Exhibit 2
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT, dated as of December 11, 1996,
between Ampal-American Israel Corporation, a corporation orga-
nized under the laws of the State of New York ("Ampal"), and Bank
Hapoalim B.M., a company incorporated under the laws of the State
of Israel (the "Bank").
WITNESSETH
WHEREAS, Ampal has a Class of Common Stock, $1 par
value (the "Common Stock"), and a Class A Stock, $1 par value
(the "Class A Stock");
WHEREAS, the Bank is the owner of 3,000,000 shares of
Common Stock (the "Bank's Common Stock");
WHEREAS, other than the Bank's Common Stock, there are
no authorized and outstanding shares of Common Stock;
WHEREAS, the Bank, in an effort to comply with the
requirements of the Israeli banking laws, has to decrease to 25%
or less its holdings in and means of control over Ampal by
December 31, 1996;
WHEREAS, the Bank has proposed to Ampal that (i) the
rights of the Bank's Common Stock be equalized with those of the
Class A Stock (the "Equalization"), and (ii) the Bank should be
compensated for the reduction in its voting rights, which would
result from the Equalization;
WHEREAS, Ampal's Board of Directors has formed a
Special Committee consisting of five outside directors (the
"Special Committee"), to consider the Equalization, and to
negotiate, approve or disapprove any such transaction on Ampal's
behalf;
WHEREAS, on May 12, 1996, the Bank and its wholly-owned
subsidiary Atad Hevra Lehashkaot Limited ("Atad", and together
with the Bank, the "Seller") entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with Rebar Financial
Corp. ("Rebar"), Xxxxxx Xxxxxxxxx, Xxxxxxxx Xxxxxxxxx and Raz
Xxxxxxxxx (collectively with Rebar, the "Buyer");
WHEREAS, pursuant to the Stock Purchase Agreement the
Seller may sell to Rebar 1,500,001 shares of the Bank's Common
Stock in consideration for an increased purchase price, or may,
so long as the Seller has not delivered to Rebar 1,500,001 shares
of the Bank's Common Stock, elect to initiate the Procedure of
Equalization of Rights (as this term is defined in the Stock
Purchase Agreement) that may be carried out, among other alterna-
tives, by way of exchanging all of the Bank's Common Stock for
3,000,000 shares of Class A Stock (the "New Shares") on a one-
for-one basis (the "Exchange"), provided, that simultaneously
with the Exchange, Ampal will undertake to both the Seller and
Rebar, finally and irrevocably, that it shall make no use whatso-
ever of all or some of the Common Stock (including sale, trans-
fer, issuance or any other action);
WHEREAS, each of the Special Committee and Ampal's
Board of Directors ("Ampal's Board") have approved, and deems it
advisable and in the best interests of Ampal's shareholders to
consummate the Exchange by the terms and subject to the condi-
tions set forth herein;
NOW, THEREFORE, in consideration of the forgoing and
the respective representations, warranties, covenants and agree-
ments set forth herein, the parties hereto agree as follows:
ARTICLE I
THE EXCHANGE
1.1 The Exchange. Upon the terms and subject to the
conditions set forth herein, the Bank and Ampal shall exchange
all of the Bank's Common Stock for the New Shares as provided in
Section 1.2 herein.
1.2 Date and Place of The Exchange. The Exchange
shall take place at the offices of Ampal at 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, XX 00000, on December 11, 1996, at or after
1:00 p.m., New York time or such other time on December 11, 1996
as the parties may agree (the "Exchange Date").
1.3 The Exchange Procedure. At the Exchange Date, the
Bank shall surrender to Ampal all certificates representing the
Bank's Common Stock, duly endorsed to Ampal or accompanied by
appropriate stock powers duly executed, in proper form for
transfer and, upon such surrender, Ampal shall deliver to the
Bank a certificate for the New Shares, registered in the name of
the Bank. From and after the Exchange Date, the Bank shall cease
to have any right with respect to the Bank's Common Stock.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE BANK
2. The Bank hereby represents and warrants to Ampal
as of the date hereof as follows:
(a) The Bank has requisite corporate power and authority to
execute and deliver this Agreement and the documents and
instruments contemplated hereby, and to carry out the trans-
actions contemplated hereby. The Board of Directors of the
Bank has duly approved and authorized the execution and
delivery by the Bank of this Agreement and the documents and
instruments contemplated hereby, and the consummation of the
transactions contemplated hereby, and no other corporate
proceedings are necessary on the part of the Bank to approve
and authorize the execution and delivery of this Agreement
and the documents and instruments contemplated hereby, and
the consummation of the transactions contemplated hereby.
