EXHIBIT 1

                              AMENDED AND RESTATED
                             ARTICLES OF ASSOCIATION

                                       OF

                          VOCALTEC COMMUNICATIONS LTD.

                           A COMPANY LIMITED BY SHARES

                                   PRELIMINARY

1.   [RESERVED]

2.   INTERPRETATION

     (a)  In these Articles, the following terms shall bear the meanings set
          opposite to them, unless inconsistent with the subject or context.

          "Office Holder" shall mean every director and every other person
          included in such definition under the Companies Law, including the
          executive officers of the Company.

          "Company" - VocalTec Communications Ltd.

          "External Directors" shall mean directors appointed and serving in
          accordance with Sections 239 through 249 of the Companies Law.

          "Companies Law" shall mean the Israeli Companies Law, 5759-1999, as
          amended and as may be amended from time to time, and any regulations
          promulgated thereunder.

          "These Articles" - These Articles of Association as originally adopted
          or as amended from time to time by a Special Resolution.

          "Office" - The registered office of the Company.

          "Year" and "Month" - a Gregorian month or year.

     (b)  Unless the subject or the context otherwise requires: words and
          expressions importing the masculine gender shall include the feminine
          gender; and words and expressions importing persons shall include
          bodies corporate.

                                     - 1 -
<PAGE>


3.   PUBLIC COMPANY

     The Company is a Public Company, as such a term is defined in the Companies
     Law.

                                  SHARE CAPITAL

4.   SHARE CAPITAL

     (a)  The authorized share capital of the Company is one million five
          hundred thousand New Israeli Shekels (NIS 1,500,000) divided into one
          hundred and fifty million (150,000,000) Ordinary Shares, par value
          NIS0.13 per share.

     (b)  The Ordinary Shares all rank pari passu in all respects.

5.   INCREASE OF AUTHORIZED SHARE CAPITAL

     (a)  The Company may, from time to time, by an Ordinary Resolution (as
          defined in Article 28(a) below), whether or not all the shares then
          authorized have been issued and whether or not all the shares
          theretofore issued have been called up for payment, increase its
          authorized share capital by the creation of new shares. Any such
          increase shall be in such amount and shall be divided into shares of
          such nominal amounts, and such shares shall confer such rights and
          preferences, and shall be subject to such restrictions, as such
          Ordinary Resolution shall provide.

     (b)  Except to the extent otherwise provided in such Ordinary Resolution,
          any new shares included in the authorized share capital increased as
          aforesaid shall be subject to all the provisions of these Articles
          which are applicable to shares of the same class included in the
          existing share capital (and, if such new shares are of the same class
          as a class of shares included in the existing share capital, to all of
          the provisions which are applicable to shares of such class included
          in the existing share capital).

6.   SPECIAL RIGHTS; MODIFICATION OF RIGHTS

     (a)  Subject to the provisions of the Memorandum of Association of the
          Company, and without prejudice to any special rights previously
          conferred upon the holders of existing shares in the Company, the
          Company may, from time to time, by Ordinary Resolution, provide for
          shares with such preferred or deferred rights or rights of redemption
          or other special rights and/or such restrictions, whether in regard to
          dividends, voting, repayment of share capital or otherwise, as may be
          stipulated in such Ordinary Resolution provided that any resolution
          with respect to the issuance of shares will be made only by the Board
          of Directors.


                                     - 2 -
<PAGE>


     (b)  (i)  If at any time the share capital is divided into different
               classes of shares, the rights attached to any class, unless
               otherwise provided by these Articles, may be modified or
               abrogated by the Company, by a Special Resolution (as defined in
               Article 28(a) below), subject to the consent in writing of the
               holders of seventy-five percent (75%) of the issued shares of
               such class or the adoption of a Special Resolution passed at a
               separate General Meeting of the holders of the shares of such
               class.

