Document:

Exhibit 10.1

 

DEAD SEA CONCESSION LAW, 1961(1)

 

1.                   Concession

 

The Deed of Concession in the Schedule to this Law, made between the State and the Concession-holder named in it, is seen as valid for all its purposes notwithstanding the provisions of any law.

 

2.                   Subconcessions

 

Any subconcession granted in accordance with the provisions of section 5 of the Deed of Concession shall be published in the Official Gazette, and once published, shall be seen as valid for all its purposes notwithstanding the provisions of any law.

 

3.                   Implementation

 

The Ministers of Finance and of Development are responsible for the implementation of this Law.

 

SCHEDULE

 

This Deed of Concession was made on May 30, 1961 between the State of Israel, represented by the Government of Israel, acting through the Minister of Finance and the Minister of Development (“the Government”), of the first part;

 

And Dead Sea Works Ltd., a company incorporated under the laws of Israel, whose registered office is in Beit Ha’ashlag in Be’er Sheva (“the Concession-holder”), of the second part; since —

 

(a)              Minerals from the Dead Sea and the areas in its vicinity are part of the natural resources of the State of Israel, and their exploitation should be regulated in the economic interests of the State;

 

(b)              the Concession-holder was incorporated with the aim, inter alia, of examining, researching and developing the natural mineral resources of the Dead Sea and the areas in its vicinity;

 

(c)               the Concession-holder, since its incorporation, has developed and exploited some of these natural mining resources, and in the same context has purchased and built, in the southern section of the Dead Sea and in its vicinity, certain plants and facilities;

 

(d)              the Concession-holder has applied to the Government for the concession written below, and the Government is ready to grant it to the Concession-holder on the terms and stipulations set forth below; therefore, this Deed of Concessions attests and it is hereby agreed and declared as follows:

 

(1)  Enacted by the Knesset on May 31, 1961. See Dead Sea Concession Law, 1961.

 

 

1.                   Definitions

 

The words and expressions below shall have the meanings alongside them unless the context requires otherwise; and they are: Local Taxes — any municipal or other tax imposed at any time by a local authority in connection with the plant’s business, property or income (excluding government taxes, local taxes, levies and mandatory government payments);

 

the Concession-holder — Dead Sea Works Ltd. and its substitutes according to this Deed of Concession;

 

the Concession — The Concession awarded in this Deed of Concession;

 

the Plant — The business of extracting mineral salts, minerals and chemicals, their preparation for marketing, their sale and dealing in them and all those businesses, property and things required for or associated with them, all according to this Concession;

 

the Minister — The Ministers of Finance and Development;

 

Month — A Gregorian calendar month;

 

Ton — a metric ton of 1000 kilograms;

 

the Dead Sea — (a) The waters and bed of that part of the Dead Sea within the borders of the State of Israel and shown on Map “A” attached to this Deed of Concession, signed by the parties to it and an integral part thereof, and (b) the evaporation area shown on that Map “A”, and delineated by a dotted black line, and (c) the coastal strip enclosed by: to the north — coordinate line 100, to the south — the aforementioned evaporation area, to the east — the water line shown on Map “A”, and to the west — the imaginary line parallel to the aforementioned water line and 150 meters from it.

 

Fixed Tangible Assets — land, buildings, factories, machinery, dams, embankments, evaporation ponds, culverts, water barriers, pumping stations, anti-flood installations, fixed pipes and other equipment of any kind, which are part of the Plant and are in the leased land, in the reserved land or in the Dead Sea.

 

Land — Including any right, benefit or right of use of or lien in or on the Land;

 

Leased Land — The land leased at the time to the Concession-holder pursuant to section 6 of this Deed;

 

Reserved Land — The land shown on the aforementioned Map “A” and marked by a pattern of thick crossing black lines;

 

Auditor — Whoever serves at the time as auditor or auditors of the Concession-holder;

 

Local Authority — Including municipality, local council, regional council and any other local body entitled to impose municipal taxes;

 

Year — 12 consecutive months;

 

Start Date — The day on which the Law approving the Concession comes into force.

 

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2.                   Grant of Concession

 

The Government hereby grants to the Concession-holder the following Concession:

 

(a)              the exclusive right to extract by way of evaporation (solar or artificial), cooling, mining, quarrying or in any other way, the mineral salts, minerals and chemicals, whether in solution or in solid form, which are in and beneath the Dead Sea, and to prepare them for marketing, to sell them and to deal in them;

 

(b)              the exclusive right — subject to all the rights existing on the date of this Deed, and subject to the provisions of section 3(3) below — to make, expand, modify, maintain and demolish, in and beneath the Dead Sea, any works, including — but without derogating from the generality of the aforesaid — embankments, evaporation ponds, culverts, water barriers, pumping stations, canals, pipes, electricity lines and electricity cables, roads, anti-flood installations, wells and bores and other installations, together with the exclusive right of access to and use of those works;

 

(c)               the right to sail vessels in the Dead Sea for the purposes of the Plant, subject to the laws applicable at the time;

 

(d)              the right — with the approval of the competent authority and subject to the rights existing on the date of this Deed — and subject to any right that may be granted after that date as in section 1(9)(b) of this Deed — to take all or some of the following actions in the Leased Land and in the Reserved Land;

 

(1)             to extract, by way of quarrying, mining or by any other production method, Dolomite rock and other rocks and mineral salts, minerals and chemicals as are required from time to time by the Concession-holder for any process that uses mineral salts, minerals and chemicals that are extracted or extractable from the Dead Sea, and to dig for the production of rock-salt at Mount Sdom or in its vicinity; and

 

(2)             to dig for the production of the materials required for the construction, expansion and maintenance of the Plant;

 

the competent authority shall not refuse its approval according to this sub-section, and it shall be granted within 30 days of the date of application for it;

 

(e)               the right, subject to the approval of the competent water authority — and that approval shall not be delayed or suspended unreasonably — to obtain sweet or semi-sweet water required for the production of the mineral salts, minerals and chemicals, for drinking, bathing or sanitation needs and for the general purposes of the Plant and of the workers of the Concession-holder, from streams or springs that flow through the Leased Lands and the Reserved Lands or rise from them or from wells in them or from any tributaries that flow to the Dead Sea, and to drill for discovery of sweet or semi-sweet water in the Leased Land and in the Reserved Land, and in that context to dig wells, to lay pipes, to build pumping stations and to do other works required for or associated with the aforesaid.

 

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3.                   Exceptions and restrictions

 

(1)              Excluded from the grants described above and reserved to the Government —

 

(a)              Gold, silver or other precious metals and their dusts, precious stones, copper and iron dust, antiquities and oil — as defined in the Oil Law, 1952 (all of the foregoing are hereinafter together called the “Materials Outside the Confines of the Concession”) in or beneath the Dead Sea and in the Leased Land or the Reserved Land or beneath them;

 

(b)              the right to enter any facility and property of the Concession-holder in or beneath the Dead Sea, in the Leased Land, the Reserved Land and beneath them, for the purpose of examination or audit in connection with sub-section (1)(a) of this section.

 

(2)              Immediately upon discovery of a material from the Materials Outside the Confines of the Concession, the Concession-holder shall deliver notice to the Government of such discovery, and shall permit the Government or any person authorized by the Government to enter any location mentioned in sub-section 1(b) to search for and extract the Materials Outside the Confines of the Concession, and the Government shall pay the Concession-holder compensation for any damage caused to it in so doing.

 

(3)              The Government may permit any person to erect on the Coastal Strip mentioned in sub- section (c) of the definition of the Dead Sea, works which are not relevant to the Plant, provided that those works do not disturb or compete with the Plant or its development.

 

Before permitting such works, the Government shall deliver to the Concession-holder written notice, not less than four months in advance, of its intention, and shall describe in that notice the location and area of the Coastal Strip where the Government proposes to grant such a permit and the nature of the work that will be done there, and the Concession-holder may, within four months from the date of receipt of that notice, notify the Government in writing that it opposes grant of the proposed permit and the reasons for its opposition. If the Government rejects the opposition, the matter shall be referred to arbitration in accordance with section 26 below, and shall be resolved by it before such a permit is granted. If within four months of the date of receipt of the aforementioned notice the Concession-holder fails to give notice of its opposition to grant of the permit, the Concession-holder shall be seen as agreeing to grant of the permit.

 

4.                   Term of Concession

 

The term of the Concession shall be for the period starting on the date on which the law approving the Concession comes into force and ending March 31, 1999.

 

5.                   Subconcessions

 

(a)              The Concession-holder shall be entitled, with the consent of the Government and the approval of the Knesset Finance Committee, to grant subconcessions by virtue of the Concession.

 

(b)              The Concession-holder having granted a subconcession in accordance with the terms of this Deed of Concession, the subconcession-holder shall have, subject to the provisions of the subconcession, all the rights, privileges, authority and immunities, the duties and the obligations of the Concession-holder if those were granted to the subconcession-holder or imposed upon it in that subconcession, all as part of this Deed of Concession.

 

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6.                   Land

 

(a)              The Government hereby leases to the Concession-holder for the term of the Concession, the Land shown on Map “A” in black, on the terms and under the guidelines set forth below.

 

(b)              The rent to be paid for the Land mentioned in sub-section (a) of this section, for the first ten Years of the lease, is IS 10, which will be paid upon the Government’s demand, and thereafter the rent shall be fair, based on the value of that Land, irrespective of any rise in its value owing to the actions or needs of the Concession-holder.

 

The rent for the period after the end of the first ten years of the lease shall be paid once a year in advance on the anniversary of the date of the Concession.

 

(c)               Whenever so required by the Concession-holder, the Government shall lease, or shall ensure that the Development Authority or Israel Lands Administration leases, to the Concession- holder for the remainder of the term of the Concession, any part of the Reserved Land granted to the State or to the Development Authority that is required by the Plant. For the first ten years from the Start Date the rent to be paid for that Land shall be symbolic, and thereafter the rent shall be fair, based on the value of that Land, irrespective of any rise in the value of the Land owing to the actions or needs of the Concession-holder and on the terms applicable to the Land mentioned in sub-section (a) of this section, mutatis mutandis.

 

(d)              The Concession-holder shall use the Leased Land only for the Plant’s purposes.

 

(e)               All the public roads passing through the Leased Land are excluded from any lease under this section.

 

(f)                If at the end of the first ten years from the Start Date it transpires that reasonably, the Concession-holder does not need all the Land included in the lease granted under sub-section (c) of this section for the Plant’s purposes, taking into account the output capacity of the Plant at that time, the Government shall be entitled at any time thereafter to demand of the Concession-holder, by delivery of written notice at least 12 months in advance, that it return the part it does not require. However, no such return shall prevent the Concession-holder from thereafter demanding that the Government lease that same Land to it or ensure its lease to it in accordance with sub-section (c) of this section.

 

(g)               Land required by the Plant within the area of the Reserved Land which is not Land granted to the Government or to the Development Authority, shall be acquired through negotiation between the Concession-holder and the persons entitled to that Land, and if they cannot reach agreement, that Land shall be expropriated by the Minister of Finance in accordance with the provisions of the Lands (Acquisition for public purposes) Ordinance, 1943.

 

(h)              Where Land is acquired by way of negotiation or expropriation, as provided in sub-section (g) of this section, its price or the compensation for it shall be paid by the Concession-holder, and ownership of that Land shall be granted to the Concession-holder.

 

(i)                  The Concession-holder shall be entitled to grant sub-leases or licenses for any of the Lands leased to it under this Deed of Concession, to any subconcession-holder according to section 5 above or — with the consent of the Government — to others.

 

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7.                   Registration of Government Lands

 

The Government shall ensure that the leases of Lands leased at the time according to section 5 above are registered as quickly as possible in the name of the Concession-holder at the competent Lands Registry office, but it is hereby declared that any such lease shall be valid even if no registration was made as aforesaid, provided that within 30 days of receipt of notice thereof from the Government, the Concession-holder appears at the competent Lands Registry office and signs all the documents required for such registration. This registration and the issue of registration certificates to the Concession-holder in respect of those Lands, shall be without payment of a registration fee or any other levy.

 

8.                   Pledge

 

For Lands leased without the prior written consent of the Minister, the Concession-holder shall not be entitled to create any mortgage or fixed lien on the right of lease on the Leased Land. Any such consensual mortgage or fixed lien for the Leased Land which is not registered at the Lands Registry office, shall be valid despite non-registration, provided that the mortgage was duly registered in accordance with section 127 of the Companies Ordinance and provided also that the holder of that mortgage or of that lien applies to the competent Lands Registry office to register the mortgage or the lien within three months of receipt of the Government’s notice of registration of the Land at the competent Lands Registry office.

 

9.                   Reserved Land

 

(1)              Throughout the term of the Concession, the Government —

 

(a)              shall not grant to any person other than the Concession-holder any lease, possession or license in the Reserved Land without first offering them to the Concession-holder on the terns prescribed in section 6(c) of this Deed of Concession; and

 

(b)              shall not grant to any person other than the Concession-holder any right, license or concession in or on the Reserved Land, for mining or for exploration by other means, of any mineral salts, minerals and chemicals that can be extracted from the Dead Sea, without first offering that right, license or concession to the Concession-holder. If the Concession-holder does not accept the offer within 18 months of the offer being delivered to it, the Government may grant the right, license or concession to that other person on terms no better than those offered to the Concession-holder, provided that no such right, license or concession is granted by the Government to that other person if such grant will have a negative effect on or is contrary to the interests or business of the Plant or of those of a subconcession-holder of the Concession-holder in connection with the Concession or the subconcession; and

 

(c)               shall not grant to any person other than the Concession-holder any right, license or concession for the production of a mineral salt in the Leased Land and in the Reserved Land, other than those persons who were entitled to do so on the date of the Concession, and together for such persons the Government may renew their licenses, concessions or rights or grant them other licenses, concessions or rights in their stead without first offering that right, license or concession to the Concession-holder, and in that case the provisions included in sub-paragraph (b) of this sub-section shall apply, including the term at its end, mutatis mutandis.

 

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(2)              The Concession-holder shall be entitled, with the Government’s consent, to transfer to a suitable location in the Reserved Land, any waste products generated in the course of operation of the Plant.

 

10.            Quiet enjoyment during the term of the Concession

 

During the term of the Concession, the Concession-holder shall have absolute and undisturbed possession of the Plant, and the Plant shall not be forcibly acquired or confiscated nor shall possession be taken in any other forcible manner.

 

11.            Public works

 

The provisions of this Deed of Concession shall not prevent the Government or a Local Authority from carrying out and shall not prevent the Government from permitting any other competent entity to carry out such works, to carry out in, on or beneath the Leased Land or the Reserved Land, any public works, including public roads, railway tracks, electricity lines or cables, bridges, pipes and pipelines, provided that —

 

(i)                  the public works do not unreasonably disturb performance of works required by the Plant or for its proper operation; and

 

(ii)               all necessary means of care are employed by whoever carries out the public works, so as to prevent damage to the Plant or to any property owned by the Concession-holder or which is in its possession or under its supervision; and

 

(iii)            the Government or the Local Authority or whoever carries out the public works, as the case may be, indemnifies the Concession-holder for any loss or expense incurred by the Concession-holder as a result of or in connection with the performance of those public works.

 

Before carrying out such works or permitting them to be carried out, the Government or the Local Authority shall deliver to the Concession-holder, at least 90 days in advance, written notice of its intention, together with the plans of those works; the notice will describe the location of the works and the way in which it is proposed to comply with the terms noted in sub-paragraphs (i) and (ii) of this section; the Concession-holder shall notify the Government in writing, within 90 days of delivery of that notice, if it opposes performance of the public works and the reasons for its opposition, and if the Government rejects that opposition, the matter shall be referred to arbitration pursuant to section 26 below and shall be decided there before any such works are carried out. If the Concession-holder does not give notice of its opposition to grant of the permit within 90 days of the date of receipt of the notice, it shall be deemed to have agreed to performance of the works or to grant of the permit for carrying out the works.

 

12.            Concession-holder’s duty to work

 

Throughout the term of the Concession the Concession-holder shall work diligently to produce the mineral salts, minerals and chemicals mentioned above and to extract them, transport them and market them in accordance with the provisions of this Concession, and to increase within a reasonable time the capacity of the Plant and the output of potassium chloride to an additional four hundred thousand tons or thereabouts per year, above its current output of 165,000 tons per year.

 

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Taking into consideration the Concession-holder’s ability to raise the requisite amounts from funds accrued in the Plant and in other ways, on reasonable terms, it shall use its best efforts at a later stage to continue to increase the Plant’s capacity to an additional annual output of approximately 200,000 — 300,000 tons of potassium chloride.

 

13.            Products not manufactured by the Concession-holder

 

(a)              If at any time after the first three years from the Start Date the Government wishes the Concession-holder to start manufacture of a product in which one or several of the components are mineral salts, minerals or chemicals extractable from the Dead Sea, which is not a product manufactured then by the Concession-holder or by a subconcession-holder of the Concession-holder, the Government shall be entitled, by written notice, to request that the Concession-holder notify the Government within 6 months of the date of receipt of such notice (“the Response Period”), whether the Concession-holder is ready to manufacture that product.

 

During the Response Period, the Concession-holder may oppose in writing the Government’s notice, explaining that the product referred to in the notice is not a product such as that referred to in this sub-section or that the manufacture of such a product would have a negative impact on or would oppose the interests or business of the Plant or of a subconcession-holder of the Concession-holder in connection with the subconcession, or that the provisions of this sub-section were not met in another way. In the event of a dispute, the matter shall be referred to arbitration and decided there in accordance with the provisions of section 26 below.

