exhibit_10-cc.htm


    
      

      

    

    Exhibit
10cc

     

    Final Version for
Signing

    Loan
Agreement

    Drawn up
and signed in Tel Aviv on the 31st day
in the month of January 2010

    


    Between

    Harel
Insurance Company Ltd.

    Public
Company Number 520004078

    


    Dikla
Insurance Company Ltd.

    Public
Company Number 5200030503

    


    Harel
Pension Funds Management Ltd

    Private
Company Number 512267592

    


    Harel
Gemel Ltd.

    Private
Company Number 512205204

    


    Atidit
Pension Funds Ltd.

    Private
Company Number 512867367

    


    Gilad
Comprehensive Pension Fund Ltd.

    Private
Company Number 512242215

    


    Manof
Pension Fund Management Ltd.

    Private
Company Number 512262577

    


    Savings
Fund for the Regular Army – Pension Fund Management Company Ltd.

    Private
Company Number 511033060

    


    At the
Address: 3, Abba Hillel Street, Ramat Gan

    (Hereinafter
all together: Harel)

    


    Menora
Mivtachim Insurance Ltd.

    Public
Company Number 52-004254-0

    At the
Address: 115, Allenby Street, Tel Aviv

    


    Menora
Mivtachim Pension Ltd.

    Private
Company Number 51-224581-2

    At the
Address: 7, Jabotinsky Street, Ramat Gan

    


    Menora
Mivtachim Gemel Ltd.

    Private
Company Number 51-279022-1

    At the
Address: 115, Allenby Street, Tel Aviv

    


    (Hereinafter
all together: Menora)

    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      (Hereinafter, Harel and Menora together:
The Lender)

    

     

    Of
the First Part;

    And
Between

    


    Merhav
Ampal Energy Ltd.

    Private
Company Number 513754077

    At the
Address: 10, Abba Eban Street, Hertzlia

    (Hereinafter:
The Company or the Borrower)

    


    Of
the Second Part;

    


    And
Between

    


    012
Smile Telecom  Ltd.

    (Previously
Ampal Investments and
Communications 2009 Ltd)

    Private
Company Number 514350024

    At the
Address: 25, HaSivim Street, Petach Tikva

    (Hereinafter:
The New
Smile)

    Of
the Third Part;

    


    
      	
              Whereas:

            	
              The
      Lender is a private company incorporated in Israel and the indirect owner
      of the control of that company is Mr. Yossi
  Maiman;

            


    

    


    
      	
              And
    Whereas:

            	
              New
      Smile (through its founders: Merhav Ampal Energy Ltd.) has entered into an
      agreement with 012 Smile Communications Ltd., Company Number: 512832742
      (Old Smile) for
      the purchase of the Old Smile communications activities through the
      Purchase Agreement signed by them both (the Purchase
      Agreement);

            


    

    


    
      	
              And
    Whereas:

            	
              The
      parties have agreed that the Lender shall extend to the Borrower, a loan
      to the sum of NIS 220,000,000 for the purposes of financing the purchase
      of Old Smile activities as stated above (when NIS 20,000,000 from that
      loan sum shall be deposited as a Safety Cushion as such is explained
      below) subject to and in accordance with that stipulated in the provisions
      to this Agreement;

            


    

    


    Therefore,
the parties declare, stipulate and agree as follows:

    


    
      	
              1.
      Preamble, Appendices, Headings and
Definitions

            


    

    


    
      	
               
      

            	
              1.1.
      The Preamble to this Agreement and the Appendices thereto constitute an
      integral part thereof.

            


    

    


    
      	
               
      

            	
              1.2.
      Section headings in this Agreement and in the Appendices thereto, are
      solely for the purposes of

                 convenience
      and shall not serve for the purposes of interpreting this
      Agreement.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              1.3.
      That stated in the masculine shall also refer to the feminine and vice
      versa; that stated in the singular shall also refer to the plural and vice
      versa.

            


    

    


    
      	
               
      

            	
              1.4.
      The terms listed below shall have the definitions given alongside those
      terms, unless the context obliges
otherwise.

            


    

    


    
      	
              Ampal
      American

            	
              Ampal
      American Israel Corporation, EIN Number 13-0435685, is a limited share
      company incorporated in accordance with the Laws of the State of New York.
      The Company’s shares are listed for trading on the NASDAQ and dual listed
      on the Tel Aviv Stock Exchange. The Company, which is controlled by Mr.
      Yossi Maiman, has indirect, whole ownership of the
    Borrower.

            


    

    


    
      	
              Old Smile or the Vendor

            	
              As
      such is defined in the Preamble to this
  Agreement

            


    

    


    
      	
              The Purchased
      Activities

            	
              All
      the activities conducted by Old Smile in the field of communications,
      including, inter
      alia, internet services, international telephone calls and land
      line communications, all subject to and as stipulated in the Purchase
      Agreement.

            


    

    


    
      	
              The
      Collateral

            	
              All
      the collateral pledged for the purposes of securing payment of the Loan,
      including that stipulated in Section 4
below.

            


    

    


    
      	
              The Loan

            	
              The
      Loan principal and interest, with added index differentials and any
      additional payment imposed upon the Borrower in accordance with the
      provisions to this Agreement and/or all
Law.

            


    

    


    
      	
              The Bank
      Accounts

            	
              The
      Safety Cushion Account – The
      bank account in the Borrower’s name, number 107361/26, at the Union Bank
      of Israel Ltd., branch number 062 in Ramat Gan, into which the Security
      Cushion shall be deposited and mortgaged to the Lender as stipulated in
      Section 2.14 below; and the Designated Account,
      which is the bank account in the Borrower’s name, number 107360/28 at the
      Union Bank of Israel Ltd., branch number 062 in Ramat Gan, into which the
      monies that shall be transferred to the Borrower from New Smile shall be
      deposited as stipulated in Section 4.1.5
below.

            


    

    


    
      	
              The
Index

            	
              The
      Consumer Price Index including fruit and vegetables, published by the
      Israeli Central Bureau of Statistics and Economic Research and including
      that Index even if it is published by a different official body and any
      official Index that shall come in its place either if such is based on the
      same data on which the aforementioned Index is based or if not. If another
      index replaces the aforementioned Index, the Central Bureau of Statistics
      and Economic Research shall determine the relationship between the
      aforementioned Index and the index that replaces it and if that
      relationship is not determined by the Central Bureau of Statistics and
      Economic Research, the relationship shall be determined by whomsoever
      shall be appointed to fulfill that task by the State of
      Israel.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              The Base
      Index

            	
              The
      Consumer Price Index for the month of December 2009 as published on
      January 15, 2010 at 105.2 points.

            


    

    


    
      	
              The Determining
      Index

            	
              The
      Consumer Price Index published immediately before the date for the
      repayment of the Loan and/or any part thereof, but which shall be no lower
      than the Base Index.

            


    

    


    
      	
              Loan Extension
      Date

            	
              The
      date for the pledging of all the collateral stipulated in Section 4.1
      below shall be January 31, 2010 and as stipulated in that Section as
      follows:

            


    

    
      	
               
      

            	
               

              To
      remove doubt, the Loan shall be extended only along with and subject to
      the completion of the purchase of the Purchased Activities in accordance
      with the Purchase Agreement and the fulfillment of all the commitments
      made by the parties therein.

            


    

    


    
      	
              The
    Lender

            	
              The
      Loan shall be extended to the Borrower through a number of separate
      sources of financing (the Lender Individuals) and
      divided up as stipulated in Appendix 4.2 to
      this Agreement and each Individual shall finance only that Individual’s
      part in the Loan. However, Menora Mivtachim Insurance Ltd. shall represent
      all Menora Individuals in the Lender Individuals and Harel Insurance
      Company Ltd. shall represent all the Harel Individuals in the Lender
      Individuals and to expedite that purpose, inter alia, Menora
      Mivtachim Insurance Ltd. and Harel Insurance Company Ltd. shall be those
      entitled to issue and receive the various notices to the Borrower by dint
      of this Agreement and they shall be those entitled to notify of a demand
      for the immediate repayment of the loan on behalf of all the Loan
      Individuals and they are those who shall realize the collateral for all
      the Loan Individuals and they are those who shall be authorized to release
      the collateral with the repayment of the Loan on behalf of all the Loan
      Individuals, they are those who shall be authorized to make any changes or
      waiver in reference to the provisions to this Agreement and they are those
      who shall be authorized to make any change, arrangement or compromise or
      the like thereof in connection with the Loan that is the subject of this
      Agreement. However, it is clarified that repayment of the Loan shall be
      executed by the Lender to each of the Lender Individuals in accordance
      with each Loan Individual’s relative part in the Loan as such is
      stipulated in Section
      4.2.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               
      

            	
              Any
      decision made by the Loan Individuals in any matter pertaining to and/or
      arising from this Agreement shall be made unanimously, subject to that
      stipulated in Sections 4.1.5 and 8.3 below in reference to the division of
      the monies received on account for the early repayment of the Loan among
      the Loan Individuals.

            


    

    


    
      	
              Index
    Linked

            	
              Any
      sum, concerning which this Agreement determines shall be paid Index Linked
      or with additional index differentials, shall be paid with additional
      index differentials for the rise in the
      Index, beginning with the Base Index and up to the Determining Index, but
      such shall be no less than the Base Index, which is stipulated as follows:
      On every payment date as aforementioned, if it becomes apparent that the
      new Index is higher than the Base Index, every payment as aforementioned
      shall be multiplied by the ratio between the New Index and the Base Index
      (or in other words, the sum to be paid shall be multiplied by the New
      Index and the figure received after that calculation shall be divided by
      the Base Index). If it becomes apparent that the New Index is the same as
      or lower than the Base Index, each payment as aforementioned shall be made
      at its nominal value (or in other words, under all circumstances, no less
      than the Base Index).

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              The Loan
      Principal

            	
              NIS
      220,000,000 (two hundred and twenty million New Israeli
      Shekels).

            


    

    


    
      	
              Interest on the
      Loan

            	
              The
      annual interest linked to the Index at the rate stipulated in Appendix 5 – Payments
      Appendix, as attached to this
Agreement.

            


    

    


    
      	
              Late Payment
      Interest

            	
              As
      stipulated in the Payments Appendix

            


    

    


    
      	
              Loan
    Period

            	
              Twelve
      (12) years, beginning on the date on which the Loan Principal was placed
      at the Lender’s disposal.

            


    

    


    
      	
              BLL

            	
              Bank
      Leumi LeIsrael Ltd. and the Israel Discount Bank
  Ltd.

            


    

    


    
      	
              EMG

            	
              The
      East Mediterranean Gas Company – a limited share private company
      incorporated in accordance with the Laws of the State of Egypt, in which
      the Lender has holdings, which reach 12.5 % of that Company’s issued and
      allocated equity capital.

            


    

    


    
      	
              EBITDA

            	
              Operating
      profit (before interest and taxes), with additional depreciation and
      deductions in accordance with the audited annual financial reports or the
      reviewed quarterly reports for New
Smile.

            


    

    


    
      	
              The Licenses or
      the

            	
               

            


    

    
      	
              Significant
      Licenses for the

            	
               

            


    

    
      	
              Company’s
      Activities

            	
              The
      general license granted to New Smile permitting the provision of
      international telephone services, the general license for 012 Telecom Ltd.
      permitting the provision of domestic land line telephony services in
      Israel, the special license granted to New Smile permitting the provision
      of internet access services, the special license granted to New Smile
      permitting the provision of network termination services and any other
      license, which shall come in their stead, or any other license, the
      cancellation or suspension of which might have an adverse effect on New
      Smile’s commercial activities, with the exception of a license, the
      cancellation or suspension of which as aforementioned shall have a
      negligible effect on New Smile’s commercial
  activities.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        
          	
                  2.
      The  Declarations and Representations made by the
      Borrower

                


        

        


        The
Borrower and New Smile hereby declare together and separately to the Lender,
that each of their representations and declarations made in this Section 2 and
below, is true and accurate in every detail (notwithstanding that stated above,
the representations given below in reference to the Borrower are given solely by
the Borrower). The Borrower hereby confirms that the Borrower is aware that the
Lender has entered into this Agreement with the Borrower while relying fully on
the representations and declarations stipulated in this Section 2
below:

        


        2.1.

