---

---

Exhibit 10.3

Date: April 26, 2007

ToBank Hapoalim Ltd.

Re: Letter of
undertaking

|              |  |                                                                                                                                                                                                           
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Whereas       |  | Bank Hapoalim Ltd.
  (hereinafter  The Bank) has
  made and/or will make a loan in the amount of USD $27 million (hereinafter  The credit) available to Ampal Israel
  Ltd. (hereinafter  AmpalIsrael);
|              |  |                                                                                                                                                                                                           
|And
  whereas |  | We the undersigned have
  undertaken vis-à-vis the bank to sign on this letter of undertaking;                                                                                                            

Accordingly it is agreed and
declared vis-à-vis the Bank, as follows:

|   |                                                                                                                                                                                                                                                                                                                                    
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | The introduction to this
  letter constitutes an integral part hereof:                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                    
|2. | Interpretations:                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                    
|   | In this letter the
  following terms will have the following meanings:                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                    
|   | The
  aforementioned amounts means the amounts of the principal of the credit, the interest, the
  additional interest, exceptional interest, arrears interest, interest at the
  maximum rate, commissions, expenses and other payments, of any sort
  whatsoever, that we and/or Ampal
  Israel owe and/or will owe to the Bank
|   |                                                                                                                                                                                                                                                                                                                                    
|3. | Undertakings and
  declarations                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                    
|   | So long as the Bank has
  not confirmed to us in writing that the aforementioned amounts have been
  repaid in full, we undertake vis-à-vis the Bank that all of what is stated
  below will apply:                                                                                                                                

| |      |                                                                                                                                                                                                                                                                                                         
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3.1. | We will not distribute
  dividends to our shareholders and we will not transfer monies to them,
  whether as repayment of shareholders loans or otherwise, without receiving
  the prior agreement of the Bank for such action, in writing.                                                            
| |      |                                                                                                                                                                                                                                                                                                         
| | 3.2. | Our shareholders equity
  will not fall below 35% of the total of our balance sheet (solo), as those
  terms will be reported in our quarterly and annual financial statements
  (solo) at any time.                                                                                                   
| |      |                                                                                                                                                                                                                                                                                                         
| | 3.3. | The ratio between the
  value of our holdings, as derived from market value (as defined below) with
  the addition of cash to gross financial debt (as defined below) will not fall
  below 2:1 at any time, and this in relation to our quarterly and annual
  financial statements (solo) at any time.
| |      |                                                                                                                                                                                                                                                                                                         
| |      | The
  value of holdings derived as derived from market value means our market value with the addition
  of net financial debt (as defined below).                                                                                                                                                     
| |      |                                                                                                                                                                                                                                                                                                         
| |      | Net
  financial debt
  means our financial liabilities, including bank credit, debts to other
  financial institutions and to our bond holders, less the balance of cash in
  hand.                                                                                                                   
| |      |                                                                                                                                                                                                                                                                                                         
| |      | Gross
  financial debt
  means our financial liabilities, including bank credit and debts to other
  financial institutions and to our bondholders.                                                                                                                                                   

