Exhibit 4.4

THIS ASSET PURCHASE AGREEMENT is made on 25th May 2000

BETWEEN:

(1)    TELRAD NETWORKS LIMITED, a company incorporated in accordance with the
       laws of Israel having its registered office at PO Box, LOD 71100,
       Israel, ("Telrad"), Telrad Chile SA, a company incorporated in
       accordance with the laws of Chile, Felix Telecom S.R.L., a company
       incorporated in accordance with the laws of Romania, and all direct or
       indirect Subsidiaries of Telrad (with Telrad hereinafter being
       individually referred to as a "Seller" and collectively referred to as
       the "Seller Group"); and

(2)    NORTEL NETWORKS LIMITED a company incorporated in accordance with the
       laws of Canada, having its executive office at 8200 Dixie Road, Suite
       100, Brampton, Ontario, Canada, ("the Purchaser") on behalf of itself
       and the other members of the Purchaser Group (as defined below).

(3)    KOOR INDUSTRIES  LIMITED ("Koor") a company  incorporated in accordance
       with the laws of Israel having its registered  office at
       21 Ha'arbaah Street, Tel Aviv 64739, Israel.

(4)    NORTEL NETWORKS ISRAEL (SALES AND MARKETING) LIMITED (the "Company") a
       company incorporated in accordance with the laws of Israel having its
       registered office at Asia House, 4 Weizmann Street, Tel Aviv 64239,
       Israel.

RECITALS

(A)    The Seller Group owns and operates the Business (as defined herein).

(B)    Each member of the Seller Group is a subsidiary of Koor.

(C)    The Seller Group has agreed to sell to the Purchaser Group and the
       Purchaser Group has agreed to purchase from the Seller Group the
       Business on the terms set out in this Agreement.

1.     DEFINITIONS AND INTERPRETATION

1.1    Definitions

       In this Agreement the following terms shall have the following
       meanings:

       Affiliate                            means, in the case of a Party,
                                            any company directly or
                                            indirectly Controlled by that
                                            Party, any company which directly
                                            or indirectly Controls such Party
                                            and any company under common
                                            Control with such Party.

       Agreement                            this Asset Purchase Agreement.

       Ancillary Agreements                 the agreements described in
                                            Section 3.1.7 of the Shareholders
                                            Agreement.

       Assigned Intellectual                means the Intellectual assigned
       Property                             pursuant to Section 3.1 (a).

       Assumed Liabilities                  as defined in Section 2.3.

       Assumed Warranty                     the warranty obligations (excluding
       Liabilities                          any obligations for product
                                            liability) of the Seller with
                                            respect to products of the
                                            Business sold prior to the
                                            Closing Date, provided that such
                                            warranty obligations are reserved
                                            and accounted for in calculating
                                            the Final Net Asset Amount.

       Balance Sheet                        the pro forma balance sheet
                                            of the Business at Balance Sheet
                                            Date, divided between the Israeli
                                            Business and the Foreign
                                            Business.

       Balance Sheet Date                   31 December, 1999

       Blue Avnet                           the contract dated 1 August 1998
                                            between Seller and the Israeli
                                            Ministry of Defence.

       Books and Records                    all lists, files and documents,
                                            including but not limited to, all
                                            business records, audit records,
                                            tangible data, computer software,
                                            electronic media and management
                                            information systems, disks, files,
                                            customer lists, supplier lists,
                                            blueprints, specifications,
                                            designs, drawings, operation or
                                            maintenance manuals, bids,
                                            personnel records, policy manuals,
                                            invoices, credit records, sales
                                            literature, tax, financial and
                                            accounting records, pricing
                                            information and costing
                                            information, and all other books
                                            and records relating to the
                                            Business.

       Business                             means the Public Networks
                                            Solutions Business and the
                                            Enterprise Solutions Business.

       Business Day                         any day other than a Saturday, a
                                            Sunday or a day on which banking
                                            institutions in Israel are not
                                            open for a full day.

       Claim Notice                         written notification pursuant to
                                            Section 12.3(a) of a Third Party
                                            Claim as to which indemnity under
                                            Section 12 is sought by the
                                            Purchaser Group, enclosing a copy
                                            of all papers served, if any, and
                                            specifying the nature of and basis
                                            for such Third Party Claim and for
                                            the Purchaser Group's claim
                                            against the Seller Group under
                                            Section 12, together with the
                                            amount or estimated amount if then
                                            known or reasonably ascertainable,
                                            determined in good faith, of such
                                            Third Party Claim.

       Closing                              the closing of the transactions
                                            contemplated by this Agreement.

       Closing Date                         as set forth in Section 10.1.

       Closing Net Asset Amount             as set forth in Section 2.5(b).

       Confidential Information             as set forth in Section 6.5.

       Constitutive Documents               means the statutes, articles
                                            of association, memorandum and
                                            articles of association,
                                            articles of incorporation and
                                            bylaws or other similar
                                            documentation of a Person.

       Contracts                            all agreements, contracts, leases,
                                            purchase orders, royalty
                                            arrangements, license agreements,
                                            incentive agreements, refund and
                                            other arrangements, and any other
                                            agreements, commitments or other
                                            legally binding arrangements,
                                            whether oral or written, express
                                            or implied, that are related to
                                            the Business or to which the
                                            Included Assets (other than the
                                            Contracts) are subject, except to
                                            the extent included in the
                                            Excluded Assets, and including,
                                            without limitation, the agreements
                                            and contracts set forth on
                                            Schedule 3.9(a).

       Control                              means ownership of more than 50%
                                            of the issued shares or ownership
                                            of shares conferring more than
                                            50% of the voting rights
                                            exercisable at general meetings.

       Customer Deposits                    the sum of all payments made
                                            by customers under the
                                            Contracts, other than those
                                            listed on Schedule 3.2(a), in
                                            advance of their acceptance of
                                            the products and/or services
                                            provided, except where such
                                            products and services relate to
                                            projects requiring no further
                                            supply or installation in order
                                            to meet the customer's
                                            acceptance criteria.

       Dispute Period                       the period ending 30 calendar
                                            days following receipt by the
                                            Purchaser Group of either a
                                            Claim Notice or Indemnity
                                            Notice.

       Dollar or $                          a dollar of the United States of
                                            America.

       Employee Plan                        as set forth in Section 4.14.

       Employees                            as set forth in Section 6.10.

       Encumbrances                         pledges, claims, options, liens,
                                            charges, encumbrances, security
                                            interests and mortgages of any
                                            kind or nature whatsoever.

       Enterprise                           means such parts of the business
       Solutions Business                   being carried out by Seller Group
                                            comprising the marketing, selling,
                                            integrating, servicing and
                                            supporting of Nortel
                                            telecommunications products and
                                            network solutions together with
                                            all improvements, adaptations and
                                            modifications thereof, (including,
                                            without limitation, network
                                            design, architecture planning,
                                            consulting, systems integration,
                                            project management and
                                            installation, but excluding
                                            research and development) to end
                                            users, including, without
                                            limitation, as described more
                                            fully in Schedule 2.1(a).

       Environmental Claim                  any written or oral notice, claim,
                                            demand, action, suit, complaint,
                                            proceeding or other communication
                                            by any person alleging material
                                            liability or potential liability
                                            (including without limitation
                                            material liability or potential
                                            liability for investigatory costs,
                                            cleanup costs, governmental
                                            response costs, natural resource
                                            damages, property damage, personal
                                            injury, fines or penalties)
                                            arising out of, relating to, based
                                            on or resulting from (i) the
                                            presence, discharge, emission,
                                            release or threatened release of
                                            any Hazardous Materials at any
                                            location, (ii) circumstances
                                            forming the basis of any violation
                                            or alleged violation of any
                                            Environmental Laws or
                                            Environmental Permits, or (iii)
                                            otherwise relating to obligations
                                            or liabilities under any
                                            Environmental Laws.

       Environmental Laws                   all applicable Laws and Orders
                                            relating in any manner to
                                            contamination, pollution or
                                            protection of human health,
                                            natural resources or the
                                            environment.

       Environmental Permits                all Permits required under
                                            Environmental Laws.

       Excluded Assets                      as set forth in Section 2.2.

       Excluded Intellectual                the Intellectual Property
       Property                             particulars of which are set forth
                                            in Schedule 2.2(5)

       Excluded Liabilities                 as set forth in Section 2.4.

       Final Net Asset Amount               means the amount calculated
                                            pursuant to Section 2.5(e) and
                                            (f).

       Financial Statements                 the Balance Sheet and related
                                            statement of operations and the
                                            Net Asset Statement of the
                                            Business as of the Balance
                                            Sheet Date and for the year
                                            then ended prepared in
                                            accordance with GAAP
                                            consistently applied, attached
                                            hereto as Schedule 4.4(a).

       Foreign Business                     means that part of the Business
                                            which is not the Israeli Business.

       Former Employees                     persons whose employment in the
                                            Business terminated prior to the
                                            Closing Date and who are not
                                            employed by the Purchaser Group
                                            following the Closing Date.

       GAAP                                 generally accepted accounting
                                            principles in the United States
                                            of America, consistently applied.

       Goodwill                             the goodwill of the Seller Group
                                            in (i) the marketing, selling,
                                            integrating, servicing and
                                            supporting of telecommunications
                                            products and networks solutions
                                            (including, without limitation,
                                            network design, architecture
                                            planning, consulting, systems
                                            integration, project management
                                            and installation, but excluding
                                            research and development) to
                                            telecommunication service
                                            providers (whether such providers
                                            provide services to end users or
                                            other service providers and
                                            whether such services relate to
                                            data, voice or other
                                            telecommunication services); and
                                            (ii) the marketing, selling,
                                            integrating, servicing and
                                            supporting of Nortel
                                            telecommunications products and
                                            network solutions together with
                                            all improvements, adaptations and
                                            modifications thereof, (including,
                                            without limitation, network
                                            design, architecture planning,
                                            consulting, systems integration,
                                            project management and
                                            installation, but excluding
                                            research and development) to end
                                            users, in each case together with
                                            the exclusive right for the
                                            Purchaser Group or their assignees
                                            to represent themselves as
                                            carrying on such activities in
                                            succession to the Seller Group.

       Governmental
       or Regulatory Authority              any court, tribunal, arbitrator,
                                            authority, agency, department,
                                            ministry, commission, official or
                                            other instrumentality of Israel or
                                            any other country or any domestic
                                            or foreign state, county, city,
                                            municipality or other political
                                            subdivision.

       Grants                               as set forth in Section 4.20.

       Hazardous Materials                  means all hazardous, dangerous
                                            or toxic materials, wastes or
                                            chemicals, including without
                                            limitation, petroleum and
                                            petroleum products, asbestos
                                            and asbestos-containing
                                            materials, and polychlorinated
                                            biphenyls and all other
                                            materials regulated pursuant to
                                            any Environmental Laws or that
                                            could result in liability under
                                            any Environmental Laws.

       Included Assets                      as set forth in Section 2.1(b).

       Income                               Taxes any and all income or
                                            franchise (or an excise tax based
                                            on income) Tax of any country,
                                            state or locality, including a
                                            Tax assessed on a corporation by
                                            reference to its income, gains or
                                            profits, and in each instance any
                                            interest, penalties or addition
                                            to tax attributable to such Tax,
                                            whether or not disputed.

       Indemnity                            Notice written notification of a
                                            claim for indemnity under Section
                                            12 by the Purchaser Group,
                                            specifying the nature of and
                                            basis for such claim, together
                                            with the amount of such claim if
                                            known by the Purchaser Group.

       Infringe                             as set forth in Section 4.6(b).

       Intellectual Property                all intellectual property, and,
                                            including, without limitation (i)
                                            patents, inventions, discoveries,
                                            processes, designs, techniques,
                                            developments, technology, and
                                            related improvements, know-how and
                                            show-how, whether or not patented
                                            or patentable; (ii) copyrights and
                                            works of authorship in any media,
                                            including computer hardware,
                                            software (including source and
                                            object code), applications,
                                            including source code systems,
                                            networks, databases, documentation
                                            and Internet site content; (iii)
                                            trademarks, service marks, trade
                                            names, brand names, corporate
                                            names, fictitious names, domain
                                            names, e-mail addresses, URLs,
                                            logos, trade dress and other
                                            indicators of origin, and the
                                            goodwill of any business
                                            appurtenant thereto and/or
                                            symbolized thereby ("Trademarks");
                                            (iv) trade secrets, drawings,
                                            blueprints and all non-public,
                                            confidential or proprietary
                                            information, documents or
                                            materials; (v) all registrations,
                                            applications and recordings
                                            related thereto, and including the
                                            right to apply for any renewals,
                                            reissues, re-examinations,
                                            continuations, continuations in
                                            part, divisions or other legal
                                            protections of the foregoing; and
                                            (vi) the right to sue at law or in
                                            equity for the infringement,
                                            misappropriation, impairment or
                                            other unauthorized use of the
                                            foregoing, including the right to
                                            receive all damages and proceeds
                                            therefrom.

       Israeli                              Business means that part of the
                                            Business operating in the
                                            Territory, together with the
                                            sales to Rwandatel, Ethiopia ETC,
                                            Mali Sotelma and Ghana Telecom.

       Inventory                            means:

                                            (i)      the products and
                                                     services provided, in
                                                     whole or part, to
                                                     customers under the
                                                     Contracts, other than
                                                     those listed in Schedule
                                                     3.2(a), in advance of
                                                     the acceptance thereof,
                                                     except where such
                                                     products and services
                                                     relate to projects
                                                     requiring no further
                                                     supply or installation
                                                     in order to meet the
                                                     customer's acceptance
                                                     criteria, and

                                            (ii)     custom development
                                                     services commissioned by
                                                     a customer under a
                                                     Contract where further
                                                     development is required
                                                     in order to meet the
                                                     customer's acceptance
                                                     criteria; and

                                            (iii)    products reserved and
                                                     accounted by the Seller
                                                     Group for use by
                                                     installation and
                                                     maintenance engineers to
                                                     be supplied to customers
                                                     as spare parts under the
                                                     Contracts; and

                                            (iv)     the captives listed in
                                                     Schedule 1.1.

       Inventory on Loan                    means products loaned free of
                                            charge to customers for a
                                            limited period with an option
                                            for the customer to buy such
                                            products at the end of such
                                            period

       Key Employees                        The employees of the Business
                                            whose names are set out in
                                            Schedule 8.9.

       Laws                                 all laws, statutes, rules,
                                            regulations, ordinances and other
                                            pronouncements having the effect
                                            of law of Israel or of any
                                            country or any domestic or
                                            foreign state, county, city or
                                            other political subdivision or of
                                            any Governmental or Regulatory
                                            Authority.

       Losses                               all damages, liabilities, losses,
                                            deficiencies, costs and expenses,
                                            including without limitation
                                            reasonable attorney's fees and
                                            expenses.

       March Net Asset Amount               as set forth in Section 2.5(a)

       Material Adverse Effect              an effect that (i) is materially
                                            adverse to the value of the
                                            Included Assets taken as a
                                            whole or materially adverse to
                                            the business, assets,
                                            properties, financial condition
                                            or results of operations of the
                                            Business taken as a whole or
                                            (ii) materially impairs or
                                            delays the ability of the
                                            Seller Group to effect the
                                            Closing or of the Purchaser
                                            Group to acquire and operate
                                            the Business after the Closing.

       Net Asset Amount                     the amount equal to (a) the
                                            amount of the Included Assets,
                                            excluding Goodwill, minus (b)
                                            the amount of the Assumed
                                            Liabilities, all as calculated
                                            according to GAAP.

       Net Asset Statement                  the statement representing
                                            the Included Assets (excluding
                                            Goodwill) and the Assumed
                                            Liabilities broken down by
                                            asset or liability category and
                                            split between the Foreign
                                            Business and the Israeli
                                            Business, all as calculated in
                                            accordance with GAAP.

       Order                                any writ, judgement, decree,
                                            injunction or similar order of
                                            any Governmental or Regulatory
                                            Authority (in each case whether
                                            preliminary or final).

