AMPAL AMERICAN ISRAEL CORP /NY/, DEF 14A, 1998-05-18

AMPAL AMERICAN ISRAEL CORP /NY/
DEF 14A, 1998-05-18
INVESTORS, NEC

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SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

AMPAL-AMERICAN ISRAEL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
(5) Total fee paid:

- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.

(1) Amount previously paid:

- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration no.:

- --------------------------------------------------------------------------------
(3) Filing Party:

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(4) Date Filed:

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<PAGE>

AMPAL-AMERICAN ISRAEL CORPORATION
1177 Avenue of the Americas
New York, New York 10036
------------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 1998
--------------------------
Dear Shareholder:

You are cordially invited to attend the Annual Meeting of the shareholders
of Ampal-American Israel Corporation (the "Company" or "Ampal") which will be
held at the offices of Bank Hapoalim B.M., 1177 Avenue of the Americas, 14th
Floor, New York, New York 10036, on Tuesday, June 9, 1998, at 9:00 a.m., local
time, to consider and act upon the following matters:

1. To elect directors for the ensuing year, to serve until their
successors shall be elected and qualified;

2. To approve the Company's 1998 Long-Term Incentive Plan;

3. To approve the grant of options and purchase rights to Dr. Yehoshua
Gleitman, the Company's Chief Executive Officer; and

4. To transact such other business as may properly come before said
meeting or any adjournment thereof.

Information regarding the matters to be acted upon at the Annual Meeting is
contained in the accompanying Proxy Statement.

The close of business on April 27, 1998, has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof.

Please vote, date, sign and mail the enclosed Proxy in the return envelope.
You will not need postage if you mail it in the United States. A prompt response
will be helpful and appreciated.

By Order of the Board of Directors,

ISAIAH HALIVNI
Vice President-Legal and Secretary

New York, New York
May 20, 1998
- -------------------------------------------------------------------------------
Your vote is important. Please date, sign, and mail promptly the enclosed proxy,
for which a return envelope is provided, even if you plan to attend the Annual
Meeting. No postage is required if mailed in the United States.
- -------------------------------------------------------------------------------
<PAGE>

AMPAL-AMERICAN ISRAEL CORPORATION

PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 1998

This Proxy Statement is being furnished to the holders of Class A Stock,
$1.00 par value (the "Class A Stock"), of Ampal-American Israel Corporation (the
"Company" or "Ampal") in connection with the solicitation of proxies on behalf
of its Board of Directors (the "Board") for use at the annual meeting of the
shareholders of the Company to be held on June 9, 1998 (the "Annual Meeting").
In an effort to present the information contained in this Proxy Statement in a
clear manner, the Company has decided to use a question and answer format.

Q: What am I voting on?

- Election of Ampal's directors;

- Approval of Ampal's 1998 Long-Term Incentive Plan (the "Plan"); and

- Approval of the grant of options and purchase rights to Dr. Yehoshua
Gleitman, Ampal's Chief Executive Officer.

Q: Who is entitled to vote?

Holders of the Class A Stock as of the close of business on April 27, 1998
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
At such date, the Company had 23,868,766 shares of Class A Stock outstanding
(excluding treasury shares). Each shareholder is entitled to one vote for each
share of Class A Stock held on the Record Date. The Class A Stock does not have
cumulative voting rights.

Q: How can I get a copy of Ampal's Annual Report on Form 10-K?

Upon request, the Company will provide without charge to any shareholder
entitled to vote at the Annual Meeting a copy of its Annual Report to the
Securities and Exchange Commission (the "SEC") on Form 10-K for 1997. Such
request should be made to the Secretary of the Company at the address shown on
the accompanying Notice of Annual Meeting of Shareholders.

Q: How can I review Ampal's financial statements for 1997?

A copy of Ampal's Annual Report to the Shareholders for 1997 containing the
Company's 1997 audited financial statements has been mailed to all holders of
Class A Stock with this Proxy Statement. The approximate mailing date of this
Proxy Statement, the Form of Proxy and the Annual Report is May 20, 1998.

Q: Who are the principal shareholders of Ampal and how will they vote?

As of the Record Date, Rebar Financial Corp. ("Rebar") was the holder of
approximately 42.5% of the outstanding Class A Stock and Bank Hapoalim B.M.
("Hapoalim") was the holder of approximately 25.8% (assuming conversion of
Ampal's preferred shares held by Hapoalim) of the outstanding Class A Stock.
Rebar and Hapoalim are the only holders of more than 10% of the Class A Stock
known to the Company. (See page 13 for more details regarding the principal
shareholders.) Rebar and Hapoalim have advised the Company that they will vote
in favor of (i) the Company's slate of nominees for directors, (ii) the Plan,
and (iii) the grant of options and purchase rights to Dr. Gleitman. Since the
Class A Stock is the only outstanding voting stock of the Company, Rebar and
Hapoalim together

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will be able to determine the outcome of all matters requiring the affirmative
vote of a majority of the outstanding shares or of "votes cast."

Q: Who is bearing the cost of preparing this Proxy Statement?

The cost of preparing, assembling and mailing the Notice of Annual Meeting
of Shareholders, this Proxy Statement and the Form of Proxy is being borne by
the Company. The Company will also reimburse brokers who are holders of record
of shares of the Company for their expenses in forwarding proxies and proxy
soliciting material to the beneficial owners of the shares held by them.

Q: Besides shareholders, who else will attend the Annual Meeting?

Some of the directors of Ampal, senior management of the Company,
representatives of Arthur Andersen LLP, whom Ampal has selected to be its
independent accountants, and representatives of ChaseMellon Shareholder
Services, the Company's transfer agent, will be present at the Annual Meeting,
will have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from shareholders.

Q: What constitutes a quorum?

The holders of record of one-third of the outstanding Class A Stock
constitute a quorum for the Annual Meeting. Since as of the Record Date,
23,868,766 shares of Class A Stock were outstanding (excluding treasury shares),
a quorum equals 7,956,256 shares of Class A Stock.

Q: How do I vote using the proxy?

Sign your name exactly as it appears in the proxy, and return it in the
enclosed prepaid envelope. IF YOU SIGN YOUR PROXY BUT DO NOT INDICATE YOUR
VOTING PREFERENCES, YOUR VOTE WILL BE COUNTED FOR ALL OF MANAGEMENT'S NOMINEES
FOR DIRECTORS, APPROVAL OF THE PLAN AND APPROVAL OF THE GRANT OF OPTIONS AND
PURCHASE RIGHTS TO DR. GLEITMAN.

Q: May I revoke my proxy?

A proxy may be revoked at any time before it is exercised at the Annual
Meeting by notifying the Company's Secretary in writing, or by returning a
later-dated proxy. You may also revoke your proxy by voting in person at the
meeting (although your attendance at the Annual Meeting will not in and of
itself constitute revocation of a proxy).

Q: How many votes are needed for the approval of each item?

There are differing vote requirements for each of the proposals. The
election of a nominee requires a plurality of the votes cast by the holders of
shares entitled to vote at the Annual Meeting. (Proxies cannot be voted for a
greater number of persons than the number of nominees listed in the Proxy
Statement.) The approval of the Plan and grant of options and purchase rights to
Dr. Gleitman requires the affirmative vote of a majority of the votes cast by
the holders of shares entitled to vote at the Annual Meeting.

Q: Can I abstain?

Yes, however, abstentions and "broker non-votes" (i.e. proxies submitted by
brokers that do not indicate a vote for some of the proposals because the
holders do not have discretionary voting authority and have not received
instructions from the beneficial owners on how to vote) will not be considered
"votes cast" for purposes of determining the number of affirmative votes
required to approve a proposal. Abstentions, broker non-votes, and instructions
on the accompanying proxy to withhold authority to vote for one or more of the
nominees will therefore not affect the outcome of any of the proposals.

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Q: Will any other matters be brought before the Annual Meeting?

The management does not presently know of any other matters which will be
brought before the Annual Meeting. If, however, other matters requiring the vote
of the shareholders, not now known or contemplated, do properly come before the
meeting or any adjournment thereof, it is the intention of the persons named to
vote the proxies held by them in accordance with their judgment in such matters.

THE FOLLOWING QUESTIONS AND ANSWERS RELATE TO THE NOMINEES FOR ELECTION TO THE
BOARD OF DIRECTORS.

Q: How many directors does Ampal have?

The Company's By-Laws provide that the entire Board shall be constituted of
not less than 3 nor more than 29 persons, with the actual number serving set by
the Board or the shareholders. The Board has set the number of directors, as of
the date of the Annual Meeting, at 8.

Q: Who recommended the Company's slate of nominees?

Pursuant to the Stock Purchase Agreement, dated May 12, 1996, among Atad
Hevra Lahashkaot Limited, a wholly-owned subsidiary of Hapoalim, Rebar, Daniel
Steinmetz, Benjamin Steinmetz and Raz Steinmetz, for the Annual Meeting, Ampal
will nominate directors recommended by Hapoalim, in proportion to Hapoalim's
holdings in Ampal. Of the nominees set forth in this Proxy Statement and
nominated by the Board, six were recommended by Rebar and two by Hapoalim.

Q: Who are management's nominees for directors?

The following is a description of the nominees, their ages, their principal
occupations for the past five years and their tenure on the Board of Directors.
All nominees are members of the present Board.