---

---



|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | The terms that are
  mentioned in this section, as above, which have not been defined are to be
  interpreted in accordance with generally accepted accounting principles in
  Israel                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|4. | Financial statements and
  information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Without impairing and/or
  detracting from our undertakings in accordance with this letter, we hereby
  undertake that so long as we will be indebted to the Bank for any amount
  whatsoever, all of what is stated below will apply:                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | 4.1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | No later than 90 days from
  the end of each calendar quarter, we undertake to furnish to the Bank our
  quarterly balance sheet (solo) for the quarter that has passed.                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 4.2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | No later than 90 days from
  the end of each calendar year, we undertake to furnish to the Bank our
  audited annual balance sheet (solo) for the year that has passed.                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | To each of the financial
  reports that are mentioned above there will be attached our declaration, signed
  by our managers, in respect of our compliance with the financial ratios that
  are detailed above in this letter.                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5. | Immediate repayment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Without detracting from
  the events that are detailed in any document whatsoever on which we have
  signed in favor of the Bank and in addition thereto, in case of the
  occurrence of one or more of the events that are detailed below occur, to
  make the aforementioned amounts, in whole or in part, repayable immediately
  (the amounts that will be made repayable immediately, as aforesaid, will be
  called hereinafter The amounts of the
  immediate repayment). Without detracting from our other
  undertakings to the Bank, we undertake to pay the Bank the amounts of the
  immediate repayment:
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | These are the events:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | 5.1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | If one or more of the
  undertakings in accordance with this letter and/or in accordance with any
  other document that has been signed and/or that will be signed in connection
  with the aforementioned amounts and/or otherwise is breached and/or is not
  complied with and/or it becomes apparent that any declaration whatsoever of
  our declarations in accordance with this letter and/or in accordance with any
  other document that we have signed and/or that will be signed in connection
  with the aforementioned amounts and/or otherwise is not correct or is not
  accurate.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 5.2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | If one or more of Ampal Israels commitments in accordance
  with any document whatsoever that has been signed and/or that will be signed
  by it in favor of the Bank is breached and/or is not complied with and/or it
  becomes apparent that any declaration whatsoever of the declarations made by
  Ampal Israel in accordance with any document whatsoever that has been
  signed and/or that will be signed by it in favor of the Bank is not correct
  or is not accurate.                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 5.3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | If any change whatsoever
  is made in our Articles or Memorandum of Association which will impair or
  which might impair the rights of the Bank and/or our undertaking vis-à-vis
  the Bank, including in connection with this letter and/or any other document
  that is made and/or that will be made by us in favor of the Bank and/or any
  other agreement that has been signed and/or that will be signed between us
  and the Bank.                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 5.4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | If the holders of the
  bonds that have been issued and/or that will be issued to the public by us
  will demand the early repayments and/or will present claims and/or demands
  for payment against us and if these are approved by the court and/or a body
  that is authorized for that purpose under the power of the bonds or if the Tel-Aviv
  Stock Exchange decides that there is to be an early redemption, and all in
  respect of the said bonds.                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 5.5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | If Mr. Yossef Maiman
  ceases to be the effective controlling interest in our company. For this
  matter, effective control is the holding, directly or indirectly, of the
  issued and paid-up share capital of our company, which affords the largest
  holding as a single shareholder from among the generality of the shareholders
  in our company, and there will not be another shareholder with a larger
  holding among the shareholders.                                                                                                                                            

---

---



|   |         |                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | General
|   |        
|   | 6.1.    | The headings of the
  sections are for convenience only and should not be used for interpretation
  purposes.                                                                                                                                                                                                                                                                                                      
|   |         |                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | 6.2.    | What is stated in this
  letter comes in addition to what is stated in any other credit document
  and/or in any other bond that has been made and/or which will be made by us
  in connection with the relationship between us and the Bank, in connection
  with the aforementioned amounts and/or otherwise. However, in the event of a
  discrepancy between them, what is stated in this letter shall prevail.
|   |         |                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | 6.3.    | In any case in which, in
  accordance with this letter and/or any document in connection with the
  aforementioned amounts and/or otherwise, the Bank will be entitled to take
  any action whatsoever, although the Bank is not required to take any action.                                                                                                                                                      

And as proof of said agreement, we
sign below:

|                                  |  | 
|--------------------------------- |  | 
|/s/ Irit Eluz ; /s/ Yoram Firon  
|                                  |  | 
|Ampal American Israel Corporation



|           |  |             |  |           |  |     | 
|---------- |  | ----------- |  | --------- |  | --- | 
|Signed by: |  | Irit Eluz   |  | Position: |  | SVP | 
|          
|Signed by: |  | Yoram Firon |  | Position: |  | VP  | 

Lawyers
confirmation

I
the undersigned, Shiri Lind, Attorney, who serves as the legal advisor to Ampal
American Israel Corporation (hereinafter Ampal),
hereby confirm that this letter was legally signed by Ampal, in accordance with the
up to date Articles and Memorandum of Association of Ampal and that it has been
done by means of persons who are authorized to bind it, whose signature on this
letter binds Ampal for all intents and purposes.



|               |  |                      |  | 
|-------------- |  | -------------------- |  | 
|April 26, 2007 |  | /s/ Shiri Lind, Adv.
|               |  |                      |  | 
|Date           |  | Signature and stamp 

---

---