       Other Employees                      employees currently employed by
                                            the Business whose names are set
                                            out in Schedule 8.10.

       Party                                a party to this Agreement.

       Permits                              as set forth in Section 4.12(b).

       Person                               any natural person, corporation,
                                            general partnership, limited
                                            partnership, proprietorship,
                                            other business organization,
                                            trust, union or association, and
                                            shall include, as the context
                                            requires, any party to this
                                            Agreement and such party's
                                            Subsidiaries.


       Proceeding                           as set forth in Section 4.10.

       Public Networks                      means such part of the business
       Solutions Business                   being carried out by the Seller
                                            Group in the marketing, selling,
                                            integrating, servicing and
                                            supporting of telecommunications
                                            products and networks solutions
                                            (including, without limitation,
                                            network design, architecture
                                            planning, consulting, systems
                                            integration, project management
                                            and installation, but excluding
                                            research and development) to
                                            telecommunication service
                                            providers (whether such providers
                                            provide services to end users or
                                            other service providers and
                                            whether such services relate to
                                            data, voice or other
                                            telecommunication services), as
                                            described in Schedule 2.1(a).

       Purchaser Group                      means collectively the
                                            Purchaser, the Company and those
                                            other Subsidiaries and Affiliates
                                            of the Purchaser nominated by the
                                            Purchaser to acquire the Included
                                            Assets relating to the Foreign
                                            Business pursuant to Section 2.5.

       Resolution Period                    the period ending 30 calendar days
                                            following receipt by the Purchaser
                                            Group of a Dispute Notice.

       Retained Business                    means the business of the Seller
                                            Group not comprised within the
                                            Business.

       Shareholders Agreement               the agreement between Nortel,
                                            Seller and Koor of even date
                                            herewith.

       Subsidiary                           with respect to any Person, (a)
                                            any corporation of which at least
                                            50% of the securities or interests
                                            having, by their terms, ordinary
                                            voting power to elect members to
                                            the board of directors, or other
                                            persons performing similar
                                            functions with respect to such
                                            corporation, is held directly or
                                            indirectly, by such Person, (b)
                                            any partnership or limited
                                            liability company of which (i)
                                            such Person is a general partner
                                            or managing member or (ii) such
                                            Person possesses a 50% or greater
                                            interest in the total capital or
                                            total income of such partnership
                                            or limited liability company

       Taxes                                all taxes, charges, fees, levies
                                            or other like assessments imposed
                                            by any taxing authority, domestic
                                            or foreign (including, without
                                            limitation, income, profits,
                                            premium, estimated, excise, sales,
                                            use, occupancy, gross receipts,
                                            franchise, ad valorem, value
                                            added, severance, capital levy,
                                            production, transfer, withholding,
                                            employment and payroll related and
                                            property taxes, import duties and
                                            other governmental charges and
                                            assessments), and including
                                            additions to tax or interest, and
                                            penalties with respect thereto.

       Territory                            means Israel, the Palestinian
                                            Autonomous Authorities and such
                                            other territories as shall be
                                            determined by the Parties from
                                            time to time,.

       Transferred Employees                as the meaning set forth in
                                            Section 6.10.

       Value-Added Taxes                    as the meaning set forth in
                                            Section 6.7.


1.2      Interpretation

                  (a)     Unless specified to the contrary:

                          (i)          a reference to:

                                       "assets" includes every kind of
                                       property, asset, interest, revenue or
                                       right of every description (whether
                                       real, personal or mixed, tangible or
                                       intangible), including any present,
                                       future or contingent right to any
                                       revenues or other payment;

                                       a "month" or a period of one or more
                                       "months" means a period beginning one
                                       calendar month and on the day
                                       preceding the day in the following
                                       calendar month numerically
                                       corresponding to the day of the
                                       calendar month in which such period
                                       started, provided that if such period
                                       started on the last day in a calendar
                                       month, or if there is no such
                                       numerically corresponding day, such
                                       period shall end on the last day in
                                       the following calendar month (and
                                       "monthly" shall be construed
                                       accordingly); and

                          (ii)         a reference to any applicable law or
                                       any provision  thereof is a reference
                                       to the applicable law of the
                                       jurisdiction in question or provision
                                       as amended or re-enacted or any
                                       successor thereof;

                          (iii)        the Table of Contents to and the
                                       headings in this Agreement shall not
                                       affect the interpretation thereof and
                                       all references to Sections,
                                       Subsections, paragraphs, Schedules or
                                       Exhibits are to Sections, Subsections
                                       and paragraphs of, and Schedules or
                                       Exhibits to, this Agreement;

                          (iv)         words and defined terms  denoting the
                                       singular  number include the plural
                                       and vice versa and the use of any
                                       gender shall be applicable to all
                                       genders;

                  (b)     The words "hereunder", "herein", "hereof" or any
                          words of like import shall refer to this Agreement
                          in its entirety and not to any particular provision
                          thereof.

                  (c)     All accounting terms not specifically defined herein
                          shall be construed in accordance with GAAP.

2.     SALE AND PURCHASE OF ASSETS

       2.1      Sale and Purchase of the Assets.

                  (a)     At Closing, the Seller Group will sell with full
                          title guarantee and assign, transfer and deliver to
                          the Company, and the Company will purchase and
                          acquire from the Seller Group, all right, title and
                          interest of the Seller Group in the Included Assets
                          relating to the Israeli Business. At Closing, the
                          Seller Group will sell with full title guarantee
                          and assign, transfer and deliver to the Purchaser
                          Group and the Purchaser Group will purchase and
                          acquire from the Seller Group all right, title and
                          interest of the Seller Group in the Included Assets
                          relating to Foreign Business, as set forth in
                          Schedule 2.6.

                  (b)     The "Included Assets" are the assets and rights
                          owned by or under the control of, the Seller Group
                          (and not already owned by Purchaser or its
                          Affiliates and Subsidiaries) and used in the
                          conduct of the Business set out below:

                          (1)          the Goodwill;

                          (2)          the Inventory;

                          (3)          the Inventory on Loan

                (c)        In the event that a customer does not acquire the
                           Inventory on Loan within twelve (12) months
                           following the date on which the Inventory on Loan
                           was delivered to the customer, then

                                    (i) in the event that the Inventory on
                                    Loan is in unusable condition; or

                                    (ii) if, despite having used reasonable
                                    efforts for a period of one month
                                    thereafter, Purchaser Group has been
                                    unable to redeploy the Inventory on Loan
                                    and realise its value with another
                                    customer,

                                    then, Purchaser Group shall have the
                                    right to sell to Seller Group and Seller
                                    Group shall be obliged to purchase such
                                    Inventory on Loan in situ at the price
                                    such Inventory on Loan was acquired by
                                    Purchaser Group. Payment shall be made by
                                    the Seller Group to the Purchaser Group
                                    within 45 days of the exercise of such
                                    right by Purchaser Group

       2.2      Excluded Assets

                Notwithstanding anything herein to the contrary, from and
                after the Closing Date, the Seller Group shall retain all of
                its right, title and interest in and to, and there shall be
                excluded from the sale, conveyance, assignment or transfer to
                the Purchaser Group, all assets of the Seller Group other
                than the Included Assets (collectively the "Excluded Assets")
                including but without limitation, the following:

                  (1)     any freehold, leasehold or tenancy rights to any
                          premises;

                  (2)     all fixtures and fittings at any premises unless
                          expressly included in the Included Assets;

                  (3)     computer operating systems;

                  (4)     customer contracts and liabilities in Myanmar;

                  (5)     the Excluded Intellectual Property.

                  (6)     the shares owned by Seller in its subsidiaries and
                          all rights and obligations of Felix Communications
                          (Romania) other than the benefit and burden of the
                          Contracts;

                  (7)     all short term and long term accounts receivable,
                          including all inter- and intra-company receivables.

       2.3      Assumption of Liabilities

                On the terms and subject to the conditions set forth herein,
                at the Closing, the Purchaser Group agrees to assume, pay,
                perform and discharge the Assumed Liabilities being the
                following:

                  (i)     liabilities (excluding liabilities for obligations
                          which should have been performed prior to Closing)
                          under the Contracts, other than those specified in
                          Schedule 3.2(a), provided that any such Contracts
                          in respect of which any required consent to
                          assignment has not been obtained by the Closing
                          shall not be deemed an Assumed Liability if the
                          Purchaser Group has not obtained the benefit of
                          such Contracts;

                  (ii)    all liabilities and obligations arising after
                          Closing under the Permits of the Business set forth
                          in Schedule 4.12(b) that are transferred or
                          assigned to the Purchaser Group (but only to the
                          extent so transferred or assigned);

                  (iii)   all liabilities and obligations in respect of
                          Transferred Employees to the extent set forth in
                          Section 6.10;

                  (iv)    all liabilities and obligations, set forth or
                          reflected on the Closing Net Asset Statement
                          (including, without limitation, the Assumed
                          Warranty Liabilities and the Customer Deposits);

                  but, in each case, excluding the Excluded Liabilities.

       2.4      Excluded Liabilities

                Notwithstanding anything herein to the contrary, it is
                expressly understood and agreed that the following
                liabilities of the Seller Group (the "Excluded Liabilities")
                will not be assumed by the Purchaser Group at the Closing but
                will be retained by the Seller Group:

                  (1)     all liabilities arising out of or in respect of the
                          Excluded Assets;

                  (2)     all liabilities to Former Employees and all
                          liabilities and obligations relating to employees of
                          the Seller Group not expressly assumed by the
                          Purchaser Group;

                  (3)     all debts, liabilities or obligations whatsoever not
                          specifically described in Section 2.3;

                  (4)     any obligation or liability of the Seller Group
                          arising from its failure to perform any of their
                          agreements contained in this Agreement or in the
                          Ancillary Agreements or incurred by the Seller
                          Group in connection with the transactions
                          contemplated by this Agreement and the Ancillary
                          Agreements;

                  (5)     any obligation or liability arising in connection
                          with or out of the sale, prior to the Closing Date,
                          of any products by the Seller, other than the
                          Assumed Warranty Liabilities;

                  (6)     any environmental costs, obligations and liabilities
                          in respect of the period prior to the Closing Date;

                  (7)     any Taxes in respect of the Business; and

                  (8)     all liabilities in connection with the supply and
                          installation of products pursuant to projects
                          detailed in the list to be provided to Purchaser
                          pursuant to Section 10.2(h)

       2.5      Consideration

                On the terms and subject to the conditions set forth herein,
                as consideration for the sale of the Included Assets ("the
                Consideration") , the Purchaser and the Purchaser Group shall
                pay to the Seller Group, in aggregate, the sum of $90,000,000
                (Ninety Million Dollars) for the Goodwill, plus the Final Net
                Asset Amount, in the following manner:

                  (a)     The Seller has prepared and delivered to the
                          Purchaser a Net Asset Statement as of 31st March
                          2000, a copy of which is attached hereto as
                          Schedule 2.5(a) with the calculation of the Net
                          Asset Amount as of that date (the "March Net Asset
                          Amount").

                  (b)     The Purchaser shall, as promptly as practical
                          following the date hereof but in no event later
                          than five (5) Business Days prior to the Closing
                          Date, nominate which of its Subsidiaries and
                          Affiliates are to acquire each part of the Included
                          Assets and to receive as assignee the Contracts
                          relating to the Foreign Business and which,
                          together with the Purchaser and the Company,
                          constitute the Purchaser Group;

                  (c)     At the Closing:

                          (i)       the Company shall pay to the Seller
                                    Group, on account for the Consideration,
                                    the sum of $84,000,000 (Eighty Four
                                    Million Dollars) for the Goodwill of the
                                    Israeli Business, plus the March Net
                                    Asset Amount in respect of the Israeli
                                    Business; and

                          (ii)      the respective members of the Purchaser
                                    Group shall pay to the Seller Group, on
                                    account of the Consideration, the sum of
                                    $6,000,000 (Six Million Dollars) for the
                                    Goodwill of the Foreign Business, plus
                                    the March Net Asset Amount in respect of
                                    the Foreign Business;

                  (d)     The Seller shall deliver to the Purchaser, as
                          promptly as practicable after the Closing Date and
                          in any event within sixty (60) days after the
                          Closing Date a Net Assets Statement as of the
                          Closing Date (the "Closing Net Asset Statement"),
                          and the Seller's written statement of the Net Asset
                          Amount as of the Closing Date based upon such
                          Closing Net Asset Statement (the "Closing Net Asset
                          Amount").

                  (e)     Following the delivery of the documents contemplated
                          by Section 2.5(d), the Seller shall make itself and
                          its employees available to meet and discuss any and
                          all financial and business matters relating to the
                          preparation of the Closing Net Asset Statement and
                          calculation of the Closing Net Asset Amount. Within
                          forty-five (45) days following the delivery of the
                          Closing Net Asset Statement, the Purchaser may
                          deliver to the Seller its objections to the
                          determination of the Closing Net Asset Statement and
                          the Closing Net Asset Amount. If the Purchaser does
                          not deliver written notice of an objection to the
                          Closing Net Asset Statement and the Closing Net
                          Asset Amount within such forty-five (45) day period,
                          the Purchaser shall be deemed to have accepted the
                          Seller's determination of the Closing Net Asset
                          Amount and such Closing Net Asset Amount shall be
                          deemed to be the Final Net Asset Amount.

                  (f)     If the Purchaser delivers written notice of an
                          objection to the Closing Net Asset Statement or
                          Closing Net Asset Amount (the "Purchaser
                          Objections") within the forty-five (45) day period
                          contemplated above, the Purchaser and the Seller
                          shall, during the forty-five (45) days (or such
                          longer period as the parties shall mutually agree)
                          following delivery of the Purchaser Objections, meet
                          and discuss in good faith the Purchaser Objections.
                          If the Purchaser Objections cannot be resolved by
                          negotiation between the parties within such period
                          after delivery of the Purchaser Objections, the
                          Purchaser Objections will be referred for resolution
                          to PricewaterhouseCoopers in Tel Aviv to serve as
                          the accounting expert (the "Accounting Expert") with
                          respect to the Purchaser Objections. The Accounting
                          Expert will be instructed to select, at its
                          discretion, the individuals who will have primary
                          responsibility for this matter, and to reach a
                          determination within forty-five (45) days from the
                          date of referral. The Accounting Expert will be
                          limited to determining matters of accounting as they
                          relate to the Purchaser Objections, it being
                          understood that such determination shall be in
                          conformity with GAAP. The decision of the Accounting
                          Expert will be final and binding upon the parties.
                          The fees and expenses of the Accounting Expert
                          engaged pursuant to this Section 2.5 shall be paid
                          one-half by the Seller and one-half by the
                          Purchaser. The Closing Net Asset Amount, as adjusted
                          by agreement of the Seller and the Purchaser or by
                          the Accounting Arbitrator in accordance with this
                          Section 2.5(f), shall be the Final Net Asset Amount.

                  (g)     Within ten (10) days following the determination of
                          the Final Net Asset Amount in accordance with this
                          Section 2.5, (i) if the Final Net Asset Amount is
                          less than the March Net Asset Amount, the Seller
                          shall pay such difference to the Purchaser, the
                          Company, or the relevant members of the Purchaser
                          Group, as nominated by the Purchaser and (ii) if
                          the Final Net Asset Amount is greater than the
                          March Net Asset Amount, the relevant member(s) of
                          the Purchaser Group shall pay to the Seller such
                          difference. All payments under this Section 2.5(g)
                          shall be made by wire transfer of immediately
                          available funds to an account specified by the
                          payee.

       2.6      Allocation of Consideration.

                The parties agree to use the allocation of the Foreign
                Business between the various members of the Purchaser Group
                as determined by the Purchaser in accordance with Section
                2.5(b)for all purposes, including preparing all Tax Returns
                and forms, and the parties agree not to take a position
                inconsistent with such allocation.

