Exhibit
      4(1)

    


    UNDERWRITING
      AGREEMENT

    


    Dated
      as of [DATE]

    


    BETWEEN

    


    THE
      STATE OF ISRAEL

    


    AND

    


    DEVELOPMENT
      CORPORATION FOR ISRAEL

    


    (Underwriter)

    


    [NAME
      OF SERIES OF BONDS]

    


    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    



    AGREEMENT
      made
      [DATE] between the STATE OF ISRAEL (the “State”) and DEVELOPMENT CORPORATION FOR
      ISRAEL (the “Corporation”).

    


    WITNESSETH:

    


    WHEREAS,
      the
      State has duly authorized the issuance and/or renewal of certain issues of
      its
      bonds in one or more series known as
      its                                             in
      the aggregate principal amount of
      $                       (the
“Bonds”) and has duly authorized the execution and delivery of this Agreement;
      and

    


    WHEREAS,
      this
      Agreement is intended by the parties to supersede any other underwriting
      agreement between the parties relating the Bonds; and

    


    WHEREAS,
      the
      Corporation, duly organized and incorporated under the laws of the State of
      New
      York, has agreed to undertake the sale of the Bonds in accordance with the
      terms
      herein contained; and

    


    WHEREAS,
      the
      State and The Bank of New York (the “Fiscal Agent”) have entered into a Master
      Fiscal Agency Agreement, a copy of which has been provided to the Corporation
      and a supplement thereto with respect to the Bonds, substantially in the form
      attached hereto as Schedule
      A
      (the
“Fiscal Agency Agreement”); and

    


    WHEREAS,
      the
      Bonds will be substantially in the form attached as Exhibit
      A
      to said
      supplement to the Master Fiscal Agency Agreement;

    


    NOW,
      THEREFORE, IT IS AGREED THAT:

    


    1.           The
      Corporation shall be the sole and exclusive underwriter and broker for the
      State
      throughout the United States for the sale of the Bonds.

    


    2.           (a)           The
      Corporation shall use its best efforts to sell the entire authorized issue
      of
      the Bonds. The price of each Bond to the public shall be 100% of the principal
      amount of such Bond (“Purchase Price”). The Corporation shall act as agent in
      the sale of the Bonds and shall receive, with respect to all Bonds sold pursuant
      to this Section 2(a), a selling concession at a rate to be determined from
      time
      to time by the State and the Corporation, but not to exceed 6% of the Purchase
      Price of the Bonds sold for the account of the State by the Corporation as
      agent. Upon prior written consent from the State, the Corporation may utilize
      the services of any other person or persons as broker, dealer or agent under
      any
      arrangements not inconsistent herewith that it may deem
      appropriate.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    (b)           The
      Bonds shall be issuable only as provided for and defined in the Fiscal Agency
      Agreement.

    


    3.           In
      effectuating the sale of the Bonds, (a) the Corporation shall be entitled to
      utilize the services of the Fiscal Agent in accordance with the terms and
      provisions of the Fiscal Agency Agreement; (b) the Corporation shall keep
      accurate and complete records of the date of sale and the Purchase Price of
      each
      Bond and such other applicable information as is required and generally expected
      of the Corporation; (c) prior to effecting any sales of the Bonds, the
      Corporation will assure that the purchaser thereof has properly completed all
      required subscription documents; and (d) the Corporation shall deliver the
      subscription price and all subscription documents to the Fiscal Agent promptly
      after their completion by the purchaser of Bonds in a form acceptable to the
      Corporation.

    


    4.           The
      State will use its best efforts to assist the Corporation in its sales
      campaigns, including the use of its facilities and representatives in Israel
      and
      elsewhere, at the request of the Corporation, to inform the public of the
      economic development and security of the State; and otherwise to assist in
      maintaining an atmosphere conducive to the sale of Bonds.

