TIDM80OA
RNS Number : 8603L
Bank Hapoalim B.M.
19 January 2009
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Bank Hapoalim B.M. (the "Company")
Circular to Employees
Regarding an offer of options to the Company's tenured employees pursuant to
Section 15b of the Securities Law, 5728-1968 and the Securities (Details of a
Circular of an Offer of Securities to Employees) Regulations, 5760-2000
There are hereby offered
4,000,000 options (not-listed for trading) exercisable for up to 4,000,000
ordinary registered shares of NIS 1.00 nominal value of the Company, subject to
the adjustments set out in the option plan adopted by the Board of Directors of
the Company on 30th May, 2004 ("the Plan") plus an additional amount of options
(not-listed for trading), not to exceed 142,000, which shall be equal to the
amount of options that expired and were not allotted and also a quantity of
options which were not allotted for any reason from the first, second, third,
fourth and fifth portions in total of up to 20,000,000 options allotted by the
Company to its employees on 8th August, 2004, 7th February, 2005, 7th February,
2006 , 7th February, 2007 and 17th February 2008, pursuant to the Plan and the
Circulars published on 4th July, 2004, 12th January, 2005, 15th January, 2006,
21st January, 2007 and 20th January 2008 ( the "First Portion", the "Second
Portion", the "Third Portion", the "Fourth Portion" and the "Fifth Portion"
respectively), (jointly, the "Options"). The Options are offered without
consideration, to all the Company's tenured Israeli employees, as determined by
the Company, being approximately 10,000 in number ("Tenured Employees"), as set
out in the Circular, provided they are not and will not be interested parties in
the Company as that term is defined in the Securities Law, 5728-1968
("Interested Parties"). The number of Options that will be granted to each
Employee will be determined by the Board of Directors according to criteria that
take account of the Tenured Employee's salary, including his seniority and
position.
January 18th, 2009
Chapter 1 - General
1.1The Options Offered
4,000,000 options, not listed for trading, are being offered without
consideration and exercisable for up to 4,000,000 ordinary registered shares of
NIS 1.00 nominal value of the Company, subject to the adjustments set out in the
Plan, plus an additional number of options not listed for trading, not to exceed
142,000 Options, which shall be equal to the number of options that have expired
and were not allotted and also a number of options that were not allotted, for
any reason whatsoever, out of the First Portion, the Second Portion, the Third
Portion, the Fourth Portion and the Fifth Portion. The Options under this
Circular may be allotted no later than the date on which the Periodic Report of
the Company for the year 2008 is published or the date prescribed by law for
publishing such report, whichever comes first.
The Options being offered (assuming the Options are exercised), constitute
approximately 0.314% of the Company's issued and paid-up share capital on the
date they are granted, and approximately 0.308% of the Company's issued and
paid-up share capital, assuming full dilution (full dilution meaning on the
assumption that all the Options that will have been granted to the Company's
employees, its officers, directors of the Group, consultants and other
service-providers of the Company, including the Options being offered under this
Circular, will be exercised into shares, without taking into account the
subordinated notes issued by the Company).
The Options are offered within the framework of an Options issue plan to the
Company's Employees (the "Plan") according to the capital gains track under
Section 102(b)(2) of the Income Tax [New Version] Ordinance, 5721-1961 (the
"Ordinance") and the rules enacted thereunder, as modified from time to time
(the "Rules"). Allocation of the Options will be implemented in accordance with
the approval granted to the Company by the Taxes Authority on 29th June, 2004.
According to the Plan, 24,000,000 Options will be allotted to Tenured
Employees to purchase up to 24,000,000 ordinary registered shares of NIS 1.00
nominal value each of the Company, in a manner whereby in each of the six years
of the existence of the Plan, commencing 2004 to and including 2009, 4,000,000
options will be allotted that are exercisable into up to 4,000,000 ordinary
registered shares of the Company, subject to the adjustments set out in the Plan
and to the approval of the Stock Exchange for the listing of the shares arising
from the unregistered Options. In each year of the Plan's existence, a circular
or other report will be published, as required by law, regarding the offer of
the options allotable in such year, according to the Plan, as aforesaid. The
Options according to the Plan will be allotted in each year at the sole
discretion of the Board of Directors, to all the employees who were tenured on
31st December of the year preceding the date of the allotment of the options and
who are tenured employees on the date of the actual allotment, and whose
salaries are payable on a monthly basis by the Company (or by a corporation to
which employees have been posted that is controlled by the Company), except for
a tenured employee who, on the allotment date, is on unpaid leave for more than
12 months (for this purpose, a tenured employee who is on unpaid leave for the
period of a year or less will be deemed to be a tenured employee of the
Company). The number of options which will be granted to each Employee will be
determined by the Board of Directors according to criteria that take into
account the salary of the Tenured Employee, including his seniority and
position.
Notwithstanding the foregoing, whenever Options are granted to the entire
group of Tenured Employees, the Company may retain a certain number of options
in order to ensure that the grant to each employee has been made in accordance
with the criteria fixed by the Board of Directors (the "Rectification Quantity")
provided the Rectification Quantity will be distributed to the Tenured Employees
on a later date pursuant to the aforesaid criteria, so that the overall number
of options that may be granted throughout all the years of the existence of the
Plan, will be such number as are exercisable into a total number of 24,000,000
shares of the Company.
The Options offered according to this Circular, in the sixth year of the
existence of the Plan, 2009, are offered without consideration, at the sole
discretion of the Board of Directors, to all the Company's Israeli Tenured
Employees as set forth in paragraph 1.2 hereof.
Each Option will be exercisable into one ordinary registered share of NIS
1.00 nominal value of the Company, in exchange for payment of an exercise price
equal to NIS 1.00. The exercise price will not be linked to the CPI or to any
other index.
The vesting period of the allotted Options to each Eligible Employee (as
defined in Clause 1.2 hereof) will be such as to enable the Options to be
exercised during the 12 month period starting 48 months after the 1st day of
January in the year in which the Options were allotted (the "Exercise Period").
