (2) a $.75 million investment in FundTech Ltd., a
company engaged in the development of software for worldwide banking
institutions to facilitate fund transfers, and (3) a $1 million investment in
NKO, Inc. which is developing low cost facsimile transmission services.
As a result of the improvement in the Company's earnings in 1997 together with
its significant reduction of debt, the Company's debt to equity ratio has
decreased from .67 to 1 at December 31, 1996, to .43 to 1 at June 30, 1997.
This, combined with the substantial amounts of uncommitted and committed credit
lines, further enhances the Company's ability to make new investments.
Recently Issued Accounting Standards
- ------------------------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share. This
statement establishes standards for computing and presenting earnings per share
("EPS"), replacing the presentation of currently required primary EPS with a
presentation of Basic EPS. For entities with complex capital structures, the
statement requires the dual presentation of both Basic EPS and Diluted EPS on
the face of the statement of income. Under this new standard, Basic EPS is
computed based on the weighted average number of shares actually outstanding
during the period. Diluted EPS includes the effect of potential dilution from
the conversions of 6-1/2% and 4% Preferred Stocks to Class A Stock. SFAS No. 128
is effective for financial statements issued for periods ending after December
15, 1997, and earlier application is not permitted. When adopted, the Company
will be required to restate its EPS data for all prior periods presented. The
Company reflected the effect of adoption of SFAS No. 128, on a pro forma basis,
in Note 4 to its June 30, 1997 consolidated financial statements.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income.
This statement establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. This statement requires that all
items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. This
statement does not require a specific format for that financial statement but
requires that an enterprise display an amount representing total comprehensive
income for the period in that financial statement. SFAS No. 130 is effective for
fiscal years beginning after December 15, 1997 with earlier application
permitted. When adopted, the Company will be required to reclassify financial
statements for all prior periods presented. The Company does not plan to adopt
SFAS No. 130 prior to the effective date.
12
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION
---------------------------------
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None.
-----------------
Item 2. Changes in Securities - On June 2, 1997, Ampal issued 1,000
---------------------
shares of its Class A Stock, $1.00 par value (the "Class A
Stock"), to each of the three members of the Board of Directors
who had recently retired. The shares were issued in consideration
for past services performed by the retired directors and in an
effort to continue a close working relationship with the retired
directors in the future. Such issuance was exempt from
registration under the Securities Act of 1933, as amended,
pursuant to Section 4(2) of such act.
See Item 4. below for recent amendments to Ampal's
Certificate of Incorporation.
Item 3. Defaults upon Senior Securities - None.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders - On May
---------------------------------------------------
28, 1997, Ampal's shareholders held their annual meeting (the
"Annual Meeting"). At such meeting, the shareholders elected the
following individuals as directors by the following vote:
FOR AUTHORITY WITHHELD
Arie Abend 20,611,515 79,233
Michael Arnon 20,612,515 78,233
Benzion Benbassat 20,636,015 54,733
Yaacov Elinav 20,611,357 79,391
Kenneth L. Henderson 20,636,715 54,033
Irwin Hochberg 20,637,115 53,633
Lawrence Lefkowitz 20,616,015 74,733
Hillel Peled 20,636,915 53,833
Shimon Ravid 20,611,357 79,391
Evelyn Sommer 20,611,615 79,133
M. Sonnenfeldt 20,641,015 49,733
Daniel Steinmetz 20,638,115 52,633
Raz Steinmetz 20,642,015 48,733
Also at the Annual Meeting, the shareholders approved
three amendments to Ampal's Certificate of Incorporation, as
amended (the "Certificate"): (i) the elimination of Ampal's Common
Stock, $1.00 par value (the "Common Stock") and all references to
the Common Stock from the Certificate; (ii) the elimination of the
rights of holders of the Class A Stock, voting as a class, to
elect 25% of Ampal's directors (the "Class A Directors"); and
(iii) the reduction of the total number of shares of authorized
capital stock of Ampal's from 67,932,850 to 61,177,342 shares
divided into two classes. See Exhibit 3a for the full text of the
amended and restated Certificate.
The results for the voting on the three amendments were as
follows:
13
<PAGE>
For the amendment to the Certificate eliminating
the Common Stock and all references to it in the Certificate:
For Against Abstain
20,427,506 76,562 34,725
For the amendment to the Certificate eliminating
the rights of the holders of Class A Stock to vote for the
Class A Directors:
For Against Abstain
14,757,484 118,261 50,211
For the amendment to the Certificate reducing the
number of shares of authorized capital stock:
For Against Abstain
20,452,598 47,960 38,235
Item 5. Other Information - After the conclusion of the Annual Meeting,
-----------------
Ampal's Board of Directors (the "Board") held a meeting. Among
other action taken, a new Chairman of the Board, Mr. Daniel
Steinmetz, was elected. At a meeting of the Executive Committee of
the Board of Directors on the same day, Mr. Raz Steinmetz was
reelected as Chairman of the Executive Committee. Both Mr. Daniel
Steinmetz and Mr. Raz Steinmetz are officers and shareholders of
Rebar Financial Corp., the holder of approximately 38% of Ampal's
Class A Stock. Additionally, at the Board Meeting a new position
of Chief Executive Officer was created which required certain
changes to Ampal's by-laws including adding the position of Chief
Executive Officer and redefining the position of President. See
Exhibit 3b for the full text of the by-laws as amended at the May
28, 1997 meeting of the Board. Furthermore, the following were
elected by the Board to serve as officers for the upcoming year:
Chairman of the Board: Daniel Steinmetz
Chief Executive Officer: Yehoshua Gleitman
President: Lawrence Lefkowitz
Vice President -
Finance and Treasurer: Alan L. Schaffer
Vice President -
Accounting and Controller: Alla Kanter
Vice President -
Legal and Secretary: Isaiah Halivni
Assistant Vice President -
Israel Operations: Miri Lent Sharir
Assistant Vice President: Alvia Miller
Assistant Secretary: Gennifer A. Starita
Also on May 28, 1997, Ampal, Ampal (Israel) Ltd. ("Ampal
Israel"), a wholly-owned subsidiary of Ampal and Dr. Yehoshua
Gleitman ("Gleitman") entered into an employment agreement (the
"Employment Agreement") pursuant to which Gleitman will act as the
Chief Executive Officer of Ampal Israel and as a senior executive
officer of Ampal, See Exhibit 10a for the full text of the
Employment Agreement. Gleitman will receive a monthly base salary
of $20,000 (adjusted annually according to the rate of increase in
the Israeli consumer price index), the use of a company car and
other standard benefits.
14
<PAGE>
Additionally, pursuant to an Amendment (the "Amendment"),
dated June 4, 1997, to that certain Legal Services Agreement
between Bank Hapoalim B.M. (the "Bank") and Ampal, the Bank
agreed, effective January 1, 1996, to increase the annual amount
the Bank reimburses Ampal to $120,000 (an increase of $20,000) for
Mr. Lawrence Lefkowitz's services. Mr. Lefkowitz is the President
of Ampal. See Exhibit 10b for the full text of the Amendment.
Item 6. Exhibits and Reports on Form 8-K
(a) Index to Exhibits:
Exhibit 3a - Amended and Restated Certificate of
Incorporation of Ampal dated May 28, 1997................. Page 18
Exhibit 3b - By-Laws of Ampal as amended................. Page 40
Exhibit 10a - Employment Agreement, dated May 28, 1997,
among Ampal, Ampal (Israel) Ltd. and
Dr. Yehoshua Gleitman..................................... Page 68
Exhibit 10b - Amendment No. 1, dated June 4, 1997,
to that certain Legal Services Agreement between
Bank Hapoalim B.M. and Ampal.............................. Page 81
Exhibit 11 - Schedule Setting Forth Computation
of Earnings Per Class A Share............................. Page 83
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K. No Reports on Form 8-K were filed between
April 1, 1997 and June 30, 1997.
15
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION
---------------------------------
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMPAL-AMERICAN ISRAEL CORPORATION
By:/s/ Yehoshua Gleitman
------------------------
Yehoshua Gleitman
Chief Executive Officer
(Principal Executive Officer)
By:/s/ Alan L. Schaffer
------------------------
Alan L. Schaffer
Vice President - Finance
and Treasurer
(Principal Financial Officer)
By:/s/ Alla Kanter
------------------------
Alla Kanter
Vice President - Accounting
and Controller
(Principal Accounting Officer)
Dated: August 14, 1997
16
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION
---------------------------------
Exhibit Index
Exhibit No. Description
3a Amended and Restated Certificate of Incorporation
of Ampal dated May 28, 1997......................... Page 18
3b By-Laws of Ampal as amended......................... Page 40
10a Employment Agreement, dated May 28, 1997, among
Ampal, Ampal (Israel) Ltd. and
Dr. Yehoshua Gleitman............................... Page 68
10b Amendment No. 1, dated June 4, 1997, to that
certain Legal Services Agreement between Bank
Hapoalim B.M. and Ampal............................. Page 81
11 Schedule Setting Forth Computation of Earnings
Per Share of Class A Stock.......................... Page 83
27 Financial Data Schedule.
17
RESTATED Exhibit 3a
CERTIFICATE OF INCORPORATION
OF
AMPAL-AMERICAN ISRAEL CORPORATION
Under Section 807 of the Business Corporation Law
We, Lawrence Lefkowitz and Isaiah Halivni, being respectively
the President and Secretary of Ampal-American Israel Corporation (the
"Corporation"), in accordance with Section 807 of the Business Corporation Law,
do hereby certify:
1. The name of the Corporation is now Ampal-American Israel
Corporation. The Corporation was formed under the name Ampal-American Palestine
Trading Corporation.
2. The certificate of incorporation was filed by the
Department of State on February 6, 1942.
