Document:

20-F

Exhibit 4.28  

UNDERWRITING AGREEMENT  

Made and entered into
at Tel Aviv on the 15th day of August, 2006 

Between 

	 	
BLUE SQUARE REAL ESTATE LTD.

(hereinafter: "the Company")  

And 

	 	
POALIM I.B.I. - UNDERWRITING AND ISSUES LTD.

AFRICA-ISRAEL ISSUES LTD.

DISCOUNT UNDERWRITING AND ISSUES LTD.

CLAL FINANCE UNDERWRITING LTD.

ALTSCHULER SHACHAM MANAGEMENT, UNDERWRITING AND INVESTMENTS LTD.

ANALYST ISSUE MANAGEMENT LTD.

MENORA UNDERWRITING AND MANAGEMENT LTD.

Y.A.Z. INVESTMENTS AND PROPERTIES LTD.

EPSILON UNDERWRITING AND ISSUES LTD.

ROSARIO CAPITAL LTD.

MEITAV UNDERWRITING LTD.

L.L. UNDERWRITING AND INVESTMENTS LTD.

GILON - TAU UNDERWRITING AND ISSUES LTD.

SYNERGETICA UNDERWRITING LTD.

JERUSALEM CAPITAL MARKETS UNDERWRITING AND ISSUES (1994) LTD.

P.R. HACKER CAPITAL MARKETS LTD.

REVAVOT UNDERWRITING LTD.

YAAD (Z.R.) UNDERWRITING AND ISSUES LTD.

SIGMA P.C.M. UNDERWRITING AND BUSINESS PROMOTION (1993) LTD.

SHOHAR TOV LTD.

SIMODAN UNDERWRITING AND ISSUES (1993) LTD.

GOREN UNDERWRITERS LTD.

(hereinafter: "the Underwriters") 

	WHEREAS:  		The
Company is due to publish a prospectus pursuant to which it will offer the public
2,500,000 ordinary shares, NIS 100,000,000 par value Debentures (Series A) linked to the
index and convertible into ordinary shares of the Company, and NIS 650,000,000 par value
Debentures (Series B) linked to the index (hereinafter: “the Securities”);
and  

	WHEREAS:  		The
Securities will be offered to the public in a composition, a quantity, at a price, in a manner, at the times and on the conditions set forth in the prospectus that
is due to be published in connection therewith (hereinafter: “the Prospectus”);
and  

1

	WHEREAS:  		The
Company represents and warrants that the Securities are not and will not be, at the date
of their allotment, pledged or encumbered, that there is no right or claim by any third
party in respect thereof, that the Company has the full and exclusive right to issue and
offer the Securities to the public, and that all the permits and approvals required for
the purpose have been obtained, apart from a permit from the Securities Authority for
publication of the Prospectus and the approval of the Stock Exchange for the listing of
the Securities for trading; and  

	WHEREAS:  		The
Securities will be offered to the public in 500,000 units (hereinafter: “the Units”),
each comprised of 5 ordinary shares, NIS 200 par value Debentures (Series A) and NIS
1,300 par value Debentures (Series B) at a price of NIS 1,205.5 per Unit, in a tender
regarding the rate of interest that the Debentures (Series B) will bear which shall not
be less than 4.25% and shall not exceed 5% (hereinafter: “the Maximum Rate
of Interest”); and  

	WHEREAS:  		Institutional
investors have undertaken, by way of a prior commitment as described in
Prospectus, to apply for 400,000 Units forming part of the Units
offered to the public (hereinafter: "the Institutional Investors'
Units"); and  

	WHEREAS:  		The
Underwriters have undertaken to underwrite the purchase of the Units offered to
the public, apart from the Institutional Investors' Units
(hereinafter: "the Underwritten Units" or "the Underwritten
Securities") at a price of NIS 1,205.5 per unit and in a manner that
the Debentures (Series A) will bear interest at the Maximum Rate of
Interest (hereinafter: "the Price to the Underwriters");  

Now
therefore it is agreed, declared and stipulated by the parties as follows: 

	1.  	Preamble  

	 	
The
preamble to this Agreement and the appendices hereto form an integral part hereof. Words
in the plural in this Agreement shall also mean the singular, and vice versa.  

	 	
In
this Agreement the following terms will have the meanings set opposite them. Terms which
are not defined in this Agreement and which appear in the Prospectus, will have the
meaning ascribed to them in the Prospectus.  

2

	 			
	 	"The Lead Managers" 	-	Poalim I.B.I. - Underwriting Issues Ltd., Africa-Israel Issues Ltd., Discount Underwriting and Issues Ltd.
	 	 
	 	"Entities authorized to receive applications" 	-	Stock Exchange members.
	 	 
	 	"Coordinator of the issue" 	-	Poalim I.B.I. - Underwriting Issues Ltd.
	 	 
	 	"The Prospectus" 	-	Means the Prospectus the Company will publish in connection with the issue described above, which is attached to this Agreement as Appendix A, including any amendment to the Prospectus that may be agreed to between the Company and the Underwriters.
	 	 
	 	"The Stock Exchange" 	-	The Tel Aviv Stock Exchange Ltd.

	2.  	General  

	 	
This
Agreement is based on a prospectus the Company will publish in connection with the
offering of the Securities, and such changes as may be agreed upon between the Company
and the Lead Managers.  

	 	
This
Agreement reflects the mutual obligations between the Underwriters, except where
otherwise expressly stated and with such changes as may be agreed upon between the
Underwriters in relation to the Underwriters’ purchase undertakings as described in
Clause 3 below.  

	 	
The
Company hereby undertakes to deliver 400 copies of the Prospectus to the Lead Managers
immediately after publication of the Prospectus.  

3

	3.  	Percentage
participation of the Underwriters  

	 	
Each
of the individual Underwriters participates in underwriting the purchase of the
Underwritten Securities in accordance with the details set forth below:  

	 	Name
	No. underwritten

Units

	 	 	
	 	Poalim I.B.I. - Underwriting And Issues Ltd.	 	 	 	54,650	 
	 	Africa-Israel Issues Ltd.	 	 	 	3,100	 
	 	Discount Underwriting And Issues Ltd.	 	 	 	3,100	 
	 	Clal Finance Underwriting Ltd.	 	 	 	3,100	 
	 	Altschuler Shacham Management, Underwriting And Investments Ltd.	 	 	 	3,100	 
	 	Analyst Issue Management Ltd.	 	 	 	3,100	 
	 	Menora Underwriting And Management Ltd.	 	 	 	3,100	 
	 	Y.A.Z. Investments And Properties Ltd.	 	 	 	3,100	 
	 	Epsilon Underwriting And Issues Ltd.	 	 	 	3,100	 
	 	Rosario Capital Ltd.	 	 	 	3,100	 
	 	Meitav Underwriting Ltd.	 	 	 	3,100	 
	 	L.L. Underwriting And Investments Ltd.	 	 	 	3,100	 
	 	Gilon - Tau Underwriting And Issues Ltd.	 	 	 	3,100	 
	 	Synergetica Underwriting Ltd.	 	 	 	950	 
	 	Jerusalem Capital Markets Underwriting And Issues (1994) Ltd.	 	 	 	950	 
	 	P.R. Hacker Capital Markets Ltd.	 	 	 	950	 
	 	Revavot Underwriting Ltd.	 	 	 	950	 
	 	Yaad (Z.R.) Underwriting And Issues Ltd.	 	 	 	950	 
	 	Sigma P.C.M. Underwriting And Business Promotion (1993) Ltd.	 	 	 	950	 
	 	Shohar Tov Ltd.	 	 	 	950	 
	 	Simodan Underwriting And Issues (1993) Ltd.	 	 	 	950	 
	 	Goren Underwriters Ltd.	 	 	 	550	 
	 	                     Total 	  	  	  	100,000 	  

	4.  	The
underwriting undertaking  

	 	4.1 	The
Underwriters hereby undertake to purchase from the Company, each according to its
percentage share as set forth in Clause 3 above, all the Underwritten Securities in
relation to which the Company gives notice that applications for the purchase thereof
have not been submitted to it up to the time of closing of the subscriptions list, or
that the Company has not been paid the full price thereof for any reason up to the time
specified for payment in the Prospectus. 

	 	
The
purchase of the Underwritten Securities, if and to the extent that it is required as
aforesaid, shall be effected at the Price to the Underwriters, less taxes and levies, in
the event that there are such. 

	 	4.2 	Each
of the individual Underwriters will be responsible to the Company according to its
percentage participation as set forth above and without any mutual responsibility between
the Underwriters. 

	 	4.3 	For
purposes of calculating the number of Securities each of the Underwriters is obliged to
purchase according to its percentage participation as set forth in Clause 3 above, a
deduction shall be made from all the Underwritten Units, of Securities for which
applications for the purchase thereof were lodged other than through the Underwriters or
by the Underwriters, or other than through corporations under the control of the
Underwriters or persons acting on their behalf. 

4

	 	4.4 	Each
of the Underwriters will be obliged to purchase Securities forming part of the
Underwritten Securities in a quantity equivalent to the difference: 

	 	
Between:
the total number of Securities it undertook to participate in underwriting (as set forth
in Clause 3 above) and after the adjustment required by virtue of the fulfillment of the
provisions of Clause 4.3 above; 

	 	
And:
the total number of Securities for which applications for the purchase thereof were
lodged through the Underwriter or through a corporation on its behalf or by the
Underwriter or through an Entity Authorized to Receive Applications acting on its behalf
as stated in Clause 4.7 below, and which were met and the full consideration for which
was paid. 

	 	4.5 	Subject
to the foregoing, if applications were lodged through any Underwriter or through a
corporation acting on its behalf or by an Underwriter for the purchase of Securities in a
total number exceeding the number of Securities it is obliged to purchase as aforesaid,
the entire surplus balance as aforesaid shall be deemed to be an application for the
purchase thereof lodged by the Underwriters who have not abided by the percentage of
their participation (any surplus balance will be deemed to be an application for the
purchase thereof lodged as aforesaid only to the extent that same is required to
supplement the number of Securities which another Underwriter is obliged to purchase).
The policy with regard to apportionment of fractional units, if any, will be decided by
the Lead Managers. 

	 	4.6 	“Corporation
acting on behalf of” one of the Underwriters as stated in Clause 4.5 above means any
corporation which forms part of such Underwriter’s group. In the case of any doubt
regarding the affiliation of a corporation to the group of such Underwriter as aforesaid,
Poalim I.B.I. will decide and its decision will be final. 

	 	4.7 	Where
an Underwriter who is not an Entity Authorized to Receive Applications, has lodged
applications for the purchase of Securities through Entities Authorized to Receive
Applications, the following provisions will apply: 

	 	4.7.1 	The
Underwriter shall give notice, at the time of lodging of the applications, to the
authorized entity, and shall obtain confirmation from the authorized entity, that the
aforesaid applications are lodged on its behalf or by an Underwriter of the Prospectus. 

5

	 	4.7.2 	The
Underwriter shall give written notice to the Coordinator of the Issue on the date of
lodgment of the applications regarding the lodgment of the applications through the
authorized entity, coupled with mention of the name of the authorized entity and the
number of Securities that have been applied for as aforesaid, and shall attach a copy of
the application to its notice to the Coordinator, as well as the confirmation from the
authorized entity. The Underwriter’s notice in accordance with this sub-clause,
accompanied by a copy of the application and the confirmation, shall be final and binding. 

	 	4.7.3 	Where
an Underwriter has notified the Coordinator of the lodgment of applications through an
authorized entity, as described in sub-clause 4.7.2 above, the Securities included in
such applications shall be deemed to be securities the applications for the purchase op
which were lodged through such Underwriter, and subject to the condition that the
applications were lodged and the full consideration in respect thereof was paid to the
Company in accordance with the terms and conditions of the Prospectus, and the number of
Securities included in the applications will be deducted from the total Securities such
Underwriter is obliged to purchase, in accordance with Clause 3 above. For the removal of
doubt, these Securities will not under any circumstances be counted as part of the count
of Securities the applications for the purchase of which were lodged through another
Underwriter or another authorized entity. 

6

	 	4.8 	The
Underwriters or any of them shall not lodge applications for the purchase for themselves,
of Units in the issue pursuant to the Prospectus unless a notice is included in the
Prospectus regarding the total number of Units for which they have undertaken to apply
for themselves. The following is a list of the Underwriters who have given notice of
their intention to apply for Units for themselves in the scope of the tender to the
public: 

	 	Name 
	No. of units it has

undertaken to
 order for
itself 

	 		
	 		
	 		
	 		
	 	Poalim I.B.I. - Underwriting And Issues Ltd.	 	 	 	54,650	 
	 	Africa-Israel Issues Ltd.	 	 	 	3,100	 
	 	Discount Underwriting And Issues Ltd.	 	 	 	3,100	 
	 	Altschuler Shacham Management, Underwriting And Investments Ltd.	 	 	 	3,100	 
	 	Clal Finance Underwriting Ltd.	 	 	 	3,100	 
	 	Analyst Issue Management Ltd.	 	 	 	3,100	 
	 	Menora Underwriting And Management Ltd.	 	 	 	3,100	 
	 	Y.A.Z. Investments And Properties Ltd.	 	 	 	3,100	 
	 	Epsilon Underwriting And Issues Ltd.	 	 	 	3,100	 
	 	Rosario Capital Ltd.	 	 	 	2,170	 
	 	Meitav Underwriting Ltd.	 	 	 	3,100	 
	 	L.L. Underwriting And Investments Ltd.	 	 	 	3,100	 
	 	Gilon - Tau Underwriting And Issues Ltd.	 	 	 	3,100	 
	 	Synergetica Underwriting Ltd.	 	 	 	950	 
	 	Jerusalem Capital Markets Underwriting And Issues (1994) Ltd.	 	 	 	950	 
	 	P.R. Hacker Capital Markets Ltd.	 	 	 	950	 
	 	Revavot Underwriting Ltd.	 	 	 	475	 
	 	Yaad (Z.R.) Underwriting And Issues Ltd.	 	 	 	950	 
	 	Sigma P.C.M. Underwriting And Business Promotion (1993) Ltd.	 	 	 	950	 
	 	Goren Underwriters Ltd.	 	 	 	275	 

	 	
The
Company undertakes to include these notices in the Prospectus.  