        


        
          	
                   
      

                	
                  2.1.1.

                	
                  The
      Borrower is a limited share, private company incorporated in accordance
      with the Laws of the State of
Israel.

                


        

        


        
          	
                   
      

                	
                  2.1.2.

                	
                  The
      Borrower’s issued and allocated share capital is controlled through
      holdings linkages by Mr. Yossi Maiman, as explained in detail in Appendix 2.1.2 to this
      Agreement.

                


        

         

        2.2.

        


        
          	
                   
      

                	
                  2.2.1.

                	
                  New
      Smile is a limited share, private company incorporated in accordance with
      the Laws of the State of Israel.

                


        

        


        
          	
                   
      

                	
                  2.2.2.

                	
                  The
      Borrower is the owner and sole holder of the 1,000 regular shares, each
      with a nominal value of NIS 1.00, in New Smile, which constitutes the
      entire equity capital issued and allocated for New Smile (hereinafter:
      The New Smile
      Shares).

                


        

        


        
          	
                   
      

                	
                  2.2.3.

                	
                  New
      Smile is a designated company established specifically for the purposes of
      the purchase of the Purchased Activities and apart from the Purchased
      Activities, the receipt of financing from BLL (for the payment of some of
      the compensation to Old Smile for the purchase of the Purchased
      Activities) and the licenses from the Ministry of Communications required
      for the activities, New Smile has no other assets or
      obligations.

                


        

        


        
          	
                   
      

                	
                  2.2.4.

                	
                  The
      Borrower’s rights to the New Smile Shares are clear of any debt,
      obligation, lien, mortgage and/or third party rights of any type
      whatsoever, with the exception of the rights accruing to BLL as stipulated
      in this Agreement below.

                   

                  Without
      derogation from the generality of that stated, the Borrower has not
      undertaken to transfer and/or sell and/or use as collateral and/or
      mortgage the Borrower’s rights to the New Smile Shares and/or any part
      thereof and/or to grant any rights to purchase the rights to the New Smile
      Shares, to any person and/or corporation whatsoever and no person and/or
      corporation has any right to first refusal in connection with the
      Borrower’s rights to the New Smile Shares, with the exception of a fixed,
      second mortgage on New Smile Shares to the benefit of
  BLL.

                


        

         

        
          	
                   
      

                	
                  2.2.5.

                	
                  There
      is no restriction and/or prohibition and/or preclusion in accordance with
      the provisions to all Law and/or any agreement whatsoever, either written
      or verbal and no agreement from a third party whatsoever is required in
      order to create a first mortgage to the benefit of the Lender covering the
      Borrower’s entire rights to New Smile Shares, with the exception of that
      which is by dint of the relevant licenses for the Purchased Activities,
      which to the best of the Borrower’s knowledge, make the realization of the
      mortgage on New Smile Shares conditional upon the receipt of prior
      permission from the Minister of
Communications.

                


        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        2.3.

        


        
          	
                   
      

                	
                  2.3.1.

                	
                  EMG
      is a limited share, private company incorporated in accordance with the
      Laws of the State of Egypt and the Borrower holds 12.5% of EMG”s issued
      share capital.

                


        

        


        
          	
                   
      

                	
                  2.3.2.

                	
                  The
      Borrower’s rights to EMG shares are clear of any debt, commitment, lien,
      mortgage and/or third party rights of any type whatsoever, with the
      exception of a conditional commitment made as part of the partnership
      agreement and the shareholders agreement (which are part of the series of
      agreements signed by the EMG shareholders either directly or indirectly
      during 2007 (the EMG
      Agreements).

                   

                  Without
      any derogation from the generality of that stated, the Borrower has not
      undertaken to transfer and/or sell and/or use as collateral and/or
      mortgage the rights to the EMG Shares and/or any part thereof and/or to
      grant rights for the purchase of the rights to the EMG shares to any
      person and/or corporation whatsoever and no person and/or corporation has
      a right to first refusal in connection with the EMG Shares, with the
      exception of that which is part of the EMG
  Agreements.

                


        

         

        
          	
                   
      

                	
                  2.3.3.

                	
                  There
      is no restriction and/or prohibition and/or preclusion in accordance with
      the provisions to all Law and/or any agreement whatsoever, either written
      or verbal and no agreement from a third party whatsoever is required in
      order to create negative mortgage to the benefit of the Lender on all the
      Borrower’s rights to EMG Shares.

                


        

        


        
          	
                   
      

                	
                  2.4.

                	
                  Ampal
      American, the Borrower and New Smile have the power and theauthority to
      enter into this Agreement and fulfill the commitments stipulated therein
      and they have undertaken all the steps and activities required in order to
      lawfully approve the arrangements made through this Agreement and the
      fulfillment of all the commitments stipulated therein, including the
      taking of all the required decisions, to the extent that such are required
      in accordance with their articles of incorporation and the receipt of all
      the required approvals from their authorized
  bodies.

                


        

        


        
          	
                   
      

                	
                  2.5.

                	
                  All
      the commitments imposed upon the Borrower and upon New Smile in accordance
      with this Agreement are legal commitments and have the validity that
      obliges the Borrower and New Smile in accordance with the conditions
      thereto.

                


        

        


        
          	
                   
      

                	
                  2.6.

                	
                  The
      Borrower’s and New Smile’s entry into this Agreement and the fulfillment
      of their obligations as stated therein, do not contradict and shall not
      contradict: (a) their articles of incorporation; (b) any Law, regulation,
      order, license or official instruction whatsoever applicable to them or
      obliging them and/or (c) the agreements between their shareholders and/or
      (d) any agreement, mortgage, letter or other document to which they are
      party or which oblige them.

                


        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	
                   
      

                	
                  2.7.

                	
                  The
      Borrower and New Smile have the fitness to repay all their
      commitments.

                


        

        


        
          	
                   
      

                	
                  2.8.

                	
                  True
      as of the reviewed financial reports for Ampal American dated September
      30, 2009, Ampal American’s equity capital stood at some USD
      223,000,000.

                


        

        


        
          	
                   
      

                	
                  2.9.

                	
                  The
      financial reports for Ampal American dated September 30, 2009 and
      published on the Israel Securities Authority’s Magna2 Distribution Site
      are an accurate reflection of Ampal American’s status, its rights and
      commitments for the period or date as appropriate, to which they refer and
      they were drawn up in accordance with standard accounting practices. From
      September 30, 2009 to the date on which this Agreement is signed, there
      has been no significant change for the worse in Ampal American’s status,
      in comparison with the aforementioned financial
  reports.

                


        

        


        
          	
                   
      

                	
                  2.10.

                	
                  No
      significant legal processes and/or quasi legal processes and/or
      administrative processes are pending against the Borrower and/or against
      New Smile and/or against Ampal American and the Borrower and/or New Smile
      and/or Ampal American are not aware of any significant investigations
      whatsoever against the Borrower and/or New Smile and/or Ampal American,
      and/or of any significant legal processes (including mediation processes,
      regulatory processes and/or investigations known to the Borrower and/or to
      New Smile) pertaining to the Borrower and/or New Smile and/or Ampal
      American, through which any of them or all of them together might have a
      negative effect on the Borrower’s ability to fulfill this Agreement, with
      the exception of in reference to New Smile – as stipulated in the
      financial reports for Old Smile dated December 31, 2008 and September 30,
      2009, as stipulated in Appendix 7.3 to the Purchase Agreement, which for
      the sake of convenience is hereby attached as Appendix 10.2a to this
      Agreement and as such is stipulated in Appendix 10.2b to this Agreement,
      with the exception of the references to Ampal American – as stipulated in
      the financial reports for Ampal American dated September 30, 2009 and the
      reports to the public issued by Ampal American after that
      date.

                


        

        


        
          	
                   
      

                	
                  2.11.

                	
                  In
      reference to the Borrower and/or New Smile and/or Ampal American and/or
      their commercial interests there has been no submission of any petition
      for bankruptcy and/or the appointment of a receiver and/or a trustee
      and/or a special manager and/or a provisional liquidator and/or
      preliminary liquidator and/or a permanent liquidator and the Borrower
      and/or New Smile and/or Ampal American have no knowledge of any cause to
      submit any such petition as
aforementioned.

                


        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	
                   
      

                	
                  2.12.

                


        

        


        
          	
                   
      

                	
                  2.12.1.

                	
                  At
      the same time and as a condition to the extension of the Loan, New Smile
      shall complete the execution of the purchase of all the Purchased
      Activities as such are defined above and shall fulfill all its commitments
      to the Vendor made as part of the purchasing transaction for the Purchased
      Activities. The Borrower and New Smile have no knowledge of any demand
      and/or claim and/or cause by the Vendor against them for non-fulfillment
      of their commitments in full and on
time.

                


        

        


        
          	
                   
      

                	
                  2.12.2.

                	
                  True
      as of the date on which this Agreement is signed, all the conditions to
      the Purchase Agreement have been met and an order has been handed down by
      the Tel Aviv District Court in accordance with Section 350 to the
      Companies Law, which approves the transfer of the agreements made with Old
      Smile’s customers and suppliers to New
Smile.

                


        

        


        
          	
                   
      

                	
                  2.12.3.

                	
                  To
      ensure the closing of the transaction in accordance with the Purchase
      Agreement, no further action or fulfillment of any additional condition is
      required, with the exception of the payment of that due for the receipt of
      the assets, which are the subject of the Purchase
    Agreement.

                


        

        


        
          	
                   
      

                	
                  2.12.4.

                	
                  The
      rights and assets accruing to New Smile (immediately upon the closure of
      the transaction for the purchase of the Purchased Activities), including
      the rights to Purchased Activities shall be clear of all debt, commitment,
      lien, mortgage and/or third party rights of any type whatsoever, with the
      exception of: (a) Permitted Liens as that term is defined in the Purchase
      Agreement and (b) the mortgages and collateral pledged to BLL and the
      Lender as stipulated explicitly in this
  Agreement.

                


        

        


        
          	
                   
      

                	
                  2.12.5.

                	
                  Without
      derogation from the generality of that stated, New Smile has not
      undertaken and shall not undertake to transfer and/or to sell not within
      the usual business framework and/or use as collateral and/or to mortgage
      its rights to the Purchased Activities and/or any part thereof and/or to
      grant rights not through a normal business framework for the purchase of
      the rights to the Purchased Activities to any person and/or corporation
      whatsoever, and no person and/or corporation has a right to first refusal
      in connection with the rights to the Purchased Activities, with the
      exception of the mortgages to BLL as such are stipulated in this
      Agreement.

                


        

        


        
          	
                   
      

                	
                  2.12.6.

                	
                  There
      is no restriction and/or prohibition and/or preclusion in accordance with
      the provisions to all Law and/or any agreement whatsoever, either written
      or verbal and no agreement from a third party whatsoever is required in
      order to create a current second mortgage to the benefit of the Lender
      covering all the assets of New Smile, with the exception of agreement from
      BLL, which was given as stipulated in Section 4.1.2 below and with the
      exception of the need for approval from the Minister of Communications. It
      must also be noted that to the best of the Borrower’s knowledge,
      realization of the floating mortgage is conditoinal upon the fact that it
      will not cause any damage whatsoever to the provision of services by New
      Smile, including as pertains to the level of services, their scope,
      availability and quality.

                


        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	
                   
      

                	
                  2.12.7.

                	
                  The
      Purchased Activities are the only activities undertaken by New Smile. New
      Smile shall have no other significant activities beyond the activities in
      the field of communications, unless prior, written permission for such is
      received from the Lender.

                


        

        


        
          	
                   
      

                	
                  2.12.8.