The vesting period will, unless otherwise directed by the Board of Directors,
only include those periods during which the Employee was employed by the Company
or is on unpaid leave for a period of one year or less. Notwithstanding the
foregoing, the Company's board of management (or a person empowered by it) is
authorized to determine, in individual cases, at its sole discretion, that the
vesting period will also include those periods during which the Employee is on
unpaid leave for a period exceeding one year. The Board of Directors may, at any
time, at its sole discretion, make provision for the acceleration of the vesting
period for all or any of the Options or for the removal of the restrictions
pertaining to the exercise of the Options, all subject to law.
In the event of the expiry and/or cancellation of a right to exercise an
option into a share according to the Plan for any reason, the share in question
will revert to the pool of 24,000,000 shares retained in the Company's
registered capital for purposes of the Plan (the "Retained Shares"), and the
Company will, subject to the remaining terms of the Plan, allot a new Option
exercisable for the same share on the next following allotment date, as
prescribed by the Plan and subject to the provisions of any law and subject to
the approval of the Stock Exchange. The exercise mentioned above will only be
made on a Business Day (as defined in paragraph 2.3 hereof).
These Options are offered pursuant to the resolutions of the Company's Board
of Directors of 30th May, 2004, to adopt an option plan for the Company's
Tenured Employees and its resolution of 30th December, 2008 regarding the
granting of the Options in accordance with the Plan and this Circular on 17th
February, 2009.
For further details regarding the Options offered and the exercise shares -
see Chapters 2 and 3 below.
For details concerning the exercise of voting rights and rights to dividends
attached to the Exercise Shares (as defined in paragraph 1.3 hereof), so long as
the Exercise Shares are deposited with the Trustee, as explained below - see
paragraphs 2.8.3, 2.8.4 and 2.8.5. For details concerning the provisions of the
Company's Articles of Association in connection with the rights attaching to the
Company's shares (and to the Exercise Shares) - see Chapter 3 below.
1.2Eligible employees and defining their entitlement
This Offer is addressed, at the sole discretion of the Board of Directors, to
all the employees who were/will be tenured employees of the Company on December
31, 2008, even if they are posted to another company, that is controlled by the
Company, in Israel or abroadand were Tenured Employees on the date of the actual
allotment, and whose salary is payable on a monthly basis by the Company (or by
a corporation to which they are posted that is controlled by the Company) except
for a Tenured Employee who, on the allotment date, is on unpaid leave for more
than 12 months (for this purpose, a Tenured Employee who is on unpaid leave for
a period of a year or less will be deemed to be a Tenured Employee of the
Company), provided they are not and will not be Interested Parties of the
Company, (the "Eligible Employees"), in a manner whereby each Eligible Employee
will be entitled to receive without consideration, the number of Options
specified in the allotment document that will be submitted to each Eligible
Employee. The number of Options offered to each Eligible Employee has been
determined on the basis of criteria that take into account the Eligible
Employee's salary, including his seniority and position. The Eligible Employees
hold positions at various levels within the Company.
1.3Permits obtained in connection with the Circular and the Listing for Trading
of
the Exercise Shares
The Company has obtained all necessary approvals for offering the Options to
the Eligible Employees according to this Circular, except for the approval of
the Tel-Aviv Stock Exchange Ltd. ("the Stock Exchange") for the listing for
trading of the shares resulting from the exercise of the Options offered under
this Circular (the "Exercise Shares").
On 30th December, 2008, the Company's Board of Directors passed a resolution
to file the Circular.
On December 31, 2008 the Company filed a request to the Stock Exchange to
list for trading the Exercise Shares.
The shares of the Company are listed on the Tel-Aviv Stock Exchange Ltd.
The Options offered under this Circular will not be listed for trading on
any stock exchange.
Chapter 2 - Details of the Offer
2.1General
4,000,000 Options, not listed for trading, are being offered to the Company's
Eligible Employees, without consideration, as set out in paragraph 1.2 above,
subject to the adjustments set out in the Plan, plus an additional amount of
options not listed for trading, not to exceed 142,000, which shall be equal to
the number of options that have expired and were not allotted and also a
quantity of options that were not allotted, for any reason whatsoever, out of
the First, Second, Third, Fourth and Fifth Portions.
Each Option may be realized for one ordinary registered share of NIS 1.00
nominal value of the Company, against payment of the exercise price on the dates
and under the conditions detailed in this Chapter.
Without derogating from the generality of the foregoing, the Board of Directors
will be authorized, at any time, and without requiring the consent of the
Eligible Employee, to determine that Options that have been granted to the
Eligible Employee according to the Plan will be cancelled and replaced by other
compensation by way of the allotment of shares of the Company, subject to the
provisions of any law, payment in cash or by such other method as the Board of
Directors may determine ("Other Compensation"), provided that the value of the
benefit inherent in Other Compensation will not be less than the value of the
benefit inherent in the Options cancelled or which have been returned to the
Company, as measured on the date of the cancellation or return, as the case may
be. In such a case, the value of the benefit inherent in the Options and the
Other Compensation will be determined by the Company and approved by an
independent outside advisor to be selected by the Company prior to replacing the
Options with Other Compensation, as aforesaid.
2.2Allotment of the Options
After fourteen days have passed from the delivery of the Offering Circular, the
Company will allot the Options to the Eligible Employees and will deliver an
allotment document, duly signed by the Company, to each Eligible Employee. The
Options will be deposited with a trustee (the "Trustee") pursuant to the
provisions of Section 102 of the Ordinance and the Rules.
The Company will publish, on the date of, or shortly after the publication of
this Circular, notice in the work places where the Eligible Employees are
employed regarding the publication of this Circular or employ such other method
as may be permitted by law.
