INDENTURE

Between:

Xfone, Inc.

whose address for the purposes of this Indenture will be c/o Xfone 018 Ltd.

1 Haodem St. P.O. Box 7616 Kiryat Matalon, Petach Tikva, Zip Code 49170 (c/o Adv. Alon Reisser)

Tel: 03-9254452

Fax: 03-9238838

(hereinafter: the “ Company ”)

Whereas :

the Company’s board of directors decided on December 12, 2007 to raise funds in consideration for an issue of Series A Bonds according to the terms and conditions of this Indenture (the “ Issue ”); and

Whereas :

in the framework of the said Issue, the Company shall issue a series of Series A Bonds, as specified in Section 2 of this Indenture; and

Whereas :

the Trustee is a company registered in Israel, limited by shares, which was incorporated in Israel pursuant to the Companies Ordinance, whose main object is occupation in trusts; and

Whereas :

the Trustee has represented that there is no impediment pursuant to the Securities Law, 5728-1968 or any other law to its engagement with the Company pursuant to this Indenture and that it meets the eligibility requirements and conditions prescribed by the Securities Law, 5728-1968 for serving as a trustee for the Issue of the Series A Bonds contemplated in this Indenture; and

Whereas :

the Company represents that there is no impediment, pursuant to any law and/or agreement, to performing a private placement of the Series A Bonds and/or to engaging with the Trustee pursuant to this Indenture;

1.1

The preamble to this Indenture and the annexes attached hereto constitute a material and integral part hereof, whilst it is hereby clarified, with respect to the Third Addendum to the Indenture, that it is attached hereto on behalf of the Company only and that the Trustee does not opine on the veracity thereof.

1.3

Anything stated in this Indenture in the plural shall also import the singular and vice versa , anything stated in the masculine gender shall also import the feminine gender and vice versa and anything stated as to a person shall also refer to a corporation, and all insofar as there is no other express and/or implied provision in this Indenture and/or the content or context does not prescribe otherwise.

The holder of an autonomous power of attorney from a transfer agent in respect of a certain number of Bonds or in respect of a certain par value amount of Bonds registered in its name in the Register (according to which the transfer agent’s proxy is not barred from exercising his discretion in the vote).

A person whose name is registered in the Register at the time being, and in the event that several joint holders are registered in the Register, the joint holder registered first in the Register, with the exception of a transfer agent;

A Series A Bond Certificate, in the form attached hereto as the First Addendum;

The Securities Law, 5728-1968 and the regulations promulgated thereunder, as being from time to time;

The par value of the Series A Bonds;

A day on which transactions are performed on TASE;

A day on which the majority of the banks in Israel are open for the performance of transactions;

The Tel Aviv Stock Exchange Ltd. ;

The price index known as the “consumer price index”, including fruit and vegetables, and which is published by the Central Bureau of Statistics and Economic Research in Israel, including the said index even if published by another official body or institution and also including any other official index that shall replace it, regardless of whether or not it shall be based on the same data as the existing index. If it shall be replaced by another index to be published by such body or institution, and such body or institution shall not have determined the ratio between it and the replaced index, such ratio shall be determined by the Central Bureau of Statistics, and if such ratio shall not be determined as aforesaid, then the Trustee, in consultation with such economic experts as shall be chosen thereby, shall determine the same;

The last known Consumer Price Index;

The Consumer Price Index for the month of October, 2007, published on November 15, 2007;

The index known on the date of the making of any payment on account of the Principal or interest, although if the payment index is lower than the Base Index, the payment index will be the Base Index;

As defined in the preamble to this agreement;

December 13, 2007

2.

The Issue of the Series A Bonds and the Applicability of the Indenture

2.1

The Company will issue a series of up to NIS 100,382,100 par value registered Series A Bonds, bearing annual interest at the rate of 9%. The Principal of the Series A Bonds will be paid in eight (8) equal annual installments on the 1 ^st of December of each of the years 2008 to 2015 (inclusive). The interest in respect of the Series A Bonds will be paid in biannual installments on June 1st and December 1st of each one of the years 2008 until 2015 (inclusive). The Series A Bonds are offered at a purchase price equal to 100% of the par value thereof. The Series A Bonds are linked (Principal and interest) to a rise in the Consumer Price Index as specified in Section 4 of the terms and conditions overleaf.

2.2.1.

The first interest payment, at the rate of 4.192%, for the period from the Date of the Issue until May 31, 2008 shall be made on June 1, 2008 (the “ First Interest Period ”).