MICHAEL ARNON, 73, was Chairman of the Board of Directors of Ampal from
November 1990 to July 1994. From July 1986 until November 1990, he was President
and Chief Executive Officer of Ampal. He became a director of Ampal in 1986.

BENZION BENBASSAT, 60, has been the President and Chief Executive Officer
of D.R.B. Investments Ltd., an investment company of which Messrs. D. Steinmetz
and R. Steinmetz are controlling persons, for more than the past five years. He
became a director of Ampal in 1997.

YAACOV ELINAV, 53, has been a Senior Deputy Managing Director of Hapoalim
since August 1992. He became a director of Ampal in 1992.

HILLEL PELED, 50, has been President of Inveco International, Inc., a
private investment company, since January 1990. From January 1982 to June 1986,
he served as Vice President-Finance and Treasurer of Ampal. He became a director
of Ampal in 1996.

SHIMON RAVID, 61, has been a Joint Managing Director of Hapoalim since
February 1994. From October 1989 until February 1994, he was a Senior Deputy
Managing Director of Hapoalim. He became a director of Ampal in 1990.

MICHAEL W. SONNENFELDT, 42, has been a Managing Director of MUUS & Company
LLC since April 1998. Prior to April 1998, he was the Managing Director of Emmes
& Company LLC, a private real estate investment group headquartered in New York
City for more than five years. He became a director of Ampal in 1996.

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DANIEL STEINMETZ, 60, has managed family diamond trading businesses in
Israel for more than the past five years. He became a director of Ampal in 1997.
Mr. Steinmetz is the father of Raz Steinmetz.

RAZ STEINMETZ, 34, has managed various investments for his family,
including real estate, financial investments and others, since September 1994.
From September 1993 through September 1994, he worked as a trainee at Republic
National Bank of New York. From September 1991 through July 1993, he attended
University of Pennsylvania, Wharton Business School, where he received a Masters
Degree in Business Administration. He became a director of Ampal in 1996 and
Chairman of the Executive Committee in December 1996. Mr. Steinmetz is the son
of Daniel Steinmetz.

Q: What happens if a nominee become unavailable for election?

In case any nominee should become unavailable for election to the Board for
any reason, which is presently neither known nor contemplated, the persons named
in the proxy will have discretionary authority in that instance to vote the
proxies for a substitute.

Q: For how long will each director serve?

Each director will serve for a term of one year and until his or her
successor shall be elected and qualified.

Q: What type of compensation do directors receive?

Directors of Ampal (other than Mr. Lawrence Lefkowitz, who resigned as a
director on March 26, 1997, and Mr. R. Steinmetz) receive $500 per Board meeting
attended. The Chairman of the Board receives $2,000 per Board meeting attended.
Such persons also receive the same amount for attendance at meetings of
committees of the Board, provided that such committee meetings are on separate
days and on a day other than the day of a regularly scheduled Board meeting.

Q: Does the Board of Directors have any committees?

Yes. The current committees consist, in part, of directors who will not
continue to be directors after the Annual Meeting. The Board will elect new
members to the various committees after the Annual Meeting. The current members,
activities and functions of the various committees are as follows:

Audit Committee
Members: Directors Evelyn Sommer (Chair), Arie Abend and Kenneth L.
Henderson
Number of Meetings in 1997: 2
Number of times acted by written consent in 1997: 0
Function: Reviews functions of the outside auditors, auditors' fees and
related matters.

Executive Committee
Members: Directors Elinav, D. Steinmetz and R. Steinmetz. Dr. Gleitman
is a member ex officio.
Number of Meetings in 1997: 3
Number of times acted by written consent in 1997: 13
Function: Meets as necessary between regularly scheduled Board
meetings, and consistent with certain statutory limitations,
exercises all authority of the Board.

MIRS Financing Committee

Members: Directors Benbassat, D. Steinmetz and R. Steinmetz. Dr.
Gleitman is a member ex officio.
Number of Meetings in 1997: 0
Number of times acted by written consent in 1997: 0
Function: Approves any financing required in connection with the
purchase from Motorola Communications Israel Ltd.
("Motorola Israel") of a one-third interest in its shared
networks operations.

4
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Related Party Transactions Committee
Members: Directors Abend, Henderson and Sommer.
Number of Meetings in 1997: 2
Number of times acted by written consent in 1997: 1
Function: Reviews and passes upon the fairness of business transactions
between Ampal and related parties.

Stock Option Committee
Members: Directors Peled (Chair), Arnon and Sommer.
Number of Meetings in 1997: 2
Number of times acted by written consent in 1997: 1
Function: Administers the Company's 1993 Stock Option Plan and other
option grants and will administer the Plan, if approved at
the Annual Meeting.

Ampal does not have a nominating committee or compensation committee. The
Executive Committee determines the Company's policy regarding executive
compensation.

Q: Did all directors attend all of the Board and Committee meetings in 1997?

Other than Ms. Evelyn Sommer (a current director of Ampal who is not a
nominee to continue as a director after the Annual Meeting), Mr. Sonnenfeldt and
Mr. Harry B. Henshel (who was a director of Ampal until May 28, 1997), all
directors attended more than 75% of the aggregate of (1) the total number of
Board of Directors meetings held during the period in 1997 for which such
individual was a director and (2) the total number of meetings held by all
committees of the Board on which such individual served in 1997 (during the
period of such service).

Q: Who are the Company's executive officers?

Executive officers are elected annually by the Board. The description of
Mr. Daniel Steinmetz, Chairman of the Board of Directors of Ampal, can be found
above with the descriptions of the nominees for the Board. The following is a
description of the executive officers, other than Mr. D. Steinmetz, their ages,
their positions and offices with Ampal or its subsidiaries and their principal
occupations and employment during the past five years.

YEHOSHUA GLEITMAN, 48, has been Chief Executive Officer of Ampal since May
1997 and Managing Director of Ampal (Israel) Ltd. ("Ampal (Israel)"), a
wholly-owned subsidiary of Ampal, head of Ampal's Israeli operations, since
April 1, 1997. From August 1996 until February 1997, he was Director General of
the Israeli Ministry of Industry and Trade and was Chief Scientist at the
Ministry of Industry and Trade from January 1993 through February 1997.

ISAIAH HALIVNI, 31, has been Vice President-Legal and Secretary of Ampal
since February 1997. From November 1993 until January 1997, he was an associate
at Kronish, Lieb, Weiner & Hellman LLP. From October 1992 until May 1993, he was
an attorney employed by Yigal Arnon & Co., a Tel Aviv law firm.

ALLA KANTER, 40, has been Vice President-Accounting of Ampal since
September 1995 and Controller of Ampal since August 1990.

MIRI LENT SHARIR, 41, has been Assistant Vice President-Israel Operations
of Ampal since July 1988 and has been employed by Ampal (Israel) for more than
five years. She also serves as a director of Carmel Container Systems Limited
(of which the Company, as of December 31, 1997, directly and indirectly owned
20.7%).

SHLOMO MEICHOR, 40, assumed the duties of Vice-President Finance and
Treasurer of Ampal on April 1, 1998. For more than the past five years, Mr.
Meichor was the Finance and Operations Manager of Digital Semi-Conductors
Israel, a semi-conductor subsidiary of Digital Equipment Corporation.

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Q: How are the Company's executives compensated?

The table below presents information regarding remuneration paid or accrued
for services to Ampal and its subsidiaries by the executive officers named below
during the three fiscal years ended December 31, 1997, 1996 and 1995.

EXECUTIVE COMPENSATION TABLE
- ----------------------------

<TABLE>
<CAPTION>
Annual Compensation
-------------------------------------------------
Name and Principal Other Annual All Other
Position Year Salary Bonus Compensation Compensation
- ------------------ ---- ------ ----- ------------ -------------
<S> <C> <C> <C> <C> <C>
Yehoshua Gleitman(1) 1997 $179,756 $23,843(2) $ 37,444 (3)
(Chief Executive Officer)

Lawrence Lefkowitz(4) 1997 221,324 8,720(2) 33,203 (5)
(President) 1996 220,851 8,123(2) 28,800 (6)
1995 212,351 $16,335 9,088(2) 26,055 (7)

Moshe Mor(8) 1997 155,707 224,126 (9)
(Executive Vice 1996 193,751 35,834(10)
President) 1995 145,880 37,185 27,267(11)

Alan L. Schaffer(12) 1997 147,950 19,378(13)
(Vice President-Finance 1996 147,950 19,527(14)
and Treasurer) 1995 142,250 10,942 16,467(15)

Miri Lent Sharir 1997 132,418 29,842(16)
(Assistant Vice 1996 120,272 27,363(17)
President-Israel 1995 111,767 29,880 24,932(18)
Operations)

Raz Steinmetz(19) 1997 100,342 5,599(2) 21,219(20)
(Chairman of the
Executive Committee)

</TABLE>

- ----------

(1) Dr. Gleitman was appointed Chief Executive Officer of Ampal on May 28, 1997.
Effective April 1, 1997, he was named Managing Director of Ampal (Israel). Dr.
Gleitman is employed by Ampal pursuant to an employment agreement dated May 28,
1997 and his salary is $240,000 (payable in New Israeli Shekels) per annum,
(plus benefits and the use of a company car) adjusted annually in accordance
with changes in the United States consumer price index. Dr. Gleitman is paid by
Ampal (Israel). Either party may terminate this agreement upon three months
written notice for each year of Dr. Gleitman's employment up to a maximum of
nine months.

