Document:

8-K

Exhibit 10.2  

EXHIBIT B  

THIS SECURITY AND THE WARRANT SHARES
TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE NOR ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. 

THE HOLDER OF THIS SECURITY AND THE
WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY AND THE WARRANT SHARES TO BE ISSUED UPON ITS
EXERCISE, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”), WHICH
IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS SECURITY OR THE WARRANT
SHARES, AS THE CASE MAY BE, AND THE LAST DATE ON WHICH AMPAL-AMERICAN ISRAEL CORPORATION
(“AMPAL”) OR ANY AFFILIATE OF AMPAL WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) ONLY (A) TO AMPAL OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (C) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
AMPAL’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION
SATISFACTORY TO IT, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO AMPAL OR AMPAL’S TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THIS WARRANT MAY NOT
BE EXERCISED UNTIL SUCH TIME AS THE TRANSACTIONS CONTEMPLATED BY THE SECURITIES PURCHASE
AGREEMENT, DATED AS OF NOVEMBER 28, 2006, BETWEEN AMPAL AND THE ORIGINAL HOLDER HEREOF
HAVE BEEN APPROVED BY THE SHAREHOLDERS OF AMPAL. 

THE HOLDER OF THIS SECURITY AND THE
WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE, BY ITS ACCEPTANCE HEREOF, AGREES NOT TO
ENGAGE IN ANY HEDGING TRANSACTION UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. THE HOLDER
OF THIS SECURITY AND THE WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE, BY ITS ACCEPTANCE
HEREOF, AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THESE LEGENDS. 

THIS SECURITY MAY NOT BE EXERCISED BY
OR ON BEHALF OF A U.S. PERSON (AS SUCH TERM IS DEFINED IN RULE 902(K) OF THE SECURITIES
ACT) UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. 

AMPAL-AMERICAN ISRAEL
CORPORATION 

WARRANT 

	Warrant No. [   ] 	Original Issue Date: December 28, 2006

        Ampal-American
Israel Corporation, a New York corporation (the “Company”), hereby
certifies that, for value received, [ ] or its registered assigns (the
“Holder”), is entitled to purchase from the Company up to a total of [
]1 shares of Class A Stock (each such share, a “Warrant
Share” and all such shares, the “Warrant Shares”), on the first
Business Day of each calendar month from and after the date that Shareholder Approval is
obtained and through and including the Expiration Date (as defined below), and
subject to the following terms and conditions: 

    1.        Definitions.
As used in this Warrant, the following terms shall have the           respective
definitions set forth in this Section 1. Capitalized terms that are           used and
not defined in this Warrant that are defined in the Purchase Agreement           (as
defined below) shall have the respective definitions set forth in the           Purchase
Agreement.  

        “Business
Day” means any day except Saturday, Sunday and any day that is a federal legal
holiday in the United States or Israel or a day on which banking institutions in the State
of New York or Israel are authorized or required by law or other government action to
close. 

        “Class
A Stock” means the Class A Stock of the Company, par value $1.00 per share, and
any securities into which such Class A Stock may hereafter be reclassified. 

        “Exercise
Price” means $4.65, subject to adjustment in accordance with Section 9. 

        “Expiration
Date” shall mean the eight (8) month anniversary of the Original Issue Date. 

        “Fundamental
Transaction” means any of the following: (1) the Company effects any merger or
consolidation of the Company with or into another Person, (2) the Company effects any sale
of all or substantially all of its assets in one or a series of related transactions, (3)
any tender offer or exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Class A Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (4) the Company effects any
reclassification of the Class A Stock or any compulsory share exchange pursuant to which
the Class A Stock is effectively converted into or exchanged for other securities, cash or
property. 

     	1	
          A number of shares as equals 50% of the Shares issuable to such investor at
          Closing under the Purchase Agreement. 

          

2

        “Original
Issue Date” means the Original Issue Date first set forth on the first page of
this Warrant. 

        “New
York Courts” means the state and federal courts sitting in the City of New York,
Borough of Manhattan. 

        “Purchase
Agreement” means the Securities Purchase Agreement, dated November 28, 2006, to
which the Company and the original Holder are parties. 

        “Trading
Day” means (i) a day on which the Class A Stock is traded on a Trading Market
(other than the OTC Bulletin Board), or (ii) if the Class A Stock is not listed on a
Trading Market (other than the OTC Bulletin Board), a day on which the Class A Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if
the Class A Stock is not quoted on any Trading Market, a day on which the Class A Stock is
quoted in the over-the-counter market as reported by the Pink Sheets LLC (or any similar
organization or agency succeeding to its functions of reporting prices); provided, that in
the event that the Class A Stock is not listed or quoted as set forth in (i), (ii) and
(iii) hereof, then Trading Day shall mean a Business Day. 

    2.        Registration
of Warrant. The Company shall register this Warrant upon           records to be
maintained by the Company for that purpose (the “Warrant           Register”),
in the name of the record Holder hereof from time to time.           The Company may deem
and treat the registered Holder of this Warrant as the           absolute owner hereof
for the purpose of any exercise hereof or any distribution           to the Holder, and
for all other purposes, absent actual notice to the contrary.  

    3.        Registration
of Transfers. The Company shall register the transfer of any           portion of
this Warrant in the Warrant Register, upon surrender of this Warrant,           with the
Form of Assignment attached hereto duly completed and signed, to the           Company at
its address specified herein and upon satisfaction of the           requirements set
forth herein and in the restrictive legend of this Warrant.           Upon any such
registration or transfer, a new Warrant to purchase Class A Stock,           in
substantially the form of this Warrant (any such new Warrant, a “New
          Warrant”), evidencing the portion of this Warrant so transferred shall
          be issued to the transferee and a New Warrant evidencing the remaining portion
          of this Warrant not so transferred, if any, shall be issued to the transferring
          Holder. The acceptance of the New Warrant by the transferee thereof shall be
          deemed the acceptance by such transferee of all of the rights and obligations
of           a holder of a Warrant.  

    4.        Exercise
and Duration of Warrants. This Warrant shall be exercisable by           the
registered Holder on the first Business Day of each calendar month from and
          after the date that Shareholder Approval is obtained and through and including
          theExpiration Date. At 5:30 p.m., New York City time on the Expiration
          Date, the portion of this Warrant not exercised prior thereto shall be and
          become void and of no value. The Company may not call or redeem any portion of
          this Warrant without the prior written consent of the affected Holder. If
          Shareholder Approval is not obtained, this Warrant shall be void and of no
          value.  

3

    5.        Delivery
of Warrant Shares.  

		    (a)        To
effect exercises hereunder, the Holder shall not be required to physically
          surrender this Warrant unless the aggregate Warrant Shares represented by this
          Warrant is being exercised. Upon delivery of the Exercise Notice (in the form
          attached hereto) to the Company (with the attached Warrant Shares Exercise Log)
          at its address for notice set forth herein and upon payment of the Exercise
          Price multiplied by the number of Warrant Shares that the Holder intends to
          purchase hereunder, the Company shall promptly (but in no event later than
three           Trading Days after the Date of Exercise (as defined herein)) issue and
deliver           to the Holder, a certificate for the Warrant Shares with the
restrictive legends           required by the Purchase Agreement. The Company shall, upon
request of the           Holder and subsequent to the date on which a registration
statement covering the           resale of the Warrant Shares has been declared effective
by the Securities and           Exchange Commission, use its reasonable best efforts to
deliver Warrant Shares           hereunder electronically through the Depository Trust
Corporation or another           established clearing corporation performing similar
functions, if available, provided, that, the Company may, but will not be required
to change its           transfer agent if its current transfer agent cannot deliver
Warrant Shares           electronically through the Depository Trust Corporation. A “Date
of           Exercise” means the date on which the Holder shall have delivered
to           the Company: (i) the Exercise Notice (with the Warrant Exercise Log attached
to           it and, if necessary, the legal opinion referenced therein), appropriately
          completed and duly signed and payment of the Exercise Price for the number of
          Warrant Shares so indicated by the Holder to be purchased.  

		    (b)        If
by the tenth Trading Day after a Date of Exercise the Company fails to           deliver
the required number of Warrant Shares in the manner required pursuant to
          Section 5(a), then the Holder will have the right to rescind such exercise.  