 

(b)              Any notice from the Government pursuant to this section should contain a detailed description of the product to be manufactured and the process by which it should be manufactured, as well as an undertaking by the Government to provide the Concession-holder or to ensure that it is provided with, upon demand, sufficient know-how on reasonable terms, enabling the Concession-holder to manufacture the product in commercial quantities according to the process mentioned in the notice, and it shall grant the Concession-holder or ensure that it is granted such licenses under patents relating to the product and the process so that the Concession-holder will be protected against any claims of breach whatsoever.

 

The notice should set out the name and address of the owner of the know-how or of the patent, as the case may be, and attach a copy of the details of the patent’s claims and point out the terns on which the owner of that know-how or of that patent is ready to provide the Concession-holder with the know-how or to grant the Concession-holder a license under the patent, as the case may be. The company shall not deliver to others any know-how or patent it receives as described above.

 

(c)               If during the Response Period the Concession-holder notifies the Government in writing that it is ready to manufacture the product in commercial quantities on which the parties will agree, the Concession-holder shall start carrying out the works required for such manufacture and shall complete them within a time agreed to by the Government and the Concession-holder. If the parties cannot agree on the quantities of the product, the period to the start of the works or the period to their completion, the matter shall be referred to arbitration and shall be decided in accordance with the provisions of section 26 below.

 

(d)             If during the Response Period the Concession-holder notifies the Government in writing that it is not ready to manufacture the product but has no objection to the Government granting

 

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another person the right to manufacture the product, or if the Concession-holder does not reply in writing within the Response Period, the Government shall be entitled to grant to another person the right to manufacture the product, on terms that are not better than those stipulated in the notice, and thereafter the Concession-holder will be obliged to supply that person, on reasonable terms, with the end water-salt solution reasonably needed for the manufacture, subject to that end solution being in excess of the needs of the Concession- holder and the subconcession-holders of the Concession-holder.

 

(e)               If within 3 months of a final arbitration award denying the opposition of the Concession-holder as noted in sub-section (a) the Government and the Concession-holder are unable to reach agreement as to the quantities to be manufactured, the date of starting the works required for manufacture of the product and the date of their completion, the matter shall be referred to arbitration and shall be decided there in accordance with the provisions of section 26 below.

 

(f)                If the Concession-holder has not started the works required or has not completed them within the dates agreed upon by the Government and the Concession-holder, or they were decided upon by the arbitrators, as the case may be, the Government shall be entitled to grant to another person the right to manufacture the product on terms that are no better than those stipulated in the aforementioned notice, and thereafter the Concession-holder will be obliged to supply that person, on reasonable terms, with the final water-salt solution reasonably needed for the manufacture, subject to that solution being in excess of the needs of the Concession-holder and the subconcession-holders of the Concession-holder.

 

14.            No contract / arrangement to limit output

 

The Concession-holder and the subconcession-holders of the Concession-holder shall not make — without the prior written consent of the Government — any contract or arrangement with any person whatsoever for limiting output of the products of the Concession-holder or for raising or maintaining prices in a way that limited the output. The provisions of this section replace the Antitrust Law, 1959, whose provisions shall not apply to the Concession-holder and the subconcession-holders of the Concession-holder in connection with the subconcession.

 

15.            Royalties

 

(a)              In consideration of any rights and privileges granted to the Concession-holder in this Deed of Concession, except for the leases mentioned in section 6 above (for which rent will be paid as provided in that section 6), the Concession-holder shall pay the Government the following royalties, commencing from the year starting April 1, 1964 and every Year thereafter:

 

(1)              Royalties equal to 5% of the value of the potassium chloride, bromine and magnesium chloride produced by the Plant and which is sold that Year, and that value shall be ascertained in the manner described below.

 

The value of each product mentioned in this sub-section shall be ascertained at the end of each Year and shall be its value at the Plant, unpacked. This value shall be determined by taking the price of its sales (including any bonus, if given), during that Year and by deduction of the following amounts from that price:

 

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(i)                 the appropriate expenses of packing, sales commission and transportation and insurance from the Concession-holder’s Plant to the destination agreed upon with the customer, and

 

(ii)              10% of the amount obtained by deduction of all the appropriate expenses mentioned in sub-paragraph (i) of this sub-section from the selling price.

 

If the production and sale of potassium chloride in a particular Year exceed 1,000,000 tons, the Government can demand a new discussion of the rate of the royalties to be paid for the quantity in excess of the 1,000,000 tons of potassium chloride sold in that Year, provided that the royalties on that surplus in no circumstances exceed 10% of the selling price calculated as above.

 

(2)              Royalties equal to 5% of the value of products, except for the products mentioned in sub- section (1) above, of the Plant which are sold that Year and comprise or contain mineral salts, minerals and chemicals extracted from the Dead Sea, and that value should be ascertained in the manner described above; the value of each product mentioned in this sub-section shall be ascertained at the end of each Year and will be its value at the Plant, unpacked. This value will be determined by taking its selling price (including any grant if given) during that Year, and by deduction of the following amounts from that price:

 

(i)                 the appropriate expenses of raw materials (which are not mineral salts, minerals or chemicals extracted from the Dead Sea) which are in the sold product, plus 15% of those appropriate expenses; and

 

(ii)              the appropriate expenses of packing, sales commission and transportation and insurance from the Concession-holder’s Plant to the destination agreed upon with the customer, and

 

(iii)           10% of the amount obtained after deduction of all the appropriate expenses mentioned in sub-paragraph (ii) of this sub-section from the selling price.

 

(b)              The Government may — with the approval of the Knesset Finance Committee — reduce the royalties paid for the products mentioned in sub-section (a) of this section.

 

(c)               The amount of the royalties for each Year shall be ascertained and approved by an auditor. The amount due will be paid by the Concession-holder to the Government within 120 days of the end of the Year for which the royalties are paid.

 

(d)              The royalties paid by the Concession-holder to the Government pursuant to this Deed of Concession shall be seen, for the matter of the Income Tax Ordinance, as if they were an expense incurred entirely and only in generating the income of the Concession-holder.

 

(e)              For the matter of this section, the term “Year” means a year commencing April 1 and ending March 31 of the following year.

 

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16.            Accounts and reports

 

(a)              The Concession-holder shall maintain at all times, at its head office, all normal and appropriate books of account and these shall be open at any reasonable time, by appointment, to the audit of Government representatives.

 

(b)              The Concession-holder shall submit to the Government every Year, a duly audited balance sheet and profit / loss report, and a detailed report approved by an auditor, providing all the details required for calculation of the royalties payable to the Government that Year in accordance with section 15 above.

 

17.            Transport facilities

 

The Government shall provide and maintain during the term of the Concession, roads or railway tracks and suitable and sufficient port facilities to enable transportation of the Concession-holder’s products and their shipment by sea from ports in Israel.

 

18.            Communication

 

The Government shall permit the Concession-holder, subject to the Postal Ordinance, to set up and operate, at its own expense, a long-distance communication system (and this term includes a telegraph and telephone network, whether above ground or underground, teleprinters, telecommunications and wireless) that provide communication between the various stations of the Plant, but such a communication system shall serve only the purposes of the Plant and shall be under Government supervision, and shall not be built or operated in a way that disturbs the actions of any competent authority whatsoever.

 

19.            Public health

 

The Concession-holder shall comply with all the laws relating to public health and safety and all the provisions of the Mines Ordinance and the Factories Ordinance, 1947, and their concomitant regulations which relate to the health and safety of workers.

 

20.            Payment in lieu of local taxes

 

(a)              The Minister of Finance and the Minister of the Interior may instruct, in an order, that the Concession-holder shall pay the Government throughout part or all of the term of the Concession, a fixed amount of tax to be agreed upon by the Minister of Finance, the Minister of the Interior and the Concession-holder, and this tax shall be in lieu of local taxes.

 

(b)              Upon execution of such an order, no local authority may impose upon or collect from the Concession-holder any local taxes, and the Minister of the Interior shall divide among the relevant local authorities, in such manner and in such proportionate percentages as he sees fit from time to time, all the monies received by the Government according to this section in lieu of any local taxes which, if not for the provisions of this section and the order referred to above, would have been paid by the Concession-holder.

 

(c)               This section or any order as referred to above shall not derogate from any relief or exemption from local taxes to which the Concession-holder was or will be entitled at any time by virtue of the provisions of the Capital Investment Encouragement Law, 1959, or any other law, and

 

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in giving such an order, the Minister of Finance and the Minister of the Interior validate such relief or exemption.

 

21.            No transfer

 

Without the prior written consent of the Government and the approval of the Knesset Finance Committee, the Concession-holder shall not be entitled to assign, pledge or remove from its possession the Concession or any part thereof.

 

22.            Force majeure

 

Non-fulfillment or non-performance — or their breach whether on the part of the Concession-holder or of the Government — of any stipulation, agreement or term of the stipulations, agreements or terms included in this Concession that one party or the other has a duty to fulfill or perform, shall not serve as cause of any claim or demand by one party against the other and they shall not act in any way that is detrimental to the other party and shall not be seen as a breach of this Concession, if it is reasonably proven that the non-fulfillment or the non-performance stemmed from one or several of the following causes: acts of God, acts by foreign rulers or nations, acts of infiltration, war, quasi-war campaigns, quarantine, embargo, uprising, rebellion, riots, strikes and slow-downs or labor disputes, fire, storm, tempest, explosion, earthquake, floods or other causes beyond the control of the parties.

 

23.            Reliefs

 

(a)              If one of the parties to this Concession does not fulfill or does not perform a stipulation, agreement or term of the stipulations, the agreement and the terms included in this Concession which that party is required to fulfill or perform, the non-fulfilling party (“the Party in Breach”) shall pay the other party (“the Injured Party”) damages in an amount sufficient to indemnify the Injured Party for any loss or damage it suffered owing to that non-fulfillment.

 

(b)              If the Injured Party alleges that the non-fulfillment or the non-performance by the Party in Breach is so severe in nature that it touches on the very foundation of the Concession, the Injured Party may demand of the Party in Breach, in a written notice, that it correct the non- fulfillment within a time that seems reasonable in the circumstances.

 

If the Party in Breach does not meet that demand, the Injured Party shall be entitled to bring to arbitration a claim to see the Concession as having come to an end. If the arbitration finds that the breach was in its nature as alleged by the Injured Party as aforesaid, the arbitration may decide to bring the Concession to an end, commencing from a date it deems justified in the circumstances and subject to the provisions of section 24 below, it may decide on severance of the relations between the parties on such terms as it deems justified and on the matters involved therein. The arbitration may also, in addition to bringing the Concession to an end or instead of bringing it to an end, rule payment of damages or compensation or any other remedy or remedies it deems justified in the circumstances, and where the Concession is brought to an end the Government shall be entitled to set off the amount of those damages or compensation ruled in its favor, against any payment due from it to the Concession-holder pursuant to section 24 below.

 

If the non-fulfillment was reflected in non-grant of a lease on any Land according to section 6 above, the arbitration may, in addition to any other remedy, order the Government to lease

 

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that Land to the Concession-holder or to ensure that it is leased to it, on terms that the arbitration lays down and which correspond to section 6 above.

 

(c)               If an order was given or a valid decision made for liquidation of the Concession-holder (not for the purpose of merger or reorganization with the consent of the Government and the approval of the Knesset Finance Committee), the arbitration shall see such order and such decision as a breach by the Concession-holder of its duties under this Deed of Concession, entitling the Government to see the Concession as ended.

 

24.            Handling the assets upon expiration of the Concession

 

(a)              At the end of the term of this Concession or upon it being brought to an end on an earlier date (““the End Date”), all the Fixed Tangible Assets belonging to the Concession-holder shall become the property of the Government and the Government shall pay the Concession- holder, in consideration of those Fixed Tangible Assets, their depreciated replacement value as is on the End Date. Any other assets of any kind belonging to the Concession-holder on the End Date shall remain the property of the Concession-holder.

 

The term “depreciated replacement value” when referring to the Fixed Tangible Assets means the purchase price of similar assets when new at market prices on the End Date, less the depreciation for the period of use of each of the assets, and this depreciation shall be based on the technical life of such an asset, taking into account the condition of its maintenance by the Concession-holder and the conditions prevailing in the Dead Sea area.

 

If on the End Date the Fixed Tangible Assets or any part of them are mortgaged or encumbered by a lien, the mortgage or the lien shall continue in place on those assets but their depreciated replacement value shall not be reduced because of the mortgage or the lien and the following provisions shall apply:

 

(i)                  The Government shall be entitled to withhold from that depreciated replacement value an amount sufficient to repay the principal and interest secured by the mortgage or the lien when they fall due, or a sum equal to the depreciated replacement value of the asset, whichever is the lower amount.

 

(ii)               If the Government withholds such an amount, it shall use it to settle the principal and interest of the debt secured by the mortgage or the lien or shall compensate the Concession-holder in the amount of the sum it withheld for that mortgage or lien against any claims and demands by the mortgagee or the lien-holder, in relation to the aforementioned principal and interest, and the balance, if any, shall be returned to the Concession-holder.

 

(b)              During the ten years prior to the end of the term of the Concession, the Concession-holder shall not invest new capital in the Plant without the prior written consent of the Government, unless the Income Tax Ordinance allows deduction of the entire investment during those ten years; however, the Government’s consent to any basic investment that could be essential for the proper operation of the Plant, shall not be unreasonably delayed or withheld.

 

25.            Priority for new concession

 

If after expiration of the Concession the Government wishes to offer a new concession for the production of mineral salts, minerals and chemicals from the Dead Sea to any person who is not

 

13

 

the Concession-holder, the Government shall first offer a new concession to the Concession- holder, on terms that are not inferior to those it intends to offer to such other person.

 

26.            Arbitration

 

If at any time within the term of the Concession or thereafter, any doubt, disagreement or dispute arises between the parties concerning the meaning or performance of this Concession or of anything related to it or concerning the rights and obligations of the parties to it, and if the doubt, disagreement or dispute cannot be resolved in other ways, and irrespective of whether there are specific provisions for referring the matter to arbitration in any of the sections of this Deed of Concession, they shall be brought to the arbitration of three persons, two of whom shall be appointed one each by the parties to the arbitration and the third shall be appointed in writing signed by the two persons appointed as aforesaid before the arbitration commences. If those two appointed persons are unable to agree on the third arbitrator, the third arbitrator shall be appointed by whoever is serving at that time as President of the Jerusalem District Court.

 

If the arbitration involves a matter of assessment or any other technical matter, the third arbitrator to be appointed as aforesaid shall be a technical expert who is competent to deal with that special matter.

 

The award of the three arbitrators shall be final and binding upon the parties. If the award is not unanimous, the ruling of the majority shall be final and binding.

 

The venue of the arbitration shall be as agreed between the parties, and if they cannot agree — the venue shall be Jerusalem. If not stipulated otherwise in this Deed of Concession, the provisions of the Arbitration Ordinance shall apply to arbitration pursuant to this section.

 

This section does not release the Government from the need for approval from the Knesset Finance Committee in those matters where such approval is required under the terms of this Deed of Concession.

 

27.            Notices

 

Whenever according to this Concession notices, consents, requests or information (“Notices”) must be delivered, the Notices shall be in writing and shall be seen as if duly delivered if sent by registered and prepaid mail to the parties at the following addresses:

 

The Government — Ministry of Finance and Ministry of Development, Jerusalem,

 

The Concession-holder — Beit Ha’ashlag, Be’er Sheva,

 

or to any other address within the State of Israel, as each party notifies the other in a similar Notice.

 

Every notice sent as aforesaid shall be seen as a Notice that was delivered seventy-two hours after the properly addressed letter containing the Notice was mailed.

 

28.            Waiver

 

(a)              If the Government accepted any payment from the Concession-holder pursuant to this Concession, whether to the royalties account or another account, such acceptance shall not

 

14

 

be seen as implying a waiver by the Government of any of its rights concerning any prior breach of any of the provisions of this Concession.

 

(b)              Waiver by one party of a breach of any of the provisions of this Concession shall not be seen as a waiver of any breach thereafter of the same provision or any other provision, whether similar or different in its nature.

 

29.            Footnotes

 

Footnotes in the Concession shall not be relied upon in the interpretation of the provisions of this Concession.

 

30.            Waiver of notarized notice

 

The parties to this Concession hereby waive the need for notarized notice or other official endorsement for any breach or non-fulfillment of any of its provisions.

 

31.            Government action

 

Any thing which under this Concession the Government is permitted to do or perform and any consent that must be given by the Government under this Concession, shall be duly done, performed or given by the Minister or by whoever is appointed under his signature for that purpose. In witness whereof the parties hereby affix their signatures and stamp on the date noted at the head of this Deed of Concession.

 

Minister of Finance Minister of Development - for and in the name of the State of Israel

 

Israel Hillman and Emmanuel Shachar — for and in the name of Dead Sea Works Ltd.

 

	
David Ben-Gurion 

Prime Minister
    	
Levi Eshkol 

Minister of Finance
    	
Mordechai Bentov 

Minister of   Development
    
	
 
    	
 
    	
 
    
	
Yitzchak Ben-Zvi 

President
    	
 
    	
 
    

 

15

 

Dead Sea Concession (Amendment No. 2) Law, 1986(1)

 

1.                   Amendment of Concession

 

Deed of Amendment No. 2 of the Concession in the Schedule to this Law, made between the State and the Concession-holder named in it, is seen as valid for all its purposes notwithstanding the provisions of any law.