3. The text of the Corporation's Certificate of Incorporation,
as restated and filed in the Office of the Secretary of State of the State of
New York on the 29th day of December 1982, and as subsequently amended by
Certificates of Amendment filed in the Office of the Secretary of State of the
State of New York on March 18, 1983, July 26, 1988 and December 4, 1995 (as so
amended, the "Certificate of Incorporation"), is hereby further amended to
effect the following changes:
(i) to eliminate all of the authorized Common Stock, par value $1.00
per share, and all references to the Common Stock,
<PAGE>
and to make certain changes necessitated by and consistent with the elimination
of such references;
(ii) to reduce the number of authorized shares of 4% Cumulative
Convertible Preferred Stock from Six Hundred Fifty Thousand (650,000) shares to
One Hundred Eighty-Nine Thousand Two Hundred Eighty-Seven (189,287) shares in
order to reflect the conversion of Four Hundred Sixty Thousand Seven Hundred
Thirteen (460,713) shares of 4% Cumulative Convertible Preferred Stock to Class
A Stock and the cancellation of the converted shares of 4% Cumulative
Convertible Preferred Stock;
(iii) to reduce the number of authorized shares of 6-1/2% Cumulative
Convertible Preferred Stock from Four Million Two Hundred Eighty-Two Thousand
Eight Hundred Fifty (4,282,850) shares to Nine Hundred Eighty-Eight Thousand
Fifty-Five (988,055) shares in order to reflect the conversion of Three Million
Two Hundred Ninety-Four Thousand Seven Hundred Ninety-Five (3,294,795) shares of
6-1/2% Cumulative Convertible Preferred Stock to Class A Stock and the
cancellation of the converted shares of 6-1/2% Cumulative Convertible Preferred
Stock;
(iv) to change the total number of authorized shares of capital
stock from Sixty-Seven Million Nine Hundred Thirty-Two Thousand Eight Hundred
Fifty (67,932,850) shares divided into three classes to Sixty-One Million One
Hundred Seventy-Seven Thousand Three Hundred Forty-Two (61,177,342) shares
divided into two classes, to reflect elimination of the Common Stock and the
2
<PAGE>
reduction in the number of authorized shares of 4% Cumulative Convertible
Preferred Stock and 6-1/2% Cumulative Convertible Preferred Stock; and
(v) to eliminate the provision in Section A of Article Fourth of the
Certificate of Incorporation which gives the holders of Class "A" Stock the
right to vote as a class to elect 25% of the number of directors constituting
the Board of Directors.
4. The text of the Corporation's Certificate of Incorporation
as amended and corrected heretofore, is hereby amended as described above, and
restated to read in full as follows:
"FIRST: The name of the corporation shall be AMPAL-AMERICAN
ISRAEL CORPORATION.
SECOND: The purposes for which it is to be formed are:
1. To develop trade between the United States and Palestine
and its surrounding countries and to assist in the
development of the economic resources of Palestine.
2. To subscribe for and acquire shares of stock or
interests, bonds, notes, debentures, mortgages, deeds or
certificates of trust and other evidences of
indebtedness of any individuals, firms,
3
<PAGE>
corporations, association, incorporated or
unincorporated, cooperative or otherwise, for any
industrial, commercial, banking credit, agriculture or
other purposes in or relating to Palestine.
3. To afford financial aid to commercial banking, credit,
industrial, and agricultural enterprises cooperative and
otherwise, in and relating to Palestine, so far as may
be permitted by the laws of the State of New York.
4. To manufacture, purchase, or otherwise acquire, hold,
own, manage, sell, pledge, transfer, export, import,
trade and deal in, goods, wares and merchandise of every
character and description, whether as principal or
agent.
5. To purchase or otherwise acquire real and personal
property of every kind and description, and wheresoever
situated, including the stocks, bonds, or other
evidences of indebtedness of any corporation, domestic
or foreign, and to issue in payment or exchange therefor
its stock, debentures, notes, bonds or other
obligations.
6. As a reasonable incident to the transaction of other
corporate business, and so far as consistent
4
<PAGE>
with the laws of the State of New York, or where
necessary to prevent corporate funds from being
unproductive to lend money to individuals, firms,
corporations or association in or relating to Palestine.
7. To apply for, obtain, register, purchase, lease or
otherwise acquire, hold, own, use, operate, introduce,
sell, assign, or otherwise dispose of, any and all
copyrights, trademarks and patents and any and all
inventions, improvements, apparatus, appliances and
processes used in connection with or secured under
letters patent of the United States of America, or
elsewhere or otherwise, and to use, exercise, develop
and grant licenses in respect of, or otherwise turn to
account any such copyrights, trademarks, patents,
inventions, improvements, apparatus, appliances,
processes and the patents, inventions, improvements,
apparatus, appliances, processes and the like so
acquired.
8. To make and enter into contracts of all kinds with and
to act as agent, factor or representative for any
individual, firm, association, private, public,
quasi-public or municipal corporation, state, government
or governmental authority.
5
<PAGE>
9. To make and enter into any agreement not repugnant to
the laws of the State of New York with any foreign
governmental or municipal authority which may be deemed
for the benefit of the Corporation; to obtain from any
such authority or otherwise acquire by purchase, lease,
assignment, or in any lawful manner, any powers, rights,
privileges, mandates, franchises, and concessions not
repugnant to such laws which the Corporation may deem
desirable; and to exercise and exploit the same, and to
undertake and prosecute any business dependent thereon.
10. To exercise in respect of all bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences, of indebtedness and
other property, any and all the rights, powers and
privileges of individual owners thereof.
11. To purchase, hold, sell, transfer and reissue the shares
of its own stock provided that shares of its own stock
belonging to it shall not be voted upon directly or
indirectly; also to purchase, sell, transfer, pledge and
reissue bonds, certificates of interest or debentures
which it may have issued.
6
<PAGE>
12. So far as may be permitted by the laws of the State of
New York, to sell and dispose of any securities and any
other property, real or personal, and to rediscount or
assign any negotiable paper, owned or acquired by the
Corporation in the course of its business operations,
and to borrow money for its corporate purposes, and in
that connection to mortgage, pledge and hypothecate any
shares of stock, notes, deeds, or certificates of trust,
bonds, debentures, or other evidences of indebtedness or
any other property owned or held by it.
13. To aid by loan, subsidy, guaranty or in any other lawful
manner whatsoever, any individual, firm, corporation or
association whose bonds, stocks, or securities or other
obligations are in any manner, either directly or
indirectly held or guaranteed by the Corporation; to do
any and all other acts toward the preservation,
protection, improvement or enhancement in value of any
such stocks, bonds, securities or other obligations, and
to do all and any such acts or things designed to
accomplish any such purpose, not inconsistent with the
laws of the State of New York.
14. To authorize and permit any and all of the
7
<PAGE>
directors of the Corporation, notwithstanding their
official relations to it, to enter into, negotiate,
consummate and perform any contract, agreement or
transaction of any name or nature between the
Corporation and themselves, or any or all of the
individuals from time to time constituting the Board of
Directors of the Corporation, or any firm or corporation
in which any such director may be interested, directly
or indirectly, or employed therein or connected
therewith, or in which such director or directors may
hold any office as director, officer, stockholder,
employee, associate or partner, or otherwise, whether or
not such individual or individuals, firm or corporation
thus contracting with the Corporation shall thereby
derive personal or corporate profit or benefit or
otherwise; the intent hereof being to relieve each and
every person who may be or become a director of the
Corporation from any disability that might otherwise
exist of contracting with the Corporation for the
benefit of himself, or of the copartnership or
corporation in which he may be in any wise interested.
15. To do any and all things herein set forth, and such
other things as are incidental, necessary or
8
<PAGE>
conducive to the attainment of the above objects or any
of them, to the same extent as natural persons might or
could do, and in any part of the world, as principals,
agents, commission merchants, factors, contractors,
trustees or otherwise, alone or in company with others.
The objects and powers specified in any clause contained in
this second paragraph shall, except where otherwise expressed in said paragraph,
be in no wise limited or restricted by reference to or inference from the terms
of any other clause of this or other paragraph in this certificate of
incorporation, but the objects and powers specified in each of the clauses of
this paragraph shall be regarded as independent objects and powers.
The foregoing enumeration of powers shall not be held to limit
or restrict in any manner the lawful powers of this Corporation. The Corporation
shall have the power to conduct its business and promote its objects in all of
its branches and to have one or more offices, and to hold, purchase, mortgage
and convey real and personal property, both within and without the State of New
York, in other states, in the territories and possessions of the United States,
in Palestine, and in all other foreign countries without restriction as to the
place where or as to the extent to which such business shall be carried on.
9
<PAGE>
THIRD: The aggregate number of shares which the Corporation is
authorized to issue is Sixty-One Million One Hundred Seventy-Seven Thousand
Three Hundred Forty-Two (61,177,342) shares divided into two classes as
hereinafter set forth.
FOURTH: Said Sixty-One Million One Hundred Seventy-Seven
Thousand Three Hundred Forty-Two (61,177,342) shares which the Corporation has
authority to issue shall be divided into two classes which shall consist of
Sixty Million (60,000,000) shares of Class "A" Stock having a par value of One
Dollar ($1.00) per share, and One Million One Hundred Seventy-Seven Thousand
Three Hundred Forty-Two (1,177,342) shares of Preferred Stock having a par value
of Five Dollars ($5.00) per share.
So long as the Class "A" Stock is listed on the American Stock
Exchange, the Corporation shall not issue after March 17, 1983 any other class
of security having voting rights which would (i) have the right to vote, as a
class, more than ten times the number of shares of such other class of security
then outstanding and entitled to vote or (ii) have voting rights which would
otherwise adversely affect the voting rights of the Class "A" Stock; provided,
however, that for the purposes hereof the authorization or issuance of
additional Class "A" Stock or securities convertible into or exchangeable for
Class "A" Stock shall not be deemed to adversely affect the voting rights of the
holders of the Class "A" Stock.
10
<PAGE>
The designations, preferences, privileges and voting powers or
restrictions or qualifications of each of the several classes of stock shall be
as follows:
A. Class "A" Stock and 4% Cumulative Convertible Preferred Stock
One Hundred Eighty-Nine Thousand Two Hundred Eighty-Seven
(189,287) shares of the authorized Preferred Stock shall constitute a series of
Preferred Stock designated "4% Cumulative Convertible Preferred Stock."
The holders of the said Preferred Stock shall be entitled to
receive cumulative dividends at the rate of four (4%) percent per annum payable
out of surplus or net earnings of the Corporation before any dividends are paid
in such year upon Class "A" Stock. The said dividends on the said Preferred
Stock shall be cumulative so that if the Corporation fails to pay such dividends
on such Preferred Stock in any calendar year, such deficiency shall be paid in
full (without interest) before any dividends shall be paid on Class "A" Stock.