3.     ASSIGNMENT

       3.1        Intellectual Property

                  (a)      Prior to Closing, the Seller Group shall disclose
                           and transfer to the Purchaser all Intellectual
                           Property in the possession of the Seller Group
                           used in relation to the Business but owned by the
                           Purchaser Group.

                  (b)      At Closing, the Seller Group shall for no
                           additional consideration assign with full title
                           guarantee to the Purchaser all Intellectual
                           Property in any improvements, developments,
                           changes, inventions, or innovations
                           ("Improvements") relating to the Business but
                           excluding the Excluded Intellectual Property.

                  (c)     In the event any Intellectual Property cannot be
                          transferred or the full benefits and liabilities of
                          any Intellectual Property cannot be provided to the
                          Purchaser Group prior to or at the Closing for the
                          reason that this would require the consent of the
                          Israeli Chief Scientist, the Seller Group shall
                          covenant not to sell or license any products or
                          technology developed therefrom to any person other
                          than the Purchaser or its Affiliates and
                          Subsidiaries and shall, from time to time, upon
                          request by the Purchaser, grant the Purchaser such
                          royalty-free, exclusive, perpetual licences (with
                          the right to grant sub-licences) as are necessary to
                          permit the Purchaser and its Affiliates and
                          Subsidiaries to manufacture, have manufactured,
                          sell, service and support such products and
                          technology in such parts of the world as are
                          specified by the Purchaser.

                  (d)      Prior to Closing the Seller Group shall disclose
                           to the Purchaser the Telrad basic software
                           packages set out in Part (c) of Schedule 2.2(5).
                           Without limiting any of the foregoing it is
                           acknowledged that the Purchaser Group has the
                           exclusive rights to use the Excluded Intellectual
                           Property set out in part (c) of Schedule 2.2(5)
                           with the products relating to the Business.
                           Furthermore, Seller Group hereby grants to
                           Purchaser and its Affiliates a perpetual, royalty
                           free, fully paid-up, non-exclusive, worldwide,
                           license (with the right to sub-licence):

                           (i)      to use such Excluded Intellectual Property
                                    or the subject matter thereof in
                                    conjunction with the Business;

                           (ii)     to make (including have made), sell,
                                    offer for sale, supply, import, export or
                                    otherwise dispose of products relating to
                                    the Business using, incorporating or
                                    based on such Intellectual Property or
                                    the subject matter thereof other than
                                    those products set forth in Parts (a),
                                    (b) and (d) of Schedule 2.2.(5); and

                          (iii)     otherwise to exploit such Intellectual
                                    Property or the subject matter thereof in
                                    relation to the Business other than in
                                    conjunction with those products set forth
                                    in Parts (a), (b) and (d) of Schedule
                                    2.2(5).

       3.2        Contracts

                  (a)     At Closing, the Seller Group shall for no additional
                          consideration assign, transfer and deliver to (i)
                          the Company (in the case of the Contracts relating
                          to the Israeli Business) and to (ii) the Purchaser
                          Group (in the case of Contracts relating to the
                          Foreign Business) and the Company and Purchaser
                          Group will purchase and acquire from the Seller
                          Group all right, title and interest of the Seller
                          Group in the Contracts, other than:

                           (i)      those Contracts specified in
                                    Schedule 3.2 (a); and

                           (ii)     liabilities for obligations under
                                    the Contracts which should have
                                    been performed prior to Closing.

                          Provided that any Contracts in respect of which any
                          required consent to assignment has not been obtained
                          by the Closing shall not be deemed an Assumed
                          Liability (as defined in Section 2.3) if the
                          Purchaser Group has not obtained the benefit of such
                          Contracts.

                  (b)     Notwithstanding anything to the contrary contained
                          in this Agreement, to the extent the sale,
                          assignment, transfer, conveyance or delivery or
                          attempted sale, assignment, transfer, conveyance or
                          delivery to the Purchaser Group pursuant to Section
                          3.2(a) above of any contract is prohibited by any
                          applicable law or would require any governmental or
                          third-party authorizations, approvals, consents, or
                          waivers and such authorizations, approvals, consents
                          or waivers shall not have been obtained prior to the
                          Closing, this Agreement shall not constitute a sale,
                          assignment, transfer, conveyance or delivery
                          thereof. Following the Closing, and without limiting
                          the provisions set forth in Section 6.6 but subject
                          to Section 2.2(d) and Section 6.13, the parties
                          shall use reasonable best efforts, and cooperate
                          with each other, to obtain promptly such
                          authorizations, approvals, consents or waivers.
                          Pending such authorization, approval, consent, or
                          waiver, the parties shall cooperate with each other
                          in any reasonable and lawful arrangements designed
                          to provide to the Purchaser Group the benefits and
                          liabilities of such Contract. Once such Contract,
                          approval, consent or waiver for the sale,
                          assignment, transfer, conveyance or delivery of an
                          Contract not sold, assigned, transferred, conveyed
                          or delivered at the Closing is obtained, the Seller
                          Group shall promptly assign, transfer, convey or
                          deliver, or cause to be assigned, transferred,
                          conveyed and delivered, such Contract to the
                          Purchaser Group for no additional consideration. To
                          the extent that any such Contract cannot be
                          transferred or the full benefits and liabilities of
                          any such Contract cannot be provided to the
                          Purchaser Group following the Closing pursuant to
                          this Section 2.1(c), the Purchaser Group and the
                          Seller Group shall enter into such arrangements for
                          no additional consideration from the Purchaser Group
                          (including subleasing or subcontracting if
                          permitted) to provide to the Purchaser Group the
                          economic and operational equivalent of obtaining
                          such authorization, approval, consent or waiver.

       3.3        Blue Avnet

                  (a)      The Blue Avnet Contract shall not be assigned
                           until Seller has completed Phase B (being the
                           phase up to and including the obtention of full
                           customer acceptance). Once Phase B is complete and
                           customer acceptance has been granted, Seller shall
                           assign the Blue Avnet Contract to the Company and
                           the warranty provisions thereunder shall
                           constitute Assumed Warranty Liabilities subject to
                           Seller transferring to the Company for no
                           additional consideration an amount equivalent to
                           the warranty provision which Seller would
                           otherwise have been required to make under GAAP.

                  (b)      Seller shall involve the Company fully in any
                           renegotiation of the Blue Avnet contract and any
                           negotiation of warranty periods or maintenance
                           obligations, and shall assist the Company to
                           negotiate a separate maintenance agreement
                           pursuant to which the Company shall provide
                           maintenance services to the Israeli Ministry of
                           Defence following the end of Phase B in respect of
                           the Blue Avnet project.

                  (c)      No later than full customer acceptance Seller
                           shall assign to the Purchaser for no additional
                           consideration such technology and Intellectual
                           Property developed during Seller's performance of
                           the Blue Avnet Contract as is necessary to enable
                           the Company to perform maintenance services for
                           the customer.

                  (d)      In order to assist Seller to perform its
                           obligations under the Blue Avnet Contract, the
                           Company and Seller shall, with effect from the
                           Closing Date, enter into a Services Agreement as
                           referred to in Schedule 3.1.5 of the Shareholders
                           Agreement.

                  (e)      Seller shall involve the Company in any publicity
                           or public relations matters relating to the Blue
                           Avnet Contract, it being acknowledged that no
                           publicity or public relations exercises are
                           possible without the consent of the Israeli
                           Ministry of Defence

                  (f)      Purchaser shall permit Seller to use such of its
                           technology and Intellectual Property associated
                           therewith to enable Seller to fulfil its
                           obligations under the Blue Avnet contact, but for
                           no other purpose, such technology to be identified
                           and mutually agreed.


4.     REPRESENTATIONS AND WARRANTIES OF THE SELLER GROUP

       The disclosure of any fact or item in the Schedules (i) shall not be
       deemed to constitute an acknowledgement that any such fact or item is
       required to be disclosed, (ii) does not represent a determination that
       such item did not arise in the ordinary course of business, and (iii)
       does not represent a determination that such item is material and
       shall not be deemed to establish a standard of materiality

       Except as otherwise specifically stated in the Schedules, Seller and
       each member of the Seller Group hereby jointly and severally
       represents and warrants to Nortel and to each member of the Purchaser
       Group as follows.

       4.1      Organization and Qualification.

                Each member of the Seller Group is a corporation duly
                organised, validly existing and in good standing under the
                laws of its jurisdiction of incorporation with corporate
                power and authority to own the Included Assets and carry on
                the Business as presently owned or conducted. Each member of
                the Seller Group is duly licensed or qualified to transact
                business and is in good standing as a foreign corporation in
                each jurisdiction in which, because of its business conducted
                there or the nature of its properties there, it would be
                required to be so licensed or qualified and in which the
                failure to be so licensed or qualified would have, either
                individually or in the aggregate, a Material Adverse Effect.

       4.2      Authority; No Breach.

                  (a)     Each member of the Seller Group has all requisite
                          corporate power and authority to execute and deliver
                          this Agreement and to perform, carry out and
                          consummate the transactions contemplated hereby. The
                          execution, delivery and performance of this
                          Agreement and each of the Ancillary Agreements, and
                          the consummation of the transactions contemplated
                          herein have been duly authorized by all necessary
                          corporate action on the part of each member of the
                          Seller Group. This Agreement constitutes, and each
                          of the Ancillary Agreements when executed and
                          delivered by the parties thereto will constitute, a
                          legal, valid and binding obligation of each Seller,
                          enforceable against each Seller in accordance with
                          its terms except as enforceability may be limited or
                          affected by applicable bankruptcy, insolvency,
                          reorganization or other laws of general
                          applicability relating to creditors' rights and
                          except as enforceability may be limited by rules of
                          law governing specific performance, injunctive
                          relief or other equitable remedies.

                  (b)     Neither the execution, delivery and performance of
                          this Agreement and each of the Ancillary Agreements
                          by any member of the Seller Group nor the
                          consummation of the transactions contemplated herein
                          and therein will: (i) violate any provision of the
                          Constitutive Documents of any member of the Seller
                          Group; (ii) (with or without the giving of notice or
                          the lapse of time or both) conflict with, result in
                          a breach of or constitute a default under or result
                          in the invalidity of, or accelerate the performance
                          required by or cause the acceleration of the
                          maturity of any debt or obligation pursuant to any
                          Contract which individually or in the aggregate
                          would have a Material Adverse Effect; (iii) (with or
                          without the giving of notice or the lapse or time or
                          both) result in the creation of, or give any party
                          the right to create, any Encumbrances upon any of
                          the Included Assets, rights under the Contracts or
                          the Assigned Intellectual Property which
                          individually or in the aggregate would have a
                          Material Adverse Effect; (iv) conflict with,
                          violate, result in a breach of or constitute a
                          default under any judgement, decree, order, or
                          process of any Governmental or Regulatory Authority
                          binding upon any of the Included Assets , the
                          Contracts, the Assigned Intellectual Property or the
                          Business which individually or in the aggregate
                          would have a Material Adverse Effect; (v) conflict
                          with or violate any statute, Law or regulation
                          applicable to any of the Included Assets, the
                          Contracts, the Assigned Intellectual Property or the
                          Business, except where such conflicts or violations
                          (individually or in the aggregate) would not have a
                          Material Adverse Effect; (vi) terminate or modify,
                          or give any third party the right to terminate or
                          modify, the provisions or terms of any Contract,
                          except where any such termination or modification
                          would not have a Material Adverse Effect; or (vii)
                          require any member of the Seller Group to obtain any
                          authorization, consent, approval or waiver from, or
                          to make any filing with, any Person, except where
                          the failure to obtain such authorization, consent,
                          approval or waiver or make any filing (individually
                          or in the aggregate) would not have a Material
                          Adverse Effect other than such as have been obtained
                          or made.

       4.3      [reserved]

       4.4      Financial Statements.

                  (a)     Prior to the date hereof, the Seller Group has
                          delivered to the Purchaser Group the Financial
                          Statements attached hereto as Schedule 4.4(a).

                  (b)     The Financial Statements have been prepared in the
                          ordinary course of business of the Seller Group in
                          accordance with GAAP consistently applied
                          throughout the periods shown and present fairly, in
                          all material respects, the financial condition of
                          the Business as of the date thereof and the results
                          of operations of the Business for the twelve-month
                          period then ended.

                  (c)     All of the material liabilities reflected on the
                          Balance Sheet are related to the Business and arose
                          out of or were incurred in the conduct of the
                          Business.

                  (d)     The Balance Sheet fairly reflects the assets and
                          liabilities of the Business at the Balance Sheet
                          Date and fairly reflects the financial condition of
                          the Business at such date and its results of
                          operations and cash flows for the year then ended
                          in accordance with GAAP consistently applied
                          throughout the periods shown.

                  (e)     The Net Asset Statement for 31st March 2000 has
                          been prepared in accordance with GAAP consistently
                          applied throughout the periods shown and present
                          fairly, in all material respects, the financial
                          condition of the Business as of the date thereof
                          and the results of operations of the Business for
                          the three-month period then ended.

       4.5      Assets.

                The Seller Group has and will transfer to the Company or to
                the Purchaser Group (as specified in Section 2.1(a) above),
                at the Closing, good and marketable title to all assets
                (tangible and intangible) included in the Included Assets and
                all rights under the Assigned Intellectual Property and all
                rights under the Contracts, in each case free and clear of
                all title defects and Encumbrances, except for (i)
                Encumbrances (if any) reflected on the Financial Statements;
                (ii) imperfections of title and Encumbrances disclosed in
                Schedule 4.5; and (iii) such other imperfections of title or
                Encumbrances which will not, in the aggregate, have a
                Material Adverse Effect.

       4.6      Intellectual Property.

                  (a)     Schedule 4.6(a) lists all patents, patent
                          applications, trademarks and trademark applications
                          included in the Intellectual Property.

                  (b)     The Seller Group owns or has the valid and duly
                          assignable right to use all of the Intellectual
                          Property necessary to conduct the Business as
                          currently conducted and consistent with past
                          practice, free of all Encumbrances; (ii) to the
                          knowledge of the Seller Group, all of the
                          Intellectual Property is valid, enforceable and
                          unexpired, has not been abandoned or
                          misappropriated, and to the knowledge of the Seller
                          Group, the products of the Business do not infringe,
                          impair or make unauthorized use of ("Infringe") the
                          Intellectual Property rights of any third party;
                          (iii) no Order or Proceeding is outstanding or
                          pending, or to the knowledge of Seller Group,
                          threatened or imminent, that would limit or
                          challenge the ownership, use, value, validity or
                          enforceability of the Intellectual Property; (iv)
                          the Seller Group has taken all reasonable steps to
                          protect, maintain and safeguard the value, validity
                          and their ownership of the Intellectual Property
                          including without limitation any confidential
                          Intellectual Property, if any, and has taken all
                          actions, made all applicable filings, paid all fees
                          and executed all agreements that are appropriate in
                          connection with the foregoing; (v) to the knowledge
                          of the Seller Group, no Employee has in connection
                          with the provision of services thereto, breached any
                          third-party contract with respect to any material
                          item of Intellectual Property which breach could
                          reasonably be expected to have a Material Adverse
                          Effect; (vi) without limiting clause (iii), to the
                          knowledge of the Seller Group no current or Former
                          Employee of the Seller Group or current or former
                          consultant or independent contractor retained by the
                          Seller Group has, or has alleged to have any right,
                          title or interest in the Intellectual Property, if
                          any; (vii) to the knowledge of the Seller Group, no
                          party to any material contract or agreement related
                          to the Intellectual Property is, or is alleged to
                          be, in breach or default thereunder, and to the
                          knowledge of the Seller Group, all material
                          contracts or agreements related to the Intellectual
                          Property are in full force and effect; and (viii)
                          the transactions contemplated by this Agreement
                          shall not impair the rights of the Seller Group
                          under any material contract or agreement related to
                          the Intellectual Property, or cause any new or
                          additional fees to be due thereunder.

                  (c)     The Seller Group represents that all of the
                          Intellectual Property owned by the Seller Group
                          necessary to conduct the Business has been
                          disclosed to Purchaser and has since its creation
                          been subject to a worldwide, perpetual royalty-free
                          licence (with the right to grant sub-licences) to
                          the Purchaser for all purposes.