                	
                  With
      the closure of the transaction for the purchase of the Purchased
      Activities, New Smile shall hold all the licenses and permits required for
      the purposes of its activities and interests pertaining to the Purchased
      Activities and New Smile is not aware of any cause for the non-renewal of
      the licenses and/or permits – to the extent that their periods are limited
      – at the end of those periods.

                


        

        


        
          	
                   
      

                	
                  2.13.

                


        

        


        
          	
                   
      

                	
                  2.13.1.

                	
                  New
      Smile has received or shall receive financing for the purchase of the
      Purchased Activities from BLL to the overall sum of NIS
      800,000,000.

                


        

        


        
          	
                   
      

                	
                  2.13.2.

                	
                  To
      secure the financing it shall receive from BLL, the Borrower and New
      Smile, as appropriate, have undertaken to pledge collateral to the benefit
      of BLL as such is stipulated below and all such is subject to and is
      stipulated in the Agreement to the benefit of BLL attached to this
      Agreement as Appendix
      2.13.2 (the BLL
      Agreement).

                


        

        


        
        

        
          
          

          
            
              	
                       
      

                    	
                      2.13.2.1.

                    	First, floating mortgage to an unlimited sum, on all the assets and
      rights held by New Smile, including all the fruits
thereof.


            

             

          

        

        
          	
                   
      

                	
                  2.13.2.2.

                	
                  Second,
      fixed mortgage on the Borrower’s shares in New
  Smile.

                


        

        


        
          	
                   
      

                	
                  2.13.2.3.

                	
                  First,
      fixed mortgage on the Borrower’s rights to the owners’ loans placed at and
      which shall be placed at New Smile’s
disposal.

                


        

        


        
          	
                   
      

                	
                  2.13.2.4.

                	
                  Mortgage
      on the bank account managed by New Smile at BLL, in which specified sums
      shall be deposited and all such as stipulated in the Agreement made with
      BLL.

                


        

        


        
          	
                   
      

                	
                  2.13.2.5.

                	
                  Guarantee
      for the loan to the benefit of BLL against the debts owed by New
      Smile.

                


        

        


        
          	
                   
      

                	
                  2.13.2.6.

                	
                  Guarantee
      provided by Ampal American to BLL, against the debts owed by New
      Smile.

                


        

        


        
          	
                   
      

                	
                  2.13.2.7.

                	
                  First,
      fixed mortgage, for the receipt of specified payments from the Vendor in
      accordance with the Purchase
Agreement.

                


        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	
                   
      

                	
                  2.13.2.8.

                	
                  First,
      fixed mortgage on the shares held by New Smile in the 012 Telecom Ltd.,
      Private Company Number 513701169 – a subsidiary company wholly owned by
      New Smile.

                


        

        


        
        

        
          
            	
                     
      

                  	
                    2.13.3.

                  	
                    In
      addition, to secure the financing to be received from BLL, New Smile has
      undertaken to comply with the covenants set out in Section 10.3 to the BLL
      Agreement and Ampal American has undertaken vis-à-vis BLL, to comply with
      the covenants set out in Appendix 11.15 to the BLL Agreement.

                     

                    Ampal
      American and New Smile undertake to comply with the covenants agreed
      between them and BLL and such shall mean that non-compliance with any of
      the covenants listed above, which shall result in BLL making a demand for
      immediate repayment of the loan extended by BLL to New Smile shall be
      considered a breach of the commitments made by the Borrower in accordance
      with this Agreement and such shall constitute cause for the issuing of a
      demand for immediate repayment of the remaining balance of the loan, as
      stipulated in Section 9 below.

                    
                       

                      That
      stated in this Section, shall also apply to any new agreement between New
      Smile and BLL, pursuant to additional undertakings or more stringent
      conditions to the undertakings listed in this Section
      above.

                    

                  


          

           

        

        
          	
                   
      

                	
                  2.14.

                


        

        


        
          	
                   
      

                	
                  2.14.1.

                	
                  The
      Borrower’s rights to the bank account, clear of all debt, commitment,
      sequestration, mortgage and/or any third party rights of any type
      whatsoever, including rights to set off and lien – without derogation from
      the generality of that stated; the Borrower undertakes not to transfer
      and/or sell and/or use as collateral and/or mortgage those rights to the
      bank account.

                


        

        


        
          	
                   
      

                	
                  2.14.2.

                	
                  There
      is no restriction and/or prohibition and/or preclusion in accordance with
      the provisions of all Law and/or any agreement whatsoever, either written
      or verbal and no agreement from a third party whatsoever is required in
      order to create a first mortgage to the benefit of the Lender covering all
      Borrower’s rights to the Safety Cushion
account.

                


        

        


        
          	
                   
      

                	
                  2.14.3.

                	
                  The
      banks where the accounts are managed shall have no rights to set off or
      lien against the Borrower’s debts to those banks – from credit balances as
      such shall be extant from time to time in the Bank Accounts and such in
      accordance with the letters from the banks hereby attached as Appendix
  2.13.4.

                


        

        


        
          	
                   
      

                	
                  2.14.4.

                	
                  The
      Borrower has no knowledge, which is not public knowledge, in connection
      with New Smile or in connection with the Purchased Activities, which has
      not been drawn to the attention of the Lender, when to the best of the
      Borrower’s understanding, if that knowledge had been brought to the
      Lender’s attention the Lender would have abstained from extending credit
      to the Borrower in accordance with this
  Agreement.

                


        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          
            	
                     
      

                  	
                    2.14.5.

                  	
                    There
      is no significant information in reference to the Borrower, which does not
      appear in the reports to the public made by Ampal American and which in
      the Borrower’s opinion, if it had been brought to the attention of the
      Lender, would have sufficed to have caused the Lender to abstain from
      extending credit in accordance with this
  Agreement.

                  


          

        

         

        
          	
                  3.
      The Declarations Made by the Lender

                


        

        


        Each of
the Lender Individuals declares that in reference to each Lender Individual’s
part in the Loan, each of the representations and declarations stipulated in
this Section 3 below, is true and accurate in all the details therein. The
Lender hereby confirms that the Lender is aware that Borrower has entered into
this Agreement, relying entirely upon the representations and declarations made
by the Lender and stipulated in this Section 3 as follows:

        


        
          	
                   
      

                	
                  3.1.

                	
                  The
      Lender is a limited share company incorporated and in existence in
      accordance with the Laws of the State of Israel and fit in accordance with
      all Law to extend the Loan, to enter into an Agreement and to fulfill all
      its obligations in accordance with that
  Agreement.

                


        

        


        
          	
                   
      

                	
                  3.2.

                	
                  The
      Lender has taken in accordance with Law, all the decisions required in
      accordance with the Lender’s articles of incorporation and in accordance
      with all Law, in order to enter into this Agreement lawfully and to
      fulfill all its obligations in accordance with this
    Agreement.

                


        

        


        
          	
                   
      

                	
                  3.3.

                	
                  The
      Lender’s entry into this Agreement and the fulfillment of all the Lender’s
      obligations in accordance with this Agreement do not contravene any Law or
      agreement obliging the Lender. All the obligations imposed upon the Lender
      in accordance with this Agreement are legal obligations and have the
      validity, which obliges the Lender in accordance with the conditions
      thereto.

                


        

        


        
          	
                   
      

                	
                  3.4.

                	
                  The
      Lender is aware that the exercise of the Lender’s rights in accordance
      with the collateral pledged in accordance with this Agreement, including
      their realization, shall be subject to all the limitations in Law and the
      licenses in this context and as stipulated in Sections 2.2.5 and 2.12.6 to
      the Agreement above.

                


        

        


        
          	
                   
      

                	
                  4.
      Conditions to the Extension of the Loan Principal, the
      Collateral

                


        

        


        Subject
to the fulfillment of all the undertakings made by the Borrower in accordance
with this Agreement, including the fulfillment of all the conditions stipulated
below and relying upon all the representations stipulated in Section 2 to this
Agreement, the Lender undertakes to extend the Loan Principal to the Borrower in
accordance with that stipulated below:

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	
                   
      

                	
                  4.1.

                	
                  On
      the date on which this Agreement is signed, the Borrower or New Smile, as
      appropriate, shall create (shall sign) for the Lender, the collateral
      listed below.

                   

                  It
      is agreed that the Borrower shall register the collateral in any register
      required by Law and shall provide the Lender with confirmation of that
      registration in accordance with Law by no later than the date on which the
      Loan is extended, subject to that stated in reference to the mortgages,
      which are the subject of Sections 4.1.2 – 4.2.4
  below.

                


        

         

        
          	
                   
      

                	
                  4.1.1.

                	
                  Fixed mortgage on New
      Smile shares

                   

                  The Borrower shall mortgage to the benefit of the
      Lender, as a first, fixed mortgage to an unlimited sum, all the rights to
      the shares held by the Borrower in New Smile, including additional shares
      in New Smile, which shall be allocated to the Borrower from time to time
      and including all the fruits wherefrom, the revenues and rights linked to
      the shares; including if such are generated and/or bestowed after the
      creation of this mortgage and as stipulated in the bond hereby attached as
      Appendix
      4.1.1. To avoid doubts: For as long as the aforementioned
      collateral has not been realized, dividends received from New Smile by the
      Borrower shall not be mortgaged and the Lender shall be entitled to make
      any use of them whatsoever, but such shall be subject to the provisions to
      Section 4.1.5 below.

                


        

         

        
          	
                   
      

                	
                  4.1.2.

                	
                  Current mortgage on
      all New Smile assets and rights

                   

                  New
      Smile shall mortgage to the benefit of the Lender, through second floating
      mortgage unlimited in sum, all New Smile’s existing and future assets and
      rights and the fruits wherefrom, including rights vis-à-vis customers and
      rights to monies and/or rights to securities deposited in New Smile’s bank
      accounts and through second fixed mortgage unlimited in sum on the unpaid
      equity capital and New Smile reputation, as such is stipulated in the bond
      hereby attached as Appendix
      4.1.2.

                   

                  Agreement
      from BLL for the extension of the second mortgage that is the subject of
      this Section is hereby attached as Appendix
      4.1.2a.

                   

                  The
      Lender is aware that the creation of the second mortgage that is the
      subject of this Section is subject to the receipt of agreement to such
      from the Minister of Communications and as such is stipulated in Section
      2.2.5 above. Therefore, it is agreed that the aforementioned mortgage
      shall be registered and extended to the benefit of the Lender by no later
      than sixty (60) days from the date on which this Agreement is signed. The
      Borrower undertakes to submit a request for approval from the Minister of
      Communications as stated, immediately after the date on which the Loan is
      extended and to make every effort to bring about its registration in the
      records kept by the Registrar of Companies at the earliest possible
      time.

                   

                  It
      is agreed that if by the end of the sixty (60) day period the
      aforementioned mortgage is not registered, then the sum for the Safety
      Cushion stated at the beginning of Section 4.1.3 below shall increase to
      NIS 30,000,000 instead of NIS 20,000,000 and the ratio stated there shall
      increase to 30/220 instead of 20/220. It is clarified that this shall be
      the only relief for non-registration, on condition that the
      non-registration is due to the refusal of the Minister of Communications
      to approve that registration. No other change shall be made to the
      provisions to Section 4.1.3.

                


        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	
                   
      

                	
                  4.1.3.

                	
                  If
      the Safety Cushion sum rises to NIS 30,000,000 as stated above and then
      afterwards, the second current mortgage is registered in the Companies
      Register, the Borrower shall be entitled to withdraw immediately, all the
      balance of monies in the Safety Cushion until after that withdrawal, the
      sum remaining in the Safety Cushion account shall be the sum equal to the
      20/220 ratio of the remaining principal and as such is defined in Section
      4.1.3 below: Safety
      Cushion.

                   

                  The
      sum of NIS 20,000,000 (the Safety Cushion Sum) out
      of the sum total of the Loan, shall be deposited by the Lender with the
      extension of the Loan, in a deposit account, which shall be opened by the
      Borrower as part of the Designated Bank Account, which shall be opened
      solely for that purpose and which is the Safety Cushion Account as such is
      defined in Section 1.4 above (hereinafter: The Safety Cushion and the
      Bank
      Account).