If, after payment of all cumulative dividends on the Preferred Stock, there
shall remain any surplus, before any further dividends are paid in such year
upon the Preferred Stock, the holders of the Class "A" Stock shall be entitled
to receive non-cumulative dividends at the rate of 4% per annum. If, after the
payment of all cumulative dividends on the Preferred Stock and payment of a
non-cumulative dividend of 4% of the outstanding Class "A" Stock, there shall
remain any surplus, the same may be declared as dividends by the
11
<PAGE>
Board of Directors upon the Preferred Stock and the Class "A" Stock which
dividends shall be participated in pari passu by the holders of the Preferred
Stock and the Class "A" Stock.
In the event that the affairs of the Corporation are
liquidated and its assets distributed by dissolution, sale or otherwise, the
holders of the Preferred Stock then outstanding shall be paid the par value
thereof and all unpaid accrued dividends before any distribution shall be made
to the holders of Class "A" Stock. After such payment to the Preferred
Stockholders, the holders of the Class "A" Stock shall be paid in an amount
equal to the par value thereof; after which the then remaining assets, if any,
shall be distributed to the stockholders according to the number of shares held
by each and the par value thereof.
The holders of the Class "A" Stock shall be entitled to vote
one (1) vote for each share of such stock at all meetings of stockholders.
Except as otherwise provided by law, the holders of the
Preferred Stock shall not have the right to vote at such elections, nor at any
annual or special meeting of the Corporation; nor shall they be entitled to vote
in a proceeding for mortgaging the property and franchises of the Corporation
pursuant to Section Sixteen of the Stock Corporation Law, for guaranteeing the
bonds of another corporation pursuant to Section Nineteen of the Stock
Corporation Law, for sale of the franchises
12
<PAGE>
and property pursuant to Section Twenty of the Stock Corporation Law, for
establishing priorities or creating preferences among the several classes of
stock pursuant to Section Thirty-Six of the Stock Corporation Law, for
consolidation pursuant to Section Eighty-Six of the Stock Corporation Law, for
voluntary dissolution pursuant to Section One Hundred and Five of the Stock
Corporation Law, nor for change of name pursuant to the General Corporation Law.
When, however, the Corporation fails to earn and pay any dividends on the
Preferred Stock for a period of three (3) successive years, then and in that
event alone, the holders of the Preferred Stock shall have the exclusive right
to vote at the election of directors one (1) vote for every share of stock. If
at any time thereafter all the cumulative dividends on the Preferred Stock shall
be fully paid up to date, the holders of the Class "A" Stock shall again have
the exclusive right to vote at meetings of stockholders, except as otherwise
provided by law.
The Preferred Stock, at the option of the respective holders
thereof, shall be convertible at any time and from time to time into fully paid
and non-assessable shares of Class "A" Stock, upon surrender to the Corporation
or to its Transfer Agent of the certificates for Preferred Stock so to be
converted, duly endorsed in blank for transfer, in the ratio of five (5) shares
of Class "A" Stock for one (1) share of Preferred Stock (such ratio to be
appropriately adjusted, as determined by the Board of Directors, to reflect all
mergers, consolidations and other
13
<PAGE>
reorganizations of the Corporation and all forward stock splits, reverse stock
splits, stock distributions, stock dividends or other reclassification or
recapitalization of or on the Class "A" Stock). All shares of said Preferred
Stock so converted shall be retired and shall not again be issued by the
Corporation. The Corporation shall not be required to issue fractions of a share
of Class "A" Stock or scrip representing any such fraction of a share upon
conversion of the Preferred Stock. If any fraction of a share of Class "A" Stock
would, except for the provisions hereof, be issuable on the conversion of any
Preferred Stock, the Corporation shall pay a cash adjustment in respect of such
fraction equal to the value of such fraction computed on the basis of the Market
Price per share of Class "A" Stock (as hereinafter defined) on the date that the
certificate representing the Preferred Stock, in respect of which such fraction
would otherwise be issuable, is received by the Corporation or its Transfer
Agent for conversion. For the purposes of this Certificate of Incorporation, the
"Market Price" per share of Class "A" Stock for a given date shall be deemed to
be the average of the daily closing prices for the 30 consecutive business days
ending with such date. The closing price for each day shall be the last reported
sale on the principal national securities exchange on which the shares of Class
"A" Stock are admitted to trading or listed, or if not admitted to trading or
listed on any national securities exchange, the average of the last highest
reported bid and lowest reported asked prices as furnished by the
14
<PAGE>
National Quotation Bureau Incorporated or such other nationally recognized
quotation service selected by the Board of Directors for this purpose, if said
Bureau is not at the time furnishing quotations.
The Corporation shall at all times have in reserve a
sufficient number of shares of Class "A" Stock for issuance in exchange for
shares of Preferred Stock upon the terms and conditions hereinbefore set forth.
B. 6-1/2% Cumulative Convertible Preferred Stock
Nine Hundred Eighty-Eight Thousand Fifty-Five (988,055) shares
of the authorized Preferred Stock shall constitute a series designated "6 1/2%
Cumulative Convertible Preferred Stock."
The holders of 6 1/2% Cumulative Convertible Preferred Stock
shall be entitled to receive cumulative dividends at the rate of six and
one-half (6 1/2%) percent per annum, payable out of surplus or net earnings of
the Corporation before any dividends are paid in such year upon the Class "A"
Stock. The said dividends on the said 6 1/2% Cumulative Convertible Preferred
Stock shall be cumulative so that if the Corporation fails to pay such dividends
on such 6 1/2% Cumulative Convertible Preferred Stock in any calendar year, such
deficiency shall be paid in full (without interest) before any dividends shall
be paid on the Class "A" Stock. After the payment of all current
15
<PAGE>
and cumulative dividends payable on the 6 1/2% Cumulative Convertible Preferred
Stock in any year, no further dividends shall be paid in such year upon the 6
1/2% Cumulative Convertible Preferred Stock.
There shall be no preferences as to the payment of dividends
on either the 4% Cumulative Convertible Preferred Stock or 6 1/2% Cumulative
Convertible Preferred Stock, which are payable prior to the payment of dividends
on the Class "A" Stock, and in the event the surplus or net earnings of the
Corporation are less than the aggregate amount of the dividends payable on the
4% Cumulative Convertible Preferred Stock and 6 1/2% Cumulative Convertible
Preferred Stock, then any dividends paid shall be applied ratably (according to
the respective numbers of shares thereof outstanding multiplied by the par value
thereof) to the payment of the dividends payable on the 4% Cumulative
Convertible Preferred Stock and the dividends payable on the 6 1/2% Cumulative
Convertible Preferred Stock.
In the event that the affairs of the Corporation are
liquidated and its assets distributed by dissolution, sale or otherwise, the
holders of the 6 1/2% Cumulative Convertible Preferred Stock then outstanding
shall be paid the par value thereof and all unpaid accrued dividends before any
distribution shall be made to the holders of the Class "A" Stock, and in
connection with any payments made upon liquidation of the Corporation, there
shall be no preferences as to the payment of
16
<PAGE>
such amounts on the 4% Cumulative Convertible Preferred Stock or the 6 1/2%
Cumulative Convertible Preferred Stock, but in the event the assets of the
Corporation to be distributed shall be less than the amounts payable to the 4%
Cumulative Convertible Preferred Stock and 6 1/2% Cumulative Convertible
Preferred Stock, then any such payments shall be applied ratably (according to
the respective numbers of shares outstanding) to the amounts payable on the 4%
Cumulative Convertible Preferred Stock and to the amounts payable on the 6 1/2%
Cumulative Convertible Preferred Stock.
Except as otherwise provided by law, the holders of the 6 1/2%
Cumulative Convertible Preferred Stock shall not have the right to vote at any
elections, nor at any annual or special meeting of the Corporation; nor shall
they be entitled to vote in a proceeding for mortgaging the property and
franchises of the Corporation, for guaranteeing the bonds of another
corporation, for sale of franchises and property, for establishing priorities or
creating preferences among the several classes of stock, for mergers or
consolidations of the Corporation, for voluntary dissolution, nor for a change
of name of the Corporation pursuant to the Business Corporation Law. When,
however, the Corporation fails to earn and pay any dividends on the Preferred
Stock for a period of three (3) successive years, then and in that event alone,
the holders of the Preferred Stock shall have the exclusive right to vote at the
election of directors one (1) vote for every share of stock. If at any time
thereafter all the
17
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cumulative dividends on the Preferred Stock shall be fully paid up to date, the
holders of the Class "A" Stock shall again have the exclusive right to vote at
meetings of stockholders, except as otherwise provided by law.
The 6 1/2% Cumulative Convertible Preferred Stock, at the
option of the respective holders thereof, shall be convertible at any time and
from time to time into fully paid and non-assessable shares of Class "A" Stock,
upon surrender to the Corporation or to its Transfer Agent of the certificates
for 6 1/2% Cumulative Convertible Preferred Stock so to be converted, duly
endorsed in blank for transfer, in the ratio of three (3) shares of Class "A"
Stock for one (1) share of 6 1/2% Cumulative Convertible Preferred Stock (such
ratio to be appropriately adjusted, as determined by the Board of Directors, to
reflect all mergers, consolidations and other reorganizations of the Corporation
and all forward stock splits, reverse stock splits, stock distributions, stock
dividends or other reclassification or recapitalization of or on the Class "A"
Stock). All shares of said 6 1/2% Cumulative Convertible Preferred Stock so
converted shall be retired and shall not again be issued by the Corporation. The
Corporation shall not be required to issue fractions of a share of Class "A"
Stock or scrip representing any such fraction of a share upon conversion of the
6 1/2% Cumulative Convertible Preferred Stock. If any fraction of a share of
Class "A" Stock would, except for the provisions of this subparagraph, be
issuable on the conversion of 6 1/2% Cumulative Convertible
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Preferred Stock, the Corporation shall pay a cash adjustment in respect of such
fraction equal to the value of such fraction computed on the basis of the Market
Price per share of Class "A" Stock on the date that the certificate representing
the 6 1/2% Cumulative Convertible Preferred Stock, in respect of which such
fraction would otherwise be issuable, is received by the Corporation or its
Transfer Agent for conversion.