                  (d)     None of the representations in this Section 4.6
                          shall refer to the Excluded Intellectual Property.

       4.7      Absence of Undisclosed Liabilities

                Except as set forth in Schedule 4.7, and for liabilities
                under this Agreement, there are no liabilities or obligations
                of any nature, whether absolute, accrued, contingent or
                otherwise, which relate to or arise out of the Business or
                any of its operations as heretofore or currently conducted,
                any of the Contracts, the Assigned Intellectual Property or
                any of the Included Assets or the past or present operation,
                condition or use of any of the Included Assets.

       4.8      Absence of Certain Changes or Events

                Since the Balance Sheet Date each member of the Seller Group
                has conducted the Business only in the ordinary and usual
                course. Without limiting the generality of the foregoing
                since the Balance Sheet Date:

                  (a)     there has been no damage, destruction or casualty
                          loss (whether or not covered by insurance) which,
                          individually or in the aggregate, has or is
                          reasonably expected to have a Material Adverse
                          Effect;

                  (b)     no member of the Seller Group has (i) granted any
                          increase in the rate or terms of compensation
                          payable or to become payable to the executive
                          officers or other employees who will be employed by
                          the Purchaser Group following the Closing, except,
                          in the case of non-executive officers and other
                          employees, for increases occurring in the ordinary
                          course of business in accordance with its customary
                          practices (which shall include normal periodic
                          performance reviews and related compensation and
                          benefit increases) or (ii) granted any increase in
                          the rate or terms of any bonus, insurance, pension
                          or other Employee Plan or arrangement covering
                          executive officers or other employees who will be
                          employed by the Purchaser Group following the
                          Closing except, in the case of non-executive
                          officers and other employees, for increases
                          occurring in the ordinary course of business in
                          accordance with its customary practices (which shall
                          include normal periodic performance reviews and
                          related compensation and benefit increases);

                  (c)     no member of the Seller Group has entered into any
                          agreement or terminated or materially amended any
                          agreement material to the Business, except
                          agreements entered into, terminated or amended in
                          the ordinary course of business consistent with
                          past practice or as permitted by this Agreement;

                  (d)     no member of the Seller Group has made any material
                          change in its accounting methods, principles or
                          practices, except as required by GAAP and concurred
                          in by the independent accountants of the relevant
                          member of the Seller Group;

                  (e)     other than as disclosed in Schedule 4.5, no member
                          of the Seller Group has sold, assigned, pledged,
                          charged, transferred, or otherwise disposed of any
                          of the Included Assets, except in the ordinary
                          course of business;

                  (f)     the Business has not incurred, nor has it or the
                          Included Assets assumed or become liable for, any
                          liabilities for borrowed money or other obligations
                          to the Seller Group or their Affiliates other than
                          in the ordinary course, consistent with past
                          practice;

                  (g)     other than acts relating to the transactions
                          contemplated by this Agreement and the Ancillary
                          Agreements, the Business has been conducted in all
                          significant respects only in the ordinary course
                          consistent with past practice; and

                  (h)     no member of the Seller Group has agreed, neither
                          in writing nor otherwise, to take any action
                          prohibited by this Section 4.8.

       4.9      Contracts and Commitments.

                  (a)     Schedule 4.9(a) sets forth a list of each written
                          Contract (other than (i) purchase orders in the
                          ordinary and usual course of business, (ii) any
                          Contract or group of related Contracts involving
                          the payment of less than $100,000 in the aggregate
                          and (iii) confidentiality agreements entered into
                          in the usual course of business) and,
                          notwithstanding clauses (i), (ii) and (iii), such
                          Schedule 4.9(a) does not omit any Contracts that
                          are, individually or in the aggregate, material to
                          the Business. True and complete copies of all the
                          Contracts have been delivered to the Purchaser
                          Group or otherwise made available for inspection.

                          In addition to and without limiting the remedies
                          provided under Section 11, Koor and the Seller
                          Group shall indemnify and keep indemnified the
                          Purchaser and/or relevant member of the Purchaser
                          Group in respect of any loss or costs arising from
                          any Contract not disclosed in Schedule 4.9(a) where
                          such loss or costs would have been avoided had the
                          Contract been properly disclosed.

                  (b)     Except as set forth in Schedule 4.9(b), each
                          material Contract is a valid and binding agreement
                          of the relevant Seller or its respective Subsidiary
                          which is a party thereto and is in full force and
                          effect, and no member of the Seller Group has any
                          knowledge of any default under any Contract listed
                          on Schedule 3.9(a) which default has not been cured
                          or waived and which default would have individually
                          or, when aggregated with other such defaults, a
                          Material Adverse Effect.

                  (c)     Schedule 4.9(c) sets forth all warranty claims with
                          respect to all products or services marketed by the
                          Business brought or settled during the past two
                          fiscal years which, individually or in the
                          aggregate for any related warranties, had remedy or
                          settlement costs of more than US$ 25,000.

       4.10     Litigation, Etc.

                Except as set forth in Schedule 4.10, there is no claim,
                action, suit, inquiry, arbitration, investigation, inquiry or
                proceeding ("Proceeding") pending, or to the knowledge of any
                Seller threatened against any member of the Seller Group, or
                involving the Business, the Contracts, the Assigned
                Intellectual Property or any of the Included Assets that
                could reasonably be expected to have individually or, when
                aggregated with any other such proceeding, a Material Adverse
                Effect or which questions or challenges the validity of this
                Agreement or any Ancillary Agreement or any action taken or
                to be taken by a Seller pursuant to this Agreement or any
                Ancillary Agreement or in connection with the transactions
                contemplated hereby or thereby. Except as set forth in
                Schedule 4.10, there is no judgement, decree, injunction,
                rule, stipulation, settlement, award or Order outstanding or
                to the knowledge of a Seller threatened against any Seller or
                with respect to any Included Asset, Contract or Assigned
                Intellectual Property, that could reasonably be expected to
                have individually or in the aggregate a Material Adverse
                Effect.

       4.11     Software

                  (a)     All software comprised in or covered by the
                          Intellectual Property being disclosed, transferred,
                          assigned or licensed pursuant to Section 3.1 hereof
                          shall function in accordance with its specifications
                          and without service-affecting defects ("the Software
                          Warranty").


                  (b)     Purchaser Group's sole remedy and Seller's sole
                          obligation during the period of three (3) years from
                          the Closing, with respect to the support of the
                          Software provided hereunder, shall be for Seller to
                          correct any failure to conform to the above
                          warranties within the specified periods for the
                          types of emergencies listed below:



                  E1      Emergency Outage/System Fail          24 hours

                  E3      Follow-up to E-1 Emergency            15 days

                  E2      Potential Traffic Degradation
                          or Outage                             30 days

                  (c)     With respect to failures occurring after the expiry
                          of three (3) years from the Closing, corrections
                          made by Seller so as to cause the Software to
                          conform to the above warranties shall be made in
                          accordance with a Set of Schedules under the Master
                          Technology Development Agreement.

                  (d)     Seller's obligations under the Software Warranty
                          contained in this Section 4.11 are conditioned upon
                          the defects not being the result of the Software
                          having been altered, mishandled, misused, improperly
                          stored, operated or repaired by anyone other than
                          Seller, or any affiliate or agent of Seller, damaged
                          by fire, explosion, or power failure not
                          attributable to Seller, or any other affiliate of
                          Seller or Seller's agent, or damaged by any act of
                          nature.

                  (e)     The above warranties shall survive inspection,
                          acceptance and payment.

                  (f)     With respect to failures which occur on or after the
                          expiry of three (3) years from the Closing,
                          Purchaser Group reserves the right to correct on its
                          own any such failures to conform to the above
                          warranties or to arrange for such correction by
                          other entities of any such failures to conform to
                          the above warranties.

                  (g)     For the avoidance of doubt, the Software Warranty
                          does not apply to future technology and developments
                          made pursuant to Sets of Schedules entered into
                          after the Date of Closing under the Master
                          Technology Development Agreement, which developments
                          and technology shall be subject to the warranty
                          obligations under those Sets of Schedules or other
                          applicable agreements.


       4.12     Compliance with Law; Necessary Authorizations.

                  (a)     Each member of the Seller Group has complied, in
                          all material respects, in respect of the Business,
                          with, and the Business is being conducted in
                          compliance with, all applicable Laws, rules,
                          regulations, Permits, authorizations, judgements
                          and decrees of all Governmental and Regulatory
                          Authorities, and the Seller Group has not received
                          notice of any material violation of Laws, except
                          where the failure to so comply, individually or in
                          the aggregate would not have a Material Adverse
                          Effect.

                  (b)     Each member of the Seller Group has all material,
                          governmental approvals, authorizations,
                          certificates, franchises, licenses, permits and
                          rights ("Permits") necessary for it to conduct the
                          Business as now conducted, except where the failure
                          to so comply would not, individually or in the
                          aggregate, have a Material Adverse Effect and there
                          has occurred no default under any such Permit which
                          individually or in the aggregate would have a
                          Material Adverse Effect. Schedule 4.12(b) sets
                          forth all material Permits.

       4.13     Labour Matters.

                  (a)     Other than as set forth in Schedule 4.13(a), there
                          is no labour strike, or material labour dispute,
                          grievance, or arbitration proceeding, relating to
                          the Business, or material charge of unfair labour
                          practice relating to the Business actually pending
                          or, to the knowledge of any Seller threatened
                          against or affecting the Business.

                  (b)     Other than as set forth in Schedule 4.13(a), no
                          member of the Seller Group has, during the 12-month
                          period prior to the date hereof, experienced any
                          material work stoppage or other material labour
                          dispute relating to the Business.

                  (c)     Except as set forth in Schedule 4.13(c), there are
                          no collective labour bargaining agreements
                          affecting the Business in regard to any Employee.

                  (d)     Except as disclosed in writing on the date hereof
                          to the Purchaser Group , and other than pursuant to
                          applicable employment laws and regulations and
                          extension orders ("tzavei harchava"), no member of
                          the Seller Group is subject to, nor do Employees
                          benefit from, any agreement, arrangement,
                          understanding or custom with respect to employment
                          (including, without limitation, termination
                          thereof). No member of the Seller Group has any
                          custom with respect to termination of employment.

                  (e)     Set forth in Schedule 4.13(e) is a list of the
                          employees of the Business (the "Employee List")
                          containing a full and accurate description, as of
                          the date hereof, of the names, positions and ranks
                          (if any), dates of commencement of employment,
                          salaries and terms and conditions of employment, of
                          all the employees and officers of the Business,
                          including all remuneration payable, vacation pay
                          balances, replenishment ("havraa") pay balances,
                          illness pay balances, fringe benefits including,
                          without limitation, balances in provident or pension
                          funds, "13th and 14th salary", car, telephone,
                          managers insurance and any profit sharing
                          commission, incentive or discretionary bonus
                          arrangements to which a Seller is a party, all in
                          accordance with Israeli GAAP applied consistently.
                          The Employee List includes a full and accurate list
                          of the officers and employees of the Business. All
                          the personal employment agreements of the employees
                          of each of the Business are substantially in one of
                          the forms attached hereto as exhibit to Schedule
                          4.13(e). Other than as listed on said the Employee
                          List, there is no person or entity (including,
                          without limitation, "agents", "distributors",
                          "independent contractors", "consultants" or
                          employees of manpower companies or other service
                          providers) that may be deemed to be an employee of
                          the Business.

                  (f)     Except for the employment agreements listed in
                          Schedule 4.13(f) hereto, there are no agreements
                          between any member of the Seller Group and any of
                          the Employees which cannot be terminated by such
                          corporation by three months notice or less without
                          giving rise to a claim for damages or compensation
                          (except for statutory severance pay).

                  (g)     Other than as set forth in Schedule 4.13(g) there is
                          no outstanding claim or complaint (including,
                          without limitation, any claim resulting from a bonus
                          arrangement), other than claims and complaints
                          demanding solely pecuniary damage in an aggregate
                          amount not exceeding $15,000, against any member of
                          the Seller Group by any person who is now or has
                          been an officer or employee of such member of the
                          Seller Group. Without limiting the generality of the
                          above, there are no unfair labour practice claims or
                          charges pending or, to the knowledge of any member
                          of the Seller Group, threatened against such Seller.
                          With respect to the employees of any member of the
                          Seller Group, individually and in the aggregate, no
                          event has occurred and, to the best knowledge of
                          each Seller, there exists no condition or set of
                          circumstances, in connection with which such Seller
                          could be subject to any liability that is reasonably
                          likely to have a Material Adverse Effect on the
                          Business.

                  (h)     Each member of the Seller Group has materially
                          complied with all applicable provisions, whether
                          contractual, customary or otherwise legally
                          required, relating to employees, and their terms
                          and conditions of employment including, without
                          limitation, with respect to wages and hours. No
                          member of the Seller Group is engaged in any unfair
                          labour practice, except for any non-compliance or
                          practice that would not have a Material Adverse
                          Effect on the Business.

                  (i)     The severance pay due to the employees is fully
                          funded or provided for in accordance with Israeli
                          GAAP, consistently applied, all liabilities of
                          Telrad or any other member of the Seller Group in
                          connection with its employees (excluding illness
                          pay) were adequately accrued in the Financial
                          Statements (in accordance with said principles)
                          and, other than as set forth in Schedule 4.13(i),
                          no member of the Seller Group is aware of any
                          circumstance whereby any employee might demand
                          (whether legally entitled to or not) any claim for
                          compensation on termination of employment beyond
                          the statutory severance pay to which such employee
                          is entitled. To the extent applicable such
                          representation is repeated for each member of the
                          Seller Group.

                  (j)     All amounts which any member of the Seller Group is
                          legally or contractually required to deduct from
                          its employees' salaries and/or transfer to such
                          employees' pension or provident, life insurance,
                          incapacity insurance, continuing education fund or
                          otherwise have been duly deducted and so paid into
                          the appropriate fund or funds, and no member of the
                          Seller Group has any outstanding obligation to make
                          any such transfer or provision.

       4.14     Employee Plans.

                  (a)     With respect to severance funds, management
                          insurance ("Bitauch Menahalim") and pension funds
                          (each an "Employee Plan"), the fair market value of
                          the assets of each funded Employee Plan, the
                          liability of each insurer for any Employee Plan
                          funded through insurance or the book reserve
                          established for any Employee Plan, together with any
                          accrued contributions, is sufficient to procure or
                          provide for the accrued benefit obligations, as of
                          the date of this Agreement, with respect to all
                          current and former participants in such Employee
                          Plan according to the actuarial assumptions and
                          valuations most recently used to determine employer
                          contributions to such Employee Plan and no
                          transaction contemplated by this Agreement shall
                          cause such assets or insurance obligations to be
                          less than such benefit obligations.

                  (b)     No Employee Plan exists that could result in the
                          payment (other than any governmental mandated
                          payment or payment required by Law) to any present
                          or Former Employee of the Business of any money or
                          other property or accelerate or provide any other
                          rights or benefits to any present or Former
                          Employee of the Business as a result of the
                          transaction contemplated by this Agreement. There
                          is no contract, plan or arrangement (written or
                          otherwise) covering any employee or former employee
                          of the Business that, individually or collectively,
                          could reasonably be expected to give rise to the
                          payment of any amount that would not be deductible
                          under the Income Tax Ordinance.

       4.15     No Brokers or Finders

                No member of the Seller Group, nor any of its respective
                directors or officers, has taken any action that, directly or
                indirectly, would obligate the Purchaser Group to anyone
                acting as broker, finder, financial advisor or in any similar
                capacity in connection with this Agreement or any
                transactions contemplated hereby.

       4.16     Inventory.

                All material items of Inventory are of good and merchantable
                quality and are fit for the purpose for which they are
                intended and are of a quantity usable in the ordinary and
                usual course of the Business as currently conducted, and do
                not consist of obsolete or damaged materials. The Inventory
                is valued by the Seller Group for financial reporting
                purposes in accordance with GAAP. The Seller Group has good
                and marketable title to all of the Inventory free and clear
                of all Encumbrances.