 

Schedule

 

The Deed of Concession Amendment made on April 2, 1986 between the State of Israel , represented by the Government of Israel, acting through the Minister of Finance and Minister of Industry and Trade of the first part, and Dead Sea Works Ltd., a company incorporated under the laws of Israel and whose registered office is in Beit Ha’ashlag in Be’er Sheva of the second part, hereby attests and it is hereby declared as follows:

 

1.                   This Deed is Amendment No. 2 to the Deed of Concession made between the above- named parties on May 30, 1961,(2) as amended on July 17, 1968(3) (“the Deed of Concession”).

 

2.                   In section 4 of the Deed of Concession, the words “March 31, 1999” shall be replaced by “March 31, 2030”.

 

3.                   In section 15 of the Deed of Concession, sub-sections (d) and (e) shall be marked (e) and (f), and the following shall be inserted before them:

 

“(d)        Notwithstanding the provisions of sub-section (c), commencing in the financial year starting April 1, 1999, the following provisions shall apply:

 

(1)             Any sum constituting a component in calculation of the annual royalties shall be linked. For this matter —

 

‘the base representative exchange rate’ — the representative exchange rate published for the following days:

 

(a)              for the matter of the selling price of a product — the date of receipt of the selling price by the Concession-holder;

 

(b)              for the matter of an expense — the date of incurring the expense;

 

‘the new representative exchange rate’ — the representative exchange rate published on the third day before the actual date of payment of the amount of the annual royalties.

 

(1)  No footnote or endnote in Hebrew doc.

 

(2)  “

 

(3)  “

 

16

 

(2)             Within one hundred and twenty days from the end of each of the first three quarters of the Year, a payment shall be made on account of the royalties (“Quarterly Payment”), in an amount equal to 75% of a quarter of the amount of

 

the annual royalties for the previous year; each Quarterly Payment shall be linked; For this matter —

 

‘the base representative exchange rate’ — the representative exchange rate published on the third day before the date of actual payment of the amount of the annual royalties for the previous year;

 

‘the new representative exchange rate’ — the representative exchange rate published on the third day before the date of actual payment of the Quarterly Payment.

 

(3)             From the amount of the annual royalties paid as provided in sub-section (c), the Quarterly Payments made for that year, linked, shall be deducted; for this matter —

 

‘the base representative exchange rate’ — the representative exchange rate published on the third day before the date of actual payment of the Quarterly Payment;

 

‘the new representative exchange rate’ — the representative exchange rate published on the third day before the date of actual payment of the annual royalties.

 

(4)             Should it transpire that the amount of the linked quarterly royalties for that year as provided in paragraph (3) exceeds the amount of the annual royalties for the same year as calculated in paragraph (1), the surplus amount shall be credited on account of the royalties in the year thereafter and will be deducted, linked, from the next Quarterly Payment or Quarterly Payments or from the amount of the annual royalties for the next year, as the case may be; for this matter —

 

‘the base representative exchange rate’ — the representative exchange rate published on the third day before the date of actual payment of the amount of the annual royalties for the year for which the surplus was generated;

 

‘the new representative exchange rate’ — the representative exchange rate published on the third day before the date of actual payment of the amount from which the surplus is deducted.

 

(5)             Calculation of the amount of the deduction which is to be made in percentages as provided in sub-sections (a)(1) (ii) and (a)(2)(iii), shall be based on the sum obtained after deduction of all the linked expenses as provided in paragraph (1) from the total linked selling prices as provided in paragraph (1); calculation of the amount of the deduction which is to be made in percentages as provided in sub-section (a)(2) (i) shall be based on the total expenses referred to in that section, linked as provided in paragraph (1).

 

17

 

(6)             In this sub-section —

 

‘linked’ — linked to the representative exchange rate, so that if a change occurs in the base representative exchange rate compared with the new representative exchange rate, the amount concerned will increase or decrease according to the rate of rise or fall;

 

‘representative exchange rate’ — the representative exchange rate of the US dollar published by the Bank of Israel; in a period when the Bank of Israel does not customarily publish exchange rates, the Governor of the Bank of Israel shall determine the representative exchange rate for the matter of this Deed of Concession;

 

‘quarter’ — a period of three months commencing April 1, July 1, October 1 and January 1.

 

4.                   Amendment of this Deed of Concession shall come into force on the start date of the law approving it.

 

In witness whereof the parties hereby affix their signatures and stamp on the date noted at the head of this Deed.

 

	
Yitzchak   Moda’i
    	
Ariel Sharon
    	
Yoram Ziv
    	
Aryeh Shachar
    
	
Minister of Finance
    	
Minister of   Industry and Trade
    	
For and on behalf of Dead Sea Works Ltd.
    

 

	
Shimon Peres 
   Prime Minister
    	
Moshe Nissim 
   Minister of Finance
    	
Ariel Sharon 
   Minister of Industry and Trade
    
	
 
    	
 
    	
 
    
	
Haim Herzog 
   President
    	
 
    	
 
    

 

18

 

[Emblem of the State of Israel]

 

Jerusalem, January 11, 1995
 95-9363.T

 

Dead Sea Works Ltd.
 Beit Ha’ashlag, Be’er Shava

 

Re: Dead Sea Deed of Concession - Section 15(a)(1) — Potassium chloride royalties

 

I hereby notify you in the name of the Government of Israel (“the Government”), which is represented by us in accordance with section 31 of the Dead Sea Concession Deed dated May 30, 1961, (“the Deed of Concession”), that subject to section 17 of the Deed of Concession not being activated and exercise of any right under that section not being required, the Government will not demand re-discussion of the amount of the royalties to be paid in respect of the surplus quantity of one million (1,000,000) tons of potassium chloride that was or will be produced during any year as noted in the last paragraph of section 15(a)(1) of the Deed of Concession, for the period preceding the date of this letter, and for the period from the date of this letter to the end of the term of the Concession which is the subject of the Deed of Concession as has been or will be amended.

 

However, commencing 2010, the Government will be able to demand re-discussion of the amount of the royalties in accordance with and subject to the provisions of the aforementioned paragraph in the Deed of Concession, with reference to the quantity in excess of three million (3,000,000) toms of potassium chloride produced in any year from that year onwards, without it granting the company any right in connection with section 17 of the Deed of Concession.

 

For the removal of doubt, we note Government Decision No. 48/34 on January 27,1992 in the matter of certain amendments to the Deed of Concession, which declared section 17 of the Deed of Concession to be void.

 

The response of Dead Sea Works to that decision, as reflected in the prospectus of Israel Chemicals Ltd. dated February, 1992, was that implementation of that Government decision would not harm the proper functioning of Dead Sea Works.

 

Yours sincerely,

 

	
Signed:
    	
/s/ Avraham (Baiga) Shochat
    	
 
    	
Signed:
    	
/s/ Micha Harish
    
	
 
    	
Avraham (Baiga) Shochat
   Minister of Finance
    	
 
    	
 
    	
Micha Harish
   Minister of Industry & Trade
    

 

	
1   Kaplan St., Jerusalem 91131
    	
P.O.B.   13195
    	
Tel:   317377
    	
Fax: 635769
    

 

 

Dead Sea Concession Law, 1961

 

Subconcession for Dead Sea Bromine Limited

 

Pursuant to section 2 of the Dead Sea Concession Law, 1961,(1) a subconcession is hereby published, granted in accordance with the provisions of section 5 of the Deed of Concession in the Schedule to the Law by the Concession-holder named in that Deed of Concession, to Dead Sea Bromine Limited in this wording:

 

This Deed of Subconcession was made on November 11, 1962

 

Between

 

Dead Sea Works Limited, a company incorporated under the laws of Israel and whose registered office is in Beit Ha’ashlag in Be’er Sheva (“the Primary Concession-holder”) of the first part;

 

And

 

Dead Sea Bromine Limited, a company incorporated under the laws of Israel and whose registered office is in Beit Ha’ashlag in Be’er Sheva (“the Subconcession-holder”) of the second part;

 

Whereas —

 

(a)              Under a deed of concession (“the Primary Concession”) made on May 30, 1961 between the State of Israel (“the Government”) of the first part and the Primary Concession-holder of the second part, the Government granted the Primary Concession-holder the exclusive right to extract by way of evaporation (solar or artificial), cooling, mining, quarrying, or in any other way, mineral salts and minerals and chemicals, whether in solution or in solid form, which are in and beneath the Dead Sea and to prepare them for marketing, to sell them and deal with them and all the other rights and privileges, subject to all the undertakings and terms and stipulations set forth in the Primary Concession; and

 

(b)              Section 5 of the Primary Concession authorizes the Primary Concession-holder, with the consent of the Government and the approval of the Knesset Finance Committee, to grant subconcessions by virtue of the Primary Concession; and

 

(c)               The Primary Concession-holder fully controls the Subconcession-holder; and

 

(d)              The Primary Concession-holder agreed to grant to the Subconcession-holder — subject to restrictions, terms and stipulations set forth below — a subconcession for the extraction of

 

(1)  Sefer Hahukkim 342, 1961, p. 130.

 

20

 

bromine and bromine compounds from minerals salts, minerals and chemicals, whether in solution or in solid form, which are in and beneath the Dead Sea, and to prepare them for marketing, to sell them and deal in them, as well as the other rights set forth below, and the Subconcession-holder is ready to accept such a subconcession, subject to those restrictions, terms and stipulations; and

 

(e)               In a letter dated November 11, 1962 signed by the Minister of Finance and by the Minister of Development, the Government agreed to grant of the subconcession to the Subconcession-holder as aforesaid.

 

It is hereby agreed and declared as follows:

 

1.                   (a)              In the subconcession, the following words and expressions shall have the meaning alongside them unless the context requires otherwise, and they are:

bromine compounds — compounds in which bromine is an element or descendant of such compounds, excluding compounds in which bromine is a trace-element only, or compounds which, despite the presence of bromine in them, are not usually described in the trade or industry as bromine compounds.

 

Solution concentrate — a solution originating in the Dead Sea and which has been evaporated or otherwise treated by the Primary Concession-holder and which is in one of the stages of production of potash or of other products from mineral salts, minerals and chemicals which are in the Dead Sea, by the Primary Concession-holder.

 

Solution from the Dead Sea — a solution from the Dead Sea which has not been evaporated or otherwise treated by the Primary Concession-holder.

 

The Plant — in relation to the Subconcession-holder — the business of extracting bromine and bromine compounds, their preparation for marketing, their sale and dealing in them, and all those businesses, property and things of the Subconcession-holder which are required or associated with such business, all in accordance with the subconcession.

 

(b)              Words and expressions whose meaning is defined in the Primary Concession shall have the same meaning in the subconcession provided the context does not require otherwise.

 

2.                   (a)              The Primary Concession-holder herby grants to the Subconcession-holder:

 

(1)             The exclusive right to extract bromine and bromine compounds from mineral salts, minerals and chemicals, whether in solution or in solid form, which are in or beneath the Dead Sea, and to prepare bromine and bromine compounds for marketing, to sell them and to deal in them.

 

(2)             The right, subject to the provisions of section 2(d) of the Primary Concession, to do all or some of the following in the Leased Land and in the Reserved Land:

 

(a)              To extract by way of quarrying, mining or by any other production method, mineral salts, minerals and chemicals as required from time to time by the

 

21

 

Subconcession-holder for any process in the manufacture of bromine or bromine compounds that use mineral salts, minerals and chemicals extracted or extractable from the Dead Sea.

 

(b)              To quarry for the production of the materials required for the construction, expansion and maintenance of the Plant.

 

(b)              In order to exercise the rights granted it in sub-section (a) of this section, the Subconcession-holder may enter the areas of the Dead Sea, the Leased Land and the Reserved Land, at points and on terms to be set from time to time in writing by the Primary Concession-holder (and those points, when used for the matter of a solution concentrate, are hereinafter called “Delivery Points”) for the extraction of a solution, a solution concentrate and other mineral salts, minerals and chemicals from the Dead Sea, from which bromine and bromine compounds will be manufactured, and to extract all of these in the quantities, by the means, in the manner and for the purpose as aforesaid, and to lay pipes and install pumping facilities and other facilities in or above the areas referred to above, as will be determined in writing from time to time by the Primary Concession-holder.

 

3.                   The subconcession is granted for the period commencing on the date of the subconcession or on the date on which the subconcession is approved by the Knesset Finance Committee, whichever is the later date, and ending one day before the end of the Primary Concession or one day before the Primary Concession is brought to an end, unless the subconcession ends earlier, as described below.

 

4.                   (a)              The Primary Concession-holder hereby leases to the Subconcession-holder in a sub- lease, for the term of the subconcession, the Land marked on Map “A” attached to the subconcession, which are within the Land leased by the Primary Concession-holder and marked with dense diagonal dotted lines, for the rent and on the terms set forth below.

 

(b)              The rent to be paid by the Subconcession-holder to the Primary Concession-holder for the sub-lease hereby granted, shall be IS 1 (one Israeli lira) for the period commencing on the date on which the subconcession comes into force and ending 10 (ten) years after the start of the Primary Concession; thereafter the rent shall be a sum equal to the rent paid by the Primary Concession-holder to the Government under the Primary Concession for the Land hereby leased in a sub-lease, and shall be paid each year in advance, one week before the anniversary of the date of the Primary Concession.

 

(c)               If the Subconcession-holder needs, for its Plant or its expansion, additional Land which is part of the Leased Land or of the Reserved Land, the Primary Concession-holder shall lease them to the Subconcession-holder, on its request, in a sub-lease for the remainder of the term of the subconcession, but the Primary Concession-holder is not obliged to lease any additional Land if it is needed for the Plant of the Primary Concession-holder or of another of its subconcession-holders, or additional Land from the Reserved Land, if it cannot obtain lease of such additional Land by virtue of section 6(b) of the Primary Concession.

 

22

 

(d)              During the period commencing on the date on which the subconcession comes into force and ending 10 (ten) years after the start of the Primary Concession, the rent to be paid for the additional Land shall be symbolic; thereafter, the rent will be a sum equal to the rent to be paid by the Primary Concession-holder to the Government under the Primary Concession for such additional land. The remaining terms of the subconcession shall be, mutatis mutandis, the same as the terms applicable to the Land hereby sub-leased.

 

(e)               If at the end of the first ten years from the date of the start of the Primary Concession it transpires that reasonably, the Subconcession-holder does not need for its Plant all the Land included in the lease granted under sub-section (c) of this section, taking into account the output capacity of the Plant at that time, the Primary Concession-holder is entitled at any time to demand, in a written notice delivered at least 12 months in advance, that the Subconcession-holder return to it the part not required; such return shall not prevent the Subconcession-holder from demanding of the Primary Concession-holder at a later date that it lease that Land to it again or ensure that it is leased to it in accordance with sub-section (c) of this section.

 

(f)                The sub-lease hereby granted is subject to all the mortgages and liens that were and will be created in favor of any trustee under any deed of trust that is signed pursuant to the agreement made on July 11, 1961 between the International Restoration and Development Bank and the Primary Concession-holder.

 

(g)               The Subconcession-holder shall use the Land sub-leased to it only for the needs of the Plant.

 

(h)              All the public roads that pass through the Land leased according to the terms of the subconcession are excluded from any sub-lease under this section.

 

(i)                  Any sub-lease granted under this section shall be valid even if not registered at the competent Lands Registry office, provided that when the Government ensures the registration of lease of the Land referred to in section 7 of the Primary Concession, the Subconcession-holder appears, within 30 (thirty) days of having received notice thereof from the Primary Concession-holder, at the competent Lands Registry office and signs all the documents required for effecting registration of the sub-lease granted by virtue of this section, and that registration and the issue of registration certificates to the Subconcession-holder in respect of that Land shall be without payment of a registration fee or any other levy.

 

(j)                 Without the prior consent of the Minister and the Primary Concession-holder, the Subconcession-holder shall not be entitled to create any mortgage or fixed lien on the right of sub-lease. Any mortgage or lien created with such consent for the Land leased in the sub-lease, which was not registered at the Lands Registry office, shall be valid despite the non-registration provided that the mortgage was duly registered in accordance with section 127 of the Companies Ordinance and provided also that the holder of that mortgage or that lien applies to the competent Lands Registry to register the mortgage or the lien within three months from the date of receipt of notice from the

 

23

 

Primary Concession-holder concerning registration of the relevant Land at that Lands Registry office.

 

5.                   In any area of the Dead Sea and of the Leased Land or the Reserved Land on which part of the Plant of the Subconcession-holder operates or on which there are facilities or equipment of the Subconcession-holder, whether the area is sub-leased to the Subconcession-holder or not, the Primary Concession-holder shall be entitled at any time, notwithstanding the subconcession, to —

 

(a)              enter it for audit and for taking measurements, as it sees fit;

 

(b)              pass through it time and again, together with workers, contractors and vehicles or without them, for access to and exit from any part of the Plant of the Primary Concession-holder, and along routes determined by the Primary Concession-holder from time to time at its discretion;

 

(c)               lay pipes and cables in it and set up pumping facilities and other installations, build roads, railway tracks and other means of transportation, from one end to the other, above it or below it.

 

6.                   In consideration of expenses incurred by the Primary Concession-holder for pumping a solution concentrate to the Delivery Point and for the repair and maintenance of pipes, pumps, installations, dams and evaporation ponds of the Primary Concession-holder, the Subconcession-holder shall pay the Primary Concession-holder 20 (twenty) agorot for every cubic meter of solution concentrate received by the Subconcession-holder at the Delivery Point by virtue of the subconcession.

 

The payments under this section shall be annual, and shall be paid on January 1 of each year, the first of which is January 1, 1963.

 

If at any time one of the parties to the subconcession alleges that the amount of that payment should be changed, it can request of the other party that it agree to a change and the other amount will be paid from the date on which the parties agree to it, and if there is no agreement — as will be determined in arbitration according to the provisions of section 23 below. Until the arbitration award, the payment amount shall remain as was before the request for the change.