	5.  	Declaration
of fitness  

	 	5.1 	Each
of the Underwriters hereby declares and represents to the Company that at the date of
signing of this Agreement the conditions of fitness which are required pursuant to the
Securities Regulations (Underwriting), 5753-1993, apply with respect to it, and it
declares and undertakes that it will have such fitness until the fulfillment of all its
aforesaid obligations, or until it becomes apparent that it has no obligation, and
undertakes that it will immediately notify the Company and the Lead Managers in regard to
any change in the correctness of its declaration regarding its fitness to serve as an
Underwriter. 

7

	 	5.2 	Each
of the individual Underwriters hereby declares that at the date of signing of this
Agreement it has undoubted and unconditional financial capability to comply with all its
obligations pursuant to this Agreement, and declares and undertakes that it will have
such financial capability until the fulfillment of all its aforesaid obligations, or
until it becomes apparent that it has no obligations, and that it will give immediate
notice to the Company and to the Lead Managers with regard to any change in the
correctness of its declaration or in its ability to comply with its obligations as
aforesaid. 

	 	5.3 	Poalim
I.B.I. – Underwriting and Issues Ltd. hereby declares and represents to the Company
that on the date of signing of this Agreement, Bank Hapoalim B.M. is not a controlling
shareholder therein, and consequently the restrictions prescribed in Regulations 10A(2)
and (3) of the Securities Regulations (Underwriting), 5753-1993, do not apply to it in
relation to the offering of Securities by the Company. 

	 	5.4 	If
notice as referred to in Clauses 5.1 and 5.2 above is received, and/or if The Lead
Managers are of the opinion that a change has occurred in the correctness of the
declarations or the capability of another Underwriter to fulfil its obligations as set
forth above, the Lead Managers may, in their sole discretion, notify the Underwriter that
it has been removed from the consortium of Underwriters and has been replaced by another
or by others, or that its share has been reduced, or may take any other step which
appears to them to be conducive in order to guarantee the performance of full and proper
underwriting of the Underwritten Securities. In the event that the Lead Managers exercise
their power as aforesaid, they shall give notice to that effect to the Company, and the
Company shall without delay give notice to that effect to the Securities Authority and to
the Stock Exchange. 

	 	
In
such circumstances, each of the Underwriters undertakes to sign an amendment to the
Prospectus, in the event that such notice necessitates an amendment to the Prospectus
according to Section 25 of the Securities Law, 5728-1968, in the opinion of the
Securities Authority or of the Lead Managers. 

	 	
Such
amendment shall not in itself constitute grounds for the release of any Underwriter from
its obligations pursuant to this Agreement. 

	6.  	Transfer
of money  

	 	6.1 	Shortly
before the day of the tender, the Coordinator of the Issue shall open a trust account
with a banking corporation (hereinafter: “the Special Account”). The
Special Account shall be managed and conducted exclusively by the Coordinator of the
Issue for and on behalf of the Company, and the amounts that have been paid, inter alia,
in respect of Securities the applications for the purchase of which through the
Coordinator of the Issue and through other members of the Stock Exchange, have been met,
shall be deposited in accordance with the terms and conditions of the Prospectus, and the
Coordinator of the Issue shall deal therewith and shall act in accordance with the
conditions of the Prospectus. 

8

	 	6.2 	The
Coordinator shall transfer to the Company the money that will be paid for Securities the
applications for which are met (including the fruits), less the full amounts of the
commissions as described in Clause 9 below, within one business day after such money is
received by it. 

	 	6.3 	The
transfer of the money is contingent upon the Coordinator receiving, simultaneous with the
transfer of the money as stated in Clause 6.2 above, letters of allotment in respect of
the Securities that have been purchased by the public, for the nominees company through
which the Securities will be traded on the Stock Exchange. 

	 	6.4 	The
amounts of commissions that have been deducted by the Coordinator shall be transferred to
the Underwriters and to the Entities Authorized to Receive Applications who are entitled
thereto pursuant to the Prospectus. 

	 	6.5 	Notwithstanding
the contents of Clauses 6.2 and 6.4 above and in accordance with this Agreement, the
Coordinator shall not transfer any money to the Company and to the Underwriters, unless
the conditions specified in the Stock Exchange directives for the existence of a minimum
spread, and for the listing for trading on the Stock Exchange, as described in the
Prospectus have been fulfilled. 

	 	6.6 	If
the Securities are not listed for trading, the Coordinator shall return to the applicants
the consideration for the Units that has been paid by them, if paid, together with the
fruits that have accrued in respect thereof, if any, and less any tax according to law,
if such tax applies. 

	7.  	Realization
of the underwriting obligation  

	 	7.1 	On
the first day of trading following the day of the tender, not later than 3:00 p.m., the
Company will notify the Coordinator of the Issue as to the total number of Securities
forming part of the Securities offered which the Underwriters are obliged to purchase in
accordance with the terms and conditions of this Agreement. 

	 	7.2 	If
the Underwriters are obliged to purchase Securities forming part of the Securities
offered in accordance with the notice as aforesaid, the Underwriters shall send to the
Company, through the Coordinator of the Issue, and in accordance with the terms and
conditions of the Prospectus, the consideration for those Securities they are obliged to
purchase as stated in this Agreement, by not later than 5:00 p.m. on the third trading
day following the day of the tender, subject to the condition that the requirements for
the minimum spread and the remaining conditions for listing for trading on the Stock
Exchange, as defined in the Prospectus, have been fulfilled. 

	 	7.3 	Against
receipt of any amount forming part of the aforesaid consideration, the Company shall
transfer and allot the Securities to the Underwriters which they have purchased, and
shall deliver letters of allotment in respect thereof to the Underwriters. 

9

	 	7.4 	The
Underwriters will be entitled to deduct from the consideration in respect of the
Securities offered to the public which they are obliged to purchase, all amounts of the
commissions that are due to them in accordance with this Agreement, provided that the
amounts of the commission have not been deducted at that time in accordance with Clause
6.4 above. 

	 	7.5 	This
Agreement will be deemed to be an irrevocable application by the Underwriters to purchase
the Underwritten Securities which they have undertaken to buy as stated in this
Agreement. 

	8.  	Listing
for trading and arrangements  

	 	
The
Company shall take steps and shall do everything it can to cause a situation that the
Securities offered pursuant to the Prospectus will be traded on the Stock Exchange.  

	9.  	Commissions  

	 	
In
consideration for the undertakings and services of the Lead Managers and the Underwriters
in accordance with this Agreement, including the services for coordination of the issue,
and in consideration for the services of the Entities Authorized to Receive Applications
and the services and undertakings of the Institutional Investors, the Company will make
payment, through the Coordinator of the Issue, by not later than the first business day
following the day of the tender (subject to Clause 6 above), of the amounts specified
below, out of the Special Account:  

	  	9.1  	To
the Underwriters 

	 	
An
underwriting commission at a rate of 1% of the overall immediate proceeds of the
Underwritten Units, where same are calculated according to the price per unit. The
commission will be divided between the Underwriters according to their proportionate
share in their undertaking as set forth in Clause 3 above, and without reference to the
number of Units that were applied for through them. 

	  	9.2 	To
the Institutional Investors 

	 	
The
Company will pay a prior commitment commission to the Institutional Investors at a rate
of 1% of the total immediate proceeds in respect of the Securities in relation to which
the Institutional Investors have undertaken to lodge applications, where such commission
is calculated according to the price per unit. 

	  	9.3  	To
the Entities Authorized to Receive Applications 

	 	
A
distribution commission at a rate of 0.1% of the total immediate proceeds which are
actually received in respect of the Securities that are purchased as a consequence of
applications that will be lodged through them. This commission will also be paid to the
Institutional Investors in respect of Securities they have purchased in order to comply
with their prior commitment (accordingly, the Entities Authorized to Receive Applications
will not be entitled to the distribution commission in respect of Units the Institutional
Investors have purchased as aforesaid to comply with their prior commitment). 

10

	  	9.4  	To
the Lead Managers and to the Underwriters 

	 	
A
management and participations commission at a rate of 2% of the overall immediate
proceeds that will actually be received in respect of the Units offered pursuant to the
Prospectus. This commission will be divided between the Lead Managers and the
Underwriters in accordance with the sole discretion of Poalim I.B.I. 

	  	9.5  	To
Poalim I.B.I. 

	 	
A
success commission in a case in which the rate of interest that will be fixed in the
tender for the Debentures (Series A) is lower than the Maximum Rate of Interest, in an
amount equivalent to a multiplication of the par value of the Debentures (Series B) which
are offered in the Prospectus by the difference between the Maximum Rate of Interest and
the rate of interest that will be fixed in the tender. However under no circumstances
shall the success commission exceed 0.4% of the proceeds of the issue under the
Prospectus. 

	  	9.6  	Reimbursement
of expenses 

	 	
The
Company will pay Poalim  I.B.I.  a  reimbursement  of expenses in an amount of $20,000
              and a coordination commission in a sum of NIS 20,000. 

	 	
The
commissions mentioned above shall be paid in full, also in a case of the purchase of
Securities by the Underwriters in accordance with the provisions of this Agreement. If
the Underwriters are obliged to purchase Securities in accordance with the provisions of
this Agreement, the commissions will be paid to each Underwriter after such Underwriter
has purchased the Securities the purchase of which it undertook to effect in accordance
with this Agreement and has paid the full consideration in respect thereof.  

	 	
In
the case of Underwriters and entities who are “an authorized trader” within the
meaning of the Value Added Tax Law, the Company will pay the commissions and the amounts
specified above together with Value Added Tax against receipt of a valid tax invoice.  

	 	
The
Underwriters and the Entities Authorized to Receive Applications are entitled to give
their customers a discount out of the distribution commissions to which they are
entitled. The payments will be effected by the Company through the Coordinator of the
Issue. The foregoing constitutes an irrevocable instruction from the Company to the
Coordinator of the Issue.  

11

	10.  	Declarations
by the Company  

	 	
The
Company hereby represents and warrants to the Underwriters that: – 

	 	10.1 	It
has carried out all the examinations in order to check and verify the information
contained in the Prospectus, that the Prospectus, including any amendment that may be
inserted therein as stated below, faithfully describes all the material information in
relation to the Company, the facts, the agreements (verbal and in writing), the permits,
licenses and all the remaining details mentioned therein, and that the Prospectus does
not omit any particular likely to be important to a reasonable investor contemplating the
purchase of securities pursuant thereto and it does not contain any misleading particular
as defined in the Securities Law, 5728-1968 (hereinafter: “Misleading Particular”). 

	 	10.2 	The
Company will indemnify the Underwriters, or any one of them, in respect of pecuniary
liability imposed on an Underwriter in favor of another person pursuant to a judgment,
including a judgment given in a compromise or an arbitrator’s award confirmed by a
court, by virtue of the fact that there was a Misleading Particular in the Prospectus, as
well as in respect of reasonable costs of litigation, including attorney’s fees that
any of the Underwriters has incurred or been ordered to pay by a court in such
proceedings or in connection with a criminal indictment of which the Underwriter was
acquitted or of which it was convicted of an offense that does not require criminal
intent or as a consequence of an investigation or proceeding conducted against it by an
authority competent to conduct an investigation or proceeding, and which culminated
without an indictment being filed against it and without monetary liability being imposed
on it as a substitute for criminal proceedings (as defined in the Companies Law,
5759-1999) or which culminated in no indictment being filed against it but with the
imposition of a monetary obligation as a substitute for criminal proceeding on an offense
that does not require the proof of criminal intent, all by virtue of the Prospectus
containing a Misleading Particular. 

	 	
Each
of the Underwriters will be entitled to demand from the Company in writing that the
Company conduct on its behalf any negotiations or defense against such claim. If the
Company does not comply with the aforesaid request within 15 days, such Underwriter may
compromise with the plaintiff for any amounts it sees fit, and the Company shall be
obliged to indemnify it for the amount of the compromise and for any reasonable amount it
incurred in the course of handling the claim and which is directly connected therewith,
provided that the Company was given written notice 7 days in advance of the intention to
compromise as aforesaid, and the Company did not take upon itself the conduct of the
claim. 