(2) Consists of amounts reimbursed for the payment of taxes.

(3) Comprised of Ampal (Israel)'s contribution pursuant to: (i) Ampal (Israel)'s
pension plan of $23,962 and (ii) Ampal (Israel)'s education fund of $13,482.

(4) By agreement between Ampal and Hapoalim, beginning in January 1996, Hapoalim
reimburses Ampal $120,000 per annum for Mr. Lefkowitz's legal services.
(Previously, Hapoalim had reimbursed Ampal $100,000 per annum for Mr.
Lefkowitz's services.) Mr. Lefkowitz is employed pursuant to an employment
agreement,

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expiring September 12, 1998, providing for the payment of salary which shall not
be less than the salary paid to him in 1992 ($191,961) (plus benefits and the
use of a company car) and which salary is subject to annual review. Mr.
Lefkowitz resigned as President and Director of Ampal on March 26, 1998 but will
continue as an employee of Ampal until September 1998.

(5) Comprised of Ampal's contribution pursuant to (i) Ampal's Pension Plan
of $16,592; (ii) Ampal's Supplementary Executive Retirement Plan of $12,111 and
(iii) Ampal's Savings Plan of $4,500. See below for a description of such plans.

(6) Comprised of Ampal's contribution pursuant to (i) Ampal's Pension Plan
of $15,476; (ii) Ampal's Supplementary Executive Retirement Plan of $8,899 and
(iii) Ampal's Savings Plan of $4,425.

(7) Comprised of Ampal's contribution pursuant to (i) Ampal's Pension Plan of
$15,562; (ii) Ampal's Supplementary Executive Retirement Plan of $9,993 and
(iii) Ampal's Savings Plan of $500.

(8) Mr. Mor resigned as Executive Vice President of Ampal, effective April 12,
1997, though he continued to be an employee of Ampal (Israel) until January 18,
1998.

(9) Comprised of (i) a one-time severance payment of $195,713 made by Ampal
(Israel) in January 1998; (ii) an Ampal (Israel) contribution to its pension
plan in the amount of $18,444 and (iii) an Ampal (Israel) contribution to its
education fund in the amount of $9,969.

(10) Comprised of Ampal (Israel)'s contribution to (i) Ampal (Israel)'s pension
plan of $23,364 and (ii) Ampal (Israel)'s education fund of $12,470.

(11) Comprised of Ampal (Israel)'s contribution to (i) Ampal (Israel)'s pension
plan of $17,982 and (ii) Ampal (Israel)'s education fund of $9,285.

(12) Mr. Schaffer resigned as Vice President-Finance and Treasurer of Ampal
effective April 1, 1998.

(13) Comprised of Ampal's contribution pursuant to (i) Ampal's Pension Plan of
$14,963 and (ii) to Ampal's Savings Plan of $4,415.

(14) Comprised of Ampal's contribution pursuant to (i) Ampal's Pension Plan of
$15,117 and (ii) Ampal's Savings Plan of $4,410.

(15) Comprised of Ampal's contribution pursuant to (i) Ampal's Pension Plan of
$15,562; (ii) Ampal's Supplementary Executive Retirement Plan of $405 and (iii)
Ampal's Savings Plan of $500.

(16) Comprised of Ampal (Israel)'s contribution to (i) Ampal (Israel)'s pension
plan of $20,899 and (ii) Ampal (Israel)'s education fund of $8,943.

(17) Comprised of Ampal (Israel)'s contribution to (i) Ampal (Israel)'s pension
plan of $19,239 and (ii) Ampal (Israel)'s education fund of $8,124.

(18) Comprised of Ampal (Israel)'s contribution to (i) Ampal (Israel)'s pension
plan of $17,463 and (ii) Ampal (Israel)'s education fund of $7,469.

(19) Mr. Steinmetz is employed by Ampal Industries (Israel) Limited ("Ampal
Industries (Israel)"), an indirect wholly-owned subsidiary of Ampal, on a
part-time basis pursuant to an employment agreement effective as of January 1,
1997. Mr. Steinmetz receives a salary of $100,000 (payable in New Israeli
Shekels) per annum (plus benefits). His agreement can be terminated by either
party upon thirty days notice.

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(20) Comprised of Ampal Industries (Israel)'s contribution to (i) Ampal
Industries (Israel)'s pension plan of $13,579 and (ii) Ampal Industries
(Israel)'s education fund of $7,640.

Mr. Shlomo Meichor became Vice President-Finance and Treasurer of Ampal,
effective April 1, 1998. Pursuant to an employment agreement, dated March 5,
1998, Mr. Meichor will receive a base salary of $144,000 per annum, adjusted
annually in accordance with the United States consumer price index (payable in
New Israeli Shekels) plus benefits and use of a car. His agreement can be
terminated upon two months notice and after the two months notice period
expires, Mr. Meichor is entitled to receive his salary for an additional four
months.

Q: How many options do the executive officers own?

FISCAL YEAR-END OPTION VALUES(1)
- --------------------------------

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Name Options at Fiscal Year-End(2)
- ---- -----------------------------
Exercisable Unexercisable
----------- --------------
<S> <C> <C>
Yehoshua Gleitman 0 0
Lawrence Lefkowitz(3) 16,000 0
Moshe Mor(4) 15,150 0
Alan L. Schaffer(5) 13,000 0
Miri Lent Sharir 11,500 0
Raz Steinmetz 0 0

</TABLE>

- -------------------
(1) No options were granted to or exercised by any named executive officer
during 1997, and no options were in-the-money as of December 31, 1997.

(2) This represents the total number of shares of Class A Stock subject to stock
options held by the named executive officer at December 31, 1997.

(3) Mr. Lefkowitz's options will expire in December 1998 (three months after the
expiration of his employment agreement).

(4) Mr. Mor's options expired in April 1998 because of the termination of his
employment with the Company.

(5) Mr. Schaffer's options will expire in July 1998 because of his resignation
from Ampal.

Q: What other benefits does the Company have for its employees?

Ampal maintains a money purchase pension plan ("Pension Plan") for its
eligible employees. Eligible employees are all full-time employees of Ampal
except non-resident aliens, night-shift employees and employees represented by a
collective bargaining unit. Ampal's contribution is equal to 7% of each
employee's compensation plus 5.7% of the compensation in excess of the Social
Security taxable wage base for that year.

Employees become vested in amounts contributed by Ampal depending on the
number of years of service worked, as provided in the following table:

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Vested
Years of Service Percentage
---------------- ----------
<S> <C>
less than 2 years.................................... 0%
2 but less than 3 years............................. 20%
3 but less than 4 years............................. 40%
4 but less than 5 years............................. 60%
5 but less than 6 years............................. 80%
6 or more years..................................... 100%

</TABLE>

Benefits under the Pension Plan are paid in a lump sum, in an annuity form
or in installments.

Ampal maintains a savings plan (the "Savings Plan") for its eligible
employees pursuant to Section 401(k) of the Internal Revenue Code of 1986, as
amended (the "Code"). Eligible employees are all employees of Ampal except
non-resident aliens, night-shift employees and employees represented by a
collective bargaining unit. Participation by employees in the Savings Plan is
voluntary. Participating employees may direct that a specific percentage of
their annual compensation (up to 15%) be contributed to a self-directed 401(k)
savings account. The amount which any employee could contribute to his or her
401(k) savings account in 1997, was limited under the Code to $10,000. Effective
January 1, 1996, the Savings Plan was amended so that Ampal matches 50% of each
employee's contribution up to a maximum of 3% of the employee's compensation.
Employees who were eligible to participate in the Savings Plan as of December
31, 1995 are 100% vested at all times in the account balances maintained in
their 401(k) savings account and employees who became eligible to participate in
the Savings Plan on or after January 1, 1996, become vested in amounts
contributed by Ampal depending on the number of years of service worked, as
provided in the following table:

</TABLE>

Benefits under the Savings Plan are required to be paid in a single,
lump-sum distribution. Payment is usually made after termination of employment.

In 1994, Ampal established a Supplementary Executive Retirement Plan
("SERP") for its eligible employees. Ampal's obligation under the SERP is to pay
to affected employees the amount that would have been paid to them by the
Pension Plan but for the operation of Section 401(a)(17) of the Code.

Q: Does Ampal have an active stock option plan?

In November 1993, the Board approved a stock option plan (the "Stock Option
Plan") which provides for grants of options to purchase up to 200,000 shares of
Class A Stock in the aggregate to employees, officers and directors of Ampal and
certain subsidiaries of Ampal. Options granted under the Stock Option Plan may
be either options which are intended to qualify as "incentive stock options"
within the meaning of Section 422 of the Code ("ISOs"), or options that are not
intended to so qualify ("Non-ISOs"). The Stock Option Plan was approved by
Ampal's shareholders on September 22, 1994.