2.3

Notwithstanding the aforesaid in Section 2.2 above, in the event that the Company shall list the Series A Bonds on TASE as specified in Section 2.4 of this Indenture, commencing from the date of the listing of the Series A Bonds on TASE, and insofar as the Series A Bonds shall indeed be listed on TASE, the interest rate that the unpaid balance of the Series A Bonds shall bear will be 8% (a deduction in the annual rate of 1% (calculated according to 365 days in a year) (the “ Reduced Interest ”) for the period that shall commence on the date of the listing of the Series A Bonds on TASE and concluding on the date of payment of the Series A Bonds. Insofar as the Series A Bonds shall be listed on TASE as aforesaid, the Company shall notify TASE regarding the effective date for a change in the interest as aforesaid, the payment date and the exact interest rate to be paid in respect of the pre-listing interest period. The listing of the Series A Bonds shall be performed shortly after the publication of a prospectus for the listing of the Series A Bonds, although in any event not before five (5) Business Days from the date of publication of such prospectus.

It is hereby clarified that on the date of the first interest payment which shall occur after the listing of the Series A Bonds, the Bondholders will be entitled to payment of the Reduced Interest, calculated according to the interest period that shall remain commencing from the date of the listing of the Series A Bonds until the date of the first interest payment which shall occur after the listing as aforesaid.

2.4

Listing of the Series A Bonds on TASE – On the date of issuance of the Series A bonds, they will be listed neither on TASE nor on the trading system for institutional investors operated by TASE (TACT Institutional). Immediately after the Issue, the Company shall apply to TASE to register the Series A Bonds as a “non-registered security” (“ NRS ”) in the TASE clearinghouse, at the Company’s discretion and subject to the provisions of any law and the TASE articles of association. The Company will notify the Trustee of the registration as a NRS, if and insofar as there shall be such registration. Any and all costs of the registration shall be borne by the Company in full, all subject to receipt of appropriate approvals of TASE and/or the TASE clearinghouse and/or another authority. The Company will be entitled to perform modifications to the Indenture and/or the Bonds, as shall be required by the Securities Authority and/or TASE and/or the TASE clearinghouse and/or another authority for the purpose of performance of the registration as a NRS, in accordance with the language that shall be agreed upon in advance and in writing with the Trustee, without the need for receipt of additional approval from the bondholders, provided that the Trustee shall be convinced that the required modification as aforesaid shall not prejudice the rights of the holders of the Series A Bonds and shall approve the modification in advance and in writing.

It is hereby clarified that if the Company’s application for registration as a NRS shall be denied for any reason, this will not constitute a breach of the terms and conditions of this Indenture and the Company will act to issue Series A Bond Certificates in the name of the investors. In such a case, the Company shall pay directly to the holders of the Series A Bonds all of the interest payments in respect of the Series A Bonds by the date of the listing of the Series A Bonds on TASE as stated in this section below.

It is hereby clarified that the holders of the Series A Bonds and the Trustee will entertain no claim against the Company or any person on behalf thereof if the Series A Bonds shall not be listed on TASE, apart from the right of the holders of the Series A Bonds to receive the Interest for the Pre-Listing Period, as defined in Section 2.2 of this Indenture, during the period in which the Series A Bonds are not listed on TASE, and except as specified in Section 2.7 below. In addition, it is hereby clarified that from the listing of the Series A Bonds forth, the Reduced Interest specified in Section 2.3 above will be the interest that shall be paid in respect of the Series A Bonds.

A precondition to the Company’s obligation to act to publish a prospectus according to which the Series A Bonds will be listed on TASE is that each holder of a series A bond will deliver to the Company information as shall be reasonably required for the listing of the Series A Bonds with respect to himself and with respect to the Series A Bonds held by him, all as shall be required pursuant to any law, including by a securities authority in the U.S.A.

The listing of the Series A Bonds is subject to the Company meeting TASE’s articles of association and the directives according thereto, as being from time to time.

2.5

Up until the date of listing on TASE, in any event in which due to an action initiated by the Company or for any other reason, the rating of the Series A Bonds shall have dropped from the rating given to the Series A Bonds on the date of the first allotment thereof, A3 of Midroog (or a rating parallel thereto by another rating company) to a rating of Baa1 of Midroog (or a rating parallel thereto of another rating company), the annual interest rate to be borne by the Series A Bonds shall be increased by one quarter percent (0.25%).

2.6

Immediately after the Date of the Issue, the Company shall act to register the Series A Bonds in the name of a transfer agent of Mizrahi Tefahot Nominees Company Ltd. . It is hereby clarified that so long as the Series A Bonds are not listed on TASE, no transfers of the Series A Bonds shall be performed other than with the Company’s approval and only after the transferee and the transferor shall deliver to the Company, in advance and in writing, the details as shall be required for the purpose of performance of the transfer of the Series A Bonds as well as an IRS W-8BEN form, all subject to Section 2.11 below. In the framework of the details that shall be required for a transfer of the Series A Bonds, the transferee shall be required to assume the terms and conditions of this Indenture, including the terms and conditions overleaf .

