----

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| Whereas | On      November 16, 2009, an agreement was signed between the Borrower (through      its founder – Merhav-Ampal Energy Ltd.) - and 012 Smile Communication Ltd.      and Ampal Energy Ltd., for the sale of the assets, activities and      obligations of Smile 012 Communication Ltd., to the Borrower, that was      amended on January 26, 2010 – all as detailed in the aforesaid agreement      (as amended); |
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| Whereas | the      Borrower has approached the Lenders, seeking to enter an agreement with      them whereby they will jointly provide it with part of the Credit required      to finance the above agreement; |
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| 1. | Definitions and      Interpretation |
|----|-------------------------------------|

|   | 1.1 | The      following terms will have the meaning set out opposite them, unless the      context requires otherwise. Terms not defined in this Agreement will be      given the meaning given to them in the Credit Documents (as defined      hereunder). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.1 | "Institutional      Loan" - a loan from institutional entities (the "Financial Institutions")      in a sum of NIS. 220,000,000 which Merhav intends to take by the Closing,      in order to provide the Independent Resources as defined hereunder, it is      hereby clarified that in the event that the Borrower has obtained sums by      virtue of Section 11.4 of the Acquisition Agreement, then for the purpose      of this Agreement, the  amount set out above will decrease by an      amount equal to 22% of the sums that the Borrower has received according      to Section 11.4 hereunder (the "Reduced Total "), and the Loan will be      considered as having been provided, ab initio, at the      Reduced Total and the Financial Institutions' settlement time table as      determined in Section 10.4.2.1 hereunder, will change accordingly. It is      hereby clarified that the above calculations, including the change in the      Financial Institutions' time table, are prepared for the purpose of this      Agreement only and have no bearing or influence on the relationships      between the Financial Institutions and Merhav and on the payments that      Merhav is to pay to the Financial Institutions in accordance with the      Agreement with them. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.2 | Ampal      American - Ampal American IsraelCorporation. |
|--------|-------|---------------------------------------------------------|

|   | 1.1.3 | "Independent      Resources" - a sum of NIS.400,000,000 (four hundred million new Israeli      shekels) derived from investment in the Borrower's share capital or from      subordinate loans which the Borrower will use to make the payments to      Smile on account of the purchaseconsideration. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.4 | "Stakeholder"      - As this term is defined in the Securities Law other than the Borrower's      subsidiary companies. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.5 | "Financial      Statements" - The Borrower's annual or quarterly Financial Statements, as      the case may be, on a consolidated basis, prepared in New Shekels,      consistently in accordance with generally accepted accounting principals,      audited (in respect of periods concluding on December 31) or reviewed (in      respect of periods concluding on other dates) as is customary in respect      of reports of this kind, by the Borrower's accountants and any other      report or explanation required according to relevant standard accounting      procedures or by authorizedauthorities. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.6 | "Financial      Statements - Solo" - The Borrower's annual or quarterly Financial      Statements as the case may be, on an individual basis, prepared in New      Shekels, consistently in accordance with generally accepted accounting      principals, approved on behalf of the Borrower by the Chief Financial      officer of the Company (CFO) or by theCEO. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 1.1.7 | "The      Credit" - the loans provided to the Borrower from time to time in      accordance with this Agreement by one of the  Lenders. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.8 | "Provisions      of the Law" - any provision of the law or legislation in Israel or abroad,      a provision from the Bank of Israel, and any other competent authority in      Israel or abroad, agreed to by one of the Lenders and the Bank of Israel      or by one of the Lenders and any other competent authority in Israel or      abroad, as may be in force from time totime. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.9 | the      "Holding" - as this term is defined in the Securities  Law. |
|--------|-------|----------------------------------------------------------------------|

|   | 1.1.10 | "Subordinated      Loans" - loans provided or to be provided to the Borrower by Merhav,      Stakeholders in Merhav or a corporation controlled by any of the aforesaid      in respect of which Merhav or a  Stakeholder or a corporation      controlled by any of them, as the case may be, and the Borrower, undertake      in writing to the Lenders, are not discharged before full settlement of      the Credit, including by way of offset, except in accordance with the      provisions of this Agreement (including by payments to Merhav in      accordance with the provisions of Section 10.4  hereunder). |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.11 | "Known      Agreement Index" means - the monthly Index for December 2009 published on      January 15, 2010 at the level of105.2. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.12 | "Acquired      Assets" - as [the term] "Acquired Assets" is defined in the Purchase      Agreement and subject to and in accordance with all provisions of the      Purchase Agreement related thereto. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.13 | this      "Agreement" - this Agreement and all its annexes, in such form as it will      be from time to time. |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | 1.1.14 | the      "Purchase Agreement" - the agreement drawn up and entered on November 16,      2009 between the Borrower (through its founder - Merhav Ampal Energy Ltd.)      Smile and Merhav, for the acquisition of part of Smile's operations,      assets and obligations by the Borrower, as amended on January 26,      2010. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.15 | the      "Guarantor" - each of: Merhav and Ampal  American. |
|--------|--------|-------------------------------------------------------------|

|   | 1.1.16 | "Operating      Profit to service the Debt" (EBITDA) means - the total cumulative      operating profit, according to the Borrower's Financial Statements      (consolidated), in each of the four consecutive calendar quarters, the      conclusion of which is the date for assessing the latest quarterly or      annual Financial Statements, as the case may be (the "Final Date") (for      the avoidance of doubt, operating profit is after payment of management      fees to Merhav), before finance costs/income (interest, linkage      differential, exchange rate differential, commissions and the differential      calculated on the activated loans, at fair value), and before taxes, plus      depreciation and write-downs recorded in that period and after excluding      capital gains/losses, excluding bonuses in respect of options granted to      employees, excluding one-off expenses arising from reorganization; and      with the total of the aforesaid cumulative amount being linked to changes      in the Known Index where the base index is the index known on the Final      Date and the revised index is the index known on the review date or on the      relevant Assessment Date. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 1.1.17 | the      "Licenses" - a general license for the Borrower to provide Bezeq      International services, a general license to 012 Telecom Ltd. to provide      domestic Bezeq land-line services, a special license for the Borrower to      provide internet access services, a special license for the Borrower to      provide end-user services and any other license that may arise in place      thereof, or other license the termination or suspension of which may have      a harmful effect on the Borrower's businesses, but not including a license      whose termination or suspension as aforesaid, has a negligible effect on      the Borrower's businesses. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.18 | "Subsidiaries"      - as this term is defined in the SecuritiesLaw. |
|--------|--------|---------------------------------------------------------------------|

|   | 1.1.19 | "Companies      Law" - the Companies Law, 1999-5759, as amended from time to      time. |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | 1.1.20 | "Securities      Law" - the Securities Law, 1968-5728, as amended from time to      time. |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | 1.1.21 | the      "Accounts" - an account as specified below, opened by the Borrower with      each of the Lenders, which serves solely to provide and manage the Credit      as defined above, as well as an account that may replace an account      specified hereunder, but only if it serves solely to manage the Credit, as      defined above: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.21.1 | Leumi      - account no. 75920/01 at Branch800 |
|--------|----------|------------------------------------------------|

|   | 1.1.21.2 | Discount      - account no. 91885843 at Branch10. |
|--------|----------|---------------------------------------------------|

|   | 1.1.22 | "Business      Day" - any day except Saturday, public holidays, the two days of Rosh      Hashana, the eve of Yom Kippur and Yom Kippur, the first and eight days of      Succoth, Purim, the first and seventh days of the Passover, Independence      Day, Shavuot Festival, the Ninth of Av and also excluding any day that is      determined by the Bank Commissioner not to be a bank Business      Day. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.23 | "Closing      Day" the day on which the Credit is provided by a Closing in accordance      with this Agreement. It is hereby clarified that the Closing Day will not      take place on a day on which the Index is published or during the two days      prior to or after, a day on which the Index is  published. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 1.1.24 | "Total      Debt Service Ratio" means - the quotient reached by dividing: (A) the      cumulative total of the Borrower's residual obligations (consolidated) to      the Financial Institutions and other Lenders, other than suppliers' credit      provided to the Borrower in its normal course of business, on commercial      terms that are customary in that field, and other than obligations in      respect of Subordinated Loans, as of the Assessment Date, less repayments      made to Lenders, to the extent made, on the Assessment Date, and less cash      and cash equivalents (including negotiable bonds) mortgaged by the      Borrower in favor of one of such entities as such will be on the      Assessment Date (it is hereby clarified that to the extent that the      Assessment Date is a date on which the Borrower will have taken the Loan      (including having made use thereof or withdrawn thereon, on account of the      lines of credit provided to it) from a Financial Institution - the amounts      of the aforementioned loan/usage/withdrawal, will be included in the      balance of the obligations) by (B), the Operating Profit to service the      Debt, according to the data in the Borrower's Financial Statements      (consolidated) to the Final Date, as defined in Section 1.1.16      above. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.25 | "Debt      Service Ratio" means - the quotient arrived at by dividing: (A), the      difference between the Operating Profit to service the Debt and the lower      of the following amounts: 70 million NIS. linked to the Known Index in the      Agreement or the cumulative total of net cash flow to be utilized for the      investment activities as appears in the Borrower's Financial Statements      (consolidated) in the  report on cash flow during the relevant      quarters; where the aforesaid cumulative total is linked to changes in the      Known Index and where the base index is the known index on the Final Date      and the revised index is the index known on the date of checking or on the      relevant Assessment Date. (For this purpose, "net cash flow" means - cash      flow to be used to acquire fixed property, equipment and other assets,      less cash flow arising from the sale of fixed assets, equipment and other      assets), by (B),      the Total for servicing the Debt for the 12 consecutive months commencing      immediately after the AssessmentDate. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.26 | "Inclusive      Total Debt Service Ratio" means - the quotient arrived at by dividing:      (A), the difference between the Operating Profit to service the Debt and      the lower of the following amounts: 70 million NIS. linked to the Known      Index in the Agreement or the cumulative total of net cash flow to be      utilized for the investment activities as appears in the Borrower's      Financial Statements (consolidated) in the cash flow report during the      relevant quarters; where the aforesaid cumulative total is linked to      changes in the Known Index and where the base index is the Known Index on      the Final Date and the revised index is the Index known on the date of      checking or on the relevant Assessment Date. (For this purpose, "net cash      flow" means - cash flow to be used to acquire fixed property, equipment      and other assets, less cash flow arising from the sale of fixed assets,      equipment and other assets), by (B), the Total for      servicing the inclusive Debt for the 12 consecutive months commencing      immediately after the AssessmentDate. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 1.1.27 | "Index"      means - the Consumer Price Index including fruit and vegetables, issued by      the Central Bureau of Statistics inIsrael. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.28 | "Financial      Institution" - means any one of the following entities: banks, including      auxiliary corporations as defined in the Banking Law (Licensing)      1981-5741, entities which are subject to the Law of Joint Investment in      Trusts, 1994-5754, corporations which are subject to the Law Controlling      Financial Services (Kupat Gemel) 2005-5765,      an insurance corporation as defined in the Law Supervising Insurance      Businesses 1981-5741, or any corporation similar to the aforementioned      which is incorporated outside Israel and which is supervised by a      competent authority in the country of incorporation and has      debentures. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.29 | "Assessment      Date" - any date of repayment of interest or principal of the Credit      according to the Credit repayment timetable, 7 days prior to any      settlement date to Financial Lenders as referred to in Section 10.4.2.1,      and on any date on which the Borrower will take Credit (including      utilization or withdrawal on account of the lines of Credit provided to it      (to the extent provided)), in a sum that exceeds 5 million NIS. from a      Financial institution. The first Assessment Date will take place on      December 31, 2010 or 7 Business Days prior to the first date for making      payments to Financial Institutions or the first date of taking Credit from      a Financial Institution as aforesaid, whichever is the      earlier. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.30 | "Merger"      - a Merger pursuant to the first chapter of the eighth section, or the      third chapter of the ninth section, of the Companies Law, or any act the      result of which is the acquisition of most of the Borrower's assets by an      individual or corporation. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.31 | "Credit      Documents" - all of the following: (a) This Agreement (with its annexes);      (b) the Securities Documents; (c) all requests to be provided with Credit      A as defined in Section 5.1; (d) all requests to provide Credit B as      defined in Section 5.2; (e) all requests to provide Credit C as defined in      Section 5.3; (f) the General Conditions; (g) all resolutions, approvals,      documents and agreements, relating to the provision of the Credit and its      administration (including with respect to opening the Accounts) signed by      the Borrower or by anyone on its behalf or delivered by the Borrower or by      anyone on its behalf, all of them being in such style, on such conditions      and in such form as is to the Lenders from time to time; and (h) every      agreement or other document signed by the Borrower in favor of any one of      the  Lenders in connection with the provision of the Credit by      such Lender. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 1.1.32 | "Securities      Documents" - all of the following: (a) agreements and forms testifying to      the floating charge; (b) documents and forms testifying to a lien on the      Accumulation Account as defined in Section 10.4.2.2; (c) the documents and      forms testifying to a lien on shares in the Borrower in accordance with      Section 8.5; (d) the documents and forms testifying to a lien on shares on      012 Telecom Ltd. in accordance with Section 8.7; (e) Owners Guarantees;      (f) the documents and forms testifying to a lien on certain rights under      the Purchase Agreement in accordance with Section 8.2 hereunder; and the      documents and forms testifying to a lien on the rights to reimbursement of      the Owners Loans in accordance with Section 8.6. And, all documents      related to the aforementioned liens and  guarantees. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.33 | "Event      of Breach" - any event or circumstance, the happening of which constitutes      grounds for the immediate repayment of the Credit in accordance with the      Credit Documents. It is hereby clarified that if such event is only      determined at the end of a period (to the extent that the situation has      not reverted to its previous condition or the event has not been      rectified) the Lender will be entitled to demand the immediate settlement      of the Credit, such event will be considered as an Event of Breach even      prior to the elapse of the period indicated  therefor. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.34 | "Merhav"      - Merhav Ampal Energy Ltd. |
|--------|--------|------------------------------------------|