2.3Exercise of the Options
The Options offered under this Circular may be realized into ordinary registered
shares of NIS 1.00 nominal value (for details regarding the Exercise Shares -
see Chapter Three hereof), in a manner whereby each existing Option may be
exchanged for a single registered ordinary share of NIS 1.00 nominal value,
subject to the adjustments set out below, in exchange for an exercise price
equal to NIS 1.00. The exercise price will not be linked to the CPI or any
index.
The vesting period of the Options conferred upon each Eligible Employee (as
defined in Clause 1.2 hereof) will be such that the Options may be realized
during the 12-month period commencing 48 months after the first day of January
in the year in which the Options were allotted, unless otherwise directed by the
Board of Directors. The vesting period only includes those periods during which
the Eligible Employee was employed by the Company or was on unpaid leave for a
period of one year or less. Notwithstanding the foregoing, the Company's board
of management (or a person empowered by it for that purpose) is authorized to
determine, in individual cases, at its sole discretion, that the vesting period
will also include those periods during which the Eligible Employee is on unpaid
leave for a period exceeding one year. The Board of Directors may, at any time,
at its sole discretion, establish guidelines for the acceleration of the vesting
period for all or any of the Options that have been granted according to the
Plan, or regarding the lifting of restrictions pertaining to the exercise of the
Options, all subject to any law.
An Eligible Employee will be entitled to exercise all or any of the Options
allotted to him, on any Business Day, at his discretion, commencing from the
date on which the Options will be exercisable, as provided above, but in no
event after 31st December, 2013, provided that the Exercise Notice (as
hereinafter defined) has been submitted to the Company 10 Business Days prior to
such date.
In this paragraph "Business Day" means a day on which trading takes place on
the Stock Exchange.
2.4Exercise procedure, release of the Options or shares from the Trustee and
sale of the
Exercise Shares
An Eligible Employee wishing to exercise his right to exercise, in whole or
in part, the Options allotted to him, shall send the Company and the Trustee
written notice in the form to be prescribed by the Company from time to time
("Exercise Notice") and which will include, inter alia, the number of Options
the Eligible Employee wishes to exercise, provided that such number will not be
less than 50% of the Options that have been allotted to such Employee
(notwithstanding the foregoing, the number of Options actually exercised may be
smaller than this figure due to the sale procedure of the Exercise Shares
subject to the Options), accompanied by a power of attorney in favor of the
Trustee and/or the Company, as explained below, and shall pay an amount equal to
the Exercise Price multiplied by the number of the Exercise Shares, in the
manner to be fixed by the Company. Shortly after receiving the Exercise Notice
and the full amount of the consideration for the Exercise from any Eligible
Employee and subject to review of the right of the Eligible Employee to exercise
the Options granted to him, the Company will allot to the party giving a due
Exercise Notice, the Exercise Shares due to him in respect thereof, which shares
will be deposited with the Trustee pursuant to the provisions of Section 102 of
the Ordinance.
Notwithstanding the foregoing, if no Exercise Notice reaches the Company
within 10 Business Days prior to the expiration of the Exercise Period, the
Eligible Employee to whom the Option was granted will be regarded as having
submitted an Exercise Notice and sale of the Exercise Shares on the same date.
Accordingly, the Option will be automatically exercised for an Exercise Share,
which will be sold on the Eligible Employee's behalf by the Trustee and/or the
Company. The proceeds obtained from the sale of the Exercise Share will be
remitted to the Eligible Employee after deducting the Exercise Price of the
Option, which will be remitted to the Company, and after deducting the
commissions involved in such Exercise and sale, and deduction of tax at source
as required by law. For this purpose, in the allotment document to be issued by
the Company to the Eligible Employee, the Employee will declare that he agrees
to the mechanism set out in this paragraph, and empowers the Trustee and/or the
Company to act in accordance therewith.
An option which has been exercised and for which an Exercise Share has been
allotted, will cease to be valid. Until the date of exercise, holders of the
Options will not be regarded as shareholders of the Company (by virtue of the
Options), save that they will be granted the protection set out below, and
become shareholders of the Company only if the Options will have been exercised
pursuant to the conditions prescribed in this Circular. Commencing on the date
of exercise, the Exercise Shares will rank pari passu with all the ordinary
shares of the Company's capital.
Pursuant to a written request of the Eligible Employee, in a form agreed to
by the Company and the Trustee, and which will be delivered to the Trustee, the
Trustee will release the Options held in trust by him or the Exercise Shares
arising from the exercise thereof, provided that prior to the release of such
Options or Exercise Shares, the Eligible Employee has transferred to the Trustee
and/or the Company, to their satisfaction, the amount of tax payable or a
confirmation as to the payment of all taxes the payment of which is required
upon the release of the Options or the Exercise Shares as the case may be.
In the alternative, the Company or the Trustee may sell on the Eligible
Employee's behalf, the Exercise Shares arising from the exercise of the Options
held in trust by the Trustee, pursuant to the Eligible Employee's instructions
and an appropriate arrangement between the employee, the Trustee and the
Company.
If the Trustee continues to hold any Exercise Shares after 24 months have
passed from the last date of exercise of the Options conferred according to the
Plan (namely 31st December, 2015) (the "Trust Termination Date"), the Company
and/or the Trustee will sell such shares, deduct tax at source, deduct and pay
the commissions involved in the sale and remit the balance to the Eligible
Employee. For this purpose, each Eligible Employee will sign a power of attorney
in favor of the Company and/or the Trustee, in such form as will be decided by
the Company and the Trustee, which power of attorney will enable the Company
and/or the Trustee to act on the Eligible Employee's behalf and sell the
Exercise Shares held by the Trustee on the Trust Termination Date.
2.5Adjustment of rights
Until the issue of the Exercise Shares as aforesaid, the holder of the
Options will have no voting rights nor the right to receive dividends or any
other right of a shareholder (save for the right to exercise the Options).