A transfer of the Series A Bonds without receipt of the Company’s approval as aforesaid will be null and void, shall confer upon the transferee no right vis-à-vis the Company and shall not bind the Company.

2.7.1.

Within one Business Day from the conclusion of the period of twelve (12) months from the Date of the Issue, the Company shall notify the holders of the Series A Bonds (by notice to the bondholders as stated in Section 21 of the Indenture), TASE and the Trustee of the fact that the listing of the Series A Bonds on TASE has not been completed. In the foregoing notice, the Company shall also give notice of the early redemption date which will be on the first Business Day after 30 days from the date on which such notice shall have been given (the “ Early Redemption Date ”).

2.7.3.

Commencing from the date on which the Company shall deliver notice as aforesaid regarding the date for notice of early redemption, it will be possible to deliver Early Redemption Notice, subject to the provisions below.

An Early Redemption Notice of a Holder of Series A Bonds registered in his name in the Register of the Company’s bondholders shall be delivered to the Company no less than ten days prior to the early redemption date, to the registered office of Xfone 018 Ltd. or any other place of which the Company shall give notice.

An Early Redemption Notice of a person holding Series A Bonds through TASE members shall be delivered to the TASE member through which he holds the Series A Bonds sought to be redeemed no less than ten Trading Days prior to the early redemption date.

2.7.4.

Pursuant to the bylaws of the TASE clearinghouse, the following provisions shall apply to delivery of Early Redemption Notices:

Up to six Trading Days prior to the early redemption date, the TASE member shall submit to the clearinghouse, separately for each sub-account, a written application in which the quantity in respect of which early redemption is sought shall be specified.

An early redemption application which relates to a quantity of Series A Bonds that exceeds the quantity registered to the credit of the TASE member in the sub-account to which the application relates will not be performed at all and will be returned to the sending TASE member, stating the reason therefor.

No later than the second Trading Day after the date on which the TASE member shall have submitted an application to the clearinghouse as specified in Subsection 2.7.4.1 above, the clearinghouse shall deliver to the transfer agent notice specifying the total par value of the Series A Bonds in respect of which early redemption applications were submitted, together with the confirmations of exemption from withholding tax.

No later than the second Trading Day after the date on which the clearinghouse shall have delivered notice to the transfer agent as specified in Subsection 2.7.4.2 above, the transfer agent shall deliver to the Company notice specifying the total par value of the Series A Bonds in respect of which early redemption applications were submitted, together with the confirmations of exemption from withholding tax.

2.7.5.

On the date of early redemption of each applicant, the Company shall redeem the Series A Bonds in respect of which early redemption notices shall have been submitted, such that the holder of the Bonds stated shall be entitled to receive from the Company the sum of NIS 1 in respect of each NIS 1 of Bonds that shall be redeemed by the Company on the said date, linked to the Index in accordance with the provisions of this Indenture. It is hereby clarified that in addition to the provisions of Section 2.7.6 below, the Company will not pay the holders of the Series A Bonds any payment and/or any interest.

2.7.6.

The interest that shall accrue in respect of the Series A Bonds from the date of the last interest payment that shall have preceded the early redemption date until the early redemption date shall be paid to the holders of the Series A Bonds who shall have chosen to perform early redemption according to this section.

2.7.8.

It is hereby further clarified that a Holder of Series A Bonds who shall not deliver Early Redemption Notice to the Company, the Company shall not redeem Bonds held by him and he will continue to hold the same subject to the provisions of this Indenture.

2.8

The Company will be entitled to issue, at any time, without the need for the consent of the holders of the Series A Bonds and/or the Trustee, including a subsidiary of the Company, pursuant to the provisions of any law, additional bonds from the series of Series A Bonds, at such price and in such manner as the Company shall deem fit, including at a discount rate which is different (higher or lower) to the rate determined in the terms and conditions of the Bonds offered pursuant to this Indenture. Subject thereto, the Indenture for the Bonds will also apply in respect of any such additional bonds from the same series that shall be issued by the Company and, from the date of the issue thereof, they shall be treated as the Bonds from the same series that were initially listed. In the event of an increase in the series of Series A Bonds, the Trustee will be entitled to demand an increase to its fee, relative to the increase of the series, and the Company gives its prior consent in its engagement in this Indenture to the increase to the Trustee’s fee as aforesaid.