    


    5.           (a)           With
      respect to the Bonds, the State shall file with the Securities and Exchange
      Commission (the “SEC”) a registration statement, including a prospectus (such
      registration statement, prospectus and all amendments and supplements thereto
      being herein referred to as the “Registration Statement”), pursuant to and in
      conformity with the Securities Act of 1933, as amended (the “Securities Act”).
      The State shall file such amended registration statements and supplementary
      prospectuses and such other documents as may be required to be filed with the
      SEC, in order to permit the continuous sale of the Bonds by the Corporation
      from
      the effective date of the registration of the Bonds until the offering and
      the
      sale of the Bonds has been completed or terminated in accordance with section
      12(b)
      hereof.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    


    (b)           The
      State shall also file all statements, registrations or other documents required
      to be filed by the State as the issuer of the Bonds in order to permit the
      continuous sale of the Bonds by the Corporation in each state of the United
      States from the effective date of the registration of the Bonds until the
      offering and the sale of the Bonds have been completed or terminated in
      accordance with section 12(b)
      hereof. 

    


    6.           The
      Corporation shall make a public offering of the Bonds within a reasonable time
      after the effective date of the Registration Statement to be filed with the
      SEC.

    


    7.           (a)           The
      Bonds shall be offered for sale at prices equal to the Purchase Price as
      determined by the State pursuant to the Fiscal Agency Agreement.

    


    (b)           The
      Corporation may allow reasonable concessions or commissions to brokers and
      dealers who are regularly engaged in the securities business with prior consent
      from the State.

    


    8.           (a)           In
      addition to the commissions provided for in Section 2 hereof, the State shall
      pay and bear all charges, expenses and fees in connection with:

    


    (i)           The
      issuance of the Bonds, including, without limitation, the preparation, printing
      and/or engraving, execution, authentication and delivery thereof;

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    


    (ii)           The
      preparation and filing of the Registration Statement (and all amendments and
      supplements thereto) to be filed pursuant to the Securities Act, and the
      registration of the Bonds thereunder;

    


    (iii)           The
      preparation, printing, publication and distribution of prospectuses, newspaper
      prospectuses, advertising, literature, collection of subscriptions, public
      presentations and maintaining complete and accurate records of all Bond
      transactions;

    


    (iv)           The
      registration of the Bonds and of the State pursuant to the statutes of the
      several states of the United States, including, without limitation, all
      registration fees; and

    


    (v)           All
      sums payable to the Fiscal Agent, pursuant to the Fiscal Agency Agreement or
      Agreements made in conformity with its provisions.

    


    (b)           The
      Corporation shall, at the end of each three-month period, or at such similar
      intervals as may be requested by the State, render an accounting to the State
      with respect to all proceeds of the sales of the Bonds, and the expenses
      incurred on behalf of the State. The settlement of any amounts which are shown
      by such accountings to be payable by either party to the other shall be made
      promptly after such accountings.

    


    9.           The
      obligations of the Corporation hereunder are subject to the following
      conditions:

    


    (a)           That
      upon request of the Corporation, the State shall furnish to the Corporation
      a
      written opinion of the Legal Advisor to the Ministry of Finance of the State
      to
      the effect that the Bonds have been duly authorized in accordance with the
      laws
      of the State, which opinion shall be satisfactory to counsel for the
      Corporation; that upon the issuance and delivery of the Bonds pursuant to the
      Fiscal Agency Agreement, they will constitute valid, binding, absolute and
      unconditional obligations of the State for the performance of which the full
      faith and credit of the State is obligated; and that this Agreement has been
      duly authorized and executed in accordance with the laws of the State applicable
      thereto and that all provisions hereof are valid and binding upon the
      State.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    


    (b)           That
      the form and validity of the Bonds, the proceedings and other related matters
      incident to the issuance and sale of the Bonds, the form of the Registration
      Statement, and the form of the prospectus relating to the Bonds shall be
      satisfactory to counsel for the Corporation.