       4.17     Customers and Suppliers

                There has not been any material adverse change and there are
                no facts known to any member of the Seller Group which may
                reasonably be expected to indicate that any material adverse
                change may occur in the business relationship of any member
                of the Seller Group with any material customer or supplier of
                the Business and no member of the Seller Group is engaged in
                any material dispute with any of the material customers or
                suppliers of the Business.

       4.18     Consents and Approvals of Governmental and Regulatory
                Authorities

                Except for (i) the approval of the Director of Restrictive
                Trade Practices of the Israeli Ministry of Trade & Industry;
                (ii) the approval of any Governmental or Regulatory
                Authorities relating to competition in appropriate
                jurisdictions; and (iii) as set forth in Schedule 4.18, no
                consent, approval or authorization of, or declaration, filing
                or registration with, or the giving of notice to, any
                Governmental or Regulatory Authority or any other Person or
                entity is required in connection with the execution, delivery
                and performance by the Seller Group of this Agreement or the
                Ancillary Agreement or the consummation by the Seller Group
                of the transactions contemplated hereby and thereby except
                where the failure to secure any of the foregoing would not
                (individually or in the aggregate) have a Material Adverse
                Effect.

       4.19     Transactions with Affiliates.

                  (a)     Schedule 4.19(a) lists all material agreements and
                          arrangements related to the Business between the
                          Seller Group and any Affiliate of the Seller Group
                          or among divisions of any member of the Seller
                          Group.

                  (b)     Except as set forth on Schedule 4.19(a), (i) there
                          are no material intercompany services currently
                          being provided (x) by any Affiliate of the Seller
                          Group to the Seller Group or (i) by the Seller
                          Group to any of their Affiliates relating to the
                          Business, and (ii) no material contracts between
                          any of the Seller Group on the one hand and any of
                          the Seller Group's Affiliates, on the other,
                          relating to the Business.

       4.20     Government Grant Programs

                Schedule 4.20 provides a complete list of all material
                pending and outstanding grants, incentives and subsidies
                (collectively, "Grants") from the Government of the State of
                Israel or any agency thereof, or from any foreign
                governmental or administrative agency, to the Seller Group
                relating to the Business including, without limitation, (i)
                Approved Enterprise Status from the Investment Centre and
                (ii) grants from the Office of the Chief Scientist of the
                Israeli Ministry of Trade & Industry. The Seller Group has
                made available to the Purchaser Group, prior to the date
                hereof, correct copies of all applications for Grants
                submitted by any Seller and of all letters of approval, and
                supplements thereto, granted to any Seller. Schedule 4.20
                details all material undertakings of the Sellers given in
                connection with the Grants. Without limiting the generality
                of the above, Schedule 4.20 includes the aggregate amounts of
                each Grant, and the aggregate outstanding obligations
                thereunder of the Sellers with respect to royalties, or the
                outstanding amounts to be paid by the Office of the Chief
                Scientist of the Israeli Ministry of Trade & Industry to the
                Sellers and the composition of such obligations or amount by
                the product or product family that it relates to. Each member
                of the Seller Group is in compliance, in all material
                respects, with the terms and conditions of its Grants and,
                has duly fulfilled, in all material respects, all the
                undertakings relating thereto. The Seller Group is not aware
                of any event or other set of circumstances that might lead to
                the revocation or material modification of any of the Grants.

       4.21     Environmental Matters

                Except as could not reasonably be expected, individually or
                in the aggregate, to result in material liability under or
                relating to Environmental Laws and relating to the Included
                Assets, and the Business:

                  (a)     To the best knowledge of the Seller Group, the
                          Included Assets and the Business hold, and are in
                          compliance with and have been in continuous
                          compliance with, all Environmental Permits and are,
                          and have been, otherwise in compliance in all
                          material respects with all Environmental Laws and,
                          to the knowledge of the Seller Group, there is no
                          condition that would reasonably be expected to
                          prevent or interfere with compliance with all
                          Environmental Laws in the future;

                  (b)     To the best knowledge of the Seller Group, no
                          modification, revocation, reissuance, alteration,
                          transfer, or amendment of the Environmental
                          Permits, or any review by, or approval of, any
                          third party of the Environmental Permits is
                          required in connection with the execution or
                          delivery of this Agreement or the consummation of
                          the transactions contemplated hereby or the
                          continuation of the Business following such
                          consummation;

                  (c)     No Seller has received any Environmental Claim
                          relating to the Included Assets or the Business and
                          the Seller Group is not aware after reasonable
                          inquiry of any such threatened Environmental Claim
                          nor has any reason to believe that any such
                          Environmental Claim will be made or threatened in
                          the future;

                  (d)     No Seller has entered into, nor has agreed to, or
                          is subject to any judgement, decree, order or other
                          similar requirement of any governmental authority
                          under any Environmental Laws and relating to the
                          Included Assets, the Business or the Corporations
                          which would have individually or in the aggregate a
                          Material Adverse Effect;

                  (e)     There are no (i) underground or aboveground storage
                          tanks, (ii) sumps, (iii) surface impoundments, (iv)
                          landfills (v) sewer or septic systems or (vi)
                          Hazardous Materials currently or formerly present
                          at or about any of the Included Assets, or any
                          properties or facilities currently or formerly
                          owned, leased or otherwise used in connection with
                          the Business, that could reasonably be expected to
                          give rise to liability under or relating to any
                          Environmental Laws which would have individually or
                          in the aggregate a Material Adverse Effect; and

                  (f)     Hazardous Materials have not been generated,
                          transported, treated, stored, disposed of, arranged
                          to be disposed of, released or threatened to be
                          released at, on, from or under any of the Included
                          Assets, any properties or facilities currently or
                          formerly owned, leased or otherwise used by the
                          Seller Group , or any properties or facilities
                          currently or formerly owned, leased or otherwise
                          used in connection with the Business, in violation
                          of Environmental Laws or in a manner or to a
                          location that could reasonably be expected to give
                          rise to liability under any Environmental Laws
                          which would have individually or in the aggregate a
                          Material Adverse Effect.

       4.22     Year 2000

                The change to the Year 2000 has not caused, and, to the best
                knowledge of the Seller Group, is not expected to cause, a
                material disruption to the operation of the Business or
                otherwise have a Material Adverse Effect.

       4.23     Joint and Several

                The representations given by Seller and each member of the
                Seller Group are joint and several and every representation
                herein stated to be made by any Seller shall be considered a
                representation of each member of the Seller Group mutatis
                mutandis.

5.     REPRESENTATIONS AND WARRANTIES OF THE PURCHASER GROUP

       Nortel and each member of the Purchaser Group hereby represents and
warrants to the Seller Group as follows:

       5.1      Organization and Qualification.

                Each Purchaser is licensed or qualified to transact business
                and is in good standing in each jurisdiction in which,
                because of its business conducted there or the nature of its
                properties there, it is required to be so licensed or
                qualified and in which the failure to be so licensed or
                qualified would have a material adverse effect on the
                business or operations (as currently conducted) or on the
                financial condition of the Purchaser Group, taken as a whole.

       5.2      Authority; No Breach.

                  (a)     The Purchaser Group has all requisite power and
                          authority to execute and deliver this Agreement and
                          the Ancillary Agreements and to perform, carry out
                          and consummate the transactions contemplated hereby
                          and thereby. The execution, delivery and performance
                          of this Agreement and the Ancillary Agreements have
                          been duly authorized by all necessary action on the
                          part of each member of the Purchaser Group. This
                          Agreement is the legal, valid and binding obligation
                          of the Purchaser Group, enforceable against each
                          Purchaser in accordance with its terms except as
                          enforceability may be limited or affected by
                          applicable bankruptcy, insolvency, reorganization or
                          other laws of general applicability relating to
                          creditors' rights and except as enforceability may
                          be limited by rules of law governing specific
                          performance, injunctive relief or other equitable
                          remedies.

                  (b)     Neither the execution and delivery of this Agreement
                          by the Purchaser Group nor the consummation of the
                          transactions contemplated herein will: (i) violate
                          any provision of the Constitutive Documents of any
                          Purchaser; (ii) conflict with, result in a breach of
                          or constitute a default under or result in the
                          invalidity of, or accelerate the performance
                          required by or cause the acceleration of the
                          maturity of any debt or obligation pursuant to any
                          material agreement or commitment to which any
                          Purchaser is a party or by which such Purchaser (or
                          any of its material properties or assets) is subject
                          or bound; (iii) conflict with, violate, result in a
                          breach of or constitute a default under any material
                          judgement, decree, order, or process of any
                          Governmental or Regulatory Authority; (iv) conflict
                          with or violate any statute, Law or regulation
                          applicable to the business or operations of any
                          Purchaser, except where such conflicts or violations
                          (individually or in the aggregate) would not have a
                          Material Adverse Effect on the business or
                          operations (as currently conducted) or the financial
                          condition of a Purchaser, taken as a whole; (v)
                          terminate or modify in any material respect, or give
                          any third party the right to terminate or modify in
                          any material respect, the provisions or terms of any
                          material contract or agreement to which a Purchaser
                          is a party or by which it (or any of its material
                          assets) is subject or bound; or (vi) require a
                          Purchaser to obtain any authorization, consent,
                          approval or waiver from, or to make any filing with,
                          any Person, except where the failure to obtain such
                          authorization, consent, approval or waiver or make
                          any filing would not have a Material Adverse Effect
                          on the business or operations (as currently
                          conducted) or on the financial condition of the
                          Purchaser Group, taken as a whole, other than such
                          as have been obtained or made.

       5.3      No Brokers or Finders

                No Purchaser, nor any of its directors or officers, has taken
                any action that, directly or indirectly, would obligate the
                Seller Group to anyone acting as broker, finder, financial
                advisor or in any similar capacity in connection with this
                Agreement or the transactions contemplated hereby.

6.     COVENANTS

       6.1      Operation of the Business for the Benefit of the Purchaser Group

                Until the Closing, the Seller Group shall operate the
                Business in accordance with the provisions of Section 6.2.

       6.2      Conduct of the Business.

                In order to preserve the value of the Included Assets, the
                Seller Group hereby covenants (i) that since the Balance
                Sheet Date it has conducted the Business in the ordinary and
                usual course and (ii) that from the date hereof until the
                Closing, and except as contemplated by this Agreement (in
                which case the Seller Group shall promptly notify Nortel
                Networks of the action taken or to be taken) or expressly
                consented to by the Purchaser Group, the Seller Group
                undertakes to conduct the Business in the ordinary and usual
                course, and to use its reasonable best efforts to preserve
                intact the Business as conducted as of the Balance Sheet
                Date. Without limiting the generality of the foregoing, from
                the date hereof and until the Closing the Seller Group will:

                  (a)     use reasonable best efforts to maintain the assets
                          and properties of the Business in reasonably good
                          working order and condition, ordinary wear and tear
                          excepted;

                  (b)     use reasonable best efforts to maintain adequate
                          insurance upon the properties and assets of the
                          Business in such amounts and of such kinds as are
                          comparable to those in effect on the date of this
                          Agreement;

                  (c)     use reasonable best efforts to keep available
                          (subject to dismissals and retirements in the
                          ordinary course of business consistent with past
                          practice), the services of the current officers and
                          employees of the Business;

                  (d)     use reasonable best efforts to preserve the current
                          advantageous relationships with Persons having
                          business dealings with the Business;

                  (e)     use reasonable best efforts to maintain its Books
                          and Records in the ordinary course, consistent with
                          past practice, comply in all material respects with
                          all Laws and contractual obligations applicable to
                          the Included Assets or the Business and perform all
                          of its material obligations relating to the
                          Business;

                  (f)     not, except as required by the terms of an
                          employment contract entered into prior to the date
                          of this Agreement except (in the case of
                          non-executive officers and other employees only) in
                          the ordinary course of business consistent with
                          past practice, make any increase in the salary,
                          wages or other compensation of any officer or
                          Employee of the Business;

                  (g)     not adopt, enter into, terminate or materially
                          amend or modify any Employee Plan relating to the
                          Business, except to the extent required by
                          applicable law or expressly consented to by the
                          Purchaser Group;

                  (h)     not modify or change in any material respect any
                          Contract relating to the Business other than in the
                          ordinary course of business consistent with past
                          practice, or enter into any Contract relating to
                          the Business other than in the ordinary course of
                          business consistent with past practice;

                  (i)     not make, or enter into commitments to make, capital
                          expenditures other than in the ordinary course of
                          business consistent with past practice;

                  (j)     not sell, transfer, or otherwise dispose of or
                          voluntarily encumber any fixed asset of the
                          Business other than in the ordinary course of
                          business, consistent with past practice;

                  (k)     not sell, transfer, or otherwise dispose of or
                          voluntarily encumber or agree to sell, transfer, or
                          otherwise dispose of or voluntarily encumber, any
                          prospects;

                  (l)     not sell, transfer, license or otherwise dispose of,
                          any Intellectual Property;

                  (m)     not settle any lawsuit or claim if such settlements
                          of lawsuits and claims impose any continuing
                          liability or non-monetary obligation on the
                          Business, the Contracts, the Assigned Intellectual
                          Property or any of the Included Assets or if such
                          settlement payments (net of any insurance
                          recoveries) exceeds the reserves therefor set forth
                          in the Balance Sheet unless such lawsuit or claim
                          is not an Assumed Liability and other than the
                          settlement of claims listed in Schedule 3.10;

                  (n)     not enter into or agree to enter into any
                          employment agreement or collective bargaining
                          agreement for the benefit of the employees of the
                          Business or amend or modify or agree to amend or
                          modify any existing employment or collective
                          bargaining agreement for the benefit of the
                          employees of the Business;

                  (o)     not make any material changes in the Seller Group's
                          accounting methods, practices or procedures as they
                          relate to the Business (except as required by GAAP
                          and approved in writing by the Seller Group's
                          independent accountants);

                  (p)     not make any changes in the Seller Group's methods,
                          practices or procedures relating to accounts
                          receivable, accounts payable or credit policies of
                          the Business (including without limitation
                          extending its trade receivables or making any
                          changes to its receivables write-off policies or
                          changing its payables cycle policies);

                  (q)     not make any material changes in its marketing
                          programs, sales promotion, pricing policies or
                          product lines relating to the Business;

                  (r)     not enter into any other material transaction
                          relating to the Business;

                  (s)     not submit any bid or proposal in respect of the
                          provisions of goods or services by Telrad outside
                          Israel (other than to the Purchaser Group) without
                          the prior consent of Nortel;

                  (t)     not submit any bid or proposal in respect of the
                          provisions of goods or services by Telrad within
                          Israel (other than to the Purchaser Group) which
                          could be deemed to be uneconomic for the Business
                          as a separate business unit, and

                  (u)     not enter into any agreement to do or engage in any
                          of the foregoing.

                  Notwithstanding the above, the Seller Group shall be
                  entitled (A) to offer incentives to employees and customers
                  in order to accelerate the completion of supply and
                  installation of products or services under the Contracts
                  and (B) to negotiate with customers to split the projects
                  under the Contracts in order to be able to complete
                  discrete phases, provided in each case that any such
                  actions shall not result in (i) any material adverse on the
                  relationship with the customer, (ii) any material adverse
                  impact on market price expectations, (iii) any material
                  adverse change in the pricing or other expectations of such
                  customer, (iv) a price discount or reduction exceeding 5%
                  of the Contract value (or, in the case the Contract is
                  split into phases, of the value of the completed phase).