          (ii) The provisions of these Articles relating to General Meetings
               shall, mutatis mutandis, apply to any separate General Meeting of
               the holders of the shares of a particular class, provided,
               however, that the requisite quorum at any such separate General
               Meeting shall be two or more members present in person or by
               proxy and holding not less than thirty three and a third per cent
               (33 1/3%) of the issued shares of such class.

          (iii) Unless otherwise provided by these Articles, the enlargement of
               an authorized class of shares, or the issuance of additional
               shares thereof out of the authorized and unissued share capital,
               shall not be deemed, for purposes of this Article 6(b), to modify
               or abrogate the rights attached to previously issued shares of
               such class or of any other class.

7.   CONSOLIDATION, SUBDIVISION, CANCELLATION AND REDUCTION OF SHARE CAPITAL

     (a)  The Company may, from time to time, by Ordinary Resolution (subject,
          however, to the provisions of Article 6(b) hereof and to applicable
          law):

          (i)  consolidate and divide all or part of its issued or un-issued
               authorized share capital into shares of a per share nominal value
               which is larger than the per share nominal value of its existing
               shares;

          (ii) subdivide its shares (issued or un-issued) or any of them, into
               shares of smaller nominal value that is fixed by the Memorandum
               of Association;

          (iii) cancel any shares which, at the date of the adoption of such
               Ordinary Resolution, have not been taken or agreed to be taken by
               any person, and diminish the amount of its share capital by the
               amount of the shares so canceled; or

          (iv) reduce its share capital in any manner, and with and subject to
               any incident authorized, and consent required, by law.


                                     - 3 -
<PAGE>


     (b)  With respect to any consolidation of issued shares into shares of a
          larger nominal value per share, and with respect to any other action
          which may result in fractional shares, the Board of Directors may
          settle any difficulty which may arise with regard thereto, as it deems
          fit, and, in connection with any such consolidation or other action
          which could result in fractional shares, may, without limiting its
          aforesaid power:

          (i)  determine, as to the holder of shares so consolidated, which
               issued shares shall be consolidated into a share of a larger
               nominal value per share.

          (ii) allot, in contemplation of or subsequent to such consolidation or
               other action, shares or fractional shares sufficient to preclude
               or remove fractional share holdings;

          (iii) redeem, in the case of redeemable preference shares, and subject
               to applicable law, such shares or fractional shares sufficient to
               preclude or remove fractional share holdings;

          (iv) cause the transfer of fractional shares by certain shareholders
               of the Company to other shareholders thereof so as to most
               expediently preclude or remove any fractional shareholdings, and
               cause the transferees of such fractional shares to pay the
               transferors thereof the fair value thereof, and the Board of
               Directors is hereby authorized to act in connection with such
               transfer, as agent for the transferors and transferees of any
               such fractional shares, with full power of substitution, for the
               purposes of implementing the provisions of this sub-Article
               7(b)(iv).


                                     SHARES


8.   ISSUANCE OF SHARE CERTIFICATES; REPLACEMENT OF LOST CERTIFICATES

     (a)  Share Certificates shall be issued under the corporate seal of the
          Company and shall bear the signature of one Director, or of any other
          person or persons authorized therefor by the Board of Directors.

     (b)  Each member shall be entitled to one or several numbered certificate
          for all the shares of any class registered in his name, each for one
          or more of such shares. Each certificate shall specify the serial
          numbers of the shares represented thereby and may also specify the
          amount paid up thereon.

     (c)  A share certificate registered in the names of two or more persons
          shall be delivered to the person first named in the Register of
          Members in respect of such co-ownership.


                                     - 4 -
<PAGE>


     (d)  A share certificate which has been defaced, lost or destroyed, may be
          replaced, and the Company shall issue a new certificate to replace
          such defaced, lost or destroyed certificate upon payment of such fee,
          and upon the furnishing of such evidence of ownership and such
          indemnity, as the Board of Directors in its discretion deems fit.