For details regarding the tax implications in the event of an issue of additional Series A Bonds at different discount rates, the Holder of the Series A Bonds is referred to the Third Addendum to this Indenture.

2.9

The Series A Bonds shall rank pari passu among themselves in connection with the Company’s undertakings according to the Series A Bonds, and without any priority or preference of one over another.

The aforesaid does not exempt the Trustee from reviewing the Issue as aforesaid, insofar as such duty is imposed on the Trustee pursuant to any law and/or constitute its prior consent to the Issue and does not derogate from the rights of the Trustee and of the meeting of the holders of the Series A Bonds according to this Indenture, including their right to accelerate the Series A Bonds as stated in Section 6 below.

2.11

The Issue is being performed in Israel only and is not being performed in the United States and/or to a U.S. Person as defined in Regulation S which was promulgated under the United States Securities Act of 1933 (“Securities Act”). Every buyer of the securities offered according to the Issue will declare in writing on the offer form that shall be delivered to the Company and a copy of which shall be delivered to the Trustee that he is not a U.S. Person, that he is not buying the securities offered according to the Issue for a U.S. Person and/or a person who is located in the United States, that he was not in the United States at the time that he submitted the application to buy the securities offered according to the Issue and that he is not buying the securities offered according to the Issue with the intention of performing a “Distribution” in the United States (according to the meaning of this term in the American securities laws).

No person is authorized to act to sell the securities offered according to the Issue in the United States.

The Series A Bonds offered according to this Indenture are not listed in the United States pursuant to the Securities Act and buyers of the Series A Bonds according to this Indenture are prohibited from offering and/or selling the same in the United States or to a “US Person” unless they shall be listed pursuant to the Securities Act or a legal opinion shall be given which shall be acceptable to the Company whereby there is an exemption from the listing requirements pursuant to the Securities Act. The Company does not undertake to list the Series A Bonds pursuant to the Securities Act .

2.12

Pursuant to the provisions of the Securities Law and Section 5 of the Securities Regulations (Details with regard to Sections 15A to 15C of the Law) , 5760-2000, restrictions apply to resale of the Series A Bonds.

2.13

Deposit of Moneys with the Trustee and Release of the Issue Proceeds

The moneys that the Company shall receive from the holders of the Series A Bonds in respect of the Issue of the Series A Bonds, after deduction of NIS 20,000 in respect of the Issue expenses (the “ Issue Proceeds ”) shall be remitted through Excellence Nessuah Brokerage Services Ltd. (the “ Depositary ”) to a trust account in the Trustee’s name at Bank Leumi Le-Israel Ltd. (the “ Bank ”), branch 812 (Migdalei Aviv), account no.: 15998/55 (the “ Trust Account ”). Within three days after the remittance of the Issue Proceeds, the Depositary shall deliver to the Trustee, via e-mail, a written list of the full names of the investors / bondholders who shall have paid the said moneys, while alongside the name of each investor on the list shall be stated the amount paid by him, his I.D/passport/corporation no., full address, telephone and fax no., the name of at least one contact person thereof and the e-mail address of the contact person as well as full details with respect to the bank account of every such investor (the “ List of Investors ”).

Subject to the following provisions, the Issue Proceeds will be invested by the Trustee in interest-bearing renewable NIS deposits for a period of up to one week (and at the Company’s written request, 8 days in advance, in daily deposits) according to the conditions then accepted at the Bank, and the Trustee will instruct the Bank to remit the same, along with the yield thereon, to the Company or to other beneficiaries, at the Company’s written demand of the Trustee, within two Business Days after the Company shall have provided the Trustee with such written demand, accompanied by a written confirmation signed by the Company’s CEO and the Company’s U.S. legal counsel (whose details shall be delivered to the Trustee in advance and in writing, duly signed by the Company), stating that:

2.13.2.

The conditions (which are unrelated to the manner of financing of the transaction) that are required for the closing of the transaction for the acquisition of the shares of NTS Communications Inc. in accordance with the provisions of the agreement for the acquisition of the shares of NTS Communications Inc. of August 22, 2007 (in this section, the “ NTS Acquisition ”), have been fulfilled.

2.14.1.

All of the aforesaid notwithstanding, any remittance of the moneys that shall be received in the Trust Account or part thereof and/or amounts that shall accrue in respect thereof in the account shall be after deduction of any expense, fee and/or other amount which shall be debited to the Trust Account, including any tax that shall be deducted by the Bank in which the Trust Account is maintained.

2.14.3.