    


    10.           The
      State warrants and represents to the Corporation that, when the Registration
      Statement becomes effective, such Registration Statement will not contain any
      untrue statement of a material fact or omit to state any material fact required
      to be stated therein or necessary to make the statements therein not misleading,
      except that this representation and warranty does not apply to statements or
      omissions in the Registration Statement based upon information furnished to
      the
      State, in writing, by the Corporation, expressly for use therein. The State
      agrees to indemnify and hold harmless the Corporation, its officers and
      directors, the members of its Board of Directors and all other persons whom
      the
      Corporation shall, in its discretion, determine to give a like indemnity,
      against any and all losses, claims, damages and liabilities to which they or
      any
      of them may become subject, and to reimburse each of them for any legal or
      other
      expenses incurred by them in connection with defending any actions, insofar
      as
      such losses, claims, damages, liabilities or actions, arise out of or are based
      upon any such untrue statement of a material fact contained in the Registration
      Statement or arise out of or are based upon the omission to state therein a
      material fact required to be stated therein or necessary to make the statements
      therein not misleading, except insofar as such losses, claims, damages,
      liabilities or actions arise out of or are based upon any such untrue statement
      or omission which was made or omitted in such Registration Statement in reliance
      upon information furnished, in writing, to the State by the Corporation
      expressly for use therein. The representations and warranties and the indemnity
      agreements herein contained shall remain operative and in full force and effect
      regardless of any termination of this Agreement, or any investigation made
      by or
      on behalf of the Corporation or any other person. In the event that the
      Corporation shall make any payment with respect to any loss, claim, damage
      or
      liability reasonably determined by it to come within the scope of the
      indemnification agreement, the State agrees to make full reimbursement to the
      Corporation with respect to such payment.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    


    11.           The
      State has entered into the Fiscal Agency Agreement with the Fiscal Agent. Said
      Fiscal Agency Agreement shall be deemed to be incorporated herein and made
      a
      part of this Agreement. The Corporation agrees to prescribe forms of
      subscription for the Bonds, determine the procedures for effecting subscriptions
      and perform to the best of its ability all other services to be performed by
      it
      pursuant to said Fiscal Agency Agreement, all in accordance with such reasonable
      instructions as may be given to it from time to time by the State; and agrees
      to
      perform its obligations hereunder in a manner which shall be consistent with
      the
      terms and conditions of said Fiscal Agency Agreement.

    


    12.           (a)           The
      terms of this Agreement shall be effective from the date hereof until the
      offering and the sale of the Bonds have been completed or terminated in
      accordance with subsection (b) of this section.

    


    (b)           On
      or after the first anniversary of the effective date of the registration of
      the
      Bonds, either party to this Agreement may give notice, in writing, to the other
      that this Agreement shall terminate on a date six (6) months subsequent to
      the
      receipt of such notice.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    


    13.           (a)           Any
      notice, report, accounting or communi-cation required to be given to the State
      under this Agreement may be given by registered mail to the Chief Fiscal Officer
      of the Ministry of Finance for the Western Hemisphere, or to any other
      representative of the State duly authorized in writing to receive such notice,
      report, accounting or communication.

    


    (b)           Any
      notice, report, account or communication required to be given to the
      Corporation, may be given by registered mail to the President, any Vice
      President, Secretary or Treasurer of the Corporation, such mail to be addressed
      to such persons at the principal office of the Corporation or to such other
      persons or such other places as the Corporation may indicate by written notice
      to the State.

    


    14.           With
      the written consent of the State, the Corporation may assign this Agreement
      and
      all of its rights and duties hereunder to a successor which shall assume the
      duties of the Corporation hereunder. Upon the making of such assignment, the
      Corporation shall be thereby discharged of all liabilities and obligations
      hereunder.

    


    15.           This
      Agreement is subject to amendment, from time to time, by mutual consent of
      the
      State and the Corporation.

    


    16.           This
      Agreement has been executed and delivered in New York, New York, and is made
      pursuant to, and shall in all respects be governed by, and construed in
      accordance with, the laws of the State of New York without regard to principles
      of conflicts of law.

    


    17.           This
      Agreement may be executed in several counterparts, each of which so executed
      shall be deemed to be an original, but such counterparts shall together
      constitute but one and the same instrument.