		    (c)        The
Company shall have no obligation to deliver any Warrant Shares to the Holder           if
the Company cannot be reasonably assured by the Holder (such assurance, at           the
request of the Company, to include a legal opinion in a form reasonably
          satisfactory to the Company) that the Warrant is not being exercised within the
          United States and that the Warrant Shares are not being delivered within the
          United States, other than in offerings deemed to meet the definition of
          “offshore transaction” pursuant to Rule 902(h) of the Securities Act,
          unless registered under the Securities Act or an exemption from such
          registration is then available.  

    6.        Charges,
Taxes and Expenses. Issuance and delivery of Warrant Shares upon           exercise
of this Warrant shall be made without charge to the Holder for any           issue or
transfer tax, withholding tax, transfer agent fee or other incidental           tax or
expense in respect of the issuance of such certificates, all of which           taxes and
expenses shall be paid by the Company; provided, however, that the           Company
shall not be required to pay any tax which may be payable in respect of           any
transfer involved in the registration of any certificates for Warrant Shares           or
Warrants in a name other than that of the Holder. The Holder shall be
          responsible for all other tax liability that may arise as a result of holding
or           transferring this Warrant or receiving Warrant Shares upon exercise hereof,
          including income taxes due under federal, state or other law, if any such tax
is           due.  

4

    7.        Replacement
of Warrant. If this Warrant is mutilated, lost, stolen or           destroyed, the
Company shall issue or cause to be issued in exchange and           substitution for and
upon cancellation hereof, or in lieu of and substitution           for this Warrant, a
New Warrant, but only upon receipt of evidence reasonably           satisfactory to the
Company of such loss, theft or destruction and customary and           reasonable
indemnity (which shall not include a surety bond), if requested.           Applicants for
a New Warrant under such circumstances shall also comply with           such other
reasonable regulations and procedures and pay such other reasonable           third-party
costs as the Company may prescribe. If a New Warrant is requested as           a result
of a mutilation of this Warrant, then the Holder shall deliver such           mutilated
Warrant to the Company as a condition precedent to the Company’s
          obligation to issue the New Warrant.  

    8.        Reservation
of Warrant Shares. The Company covenants that it will at all           times reserve
and keep available out of the aggregate of its authorized but           unissued and
otherwise unreserved Class A Stock, solely for the purpose of           enabling it to
issue Warrant Shares upon exercise of this Warrant as herein           provided, the
number of Warrant Shares which are then issuable and deliverable           upon the
exercise of this entire Warrant, free from preemptive rights or any           other
contingent purchase rights of Persons other than the Holder (taking into
          account the adjustments and restrictions of Section 9). The Company covenants
          that all Warrant Shares so issuable and deliverable shall, upon issuance and
the           payment of the applicable Exercise Price in accordance with the terms
hereof, be           duly and validly authorized, issued and fully paid and
nonassessable.  

    9.        Certain
Adjustments. The Exercise Price and number of Warrant Shares           issuable upon
exercise of this Warrant are subject to adjustment from time to           time as set
forth in this Section 9.  

		    (a)        Stock
Dividends and Splits. If the Company, at any time while this           Warrant is
outstanding, (i) pays a stock dividend on its Class A Stock or           otherwise makes
a distribution on any class of capital stock that is payable in           shares of Class
A Stock, (ii) subdivides outstanding shares of Class A Stock           into a larger
number of shares, or (iii) combines outstanding shares of Class A           Stock into a
smaller number of shares, then in each such case the Exercise Price           shall be
multiplied by a fraction of which the numerator shall be the number of           shares
of Class A Stock outstanding immediately before such event and of which           the
denominator shall be the number of shares of Class A Stock outstanding
          immediately after such event. Any adjustment made pursuant to clause (i) of
this           paragraph shall become effective immediately after the record date for the
          determination of stockholders entitled to receive such dividend or
distribution,           and any adjustment pursuant to clause (ii) or (iii) of this
paragraph shall           become effective immediately after the effective date of such
subdivision or           combination.  

		    (b)        Fundamental
Transactions. If, at any time while this Warrant is           outstanding there is a
Fundamental Transaction, then the Holder shall have the           right thereafter to
receive, upon exercise of this Warrant, the same amount and           kind of securities,
cash or property as it would have been entitled to receive           upon the occurrence
of such Fundamental Transaction if it had been, immediately           prior to such
Fundamental Transaction, the holder of the number of Warrant           Shares then
issuable upon exercise in full of this Warrant (the “Alternate Consideration”).
For purposes of any such exercise,           the determination of the Exercise Price
shall be appropriately adjusted to apply           to such Alternate Consideration based
on the amount of Alternate Consideration           issuable in respect of one share of
Class A Stock in such Fundamental           Transaction, and the Company shall apportion
the Exercise Price among the           Alternate Consideration in a reasonable manner
reflecting the relative value of           any different components of the Alternate
Consideration. If holders of Class A           Stock are given any choice as to the
securities, cash or property to be received           in a Fundamental Transaction, then
the Holder shall be given the same choice as           to the Alternate Consideration it
receives upon any exercise of this Warrant           following such Fundamental
Transaction. The terms of any agreement pursuant to           which a Fundamental
Transaction is effected shall include terms requiring any           such successor or
surviving entity to comply with the provisions of this           paragraph (b) and
insuring that the Warrant (or any such replacement security)           will be similarly
adjusted upon any subsequent transaction analogous to a           Fundamental
Transaction.  

5

		    (c)        Number
of Warrant Shares. Simultaneously with any adjustment to the           Exercise Price
pursuant to this Section 9, the number of Warrant Shares that may           be purchased
upon exercise of this Warrant shall be increased or decreased           proportionately,
so that after such adjustment the aggregate Exercise Price           payable hereunder
for the adjusted number of Warrant Shares shall be the same as           the aggregate
Exercise Price in effect immediately prior to such adjustment.  

		    (d)        Calculations.
All calculations under this Section 9 shall be made to the           nearest cent or the
nearest 1/100th of a share, as applicable. The           number of shares of
Class A Stock outstanding at any given time shall not           include shares owned or
held by or for the account of the Company, and the           disposition of any such
shares shall be considered an issue or sale of Class A           Stock.  

		    (e)        Notice
of Adjustments. Upon the occurrence of each adjustment pursuant to           this
Section 9, the Company at its expense will promptly compute such adjustment           in
accordance with the terms of this Warrant and prepare a certificate setting
          forth such adjustment, including a statement of the adjusted Exercise Price and
          adjusted number or type of Warrant Shares or other securities issuable upon
          exercise of this Warrant (as applicable), describing the transactions giving
          rise to such adjustments and showing in detail the facts upon which such
          adjustment is based. Upon written request, the Company will promptly deliver a
          copy of each such certificate to the Holder and to the Company’s Transfer
          Agent.  

		    (f)        Notice
of Corporate Events. If the Company (i) declares a dividend or any           other
distribution of cash, securities or other property in respect of its Class           A
Stock, including without limitation any granting of rights or warrants to
          subscribe for or purchase any capital stock of the Company or any Subsidiary,
          (ii) authorizes or approves, enters into any agreement contemplating or
solicits           stockholder approval for any Fundamental Transaction or (iii)
authorizes the           voluntary dissolution, liquidation or winding up of the affairs
of the Company,           then the Company shall deliver to the Holder a notice
describing the material           terms and conditions of such transaction (but only to
the extent such disclosure           would not result in the dissemination of material,
non-public information to the           Holder) at least 10 calendar days prior to the
applicable record or effective           date on which a Person would need to hold Class
A Stock in order to participate           in or vote with respect to such transaction,
and the Company will take all steps           reasonably necessary in order to insure
that the Holder is given the practical           opportunity to exercise this Warrant
prior to such time so as to participate in           or vote with respect to such
transaction; provided, however, that the failure to           deliver such notice or any
defect therein shall not affect the validity of the           corporate action required
to be described in such notice.  

6

    10.        Payment
of Exercise Price; Cash Exercise. The Holder may pay the Exercise           Price
only be the delivery of immediately available funds.  