12

	 	
Notwithstanding
the foregoing, the amounts of indemnity shall not under any circumstances exceed a sum of
NIS 911 million (linked to the Consumer Price Index commencing from the date of signing
of this Agreement). Notwithstanding the foregoing, no amount in respect of the indemnity
will be paid which is greater than 25% of the Company’s equity capital according to
the Company’s last consolidated financial statements at the time of the demand for
indemnity by the Underwriters in accordance with this Agreement (hereinafter: “the
Interim Amount”), in the event that there is a reasonable fear that the payment
thereof will prevent the Company from meeting its existing and anticipated obligations
(apart from the Company’s obligations to the controlling shareholders therein) at
the date of the demand by the Underwriters for indemnity (hereinafter: “the
Condition”). It is clarified that payment of the indemnity up to the Interim
Amount is not subject to the Condition, and that the Condition does not derogate from the
rights of the Underwriters to remedies against the Company in accordance with and subject
to any law, and that the Condition shall not apply in the event that a liquidation order
is issued against the Company or a provisional receiver is appointed for it in a
proceeding initiated other than by any of the Underwriters on causes of action pursuant
to this Agreement. Such indemnity will not be given unless it has been proved that the
Underwriter believed in good faith that the Prospectus did not contain a Misleading
Particular. Likewise no indemnity will be given in respect of an act performed by the
Underwriter intentionally or recklessly. 

	 	
The
aforesaid obligations for indemnity will not apply vis-à-vis any
Underwriter in connection with the inclusion of a Misleading Particular in the Prospectus
that was based on information given to the Company by such Underwriter in writing, or on
a request in writing, for purposes of such information being used in the preparation of
the Prospectus. 

	 	
Upon
the service of any claim and/or demand for payment, as aforesaid, on any Underwriter,
such Underwriter shall forthwith give notice to that effect to the Company and to the
Lead Managers. 

	 	10.3 	Without
derogating from the generality of the Company’s representations and warranties, as
set forth in this Clause 10, the Company will deliver to the Underwriters, simultaneous
with the signing of this Agreement, the following documents: 

	 	10.3.1 	An
opinion from the attorneys for the issue in accordance with the text set forth in
Appendix B. 

	 	10.3.2 	A
certificate from the Company’s accountant according to the text attached as Appendix
C. 

	 	10.3.3 	A
certificate signed by the chairman of the Company’s board of directors, the CEO of
the Company and its financial officer, according to the text set forth in Appendix D. 

	11.  	Additional
duties of disclosure  

	 	
From
the date of signing of this Agreement and up to the date of payment for the Securities
offered pursuant to the Prospectus:  

13

	 	11.1 	The
Company will enable the Lead Managers to regularly peruse and inspect, at their request,
all the minutes of its general meetings, of meetings of its board of directors and
committees of directors (including an audit committee) and of any material agreement (or
a draft of such agreement prior to the signing thereof) to which the Company is a party.
The Company undertakes to draw the attention of the Lead Managers to every signing of a
material agreement immediately after the signing thereof, and with regard to the conduct
of negotiations relating to the signing of a material agreement as aforesaid. 

	 	11.2 	The
Company shall furnish the Lead Managers, in writing with any information the Company is
obliged to report to the Securities Authority in accordance with the Securities Law
(including a report under Chapter D and Chapter F) of the Law, and in accordance with the
Securities Regulations (Furnishing of Notices to the Authority), 5744-1984, as well as
all the reports the Company is obliged to report to the Stock Exchange, in accordance
with the Stock Exchange requirements, and it shall comply with its obligations for
rendering reports to the Securities Authority and to the Stock Exchange as aforesaid. 

	 	
The
Company shall without delay notify the Lead Managers about any material change or the
development of a tendency for a material adverse change in the Company’s financial
statements or in the method of presentation of the data therein. 

	 	11.3 	If
as a result of a disclosure as referred to in Clauses 11.2 and 11.3, the Lead Managers
should decide to demand an amendment to the Prospectus or an amended Prospectus, the
parties will immediately take all the necessary steps, to the satisfaction of the Lead
Managers, to effect the amendment as quickly as possible, including an application to the
Securities Authority in accordance with Section 25 and/or 25A of the Securities Law. 

	 	11.4 	Upon
the publication of any financial statement by the Company, the statement shall be
attached to the Prospectus, without delay, by way of an amendment to the Prospectus or an
amended prospectus, in a manner that is acceptable to the Lead Managers. 

	12.  	Coming
into force of the Underwriters’ undertakings  

	 	
The
Underwriters’ undertakings pursuant to this Agreement will come into immediate force
(but not retroactively) once a permit is received from the Securities Authority for
publication of the Prospectus in accordance with the contents of Section 21 of the
Securities Law. The Company undertakes that not later than one business day after the
date of the Prospectus, it will publish a notice as referred to in Section 23(c)(2) of
the aforesaid law in two newspapers.  

	13.  	Additional
approvals  

	 	
The
Company will deliver to the Lead Managers, within two business days after the date of the
Prospectus, a copy of a certificate from the attorneys for the issue to the effect that
an approval has been received from the Stock Exchange and a permit has been received from
the Securities Authority for publication of the Prospectus and effecting of the issue
pursuant thereto, and that a duly signed Prospectus by the Company and its directors was
indeed reported on Magna.  

14

	14.  	Release
of Underwriter from obligations  

	 	
Notwithstanding
everything stated in this Agreement, if it should transpire that the Prospectus contains
any Misleading Particular or that an important particular was omitted from the Prospectus
or in a case that the Securities Authority gives an instruction to the Company in
accordance with Section 25(a) and/or Section 25A(b) of the Securities Law, to publish an
amendment to the Prospectus or to publish an amended prospectus, or in a case that the
Company should request (without having received the prior consent thereto of The Lead
Managers) to make an amendment to the Prospectus in accordance with Section 25A(a) of the
aforesaid law, the Underwriters or any of them will be entitled, by giving notice to the
Company within 2 business days from the date on which it became aware of one of the
events enumerated above, as the case may be, but not later than 12 hours before the
subscriptions list, to be released from all their obligations to the Company pursuant to
the Underwriting Agreement. This shall apply if the Misleading Particular or the
important particular omitted from the Prospectus as aforesaid was not known to such
Underwriter at the time of signing of the Underwriting Agreement, or if the instruction
was given or the request submitted as a consequence of something that was not known to
such Underwriter at the time of signing of the Underwriting Agreement, which had same
been known to it would reasonably not have contracted with the Company and the offeror
under the Underwriting Agreement, or would not have entered into this Agreement under the
same conditions.  

	 	
The
Company shall give notice on the same day to the Lead Managers as to an instruction
having been given by the Securities Authority to publish an amendment to the Prospectus
as aforesaid or of the Company having submitted a request to publish an amended
prospectus as aforesaid.  

	 	
If
one or more of the Underwriters exercises its right as aforesaid and is released from its
obligations pursuant to the Underwriting Agreement as aforesaid, the Company will apply
to the Securities Authority with an application to amend the Prospectus in accordance
with the provisions of Section 25A(a) of the Securities Law. Such application and the
amendment of the Prospectus in consequence thereof shall not in themselves serve as
grounds for the release of any Underwriter from its obligations pursuant to this
Agreement.  

	 	
If
any of the Lead Managers should act in accordance with this provision and be released
from its obligations as aforesaid without another Lead Manager assuming the obligations
of the Lead Managers who has been released, the Underwriting Agreement will also be
cancelled with the remaining underwriters, and the Company will refer to the Securities
Authority with an application to amend the Prospectus or to cancel the issue, in the
Company’s discretion. In a situation where the Company has chosen not to cancel the
issue and to implement it without an underwriting obligation, it shall refer to the
Securities Authority with a request to publish an amended prospectus in which the
Underwriting Agreement will not be included and the signatures of the Underwriters will
not be included. If for any reason such amended prospectus is not published, the issue
will be cancelled.  

15

	15.  	Circumstances
for cancellation of the Issue  

	 	
Notwithstanding
the contents of this Agreement, it is agreed that the Lead Managers will be entitled, in
their absolute discretion, to cancel all the obligations of the Underwriters pursuant to
the Underwriting Agreement not later than 12 hours before the time of opening of the
subscriptions list in the tender to the public, if in their discretion there has been an
adverse change in the securities market in Israel or there has been a change in the
security, economic, or political situation in Israel or around the world which has an
adverse affect or is likely to have an adverse affect on the securities market in Israel
or on the Company, as compared with the situation prevailing at the time of signing of
this Agreement.  

	 	
In
such case this Agreement will be cancelled also with the remaining Underwriters, and the
Company will refer to the Securities Authority with an application to amend the
Prospectus or to cancel the issue, in the Company’s discretion.  

	 	
Notice
of cancellation of the Underwriters’ obligation and cancellation of the Underwriting
Agreement as aforesaid shall be given under the signature of the Lead Managers, and shall
be deemed to have been delivered to the Company at the time of its delivery at the Company’s
registered office or at the office of the attorneys for the issue.  

	 	
In
a case in which the Company has elected not to cancel the issue, it shall refer to the
Securities Authority with an application to publish an amended prospectus in which the
Underwriting Agreement will not be included and it will also not contain the signatures
of the Underwriters. If for any reason no amended prospectus is published as aforesaid,
the issue will be cancelled.  

	16.  	Actions
in the case of cancellation of the issue  

	 	
In
the event of a cancellation of the issue as stated in Clauses 14 or 15 above, the Company
shall give notice to that effect by an immediate report, and shall publish a notice to
that effect on the same day if possible, in one newspaper, and on the following day in
two widely circulating Hebrew dailies published in Israel. The Company shall attend to
dissemination of the immediate report amongst all Stock Exchange members, the Securities
Authority and the Entities Entitled to Receive Applications in accordance with this
Agreement, on the date of cancellation of the Agreement.  

	 	
It
is hereby clarified that if the issue is cancelled in the circumstances as described in
Clauses 14 or 15 above as aforesaid, the Lead Managers and/or the Underwriters and each
of them will not be liable to the Company, and the Company will not be liable to the
Underwriters and/or to the Lead Managers, in respect of any damage that may be caused as
a result of and/or in connection with the aforesaid cancellation and/or in respect of any
expense incurred in the course of and/or in connection with dealing with the preparation
of drafts of the prospectus and the Prospectus and/or in the course of negotiations
leading up to the signing of this Agreement.  

16

	17.  	Power
of attorney to the Lead Managers  

	 	17.1 	The
Underwriters hereby empower the Lead Managers to postpone dates specified in the
Prospectus, on their behalf, including, but without limitation, the day of the tender
and/or in their name to cancel this Agreement in the discretion of the Lead Managers. 

	 	17.2 	The
Underwriters hereby empower the Lead Managers to agree in their name and on their behalf
and to sign on their behalf and in their name on any amendment to the final draft of the
Prospectus and to any amendment to this Agreement. 

	 	17.3 	The
Underwriters hereby empower the Lead Managers to sign in their name on any amendment to
the Prospectus, also after it has been published, if in the discretion of the Lead
Managers there is a legal, commercial or other necessity for amending it. 

	 	17.4 	It
is hereby clarified that the Lead Managers will not be liable to the Company and/or to
the Underwriters for any damage that has been caused and/or may be caused to them as a
result of and/or in connection with the postponement or cancellation or amendment in
circumstances as described in Clauses 14 or 15 above, including in respect of any expense
they incurred in the course of and in connection with the preparations of drafts of the
prospectus and of the Prospectus and/or in the course of negotiations in advance of
entering into this Agreement. 

	18.  	Entire
Agreement  

	 	
This
Agreement embodies all the agreements between the parties and it replaces any prior
agreement, accord, representations or document between the parties in connection with the
matters stated herein. Likewise there shall be no validity to any alteration to this
Agreement, unless it is drawn up in writing and signed by all the parties or their lawful
representatives.  

	19.  	Authorization
for Magna  

	 	
By
their signatures to this Agreement the Underwriters authorize the authorized persons to
sign an electronic signature of the Company to report in their name on the Magna system
about the Underwriters having entered into this Agreement and their signature hereto, and
also of their signature to the Prospectus.  

In Witness Whereof the
Parties have Hereunto Signed: 

			By: /s/ David Weissman
/s/ Dror Moran
——————————————

Blue Square Real Estate Ltd.

1720-F

Exhibit 4.29  

DEED OF TRUST  

Made
and entered at Tel Aviv on the 14th day of August 2006 

Between: 

	 	BLUE
SQUARE REAL ESTATE LTD. 

of 2 Amal Street, Rosh Ha'ayin 

Telephone: 03-9282670/1 

Fax: 03-9282498 

(hereinafter: “the Company”)  

of the one part;  

And: 

	 	HERMETIC
TRUST (1975) LTD. 

of 113 Hayarkon Street, Tel Aviv 

Telephone: 03-5272272 

Fax: 03-5271736 

(hereinafter: “the Trustee”)  

of the other part;  

	WHEREAS:  	The
board of  directors  of the  Company  decided on August 13, 2006 to approve an issue of
                  Debentures (Series A), in accordance with the terms and conditions of
the Prospectus; and

	WHEREAS:  	The
Trustee is a company  limited by shares  which was  incorporated  in Israel in February
                  1975 in accordance  with the Companies  Ordinance,  whose main object
is to engage in trust                   functions; and

	WHEREAS: 	
The Trustee has represented and declared that there is no impediment under the Securities
Law, 5728-1968, or any other law, to its contracting with the Company under this Deed of
Trust and that it meets the requirements and the conditions of qualification specified in
the Securities Law to serve as a trustee for the issue of the Debentures (Series A) that
are the subject to the Prospectus; and 

	WHEREAS:  	In
the scope of the  Prospectus  the  Company  will issue up to NIS  100,000,000  par value
                  Debentures (Series A) as stated in Clause 2 of this Deed of Trust; and

	WHEREAS:  	The
 Company  has made a request to the  Trustee to serve as trustee for the holders of the
                  Debentures  (Series  A),  and  the  Trustee  has  agreed  thereto,  all
 subject  to and in                   accordance with the terms and conditions of this
Deed of Trust;

Now
therefore it is agreed, declared and stipulated by the parties as follows: 

1

	1.  	Preamble,
interpretation and definitions

	 	1.1 	The
preamble to this Deed of Trust and the appendices attached hereto constitute a material
and integral part hereof. 

