UNDERWRITING AGREEMENT



                                 DATED AS OF [ ]



                                     BETWEEN



                               THE STATE OF ISRAEL



                                       AND



                       DEVELOPMENT CORPORATION FOR ISRAEL



                                  (UNDERWRITER)



                                 [ BOND ISSUE ]

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      AGREEMENT made [       ] between the STATE OF ISRAEL (the "State") and

DEVELOPMENT CORPORATION FOR ISRAEL (the "Corporation").



                             W I T N E S S E T H:

                             - - - - - - - - - -



      WHEREAS, the State has duly authorized the issue of its bonds in

one or more series known as its [NAME OF BONDS] in the aggregate principal

amount of [$     ] (the "Bonds") and has duly authorized the execution

and delivery of this Agreement; and



      WHEREAS, the Corporation, duly organized and incorporated under the laws

of the State of New York, has agreed to undertake the sale of the Bonds in

accordance with the terms herein contained; and



      WHEREAS, the State intends to enter into a Fiscal Agency Agreement (the

"Fiscal Agency Agreement") with [      ]. (the "Fiscal Agent"), substantially in

the form attached hereto as Schedule A; and



      WHEREAS, the Bonds will be substantially in the form attached to said

Fiscal Agency Agreement as Exhibit A thereto;



      NOW, THEREFORE, IT IS AGREED THAT:



         1. The Corporation shall be the sole and exclusive underwriter and

broker for the State throughout the United States for the sale of the Bonds.



         2. (a) The Corporation shall use its best efforts to sell the entire

authorized issue of the Bonds. The Corporation shall act as agent in the sale of

the Bonds and shall receive, with respect to all Bonds sold pursuant to this

Section 2(a), a commission at a rate to be determined from time to time by the

State and the Corporation, but not to exceed 6% of the Purchase Price (as

defined in the Fiscal Agency Agreement) of the Bonds sold for the account of the

State by the Corporation as agent. The Corporation may utilize the services of

any other person or persons as

{PAGE}

broker, dealer or agent under any arrangements not inconsistent herewith that it

may deem appropriate.



                  (b) The Bonds shall be issuable only as provided for and

defined in the Fiscal Agency Agreement.



         3. In effectuating the sale of the Bonds, (a) the Corporation shall be

entitled to utilize the services of the Fiscal Agent in accordance with the

terms and provisions of the Fiscal Agency Agreement; (b) the Corporation shall

keep accurate and complete records of the date of sale and the Purchase Price

(as defined in the Fiscal Agency Agreement) of each Bond and such other

applicable information as is required and generally expected of the Corporation;

(c) prior to effecting any sales of the Bonds, the Corporation will assure that

the purchaser thereof has properly completed all required subscription

documents; and (d) the Corporation shall deliver the subscription price and all

subscription documents to the Fiscal Agent within five (5) business days of

their completion by a purchaser of Bonds in form acceptable to the Corporation.



         4. The State will provide every possible assistance to the Corporation

in its sales campaigns, including the use of its facilities and representatives

in Israel and elsewhere, at the request of the Corporation, to inform the public

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