No adjustments in respect of dividends or other rights will be made during
the period preceding the issue of the Exercise Shares, except for the following:
2.5.1 If the Company distributes bonus shares and the determination date
for the distribution thereof (the "Bonus Date") falls after the date of
allotment of the Options but before the date of exercise, the exercise price for
each option will remain unchanged, but the number of shares which each Eligible
Employee is entitled to receive at the time of exercise will increase by the
number of shares that the Eligible Employee would have been entitled to as bonus
shares had he exercised the option immediately before the Bonus Date, and the
number of the Retained Shares will correspondingly increase, and the Company
will make the necessary adjustments to its capital as required by law. Similar
adjustments to those stated in this paragraph will be made in the event of a
split (or consolidation) of the Company's shares.
2.5.2 In the event of a rights offer by the Company to its shareholders
following the allotment date of the Options but before the date of exercise, the
number of shares which each Eligible Employee is entitled to receive at the time
of exercise will increase to reflect the element of benefit inherent in the
rights, and the number of Retained Shares will correspondingly increase. In such
a case, the value of the benefit inherent in such rights as well as the
necessary adjustment required according to the foregoing will be fixed by the
Company pursuant to the terms of Rule 91.C. 4(b) of Schedule A of Part Two of
the Stock Exchange Rules, and will be approved by an independent outside advisor
who will be selected by the Company.
2.5.3 Notwithstanding the provisions of Clauses 2.5.1 and 2.5.2 above, an
employee will not be entitled to exercise an option for a fractional share, and
the number of shares to which the employee will be entitled at the time of
exercise of the Option according to the Plan will be rounded (up or down, as the
case may be) to the nearest whole number.
2.5.4 It is clarified that a distribution of a dividend by the Company (in
cash or in specie) will not affect in any way the number of Exercise Shares or
the Exercise Price, nor obligate the Company to make any adjustment in
connection with the Option and/or the Exercise Shares.
2.5.5 In the event of a structural change in the Company ("Structural
Change"), the merger of the Company with or into another company, either by way
of a share exchange, cash purchase or otherwise ("Merger") or sale of all or
most of the Company's assets or its issued capital to any third party ("Sale"),
the Board of Directors may, inter alia, at its election, and subject to any law:
2.5.5.1 Determine that each option will be replaced
or converted into an option of equal
value in the New
Company following the Merger or the Sale, and implement for such
purpose changes in the exercise price (if and to the extent these
will be required), all subject
to the discretion of the
Board of Directors; or
2.5.5.2 Determine that each option will be adopted by the New Company in a
manner whereby it will be exchangeable for a share of the New Company, subject
to the adjustments and changes that will be determined by the Board of
Directors; or
2.5.5.3 Determine that each option will be cancelled or be returned to the
Company, and the Company shall pay the Eligible Employee financial compensation
for such cancellation or return of the Option, as the case may be, provided that
the value of the benefit inherent in the compensation will not be less than that
inherent in the Options which have been cancelled or returned to the Company, as
measured on the date of the cancellation or return, as the case may be; and
2.5.5.4 Perform any act and/or adjustment relating to the Options and the
terms thereof as may be required in its discretion.
For the purpose of the provisions of this Clause, the term "New Company" shall
refer to the company with whom a Merger or a transaction of Sale has been made
or which steps into the shoes of the Company after the Structural Change.
2.5.6 Unless otherwise prescribed by the Board of Directors, in the event of
a winding-up of the Company, all options that have been allotted to the Eligible
Employees will immediately expire prior to the winding-up of the Company. In
such event, the Board of Directors may declare that all or some of the Options
will expire on a certain pre-determined date, and enable all or part of the
Eligible Employees to have the right to exercise the Options conferred upon
them, and the Board of Directors may determine that the ability to exercise such
Options will similarly apply with respect to options which, according to the
terms thereof, were not exercisable on the date so fixed.
2.6Exceptions to the Exercise of the Options - Termination of Employment
In the event an Eligible Employee ceases for any reason whatsoever to be
employed by the Company ("Termination of Employment"), (in this Clause 2.6 the
term "Company" also includes a subsidiary or an affiliate of the Company), the
Options to which this Circular relates will expire, as detailed below, unless
otherwise determined by the Board of Directors:
2.6.1 The date of the Termination of Employment will be the date on which the
employer-employee relationship between the Eligible Employee and the Company
will cease ("Termination of Employment Date").
2.6.2 On the Termination of Employment Date, all the Options that have been
allotted to the Eligible Employee under this Circular, for which the vesting
period is still pending, will expire. Upon the expiry of the Options, all the
Eligible Employee's rights and/or those of his heirs in connection with the
Options, including the right to purchase the Exercise Shares, will expire. The
Options that have been allotted to the Eligible Employee and for which the
vesting period has ended by the Termination of Employment Date, may be exercised
by the Eligible Employee during the 60-day period following the Termination of
Employment Date, unless otherwise provided by the Board of Directors.
If no Exercise Notice reaches the Company before 60 days have passed
following the Termination of Employment Date, the Eligible Employee will be
regarded as having submitted an exercise and sale notice of the Exercise Shares
on such date. Accordingly, the Options that were allotted to an Eligible
Employee where the vesting period ended on or prior to the Termination of
Employment Date will be exercised automatically, and the Exercise Shares will be
sold on behalf of the Eligible Employee by the Trustee and/or the Company. The
consideration obtained from the sale of the Exercise Shares will be remitted to
the Eligible Employee after deducting the exercise price of the Options, which
will be remitted to the Company, after deducting the commissions involved in
such exercise and sale, and deduction of tax at source as required by law. For
such purpose, in the allotment document to be issued by the Company to the
Eligible Employee, the Eligible Employee will declare that he agrees to the
mechanism set out above and empowers the Trustee and/or the Company to act in
accordance therewith.
2.6.3 Notwithstanding the foregoing, if the Termination of Employment of the
Eligible Employee by the Company results from retirement, a voluntary retirement
plan of the Company, taking an early pension, or, God forbid, death or Loss of
Earning Capacity (as defined below), all the Options allotted to the Eligible
Employee until the Termination of Employment Date of the Employee will be
exercisable by the Employee or his legal heirs (as the case may be) at the end
of the vesting period, as if the employment of the Eligible Employee in the
Company had not ended.