The Stock Option Plan is administered by the Board or by a Stock Option
Committee thereof (the "Committee") consisting exclusively of directors who are
not to be granted options under the Stock Option Plan. The Board (or the
Committee) determines, subject to the terms of the Stock Option Plan, the
individuals to whom

9
<PAGE>

options are to be granted and the terms of the options, including the exercise
price, number of shares subject to each option, whether the option is to qualify
as an ISO and the vesting of rights to exercise each option. Currently, the
Stock Option Committee is administered by a committee consisting of Mr. Peled
(Chairman), Mr. Arnon and Ms. Sommer.

The exercise price of each ISO granted under the Plan must not be less than
the fair market value of the shares on the date of grant or 110% of the fair
market value on the date of grant if the ISO grantee owns stock representing
more than 10% of the voting power of Ampal's capital stock or value of all
classes of stock of Ampal or a subsidiary corporation. The exercise price of
each Non-ISO granted under the Stock Option Plan, which may be less than fair
market value on the date of grant, will be fixed by the Board (or the Committee)
at the time the Non-ISO is granted.

The Board (or the Committee) shall determine the dates on which each option
shall be exercisable and the conditions precedent to such exercise. However, all
options, other than those granted to non-employee directors of Ampal, may not be
exercisable prior to the second anniversary of their date of grant. Options
granted to non-employee directors of Ampal shall be exercisable immediately upon
grant. The terms of options granted under the Stock Option Plan may not exceed
five years.

To the extent that a grant of options results in the aggregate fair market
value of the shares of Class A Stock with respect to which ISOs are exercisable
for the first time by an optionee during any calendar year exceeding $100,000,
such options are treated as Non-ISOs.

Pursuant to an amendment to the Stock Option Plan, dated March 23, 1994,
optionees may pay the exercise price or their tax withholding obligation with
the shares of Class A Stock which are to be delivered upon exercise.

In January 1994, pursuant to the Stock Option Plan, Non-ISO Options to
purchase 134,900 shares of Class A Stock were granted to employees, officers,
and directors of Ampal and certain subsidiaries of Ampal. Currently, options, to
purchase 84,000 shares of Class A Stock remain outstanding (not including
options granted to former directors which will expire in May 1998). The
remaining options expired upon the termination of the option holder's employment
with the Company. No stock options were granted under the Stock Option Plan
during 1997.

Q: What is the Company's policy regarding executive compensation?

The Executive Committee of the Board, whose current members are listed
below, pursuant to authority delegated by the Board to create a policy related
to executive compensation, determined that the Company's policy for 1997
regarding executive compensation reflects the following:

The assets of the Company are almost entirely located in Israel, where
macro-economic and political factors have a greater influence on the
performance of the Company and its investees than is the case of businesses
in the United States. Consequently, performance of the Company and its
investees, to the extent the Executive Committee believes it is unrelated to
general economic conditions in Israel, is a factor in determining executive
compensation; but it is not the only factor in determining compensation.
Executives are also to be compensated on a basis which reflects (i) their
contributions to long-term strategic planning and management, as this has
the most beneficial effect upon the enhancement of shareholder value and
(ii) changes in the cost of living. In 1997, compensation of executives did
not include the grant of a bonus.

The 1997 compensation of Dr. Yehoshua Gleitman, the Chief Executive Officer
of Ampal since May 28, 1997 and Mr. Lawrence Lefkowitz, the President of
Ampal until March 26, 1998 and the Chief Executive Officer of Ampal until
May 28, 1997, was determined based upon the terms of their employment
agreements, the Executive Committee's application of the foregoing policies
and subjective criteria, including the Executive Committee's assessment of
their performance and contribution in the short and long term. Mr.
Lefkowitz, who was a member

10
<PAGE>

of the Executive Committee until his resignation as a director on March 26,
1998, did not participate in determining his compensation.

Yaacov Elinav Daniel Steinmetz
Raz Steinmetz

Q: Who determines the Company's policy regarding executive compensation?

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 1997, members of the Executive Committee which functions as the
compensation committee of Ampal included: Mr. Lawrence Lefkowitz, President of
Ampal (who resigned as Director and President of Ampal on March 26, 1998); Mr.
Yaacov Elinav, Senior Deputy Managing Director of Hapoalim; and Mr. Raz
Steinmetz (Chairman). Mr. Stanley I. Batkin was a member of the Executive
Committee until May 28, 1997. Mr. Daniel Steinmetz was appointed to the
Executive Committee as of April 28, 1998. For a description of business
transactions between Ampal and Hapoalim, see below.

11
<PAGE>

THE FOLLOWING QUESTIONS AND ANSWERS RELATE TO THE COMPANY'S CLASS A STOCK.

Q: How has the Company's stock performed over the past five years?

The following graph compares the percentage change in cumulative total
return (change in the stock price plus reinvested dividends) of Ampal Class A
Stock, the S&P Composite - 500 Index and a peer group index composed of American
Israeli Paper Mills Limited (an Israeli industrial company), Etz Lavud Ltd. (an
Israeli industrial company), Israel Land Development Co., Ltd. (an Israeli real
estate development company) and PEC Israel Economic Corporation (an American
holding company that acquires interests in companies located in Israel or
related to Israel) for the period December 31, 1992 through December 31, 1997.*
The comparisons in this table are required by the SEC. The stock price
performances shown on the graph are not intended to forecast or be indicative of
future price performance.

The following information was presented as a line graph in the printed
material.

Ampal S&P 500 Peer Group
---------------------------------------------------------------
<S> <C> <C> <C>
12/31/92 100.00% 100.00% 100.00%
12/31/93 213.95% 110.09% 114.38%
12/31/94 123.26% 111.54% 106.91%
12/31/95 101.55% 153.47% 95.41%
12/31/96 93.09% 188.71% 82.35%
12/31/97 99.13% 251.68% 94.16%

</TABLE>

- -------------------
* Assumes that the value of the investment in Ampal's Class A Stock and each
index was $100 on December 31, 1992 and that all dividends were reinvested.
The Peer Group Index has been weighted based on market capitalization.

12
<PAGE>

Q: Who are Ampal's principal shareholders?

The following table sets forth information as of the Record Date as to
the holders known to Ampal who beneficially own more than 5% of the Class A
Stock, the only outstanding series of voting securities. For purposes of
computation of the percentage ownership of Class A Stock set forth in the
table, conversion of any 4% Cumulative Convertible Preferred Stock (the "4%
Preferred Stock") and 6 1/2% Cumulative Convertible Preferred Stock (the
"6 1/2% Preferred Stock") owned by such beneficial owner has been assumed,
without increasing the number of shares of Class A Stock outstanding by
amounts arising from possible conversions of convertible securities held by
shareholders other than such beneficial owner. As at the Record Date, there
were outstanding 23,868,766 (excluding treasury shares) shares of Class A
Stock of Ampal. In addition, there were outstanding 952,891 non-voting shares
of 6 1/2% Preferred Stock (each convertible into 3 shares of Class A Stock)
and 177,742 non-voting shares of 4% Preferred Stock (each convertible into
5 shares of Class A Stock).

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- -----------------------------------------------

<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Percent
of Beneficial Owner Title of Class Ownership of Class
- ------------------- -------------- ----------------- ---------
<S> <C> <C> <C>
Daniel Steinmetz
Rebar Financial Corp.
c/o Icaza, Gonzalez-Ruiz
& Aleman (BVI) Ltd.
Wickhams Cay, Road Town,
Tortola, British Virgin Islands Class A Stock 10,137,352 shs.(1) 42.5%

Raz Steinmetz
Rebar Financial Corp.
c/o Icaza, Gonzalez-Ruiz
& Aleman (BVI) Ltd.
Wickhams Cay, Road Town,
Tortola, British Virgin Islands Class A Stock 10,137,352 shs.(1) 42.5%

Rebar Financial Corp.
c/o Icaza, Gonzalez-Ruiz
& Aleman (BVI) Ltd.
Wickhams Cay, Road Town,
Tortola, British Virgin Islands Class A Stock 10,137,352 shs.(1) 42.5%

Bank Hapoalim B.M
50 Rothschild Blvd.
Tel Aviv, Israel Class A Stock 6,258,639 shs.(2) 25.8%

</TABLE>

- ----------

(1) As reported by Mr. Daniel Steinmetz, Mr. Raz Steinmetz and Rebar on Forms
4 for the month of April 1998, as filed with the SEC. Consists of
10,137,352 shares of Class A Stock held directly by Rebar. Mr. Raz
Steinmetz is the President of Rebar and Mr. Daniel Steinmetz is the Vice
President. They are the sole directors of Rebar and beneficially own,
directly and indirectly, 96% and 4% of the outstanding equity of Rebar,
respectively. Certain of the shares of Class A Stock held by Rebar have
been pledged to The First International Bank of Israel Ltd.

(2) As reported by Hapoalim on Amendment No. 34 to Schedule 13-D, dated
December 18, 1996, as filed with the SEC. These shares represent all of the
shares owned directly by its wholly-owned subsidiary Atad Hevra

13
<PAGE>

Lehashkaot Limited. Assumes conversion of 122,536 shares of 6 1/2% Preferred
Stock and 3,350 shares of 4% Preferred Stock.

Q: What percentage of Class A Stock do the directors and officers own?