|   | 1.1.35 | "Free      and Clear" - Free and Clear of any lien, pledge, encumbrance, charge,      debt, claim or any other right of any type or kind of any third party      whatsoever. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.36 | "Total      Debt Service" means - the cumulative amount of payments of financial      charges to Financial Institutions, in respect of the Borrower's      obligations (consolidated)      existing on the Assessment Date, in respect of anticipated financial      charges for the 12 consecutive months starting immediately after the      Assessment Date, together with the cumulative amount of payments on      account of principal repayments to Financial Institutions the repayment of      which occurs in the aforementioned 12 month period. It is hereby clarified      that payments actually repaid on the Assessment Date will not be reckoned      in the total of Debt servicing. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.37 | "Inclusive      Total Debt Service" means - the cumulative amount of payments of financial      charges to Financial Institutions, in respect of the Borrower's      obligations (consolidated)      existing on the Assessment Date, together with payments to Lending      Institutions as defined in Section 1.1.46 hereunder, as such are      anticipated for the 12 consecutive months commencing immediately after the      Assessment Date, together the cumulative amount of payments on account of      repayment of principal to Financial Institutions (for the avoidance of      doubt, including in respect of payments to Lending Institutions as defined      in Section 1.1.46 hereunder) the repayment of which occurs in the      aforementioned 12 month period. It is hereby clarified that payments      actually repaid on the Assessment Date and payments to Lending      Institutions effected 7 Business Days after the Assessment Date will not      be reckoned in the total of Inclusive Debt  servicing. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 1.1.38 | "Smile"      - 012 Smile Communications Ltd. |
|--------|--------|----------------------------------------------|

|   | 1.1.39 | "Owners      Guarantees" - the Guarantees specified in Section 8.4, in the format      attached as Annex      1.1.39. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | 1.1.40 | "Applicable      Interest" the rate of interest before the addition of any kind of profit,      used by Leumi to establish the interest to its customers for providing      credit - in an amount, of such kind and for such period as are identical      to the amount, kind and period of the relevant Credit, and this on the      date that such credit is provided, renewed or replaced, as the case may be      (the "Determining Date"). The aforesaid applies both in respect of credit      bearing interest at a fixed rate and credit bearing interest at a variable      rate. In the event that the relevant credit bears interest that includes a      component of customarily basic interest whatsoever, that is likely to      change during such credit period (for example - credit based on Prime      interest) the Applicable Interest will be at the aforesaid interest rate      plus or minus the fixed rate (the "Fixed Supplement") when the rate of the      Fixed Supplement will be determined on the Determining Date; thus the      Applicable Interest will be in accordance with the principals detailed      above in this sub-Section and the rate of the Fixed Supplement will vary      above or below the aforementioned basic interest during that credit      period. A notification by Leumi regarding the Applicable Interest will be      binding on the Borrower and may not be protested or    appealed. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.41 | "Rate      of Participation" - the percentage set out below in respect of each      Lender: |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | Bank      Leumi L'Israel Ltd. - 80% |
|--------|-------------------------------------|

|   | Bank      Discount L'Israel Ltd. - 20% |
|--------|----------------------------------------|

|   | or      as such may vary as stated in Section 2.1.6 or 5.3.5      hereunder. |
|--------|------------------------------------------------------------------------------|

|   | 1.1.42 | "Control"      - as this term is defined in the SecuritiesLaw. |
|--------|--------|----------------------------------------------------------------|

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|   | 1.1.43 | "Related      Corporation" - a corporation, including a partnership or promoter, in      which the Borrower has Control as well as any corporation (including a      partnership or promoter) whose obligations the Borrower guarantees towards      any entity whatsoever or in respect of the failure of such corporation      (including a partnership or promoter) to comply with a debt or      obligations, [the Borrower] has undertaken to indemnify any entity      whatsoever. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.44 | "Area      of Business" - means the field of communications in Israel only, including      television services through the infrastructure of the internet or a      similar service. It is clarified that apart from television services      through the infrastructure of the internet, any investment or provision of      services in the field of media, including television, will not be included      in the Area of Business. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.45 | "General      Conditions" - the general conditions of each of the Lenders for opening      and managing the Account, and, also, with respect to Leumi, the      Accumulation Account as defined in Section  10.4.2.2. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.46 | "Payments      to Financial Institutions" - the cumulative total of payments of interest      and principal that Merhav must pay in respect of the Financial      Institutions' loan, during the relevantperiod. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.1.47 | "Closing"      - the closing (completion) of the transaction that is the subject of the      Purchase Agreement. |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | 1.2 | General:      relationship betweendocuments |
|--------|-----|---------------------------------------------|

|   | 1.2.1 | Headings      in this Agreement are added for the sake of convenience only and are      intended for its interpretation. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.2 | The      preamble and appendixes to this Agreement constitute an integral part      hereof. |
|--------|-------|---------------------------------------------------------------------------------------------|

|   | 1.2.3 | Every      reference in this Agreement to an annex or Section will be understood,      except if the context requires otherwise, as a reference to an annex or      Section in this Agreement,respectively. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.4 | Any      information, reporting, notice, demand, agreement or application pursuant      to this Agreement, shall be given in writing even if no written request is      specified as aforesaid. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.5 | Subject      to the provisions of Section 1.2.6 hereunder, the provisions of this      Agreement are in addition to the provisions of other credit agreements and      do not derogate therefrom. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.6 | In      the event of a specific contradiction between the provisions of this      Agreement and the provisions of any of its annexes or between the      provisions of this Agreement and provisions of any other credit      agreements, the provisions of this Agreement will  prevail. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 2. | Consortium's      Rules |
|----|-------------------------|

|   | 2.1.2 | The      Borrower undertakes that any borrowings in respect of the Credit to be      provided to the Borrower in accordance with the provisions of this      Agreement, will be effected from each one of the  Lenders in      parallel and that this will be at the Rate of Participation and on      identical terms. Furthermore, the Borrower undertakes that each repayment      of the Credit (including early settlement under Section 6 hereunder) as      well as any reduction in the outstanding amount or the renewed outstanding      amount as stated in Section 5.3.5 or 5.3.11 hereunder, will be implemented      with each of the  Lenders in parallel and at the Rate of      Participation. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.3 | For      the removal of doubt, the Lenders and the Bank Coordinator are obligated      to verify that the amounts of the Credit provided in accordance with the      provisions of this Agreement or the amounts of repayment, actually comply      with the Rate of Participation that applies to each of the Lenders, or are      on terms that are identical for each of the Lenders and that the      responsibility for this is enforced on the  Borrower. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.4 | Unless      specifically stated to the contrary, it is hereby clarified that any      payment to the  Lenders or to the Bank Coordinator according to      the provisions of this Agreement will be implemented without offset, lien,      cross-claim or any other right from any source and that the sums to be      paid to each of the  Lenders or the Bank Coordinator will be      Free and Clear. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.5 | Unless      specifically stated to the contrary, the obligations and rights of the      Lenders under the Credit Documents are individual, are not reciprocal, are      not inter-connected and are not dependent on one another. None of the      Lenders will bear the costs of a breach of the obligations in this      Agreement by one of the other Lenders. A breach of the obligations      contained in the Credit Documents by one of the Lenders, does not      constitute, of itself, a breach of the other Lenders' obligations, and      unless specifically stated to the contrary, will not affect the      obligations and rights of the otherLenders. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.6 | Notwithstanding      the aforesaid, it is hereby agreed that if on the Closing Day, Bank      Discount does not provide its full part of the Credit according to the      Rate of Participation which applies to it, pursuant to a breach of this      Agreement or due to one of the events specified in Section 7 hereunder,      applying to it, or for any other reason - Leumi will provide, in its      place, the full part of credit as aforesaid, Leumi's Rate of Participation      will change accordingly and such Lender will cease to be a party to this      Agreement. It is hereby clarified that an occurrence such as the aforesaid      will not, of itself, constitute a ground for non-provision of the Credit      by the remaining Lenders in accordance with the Rate of Participation for      each Lender. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 2.1.7 | In      any event that the agreement of the Lenders is required according to the      Credit Documents, the notice in respect of agreeing or refusing to give      their agreement, will be issued to the Borrower by the Bank      Coordinator. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.8 | A      notice concerning exercise of the right to make immediate settlement of      the Credit or part thereof, or the right to increase the rate of interest      according to Section 5.4 hereunder or in the matter of taking measures to      exercise a security out of the Securities, will be issued to the Borrower      or to a Guarantor, as the case may be, by the Bank Coordinator. It is      specifically clarified that notwithstanding anything stated in this      Agreement (including Section 2.15 above), exercise of the rights detailed      above in this Section 2.18, will apply pro rata to all the      Lenders. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.9 | Each      of the parties will appoint someone to represent it and to act on its      behalf in all matters relating to the implementation of this Agreement      (the "Representatives"). The following persons will serve as the initial      Representatives of the Parties: (a) for Leumi or the Bank Coordinator -      the head of Leumi's communications department; (b) Discount - the business      manager. Details of how to communicate with each of the Representatives      are as specified in Section 19.3hereunder. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.10 | Each      of the parties will be entitled to replace its Representative by giving a      notice, in writing, to the other parties which includes contact details      for the new Representative on its behalf, and the date of replacing the      Representatives. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.11 | Each      of the Lenders and the Bank Coordinator will be entitled to rely on any      notice or instruction given in the name of the Representative. None of the      Lenders or the Bank Coordinator will be required to obtain any further      proof of the genuineness of any fact, issue or calculation included in any      notice or instruction given to it by one of the other Lenders'      Representatives or a Representative of the Bank    Coordinator. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.12 | The      Lenders hereby declare to the Borrower that as of the date of entering      this Agreement, there is no restriction or impediment, of any kind      whatsoever, to providing all the amounts of credit under this Agreement to      the Borrower, in full and on the due dates, including on the assumption of      the adoption of any anticipated regulations (including Basel      II). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.13 | The      Lenders hereby undertake that exercising their rights under the liens      specified in Sections 8.1, 8.5 and 8.7 hereunder, including their      actualization, will not cause any adverse effect whatsoever to the      provision of services under the Licenses, and in any event, exercise of      their rights as aforesaid will be subject to all the limitations existing      in law and in the Licenses in connection  therewith. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 3. | Object |
|----|--------|

| 4. | Preconditions      for providing the Credit on the Closing  Day |
|----|-----------------------------------------------------------------|

|   | 4.1.1 | The      Borrower will have provided to the Lenders, two Business Days prior to the      Closing Day, a letter from the Borrower's attorney relating to the Loans      and including its confirmation that all consents, authorizations,      approvals and other requirements (to the extent required) have been      received in accordance with the Provisions of the Law and in accordance      with the Borrower' incorporation documents for the purpose of entering the      Purchase Agreement and for the implementation of the Credit Documents in      accordance with and subject to, the provisions  thereof. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1.2 | On      the Closing Day, the Borrower will have deposited the Independent      Resources in its account with the Bank Coordinator and signed on the      irrevocable instructions attached as Annex 4.1.2 to this      Agreement. The Independent Resources will be transferred by the Bank      Coordinator to Smile together with the transfer of the amounts of the      Credit, as stated in Section 5hereunder. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1.3 | The      Borrower will have effected (signed on) the Securities, as detailed in      Section 8 hereunder, in favor of theLenders. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1.4 | The      Guarantors will have signed the Owners Guarantees, as detailed in Section      8.4 hereunder, in favor of theLenders. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1.5 | Merhav      will have activated the liens as detailed in Sections 8.5 and 8.6      hereunder, in favor of the Lenders. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------|

|   | 4.1.6 | The      Borrower will have fulfilled all its obligations under the Credit      Documents. |
|--------|-------|--------------------------------------------------------------------------------------------|