    11.        Limitations
on Exercise. Notwithstanding anything to the contrary           contained herein, the
number of Warrant Shares that may be acquired by the           Holder upon any exercise
of this Warrant (or otherwise in respect hereof) shall           be limited to the extent
necessary to insure that, following such exercise (or           other issuance), the
total number of shares of Class A Stock then beneficially           owned by such Holder
and its Affiliates and any other Persons whose beneficial           ownership of Class A
Stock would be aggregated with the Holder’s for           purposes of Section 13(d)
of the Exchange Act, does not exceed 9.99% of the           total number of issued and
outstanding shares of Class A Stock (including for           such purpose the shares of
Class A Stock issuable upon such exercise). For such           purposes, beneficial
ownership shall be determined in accordance with Section           13(d) of the Exchange
Act and the rules and regulations promulgated thereunder.           This provision shall
not restrict the number of shares of Class A Stock which a           Holder may receive
or beneficially own in order to determine the amount of           securities or other
consideration that such Holder may receive in the event of a           Fundamental
Transaction as contemplated in Section 9 of this Warrant. This           restriction may
not be waived, and notwithstanding anything to the contrary in           any Transaction
Document, may not be amended by agreement of the parties.  

    12.        No
Fractional Shares. No fractional shares of Warrant Shares will be           issued in
connection with any exercise of this Warrant. In lieu of any           fractional shares
which would, otherwise be issuable, the Company shall pay cash           equal to the
product of such fraction multiplied by the closing price of one           Warrant Share
as reported by the applicable Trading Market on the date of           exercise.  

    13.        Notices.
Any and all notices or other communications or deliveries           hereunder (including,
without limitation, any Exercise Notice) shall be in           writing and shall be
deemed given and effective on the earliest of (i) the date           of transmission, if
such notice or communication is delivered via facsimile at           the facsimile number
specified in this Section prior to 5:30 p.m. (New York City           time) on a Trading
Day, (ii) the next Trading Day after the date of           transmission, if such notice
or communication is delivered via facsimile at the           facsimile number specified
in this Section on a day that is not a Trading Day or           later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the Trading           Day following the date of
mailing, if sent by nationally recognized overnight           courier service, or (iv)
upon actual receipt by the party to whom such notice is           required to be given.
The addresses for such communications shall be: (i) if to           the Company, to 111
Arlozorov Street, Tel Aviv, Israel 62098, Attn: President,           or to facsimile no.:
972-608-0101 (or such other address as the Company shall           indicate in writing in
accordance with this Section), or (ii) if to the Holder,           to the address or
facsimile number appearing on the Warrant Register or such           other address or
facsimile number as the Holder may provide to the Company in           accordance with
this Section.  

    14.        Warrant
Agent. The Company shall serve as warrant agent under this           Warrant. Upon 10
calendar days’ notice to the Holder, the Company may           appoint a new warrant
agent. Any corporation into which the Company or any new           warrant agent may be
merged or any corporation resulting from any consolidation           to which the Company
or any new warrant agent shall be a party or any           corporation to which the
Company or any new warrant agent transfers           substantially all of its corporate
trust or shareholders services business shall           be a successor warrant agent
under this Warrant without any further act. Any           such successor warrant agent
shall promptly cause notice of its succession as           warrant agent to be mailed (by
first class mail, postage prepaid) to the Holder           at the Holder’s last
address as shown on the Warrant Register.  

7

    15.        Miscellaneous.  

		    (a)        This
Warrant shall be binding on and inure to the benefit of the parties hereto           and
their respective successors and assigns. Subject to the preceding sentence,
          nothing in this Warrant shall be construed to give to any Person other than the
          Company and the Holder any legal or equitable right, remedy or cause of action
          under this Warrant. This Warrant may be amended only in writing signed by the
          Company and the Holder and their successors and assigns.  

		    (b)        All
questions concerning the construction, validity, enforcement and           interpretation
of this Warrant shall be governed by and construed and enforced           in accordance
with the internal laws of the State of New York, without regard to           the
principles of conflicts of law thereof. Each party agrees that all legal
          proceedings concerning the interpretations, enforcement and defense of this
          Warrant and the transactions herein contemplated (“Proceedings”)
(whether brought against a party hereto or its           respective Affiliates, employees
or agents) shall be commenced exclusively in           the New York Courts. Each party
hereto hereby irrevocably submits to the           exclusive jurisdiction of the New York
Courts for the adjudication of any           dispute hereunder or in connection herewith
or with any transaction contemplated           hereby or discussed herein, and hereby
irrevocably waives, and agrees not to           assert in any Proceeding, any claim that
it is not personally subject to the           jurisdiction of any New York Court, or that
such Proceeding has been commenced           in an improper or inconvenient forum. Each
party hereto hereby irrevocably           waives personal service of process and consents
to process being served in any           such Proceeding by mailing a copy thereof via
registered or certified mail or           overnight delivery (with evidence of delivery)
to such party at the address in           effect for notices to it under this Warrant and
agrees that such service shall           constitute good and sufficient service of
process and notice thereof. Nothing           contained herein shall be deemed to limit
in any way any right to serve process           in any manner permitted by law. Each
party hereto hereby irrevocably waives, to           the fullest extent permitted by
applicable law, any and all right to trial by           jury in any legal proceeding
arising out of or relating to this Warrant or the           transactions contemplated
hereby. If either party shall commence a Proceeding to           enforce any provisions
of this Warrant, then the prevailing party in such           Proceeding shall be
reimbursed by the other party for its attorney’s fees           and other costs and
expenses incurred with the investigation, preparation and           prosecution of such
Proceeding.  

		    (c)        The
headings herein are for convenience only, do not constitute a part of this
          Warrant and shall not be deemed to limit or affect any of the provisions
hereof.  

8

		    (d)        In
case any one or more of the provisions of this Warrant shall be invalid or
          unenforceable in any respect, the validity and enforceability of the remaining
          terms and provisions of this Warrant shall not in any way be affected or
          impaired thereby and the parties will attempt in good faith to agree upon a
          valid and enforceable provision which shall be a commercially reasonable
          substitute therefor, and upon so agreeing, shall incorporate such substitute
          provision in this Warrant.  

		    (e)        Prior
to exercise of this Warrant, the Holder hereof shall not, by reason of           being a
Holder, be entitled to any rights of a stockholder with respect to the           Warrant
Shares.  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

9

        IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized
officer as of the date first indicated above. 

			AMPAL-AMERICAN ISRAEL CORPORATION

By:
——————————————

Name:
Title:

10

EXERCISE NOTICE 

AMPAL-AMERICAN ISRAEL CORPORATION 

WARRANT DATED DECEMBER __, 2006 

The undersigned Holder hereby
irrevocably elects to purchase _____________ shares of Class A Stock pursuant to the above
referenced Warrant. Capitalized terms used herein and not otherwise defined have the
respective meanings set forth in the Warrant. 

(1)     The
undersigned Holder hereby exercises its right to purchase _________________
          Warrant Shares pursuant to the Warrant.  

(2)     The
holder shall pay the sum of $____________ to the Company in accordance with           the
terms of the Warrant.  

(3)     Pursuant
to this Exercise Notice, the Company shall deliver to the holder
          _______________ Warrant Shares in accordance with the terms of the Warrant.  

(5)     By its
delivery of this Exercise Notice, the undersigned represents and warrants           to
the Company that in giving effect to the exercise evidenced hereby the Holder
          will not beneficially own in excess of the number of shares of Class A Stock
          (determined in accordance with Section 13(d) of the Securities Exchange Act of
          1934) permitted to be owned under Section 11 of this Warrant to which this
          notice relates.  

(6)     By its
delivery of this Exercise Notice, the undersigned represents and warrants           to
the Company that it is not a U.S. person (as such term is defined in Rule
          902(k) of the Securities Act) and the Warrant is not being exercised on behalf
          of a U.S. person or, if the foregoing is not the case, the undersigned
covenants           and agrees to provide to the Company concurrently herewith, in
customary form, a           written opinion of counsel (such counsel to be reasonably
satisfactory to the           Company) to the effect that the Warrant and the Warrant
Shares have been           registered under the Securities Act or are exempt from
registration thereunder.  