 

7.                   If the Primary Concession-holder carried out public works in or outside the Dead Sea, the Leased Land or the Reserved Land, including installations for flood prevention, railway tracks, roads, water, electricity, gas or fuel installations — and the public works are likely to benefit the Plant of the Subconcession-holder, the Subconcession-holder shall participate in the maintenance expenses to an extent deemed justified in the circumstances, and noting the scope of the benefit that will devolve to the Subconcession-holder from those works on the one hand, and the scope of the benefit from them for the Plant of the Primary Concession-holder and others, on the other hand, provided that nothing stated in this section applies to

 

24

 

the expenses of construction or maintenance of dams, evaporation ponds, pumps, installations, pipes and related installations.

 

Payments under this section shall be made on the dates and in the manner determined between the parties, and failing agreement, in arbitration in accordance with section 23 below.

 

Any dispute on the question of whether a particular public work constitutes a benefit to the Plant of the Subconcession-holder or concerning the amount of the participation of the Subconcession-holder in its performance and maintenance — failing agreement on its resolution — shall be decided in arbitration in accordance with section 23 below.

 

8.                   The Subconcession-holder undertakes to run its Plant in the manufacture of bromine and bromine compounds with appropriate diligence.

 

9.                   (a)              If at any time the Government delivers a notice to the Primary Concession-holder, by virtue of section 13 of the Primary Concession, demanding that the Primary Concession-holder start manufacture of a product as stated in that section and the product is bromine or a bromine compound, the Primary Concession-holder shall immediately send a copy of that notice to the Subconcession-holder, with a written request to notify the Primary Concession-holder in writing, within three months of the date of receipt of the copy of the notice, whether the Subconcession-holder is ready to manufacture that product.

 

(b)              If the Subconcession-holder wishes the Primary Concession-holder to exercise the powers granted it under section 13 of the Primary Concession to oppose the Government’s notice, it shall notify the Primary Concession-holder accordingly within the aforesaid three months, and shall present all the reasons and evidence required and desirable for preparation of the opposition.

 

(c)               Notice from the Subconcession-holder to the Primary Concession-holder under sub- section (a) of this section, of its readiness to manufacture the product, or notice under sub-section (b) of this section of its request that the Primary Concession-holder oppose the Government’s notice, shall not bind the Primary Concession-holder, but the Primary Concession-holder will consider it before notifying the Government that the Subconcession-holder is ready to manufacture the product or that the Subconcession-holder opposes the Government’s notice under the aforementioned section 13. Furthermore, before notifying the Government as aforesaid, the Primary Concession-holder may take into account each of the matters mentioned in that section 13 of the Primary Concession, whether they relate to the Subconcession- holder or were raised by it or not.

 

(d)              If the Subconcession-holder gave notice that it is ready to manufacture the product named in the Government’s notice, and the Primary Concession-holder confirmed this in accordance with sub-section (c) of this section, it shall notify the Subconcession-holder immediately, in writing, and the Subconcession-holder shall do everything necessary as

 

25

 

quickly as possible to ensure fulfillment of the undertakings of the Primary Concession-holder pursuant to section 13 of the Primary Concession in connection with that product.

 

(e)               If within the aforementioned period of three months the Subconcession-holder notified the Primary Concession-holder that it does not wish to manufacture the product, or does not notify it of its decision, the Primary Concession-holder may, at its discretion and without prejudice to any other remedy it has under the subconcession or under any law, oppose the Government’s notice or accept it and manufacture the product itself or using another subconcession-holder or another license-holder, or it may notify the Government that there is no objection to the Government granting the right to manufacture the product to another person.

 

MAP

 

(f)                Unless stated otherwise in this section, the Subconcession-holder shall maintain, perform and fulfill all the undertakings of the Primary Concession-holder to the Government under the aforementioned section 13 concerning the manufacture of bromine and bromine compounds, including the undertakings of the Primary Concession-holder stemming from any arbitration award pursuant to the Primary Concession for the matter of bromine, bromine compounds or their manufacture.

 

(g)               The Subconcession-holder shall cooperate with the Primary Concession-holder in providing technical know-how, testimony and reasons before any arbitration between the Government and the Primary Concession-holder pursuant to the aforementioned section 13 of the Primary Concession, in the matter of the proposed manufacture of bromine or bromine compounds or everything stemming from it.

 

10.            The Subconcession-holder shall be entitled, with the approval of the Government and the Primary Concession-holder, to transfer to a suitable location in the Reserved Land any waste products generated in the course of operating the Plant.

 

11.            The Subconcession-holder hereby agrees — if there is no specific provision in the Subconcession (other than the undertaking of the Primary Concession-holder to pay royalties to the Government and to pay rent according to the Primary Concession) — to take upon itself all the undertakings of the Primary Concession-holder for the matter of extracting bromine and its compounds, their preparation for marketing, their sale and dealing in them, and to fulfill and uphold all the terms of the Primary Concession and to indemnify the Primary Concession-holder for any damages claims and expenses relating to them in any way.

 

12.            (1)              Excluded from any grants described in section 2 above and reserved to the Government —

 

26

 

(a)              Gold, silver or other precious metals and their dusts, precious stones, copper and iron dust, antiquities and oil — as defined in the Oil Law, 1952 (all of the foregoing are hereinafter together called the “Materials Outside the Confines of the Subconcession”) in or beneath the Dead Sea and in the Leased Land or the Reserved Land or beneath them;

 

(b)              the right to enter any facility and property of the Subconcession-holder in or beneath the Dead Sea, the Leased Land, the Reserved Land and beneath them, for the purpose of examination or audit in connection with sub-section (1)(a) of this section.

 

(2)              Immediately upon discovery of a material from the Materials Outside the Confines of the Subconcession, the Subconcession-holder shall deliver notice of such discovery to the Government and to the Primary Concession-holder, and shall permit the Government or any person authorized on behalf of the Government, to enter any location mentioned in sub-section 1(b) to search for and extract the Materials Outside the Confines of the Subconcession, and the Primary Concession-holder shall pay the Subconcession-holder compensation for any damage caused to it in so doing, within the limits of the compensation awarded to it by the Government under section 3(2) of the Primary Concession.

 

13.            The Subconcession-holder shall not make — without the prior written consent of the Government and the Primary Concession-holder — any contract or arrangement with any person whatsoever for limiting output of the products of the Subconcession-holder with the aim of raising or maintaining prices in a way that will limit the output. The provisions of this section replace the Antitrust Law, 1959, the provisions of which shall not apply to the Subconcession-holder in connection with the subconcession.

 

14.            The Subconcession-holder shall comply with all the laws relating to public health and safety and the provisions of the Mines Ordinance and the Factories Ordinance, 1947, and their concomitant regulations relating to the health and safety of the public.

 

15.            (a)              The Subconcession-holder may demand of the Primary Concession-holder that the Primary Concession-holder request of the Minister of Finance and the Minister of the Interior to issue an order or that the Subconcession-holder shall pay the Government during all or part of the term of the Subconcession, a fixed amount of tax that will be agreed upon between the Minister of Finance, the Minister of the Interior and the Subconcession-holder, and this tax shall be in lieu of local taxes.

 

(b)              Upon execution of such an order, no local authority may impose upon or collect from the Subconcession-holder any local taxes, and the Minister of the Interior shall divide among the relevant local authorities, in such manner and in such proportionate percentages as are deemed appropriate from time to time, all the monies received by the Government according to this section in lieu of any local taxes which, if not for the

 

27

 

provisions of this section and the order referred to above, would have been paid by the Subconcession-holder.

 

(c)               This section or any order as referred to above shall not derogate from any relief or exemption from local taxes to which the Subconcession-holder was or will be entitled at any time by virtue of the provisions of the Capital Investment Encouragement Law, 1959, or any other law, and in giving such an order, the Minister of Finance and the Minister of the Interior validate such relief or exemption.

 

16.            Non-execution or non-performance or the breach, whether on the part of the Primary Concession-holder or the Subconcession-holder, of any stipulation, agreement or term of the stipulations, agreements or terms included in the Subconcession and which one party or the other has a duty to fulfill or perform, shall not serve as cause of any claim or demand by one party against the other and they shall not act in any way that is detrimental to the other party and shall not be seen as breach of the Subconcession, if it is reasonably proven that the non-fulfillment or the non-performance stemmed from one or several of the following causes: acts of God, acts by foreign rulers or nations, acts of infiltration, war, quasi-war campaigns, quarantine, embargo, uprising, rebellion, riots, strikes and slow-downs or labor disputes, fire, storm, tempest, explosion, earthquake, floods or other causes beyond the control of the parties.

 

17.            (a)              In consideration of all the rights and privileges granted to the Subconcession-holder in the Subconcession, except for the sub-leases referred to in section 4 above and excluding the matters referred to in sections 6 and 7 above (in consideration of which payments shall be as provided in those sections), the Subconcession-holder shall pay the Primary Concession-holder each year of the Years commencing April 1, 1964, royalties equal to 5% (five percent) of the value of the bromine produced by the Subconcession-holder which is sold in the same Year, and that value shall be ascertained at the end of each Year and shall be the value at the Plant of the Subconcession-holder, unpacked. This value shall be determined by taking the price of its sales (including any bonus, if given), during that Year and by deduction of the following amounts from that price:

 

(i)                 Appropriate expenses of packing, sales commission and transportation and insurance from the Plant of the Subconcession-holder to the destination agreed upon with the customer; and —

 

(ii)              10% of the sum obtained by deduction of all the appropriate expenses referred to in paragraph (i) of this sub-section, from that selling price.

 

And royalties of 5% (five percent) of the value of the bromine compounds produced by the Subconcession-holder and sold in the same Year, and this value shall be ascertained at the end of each Year and shall be the value at the Plant of the Subconcession-holder, unpacked. This value shall be determined by taking the price of its sales (including any grant, if given), during that Year and by deduction of the following amounts from that price:

 

28

 

(i)                 Appropriate expenses of raw materials (which are not mineral salts, minerals and chemicals from the Dead Sea) which are in the product sold, plus 15% of those appropriate expenses, and —

 

(ii)              Appropriate expenses of packing, sales commission and transportation and insurance from the Plant of the Subconcession-holder to the destination agreed upon with the customer; and —

 

(iii)           10% of the sum obtained after deduction of all the appropriate expenses referred to in paragraph (ii) of this sub-section, from that selling price.

 

(b)              After the Government has deducted the Government royalties relating to bromine compounds in accordance with section 15(b) of the Primary Concession, the Government royalties relating to those bromine compounds shall be deducted by the royalties deducted as aforesaid.

 

(c)               The amount of the royalties for each Year shall be ascertained and confirmed by an auditor. The amount due shall be paid by the Subconcession-holder to the Primary Concession-holder within 90 (ninety) days of the end of the Year for which the royalties are paid.

 

(d)              Royalties paid by the Subconcession-holder to the Primary Concession-holder under the Subconcession shall be seen, for the matter of the Income Tax Ordinance, as if they were an expense incurred entirely and only in generating the income of the Subconcession-holder.

 

(e)               For the matter of this section, the word “Year” means a year commencing April and ending the following March 31.

 

18.            (a)              The Subconcession-holder shall hold at all times, at its head office, all normal and appropriate books of account and these shall be open at any reasonable time, by appointment, to the audit of Government representatives and the Primary Concession-holder.

 

(b)              The Subconcession-holder shall submit to the Government and to the Primary Concession-holder every Year, a duly audited balance sheet and profit / loss report, and a detailed report approved by an auditor, providing all the details required for calculation of the royalties payable to the Government and to the Primary Concession-holder that Year in accordance with section 17 above.

 

19.            The Subconcession shall expire if, without the prior consent of the Primary Concession- holder, the Government and the approval of the Knesset Finance Committee, the Subconcession-holder “pledges” a lien or removes from its possession in another way, the Subconcession or any part thereof, or grants subconcessions or licenses by virtue of the Subconcession.

 

29

 

20.            (a)              Notwithstanding the Subconcession, if the Subconcession-holder is in breach of or fails to fulfill its undertakings to the Primary Concession-holder according to the Subconcession and does not cure that breach or that non-fulfillment within a reasonable time after written notice from the Primary Concession-holder describing the breach or non-fulfillment and demanding that the Subconcession-holder cure them, the Primary Concession-holder may end at any time, in a written notice, without prejudice to any other right it has under the Subconcession or under any law, the Subconcession and all the rights and privileges granted under it to the Subconcession-holder, and take back possession of all the Land sub-leased to it under or by virtue of the Subconcession.

 

(b)              Notwithstanding the Subconcession, if an order was given or a decision was made to liquidate the Subconcession-holder, the Subconcession shall expire unless the Concession-holder, decides otherwise.

 

21.            (a)              At the end of the term of the Subconcession not by early termination pursuant to sections 19, 20 and 26 of the Subconcession (“the End Date”), all the Fixed Tangible Assets belonging to the Subconcession-holder shall become the property of the Primary Concession-holder and the Primary Concession-holder shall pay the Subconcession-holder the sum received by the Primary Concession-holder from the Government under section 24 of the Primary Concession in consideration of the depreciated replacement value of those Fixed Tangible Assets, and any other assets of any kind belonging to the Subconcession-holder on the End Date shall remain the property of the Subconcession-holder.

 

(b)              If on the End Date the Fixed Tangible Assets of the Subconcession-holder or any part of them are mortgaged or encumbered by a lien, the mortgage or the lien shall continue in place on those assets but their depreciated replacement value shall not be reduced because of the mortgage or the lien and the following provisions shall apply:

 

(i)                 The Primary Concession-holder shall be entitled to withhold from that depreciated replacement value an amount sufficient to repay the principal and interest secured by the mortgage or the lien when they fall due, or a sum equal to the depreciated replacement value of the assets, whichever is the lower amount.

 

(ii)              If the Primary Concession-holder withholds such an amount, it shall use it or shall agree that the Government use it to settle the principal and interest of the debt secured by the mortgage or the lien or — if the Government compensates the Primary Concession-holder pursuant to section 24(a)(ii) of the Primary Concession — the Primary Concession-holder shall compensate the Subconcession-holder in the amount of the sum given by the Government, for any claims and demands by the mortgagee or the lien-holder in relation to the aforementioned principal and interest; the balance of the amount of the compensation given to the Primary Concession-holder by the Government for the Fixed Tangible Assets of the Subconcession-holder, shall be returned to the Subconcession-holder.

 

30

 

(c)               During the ten years prior to the end of the term of the Subconcession, the Subconcession-holder shall not invest new capital in the Plant without the prior written consent of the Government and the Primary Concession-holder, unless the Income Tax Ordinance allows deduction of the entire investment during those ten years; however, the consent of the Government and the Primary Concession-holder to any basic investment that could be essential for the proper operation of the Subconcession-holder’s Plant, shall not be unreasonably delayed or withheld. Delay or withholding of that consent owing to the refusal of the Government to agree or owing to non-consent to investment according to the provisions of the Primary Concession, shall not be seen as a breach of this section and shall not constitute cause of any claim of the Subconcession-holder against the Primary Concession-holder.

 

22.            (a)              Upon early termination of the Subconcession by the Primary Concession-holder by virtue of section 20(a) above, and in the event of its expiration according to section 19, 20(c) or 26 of the Subconcession (“the Cancellation Date”), the Primary Concession-holder shall receive back all the Lands leased to the Subconcession-holder under or by virtue of the Subconcession and the all the Fixed Tangible Assets belonging to the Subconcession-holder shall become the property of the Primary Concession-holder and the Primary Concession-holder shall pay the Subconcession-holder, on the dates and in the manner and subject to the following exceptions: the depreciated replacement value of those Fixed Tangible Assets, and any other assets of any kind belonging to the Subconcession-holder on the Cancellation Date shall remain the property of the Subconcession-holder.

 

(b)              The depreciated replacement amount that will be paid by the Primary Concession- holder to the Subconcession-holder under this section shall be paid in 10 (ten) equal annual installments, the first of which shall be paid six months after the Cancellation Date and the subsequent payments shall be made each year thereafter on the same date as the first of those payments.

 

(c)               If on the Cancellation Date the Fixed Tangible Assets of the Subconcession-holder or any part of them are mortgaged or encumbered by a lien, the mortgage or the lien shall continue to encumber those assets but their depreciated replacement value shall not be reduced because of the mortgage or the lien, and the following provisions shall apply:

 

(i)                 The Primary Concession-holder shall be entitled to withhold from a depreciated replacement value such amount as is sufficient to repay the principal and interest secured by that mortgage or that lien when they fall due, or a sum equal to the depreciated replacement value of the assets, whichever is the lower amount;

 

(ii)              If the Primary Concession-holder withheld such an amount, it shall use it to settle the principal and interest secured by the mortgage or the lien, or, if it sees fit, it shall compensate the Subconcession-holder within the limits of the amount so withheld, for any claims and demands from the mortgagee or the lien-holder relating to that principal or interest; the balance of the amount withheld by the Primary Concession-holder relating to the Fixed Tangible Assets of the

 

31

 

Subconcession-holder shall be returned to the Subconcession-holder on the dates and in the manner described in sub-section (b) of this section.

 

23.            If at any time within the term of the Subconcession or thereafter, any doubt or dispute arises between the parties concerning the meaning or performance of the Subconcession or of anything related to it or concerning the rights and obligations of the parties to it, and if the doubt or dispute cannot be resolved in other ways, and irrespective of whether there are specific provisions for referring the matter to arbitration in any other section of the Subconcession, they shall be brought to the arbitration of two persons, where each party to the arbitration appoints one of them. The venue of the arbitration shall be as agreed between the parties, and failing agreement, the venue shall be Jerusalem.