|   | 4.1.7 | Cancelled |
|--------|-------|-----------|

|   | 4.1.8 | No      Event of Breach will have taken place and/or will there be, to the      Lenders' knowledge, any great likelihood of there being an Event of      Breach. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1.9 | The      Borrower's board of directors will have passed the resolution in the form      attached as Annex      4.1.9 and the Borrower's attorney will have signed a confirmation      in the form and on the terms that are acceptable to the      Lenders. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 4.1.10 | The      Borrower will have opened the Accounts and signed on the authorizations,      confirmations and declarations required by any of the Lenders to that      end. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1.11 | The      Closing Day will be not later than22.6.2010. |
|--------|--------|-------------------------------------------------------|

|   | 4.1.12 | If      and to the extent that the Borrower is aware, that one of the conditions      of the conditions prescribed in this Section has not been fulfilled, the      Borrower will give notification thereof to the Lenders immediately after      it becomes aware of the non-fulfillment of such  condition. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | The      Credits and their Conditions |
|----|---------------------------------------|

|   | 5.1 | Loan      A, in the amount of (overall for each of the Lenders) NIS 500 million      which will be provided on the ClosingDay. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.1 | The      principal of Loan A will be linked to the Index and will be settled in 14      continuous and equal, semi annual instalments (with the addition of      linkage differences for each instalment). The first principal payment with      respect to Loan A will apply upon the lapse of 6 months from the date of      providing Loan A and the final payment will apply upon the lapse of 84      months from the date of the provision up thereof (“The Final Credit      Settlement Date”). |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.2 | Loan      A will bear annual interest at a fixed rate of 2% above the Applicable      Interest with the addition of index linkage differences. As an indication      only, the Lenders confirm that as at the date of the signing of this      Agreement, the Applicable Interest is [2.2]%. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.3 | The      interest on Loan A will be paid every three months, commencing from the      lapse of three months from the date of providing the  loan. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.4 | The      remaining terms and conditions of Loan A will be as detailed in the Loan      Application, Annex      5.1.4 to this Agreement. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.2 | Loan      B, in the overall cumulative amount (for all the Lenders) of NIS 200      million which will be provided on the Closing  Day. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.2.1 | The      principal of Loan B will be linked to the index and will be settled in one      instalment at the final credit settlementdate. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.2.2 | Loan      B will bear annual interest at a fixed rate of 2% above the Applicable      Interest with the addition of index linkage differences. As an indication      only, the Lenders confirm that as at the date of the signing of this      Agreement, the Applicable Interest is [3.1]%. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 5.2.3 | The      interest on Loan B will be paid every three months, commencing from the      lapse of three months from the date of providing the  Loan. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.2.4 | The      remaining terms and conditions of Loan B will be as detailed in the Loan      Application, Annex 5.2.4 to thisAgreement. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | 5.3 | The      line of Credit C, under the terms and conditions as detailed below, and in      an overall and cumulative amount (for all Lenders) of NIS 100 million (the      “Outstanding Renewed Amount”), which will be exploited in full, on the      Closing Day. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.3.1 | Line      of Credit C will be exploited by the Borrower by means of taking out an      unlinked loan in NIS, (each loan will be designated a “Loan C”) for a      period of 3, 6 or 12 months, at the Borrower's choice (each of the periods      will hereinafter be designated – “The period of Loan C”) as long as the      date of final settlement of the loans that will be provided within the      line of Credit C, will commence after the lapse of 42 months from the      Closing Day (the “Final Loan C Settlement  Date”). |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.3.2 | Each      application to be provided with a Loan C will be submitted by the Borrower      to the Lenders at least 4 Business Days prior to the date requested for      providing the loan. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.3.3 | The      total cumulative amount of the unpaid balance of Loan C will not exceed,      at any time whatsoever, the Outstanding Renewed Amount or the Revised      Outstanding Renewed Amount, as the case maybe. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.3.4 | At      the behest of the Borrower, as detailed above, the Lenders will put at the      disposal of the Borrower the requested amount (each Lender in accordance      with its Rate of Participation) as long as in addition to that stated in      the sub-section of Section 5.3, the following terms and conditions will      ensue cumulatively: a) If upon the date of providing the (new) loan, there      is an unpaid balance of Loan C, the settlement date of which occurs at      that time, the (new) loan will be initially used to settle the principal      of Loan C, the settlement date of which occurs at that time, and if the      amount of the (new) loan will be higher than the unpaid balance of Loan C,      the settlement date of which occurs at that time, or, at that time, there      is no applicable date of settlement of Loan C; then the balance of the      (new) loan will serve the Borrower solely for the execution of investments      in the Area of Business and b), up to that point in time, no instance of a      breach has occurred and c) the cumulative amount of the unsettled balance      of Loan C that will be conducted by each Lender immediately after      providing the requested (new) loan, will not exceed the Rate of      Participation of each Lender of the cumulative unsettled balance of Loan C      that will be conducted by each Lender immediately after providing the      requested (new) loan, and d) at that time, there is no limitation, as      detailed in Section 7 below, on the part of any of the      Lenders. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 5.3.5 | It      is hereby agreed that, other than at the time of providing the loans on      the Closing Day, with respect to which that stated in Section 2.1.6 above      applies, should any of the Lenders not put at the disposal of the      Borrower, the loan as detailed in Section 5.3 above, (whether as a result      of the breach of this contract by the Borrower or whether a limitation, as      detailed in Section 7 below, exists), this fact in itself will not      constitute a ground for non-provision of the Credit by the remaining      Lenders. It is hereby clarified that should an event as stipulated above      occur, as of that date, the Outstanding Renewed Amount or the Revised      Outstanding Amount, as the case may be, will automatically be reduced by      the total of the amount not provided by the Lender as stated above, as      well as, commencing from such date, the Rate of Participation of the      Lenders will be updated in accordance with the ratio that will be in place      at that time (immediately after providing the loan by the remaining      Lenders, or part thereof), whether the unsettled balance of the Credit      with each of the Lenders or the total amount of the unsettled balance of      the Credit. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.3.6 | The      principal of each Loan C will be settled in one instalment at the end of      the period of the respective LoanC. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------|

|   | 5.3.7 | Loan      C will bear annual interest at a fixed rate of 2% above the Applicable      Interest. |
|--------|-------|-------------------------------------------------------------------------------------------------|

|   | 5.3.8 | The      interest on Loan C will be paid every three months, commencing from the      lapse of three months from the date of providing the applicable      loan. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.3.9 | The      remaining terms and conditions of Loan C that will be provided on the      Closing Day will be as detailed in the Loan Application, Annex 5.3.9 to      this Agreement. The remaining terms and conditions of Loan C that will be      provided thereafter will be as detailed in the Loan Application to be      signed by the Borrower with each Lender as is acceptable at that time to      such Lender. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.3.10 | The      Borrower will pay the Lenders (to each Lender in accordance with the rate      of the Lender’s Participation), with respect to the unexploited balance of      Line of Credit C, non exploitation commission as detailed in Annex 12 of      this Agreement. The commission will be calculated on the balance of the      unexploited Line of Credit C. The checking of the total unexploited Line      of Credit C will be carried out on a daily basis and the payment of the      commission with respect thereto, will be carried out retrospectively at      the end of each calendar quarter. It is hereby clarified that should that      stated in Section 5.3.5 be upheld, then commencing from that date, the      Borrower will cease paying non exploitation commission to the Lender who      has not provided its share in the new Loan C, as detailed in the above      stated Section 5.2.5. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 5.3.11 | At      any time at which there will be an unexploited balance of Line of Credit      C, the Borrower will be at liberty to notify the Lenders in writing that      it is the Borrower’s desire to reduce the amount of the Line of Credit C      by the amount of the unexploited balance or part thereof. Commencing from      the date of the receipt of the above stated notification, the amount of      the Outstanding Renewed Amount will be irreversibly reduced accordingly.      (the “Revised Outstanding RenewedAmount”). |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.4 | Notwithstanding      the aforesaid, should an instance of a breach occur, in respect of which a      period [to remedy] is determined, only at the end of that period (to the      extent that the situation has not reverted to its former state or the      incident has not been rectified), will the Lender be entitled to demand      the immediate settlement of the Credit, then, commencing from the date of      the occurrence of the incident as stated and up to the earliest of the      following dates: the date upon which the situation reverted to its former      situation, or the date upon which the incident was rectified or the date      upon which the Lenders issued a Letter of Waiver with respect to the      breach (should such have been issued), or the date upon which the Lenders      demanded the immediate settlement of the Credit, the interest rate      determined for Loan A, Loan B and Loan C will increase by 2% per annum      above the rate of interest determined for such loan, in accordance with      Section 5.1.2 or 5.2.2. above, respectively, as such will be at that point      in time. That stated in this sub-section above will not apply in the case      of that stipulated in Section 11.3 or 11.2  occurring. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.5 | It      is hereby clarified that in any case that the immediate settlement of the      Credit will be demanded, on any date whatsoever, then, from that date, the      unexploited balance of the Credit will bear arrears    interest. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.6 | The      Bank Coordinator will inform the Borrower and each of the Lenders      regarding the change in the rate of interest by virtue of Section 5.4      above and the Bank Coordinator’s notification obligates the Borrower and      the Lenders. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 6. | Early      Settlement of the Credit |
|----|-------------------------------------|

|   | It      is hereby agreed that Article 13 (b) of the Mortgage Law, 5727 – 1967 will      not apply and that the Borrower will be at liberty to settle, by means of      early settlement, the lines of Credit or any part thereof, subject to the      following cumulative terms andconditions: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.1 | The      order of the execution of early settlement will be as    follows: |
|--------|-----|----------------------------------------------------------------------------|

|   | 6.1.1 | The      settlement of Loan C. |
|--------|-------|--------------------------------|

|   | 6.1.2 | If,      at the date of the execution of the early settlement, there is no      unsettled balance of Loan C – the settlement of Loan  B. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.1.3 | If,      at the date of the execution of the early settlement, there is no      unsettled balance of Loan C or Loan B, the settlement of Loan A by means      of settlement on account of each of the outstanding principal instalments      of Loan A in an equal manner, thus each instalment will be reduced by an      identical amount. In the stated case, no changes in the dates of the      payments and in the period of Loan A, will apply. Upon the execution of      early settlement the Lenders will provide the Borrower with a new      settlement time-table and this will obligate the  Borrower. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.2 | The      amount that will be settled by means of early settlement will not be less      than NIS 5 million. |
|--------|-----|-------------------------------------------------------------------------------------------------------------|

|   | 6.3 | The      early settlement will only be done upon a date for the payment of      interest. |
|--------|-----|-------------------------------------------------------------------------------------------|

|   | 6.4 | The      early settlement of the New Israeli Shekel, index linked credit can only      be executed after the lapse of one year from the date of providing the      Credit, and this on a calendar date that overlaps with the date of the      provision thereof (and should this date not be a Business Day, then the      general terms informing the matter of the bringing forward or moving back      to coordinate a Business Day, willapply.). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.5 | The      Borrower will notify the Lenders in writing regarding the execution of the      early settlement, 7 Business Days inadvance. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.6 | On      the date of the early settlement, the Borrower will pay the Lenders the      full amounts of the interest and the commissions that have accumulated up      to that time. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.7 | On      the date of the execution of the early settlement, commission that will be      calculated in accordance with the formula appearing in Annex 6.7, will be      paid to each of the Lenders. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.8 | The      early settlement by the Borrower will be carried out in a manner that will      maintain the relevant Rate of Participation of each of the Lenders in the      remaining credit. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.9 | Any      notification issued by the Borrower regarding the intention of the      Borrower to carry out early settlement will be non-revolving and      irreversible. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.10 | With      the exception of amounts that will settle Loan C, by means of early      settlement and which, at the behest of the Borrower, will be provided anew      [by the Lenders], subject to and in accordance with that stated in Section      5.3.2 above, any amount that will be settled by means of early settlement      will not be provided anew [by theLenders]. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 7. | Change      in the Ownership of the Borrower |
|----|----------------------------------------------|