"Loss of Earning Capacity" shall mean for purpose of this sub-clause the
inability of the Eligible Employee to carry out his job function as a result of
injury and/or sickness for a period of at least 6 consecutive months.
2.6.4 Notwithstanding the foregoing, if the Eligible Employee has been
dismissed in circumstances which do not entitle him to severance pay as provided
by the Severance Pay Law, 5723-1963, and subject to any law, all the Options
allotted to him will expire, including Options for which the vesting period has
ended.
2.6.5 An Eligible Employee who takes unpaid leave for a period of one year or
less, will continue to be regarded as an employee for purposes of the Plan,
while an Eligible Employee who takes unpaid leave for a period exceeding one
year will be regarded as having terminated his employment, and ceases to be an
employee for purposes of the Plan, as of the first day following one year on
unpaid leave.
2.6.6 Notwithstanding the foregoing, the board of management of the Company
or such person authorized on its behalf, shall be authorized to determine, in
individual cases, at its sole discretion, that an Eligible Employee taking
unpaid leave for a period exceeding one year will continue to be regarded as an
employee for purposes of the Plan.
2.6.7 Subject to the provisions of the Plan regarding an adverse change in
the conditions of allotted Options, the Board of Directors may prescribe, at any
time and in its sole discretion, time periods and conditions with respect to any
particular employee or generally which may be different from those set forth
herein.
2.6.8 It is clarified that in no event will it be possible to exercise an
Option after the expiration of the Exercise Period.
2.7Transferability of the Options and Exercise Shares
2.7.1 Unless otherwise prescribed by the Board of Directors, the Options will
not, in any event, be transferable and/or assignable, save for transmission to
legal heirs. In the event of such transmission, the terms of the Option and the
provisions of the Plan will be binding upon the heirs.
2.7.2 The Exercise Shares are subject to limitations regarding its sale and
transferability, as shall be determined by the Board of Directors from time to
time, subject to applicable law including the limitation of use of inside
information. According to the Israeli Securities Authority's approach as
received by the Company, the execution of the automatic sale procedure specified
in sections 2.4 and 2.6.2 in this Circular, shall not constitute a valid defense
from criminal indictment of misuse of inside information
2.8Tax Implications on Allotment of Options, Their Exercise into Shares and Sale
of Shares Realized
2.8.1General
On June 29, 2004, the Taxes Authority approved the Plan as a share allotment
plan through a trustee, pursuant to the provisions of Section 102 of the
Ordinance.
The Company's duty to allot Exercise Shares at the time the Options are
realized or to carry out any other act in connection with or in respect of
Options or Exercise Shares is subject to the full compliance with all duties to
pay income tax or other compulsory payments that apply (to the extent they
apply) including deduction of any tax or compulsory payment required by law.
In the event of any liability for tax or any other compulsory payment
(National Insurance, State Health Tax, etc.) in respect of and/or as a result of
the Plan (whether in Israel or abroad), including in respect of the allotment of
the Options to the Eligible Employees, the exercise thereof into shares, the
sale of the Exercise Shares, receipt of dividend or any other benefit in respect
of the Options or the Exercise Shares, it will be borne by the Eligible
Employees in accordance with law (to the extent it applies by law to such
Employee). The Eligible Employees will indemnify the Company and/or the Trustee
in respect of any payment or claim for payment of any tax payable as aforesaid,
if payable, and the Company may deduct from the sums becoming due to the
Employee any balance of the Eligible Employee's debt to the Company, to the
extent that such a debt exists in respect of such indemnity.
2.8.2Taxes Applicable to Options Offered Within the Scope of Section 102 to
Israeli Employees
The grant of Options in accordance with this Circular is made subject to the
provisions contained in Section 102 of the Ordinance and is also subject to the
Rules. Accordingly, the Company has elected the capital gains track prescribed
by Section 102(b)(2) of the Ordinance for the purpose of taxing the income of
Eligible Employees from the Options.
In accordance with Section 102 and the Regulations, the following provisions
will apply:
[a]Date of liability for tax
The Eligible Employee's income from the allotment of the Options is
tax-exempt at the time of allotment, but will be liable for tax at the time the
shares resulting from the exercise of the Options are sold ("Exercise Shares")
or the Options or Exercise Shares are transferred from the Trustee into the name
of the Employee ("Transfer").
[b]Rate of tax
Pursuant to the capital gains track, if the Options or the Exercise Shares
are held by the Trustee until the expiration of the period required by the
Ordinance for the capital gains track, or until the expiration of such other
period as may be approved by the Taxes Authority (the "Trust Period"), part of
the benefit inuring to the Eligible Employee from the sale of the Exercise
Shares up to no higher than the average value of the Company's shares on the
Stock Exchange at the end of the 30 day trading period preceding the allotment
of the Options, will be regarded as income from work under Section 2(2) of the
Income Tax Ordinance, such income to be adjusted to the Consumer Price Index up
until the date of sale of the Exercise Shares or the execution of a Transfer,
and the balance of the value of the benefit will be regarded as a capital gain
liable to tax at the rate of 25%.
The Eligible Employee will not be entitled to sell Exercise Shares or
execute a Transfer prior to the expiration of the Trust Period. Moreover, the
rights conferred by virtue of the Exercise Shares, including bonus shares, but
excluding dividends paid in cash ("Rights"), will be deposited with the Trustee
until the expiration of the Trust Period, and the capital gains track will apply
thereto.
2.8.3 The Trustee will not execute any transaction or act in connection with
the Options and/or the Exercise Shares held by him, and will not transfer,
assign, withdraw, attach or charge them voluntarily and will not grant with
respect thereto any power of attorney or instrument of transfer, of either
immediate effect or which will come into effect at a future date, except for a
transfer based on a will or by operation of law, until after the applicable tax
as aforesaid has been paid or until payment of the tax has been secured.