                  
                     

                    At
      all times during the Loan Period, the Safety Cushion Sum shall stand at a
      sum, which shall be no less than the ratio 20/220 of the remaining
      un-discharged balance of the Loan Principal indexed to the CPI
      (hereinafter in this Section: the Balance of the Principal).

                     

                    The
      following provisions shall apply to the Safety Cushion and the Bank
      Account:

                  

                


        

         

        
          	
                   
      

                	
                  4.1.3.1.

                	
                  The
      Borrower shall mortgage to the benefit of the Lender, as a first fixed
      mortgage unlimited by sum, all the rights to the Bank Account and the
      monies it shall contain from time to time and as stipulated in the bond
      hereby attached as Appendix
      4.1.1.

                


        

        


        
          	
                   
      

                	
                  4.1.3.2.

                	
                  On
      the last day of each calendar quarter (the Examination Date) the
      Borrower shall conduct an examination of the un-discharged balance of the
      Loan Principal, compared with the sums and the value of the assets (to the
      extent that investments have been made as stated in sub-section 5 below)
      deposited in the Bank Account as of the date of the examination. On the
      date of that examination, the Borrower shall provide the Lender with a
      report on the results of that examination, signed on behalf of the
      Borrower by the Borrower’s CFO or CEO.

                   

                  If
      the total of sums and assets in the Bank Account as of the date of the
      examination is higher than the ration of 20/220 of the Balance of the
      Principal on the date of the examination, then the Borrower shall
      be  entitled to withdraw the difference between the two, subject
      to prior written notice to the Lender, in a manner ensuring that after the
      withdrawal, the aforementioned ratio shall be no less than 20/220 and to
      make any use of that sum at the Borrower’s discretion. If the sum in the
      Bank Account is lower than the ratio of 20/220 of the Balance of the
      Principal, then the Borrower shall be obliged to deposit the difference
      between them immediately. The reference to the Safety Cushion Sum in
      sub-section 4 below shall refer to the updated Safety Cushion Sum as
      extant immediately after the examination
date.

                


        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        Without
derogation from that stated above, the Lender shall be entitled to conduct an
examination of the Bank Account as stated above at any time during the Loan
Period and if the total sum is lower than the ratio of 20/220 of the Balance of
the Principal, the Lender shall be entitled to demand that the Borrower deposit
the difference within no more than three (3) days. The Borrower shall empower
the Manager of the Division / Field of Investments or the Division / Field of
Credit at Harel Insurance Company Ltd and shall empower the Manager of the
Division / Field of Investments or the Division / Field of Credit at Menora
Mivtachim Insurance Ltd, to receive from the Bank at least once every month and
more frequently at their demand, a printout of the details of the Bank Account,
including details of the movements executed in the Bank Account.

        


        Any
breach of the Borrower’s obligation to deposit funds as aforementioned shall
constitute cause for a demand for immediate repayment.

         

        
          
            	
                     
      

                  	4.1.3.3.	In any circumstances in which the Borrower does not fulfill the
      Borrower’s obligations to make a particular payment in accordance with the
      provisions to this Agreement and/or if a demand is made for immediate
      repayment of the Loan in accordance with this Agreement, the Lender shall
      be entitled to withdraw any sum from the Safety Cushion and deposit that
      sum in the Lender’s account – for the purposes of discharging the
      Borrower’s remaining balance of debt to the Lender. To expedite that
      purpose, the Borrower shall provide the Lender with an irrevocable order
      for the Bank to pay to the Lender on demand; all the sums extant in and
      which shall accumulate in the Bank Account as such is explained in Appendix
    4.1.3.


          

        

        
          
            


            
              	
                       
      

                    	4.1.3.4. 	If the Lender uses the Safety Cushion during the Loan Period as stated
      in sub-section 4.1.3.3 above, any sum transferred by New Smile to the
      Borrower, shall serve first and foremost to replenish the Safety Cushion
      up to the Safety Cushion Sum. It is clarified that nothing in that stated
      shall derogate from the Lender’s rights to demand immediate payment of the
      Loan.


            

          

           

        

        
        

        
          
            
            

          

          
            
            

            
              

            

          

           

          
            
              
                	
                         
      

                      	4.1.3.5.	
                        The Lender shall be entitled to invest the monies in the Bank Account
      in short term bank deposits or in securities or in certificates of
      indebtedness issued by the State of Israel and/or in securities rated
      using the local rating system as at least A grade by Standard and Poors,
      Maalot ltd. or the parallel grade used by Midrug Ltd. (with the exception
      of debentures and securities from the Ampal American
  Group.

                      


              

            

            
              
                 

                
                  
                    
                      
                        	
                                 
      

                              	4.1.4. 	Mortgage of
      Owners’ Loans Extended or which Shall be Extended to New
  Smile


                      

                    

                  

                   

                

              

            

          

        

        
        

        The
Borrower shall mortgage to the benefit of the Lender through second fixed
mortgage unlimited by sum, all the rights pertaining to owners loans extended to
and/or which shall be extended to the benefit of New Smile as stipulated in the
bond hereby attached as Appendix 4.1.4 and
subject to the letter from BLL agreeing to the second mortgage attached as Appendix 4.1.4a to
this Agreement. To avoid doubt: For as long as the aforementioned collateral has
not been realized, the Borrower shall be entitled to make any use whatsoever of
the sums for the repayment of owners’ loans, but such shall be subject to the
provisions to Section 4.1.5 below.

        


        The
Borrower undertakes to submit the aforementioned bonds for registration with the
Registrar of Companies, no later than one business day after the signing of the
bonds and to provide the Lender with a mortgage registration certificate for the
mortgage, within seven (7) days from the signing as aforementioned.

        


        To remove
doubt, in a circumstance in which a demand for immediate payment of the Loan is
made, the Borrower and New Smile undertake that the repayment dates for the
owners’ loans (principal and interest) extended by and/or which shall be
extended by the Borrower for the benefit of New Smile shall not be before the
date for the repayment of the Loan in accordance with this Agreement and those
loans shall not be repaid before the repayment of the Loan to the Lender under
any circumstances whatsoever.

         

        
          
            
              	
                       
      

                    	4.1.5.	In addition to the collateral mentioned above, the following
      provisions shall apply:


            

          

        

         

        The
Borrower shall open a Designated Bank Account at the Union Bank of Israel Ltd.
(the Designated
Account). Whenever monies shall fall due to the Borrower from New Smile
for dividends or the repayment of owners’ loans (principal and interest) (Monies), those Monies shall be
received in the Designated Account.

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        Without
derogation from the commitment made by the Borrower to repay the Loan in
accordance with the original repayment schedule on time and in full, it is
agreed that the Monies shall be used first to make the next payment (principal
and/or interest) according to the repayment schedule (the Original Repayment Monies). To
the extent that any Monies above the sum of the Original Repayment Monies shall
be received from New Smile (the Surplus Monies), the Borrower
shall inform the Lender of such in writing and the Lender shall be entitled, no
later than at the end of fourteen (14) days from receipt of such notice by the
Lender, to inform the Borrower that the Lender is interested in having the sum
equal to up to 40% of the total of Surplus Monies (but under all circumstances
no more than the un-discharged Balance of the Loan Principal balance) serve as
early payment of the Loan, which shall be executed immediately, on condition
that in the circumstances as stated, the Lender shall not be paid early
repayment fees. The early repayment monies as aforementioned, shall be divided
up among the Lender Individuals in accordance with the division stipulated in
the notice from the Lender mentioned above (that decision shall be made
unanimously by the Lender Individuals). (To avoid doubt: It shall not be
obligatory to divide up those Monies equally among the Lender
Individuals.

         

        The
Borrower shall be entitled to make any use whatsoever of the balance of Surplus
Monies (or of all of them, if no notice has been given by the end of the
fourteen (14) day period mentioned above), including their withdrawal from the
Designated Account.

        


        It is
clarified that the sum, which shall be repaid as Early Repayment as such is
mentioned above, shall be paid on account for the Principal of the Loan and that
sum shall reduce equally, all the payments of remaining Loan Principal according
to the Repayments Schedule and therefore, the Loan Period shall not
change.

        


        The
Borrower shall authorize the Lender to receive from the Bank at least once every
month and more frequently at the Lender’s demand, a printout of the details of
the Designated Account, including details of the movements executed in the Bank
Account. The wording for that authorization is attached as Appendix 4.15 to this
Agreement.

        


        The
Borrower undertakes not to open any bank account in addition to the Designated
Account, to which there shall be a transfer of funds by New Smile and not to
grant to any third party whatsoever, any rights whatsoever to the Designated
Bank Account (including, without derogation from the generality of that stated,
mortgage, collateral, lien, etc.) and such until the repayment of all the
Borrower’s debts to the Lender.

         

        
          
            	
                     
      

                  	4.1.6.	As a precondition to the extension of the Loan Principal, on the date
      on which the Loan is extended, the Borrower shall provide the Lender with
      perpetual, irrevocable guarantees from Ampal American, to guarantee the
      repayment of the Loan and signed by Ampal at the end of this
  Agreement.


          

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          
            
              	
                       
      

                    	
                      4.2.

                    	
                      Simultaneous
      with the pledging of the collateral listed in Section 4.1 above, together
      with certificates of registration of the mortgages with the Registrar of
      Companies for the purposes of the mortgages, which are the subject of
      Sections 4.1.1, 4.1.3, the guarantees from Ampal American, the empowering
      in reference to the Designated Account and the irrevocable instructions
      stipulated above in Section 4.1.3; the Lender shall extend the Loan
      Principal  to the Borrower through bank transfer to the account
      in the name of 012 Smile Communications Ltd. in the following manner (and
      divided up as stipulated in Appendix 4.2 to this
    Agreement):

                    


            

            


            Account
Number: 75523/11 at Bank Leumi LeIsrael Ltd. branch number 800, (IBAN: IL24 0108
0000 0000 7552 311)

            


            To remove
doubt, the condition to the extension of the Loan as aforementioned is the
completion of the purchase of the Purchased Activities simultaneously with the
extension of the Loan.

            


            
              	
                       
      

                    	
                      4.3.

                    	
                      It
      is agreed that if and to the extent that New Smile shall be entitled to
      sums from Old Smile by dint of Section 11.4 to the Purchase Agreement,
      then the Lender shall be entitled to demand repayment of the Loan by the
      Borrower, to the same level as the reduction of payment for the purchase
      as aforementioned, Thus, and solely for the purposes of example – if by
      dint of the aforementioned Section, New Smile receives sums from Old Smile
      and thereby, the payment for the Purchase in accordance with the Purchase
      Agreement is reduced by 10%, then the Lender shall  be entitled
      to demand early repayment to the sum that is 10% of the Loan (it is
      clarified that in the circumstances described here, the Safety Cushion
      shall be reduced by the same rate).

                    


            

            


            A numeric
example would be as follows: If the payment for the Purchase is reduced by 10%,
to 1,080,000,000, the Lender shall be entitled to demand early repayment to the
sum of NIS 22,000,000 and the Loan shall stand at NIS 198,000,000 and the Safety
Cushion shall be reduced by the ratio 20/220 to NIS 18,000,000
(18/198).

            


            New Smile
shall send notice to the Lender immediately upon becoming aware of its
entitlement to receive sums as aforementioned in this Section and the Lender
shall be entitled to inform New Smile of the implementation of the right to
early repayment no later than seven (7) business days from the receipt of the
aforementioned notice.

             

            
              	
                      5.
      Repayment of the Loan

                    


            

            


            
              	
                       
      

                    	
                      5.1.

                    	
                      The
      Loan shall be repaid throughout the Loan Period as stipulated
      below:

                    


            

            


            
              	
                       
      

                    	
                      5.1.1.

                    	
                      The
      interest, with additional indexing differentials shall be paid in half
      yearly installments, beginning on January 31, 2011 and on the 31st
      of each of the months of July and January in each year, beginning on the
      date on which the Loan was extended and ending with the date on which the
      Loan was repaid.