The following table sets forth information as of the Record Date as to each
class of equity securities of Ampal or any of its subsidiaries beneficially
owned by each director and named executive officer of Ampal listed in the
Summary Compensation Table and by all directors and named executive officers of
Ampal as a group. All ownerships are direct unless otherwise noted. The table
does not include directors or named executive officers who do not own any such
shares:

<TABLE>
<CAPTION>
Percent of
Amount and Nature of Outstanding
Beneficial Ownership Shares of
Name of Class A Stock Class A Stock
- ---- -------------------- -------------
<S> <C> <C>
Michael Arnon 7,500(1) *
Irwin Hochberg 3,000(2) *
Lawrence Lefkowitz 48,375(3) *
Miri Lent Sharir 16,630(4) *
Alan L. Schaffer 13,000(5) *
Evelyn Sommer 5,000(1) *
Daniel Steinmetz 10,137,352(6) 42.5%
Raz Steinmetz 10,137,352(6) 42.5%
All Directors and Executive Officers as a Group 10,230,857(7) 42.8%

</TABLE>

- ----------

* Represents less than 1% of the class of securities.

(1) Consists of options to purchase shares of Class A Stock which are currently
exercisable.

(2) Includes 1,000 shares of Class A Stock held of record by Mr. Hochberg's
wife.

(3) Includes 23,100 shares of Class A Stock held by a trust under an estate as
to which Mr. Lefkowitz is co-personal representative and options to
purchase 16,000 shares of Class A Stock which are currently exercisable.
Mr. Lefkowitz resigned as President and Director of Ampal effective March
26, 1998 and will continue to be an employee of Ampal until the expiration
of his employment agreement in September 1998. His options will expire in
December 1998.

(4) Includes options to purchase 11,500 shares of Class A Stock which are
currently exercisable.

(5) Consists of options to purchase 13,000 shares of Class A Stock which will
expire in July 1998 because of Mr. Schaffer's resignation from Ampal.

(6) Attributable to 10,137,352 shares of Class A Stock held directly by Rebar.

(7) Includes options to purchase 53,000 shares of Class A Stock which are
currently exercisable.

<PAGE>

THE FOLLOWING QUESTIONS AND ANSWERS RELATE TO THE 1998 LONG-TERM INCENTIVE PLAN.

Q: Has the Board approved the Plan?

Yes, the Board approved the Plan on March 26, 1998.

Q: What are the essential features of the Plan?

The essential features of the Plan are summarized below:

General

The Plan became effective when the Board approved the Plan and will
continue in effect until March 26, 2008. All awards pursuant to the Plan prior
to the Annual Meeting, of which there were none, would have been subject to
shareholders approval of the Plan. All employees, officers, directors and
consultants of Ampal and its subsidiaries are eligible for selection to receive
awards under the Plan.

The Plan will be administered by the Stock Option Committee, which will
have the authority to select those employees, officers, directors and
consultants whose performances it determines significantly promote the
success of the Company to receive discretionary awards under the Plan, grant
the awards, interpret and determine all questions of policy with respect
thereto, adopt rules, regulations, agreements and instruments deemed
necessary for its proper administration and take any and all other actions
deemed necessary or desirable for the proper administration of the Plan and
the effectuation of its purposes. The Plan may be terminated at any time and
may be modified or amended in such manner as the Board deems advisable,
provided, however, that the Board may not make any material amendments
without the approval of the holders of a majority of the outstanding shares
of Class A Stock. Any termination, modification or amendment may not
materially alter or adversely affect any outstanding award under the Plan
without the written consent of the award recipient.

Awards

Non-Qualified and Incentive Stock Options. Options may be granted under the
Plan. Awards may be ISOs or Non-ISOs. The exercise price of options will be set
by the Stock Option Committee and stated in the option agreement and, in the
case of ISOs, may not be less than 100% of fair market value of the underlying
shares on the date of grant. The exercise price may be paid in cash or by
delivery of the Company's Class A Stock or pursuant to a broker-assisted
"cashless exercise" program if established by the Company. Such a program would
enable an optionee to finance through an independent broker the exercise of his
or her option and then either sell the shares of Class A Stock underlying the
option or hold them in an account with the broker who financed the exercise of
such option. Options may also contain a stock appreciation right permitting the
recipient to receive the difference between exercise price per share and the
market value on the date of surrender.

Restricted Stock. Awards of Class A Stock granted under the Plan may be
subject to forfeiture until such restrictions, terms and conditions as the Stock
Option Committee may determine lapse or are fulfilled, as the case may be.
Grants may consist of newly issued Class A Stock, Class A Stock held in treasury
or a combination thereof. The Stock Option Committee will determine how the
price for the Class A Stock, if any, may be paid. Generally a participant
obtaining a restricted stock award will have all the rights of a stockholder,
including the right to receive dividends. Restricted Class A Stock will be
issued in the name of the participant and held in escrow until any applicable
restrictions lapse or terms and conditions are fulfilled, as the case may be.
Until the restrictions are eliminated, restricted Class A Stock may not be
transferred.

Dividend Equivalent Award. The Stock Option Committee may grant an award
that represents the right to receive a dividend or its equivalent with respect
to any new or previously existing award, which will entitle the recipient to
receive at the time of settlement an amount equal to the actual dividends paid
on the Class A Stock delivered to the recipient, calculated from the date of
award and accounted for as if reinvested in Class A Stock on

15
<PAGE>

the dividend payment dates. This type of award may be paid in the form of Class
A Stock, cash or a combination of both.

Stock Appreciation Rights. The Stock Option Committees may award stock
appreciation rights ("SARs"), which may or may not be granted together with
options, under the Plan. Generally SARs permit the holder thereof to receive an
amount (in cash, Class A Stock or a combination thereof) equal to the number
shares of Class A Stock with respect to which SARs are exercised multiplied by
the excess of the fair market value of the Class A Stock on the exercise date
over the exercise price. In general, the exercise of any portion of the SARs or
any related option will cause a corresponding reduction in the number of shares
of Class A Stock remaining subject to SARs and related option.

Other Stock Based Awards. The Stock Option Committee may grant Class A
Stock or other Class A Stock based awards that are related to or similar to the
awards described above.

Class A Stock Available for Awards. The maximum number of Class A Stock
available for awards under the Plan is 400,000.

Federal Income Tax Consequences

The following summary generally describes the principal United States
federal (and not state and local) income tax consequences of awards granted
under the Plan. It is general in nature and is not intended to cover all tax
consequences that may apply to a particular participant or to the Company. The
provisions of the Code and the regulations thereunder relating to these matters
are complicated and their impact in any one case may depend upon the particular
circumstances. This discussion is based on the Code as currently in effect.

The Plan is not subject to any of the requirements of the Employee
Retirement Income Security Act, nor is it qualified under Section 401(a) of the
Code.

Stock Options. If an option that is not an ISO is granted in accordance
with the terms of the Plan, no income will be recognized by the recipient at the
time the option is granted. On exercise of such stock option, the amount by
which the fair market value of the Class A Stock on the date of the exercise
exceeds the purchase price of such shares will generally be taxable to the
recipient as ordinary income, and will be deductible for tax purposes by the
Company (or one of its subsidiaries) in the year in which the recipient
recognizes the ordinary income. The disposition of shares acquired upon exercise
of any stock option will ordinarily result in long-term or short-term capital
gain or loss (depending on the applicable holding period) in an amount equal to
the difference between the amount realized on such disposition and the sum of
the purchase price and the amount of ordinary income recognized in connection
with the exercise of the stock option.

Incentive Stock Options. If an ISO is granted in accordance with the terms
of the Plan, no income will be recognized by the recipient at the time the ISO
is granted. On exercise of an ISO, the recipient will generally not recognize
any income and the Company (or one of its subsidiaries) will generally not be
entitled to a deduction for tax purposes. However, the difference between the
purchase price and the fair market value of the shares received on the date of
exercise will be treated as a positive adjustment in determining alternative
minimum taxable income, which may subject the recipient to the alternative
minimum tax. The disposition of shares acquired upon exercise of an ISO will
ordinarily result in long-term capital gain or loss. However, if the recipient
disposes of the shares acquired upon exercise of an ISO within two years after
the date of grant or within one year after the date of exercise (a
"disqualifying disposition"), the recipient will generally recognize ordinary
income, and the Company (or one of its subsidiaries) will generally be entitled
to a deduction for tax purposes, in the amount of the excess of the fair market
value of the Class A Stock on the date the ISO is so exercised over the purchase
price (or the gain on sale, if less). Any excess of the amount realized by the
recipient on the disqualifying disposition over the fair market value of the
shares on the date of exercise of the ISO will ordinarily constitute long-term
or short-term capital gain (depending on the applicable holding period).

16
<PAGE>

Stock Appreciation Rights. If an SAR is granted in accordance with the
terms of the Plan, no income will be recognized by the recipient at the time the
SAR is granted. The amount of any cash (or the fair market value of any Common
Stock) received upon the exercise of SARs under the Plan will be includible in
the holder's ordinary income and the Company (or one of its subsidiaries) will
be entitled to a deduction for such amount.