2.8.4 So long as the Exercise Shares are held by the Trustee in trust for an
Eligible Employee, the voting rights attaching to the Exercise Shares will be
vested solely in the Trustee. The Trustee will not vote in respect of Exercise
Shares that are held by him on behalf of the Eligible Employee, and such
Employee will be entitled to vote in respect of the Exercise Shares at meetings
of the Company's shareholders only in accordance with a power of attorney from
the Trustee.
2.8.5 So long as the Exercise Shares are held by the Trustee in trust for an
Eligible Employee, cash dividends which may be distributed in respect thereof
will be transferred directly to the Eligible Employee, all as determined by the
Company's Board of Directors, at its sole discretion and subject to any law,
prior to implementing the distribution of such dividend.
The foregoing refers to applicable law on the date of the Circular and does not
purport to be an authoritative interpretation of the tax provisions mentioned
above, or an exhaustive description of the general provisions of law pertaining
to taxes which may apply in connection with the Options being offered to the
Eligible Employees, and does not serve as a substitute for legal and
professional advice on the subject. As is usual when deciding on an investment,
each Eligible Employee receiving Options who decides to exercise them must
consider the various tax aspects and tax implications that his investment will
have. The Eligible Employee must consult his professional advisors, including
legal and tax counsel, having regard to his own particular circumstances.
2.9Consideration for the Options Offered
The Options offered are offered for no consideration. Assuming all the
offered Options are exercised, the Company will receive proceeds amounting to
NIS 4,142,000 without linkage to the CPI. The amount to be received by the
Company was determined according to the exercise price determined by the Board
of Directors on the date it resolved to grant the Options, multiplied by the
number of Options offered at such exercise price, as set out in this Chapter.
2.10The Economic Value of the Options
2.10.1 The Company applies Accounting Standard No. 24 "Share Based Payment".
The main provisions of the Standard are to require the recognition of expenses
in respect of the Options in the financial statements of the Company according
to their economic value at the time the Options are actually allotted. The
expense will be recorded in the financial statements of the Company over the
vesting period of the Options and according to the number of options to be
granted.
2.10.2 The calculation of the economic value of each Option reflected in the
financial statements of the Company will be made according to the Black and
Scholes model, according to the terms of the Plan and according to the
principles embodied in Accounting Standard No. 24, as aforesaid.
2.10.3 By way of illustration only, there follows a calculation of the
economic value of each Option were it to have been actually granted at about the
time of submission of this Circular:
[a] The price of the share for the purpose of the calculation is the closing
price of the share of the Company on the Stock Exchange at the close of trading
on 15th January 2009 (NIS 8.37).
[b] The exercise price is NIS 1.00, unlinked.
[c] Until the Exercise Shares are issued, the holder of the Option will have
no right to receive any dividend.
[d] The calculation is made subject to the following assumptions:
- the standard deviation is calculated according to the daily yield according
to the price of the share of the Company on the Stock Exchange over the last
four years; accordingly, the standard deviation is about 33.77%.
- the life expectancy of the Options is four years.
- the annual rate of capitalization is determined according to the yield to
maturity of unlinked bonds ("Shahar") which corresponds to the life expectancy
of the Options, and accordingly, the calculation assumes a rate of interest for
capitalization of 2.96%.
- the yield on account of dividend which the shareholders of the Company expect
to receive is 8.28%.
[e] The calculation of the economic value does not take into account the fact
that the Options will not be listed for trading on the Stock Exchange, and also
does not take into account the vesting periods of the Options as provided in the
Plan and the tax likely to apply at the time of sale of the Exercise Shares.
On the basis of the above assumptions, the value of each Option is NIS 5.12.
It is emphasized that the calculations presented above were made as of 15th
January 2009. The determination date for calculating the value of the Options
for the purpose of the financial statements of the Company, according to
Accounting Standard No. 24, is the date on which the Options are granted (and
not the submission date of the Circular). Therefore, the value of the Option
which will serve for the recognition of the amounts of the expense to be
actually recorded and reflected in the financial statements of the Company will
be different from the data presented above, and will be subject to computation
by the Company on the basis of similar assumptions.
Chapter 3 - The Exercise Shares
The Exercise Shares will rank equally with all the ordinary shares of the
Company's capital. All the shares in the Company's capital are registered
shares, having a nominal value of NIS 1.00.
Details concerning the provisions contained in the Company's Articles of
Association, relating to the rights attaching to the Company's shares (and to
the Exercise Shares), are set out below:
3.1Voting rights
Each ordinary registered share confers upon the holder thereof the right to
receive notices of and to attend general meetings of the shareholders of the
Company, and the right to one vote in respect of each ordinary share whenever
votes are cast at any general meeting of the Company attended by the holder
thereof.
3.2Rights to dividend and distribution of bonus shares
All ordinary shares in the Company's capital rank equally among themselves
and confer upon the holders thereof the right to receive dividends (if and when
distributed), the right to receive bonus shares (if and when distributed), and
the right to participate in the distribution of surplus assets of the Company
after the winding-up thereof according to the proportionate share thereof in the
Company's issued share capital.
Shareholders entitled to dividends are the shareholders on the date of the
resolution regarding the dividends or on such later date as may be determined by
the resolution. The Company's resolution to distribute dividends or bonus shares
shall be adopted by the Board of Directors of the Company.
Subject to any special rights or restrictions attaching to any shares,
dividends in cash and bonus shares will be paid and distributed to the
shareholders in proportion to the capital amount paid on the nominal value of
the shares held by them, disregarding any premium paid thereon.
No dividend or monies or benefits in respect of a share will bear interest.
The Board of Directors may deduct from any dividend or monies or benefits in
respect of a share, such sums as the holder of such share owes the Company on
account of calls at such time.
The Board of Directors may withhold any dividend or bonus shares or monies
or benefits in respect of a share over which the Company has a charge, and apply
such dividend or bonus shares or monies or benefits in discharge of the debts or
liabilities in respect of which the Company holds a charge.