|   | 7.1 | In      any case that as a result of any change in the Provisions of the Law (as      defined hereinafter), as well as in any case that as a result of the      fulfilment of a demand, provision or request of any kind – issued to or      referred to any of the Lenders by the Bank of Israel or by any other      qualified Authority, or as a result of the fulfilment of any undertaking      on the part of any of the Lenders to the Bank of Israel or to any other      qualified Authority, whether the fulfilment of the stated undertaking, the      provision, the demand or the request results from any change whatsoever in      the law as stated or whether it results from an agreement that has been      drawn up or will be drawn up from time to time, between any of the Lenders      and the Bank of Israel, or other qualified  Authority: |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.1.1 | The      Lenders, all or part thereof, will be obligated to hold or deposit liquid      assets of any type or the amounts or value of the liquid assets, that any      of the Lenders is obligated to hold or deposit, will be raised;      or |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.1.2 | The      amounts of the Credit that any of the Lenders is at liberty to grant or to      continue to maintain will be limited or reduced, or the amounts of the      deposits that any of the Lenders is at liberty to deposit with others      [will be limited or reduced]; or |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.1.3 | Any      demands whatsoever will be imposed or will apply to any of the Lenders (or      there is a change that, in the opinion of any of the Lenders, results in,      from the point of view of the Lender, stricter requirements whatsoever)      with respect to the ratio of the reserves of the relevant Lender, on the      one hand, to the Credit the relevant Lender is at liberty to grant or to      continue to maintain, or to the assets or deposits that the relevant      Lender is permitted to hold or to receive – on the other hand;      or |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.1.4 | Should      interest payments, fines, levies, or other payments be imposed or apply to      any of the Lenders, or should any of the Lenders be required to pay such      (or, should a change occur that, in the opinion of any of the Lenders,      constitutes, from that Lender’s point of view, stricter requirements for      these payments). |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | And      such Lender will determine that, as a result of the above stated, the cost      or the expenses of such Lender will increase with respect to the provision      of the Credit (in whole or in part) or with respect to the continued      existence of the Credit (in whole or in part), or should the amounts of      the principal and the interest that that Lender is entitled to receive      with respect to the loan, will decrease, then such Lender will be at      liberty to refuse to put the Credit, in whole or in part, at the disposal      of the Borrower – the Borrower will pay such Lender, from time to time,      upon the first demand, such an amount which will, in the opinion of the      Lender, indemnify for the increase in the costs and expenses of such      Lender with respect to the Credit or regarding the reduction in the      principal and the interest as stated, and the amount of the      indemnification, as will be determined by such Lender, from time to time,      as stated, will obligate the Borrower. It is clarified that the Lender in      this matter will be at liberty to make use of its rights in accordance      with the above stated, on condition that at the same time, the Lender will      make use of the identical rights granted to the Lender with respect to      other customers who were granted credit of such type, by such Lender, in a      similar scope to the Credit and which was characterized in a similar      classification in all matters related to the matter of requirements for      reporting to the Bank of Israel. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For      the purpose of this Section 7, the term “any change in the Provisions of      the Law” – including a change as stated in the interpretation of the      Provisions of the Law, by the Court or other Authority of the State as      stated, qualified to this end or charged with the execution or the      upholding of the Law, Regulation or Provision or Rule as      stated. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2 | If,      at any time whatsoever, any of the Lenders will determine (and the stated      determination of such Lender will obligate the Borrower) that as a result      of any amendment whatsoever to the Law, the provision of the Credit, in      whole or in part, at the disposal of the Borrower, or – if the Credit, in      whole or in part, has been put at the disposal of the Borrower – the      continued existence of the Credit, will become, for such Lender, illegal,      then such Lender is at liberty to refuse to put the Credit, in whole or in      part, at the disposal of the Borrower, or – if the Credit, in whole or in      part, has already been put at the disposal of the Borrower – such Lender      will be entitled to demand, of the Borrower, the settlement of the      unsettled portion of the Credit (together with interest up to the actual      date of settlement) and the Borrower hereby undertakes to repay all the      above stated amounts, to such Lender, within 90 days of the date of first      demand in writing on the part of such Lender as long as in the above      stated demand, it will be stipulated that it is based on the provisions of      this Section and an appropriate explanation will be attached to it. It is      clarified that in the stated case, the Borrower will not be required to      pay early settlement commission or other payments with respect to the      early settlement. It is also explicitly clarified that, in the above      stated case, the Borrower will not be required to also settle the parallel      credit granted by the remaining Lenders should the illegality not be      relevant to them. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 8. | Guarantees |
|----|------------|

|   | The      guarantees detailed in this Section below, that will be produced for the      Lenders, will serve to guarantee the full and precise settlement of the      Credit and of all the remaining amounts owing and that will be owing to      any of the Lenders by the Borrower, in accordance with the Credit      Documents and also to guarantee any debt or other undertaking, from any      source whatsoever, of the Borrower with respect to any of the      Lenders: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.1 | General      first ranking floating charge, without limitations on the amount, on all      the existing and future assets and rights of the Borrower and a first      ranking fixed charge, without limitation in the amount, on the unpaid      share capital and the equity of the Borrower (the "Floating Charge”). The      Charge will be imposed on the assets, the rights, the unpaid share capital      and the equity, they being free and clear, with the exception of      “Permitted Liens”, as this term is defined in the Purchase      Agreement. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.2 | First      ranking fixed charge on all the rights of the Borrower in accordance with      the Purchase Agreement to receive amounts of indemnification in accordance      with the provisions of Section 11.4 of the Purchase Agreement as well as      the receipt of indemnity amounts in accordance with alternatives (i) and      (ii) of Section 11.2 of the Purchase Agreement. The Borrower will      transfer, to each of the Lenders, irrevocable instructions signed by the      Borrower and referred to Smile and authorized by its signature, in the      wording attached hereto as Annex 8.2, to transfer any amount that will be      owing to the Borrower in accordance with the stated clauses of the      Purchase Agreement, directly to the Borrower' account with each of the      Lenders in accordance with its Rate of Participation. It is agreed that      amounts that will be received in accordance with Section 11.4 of the      Purchase Agreement will be handled as follows – a total of 66.66% of this      amount will be used for the early settlement of the Credit under the terms      and conditions as detailed in Section 6 above, with the following change:      The Credit that will be settled against Loan C that was granted within the      framework of Credit C will not be provided anew, and the Outstanding      Amount or the Revised Outstanding Amount, as is appropriate, will be      reduced accordingly, and the balance can be used by the Borrower for any      purpose whatsoever, including distribution to shareholders, directly or      indirectly, in the Borrower, in any manner whatsoever, and without any      limitations whatsoever. Amounts that will be received in accordance with      the alternatives (i) and (ii) of Section 11.2 of the Purchase Agreement      will be used in full for the early settlement of the Credit under the      conditions as detailed in Section 6 above with the following change: The      Credit that will be settled against Loan C that was granted within the      framework of Credit C will not be provided anew, and the Outstanding      Amount or the Outstanding Renewed Amount, as is appropriate, will be      reduced accordingly. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 8.3 | First      ranking fixed charge on account of the accumulation as defined in Section      10.4.2.2. below, on all the monies credited or to be credited in favor of      the accumulation account and all the Borrower's rights in respect thereof.      As well as a first ranking fixed charge on account of the securities      linked to the accumulation account on all the securities and the rights      charged and which will be charged to the credit of the securities account      and all the Borrower's rights with respect  thereto. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.4 | Unlimited      permanent guarantee of the amount that will be signed on by Merhav and      unlimited permanent guarantee of the amount that will be signed on by      Ampal American Israel Corporation in the wording attached as Annex 1.1.39, which, in      spite of that stated at the beginning of this Section 8, will only      guarantee the amounts as will be detailed in the letter of guarantee. The      Borrower undertakes to produce to the Lenders by no later than March 15,      2010, an authorization from Ampal American Israel Corporation's lawyer      attesting to the fact that the guarantee is valid and obligates Ampal      American Israel Corporation under the applicable  law. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.5 | Second      ranking fixed charge after charges that will be created for the benefit of      the Institutions, on all Merhav shares existing on the Closing Day, and on      all the rights derived therefrom and relating thereto, including and      without derogating from the stated generality, the rights to receive      dividends or any other distribution with respect to the shares as well as      the undertaking on the part of Merhav to create, for the benefit of the      Lenders, a charge of the ranking as detailed above, on all additional      shares that it will receive (directly or indirectly) in the Borrower and      this together with the receipt thereof. It is hereby agreed that the      charge will be subject to the limitations detailed in Annex 8.5 to this      Agreement; it is clarified that as long as the Lenders have not realized      the above stated charge, all the amounts or assets that Merhav will      receive from the Borrower in the wake of a “distribution” (as defined in      the Companies Law), with respect to Merhav’s shares in the Borrower, will      be released to Merhav for itsrequirements. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.6 | First      ranking fixed charge on all the rights of Merhav to the Borrower with      respect to the loans provided by Merhav to the Borrower as well as the      undertaking by Merhav to create, for the benefit of the Lenders, a charge      of the ranking as detailed above, on all the rights for the repayment of      the additional loans that will be granted to the Borrower, and this      together with their being provided. It is agreed that Merhav will be at      liberty to use the amounts received under the provisions of Section 10.4.2      below for the purpose of the payments to the Financial      Institutions. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.7 | First      ranking fixed charge on all the shares that will be transferred on the      Closing Day to the ownership of the Borrower in 012 Telecom Ltd. and all      the rights derived therefrom and related thereto, including, and without      derogating from the stated generality, the rights to receive dividends or      any other distribution with respect to the shares. It is hereby agreed      that as long as no Instance of Breach has occurred, the Borrower will be      at liberty to use the cash dividend amounts that will be transferred to      the Borrower from 012 Telecom Ltd., for any purpose, subject to the      provisions of this Agreement. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.7.1 | The      Borrower undertakes that by no later than the lapse of 30 days from the      Closing Day, Article 37a will be added to the 012 Telecom Ltd. Articles of      Association, in the following wording: “That stated in Articles 36 and 37      will not apply to the realization of any charge whatsoever created and /      or which will be created with respect to the shares in the company, in      whole or in part, for the benefit of a banking institution. For the      avoidance of doubt, it is clarified that any realization of a charge as      stated, will be executed subject to obtaining the approval of the Minister      as defined in the special general license issued to the company for the      provision of internal land line based Bezeq services on December 21, 2005,      as amended and / or will be amended from time to time.” “Banking Institution” –      as defined in the Banking Law (Licensing) 5741 –  1981. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 9. | Declarations      by the Borrower |
|----|-----------------------------------|

|   | The      Borrower declares and undertakes to the Lenders as  follows: |
|--------|-----------------------------------------------------------------------|

|   | 9.1 | The      Borrower is a private company incorporated and registered in accordance      with the laws of the State ofIsrael. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------|

|   | 9.2 | On      the Closing Day, there are no claims, arbitration, discussions or      administrative process pending against the Borrower, with the exception of      an application to authorize an arrangement under Article 350 of the      Companies Law 5759 – 1999, of December 15, 2009 and the Borrower is not      aware of any claim, arbitration, discussions or administrative process      pending against Smile with the exception of the above stated application      and the claims detailed in the Purchase Agreement and all its appendixes      and with the exception of that as detailed in Annex 9.2 of this Agreement.      Furthermore, no information has been received by the Borrower with respect      to the intention to open a process, as stated, against the Borrower or      against Smile. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.3 | On      the Closing Day, there is no lien or mortgage of any kind on the assets of      the Borrower, (subject to that stated in Section 8.1 above), there is no      undertaking on the part of the Borrower to create a lien or mortgage of      any kind on any of the assets of the Borrower, and no entity whatsoever      has a right of financial security or other right in any of the assets of      the Borrower and there is no undertaking on the part of the Borrower to      impart, to any entity whatsoever, rights of financial security or similar      right in any of the assets of the Borrower, with the exception of liens      created and / or which will be created by the Borrower in favor of the      Lenders under the terms of this Agreement, and the current second ranking      charge in favor of the Institutions with respect to the loan by the      Institutions that will be subject to limitations as detailed in Annex 9.3 to this      Agreement. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 9.4 | Neither      the Borrower nor Merhav have any ground for the cancellation of the      Purchase Agreement in accordance with the grounds for cancellation      detailed therein. It is clarified that should the Borrower and / or Merhav      are aware of a ground as stated up to the Closing Day, then even if the      Borrower will decide to not realize its right to cancel the Purchase      Agreement, the Borrower must inform the Lenders in writing regarding the      ground as soon as possible after becoming aware of the ground for the      first time, and the Lenders will be entitled not to provide credit and to      cancel this Agreement. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.5 | As      at the Closing Day, all the agreements, the permits and the authorizations      required with respect to the execution of the Purchase Agreement, have      been given to the Borrower by the Anti Trust Authority as well as by the      Ministry of Communications and no additional authorizations whatsoever are      required from other regulatoryauthorities. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.6 | Merhav      is the holder of 100% of the issued share capital of the Borrower, and is      the sole direct controlling shareholder in the  Borrower. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.7 | The      Borrower has the legal powers, the authority and the rights to      contractually associate under this Agreement and to fulfil all its      provisions and conditions, and all the Borrower's undertakings under this      Agreement which are, in the framework thereof or in connection therewith,      are legal, effective, valid, obligating and enforceable on the Borrower in      accordance with all its terms andconditions. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.8 | All      the agreements, the authorities, the permits and the authorizations      required under the Provisions of the Law, in accordance with the      Borrower’s documents of incorporation, in accordance with the Purchase      Agreement, and in accordance with any other agreement that the Borrower or      the controlling shareholders in the Borrower is a party to, for the      purpose of contractually associating in the Purchase Agreement and the      execution thereof in accordance with the provisions thereof, for the      purpose of the signing of this Agreement by the Borrower, for the purpose      of obtaining credit from each of the Lenders in accordance with this      Agreement, for the purpose of creating the Securities in favor of each of      the Lenders as detailed in this Agreement and for the purpose of granting      priorities to the Lenders over third parties with respect to the above      stated Securities (with the exception of the permitted liens existing over      the mortgaged assets within the framework of the floating charge as      stipulated in Section 8.1 above and with the exception of the lien on the      Borrower’s shares, as stated in Section 8.5 above, which will be only of      second ranking) and for the purpose of the execution of all that stated in      this Agreement. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.9 | That      by the Closing Day, the authorization of the Court will be obtained with      respect to the application of December 15, 2009, submitted by the Borrower      under Article 350 of the Companies Law and that the confirmation of the      Borrower’s attorney of the fact that up to the Closing Day, no objections      to the execution of the arrangement were submitted to the Court and that      the period for the submission thereof, by law, has ended, will also be      obtained. That the Borrower has carried out all the actions and has taken      all the decisions and authorizations required for the purpose of the      signing the Credit Documents and the execution thereof, and that the      signing on the part of the Borrower on these documents obligates the      Borrower to all intents and purpose. That each of the Credit Documents,      after they will be signed by the other parties to the Agreement, will      constitute an obligating and valid legal undertaking on the part of the      Borrower, and will be enforceable on the Borrower in accordance with the      terms and conditions thereof. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 9.10 | There      is no limitation or exclusion under the law or in accordance with any      agreement for the upholding of all the undertakings of the Borrower in      accordance with this Agreement, and there is no limitation and / or      exclusion as stated for the provision of the Securities in accordance with      this document and that there are no limitations to the realization of the      Securities in accordance with this document, on the part of any of the      Lenders, with the exception of limitations in accordance with the Licenses      and the limitations as stated in Annex 8.5 to this      Agreement. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.11 | The      Purchase Agreement has been legally signed and, as at the Closing Day, is      valid, to all intents and the purpose, and obligates all the parties to it      in accordance with its terms andconditions. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.12 | That      all the information and the documents handed over to the Lenders or to the      Bank Coordinator or to anyone acting of their behalf, in accordance with      the Credit Documents, were correct, in full and precise at the time of the      handing over thereof. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.13 | With      the exception of their undertakings in accordance with the Purchase      Agreement, no undertaking has been given on the part of the Borrower and /      or on the part of the controlling shareholders in the Borrower, with      respect to Smile, and the purchase consideration will be paid in full by      means of the Credits and by means of the Independent      Resources. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.14 | The      Borrower is not in possession of information, that is not in the public      domain, with respect to Smile or with respect to the Acquired Assets and /      or with respect to the Purchase Agreement, which was not brought to the      attention of the Lenders, and which, to the best of the Borrower’s      understanding, if it had been brought to the attention of any of the      Lenders, would have lead to the Lenders, all or some thereof, to refrain      from providing the Credit for the benefit of the Borrower, or would have      lead to their not agreeing to rely on the Securities detailed in this      Agreement. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.15 | To      the best of the Borrower’s knowledge, no Instance of Breach has      occurred. |
|--------|------|----------------------------------------------------------------------------------------------|