Restricted Shares. If restricted shares are awarded in accordance with the
terms of the Plan, no income will be recognized by the recipient at the time the
award is made. Generally, a participant who is awarded restricted shares will be
required to include in his ordinary income, as compensation, the fair market
value of such restricted shares upon the lapse of the forfeiture provisions
applicable thereto, plus the amount of any dividend equivalents on such
restricted shares, less any amount paid therefor. The recipient may elect,
however, to include in his ordinary income, as compensation, at the time the
restricted shares are first issued the fair market value of such restricted
shares at the time of receipt, less any amount paid therefor. Absent the making
of the election referred to in the preceding sentence, any cash dividends or
other distributions paid with respect to restricted shares prior to lapse of the
applicable restriction will be includible in the recipient's ordinary income as
compensation at the time of receipt. In each case, the Company (or one of its
subsidiaries) will be entitled to a deduction in the same amount as the
recipient realizes compensation income.

Q: How does the Board recommend I vote?

The Board recommends a vote FOR approval of the Plan and it is intended
that proxies not marked to the contrary will be so voted.

Q: Can I see a copy of the Plan?

A copy of the Plan is attached as an exhibit to this Proxy Statement.

THE FOLLOWING QUESTIONS AND ANSWERS RELATE TO THE GRANT OF OPTIONS AND
PURCHASE RIGHTS TO DR. GLEITMAN.

Q. What grant of options and purchase rights to Dr. Gleitman am I being asked
to approve?

At the Annual Meeting (the "Effective Date"), Ampal's shareholders will be
asked to approve the grant of options and purchase rights to Dr. Yehoshua
Gleitman, Ampal's Chief Executive Officer. These options were not granted
pursuant to the Plan. The terms of the options to be approved by the
shareholders is as follows:

No. Of Options Exercise Price Term
- -------------- -------------- ----
<S> <C> <C>
200,000 $6.75 4.25 years
300,000 $8 7 years
500,000 $10 10 years

</TABLE>

Five-sixteenths of all such options will vest immediately and the remaining
options will vest at a rate of one-sixteenth of the total number of options
every three months until March 2001. The 200,000 shares with an exercise
price of $6.75 will expire four years and three months after the Effective
Date; the 300,000 shares with an exercise price of $8 will expire on the
seventh anniversary of the Effective Date; and the 500,000 shares with an
exercise price of $10 will expire on the tenth anniversary of the Effective
Date. All options that have not vested prior to the termination of Dr.
Gleitman's employment with Ampal or its subsidiary will immediately terminate
and not be exercisable. Dr. Gleitman will then have the greater of (i) two
times the length of any applicable termination notice period and (ii) 30 days
to exercise vested options. Dr. Gleitman was granted the right to exercise
his options through a cashless exercise of options.

Subject to shareholders' approval, Dr. Gleitman will also be granted the
right to purchase up to 200,000 shares of Class A Stock at a price equal to 80%
of the average closing sales prices of the Class A Stock during the

17
<PAGE>

30 days prior to the exercise of the particular purchase right. The purchase
rights will vest and terminate in blocks of 50,000. The first block will vest
and become exercisable on the Effective Date and terminate on the day prior to
the sixth month anniversary of the Effective Date. The second block will vest
and become exercisable on September 1, 1998 and terminate on February 28, 1999.
The third block will vest and becomes exercisable on March 1, 1999 and terminate
on August 30, 1999. The fourth block will vest and become exercisable on
September 1, 1999 and terminate on February 28, 2000. The above purchase rights
may only vest and be exercised while Dr. Gleitman is an employee of Ampal or a
subsidiary. Any purchase rights not exercised during the periods referred to
above shall terminate and shall no longer be exercisable. Dr. Gleitman may
exercise his purchase rights by delivering a promissory note due and payable in
thirty months, in a principal amount equal to up to 75% of the purchase price,
together with payment in full of the purchase price not covered by such note.
The interest rate on such notes shall equal the effective rate of interest
incurred by Ampal from time to time for unsecured recourse borrowings. All
shares of Class A Stock purchased on exercise of the purchase right or on
exercise of the options or otherwise acquired by Dr. Gleitman will be pledged as
collateral security for such notes. No shares of Class A Stock acquired by Dr.
Gleitman on its exercise of any purchase rights may be sold for a period of two
years from the date of acquisition.

Ampal will retain a right of first refusal for ten years in connection with
the resale of any shares of Class A Stock that Dr. Gleitman acquired through the
exercise of options or any purchase rights, other than in respect of (i) certain
transfers to family members and certain affiliates and (ii) bona fide open
market sales.

Q: How does the Board recommend I vote?

The Board recommends a vote FOR approval of the grant of options and
purchase right of Dr. Gleitman and it is intended that proxies not marked to the
contrary will be so voted.

Q: Can I see a copy of Dr. Gleitman's Option Agreement?

A form of Dr. Gleitman's Option Agreement is attached as an exhibit to the
Company's Annual Report on Form 10-K for 1997 and is available upon request to
the Secretary of the Company at the address shown on the accompanying Notice of
Annual Meeting of Shareholders.

MISCELLANEOUS INFORMATION

Q: Have the Company's officers, directors and shareholders filed all
appropriate reports with the SEC?

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Ampal's officers and directors, and persons who own more than 10% of a
registered class of Ampal's equity securities, to file reports of ownership and
changes in ownership with the SEC and the American Stock Exchange. These persons
are required by regulation of the SEC to furnish Ampal with copies of all
Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, Ampal believes that, during 1997, Ampal's officers,
directors and greater than 10% beneficial owners complied with all applicable
Section 16(a) filing requirements.

18
<PAGE>

Q: Does the Company enter into transactions with affiliated parties?

The Board maintains a Related Party Transactions Committee comprised of
independent directors which reviews and passes upon the fairness of any business
dealings and arrangements (other than borrowings on then prevailing market terms
or deposits made in the ordinary course of business) between Ampal and any
affiliated party. With certain exceptions, Ampal may not enter into transactions
with any officer, director or principal shareholder of Ampal, without first
obtaining the approval of the Related Party Transactions Committee or a majority
of the disinterested members of the Board or the shareholders.

The management of Ampal believes that all of the following transactions
were done on terms which were no less advantageous to Ampal than could have been
obtained from unaffiliated third parties.

Ampal borrows and receives deposits from Hapoalim and its subsidiaries.
During 1997, the largest amount of such indebtedness outstanding at any one time
was $32,375,000 and interest expense thereon was $2,540,000. Additionally, Ampal
makes loans to and maintains deposits with Hapoalim and its subsidiaries. The
largest amount of such loans and deposits at any one time during 1997 was
$62,958,000 and interest income thereon was $4,543,000. As of December 31, 1997,
the amount of borrowings and deposits from Hapoalim and its subsidiaries was
$18,207,000 and the amount of loans to and deposits with Hapoalim and its
subsidiaries was $62,958,000. Ampal is the beneficiary of a $2 million committed
line of credit from Hapoalim which expires in October 1998. Borrowings under
this line of credit bear interest at a variable rate of interest equal to LIBOR
plus 0.5%. Such loans and borrowings are made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unaffiliated third persons and, in the opinion of
the management of Ampal, do not involve more than normal risk of collectibility
or present other unfavorable features.

In connection with the purchase of a one-third interest in the assets of
the shared networks operation of Motorola Israel in January 1998 by a
wholly-owned subsidiary of the Company, Ampal Communications, Inc.
("Communications"), the Company borrowed $75 million, including $35 million from
Hapoalim. This Hapoalim loan had a term of 90 days, with an interest rate of
LIBOR plus 0.5%, and was repaid in full on May 4, 1998. This loan was made on
substantially the same terms as a second loan to the Company made by Bank Leumi
USA in the amount of $40 million.

In March 1998, Communications transferred its interest in the assets to
a limited partnership (the "Partnership"). A wholly-owned Israeli subsidiary
of Communications is the general partner of the Partnership and owns 75.1% of
the Partnership. In May 1998, the Partnership borrowed $36.4 million from
Hapoalim and $36.4 million from Bank Leumi Le'Israel B.M. ("Leumi"). The
proceeds of such loans were used to repay the Company's short-term loans
desribed above. This Hapoalim loan is due March 31, 2008 and bears interest
at a rate of LIBOR plus 0.8%. The principal payments are due as follows: 10%
on March 31, 2004, 15% on March 31, 2005 and 25% on each of March 31, 2006,
2007 and 2008. Interest shall be paid annually on March 31 of each year from
March 31, 2001 until and including March 31, 2008. The loan from Leumi was
made on substantially the same terms as the one from Hapoalim. Both loans are
without recourse to the Partnership, but are secured by the Partnership's
interest in the shared networks operations.

In March 1998, the Partnership sold portions of its interest in the shared
networks operations of Motorola Israel to, among others, (i) an entity owned by
Daniel Steinmetz and Raz Steinmetz (directors of Ampal and the controlling
persons of Ampal's principal shareholder), (ii) Hapoalim, and (iii) an entity
owned by Dr. Yehoshua Gleitman, Ampal's Chief Executive Officer. The related
parties purchased their limited interests on the same terms as an unrelated
third party (The Israel Mezzanine Fund L.P., a limited partnership whose general
partner is First Israel Mezzanine Investors Ltd.) which were determined through
arm's length negotiations between the Company and the unrelated third party. A
portion of Dr. Gleitman's entity's purchase price was obtained through two loans
aggregating $250,000 from the Company. One loan, in the amount of $150,000, has
a term of 10 years, an interest rate of LIBOR plus 0.8% and is without recourse
to Dr. Gleitman. The second loan, in the amount of $100,000, has a term of 10
years, an interest rate of LIBOR plus 0.5% and is with recourse to Dr. Gleitman.
Both loans are secured by Dr. Gleitman's interest in the Partnership.