       6.3      Access to Information

                From and after the date hereof until the earlier of the
                Closing Date or the date on which this Agreement is
                terminated, the Seller Group will (i) afford the Purchaser
                Group and its representatives reasonable access to all of its
                offices and other facilities and properties, (ii) permit the
                Purchaser Group to make such inspections thereof as it may
                reasonably request, and (iii) furnish the Purchaser Group
                with such financial and operating data and other information
                as it may from time to time reasonably request, and (iv) make
                its employees available to the Purchaser Group for such
                consultation as it may from time to time reasonably request.
                All such consultations shall be made in coordination with the
                Seller, provided that such coordination does not limit in any
                way the Purchaser Group's access to the information and
                personnel described above. In furtherance of the foregoing,
                the Seller Group shall provide the Purchaser Group and its
                representatives reasonable access to its Books and Records
                and to the work papers and audit files prepared by the Seller
                Group and their independent accountants in connection with
                the preparation of the Financial Statements and the Closing
                Date Financial Statements. All information obtained by or on
                behalf of the Purchaser Group pursuant to this Section 6.3
                shall be kept confidential.

       6.4      Discussions with Others

                Except as otherwise permitted by this Agreement, from the
                date of this Agreement until the Closing Date, no Seller or
                Koor, nor any of its officers, employees, representatives or
                agents, will, directly or indirectly, solicit, encourage, or
                initiate any discussions or negotiations with, or provide any
                information to, any corporation, partnership, person or other
                entity or group other than the Purchaser Group and its
                employees, representatives and agents, concerning any
                transaction involving the sale of the Included Assets or the
                transfer of the Contracts or any Intellectual Property,
                except as required by law or stock exchange rules, in which
                case the Seller or Koor, as appropriate, shall liase with the
                Purchaser to the closest extent possible concerning the
                wording and timing of such disclosures.

       6.5      Confidentiality

                Each Party shall, and shall use reasonable best efforts to
                cause its representatives and affiliates to: (a) hold in
                strict confidence and not utilize in its respective
                businesses all and any non-public information and documents
                concerning the other party hereto or any of its affiliates
                furnished to it by such other party or its representatives in
                connection with this Agreement or the transactions
                contemplated hereby, including the delivery by the Seller
                Group of the Books and Records or copies thereof, to the
                extent such Books and Records contain non-public information
                which is not related to the Business ("Confidential
                Information"), except where disclosure may be required by
                judicial or administrative process or by Law or as may be
                necessary for each Party to enforce its rights under this
                Agreement or the Ancillary Agreements (or any documents or
                instruments executed pursuant hereto or thereto) provided
                that, if disclosure is required by Law or judicial or
                administrative process, the party that is required to
                disclose the Confidential Information shall notify the
                non-disclosing party of such requirement as soon as possible.
                Notwithstanding the foregoing, the following will not
                constitute "Confidential Information" for purposes of this
                Agreement: (i) information which was already in the
                possession of the receiving party or its affiliates prior to
                the date hereof and which was not acquired or obtained from
                the other party or its affiliates, (ii) information which is
                independently developed by the receiving party or any
                affiliate thereof without access to the Confidential
                Information, (iii) information which is obtained or was
                previously obtained by the receiving party or its affiliates
                from a third person who, insofar as is known to the receiving
                party or its affiliates, is not prohibited from transmitting
                the information to the receiving party or its affiliates by a
                contractual, legal or fiduciary obligation to any other party
                or its affiliates and (iv) information which is or becomes
                generally available to the public other than as the result of
                a disclosure by the receiving party or any Affiliate thereof
                or their agents or employees. Notwithstanding the foregoing,
                following the Closing, the foregoing restrictions shall not
                apply to the use by the Purchaser Group of documents or
                information concerning the Business furnished by the Seller
                Group hereunder.

       6.6      Regulatory and Other Approvals and Consents

                Each Party will (a) take all reasonable steps necessary or
                desirable, and proceed diligently and in good faith and use
                all reasonable best efforts, as promptly as practicable to
                obtain all consents, approvals or actions of, to make all
                filings with and to give all notices to any Governmental or
                Regulatory Authorities or any other Person required of each
                Party to consummate the transactions contemplated hereby, and
                (b) provide such other information and communications to such
                Governmental or Regulatory Authorities or other Persons as
                either the Purchaser Group or the Seller Group or such
                Governmental or Regulatory Authorities or other Persons may
                reasonably request. The Seller Group agrees to use its
                reasonable best efforts to take, or cause to be taken, all
                action and to do, or cause to be done, all things necessary,
                proper or advisable to assist the Purchaser Group in
                obtaining prior to the Closing Date all Permits and Orders as
                are necessary in order to enable the Purchaser Group to
                conduct the Business in the ordinary course as of and from
                the opening of business on the Closing Date. Where the
                consent of any third party is required under the terms of any
                of the Contracts to be assumed by the Purchaser Group
                hereunder the Seller Group will take, all reasonable and
                necessary steps to obtain such consent on terms and
                conditions not materially less favourable than as in effect
                on the date hereof. The Seller Group and the Purchaser Group
                shall cooperate fully to the extent reasonably required to
                obtain such consents. To the extent that any such consent is
                not so obtained with respect to any such lease, contract,
                license or agreement, this Agreement shall not constitute an
                assignment or an attempted assignment thereof. In each such
                case, the Seller Group agrees to cooperate, with the
                Purchaser Group in any reasonable arrangement designed to
                provide for the Purchaser Group the benefits under any such
                Contract, including enforcement of any and all rights of the
                Seller Group against the other party thereto arising out of
                the breach or cancellation thereof by such other party or
                otherwise. If and to the extent that such arrangement cannot
                be made, the Purchaser Group shall not have any obligation
                with respect to any such lease or contract.

       6.7      Transfer Taxes.

                  (a)     All value-added taxes incurred in connection with
                          the transactions contemplated hereby (the
                          "Value-Added Taxes") shall be borne by the Purchaser
                          Group, with no reduction in the consideration to be
                          paid to the Seller Group. The Seller Group shall
                          cooperate with the Purchaser Group to cause the
                          amount of the Value-Added Taxes to be refunded by
                          the applicable Governmental or Regulatory Authority
                          to the Purchaser Group as soon as reasonably
                          practicable. Subject to paragraph (c) below, payment
                          of the Value-Added Taxes shall be made against
                          presentation to the Purchaser Group of a valid value
                          added tax invoice and shall be made on the due date
                          for payment of the Value-Added Taxes by the Seller
                          Group to the value added tax authorities.

                  (b)     For the avoidance of doubt, no Value-Added Taxes
                          shall be due in respect of (i) the sale of cash or
                          securities; (ii) the sale of assets situated
                          outside Israel; (iii) the export of goods out of
                          Israel; or (iv) the sale of intangible assets to a
                          foreign corporation which is not required to make
                          notification to the value added tax authorities
                          under Section 60 of the VAT Law.

                  (c)     At the Purchaser Group's request, the Purchaser
                          Group shall be entitled to be registered with the
                          Seller Group under a joint value added tax
                          registration or to request the consent of the value
                          added tax authorities to bear any Value-Added Taxes
                          due in connection with the purchase of assets in
                          accordance with Section 20 of the VAT Law. The
                          Seller Group shall give the Purchaser Group such
                          assistance as they may reasonably request in
                          connection with such procedures;

                  (d)     Any stamp duties incurred in connection with the
                          transactions contemplated hereby shall be borne
                          equally by the Seller Group and the Purchaser Group
                          respectively.

       6.8      Supply Agreements

                Prior to Closing, the Seller and the Purchaser Group shall
                negotiate in good faith to conclude the Schedules to the
                Manufacturing and Services Subcontract Agreement and identify
                the hardware, software, firmware and documentation comprised
                in the Systems to be supplied by Seller pursuant to that
                Agreement, it being understood that such Systems shall
                include fully or partially assembled and tested TX-1, DMS 10,
                TMX 100, DMS 300, TOPS, INM or Unirem systems. The Seller and
                the Purchaser Group shall, concurrently with such
                negotiations, use all reasonable best efforts to conclude the
                Manufacturing 2000 Agreements no later than 30 June 2000.

       6.9      [reserved]

       6.10       Employees.

                  (a)     Prior to Closing, the Seller shall conduct
                          discussions in good faith with all relevant trade
                          unions and workers committees active in the Seller
                          Group (the "Unions") with the intention of
                          obtaining the consent of Unions that all the
                          employees set forth in Schedule 6.10(a), in the
                          event that their employment is transferred to the
                          Company, shall be entitled to be transferred onto
                          personal employment agreements with the Company and
                          shall not be subject to or entitled to enjoy the
                          benefit of any collective labour agreement, labour
                          arrangement, custom, practice or other benefit
                          (whether written or oral) resulting from their
                          employment by the Seller.

                  (b)     Following the signing of this Agreement, the
                          Purchaser Group shall issue the Employees with
                          offers of employment in the form attached hereto as
                          Schedule 6.10(b), which shall include enhanced
                          severance provisions, the details of which are set
                          forth in Schedule 6.10(b).

                  (c)     The Seller Group shall use all reasonable endeavours
                          to cooperate in Purchaser's efforts to employ all of
                          the Employees and shall in no event assist any other
                          person in employing or soliciting the employment of
                          such individuals and shall not dismiss any of the
                          Employees prior to Closing. In addition, the Seller
                          shall assist the Company, at its request, in
                          entering into an agreement with manpower agencies
                          (or other entities through whom the Seller obtains
                          "manpower" services) with which the Seller works
                          with respect to the provision of services by those
                          persons listed in Schedule 6.10(c) through such
                          agencies from the Closing Date. The Purchaser agrees
                          that Seller's undertaking in this Section is
                          predicated upon the Company signing an agreement
                          with the above mentioned manpower agencies for the
                          provision of services in respect of such persons.

                  (d)     The Seller Group will retain all liability for (i)
                          liabilities or obligations related to current or
                          former employees who are not Transferring Employees
                          (ii) liabilities or obligations related to an
                          Employee's employment with the Seller Group or
                          related Union claims on or before the Closing Date
                          other than liabilities or obligations which are
                          being assumed by the Purchaser and appearing in the
                          Closing Net Asset Statement (iii) severance,
                          termination, retirement payments required to be made
                          to any Employee in connection with the consummation
                          of the transactions contemplated by this Agreement
                          to the extent that such amounts are not accrued as a
                          liability on the Closing Net Asset Statement or are
                          funded in a pension or severance fund transferred to
                          the Purchaser pursuant to the provisions of this
                          Agreement or in such funds in the name of the
                          employees (iv) severance or termination payments to
                          be made to any Employee, whose employment was
                          terminated by Seller and to whom severance payments
                          were due to be made by Seller, in respect of the
                          period of such Employee's employment with the Seller
                          Group and which becomes payable after the Closing
                          Date, alone or together with severance or
                          termination payments in respect of the period of
                          such Employee's employment after the Closing Date
                          with any member of Purchaser Group, except for
                          amounts appearing in the Closing Net Asset
                          Statement, or amounts received by such Employees
                          from severance, termination or pension funds in the
                          name of such Employee or in the name of the Company
                          and held on behalf of such Employee, or amounts
                          detailed in the enhanced severance provisions set
                          forth in Schedule 6.10(b), provided, however, that
                          the Seller Group's liability hereunder shall be
                          limited to the amount of severance payments due to
                          such Employee by Seller and (v) liabilities or
                          obligations relating to its failure to comply with
                          any employee notifications, consultation and
                          information requirements applicable to the Seller
                          Group. The Seller Group, as an additional indemnity,
                          hereby indemnifies the Purchaser Group and holds it
                          harmless and defends it from and against any and all
                          demands, claims, action, liabilities, losses, costs,
                          damages or expenses whatsoever (including reasonable
                          attorneys' fees) asserted against, imposed upon or
                          incurred by the Purchaser Group resulting from or
                          arising out of any claim against it in connection
                          with any of the above liabilities. The provisions of
                          Section 12.3 below concerning the terms and
                          conditions of indemnification shall apply to the
                          indemnification contained in this Section 6.10(d),
                          except that the Purchaser Group shall be entitled to
                          bring claims for indemnification under this Section
                          6.10(d) even in the event that it has suffered
                          damages or losses in an amount of less than
                          $100,000.

                  (e)     The Closing Net Asset Statement, together with the
                          amounts disclosed in writing on the date hereof to
                          the Purchaser Group shall reflect all severance,
                          termination, pension or retirement liabilities (the
                          "Employment Liabilities") that have been accrued
                          with respect to the Employees except for the
                          liabilities pursuant to the enhanced severance
                          provisions as disclosed in Schedule 6.10(b) as of
                          the Closing Date, which shall reflect the said
                          amount actually owed to the Employees less the
                          value at the Closing Date of any assets set aside
                          for, or dedicated to any such liability that is
                          transferred to the Purchaser pursuant to this
                          Agreement.

                  (f)     The Seller Group shall transfer to the Purchaser
                          Group in accordance with and to the extent permitted
                          by applicable law and subject to the conditions of
                          the relevant policy (i) ownership and all other
                          rights in all policies and independent funds in
                          respect of the Employment Liabilities (ii) all
                          dedicated or set-aside assets with respect to the
                          Employment Liabilities, other than liabilities or
                          obligations which are being assumed by the Purchaser
                          and appearing in the Closing Net Asset Statement,
                          including, but not limited to, pension, severance,
                          retirement or other funds (together the "Accrued
                          Funds") in respect of the Employee. Prior to
                          Closing, the Seller shall, at its own expense,
                          provide to the Purchaser a calculation of the amount
                          of the Accrued Funds to be transferred on the
                          Closing Date in respect of each Employee.

                  (g)     Each member of the Seller Group undertakes to sign
                          all documents and take all actions required in
                          order to effect the transfer of the assets
                          described in Section 6.10 (e) and (f) above and
                          shall cooperate with the Purchaser Group in
                          effecting such transfers.

       6.11       Notices

                  (a)     Each of the Purchaser Group and the Seller Group
                          will notify the other promptly in writing of, and
                          contemporaneously will provide the other parties
                          with true and complete copies of any and all
                          information or documents relating to, and will use
                          all reasonable best efforts to cure before the
                          Closing, any event, transaction or circumstance
                          occurring after the date of this Agreement that
                          causes or is reasonably likely to cause any covenant
                          or agreement of such party under this Agreement to
                          be breached in any material respect or that renders
                          or will render untrue in any material respect any
                          representation or warranty of such party contained
                          in this Agreement as if the same were made on or as
                          of the date of such event, transaction or
                          circumstance. No notice given pursuant to this
                          Section 6.11 shall have any effect on the
                          representations, warranties, covenants or agreements
                          contained in this Agreement or for the purposes of
                          determining satisfaction of any condition contained
                          herein.

                  (b)     Each of the Purchaser Group and the Seller Group
                          shall promptly notify the other of:

                          (i)          any material notice or other material
                                       communication of which such party has
                                       knowledge from any Person alleging
                                       that the consent of such Person is or
                                       may be required in connection with the
                                       transactions contemplated by this
                                       Agreement or the Ancillary Agreements;

                          (ii)         any material notice or other material
                                       communication of which such party has
                                       knowledge from any Governmental or
                                       Regulatory Authority in connection
                                       with the transactions contemplated by
                                       this Agreement or the Ancillary
                                       Agreements;

                          (iii)        any actions, suits, charges,
                                       complaints, claims, investigations or
                                       proceedings commenced or to the
                                       knowledge of such party threatened
                                       against, relating to, involving or
                                       otherwise affecting, the Business
                                       which, if pending on the date of this
                                       Agreement, would individually or in
                                       the aggregate have a Material Adverse
                                       Effect or which relate to the
                                       consummation of the transactions
                                       contemplated by this Agreement and the
                                       Ancillary Agreements; or

                          (iv)         any other material adverse effect or
                                       of any event that would materially
                                       impair such party's ability to perform
                                       its obligations under this Agreement
                                       or the Ancillary Agreements.

                The notification to the other party of any of the events set
                forth above in accordance with this Section 6.11 shall not be
                deemed to cure any related breaches of the representations,
                warranties, covenants or agreements contained in this
                Agreement, nor shall the failure of the non-notifying party
                to take any action with respect to such notice be deemed a
                waiver of any such breaches.