|   | 9.16 | As      at the date of the signing of this Agreement, all the terms and conditions      and all the representations detailed therein, with the exception of the      terms and conditions that are to be upheld after this date, are being      upheld. The Borrower is not in breach of the terms and conditions and      undertakings detailed in this Agreement. With respect to all the terms and      conditions that must be upheld in accordance with this Agreement, after      the date of the signing of this Agreement, there is no exclusion to      executing and / or upholding them in full and on  time. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10. | Additional      Undertakings on the Part of theBorrower. |
|-----|----------------------------------------------------------|

|   | Without      derogating from the Provisions of the Law and the provisions of the Credit      agreement, the Borrower undertakes, to each of the Lenders, to uphold the      following undertakings, at all times up to the settlement of all the      Credit amounts: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1 | Financial      Information |
|--------|------|----------------------------|

|   | The      Borrower undertakes to submit to each of the  Lenders: |
|--------|-----------------------------------------------------------------|

|   | 10.1.1 | No      later than April 7 each year, the annual Financial Statements as at      December 31 of the previous year. The following will be attached to the      above stated Financial Statements: a). A confirmation, in the name of the      Borrower, from the Chief Financial Officer (CFO) or from the Chief      Executive Officer (CEO) of the Borrower, in accordance with which, the      Borrower has complied with all the financial bench marks detailed below.      b). Details of the relevant data and an exhaustive explanation with      respect to the manner of the calculation of the Borrower complying with      the financial bench marks. c). Solo Financial Statements referring to      December 31 of the previous year, insofar as the Borrower customarily      does, during the period related to the matter, draw up solo Financial      Statements as stated, including for its internal use and d). Details of      the Related Corporations existing as at December 31 of the previous      year. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1.2 | No      later than 61 days after the end of each quarter, the Financial Statements      relating to the preceding quarter, as well as: Details of the unsettled      balance of Loan A, of Loan B and of Loan C as was the situation on the      last day of the preceding quarter, with respect to each of the Lenders      separately, details of the management fees paid by the Borrower during the      course of the preceding quarter, insofar as this is not detailed in the      Financial Statements relating to the matter, and insofar that, at the      Closing Day, the Borrower selected the alternative as detailed in Section      5.3.2 – details of the unexploited balance of the Line of Credit C that      was (insofar as it was), on the last day of the preceding quarter, with      respect to each of the Lenders separately. Furthermore, the following will      be attached to the above stated Financial Statements: a). A confirmation,      in the name of the Borrower, from the Chief Financial Officer (CFO) or      from the Chief Executive Officer (CEO) of the Borrower, in accordance with      which, the Borrower has complied with all the financial bench marks      detailed below. b). Details of the relevant data and an exhaustive      explanation with respect to the manner of the calculation of the Borrower      complying with the financial bench marks. c). Details of the Related      Corporations existing as at the end of the quarter to which the Financial      Statements refer, as stated. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10.1.3 | No      later than 2 days prior to the Assessment Date, all the relevant data for      the purpose of the calculation of the compliance of the Borrower with the      benchmarks stipulated in Sections 10.3 and 10.4.2, signed, in the name of      the Borrower, by the Chief Financial Officer (CFO) or by the Chief      Executive Officer (CEO) of theBorrower. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1.4 | Should      the Borrower not draw up solo Financial Statements, for any particular      fiscal year, then the Lenders will be at liberty to demand of the      Borrower, and the Borrower will be obliged to arrange for the Lenders, a      presentation – on a date that will be set in coordination with the Lenders      and the Borrower, but no later than May 31 – with respect to the solo      financial data of the Borrower for such fiscal year, accompanied by      explanations and notes insofar as will be demanded by the Lenders in that      context. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1.5 | Should      one of the Lenders notify the Borrower that, in accordance with the      demands of the Bank of Israel, the submission of Financial Statements is      required at an earlier date than any date stipulated above, the Borrower      undertakes to bring the submission of the Financial Statement forward to      such date. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1.6 | The      Borrower confirms that it has been informed of the demands of the Bank of      Israel with respect to the submission of Financial Statements on time and      that a delay in the submission of the Statements is likely to cause any of      the Lenders, inter alia additional costs and / or to obligate any of them      to make a provision in their books. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1.7 | The      Borrower will submit, to the Lenders, a report regarding any management      agreement or other agreement that gives the controlling shareholders in      the Borrower the right to any payment whatsoever from the Borrower or from      the companies under its control, immediately after the signing thereof.      For the avoidance of doubt, it is hereby clarified that there is nothing      stated in this Section to permit the payment of any payment whatsoever to      the controlling shareholders in the Borrower, except in accordance with,      and subject to, the limitations detailed in Section 10.4      below. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10.1.8 | The      Borrower will submit, to the Lenders, a copy of every authorization,      notification, report or any other document that the Borrower is obliged to      submit to the Registrar of Companies and / or to the Securities Authority      and / or to the Stock Exchange in Tel Aviv and / or to the Ministry of      Communications and / or to any other Authority and which is intrinsic for      the purpose of examining capability of the Borrower to meet its      obligations in accordance with this Agreement and this as soon as possible      after the producing thereof to such entity. If the notification or the      report are published on the date of the submission thereof to the relevant      Authority, on the Authority’s website, the Borrower will inform the      Lenders in writing regarding the submission of the report or notification,      as stated, to the relevant Authority and submit a copy thereof to any of      the Lenders, at its behest. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1.9 | The      Borrower will submit to the Lenders, at the end of 30 days after the      Closing Day, a proforma report of the Borrower that will reflect the      execution of the Purchase Agreement, signed in the name of the Borrower,      by the Chief Financial Officer (CFO) or by the Chief Executive Officer      (CEO) of the Borrower. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1.10 | The      Borrower will submit to any of the Lenders, at the reasonable demand of      the Lender, subject to and in accordance with the Provisions of the Law,      reports, documents, information and clarifications which, in the opinion      of such Lender, are relevant for the purpose of the management of the      Credits, the charges and the Securities, insofar as will be demanded by      the Lenders including, but without derogating from the generality of the      above stated, any information and documents with respect to the business      and the financial state of the Borrower and of the corporations under its      control and the Financial Statements of the corporations under the control      of the Borrower, insofar as the above stated corporations generally draw      up, at that time, Financial Statements on a separate  basis. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1.11 | The      Borrower undertakes to transfer to the Lenders, a notification, in any      case that the Borrower will become aware of the occurrence of an Instance      of Breach, and this close to the time of the Borrower becoming aware of      the breach. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1.12 | The      Borrower will submit, to the Lenders, a copy of every notification or      essential material that the Borrower will submit to its shareholders in      their capacity as shareholders in the Borrower (that is, any material that      the shareholders in the company have a right to peruse, as stated in      Article 184 of the Companies Law), close to the time of the stated      submission. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10.1.13 | The      Borrower will transfer to the Lenders, any notification in writing      received from a Government or Administrative Authority, with respect to      the Licenses or any one thereof, with respect to a breach or apparent      breach of the terms and conditions of the Licenses or any one thereof, the      cancellation, suspension thereof or intrinsic change thereto, and this      immediately after the receipt of the above stated      notification. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | All      the documents and the data required of the Borrower in accordance with      this Section 10.1 will be drawn up to the satisfaction of the Bank      Coordinator. In order only to eliminate doubt, it is hereby clarified      that, subject to the remaining provisions of this Agreement, the handing      over of the above stated documents and information is subject to the      obligation of banking confidentiality customary in  Israel. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.2 | Access      to Data |
|--------|------|---------------------|

|   | The      Borrower will enable the Lenders, including their employees and office      holders (hereinafter – the “Representatives of the Lenders”), access to      the books, documents, data or other information whatsoever in its      possession, and the Borrower will also enable the Lenders or the      representatives of the Lenders as stated, to obtain copies of the stated      material, insofar as the matter will be deemed by the Lenders or their      Representatives required to execute this Agreement or to manage the Credit      and the Securities or to protect the rights of the Lenders in accordance      with the Credit Documents. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In      addition, the Borrower will enable the Lenders' professional consultants      nominated with the consent of the Borrower who have entered into      confidentiality undertakings towards it, access to its books, documents,      data or information of any kind in its possession, and will also enable      the aforesaid consultants to be provided with copies of such material to      the extent that it seems to the consultant, a relevant requirement for the      purpose of providing the services that they have agreed with it, to the      Lenders in connection with its executing this Agreement or managing the      Credit and Securities or protecting the Lenders' rights according to the      Credit Documents. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | In      addition, the Borrower will cooperate and will cause the office holders,      consultants and relevant workers acting on behalf of the Borrower, to      cooperate with the Lenders, their consultants or representatives of the      Lenders as stated, will meet with them from time to time and will transfer      to them any information or material as stated, all as the Lenders, their      consultants, or representatives will deem necessary for them, and subject      to the above stated limitations. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Borrower declares that there is nothing in the appointment of the      consultants acting on behalf of the Lenders as stated, and in the reports      or information of any kind whatsoever, that will be handed over by those      same consultants to the Lenders, in order to release the Borrower from any      obligation whatsoever imposed on the Borrower, with respect to the      Lenders, in accordance with the Credit Documents, whether an undertaking      to transfer reports and information or with respect to any other      undertaking whatsoever, or in order to impose on the Lenders or on the      representatives of the Lenders or on the consultants acting on their      behalf, any obligation whatsoever, or any liability with respect to the      Borrower – with the exception of the obligation of confidentiality imposed      on the consultants as will be detailed in the non disclosure agreement      that will be signed by them as stated above – or in order to constitute a      waiver of any kind on the part of the Lenders, or any estoppel whatsoever      with respect to the Lenders or other allegations and such      forth. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In      order to only eliminate doubt, it is hereby clarified that, subject to the      remaining provisions of this Agreement, the handing over of the documents      and the information as stated above is subject to the obligation of      banking confidentiality applicable inIsrael. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.3 | Undertaking to Comply      with the Financial Benchmarks (an Example of the Manner of the Examination      Attached as Annex 10.3) |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Borrower undertakes to the Lenders to comply with each of the financial      benchmarks detailed in this sub-section below, which will be examined at      each Assessment Date: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.3.1 | The      Operating Profit to service the Debt (EBITDA) of the Borrower will not be      less than a total of NIS 220 million, this amount being linked to the      index, commencing from the Known Agreement  Index. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.3.2 | In      accordance with the data of each of the calendar quarters detailed below,      the Debt Service Ratio of the Borrower will not be less than the value      stipulated in the following table with respect to such      quarter. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   | With      Respect to Q1 |   |   | With      Respect to Q2 |   |   | With      Respect to Q3 |   |   | With      Respect to Q4 |   |
|--------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|
| 2010   |   |                    |   |   |                    | 1.230  |   |                    |   | 1.230  |                    |   |   | 1.251 |   |
| 2011   |   |                    | 1.251  |   |                    |   | 1.281  |                    |   |   | 1.281                   |   |   |   | 1.322 |   |
| 2012   |   |                    | 1.322  |   |                    |   | 1.361  |                    |   |   | 1.361                   |   |   |   | 1.434 |   |
| 2013   |   |                    | 1.434  |   |                    |   | 1.510  |                    |   |   | 1.510                   |   |   |   | 1.547 |   |
| 2014   |   |                    | 1.547  |   |                    |   | 1.582  |                    |   |   | 1.582                   |   |   |   | 1.614 |   |
| 2015   |   |                    | 1.614  |   |                    |   | 1.648  |                    |   |   | 1.648                   |   |   |   |   |   |