19
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Ampal subleases 4,960 rentable square feet of office space leased by
Hapoalim at 1177 Avenue of the Americas, New York City under a sublease which
expires on August 30, 2009. The base rent which commenced in September 1994, is
$169,000, subject to escalation. In 1997, Ampal's total payments to Hapoalim in
connection with this lease totaled $155,000. (Pursuant to the sublease
agreement, Ampal was entitled to one month's free rent in 1997.)

The Company leases office space in various locations in Israel to Hapoalim
and its subsidiaries, pursuant to leases which will generally expire in the
years between 2000 and 2003, in exchange for total rental payments in 1997 of
approximately $2,953,000. Generally, the annual payments are based upon 10% of
the value of the property linked to the Israeli CPI.

At the request of, and pursuant to the terms of an employment agreement
with, Ampal, Mr. Lefkowitz has been counsel to Hapoalim and has rendered legal
services to its United States branches since August 1990. In 1997, Hapoalim
reimbursed Ampal $120,000 for the services of Mr. Lefkowitz under the
arrangement.

Pursuant to a Letter Agreement, dated as of March 1, 1997, among Ampal,
Ampal Realty Corporation and Emmes Asset Management Corp. ("Emmes"), Emmes
provides general asset management and property advisory services with respect to
the building located at 800 Second Avenue. As compensation for such services,
Ampal Realty pays Emmes a base fee equal to $60,000 per annum (of which $50,000
was paid in 1997). Emmes is also entitled to a sales incentive fee for assisting
in sales of condominium units equal to $1.50 per rentable square foot sold and
an incentive leasing fee equal to $.50 per annum per rentable square foot up to
a maximum of $5.00 per rentable square foot. Ampal Realty entered into one lease
in 1997 for 19,000 square feet. As a result, Emmes is entitled to an additional
$9,500 per year of which $4,750 was earned in 1997 (since the lease was signed
in the middle of the year). In addition, Ampal agreed to issue to Mr. Andrew
Davidoff, as custodian, 100 shares of Class A Stock for each of his three
children each year for the duration of the effectiveness of the Letter
Agreement. On January 20, 1998, Ampal issued 300 shares to Mr. Davidoff, as
custodian. Mr. Davidoff is a Vice President of Emmes. Emmes is a wholly-owned
subsidiary of Emmes & Company LLC. Mr. Michael Sonnenfeldt, a director of Ampal,
was a managing director of Emmes & Company LLC until April 1998.

Q: Does the Company have directors and officers liability insurance?

Effective January 29, 1998, the Company purchased a Directors and Officers
Liability policy in the amount of $20,000,000 issued by Reliance Insurance
Company and by Great American Insurance Company. The cost of the policy, which
expires January 29, 2000, was $307,000. This policy provides coverage to all of
the officers and directors of the Company and of those subsidiaries of which the
Company owns more than 50% of the outstanding voting stock.

Q: When are shareholder proposals for the 1999 meeting due?

Any holder of Class A Stock who wishes to submit a proposal to be presented
at the next annual meeting of shareholders must forward such proposal to the
Secretary of the Company at the address in the Notice of Annual Meeting so that
it is received by the Company no later than January 10, 1999 and comply with
such rules as may be prescribed from time to time by the SEC regarding proposals
of security holders.

By Order of the Board of Directors,

ISAIAH HALIVNI
Vice President-Legal and Secretary

May 20, 1998

20
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EXHIBIT A

AMPAL-AMERICAN ISRAEL CORPORATION

1998 LONG-TERM INCENTIVE PLAN

I. Purpose

The purpose of the Ampal-American Israel Corporation 1998 Long-Term
Incentive Plan (the "Plan") is to attract and retain and provide incentives to
employees, officers, directors and consultants of the Corporation, and to
thereby increase overall shareholder value. The Plan generally provides for the
granting of stock, stock options, stock appreciation rights, restricted shares
or any combination of the foregoing to the eligible participants.

II. Definitions

(a) "Award" includes, without limitation, stock options (including
incentive stock options within the meaning of Section 422(b) of the Code) with
or without stock appreciation rights, dividend equivalent rights, stock awards,
restricted share awards, or other awards that are valued in whole or in part by
reference to, or are otherwise based on, the Common Stock ("other Common
Stock-based Awards"), all on a stand alone, combination or tandem basis, as
described in or granted under this Plan.

(b) "Award Agreement" means a written agreement setting forth the terms and
conditions of each Award made under this Plan.

(d) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

(e) "Committee" means the Stock Option Committee of the Board or such other
committee of the Board as may be designated by the Board from time to time to
administer this Plan, the members of which shall consist solely of at least two
members of the Board.

(f) "Common Stock" means the Class A common stock, $1.00 par value, of the
Corporation.

(g) "Corporation" means Ampal-American Israel Corporation, a New York
corporation.

(h) "Employee" means an employee of the Corporation or a Subsidiary.

(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(j) "Fair Market Value" means such fair market value as determined by the
Board and, if shares of Common Stock are listed on a national securities
exchange or traded on the over-the-counter market, the fair market value shall
be the mean of the highest and lowest trading prices or of the high bid and low
asked prices of shares of Common Stock on such exchange, or on the
over-the-counter market as reported by the NASDAQ system or the National
Quotation Bureau, Inc., as the case may be, on the relevant date or, if there is
no trading or bid or asked price on that day, the mean of the highest and lowest
trading or high bid and low asked prices on the most recent day preceding the
relevant day for which such prices are available.

(k) "Participant" means an Employee, officer, director or consultant who
has been granted an Award under the Plan.

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(l) "Plan Year" means a twelve-month period beginning with January 1 of
each year.

(m) "Subsidiary" means any corporation or other entity, whether domestic or
foreign, in which the Corporation has or obtains, directly or indirectly, a
proprietary interest of more than 50% by reason of stock ownership or otherwise.

III. Eligibility

Any Employee, officer, director or consultant of the Corporation or
Subsidiary selected by the Committee is eligible to receive an Award.

IV. Plan Administration

(a) Except as otherwise determined by the Board, the Plan shall be
administered by the Committee. The Board, or the Committee to the extent
determined by the Board, shall periodically make determinations with respect to
the participation of Employees, officers, directors and consultants in the Plan
and, except as otherwise required by law or this Plan, the grant terms of
Awards, including vesting schedules, price, restriction or option period,
dividend rights, post-retirement and termination rights, payment alternatives
such as cash, stock, contingent awards or other means of payment consistent with
the purposes of this Plan, and such other terms and conditions as the Board or
the Committee deems appropriate which shall be contained in an Award Agreement
with respect to a Participant.

(b) The Committee shall have authority to interpret and construe the
provisions of the Plan and any Award Agreement and make determinations pursuant
to any Plan provision or Award Agreement which shall be final and binding on all
persons. No member of the Committee shall be liable for any action or
determination made in good faith, and the members shall be entitled to
indemnification and reimbursement in the manner provided in the Corporation's
Certificate of Incorporation, as it may be amended from time to time.

(c) The Committee shall have the authority at any time to provide for the
conditions and circumstances under which Awards shall be forfeited. The
Committee shall have the authority to accelerate the vesting of any Award and
the times at which any Award becomes exercisable.

V. Capital Stock Subject to the Provisions of this Plan

(a) The Common Stock subject to the provisions of this Plan shall be shares
of authorized but unissued Common Stock and shares of Common Stock held as
treasury stock. Subject to adjustment pursuant to Section X hereof, the total
number of shares of Common Stock available and reserved for the grant of Awards
under the Plan (including as to Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related to,
shares of Common Stock, such number of shares) shall be 400,000 shares.

(b) Subject to Section V(a), there shall be available for Awards under the
Plan: (i) shares of Common Stock represented by options to the extent such
options are cancelled, forfeited, surrendered, terminated or expire unexercised;
(ii) the excess number of shares subject to variable Awards that become fixed at
less than the maximum number of shares subject to such Awards and (iii) shares
of restricted stock that have been forfeited.

VI. Awards Under This Plan

As the Committee may determine, the following types of Awards and other
Common Stock-based Awards may be granted under this Plan on a stand alone,
combination or tandem basis:

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(a) Stock Option. A right to buy a specified number of shares of Common
Stock at a fixed exercise price during a specified time, all as the Committee
may determine.

(b) Incentive Stock Option. An Award in the form of a stock option which
shall comply with the requirements of Section 422 of the Code or any successor
section as it may be amended from time to time. Incentive stock options shall be
granted only to Employees. The exercise price of any incentive stock option
shall not be less than 100% of the Fair Market Value of the Common Stock on the
date of grant of the incentive stock option Award. To the extent that Section
422 of the Code requires certain provisions to be set forth in a written plan,
said provisions are incorporated herein by this reference. Up to the maximum
number of shares of Common Stock available for the grant of Awards shall be
available for the grant of incentive stock options.

(c) Stock Option in Lieu of Compensation Election. A right given with
respect to a year or years to a director, officer or key Employee to elect to
exchange annual retainers, fees or compensation for stock options.