9.   REGISTERED HOLDER

     Except as otherwise provided in these Articles, the Company shall be
     entitled to treat the registered holder of each share as the absolute owner
     thereof, and accordingly, shall not, except as ordered by a court of
     competent jurisdiction, or as required by statute, be obligated to
     recognize any equitable or other claim to, or interest in, such share on
     the part of any other person.

10.  ALLOTMENT OF SHARES

     The un-issued shares from time to time shall be under the sole control of
     the Board of Directors, who shall have the power to allot, issue or
     otherwise dispose of shares to such persons, on such terms and conditions
     (including inter alia terms relating to calls as set forth in Article 12(f)
     hereof), and either at par or at a premium, or, subject to the provisions
     of the Companies Law, at a discount and/or with payment of commission, and
     at such times, as the Board of Directors deems fit, and the power to give
     to any person the option to acquire from the Company any shares, either at
     par or at a premium, or, subject as aforesaid, at a discount and/or with
     payment of commission, during such time and for such consideration as the
     Board of Directors deems fit.

11.  PAYMENT IN INSTALLMENTS

     If pursuant to the terms of allotment or issue of any share, all or any
     portion of the price thereof shall be payable in installments, every such
     installment shall be paid to the Company on the due date thereof by the
     then registered holder(s) of the share or the person(s) then entitled
     thereto.

12.  CALLS ON SHARES

     (a)  The Board of Directors may, from time to time, as it, in its
          discretion, deems fit, make calls for payment upon members in respect
          of any sum which has not been paid up in respect of shares held by
          such members and which is not pursuant to the terms of allotment or
          issue of such shares or otherwise, payable at a fixed time, and each
          member shall pay the amount of every call so made upon him (and of
          each installment thereof if the same is payable in installments), to
          the Company at the time(s) and place(s) designated by the Board of
          Directors, as any such time(s) may be thereafter extended or place(s)
          changed. Unless otherwise stipulated in the resolution of the Board of
          Directors (and in the notice hereafter referred to), each payment in
          response to a call shall be deemed to constitute a pro rate payment on
          account of all the shares in respect of which such call was made.


                                     - 5 -
<PAGE>


     (b)  Notice of any call for payment by a member shall be given in writing
          to such member not less than fourteen (14) days prior to the time of
          payment fixed in such notice, and shall specify the time and place of
          payment. Prior to the time for any such payment fixed in a notice of a
          call given to a member, the Board of Directors may in its absolute
          discretion, by notice in writing to such member, revoke such call in
          whole or in part, extend the time fixed for payment thereof, or
          designate a different place of payment. In the event of a call payable
          in installments, only one notice thereof need be given.

     (c)  If pursuant to the terms of allotment or issue of a share or
          otherwise, an amount is made payable at a fixed time (whether on
          account of such share or by way of premium), such amount shall be
          payable at such time as if it were payable by virtue of a call made by
          the Board of Directors and for which notice was given in accordance
          with paragraphs (a) and (b) of this Article 12, and the provisions of
          these Articles with regard to calls (and the non-payment thereof)
          shall be applicable to such amount (and the non-payment thereof).

     (d)  Joint holders of a share shall be jointly and severally liable to pay
          all calls for payment in respect of such share and all interest
          payable thereon.

     (e)  Any amount called for payment which is not paid when due shall bear
          interest from the date fixed for payment until actual payment thereof,
          at such rate (not exceeding the then prevailing debitory rate charged
          by leading commercial banks in Israel), and payable at such time(s) as
          the Board of Directors may prescribe.

     (f)  Upon the allotment of shares, the Board of Directors may provide for
          differences among the allottees of such shares as to the amounts and
          times for payment of calls in respect of such shares.

13.  PREPAYMENT

     With the approval of the Board of Directors, any member may pay to the
     Company any amount not yet payable in respect of his shares, and the Board
     of Directors may approve the payment by the Company of interest on any such
     amount until the same would be payable if it had not been paid in advance,
     at such rate and time(s) as may be approved by the Board of Directors. The
     Board of Directors may at any time cause the Company to repay all or any
     part of the money so advanced, without premium or penalty. Nothing in this
     Article 13 shall derogate from the right of the Board of Directors to make
     any call for payment before or after receipt by the Company of any such
     advance.