|   | It      is clarified that the unsettled balance of the principal of Loan C will be      deducted from the Debt ServiceRatio. |
|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | 10.3.3 | In      accordance with the data of each of the calendar quarters detailed below,      the Debt Service Ratio of the Borrower will not exceed the value      stipulated in the following table with respect to such      quarter. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | With      Respect to Q1 |   |   | With      Respect to Q2 |   |   | With      Respect to Q3 |   |   | With      Respect to Q4 |   |
|--------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|
| 2010   |   |                    |   |   |                    | 3.830  |   |                    |   | 3.830  |                    |   |   | 3.651 |   |
| 2011   |   |                    | 3.651  |   |                    |   | 3.425  |                    |   |   | 3.425                   |   |   |   | 3.208 |   |
| 2012   |   |                    | 3.208  |   |                    |   | 2.981  |                    |   |   | 2.981                   |   |   |   | 2.786 |   |
| 2013   |   |                    | 2.786  |   |                    |   | 2.111  |                    |   |   | 2.111                   |   |   |   | 1.936 |   |
| 2014   |   |                    | 1.936  |   |                    |   | 1.752  |                    |   |   | 1.752                   |   |   |   | 1.587 |   |
| 2015   |   |                    | 1.587  |   |                    |   | 1.410  |                    |   |   | 1.410                   |   |   |   | 1.246 |   |

|   | It      is clarified that for the purpose of the examination of the compliance on      the part of the Borrower with all of the financial benchmarks detailed in      Sections 10.3.1, 10.3.2 and 10.3.3 above, in each of the quarters in 2010,      the cumulative Operating Profit to service the Debt (EBITDA) as at the      Closing Day, will be taken when adjusted by an annual      calculation. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      financial benchmarks laid down in Sections 10.3.1, 10.3.2 and 10.3.3 above      (“The      Benchmarks”), are based on accounting standards, accounting rules,      estimates and accounting policies (“Financial Reporting”) as      implemented in the most recent Financial Statements of the Borrower, as at      the date of this document (“The Most Recent      Statements”). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | A      different financial reporting from that on which the drawing up of the      most recent Statements was based, including, but not limited to, in the      wake of the implementation of the International Financial Reporting      Standards (IFRS), new / other / any financial reporting standards in      Israel or abroad, a change in estimates and / or a change in financial      reporting policies (all the above stated will be hereinafter called,      jointly and severally - “New Financial      Reporting”), is likely to bring about changes which will have      ramifications on the benchmarks. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Therefore,      the Borrower agrees as follows: |
|--------|-------------------------------------------------|

|   | At      any time that it will transpire in the perception of the Lenders, at their      sole discretion, that changes have been made and / or are about to be made      to the Borrower’s Financial Statements, in the wake of the New Financial      Reporting, they will be at liberty, after consulting with the Borrower and      upon obtaining the agreement of the Borrower, to determine what are the      changes required in the benchmarks (“The Amended Benchmarks”)      in order to adjust them to the stated changes, and this with the intention      of adjusting them to the original financial purpose for which the      benchmarks were determined. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Should      the Bank Coordinator inform the Borrower what the amended benchmarks are –      these will obligate the Borrower commencing from the date of the      submission of the notification by the Bank Coordinator and will view this      appendix as if it includes, commencing from the date of the submission of      the notification by the Bank Coordinator, the Amended      Benchmark. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | It      is hereby agreed that in any case that a difference of opinion between the      Borrower and the Lenders will become apparent, with respect to the changes      required in the benchmarks in the wake of the New Financial Reporting, the      parties will appoint an expert who is an independent auditor, belonging to      one of the big five auditing firms in Israel, who will determine what the      Amended Benchmarks are and his ruling will obligate the parties. The      Borrower will bear the cost of the fees of the above stated      expert. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4 | Undertakings      with respect to Payments toStakeholders |
|--------|------|-----------------------------------------------------------|

|   | 10.4.1 | With      the exception of that detailed in Sections 10.4.2 and 10.4.3 below, the      Borrower and any Related Corporation, will not pay, directly or      indirectly, in any manner whatsoever, to any of the Stakeholders in the      Borrower or to a relative of an Stakeholder and / or to a corporation      (including a partnership or enterprise) under the control of any of them,      (not through the Borrower) and / or to a corporation (including a      partnership or enterprise) under the control of any of them together with      others (not through the Borrower) and / or to a third party who will      replace them or act on their behalf, dividends, repayments of owners      equity, salary, expenses, management fees, consultancy fees, participation      fees, commissions or and amount owing and / or will be owing to them, with      respect to any other ground whatsoever, whether in money or money      equivalents, and will also not allow then to withdraw a monetary amount or      monetary equivalent amount, as stated, without obtaining the prior written      agreement of the Lenders. In spite of that stated in this Section above,      it is hereby agreed that the Borrower as well as a Related Corporation,      will be entitled to pay the CEO of the Borrower or of a Related      Corporation, salary with respect to his office at the Borrower or at a      Related Corporation and also to pay a director in the Borrower or in the      Related Corporation, or to a Stakeholder or to the relatives of the      Stakeholder, as the case may be, acceptable salary with respect to his      position as a director or other officer in the Borrower or in the Related      Corporation. Furthermore, the Borrower or the Related Corporation will be      at liberty to pay amounts to the Stakeholders and their relatives, as      stated above, with respect to transactions and contractual associations      that are conducted in the course of the regular business of the Borrower      or the Related Corporation and of the Stakeholder and under market      conditions. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10.4.2 | It      is hereby agreed that the Borrower will be at liberty to pay Merhav      payments as detailed below subject to the upholding of all the following      terms and conditions inaccumulation: |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4.2.1 |  On      every date of institutional payments as detailed in the settlement table      attached as Annex 10.4.2.1 to this Agreement, or as will be amended in      accordance with that stated in Section 1.1.1. (“Financial Institutions      Settlements Time Table”), the amount of payment to Financial      Institutions relevant at that date. It is hereby agreed that in the case      that Merhav will alter the terms and conditions of the Financial      Institutions loan and, as a result thereof, the amounts that will be      required to be settled with the Financial Institutions every three months      will be lower than the amounts detailed in the Financial Institutions      Settlements Time Table, and also in the case that Merhav will replace the      loan from the Financial Institutions with credit from another financial      institution, and the amounts that it will be required to settle with      respect thereto, every three months, will be lower than the amounts      detailed in the Financial Institutions Settlements Time Table, the      Financial Institutions Settlements Time Table will be replaced in      accordance with the amended or replaced credit terms and conditions as is      appropriate, and the new Financial Institutions Settlements Time Table      will apply and obligate from such date. At the date of the replacement of      the Financial Institution Settlements Time Table as stated above, the      parties will sign on an amendment to this Agreement for the purpose of      changing the definition of the loan from the Financial Institutions and      the institutional paymentsaccordingly. |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10.4.2.2 |  By      no later than 2 Business Days prior to the date of the execution of the      payments to Financial Institutions in accordance with sub-section 10.4.2.1      above, the Borrower will deposit, in a separate account, (the      “Accumulation Account”) which will be conducted in the name of the      Borrower at the Central Tel Aviv Branch (800) of the Bank Coordinator, an      identical amount to the amount of the payments to the Financial      Institutions for such date. The obligation of the Borrower to deposit the      amounts as stated in the sub-section will be until the amounts that will      be accumulated in the accumulation account will reach the accumulated      amount – as the above stated amount will be estimated by the Bank      Coordinator – of the interest that the Borrower will have to pay to the      Lenders with respect to Loan A, Loan B and Loan C at two consecutive      payments dates of each of the above stated loans, that apply after the      date of the execution of the payment to the Financial Institutions related      to the matter. |
|--------|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4.2.3 |  Together      with the first deposit in favor of the accumulation account, the Borrower      will create, in favor of the Lenders, a fixed charge of first ranking, on      the accumulation account and on all the monies that will be deposited into      the stated account and all the rights with respect thereto, for the      purpose of guaranteeing its debts and undertakings with respect to the      Lenders regarding the Credit Documents. The charge will be in the wording      and under the terms and conditions as will be acceptable to the Bank      Coordinator and the company will produce for the Bank Coordinator, upon      the creation of the lien, any authorization and agreement as will be      demanded by the Bank Coordinator. |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In      this matter it is clarified that: |
|--------|-------------------------------------------|

|   | The      Borrower will be at liberty to invest the monies in the accumulation      account in short term banking deposits, short term loans, or negotiable      securities or negotiable Exchange Traded Notes issued by the State of      Israel. To this end, the values of the short term banking deposits and /      or the securities and / or the Exchange Traded Notes will be considered in      accordance with their closing price on the Tel Aviv Stock Exchange, 2      Business Days prior to each payment date to Financial Institutions.      Surpluses that will accumulate over and above the amounts required as      stated in Section 10.4.2.2. above, will be able to be withdrawn by the      Borrower. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10.4.2.4 |  As      at the [date of the] Financial Statements known at the date of the      relevant payment to the Financial Institutions, the overall Debt Service      Ratio will not be less that the value stipulated in the following table,      with respect to the quarter that is the subject of the above stated      Financial Statements: |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | With      Respect to Q1 |   |   | With      Respect to Q2 |   |   | With      Respect to Q3 |   |   | With      Respect to Q4 |   |
|--------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|
| 2010   |   |                    |   |   |                    | 1.293  |   |                    |   | 1.293  |                    |   |   | 1.209 |   |
| 2011   |   |                    | 1.209  |   |                    |   | 1.146  |                    |   |   | 1.146                   |   |   |   | 1.183 |   |
| 2012   |   |                    | 1.183  |   |                    |   | 1.161  |                    |   |   | 1.161                   |   |   |   | 1.216 |   |
| 2013   |   |                    | 1.216  |   |                    |   | 1.274  |                    |   |   | 1.274                   |   |   |   | 1.306 |   |
| 2014   |   |                    | 1.306  |   |                    |   | 1.336  |                    |   |   | 1.336                   |   |   |   | 1.365 |   |
| 2015   |   |                    | 1.365  |   |                    |   | 1.394  |                    |   |   | 1.394                   |   |   |   |   |   |

|  |   | It is hereby clarified that the unsettled balance of the principal of      Loan C will be offset from the Debt ServiceRatio. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4.2.5 |  As      at the [date of the] Financial Statements known at the date of the      relevant institutional payment, the total Debt Service Ratio will not      exceed the value stipulated in the following table, with respect to the      quarter that is the subject of the above stated Financial      Statements: |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | With      Respect to Q1 |   |   | With      Respect to Q2 |   |   | With      Respect to Q3 |   |   | With      Respect to Q4 |   |
|--------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|
| 2010   |   |                    |   |   |                    | 3.377  |   |                    |   | 3.377  |                    |   |   | 3.219 |   |
| 2011   |   |                    | 3.219  |   |                    |   | 3.043  |                    |   |   | 3.043                   |   |   |   | 2.850 |   |
| 2012   |   |                    | 2.850  |   |                    |   | 2.801  |                    |   |   | 2.801                   |   |   |   | 2.619 |   |
| 2013   |   |                    | 2.619  |   |                    |   | 1.999  |                    |   |   | 1.999                   |   |   |   | 1.833 |   |
| 2014   |   |                    | 1.833  |   |                    |   | 1.672  |                    |   |   | 1.672                   |   |   |   | 1.514 |   |
| 2015   |   |                    | 1.514  |   |                    |   | 1.356  |                    |   |   | 1.356                   |   |   |   | 1.199 |   |