	 	1.2 	The
division of this Deed of Trust into clauses and the assigning of headings to the clauses
has been done for reasons of convenience and as place-finders only, and no use shall be
made thereof for purposes of interpretation. 

	 	1.3 	Everything
appearing in this deed in the plural shall include the singular, and vice versa,
and everything appearing in the masculine gender shall also include the feminine, and vice
versa, and words importing a person shall also imply a body corporate, unless
there is an express and/or implied provision to the contrary in this deed and/or unless
the context otherwise dictates. 

	 	1.4 	In
this Deed of Trust and in the Debentures (Series A), the following terms and expressions
will have the meanings set opposite them, unless a different intention is to be implied
from the context: 

		"This deed" or "the Deed of Trust" 
	–	 This Deed of Trust  including the appendices  attached  hereto and which form an integral
part hereof;

		"The Prospectus"
  	–	The  Company's  Prospectus  which is due to be  published,  inter alia, in respect of the
issue of the Debentures (Series A);

		"The Debentures (Series A)"
  	–	Registered Debentures (Series A) of the Company,  which will be issued in accordance with
the Prospectus;

		"The Trustee"
  	–	Hermetic Trust (1975) Ltd.  and/or any one who may serve from time to time as trustee for
holders of the Debentures (Series A) pursuant to this deed;

		"Register"
  	–	A register  of holders of the  Debentures  (Series A) as referred to in Clause 24 of this
deed;

		"Holders of the Debentures (Series A)"
  	–	The persons whose names are  registered  for the time being in the register of holders of
the  Debentures  (Series A), and in the case of several joint  holders,  the joint holder
whose name stands first in the register;

		"Debenture (Series A) certificate"
  	–	A Debenture (Series A) certificate the wording of which appears as the First Schedule to
this deed; 

		"The Law" or "the Securities Law" 
	–	The Securities Law,  5728-1968 and the regulations  thereunder,  as in force from time to
time;

		"Principal"
  	–	The par value of the Debentures (Series A) which are in circulation;

2

		 "Consumer Price Index" ("index")
  	–	The  price  index  known by the name of  "Consumer  Price  Index",  including  fruit  and
vegetables,  published by the Central  Bureau of Statistics  and Economic  Research,  and
including  that index even if it is published by another  official  body or  institution,
and also including any official index that may come in its stead,  whether or not same is
structured on the same data on which the existing index is  structured.  If another index
should  replace  it which is  published  by such  body or  institution,  and such body or
institution has not fixed the ratio between that index and the replaced index,  the ratio
will be determined by the Central  Bureau of  Statistics,  and if such ratio has not been
fixed as aforesaid,  then it will be fixed by the Trustee who will, in consultation  with
experts on economics  chosen by the Trustee,  determine the ratio between the other index
and the replaced index;

		"The known index"
  	–	The last-known Consumer Price Index;

		"The Basic Index"
  	–	The Consumer Price Index in respect of July 2006, which was published on August 15, 2006;

		"The payment index"
  	–	The  Consumer  Price Index known on the date of  effecting  any payment on account of the
principal or the interest;

		"Trading day"
  	–	A day on which the banks in Israel are open for the execution of transactions;

		"The Stock Exchange"
  	–	The Tel Aviv Stock Exchange Ltd.

	2.  	Issue
of the Debentures (Series A) and applicability of the Deed of Trust

	 	
The
Company will issue a series of up to 100,000,000 par value registered Debentures (Series
A), repayable in 4 equal annual payments on August 31 of each of the years from 2013
– 2016 (inclusive), which are offered to the public at the price of their par value.
The Debentures (Series A) bear interest at an annual rate of 6.25%, payable twice per
annum, on February 28 and on August 31 of each of the years from 2007 until 2016
(inclusive) until the final redemption of the Debentures. The Debentures (Series A) are
linked (as to principal and interest) to the Consumer Price Index for the month of July
2006. The Debentures (Series A) are convertible on any trading day, commencing from the
date of their listing for trading on the Stock Exchange and until August 16, 2016
(inclusive), except in the periods from August 17 until August 31 of each of the years
from 2013 until 2015 (inclusive), into registered ordinary shares of NIS 1 par value each
of the Company, at a conversion rate of NIS 100 par value Debentures (Series A) for one
ordinary share of NIS 1 par value, until August 31, 2008, and thereafter and until August
15, 2016 at a conversion rate of NIS 300 par value Debentures (Series A) for one ordinary
shares of NIS 1 par value (subject to adjustments as described in Paragraphs 2.10.13 and
2.10.14 of the Prospectus).  

3

	 	
The
provisions of this Deed of Trust will apply to the Debentures (Series A) which will be
issued as aforesaid pursuant to the Prospectus and which will be held from time to time
by the public, unless otherwise stated. For purposes of this Deed of Trust, “the
public” means – anyone who holds a Debenture (Series A), excluding a subsidiary
of the Company, for so long as same is held by it.  

	3.  	Terms
of issue; buyback

	 	3.1 	The
Company will issue the Debentures (Series A) on the terms and conditions as set forth in
the Prospectus and in the Debentures (Series A) and will secure same as stated in this
deed. 

	 	3.2 	The
Company reserves the right to purchase on the open market at any time, whether on the
Stock Exchange or off the Stock Exchange, Debentures forming part of this issue at any
price it may deem fit, without prejudice to the obligation for repayment as set forth
above. In the case of such a purchase by the Company, the Company will give notice to
that effect in an immediate report, a copy of which shall be delivered to the Trustee.
Debentures that are purchased by the Company will be cancelled and will be expunged from
trading on the Stock Exchange, and the Company will not be entitled to reissue same. 

	 	3.3 	A
subsidiary of the Company, an investee company, an affiliate or the controlling
shareholders are entitled to buy and sell Debentures at any time at such price as they
see fit, and to sell same accordingly. In the case of a purchase and/or sale as
aforesaid, the Company shall render an immediate report to that effect / a notice to the
Trustee immediately after it becomes aware of the fact. The Debentures which are held as
aforesaid by a subsidiary will be deemed to be an asset of the subsidiary, and will not
be expunged from trading on the Stock Exchange. 

	 	
At
the time of holding of a meeting of debenture holders, the Trustee shall examine whether
a conflict of interest exists amongst the holders of certificates, in accordance with the
circumstances of the matter. The Company and the Trustee shall take steps to convene
class meetings of certificate holders in accordance with the provisions of any law,
decided cases, provisions of the Securities Law and the regulations and directives issued
pursuant thereto, as the Trustee shall direct. It is presumed that a subsidiary, investee
company, affiliate or the controlling shareholders (hereinafter in this clause: “Related
Holders”) have conflicting interests. In a case in which any of the Related
Holders holds Debentures (Series A), class meetings of debenture holders will be required
in a manner that one of the classes of holders will be a group which does not include
Related Holders. In a case that class meetings are held approval of a resolution shall
require the approval of each of the class meetings that are called and at a meeting of
all the debenture holders, all by the majority required in accordance with the provisions
of this deed and the appendices hereto. The Trustee may, in its sole discretion,
stipulate that such resolution does not require a meeting of Related Holders or that such
meeting will not be called. Under no circumstances will a meeting of the Related Holders
have the power to prevent the passing of a resolution brought for the approval of the
class meetings. 

4

	 	3.4 	The
Company may at any time, subject to any law, including in the period up to the time of
final redemption of the Debentures (Series A), issue additional Debentures (Series A) the
terms and conditions of which will be identical to the terms and conditions of the
Debentures (Series A) offered pursuant to the Company’s Prospectus, at the same rate
of discount or at a different rate of discount (higher or lower) than the discount rate
of the Debentures (Series A)1, without requiring the consent of the Trustee
and/or the consent of the holders Debentures (Series A) and without being obliged to
obtain the Trustee’s consent to creating additional charges over its assets, but
subject to giving notice to the Trustee in regard to an enlargement of the series as
aforesaid, but the Trustee shall, in such case, have the right to demand an increase in
its remuneration pro rata to the increase of the series, and the Company gives its
consent in advance, by contracting under this deed, to an increase of the Trustee’s
remuneration as aforesaid. The Company will apply to the Stock Exchange to list the
additional Debentures (Series A) for trading on the Stock Exchange. 

	 	3.5 	The
Company will be entitled at any time, without requiring the consent of the Trustee and/or
the consent of holders of the Debentures (Series A), to issue additional series of
debentures, whether or not same confer a right to convert into shares of the Company as
aforesaid, under the same conditions of redemption, interest, linkage, ranking for
payment in the case of a winding-up and other conditions as the Company shall deem fit,
whether same are more favorable than the terms and conditions of the Debentures (Series
A), ranking pari passu  with them or inferior thereto. This right the Company has
shall in no way release the Trustee from examining such issue, to the extent that such
obligation is imposed on the Trustee according to law, and it shall not have the effect
of derogating from the rights of the Trustee and of a meeting of the debenture holders
pursuant to this deed, including their right to make the Debentures (Series A)
immediately due and payable as stated in Clause 7.2 or 7.3 below. 

	 	
The
Company shall notify the Trustee, and the Trustee shall notify the debenture holders with
regard to the issue of debentures as aforesaid. 

	 	3.6 	Nothing
set forth above in this clause shall in itself oblige the Company or the debenture
holders to buy debentures or sell debentures held by them. 

	 	3.7 	The
Company reserves the right to effect early repayment of the Debentures (Series A) on the
fulfillment of the conditions set forth in Clause 6 of this deed. 

	4.  	The
Company’s undertakings  

	 	
The
Company hereby undertakes to pay all amounts of principal, interest and linkage
differentials that will be payable pursuant to the terms and conditions of the Debentures
(Series A) and to comply with all the remaining conditions and obligations imposed on it
in accordance with the conditions of the Debentures (Series A) and pursuant to this deed.  

          	1 	
               With regard to the tax implications of an issue at a discount, see Paragraph
               2.13 of the Company’s Prospectus. 

               

5

	5.  	Securing
of the Debentures (Series A)  

	 	5.1 	The
Company’s obligation to repay the Debentures (Series A) (principal, interest and
linkage differentials) is not secured by any charge or encumbrance. 

	 	
For
the avoidance of doubt it is clarified that there is no obligation on the Trustee to
examine, and in practice the Trustee has not examined, the need for the furnishing of
collateral security to guarantee the payments to the debenture holders. By entering into
this Deed of Trust, and by the Trustee’s consent to serve as a trustee for the
debenture holders, the Trustee does not express an opinion, whether expressly or
impliedly, regarding the Company’s ability to meet its obligations to the debenture
holders. Nothing in the foregoing shall derogate from the duties of the Trustee according
to law and/or the Deed of Trust, and this shall include the fact that it does not
derogate from the Trustee’s obligation (to the extent that such obligation applies
to the Trustee according to any law) to examine the impact of changes in the Company from
the date of the Prospectus onwards, to the extent that such changes have an adverse
affect on the Company’s ability to meet its obligations to holders of the Debentures
(Series A). Nothing in the foregoing shall derogate from the Trustee’s duties and
obligations according to law and/or pursuant to the Deed of Trust. 

	 	5.2 	The
Company will be entitled from time to time to create additional charges and encumbrances,
fixed and/or floating of any ranking over its assets, in whole or in part, without the
necessity for obtaining any consent from the Trustee, or from the debenture holders, and
without it being obliged to notify the Trustee about the creation of such charges or
encumbrances. 

	 	5.3 	The
Debentures (Series A) will rank pari passu for purposes of security ranking as
between themselves in connection with the Company’s obligations pursuant to the
Debentures (Series A), and without a preferential or prior right for one debenture over
another. 

	6.  	Early
redemption  

	 	
If
it should be decided by the Stock Exchange to expunge the Debentures (Series A) in
circulation from trading due to the fact that the value of the public’s holdings
thereof is less than the minimum amount specified in the Stock Exchange directives with
regard to deletion from trading, the Company will act as follows:  

	 	6.1 	Within
45 days from the date of the Stock Exchange’s notice regarding deletion of the
Debentures (Series A) from trading, the Company will give notice of a date of early
redemption at which the holder of Debentures (Series A) will be entitled to redeem same. 

	 	6.2 	The
notice regarding the date of early redemption will be published in two widely circulating
Hebrew dailies appearing in Israel, and in an immediate report on the Magna system and
shall be delivered in writing to the Trustee and to all the registered holders of the
Debentures (Series A). 

	 	6.3 	The
date of early redemption will fall not less than 30 days from the date of publication of
the notice and not later than 45 days from the aforesaid date, but not in a period
between the date specified for payment of interest and the date of actual payment
thereof. 

6

	 	6.4 	On
the date of early redemption the Company will redeem the Debentures (Series A) which the
holders thereof have requested to redeem, according to the balance of the par value
thereof, plus linkage differentials and the interest which has accrued on the principal,
calculated pro rata to the period commencing after the last date in respect of
which the interest was paid and up to the aforesaid date of early redemption. 

	 	
Fixing
of a date of early redemption as aforesaid shall in no way prejudice the rights of
conversion and the rights of redemption stipulated in the Debentures (Series A) for any
of the holders of the Debentures (Series A) who do not redeem same on the date of early
redemption as aforesaid, but the Debentures (Series A) will be expunged from trading on
the Stock Exchange and, inter alia, the tax implications arising from this shall
apply to them.  