This Agreement constitutes and will constitute a valid and
binding agreement of the Bank enforceable against the Bank
in accordance with its terms.
(b) The Bank is the record and beneficial owner of, has and
transfers to Ampal good and marketable title to the Bank's
Common Stock, free and clear of any lien, pledge, security
interest, proxy, voting trust arrangement, collateral secu-
rity agreement, claim, charge, equities, title defect,
option or other encumbrance (any of the foregoing, an "En-
cumbrance"). The Bank's shares of Common Stock are not
subject to any restrictions on transferability other than
those imposed under the Securities Act of 1933, as amended
(the "Securities Act"), and applicable state securities
laws, and other than as provided in the Stock Purchase
Agreement, there are no options, warrants, calls, commit-
ments or rights of any character to purchase or otherwise
acquire shares of Common Stock from the Bank pursuant to
which the Bank may be obligated to sell or transfer any such
shares.
(c) Neither the execution and delivery of this Agreement
nor the consummation of the Exchange by the Bank, nor com-
pliance by the Bank with any of the provisions hereof, (i)
conflicts with or results in the breach of the provisions of
the Bank's Memorandum of Association or Articles of Associa-
tion, (ii) requires the consent or approval of the Bank's
shareholders, (iii) violates or breaches or constitutes a
default under the Stock Purchase Agreement, and (iv) to the
best of the Bank's knowledge, violates or breaches in a
material way, or constitutes a default under, U.S. (federal
or state) or Israeli laws applicable to the Bank, or the
terms, conditions or provisions of any material instrument
or agreement to which the Bank is a party or by which the
Bank's businesses, properties or assets are bound.
(d) The Bank acknowledges that the New Shares have not been
registered for sale under the Securities Act of 1933 (the
"Securities Act") or applicable state securities laws, if
any, and that the New Shares are being issued to the Bank
pursuant to the exemption from registration provided for in
Section 4(2) of the Securities Act and pursuant to any other
applicable exemption under the Securities Act.
(e) As of the Exchange Date, the Bank is an "accredited
investor" within the meaning of Rule 501 ("Rule 501") under
the Securities Act.
(f) The Bank is familiar with the Restated Certificate of
Incorporation of Ampal, as amended, and with the rights of
the holders of Common Stock and the holders of Class A
Stock. In addition, several officers of the Bank currently
serve as directors of Ampal. Ampal has made available to
the Bank all information as the Bank has requested with
respect to Ampal, its subsidiaries and their financial
condition.
(g) Any New Shares issued to the Bank pursuant to this
Agreement will be taken by the Bank solely for its own
account for the purpose of investment and not with a view to
the distribution thereof, except in compliance with the
Securities Act.
(h) To the best of the Bank's knowledge, no commission or
other remuneration has been or will be paid or given direct-
ly or indirectly for soliciting the Exchange.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AMPAL
3. Ampal hereby represents and warrants to the Bank
that as of the Exchange Date:
(a) Ampal has requisite corporate power and authority to
execute and deliver this Agreement and the documents and
instruments contemplated hereby, and to carry out the trans-
actions contemplated hereby. The Special Committee has duly
approved the Exchange and recommended that Ampal's Board
approve the Exchange and all actions appropriate thereto.
Ampal's Board has duly approved the Exchange and has duly
approved and authorized the execution and delivery of this
Agreement and the documents and instruments contemplated
hereby, and, other than approval of Ampal's shareholders to
amendments to Ampal's Restated Certificate of Incorporation,
as amended, contemplated by this Agreement, no other corpo-
rate proceedings on the part of Ampal are necessary to
approve and authorize the execution and delivery by Ampal of
this Agreement and the documents and instruments contemplat-
ed hereby and the consummation by Ampal of the transactions
contemplated hereby. This Agreement constitutes a valid and
binding agreement of Ampal, enforceable against Ampal in
accordance with its terms.
(b) Ampal transfers to the Bank good and marketable title
to the New Shares, free and clear of any Encumbrance other
than any restrictions on transferability arising under any
applicable securities laws.