The Company hereby confirms and undertakes that any and all moneys that shall be remitted to the Trust Account will be remitted as required by law and that the holding thereof by the Trustee and its actions in respect thereof which shall be performed pursuant to this Indenture are permitted and legitimate pursuant to any law, including U.S. laws.

2.14.5.

At the Company’s request, the Trustee shall transfer to the Company detailed bank documents attesting to the transactions in the account.

3.1

The Company shall issue the Series A Bonds under the terms and conditions as specified in this Indenture and in the Series A Bonds and shall secure the same as specified in this Indenture.

3.2

The Company reserves the right to purchase, at any time, regardless of whether on TASE, insofar as the Series A Bonds shall be listed thereon, or elsewhere, Series A Bonds at such price as it shall deem fit, without prejudice to the obligation to pay the Series A Bonds that shall be held by others who are not the Company.

The Series A Bonds that shall be purchased by the Company shall be cancelled and delisted from TASE, insofar as they shall be listed thereon, and the Company will not be entitled to reissue the same.

A subsidiary of the Company or of controlling shareholders of the Company and/or a company controlled by the controlling shareholders of the Company and/or of another entity affiliated with the Company and/or with the controlling shareholders thereof, apart from the Company itself (an “ Affiliated Corporation ”) may purchase and/or sell Bonds, from time to time, either on TASE or elsewhere, including by way of an issue, by the Company, of bonds at such price as it shall deem fit, and to sell the same accordingly. In the event of such a purchase and/or sale, the Company shall release an immediate report thereon and shall deliver notice to the Trustee. The immediate report and the notice as aforesaid will include reference to the quantities and prices that were purchased and/or sold by the Affiliated Corporation, as the case may be. The Bonds that shall be held as aforesaid by an Affiliated Corporation shall be deemed as an asset of the Affiliated Corporation and will not be delisted from TASE, other than subject to TASE rules. However, so long as the Bonds shall be held by the Affiliated Corporation, they shall confer no voting rights on their holders at the general meeting of the bondholders nor be taken into account for the purpose of determination of the presence of a legal quorum.

At the time of holding of a meeting of the holders of the Series A Bonds, the Trustee will examine the existence of conflicting interests of the holders of the Series A Bonds, according to the circumstances of the matter. The Company and the Trustee will act to convene class meetings of the holders of the Series A Bonds pursuant to the provisions of any law, the binding precedent, the provisions of the Securities Law and the regulations and directives that shall be promulgated thereunder, as the Trustee shall instruct. In the event of the holding of class meetings, approval of a resolution requires its approval by each one of the class meetings that shall be convened and by the meeting of all of the holders of the Series A Bonds, and all by the majority required according to the provisions of this Indenture, including the annexes hereto. The Trustee may, at its sole discretion, determine that such a meeting not be convened.

4.

Undertakings of the Company and Securing the Series A Bonds

The Company hereby undertakes to pay any and all Principal and interest amounts (including arrears interest, insofar as applicable) which shall be payable according to the terms and conditions of the Series A Bonds and to fulfill all of the remaining conditions and undertakings imposed thereon according to the terms and conditions of the Series A Bonds and according to this Indenture.

The Company’s undertaking to pay the Series A Bonds (Principal, interest and linkage differentials) is not secured by any pledge or collateral .

For the avoidance of doubt it is clarified that the Trustee is under no duty to examine, and in practice the Trustee has not examined, the need for the provision of securities to secure the payments to the bondholders. In its engagement in this Indenture, and in the Trustee’s agreement to serve as trustee for the bondholders, the Trustee does not opine, either explicitly or implicitly, on the Company’s ability to meet its undertakings to the bondholders. The aforesaid does not constitute prior consent on the part of the Trustee to such actions nor does it derogate from the Trustee’s duties pursuant to law and/or the Indenture, including the Trustee’s duty (insofar as the Trustee is subject to such a duty pursuant to any law) to examine the effect of changes in the Company from the Date of the Issue forth, insofar as they serve to have an adverse effect on the Company’s ability to meet its undertakings to the holders of the Series A Bonds. The aforesaid does not derogate from the Trustee’s duties pursuant to law and/or the Indenture.

5.

Early Redemption

Insofar as the Series A Bonds shall be listed on TASE:

Should TASE decide to delist the Series A Bonds in circulation due to the fact that the value of the public holdings thereof has dropped below the minimal amount determined in the TASE directives regarding delisting, the Company shall not perform immediate redemption of the Series A Bonds, although the Series A Bonds will be delisted from TASE and the holders thereof will be subject to the tax implications deriving therefrom.

Acceleration

6.1.1.

If the Company shall not pay any amount that shall be due therefrom in connection with the Bonds within 14 days after its payment due date.