 

This section shall not release the parties from the need for the approval of the Knesset Finance Committee in matters where such approval is required under the Subconcession.

 

24.            Nothing in the Subconcession derogates from the duties of the Primary Concession-holder towards the Government under the Primary Concession or grants the Subconcession-holder rights that were not granted to the Primary Concession-holder in the Primary Concession or releases the parties from obtaining the approval of the Knesset Finance Committee in any matter requiring such approval according to the Primary Concession or the Subconcession.

 

25.            Nothing in the Subconcession shall be construed as granting the Subconcession-holder the right to extract mineral salts, minerals and chemicals from the Dead Sea, from the Leased Land or from the Reserved Land except for the purpose of the production of bromine or bromine compounds, nor shall it prejudice or restrict in any way whatsoever the rights of the Primary Concession-holder under the Primary Concession to extract mineral salts, minerals and chemicals from the Dead Sea, from the Leased Land or from the Reserved Land for any purpose approved under the Primary Concession and which is not the production of bromine and bromine compounds.

 

26.            (a) The Primary Concession-holder shall not —

 

(1)             transfer more than 49% of the issued share capital of the company that holds the Subconcession it owns;

 

(2)             transfer more than 49% of its voting power in the company that holds the Subconcession;

 

(3)             waive the right to appoint most of the board of directors of the company that holds the Subconcession.

 

(b)              If the Primary Concession-holder is in breach of one of the provisions of sub-section (a) above, the Subconcession shall expire unless the Government gave its consent in advance and the Knesset Finance Committee gave its approval.

 

32

 

27.            The Subconcession shall be binding upon the parties, their legal representatives and their substitutes.

 

28.            (a)              If the Primary Concession-holder received royalties, rent or other payment under the Subconcession, such payment shall not be seen as implying a waiver of the Primary Concession-holder of any of its rights relating to any prior breach of one of the provisions of the Subconcession,

 

(b)              Waiver by one of the parties of a breach of one of the provisions of the Subconcession shall not be seen as a waiver of any breach thereafter of the same provision or of another provision, whether similar or different in its nature.

 

29.            Whenever according to the Subconcession notices, consents, requests demands or information (“Notices”) must be delivered, the Notices shall be in writing and shall be following addresses:

 

The Primary Concession-holder — Beit Ha’ashlag, Be’er Sheva;

 

The Subconcession-holder — Beit Ha’ashlag, Be’er Sheva;

 

or to any other address within the State of Israel, as each party notifies the other in a similar Notice.

 

Every notice sent as aforesaid shall be seen as a Notice that was delivered seventy-two hours after the properly addressed letter containing the Notice was mailed.

 

30.            The parties to the Subconcession hereby waive the need for notarized Notice of any breach or non-fulfillment of any of its provisions.

 

In witness whereof the parties hereby affix their signatures and stamps on the day and year noted at the head of this Subconcession.

 

	
 
    	
For and in the name of
   Dead Sea Works Ltd.
    	
 
    	
For and in the name of
   Dead Sea Bromine Ltd.
    

 

33

 

Urban Building Ordinance, 1936

 

	
Urban Building Area, Tel Aviv   Yafo

 

Notice of authorization to   validate amendment of the detailed plan and notice of deposit of amendment of   a detailed plan and drawing

 

Notice is hereby delivered, in accordance with section   19 of the Urban Building Ordinance, 1936, that the Regional Urban Building   and Planning Committee, Tel Aviv District, has permitted validation — fifteen   days after publication of this notice in the records — for amendment of a   published plan called “Detailed Urban Building Plan No. 82 — and its   amendments — in Lot 6966 — Hilton Hotel”, notice of the deposit of which with   its attached drawing, at the office of the Local Urban Building and Planning   Committee of Tel Aviv-Yafo, was published in Official Gazette 953, 1962, p.   1968.

 

Notice is also delivered, in accordance with section 19   of the Urban Building Ordinance, 1936, that copies of the aforementioned plan   and of the drawing attached to it, in the form in which they were approved by   that Local Committee — were deposited in the office of that Local Committee   and can be reviewed there by any person.

 

December 5, 1962

 

Y. Cooperman

 

Chairman, Regional Urban Building
   and Planning Committee 
   Tel Aviv District
    	
 
    	
Urban Building Area, Herzliya

 

Notice of deposit of amendment   to 
   outline plan

 

Notice is hereby delivered, in accordance with section   19 of the Urban Building Ordinance, 1936, that a copy of an amendment to an   outline plan called “Urban Building Plan No. 533, Amendment to Herzliya   Outline Plan — in Lot 6531 Parcels 2, 7-14, 16, 31, 32, 36, 38, 55-60, 73-76,   93-98, 110-112; in Lot 6532 Parcels 1-3, 5, 6, 8, 9, 11, 32.37, 50-56, 59,   80, 99-106, 110-113, 118,119, 148-160, 165-177”, was deposited at the office   of the Local Urban Building and Planning Committee of Herzliya, together with   the drawing attached to it.

 

And these are the borders of the plan:

North: Lot 6531 Parcels 33-35, Lot 6532 Parcel 30;   East: Lot 6532 the border of the Lot;

South: Lot 6531 Parcel 30, Lot 6532 Parcel 29; West:   Lot 6531 the border of the Lot.

 

Whoever wishes to review copies of the above- mentioned   plan and drawing, without payment, and whoever has an interest — as owner or   from another aspect — in land, buildings or other assets which the plan   affects, may submit opposition to the plan at the office of the   aforementioned Local Committee during the two months from publication of a   notice in the records.

 

November, 1982

 

Y. Cooperman

 

Chairman, Regional Urban Building
   and Planning Committee 
   Tel Aviv District
    

 

34Exhibit 10.2

 

Translation from the Hebrew. The Hebrew version is the binding version.

 

Outline

 

Pursuant to section 15B(1)(a) of the Securities Law, 5728-1968 and the
 Securities Regulations (Details of Outline of an Offer of Securities to
 Employees) 5760-2000

 

Together with

 

Report regarding a substantial private offering

 

pursuant to the Securities Regulations (Private Offering of Securities in a Listed Company), 5760-2000

 

An offer of

 

Up to 11,000,000 unlisted options, offered for no consideration to officers and other senior management employees at Israel Chemicals Ltd. (“the Company” or “ICL”) and subsidiaries, including for the chairman of the board of directors and CEO of the Company, exercisable for up to 11,000,000 registered ordinary shares of NIS 1.00 par value each in the Company.

 

Outline date: January 7, 2010

 

1

 

Contents

 

	
PART A   — INTRODUCTION
    	
4
    
	
 
    	
 
    	
 
    
	
1.
    	
General
    	
4
    
	
 
    	
 
    	
 
    
	
2.
    	
Objective of the Plan
    	
4
    
	
 
    	
 
    	
 
    
	
3.
    	
Permits and approvals
    	
4
    
	
 
    	
 
    	
 
    
	
PART B   — DETAILS AND CONDITIONS OF THE OFFERING
    	
5
    
	
 
    	
 
    	
 
    
	
4.
    	
The offerees
    	
5
    
	
 
    	
 
    	
 
    
	
5.
    	
Description and rates of the offered   securities
    	
5
    
	
 
    	
 
    	
 
    
	
6.
    	
Deposit of options with a trustee
    	
8
    
	
 
    	
 
    	
 
    
	
7.
    	
Right of exercise, lock-up and method   of exercise of options
    	
8
    
	
 
    	
 
    	
 
    
	
8.
    	
Rights attaching to the underlying   shares
    	
9
    
	
 
    	
 
    	
 
    
	
9.
    	
Restrictions applicable to activities   in the options and underlying shares
    	
9
    
	
 
    	
 
    	
 
    
	
10.
    	
Conditions of the Plan in the event of   termination of employment
    	
10
    
	
 
    	
 
    	
 
    
	
11.
    	
Change in control
    	
11
    
	
 
    	
 
    	
 
    
	
12.
    	
Restructure or merger
    	
11
    
	
 
    	
 
    	
 
    
	
13.
    	
Tax implications and issue to the   trustee
    	
12
    
	
 
    	
 
    	
 
    
	
14.
    	
Adjustments for distribution of bonus   shares and/or issue by way of rights and/or splitting or merging capital   and/or distribution of a dividend
    	
13
    
	
 
    	
 
    	
 
    
	
15.
    	
Obligations of the offerees
    	
14
    
	
 
    	
 
    	
 
    
	
16.
    	
Applicable law
    	
14
    
	
 
    	
 
    	
 
    
	
17.
    	
The financial value of the options
    	
14
    
	
 
    	
 
    	
 
    
	
18.
    	
Information based on the sixth   Addendum to the Securities Regulations (Periodic and Immediate Reports),   5730-1970
    	
14
    
	
 
    	
 
    	
 
    
	
 
    	
Organs of the Company which approved and issued the options to Akiva   Mozes and Nir Gilad and officeholders and dates of approval
    	
15
    
	
 
    	
 
    	
 
    
	
 
    	
Method for determining compensation
    	
15
    
	
 
    	
 
    	
 
    
	
 
    	
Summary of the explanations of the audit committee and board of   directors
    	
16
    
	
 
    	
 
    	
 
    
	
19.
    	
The issued share capital of the   Company, quantity and rate of holdings of offerees and interested parties in   the Company
    	
17
    
	
 
    	
 
    	
 
    
	
20.
    	
Consideration and method of   determination thereof
    	
18
    
	
 
    	
 
    	
 
    
	
21.
    	
Personal interest in the approval of   the Substantial Private Offering
    	
19
    
	
 
    	
 
    	
 
    
	
22.
    	
Required approvals
    	
19
    
	
 
    	
 
    	
 
    
	
23.
    	
Details of agreements pertaining to   rights in the shares of the Company
    	
19
    
	
 
    	
 
    	
 
    
	
24.
    	
Restraints and restrictions applicable   to the offerees with respect to operations that may be carried out with the   options
    	
19
    
	
 
    	
 
    	
 
    
	
25.
    	
Term of grant of securities
    	
19
    
	
 
    	
 
    	
 
    
	
26.
    	
Powers of the board of directors of   the Company
    	
19
    
	
 
    	
 
    	
 
    
	
27.
    	
No undertaking of continued employment
    	
20
    
	
 
    	
 
    	
 
    
	
PART C   — RIGHTS ATTACHING TO THE COMPANY’S SHARES
    	
20
    
	
 
    	
 
    	
 
    
	
28.
    	
Below is a summary description of the   rights attaching of the Company’s shares as prescribed in the Company’s   articles of association
    	
20
    

 

2

 

	
PART D   — ADDITIONAL DETAILS
    	
21
    
	
 
    	
 
    	
 
    
	
29.
    	
Details of the price of the Company’s   shares on the Stock Exchange
    	
21
    
	
 
    	
 
    	
 
    
	
30.
    	
Notice of Outline
    	
22
    
	
 
    	
 
    	
 
    
	
31.
    	
Reference to periodic reports and   interim financial statements
    	
22
    
	
 
    	
 
    	
 
    
	
32.
    	
Powers of the Israel Securities   Authority
    	
22
    
	
 
    	
 
    	
 
    
	
33.
    	
Company representative
    	
22
    

 

3

 

PART A — INTRODUCTION

 

1.                                      General

 

Israel Chemicals Ltd. (“the Company” or “ICL”) hereby reports, pursuant to the Securities Regulations (Details of an Outline of an Offer of Securities to Employees) 5760-2000 and the Securities Regulations (Private Offering of Securities in a Listed Company), 5760-2000 (“the Private Offering Regulations”) that on January 7, 2010, the Company’s board of directors approved a plan for a private offering of options exercisable for shares of the Company to approximately 300 offerees, including 14 officers and other senior management employees in the Company and subsidiaries (“the Private Offer”), including a substantial private offering of such options to the chairman of the board of directors and the CEO of the Company (“the Substantial Private Offer”), as set out below (“the Plan”). In respect of the offer to the chairman of the board of directors and CEO of the Company, this Outline also includes details as required by the Private Offering Regulations. Moreover, in respect of the offer for the chairman of the board of directors, an immediate report and notice regarding the convening of a special general meeting are attached to this Outline, pursuant to the Securities Regulations (Transaction between a Company and its Controlling Shareholder), 5761-2001 and the Securities Regulations (Periodic and Immediate Reports), 5730-1970.

 

The options shall be offered to the offerees under this Outline in accordance with section 15B(1)(a) of the Securities Law, 5728-1968 (“the Securities Law”) and the Outline Regulations and Private Offering Regulations (as the case may be).

 

2.                                      Objective of the Plan

 

The objective of the Plan is to provide an incentive to the offerees under the Plan to continue contributing to the Company and to its success in the future as well. This success is expected to be reflected, inter alia, in the long-term business results and in the price of the Company’s shares on the Tel Aviv Stock Exchange and as such, to promote the interests of the Company and increase its profits in the long term. The Plan will also create an incentive for the continued long-term employment of talented and skilled managers in the Company. This Plan is a continuation of the previous incentive plans of 1999, 2003 and 2007, ensuring the continuation of the incentive for the offerees and reflects the Company’s interest in expanding the circle of managers it wishes to motivate and retain.

 

3.                                      Permits and approvals

 

The offer of options under this Immediate Report is subject to obtaining the approvals set out below:

 

3.1                               The approval of the Tel Aviv Stock Exchange Ltd. (TASE) to list the shares underlying the exercise of the options (“the underlying shares”) that are the subject of this immediate report. Immediately after this Outline is issued, the Company intends to apply to the TASE to list the underlying shares for trading.

 

3.2                               Since, as set out in section 13 below, the options for the Company’s employees (with the exception of the offerees as set out in section 13.6 below), are to be issued in a capital gain track under section 102 of the Income Tax Ordinance (New Version) (“the Income Tax Ordinance”), the Plan requires the approval of the tax assessor and of a trustee to be appointed by the Company. The Company shall apply to the tax assessor close to the publication date of this Outline, requesting approval of the Plan and the trustee, and may issue the options 30 days after the submission date of the Plan to the tax assessor.

 

3.3                               Approvals from the relevant organs in the Company as required by law. The audit committee discussed the Plan in its meetings held on December 20, 2009 and December 28, 2009 and approved the private offering for officers, including the Substantial Private Offering, in its meeting on January 4, 2010. The board of directors’ human resource committee discussed the Plan on December 8, December 14 and December 24, 2009 and recommended that the board of directors approves the Plan and the offering to senior officers, including the Substantial Private Offering, in its meeting held on January 3, 2010.

 

4

 

The board of directors discussed the principles of the Plan in its meeting held on January 6, 2010 and discussed the Plan and the Private Offering for the officers in its meeting held on January 7, 2010.

 

The offering to the chairman of the board of director is also subject to the approval of the general meeting convened under an immediate report and notice regarding the convening of a special general meeting pursuant to the Securities Regulations (Transaction between a Company and its Controlling Shareholder), 5761-2001 and the Securities Regulations (Periodic and Immediate Reports), 5730-1970 together with this Outline.

 

The Company may offer options to offerees under the conditions of the Plan and this Outline, after receiving all the approvals required for the offering as set out in this section 3 above and subject to the provisions in section 25 below.

 

PART B — DETAILS AND CONDITIONS OF THE OFFERING

 

4.                                      The offerees

 

4.1                               The offerees of the Private Offering are, or shall be at the time of the offering, as the case may be, officers or other senior management employees at the Company and subsidiaries, in Israel and other countries, as defined in this section 4.1 below (these offerees, with the exception of the offerees set out in section 4.2 below, shall be referred to hereunder as: the “employees”).

 

Under the Private Offering, up to 11,000,000 options shall be issued to a trustee for approximately 300 employees (including 14 officers and including the CEO and chairman of the board of directors of the Company as set out in section 4.2 below) (for this matter, see also section 26 below).

 

4.2                               The offerees under the Substantial Private Offering are Mr. Akiva Mozes (“Akiva Mozes”), who is CEO of the Company, and Mr. Nir Gilad (“Nir Gilad”), who is the chairman of the board of Directors, and who are considered to have an interest in the Company by virtue of their positions. The options offered to Akiva Mozes and Nir Gilad are described in section 5.1 below.

 

4.3                               According to information provided to the Company, at the date of this immediate report:

 

4.3.1                                 Akiva Mozes holds 433,231 ordinary shares of NIS 1 par value each (“the shares”), representing 0.03% of the issued share capital of the Company and 2,200,000 options exercisable for up to 2,200,000 ordinary shares of the Company of NIS 1 par value each, under the Company’s 2007 options plan.

 

4.3.2                                 Nir Gilad does not hold Company shares or options that are exercisable into Company shares.

 

4.3.3                                 To the best of the Company’s knowledge, none of the employees is an interested party in ICL.

 

4.3.4                                 Akiva Mozes, Nir Gilad and the employees (hereinafter together: the “offerees”) are not an interested party, as such term is defined in section 270(5) of the Companies Law, 5759-1999 (“the Companies Law”).

 

5.                                      Description and rates of the offered securities

 

5.1                               The offerees — the employees (including 12 officers), Akiva Mozes and Nir Gilad shall be offered, for no consideration, 11,000,000 non-negotiable options, exercisable into up to 11,000,000 ordinary shares of the Company of NIS 1 par value each, subject to the adjustments set out in section 14 below and all the other conditions of the Plan as set out below. It is noted that the number of underlying shares that will be offered in practice when exercising the options are likely to be lower if the Company elects to exercise its right as 

 

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set out in section 5.3 below, and in this event, the offerees’ holdings will be lower that the rates set out below.