(c) Neither the execution, delivery or performance of this
Agreement nor the consummation by Ampal of the transactions
contemplated hereby nor compliance by Ampal with any of the
provisions of this Agreement, (i) conflicts with or results
in any breach of any provisions of Ampal's Restated Certifi-
cate of Incorporation, as amended, or By-Laws or similar
organizational document of Ampal, (ii) requires the consent
or approval of Ampal's shareholders, except for the amend-
ments to Ampal's Restated Certificate of Incorporation, as
amended, contemplated in this Agreement, or (iii) to the
best of Ampal's knowledge, violates or breaches in a materi-
al way, or constitutes a default under, U.S. (federal or
state) or Israeli laws applicable to Ampal, or the terms,
conditions or provisions of any material instrument or
agreement to which Ampal is a party or by which Ampal's
businesses, properties or assets are bound.
(d) The aggregate number of shares that Ampal is authorized
to issue is sixty seven million nine hundred thirty two
thousand eight hundred fifty (67,932,850) shares divided
into the following three classes: (i) three million
(3,000,000) shares of Common Stock, of which three million
(3,000,000) shares are outstanding; (ii) sixty million
(60,000,000) shares of Class A Stock of which twenty million
five hundred eighty three thousand two hundred eleven
(20,583,211) shares were outstanding as of September 30,
1996; and (iii) two series of Preferred Stock consisting of
(a) six hundred fifty thousand (650,000) shares of 4% Cumu-
lative Convertible Preferred Stock, of which one hundred
ninety five thousand five hundred twenty three (195,523)
shares were outstanding as of September 30, 1996, and (b)
four million two hundred eighty two thousand eight hundred
fifty (4,282,850) shares of 6-1/2% Cumulative Convertible
Preferred Stock, of which one million seventeen thousand
four hundred forty one (1,017,441) shares were outstanding
as of September 30, 1996.
(e) The Special Committee and the Board have received the
opinion of Xxxxxxxx Xxxxxxxx & Co. Incorporated, dated the
date hereof, to the effect that, as of such date, the Ex-
change is fair to the holders of the Class A Stock, other
than the Bank, from a financial point of view, a copy of
which opinion has been made available to the Bank.
(f) The Class A Stock is registered pursuant to the Securi-
ties Exchange Act of 1934, and is listed on the American
Stock Exchange ("AMEX").
(g) Ampal submitted and AMEX approved an application to
list the New Shares on AMEX.
(h) To the best of Ampal's knowledge, no commission or
other remuneration has been or will be paid or given direct-
ly or indirectly for soliciting the Exchange.
ARTICLE IV
COVENANTS
4.1 The Bank agrees that it will not sell or otherwise
dispose of any of the New Shares except in compliance with
applicable federal and state securities laws. All certificates
representing the New Shares will have stamped, printed or typed
thereon a legend substantially in the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE
RESTRICTED SECURITIES UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE RULES THEREUNDER, AND MAY NOT BE
SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM.
4.2 Amendment To Ampal's Restated Certificate of
Incorporation. Ampal hereby undertakes to recommend to its
shareholders that they vote their shares at the next meeting of
Ampal's shareholders in favour of an amendment to Ampal's Restat-
ed Certificate of Incorporation, as amended, that shall provide
for (i) the removal and elimination of the Common Stock from
Ampal's authorized shares, and (ii) the cancellation of any
reference to the Common Stock in Ampal's Restated Certificate of
Incorporation, as amended.
4.3 Interim Undertakings. Until such time when
Ampal's Restated Certificate of Incorporation, as amended, is
amended as provided in Section 4.2 herein, Ampal shall not:
(a) Reissue, resell, transfer, distribute or take any
other action with respect to any or all of the Common Stock;
and
(b) Issue any class of equity security that has voting
rights that are preferential to the voting rights of the
Class A Stock, other than preferred stock that has customary
preferential voting rights with respect to the election of
members of Ampal's board of directors only in the event of
the nonpayment of preferential dividends.
4.4 Issuance of Equity Securities. Until such time
when the Bank's interest in Ampal, whether directly or through
subsidiaries of the Bank, is less than 10% of the outstanding
shares of the Class A Stock, Ampal shall not issue any class of
equity security that has voting rights that are preferential to
the voting rights of the Class A Stock, other than preferred
stock that has customary preferential voting rights with respect
to the election of members of Ampal's board of directors only in
the event of the nonpayment of preferential dividends.