	 	
Early
redemption of the Debentures (Series A) as aforesaid shall not confer on anyone who holds
the Debentures (Series A) which are redeemed as aforesaid the right to payment of
interest in respect of the period subsequent to the date of redemption.  

	7.  	Immediate
repayment  

	 	7.1 	On
the occurrence one or more of the events enumerated below: 

	 	7.1.1 	If
the Company does not pay any amount that is due from it in connection with the Debentures
within 30 days after the due date for payment thereof has arrived. 

	 	7.1.2 	If
a provisional liquidator has been appointed by a court or a valid resolution has been
passed for the winding-up of the Company (except a winding-up for purposes of merger with
another company and/or a change in the structure of the Company) and such appointment or
such resolution has not been set aside within 20 business days from the date on which it
was given or taken. 

	 	7.1.3 	If
an attachment is imposed on material assets of the Company [of the Company], in whole or
in part, and the attachment is not removed within 60 days. 

	 	7.1.4 	An
execution office act is executed against a material asset of the Company, in whole or in
part, and the action is not set aside within 60 days. 

	 	7.1.5 	If
a receiver is appointed for the assets of the Company and/or for its material assets, in
whole or in part, and the appointment is not set aside within 60 days. 

	 	7.1.6 	If
the Company ceases payments on the Debentures and/or gives notice of its intention to
cease payments on the Debentures. 

7

	 	7.1.7 	If
the Company ceases to continue engaging in and/or carrying on its business and/or gives
notice of its intention to cease continuing to engage in its business and/or to manage
same. 

	 	7.1.8 	If
another series of debentures issued by the Company has been made immediately due and
payable. 

	 	7.1.9 	If
a stay of proceedings order has been granted in accordance with Section 350 of the
Companies Law, 5759-1999, against the Company, and such order has not been set aside
within 60 (sixty) days from the date of its commencement. 

	 	7.1.10 	If
an application has been filed in relation to the Company for making an arrangement with
creditors of the Company in accordance with Section 350 of the Companies Law, 5759-1999,
or a stay of proceedings order has been granted against the Company in accordance with
the aforesaid section, and the application or the order has not been withdrawn or set
aside, within 60 days from the date of the filing or grant thereof, as the case may be. 

	 	7.1.11 	If
the Company is liquidated or expunged for any reason. 

	 	7.1.12 	If
there is a genuine fear that the Company will cease payments of the Debentures and/or
will cease to continue its business and/or is about to cease carrying on its business
and/or a genuine fear exists that it will cease conducting its business. 

	 	7.1.13 	On
the occurrence of any other event that constitutes material prejudice and/or could cause
material prejudice to the rights of the holders of the Debentures (Series A). 

	 	
The
provisions of Clauses 7.2 or 7.3 below, as the case may be, shall apply. 

	 	
For
purposes of this clause “material asset” means – an asset the value of
which in the Company’s books exceeds 25% of the Company’s equity capital
according to the last financial statements it published. 

	 	7.2 	On
the occurrence of any of the events mentioned in Clauses 7.1.1 to 7.1.11 (inclusive)
above: 

	 	7.2.1 	The
Trustee will be obliged to call a meeting of holders of Debentures (Series A) the date
for convening of which shall be after the elapse of 30 days from the date on which it is
called (or such shorter period in accordance with the provisions of Clause 7.2.4 below)
the agenda of which shall contain a resolution with regard to making the entire unpaid
balance of the Debentures (Series A) immediately due and payable by virtue of the
occurrence of one of the events mentioned in Clauses 7.1.1 to 7.1.11 (inclusive) above. 

8

	 	7.2.2 	In
a case in which up to the date for convening the meeting any of the events mentioned in
Clauses 7.1.1 to 7.1.11 (inclusive) above has not been set aside or withdrawn, and a
resolution of the meeting of debenture holders as aforesaid has been passed as a special
resolution (as defined in the Second Schedule to this deed), the Trustee will be obliged,
within a reasonable time, to make the entire unpaid balance of the Debentures (Series A)
immediately due and payable. 

	 	7.2.3 	A
copy of the notice calling such meeting shall be sent by the Trustee to the Company
immediately upon publication of the notice and will constitute a prior written warning to
the Company regarding the Trustee’s intention to act as aforesaid. 

	 	7.2.4 	The
Trustee may, in its discretion, shorten the period of 30 days as aforesaid (in Clause
7.2.1 above) in a case in which the Trustee believes that any postponement in making the
Company’s debt payable endangers the rights of the holders of the Debentures (Series
A), but under no circumstances shall the aforesaid period be shortened to less than 7
days. 

	 	7.3 	On
the occurrence of any of the events mentioned in Clauses 7.1.12 to 7.1.13 (inclusive)
above: 

	 	7.3.1 	Each
of the debenture holders and the Trustee will be entitled (but not obliged) to call a
meeting of the holders of the Debentures (Series A) the time for convening of which shall
be after the elapse of 30 days from the date it is called (or a shorter period in
accordance with the provisions of Clause 7.2.4 below), the agenda of which shall contain
a resolution with regard to making of the entire unpaid balance of the Debentures (Series
A) immediately due and payable by virtue of the occurrence of any of the events set forth
in Clauses 7.1.12 to 7.1.13 (inclusive) above. 

	 	7.3.2 	In
a case in which a resolution is passed at a meeting of debenture holders as referred to
in Clause 7.3.1 above as a special resolution (as defined in the Second Schedule to this
deed), the Trustee will be obliged, within a reasonable time, to make the entire unpaid
balance of the Debentures (Series A) immediately due and payable. 

	 	7.3.3 	A
copy of the notice calling such meeting shall be sent by the party calling the meeting to
the Company and to the Trustee immediately upon the publication of the notice and this
will constitute prior written warning to the Company of the intention to act in the
aforesaid manner. 

	 	7.3.4 	A
debenture holder or the Trustee, as the case may be, who calls the meeting will be
entitled, at his or its discretion, to shorten the aforesaid 30 day period (as mentioned
in Clause 7.3.1 above) in a case in which the party calling the meeting is of the opinion
that any postponement in making the Company’s debt payable endangers the rights of
holders of the Debentures (Series A), but under no circumstances shall the aforesaid
period be shortened to less than 7 days. 

9

	 	7.3.5 	The
Trustee will be responsible for reporting to the debenture holders in regard to the
occurrence of any of the events mentioned in Clauses 7.1.12 to 7.1.13 (inclusive) above,
whether on the strength of publicized reports the Company may publish or in accordance
with the notice the Company may send to it in accordance with a provisions of Clause 22
below, shortly after this has been brought to the notice of the Trustee and/or has been
delivered to it. 

	8.  	Claims
and proceedings by the Trustee

	 	8.1 	Without
derogating from any other provision in this deed, the Trustee will be entitled, in its
discretion, and will be obliged to do so pursuant to a special resolution passed at a
meeting of holders of the Debentures (Series A), and without giving the Company further
notice, to take all such proceedings, including legal proceedings as it sees fit and
subject to the provisions of any law, in order to enforce the Company’s obligations
under this deed, or the exercise of the rights of the holders of the Debentures (Series
A) and protection of their rights pursuant to this deed. Subject to the provisions set
forth below, the Trustee will be obliged to do so on the demand of a special resolution
of holders of the Debentures (Series A). The Trustee will be entitled to commence legal
and/or other proceedings also if the Debentures have not been made immediately due and
payable, and may do all this to protect the rights of the debenture holders and subject
to any law. Notwithstanding the foregoing in this clause, the right to make the
Debentures immediately due and payable will only arise in accordance with the provisions
of Clause 7 above and not on the strength of this clause. 

	 	8.2 	The
Trustee will be entitled, subject to any special resolution of holders of the Debentures
(Series A) as aforesaid, to waive, on such conditions as it deems fit, the fulfillment of
such obligations of the Company, in whole or in part. 

	 	8.3 	The
Trustee may, in its discretion and without the necessity for giving notice to the
Company, apply to the appropriate court with an application for instructions on any
matter connected with and/or arising out of this deed. 

	 	8.4 	Subject
to the provisions of this deed, the Trustee will be entitled, but not obliged, to convene
a general meeting of holders of the Debentures (Series A) at any time in order to
consider and discuss and/or to receive its instructions on any matter pertaining to this
deed, and it shall be entitled to reconvene such meeting. 

	 	8.5 	The
Trustee may, in its sole discretion, delay the performance of any act by it in accordance
with this deed, for purposes of referring to a meeting of holders of the Debentures
(Series A) and/or to the court until it receives instructions from a meeting of holders
of the Debentures (Series A) and/or instructions from the court as to how to act.
Notwithstanding the foregoing, the Trustee is not entitled to delay proceedings for
making the Debentures immediately due and payable on which a meeting of debenture holders
has decided in accordance with the provisions of Clauses 7.2 and 7.3 above. 

	 	8.6 	For
the avoidance of doubt it is hereby clarified that nothing contained in the provisions
set forth above shall prejudice and/or derogate from the Trustee’s right, which is
hereby conferred on it, to apply to judicial instances, at its sole discretion, even
before the Debentures (Series A) are made immediately due and payable, for purposes of
the grant of any order relating to matters of the trust. 

10

	9.  	Distribution
of receipts  

	 	
All
the receipts that the Trustee may receive as a result of proceedings it institutes, if
any, against the Company, shall be held by it in trust and shall serve in its hands for
the purposes and according to the order of priority as follows:  

	 	
Firstly
for the discharge of the expenses, payments, levies and obligations that have been
incurred by the Trustee, imposed on it, or caused by virtue or as a result of actions for
implementing the trust, or otherwise, or in another connection with the terms and
conditions of this deed, including its remuneration (on condition that the Trustee shall
not receive double remuneration both from the Company and also from the debenture
holders). Secondly – in order to pay holders of the Debentures (Series A) the arrear
interest due to them pursuant to the terms and conditions of the Debentures (Series A)
and subject to the conditions of linkage contained in the Debentures (Series A) pro
rata  and proportionately to the amount of interest in arrear which is due to each of
them, without any preference or prior right in respect of any of them; thirdly – in
order to pay holders of the Debentures (Series A) the amounts of the principal that are
due to them in accordance with the Debentures (Series A) held by them, pro rata and
subject to the conditions of linkage contained in the Debentures (Series A), whether or
not the due date for payment of the amounts of principal have arrived and pro ratato
the amounts due to them, without any preference in regard to priority in time of the
issue of the Debentures (Series A) by the Company, or otherwise, and the surplus, if
there should be such, shall be paid by the Trustee to the Company or to its
successors-in-title.  

	 	
Payment
of the amounts by the Trustee to holders of the Debentures (Series A) is subject to the
rights of other creditors of the Company, if there are such.  

	10.  	Power
to delay distribution of money

	 	10.1 	Notwithstanding
the contents of Clause 9 above, if the monetary amount that is received as a result of
instituting proceedings as aforesaid which is available for distribution at any time, as
stated in that clause, is less than NIS 3.125 million, the Trustee will not be obliged to
distribute it and will be entitled to invest the aforesaid amount, in whole or in part,
in investments that are permitted under this deed and to vary such investments from time
to time with other permitted investments, all as it sees fit. 

	 	10.2 	When
the aforesaid investments together with the profits thereon and together with additional
moneys that will be due to the Trustee for purposes of payment to holders of the
Debentures (Series A), if any, reach the amount specified in Clause 10.1 above, the
Trustee shall make payment thereof to holders of the Debentures (Series A) in the manner
stated in Clause 9 above. 

11

	11.  	Notice
regarding distribution and deposit with the Trustee

	 	11.1 	The
Trustee shall notify holders of the Debentures (Series A) as to the day and the place at
which any of the payments mentioned in Clause 9 and Clause 10 above will be effected, and
shall do so by way of prior notice of 14 days that shall be delivered in the manner
stipulated in Clause 22 below. 

	 	
After
the date specified in the notice, holders of the Debentures (Series A) will be entitled
to interest in respect of the Debentures according to the rate stipulated in the
Debentures (Series A), solely on the balance of the amount of the principal (if there is
such) after deduction of the amount which has been paid or which has been offered to them
as aforesaid. 

	 	11.2 	Any
amount due to a holder of Debentures (Series A) which has not actually been paid for a
reason that is not dependent on the Company, at a time the Company was prepared to make
payment thereof, shall cease to bear interest and linkage differentials from the date
specified for the payment thereof, and the holder of the Debenture (Series A) will be
entitled only to those amounts he would have been entitled to at the date specified for
effecting of such payment on account of the principal, the linkage differentials or the
interest. 

	 	11.3 	The
Company shall deposit with the Trustee, not later than 14 business days from the date
specified for such payment, the amount of the payment which has not been paid for a
reason that is not dependent on the Company, and such deposit shall be deemed to be
discharge of such payment, and in the event of discharge of everything due in respect of
the Debenture (Series A), also as redemption of the Debenture (Series A). 

	 	11.4 	The
Trustee shall deposit any such amount at a bank, in favor of those account owners and
shall invest same in investments permissible for it in accordance with the Deed of Trust,
which are securities of the State of Israel and other securities in which the laws of the
State of Israel make it permissible to invest trust moneys, all as the Trustee shall deem
fit and subject to the provisions of the law. Once the Trustee has done so it will not be
liable to the entitled persons in respect of such amounts, but only for the proceeds that
will be received from realization of the investments, less the expenses, commissions and
compulsory payments, if any, connected with the aforesaid investment in conducting the
trust account, less the Trustee’s remuneration. 