(d) Stock Appreciation Right. A right, which may or may not be contained in
the grant of a stock option or incentive stock option, to receive in cash (or
its equivalent value in Common Stock) the excess of the Fair Market Value of a
share of Common Stock on the date the right is surrendered over the option
exercise price or other price specified in the Award Agreement.

(e) Restricted Shares. The issuance of Common Stock to a Participant
subject to forfeiture until such restrictions, terms and conditions as the
Committee may determine are fulfilled.

(f) Dividend or Equivalent. A right to receive dividends or their
equivalent in value in Common Stock, cash or in a combination of both with
respect to any new or previously existing Award.

(g) Stock Award. The issuance of Common Stock, which may be on a contingent
basis, to a Participant.

(h) Other Stock-Based Awards. Other Common Stock-based Awards which are
related to or serve a similar function to those Awards set forth in this
Section VI.

VII. Award Agreements

Each Award under the Plan shall be evidenced by an Award Agreement setting
forth the terms and conditions of the Award and executed by the Corporation and
Participant.

VIII. Other Terms and Conditions

(a) Assignability. Unless provided to the contrary in any Award, no Award
shall be assignable or transferable except by will or by the laws of descent and
distribution and during the lifetime of a Participant, the Award shall be
exercisable only by such Participant. Notwithstanding the foregoing, the
Committee, in its discretion, may at any time permit, subject to such terms and
conditions as the Committee may impose, the transfer by gift of an Award by any
Participant solely to one or more members of the Participant's immediate family
or to a trust (including a revocable trust) for the benefit thereof.

(b) Termination of Employment or Other Relationship. The Committee shall
determine the disposition of the grant of each Award in the event of the
retirement, disability, death or other termination of a Participant's employment
or other relationship with the Corporation or a Subsidiary.

A-3

<PAGE>

(c) Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to shares covered by an Award until the date the
Participant is the holder of record. No adjustment will be made for dividends or
other rights for which the record date is prior to such date.

(d) No Obligation to Exercise. The grant of an Award shall impose no
obligation upon the Participant to exercise the Award.

(e) Payments by Participants. The Committee may determine that Awards for
which a payment is due from a Participant may be payable: (i) in U.S. dollars by
personal check, bank draft or money order payable to the order of the
Corporation, by money transfers or direct account debits; (ii) through the
delivery or deemed delivery based on attestation to the ownership of shares of
Common Stock with a Fair Market Value equal to the total payment due from the
Participant; (iii) pursuant to a broker-assisted "cashless exercise" program if
established by the Corporation; (iv) by a combination of the methods described
in (i) through (iii) above; or (v) by such other methods as the Committee may
deem appropriate.

(f) Withholding. Except as otherwise provided by the Committee, (i) the
deduction of withholding and any other taxes required by law will be made from
all amounts paid in cash and (ii) in the case of payments of Awards in shares of
Common Stock, the Participant shall be required to pay the amount of any taxes
required to be withheld prior to receipt of such stock, or alternatively, a
number of shares the Fair Market Value of which equals the amount required to be
withheld may be deducted from the payment.

(g) Restrictions on Sale and Exercise. With respect to officers and
directors for purposes of Section 16 of the Exchange Act, and if required to
comply with rules promulgated thereunder, (i) no Award providing for exercise, a
vesting period, a restriction period or the attainment of performance standards
shall permit unrestricted ownership of Common Stock by the Participant for at
least six months from the date of grant, and (ii) Common Stock acquired pursuant
to this Plan (other than Common Stock acquired as a result of the granting of a
"derivative security") may not be sold for at least six months after
acquisition.

(h) Maximum Awards. The maximum number of shares of Common Stock that may
be issued to any single Participant pursuant to options under this Plan or in
any single Plan Year is 300,000.

IX. Termination, Modification and Amendments

(a) The Plan may from time to time be terminated, modified or amended by
the affirmative vote of the holders of a majority of the outstanding shares of
the capital stock of the Corporation present or represented and entitled to vote
at a duly held stockholders meeting.

(b) The Board may at any time terminate the Plan or from time to time make
such modifications or amendments of the Plan as it may deem advisable; provided,
however, that the Board shall not make any material amendments to the Plan
without the approval of at least the affirmative vote of the holders of a
majority of the outstanding shares of the capital stock of the Corporation
present or represented and entitled to vote at a duly held stockholders meeting.

(c) No termination, modification or amendment of the Plan may adversely
affect the rights conferred by an Award without the consent of the recipient
thereof.

X. Recapitalization

The aggregate number of shares of Common Stock as to which Awards may be
granted to Participants, the number of shares thereof covered by each
outstanding Award, and the price per share thereof in each such Award, shall all
be proportionately adjusted for any increase or decrease in the number of issued
shares of

A-4

<PAGE>

Common Stock resulting from a subdivision or consolidation of shares or other
capital adjustment, or the payment of a stock dividend or other increase or
decrease in such shares, effected without receipt of consideration by the
Corporation, or other change in corporate or capital structure; provided,
however, that any fractional shares resulting from any such adjustment shall be
eliminated. The Committee may also make the foregoing changes and any other
changes, including changes in the classes of securities available, to the extent
it is deemed necessary or desirable to preserve the intended benefits of the
Plan for the Corporation and the Participants in the event of any other
reorganization, recapitalization, merger, consolidation, spin-off, extraordinary
dividend or other distribution or similar transaction.

XI. No Right to Employment

No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to be
retained in the employ of, or in the other relationship with, the Corporation or
a Subsidiary. Further, the Corporation and each Subsidiary expressly reserve the
right at any time to dismiss a Participant free from any liability, or any claim
under the Plan, except as provided herein or in any Award Agreement issued
hereunder.

XII. Governing Law

To the extent that federal laws do not otherwise control, the Plan shall be
construed in accordance with and governed by the laws of the State of New York.

XIII. Savings Clause

This Plan is intended to comply in all aspects with applicable laws and
regulations, including, with respect to those Employees who are officers or
directors for purposes of Section 16 of the Exchange Act, Rule 16b-3 under the
Exchange Act. In case any one more of the provisions of this Plan shall be held
invalid, illegal or unenforceable in any respect under applicable law and
regulation (including Rule 16b-3), the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby
and the invalid, illegal or unenforceable provision shall be deemed null and
void; however, to the extent permissible by law, any provision which could be
deemed null and void shall first be construed, interpreted or revised
retroactively to permit this Plan to be construed in compliance with all
applicable laws (including Rule 16b-3) so as to foster the intent of this Plan.

XIV. Effective Date and Term

The Plan shall become effective upon adoption by the Board of Directors.
The Plan shall be submitted for the approval of the shareholders of Ampal at a
meeting constituting a quorum within one year following the adoption of the Plan
by the Board of Directors, and all Awards granted prior to such approval shall
be subject thereto. The Plan shall be approved by the affirmative vote of the
holders of a majority of the shares of the capital stock of Ampal entitled to
vote at such meeting. In the event such adoption or approvals are withheld, the
Plan and all Awards which may have been granted thereunder shall become null and
void. The Plan shall terminate on the tenth anniversary of its effective date.
No Awards shall be granted after the termination of the Plan.

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<PAGE>

PROXY

AMPAL-AMERICAN ISRAEL CORPORATION

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED
FOR THE NOMINEES AND PROPOSALS LISTED IN THE ACCOMPANYING PROXY STATEMENT, IF
NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED.

The undersigned hereby constitutes and appoints RAZ STEINMETZ, YEHOSHUA
GLEITMAN and ISAIAH HALIVNI, and each of them, as proxies with full power of
substitution in each, to represent the undersigned and vote all shares of
Class A Stock of the undersigned at the Annual Meeting of Shareholders of
Ampal-American Israel Corporation to be held at the offices of Bank Hapoalim
B.M., 1177 Avenue of the Americas, 14th Floor, New York, New York, on
Tuesday, June 9, 1998, at 9:00 A.M., and at any adjournments thereof as
follows:

(Continued, and to be signed and dated on reverse side)

<PAGE>

Please mark
your vote as / X /
indicated in
this sample

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1. THE BOARD OF DIRECTORS RECOMMENDS
VOTES FOR PROPOSALS 2 AND 3.
1. ELECTION OF DIRECTORS

<S> <C> <C> <C>
FOR all nominees WITHHOLD Nominees: M. Arnon, B. Benbassat, Y. Elinav, H. 2. Approval of the Ampal-American
listed to the right AUTHORITY Peled, S. Ravid, M. Sonnenfeldt, D. Steinmetz, Israel Corporation 1996
(except as marked to vote for all nominees and R. Steinmetz Long-Term Incentive Plan.
to the contrary) listed to the right
/ / / / (INSTRUCTION: To withhold authority to vote FOR AGAINST ABSTAIN
for any individual nominee(s), print the name / / / / / /
of such nominee(s) below.)
---------------------------------------------

3. Approval of the grant of options and 4. In their discretion, upon each other matter as may properly
purchase rights to Dr. Yehoshua Gleitman. come before the meeting.
FOR AGAINST ABSTAIN
/ / / / / /

Dated: , 1998
-----------------------------

-----------------------------------
Signature

Please sign exactly as name appears. If
acting as attorney, executor, trustee or
in other representative capacity, sign
name and title.

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FOLD AND DETACH HERE

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