6.1.3.

If an attachment shall be imposed on the Company’s material assets, in whole or in material part, and the attachment shall not be removed within 60 days.

6.1.5.

If a temporary or permanent receiver shall be appointed for the Company and/or its assets, in whole or in material part, which appointment shall not be cancelled within 60 days.

6.1.7.

If the Company shall discontinue the Series A Bond payments (Principal and/or interest) and/or shall give notice of its intention to discontinue the Series A Bond payments (Principal and/or interest) and/or there is a substantial concern that it shall discontinue the Series A Bond payments (Principal and/or interest).

6.1.9.

In the event that the Company shall breach or fail to fulfill a material undertaking or condition included in the Bonds or the Indenture and the Company shall not have fulfilled such undertaking or condition within 15 Business Days from the date on which the Trustee shall have given it written warning thereof.

6.1.11.

So long as the Series A Bonds shall not have been listed on TASE – if the rating of the Series A Bonds shall have dropped to the rating of Baa2 of Midroog (or a rating parallel thereto by another rating company) or a lower rating.

6.1.13.

So long as the Series A Bonds shall not have been listed on TASE – if the Series A Bonds shall cease to be rated for a period of over 30 days. For the avoidance of doubt, it is clarified that in the event that the Series A Bonds shall be rated by several companies, for the purposes of this section, cessation of rating means cessation of rating by all of the rating companies.

6.1.15.

In the event that the Bank shall have accelerated credit in a material amount due to a breach of an undertaking of the Company thereto or in instances in which bonds from other series (insofar as such series shall be issued) of the Company shall be accelerated in the future.

6.1.17.

Failure to publish financial statements within 45 days from the date determined therefor in the U.S. laws (and if the Company shall have received an extension from a competent authority – within 45 days from the end of the extension period).

6.1.19.

So long as the Series A Bonds shall not have been listed on TASE – if the debt to EBITDA ratio shall exceed 4. For this purpose, “EBITDA” means the Company’s earnings before financing expenses, taxes, depreciation and amortization and other expenses / revenues, all according to the Company’s financial statements for such period, audited by the Company’s auditors and approved by the Company’s board of directors. The EBITDA shall be calculated on the basis of the Company’s two quarterly financial statements in which the financial results of NTS shall have been consolidated throughout the period of the statement.

6.1.21.

Upon the occurrence of any other event which, in the opinion of the Trustee, materially prejudices the rights of the holders of the Series A Bonds.

For the purposes of this section “a material part of the Company’s assets” is a part of the Company’s assets, whose book value exceeds 40% of the Company’s total assets.

6.2

Upon the occurrence of any of the events specified in Sections 6.1.1 to 6.1.21 (inclusive) above:

6.2.2.

In the event that by the date of convening of the meeting, any of the events specified in Sections 6.1.1 to 6.1.21 (inclusive) above shall not have been cancelled, removed or ceased, and a resolution at the meeting of the bondholders as aforesaid shall have been adopted as a Special Resolution (as defined in the Second Addendum hereto), the Trustee will be obligated, within a reasonable time, to accelerate the entire unpaid balance of the Series A Bonds, provided that it shall have given the Company written warning of 7 Business Days before approaching the courts for enforcement of the acceleration.

6.2.4.

The Trustee may, at its discretion, shorten the timeframe stated above in the event that the Trustee shall be of the opinion that any delay in acceleration of the Company’s debt shall risk the rights of the holders of the Series A Bonds. Prior notice on the matter as aforesaid shall be delivered to the Company simultaneously with an immediate acceleration of the Series A Bonds.

7.1

Without derogating from any other provision of the Indenture, the Trustee will be entitled, at the discretion thereof, to institute against the Company any such proceedings, including legal proceedings, as it shall deem fit and subject to the provisions of any law, for the purpose of enforcement of the Company’s undertakings pursuant to the Indenture and for the exercise of the rights of the holders of the Series A Bonds pursuant to the Indenture. The Trustee will notify the Company in writing of its intention to institute proceedings as aforesaid 14 days before the institution thereof, insofar as possible.

7.3

The Trustee is entitled, prior to instituting proceedings as aforesaid, to convene a meeting of the holders of the Series A Bonds in order that the bondholders shall decide, by a Special Resolution, which proceedings to institute for the exercise of their rights pursuant to the Indenture. In addition, the Trustee will be entitled to reconvene meetings as aforesaid for the purpose of receiving instructions on any matter relating to the management of the proceedings as aforesaid.