    


    [The
      remainder of this page has been intentionally left
      blank]


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    



    IN
      WITNESS WHEREOF,
      the
      State has caused this Agreement to be signed in its behalf by the Chief Fiscal
      Officer and the Deputy Chief Fiscal Officer of the Ministry of Finance for
      the
      Western Hemisphere, thereunto duly authorized, and to be impressed with its
      seal, Development Corporation for Israel has caused this Agreement to be signed
      by its President or Vice President and to be impressed with its corporate
      seal.

    


    STATE
      OF
      ISRAEL

    


    By: 
      __________________________________________


    Chief
      Fiscal Officer of the 

    Ministry
      of Finance for the

    Western
      Hemisphere

    


    (Seal
      of
      the    


    State
      of
      Israel)    

    


    By: 
      ___________________________________________


    Deputy
      Chief Fiscal Officer of the 

    Ministry
      of Finance for the

    Western
      Hemisphere

    


    DEVELOPMENT
      CORPORATION FOR


    ISRAEL

    


    (Seal
      of
      Development


    Corporation
      for Israel)

    
      By: 
        ___________________________________________

    

    Name:


    Title:

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      A

    


    SUPPLEMENT,

    


    Dated
      as
      of [DATE]

    


    TO
      MASTER
      FISCAL AGENCY AGREEMENT

    


    BETWEEN

    


    THE
      STATE
      OF ISRAEL (“STATE”) 

    


    AND

    


    THE
      BANK
      OF NEW YORK (“FISCAL AGENT”)

    


    Name
      of Bonds -
        

    


    Aggregate
      Principal Amount
      -


    


    Denominations
      -


    


    Maturity
      Date(s) - 

    


    Issue
      Date(s)
      -


    


    Interest
      Accrual
      -


    


    Interest
      Payment Date(s)
      -


    


    Interest
      Rate
      -


    


    Sales
      Period - 

    


    Regular
      Record Date(s)
      -

    


    Holders/Purchasers
      -


    


    Permitted
      Transferees
      -

    


    Purchase
      by State -

    


    Redemption
      at the Option of the State
      -


    


    Exchanges,
      Split Ups
      -


    


    Book
      Entry
      -


    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

    


    STATE
      OF
      ISRAEL

    


    By: 
      ________________________________________
Chief
      Fiscal Officer of the
Ministry
      of Finance for the
Western
      Hemisphere

    


    By: 
      ________________________________________
Deputy
      Chief Fiscal Officer
of
      the
      Ministry of Finance for the
Western
      Hemisphere

    


    BANK
      OF
      NEW YORK
as
      Fiscal
      Agent

    


    By: 
      ________________________________________
Name:
Title:

    


    Attest:

    
      


      By: 
        ________________________________________
Name:
Title:


      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

    

    Exhibit
      A to Supplement

    
 

    Form
      of Bond

     

    [FRONT
      OF
      BOND]

     

    
      STATE
        OF ISRAEL

       

      State
        of
        Israel (hereinafter called the “State”), for value received, hereby promises to
        pay to

       

      (hereinafter
        called the “owner”) the sum
        of                              
 U.S.
        DOLLARS

       

      In
        such
        coin or currency of the United States of America as at the time of payment
        is
        legal tender for the payment therein of public and private debts. Terms used
        herein, unless otherwise defined, shall have the meaning given them under
        the
        Master Fiscal Agency Agreement, dated as of February 16, 2001, as thereafter
        amended, and the applicable Supplement thereto, between the State and The
        Bank
        of New York (together, the “Fiscal Agency Agreement”).

      The
        State
        also promises to pay interest on the principal sum in the amounts, at the
        times
        and to the persons provided for in the Fiscal Agency Agreement.

      Reference
        is hereby made to the further provisions of this Bond set forth on the reverse
        hereof, which further provisions shall for all purposes have the same effect
        as
        if set forth at this place.