	Dated: _______________________, _______      	Name of Holder:

(Print) _______________________

By: _________________________

Name: _______________________

Title: ________________________

(Signature  must  conform  in all  respects  to  name of

holder as specified on the face of the Warrant)

Warrant Shares
Exercise Log 

	Date	Number of Warrant Shares

Available to be Exercised	Number of Warrant Shares

Exercised	Number of Warrant

Shares Remaining to

be Exercised
	 
 
 
 
 
 	 
 
 
 
 
 	 
 
 
 
 
 	 
 
 
 
 
 

AMPAL-AMERICAN ISRAEL
CORPORATION 

WARRANT ORIGINALLY ISSUED DECEMBER __, 2006 

WARRANT NO. [ ] 

FORM OF ASSIGNMENT 

        [To
be completed and signed only upon transfer of Warrant] 

        FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the above-captioned Warrant to
purchase ____________ shares of Class A Stock to which such Warrant relates and appoints
________________ attorney to transfer said right on the books of the Company with full
power of substitution in the premises. 

Dated: _______________,
____ 

	 	_______________________________________

(Signature  must  conform in all respects to name of holder as

specified on the face of the Warrant)

_______________________________________

Address of Transferee

_______________________________________

_______________________________________

In the presence of:8-K

Exhibit 10.3  

EXHIBIT A  

REGISTRATION RIGHTS
AGREEMENT 

        This
Registration Rights Agreement (this “Agreement”) is made and entered into
as of December 28, 2006, by and among Ampal-American Israel Corporation, a company formed
under the laws Israel (the “Company”) and the investors signatory hereto
(each a “Investor” and collectively, the “Investors”). 

        This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date
hereof among the Company and the Investors (the “Purchase Agreement”). 

        The
Company and the Investors hereby agree as follows: 

    1.        Definitions.
Capitalized terms used and not otherwise defined herein that           are defined in the
Purchase Agreement will have the meanings given such terms in           the Purchase
Agreement. As used in this Agreement, the following terms have the           respective
meanings set forth in this Section 1:  

        “Advice”
has the meaning set forth in Section 6(d). 

        “Effective
Date” means, as to the Registration Statement, the date on which such
Registration Statement is first declared effective by the Commission. 

        “Effectiveness
Period” has the meaning set forth in Section 2(a). 

        “Exchange
Act” means the Securities Exchange Act of 1934, as amended. 

        “Filing
Date” means the earlier of (i) the 60th calendar day following the
date that Shareholder Approval is obtained and (ii)July 28, 2007. 

        “Holder”
or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities. 

        “Indemnified
Party” has the meaning set forth in Section 5(c). 

        “Indemnifying
Party” has the meaning set forth in Section 5(c). 

        “Losses”
has the meaning set forth in Section 5(a). 

        “New
York Courts” means the state and federal courts sitting in the City of New York,
Borough of Manhattan. 

        “Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced or
threatened. 

        “Prospectus”
means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and supplements
to the Prospectus, including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus. 

        “Registrable
Securities” means: (i) the Shares, (ii) the Warrant Shares and (iii) any
securities issued or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to any of the securities referenced in (i)
or (ii) above. 

        “Registration
Statement” means the registration statement required to be filed in accordance
with Section 2(a), including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be incorporated
by reference therein. 

        “Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule. 

        “Rule
415” means Rule 415 promulgated by the Commission pursuant to the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule. 

        “Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule. 

        “Securities
Act” means the Securities Act of 1933, as amended. 

        “Shares”
means the shares of Common Stock issued to the Investors pursuant to the Purchase
Agreement. 

        “Warrants”
means the Common Stock purchase warrants issued or issuable to the Investors pursuant
to the Purchase Agreement. 

        “Warrant
Shares” means the shares of Common Stock issued or issuable upon exercise of the
Warrants. 

2

    2.       Registration.  

		    (a)       On
or prior to the Filing Date, the Company shall prepare and file with the
          Commission a Registration Statement covering the resale of all Registrable
          Securities not already covered by an existing and effective registration
          statement for an offering to be made on a continuous basis pursuant to Rule
415,           on Form S-3 (or on such other form appropriate for such purpose). Such
          Registration Statement shall contain (except if otherwise required pursuant to
          written comments received from the Commission upon a review of such
Registration           Statement) the “Plan of Distribution” attached hereto as
Annex           A. The Company shall use its reasonable commercial efforts to
cause such           Registration Statement to be declared effective under the Securities
Act and to           keep the Registration Statement continuously effective under the
Securities Act           until the date which is the earliest of (i) five years
after its Effective           Date, (ii) such time as all of the Registrable Securities
covered by such           Registration Statement have been publicly sold by the Holders,
or (iii) such           time as all of the Registrable Securities covered by such
Registration Statement           may be sold by the Holders pursuant to Rule 144(k) as
determined by the counsel           to the Company pursuant to a written opinion letter
to such effect, addressed           and acceptable to the Company’s transfer agent
and the affected Holders           (the “Effectiveness Period”). By 5:00
p.m. New York City time           on the Trading Day immediately following the Effective
Date, the Company shall           file with the Commission in accordance with Rule 424
under the Securities Act           the final prospectus to be used in connection with
sales pursuant to such           Registration Statement (whether or not such filing is
technically required under           such Rule). With respect to each Holder, from the
date of Closing until the date           on which all of the Registrable Securities that
such Holder owns become freely           transferable under Rule 144(k) promulgated under
the Securities Act, the Company           agrees to use its reasonable best efforts: (i) to
make and keep public           information available, as those terms are understood and
defined in the General           Instructions to Form S-3, or any successor or substitute
form, and in Rule 144,           (ii) to file with the SEC all reports and other
documents required to be           filed by an issuer of securities registered under
Sections 13 or 15(d) of the           Exchange Act, and (iii) if such filings are not
available via EDGAR, to furnish           to such Holder as long as the Holder owns or
has the right to acquire any           Registrable Securities prior to the applicable
termination date described above,           a copy of the most recent annual or quarterly
report of the Company, and such           other reports and documents so filed by the
Company under Sections 13 or 15(d)           of the Exchange Act as may be reasonably
requested in availing such Holder of           any rule or regulation of the SEC
permitting the selling of any such Registrable           Securities without registration.  

		    (b)       If:
(i) the Registration Statement is not filed on or prior to its Filing Date           (if
the Company files the Registration Statement without affording the Holders           the
opportunity to review and comment on the same as required by Section 3(a)
          hereof, the Company shall not be deemed to have satisfied this clause (i)), or
          (ii) if by the third Trading Day immediately following the Effective Date the
          Company shall not have filed a “final” prospectus for the
Registration           Statement with the Commission under Rule 424(b) (whether or not
such a           prospectus is actually required by such Rule), (any such failure or
breach being           referred to as an “Event,” and the date on which
such Event           occurs, being referred to as “Event Date”), then in
addition to           any other rights the Holders may have hereunder or under applicable
law: on each           such Event Date, and on each monthly anniversary of each such
Event Date (if the           applicable Event shall not have been cured by such date)
until the applicable           Event is cured, the Company shall pay to each Holder an
amount in cash, as           partial liquidated damages and not as a penalty, equal to
0.5% of the aggregate           Investment Amount paid by such Holder for Shares pursuant
to the Purchase           Agreement, up to a maximum aggregate liquidated damages of 10%
of the amount           paid by such Holder. The partial liquidated damages pursuant to
the terms hereof           shall apply on a daily pro-rata basis for any portion of a
month prior to the           cure of an Event, except in the case of the first Event
Date.  

3

		    (c)       Each
Holder (and any assignee of Holder) agrees to furnish to the Company a
          completed Questionnaire in the form attached to this Agreement as Annex B          (a
“Selling Holder Questionnaire”). The Company shall not be
          required to include the Registrable Securities of a Holder in the Registration
          Statement who fails to furnish to the Company a fully completed Selling Holder
          Questionnaire at least two Trading Days prior to the Filing Date (subject to
the           requirements set forth in Section 3(a)).  