The Corporation shall at all times have in reserve a
sufficient number of shares of Class "A" Stock for issuance in exchange for
shares of the 6 1/2% Cumulative Convertible Preferred Stock upon the terms and
conditions hereinbefore set forth.
The Board of Directors shall have the authority to issue the
preferred stock in series. The Board of Directors is authorized to determine the
number of shares in each subsequent series and to fix from time to time before
issuance, the designations, preferences, privileges and voting powers of the
shares of each subsequent series of the preferred stock and the restrictions or
qualifications thereof; provided, that the shares of all series of the same
class having voting power shall not have more than one vote each, and when the
stated dividends and amounts payable on liquidation are not paid in full, the
shares of all series of the same class shall share ratably in the payment of
dividends including accumulations, if any, in accordance with the sums which
would be payable on said shares if
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all dividends were declared and paid in full, and in any distribution of assets
other than by way of dividends in accordance with the sums which would be
payable on such distribution if all sums payable were discharged in full.
FIFTH: The office of the Corporation shall be located in the
City of New York, County of New York; and the address of which the Secretary of
State shall mail a copy of process in any action or proceeding against the
Corporation, which may be served upon him is 1177 Avenue of the Americas, New
York, New York.
SIXTH: The duration of the Corporation shall be perpetual.
SEVENTH: No holder of shares of the Corporation of any class,
now or hereafter authorized, shall have any preferential or preemptive right to
subscribe for, purchase or receive any shares of the Corporation of any class,
now or hereafter authorized, or any options or warrants for such shares, or any
rights to subscribe to or purchase such shares or any securities convertible
into or exchangeable for, or carrying options or warrants for, or other rights
to purchase, such shares, which may at any time be issued, sold or offered for
sale by the Corporation.
EIGHTH: The personal liability of the directors of the
Corporation is hereby limited to the fullest extent permitted
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by law, including limitations contained in the provisions of paragraph (b) of
Section 402 of the Business Corporation Law of the State of New York, as the
same may be amended or supplemented.
NINTH: [Omitted]
TENTH: [Omitted]
ELEVENTH: The Secretary of the State of New York is hereby
designated as the agent of the Corporation upon whom process in any action or
proceeding may be served."
5. (i) The amendments described in paragraphs 3(i), (iv) and
(v) of this Restated Certificate of Incorporation were authorized by the
affirmative vote of the holders of a majority of all outstanding shares entitled
to vote thereon, at a meeting of the shareholders of the Corporation duly called
and held on May 28, 1997, a quorum being present.
(ii) The amendments described in paragraphs 3(ii) and
(iii) of this Restated Certificate of Incorporation were authorized pursuant to
Section 515(e) of the Business Corporation Law by the Board of Directors of the
Corporation at a duly constituted meeting held on March 27, 1997, a quorum being
present.
IN WITNESS WHEREOF, we have executed this Restated Certificate
of Incorporation and affirm it to be true under the
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penalties of perjury this 28th day of May, 1997.
/s/Lawrence Lefkowitz
----------------------------------
Lawrence Lefkowitz, President
/s/Isaiah Halivni
----------------------------------
Isaiah Halivni, Secretary
22
Exhibit 3b
BY-LAWS
of
AMPAL-AMERICAN ISRAEL CORPORATION
ARTICLE I
OFFICES
Section 1.1 Offices. The principal office of the corporation shall be
located in the City, County and State of New York; other offices, either within
or without the State of New York, shall be at such place or places as the Board
of Directors may from time to time determine or the business of the corporation
requires.
ARTICLE II
SHAREHOLDERS
Section 2.1 Annual Meetings. Annual meetings of the shareholders for the
election of directors and for transaction of other business shall be held at
such time and on such date as shall be designated by the Board of Directors, at
the principal office of the corporation in the State of New York or at such
other place within or without the State of New York as shall be designated by
the Board of Directors and specified in the notice of each such meeting.
<PAGE>
Section 2.2 Special Meetings of Shareholders. Special meetings of the
shareholders may be held either within or without the State of New York, at any
time and place and for any purpose or purposes, unless otherwise prescribed by
law or by the Certificate of Incorporation, and shall be called by the President
or Secretary or by any officer of the corporation by order of the Board of
Directors or upon the request in writing of shareholders representing at least
25% of the voting power of the outstanding shares entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting.
Section 2.3 Notice of Meetings. Notice of all meetings of shareholders
shall be in writing, shall state the place, date and hour of the meeting and,
except in the case of the annual meeting, indicate that it is being issued by or
at the direction of the person or persons calling the meeting. Notice of any
special meeting shall also state the purpose or purposes for which the meeting
is called. If, at any meeting, action is proposed to be taken which would, if
taken, entitle shareholders fulfilling the statutory requirements to receive
payment for their shares, the notice of such meeting shall include a statement
of that purpose and to that effect. A copy of the notice of any meeting shall be
given, personally or by mail, not less than ten nor more than fifty days before
the date of the meeting to each shareholder entitled to vote at such meeting. If
mailed, such notice shall be deemed given when deposited in the
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United States mail, with postage thereon prepaid, directed to the shareholder at
his address as it appears on the record of shareholders, or, if he shall have
filed with the Secretary of the corporation a written request that notices to
him be mailed to some other address, then directed to him at such other address.
Section 2.4 Adjourned Meetings. The shareholders present at a meeting of
shareholders may adjourn the meeting despite the absence of a quorum. Notice of
any adjourned meeting of the shareholders shall not be required, if the time and
place to which the meeting is adjourned are announced at the meeting at which
the adjournment is taken, but if after the adjournment the Board of Directors
fixes a new record date for the adjourned meeting, notice of the adjourned
meeting shall be given to each shareholder of record on the new record date
entitled to notice.
Section 2.5 Fixing Record Date. The Board of Directors may fix, in
advance, a date as the record date for the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to or to dissent from any
proposal without a meeting, or for the purpose of determining shareholders
entitled to receive payment of any dividend or the allotment of any rights, or
for the purpose of any other action. Such date shall be not more than fifty nor
less than ten days before the date of
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such meeting, nor more than fifty days prior to any other action. If no record
date is fixed, the record date for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of the
business day preceding the day on which notice is given; the record date for
determining shareholders for any purpose other than that specified in the
preceding clause shall be at the close of business on the day on which the
resolution of the directors relating thereto is adopted.
Section 2.6 Quorum. Except as otherwise provided by law, by the
Certificate of Incorporation, or by these By-Laws, the holders of record of
one-third of the shares entitled to vote at any meeting of shareholders, present
in person or by proxy shall be necessary to constitute a quorum for the
transaction of any business. When a quorum is once present to organize a meeting
of shareholders, it is not broken by the subsequent withdrawal of any of the
shareholders.
Section 2.7 Vote of Shareholders. Except as otherwise required by law, at
any meeting at which a quorum is present, all elections shall be had and all
questions decided by a plurality of the votes cast by the shareholders so
present in person or represented by proxy or, in cases where any class of stock
votes as a class, by a plurality of the votes cast by the holders of such class
of stock so present in person or by proxy. All voting
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shall be viva voce unless the chairman shall direct that the vote be by written
ballot, or the owners and holders of not less than 20% of the shares entitled to
vote shall in writing demand that the vote in question be by ballot.
Section 2.8 Proxies. Every shareholder entitled to vote at a meeting of
the shareholders or to express consent or dissent without a meeting may
authorize another person to act for him by proxy. Every proxy must be in writing
and signed by the shareholder or his attorney-in-fact, and no proxy shall be
valid after the expiration of eleven months from the date thereof, unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the shareholder executing it, except as otherwise provided by law.
Section 2.9 List of Shareholders at Meetings. A list of shareholders as of
the record date, certified by the Secretary or other officer responsible for its
preparation or by the transfer agent, shall be produced at any meeting of
shareholders upon the request thereat or prior thereto of any shareholder. If
the right to vote at any meeting is challenged, the inspectors of election, if
any, or person presiding thereat, shall require such list of shareholders to be
produced as evidence of the right of the persons challenged to vote at such
meeting, and all persons who appear from such list to be shareholders entitled
to vote thereat may vote at such meeting.
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Section 2.10 Inspectors at Shareholders' Meeting. The Board of Directors,
in advance of any shareholders' meeting, may appoint one or more inspectors to
act at the meeting or any adjournment thereof. If inspectors are not so
appointed, the person presiding at a shareholders' meeting may, and on the
request of any shareholder entitled to vote thereat shall, appoint one or more
inspectors. In case any person appointed fails to appear or act, the vacancy may
be filled by appointment made by the Board in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector at such meeting with strict impartiality and according
to the best of his ability.
Section 2.11 Waiver of Notice. Notice of a shareholders' meeting need not
be given to any shareholder who submits a signed waiver of notice, in person or
by proxy, whether before or after the meeting. The attendance of any shareholder
at a meeting, in person or by proxy, without protesting prior to the conclusion
of the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by him.
Section 2.12 Written Consent of Shareholders Without a Meeting. Any
shareholder action required as permitted by law,
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the Certificate of Incorporation or these By-Laws, to be taken by vote may be
taken without a meeting on written consent, setting forth the action so taken,
signed by the holders of all outstanding shares entitled to vote thereon.
ARTICLE III
DIRECTORS
Section 3.1 Powers of the Board of Directors. Except as otherwise provided
by law, by the Certificate of Incorporation or by these By-Laws, the property,
business and affairs of the corporation shall be managed by the Board of
Directors (sometimes hereinafter referred to as the "Board").
Section 3.2 Number, Election, Tenure and Qualifications of Directors.
Until changed by amendment to these By-Laws or resolution of the Board of
Directors the number of directors shall be not less than 3 nor more than 29
members, with the actual number of members of the Board of Directors to be set
from time to time by resolution of the Board of Directors. Such an amendment or
resolution shall require the affirmative vote of a majority of the entire Board.