      This
        Bond
        shall not become valid or obligatory for any purpose unless and until this
        Bond
        has been countersigned for authentication by the Fiscal Agent. No representation
        shall be implied from such countersignature other than the representation
        that
        the Fiscal Agent has not countersigned Bonds in excess of the aggregate
        authorized amount of the Bonds and Bonds delivered in substitution therefor
        or
        in replacement thereof as provided in the Fiscal Agency Agreement.

      This
        Bond
        shall in all respects be governed by, and construed in accordance with, the
        laws
        of the State of New York without regard to principles of conflicts of
        law.

       

      IN
        WITNESS WHEREOF, the
        State
        of Israel has caused this Bond to be executed with the facsimile signatures
        of
        the Prime Minister of the State and the Minister of Finance of the State,
        said
        signatures being duly authorized, and to bear the facsimile Emblem of the
        State
        of Israel, all in the City of New York, State of New York, United States
        of
        America, as of the Issue Date hereof.

      


       

      
        	 DATED
                AS OF:	 	 	 STATE
                OF ISRAEL
	  	 	 	 	 	 	 	 
	
                COUNTERSIGNED
                  FOR AUTHENTICATION                             
                  

                             
                  THE BANK OF NEW YORK

                                                           As
                  Fiscal Agent

              	 	
                By

              	
                 

              	 	By	
                 

              
	 	 	 	Prime
                Minister	 	 	Minister
                of Finance
	
                By

              	
                 

              	 	 	
                 

              	 	 	
                 

              
	 	AUTHORIZED
                SIGNATURE	 	 	 	 	 	 


      

      


      
        
          
          

        

        
          A-3

          
            

          

        

        
          
          

        

      

       

      [BACK
        OF BOND]

       

      STATE
        OF ISRAEL

       

      This
        Bond
        is one of a duly authorized issue of Bonds of the State. The Bonds of this
        issue
        are issued in the form hereof.

       

      Payment
        of
        the principal of and interest on this Bond shall be made at the principal
        corporate trust office of the Fiscal Agent in New York, New York; provided,
        however, that, at the option of the State, interest may be paid by check
        mailed to the address of the person entitled thereto as such address shall
        appear in the Bond Register.

       

      If
        any
        amounts due, whether on any Interest Payment Date or at maturity, and whether
        of
        principal or of interest, shall remain unclaimed at the end of six months
        after
        such monies shall have become due and payable in accordance with the terms
        and
        conditions of this Bond, then the State may make such amounts payable at
        the
        principal office of the Chief Fiscal Officer of the Ministry of Finance of
        the
        State of Israel for the Western Hemisphere in New York, New York, in
        substitution of said agency of the State.

       

      The
        principal of and interest on this Bond, or any income or gain obtained in
        transactions therein, shall be free of all taxes, whether ad valorem or
        otherwise and whether of specific or general applicability, now or at any
        time
        hereafter imposed by the State, or by any taxing authority thereof or therein,
        except when this Bond is beneficially owned by any person residing in or
        ordinarily a resident of the State.

       

      The
        State
        has entered into a Master Fiscal Agency Agreement, dated as of February 16,
        2001, as thereafter amended, and a Supplement thereto relating to every bond
        issue (together, the “Fiscal Agency Agreement”) between the State and The Bank
        of New York (said bank, or its successor, as such fiscal agent, being herein
        referred to as the “Fiscal Agent”). A copy of the Fiscal Agency Agreement is on
        file and available for inspection at the principal corporate trust office
        of the
        Fiscal Agent in New York, New York. Reference is hereby made to the Fiscal
        Agency Agreement for additional terms related to the Bonds, a description
        of the
        rights and limitations on the rights of the owners of the Bonds and of the
        responsibilities and limitations of the responsibilities of the Fiscal
        Agent.

       

      Bonds
        shall be issuable to any person or entity.

       

      This
        Bond
        is the direct, unconditional, general obligation of the State, and the State
        pledges its full faith and credit for the due and punctual payment of principal
        and interest, as herein provided, and for the due and timely performance
        of all
        obligations of the State hereunder and under the Fiscal Agency
        Agreement.