       6.12     Warranty Liabilities

                After the Closing Date, the Seller shall at its cost resolve
                any claims arising from the Seller's or a member of the
                Seller Group's sale of products prior to the Closing Date
                (other than in respect of Assumed Warranty Liabilities). The
                Seller shall handle such claims (excluding those claims
                giving rise to Assumed Warranty Liabilities) in a
                commercially reasonable manner and reasonably cooperate with
                the Purchaser in regard to any such claim made by a customer
                of the Purchaser, provided that the ultimate resolution of
                such claim shall, unless the Purchaser has agreed in its sole
                discretion to pay or otherwise resolve such claim, remain
                with the Seller.

       6.13     Fulfilment of Conditions

                Each of the Purchaser Group and the Seller Group will use
                their respective best efforts to and take all reasonable
                steps necessary or desirable and proceed diligently and in
                good faith to satisfy each condition to the obligations of
                the other parties contained in this Agreement and will not
                take, or fail to take, any action that could reasonably be
                expected to result in the non-fulfilment of any such
                condition. Notwithstanding the foregoing, neither the
                Purchaser Group nor the Seller Group shall be required to
                expend any material amount of money or agree to make any
                material concession or give any material undertaking in order
                to obtain the consent of any Governmental or Regulatory
                Authority or other third party necessary to consummate the
                transactions contemplated by this Agreement.

       6.14     Public Announcements

                All announcements, press releases or other publications
                relating to this Agreement or the transactions contemplated
                hereby prior to the Closing, including announcements to
                employees, will be made only with the prior written approval
                as to form and content by the other Party, provided, however,
                that with respect to any public disclosure which is deemed
                necessary by such party's counsel in order to comply with
                applicable Law or Stock Exchange rules, no such approval or
                consent shall be required, provided that the parties shall to
                the fullest extent practicable consult with each other prior
                to making any such announcement, press release or other
                publication. Notwithstanding the foregoing, the parties agree
                that the initial press release announcing the execution and
                delivery of this Agreement shall be in a form mutually agreed
                by the parties hereto.

       6.15     Refunds and Remittances, Etc.

                  (a)     In the event that the Seller Group receives any
                          amount which is reflected as an Included Asset on
                          the Balance Sheet or is otherwise properly due and
                          owing to the Purchaser Group in accordance with the
                          terms of this Agreement, the Seller Group shall
                          cause the same to be promptly remitted to the
                          Purchaser Group as the Purchaser Group may direct.

                  (b)     In the event the Purchaser Group receives any
                          amount that is an Excluded Asset or is otherwise
                          properly due and owing to the Seller Group in
                          accordance with the terms of this Agreement, the
                          Purchaser Group shall cause the same to be promptly
                          remitted to the Seller Group as the Seller Group
                          may direct.

                  (c)     In the event that there are any assets of any of
                          the corporations acquired by the Purchaser Group
                          that belong to the Seller Group, at the Purchaser
                          Group's option, exercisable within 90 days after
                          the Closing, the Purchaser Group shall transfer
                          such assets to the Seller Group, at book value and
                          shall be reimbursed therefor by the Seller Group.

       6.16     Purchaser Group covenants not to enter into any arrangements
                with previous customers of Seller Group calculated to damage
                Seller Group's ability to collect receivables from those
                customers, and the Purchaser Group shall cooperate with the
                Seller Group in good faith and to the extent consistent with
                Purchaser Group's business practices to facilitate the Seller
                Group to collect such receivables..

7.     PARTIES' CLOSING CONDITIONS

       The obligation of the Purchaser Group and the Seller Group under this
       Agreement to consummate the purchase and sale of the Included Assets
       and transfer of the Contracts and assignment of the Assigned
       Intellectual Property at the Closing shall be subject to the
       satisfaction, at or prior to the Closing, of all of the following
       conditions, any one or more of which may be waived by the Purchaser
       Group or the Seller Group, as the case may be.

       7.1      Ancillary Agreements

                All the relevant Parties shall have executed the Ancillary
                Agreements.

       7.2      Shareholder  Agreement

                Each of Nortel, Koor and the Seller shall have executed the
                Shareholders Agreement.


8.     PURCHASER GROUP'S CLOSING CONDITIONS

       The obligation of the Purchaser Group under this Agreement to
       consummate the purchase of the Included Assets and transfer of the
       Contracts and assignment of the Assigned Intellectual Property at the
       Closing shall be subject to the satisfaction, at or prior to the
       Closing, of all of the following conditions, any of which may be
       waived by the Purchaser Group:

       8.1      Representations and Warranties Accurate

                All representations and warranties of the Seller Group
                contained in this Agreement shall be true and accurate in all
                material respects on and as of the Closing Date.

       8.2      Performance by the Seller Group

                The Seller Group shall have performed and complied in all
                material respects with all agreements, covenants and
                conditions required by this Agreement to be performed and
                complied with by it prior to or on the Closing Date.

       8.3      Certificate

                The Purchaser Group shall have received a certificate, dated
                the Closing Date, signed on behalf of the Seller Group by a
                principal corporate officer of the Seller Group, to the
                effect that the conditions set forth in Sections 8.1 and 8.2
                have been satisfied.

       8.4      Orders and Laws

                No Order or Law shall be in effect on the Closing Date that
                restrains, enjoins, or otherwise prohibits or makes illegal
                the consummation of the transactions contemplated by this
                Agreement and no action or proceeding shall be pending or
                overtly threatened before or by any Governmental or
                Regulatory Authority which could reasonably be expected to
                result in the issuance of any such Order or the enactment or
                promulgation of any such Law.

       8.5      Consents.

                  (a)     All consents, approvals and actions of, filings
                          with, and notices to, all Governmental or Regulatory
                          Authorities required to be obtained or made in order
                          to consummate the transactions contemplated by this
                          Agreement and which could reasonably be expected to
                          have a Material Adverse Effect if not obtained,
                          shall have been made and obtained and shall be in
                          full force and effect, and all terminations or
                          expirations of waiting periods imposed by any
                          Governmental or Regulatory Authority with regard to
                          those consents, approvals, filings and notices shall
                          have occurred and no such consents or approvals or
                          similar actions from any Governmental or Regulatory
                          Authority shall impose terms or conditions or
                          qualifications that, individually or in the
                          aggregate, could reasonably be expected to have a
                          Material Adverse Effect.

                  (b)     All third party consents (or in lieu thereof
                          waivers) set forth in Schedule 4.18 (in form and
                          substance reasonably satisfactory to the Purchaser
                          Group) to the performance by the Seller Group of
                          its obligations under this Agreement and the
                          Ancillary Agreements or the consummation of the
                          transactions contemplated hereby and thereby
                          (including transfer of the Included Assets and the
                          Contracts to the Purchaser Group), shall have been
                          obtained, shall not be subject to the satisfaction
                          of any condition that has not been satisfied or
                          waived and shall be in full force and effect.

                  (c)     The consent of the Israeli Ministry of Defence (or
                          in lieu thereof waivers), in a form reasonably
                          satisfactory to the Purchase Group, to the
                          assignment or transfer, with effect from the date
                          of Closing, of Contracts with the Israeli Ministry
                          of Defence (including, without limitation, the Blue
                          Avnet Contract) shall have been obtained, shall not
                          be subject to the satisfaction of any condition
                          that has not been satisfied or waived and shall be
                          in full force and effect.

                  (d)     The consent of Bezeq (or in lieu thereof waivers),
                          in a form reasonably satisfactory to the Purchaser
                          Group, to the assignment or transfer, with effect
                          from the date of Closing, of Contracts with Bezeq
                          shall have been obtained, shall not be subject to
                          the satisfaction of any condition that has not been
                          satisfied or waived and shall be in full force and
                          effect.

       8.6      Material Adverse Change

                Since the date of this Agreement, there shall have been no
                change, circumstance or occurrence in the Included Assets or
                Contracts or the Assigned Intellectual Property or the
                Business or financial condition of the Business that would
                have a Material Adverse Effect.

       8.7      Additional Documents, etc.

                The Seller Group shall have delivered to the Purchaser Group
                such other documents, instruments and certificates as shall
                be reasonably requested by the Purchaser Group for the
                purpose of effecting the transactions provided for and
                contemplated by this Agreement.

       8.8      Due Diligence

                The Purchaser Group shall have completed its due diligence
                investigations into the business to its satisfaction.

       8.9      Key Employees

                At least 90% of the Key Employees shall have signed
                employment agreements with the Purchaser Group in form and
                substance acceptable to the Purchaser Group.

       8.10     Employees

                At least 80% of the Employees shall have accepted employment
                with the Purchaser Group.


       8.11     Shareholders Agreement

                The Shareholders Agreement between Koor, the Seller and the
                Purchaser signed on the date hereof shall have closed
                according to its terms.

       8.12     Removal of Encumbrances over Included Assets

                Any Encumbrances over the Included Assets, even if disclosed
                at or prior to signing, shall have been removed and evidence
                thereof in a form satisfactory to the Purchaser Group
                submitted to the Purchaser Group.

9.     SELLER GROUP'S CLOSING CONDITIONS

       The obligations of the Seller Group under this Agreement to consummate
       the sale of the Assets at the Closing shall be subject to the
       satisfaction, at or prior to the Closing, of all of the following
       conditions, any one or more of which may be waived by the Seller
       Group.

       9.1      Representations and Warranties Accurate

                All representations and warranties of the Purchaser Group
                contained in this Agreement shall be true and accurate in all
                material respects on and as of the Closing Date.

       9.2      Performance by the Purchaser Group

                The Purchaser Group shall have performed and complied in all
                material respects with all agreements, covenants and
                conditions required by this Agreement to be performed and
                complied with by them prior to or on the Closing Date.

       9.3      Certificate

                The Seller Group shall have received a certificate, dated the
                Closing Date, signed on behalf of the Purchaser Group by a
                principal corporate officer of the Purchaser Group, to the
                effect that the conditions set forth in Sections 9.1 and 9.2
                have been satisfied.

       9.4      Orders and Laws

                No Order or Law shall be in effect on the Closing Date that
                restrains, enjoins, or otherwise prohibits or makes illegal
                the consummation of the transactions contemplated by this
                Agreement and no action or proceeding shall be pending or
                overtly threatened before or by any Governmental or
                Regulatory Authority which could reasonably be expected to
                result in the issuance of any such Order or the enactment or
                promulgation of any such Law.

       9.5      Consents

                All the consents, approvals and actions of, filings with, and
                notices to, all Governmental or Regulatory Authorities
                required to be obtained or made in order to consummate the
                transactions contemplated by this Agreement, and which could
                reasonably be expected to have a material adverse effect if
                not obtained, shall have been made and obtained and shall be
                in full force and effect, and all terminations or expirations
                of waiting periods imposed by any Governmental or Regulatory
                Authority with regard to those consents, approvals, filings
                and notices shall have occurred.

       9.6      Additional Documents, Etc.

                The Purchaser Group shall have delivered to the Seller Group
                such other documents, instruments and certificates as shall
                be reasonably requested by the Seller Group for the purpose
                of effecting the transactions provided for and contemplated
                by this Agreement.

10.    CLOSING

       10.1     The Closing

                The Closing shall take place at 10:00 A.M. on the date (the
                "Closing Date") which is the first Business Day of the
                calendar month following the month during which all of the
                conditions to Closing set forth in Sections 7, 8, and 9 are
                satisfied or waived (other than those conditions which by
                their terms are to be satisfied at the Closing) at the
                offices of Koor, or at such other time, date or place as the
                parties may mutually agree. The actual time and date of the
                Closing are herein called the "Closing Date".

       10.2     Obligations of the Seller Group

                At the Closing, the Seller Group shall deliver to the
                Purchaser Group the following:

                (a)       such deeds, bills of sale, endorsements, consents,
                          assignments, and other good and sufficient
                          instruments of conveyance and assignment, all in
                          recordable form, where applicable, in form and
                          substance reasonably acceptable to the Purchaser
                          Group, as shall be effective to vest in the
                          Purchaser Group all right, title and interest of the
                          Seller Group and their subsidiaries in and to the
                          Included Assets

                (b)       all Books and Records (or, in the case of Books and
                          Records not exclusively related to the Business or
                          where the delivery of original Books and Records is
                          prohibited by law, copies thereof);

                (c)       the certificate and other documents required by
                          Section 8;

                (d)       appropriate receipts;

                (e)       all internal policy and instruction manuals and
                          directories relating to the conduct and operations
                          of the Business, and all sales and promotional
                          literature, customer lists and other sales-related
                          materials pertaining to the Business;

                (f)       all Permits and licenses held or used by the Seller
                          Group in connection with, or required for, the
                          Business, to the extent transferable;

                (g)       such other instruments or documents, in form and
                          substance reasonably acceptable to the Purchaser
                          Group, as may be necessary to carry out the
                          provisions of this Agreement; and

                (h)       a list showing details of the products and services
                          provided to customers under the Contracts which
                          relate to projects where customer acceptance has not
                          been granted but which require no further supply or
                          installation in order to meet the customer's
                          acceptance criteria

       10.3     Obligations of the Purchaser Group

                  At the Closing, the Purchaser Group shall deliver to the
                  Seller Group:

                  (a)     the sums on account of the Consideration set forth
                          in Section 2.5(a) and (b);

                  (b)     the certificate and other documents required by
                          Section 9;

                  (c)     appropriate receipts;

                  (d)     such instruments of assumption and other
                          instruments or documents, in form and substance
                          reasonably acceptable to the Seller Group, as may
                          be necessary to effect the assumption of the
                          Assumed Liabilities by the Purchaser Group; and

                  (e)     such other instruments and documents, in form and
                          substance reasonably acceptable to Seller Group, as
                          may be necessary to carry out the provisions of
                          this Agreement.

       10.4     Further Assurances.

                From time to time after the Closing Date, the Seller Group
                will execute, acknowledge and deliver, or cause to be
                executed, acknowledged and delivered, such other instruments
                of conveyance, assignment, transfer and delivery and will
                take or cause to be taken such other actions as the Purchaser
                Group may reasonably request in order to more effectively
                sell, transfer, convey, assign and deliver to the Purchaser
                Group any of the Included Assets and Contracts and Assigned
                Intellectual Property or to enable the Purchaser Group to
                exercise and enjoy all rights and benefits with respect
                thereto, and as otherwise may be appropriate to carry out the
                transactions contemplated by this Agreement.

       10.5     Customer Guarantees

                The Purchaser Group shall use reasonable endeavours to cause
                the release of any guarantees provided by the Seller Group in
                respect of those Contracts assigned and transferred at
                Closing. The Seller Group and Koor shall cooperate with the
                Purchaser Group in order to effect such releases, which
                cooperation shall include agreeing to the provision of such
                guarantees by the Company, as shall be deemed reasonably
                necessary by the Purchaser Group. Should the Purchaser Group
                fail to procure the release of said guarantees by Closing,
                then, until such time as the release is obtained, the
                Purchaser Group shall indemnify and hold the Seller Group
                harmless from and against any liability or loss which may
                accrue to the Seller Group as a result of any claim in
                respect of such guarantee brought against a member of the
                Seller Group to the extent they concern acts or omissions
                attributable to the Purchaser Group.

11     TERMINATION

       11.1     Rights to Terminate

                This Agreement may be terminated at any time prior to the
                Closing Date:

                  (a)     by mutual consent of the Purchaser Group and the
                          Seller Group;

                  (b)     by the Purchaser Group or the Seller Group if there
                          has been a material breach of this Agreement on the
                          part of the other party and such other party has
                          failed to cure such material breach after not less
                          than 30 days' notice of such material breach;

                  (c)     by the Purchaser Group or the Seller Group if the
                          transactions contemplated herein shall not have
                          been consummated by 31 August 2000; provided,
                          however, that this Section 11.1 will not be
                          available to any party whose failure to perform any
                          of its obligations under this Agreement results in
                          the failure of the transactions contemplated herein
                          to be consummated by such time.