	 	11.5 	The
Trustee shall transfer to every holder of a Debenture (Series A) for whom amounts and/or
moneys that are due to holders of the Debentures (Series A) have been deposited with the
Trustee out of those moneys that were deposited as aforesaid, less all the expenses,
commissions, compulsory payments and the Trustee’s remuneration as stated in Clause
11.4 above, against presentation of such proof as may be demanded by the Trustee to its
full satisfaction. 

	12.  	Receipt
from holders of the Debentures (Series A) as proof

	 	12.1 	A
receipt from a holder of a Debenture (Series A) in respect of amounts of the principal,
the interest and the linkage differentials that have been paid to him by the Trustee in
respect of the Debenture (Series A) shall release the Trustee by way of absolute release
in all respects connected with payment of the amounts mentioned in the receipt. 

12

	 	12.2 	A
receipt from the Trustee regarding the deposit of amounts of the principal, the interest
and the linkage differentials with it for the benefit of holders of the Debentures
(Series A) as stated in Clause 11.3 above will be deemed to be a receipt from a holder
the Debenture (Series A) for purposes of the provisions of Clause 12.1 above. 

	 	12.3 	Moneys
that have been distributed as stated in Clause 11 above will be deemed to be payment on
account of the repayment. 

	13.  	Presentation
of Debenture (Series A) to the Trustee and recording of a                     note with
regard to partial payment

	 	13.1 	A
holder of a Debenture (Series A) shall be obliged to present to the Trustee, at the time
of payment of any interest or partial payment of principal, interest and linkage
differentials in accordance with Clauses 9, 10 and 11 above, the Debenture (Series A) in
respect of which the payments are made. 

	 	13.2 	The
Trustee shall record a note on the Debenture (Series A) with regard to the amounts that
have been paid as aforesaid and the date of the payment thereof. 

	 	13.3 	The
Trustee will be entitled in any special situation, in its discretion, to waive
presentation of the Debenture (Series A), after it has been given a deed of indemnity
and/or an adequate guarantee to its satisfaction with respect to the damage likely to be
caused by virtue of the failure to record the note as aforesaid, all as the Trustee shall
see fit. 

	 	13.4 	Notwithstanding
the foregoing, the Trustee shall be entitled, in its discretion, to maintain records in a
different manner with regard to partial payments as aforesaid. 

	14.  	The
Company’s undertakings to the Trustee  

	 	
As
long as the Debentures (Series A) (including the linkage differentials on the Debentures)
have not been paid, the Company hereby undertakes to the Trustee as follows:  

	 	14.1 	To
give the Trustee immediate written notice of a reasonable fear of the Company that all or
any of the events described in Clause 7.1 above are likely to eventuate and also in
regard to the occurrence of any of the events mentioned in Clause 7.1 above. 

	 	14.2 	Not
later than the end of 30 days from the date of this Deed of Trust to deliver to the
Trustee a schedule of payments regarding the payment of the Debentures (principal and
interest) in an Excel file. 

13

	 	14.3 	To
give the Trustee written notice within 4 business days in regard to the effecting of any
payment to the debenture holders and in regard to the balance of the amounts the Company
owes at such time to the debenture holders, after the effecting of the aforesaid payment. 

	 	14.4 	To
continue constantly to manage and conduct the business of the Company in an orderly,
proper and efficient manner. 

	 	14.5 	Immediately
upon the publication of the Company’s consolidated audited financial statements for
the financial year ended December 31 of the preceding year, and of the periodic reports,
to deliver same to the Trustee. 

	 	14.6 	To
deliver to the Trustee immediately, upon the publication thereof any consolidated interim
financial statement of the Company and any quarterly report, accompanied by a review
report from a C.P.A. in relation thereto. 

	 	14.7 	To
deliver to the Trustee immediately upon service thereof any report it is obliged to
submit to the Securities Authority. 

	 	14.8 	On
December 31 of each year, and so long as this deed is in force, the Company shall furnish
the Trustee with a certificate signed by an officer of the Company to the effect that to
the best of his knowledge or their knowledge, as the case may be, there has been no
breach of this deed by the Company (including a breach of the terms and conditions of the
Debenture (Series A), unless otherwise expressly stated. 

	 	14.9 	To
cause a situation that the Company’s auditors shall, within a reasonable time, give
the Trustee and/or persons the Trustee may direct, any explanation, document, calculation
or information relating to the Company, its business and/or its assets which may be
reasonably required, in the discretion of the Trustee, for examinations that are made by
the Trustee for purposes of safeguarding holders of the Debentures (Series A). 

	 	14.10 	To
keep proper books of account in accordance with accepted accounting principles. 

	 	14.11 	The
Trustee undertakes, by its signature to this Deed of Trust, to keep confidential any
information given as aforesaid. It is clarified that the passing on of information to
holders of the Debentures (Series A) for purposes of passing a resolution pertaining to
their rights under the Debentures (Series A), or for purposes of giving a report about
the state and condition of the Company, does not constitute a breach of the Trustee’s
aforesaid confidentiality undertaking. 

	 	14.12 	To
notify the Trustee, immediately it became aware thereof, of any case in which an
attachment has been imposed on its assets, in whole or in part, and also in every case in
which a receiver has been appointed for its assets, in whole or in part, and immediately
to take all the reasonable measures, at its expense, that are required for the removal of
such attachment or for cancellation of the receivership of assets. 

14

	 	14.13 	To
give the Trustee notice of all its general meetings (whether annual general meetings or
special general meetings of the shareholders of the Company), without conferring on the
Trustee a right to vote at such meetings. 

	 	14.14 	To
deliver to the Trustee, upon the Trustee’s written demand, a certificate in writing
signed by the Company’s auditor to the effect that all the payments to holders of
the Debentures (Series A) have been paid on due date, and specifying the balance of the
par value of the Debentures (Series A) in circulation. 

	 	14.15 	A
copy of every document the Company transmits to its shareholders or to debenture holders
and any additional information, upon the Trustee’s reasonable request, which is
required for fulfilling the Trustee’s duty in order to protect and safeguard the
rights of the debenture holders. 

	15.  	Additional
undertakings  

	 	
After
the Debentures (Series A) have been made immediately due and payable, as defined in
Clause 7 above, the Company shall from time to time and at any time it is called upon to
do so by the Trustee, perform all the reasonable actions in order to facilitate the
exercise of all the powers vested in the Trustee, and in particular the Company shall
perform the following acts:  

	 	15.1 	It
shall make the declarations and/or shall sign all the documents and/or shall perform
and/or cause the performance of all the requisite and/or necessary acts according to law
for giving validity to the exercise of the powers, authorities and authorizations of the
Trustee and/or its representatives. 

	 	15.2 	It
shall give all the notices, the orders and the instructions the Trustee shall deem
conducive and shall demand. 

	 	15.3 	For
purposes of this clause – a notice in writing signed by the Trustee confirming that
an act demanded by it, in the scope of its powers, is a reasonable act, shall constitute
prima facie proof of such fact. 

	16.  	Other
agreements  

	 	
Subject
to the provisions of the law and the restrictions imposed on the Trustee by law, the
fulfillment of the Trustee’s duties, in accordance with this deed, or the fact of it
holding the status as Trustee, shall not have the effect of preventing it from entering
into various contracts with the Company or from transacting transactions with it in the
ordinary course of its business.  

	17.  	Reporting
by the Trustee  

	 	
The
Trustee shall, by the end of the second quarter of each calendar year, draw up an annual
report regarding the affairs of the trust (hereinafter: “the Annual Report”).  

	 	
The
Annual Report shall contain details on the following subjects:  

	 	17.1 	Current
details about the course of the affairs of the trust in the preceding year. 

15

	 	17.2 	A
report on irregular events in connection with the trust that occurred during the
preceding year.

	 	
Holders
of the Debentures (Series A) will be entitled to peruse the Annual Report at the offices
of the Trustee during normal working hours, and will be entitled to receive a copy of the
report on request.  

	 	
The
Trustee shall deliver to holders of the Debentures (Series A) a notice regarding the date
of submission of the report, as stated in Clause 22 below. Where the Trustee has become
aware of a material breach of this deed on the part of Company, it shall notify holders
of the Debentures (Series A) about the breach and about the steps that it has taken to
prevent same or for the fulfillment of the Company’s obligations, as the case may
be.  

	18.  	Remuneration
and cover of the Trustee’s expenses

	 	18.1 	The
Company shall pay the Trustee a remuneration for the Trustee’s services in
accordance with this deed, in the manner set forth below: 

	 	18.1.1 	Within
one business day after publication of the results of the offering to the public in
respect of the first year of the trust – that is to say up to the end of 12 months
from the date of the issue, NIS 25,000. 

	 	18.1.2 	In
respect of each of the years and commencing from the second year (that is to say,
commencing from the end of 12 months from the date of the issue) in which Debentures
(Series A) which have not yet been repaid, a sum of NIS 15,000 linked to the index known
at the time of publication of the Prospectus (“the annual remuneration”).
The annual remuneration shall be paid to the Trustee at the beginning of each year of the
trust. The annual remuneration shall be paid to the Trustee in respect of the period up
to the end of the trust period in accordance with the terms and conditions of this deed,
even if a receiver and/or a receiver and special manager has been appointed for the
Company and/or in the event that the trust pursuant to this deed is conducted under the
supervision of a court. 

	 	18.1.3 	If
the Trustee’s term of office should expire, as stated in Clause 26 below, the
Trustee will not be entitled to payment of its remuneration commencing from the date of
expiration of its term of office. If the Trustee’s term of office has expired during
the course of a year of the trust, the remuneration that was paid in respect of the
months in which the Trustee did not serve as a trustee for the Company shall be refunded.
The contents of this sub-clause (c) [sic] will not apply with respect to the first year
of the trust. 

	 	18.1.4 	In
addition the Trustee will be entitled to a reimbursement of the reasonable expenses
incurred by it in the course of fulfilling its function and/or pursuant to the powers
conferred on it under this deed, including in respect of advertisements in newspapers,
provided that in respect of expenses for an expert opinion, as referred to in Clause 19.2
below, the Trustee shall give prior notice of its intention to obtain an expert opinion. 

16

	 	18.1.5 	The
Trustee will also be entitled to a further payment, in respect of an act arising from a
breach of this Deed of Trust by the Company or in respect of an act for making the
Debentures (Series A) immediately due and payable and in respect of special actions that
it may be required to perform, if required, for purposes of fulfilling its functions
pursuant to this deed, all without prejudice to the generality of the contents of this
Clause 18. 

	 	
It
is hereby agreed between the parties that the Trustee will be entitled to a remuneration
in an amount of 120 US dollars for each hour of work that it is called upon to perform as
aforesaid. 

	 	18.1.6 	In
respect of every annual meeting of shareholders or a meeting of debenture holders which
the Trustee attends, an additional remuneration of NIS 500 per meeting will be paid. 

	 	18.1.7 	If
there are changes in the provisions of the law pursuant to which the Trustee will be
called upon to perform acts and/or examinations and/or to prepare additional reports, the
Company undertakes to bear all the reasonable expenses that may be incurred by the
Trustee by virtue thereof, including a reasonable remuneration in respect of such actions. 

	 	18.1.8 	The
Trustee will be entitled to an additional payment in respect of the hours devoted to
discussions with the Securities Authority immediately prior to the signing of this deed,
according to the amount per hour specified in Clause 18.1.5 above. 

	 	18.2 	V.A.T.,
 if same applies,  shall be added to the payments due to the Trustee in accordance with
              the provisions of this clause, and shall be paid by the Company.

	19.  	Special
powers  

	 	19.1 	The
Trustee will be entitled to deposit all the deeds and the documents which evidence,
represent and/or specify its right in connection with any asset held by it for the time
being, in a safe and/or at another place it may elect, with any banker and/or any banking
corporation and/or with an attorney. Where the Trustee has done so, it will not be
responsible for any loss that may be caused in connection with such deposit, unless the
Trustee acted negligently or with malicious intent. 

	 	19.2 	The
Trustee may, in the scope of carrying out the affairs of the trust pursuant to this deed,
act in accordance with an opinion and/or advice of any attorney, accountant, chartered
appraiser, valuer, surveyor, broker or other expert, whether such opinion and/or advice
was prepared at the request of the Trustee and/or by the Company, and the Trustee will
not be responsible for any loss or damage that may be caused as a result of any act
and/or omission on its part in reliance on such advice or opinion, unless the Trustee
acted negligently or with malicious intent. 

	 	19.3 	Any
such advice and/or opinion may be given, sent or received by way of letter, telegram,
facsimile and/or any other electronic means for the transmission of information, and the
Trustee will not be responsible in respect of acts performed in reliance on advice and/or
an opinion or notification transmitted by one of the ways mentioned above, even though
there were errors in it and/or same were not authentic, unless the Trustee acted
negligently or with malicious intent. 

17

	 	19.4 	Should
the Trustee receive a certificate signed by the Company through two directors of the
Company and/or an assessment confirming that in their opinion a transaction, step, action
or anything else done or intended to be done by the Company is desirable and for the
benefit of the Company, this will constitute adequate proof that the transaction, the
step, the action or the thing is indeed desirable for the Company and in its best
interests. 

	 	
Where
the Trustee has acted in reliance on such certificate, it will not be responsible in any
manner for any damage and/or loss that may be caused as a result of such step, operation
and/or thing. 

	 	19.5 	Subject
to the provisions of this deed, the Trustee shall be entitled, but not obliged, to call a
general meeting of holders of the Debentures (Series A), at any time, in order to
consider and discuss and/or to obtain the instructions of the meeting on any matter
pertaining to this deed and it may reconvene such meeting. 