----

|   | 10.4.2.6 |  As      at the date of the payment of the relevant Institutional payments, the      amount of the Operating Profit to service the Debt will not be less than      an amount of NIS 230 million, with this amount being linked to the Known      Agreement Index. |
|--------|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | It      is clarified that for the purpose of the examination of the compliance of      the Borrower with each of the financial benchmarks detailed in Sections      10.4.2.4, 10.4.2.5, 10.4.2.6 above, in each of the quarters applicable      during 2010, the cumulative Operating Profit to service the Debt (EBITDA)      from the Closing Day will be taken, it being adjusted by an annual      calculation. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4.2.7 |  Commencing      from the lapse of 36 months from the Closing Day (and after the payment to      the Financial Institutions and the payment to the Lenders due at that      point in time) and as long as Loan C, insofar as such exists, has not been      settled, the payment to the Financial Institutions will be dependent, in      addition to that stated heretofore and hereinafter, upon obtaining the      prior authorization of the Lenders, in writing, for the execution thereof.      The Lenders will not withhold such authorization, provided that the      Borrower satisfies them, prior to the execution of the payments to the      Financial Institutions, with respect to the Borrower’s ability to settle      the unsettled balance of the principal of Loan C, in full and on      time. |
|--------|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4.2.8 |  At      the first date upon which the payment to the Financial Institutions will      be executed, the Lenders will be in possession of the Financial Statements      referring to the preceding quarter, and the data that will be included in      the Financial Statements as stated, will indicate the fact that the      Borrower was an active company during a minimum period of three      months. |
|--------|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4.2.9 |  The      Borrower has complied with all its obligations to each of the Lenders in      accordance with the CreditDocuments. |
|--------|----------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4.2.10 | No      Instance of Breach has occurred. |
|--------|-----------|------------------------------------------|

|   | 10.4.3 | Furthermore,      it is hereby agreed that the Borrower will be entitled to pay Merhav, a      Stakeholder in the Borrower (as defined in the Securities Law) or bodies      related to them, management fees, the cumulative total of which, in a      calendar year, will not exceed NIS 15 million, linked to the Known      Agreement Index (the “Maximum Management Fee Amount”) as well as the      payment of the Value Added Tax, against an invoice that Merhav will      produce to the Borrower, with respect to the interest paid on the      Subordinate Loans, subject to all the following terms and conditions: (a)      The terms and conditions detailed in Sections 10.4.2.9 and 10.4 2 10 will      be upheld, (b) the Lenders will be in possession of Financial Statements      indicating the fact that the Borrower was an active company during a      minimum period of three months. It is hereby clarified that the amount of      the management fees refers to each calendar year separately. Should      management fees not be paid in a particular year – not as result of the      Borrower failing to comply with the terms and conditions detailed in      Sections 10.4.2.9 and 10.4 2 10 above – all or part thereof, the Borrower      will be entitled to pay them subject to the upholding of the terms and      conditions as stated above, only in the subsequent    year. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10.4.4 | The      Borrower and any Related Corporation will not carry out, directly or      indirectly, exceptional transactions as defined in the Companies Law      (including provision of loans by the Borrower or a Related Corporation),      with any of the Stakeholders in the Borrower, or a relative of a      Stakeholder and / or with a corporation under the control of any of them      (not through the Borrower) and / or with a corporation under the control      of any of them together with others (not through the Borrower) and / or      with a third party that will replace them or act on their behalf, without      obtaining the prior authorization of the Lenders. It is clarified that, in      the matter of the definition of “exceptional transactions”, the market      conditions and the regular course of business will be examined relative to      each of the parties to thetransaction. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5 | Conducting      the Business of the Borrower. |
|--------|------|-----------------------------------------------|

|   | 10.5.1 | The      Borrower will not alter the field of its activities from the Area of      Business except subject to that stated in Section 10.5.2      below. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5.2 | The      Borrower undertakes that, without the prior written agreement of the      Lenders, the Borrower will not carry out significant investments that are      not in the Area of Business, except after obtaining the prior written      agreement of the Lenders. In the matter of this Section 10.5.2,      “significant investments” – investments of an annual cost of a cumulative      total exceeding NIS 5 million (linked to the Known Agreement Index), in      each calendar year. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5.3 | For      the avoidance of doubt, and without derogating from the obligations of the      Borrower detailed in the remaining Sections of this Agreement, or in the      Security Documents, it is hereby clarified that all the activities      purchased by the Borrower in accordance with the Purchase Agreement will      be carried out and managed by the Borrower directly and will, at all      times, be under the ownership of theBorrower. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5.4 | The      Borrower undertakes that any corporation that the Borrower is, or will be,      a Stakeholder therein, including partnerships that the Borrower will,      directly or indirectly, be the owners thereof, at a rate of 5% and over,      will only deal in activities in the Area of  Business. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5.5 | The      Borrower undertakes not to execute, not to undertake to execute, and not      to institute any procedures whatsoever to execute a Merger (with the      exception of in accordance with the application submitted to the Court on      December 12, 2009, for an arrangement in accordance with Article 350 of      the Companies Law 5759 – 1999) without obtaining the prior written      authorization of the Lenders for this purpose. To this end, the Borrower      undertakes to transfer to the Lenders, immediately, any information and      document, required by the Lenders, at their discretion, with respect to      the requested Merger, in order for them to determine their position with      respect to the Merger. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10.5.6 | The      Borrower undertakes that no Related Corporation will create, for the      benefit of any entity whatsoever, a lien of any kind whatsoever, on its      assets or on part thereof, including on equity and non-paid up share      capital. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5.7 | The      Borrower undertakes that it will not sign any guarantee to secure debts or      undertakings of a corporation (including a partnership or venture) in      which the Borrower is not a controlling shareholder, with respect to any      entity, and neither will the Borrower undertake to indemnify any entity      whatsoever with respect to the non-upholding of a debt or undertaking of      the corporation (including a partnership or venture) as stated, with      respect thereto, without obtaining the prior written authorization of the      Lenders. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.6 | Undertaking to Produce      Valuation |
|--------|------|---------------------------------------|

|   | The      Borrower will produce for the Lenders, at their behest, in which the      Lenders will stipulate that it derives from a provision or demand from the      Bank of Israel, and no more than once a year, an assessment of the value      of the Borrower, (by cash flow capitalization, DCF, and in accordance with      additional requirements that will be laid down by the Bank Coordinator in      light of the provisions or demands of the Bank of Israel, as such will be      from time to time), by an independent value assessor, who will be agreed      upon by the Lenders in advance. For the avoidance of doubt, it is      clarified that the Borrower will bear all the costs related to the value      assessment as stated. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11. | Immediate      Settlement |
|-----|---------------------------|

----

|   | (a) | Not      to provide the Borrower with any additional credit that they have      undertaken to provide under thisAgreement; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------|

|   | (b) | To      demand the immediate payment of the balance of the undischarged Credit or      part thereof, together with linkage differentials, exchange rate      differentials, interest cumulative up to such time and not yet paid,      expenses, other obligations and commission that have accumulated up to      such time and have not been paid, plus arrears of interest applicable to      such credit (but arrears of interest will only be paid on the Credit      actually provided up to immediate settlement and applicable from such date      to the extent that it has not been paid), as well as any additional sum      which is, in the Lenders' opinion, available to them in respect of any      damage caused to them pursuant to early settlement of the      Credit; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | To      increase the rate of interest applicable to the Credit, or any part      thereof, as specified in Section 5.4above; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------|

|   | 11.1 | If      the Borrower does not pay to any of the Lenders any amount whatsoever that      is due to any of them according to the Credit Documents on the date      determined for its payment and if such amount is not paid within 7      Business Days from the paymentdate. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.2 | If  a      sequestration or any action by the Execution Office is imposed on the      Borrower's assets or the assets of any Related Corporation or on part      thereof or if the Execution Office initiates any action in respect      thereof, in a sum that exceeds 20 million NIS., linked to the Known      Agreement Index and it is not rescinded within 45 days, of if the sum is      less than 20 million NIS. linked to the Known Agreement Index, and it is      not rescinded within 90 days. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.3 | If      an application is issued for a liquidation or the prior appointment of a      provisional liquidator, receiver, special administrator or freezing      processes or the granting of an order to seize assets, and no objection to      such application is submitted within 30 days, or the objection is      overruled, or if a winding-up order is issued against the Borrower or a      Related Corporation, or a freezingorder. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 11.4 | If      the Borrower or a Related Corporation requests that a winding-up order be      served on it, or a freezing order, or if the Borrower or a Related      Corporation convenes a meeting of creditors for an arrangement with it,      (unless the Lenders' prior written agreement has been given for a meeting      of creditors in order to make a change in structure or for reorganization)      or if the Borrower or a Related Corporation resolves on dissolution, or      commits an act of bankruptcy. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.5 | If      the Borrower or a Related Corporation resolves on a Merger, or a division      or an arrangement, or if control or ownership of the Borrower changes,      directly or indirectly compared with that which is detailed in Section 9.5      above, without the Borrower having obtained the prior written agreement      therefore, of the Lenders. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | "Splitting"      - as defined in Part E(2) of the Income Tax Ordinance (New Version) or any      Provision of the Law that succeedsit. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | "Arrangement"      - as defined in Sections 350 and 351 of the Companies Law 1999-5759, or      any Provision of the Law that may succeedit. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.6 | If      the Borrower's or a Related Corporation's business activities or      commercial activity is discontinued and not recommenced within six months      from the date of discontinuation. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.6a | If      the Borrower or a Related Corporation infringes or fails to fulfill the      undertakings under the Credit Documents in a way that is not mentioned in      any of the other sub-Sections of this Section 11 and which, in the opinion      of one of the Lenders, is a fundamental undertaking towards it, and the      breach thereof is not rectified within 30 days from the date on which the      Lenders give warning thereof inwriting. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.7 | If      is clarified that there is a declaration or confirmation by the Borrower      contained in the Credit Documents, that is "fundamental" in the sense that      had the Lender been aware of it on the date of providing the Credit to the      Borrower, the Lenders would not have given the Credit, whether contained      above in this Agreement or contained in any of the other Credit      Documents. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.8 | If      the Borrower issues bearer securities without the Lenders' prior written      agreement. |
|--------|------|--------------------------------------------------------------------------------------------------|

|   | 11.9 | If      a License/franchise that the Borrower or a Related Corporation has      received, is rescinded or postponed, or if there is any change is made in      the conditions of the License/franchise that the Borrower of the Related      Corporation has received, which is, in the opinion of the Lenders,      fundamental, and, in the opinion of any of the Lenders, pursuant to such      change or rescission, as the case may be, there is less likelihood of the      Credit being repaid in full and ontime. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 11.10 | If      at any time, an event or circumstance should occur that would, in the      opinion of the Lenders, threaten or endanger, in a fundamental way, the      likelihood of full and timely repayment of the Credit to the Lenders,      including the aforesaid circumstances that could result in there being a      high probability of an adverse effect on the financial position and/or the      activities and/or the businesses of the Borrower, or if, in the opinion of      the Lenders, there is a high probability that such event or circumstance      is expected to occur, whether the occurrence of the event or circumstances      as aforesaid is dependent on the Borrower or not;  but only if,      to the extent that the event or circumstance is dependent on the Borrower,      after the lapse of 30 days from the date on which the Lenders have given      the Borrower notification of its existence, the Borrower has failed to      establish, to the Lenders' complete satisfaction, that the measures      required to assure the likelihood of the Lenders' being repaid in full and      on time, have been adopted. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.11  | If      an event of any kind occurs, the result of which could entitle a Financial      Institution, in accordance with any document whatsoever signed and/or to      be signed by the Borrower or by a Related Corporation, to require the      immediate settlement of the indebtedness and obligations of the Borrower      or of a Related Corporation towards such entity, the cumulative total of      which is not lower than 50 million NIS., and also if such entity does not      exercise the aforesaid entitlement - on condition that the Financial      Institution has not issued to the Borrower or the Related Corporation,      within 25 days from the occurrence of the event, a written confirmation      according to which it does not require immediate settlement of the Credit      due to the occurrence of the event. |
|--------|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.12  | If      a Financial Institution has required immediate settlement of the      indebtedness and obligations of the Borrower or of a Related Corporation      towards such entity, the cumulative total of which is not lower than 10      million NIS. (linked to the Known Agreement  Index). |
|--------|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.13 | If      an application is submitted against any one of the Guarantors, for      liquidation or the prior appointment of a provisional liquidator, a      receiver, a special administrator or the freezing of proceedings or the      granting of an order for the appropriation of assets, and an objection to      such request is not submitted within 30 days or if the objection is      rejected, or if a winding-up order or an order to freeze proceedings is      issued against any of theGuarantors. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.14 | If      Ampal American adopts a resolution regarding Merger, Splitting or      Arrangement without obtaining the prior written approval of the Lenders      therefore. In this regard, "Arrangement" is as defined in Section 11.5      above and "Splitting", as defined in Part E(2) of the Income Tax Ordinance      (New Version) or any Provision of the Law that succeeds it, excluding      however, transactions in the normal course of Ampal American's      business. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 11.15  | If      Ampal American breaches or does not fulfill any of its obligations      whatsoever towards the Lenders, detailed in Annex 11.15 of this      Agreement and the breach is not remedied within 30 days from the date on      which the Lenders give warning thereof in  writing. |
|--------|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.16  | In      the event that a Financial Institution requires immediate settlement of      the indebtedness and obligations of Ampal American towards such entity,      the cumulative total of which is not lower than 100 million NIS. (linked      to the Known Agreement Index). |
|--------|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12.  | Commission |
|-----------|------------|