                       

                      The
      calculation of the interest on the Loan shall take into account 365 days
      in a year (and if there are 366 days in a year, the formula shall be
      amended to include 366 instead of
365).

                    


            

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            
              	
                       
      

                    	
                      5.1.2.

                    	
                      The
      Loan Principal, with additional index differentials, shall be paid in
      equal half yearly installments beginning on January 31, 2012 and on the
      31st
      day of each of the months of July and January in each year, beginning on
      the date on which the Loan was extended and ending with the date on which
      the Loan was repaid.

                       

                      Precise
      details of the sums to be paid are to be found in the Repayment Schedule
      attached to this Agreement as Appendix
      5.1.

                    


            

             

            
              	
                       
      

                    	
                      5.2.

                    	
                      In
      addition to that stated above, the Borrower shall bear the payments listed
      in Appendix 5 to this Agreement.

                    


            

            


            
              	
                       
      

                    	
                      5.3.

                    	
                      The
      Borrower undertakes to pay to each of the Lender Individuals, all those
      payments due to each Lender Individual, through bank transfer to the bank
      accounts listed in Appendix 4.2.
      The Lender shall inform the Borrower of any change to the data listed in
      that Appendix, if there shall be any changes, fourteen (14) days before
      the date for the making of any payment in accordance with the Repayment
      Schedule.

                       

                      The
      Lender shall credit the Borrower for any payment whatsoever, only on the
      date on which the Lender shall be actually credited for that payment in
      the bank accounts stipulated above.

                    


            

             

            
              	
                       
      

                    	
                      5.4.

                    	
                      In
      any circumstance in which the date for any payment whatsoever, on account
      for the repayment of a Loan Principal and interest sum or another payment
      due to the Lender in accordance with this Agreement, shall fall on a day
      that is not a business day, the payment of that sum shall be delayed until
      the first business day that follows the payment
  date.

                    


            

            


            
              	
                      6.
      Accompanying Payments

                    


            

            


            In
addition to the Loan Principal, the interest and the index differentials, which
the Borrower must pay to the Lender in accordance with this Agreement, the
Borrower undertakes to pay the Lender or as instructed by the Lender, the
payments listed here below:

            


            
              	
                       
      

                    	
                      6.1.

                    	
                      The
      cost of registering the collateral, to the extent that they shall be borne
      by the Lender.

                    


            

            


            
              	
                       
      

                    	
                      6.2.

                    	
                      Legal
      fees to the Lender’s attorneys, for the drawing up of this Agreement and
      those fees shall be paid by the Borrower directly to the Lender’s
      attorneys within seven (7) days from the date on which this Agreement is
      signed and against the receipt of a tax invoice as required by
      Law.

                    


            

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            
              	
                       
      

                    	
                      6.3.

                    	
                      All
      the costs incurred by the Lender in connection with the realization of
      collateral, to the extent that there shall be realization, including legal
      fees, Court fees, Execution Office fees, the appointment of an official
      receiver and/or manager and/or trustee and/or liquidator and their
      salaries.

                       

                      All
      the collateral, which shall be provided in accordance with this Agreement,
      shall also serve to guarantee the payment of all the aforementioned
      sums.

                    


            

             

            
              	
                      7.
      Order for Making Payments

                    


            

            


            Any sum
paid to the Lender by the Borrower and/or which shall be received by the Lender
in any manner whatsoever shall be credited by the Lender in accordance with the
following order:

            


            
              	
                       
      

                    	
                      7.1.

                    	
                      On
      account for the costs and expenses listed in Section 6 above, if and to
      the extent that they shall be paid by the
  Borrower.

                    


            

            


            
              	
                       
      

                    	
                      7.2.

                    	
                      On
      account for the early repayment
fee.

                    


            

            


            
              	
                       
      

                    	
                      7.3.

                    	
                      On
      account for late payment interest.

                    


            

            


            
              	
                       
      

                    	
                      7.4.

                    	
                      On
      account for index differentials on late payment
  interest.

                    


            

             

            
              
                	
                         
      

                      	
                        7.5.

                      	
                        On
      account for Loan interest

                      


              

               

            

            
              	
                       
      

                    	
                      7.6.

                    	
                      On
      account for index differentials on the interest on the
    Loan.

                    


            

            


            
              	
                       
      

                    	
                      7.7

                    	
                      On
      account for the Loan Principal and index differentials on the Loan
      Principal.

                    


            

            


            
              	
                      8.
      The Commitments Made by the Borrower and New
  Smile

                    


            

            


            Without
derogation from the commitments stipulated in this Agreement, for as long as the
balance of the Loan in accordance with this Agreement has not been paid to the
Lender, in addition, the Borrower and New Smile make their commitment to the
Borrower to fulfill that stated in this Section 8 below:

             

            
              	
                       
      

                    	
                      8.1.

                    	
                      Without
      derogation from the undertaking to comply with the covenants vis-à-vis BLL
      as stipulated in Section 2.13.3 above, Ampal American and New Smile
      undertake to comply with the covenants listed here
  below:

                    


            

            


            
              	
                       
      

                    	
                      8.1.1.

                    	
                      Ampal
      American undertakes that Ampal American’s solo, tangible equity capital
      (pro forma) shall at no time be less than the total of USD 150
      million.

                    


            

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            
              	
                       
      

                    	
                      8.1.2.

                    	
                      In
      addition, Ampal American undertakes that the total sum of Ampal American’s
      equity capital shall at no time be less than a total of USD 150
      million.

                    


            

            


            
              	
                       
      

                    	
                      8.1.3.

                    	
                      Ampal
      American undertakes that the ratio between net debt and net CAP at Ampal
      American (pro forma) shall not rise above 75%. For the purposes of this
      Section, the aforementioned ratio shall mean the portion received from
      financial commitments after deduction of cash and cash equivalent,
      deposits and negotiable securities (net debt) divided by the
      equity capital with the addition of the net debt (net CAP).

                       

                      Financial Institution –
      shall mean – Each of the following bodies: Banks, including Auxiliary
      Corporations, as such are defined in the Banking Law (Licensing) 5741 –
      1981; corporations to which the Joint Investments Trust Law,
      5754 - 1994
      applies; corporations to which the Control of Financial Services Law
      (Provident Funds) 5765 – 2005 applies; an insuring corporation, as such is
      defined in the Control on Insurance Business Law 5741 – 1981, or any
      corporation similar to those mentioned above, which was incorporated
      outside Israel and is under the supervision of the competent authority in
      the country of incorporation and the holders of debentures.

                       

                      Financial Commitments –
      shall mean – The balance of debts and commitments to Financial
      Institutions as such appear in the financial reports for Ampal American
      (pro forma).

                      
                         

                        Equity Capital – shall
      mean – The equity capital presented in the financial reports on a combined
      basis for Ampal American.

                         

                        Financial Reports for Ampal American (pro
      forma) – shall mean – The financial reports for Ampal American,
      including the combined reports for companies which are either directly or
      indirectly, wholly owned by Ampal American and when their entire
      activities are the holdings in or the investment in corporations
      (including but without derogation from partnerships or projects) or in
      financial assets. True of the date of the signing of this document, the
      companies included in the Financial Reports (pro forma) are as listed in
      Appendix
      8.1 to this Agreement.

                         

                        It
      is hereby clarified that in reference to the Financial Reports drawn up in
      accordance with US GAAP standards, the definition for equity capital (in
      reference to combined reports) does not include the minority rights that
      appear as part of the equity capital.

                         

                        Furthermore,
      it is hereby clarified that in reference to the Financial Reports drawn up
      in accordance with the IFRS standard for the purposes of defining equity
      capital:

                      

                    


            

             

            
              	
                       
      

                    	
                      A.

                    	
                      Such
      shall not include minority rights that appear as part of the equity
      capital (in reference to combined reports) and furthermore
    –

                    


            

             

            
              
                 

              

              
                 

                
                  

                

              

              
                 

              

            

             

            
              	
                       
      

                    	
                      B.

                    	
                      The
      equity capital shall also include options when the realization addition
      for those options is indexed (they shall appear as part of the
      commitments) and furthermore –

                    


            

            


            
              	
                       
      

                    	
                      C.

                    	
                      The
      equity capital shall also include the conversion component for convertible
      bonds, when their realization price is indexed (if they appear separately
      as part of the commitments in the balance) and furthermore
    –

                    


            

            


            
              	
                       
      

                    	
                      D.

                    	
                      They
      shall not include the re-evaluation principal for fixed assets created due
      to the adoption of the re-evaluation model during the period after the
      formulation of the financial
conditions.

                    


            

            


            Solo, Tangible Equity Capital
– shall mean – The equity capital as presented in the annual or quarterly
Financial Reports as appropriate, for Ampal American (pro forma), drawn up in
USD in accordance with standard accounting practices applied consistently,
approved in the name of Ampal American by the CFO or the CEO at Ampal American
with added explanations in accordance with the demand made by the Lender,
including paid up share capital, undistributed surpluses, funds, with additional
balances for the owners’ loans fund sums and/or capital bills, for which Ampal
American and its shareholders have signed subordination documents for the
Lenders and after deduction of non-tangible assets such as: Reputation, patents,
brand names, trade names, copyright, etc.

            


            Furthermore,
it is hereby clarified that in reference to the Financial Reports drawn up in
accordance with the IFRS standards, for the purposes of defining equity
capital:

            


            
              	
                       
      

                    	
                      A.

                    	
                      Such
      shall not include minority rights that appear as part of the equity
      capital (in reference to combined reports) and furthermore
    –

                    


            

            


            
              	
                       
      

                    	
                      B.

                    	
                      The
      equity capital shall also include options when the realization addition
      for those options is indexed (they shall appear as part of the
      commitments) and furthermore –

                    


            

            


            
              	
                       
      

                    	
                      C.

                    	
                      The
      equity capital shall also include the conversion component for convertible
      bonds, when their realization price is indexed (if they appear separately
      as part of the commitments in the balance) and furthermore
    –

                    


            

            


            
              	
                       
      

                    	
                      D.

                    	
                      They
      shall not include the re-evaluation principal for fixed assets created due
      to the adoption of the re-evaluation model during the period after the
      formulation of the financial
conditions.

                    


            

             

            
              
                	
                         
      

                      	
                        8.1.4.

                      	
                        The
      debt to EBIDTA ratio at New Smile shall be no more than 3.7

                         

                      


              

               

            

            
              	
                       
      

                    	
                      8.1.5.

                    	
                      Management
      fees to be paid by New Smile to those in control of New Smile, directly
      and/or indirectly shall not rise above, collectively, the sum of NIS
      15,000,000 per year, indexed to the CPI; if the aforementioned sum is not
      paid in a specific year, it shall be paid out only during the following
      year.

                       

                      If
      Ampal American and/or New Smile do not comply with any of the covenants
      stated in Sections 8.1.1 to 8.1.5 above, such shall be considered a breach
      of the Borrower’s commitments in accordance with this Agreement and shall
      constitute cause to demand immediate repayment of the balance of the Loan
      and as such is stipulated in Section 9 below. To remove doubt it is hereby
      clarified that non-compliance with the financial relationship vis-à-vis
      BLL (which is not mentioned in Sections 8.1.1 to 8.1.5 above) shall not
      constitute cause for the demand of immediate payment of the Loan, unless
      if BLL demands the immediate repayment of the credit extended to New Smile
      by BLL as aforementioned in Section 2.13.3
  above.

                    


            

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            
              	
                       
      

                    	
                      8.2.

                    	
                      With
      the exception of that stated explicitly in this Agreement (and in the
      floating mortgage bond), not to sell and/or transfer and/or assign and/or
      mortgage the collateral provided to the Lenders in accordance with this
      Agreement, including at an equal or lower
level.

                    


            

            


            
              	
                       
      

                    	
                      8.3.

                    	
                      The
      Borrower does also undertake not to mortgage the Borrower’s shares in the
      EMG Company, without the Lender’s prior permission for
    such:

                    


            

            


            
              	
                       
      

                    	
                      8.3.1.