		    (d)       In
the event of a public sale of the Company’s equity securities by the
          Company in an underwritten offering, the Holders agree, if requested by the
          managing underwriter or underwriters in such underwritten offering, not to
          effect any public sale or distribution of any securities (except, in each case,
          as part of the applicable registration, if permitted) that are the same as or
          similar to those being registered in connection with such public sale by the
          Company, or any securities convertible into or exchangeable or exercisable for
          such securities, during the period beginning 7 days before, and ending 120 days
          (or such lesser period as may be permitted by the Company or such managing
          underwriter or underwriters) after, the effective date of the registration
          statement, filed in connection with such registration, to the extent timely
          notified in writing by the Company or the managing underwriter or underwriters.  

		    (e)       Notwithstanding
anything in this Agreement to the contrary, if the Company shall           furnish to the
selling Holders a certificate signed by the Chief Executive           Officer of the
Company stating that the Board of Directors has made the good           faith
determination (i) that continued use by the selling Holders of the
          Registration Statement for purposes of effecting offers or sales of Registrable
          Securities pursuant thereto would require, under the Securities Act, disclosure
          in the Registration Statement (or the prospectus relating thereto) of material,
          nonpublic information concerning the Company, its business or prospects or any
          proposed transaction involving the Company, and (ii) that such disclosure
          would be premature and would be adverse to the Company, its business or
          prospects or any such proposed transaction or would make the successful
          consummation by the Company of any such transaction significantly less likely,
          then the right of the selling Holders to use the Registration Statement (and
the           prospectus relating thereto) for purposes of effecting offers or sales of
          Registrable Securities pursuant thereto shall be suspended for a period (the
          “Suspension Period”) of not more than 60 days after delivery
by           the Company of the certificate referred to above in this Section 2(e).
During           the Suspension Period, none of the Holders shall offer or sell any
Registrable           Securities pursuant to or in reliance upon the Registration
Statement (or the           prospectus relating thereto). The Company may not exercise
this right more than           two times in each year after the Closing.  

		    (f)       Holders
shall not, during the period starting with the Company’s date of           filing
of, and ending ninety calendar days immediately following the effective           date of
any registration statement pertaining to securities of the Company, if           so
requested by an underwriter in an underwritten offering for the Company,           effect
any public sale or distribution of any of the Company’s equity           securities
including a sale pursuant to Rule 144. In addition, if requested by           the
Company, the Stockholders shall not effect any public sale or distribution           of
any of the Registrable Securities pursuant to the Registration Statement,
          during the ten-day period prior to any period during which an exchange ratio or
          similar valuation formula based upon the trading prices of the Company’s
          common stock is being calculated.  

4

    3.       Registration
Procedures.  

        In
connection with the Company’s registration obligations hereunder, the Company shall: 

		    (a)       Not
less than ten Trading Days prior to the filing of the Registration Statement           or
any related Prospectus or any amendment or supplement thereto, the Company
          shall furnish to each Holder copies of the “Selling Stockholders”          section
of such document, the “Plan of Distribution” and any risk           factor
contained in such document that addresses specifically this transaction           or the
Selling Stockholders, as proposed to be filed which documents will be           subject
to the review of such Holder. The Company shall not file the           Registration
Statement, any Prospectus or any amendments or supplements thereto           in which the
“Selling Stockholder” section thereof differs from the           disclosure
received from a Holder in its Selling Holder Questionnaire (as           amended or
supplemented).  

		    (b)       (i)
Prepare and file with the Commission such amendments, including           post-effective
amendments, to the Registration Statement and the Prospectus used           in connection
therewith as may be necessary to keep such Registration Statement           continuously
effective as to the applicable Registrable Securities for its           Effectiveness
Period and prepare and file with the Commission such additional           Registration
Statements in order to register for resale under the Securities Act           all of the
Registrable Securities; (ii) cause the related Prospectus to be           amended or
supplemented by any required Prospectus supplement, and as so           supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as           promptly as
reasonably possible to any comments received from the Commission           with respect
to the Registration Statement or any amendment thereto and, as           promptly as
reasonably possible provide the Holders true and complete copies of           all
correspondence from and to the Commission relating to such Registration
          Statement that would not result in the disclosure to the Holders of material
and           non-public information concerning the Company; and (iv) comply in all
material           respects with the provisions of the Securities Act and the Exchange
Act with           respect to the Registration Statement and the disposition of all
Registrable           Securities covered by such Registration Statement.  

5

		    (c)       Notify
the Holders as promptly as reasonably possible (and, in the case of           (i)(A)
below, not less than three Trading Days prior to such filing and, in the           case
of (v) below, not less than three Trading Days prior to the financial
          statements in the Registration Statement becoming ineligible for inclusion
          therein) and (if requested by any such Person) confirm such notice in writing
no           later than one Trading Day following the day (i)(A) when a Prospectus or any
          Prospectus supplement or post-effective amendment to the Registration Statement
          is proposed to be filed; (B) when the Commission notifies the Company whether
          there will be a “review” of such Registration Statement and whenever
          the Commission comments in writing on such Registration Statement (the Company
          shall provide true and complete copies thereof and all written responses
thereto           to each of the Holders that pertain to the Holders as a Selling
Stockholder or           to the Plan of Distribution, but not information which the
Company believes           would constitute material and non-public information); and (C)
with respect to           the Registration Statement or any post-effective amendment,
when the same has           become effective; (ii) of any request by the Commission or
any other Federal,           state or Israeli governmental authority for amendments or
supplements to the           Registration Statement or Prospectus or for additional
information; (iii) of the           issuance by the Commission of any stop order
suspending the effectiveness of the           Registration Statement covering any or all
of the Registrable Securities or the           initiation of any Proceedings for that
purpose; (iv) of the receipt by the           Company of any notification with respect to
the suspension of the qualification           or exemption from qualification of any of
the Registrable Securities for sale in           any jurisdiction, or the initiation or
threatening of any Proceeding for such           purpose; and (v) of the occurrence of
any event or passage of time that makes           the financial statements included in
the Registration Statement ineligible for           inclusion therein or any statement
made in such Registration Statement or           Prospectus or any document incorporated
or deemed to be incorporated therein by           reference untrue in any material
respect or that requires any revisions to such           Registration Statement,
Prospectus or other documents so that, in the case of           such Registration
Statement or the Prospectus, as the case may be, it will not           contain any untrue
statement of a material fact or omit to state any material           fact required to be
stated therein or necessary to make the statements therein,           in light of the
circumstances under which they were made, not misleading.  

		    (d)       Use
its reasonable efforts to avoid the issuance of, or, if issued, obtain the
          withdrawal of (i) any order suspending the effectiveness of the Registration
          Statement, or (ii) any suspension of the qualification (or exemption from
          qualification) of any of the Registrable Securities for sale in any
          jurisdiction, at the earliest practicable moment.  

		    (e)       Furnish
to each Holder, at the Company’s expense, at least one conformed           copy of
the Registration Statement and each amendment thereto and all exhibits           to the
extent requested by such Person (including those previously furnished)           promptly
after the filing of such documents with the Commission.  

		    (f)       Promptly
deliver to each Holder, without charge, a reasonable number of copies           of each
Prospectus or Prospectuses (including each form of prospectus) and each
          amendment or supplement thereto as such Persons may reasonably request. The
          Company hereby consents to the use of such Prospectus and each amendment or
          supplement thereto by each of the selling Holders in connection with the
          offering and sale of the Registrable Securities covered by such Prospectus and
          any amendment or supplement thereto.  

		    (g)       Prior
to any public offering of Registrable Securities, register or qualify such
          Registrable Securities for offer and sale under the securities or Blue Sky laws
          of all jurisdictions within the United States and Israel, to keep each such
          registration or qualification (or exemption therefrom) effective during the
          Effectiveness Period and to do any and all other acts or things necessary or
          advisable to enable the disposition in such jurisdictions of the Registrable
          Securities covered by the Registration Statement; provided, that the Company
          shall not be required to qualify generally to conduct business in any
          jurisdiction where it is not so qualified, or subject the Company to any tax in
          any such jurisdiction where it is not so subject, or file a general consent to
          service of process in any such jurisdiction.  