 

Below is the division of the options between the offerees:

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Percentage after the
   issue and exercise(1)
    	
 
    	
Percentage after the
   issue and exercise
   (fully diluted)(2)
    	
 
    	
Financial value of
   the options
    	
 
    
	
Offeree
    	
 
    	
Position
    	
 
    	
Number of options
    	
 
    	
In capital
    	
 
    	
In voting
    	
 
    	
In capital
    	
 
    	
In voting
    	
 
    	
(NIS thousands)(3)
    	
 
    
	
Employees (including 8   officers)
    	
 
    	
—
    	
 
    	
7,700,000  
    	
 
    	
0.6
    	
 
    	
0.6
    	
 
    	
0.6
    	
 
    	
0.6
    	
 
    	
142,450
    	
 
    
	
 
    	
 
    	
 
    	
(including 8 officers, offered a total of 725,000   options)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Akiva Mozes
    	
 
    	
CEO
    	
 
    	
1,100,000
    	
 
    	
0.086
    	
%
    	
0.086
    	
%
    	
0.085
    	
%
    	
0.085
    	
%
    	
20,350
    	
 
    
	
Nir Gilad
    	
 
    	
Chairman of the board
    	
 
    	
800,000
    	
 
    	
0.063
    	
%
    	
0.063
    	
%
    	
0.062
    	
%
    	
0.062
    	
%
    	
14,800
    	
 
    
	
Asher Grinbaum
    	
 
    	
Executive VP
    	
 
    	
350,000
    	
 
    	
0.027
    	
%
    	
0.027
    	
%
    	
0.027
    	
%
    	
0.027
    	
%
    	
6,475
    	
 
    
	
Yossi Shahar
    	
 
    	
Executive VP
    	
 
    	
350,000
    	
 
    	
0.027
    	
%
    	
0.027
    	
%
    	
0.027
    	
%
    	
0.027
    	
%
    	
6,475
    	
 
    
	
Dani Chen
    	
 
    	
CEO, ICL Fertilizers
    	
 
    	
350,000
    	
 
    	
0.027
    	
%
    	
0.027
    	
%
    	
0.027
    	
%
    	
0.027
    	
%
    	
6,475
    	
 
    
	
Nissim Adar
    	
 
    	
CEO, ICL Industrial Products
    	
 
    	
350,000
    	
 
    	
0.027
    	
%
    	
0.027
    	
%
    	
0.027
    	
%
    	
0.027
    	
%
    	
6,475
    	
 
    
	
All the offerees
    	
 
    	
 
    	
 
    	
11,000,000
    	
 
    	
0.861
    	
%
    	
0.861
    	
%
    	
0.855
    	
%
    	
0.855
    	
%
    	
203,500
    	
 
    

 

Offer to offerees who are officers: The number of options offered to each offeree who is an officer was recommended for approval by the human resource committee of the board of directors, and approved by the audit committee and the board of directors. It is noted that the Private Offering for offerees who are officers and who are not directors was approved in accordance with the Company’s internal regulations and by the audit committee, notwithstanding the fact that the audit committee and board of directors believe that the Private Offering for officers does not constitute an extraordinary transaction under the circumstances, pursuant to the Companies Law.

 

It is further noted that the number of options that were approved for the offer to the CEO and chairman of the board and other officers were recommended by the human resource committee of the board of directors, and approved by the audit committee and board of directors, in view of the high appreciation of their activities and contribution to the Company, and out of a desire to ensure their continued tenure in the future, taking into account the size of the Company’s activities and its performance (for further details, see section 18.6 below). The issue of options to the chairman of the board of directors is also subject to the approval of the general meeting, convened under an  immediate report and notice regarding the convening of a special general meeting pursuant to the Securities Regulations (Transaction between a Company and its Controlling Shareholder), 5761-2001

 

(1)         Presuming the theoretic exercise of all of the options for shares by the offerees under this Outline, without exercising the Company’s right to offer shares in an amount equivalent to the financial benefit under section 5.3 below, and without taking into account shares held by the Company.

(2)         The calculation, fully diluted, is based on the assumption in footnote 1 above, and assuming exercise of all of the balance of the Company’s securities that are convertible or exercisable for shares of the Company.

(3)         Calculated according to the economic opinion of external consultants based on the Black and Scholes model and according to the assumptions set out in section 17 below.

 

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and the Securities Regulations (Periodic and Immediate Reports), 5730-1970, together with this Outline.

 

Offer to offerees who are not officers: The human resource committee of the board of directors shall approve the number of options offered to offerees who are not interested parties, subsequent to the date of this Outline, according to the authority delegated by the board of directors to this committee as set out in section 26 below.

 

5.2                               Each option confers the right to receive from the Company or its representative, by way of issue or transfer (as set out in section 5.3 below), one ordinary share of the Company, of NIS 1 par value, against payment of an exercise price of NIS 53.1, equivalent to the closing price of the Company’s share on the TASE on January 6, 2010 (the last known closing price at the date of the board of directors’ resolution), subject to adjustments as set out in section 14 below. The exercise price shall be linked to the CPI and the base index shall be the index for November 2009, published on December 15, 2009 (105.2 points). The exercise price will be increased or decreased according to the ratio between the known index at the exercise date and the base index (the linked exercise price shall be referred to hereunder as: “the exercise increment”). Notwithstanding the aforesaid, the exercise price for offerees who are residents of the United States and/or are subject to the tax laws in the United States, shall not be linked to the CPI as aforesaid, and accordingly the exercise increment for these offerees will be the same as the exercise price.

 

5.3                               Alternately, and at the sole discretion of the Company, the Company may, upon exercise of the options, issue share to the offerees, or transfer shares that are held or that will be held by the Company or a subsidiary, at the value of the benefit only, as set out below:

 

5.3.1                                 The number of underlying shares to which each offeree would be entitled at the exercise date of the options (as set out in section 7.5 below) shall be calculated according to the difference between:

 

5.3.1.1.                                The closing price of the Company’s shares on the TASE on the trading day preceding the exercise date (“the effective price”) multiplied by the number of shares underlying the options tor which the exercise notice has been given (adjusted as set out in section 14 below).

 

And between:

 

5.3.1.2.                                The exercise increment (adjusted as set out in section 14 below), multiplied by the number of options for which the exercise notice has been given.

 

This difference shall constitute the sum of the monetary bonus for the offeree on the date of the exercise (“the sum of the monetary bonus”).

 

5.3.2                                 The Company shall issue to the offerees, or transfer the shares that are held or that will be held by the Company or a company under its control, the number of shares with a market value, at the effective price, is equal to the sum of the monetary bonus only. Fraction of shares obtained as a result of this calculation shall be rounded up to the nearest full share.

 

The following conditions shall apply in the event of an issue of shares under this section: The Company shall convert part of its profits from share premiums or any other source included in its equity set out in its financial statements, into share capital, in the sum equal to the nominal value of the underlying shares, as set out in section 304 of the Companies Law. If this is not possible, the offeree shall be paid the nominal value of the underlying shares only. In this case, the Company will issue additional shares to the offeree, equivalent to the nominal value of the issued shares. It is clarified that in any event of issue of shares under this section, the exercise shall be effected in such a manner that the nominal value of the shares will be paid (or, as the case may be, capitalized), by the 

 

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Company or by the offeree, under any law, including the Companies Law, regarding distributions.

 

6.                                      Deposit of options with a trustee

 

The options shall be issued to a trustee according to the terms of the capital gains track, through a trustee as set out in section 13.4 below (“the trustee”), for the offerees, following and subject to receipt of all the approvals set out in section 3 above.

 

The effective date for implementing the Plan is the date of approval of the Plan by the board of directors of the Company, as set out in the introduction to this report, in other words, on January 7, 2010.(4)

 

7.                                      Right of exercise, lock-up and method of exercise of options

 

7.1                               All of the options granted to employees, Nir Gilad and Akiva Mozes are valid from the effective date (subject to the fulfillment of all the conditions set out in section 3 above). Unless otherwise determined by the board of directors, the options shall vest in three equal lots, as set out below:

 

7.1.1                                 One third of the options issued to each of the offerees shall vest 12 months after the effective date. The options or underlying shares shall be locked up for a minimum period as defined in section 13.4 below.

 

7.1.2                                 A second third of the options issued to each of the offerees shall vest 24 months after the effective date.

 

7.1.3                                 The last third of the options issued to each of the offerees shall vest 36 months after the effective date.

 

7.2                               Each of the offerees may exercise the options, in accordance with the conditions of the Plan (including section 10 below), in each lot that vests, in whole or in part, as follows: For the first and second lots — from the end of the minimum lock-up period as defined in section 13.4 below and up to 36 months after the date the options were issued (“the exercise date of the first lot” and the “exercise date of the second lot”, respectively). For the third lot, from the vesting date of that lot up to 48 months after the date the options were issued (“the exercise date of the third lot”). Should the exercise date of the first, second or third lots fall on a day other than a banking day in Israel or a trading day on the TASE, the final exercise date shall be deferred to the next business day thereafter, which is also a trading day on the TASE.

 

7.3                               An offeree wishing to exercise the options, under all the conditions of the Plan, shall submit a written and signed notice to the Company and the trustee, in the text prescribed by the Company (“the exercise notice”). The exercise notice shall include the identity of the offeree and the number of options he wishes to exercise. The offeree, and not the trustee, shall decide whether or not to exercise and shall pay the exercise price.

 

7.4                               The offeree shall pay the Company the consideration for the underlying shares issued to the offeree in accordance with the exercise notice as determined by the Company, unless the Company chooses to exercise its right under section 5.3 above.

 

7.5                               On the first trading day following the day the Company receives the exercise notice, completed and signed by the offeree, after having paid the consideration as set out in section 7.4 above (“the exercise date”), the Company shall issue the underlying shares to  the trustee, and should the Company elect to exercise its right as set out in section 5.3 above, the provisions in section 5.3 shall apply.

 

(4)         Note that lock-up under section 102 shall apply to Israeli offerees, for 24 months subsequent to the date of issue to the trustee as set out in section 13.4 below.

 

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7.6                               Options that are unexercised at the exercise date set for their relevant lot (as set out in section 7.2 above), shall expire and shall not afford any right to compensation or indemnification and shall not be valid.

 

8.                                      Rights attaching to the underlying shares

 

8.1                               The underlying shares shall be equal in their rights, to all intents and purposes, to the ordinary shares in the Company’s share capital at the date of this Outline, and shall confer, inter alia, the same rights to receive notice and to participate in the Company’s general meeting, receive dividends or any other distribution and receive surplus assets upon winding up.

 

8.2                               In any event where, according to the provisions of the Plan, the offeree is entitled to rights and/or bonus shares and/or any other right afforded to the offeree by virtue of the options and/or underlying shares (“the rights”), and at the date of record for distribution of the rights, the options and/or underlying shares were held by the trustee, the rights shall be transferred to the trustee, and the trustee shall deduct tax at source in accordance with the law, insofar as it applies. All the rights shall be issued to the trustee in favor of the offerees and shall be held by the trustee until the end of the lock up period of the options for which the rights were issued. The conditions of the tax track shall apply to these additional rights.

 

8.3                               In any event where the Company distributes a cash dividend and at the date of record for distribution of the dividend the trustee held underlying shares for any of the offerees, the Company shall transfer to the trustee the sum of the dividends for the underlying shares held by the trustee for each offeree. The trustee shall deduct tax at source according to the law, insofar as this is required, before transferring the sum of the dividend (net of the tax) to the offeree.

 

8.4                               Notwithstanding the aforesaid in section 8.1 above, if, in accordance with the provisions of the Plan, the trustee holds the underlying shares in favor of the offeree and these shares are yet to be transferred to the offerees, the shares shall not afford rights to receive notices and to participate in the Company’s general meetings.

 

9.                                      Restrictions applicable to activities in the options and underlying shares

 

9.1                               The options are a personal right that may not be transferred, endorsed or pledged, whether voluntarily or otherwise (except to the heirs of a deceased offeree according to a will or inheritance laws, provided they confirm their consent to the conditions). The options shall not be listed on the TASE. The shares underlying the exercise of the options (“the underlying shares”) shall be listed on the TASE.

 

9.2                               The options for offerees in Israel shall be issued to the trustee under section 102 of the Income Tax Ordinance. Accordingly the options or the underlying shares, as the case may be, shall be held by the trustee, under section 102 of the Income Tax Ordinance, for the minimum lock up period, as set out in section 13 below.

 

9.3                               The trustee may not transfer the options that were issued in accordance with the Plan to a third party, including an offeree, unless instructed by the Company.

 

9.4                               Transfer of rights to options and/or underlying shares under a will or inheritance laws shall be valid and shall bind the Company, only after the Company is furnished with the following notarized approvals:

 

A.            A written request for the transfer and a copy of a legal document confirming the right of the person to act in respect of the offeree’s estate or confirming the right of the transferee

 

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B.            Written consent from the transferee to pay any amount in respect of the options under the Plan and any amount required under the provisions of the Plan as well as consent to comply with all the provisions of the Plan

 

C.            Any other evidence required by the board of directors to establish the right to transfer the options and/or underlying shares and the validity of the transfer.

 

9.5                               The underlying shares are subject to restrictions under the provisions in the Company’s articles of association.

 

9.6                               The options under this Outline are issued in accordance with section 15B(1)(a) of the Securities Law, and therefore restrictions on the buyback as set out in section 15C of the Securities Law will not apply to the underlying shares (except as set out below).

 

Section 15C of the Securities Law and the Securities Regulations (Details Regarding Sections 15A to 15C of the Law) 5760-2000 (“the Further Details Regulations”) apply to the shares underlying the options issued to the chairman of the board under the Private Offering Regulations and the shares underlying the options issued to offerees in countries other than Israel, as follows:

 

9.6.1                                 The offerees may not offer the underlying shares prior to the lapse of six months following the issue date of the options.

 

9.6.2                                 In six consecutive quarters, starting from the end of the period set out in section 9.6.1 above, each of the offerees may offer a number of shares on any trading day, which is no more than the daily average of the volume of trading of the Company’s shares on the TASE over the eight week period preceding the date of the offer, provided that the total number of shares offered in any quarter does not exceed one percent of the Company’s issued and paid up share capital, as set out in the further details regulations.

 

10.                               Conditions of the Plan in the event of termination of employment

 

10.1                        In the event of termination of employer-employee relations between the Company and the offeree following voluntary retirement of the offeree, and not as a result of disability due to health problems (“disability”), the offeree may exercise only those options included in the lots that have vested and are unexercised and unexpired by the termination date of employment, and they shall be exercisable for up to 90 days from the date of termination of employment (or, if the lock up period under section 102 of the Income Tax Ordinance has not yet ended, up to 90 days after the end of this period, whichever is the later). The rest of the options shall expire on the date of termination of employment.

 

10.2                        In the event of termination of employment due to disability or death, the offeree (or his heirs) may exercise the options in the lots that have already vested but which have not yet been exercised for shares, and a proportionate part of the next lot that has not yet vested, if any, to be calculated according to the proportion of the number of months that have lapsed since the date of vesting of the previous lot to have vested (or since the effective date, as the case may be), and up to termination of the offeree’s employment, and 12 months, and they shall be exercisable until the final date or dates of exercise (as set out in section 7.2 above), of each of the vested lots that are exercisable as set out in this section. The rest of the options shall expire on the date of termination of employment.

 

10.3                        In the event of termination of employment due to dismissal under circumstances which, in the Company’s opinion, afford the Company the right under law to dismiss the employee without severance pay, all the options offered to the offeree under this Plan shall expire immediately at the dismissal date, including those which have already vested but have not yet in fact been exercised.

 

10.4                        In the event of termination of employment for any reason which is not described in subsections 10.1-10.3, the offeree may exercise only the options that have vested by the

 

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date of termination of employment, and which are unexercised and unexpired at the exercise date of the lot or the exercise dates of each of the shares (as the case may be), which vested and are exercisable as set out in this section. The rest of the options shall expire on the date of termination of employment.

 

10.5                        The offeree’s right to the options offered under the Plan or their exercise shall not be ended or expire or be accelerated solely as a result of the fact that the offeree was transferred from the Company to a subsidiary, or vice versa, as an employee or officer.

 

10.6                        The board of directors may amend the provisions of this section 10 (and/or any of them), in general or specifically, at its own absolute discretion.

 

10.7                        In this section 10, the severance date is the date of termination of employee-employer relations between the offeree and the Company, or the end of the notice period (or the adjustment period, if any), whichever is the later.

 

11.                               Change in control

 

In the event of change in control in the Company, on completion of the change in control, the rights to receive all the options issued to 14 offerees who are officers in the Company, will vest immediately, including those which, according to the dates set out in section 7.1 above, have not yet vested and they will be exercisable commencing from that date (subject to the minimum lock up period as set out in section 13.4 below) and up to the exercise date of each of the lots as set out in section 7.2 above.

 

In this section:

 

“Transfer of control” — including by way of the sale of shares (including a share swap), distribution of a dividend in kind or issue of shares to a third party

 

“Control” in this section — as defined in the Securities Law

 

12.                               Restructure or merger

 

In the event of merger of the Company with or into another Company, whether by way of a share swap, cash purchase or in any other manner, or sale of all (or the vast majority) of the Company’s assets or issued capital or any event with a similar corporate nature and any related action (hereinafter together: “restructure” or “merger”) and subject to any law, the board of directors may prescribe the following:

 

12.1                        Every option is replaced or converted into an option of equal value in the new company following the merger or sale and the exercise price is amended for such purpose, insofar as this is required, all at the discretion of the board of directors, or;

 

12.2                        Every option shall be adopted by the new company such that it shall be exercisable into a share of the new company subject to adjustments and amendments as may be prescribed by the board of directors, or;

 

12.3                        Every option shall be cancelled or returned to the Company and the Company shall pay the entitled employee monetary compensation for the cancellation or return of the option, provided that the value of the benefit in such compensation shall be no less than the value in the options that were cancelled or returned to the Company, as measured on the date of cancellation or return, as the case may be, and;

 

12.4                        To perform any action and/or adjustment in respect of the options and their conditions, as may be required, at its discretion.