Directors need not be shareholders. Except as otherwise provided by law or these
By-Laws, the directors shall be elected at the annual meetings of the
shareholders, and each director shall hold office until the next annual meeting
of shareholders and until his successor has been
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elected and qualified. No decrease in the number of directors by amendment of
these By-Laws shall shorten the term of any incumbent director.
Section 3.3 Newly Created Directorships and vacancies. Newly created
directorships resulting from an increase in the authorized number of directors
and vacancies occurring in the Board through death, resignation or
disqualification or for any other reason, including the removal of directors
without cause, may be filled by the vote of a majority of the directors then in
office, although less than a quorum exists, or by the shareholders, and the
directors so chosen shall hold office until the next annual meeting of
shareholders and until their successors shall be duly elected and qualified
unless sooner displaced.
Section 3.4 Regular Meetings. Regular meetings of the Board of Directors
may be held without call or formal notice at such place either within or without
the State of New York, and at such times as the Board may by vote from time to
time determine. There shall be a regular meeting of the Board of Directors which
may be held without call or formal notice immediately after and at the same
place as the annual meeting of the shareholders or any special meeting of the
shareholders at which a Board of Directors is elected.
Section 3.5 Special Meetings. Special meetings of the
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Board of Directors may be held at any place within or without the State of New
York at any time when called by the President or Secretary or two or more
directors, notice of the time and place thereof being given to each director by
leaving such notice with him at his residence or usual place of business or by
mailing, cabling, telegraphing or telexing it, prepaid, addressed to him at his
post office address as it appears on the books of the corporation, at least two
days before the meeting. Notice shall be deemed given when sent in accordance
with these By-Laws. Neither the call, notice nor waiver of notice need specify
the purpose of any special meeting of the Board of Directors.
Section 3.6 Quorum. One-third of the entire Board of Directors shall
constitute a quorum, but in no case less than two directors. A majority of the
directors present, whether or not a quorum exists, may adjourn a meeting to
another time and place without further notice until a quorum shall attend.
Section 3.7 Action by the Board of Directors. The vote of a majority of
the directors present at the time of the vote, if a quorum is present at such
time, shall be the act of the Board, except where a larger vote is required by
law, by the Certificate of Incorporation or these By-Laws.
Section 3.8 Compensation of Directors. The Board of Directors shall have
authority to fix the compensation of directors for services in any capacity.
9
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Section 3.9 Resignation and Removal of Directors.
(a) Any director may resign at any time by giving written notice thereof
to the president or to the Board of Directors, and such resignation shall take
effect at the time therein specified without the necessity of further action by
the Board.
(b) Any director elected by the holders of the Preferred Stock of the
corporation or by the holders of the Class A stock of the corporation voting as
a separate class may be removed with or without cause by vote of the holders of
the class of stock electing such director at a meeting. Any other director may
be removed with or without cause by vote of the shareholders at a meeting or for
cause by vote of the Board of Directors at a meeting.
Section 3.10 Interested Directors.
(a) Unless previously disclosed or otherwise known, each director of the
corporation shall inform the Board or the committee thereof considering any
contract or other transaction with any other corporation, firm, association or
entity if such director is a director or officer of such other corporation,
firm, association or other entity or has a substantial financial interest
therein;
(b) No contract or other transaction between the corporation and one or
more of its directors, or between the corporation and any other corporation,
firm, association or other
10
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entity in which one or more of its directors are directors or officers, or have
a substantial financial interest, shall be either void or voidable for this
reason alone or by reason alone that such director or directors are present at
the meeting of the Board, or of a committee thereof, which approves such
contract or transaction, or that his or their votes are counted for such
purpose:
(1) If the material facts as to such director's interest and as to
any such common directorship, officership or financial interest are
disclosed in good faith or known to the Board or committee, and the Board
or committee approves such contract or transaction by a vote sufficient
for such purpose without counting the vote or votes of such interested
director or directors or, if the votes of the disinterested directors are
insufficient to constitute an act of the Board as provided by law, by
unanimous vote of the disinterested directors; or
(2) If the material facts as to such director's interest and as to
any such common directorship, officership or financial interest are
disclosed in good faith or known to the shareholders entitled to vote
thereon, and such contract or transaction is approved by vote of such
shareholders.
(3) If there is no good faith disclosure of the
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material facts as to the director's interest in the contract or
transaction and if there is no knowledge of such interest, or if the vote
of such interested director was necessary for the approval of such
contract or transaction at a meeting of the Board or committee at which it
was approved, and the party or parties thereto shall establish
affirmatively that the contract or transaction was fair and reasonable as
to the corporation at the time it was approved by the Board or committee
of the Shareholders.
(c) common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which approves
such contract or transaction.
Section 3.11 Waiver of Notice. Notice of a meeting need not be given to
any director who signed a waiver of notice whether before or after the meeting,
or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to him.
Section 3.12 The Entire Board of Directors. As used in these By-Laws the
term "the entire Board of Directors" or "the entire Board" means the number of
directors the Board would have if there were no vacancies.
Section 3.13 Participation at Meetings by Use of Communications Equipment.
Any one or more members of the Board of Directors or any committee thereof may
participate in a
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meeting of the Board of Directors or a committee thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
Section 3.14 Consent in Lieu of Meeting. Unless otherwise restricted by
the certificate of incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board of
Directors or committee, as the case may be, consent in writing to the adoption
of a resolution authorizing the action and the resolution and the written
consents thereto are filed with the minutes of the proceedings of the Board or
committee.
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
OF THE BOARD
Section 4.1 How Constituted and Powers. The Board of Directors, by
resolution adopted by a majority of the entire Board, may designate from among
its members an Executive Committee and other committees, each consisting of
three or more directors. No such committee shall have authority as to the
following matters:
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(1) The submission to shareholders of any action that needs
shareholders' authorization by law.
(2) The filling of vacancies in the Board of Directors or in any
committee.
(3) The fixing of compensation of the directors for serving on the
Board or on any committee.
(4) The amendment or repeal of By-Laws, or the adoption of new
By-Laws.
(5) The amendment or repeal of any resolution of the Board which by its
terms shall not be so amendable or repealable.
Except as provided above and except to the extent the Board, by
resolution, withholds from or denies to the Executive Committee any power or
authority, the Executive Committee shall have all the authority of the Board of
Directors. Except as provided above, each other committee designated by the
Board of Directors shall have such authority as is specifically delegated to it
by resolution of the Board of Directors.
Section 4.2 Alternate Committee Members. The Board may designate one or
more directors as alternate members of any committee established under this
Article, who may replace any absent member or members at any meeting of such
committee.
Section 4.3 Organization, etc. The Executive Committee (or other committee
established under this Article) may choose its
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own Chairman and Secretary and shall keep minutes of all of its acts and
proceedings and report the same from time to time to the Board of Directors.
Section 4.4 Meetings. Regular meetings of the Executive Committee (or
other committee established under this Article), of which no notice shall be
necessary, shall be held at such times and in such places as shall be fixed by a
majority of the Committee. Special meetings of the Committee shall be called at
the request of any member of the Committee. Notice of each special meeting of
the Committee shall be sent by mail, telegraph, cable or wireless or telephone
not later than the day before the date on which the meeting is to be held.
Notice of any such meeting need not be given to any member of the Committee,
however, if waived by him in writing or by telegraph, cable or wireless, before
or after the meeting; and any meeting of the Committee shall be a legal meeting
without notice thereof having been given, if all the members of the Committee
shall be present thereat.
Section 4.5 Quorum and Manner of Acting. A majority of the Executive
Committee (or other committee established under this Article), shall constitute
a quorum for the transaction of business, and the act of a majority of those
present at the meeting at which a quorum is present shall be the act of the
Executive Committee.
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Section 4.6 General. Each committee established by the Board of Directors
shall serve at the pleasure of the Board of Directors, which may fill vacancies
in any such committee.
ARTICLE V
OFFICERS
Section 5.1 Authorized Officers. The officers of the corporation shall be
a chairman of the board of directors, a chief executive officer, a president,
one or more vice-presidents, a secretary, a treasurer and a controller, and such
other officers, including one or more assistant vice-presidents, assistant
secretaries, assistant treasurers, assistant controllers, as the Board may from
time to time determine as the business of the corporation may require. The
president shall be chosen from among the directors, but no other officer need be
a director. One person may hold the office of, and perform the duties of, any
one or more of the above mentioned positions, except those of president and
secretary or assistant secretary.
Section 5.2 Election or Appointment and Term of Office. The officers of
the corporation shall be elected by the Board of Directors and, except as
otherwise provided by these By-Laws, shall hold office until the first meeting
of the Board following the next annual meeting of shareholders and until his
successor
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has been elected or appointed and qualified.
Section 5.3 Resignation and Removal. Any officer may resign at any time by
giving written notice thereof to the president or to the Board of Directors, and
such resignation shall take effect at the time therein specified. Any officer
may be removed from office, with or without cause by a vote of a majority of the
entire Board of Directors.
Section 5.4 Vacancies. A vacancy occurring in any office shall be
filled by the Board of Directors.
Section 5.5 Compensation. Each officer shall receive such salary as
compensation as may be determined by the Board of Directors, and no officer
shall be prevented from receiving such compensation by reason of the fact that
he is also a director of the corporation.
Section 5.6 Chairman of the Board of Directors. The chairman of the board
of directors shall, when present, preside at all meetings of the shareholders
and the Board of Directors.
Section 5.7 Chief Executive Officer. The chief executive officer of the
corporation, subject to the direction of the Board of Directors, shall have
general and active control of its affairs and business and general supervision
of its offices, agents and employees. The chief executive officer shall see that
all orders and resolutions of the Board are carried into effect. He may sign
deeds, mortgages, bonds, contracts or other
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instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these By-Laws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or executed. He
shall perform all duties incident to the office of chief executive officer and
such other duties as may be prescribed by the Board of Directors from time to
time. He shall have custody of the treasurer's bond, if any.
Section 5.8 President. The president, subject to the direction of the
Board of Directors, shall have general and active control of the operations,
affairs and business of the corporation in North America and general supervision
of the corporation's officers, agents and employees in North America.