ARTICLE V
MISCELLANEOUS
5.1 Governing Law. This Agreement shall be construed
under and governed by the laws of the State of New York without
regard to the conflicts of laws provisions thereof.
5.2 Consent to Jurisdiction. Each party hereto irrevo-
cably submits to the exclusive jurisdiction of the United States
District Court for the Southern District of New York located in
the borough of Manhattan in the City of New York, or if such
court does not have jurisdiction, the Supreme Court of the State
of New York, New York County, for the purposes of any suit,
action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each party hereto further
agrees that service of any process, summons, notice or document
by U.S. registered mail to such party's respective address set
forth in Section 5.7 shall be effective service of process for
any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction as set forth
above in the immediately preceding sentence. Each party hereto
irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of
this Agreement in (a) the United States District Court for the
Southern District of New York or (b) the Supreme Court of the
State of New York, New York County, and hereby further irrevoca-
xxx and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient
forum.
5.3 Amendment. This Agreement may not be amended,
modified or supplemented except upon the execution and delivery
of a written agreement executed by the Bank and Ampal.
5.4 No Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned
by any party hereto without the prior consent of the other party
hereto.
5.5 Waiver. Any of the terms or conditions of this
Agreement which may be lawfully waived may be waived at any time
by each party which is entitled to the benefits thereof. Any
waiver of any of the provisions of this Agreement by any party
hereto shall be binding only if set forth in an instrument in
writing executed on behalf of such party. No failure to enforce
any provision of this Agreement shall be deemed to or shall
constitute a waiver of such provision and no waiver of any of the
provisions of this Agreement shall be deemed to waive or shall
constitute a waiver of any other provision hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
5.6 Survival of Representations, Warranties and
Covenants. Unless specifically provided otherwise herein, all of
the representations, warranties and covenants in this Agreement
or in any instrument or other document delivered pursuant to this
Agreement shall survive the Exchange Date.
5.7 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall
be given by delivery, by telex, telecopier or by mail (registered
or certified mail, postage prepaid, return receipt requested) to
the respective parties as follows:
If to the Bank:
Bank Hapoalim B.M.
00 Xxxxxx Xxxxxx Xxxxxx
Xxx Xxxx 00000, Xxxxxx
(972)(0)-000-0000 (facsimile)
(972)(0)-000-0000 (telephone)
Attention: General Counsel
If to Ampal:
Ampal-American Israel Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000 (facsimile)
(000) 000-0000 (telephone)
Attention: President
or to such other address as any party hereto may, from time to
time, designate in a written notice given in like manner. All
such notices, requests, claims, demands and other communications
shall be deemed given upon receipt.
5.8 Complete Agreement. This Agreement contains the
entire understanding of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understand-
ings, both written and oral, between the parties with respect to
the subject matter hereof. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
5.9 Counterparts. This Agreement may be executed in
two counterparts, all of which shall be considered one and the
same agreement and, if executed in counterparts, shall become
effective when the two counterparts have been signed by each of
the parties and delivered to the other parties, it being under-
stood that all parties need not sign the same counterpart.
5.10 Headings. The headings contained in this Agree-
ment are for reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
5.11 Severability. Any provision of this Agreement
which is invalid, illegal or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity, illegality, or unenforceability, without affect-
ing in any way the remaining provisions hereof in such jurisdic-
tion or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
5.12 Third Parties. Except as specifically set forth
or referred to herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any
person or entity other than the parties hereto and their permit-
xxx successors or assigns, any rights or remedies under or by
reason of this Agreement.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, each of the Bank and Ampal have
caused this Agreement to be executed by their duly authorized
officers as of the day and year first above written.
BANK HAPOALIM B.M.
/s/ Xxxxxx Xxxxx
By: Xxxxxx Xxxxx
Title: Joint Managing Director
/s/ Yaacov Elinav
By: Yaacov Elinav
Title: Senior Deputy Managing Director
AMPAL-AMERICAN ISRAEL
CORPORATION
/s/ Xxxxxxxx Xxxxxxxxx
By: Xxxxxxxx Xxxxxxxxx
Title: President