       

      This
        Bond
        is non-transferable and non-assignable, except as set forth in the Fiscal
        Agency
        Agreement.

       

      The
        Bond
        is eligible for the repurchase by the State, at the request of the Bondholder
        or
        at the election of the State, in either case, to the extent, subject to and
        in
        accordance with the terms provided for in the Fiscal Agency
        Agreement.

       

      The
        State
        and the Fiscal Agent may deem and treat the registered owner as the absolute
        owner of this Bond for the purpose of receiving payment hereof and interest
        hereon or on account hereof, and for all purposes, whether or not this Bond
        shall be overdue and for all other purposes, and neither the State nor the
        Fiscal Agent shall be affected by any notice to the contrary.

       

      The
        State
        hereby certifies and declares that all acts, conditions and things required
        to
        be done and performed and to have happened, before the creation and issuance
        of
        the Bonds, to constitute the same valid, legal and binding obligations of
        the
        State in accordance with their terms, have been done and performed and have
        happened in due and strict compliance with the law of the State.

       

      This
        Bond is non-transferable and non-assignable except in the special instances
        referred to in this Bond and subject to the terms and conditions of this
        Bond
        and of the Fiscal Agency Agreement.

       

      Interest
        on this Bond shall cease to accrue on or after its maturity
        date.

      
        
  ABBREVIATIONS

       

      The
        following abbreviations, when used in the inscription on the face of this
        bond,
        shall be construed as though they were written out in full according to
        applicable laws or regulations:

      


      
        	
                TEN
                  COM

              	
                -

              	 
                as tenants in common	 	
                UNIF
                  GIFT MIN ACT - _______CUSTODIAN ________

              
	
                TEN
                  ENT

              	
                -

              	 
                as tenants by the entirety	 	
                (Cust)                                (Minor)

              
	
                JT
                  TEN

              	
                -

              	 
                as joint tenants with right of survivorship
                and not as tenants in common	 	
                 

                under
                  Uniform Gifts to Minors

                 

                Act
                  _________________

                    
                  (State)

              
	 	 	 	 	 


      

      Additional
        abbreviations may also be used though not in the above list.

      
        

      

       

      FOR
        VALUE
        RECEIVED, the undersigned hereby sells, assigns and transfers unto

      
        	
                PLEASE
                  INSERT SOCIAL SECURITY OR OTHER

                IDENTIFYING
                  NUMBER OF ASSIGNEE

              	 	 
	 	 	 


      

       

      
        _________

      

      (PLEASE
        PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
        ASSIGNEE)

       

      _________

      the
        within bond, and all rights thereunder, hereby irrevocably constituting and
        appointing

      Attorney

      to
        transfer said bond on the books of the State, with full power of substitution
        in
        the premises.

      Dated: ________________________

      NOTICE:
        The signature to this assignment must correspond with the name as it appears
        upon the face of the within bond in every particular, without alteration
        or
        enlargement or any change whatever.

      SIGNATURE
        GUARANTEED:           
_________   

      Signatures
        applicable to the assignment must be guaranteed by an eligible guarantor
        institution which is a member of or participant in one of the following
        signature guarantee programs: the Securities Transfer Agents Medallion Program
        (STAMP), New York Stock Exchange Medallion Signature Program (MSP), or Stock
        Exchanges Medallion Program (SEMP).

       

      
        
          
          

        

        
          A-4

          
            

          

        

        
          
          

        

      

       

      UPON
        TRANSFER OF THIS BOND, THE TRANSFEREE SHOULD IMMEDIATELY SUBMIT THIS BOND
        TO THE
        FISCAL AGENT FOR REGISTRATION OF THIS BOND IN THE NAME OF SUCH TRANSFEREE
        IN
        ORDER TO ASSURE THAT FUTURE INTEREST PAYMENTS ARE MADE TO SUCH
        TRANSFEREE.

    

     

    
      
        
        

      

      
        A-5