                    	
                      If
      the Borrower sells or transfers more than 50% of the Borrower’s shares in
      EMG, the Borrower shall inform the Lender of such in writing and within
      thirty (30) days from the date on which the Lender received that notice,
      the Lender shall be entitled to inform the Borrower that the Lender is
      interested in the execution of immediate repayment of the net sum received
      by the Borrower for the aforementioned sale (but no more than the Balance
      of Loan Principal not yet discharged, hereinafter: The Net Return). If the
      Lender demands early repayment as aforementioned, no early repayment fee
      shall be paid.

                    


            

            


            
              	
                       
      

                    	
                      8.3.2.

                    	
                      If
      the Borrower sells up to 50% of the Borrower’s shares in the EMG Company,
      then that stipulated in sub-section 8.3.1 above shall apply only to 10% of
      the Net Return. If the Borrower sells in blocks, after each sale the
      Lender shall be able to demand immediate repayment as stipulated in this
      sub-section.

                    


            

            


            
              	
                       
      

                    	
                      8.3.3.

                    	
                      Notwithstanding
      that stated in sub-section 8.3.2 above, if the Borrower sells the
      Borrower’s shares in blocks that accumulate to constitute more than 50% of
      the Borrower’s shares, then that stipulated in sub-section 8.3.1 shall
      apply to the Net Return.

                    


            

            


            To the
extent that some of the early repayment sums have already been paid – in
accordance with that stipulated in sub-section 8.3.2 above, at the Lender’s
request, additional early repayment monies shall be paid up to the sum of the
Net Return, including that received for the sales at the scale mentioned (to
avoid doubt – without payment of early repayment fees).

            


            
              	
                       
      

                    	
                      8.3.4.

                    	
                      Early
      repayment monies as aforementioned, shall be divided up among the Lender
      individuals in accordance with the division which shall be stipulated in
      the Lender’s notice mentioned above (to avoid doubt – the monies shall not
      necessarily be distributed equally among the Lender
      individuals).

                    


            

             

            
              
                
                

              

              
                
                

                
                  

                

              

               

              
                
                

              

            

            
              	
                       
      

                    	
                      8.3.5.

                    	
                      The
      sale or transfer of EMG shares in lieu of rights to shares in another
      company (share swopping), as differentiated from the sale of shares in
      lieu of cash, shall be subject the Lender’s Board of Directors’ approval
      that the shares in the other company constitute economic benefit befitting
      the value of the EMG shares. The Lender shall give the Borrower prior,
      written notice concerning the aforementioned share swop. If shares are
      exchanged as aforementioned in this sub-section, the provisions to this
      sub-section 8.3 shall apply to the shares in the other
      company.

                    


            

            


            
              	
                       
      

                    	
                      8.3.6.

                    	
                      It
      is clarified that early repayment (when such is lower than the
      un-discharged Balance of the Loan Principal) shall be paid on account for
      the un-discharged Balance of the Loan Principal and it shall reduce
      equally the payments of Loan Principal remaining according to the
      Repayment Schedule and therefore, the Loan Period shall not
      change.

                    


            

            


            
              	
                       
      

                    	
                      8.4.

                    	
                      To
      verify that all the sums paid to the Borrower by New Smile and/or for the
      Borrower shall be transferred into the Designated
  Account.

                    


            

            


            
              	
                       
      

                    	
                      8.5.

                    	
                      To
      inform the Lender in writing without delay, of any incident involving
      application of lien, execution of Court Execution Office instructions, the
      appointment of a receiver or the institution of any similar process
      whatsoever, which might have a significant negative effect on the
      Borrower’s ability to fulfill the conditions to the Agreement or on the
      ability of New Smile to fulfill its commitments and without delay to take
      at the Borrower’s expense, all the steps required for the purposes of
      cancelling the lien, execution of Court Execution Office instructions, the
      appointment of a receiver or institution of any similar process in
      connection with the Borrower as soon as possible and no later than up to
      sixty (60) days from the date on which the lien was applied, the Execution
      Order was implemented, the receiver was appointed, or another process was
      instituted.

                    


            

            


            
              	
                       
      

                    	
                      8.6.

                    	
                      To
      inform the Lender in writing without delay of any suit, mediation,
      regulatory or administrative processes against the Borrower or concerning
      the Borrower (including notice of any threat of suit, mediation or
      processes as aforementioned) or against New Smile or concerning New Smile,
      which in the Borrower’s opinion, based on the Borrower’s assessment of the
      risks associated with the aforementioned process, will have a significant
      negative effect on the Borrower’s ability to fulfill the conditions to the
      Agreement.

                    


            

            


            
              	
                       
      

                    	
                      8.7.

                    	
                      To
      send to the Lender without delay, written notice of every event in which
      there is a significant breach of this Agreement, along with reasonable
      explanation of the details of that event and the steps taken (if taken) to
      rectify the situation.

                    


            

            


            
              	
                       
      

                    	
                      8.8.

                    	
                      Not
      to perform knowingly, any act which might have any significant negative
      effect whatsoever on the Borrower’s ability to fulfill the Borrower’s
      commitments.

                    


            

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            
              	
                       
      

                    	
                      8.9.

                    	
                      To
      comply with all the rules, instructions and guidelines applicable to the
      Borrower’s activities.

                    


            

            


            
              	
                       
      

                    	
                      8.10.

                    	
                      To
      send the following reports (the confidentiality of which will be
      maintained by the Lender, unless that information is made public knowledge
      not due to the breach of the duty of confidentiality) to the
      Lender:

                    


            

             

            
              
                	
                         
      

                      	
                        8.10.1.

                      	
                        The
      pro forma report for New Smile, which reflects the execution of the
      purchase of the Purchased Activities in accordance with the Purchase
      Agreement, by no later than thirty (30) days from the date for the
      extension of the Loan as such is defined
above.

                      


              

               

              
                
                  
                    	
                             
      

                          	
                            8.10.2.

                          	
                            In
      reference to Ampal American and New
Smile:

                          


                  

                   

                

              

            

            
              	
                       
      

                    	
                      8.10.2.1.

                    	
                      A
      copy of the audited Financial Reports for each of them for each financial
      year.

                    


            

            


            
              	
                       
      

                    	
                      8.10.2.2.

                    	
                      A
      copy of every intermediate Financial Report and/or Quarterly Report for
      each of them.

                    


            

             

            By no
later than fourteen (14) business days from the date determined in Law for the
publication referring to a Company, with shares registered for trading on the
NASDAQ, or referring to a corporation reporting to the Tel Aviv Stock Exchange
Ltd. if Ampal American shares will not be registered on the NASDAQ.

             

            
              
                
                  
                    	
                             
      

                          	
                            8.10.3.

                          	
                            A
      copy of every audited Financial Report for the Borrower by no later than
      fourteen (14) business days form the date determined in Law for its
      submission to the tax authorities and under all circumstances, no later
      than January 14 in the year following the year in which the report must be
      submitted.

                          


                  

                   

                  
                    
                      
                        
                          
                            	
                                     
      

                                  	
                                    8.10.4.

                                  	
                                    The
      Borrower’s confirmation of compliance with the Covenants, which are the
      subject of Section 8.1 above and compliance with the Covenants agreed with
      BLL, up to and no later than the end of the second calendar month after
      the end of each quarter.

                                  


                          

                           

                          
                            
                              
                                
                                  
                                    	
                                             
      

                                          	
                                            8.10.5.

                                          	
                                            Information
      pertaining to the Borrower’s, or Smile’s, or Ampal American’s obligations
      to BLL, in connection with the credit and/or the collateral provided to
      and/or which shall be provided by BLL to New Smile for the purposes of
      purchasing the Purchased Activities, including in reference to covenants,
      waivers, changes to covenants, agreement from BLL for the those changes
      and including any changes to the original conditions to the Loan with BLL
      – the Repayment Schedule, interest rates, changes to the collateral, etc.
      and all information pertaining to any event or misgivings inferring that
      the Borrower shall not meet the Borrower’s obligations to comply with the
      covenants with BLL.

                                          


                                  

                                   

                                  
                                    
                                      
                                      

                                    

                                    
                                      
                                      

                                      
                                        

                                      

                                    

                                    
                                      
                                      

                                    

                                  

                                  
                                    
                                    

                                    
                                      
                                        	
                                                 
      

                                              	
                                                8.10.6.

                                              	
                                                Information
      concerning every circumstance in which the Borrower shall not meet its
      commitments to comply with the covenants made with a third party and due
      to which that third party has asked for or warned that it intends to
      demand immediate repayment of the Borrower’s debt to that third party, on
      condition the size of the debt, to the extent that the matter pertains to
      New Smile, is more than NIS 20 million and to the extent that the matter
      pertains to Ampal American, is more than NIS 50
  million.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                8.10.7.

                                              	
                                                All
      information requested by the Lender concerning the Borrower’s and New
      Smile’s business interests, rights, obligations and when that information
      contains sufficient to constitute relevant information pertaining to the
      Borrower’s ability to meet its obligations in accordance with this
      Agreement.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                8.10.8.

                                              	
                                                Information
      concerning any event, which constitutes cause to demand the immediate
      repayment of the Loan, as stipulated in Section 9 below, with an almost
      certain likelihood.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                8.10.9.

                                              	
                                                The
      Borrower shall provide the Lender with a copy of assessment of the value
      of New Smile drawn up by an independent evaluator, which shall be
      delivered to BLL, to the extent that such shall be delivered, in
      accordance with the provisions to the BLL Agreement and such on the date
      on which it shall be delivered to
BLL.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                8.11.

                                              	
                                                In
      addition to that stated above, for as long as the balance of the loan has
      not been discharged for the Lender in accordance with this Agreement, the
      Borrower undertakes to maintain the following vis-à-vis the
      Lender:

                                              


                                      

                                       

                                      
                                        
                                          	
                                                   
      

                                                	8.11.1.	Ampal American shall not distribute dividends to its shareholders
      during the period up to the date for the first payment of the Loan
      Principal.


                                        

                                         

                                      

                                      
                                        	
                                                 
      

                                              	
                                                8.11.2.

                                              	
                                                A
      transaction between Ampal American and the interested parties in Ampal
      American to a sum greater than NIS 50 million shall require prior approval
      from the Lender. However, that clause shall not apply for as long as Ampal
      American is registered for trading on the NASDAQ, the Tel Aviv Stock
      Exchange (or both).

                                                 

                                                Interested Party – shall
      mean – an interested party in the Company as that term is defined in the
      Securities Law 5728 – 1968, not including a subsidiary company wholly
      owned by the Borrower.

                                                
                                                   

                                                  Transactions with Interested
      Parties, personal matter, transaction, relative, position holder, linked
      company and control – shall have the meanings those terms were
      given in the Companies Law 5759 –
1999.

                                                

                                              


                                      

                                       

                                      
                                        
                                          	
                                                   
      

                                                	
                                                  8.11.3.

                                                	
                                                        
                                                    The
      Ampal American Group, including all the companies within that Group and
      all parties linked to the Group (with the exception of New Smile and its
      owned corporations, to the extent that they are required for the purpose
      of New Smile activities and subject to the covenants to which New Smile
      has made commitments in this Agreement), have not taken and shall not take
      other credit from BLL, guaranteed by the collateral provided for the
      benefit of BLL and as stipulated in this Agreement. It is explicitly
      clarified that solely for the purposes of the relationship between the
      Lender and the Borrower, the provisions to this sub-section 8.11.3 take
      precedence over any contradictory provision, if there be any such, in the
      BLL agreements (Appendices 4.1.2a and 4.1.4a to this
      Agreement).