In order to execute any resolution regarding a distribution as defined in
the Companies Law, 5759-1999 (the "Companies Law") the Board of Directors may,
as it deems fit, settle any difficulty arising in relation to the distribution,
and take such steps as are required for that purpose. Shares of a value less
than that resolved by the Board of Directors will not be taken into account for
the purpose of adjusting the rights of shareholders.
The Board of Directors may determine from time to time the manner of paying
the dividend or the distribution of the bonus shares and the arrangements
relating thereto to registered shareholders or with respect to those holding
share warrants. Without derogating from the generality of the foregoing, the
Board of Directors may pay any dividend or monies in respect of shares by
sending a cheque by post to the address of the shareholder as registered in the
register of shareholders of the Company. The dispatch of any such cheque will be
at the risk of the shareholder.
In the event of a declaration of dividend, distribution of shares or
debentures following a capitalization or grant of any rights to members, for
subscription to shares as yet unissued, the Board of Directors will publish a
notice thereof at least once in two daily newspapers in Israel.
A dividend, the payment of which has not been claimed within a period of
seven (7) years from the date of the resolution to distribute the same, will be
regarded as having been waived by the person entitled thereto and such dividend
will revert to the ownership of the Company.
3.3Increase of Capital and Modification of the Rights Attaching to the Company's
Shares
A general meeting of the shareholders may decide upon the following matters
by a resolution passed by a simple majority:
1. To increase its registered share capital by such amount as will be
resolved, by creating new shares on such conditions and with such rights as the
resolution prescribes. Such resolution may be adopted whether or not all the
shares for the time being have been issued or a resolution exists for the issue
thereof and whether or not they have yet to be issued or resolved to be issued.
2. To cancel any registered capital which has not been allotted, provided no
undertaking, including a contingent undertaking, on the part of the Company
exists to allot such registered share capital.
3. To vary, cancel, convert, extend, add to or otherwise modify the rights,
privileges, advantages, restrictions and terms whether or not for the time being
related to the Company's shares.
4. To consolidate and redistribute its share capital into shares of larger or
smaller denominations than those of the existing shares.
5. To reduce its share capital in such manner and on such terms and subject
to obtaining such approvals as are required by law.
6. To make any other change in the Company's share capital or the rights
attaching to its shares, to the extent that such power is not vested in any
other organ of the Company.
The rights conferred upon the holders of any shares, including preference shares
(as defined in the Securities Law, 5728-1968), will not be deemed to have been
varied by the creation or issue of additional shares ranking pari passu with
them, unless otherwise stipulated by the terms of issue of such shares.
The Board of Directors of the Company may:
1. Issue shares and other securities, including convertible or realizable
securities, up to the amount of the Company's registered share capital, and may
similarly allot the same (or otherwise deal therewith) to such persons, in
exchange for cash or other non-cash consideration, on such exceptions and
conditions, at a premium or at par or at a discount, at such times as it deems
fit; and grant any person the right to demand the allotment of any shares during
such time period and against such consideration as the Board of Directors may
determine.
2. Issue redeemable securities and redeem the same in such manner and on such
conditions as it may resolve from time to time.
3. Resolve to issue a series of debentures within the scope of its authority
to borrow on the Company's behalf, and to the limit of such power.
Upon the issue of shares the Board of Directors may establish different
conditions for the shareholders in relation to the consideration, the amounts of
the calls and/or the dates of payment thereof.
3.4Transfer of Shares
No transfer of shares of the Company will be registered without a proper
instrument of transfer being delivered to the Company. The instrument of
transfer of a share in the Company will be signed by the transferor and
transferee, and the transferor will be deemed to remain the shareholder until
the transferee's name is registered in the register of shareholders in respect
of the share transferred.
Any document (including the certificate of the share being transferred) that
the Board of Directors may require in connection with the transfer must be
submitted to the Company together with the instrument of transfer.
The Board of Directors may decline to recognize the instrument of transfer
until the certificate of the share being transferred is attached thereto,
together with such other evidence as the Board of Directors may demand to prove
the transferor's right to transfer the share, and payment of a transfer fee if
prescribed by the Board of Directors.
3.5Notices to Shareholders of General Meetings
A notice convening a general meeting will be published in at least two
Hebrew daily newspapers having a broad circulation, and will include the agenda
fixed for the meeting, the proposed resolutions and arrangements regarding poll
cards as the case may be.
The Company is not bound to personally serve notice of a general meeting on
a shareholder registered in the register of shareholders.
3.6General Meetings of the Company's Shareholders
There will be a quorum for holding a general meeting when at least two
shareholders holding at least twenty-five per cent (25%) of the voting rights
are present, within half an hour of the time appointed for the meeting to
proceed to business.
If within half an hour of the time appointed for the meeting to proceed to
business a quorum is not present at the general meeting, the meeting will stand
adjourned to the same day in the next week at the same time and place, or to
such other time if specified in the invitation to the meeting or the notice of
the meeting. If no quorum is present at the adjourned meeting within half an
hour of the time appointed therefore, the meeting will take place with such
number of participants as are present. Notwithstanding the foregoing, if the
general meeting has been convened upon requisition by shareholders as provided
in Sections 63(b)(2) or 64(a) of the Companies Law, the adjourned meeting will
be held only if there are present at least that number of shareholders required
to convene a meeting as provided in those sections of the Law.
A general meeting at which a quorum is present may resolve to adjourn the
meeting to such other time and place as it may determine. At the adjourned
meeting, only the business appearing on the agenda of the original meeting and
for which no resolution has been passed, will be transacted. If the general
meeting is adjourned for a period exceeding 21 days, notices of the adjourned
meeting will be given as stated in Clause 3.5 of this Circular.
3.7Election of the Members of the Board of Directors
The number of members of the Board of Directors will be fixed from time to
time by a resolution of the general meeting of the Company. The number of
members of the Board of Directors will not be less than seven (7) nor greater
than fifteen (15).