 

For the purposes of the provisions of this clause, the term “new company” shall refer to the company with which a merger may take place, with which a sale transaction may be effected or which may stand in place of the Company following a restructuring or any related transaction. To

 

11

 

remove all doubt, it is clarified that if control in the Company is transferred as a result of restructure or merger, the provisions in section 11 above shall apply.

 

13.                               Tax implications and issue to the trustee

 

The following are details of certain tax-related provisions regarding the issue and exercise of the options:

 

13.1                        The offerees shall bear any tax obligation regarding issue of the options to offerees (including income tax, capital gains tax, national insurance and health tax) and any other mandatory payment owing on account of the grant or exercise of the options or the sale of the underlying shares. The trustee and the Company may deduct any amount required to be deducted at source by law.

 

13.2                        The provisions of section 102 of the Income Tax Ordinance (New Version) and the regulations promulgated thereunder (jointly: “section 102”) shall apply to the options issued to the offerees in Israel. The Company has decided that the issue shall be through a trustee, in the capital gains track.

 

13.3                        At the date of this report, the provisions of section 102 regarding the capital gains track provide, inter alia, the following :

 

·                        The options and underlying shares shall be locked up with the trustee until two years after the date of issue and designation of the issue for the employee.

 

·                        The offeree’s income from issue of the options shall not be taxed on the date of the issue.

 

·                        The employee’s tax liabilities for “part of the value of the benefit” on the date of the issue of the options shall be calculated in accordance with the marginal tax rate that applies to the employee. For this purpose, the “part of the value of the benefit” shall be calculated in accordance with the average value of the Company’s shares on the TASE at the end of the 30 trading days which preceded the issue of the options, less the cost of exercising the options.

 

·                        The balance of the value of the benefit shall be subject to tax at a rate of 25%.

 

·                        When issuing the options as aforesaid, the company employing the offeree shall be allowed a salary expense in the sum of the employee’s income, taxable at the marginal tax rate. In respect of the value of the benefit for the employee, taxable at a rate of 25%, the Company shall not be allowed an expense for tax purposes.

 

The aforesaid should not be considered as tax advice and offerees should examine the tax situation applicable to them and decide whether and how to act under their own specific circumstances.

 

13.4                        Accordingly

 

·                        The issue to the offerees shall only be effected after the approval of the tax assessor under section 102 and in accordance with the terms of the approval.

 

·                        Prior to the issue of the options to the offerees, the Company shall enter into an agreement with the trustee, which shall hold the options in trust for the offerees pending exercise (or expiration, as the case may be), and shall hold the underlying shares for at least 24 months subsequent to the date of issue to the trustee (“the minimum lock up period”)

 

13.5                        Notwithstanding any other provision in this clause, it is clarified that transfer of the underlying shares from the trustee to an Israeli offeree or from an Israeli offeree to any

 

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third party (including sale thereof), is only be permitted after the minimum lock up period, after payment or deduction of the tax owing, if any, and shall be effected in accordance with the provisions, conditions and arrangements as may be agreed upon between the Company and the trustee, and subject to the provisions of section 102 or the provisions of any law and any agreement with the tax authorities.

 

13.6                        Notwithstanding the provisions above or below, the offerees under this Outline may include offerees whose place of residence or employment is outside of Israel, and therefore the provisions of section 102 are not applicable in their respect. The options of these offerees shall be deposited with the trustee on the date of their issue and shall be exercised through the trustee in the manner set out in this Outline, without the lock up restrictions under section 102.

 

The aforesaid in this section 13 above does not purport to be a certified interpretation of the provisions of the laws relating to issue of the options to the offerees, and is does not replace legal and professional advice on the matter. As is accepted in investments in securities, each of the offerees (including offerees as set out in section 13.6 above), should consider the various tax options and the implications of the tax applicable to the investment and should consult with professional advisors, including legal and tax consultants, taking into account their specific circumstances.

 

14.                               Adjustments for distribution of bonus shares and/or issue by way of rights and/or splitting or merging capital and/or distribution of a dividend

 

14.1                        If the Company distributes bonus shares after issuing options under this Outline, then on the date of record for distribution of the bonus shares, the number of underlying shares for exercising options that are unexercised and unexpired on the date of record for the bonus shares shall be increased by adding the appropriate number of shares, without consideration, to which the offeree would have been entitled had he exercised the unexercised options for shares on the date of record for the right to receive bonus shares, immediately prior to the date of distribution of the bonus shares. It is clarified that the exercise price of the options shall not change if bonus shares are distributed, however the payment for each share shall be decreased accordingly, in view of the increase in the number of underlying shares from each option.

 

14.2                        Should the Company offer its shareholders securities of any type whatsoever by way of a rights issue, the exercise price of the warrants shall not be adjusted, however the number of underlying shares for the exercise of the options not yet exercised by the date of record regarding the right to purchase rights under the rights issue shall be adjusted according to the benefit component embodied in the rights, to be calculated in accordance with the TASE guidelines in effect on the date of record.

 

14.3                        In any event of a split or merge of the Company’s share capital, or any corporate equity event that is materially similar in nature, the Company shall effect the amendments or adjustments that are required to prevent dilution or increase the offeree’s rights under the Plan in relation to the number and class of underlying shares for the unexercised options and/or in respect of the exercise price of each option.

 

14.4                        If the Company pays a cash dividend, and the date of record for its distribution falls after the options are issued under this Outline, then on the date of record, the exercise increment of the unexercised and unexpired options as of that date shall be reduced by the gross amount of the dividend per share, in its sum in Israeli shekels at the date of record. To remove all doubt, the exercise price shall not fall below the par value of the share. It is clarified that the provisions of this section shall not apply to offerees who are residents of the United States and/or subject to the tax laws in the United States.

 

14.5                        If the adjustments set out in this section result in share fractions, the Company shall not issue share fractions, and the number of shares issued to the offeree shall be rounded up to the next full share.

 

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14.6                        It is clarified that the offeree’s right to additional underlying shares as a result of the adjustments under the provisions of this section shall only apply on the exercise date of the options.

 

15.                               Obligations of the offerees

 

When issuing the options, the Company shall deliver to each offeree a letter of offer in respect of the number of options that each offeree is entitled to receive under the Plan. When receiving the options under the Plan, the offeree shall undertake and declare the following: (1) To agree and confirm that he received and read the Plan and the letter of offer and accepts all of the conditions therein, including and without derogating from the generality of the aforesaid, his consent to bear all of the tax liabilities and other mandatory payments resulting from the offering and issue of the options, the exercise or sale of the underlying shares, and that he agrees and authorized the Company to deduct any tax at source that may apply (including, if required, from the number of options and/or underlying shares); (2) To fulfill all the conditions set out in section 102 (including provisions relating to the tax track), the provisions of section 102, the Plan, letter of offer and trustee agreement; (3) Subject to the provisions and conditions of section 102 and the rules, not to sell or remove the underlying shares from the trustee before the end of the lock up period; (4) To comply with the procedures for exercising the options and selling the underlying shares, as will be agreed upon between the Company and the trustee.

 

16.                               Applicable law

 

The Plan, this Outline and all the attached documents that were submitted or signed by the Company or subsidiaries in respect of the Plan and Outline, are subject to the laws of the State of Israel.

 

17.                               The financial value of the options

 

17.1                        The options will be offered to the offerees for no consideration.

 

17.2                        The financial value of each option at January 6, 2010, immediately prior to the date of record, is as follows: first and second lots: NIS 18.10; third lot: NIS 19.30. The total financial value of all of the options for the offerees is NIS 203.5 million. For further details, see paragraph 5.1 above.

 

17.3                        The financial value was calculated according to the financial opinion of external consultants and based on the Black and Scholes model, according to the calculation formula set out in the TASE guidelines for determining the value of options. The annual standard deviation of the share is 54.98% for the first and second lots and 48.45%, for the third lot. The annual capitalization rate is 0.59% for the first and second lots and 1.29% for the third lot. The life of the options is two and a half years for the first and second lots (taking into account, inter alia, the minimum lock-up period as set out in section 13.4 above) and three and a half years for the third lot. The exercise price set out in section 5.2 above and the closing price of the share on the TASE immediately prior to the date of record is NIS 53.10.

 

18.                              Information based on the sixth Addendum to the Securities Regulations (Periodic and Immediate Reports), 5730-1970

 

This section 18 presents information based on the sixth Addendum to the Securities Regulations (Periodic and Immediate Reports), 5730-1970, (“the Addendum”).

 

18.1                        For details of the options issued to Akiva Mozes and Nir Gilad and other officers under this Plan and Outline, and the percentage of their voting rights and the issued and paid-up share capital subsequent to their issue and exercise, at full dilution, and their financial value, see section 5 above.

 

18.2                        For details of all the compensation components for Akiva Mozes and the other four officers, who are the five highest-paid senior officers in 2009, among all the senior officers

 

14

 

in the Company and its subsidiaries, pursuant to Part C of the Addendum, see section 8.1 of the Shelf Prospectus (Ref. No.: 2009-01-190410) published by the Company on August 9, 2008. It should be noted that as from the second quarter of 2009 through to the date of this report, no changes have occurred in the terms and conditions of the tenure of the offerees as noted in this section 18.2.

 

18.3                        At the date of this report, Nir Gilad does not hold Company shares or options that are exercisable into Company shares. Furthermore, pursuant to the resolution adopted by the general meeting of the Company’s shareholders on July 20, 2009 pertaining to approval of the contract engaged by the Company to receive management services from Israel Corp. and/or H.L. Management Consulting (1986) Ltd., which is a wholly controlled subsidiary of Israel Corp., commencing January 1, 2009 through December 31, 2011, Mr. Gilad is not entitled to directors’ compensation for serving on the board of directors of the company and its committees. For further information see the Company’s Immediate Report dated June 16, 2009 (Ref. No.: 2009-01-143919). Likewise, as of the date of this report, Nir Gilad has no other compensation components with respect to his tenure with the Company or any of the Company’s subsidiaries.

 

18.4                        Organs of the Company which approved and issued the options to Akiva Mozes and Nir Gilad and officeholders and dates of approval

 

Further to the recommendations of the board of directors’ human resource committee (see details in section 3.3 above), the issue of options to Akiva Mozes and Nir Gilad and to the other officers, under this Outline, were approved by:

 

The Company’s audit committee deliberated the Plan and Private Offering, including the Substantial Private Offer to Akiva Mozes and Nir Gilad, in its meetings of December 20 and December 28, 2009, and approved them on January 3, 2010.

 

The Company’s board of directors deliberated the Plan at its meeting on January 6, 2010 and discussed the Plan and Private Offer to officers, including the Substantial Private Offer to Akiva Mozes and Nir Gilad, and approved them at its meeting on January 7, 2010.

 

In addition to the foregoing approvals, the issue of options to Nir Gilad is also subject to the approval of the general meeting of the Company’s shareholders which will be convened pursuant to an immediate report, and notice of the convening of a special general meeting, in accordance with the Securities Regulations (Transaction between a Company and its Controlling Shareholder), 5761-2001 and the Securities Regulations (Immediate and Periodic Reports), 5730-1970, published simultaneously and together with this Outline.

 

18.5                        Method for determining compensation

 

For the purpose of determining compensation, the audit committee and board of directors examined and took into account, in their deliberations concerning these matters, inter alia, the following parameters:

 

(a)         Assessment of the activities and contributions of Akiva Mozes and Nir Gilad and other officers to the Company’s performance and the achievement of its long-term goals;

 

(b)         The Company’s desire to ensure the continuation of their tenure in the Company in the upcoming years and to provide them with an incentive to continue to act to achieve the Company’s profits and its long-term goals;

 

(c)          The scope and complexity of the Company’s operations and its financial results;

 

(d)         Figures pertaining to the scope of the total compensation for Nir Gilad and Akiva Mozes and other officers (as well as details of the various compensation components, including options);

 

15

 

(e)          The terms for issuing the options and ratio between the inherent value of the benefit and the scope of the total compensation for Nir Gilad and Akiva Mozes and other officers.

 

(f)           Economic opinion prepared by external advisors with respect to the financial value of the benefit inherent in the options (see section 17.3 above);

 

(g)          Detailed review of the generally accepted methods of compensation for executives in Israel and other countries. As part of the review, the organizational, financial and accounting significance of these compensation methods were presented. The review included benchmarks for all the compensation components (including salary, bonus and equity compensation) for officers in public companies, the majority of which are included in the TASE TA-25 index and similar foreign companies which are public companies trading on stock exchanges abroad and operating in the sector in which the Company operates and which the Company deems to be a reference group for its business (in this connection, it is noted that the Company employs numerous employees abroad, some of whom are offerees in the Private Offer and for this reason emphasis was placed on benchmarks for similar compensation in competitive international companies. For further information see section 18.6.2 below). The benchmarks were gathered and prepared by external advisors, based on public information published by said companies.

 

(h)         Figures pertaining to the scope of compensation in securities for officers under the Company’s previous options plan of 2007.

 

18.6                        Summary of the explanations of the audit committee and board of directors

 

The audit committee and board of directors of the Company examined the terms and conditions of the issue of options with attention paid to all the parameters specified in section 18.5 above and resolved to approve the issue of options to Nir Gilad and Akiva Mozes and officers, based on the following considerations:

 

18.6.1                          The audit committee and board of directors resolved, while taking into account the terms and conditions of the issue of options and the total scope of the compensation for Nir Gilad and Akiva Mozes and other officers, the complexity of their positions, their skills and extensive experience and benchmarks for officers in similar positions among public companies in Israel, the majority of which are included in the TASE TA-25 index, as well as among similar foreign companies which are public companies trading on stock exchanges abroad and operating in the sector in which the Company operates, that: (a) the scope of compensation in securities and the total scope of compensation for Akiva Mozes and Nir Gilad and other officers, are reasonable under the circumstances and do not deviate from the conventional level of compensation for officers in these companies, including in respect of the percentage of the capital and voting rights underlying the exercise of the options; (b) the compensation is also reasonable in respect of the number of options offered under the plan.

 

18.6.2                          Without derogating from the stipulations in section 18.6.1 above, the audit committee and board of directors are of the opinion that, since ICL is a multinational company and its primary sales are carried out outside of Israel, and that a significant number of its employees operate and are employed abroad, and due to the relatively minor number of Israeli companies operating in ICL’s areas of operations, it is difficult to find similar relevant companies in Israel. Therefore, it is proper that, for the sake of analyzing information of similar companies and similar compensation in the sector in which ICL operates, an appropriate and relevant benchmark group is chosen of foreign public companies trading on foreign stock exchanges and that the Company deems them to be a reference group for the management of its business.

 

16

 

18.6.3                          The number of options approved for issue to Nir Gilad and Akiva Mozes and the other officers, was determined by the audit committee and the board of directors of the Company, in view of high appreciation for their activities and contribution to the Company and the outstanding achievements of the Company’s management (headed by the Company CEO, Akiva Mazes), in managing and navigating the Company through the recent global economic crisis, and by comparison with the business results of the competitors worldwide.

 

18.6.4                          Members of the audit committee and board of directors consider preservation of managerial stability of the Company and the continued activity of Nir Gilad. Akiva Mozes and other officers to be highly important, and in their decision to approve the number of issued options, they took into account the importance of ensuring their continued tenure in the Company in the upcoming years and the scope of the Company’s business operations, complexity of its operations and its performance in the long term.

 

18.6.5                          The scope of compensation for Nir Gilad and Akiva Mozes and the other officers is also reasonable compared to the scope of compensation in securities granted to officers under the Company’s previous options plan of 2007.

 

18.6.6                          Taking into account all the parameters that were examined and the above explanations, members of the audit committee and board of directors believe that the compensation in securities for Akiva Mozes and Nir Gilad and the other officers (including the ratio between them and their total compensation) is reasonable and appropriate and is an important and central part of the mix of compensation factors designed to provide an optimum incentive to act to achieve profits for the Company and its long-term goals, and that the options plan and issue of the options is designed to serve the benefit of the Company.

 

For further information pertaining to the method of determining the compensation and the considerations taken into account by the audit committee and the board of directors for the Private Offer to the chairman of the board, Mr. Nir Gilad, see immediate report and notice of the convening of a special general meeting, in accordance with the Securities Regulations (Transaction between a Company and its Controlling Shareholder), 5761-2001 and the Securities Regulations (Immediate and Periodic Reports), 5730-1970, published simultaneously and together with this Outline.

 

19.                               The issued share capital of the Company, quantity and rate of holdings of offerees and interested parties in the Company

 

19.1                        At the date of this report, the issued and paid-up share capital of the company is NIS 1,288,232,191 par value, divided into 1,288,232,190 ordinary shares of NIS 1.00 par value each and one special State share.

 

19.2                        At the date of this report, the amount of 2,216,131 shares of the Company are held by Ferson Chemical Materials Ltd., a wholly owned and controlled subsidiary of ICL. The Company holds 22,373,500 shares of the Company.

 

19.3                        Subsequent to the issue under this report and on the assumption of full exercise of all the options offered under this report, the shareholders’ equity(5) shall amount to NIS 1,276,853,788 par value (disregarding the shares held by the subsidiary, Ferson Chemical Materials Ltd. — see above).