	 	19.6 	The
Trustee will not be obliged to notify any party about the signing of this deed and it
will not be entitled to interfere in any manner in the management of the business of the
Company or its affairs, except pursuant to the powers and authorities conferred on the
Trustee under this deed. 

	 	19.7 	The
Trustee shall loyally and faithfully exercise the powers, authorizations and authorities
conferred on it under this deed, in its absolute discretion and without being liable for
any damage caused as a result of an error in its discretion as aforesaid, unless the
Trustee acted with gross negligence or with malicious intent. 

	20.  	The
Trustee’s power and authority to employ agents

	 	
The
Trustee will be entitled to appoint an agent/s to act in its stead, whether an attorney
or otherwise, in order to perform or participate in the performance of special actions
that require to be performed in connection with the trust, and without derogating from
the generality of the foregoing, the instituting of legal proceedings. The Trustee will
further be entitled to discharge, at the Company’s expense, the reasonable fee or
remuneration of any such agent, and the Company shall refund to the Trustee, immediately
upon its first demand, any such expense, on condition that the Trustee has given the
Company notice in advance in regard to the appointment of such agents.  

	 	
The
Trustee may at any time delegate any of the trusts, the powers, authorizations and
authorities conferred on it pursuant to this Deed of Trust, in whole or in part, to
another person or to other persons, and any such delegation shall be made under the
conditions and instructions (including permission to an agent to appoint another agent)
which the Trustee shall deem expedient, but the delegation of powers as aforesaid shall
not release the Trustee from any liability and responsibility that would have been
imposed on it had it not been for the delegation of the powers.  

18

	21.  	Indemnification
of the Trustee  

	 	21.1 	The
Trustee will be entitled to receive indemnity from holders of the Debentures (Series A)
or from the Company, as the case may be, in respect of reasonable expenses incurred by it
and/or which it may incur in connection with actions it has performed or which it is
obliged to perform by virtue of its duties under this Deed of Trust, and/or according to
statute and/or on an instruction from a competent authority and/or any law and/or on a
demand by holders of the Debentures (Series A) and/or on a demand by the Company,
provided that: 

	 	21.1.1 	The
expenses in respect of liability for damage are reasonable. 

	 	21.1.2 	The
Trustee acted in good faith, and such act was performed within the scope of fulfilling
its duties. 

	 	21.2 	Without
prejudice to the rights to compensation granted to the Trustee according to the law
and/or to the Company’s obligations pursuant to this deed, the Trustee, its
representative, manager, agent or other person appointed by the Trustee in accordance
with this deed, will be entitled to receive indemnity out of the moneys that will be
received by the Trustee as a consequence of proceedings it has instituted and/or
otherwise in accordance with this deed, with respect to obligations they have assumed,
with respect to expenses they have incurred in the course of performing the trust or in
connection with such actions which, in their opinion, were required for performance of
the foregoing and/or in connection with the exercise of the powers and authorities
conferred by virtue of this deed, and also in connection with all kinds of legal
proceedings, opinions from attorneys and other experts, negotiations, discussions,
expenses, claims and demands relating to any matter and/or thing that has been done
and/or has not been done in any manner in relation to the foregoing, and the Trustee may
withhold moneys in its possession and make payment out of them of the amounts necessary
for payment of the aforesaid indemnity. All the abovementioned amounts will rank
preferentially to the debenture holders and subject to the provisions of any law,
provided that the Trustee has acted in good faith. 

	 	21.3 	Wherever
the Trustee is obliged pursuant to the terms and conditions of the Deed of Trust and
according to statute and/or a directive from a competent authority and/or any law and/or
on a demand by holders of the Debentures (Series A) and/or on a demand by the Company, to
perform any act, including, but without limitation, the commencing of proceedings or
institution of claims on a demand by holders of the Debentures (Series A), as stated in
the Deed of Trust, the Trustee will be entitled to refrain from taking any such action,
until it has received, to its satisfaction, a deed of indemnity from holders of the
Debentures (Series A) or from any of them, and if the act is performed by virtue of a
demand from the Company – from the Company in respect of any liability for damages
and/or expenses that may be incurred by the Trustee and the Company or either of them, as
a consequence of performing the aforesaid act. All this will be with the exception of
circumstances in which urgent action is required, where failure to perform it prior to
receipt of a deed of indemnity as aforesaid will inflict damage and/or a loss on holders
of the Debentures (Series A). Notwithstanding the foregoing, in a case in which there is
a necessity for taking legal proceedings, the Company shall deposit with the Trustee an
amount that will be fixed by the Trustee as the anticipated amount of the Trustee’s
expenses in connection with such proceedings. In a case in which the Company has not
deposited the aforesaid amount at the time it was requested by the Trustee to do so, and
in the Trustee’s opinion there will be doubt regarding the Company’s ability to
cover the expenses involved in the taking of proceedings by the Trustee, the Trustee
shall immediately call a meeting of debenture holders in order to confirm their liability
to cover the expenses involved in the proceedings which the Trustee will take. In the
event that the debenture holders should refuse to bear the expenses connected with the
taking of proceedings by the Trustee, there will be no obligation on the Trustee to
institute such proceedings. 

19

	22.  	Notices  

	 	22.1 	Any
notice by the Company and/or the Trustee to holders of the Debentures (Series A) shall be
given as follows: 

	 	22.1.1 	By
reporting on the Magna system of the Securities Authority; (the Trustee is entitled to
instruct the Company, and the Company will be obliged immediately to render a report on
behalf of the Trustee to the Magna system in such text as will be transmitted to the
Company in writing by the Trustee); 

and also by: 

	 	22.1.2 	A
notice to be published in two widely circulating Hebrew dailies published in Israel; 

	 	
or  

	 	
By
sending a notice by registered mail to every registered holder of Debentures (Series A)
according to the last address recorded in the register of debenture holders (in the case
of joint holders – to the joint holder whose name stands first in the register). 

	 	22.2 	Any
notice or demand by the Trustee to the Company may be given by way of a letter sent by
registered mail according to the address set forth in the Deed of Trust, or according to
another address of which the Company shall notify the Trustee in writing, or by the
transmission thereof by facsimile or via messenger, and any such notice or demand shall
be deemed to have been received by the Company: (1) in the case of dispatch by registered
mail – after three business days from the date of its posting; (2) in the case of
transmission by facsimile (coupled with telephonic confirmation as to the receipt
thereof) – after one business day from the day of its transmission; (3) and in the
case of delivery via a messenger – upon delivery thereof by the messenger to the
addressee or the offer thereof to the addressee, as the case may be. 

	 	22.3 	Any
notice or demand by the Company to the Trustee may be given by way of a letter sent by
registered mail according to the address set forth in the Deed of Trust, or according to
another address of which the Trustee shall notify the Company in writing, or by the
transmission thereof by facsimile or via messenger, and any such notice or demand will be
deemed to have been received by the Trustee: (1) in the case of dispatch by registered
mail – after three business days from the date of its posting; (2) in the case of
transmission by facsimile (coupled with telephonic confirmation as to the receipt
thereof) – after one business day from the day of its transmission; (3) and in the
case of delivery via a messenger – upon delivery thereof by the messenger to the
addressee or the offer thereof to the addressee, as the case may be. 

20

	 	22.4 	Copies
of notices and invitations to meetings which the Company and/or the Trustee give to
holders of the Debentures (Series A) shall be sent by the Company also by way of an
immediate report a copy of which shall be delivered to the Trustee. 

	23.  	Waiver;
compromise; and modifications of terms and conditions of the Deed           of Trust

	 	23.1 	Subject
to the provisions of any law, the Trustee may from time to time and at any time, if it
has been persuaded that this does not, in its opinion, constitute a prejudice to the
rights of holders of the Debentures (Series A), waive any breach or non-fulfillment by
the Company of any of the conditions of this deed. 

	 	23.2 	Subject
to the provisions of the law and with prior approval to be obtained from a general
meeting of holders of the Debentures (Series A) by a majority of 75% of the persons
participating in the vote, at which holders of at least 50% of the balance of the par
value of the Debentures (Series A) in circulation were personally present or represented
by proxy, or at an adjourned meeting, at which holders of at least 10% of the aforesaid
balance were personally present or represented by proxy, the Trustee may, either before
or after the principal of the Debentures (Series A) is due for repayment, compromise with
the Company in connection with any right or claim of holders of the Debentures (Series A)
and may agree with the Company on any arrangement in connection with its rights or the
rights of holders of the Debentures (Series A), including its waiving any right or claim
of holders of the Debentures (Series A) vis-à-vis the Company pursuant to
this deed. Where the Trustee has compromised with the Company after having received prior
approval from the debenture holders as aforesaid, the Trustee will be released from all
liability in respect of such act. 

	 	23.3 	Subject
to the provisions of the law, the Trustee and the Company may, either before or after the
principal of the Debentures (Series A) is due for repayment, alter the Deed of Trust
(including an alteration of the conditions of the Debentures (Series A)), if one of the
following conditions is fulfilled: 

	 	23.3.1 	The
Trustee has been persuaded that the alteration is not prejudicial to holders of the
Debentures (Series A).  

	 	23.3.2 	The
holders of the Debentures (Series A) have agreed to the proposed alteration, by way of a
special resolution passed at a general meeting of holders of the Debentures (Series A) at
which holders of at least 50% of the unpaid balance of the principal of the Debentures
(Series A) in circulation are personally or represented by proxy, or at an adjourned
meeting, at which the holders of at least 10% of the aforesaid balance were personally or
represented by proxy.  

21

	 	23.4 	The
Company shall render an immediate report in regard to any such alteration or
modification. 

	 	23.5 	The
general meetings as referred to in this clause shall be convened in the manner stated in
the Second Schedule to this deed. 

	 	
In
every case of the exercise of the Trustee’s right pursuant to this clause as
aforesaid, the Trustee will be entitled to demand from holders of the Debentures (Series
A) to deliver their debenture certificates to it or to the Company, for purposes of
recording a note with regard to any compromise, waiver, modification or amendment as
aforesaid, and on the Trustee’s request, the Company will record such note on the
certificates that are delivered to it.  

	24.  	Register
of holders of Debentures (Series A)

	 	24.1 	The
Company shall keep and maintain at its registered office a register of holders of the
Debentures (Series A), in which the names and addresses of holders of the Debentures
(Series A) shall be recorded, as well as the number and par value of the registered
Debentures (Series A). Every transfer of ownership of the debentures shall also be
registered in the register. The Company may close the register from time to time for a
period or periods which shall not in aggregate exceed 30 days in a year. The Trustee and
any holders of the Debentures (Series A) will be entitled to inspect the register of
holders of the Debentures (Series A) at any reasonable time. 

	 	24.2 	The
Company will not be obliged to register any notice in the register of holders of the
Debentures (Series A) with regard to an express, implied or presumed trust, or a pledge
or charge of any sort, or of any equitable right, claim or set-off or any other right in
connection with the Debentures (Series A). The Company will only recognize the title of
the person in whose name the Debentures (Series A) are registered, provided that his
lawful heirs, administrators of the estate or executors of the registered holder and any
person who may be entitled to a debenture as a consequence of the bankruptcy of any
registered holder (and if it is a body corporate – as a result of its liquidation)
will be entitled to be registered as holders thereof, after providing such proof as is
sufficient, in the Company’s opinion, to prove the right of any of them to be
registered as a holder thereof. 

	25.  	Release  

	 	
Once
it has been proved to the Trustee’s satisfaction that all the Debentures (Series A)
have been repaid, or redeemed, or when the Company deposits in trust with the Trustee
amounts of money that will be sufficient for redemption, and also once it has been proved
to the Trustee’s satisfaction that all the undertakings and the expenses made or
incurred by the Trustee in connection with this deed and in accordance with the
provisions hereof, have been paid in full, the Trustee will then be obliged, upon the
Company’s first demand, to deal with the moneys that have been deposited in respect
of the Debentures (Series A) the redemption of which has not been demanded, in accordance
with the conditions set forth in this deed.  

22

	26.  	Appointment
of new trustee and expiry of term of office as Trustee

	 	26.1 	The
provisions of the law will apply to the Trustee’s term of office and to the
expiration thereof, as well as to the appointment of a new trustee. Subject to the
provisions of the law, the Trustee and any trustee who may come in its stead, will be
entitled to resign from their positions as trustees after having given the Company prior
written notice of three (3) months, which notice shall specify the reasons for the
resignation. 

	 	
The
resignation will come into force only after the court’s approval and from the date
fixed for this in the approval. 

	 	
In
the case of such resignation or in the event of the expiration of the Trustee’s term
of office, the court may appoint another trustee in place of the Trustee, for such period
and on such conditions as the court deems fit. 

	 	26.2 	In
accordance with the provisions of the Deed of Trust, where the Trustee or any trustee who
may come in its stead have acted in such manner, they will not be liable for expenses or
losses that are caused as a result of their resignation. 

	 	26.3 	The
court may dismiss a trustee if he or it has not fulfilled his or its function properly or
if the court finds another reason for dismissing him or it. 

	 	26.4 	The
holders of ten percent of the unpaid balance of the Debentures (Series A) and/or the
Company may convene a general meeting of holders of certificates of the Debentures
(Series A). Every meeting convened as aforesaid may decide by a vote of the holders of at
least fifty percent of the unpaid balance of the Debentures (Series A) on removing the
Trustee from its position. 

	 	26.5 	The
Securities Authority is entitled to apply to the court with an application to terminate
the Trustee’s term of office, in accordance with Section 35N of the Law. 