7.5

The Trustee is entitled, although not obligated, at the sole discretion thereof, to delay the performance of any action thereby pursuant to the Indenture, for the purpose of approaching the meeting of the holders of the Series A Bonds and/or the Court until it shall receive instructions from the meeting of the holders of the Series A Bonds and/or instructions from the Court on how to act. The general meeting of the holders of the Series A Bonds and/or the Court, as the case may be, shall be approached without delay and on the first reasonably possible date, provided that the delay of the proceedings will not jeopardize the rights of the holders of the Series A Bonds.

8.

Distribution of the Revenues

First, for payment of the expenses, payments, levies and liabilities incurred by the Trustee, imposed thereon or caused incidentally to or as a consequence of actions for performance of the trust or otherwise in another connection with the terms and conditions of this Indenture, including its fee; second – in order to pay the holders of the Series A Bonds the interest arrears due to them according to the terms and conditions of the Series A Bonds, pari passu and relative to the amount of the interest in arrears that is due to each one of them, without preference or priority in respect of any of them; third – in order to pay the holders of the Series A Bonds the Principal amounts due to them according to the Series A Bonds that are held by them, pari passu , regardless of whether or not the Principal amounts shall have been due and payable and proportionately to the amounts due to them, without any preference in connection with the precedence of time of issue of the Series A Bonds by the Company or otherwise, and the Trustee will pay the surplus, if any, to the Company or its substitutes.

Payment of the amounts by the Trustee to the holders of the Series A Bonds is subject to the prior rights of other creditors of the Company, if any.

9.1

The provisions of Section 8 above notwithstanding, in the event that the monetary amounts that shall be received as a consequence of the institution of the foregoing proceedings that shall be distributable at any time, as stated in the said section, shall be less than the sum of one million (1,000,000) NIS, the Trustee will not be obligated to distribute the same and will be entitled to invest the said amount, in whole or in part, in the investments permitted pursuant to this Indenture, and to substitute these investments from time to time with other permitted investments, all as it shall deem fit.

9.3

The Trustee will be entitled to decide, and will be obligated to do so if demanded by the holders of the Series A Bonds by a Special Resolution, upon the distribution of the moneys in its hands, even if the amount thereof shall be less than 10% of the unpaid balance of the Principal of the Series A Bonds and the interest.

10.1

The Trustee shall notify the holders of the Series A Bonds of the date and place at which any of the payments mentioned in Section 8 and 9 above shall be made by prior notice of 14 days which shall be delivered in the manner determined in Section 21 below.

After the date determined in the notice, the holders of the Series A Bonds will be entitled to interest in respect thereof according to the rate determined in the Series A Bonds only on the balance of the Principal amount (if any) after deduction of the amount that was paid or for payment as aforesaid.

10.3

The Company will deposit with the Trustee, within 15 days from the date scheduled for the said payment, the amount of the payment that shall not have been paid for a reason that is not dependent upon the Company, and such deposit shall be deemed as payment of said payment, and in the event of payment of everything due in respect of the Series A Bond, also as redemption of the Series A Bond.

10.5

The Trustee will remit moneys to every Holder of a Series A Bond for whom amounts and/or moneys due to the holders of the Series A Bonds shall have been deposited with the Trustee, out of such moneys that shall have been deposited as aforesaid, against presentation of such proof, as shall be required by the Trustee to the full satisfaction thereof, of the holder’s entitlement to the moneys.

11.1

A receipt from a Holder of the Series A Bonds in respect of the Principal and interest amounts that shall have been paid thereto by the Trustee in respect of the Series A Bond shall absolutely release the Trustee with respect to payment of the amounts stated therein.

11.2

The moneys distributed according to the provisions of Section 10 above shall be deemed as made on account of the payment.

12.

The Company’s Undertakings to the Trustee

The Company hereby undertakes, vis-à-vis the Trustee, so long as the Series A Bonds shall not have been paid, as follows:

12.1

To give and instruct its auditors to give the Trustee and/or persons on its behalf, any document or information regarding the business and/or assets of the Company that shall reasonably be required for the protection of the holders of the Series A Bonds.

12.2

To maintain orderly books of account in accordance with GAAP. To keep the books and documents serving as authorities therefor (including deeds of pledge, mortgage, accounts and receipts) and also to enable the Trustee and/or any person who the Trustee shall appoint in writing for this purpose, to inspect any book and/or document and/or approval as aforesaid at any reasonable time.

The Trustee hereby undertakes to keep any information that is given as aforesaid confidential, except for the purpose of transferring information to a meeting of the holders of the Series A Bonds for the adoption of a resolution relating to their rights pursuant to the Series A Bonds or for the provision of a report on the condition of the Company.