                                                  

                                                


                                        

                                         

                                      

                                      
                                      

                                      
                                        
                                          
                                          

                                        

                                        
                                          
                                          

                                          
                                            

                                          

                                        

                                        
                                          
                                          

                                        

                                      

                                       

                                      
                                        	
                                                9. Breach and Immediate
      Repayment

                                              


                                      

                                      


                                      The
Borrower hereby agrees that in each of the following circumstances and for as
long as they remain extant, the Lender shall be entitled to demand the immediate
repayment of the balance of un-discharged Loan, including those sums that have
not yet reached their repayment date, the interest on them as such has
accumulated by the date of repayment of the balance of the Loan to the Lender
and all other sums due to the Lender in accordance with this Agreement and the
Lender shall be able to realize the collateral provided to or which shall be
provided to the Lender in accordance with this Agreement, or any part thereof
and/or to appoint a receiver and/or a business manager and/or a liquidator
and/or a trustee for the Borrower and/or the Borrower’s assets, or any part
thereof and/or to conduct any other activity, either the Lender itself or
through those representing the Lender and the Borrower hereby undertakes to do
all that required in order to allow the Lender to realize the collateral,
immediately upon the Lender’s first demand:

                                      


                                      
                                        	
                                                 
      

                                              	
                                                9.1.

                                              	
                                                The
      Lender has breached one of the provisions to this Agreement and has not
      rectified that breach within a period of twenty (20) business days from
      the date on which the Borrower received written demand to rectify the
      breach.

                                                 

                                                It
      is hereby clarified that even a breach, which cannot be rectified or
      cannot be rectified within the aforementioned period, shall constitute a
      breach.

                                              


                                      

                                      
                                        


                                        
                                          	
                                                   
      

                                                	
                                                  9.2.

                                                	
                                                  Without
      derogation from the generality of that stated above, if the Safety Cushion
      Sum is less than the ratio determined in sub-section 4.1.3 above and the
      Company has not made up the missing sum in the Safety Cushion Sum within
      three business days.

                                                


                                        

                                         

                                        
                                          
                                            	
                                                     
      

                                                  	
                                                    9.3.

                                                  	
                                                    If
      it becomes apparent that a significant declaration made by the Borrower or
      New Smile in accordance with this Agreement is untrue or incomplete and
      the Borrower does not rectify that which must be rectified within twenty
      (20) business days.

                                                  


                                          

                                           

                                        

                                      

                                      
                                        	
                                                 
      

                                              	
                                                9.4.

                                              	
                                                If
      any debt owed by the Borrower, or New Smile or Ampal American is subject
      to a demand for immediate repayment, on condition that the size of the
      debt, to the extent that such shall refer to New Smile is more than NIS 20
      million and to the extent that such shall refer to the Borrower and Ampal
      American, more than NIS 50 million.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                9.5.

                                              	
                                                If
      he Borrower or New Smile shall be unable to pay their debts on time, or
      begin negotiations with their creditors, with the aim of reaching a debt
      rescheduling arrangement with their creditors or any other similar
      arrangement whatsoever, based on concerns that they might not be able to
      meet their commitments.

                                              


                                      

                                       

                                      
                                        
                                          
                                          

                                        

                                        
                                          
                                          

                                          
                                            

                                          

                                        

                                         

                                        
                                          
                                            	
                                                     
      

                                                  	
                                                          
                                                      9.6.

                                                    

                                                  	
                                                    If
      the Borrower or New Smile or Ampal American have begun taking steps or
      shall begin steps, or if processes instigated against them shall lead to
      the granting of a winding up order, a liquidation order, a process
      freezing order in accordance with the Section 350 to the Companies Law,
      the cessation of payments, protection from creditors, the appointment of a
      liquidator, a receiver, a managing receiver, special manager, or any
      similar position holder, in connection with the Borrower or New Smile or
      their assets, in whole or any significant part thereof; or if steps or
      other similar processes are instigated in connection with the Borrower or
      New Smile or their assets, in whole or any significant part thereof, or
      another, similar order is granted against them, be such processes or
      orders either temporary, for a given period or permanent and the
      aforementioned steps, processes or orders were not cancelled within a
      period of forty five (45) business days from the date on which they began,
      if they refer to processes or from their granting if such refers to Court
      orders.

                                                  


                                          

                                        

                                         

                                      

                                      
                                        	
                                                 
      

                                              	
                                                9.7.

                                              	
                                                If
      a significant lien, including a temporary significant lien is imposed upon
      assets belonging to the Borrower, New Smile or Ampal American, or if any
      Execution Order whatsoever is applied to their assets and the lien or
      Execution Order is not removed within forty five (45) business days from
      the date of their imposition.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                9.8.

                                              	
                                                If
      the Borrower or New Smile or Ampal American shall cease or notify that
      they intend to cease managing their
affairs.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                9.9.

                                              	
                                                If
      a claim is submitted and/or mediation, regulatory or other processes, or
      investigations in reference to or touching upon the Borrower or New Smile
      or Ampal American begin and according to the assessment of the risks
      associated with that process made by the Borrower or New Smile or Ampal
      American as appropriate, it is reasonable to assume that they will have a
      significant, negative effect on the ability of the Borrower or New Smile
      to fulfill their commitments in accordance with this
      Agreement.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                9.10.

                                              	
                                                If
      Mr. Yossi Maiman is no longer the controlling party, indirectly, in the
      Borrower and for the purposes of that matter, the term “controlling party”
      shall have the meaning given to it in the Securities
  Law.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                9.11.

                                              	
                                                If
      there shall be changes to the Borrower’s holdings in New Smile, compared
      with the situation extant on the date of this
  Agreement.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                9.12.

                                              	
                                                If
      credit extended to New Smile by BLL as stated above – is not be repaid
      within seven (7) days from the date set for its
  repayment.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                9.13.

                                              	
                                                If
      securities issued by Ampal American are not repaid within seven (7) days
      from the date set for their repayment or if there is almost certain doubt
      that they shall not be repaid on
time.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                9.14.

                                              	
                                                If
      the significant licenses required by New Smile for its activities are
      cancelled or suspended.

                                              


                                      

                                       

                                      
                                        
                                          
                                          

                                        

                                        
                                          
                                          

                                          
                                            

                                          

                                        

                                        
                                          
                                          

                                        

                                      

                                      
                                        	
                                                 
      

                                              	
                                                9.15.

                                              	
                                                If
      there is a sale of or change are made to New Smile’s or the Borrower’s
      principal assets or activities (including to the significant
      licenses).

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                9.16.

                                              	
                                                If
      the Borrower or New Smile takes a decision concerning structural change or
      a merger, or splitting or concerning an arrangement.

                                                 

                                                For
      the purposes of this matter, “Merger” shall mean a
      merger in accordance with the first Chapter to Part Eight or in accordance
      with the third Chapter to Part Nine in the Companies Law or any other act,
      the result from which shall be the purchase of most of or the majority of
      the Borrower’s or New Smile’s assets by another. “Splitting” shall mean as
      it is defined in Part 5(2) to the Income Tax Ordinance (New Version), or
      as it shall be defined in any lawful provision that comes in its place.
      “Arrangement”
      shall mean as it is defined in Sections 350 and 351 to the Companies Law
      5759 -1999), or as it shall be defined in any lawful provision that comes
      in its place.

                                              


                                      

                                       

                                      
                                        	
                                                 
      

                                              	
                                                9.17.

                                              	
                                                If
      a significant change for the worse occurs to the detriment of the
      Borrower’s or New Smile’s or Ampal American’s financial status or the
      status of their commercial activities and consequential to which, in the
      opinion of the Lender such shall have a detrimental effect on the
      Borrower’s ability to pay on time the full sum due to the Lender in lieu
      of the Loan, including the realization of the collateral and that
      situation has not been rectified within seven (7) days from the date on
      which the Lender informed the Borrower of such in writing. However, if in
      the Lender’s opinion, waiting for the period stipulated above will incur
      risk to the realization of the Lender’s rights, the waiting period shall
      be cancelled.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                9.18.

                                              	
                                                If
      the rating for Ampal American rated securities drops to (BB+) or lower in
      the local rating scale, or if ratings cease for the aforementioned
      securities, on condition that the Lender shall make use of the Lender’s
      rights within thirty (30) days from the date on which notice was given of
      a drop in rating.

                                              


                                      

                                      


                                      
                                        	
                                                10.
      The Manner in Which Collateral Shall be
Realized

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                10.1.

                                              	
                                                Subject
      to the making of a demand for immediate repayment by the Lender in
      accordance with the provisions to Section 9 above and subject to all Law;
      for as long as the collateral, in whole or in part thereof, shall be
      realizable, the Lender and/or any appointed by a Court (the Appointee) for the
      purposes of realizing the collateral and collecting the return in lieu of
      the collateral shall be entitled as they shall see fit and without any
      derogation from their authority, to instigate any process in accordance
      with the provisions in all Law and to instigate any other activity in
      reference to the collateral, as they shall see fit and all such in order
      to repay the un-discharged balance of the Loan to the Lender. To remove
      doubt: Nothing stated in this Section shall derogate from the Lender’s
      rights to be repaid directly from the Bank Account and the Safety Cushion,
      without a realization process.

                                              


                                      

                                       

                                      
                                        
                                          
                                          

                                        

                                        
                                          
                                          

                                          
                                            

                                          

                                        

                                        
                                          
                                          

                                        

                                      

                                      
                                        	
                                                 
      

                                              	
                                                10.2.

                                              	
                                                Subject
      to the provisions in all Law, the Lender and the Appointee appointed as
      aforementioned in sub-section 10.1 above, shall have full authority to
      compromise and to execute any compromise for the purposes of achieving the
      objectives stated above, in whole or in part thereof and they shall have
      the authority to undertake and execute any activities and to sign any
      documents that they shall see fit and all such after given written notice
      to the Borrower and such shall include inter
    alia:

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                10.2.1.

                                              	
                                                To
      receive the collateral into their possession, for the purposes of its
      realization and the repayment of the un-discharged balance of the Loan in
      accordance with sub-section 10.1
above.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                10.2.2.

                                              	
                                                To
      manage or participate in the management of the
  collateral.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                10.2.3.

                                              	
                                                To
      sell or to agree to the sale of the collateral or any part thereof and to
      transfer the collateral in any other manner under the conditions they
      shall see fit to impose.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                10.2.4.

                                              	
                                                To
      sign in the name of the Borrower, any request or document required for the
      purposes of the sale of collateral and such shall include the signing of
      requests for tax exemptions.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                10.3.

                                              	
                                                All
      costs incurred by the Lender in connection with the realization of
      collateral in accordance with the provisions to this Agreement shall be
      paid by the Borrower.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                10.4.

                                              	
                                                In
      addition to all payments to be borne by the Borrower in circumstances in
      which the Lender makes a demand for the immediate repayment of the Loan,
      the Borrower shall pay the Lender early payment fees as defined in Section
      11 below on the sum subject to immediate
  repayment.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                10.5.

                                              	
                                                After
      application of mortgage realization to the collateral in accordance with
      this Agreement, at any time when so required by the Lender or the
      Appointee appointed to realize the collateral, the Borrower shall execute
      all the reasonable activities required in order to facilitate the
      realization of the collateral.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                10.6.

                                              	
                                                The
      monies received from realization of collateral or collected shall be used
      first and foremost and/or money shall be set aside to pay the costs of the
      fees and costs expended, imposed or incurred due to or consequential to
      the realization activities performed in connection with collection of the
      Balance of the Loan (including salaries and expenses due to the
      Appointee).

                                                 

                                                The
      remaining sum shall be used to pay the sums due in accordance with the
      payment order stipulated in Section 7
above.

                                              


                                      

                                       

                                      
                                        	
                                                11. Early
      Repayment

                                              


                                      

                                      


                                      The
Borrower shall be entitled to repay the Loan through early repayment on any
interest payment date, sums on account for the Loan Principal to a total of NIS
10,000,000 or more, with additional interest and index differentials accumulated
on them by the date of the early repayment, after providing ten (10) days prior,
written notice to the Lender.

                                       

                                      
                                        
                                          
                                          

                                        

                                        
                                          
                                          

                                          
                                            

                                          

                                        

                                        
                                          
                                          

                                        

                                      

                                      


                                      If the
Borrower chooses to implement this entitlement, the Borrower shall pay the
Lender an early repayment fee, at the rate which is the difference between the
capitalization of the future flow on the sum designated for early repayment –
for the return on the Loan as such is defined in the Payments Appendix and that
sum capitalized as return on government securities for a similar duration on
condition that it is positive.