	 	26.6 	The
Trustee and the Company shall submit an immediate report to the Securities Authority in
regard to any event as referred to above in this clause, in connection with the Trustee’s
term of office. 

	 	26.7 	Every
new trustee will have the same powers, authorities and other authorizations and will be
able to act in all respects as if appointed Trustee from the outset, subject to the
provisions of Section 35N of the Law. 

23

	27.  	Meetings
of holders of the Debentures (Series A)

	 	
Meetings
of holders of the Debentures (Series A) shall be conducted as stated in the Second
Schedule to this deed.  

	28.  	Investment
of money  

	 	
All
the money the Trustee is entitled to invest pursuant to this deed, shall be invested by
it at a bank/banks, in its name or to its order, in investments in which the laws of the
State of Israel permit such moneys to be invested, as shall be found suitable, and all
subject to the terms and conditions of this Deed of Trust, provided that any investment
in securities shall be in securities that have been rated with a rating that is not less
than an AA rating. Where the Trustee has done so, it will not be liable to the persons
entitled in respect of such amounts, except for the proceeds received from the
realization of the investments, less the expenses connected with the aforesaid
investments and with maintaining and managing the trust accounts, the commissions and
less the compulsory payments which are imposed on the trust accounts. Out of such moneys
the Trustee shall transfer amounts to the debenture holders who are entitled thereto, as
soon as possible after proof and confirmation have been furnished to the Trustee in
regard to their right to such amount, to the Trustee’s full satisfaction, but less
the Trustee’s expenses and its commission at a rate that is customary with it at
such time.  

	29.  	Governing
law  

	 	
The
Debentures (Series A) are subject to the provisions of the Israeli law. In regard to any
matter that has not been mentioned in this deed and also in every case of a conflict
between the provisions of the law and the provisions of this deed, the parties will act
in accordance with the provisions of the Israeli law. In every case of a conflict between
the provisions described in the Prospectus regarding this deed and/or the Debentures
(Series A), the provisions of this deed shall prevail.  

	30.  	Addresses  

	 	
The
Debentures (Series A) are subject to the provisions of the Israeli law. On any matter
that has not been mentioned in this deed and also in every case of a conflict between the
provisions of the law and this deed, the parties will act in accordance with the
provisions of the law [sic].  

24

	31.  	Authorization
for Magna  

	 	
In
accordance with the provisions of the Securities Regulations (Electronic Signature and
Reporting), 5763-2003, the Trustee hereby gives approval for an authorized entity for the
purpose on behalf of the Company, to report electronically to the Securities Authority in
regard to this Deed of Trust.  

In Witness Whereof the
Parties have Hereunto Signed: 

	By: /s/ Hermetic Trust (1975) Ltd.

 
——————————————

Hermetic Trust (1975) Ltd. 		By: /s/ David Weissman

/s/ Dror Moran
——————————————

The Company 

I, the undersigned, Elli
Levinson-Sela, Adv., certify that this Deed of Trust was signed by Mr. David Weissman and
Dror Moran and their signatures bind the Company in connection with this Deed of Trust. 

			By: /s/ Elli Levinson-Sela, Adv.

Lic. No. 15877
——————————————

Elli Levinson-Sela, Adv.

25

BLUE SQUARE REAL
ESTATE LTD.  

Second Schedule

Meetings of Holders of
the Debentures (Series A)  

	1.  	The
Trustee or the Company may call meetings of holders of the Debentures
                    (Series A). Where the Company has called such meeting, it shall
immediately send                     written notice to the Trustee regarding the place,
the day and the hour at which                     the meeting will be held and also the
matters that will be brought for                     consideration thereat, and the
Trustee or a representative on its behalf will be                     entitled to attend
such meeting. The Company will be obliged to call a general                     meeting
on a written request from the Trustee or on a requisition by holders of
                    the Debentures (Series A) who hold at least 10% of the unpaid balance
of                     principal of the Debentures (Series A) in circulation, as the case
may be. In a                     case that the persons requisitioning the calling of the
meeting are holders of                     Debentures (Series A), the Company and/or the
Trustee, as the case may be, will                     be entitled to request indemnity
from the persons requisitioning the calling of                     the meeting for the
reasonable expenses connected therewith. 

	 	
Prior
notice of at least fourteen (14) days shall be given in respect of every meeting of
holders of the Debentures (Series A), specifying the place, the day and the hour of the
meeting, and also mentioning in general terms the subjects that will be considered and
discussed at the meeting. The notice shall be given to holders of the Debentures (Series
A), to the Trustee and in an immediate report.  

	 	
If
the purpose of the meeting is to consider and pass a special resolution, prior notice
regarding the convening of the meeting of at least twenty-one (21) days before the date
planned for the convening thereof, shall be given. Such notice shall, in addition to the
foregoing, also give details of the main points of the proposed resolution. The Trustee
may shorten the period of the aforesaid prior notice if it believes that a postponement
of convening the meeting constitutes prejudice to the rights of the holders of Debentures
(Series A). No resolution duly passed at a meeting called as aforesaid will be
invalidated if, due to an inadvertent omission, notice was not given to all holders of
the Debentures (Series A) or if such notice was not received by all holders of the
Debentures (Series A).  

	 	
Every
notice as aforesaid by the Company and/or the Trustee to the debenture holders shall be
given by way of an immediate report and also by way of a notice to be published in two
(2) widely circulating Hebrew dailies published in Israel, or by sending a notice by
registered mail to every registered holder of the Debentures (Series A) according to his
last address as recorded in the register of holders of Debentures (Series A) (in the case
of joint holders – to the joint holder whose name stands first in the register of
holders of Debentures (Series A)). Every notice that is published or sent as aforesaid
will be deemed to have been delivered to holders of the Debentures (Series A) on the date
of its publication as aforesaid, or after three (3) days from the date of its posting, as
the case may be.  

26

	2.  	The
chairman of the meeting shall be a person to be appointed by the Trustee. If
                    the Trustee has not appointed a chairman or if the chairman is absent
from the                     meeting, the holders of the Debentures (Series A) present at
the meeting shall                     elect a chairman from amongst their number. 

	3.  	A
meeting of holders of the Debentures (Series A) shall be opened after it has
                    been proved that the quorum required for the start of business is
present. 

	4.  	Subject
to the required quorum at a meeting convened to pass a special
                    resolution, and subject to the required quorum for dismissal of a
trustee in                     accordance with the Securities Law, two holders of
Debentures (Series A),                     personally or represented by proxy and jointly
holding or representing at least                     one-tenth (1/10) of the unpaid
balance of the Debentures (Series A) in                     circulation for the time
being, shall constitute a quorum. 

	5.  	At
a meeting convened to pass a special resolution, and inter alia on the
                    subjects set forth below: 

	 	5.1 	An
alteration and/or amendment to the Deed of Trust.

	 	5.2 	An
arrangement for reorganization of the Company with any other company.

	 	5.3 	Any
amendment, alteration or arrangement of the rights of holders of the Debentures (Series
A), whether such rights flow from the Debentures (Series A), the Deed of Trust or
otherwise, or any compromise or waiver in connection with the such rights. 

	 	5.4 	Making
of the Debentures (Series A) immediately due and payable in accordance with the terms and
conditions of the Deed of Trust. 

	 	
A
quorum will be constituted if at least 50% of the unpaid balance of the Debentures
(Series A) in circulation for the time being are present at the meeting, or at an
adjourned meeting, if holders of at least 10% of the abovementioned balance are present.  

	6.  	The
holders of the Debentures (Series A) are entitled to attend and vote through
               proxies. 

	7.  	Every
meeting of holders of the Debentures (Series A) shall be held at the place
               of which the Company gave notice, unless the Trustee gives notice of a
different                place for the convening thereof. 

27

	8.  	Except
as otherwise expressly provided, if within half an hour from the time
               appointed for the start of a meeting, no quorum is present, the meeting
will be                adjourned to the same day in the following week (and in the event
that such day                is not a trading day, to the immediately following trading
day) and to the same                place, without there being an obligation to give
notice to that effect to                holders of the Debentures (Series A), or to such
other day, place and hour, at                the election of the party calling the
meeting, of which notice shall be given to                the holders of the Debentures
(Series A) at least three (3) days in advance. If                no quorum is present at
such adjourned meeting, two (2) holders of Debentures                (Series A)
personally present or represented by proxy at such meeting, without                taking
account of the par value held by them, shall constitute a quorum, on
               condition that the provision which stipulates the quorum as aforesaid
shall be                published in the scope of the notice of the original meeting and
on condition                that the notice to holders of the Debentures (Series A) with
regard to the                holding of the adjourned meeting shall be published in
accordance with the                contents of Clause 8 below [sic], not later than seven
(7) days before the date                for convening of the adjourned meeting. Such
notice may be published in the                scope of the notice regarding the original
meeting (the general meeting that was                adjourned). 

	9.  	With
the consent of the majority at a meeting at which a quorum is present, the
               chairman may, and on a demand by the meeting shall be obliged to, adjourn
the                meeting from time to time and from place to place, as the meeting
shall decide.                If the meeting is adjourned for ten (10) days or more,
notice of the adjourned                meeting shall be given in the same way as notice
was given in regard to the                first meeting. Save for the foregoing, a holder
of a Debenture (Series A) will                not be entitled to receive any notice about
an adjourned meeting and/or about                the matters which will be considered and
discussed at the adjourned meeting.                Only matters which it was possible to
consider at a meeting at which it was                decided on the adjournment may be
considered and discussed at an adjourned                meeting. 

	10.  	In
a vote every holder, personally or represented by proxy, will have one vote
               in respect of each NIS 1 par value of the total face value principal of
the                Debentures (Series A) by virtue of which he is entitled to vote, which
remains                unpaid. 

	11.  	The
majority required for an ordinary resolution is a simple majority of the
               number of votes represented in a vote at a meeting. The majority required
for a                special resolution at such meeting is a majority of not less than
75% of the                number of votes represented in such vote. For these purposes no
distinction                shall be drawn between persons who are interested parties in
the Company and                persons who are not. 

	12.  	An
instrument appointing a proxy shall be in writing and shall be signed by the
               appointer or by his representative holding due written authorization to do
so.                If the appointer is a body corporate, the appointment shall be made in
writing                and shall be signed with the rubber stamp of the body corporate,
together with                the signature of the secretary of the body corporate or a
representative of the                body corporate having the power and authority to do
so. The instrument                appointing a proxy shall be drawn in the usual form. A
proxy need not himself be                a holder of a Debenture (Series A). An
instrument of proxy and the power of                attorney or other certificate
pursuant to which the instrument of proxy was                signed, or a certified copy
of such power of attorney, shall be lodged at the                registered office of the
Company, or at such other address of which the Company                shall give notice,
not less than forty-eight (48) hours before the time of the                meeting in
respect of which the power of attorney was given, unless otherwise                stated
in the notice calling the meeting. Any body corporate which is the holder
               of a Debentures (Series A) may by duly-signed written authorization
appoint such                person as it deems fit to act as its representative at every
meeting of holders                of the Debentures (Series A), and the person who has
been authorized will be                entitled to act in the name and on behalf of the
body corporate he represents. 

28

	13.  	Every
proposed resolution put to the vote at a meeting of holders shall be
               decided on a show of hands, unless a poll has been demanded by the
chairman or                at least two (2) holders of Debentures (Series A), personally
present or                represented by proxy, whether before a vote was held on a show
of hands or                subsequent thereto, and the vote on a poll shall be decisive.
In the case of                joint holders only the vote of the senior joint holder
wishing to vote, whether                personally or by way of proxy, will be accepted,
and for this purpose seniority                shall be determined according to the order
in which the names stand in the                register of holders. 

	14.  	The
Trustee, who attends the meeting on an invitation from the Company, shall
               attend without having a right to vote. 

	15.  	In
a vote the holder of a Debentures (Series A), or his proxy, may vote in
               respect of some of his votes in favor of the motion that has been put to
the                vote, and in respect of portion thereof against the motion, as he
deems fit. 

	16.  	A
vote given in accordance with the conditions contained in a document
               appointing a proxy shall be valid even if prior thereto the appointer has
died                or been declared legally incompetent, or the instrument of proxy has
been                revoked, or the Debentures (Series A) in respect of which the vote
was given has                been transferred, unless written notice has been received at
the registered                office of the Company or at such other place of which the
Company shall give                notice, before the meeting, in regard to the death of
the appointer, the fact of                his being legally incompetent, or with regard
to the revocation or transfer as                aforesaid. 

	17.  	The
announcement by the chairman of the meeting that a resolution has been
               passed or has been defeated and an entry to that effect in the minute book
shall                serve as conclusive proof of such fact. 

	18.  	A
resolution for a modification of the Deed of Trust, to the extent that this is
               submitted to a meeting, shall be passed by a special resolution as
aforesaid,                and subject to the provisions of the Securities Law. 

	19.  	The
chairman of the meeting shall cause minutes to be kept of the meeting of
               holders of the Debentures (Series A) which shall be recorded in the minute
book.                Every such minute shall be signed by the chairman of the meeting or
by the                chairman of the next meeting, and every minute signed as aforesaid
shall serve                as conclusive evidence as to the proceedings at the meeting,
and until the                contrary is proved, any resolution passed at such meeting
shall be deemed to                have been duly passed. 

	20.  	A
person or persons who may be appointed by the Trustee, the secretary of the
               Company and any other person or persons who are authorized to do so by the
               Company, will be entitled to be present at the aforesaid meetings of
holders of                the Debentures (Series A), without having a right to vote. 

29

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