6

		    (h)       Cooperate
with the Holders, at the Holders’ request and expense, to           facilitate the
timely preparation and delivery of certificates representing           Registrable
Securities to be delivered to a transferee pursuant to the           Registration
Statement, which certificates shall be free, to the extent           permitted by the
Purchase Agreement, of all restrictive legends, and to enable           such Registrable
Securities to be in such denominations and registered in such           names as any such
Holders may request.  

		    (i)       Upon
the occurrence of any event contemplated by Section 3(c)(v), as promptly as
          reasonably possible, prepare a supplement or amendment, including a
          post-effective amendment, to the Registration Statement or a supplement to the
          related Prospectus or any document incorporated or deemed to be incorporated
          therein by reference, and file any other required document so that, as
          thereafter delivered, neither the Registration Statement nor the Prospectus
will           contain an untrue statement of a material fact or omit to state a material
fact           required to be stated therein or necessary to make the statements therein,
in           light of the circumstances under which they were made, not misleading.  

    4.       Registration
Expenses. All fees and expenses incident to the performance           of or
compliance with this Agreement by the Company shall be borne by the           Company
whether or not any Registrable Securities are sold pursuant to the           Registration
Statement. The fees and expenses referred to in the foregoing           sentence shall
include, without limitation, (i) all registration and filing fees           (including,
without limitation, fees and expenses (A) with respect to filings           required to
be made with any Trading Market on which the Common Stock is then           listed for
trading, and (B) in compliance with applicable state securities or           Blue Sky
laws or Israeli securities laws), (ii) printing expenses (including,           without
limitation, expenses of printing certificates for Registrable Securities           and of
printing prospectuses if the printing of prospectuses is reasonably           requested
by the holders of a majority of the Registrable Securities included in           the
Registration Statement), (iii) messenger, telephone and delivery expenses,           (iv)
fees and disbursements of counsel for the Company, (v) Securities Act           liability
insurance, if the Company so desires such insurance, and (vi) fees and           expenses
of all other Persons retained by the Company in connection with the
          consummation of the transactions contemplated by this Agreement. In addition,
          the Company shall be responsible for all of its internal expenses incurred in
          connection with the consummation of the transactions contemplated by this
          Agreement (including, without limitation, all salaries and expenses of its
          officers and employees performing legal or accounting duties), the expense of
          any annual audit and the fees and expenses incurred in connection with the
          listing of the Registrable Securities on any securities exchange as required
          hereunder. the company is not responsible for any counsel or any internal
          expenses the Holders.  

7

    5.       Indemnification.  

		    (a)       Indemnification
by the Company. The Company shall, notwithstanding any           termination of this
Agreement, indemnify and hold harmless each Holder, the           officers, directors,
agents, investment advisors, partners, members and           employees of each of them,
each Person who controls any such Holder (within the           meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act)           and the officers,
directors, agents and employees of each such controlling           Person, to the fullest
extent permitted by applicable law, from and against any           and all losses,
claims, damages, liabilities, costs (including, without           limitation, reasonable
costs of preparation and reasonable attorneys’ fees)           and expenses
(collectively, “Losses”), as incurred, arising out           of or
relating to any untrue or alleged untrue statement of a material fact           contained
in the Registration Statement, any Prospectus or any form of           prospectus or in
any amendment or supplement thereto or in any preliminary           prospectus, or
arising out of or relating to any omission or alleged omission of           a material
fact required to be stated therein or necessary to make the           statements therein
(in the case of any Prospectus or form of prospectus or           supplement thereto, in
light of the circumstances under which they were made)           not misleading, except
to the extent, but only to the extent, that (1) such           untrue statements or
omissions are based solely upon information regarding such           Holder furnished in
writing to the Company by such Holder expressly for use           therein, or to the
extent that such information relates to such Holder or such           Holder’s
proposed method of distribution of Registrable Securities and was           reviewed and
expressly approved in writing by such Holder expressly for use in           the
Registration Statement, such Prospectus or such form of Prospectus or in any
          amendment or supplement thereto (it being understood that the Holder has
          approved Annex A hereto for this purpose) or (2) in the case of an occurrence
of           an event of the type specified in Section 3(c)(ii)-(v), the use by such
Holder           of an outdated or defective Prospectus after the Company has notified
such           Holder in writing that the Prospectus is outdated or defective and prior
to the           receipt by such Holder of an Advice or an amended or supplemented
Prospectus,           but only if and to the extent that following the receipt of the
Advice or the           amended or supplemented Prospectus the misstatement or omission
giving rise to           such Loss would have been corrected. The Company shall notify
the Holders           promptly of the institution, threat or assertion of any Proceeding
of which the           Company is aware in connection with the transactions contemplated
by this           Agreement.  

		    (b)       Indemnification
by Holders. Each Holder shall, severally and not jointly,           indemnify and
hold harmless the Company, its directors, officers, agents and           employees, each
Person who controls the Company (within the meaning of Section           15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
          officers, agents or employees of such controlling Persons, to the fullest
extent           permitted by applicable law, from and against all Losses, as incurred,
arising           solely out of or based solely upon: (x) such Holder’s failure to
comply           with the prospectus delivery requirements of the Securities Act or (y)
any           untrue statement of a material fact contained in the Registration
Statement, any           Prospectus, or any form of prospectus, or in any amendment or
supplement           thereto, or arising solely out of or based solely upon any omission
of a           material fact required to be stated therein or necessary to make the
statements           therein not misleading to the extent, but only to the extent that,
(1) such           untrue statements or omissions are based solely upon information
regarding such           Holder furnished in writing to the Company by such Holder
expressly for use           therein, or to the extent that such information relates to
such Holder or such           Holder’s proposed method of distribution of
Registrable Securities and was           reviewed and expressly approved in writing by
such Holder expressly for use in           the Registration Statement (it being
understood that the Holder has approved           Annex A hereto for this purpose), such
Prospectus or such form of Prospectus or           in any amendment or supplement thereto
or (2) in the case of an occurrence of an           event of the type specified in
Section 3(c)(ii)-(v), the use by such Holder of           an outdated or defective
Prospectus after the Company has notified such Holder           in writing that the
Prospectus is outdated or defective and prior to the receipt           by such Holder of
an Advice or an amended or supplemented Prospectus, but only           if and to the
extent that following the receipt of the Advice or the amended or           supplemented
Prospectus the misstatement or omission giving rise to such Loss           would have
been corrected. In no event shall the liability of any selling Holder           hereunder
be greater in amount than the dollar amount of the net proceeds           received by
such Holder upon the sale of the Registrable Securities giving rise           to such
indemnification obligation.  

8

		    (c)       Conduct
of Indemnification Proceedings. If any Proceeding shall be           brought or
asserted against any Person entitled to indemnity hereunder (an           “Indemnified
Party”), such Indemnified Party shall promptly           notify the Person from
whom indemnity is sought (the “Indemnifying           Party”) in
writing, and the Indemnifying Party shall assume the defense           thereof, including
the employment of counsel reasonably satisfactory to the           Indemnified Party and
the payment of all fees and expenses incurred in           connection with defense
thereof; provided, that the failure of any Indemnified           Party to give such
notice shall not relieve the Indemnifying Party of its           obligations or
liabilities pursuant to this Agreement, except (and only) to the           extent that it
shall be finally determined by a court of competent jurisdiction           (which
determination is not subject to appeal or further review) that such           failure
shall have proximately and materially adversely prejudiced the           Indemnifying
Party.  

        An
Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party
has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to
any such Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel
that a conflict of interest is likely to exist if the same counsel were to represent such
Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter of such
Proceeding. 

        All
fees and expenses of the Indemnified Party (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such Proceeding in
a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified Party is not
entitled to indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to the extent
it is finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder). 