The directors of the Company will be appointed by a resolution adopted by a
general meeting of the shareholders present at the meeting personally or by
proxy. Notwithstanding the foregoing, the Board of Directors may resolve, from
time to time, to appoint an additional director or directors whether as an
additional director, or in order to fill the position of a director that has
fallen vacant for any reason, provided that every such appointment and any
change in such appointment will be made in accordance with the provisions of a
voting agreement between the shareholders of the Company entitled to appoint
directors, a signed copy of which has been given to the Board of Directors.
A director will take up office on the date of his appointment or at such
later date in the future, in accordance with the resolution of the general
meeting or of the Board of Directors, as the case may be, which appointed the
director. Such appointment will continue until it is terminated or discontinued.
A director may resign by written notice given to the Board of Directors, the
chairman of the Board of Directors or the Company, and such resignation will
enter into effect on the date the notice is given, unless a later date is
prescribed in the notice. The director's notice of resignation will contain the
reasons for his resignation.
Upon notice of a director's resignation being received, notice thereof and
the reasons given therefore shall be submitted to the Board of Directors, and
they shall be recorded in the minutes of the next meeting convened after the
resignation.
The general meeting may, at any time, remove a director from office. In
addition, the Board of Directors may remove from office a director that it
appointed, provided that such termination of service shall be made with the
consent of the shareholders. A director removed from office will be given a
reasonable opportunity to present his case to the general meeting or the Board
of Directors, as the case may be.
Without derogating from the causes enumerated in the Companies Law, the
office of a director will be vacated in any of the following cases: if he has
resigned his office, been removed from office, been convicted of an offence
under the law, by a decision of a court of law made according to the law, if the
director has been adjudicated bankrupt, and, if a corporate body, a resolution
has been passed for its voluntary liquidation or a winding-up order is made
against it, upon the date of adoption of a resolution by the Board of Directors
terminating his office, if he has become legally incompetent, upon the
expiration of the period for which he was elected and if the director was absent
from six consecutive meetings of the Board of Directors or from eight
non-consecutive meetings of the Board of Directors during one year, provided,
however, that the Board of Directors may allow a director's membership to
continue if the absences occurred during a period of time not exceeding six
months.
A director who has ceased to hold office may be re-appointed. If no director
is appointed or if the office of a director is vacated, the remaining directors
may act in all matters so long as their number has not fallen below the minimum
prescribed for the time being for meetings of the Board of Directors.
Chapter 4 - Details Regarding the Company's Share Prices
The following sets out details of the highest and lowest prices at which the
Company's shares were traded in 2007 and 2008, and during the period between
January 1st, 2009 and January 15th, 2009 on the Stock Exchange (without taking
into account dividend distributed during the same period):
+-------------+--------------------------------------+-------+----------------+-------+----------------+-------+
| Stock | In the Period | 2008 | 2007 |
| Exchange | Between January | | |
| Price | 1st and January | | |
| | 15th, 2009 | | |
+-------------+----------------------------------------------+------------------------+------------------------+
| | Date | NIS | Date | NIS | Date | NIS |
| | | Price | | Price | | Price |
+-------------+--------------------------------------+-------+----------------+-------+----------------+-------+
| High | 07.01.09 | 8.85 | 02.01.08 | 19.55 | 10.05.07 | 23.45 |
+-------------+--------------------------------------+-------+----------------+-------+----------------+-------+
| Low | 01.01.09 | 8.27 | 12.03.08 | 7.13 | 04.12.07 | 18.11 |
+-------------+--------------------------------------+-------+----------------+-------+----------------+-------+
The share price on the Stock Exchange on 15th January, 2009 (the last trading
day before the date of this Circular) was NIS 8.37.
Chapter 5 - Reference to Financial Statements
Eligible employees are referred to the Company's financial statements as at
December 31, 2007, published on March 31, 2008, the Company's financial
statements as at March 31, 2008, published on May 29, 2008, the Company's
financial statements as at June 30, 2008, published on August 28, 2008, and the
Company's financial statements as at September 30, 2008, published on November
25, 2008.
The Company also refers the Eligible Employees to the Immediate Reports that
were published by it commencing 25st November 2008 (excluding those reports
regarding changes in the holdings of institutional bodies), as follows:
+---------------------+--------------------------------------------------+
| Date of Publication | Subject Matter |
| of | |
| Immediate Report | |
+---------------------+--------------------------------------------------+
| 18/01/09 | Event or Matter that are not within the scope of |
| | Corporate's ordinary business |
+---------------------+--------------------------------------------------+
| 06/01/09 | Transaction with Controlling Shareholder |
+---------------------+--------------------------------------------------+
| 04/01/09 | Changes in Securities of the Corporation |
+---------------------+--------------------------------------------------+
| 01/01/09 | Holdings of Senior Office Holders |
+---------------------+--------------------------------------------------+
| 01/01/09 | Cessation of Service as Senior Office Holder |
+---------------------+--------------------------------------------------+
| 31/12/08 | Transaction with Controlling Shareholder |
+---------------------+--------------------------------------------------+
| 31/12/08 | Filing of Preliminary Circular |
+---------------------+--------------------------------------------------+
| 31/12/08 | Filing of Preliminary Circular |
+---------------------+--------------------------------------------------+
| 23/12/08 | Board of Management and office holders -schedule |
| | as at 23/12/08 |
+---------------------+--------------------------------------------------+
| 23/12/08 | Senior office holder- ceased to hold office Ido |
| | Yosef Disenchik |
+---------------------+--------------------------------------------------+
| 3/12/08 | Changes and Schedule of Capital - Option |
| | exercise. |
+---------------------+--------------------------------------------------+
Date: January 18th, 2009
Respectfully yours,
Bank Hapoalim B.M.
Name of signatory on behalf of the Corporation: Doron Klausner
Title: Member of the Board of Management, Head of Human Resources, Logistics and
Procurement
Name of signatory on behalf of the Corporation: Eli Eisdorfer
Title: Manager of Human Resources Division
This information is provided by RNS
The company news service from the London Stock Exchange
END
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