Section 5.9 Vice-Presidents. Each vice-president shall assist the
president and shall perform such duties as may be assigned to him by the
president or the Board of Directors. In the event of the absence, death, or
incapacity of the president, the vice-presidents in the order designated by the
Board of Directors, or if no such designation has been made, in order of
seniority in office, shall have the powers and duties of the president. Any
vice-president may sign, with the secretary or other proper officer of the
corporation thereunto authorized by the Board of Directors, certificates
representing shares of the
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corporation.
Section 5.10 The Secretary. The Secretary shall act as Secretary of all
meetings of the Board of Directors and of the Executive Committee and of the
stockholders of the corporation, and shall keep the minutes thereof in the
proper book or books to be provided for that purpose; he shall see that all
notices required to be given by the corporation are duly given and served; he
may, with the president or any of the vice-presidents, sign certificates for
stock of the corporation; he shall be custodian of the seal of the corporation
and shall affix the seal or cause it to be affixed to all certificates for stock
of the corporation and to all documents the execution of which on behalf of the
corporation under its corporate seal is duly authorized in accordance with the
provisions of these By-Laws; he shall have charge of the stock records and also
of the other books, records and papers of the corporation relating to its
organization and management as a corporation, and shall see that the reports,
statements and other documents required by law are properly kept and filed; and
shall, in general, perform all the duties incident to the office of secretary
and such other duties as from time to time may be assigned to him by the Board
of Directors or by the Executive Committee or by the president.
Section 5.11 Treasurer. The treasurer shall have charge and custody of,
and be responsible for, all funds, securities,
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evidences of indebtedness and other personal property of the corporation and
shall deposit, or cause to be deposited, the same in accordance with
instructions of the Board of Directors. He shall receive and give receipts and
acquittances for moneys paid in on account of the corporation, and shall pay out
of the funds on hand all bills, payrolls and other just debts of the
corporation. He shall enter regularly in the books belonging to the corporation
to be kept by him for that purpose, full and accurate accounts of all moneys
received and paid out by him on account of the corporation. He shall have the
right to require, from time to time, reports or statements giving such
information as he may desire with respect to any and all financial transactions
of the corporation from the officers or agents transacting the same. Upon the
request of the Board, the president or the Executive Committee, he shall make
such reports to them as they shall require from time to time relating to the
financial condition of the corporation and all his transactions as treasurer. He
shall perform all other duties incident to the office of treasurer and such
other duties as from time to time may be assigned to him by the president, the
Board of Directors or by the Executive Committee. He may sign, with the
president or a vice-president, certificates for stock of the corporation.
The treasurer shall, if required by the Board of Directors, give the
corporation a bond in such sums and with such securities
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as may be satisfactory to the Board, conditioned upon the faithful performance
of his duties and for the restoration to the corporation in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind belonging to the corporation in his
possession or under his control.
Section 5.12 Assistant Secretaries, Assistant Treasurers and Assistant
Controllers. The assistant secretary, assistant treasurer and assistant
controller, or, if there be more than one, the assistant secretaries, assistant
treasurers and assistant controllers in the order determined by the Board of
Directors shall, in the absence or disability of the secretary, treasurer or the
controller, perform the duties of the secretary, treasurer and the controller,
respectively, and shall perform such other duties and have such other powers as
from time to time may be assigned to them or any of them by the president or
Board of Directors or Executive Committee. The assistant treasurer or treasurers
shall, if required by the Board of Directors, give the corporation a bond in
such sums and with such securities as shall be satisfactory to the Board,
conditioned upon the faithful performance of their duties and for the
restoration to the corporation in case of their death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other property
of whatever kind belonging to the corporation in
21
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their possession or under their control.
ARTICLE VI
SHARES
Section 6.1 Certificates for Shares. Certificates for stock of the
corporation shall be in such form as shall be approved by the Board of
Directors. The certificates for such stock shall be numbered in the order of
their issue, shall be signed by the president or one of the vice-presidents and
by the secretary or an assistant secretary or the treasurer or an assistant
treasurer, and the seal of the corporation shall be affixed thereto, which seal
may be facsimile, engraved or printed. Where any such certificate is signed by a
transfer agent or transfer clerk acting on behalf of the corporation and by a
registrar, the signatures of the president, a vice president, secretary,
assistant secretary, treasurer or assistant treasurer upon such certificate may
be facsimiles, engraved or printed. In case any officer or officers who shall
have signed or whose signature or facsimile signature or signatures shall be
used on any such certificate or certificates shall cease to be such officer or
officers of the corporation, whether because of death, resignation, removal or
otherwise, before such certificate or certificates shall have been delivered by
the corporation, such certificate or certificates shall nevertheless, unless
22
<PAGE>
otherwise ordered by the Board of Directors, be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures shall have been used thereon had not ceased to
be such officer or officers of the corporation.
Section 6.2 Transfer of Shares. Upon surrender to the corporation or to a
transfer agent of the corporation of a certificate representing shares, duly
endorsed or accompanied with proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, and cancel the old certificate. The
corporation shall be entitled to treat the holder of record of any shares or
share of stock as the holder in fact thereof, and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person whether or not the corporation shall have
express or other notice thereof, except as may be required by law.
Section 6.3 Record of Shareholders. The corporation shall keep at its
principal office in the State of New York, or at the office of its transfer
agent or registrar in the State of New York a record in written form, or in any
other form capable of being converted into written form within a reasonable
time, which shall contain the names and addresses of all the shareholders,
23
<PAGE>
the number and class of shares held by each, the dates when they respectively
became the owners thereof, and, when shares are originally issued by the
corporation, the amount paid therefor.
Section 6.4 Lost Certificates. In case of the alleged loss, destruction or
mutilation of a certificate or certificates representing shares, the Board of
Directors may direct the issuance of a new certificate or certificates in lieu
thereof upon such terms and conditions in conformity with law as it may
prescribe.
ARTICLE VII
INTERNATIONAL BOARD
Section 7.1 Selection, Qualifications and Powers of the International
Board. There shall be an International Board whose members shall be chosen by
the Board of Directors, or by the president in pursuance of authority delegated
to him by the Board of Directors. Members of the International Board shall be
stockholders of the corporation, and shall serve at the pleasure of the
President. The International Board shall advise the officers and directors of
the corporation in connection with the business affairs of the corporation, when
requested to do so by the officers and directors of the corporation. The said
International Board shall have no power to manage the affairs of the
corporation, said power resting exclusively in the Board of
24
<PAGE>
Directors of the corporation as provided in Article III of these By-Laws.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification of Certain Persons. To the fullest extent
permitted by the laws and statutes of the State of New York:
(a) The corporation shall indemnify any person made, or threatened to be
made, a party to an action or proceeding other than one by or in the right of
the corporation to procure a judgment in its favor, by reason of the fact that
such person, his testator or intestate, is or was a director or officer of the
corporation against any reasonable expenses, including attorneys' fees, actually
and necessarily incurred by him as a result of such action or proceeding, or any
appeal therein, except in relation to matters as to which such person is
adjudged to have breached his duty to the corporation; and
(b) The corporation shall indemnify any person made, or threatened to be
made a party to an action or proceeding other than one by or in the right of the
corporation to procure a judgment in its favor, whether civil or criminal,
including without limitation, one by or in the right of any other corporation,
domestic or foreign, which any director or officer
25
<PAGE>
of the corporation served in any capacity at the request of the corporation, by
reason of the fact that such person, his testator or intestate was a director or
officer of the corporation, or served in such other corporation, in any
capacity, against any and all judgments, fines, amounts paid in settlement, and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him as a result of such action or proceeding, or any appeal therein,
if such person acted in good faith, for a purpose which he reasonably believed
to be in the best interests of the corporation and, in criminal actions or
proceedings in addition had no reasonable cause to believe that his conduct was
unlawful.
Section 8.2 Indemnification for Expenses. Indemnification for expenses
incurred in any civil or criminal action or proceeding as authorized under
Section 8.1 (a) and (b) may be paid by the corporation in advance of the final
disposition of such action or proceeding in the manner authorized by the laws
and statutes of the State of New York subject to repayment by the person, his
testator or intestate, to the extent the expenses so advanced by the corporation
exceed the indemnification to which such person is entitled or if such person is
ultimately found not entitled to indemnification under the laws and statutes of
the State of New York.
26
<PAGE>
ARTICLE IX
MISCELLANEOUS
Section 9.1 Seal. The corporate seal of the corporation shall be circular
in form and shall contain the name of the corporation, the year of its
organization and such other legend as may from time to time be determined by the
Board.
ARTICLE X
AMENDMENT AND REPEAL
Section 10.1 Mode of Amendment or Repeal. These By-Laws may be amended,
repealed or new By-Laws adopted, by a majority vote of the shares at the time
entitled to vote in the election of any directors or, except as provided in
Section 3.2 of these By-Laws, by the affirmative vote of a majority of the
members of the Board of Directors present at any meeting duly called and held at
which a quorum is present, provided that a reference to the proposed action is
contained in the notice or waiver of notice of any meeting held for such
purpose. Any By-Law adopted by the Board may be amended or repealed by the
shareholders entitled to vote thereon as herein provided.
Section 10.2 By-Laws Regulating Impending Election. If any By-Law
regulating an impending election of directors is adopted, amended or repealed by
the Board, there shall be set forth in the
27
<PAGE>
notice of the next meeting of shareholders for the election of directors the
By-Law so adopted, amended or repealed, together with a concise statement of the
changes made.
Exhibit 10a
CONTRACT OF EMPLOYMENT
Made and signed in Tel Aviv and New York this 28th day of May 1997
BETWEEN: 1) AMPAL (ISRAEL) LTD. - P.C.
of 111 Arlozorov street, Tel-Aviv 62098 ISRAEL
(hereinafter referred to as "Ampal Israel" or "the Company")
2) AMPAL - AMERICAN ISRAEL CORPORATION
a company registered in New York, USA
of 1177 Avenue of the Americas, New York, New York 10036, USA
(hereinafter referred to as "Ampal USA")
of the one part;
AND: MR. YEHOSHUA GLEITMAN - I.D. NO. 008459828 of Tabenkin 33,
Tel-Aviv, ISRAEL (hereinafter referred to as "the Employee")
of the other part.