| 13.  | Authorization      to charge an Account |
|-----------|-----------------------------------------|

|   | 13.1 | The      Borrower hereby grants irrevocable consent to debit the Accounts at each      of the Lenders with the amounts due therefore according to the provisions      of this Agreement, whether the relevant Account is in credit or in      debit. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.2 | If      one of the Lenders implements a right of offset available to it under one      of the Credit Documents or under any other source, in respect of the      amounts lodged with such Lender, (a) it will use the offset amount to      settle the Credit, in respect of which it has exercised the right to      offset as aforesaid, with all the Lenders at the Rate of Participation of      each of them, and (b) the offset amount will not reduce the amount of      Credit with the Lender that exercises the right of offset, by an amount      that exceeds the Rate of Participation of such Lender in its amount of      Credit. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 14.  | Management      of the Accounts and their  computation |
|-----------|--------------------------------------------------------|

|   | 14.1 | Each      of the Lenders will manage the Accounts and will carry out computations in      accordance with their customary procedures regarding credit and each      amount that is repaid by the Borrower to such Lender. In the absence of      any obvious error, prima      facie, any written notification given by any of the Lenders in      respect of the management of the Accounts and their computation as      specified in this Section, will constitute prima facie evidence of      the accuracy of its content. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.2 | The      Borrower declares in respect of the relationship between it and each of      the Lenders, in any legal or administration proceeding regarding the      Credit Documents: (a) in the absence of any obvious error, prima facie, the      Accounts managed by such Lender and the computations carried out by it in      respect of these Accounts constitute prima facie evidence of      the accuracy of their content, and (b) a declaration by an authorized      Representative of the Bank Coordinator in respect of the Applicable      Interest for the periods to which it refers, constitutes a conclusive      presumption of the accuracy of itscontent. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15. | The      Bank Coordinator |
|-----|---------------------------|

|   | 15.1 | Appointment of the      Bank Coordinator and itspowers |
|--------|------|--------------------------------------------------------|

|   | 15.1.1 | Each      of the Lenders appoints the Bank Coordinator to act on its behalf in      accordance with the powers extended to the Bank Coordinator as specified      in the Credit Documents. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15.2 | The      powers, rights and authority extended to the Bank Coordinator in this      Agreement are solely of an administrative nature. Without derogating from      the generality of the aforesaid, the Bank Coordinator will not have the      power to bind any of the Lenders by any obligation whatsoever under the      Credit Documents and will not be entitled to sign on them on behalf of the      Lenders. The Bank Coordinator will not have the power to represent any of      the Lenders or to bind any of them in any legal or administrative      proceeding related to the CreditDocuments. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 15.1.3 | The      Bank Coordinator is entitled to exercise its powers in accordance with      this Agreement through its employees or      representatives. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15.2 | The Bank Coordinator's      responsibilities |
|--------|------|----------------------------------------------|

|   | 15.2.1 | The      Bank Coordinator, its employees, functionaries, directors, share holders      or representatives will not be held responsible to any of the Lenders in      any regard of: (a) the validity, reliability or enforceability of the      Credit Documents; (b) the collection of amounts owing to the Lenders under      the Credit Documents; and (c) the accuracy of any declaration or      representation that is given, whether in writing or orally, relating to      the Credit Documents. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15.2.2 | The      Bank Coordinator will not be held responsible for its acts or omissions      relating to the Credit Documents, other than an act or omission as      aforesaid that constitutes extreme negligence or is perpetrated      maliciously. The parties undertake not to initiate any proceeding or      request for indemnification or other relief under any law, against the      Bank Coordinator's employees, functionaries, directors, shareholders or      representatives in respect of any claim they may have against any of them      (even if based on extreme negligence or a malicious act by one of them)      under the Credit Documents. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15.2.3 | Each      of the Lenders undertakes to indemnify the Bank Coordinator, in accordance      with the Rate of Participation, for any claim, expense, loss or payment      imposed on it that arises, directly or indirectly, from its appointment or      from the performance of its office (except in the event of extreme      negligence or a malicious act by the Bank      Coordinator). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15.2.4 | The      Bank Coordinator is entitled to perform any action or to refrain from the      performance of any action, the performance of or refraining from which, as      the case may be, constitutes, in its opinion, a breach of any law applying      to it or which is required for the fulfillment of any condition under law      applying to it. Without derogating from the generality of the aforesaid,      the Bank Coordinator is entitled to refrain from disclosing information in      his possession relating to the Borrower, if, in its opinion, such      disclosure constitutes a breach of the confidentiality undertakings      applying to it or a breach of any law or that could constitute the basis      for a claim againstit. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16. | Amendments,      changes and waivers |
|-----|--------------------------------------|

|   | 16.1 | Except      as specifically stated to the contrary, in every instance where there is a      requirement for the Lenders' agreement or approval under this Agreement or      the Security Documents or in an instance where there is a requirement for      their agreement in respect of a waiver in relation to the provisions of      this Agreement or of the Security Documents, the intention is for      agreement to be given through the Bank Coordinator to implement the action      requiring the agreement of the Lenders. In any instance in which the      Borrower is required to implement an action pursuant to an instruction,      request etc. from the Lenders under this Agreement or the Security      Documents, the intention is for the request, instruction etc. given      through the Bank Coordinator. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 16.2 | It      is specifically clarified that any notice, confirmation or agreement given      by the Bank Coordinator to the Borrower will be conclusively presumptive      as if given on behalf of theLenders. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 16.3 | Any      provision included in the Credit Documents can be amended or changed only      in a document testifying to the amendment or change is signed by the      Borrower and by each of theLenders. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 16.4 | The      amendment of a provision that bestows rights of any kind to the Bank      Coordinator, a change to or waiver thereof, or an amendment, change or      waiver of additional obligations imposed  on the Bank      Coordinator or an extension of the existing obligations, will not come      into effect without the Bank Coordinator's written agreement to the said      amendment, change or waiver. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 16.5 | A      waiver by one of the Lenders of a prior breach or the non-performance of      one or more the Borrower's obligations or the non-fulfillment of any      condition whatsoever under the Credit Documents, will not be considered as      agreeing to a further breach or to the further non-fulfillment of any such      condition or obligation; the failure of the Lenders to exercise any right      whatsoever available to them under the Credit Documents or according to      any law, will not be regarded as a waiver of such  right. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17.   | Change      in the parties; the Bank Coordinator's obligations and      rights |
|-----------------|--------------------------------------------------------------------------------|

|   | 17.1 | The      Borrower |
|--------|------|-------------------|

|   | The      rights and obligations of the Borrower included in the Credit Documents,      cannot be transferred without the agreement of all the      Lenders. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 17.2 | The      Lenders |
|--------|------|------------------|

|   | 17.2.1 | Each      of the Lenders is entitled at its exclusive discretion, to transfer its      rights under the Credit Documents, in whole or in part, to Financial      Institutions in Israel (a "Transferee"), on condition that the Transferee,      as aforesaid, is subject to all components of the Credit (Loan A/Loan B/      Loan C and the Outstanding Renewed Amount) and the remaining cumulative      unsettled balances of all credit (plus any Outstanding Renewed Amount or      any of the Revised Outstanding Renewed Amount, as the case may be)      immediately after the implementation of the transfer, both with the      Transferor and the Transferee shall not fall below 12.5% of the balance of      Cumulative unsettled balance of all the Credits plus the total unused      amount of Credit C with each of the Lenders, as it will be at that time.      The Borrower and the other Lenders will take all actions and sign all      documents required to bring the transfer transaction as aforesaid into      effect or to refine it, to release the transferring Lender from its      transferred obligations and to transfer them to the Transferee or to      bestow the transferred rights on the Transferee. It is hereby agreed that      in any event where the Transferee is not a banking corporation in Israel,      the Lenders will be entitled to implement the transfer transaction as      aforesaid only after receiving the Borrower's prior written consent. For      the purpose of this Section 17.2, "transfer" - the transfer of rights or      obligations by a sale, check, endorsement, transfer or lien in any way      whatsoever, either in whole or in part, either directly or indirectly      (including by way of a sale of rights to participate in the above rights      (participations) or in any other manner). The transfer can be made to one      Transferee or to a number of Transferees, on the same date or from time to      time. |
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|   |  | The      transfer as aforesaid in this Section 17.2.1 above, shall not be      implemented unless a prior written notice has been issued to the Borrower      not less than 3 Business Days in advance and the Transferee has accepted      the transferor's obligations under this    Agreement. |
|--------|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 17.2.2 | A      Lender will be entitled, at any time, to reveal Information, (as defined      hereunder) regarding a transfer transaction to any person or entity that      corresponds to the definition of a "Transferee" when the Lender is      conducting or is likely to be conducting with it, negotiations to      implement a transfer transaction. Furthermore, such Lender will be      entitled to reveal Information to anyone advising him and/or anyone on      behalf of such person or entity and to companies involved in [the field      of] credit rating, for the purpose of rating the rights. Disclosure of      Information will be subject to the recipient of the Information signing a      confidentiality undertaking, in a form that is acceptable to the Lenders      and to the Borrower. For the purpose of this Section, "Information" means      - any information currently in the Lender's possession or that is likely      to be in its possession in the future, including information that is      passed to the Lender by the Borrower, which, in the Lender's opinion, is      essential or desirable to be passed regarding the transfer transaction,      including information regarding the Credit, the Loans and any other      banking service given or to be given to the Borrower, information on the      liens and Securities given or to be given to secure [the Loans] and      information regarding theBorrower. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  | It      is hereby agreed that notwithstanding the aforesaid, the Lender will be      entitled to transfer this Agreement to others without a confidentiality      undertaking needing to besigned. |
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|   | 17.2.3 | In      the event of a transfer of part of the rights of one of the Lenders, the      proportion of the relevant Rate of Participation of such Lender between it      and the Transferee will be prorata. |
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|   | 17.3 | Third      parties |
|--------|------|--------------------|

| 18. | Expiration      of the validity of theAgreement |
|-----|-------------------------------------------------|

| 19. | Miscellaneous |
|-----|---------------|

|   | 19.1 | The      Borrower agrees that the Lenders and the Bank Coordinator may share any      information regarding it amongst and between themselves, including any      document that any one of the Lenders or the Bank Coordinator receives or      any information regarding its commercial situation or its financial      situation, and there will be no contention in respect    thereof. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 19.2 | In      the event that a provision from the Credit Documents' provisions is      determined to have been rescinded, is unlawful or unenforceable, this will      not affect the validity of the remaining provisions in the Credit      Documents. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 19.3 | Any      notice sent by one of the parties to any of the others, will be considered      to have reached its destination on the date of hand delivery, one Business      Day after delivery by facsimile – on condition that confirmation of its      receipt has been confirmed by telephone, or within three Business Days      from the date on which it is sent by registered mail. |
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| Bank      Leumi L'Israel Ltd.Attention:      Head of Communications DepartmentTel:      03-514-8398Fax:      03-514-9017Address:      Yehuda Halevi 34, Tel-Aviv                           | Bank      Discount L'Israel Ltd.Attention:      Business ManagerTel:      03-514 4724Fax:      03 -514-4053Address      Yehuda Halevi 23, Tel Aviv |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|
| Bank      Coordinator                                                                                                                                                                           |                                                                                                                                               |
| Bank      Coordinator – Bank Leumi L'Israel Ltd.Attention:      Head of Communications DepartmentTel:      03-514-8398Fax:      03-514-9017Address:      Yehuda Halevi 34, Tel-Aviv  |                                                                                                                                               |

|   | 19.4 | This      Agreement may be signed on one page containing the signatures of all the      parties, and may be signed on separate pages which, when attached to this      Agreement, will, together, constitute the parties' valid signing      thereon. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 19.5 | The      Credit Documents will be governed by the laws of the State of Israel and      the courts of Tel-Aviv-Jaffo will have exclusive    jurisdiction. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 19.6 | This      Agreement will be considered as a draft by all the  parties. |
|--------|------|------------------------------------------------------------------------|

|   | 19.7 | This      Agreement and the Credit Documents contain, embody, merge and cause all      the conditions agreed upon by the parties. No pledges, agreements, written      or verbal, undertakings or representations in connection therewith, given      or made by the parties prior to the date of executing this Agreement,      shall increase the parties' obligations and rights as set out in this      Agreement and the other Credit Documents or arising therefrom, or derogate      from or change them, and the parties will not be bound by them as of the      date of signing this Agreement. |
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| Bank      Leumi L'Israel Ltd. By:      /s/ Rina Vahaba       /s/      Gadi Sivani                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Bank      Discount L'Israel Ltd. By:      /s/ Natalia Hagendorf       /s/      Orit Alster                                                       |
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| Bank      Coordinator - Bank Leumi L'Israel Ltd.                                                                           By:      /s/ Rina Vahaba                                                                                /s/      Gadi Sivani                                                                                                 |
| 012      Smile Telecom Ltd. By:      /s/ Irit Eluz       /s/      Yoram Firon                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

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