 

(5)         Presuming full exercise by the offerees, without exercise of the Company’s right under section 5.3 of the plan, and without taking into account shares held by the Company, and without taking into account the exercise of the balance of the securities of the Company that are convertible or exercisable for shares of the Company.

 

17

 

19.4                        To the best of the Company’s knowledge, the holdings of Akiva Mozes and Nir Gilad, both of whom are interested parties by virtue of their positions in the Company, and the rest of  the holders of issued and paid-up shares of the Company are, at the date of this report, and will be subsequent to the private offering, as follows:

 

	
 
    	
 
    	
 
    	
 
    	
Immediately prior to the private
   offering
    	
 
    	
Subsequent to the private offering and presuming that
   the offerees will exercise all of the options issued to
   them under this Outline Plan.
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Capital,
    	
 
    	
 
    	
 
    	
Voting
   rights,
    	
 
    
	
Company’s shareholders
    	
 
    	
Quantity
    	
 
    	
Capital
    	
 
    	
Voting
   rights
    	
 
    	
Number
    	
 
    	
Capital(6)
    	
 
    	
fully
   diluted(7)
    	
 
    	
Voting
   rights(8)
    	
 
    	
fully
   diluted(9)
    	
 
    
	
Interested   parties
    	
 
    	
Israel Corp. Ltd.
    	
 
    	
671,767,522
    	
 
    	
53.07
    	
%
    	
53.07
    	
%
    	
671,767,522
    	
 
    	
52.61
    	
%
    	
52.21
    	
%
    	
52.61
    	
%
    	
52.21
    	
%
    
	
 
    	
 
    	
PCS
    	
 
    	
143,648,630
    	
 
    	
11.35
    	
%
    	
11.35
    	
%
    	
143,648,630
    	
 
    	
11.25
    	
%
    	
11.16
    	
%
    	
11.25
    	
%
    	
11.16
    	
%
    
	
 
    	
 
    	
Ferson Chemical   Materials Ltd.
    	
 
    	
2.216,131
    	
 
    	
0.18
    	
%
    	
0.18
    	
%
    	
2,216,131
    	
 
    	
0.17
    	
%
    	
0.17
    	
%
    	
0.17
    	
%
    	
0.17
    	
%
    
	
 
    	
 
    	
Akiva Mozes
    	
 
    	
433,231
    	
 
    	
0.03
    	
%
    	
0.03
    	
%
    	
1,533,231
    	
 
    	
0.12
    	
%
    	
0.29
    	
%
    	
0.12
    	
%
    	
0.29
    	
%
    
	
 
    	
 
    	
IDE Technologies
    	
 
    	
205
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
205
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    
	
 
    	
 
    	
Rotem Amfert Negev Ltd.
    	
 
    	
205
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
205
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    
	
 
    	
 
    	
Nir Gilad
    	
 
    	
—
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
800,000
    	
 
    	
0.06
    	
%
    	
0.06
    	
%
    	
0.06
    	
%
    	
0.06
    	
%
    
	
 
    	
 
    	
Amnon Sadeh
    	
 
    	
27,500
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
27,500
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    
	
 
    	
 
    	
Yair Orgler
    	
 
    	
1,600
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
1,600
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    
	
 
    	
 
    	
Avraham (Baiga) Shochat:
    	
 
    	
2,000
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
2,000
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    
	
 
    	
 
    	
Moshe Vidman:
    	
 
    	
6,100
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
6,100
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    
	
 
    	
 
    	
Yossi Rosen
    	
 
    	
3,500
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
3,500
    	
 
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    	
0.00
    	
%
    
	
 
    	
 
    	
Ofer Holdings Group Ltd.
    	
 
    	
377,662
    	
 
    	
0.03
    	
%
    	
0.03
    	
%
    	
377,662
    	
 
    	
0.03
    	
%
    	
0.03
    	
%
    	
0.03
    	
%
    	
0.03
    	
%
    
	
 
    	
 
    	
Israel Chemicals Ltd.
    	
 
    	
22,373,500
    	
 
    	
—
    	
 
    	
—
    	
 
    	
22,373,500
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
Balance   of shareholders
    	
 
    	
Public
    	
 
    	
447,369,502
    	
 
    	
35.34
    	
%
    	
35.34
    	
%
    	
456,469,502
    	
 
    	
35.75
    	
%
    	
36.07
    	
%
    	
35.75
    	
%
    	
36.07
    	
%
    

 

20.                               Consideration and method of determination thereof

 

20.1                        The options are offered to the offerees for no consideration.

 

20.2                        If all the options offered are exercised for shares(10), the Company should receive the sum of approximately NIS 584,100 thousands by the final date of exercise, inclusive.

 

20.3                        The Company intends to use the consideration obtained from the exercise of the options, if obtained, (see footnote 10), as may be resolved by the management or the board of directors of the Company, from time to time.

 

20.4                        The exercise price of the options is set by the audit committee and the board of directors in accordance with section 5.2 above, and it is identical for all the offerees under this Outline, including Akiva Mozes and Nir Gilad.

 

(6)          Presuming the theoretic exercise of all of the option warrants into shares by the offerees under this outline, without exercising the Company’s right to issue shares in an amount equivalent to the financial benefit under section 5.3 below, and without taking into account shares held by the Company.

(7)          The calculation of the fully diluted percentage is made on the basis of the assumption in footnote 6 above and assuming the exercise of all the balance of the securities of the Company that are convertible and exercisable for shares in the Company.

(8)          Cf. footnote 6 above

(9)          Cf. footnote 7 above

(10)    Without exercising the Company’s rights under section 5.3 above

 

18

 

21.                               Personal interest in the approval of the Substantial Private Offering

 

The Israel Corporation Ltd, the controlling shareholder in the Company. (“Israel Corp.”), is liable to have a personal interest in the approval of the Substantial Private Offering with respect to Nir Gilad  due to his position as CEO of Israel Corp. To the best of the Company’s knowledge, none of the officers of the Company have a personal interest in the approval of the Substantial Private Offering, with the exception of the following officers who are offerees under the placement: Mr. Mozes and Mr. Gilad; and who may be deemed parties with personal interest with respect to the Substantial Private Offer to Nir Gilad — Mr. Moshe Vidman and Mr. Yossi Rosen, due to their tenure as directors in Israel Corp. (due the personal interest that Israel Corp. could have); and Mr. Avisar Paz and Mrs. Noga Yatziv, who may be deemed as parties with personal interest due to their tenure as officers in Israel Corp. who are, in the framework of their positions; subordinate to Mr. Nir Gilad, in his position as CEO of Israel Corp.

 

22.                               Required approvals

 

For further information pertaining to the required approvals and permits, see section 3 above.

 

23.                               Details of agreements pertaining to rights in the shares of the Company

 

To the best of the Company’s knowledge, subsequent to the clarifications conducted with Akiva Mozes and Nir Gilad, there are no agreements, either written or oral, between any of the offerees of the Substantial Private Offer and any shareholder in the Company, or between the offerees, all or in part, between each other or between them and other persons, with respect to the acquisition or sale of securities of the Company or with respect to the voting rights in the Company.

 

24.                               Restraints and restrictions applicable to the offerees with respect to operations that may be carried out with the options

 

For further information in this regard, see section 9 above.

 

25.                               Term of grant of securities

 

The term of the grant of options to the offerees under this Outline shall be effected as of: (a) receipt of all the required approvals as set forth in section 3 above or (b) 14 business days after the date of publication of this Outline, whichever is the later; and shall terminate on: (a) the date of submission of the periodic report for 2009 or (b) March 31, 2010, whichever is the earlier.

 

26.                               Powers of the board of directors of the Company

 

The board of directors of the Company is authorized to interpret the provisions of the Outline and the Plan and to make any supplementary or clarifying provision with respect to the execution thereof, to the extent that the matter may be required, at its discretion.

 

Without derogating from the generality of the aforesaid, it is clarified that subject to any law, the board of directors of the Company is authorized, at its exclusive discretion, to exercise all of the powers required for the purpose of management of the Plan, including determining the identity of the offerees, determining the number of options to be issued to each of the offerees, determining the dates of such issue, determining the vesting period and in special cases in which the board of directors shall deem fit, to bring forward the vesting dates of the unvested options (all or in part), with respect to all the offerees or some of them.

 

Likewise, the board of directors of the Company is authorized, at its exclusive discretion, to amend the provisions of the Plan (and its ancillary documents), provided that the amendment of any of the terms and conditions of the Plan shall not contradict the provisions of section 102 and shall not harm the rights of the offerees under the Plan without obtaining the prior consent of the offerees to whom options have been issued under the Plan on the date of the proposed amendment.

 

19

 

The board of directors has delegated its authority to designate the shares issued to the Trustee to specific employees (who are not officers) to its human resources committee, all in accordance with the provisions of section 288(b) (1) of the Companies Law.

 

27.                               No undertaking of continued employment

 

The granting of options to offerees under this Plan and this Outline shall not be interpreted as imposing any obligation on the Company and/or its subsidiaries to continue the employment of any of the offerees and/or as restricting them from terminating the employment of any of the employees and/or as granting any right to an offeree to continue to be employed.

 

PART C — RIGHTS ATTACHING TO THE COMPANY’S SHARES

 

28.                               Below is a summary description of the rights attaching of the Company’s shares as prescribed in the Company’s articles of association.

 

The full version of the Company’s articles of association can be viewed on the distribution website of the Securities Authority at (www.magna.isa.gov.il) and at the registered office of the Company.

 

At the date of this report, all the shares in the issued and paid-up share capital of the Company and the shares to be obtained from exercise of the options under this Plan are registered ordinary shares, except for one special State share (“the Gold Share”) which is held by the State of Israel.

 

28.1                        Conditions and rates of participation in the distribution of dividends and bonus shares: The ordinary shares shall have equal rights and shall afford the holders of them the right to receive notices regarding shareholders’ meetings of the Company, to participate in and vote at such meetings, to elect members of the board of directors as set forth in these articles of association and the right to participate in the distribution of the Company’s profits and surplus assets upon winding up.

 

In the event of a payment of dividends, such shall be paid proportionally to the sums paid-up or credited as paid-up on account of the par value of the shares, without taking into account any premium paid thereupon.

 

In the event of distribution of bonus shares, such shall be divided up between the ordinary shareholders, in proportion to their entitlement to participate in the payment of dividends, and shall be of the same class as the shares in respect of which they were distributed.

 

28.2                        Rights to participate in the division of the Issuer’s property upon winding- up: Upon winding up of the Company, the surplus of the Company’s assets over all of its liabilities, subject to rights granted for any class of shares that may be issued at such time, if any, shall be distributed among the ordinary shareholders in proportion to the sum paid-up or credited as being paid-up on the par value of such shares, without taking into account any premium paid on the shares.

 

28.3                        Right to appoint directors: The members of the board of directors shall be elected by the shareholders’ meeting by ordinary majority. All of the members of the board of directors shall hold office from the date of their election and/or appointment, until the next annual shareholders’ meeting, and subject to the provisions of any law and of the articles of association. The majority of the members of the board of directors shall be citizens and residents of Israel. A person who is not a citizen or resident of Israel shall not be elected and/or appointed as a director, if as a result of such appointment, the majority of the board of directors shall not be citizens and residents of Israel and the election and/or appointment of a director as aforesaid shall not have any force and shall be deemed not to have been made from the outset.

 

The number of members of the board of directors shall be no fewer than 7 and no greater than 20. The external directors of the Company shall be included in counting of the members of the board of directors.

 

20

 

28.4                        Rights to receive notices of meetings of shareholders, rights to participation and vote, and quorum: As aforesaid, every regular shareholder has the right to receive notices of general meetings of the Company and to attend and vote at such meetings. Deliberations in a shareholders’ meeting shall not commence unless a quorum is present.  A quorum shall be constituted by the presence in person or by proxy, of at least two members who together hold at least 50% of the issued shares of the Company conferring voting rights. If, within half an hour of the time set for the commencement of the meeting, there is no quorum, the meeting shall be adjourned to the same day, time and place, or on such other day and/or other time and/or other place, as the board of directors shall prescribe by notice to the shareholders; and if at such adjourned meeting there is no quorum after half an hour of the time fixed for the meeting, then two members with voting rights, present in person or by proxy, holding at least one third of the Company’s issued share capital, shall be entitled to discuss and resolve matters in respect of which the meeting was convened.

 

28.5                        Restriction on transfer of shares: Fully paid up shares may be transferred without the need for the consent of the board of directors. The special State share shall not be transferable. The articles of association contain provisions restricting the purchase or holding of shares in rates exceeding 14%, 25% and any number affording the right, ability or practical possibility to appoint most of the directors of the Company, alone or jointly with others. Any such purchase shall require the consent of the person holding the special State share, in accordance with the proceedings and conditions set forth in the articles of association.

 

28.6                        Conditions for amendment of rights attaching to shares

 

Ordinary shares: Amendments of rights attaching to any class of shares shall be prescribed in a resolution of the shareholders of such class, and in a resolution of a meeting of such classes of shares whose rights may be harmed as a result of the amendment, by a majority of those persons holding three quarters of the voting rights of shareholders present at such meetings, or if such amendment has the written consent of the holders of three quarters of the number of shares of such class issued and of those classes whose rights shall be harmed as a result of the amendment.

 

The special State share: Any amendment of the articles of association which might directly or indirectly harm the rights attaching to the special State share, shall be deemed to be an amendment of the rights attaching to the special State share. Any resolution or act which might directly or indirectly harm the rights attaching to the special State share shall only be effected with the consent of the holder of the special State share, and shall be void and of no effect in the absence of the consent of the holder of the special State share.

 

PART D — ADDITIONAL DETAILS

 

29.                               Details of the price of the Company’s shares on the Stock Exchange

 

Below are details of the highest and lowest share prices (in agorot) on the dates on which the Company’s shares were traded during each of the two calendar years preceding the date of this Outline, and during the period from January 1, 2010 through shortly prior to the date of the publication of this Outline.

 

	
 
    	
 
    	
High price*
    	
 
    	
Low price*
    	
 
    
	
Period
    	
 
    	
Date
    	
 
    	
Price
    	
 
    	
Date
    	
 
    	
Price
    	
 
    
	
2008
    	
 
    	
June 18, 2008
    	
 
    	
7,296
    	
 
    	
November 23, 2008
    	
 
    	
1,781
    	
 
    
	
2009
    	
 
    	
December 14, 2009
    	
 
    	
5,510
    	
 
    	
January 22, 2009
    	
 
    	
2,527
    	
 
    
	
2010 (through to   January 6, 2010)
    	
 
    	
January 6, 2010
    	
 
    	
5,310
    	
 
    	
January 3, 2010
    	
 
    	
5,020
    	
 
    

 

* The closing prices of the shares subsequent to their adjustment for the purpose of the distribution of a dividend, as carried out by the Tel Aviv Stock Exchange Ltd.

 

21

 

30.                               Notice of Outline

 

Within 21 days from the date of the publication of this Outline, the Company shall provide a copy of the Outline, together with reference to the reports to which it refers, to each offeree at their place of  employment or at their addresses as recorded by the Company. Each offeree shall receive a page setting out reference to links on the distribution website of the Securities Authority, with respect to each of the reports to which this Outline refers. In addition, a printed copy of the aforesaid reports shall be deposited with the Company’s secretariat and with segment secretariats, and each offeree will be able to view such and may obtain a copy thereof upon request.

 

Any notice from the Company to the offerees shall be given by way of written notice to be delivered to each of the offerees at their place of employment, or at their address as recorded by the Company, or at their email address.

 

31.                               Reference to periodic reports and interim financial statements

 

Attention is hereby drawn to the periodic report for 2008, which was published by the Company on March 30, 2009 (Ref. No.: 2009-01-071403) and to the interim financial statements for the period ended March 31, 2009, which was published by the Company on May 25, 2009 (Ref. No.: 2009-01-115038), to interim financial statements for the period ended June 30, 2009, which was published by the Company on August 24, 2009 (Ref. No.: 2009-01-206604) and to interim financial statements for the period ended September 30, 2009, which was published by the Company on November 24, 2009 (Ref. No.: 209-01-294039) and to the immediate reports published by the Company subsequent to the periodic report. These documents may be perused on the distribution website of the Securities Authority at: www.magna.isa.gov.il and at the website of the TASE at www.tase.co.il and at the registered office of the Company (at the office of the general counsel and company secretary), during regular business hours and with prior appointment, at Tel: 03-6844412.

 

32.                               Powers of the Israel Securities Authority

 

The Securities Authority, including an employee of the Authority so authorized, may instruct the Company, within 14 business days of the date of submission of the Outline, to provide any explanation, details, information or documents pertaining to the Outline and may instruct the Company to amend the Outline within such time as it may prescribe. Should the Authority instruct to amend this Outline, it may order a postponement of the effective date of the commencement of the term of granting of securities to a date which may fall no earlier than three business days and no later than 14 business days from the date on which the amendment to this Outline is published. The amendment of the Outline and the postponement of the commencement of the term of granting of the securities under these instructions shall be effected in accordance with the provisions of the Outline Regulations.

 

33.                               Company representative

 

The representative of the Company for the purpose of handling the report and this Outline is the Company’s general counsel and the company secretary, Adv. Liza Haimovitz, at telephone 972-3-6844412 and fax 972-3-6844427.

 

Israel Chemicals Ltd.

 

	
/s/   Lisa Haimovitz
    	
 
    
	
Lisa Haimovitz
    	
 
    

 

General Consul and Company Secretary

 

22

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