12.3

To notify the Trustee, immediately upon learning thereof, of any instance in which a material attachment shall have been imposed on its assets, and of any instance in which a receiver shall have been appointed for its assets, in whole or in part, and also to immediately take, at its expense, any and all reasonable measures required for the removal of such material attachment or cancellation of the receivership.

12.5

To immediately notify the Trustee, in writing, of the occurrence of any of the events specified in Section 6.1 above, insofar as the Company is aware of the occurrence of such event.

12.7

To arrange that so long as the Series A Bonds shall not have been paid in full, they shall continue to be rated by a rating company, to which end the Company undertakes to pay all of the payments and to cooperate with the rating company as aforesaid.

12.9

To deliver to the Trustee, no later than 30 days after the date of this Indenture, a payment schedule for payment of the Bonds (Principal and interest) in an Excel file.

12.11

To carry out any reasonable instruction of the Trustee that is intended to protect, according to the provisions of this Indenture, the rights of the holders of the Series A Bonds.

13.

Additional Undertakings

If and insofar as the Series A Bonds shall be accelerated, as defined in Section 6 above, the Company shall perform, from time to time and at any time that it shall be demanded to do so by the Trustee, any and all reasonable actions in order to enable the exercise of all of the authorities vested in the Trustee, and the Company shall perform the following actions in particular:

13.2

Give any such notices, orders and instructions as the Trustee shall deem to be beneficial and shall demand.

14.

Representatives

The Company hereby irrevocably appoints the Trustee as its representative, to execute and perform, on its behalf and in its stead, all of the actions that it shall be obligated to perform according to the terms and conditions included in this Indenture, and generally to act on its behalf in relation to actions that the Company is obligated to perform according to this Indenture and shall not have performed or to perform part of the authorities vested therein, and to appoint any other person, as the Trustee shall deem fit, to perform the duties thereof pursuant to this Indenture, subject to the Company not having performed the actions that it is obligated to perform pursuant to the terms and conditions of this Indenture within a reasonable period of time, according to the determination of the Trustee, from the date of the Trustee’s demand, provided that it shall have acted reasonably.

An appointment pursuant to this section does not serve to obligate the Trustee to take any action and the Company and the holders of the Series A Bonds hereby exempt the Trustee in advance in the event that it shall not take, by virtue of the said power of attorney, any action and/or shall not timely and/or correctly perform the same. In addition, the Company and the holders of the Series A Bonds hereby waive in advance any claim against the Trustee and/or its agents in respect of any damage that is caused and/or may be caused thereto, either directly and/or indirectly, due to the actions and/or omissions of the Trustee as stated in this section, provided that its actions and/or omissions shall not have been performed maliciously and/or negligently and that it shall have acted in good faith.

15.

Other Agreements

Subject to the provisions of the Law and the restrictions imposed upon the Trustee by law, neither the fulfillment of the Trustee’s duties pursuant to this Indenture nor its mere status as a trustee shall serve to prevent it from engaging with the Company in different contracts or from performing transactions therewith in the ordinary course of its business.

16.

Reporting by the Trustee

The Trustee shall, every 12 months from the date of this Indenture and up until payment of the Bonds, draw up an annual report on the trust affairs (hereinafter: the “ Annual Report ”).

The Annual Report shall include a specification of the following matters:

16.2

A report on irregular events in connection with the trust which shall have occurred during the previous year.

The holders of the Series A Bonds will be entitled to inspect the Annual Report at the Trustee’s offices during accepted working hours and will be entitled to receive a copy of the report upon request.

The Trustee will deliver notice to the holders of the Series A Bonds of the date of submission of the report, as stated in Section 21 below or in an immediate report which shall be issued by the Company at the Trustee’s request. In the event that the Trustee shall learn of a material breach of this Indenture on the part of the Company, it shall notify the holders of the Series A Bonds of the breach and of the steps that it shall have taken to remedy the same or to fulfill the undertakings of the Company, as the case may be.

17.

The Trustee’s Fee and Coverage of Expenses

The Company shall pay the Trustee a fee for its services in accordance with this Indenture as specified below:

17.2

For each of the years commencing from the second year (namely commencing from the end of 12 months from the Date of the Issue) in which there shall be Series A Bonds that shall still not have been paid, the sum of NIS 22,000, positively linked to the Consumer Price Index known on the Date of the Issue (hereinafter: the “ Annual Fee ”). The Annual Fee will be paid to the Trustee at the start of each trust year, after receipt of prior notice from the Trustee regarding the next payment. The Annual Fee shall be paid to the Trustee in respect of the period up until the end of the trust period pursuant to the terms and conditions of this Indenture, even if a