       11.2     Consequences

                In the event of termination of this Agreement pursuant to
                Section 11.1, this Agreement shall forthwith become void and
                there shall be no liability or obligation on the part of any
                party except (a) to the extent that such termination results
                from a material breach of this Agreement by such party, (b)
                Sections 6.5 (Confidentiality) and 15.1 (Expenses) shall
                survive the termination date. The Seller Group or the
                Purchaser Group may seek such remedies, including damages and
                fees of attorneys, against the other with respect to any such
                breach described in the prior sentence as are provided in
                this Agreement or as are otherwise available at Law or in
                equity.

12     INDEMNIFICATION

       12.1     Termination of Representations and Warranties

                All representations and warranties contained in Sections 4
                and 5 shall survive the Closing and shall expire on the third
                anniversary of the Closing Date.

       12.2     Indemnification by the Seller Group

                From and after the Closing, the Seller Group and Koor shall
                jointly and severally indemnify and save the Purchaser Group
                harmless from and defend it from and against any and all
                demands, claims, actions, liabilities, losses, costs, damages
                or expenses whatsoever (including reasonable attorneys' fees)
                asserted against, imposed upon or incurred by the Purchaser
                Group resulting from or arising out of (i) any Excluded
                Liabilities, (ii) any breach of the representations and
                warranties of the Seller Group contained in Section 4 but
                only for the period such representation or warranty survives
                pursuant to Section 12.1, (iii) the breach of any covenant or
                agreement of the Seller Group contained in this Agreement, or
                (iv) any Income Taxes imposed upon gain from the asset
                purchase transaction under this Agreement. In the event
                notice of a claim for indemnification under this Section 12.2
                is given by the Purchaser Group within the applicable
                survival period, the representations and warranties that are
                the subject of such indemnification claim shall survive until
                such time as such claim is finally resolved.

       12.3     Terms and Conditions of Indemnification

                The Purchaser Group shall only be entitled to bring claims
                for indemnification under Section 12.2 where it has suffered
                damages or losses in excess of $100,000. All claims for
                indemnification by the Purchaser Group under Section 12.2
                will be asserted and resolved as follows:

                  (a)     In the event any claim or demand in respect of which
                          the Purchaser Group might seek indemnity under
                          Section 12.2 is asserted against or sought to be
                          collected from the Purchaser Group by a Person other
                          than the Seller Group or the Purchaser Group (a
                          "Third Party Claim"), the Purchaser Group shall
                          deliver a Claim Notice with reasonable promptness to
                          the Seller Group. If the Purchaser Group fails to
                          provide the Claim Notice with reasonable promptness
                          after the Purchaser Group receives notice of such
                          Third Party Claim, the Seller Group will not be
                          obligated to indemnify the Purchaser Group with
                          respect to such Third Party Claim to the extent that
                          the Seller Group's ability to defend against the
                          claim has been actually and materially prejudiced by
                          such failure of the Purchaser Group. The Seller
                          Group will notify the Purchaser Group as soon as
                          practicable within the Dispute Period whether the
                          Seller Group disputes its liability to the Purchaser
                          Group under Section 12.2, and whether the Seller
                          Group desires, at its sole cost and expense, to
                          defend the Purchaser Group against such Third Party
                          Claim.

                  (b)     If the Seller Group notifies the Purchaser Group
                          within the Dispute Period that the Seller Group
                          desires to defend the Purchaser Group with respect
                          to the Third Party Claim pursuant to this Section
                          12.3, then the Seller Group will have the right to
                          defend, with counsel reasonably satisfactory to the
                          Purchaser Group, at the sole cost and expense of the
                          Seller Group, such Third Party Claim by all
                          appropriate proceedings, which proceedings will be
                          prosecuted by the Seller Group in a reasonable
                          manner and in good faith or will be settled at the
                          discretion of the Seller Group (but only with the
                          consent of the Purchaser Group, which shall not be
                          unreasonably withheld or delayed, in the case of any
                          settlement that provides for any relief other than
                          the payment of monetary damages or that provides for
                          the payment of monetary damages as to which the
                          Purchaser Group will not be indemnified in full
                          pursuant to Section 12.2). The Seller Group will
                          have full control of such defence and proceedings,
                          including (subject to the preceding sentence) any
                          compromise or settlement thereof; provided, however,
                          that if requested by the Seller Group, the Purchaser
                          Group will, at the sole cost and expense of the
                          Seller Group, provide reasonable co-operation to the
                          Seller Group in contesting any Third Party Claim
                          that the Seller Group elects to contest. The
                          Purchaser Group may participate in, but not control,
                          any defence or settlement of any Third Party Claim
                          controlled by the Seller Group pursuant to this
                          clause, and except as provided in the preceding
                          sentence, the Purchaser Group will bear its own
                          costs and expenses with respect to such
                          participation. Notwithstanding the foregoing, the
                          Purchaser Group may take over the control of the
                          defence or settlement of a Third Party Claim at any
                          time if it irrevocably waives its right to indemnity
                          under Section 12.2, with respect to such Third Party
                          Claim.

                  (c)     If the Seller Group notifies the Purchaser Group
                          within the Dispute Period that the Seller Group does
                          not desire to defend the Third Party Claim pursuant
                          to Section 12.3(c), or if the Seller Group fails to
                          give any notice whatsoever within the Dispute
                          Period, or if the Purchaser Group reasonably
                          concludes that it may have separate or different
                          defences available to it that are not available to
                          the Seller Group, then the Purchaser Group will have
                          the right to defend, at the sole cost and expense of
                          the Seller Group, the Third Party Claim by all
                          appropriate proceedings, which proceedings will be
                          prosecuted by the Purchaser Group in a reasonable
                          manner and in good faith or will be settled at the
                          discretion of the Purchaser Group (with the consent
                          of the Seller Group, which consent will not be
                          unreasonably withheld). The Purchaser Group will
                          have full control of such defence and proceedings,
                          including (subject to the preceding sentence) any
                          compromise or settlement thereof; provided, however,
                          that if requested by the Purchaser Group, the Seller
                          Group will, at the sole cost and expense of the
                          Seller Group, provide reasonable co-operation to the
                          Purchaser Group and its counsel in contesting any
                          Third Party Claim which the Purchaser Group is
                          contesting. Notwithstanding the foregoing provisions
                          of this Section 12.3(c), if the Seller Group has
                          notified the Purchaser Group within the Dispute
                          Period that the Seller Group disputes its liability
                          hereunder to the Purchaser Group with respect to
                          such Third Party Claim and if such dispute is
                          resolved in favour of the Seller Group in the manner
                          provided in Section 12.3(d) below, the Seller Group
                          will not be required to bear the costs and expenses
                          of the Purchaser Group's defence pursuant to this
                          Section 12.3(c) or of the Seller Group's
                          participation therein at the Purchaser Group's
                          request, and the Purchaser Group will reimburse the
                          Seller Group in full for all reasonable costs and
                          expenses incurred by the Seller Group in connection
                          with such litigation. The Seller Group may
                          participate in, but not control, any defence or
                          settlement controlled by the Purchaser Group
                          pursuant to this Section 12.3(c), and the Seller
                          Group will bear its own costs and expenses with
                          respect to such participation.

                  (d)     If the Seller Group notifies the Purchaser Group
                          that it does not dispute its liability to the
                          Purchaser Group with respect to the Third Party
                          Claim under Section 12.2 or fails to notify the
                          Purchaser Group within the Dispute Period whether
                          the Seller Group disputes its liability to the
                          Purchaser Group with respect to such Third Party
                          Claim, the Seller Group shall indemnify the
                          Purchaser Group for such liability. If the Seller
                          Group has timely disputed its liability with respect
                          to such claim, the Seller Group and the Purchaser
                          Group will proceed in good faith to negotiate a
                          resolution of such dispute, and if not resolved
                          through negotiations within the Resolution Period,
                          such dispute shall be resolved by litigation in a
                          court of competent jurisdiction. Pending such
                          resolution the Seller Group shall nevertheless be
                          obligated to indemnify the Purchaser Group as
                          provided in Section 12.3(c).

                  (e)     In the event the Purchaser Group should have a claim
                          under Section 12.2 against the Seller Group that
                          does not involve a Third Party Claim, the Purchaser
                          Group shall deliver an Indemnity Notice with
                          reasonable promptness to the Seller Group. The
                          failure by any Purchaser Group to give the Indemnity
                          Notice shall not impair such party's rights
                          hereunder except to the extent that an Seller Group
                          demonstrates that it has been actually and
                          materially prejudiced thereby. If the Seller Group
                          notifies the Purchaser Group that it does not
                          dispute the claim described in such Indemnity Notice
                          or fails to notify the Purchaser Group within the
                          Dispute Period whether the Seller Group disputes the
                          claim described in such Indemnity Notice, the Losses
                          in the amount specified in the Indemnity Notice will
                          be conclusively deemed a liability of the Seller
                          Group under Section 12.2 and the Seller Group shall
                          pay the amount of such Losses to the Purchaser Group
                          on demand. If the Seller Group has timely disputed
                          its liability with respect to such claim, the Seller
                          Group and the Purchaser Group will proceed in good
                          faith to negotiate a resolution of such dispute, and
                          if not resolved through negotiations within the
                          Resolution Period, such dispute shall be resolved in
                          a court of competent jurisdiction.

       12.4     Exclusive Remedy

                          Save for the software warranty and remedies for
                          breach thereof set out in Section 4.11, the
                          indemnification provided for under this Section 12
                          shall be the Purchaser Group's exclusive remedy for
                          any and all liability, Losses, cost, damage and
                          expense whatsoever resulting from or arising out of
                          or relating to this Agreement or any of the
                          transactions contemplated by this Agreement, absent
                          fraud or other wilful misconduct.

13.    MYANMAR

         Seller Group undertakes not to enter into any new contracts for the
         supply of equipment or services to customers in Myanmar. At any time
         after Closing, at Nortel Networks' request, Seller Group Telrad
         shall terminate all customer contracts in Myanmar and will use its
         best efforts to minimise the costs of such termination and collect
         outstanding receivables. Nortel Networks shall pay to Seller Group
         any uncollected amounts payable by the customer in Myanmar in
         respect any such customer contracts entered into prior January 2000,
         and any pre-approved expenses relating thereto.

14.      NON-COMPETITION

         In order to preserve the value of the Businesses and assets
         transferred hereunder, the Seller Group agrees and undertakes
         towards the Purchaser Group that it shall not buy, establish or
         engage in a business (or acquire a controlling interest in a
         business) that has as its principle business the marketing, selling,
         integrating, servicing or supporting of competing telecommunications
         or networking products or equipment in Israel for a period of three
         years from Closing.

15.    MISCELLANEOUS

       15.1     Expenses

                All costs, fees or expenses (including, without limitation,
                legal and accounting fees), incurred in connection with this
                Agreement and the Ancillary Agreements and in connection with
                all obligations required to be performed by each party hereto
                under this Agreement and the Ancillary Agreements shall be
                borne by the party incurring such costs, fees or expenses,
                except as expressly provided herein.

       15.2     Amendment

                This Agreement may not be modified, amended, altered or
                supplemented except by a written agreement executed by the
                Purchaser Group and the Seller Group.

       15.3     Entire Agreement

                This Agreement, including the Exhibits and Schedules hereto,
                contain all of the agreements, covenants, terms, conditions
                and representations and warranties agreed upon by the parties
                relating to the subject matter of this Agreement and
                supersede all prior and contemporaneous agreements,
                negotiations, correspondence, undertakings, representations,
                warranties and communications of any kind of or between the
                parties and their representatives, whether oral or written,
                respecting each subject matter.

       15.4     Waivers

                Waiver by any party of any breach of or failure to comply
                with any provision of this Agreement by the other parties
                shall not be construed as, or constitute, a continuing waiver
                of such provision, or a waiver of any other breach of, or
                failure to comply with, any other provision of this
                Agreement. No waiver of any such breach or failure or of any
                term or condition of this Agreement shall be effective unless
                in a written notice signed by the waiving party and
                delivered, in the manner required for notices generally, to
                each affected party.

       15.5     Notices

                Any notice, demand, request, consent, approval, declaration,
                delivery or other communication hereunder to be made pursuant
                to the provisions of this Agreement ("notice") shall be
                sufficiently given or made if in writing and delivered in
                person with receipt acknowledged, sent by registered or
                certified mail, receipt requested, posted prepaid, sent by
                overnight courier with guaranteed next day delivery or sent
                by telex or facsimile to the party to whom directed at the
                following address:

                To the Purchaser Group
                Nortel Networks
                Oakleigh Road South
                LONDON
                N11 1HB
                England
                Fax:  44 (20) 8945 2864
                Attention:  Company Secretary

                With a copy to
                Herzog, Fox & Neeman
                Asia House, 4 Weizmann Street
                Tel Aviv 64239, Israel
                Fax: (972 3)696 6464
                Attention: Daniel Chinn

                To Telrad
                P.O. Box 50
                Lod 71100
                Israel
                Fax: (+972) 8 913 4665
                Attention: Reuven Avi-Tal

                To Koor
                21 Ha'arbaah Street
                TEL AVIV, Israel 64739
                Fax:  (+972) 3 623 8334
                Attention: Jonathan Kolber

                With a copy to
                Fischer, Behar Chen & Co
                3 Daniel Frisch Street
                TEL AVIV 64731
                Israel
                Fax (+972) 3 609 1116
                Attention: Reuven Behar


                or at such other address as may be substituted by notice
                given as herein provided. The giving of any notice required
                hereunder may be waived in writing by the party entitled to
                receive such notice. Every notice shall be deemed to have
                been duly given or served on the date on which personally
                delivered, with receipt acknowledged, one Business Day after
                sent by overnight (next day) courier, two Business Days after
                sent by international (two day) courier or on the day telexed
                or faxed.

       15.6     Counterparts

                This Agreement may be executed in two or more counterparts,
                each of which shall be deemed to be an original, but all of
                which together shall constitute one and the same document.

       15.7     Governing Law

                This agreement shall be governed by and construed in
                accordance with the laws of England and the parties submit to
                the exclusive jurisdiction of the courts of England in
                respect of any dispute arising out of or connected to this
                Agreement.

       15.8     Binding Effect; Assignment; No Third Party Beneficiaries

                This Agreement shall be binding upon, enure to the benefit
                of, and be enforceable by, the parties hereto and their
                respective legal representatives, successors and permitted
                assigns; provided, that the Seller Group shall not assign or
                transfer this Agreement nor any right or obligation hereunder
                by operation of law or otherwise; provided further, that the
                Purchaser Group may prior to the Closing Date assign all or a
                portion of their rights under this Agreement to any of its
                subsidiaries; provided, further that no assignment by the
                Purchaser Group shall relieve it of its obligations
                hereunder. Neither this Agreement no any of the Ancillary
                Agreements shall be construed to confer any benefits or
                rights on, or be enforceable by, any Person other than the
                parties that are signatories hereto.

       15.9     Severability

                Any provision of this Agreement which is prohibited or
                unenforceable in any jurisdiction shall not invalidate the
                remaining provisions hereof, and any such prohibition or
                unenforceability in any jurisdiction shall not invalidate or
                render unenforceable such provision in any other
                jurisdiction, and any such provision, to the extent invalid
                or unenforceable, shall be replaced by a valid and
                enforceable provision which comes closest to the intention of
                the parties underlying such invalid or unenforceable
                provision.

       15.10    Headings

                The headings contained in this Agreement are for reference
                purposes only and shall not affect in any way the meaning or
                interpretation of this Agreement.

       15.11    Further Assurances

                After the Closing Date, without further consideration, the
                Seller Group and the Purchaser Group shall take such further
                action and shall respectively cause each member of the Seller
                Group and the Purchaser Group and shall execute and deliver
                such further instruments and documents as either party shall
                reasonably request in order to carry out the provisions and
                purposes of this Agreement.





 IN WITNESS whereof the Parties have executed this Agreement effective as of
the date first above written



 NORTEL NETWORKS                            KOOR INDUSTRIES LTD.
 LIMITED

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 NORTEL NETWORKS ISRAEL                     TELRAD NETWORKS LIMITED
 (SALES AND MARKETING) LIMITED


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