WHEREAS: Ampal Israel is a subsidiary of and fully owned and controlled
by Ampal USA;
AND WHEREAS: the Company wishes to employ the Employee as the
chief executive officer (CEO) of Ampal Israel (and/or in
another senior position therein), and, within the scope of
such position, he may also be required to operate in an
executive capacity at Ampal USA and companies related thereto,
all as specified below in this contract;
AND WHEREAS: the Employee agrees to act in the said position on
the terms and conditions specified below in this contract;
<PAGE>
-2-
AND WHEREAS: the provisions of any collective agreement, collective
arrangement and/or any other agreement or arrangement, save
for this contract, shall not apply to the Employee.
ACCORDINGLY, IT IS WARRANTED, PROVIDED AND AGREED BETWEEN THE
PARTIES AS FOLLOWS:
1. GENERAL
1.1 The recitals and appendices to this contract constitute an
integral part hereof and shall be read together herewith.
1.2 This contract revokes any previous understandings and/or
agreements which prescribed the terms and conditions of the
Employee's employment by the Company and his remuneration,
whether made in writing, orally or by way of the parties'
conduct. All the terms and conditions of the Employee's
employment with the Company and the companies are only as
provided in this contract (including in the allotment
agreement as defined below), and the terms and conditions of
any other arrangement whatsoever, including any collective
agreement or collective arrangement or practice whatsoever,
applicable or that shall be applicable to any of the other
companies' employees, shall not apply to the Employee.
1.3 Definitions
In this contract, the following expressions shall have the
meanings set forth alongside them:
"The companies" means Ampal Israel, Ampal USA,
any subsidiary thereof and any company
controlled directly or indirectly by Ampal
Israel or Ampal U.S.A.
<PAGE>
-3-
"CPI" means the consumer price index, all
states, as published annually by the
United States Department of Labor.
2. TERM OF THE CONTRACT
The Company agrees and undertakes to employ the Employee as its
chief executive officer (CEO) as specified below (and/or in another
senior position) commencing from the date of signing this contract
and until the termination hereof as provided in clause 9 below
(hereinafter referred to as "the term of the contract"), and the
Employee agrees and undertakes to perform his position during the
term of the contract and to perform all his other obligations
pursuant hereto.
3. DUTIES AND POWERS
3.1. The Employee undertakes to manage Ampal Israel and its
subsidiaries, to operate and advance their business in all
spheres and to act to the best of his ability in order to make
the companies profitable and successful. The Employee shall
dedicate all his business time and energy to the business of
the Company and the other companies, and shall invest his best
efforts to advance their affairs and business, directly and
through the executive. Without derogating from the generality
of the aforegoing, within the scope of his duties in the
companies the Employee shall manage Ampal Israel, and shall
perform certain management and executive duties for Ampal USA
and companies related thereto, and in such context he shall
engage inter alia (but not only) in the supervision and
management of existing investments, in the location,
performance and management of new investments, in the
management of personnel, in financial management and in
reporting etc.
3.2 In addition, the Employee's duties in respect of the companies
shall include, inter alia, aspects relating to serving as a
senior executive and
<PAGE>
-4-
being involved in the management of Ampal USA, as a public
company registered in the USA whose securities are traded in
the USA, including deliberations and decisions regarding or
effected by securities laws and laws relating to taxation in
the USA and in Israel, as well as duties relating to public
relations, the raising of capital, strategic planning and the
like, as directed from time to time by the president of the
Board of Directors or Executive Committee of Ampal U.S.A.
3.3 The Employee's powers and duties in the companies shall be in
accordance with the resolutions, instructions and guidelines
of the Company's board of directors or those boards of
directors of companies in respect of which the Employee
performs management or executive functions pursuant to this
contract, as advised to him from time to time.
3.4 The Employee undertakes to give the companies' boards of
directors and/or any of their members appropriate reports and
other information in connection with the companies' affairs or
business, on the dates and in the manner that shall be
required by the companies' boards of directors.
4. PERSONAL TRUST
4.1. The Employee undertakes to perform his duties diligently and
loyally and to use all his qualifications, knowledge and
experience for the companies' benefit. The companies undertake
that during the term of the Employee's employment, they shall
grant him appropriate employment terms and conditions as
specified in the provisions of this contract and subject
thereto.
4.2 During the term of his employment with the Company, the
Employee may not engage in any additional employment
whatsoever, for payment or otherwise, without obtaining the
prior written approval of the chairman of the Company's board
of directors.
<PAGE>
-5-
The Employee may also not carry on any independent business
activities during such period, whether for consideration or
otherwise, including as employee, consultant, partner, agent,
broker, manager, provider of services and/or in another manner
whatsoever (save for passive investments of not more than 5%
in companies whose shares are listed for trading on a major
stock exchange or market in Israel or the United States),
without obtaining prior written approval as aforesaid.
4.3 The Employee undertakes that throughout the term of the
contract he shall not directly or indirectly compete with the
companies and or/or their business, that he shall maintain
confidentiality in all respects relating to the business and
affairs of the companies or any other entity related thereto
and that he shall not howsoever prejudice the companies'
reputation, its customer base and/or business relationships.
The Employee further undertakes not to place himself in a
position of conflict of interests which might influence the
performance of his duties and/or obligations pursuant to this
contract, and without derogating from the aforegoing, he
undertakes not to place himself in the position of an
interested party (within the meaning thereof in the Securities
law, 5728-1968) in a business competing with any of the
companies.
4.4 For the avoidance of doubt, it is expressed that the
provisions of this clause do not derogate from any liability
and/or responsibility imposed upon the Employee at law, by
agreement and/or by custom, including the provisions of clause
10 below.
5. SALARY
5.1 In consideration for his employment with the Company and the
other companies, in consideration for all his services to them
and in
<PAGE>
-6-
consideration for the performance of all his obligations
pursuant hereto, the Company shall pay the Employee a gross
monthly salary in an amount in NIS equal to US$ 20,000,
adjusted annually (as of 31 December of each calendar year
beginning December 31, 1997), according to the rate of
increase in the CPI such adjustment to be made using 1996 as
the base year (hereinafter referred to as "the salary").
5.2 The salary shall be paid to the Employee once a month on the
2nd of each month in respect of the preceding calendar month
of employment.
6. COMPANY CAR
The Company shall make available to the Employee a private passenger
car of a value of up to NIS 150,000 for the Employee's personal use.
The Company shall bear all the expenses involved in the car's use
and maintenance. The value of the use of the car for income tax
purposes shall be grossed up and added to the salary, but shall not
be recorded as part of his salary for any other purpose, including
for the purpose of calculating his social rights.
7. SOCIAL RIGHTS & REIMBURSEMENT OF EXPENSES
7.1 The Employee shall be entitled to social rights based on the
salary as defined above, as follows:
(a) Pension fund - Based on the Salary, the Company and the
Employee shall allocate the customary accepted amounts
to a pension fund on behalf of the Employee, as
established by law.
The Company shall gross-up and/or bear any undeductable
expenses derived of this allocation.
<PAGE>
-7-
(b) Compensation fund - Based on the salary, the Company
shall allocate the customary and acceptable amounts to a
compensation fund on behalf of the Employee.
(c) Professional fund - Based on the salary the Company
shall allocate the cotomary accepted amounts to a
professional education fund on behalf of the Employee.
The Company shall gross-up and/or bear any undeductable
expenses derived of this allocation.
(d) Yearly vacation - The Employee shall be
entitled to a yearly vacation of up to 21
days a year. Any vacation time not used
during any given year or the year
succeeding it may not be carried forward
into later years, and the Employee will
not be entitled to any additional
compensation on account of unused
vacation time, except as may be required
by Law. All vacations shall be scheduled
at mutually acceptable times.
(e) the employee shall be entitled to sick
leave according to to applicable Israeli
law.
7.2 The Company shall bear the expenses which the Employee shall
be required to expend in order to perform his duties in the
companies, upon submission of proper documentation and only in
accordance with Company policies in effect from time to time.
<PAGE>
-8-
In addition, the Employee shall be entitled to Customary
benefits as accepted among the senior employees of the
Company.
8. PLAN FOR THE ALLOTMENT OF SHARES AND OPTIONS
At or about the time of executing this contract, the parties shall
execute an agreement for the allotment of shares and for the
allotment of options to the Employee as part of the consideration
for the performance of his duties in the companies (in addition to
his salary and ancillary conditions), subject to and in accordance
with the provisions of section 102 of the Israeli Tax Ordinance -
all as specified in the said agreement (hereinafter referred to as
"the allotment agreement").
The allotment agreement shall be deemed an integral part of his
contract and the two shall be viewed together.
Notwithstanding any other provision, including the provisions of the
allotment agreement, it is hereby agreed that from the date on which
any of the parties notifies the other of its/his wish to terminate
this contract (whether in accordance with the provisions of clause 9
below or in any other manner) or commencing from the date on which
the Employee's employment with the Company ceases, whichever is the
earlier, the Employee shall not be entitled to any shares and/or
options in addition to those already transferred to the trustee (as
defined in the allotment agreement) until such date and, without
derogating from the generality of the aforegoing, it is expressed
that upon the giving of notice as aforesaid, the Employee shall not
be entitled to the allotment of additional shares and/or options, in
respect of his activities performed for the Company during the
transition period specified in sub-clause 10.1 below.
9. TERMINATION OF THE CONTRACT
9.1 Notwithstanding the foregoing, any of the parties may
terminate this contract by giving the other prior written
notice of at least three months for
<PAGE>
-9-
each year (or portion thereof) of employment, up to a maximum
of nine months (hereinafter referred to as "the prior notice
period"), and in such event the terms and conditions specified
in clause 10 shall inter alia apply. For example, at any time
during the first year of employment, the prior notice period
shall be three months; during the second year of employment,
the prior notice shall be six months; and thereafter the prior
notice period shall be nine months.