9

		    (d)       Contribution.
If a claim for indemnification under Section 5(a) or 5(b)           is unavailable to an
Indemnified Party (by reason of public policy or           otherwise), then each
Indemnifying Party, in lieu of indemnifying such           Indemnified Party, shall
contribute to the amount paid or payable by such           Indemnified Party as a result
of such Losses, in such proportion as is           appropriate to reflect the relative
fault of the Indemnifying Party and           Indemnified Party in connection with the
actions, statements or omissions that           resulted in such Losses as well as any
other relevant equitable considerations.           The relative fault of such
Indemnifying Party and Indemnified Party shall be           determined by reference to,
among other things, whether any action in question,           including any untrue or
alleged untrue statement of a material fact or omission           or alleged omission of
a material fact, has been taken or made by, or relates to           information supplied
by, such Indemnifying Party or Indemnified Party, and the           parties’ relative
intent, knowledge, access to information and opportunity           to correct or prevent
such action, statement or omission. The amount paid or           payable by a party as a
result of any Losses shall be deemed to include, subject           to the limitations set
forth in Section 5(c), any reasonable attorneys’ or           other reasonable fees
or expenses incurred by such party in connection with any           Proceeding to the
extent such party would have been indemnified for such fees or           expenses if the
indemnification provided for in this Section was available to           such party in
accordance with its terms.  

        The
parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any damages that
such Holder has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 

        The
indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties. 

    6.       Miscellaneous.  

		    (a)       Remedies.
In the event of a breach by the Company or by a Holder, of any           of their
obligations under this Agreement, each Holder or the Company, as the           case may
be, in addition to being entitled to exercise all rights granted by law           and
under this Agreement, including recovery of damages, will be entitled to
          specific performance of its rights under this Agreement. The Company and each
          Holder agree that monetary damages would not provide adequate compensation for
          any losses incurred by reason of a breach by it of any of the provisions of
this           Agreement and hereby further agrees that, in the event of any action for
          specific performance in respect of such breach, it shall waive the defense that
          a remedy at law would be adequate.  

		    (b)       No
Piggyback on Registrations. Neither the Company nor any of its           security
holders (other than the Holders in such capacity pursuant hereto) may           include
securities of the Company in the Registration Statement other than the
          Registrable Securities.  

10

		    (c)        Compliance.
Each Holder covenants and agrees that it will comply with the           prospectus
delivery requirements of the Securities Act as applicable to it in           connection
with sales of Registrable Securities pursuant to the Registration           Statement.  

		    (d)        Discontinued
Disposition. Each Holder agrees by its acquisition of such           Registrable
Securities that, upon receipt of a notice from the Company of the           occurrence of
any event of the kind described in Section 3(c), such Holder will           forthwith
discontinue disposition of such Registrable Securities under the           Registration
Statement until such Holder’s receipt of the copies of the           supplemented
Prospectus and/or amended Registration Statement or until it is           advised in
writing (the “Advice”) by the Company that the use           of the
applicable Prospectus may be resumed, and, in either case, has received           copies
of any additional or supplemental filings that are incorporated or deemed           to be
incorporated by reference in such Prospectus or Registration Statement.           The
Company may provide appropriate stop orders to enforce the provisions of           this
paragraph.  

		    (e)        Amendments
and Waivers. The provisions of this Agreement, including the           provisions of
this Section 6(e), may not be amended, modified or supplemented,           and waivers or
consents to departures from the provisions hereof may not be           given, unless the
same shall be in writing and signed by the Company and the           Holders of no less
than a majority in interest of the then outstanding           Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to           depart from the
provisions hereof with respect to a matter that relates           exclusively to the
rights of certain Holders and that does not directly or           indirectly affect the
rights of other Holders may be given by Holders of at           least a majority of the
Registrable Securities to which such waiver or consent           relates.  

		    (f)        Notices.
Any and all notices or other communications or deliveries           required or permitted
to be provided hereunder shall be in writing and shall be           deemed given and
effective on the earliest of (a) the date of transmission, if           such notice or
communication is delivered via facsimile (provided the sender           receives a
machine-generated confirmation of successful transmission) at the           facsimile
number specified in this Section prior to 6:30 p.m. (New York City           time) on a
Trading Day, (b) the next Trading Day after the date of transmission,           if such
notice or communication is delivered via facsimile at the facsimile           number
specified in this Section on a day that is not a Trading Day or later           than 6:30
p.m. (New York City time) on any Trading Day, (c) the Trading Day           following the
date of mailing, if sent by U.S. nationally recognized overnight           courier
service, or (d) upon actual receipt by the party to whom such notice is
          required to be given. The address for such notices and communications shall be
          as follows:  

	 	If to the Company:	Ampal-American Israel Corporation

111 Arlozorov Street

Tel Aviv, Israel 62098

Attention: Yoram Firon

Facsimile: 972-3-608-0101

	 	With a copy to:	Bryan Cave LLP

1290 Avenue of the Americas

New York, New York 10104

Attention: Kenneth L. Henderson, Esq.;

Facsimile: (212) 541-1357

	 	If to an Investor:	To the address set forth under such Investor's name on the signature pages
hereto.

	 	
If
to any other Person who is then the registered Holder: 

	 		To the address of such Holder as it appears in the stock transfer books of the
Company

or such other address as may be
designated in writing hereafter, in the same manner, by such Person. 

11

		    (g)       Successors
and Assigns. This Agreement shall inure to the benefit of and           be binding
upon the successors and permitted assigns of each of the parties and           shall
inure to the benefit of each Holder provided that the requirements of this
          Section 6(g) fulfilled. The Company may not assign its rights or obligations
          hereunder without the prior written consent of each Holder. None of the rights
          of any Holder under this Agreement shall be transferred or assigned to any
          person. Notwithstanding the foregoing, a Holder’s right under this
          Agreement may be assigned, in whole or in part, to any permitted transferee,
and           any permitted transferee shall be deemed to be a Holder (and, to the extent
          required by law, amend the Registration Statement in connection with such
          assignment); provided that no such assignment shall be effective or confer any
          right on any such assignee unless, prior to such assignment, the assignee
agrees           in writing, by executing and delivering to the Company a counterpart
signature           page to this Agreement and such assignee will be bound by all
provisions binding           on a Holder hereunder.  

		    (h)       Execution
and Counterparts. This Agreement may be executed in any number           of
counterparts, each of which when so executed shall be deemed to be an           original
and, all of which taken together shall constitute one and the same           Agreement.
In the event that any signature is delivered by facsimile           transmission, such
signature shall create a valid binding obligation of the           party executing (or on
whose behalf such signature is executed) the same with           the same force and
effect as if such facsimile signature were the original           thereof.  

		    (i)       Governing
Law. This Agreement shall be governed and interpreted in           accordance with
the internal laws of the State of New York, without regard to           the principles of
conflicts of law thereof. Each party hereby irrevocably           submits to the
jurisdiction of the New York Courts for the adjudication of all           Proceedings,
and hereby irrevocably waives, and agrees not to assert in any           Proceeding, any
claim that it is not personally subject to the jurisdiction of           any New York
Court, or that any such New York Court is an inconvenient or           improper forum for
such Proceeding. Each party hereby irrevocably waives           personal service of
process and consents to process being served in any           Proceeding by mailing a
copy thereof via registered or certified mail or           overnight delivery (with
evidence of delivery) to such party at the address set           forth on the signature
page hereto and agrees that such service shall constitute           good and sufficient
service of process and notice thereof. Nothing contained           herein shall be deemed
to limit in any way any right to serve process in any           manner permitted by law.
Each party hereby irrevocably waives, to the fullest           extent permitted by
applicable law, any and all right to trial by jury in any           Proceeding. If there
shall be commenced a Proceeding, then the prevailing party           in such Proceeding
shall be reimbursed by the adverse party or parties for its           reasonable
attorneys fees and other expenses incurred in connection therewith.  

12

		    (j)       Cumulative
Remedies. The remedies provided herein are cumulative and not           exclusive of
any remedies provided by law.  

		    (k)       Severability.
If any term, provision, covenant or restriction of this           Agreement is held by a
court of competent jurisdiction to be invalid, illegal,           void or unenforceable,
the remainder of the terms, provisions, covenants and           restrictions set forth
herein shall remain in full force and effect and shall in           no way be affected,
impaired or invalidated, and the parties hereto shall use           their reasonable
efforts to find and employ an alternative means to achieve the           same or
substantially the same result as that contemplated by such term,           provision,
covenant or restriction. It is hereby stipulated and declared to be           the
intention of the parties that they would have executed the remaining terms,
          provisions, covenants and restrictions without including any of such that may
be           hereafter declared invalid, illegal, void or unenforceable.  