                                      


                                      The
Borrower shall have no entitlement to early repayment at the Borrower’s
initiative, unless two (2) years have passed since the extension of the
Loan.

                                      


                                      For the
purposes of this Section –

                                      


                                      “Return on government securities over
a similar duration” – shall mean – The average yield over the previous
five (5) business days previous to the date for the repayment of the series of
government securities issued by the Government of the State of Israel, indexed
to the CPI at a fixed rate of interest, with the duration closest to the
duration for the balance of the Loan (on the date for early
repayment).

                                      


                                      It is
hereby agreed that the early repayment fee shall also be paid in any instance of
immediate repayment of the loan in accordance with the provisions to Section 9
above.

                                      


                                      
                                        	
                                                12.
      Late Payment Interest

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                12.1.

                                              	
                                                In
      any instance in which the Borrower does not pay within fourteen (14)
      business days from the stipulated date, any sum whatsoever so required
      from the Borrower in accordance with this Agreement, late payment interest
      shall apply to that sum and such beginning on the stipulated date for
      payment of the unpaid sum until the date of its actual payment in full and
      such shall not derogate from any other relief granted to the Lender in
      accordance with the provisions to this Agreement or in all
      Law.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                12.2.

                                              	
                                                The
      Lender shall be entitled to charge the Borrower late payment interest
      without prior notification of such to the Borrower and at all times and
      without prior notification of such to the Borrower the Lender shall be
      entitled to add the late payment interest to the late payment, at any
      interest repayment date according to the Repayment Schedule and to apply
      to the late payment interest, all the conditions to this Agreement
      applicable to late payment.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                12.3.

                                              	
                                                The
      Lender shall determine the manner for the calculation and the recording
      for implementation of the provisions to this Section and the determination
      made by the Lender shall constitute prima facie evidence of
      the verity of the calculation.

                                              


                                      

                                       

                                      
                                        
                                          
                                          

                                        

                                        
                                          
                                          

                                          
                                            

                                          

                                        

                                        
                                          
                                          

                                        

                                      

                                      
                                        	
                                                13.
      Transfer of Rights and Obligations

                                              


                                      

                                       

                                      
                                        	
                                                 
      

                                              	
                                                13.1.

                                              	
                                                The
      Borrower hereby undertakes not to transfer and/or endorse and/or assign
      and/or mortgage the rights and obligations, in whole or in part thereof –
      in accordance with this Agreement – to any third party whatsoever, in any
      manner or fashion, without receipt of prior agreement to such from the
      Lender.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                13.2.

                                              	
                                                The
      Lender shall be entitled to assign all the Lender’s rights and obligations
      in accordance with this Agreement, or part thereof, to the following
      bodies, with receipt of the Borrower’s agreement: [a] Banks in Israel,
      including auxiliary corporations as such are defined in the Banking Law
      (Licensing) 5741 – 1981, to insuring corporations, as such are defined in
      the Control on Insurance Business Law 5741 – 1981; [b] Corporations, to
      which the Joint Investments in Trust Law 5754 – 1994 applies; corporations
      to which the Control on Financial Services (Provident Funds) 5765 –2005
      applies, when such manage funds to the sum of more than NIS 10
      billion.

                                              


                                      

                                      


                                      
                                        	
                                                14.
      Repayment of the Loan and Release of
Collateral

                                              


                                      

                                      


                                      In return
for the final and absolute repayment of the entire sum of Loan (including all
the other sums owed to the Lender by the Borrower at that time), the Lender
undertakes to provide the Borrower with the Lender’s written agreement to the
removal, release and cancellation of all the collateral pledged to the Lender’s
benefit in accordance with the provisions to this Agreement and the Appendices
thereto. It is clarified that only documents signed by the Lender shall
constitute sufficient proof to release the collateral.

                                      


                                      
                                        	
                                                15.
      Miscellaneous

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                15.1.

                                              	
                                                The
      Borrower shall have no right to set off or lien in reference to the sums
      due to the Lender from the Borrower in accordance with this Agreement
      under any circumstances whatsoever.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                15.2.

                                              	
                                                This
      Agreement constitutes the full Agreement between the parties in reference
      to the subject of this Agreement and it replaces any other previous
      agreement or arrangement or understanding between the parties referring to
      the subject of this Agreement.

                                              


                                      

                                       

                                      
                                        
                                           

                                        

                                        
                                           

                                          
                                            

                                          

                                        

                                        
                                           

                                        

                                      

                                      
                                        	
                                                 
      

                                              	
                                                15.3.

                                              	
                                                Any
      abstention by the Lender or the Borrower from exercising any right
      whatsoever granted to the Lender or the Borrower in accordance with this
      Agreement or in all Law, or any delay or postponement of the exercise of
      any such right as aforementioned, shall not be considered waiver of that
      right and any single or partial exercise of a right by the party entitled
      to that right shall not prevent further or other exercise of that right or
      the exercise of any other right whatsoever in that party’s good stead in
      accordance with this Agreement or in all Law. The remedies and reliefs in
      accordance with this Agreement are in addition to and do not derogate from
      any other remedy or relief granted by all Law. Any extension or mitigation
      granted, or waiver or compromise made by either the Lender or the Borrower
      in any circumstances whatsoever, shall not be interpreted as a precedent
      or waiver in a difference circumstance and shall not derogate from the
      rights accruing to the Lender or the Borrower as appropriate, in
      accordance with this Agreement or in accordance with all
    Law.

                                              


                                      

                                      
                                        
                                          
                                          

                                        

                                      

                                      
                                        	
                                                 
      

                                              	
                                                15.4.

                                              	
                                                The
      Lender’s books and accounts shall be considered trustworthy by the
      Borrower with all that implied thereby pertaining to the Loan, including
      the balance of the Loan Principal, the accompanying payments, the
      interest, the index differentials, the costs, recording of payments and
      all other matters pertaining to this Loan and at all times, they shall
      serve as prima
      facie proof of that recorded
therein.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                15.5.

                                              	
                                                The
      Lender shall be entitled to sue and/or to submit claims against the
      Borrower for party of the Loan and/or part of the sums, which the Borrower
      owes to the Lender, without such derogating from or derogating in the
      future, from the Lender’s right to submit further claims in reference to
      the balance of the sums. Any sum claimed by the Lender shall serve as
      cause for a separate, independent claim in any other part of the Loan or
      for any part of the Loan.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                15.6.

                                              	
                                                The
      Borrower undertakes to take any steps and conduct any activity; to appear
      before any body and/or authority and to sign any document for the purposes
      of the complete fulfillment of this
Agreement.

                                              


                                      

                                      


                                      
                                        	
                                                 
      

                                              	
                                                15.7.

                                              	
                                                If
      a Court or a qualified mediator determine in a final decision obliging the
      parties that a commitment made in the Agreement, in whole or in part
      thereof, has no validity or is not reasonable, then to the extent that it
      shall be possible – the scale of that commitment shall be reduced in
      accordance with the decision handed down by that Court or mediator and
      that commitment shall be enforceable in accordance with the aforementioned
      decision. Furthermore, such a determination as aforementioned, shall not
      derogate from the other parts of the Agreement, which shall remain valid
      and obliging with all that implied thereby, to the extent that such shall
      not be a significant change to the economic significance of the
      transaction, which is the subject of this
  Agreement.

                                              


                                      

                                      
                                        
                                          
                                          

                                        

                                      

                                      
                                        	
                                                 
      

                                              	
                                                15.8.

                                              	
                                                The
      Laws of the State of Israel shall apply to this Agreement and its
      interpretation and the sole legal jurisdiction competent to hear any
      matter in connection with this Agreement or arising from this Agreement is
      hereby granted to the competent Court in Tel Aviv –
  Jaffa.

                                              


                                      

                                       

                                      
                                        
                                          	
                                                   
      

                                                	
                                                  15.9.

                                                	
                                                  Any
      notice in accordance with this Agreement shall be given in writing and
      sent to the parties addresses as stated in the preamble to this Agreement
      and shall be considered notice delivered to the addressee, four (4)
      business days after the date on which that notice was handed in for
      sending by registered mail or the first business day after the sending of
      that notice by fax; for the purposes of that delivery as aforementioned,
      it shall suffice to prove that the notice was handed in for sending by
      registered mail, addressed in accordance with
  Law.

                                                


                                        

                                      

                                       

                                      The
Borrower undertakes to give written notice to the Lender of any changes that
occur, if such shall occur, to the Lender’s address or name or any other detail
that appears in this Agreement. Until such notice has been received, the address
that appears in the Lender’s books shall be considered the Borrower’s address
for all matters and the sending of an item of mail to that address shall be
considered as having reached its destination, even if returned because of a
change of address.

                                       

                                      
                                        
                                           

                                        

                                        
                                           

                                          
                                            

                                          

                                        

                                        
                                           

                                        

                                      

                                       

                                      Now
in witness thereof, the parties have signed below:

                                       

                                      
                                        	
                                                
                                                    By:
      /s/ Irit Eluz

                                                

                                                
                                                           /s/
      Yoram Firon

                                                  
                                                    
      

                                                  Merhav Ampal Energy Ltd. 

                                                   

                                                

                                                 

                                                By:
      /s/ Itzhak Tawil

                                                       /s/
      Ofer Nargasi

                                                _________________________

                                              	
                                                By:
      /s/ Irit Eluz

                                                
                                                  
                                                          /s/
      Yoram Firon

                                                      
      

                                                          
                                                      012
      Smile Telecom Ltd.


                                                  

                                                

                                                 

                                                 

                                                By:
      /s/ Yoni Tal 

                                                       /s/
      Haim Hoisman

                                                _________________________

                                              
	
                                                Harel
      Insurance Company Ltd

                                              	
                                                Menora
      Mivtachim Insurance Ltd.

                                              
	
                                                 

                                                By:
      /s/ Itzhak Tawil

                                                       /s/
      Ofer Nargasi

                                                _________________________

                                              	
                                                By:
      /s/ Rami Armon

                                                       /s/
      Israel Ezra

                                                _________________________

                                              
	
                                                Manof
      Pension Fund Management Ltd.

                                              	
                                                Menora
      Mivtachim Pension Ltd

                                              
	
                                                 

                                                By:
      /s/ Itzhak Tawil

                                                       /s/
      Ofer Nargasi

                                                _________________________

                                              	
                                                By:
      /s/ Yoni Tal 

                                                       /s/
      Rami Armon

                                                _________________________

                                              
	
                                                Savings
      Fund for the Regular Army –

                                                 Pension
      Fund Management Company Ltd.

                                              	
                                                Menora
      Mivtachim Gemel Ltd.

                                                 

                                              
	
                                                 

                                                By:
      /s/ Itzhak Tawil

                                                       /s/
      Ofer Nargasi

                                                _________________________

                                              	 
      
	
                                                Dikla
      Insurance Company Ltd.

                                              	 
      
	
                                                 

                                                By:
      /s/ Itzhak Tawil

                                                       /s/
      Ofer Nargasi

                                                _________________________

                                              	 
      
	
                                                Gilad
      Comprehensive Pension Fund Ltd.

                                              	 
      
	
                                                 

                                                By:
      /s/ Itzhak Tawil

                                                       /s/
      Ofer Nargasi

                                                _________________________

                                              	 
      
	
                                                Harel
      Pension Funds Management Ltd

                                              	 
      
	
                                                 

                                                By:
      /s/ Itzhak Tawil

                                                       /s/
      Ofer Nargasi

                                                _________________________

                                              	 
      
	
                                                Harel
      Gemel Ltd.

                                              	 
      
	
                                                 

                                                By:
      /s/ Itzhak Tawil

                                                       /s/
      Ofer Nargasi

                                                _________________________

                                              	 
      
	
                                                Atidit
      Pension Funds Ltd.