9.2 Notwithstanding the provisions of sub-clause 9.1 above and in
addition thereto, the Company may terminate this contract by
giving at least two weeks' prior written notice on the
occurrence of at least one of the following incidents, and in
such event such two week period shall be deemed the prior
notice period for all intents and purposes:
9.2.1 if the Employee commits a fundamental breach of this
contract, including if he performs acts or omissions
involving gross negligence, willful misconduct, fraud or
embezzlement on his part, and he does not rectify the
breach within 15 days of the date on which he receives
written warning to do so;
9.2.2 if the Employee is convicted in a final judgment of an
offence involving moral turpitude;
9.2.3 if the Employee sustains a permanent disability (as
determined by the Company's Board of Directors), or
protracted illness (at least three months) or if his
legal capacity is limited and in consequence thereof he
is unable to continue performing his duties, or if he is
prohibited or
<PAGE>
-10-
prevented for any other reason from continuing to act
in his position pursuant to this contract.
9.3 In the event that one party notifies the other of its/his wish
to terminate this contract, the Company may, but is not bound,
in its exclusive discretion, require that the Employee
continue performing his duties in the companies until the end
of the term specified in sub-clause 9.1 or 9.2 above, or part
thereof.
However, it is agreed that in the event that for any reason
whatsoever the Employee is not employed in his position in the
Company during the prior notice period, he shall only be
entitled (if at all) to his salary pursuant to sub-clause 5.1
and to a company car pursuant to sub-clause 6.1 above during
the remainder of the prior notice period.
9.4 It is hereby expressed that the provisions of sub-clause 9.1
to 9.3 above do not impair the companies' rights to terminate
this contract by virtue of any law and/or to insist upon their
rights pursuant to any law, in the event that acts and/or
omissions for which the Employee is at fault, which are not
within the scope of performing his duties in the companies,
are involved.
In addition, it is expressed that use made by one party of
its/his authority pursuant to this clause, or his/its failure
to do so, do not derogate from its/his right to any other
remedy or relief available to it/him at law and/or by virtue
hereof.
9.5 In the event of termination of the Employee's employment with
the company, either by the employee himself or by the company,
the directors and officers' insurance policy which was issued
on behalf of him, shall, as far as is permissible, be
transferred to the name of the employee. However, it is agreed
that this provision shall not apply in the event of
termination of employment as set forth in articles 9.2.1,
9.2.2.
<PAGE>
-11-
10. HANDING OVER THE POSITION
Upon the termination of the Employee's employment with the Company,
and without excluding any obligation imposed upon him by
virtue of any agreement and/or law, the Employee hereby
undertakes to act in accordance with the following provisions:
10.1 The Employee shall hand over his position in an orderly manner
and in such context he shall give the companies or anyone
acting on their behalf all the documents, information and
material which comes into his possession and/or which is
prepared by him in connection with his employment with the
Company or with the other companies.
10.2 The Employee undertakes to maintain confidentiality in all
respects relating to the companies' business and/or affairs,
including any information or know-how which comes into his
possession during the period of his employment with the
companies.
Furthermore, the Employee undertakes not to make any use
whatsoever of the aforementioned information and/or know-how
and not to disclose and/or make any use of any of the
companies' tangible and/or intangible property, whether for
consideration or otherwise.
This undertaking shall remain valid for an unlimited period.
10.3 The Employee undertakes not to directly or indirectly compete
in Israel with the companies' business in a manner that might
prejudice the companies and/or their business, including by
providing consultancy services to, managing and/or by being an
interested party (within the meaning thereof in the Securities
Law, 5728-1968) in a business directly competing with the
companies, as aforesaid, for the following periods:
<PAGE>
-12-
10.3.1 if the relationship is terminated in consequence
of the Employee's resignation - for a period of two
years from the date of the relationship's
termination;
10.3.2 if the relationship is terminated in consequence of
the Employee's dismissal by the Company - for a
period of one year from the date of the
relationship's termination.
10.4 After the termination of his employment, the Employee shall
not, directly or indirectly, solicit, entice, recruit,
persuade or seek to induce any person who is or was an
employee of, or consultant to, any of the companies at the
date of termination or at any time during the period of
employment to terminate his or her employment or consultancy
with the companies, or approach any such employee or
consultant for any or the foregoing purposes, or authorize or
assist in the taking of any such actions by any third party.
11. MISCELLANEOUS
11.1 This contract is dependent an conditional upon the approval of
the board of directors of Ampal Israel and the Executive
Committee of the board of directors of Ampal USA.
11.2 This agreement (including the allotment agreement) and all
rights and obligations of the parties related to it shall be
governed by and construed in accordance with the laws of
Israel, except that all matters relating to the form and
manner of the allotment under the allotment agreement and the
issuance of shares of Ampal USA shall be governed by New York
law.
<PAGE>
-13-
Any dispute concerning the above-mentioned agreements, rights
and/or obligations shall be settled pay conducted in front of
an Israeli tribunal exclusively.
11.3 Notice sent by registered mail to the parties' addresses
specified in the recitals hereto or to their appointed
representatives shall be deemed to have reached its addressee
with 15 days from the date of dispatch, and if transmitted by
facsimile or delivered by hand on an ordinary business day -
at the time of transmission or delivery, and if transmitted or
delivered on a day which is not an ordinary business day - on
the first ordinary business day thereafter.
AS WITNESS THE HANDS OF THE PARTIES ON THE DATE AND
AT THE PLACE SPECIFIED ABOVE:
/s/Yehoshua Gleitman /s/Lawrence Lefkowitz /s/Raz Steinmetz
- --------------------- ---------------------- --------------------
THE EMPLOYEE AMPAL USA AMPAL ISRAEL
Exhibit 10b
AMENDMENT NO. 1 TO LEGAL SERVICES AGREEMENT
Amendment No. 1, dated June 4, 1997, to that certain Legal Services
Agreement (the "Legal Services Agreement") between Bank Hapoalim B.M., an
Israeli banking corporation (the "Bank"), and Ampal-American Israel Corporation,
a New York corporation ("Ampal").
WHEREAS, the Bank and Ampal are parties to the Legal Services Agreement
whereby the Bank makes use of the legal services of Mr. Lawrence Lefkowitz,
President of Ampal; and
WHEREAS, the Bank and Ampal wish to amend the Legal Services Agreement by
increasing the compensation that the Bank pays Ampal in return for the use of
Mr. Lefkowitz's services.
NOW, THEREFORE, it is agreed as follows:
1. All references to "Employee" or "Employees" in the Legal Services
Agreement or this Agreement shall be deemed to refer to Mr. Lefkowitz only
and not to Mr. Charles J. Ferris, who is no longer an Employee of Ampal.
2. Section 1 of the Legal Services Agreement is hereby amended and
restated so that such Section 1 shall read in its entirety as follows:
"The Employee will continue in his present position with Ampal, while at
the same time performing legal services for the Bank estimated not to
exceed 50% of his aggregate business hours, in exchange for compensation
equal to $120,000 per annum, subject to upwards adjustment if the Bank
requires more than 50%
<PAGE>
of Employee's aggregate business time. The Employee shall not be
considered an employee of the Bank and shall continue to be an employee of
Ampal.
3. Section 2 of the Legal Services Agreement is hereby deleted in its
entirety.
4. Sections 3-5 of the Legal Services Agreement are hereby renumbered
Sections 2-4.
5. For purposes of Section 5 of the Legal Services Agreement, the address
of both the Bank and Ampal shall be 1177 Avenue of the Americas, New York, NY
10036.
6. This Agreement shall be effective as of January 1, 1996.
7. Except as otherwise amended by this Agreement, the Legal Services
Agreement shall remain in full force and effect.
8. This Agreement may be executed by the parties hereto in one or more
counterparts, each of which together shall be deemed to constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
BANK HAPOALIM B.M. AMPAL-AMERICAN ISRAEL
CORPORATION
By: /s/ Arie Abend /s/ Yehoshua Gleitman
---------------------------- --------------------------
Name: Arie Abend Yehoshua Gleitman
Title: Joint Managing Director Chief Executive Officer
and Regional Manager
By: /s/ Nikolas G. Kasatos
----------------------------
Name: Nikolas G. Kasatos
Title: Vice President
Exhibit 11
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
--------------------------------------------------
SCHEDULE SETTING FORTH COMPUTATION OF EARNINGS PER SHARE OF CLASS A STOCK
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1997 1996
- --------------------------------------------------------------------------------------
(Amounts in thousands, except (Unaudited) (Unaudited)
per share data)
<S> <C> <C> <C> <C>
Weighted average number of shares
outstanding:
4% Preferred ......................... 189 198
6-1/2% Preferred ..................... 989 1,040
Class A .............................. 23,702 20,503
Common ............................... -- 3,000
======= =======
Weighted average number of shares
outstanding assuming conversion of
preferred stock into Class A stock:
Class A .............................. 27,614 100.00% 24,613 89.14%
Common ............................... -- -- 3,000 10.86
------- -------- -------- -------
27,614 100.00% 27,613 100.00%
======= ======== ======== =======
Income from continuing operations ........ $ 7,290 $ 1,552
Loss from discontinued operations ........ -- (2,575)
------- -------
NET INCOME (LOSS) ................... $ 7,290 $(1,023)
======= =======
Allocation of net income (loss) on the
basis of the respective dividend rights
of the above classes of stock, pro rata:
Class A .............................. $ 7,290 100.00% $ (912) 89.14%
Common ............................... -- -- (111) 10.86
------- -------- -------- -------
$ 7,290 100.00% $ (1,023) 100.00%
======= ======== ======== =======
Earnings (loss) per Class A share:
Earnings from continuing operations .... $ .26 $ .05
Loss from discontinued operations ...... -- (.09)
------- -------
Earnings (loss) per Class A share ........ $ .26 $ (.04)
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from unaudited
consolidated financial statements for the six months ended June 30, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 17,808
<SECURITIES> 125,495
<RECEIVABLES> 58,012
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,912
<PP&E> 39,167
<DEPRECIATION> 7,882
<TOTAL-ASSETS> 251,512
<CURRENT-LIABILITIES> 30,078
<BONDS> 66,417
0
5,821
<COMMON> 24,354
<OTHER-SE> 124,842
<TOTAL-LIABILITY-AND-EQUITY> 251,512
<SALES> 6,286
<TOTAL-REVENUES> 29,840
<CGS> 0
<TOTAL-COSTS> 6,375
<OTHER-EXPENSES> 6,244
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,057
<INCOME-PRETAX> 11,804
<INCOME-TAX> 4,514
<INCOME-CONTINUING> 7,290
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,290
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