		    (l)       Headings.
The headings in this Agreement are for convenience of reference           only and shall
not limit or otherwise affect the meaning hereof.  

13

        IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above. 

	 	
AMPAL-AMERICAN ISRAEL CORPORATION

By:_________________________________

     Name:

     Title: 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES OF INVESTOR TO FOLLOW]

        IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above. 

	 	
INVESTOR

 _______________________________________________

By: ____________________________________________

         Name:

         Title:

ADDRESS FOR NOTICE

c/o: ___________________________________________

Street: _________________________________________

City/State/Zip: ___________________________________

Attention: ______________________________________

Tel: ___________________________________________

Fax: ___________________________________________

Email: _________________________________________ 

15

Annex A 

Plan of Distribution 

        The
Selling Stockholders and any of their pledgees, donees, transferees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares of Common
Stock on any stock exchange, market or trading facility on which the shares are traded or
in private transactions. These sales may be at fixed or negotiated prices. The Selling
Stockholders may use any one or more of the following methods when selling shares: 

	—  	ordinary
brokerage transactions and transactions in which the broker-dealer solicits Investors;

	—  	block
trades in which the broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the transaction; 

	—  	purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;

	—  	an
exchange distribution in accordance with the rules of the applicable exchange;

	—  	privately
negotiated transactions;

	—  	to
cover short sales made after the date that this  Registration  Statement  is declared
 effective by the      Commission;

	—  	broker-dealers
 may agree with the Selling  Stockholders  to sell a  specified  number of such shares at
a      stipulated price per share;

	—  	a
combination of any such methods of sale; and

	—  	any
other method permitted pursuant to applicable law.

        The
Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if
available, rather than under this prospectus. 

        Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to participate
in sales. Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these
commissions and discounts to exceed what is customary in the types of transactions
involved. 

        The
Selling Stockholders may from time to time pledge or grant a security interest in some or
all of the Shares owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell shares of Common Stock
from time to time under this prospectus, or under an amendment to this prospectus under
Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the
list of selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus. 

16

        Upon
the Company being notified in writing by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Common Stock
through a block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if
required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of
each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number
of shares involved, (iii) the price at which such the shares of Common Stock were sold,
(iv)the commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this prospectus, and (vi)
other facts material to the transaction. In addition, upon the Company being notified in
writing by a Selling Stockholder that a donee or pledgee intends to sell more than 500
shares of Common Stock, a supplement to this prospectus will be filed if then required in
accordance with applicable securities law. 

        The
Selling Stockholders also may transfer the shares of Common Stock in other circumstances,
in which case the transferees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus. 

        The
Selling Stockholders and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities
Act in connection with such sales. In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of the shares purchased by them may
be deemed to be underwriting commissions or discounts under the Securities Act. Discounts,
concessions, commissions and similar selling expenses, if any, that can be attributed to
the sale of Securities will be paid by the Selling Stockholder and/or the purchasers. Each
Selling Stockholder has represented and warranted to the Company that it acquired the
securities subject to this Registration Statement in the ordinary course of such Selling
Stockholder’s business and, at the time of its purchase of such securities such
Selling Stockholder had no agreements or understandings, directly or indirectly, with any
person to distribute any such securities. 

        The
Company has advised each Selling Stockholder that it may not use shares registered on this
Registration Statement to cover short sales of Common Stock made prior to the date on
which this Registration Statement shall have been declared effective by the Commission. If
a Selling Stockholder uses this prospectus for any sale of the Common Stock, it will be
subject to the prospectus delivery requirements of the Securities Act. The Selling
Stockholders will be responsible to comply with the applicable provisions of the
Securities Act and Exchange Act, and the rules and regulations thereunder promulgated,
including, without limitation, Regulation M, as applicable to such Selling Stockholders in
connection with resales of their respective shares under this Registration Statement. 

        The
Company is required to pay all fees and expenses incident to the registration of the
shares, but the Company will not receive any proceeds from the sale of the Common Stock.
The Company has agreed to indemnify the Selling Stockholders against certain losses,
claims, damages and liabilities, including liabilities under the Securities Act. 

17

Annex B 

AMPAL-AMERICAN ISRAEL
CORPORATION 

Selling Securityholder
Notice and Questionnaire 

The undersigned beneficial owner of
common stock (the “Common Stock”), of Ampal-American Israel Corporation
(the “Company”) understands that the Company has filed or intends to file
with the Securities and Exchange Commission (the “Commission”) a
Registration Statement for the registration and resale of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement, dated as of November __,
2006 (the “Registration Rights Agreement”), among the Company and the
Investors named therein. A copy of the Registration Rights Agreement is available from the
Company upon request at the address set forth below. All capitalized terms used and not
otherwise defined herein shall have the meanings ascribed thereto in the Registration
Rights Agreement. 

The undersigned hereby provides the
following information to the Company and represents and warrants that such information is
accurate: 

QUESTIONNAIRE 

	1.  	Name.  

	 	(a) 	Full
Legal Name of Selling Securityholder

	 	
 

	 	(b) 	Full
Legal Name of Registered Holder (if not the same as (a) above) through
                    which Registrable Securities Listed in Item 3 below are held: 

	 	
 

	 	(c) 	Full
Legal Name of Natural Control Person (which means a natural person who
                    directly or indirectly alone or with others has power to vote or
dispose of the                     securities covered by the questionnaire): 

	 	
 

	2.  	Address
for Notices to Selling Securityholder:  

	
 

	
 

	
 

Telephone: ______________________________________________________ 

Fax: ____________________________________________________________

Contact Person: ___________________________________________________

18

	3.  	Beneficial
Ownership of Registrable Securities:  

	 	
Type
and Principal Amount of Registrable Securities beneficially owned:  

	 	
 

	 	
 

	 	
 

	4.  	Broker-Dealer
Status:  

	 	(a) 	Are
you a broker-dealer? 

Yes o
 No o

	 	         Note: 	If
yes, the Commission's staff has indicated that you should be identified as an underwriter
in                   the Registration Statement.

	 	(b) 	Are
you an affiliate of a broker-dealer? 

Yes o
 No  o

	 	(c) 	If
you are an affiliate of a broker-dealer, do you certify that you bought the
                    Registrable Securities in the ordinary course of business, and at the
time of                     the purchase of the Registrable Securities to be resold, you
had no agreements                     or understandings, directly or indirectly, with any
person to distribute the                     Registrable Securities? 

Yes o
 No o

	 	         Note: 	If
no, the Commission's staff has indicated that you should be identified as an underwriter
in                   the Registration Statement.

	5.  	Beneficial
Ownership of Other Securities of the Company Owned by the Selling
          Securityholder.

	 	
Except
as set forth below in this Item 5, the undersigned is not the beneficial or registered
owner of any securities of the Company other than the Registrable Securities
listed above in Item 3. 

	 	
Type
and Amount of Other Securities beneficially owned by the Selling Securityholder:  

	 	
 

	 	
 

	 	
 

19

	6.  	Relationships
with the Company:  

	 	
Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years. 

	 	
State
any exceptions here:  

	 	
 

The undersigned agrees to promptly
notify the Company of any inaccuracies or changes in the information provided herein that
may occur subsequent to the date hereof and prior to the Effective Date for the
Registration Statement. 

By signing below, the undersigned
consents to the disclosure of the information contained herein in its answers to Items 1
through 6 and the inclusion of such information in the Registration Statement and the
related prospectus. The undersigned understands that such information will be relied upon
by the Company in connection with the preparation or amendment of the Registration
Statement and the related prospectus. 

IN WITNESS WHEREOF the undersigned,
by authority duly given, has caused this Notice and Questionnaire to be executed and
delivered either in person or by its duly authorized agent. 

	Dated: ___________________________________	Beneficial Owner:_______________________

By: ____________________________________

     Name:

     Title:

PLEASE FAX A COPY OF THE COMPLETED
AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO: 

	 	Ampal-American
Israel Corporation 

111 Arlozorov Street 

Tel Aviv, Israel 62098 

Attention: Yoram Firon 

Facsimile: 972-3-608-0101 

20

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