                                     - 6 -
<PAGE>


14.  FORFEITURE AND SURRENDER

     (a)  If any member fails to pay an amount payable by virtue of a call, or
          interest thereon as provided for in accordance herewith, on or before
          the day fixed for payment of the same, the Board of Directors may at
          any time after the day fixed for such payment, so long as such amount
          (or any portion thereof) or interest thereon (or any portion thereof)
          remains unpaid, resolve to forfeit all or any of the shares in respect
          of which such payment was called for. All expenses incurred by the
          Company in attempting to collect any such amount or interest thereon,
          including, without limitation, attorney's fees and costs of legal
          proceedings, shall be added to, and shall, for all purposes (including
          the accrual of interest thereon), constitute a part of, the amount
          payable to the Company in respect of such call.

     (b)  Upon the adoption of a resolution as to the forfeiture of a member's
          share, the Board of Directors shall cause notice thereof to be given
          to such member, which notice shall state that, in the event of the
          failure to pay the entire amount so payable by a date specified in the
          notice (which date shall be not less than fourteen (14) days after the
          date such notice is given and which may be extended by the Board of
          Directors), such shares shall be ipso facto forfeited, provided,
          however, that, prior to such date, the Board of Directors may nullify
          such resolution of forfeiture, but no such nullification shall stop
          the Board of Directors from adopting a further resolution of
          forfeiture in respect of the non-payment of the same amount.

     (c)  Without derogating from Articles 54 and 59 hereof, whenever shares are
          forfeited as herein provided, all dividends, if any, theretofore
          declared in respect thereof and not actually paid shall be deemed to
          have been forfeited at the same time.

     (d)  The Company, by resolution of the Board of Directors, may accept the
          voluntary surrender of any share not fully paid for.

     (e)  Any share forfeited or surrendered as provided herein, shall become
          the property of the Company, and the same, subject to the provisions
          of these Articles, may be sold, re-allotted or otherwise disposed of
          as the Board of Directors deems fit.

     (f)  Any member whose shares have been forfeited or surrendered shall cease
          to be a member in respect of the forfeited or surrendered shares, but
          shall, notwithstanding, be liable to pay, and shall forthwith pay, to
          the Company, all calls, interest and expenses owing upon or in respect
          of such shares at the time of forfeiture or surrender, together with
          interest thereon from the time of forfeiture or surrender until actual
          payment, at the rate prescribed in Article 12(e) above, and the Board
          of Directors, in its discretion, may, but shall not be obligated to,
          enforce the payment of such moneys, or any part thereof. In the event
          of such forfeiture or surrender, the Company, by resolution of the
          Board of Directors, may accelerate the date(s) of payment of any or
          all amounts then owing to the Company by the member in question (but
          not yet due) in respect of all shares owned by such member, solely or
          jointly with another.


                                     - 7 -
<PAGE>


     (g)  The Board of Directors may at any time, before any share so forfeited
          or surrendered shall have been sold, re-allotted or otherwise disposed
          of, nullify the forfeiture or surrender on such conditions as it deems
          fit, but no such nullification shall stop the Board of Directors from
          re-exercising its powers of forfeiture pursuant to this Article 14.

15.  LIEN

     (a)  Except to the extent the same may be waived or subordinated in
          writing, the Company shall have a first and paramount lien upon all
          the shares registered in the name of each member (without regard to
          any equitable or other claim or interest in such shares on the part of
          any other person), and upon the proceeds of the sale thereof, for his
          debts, liabilities and engagements to the Company arising from any
          amount payable by such member in respect of any unpaid or partly paid
          share, whether or not such debt, liability or engagement has matured.
          Such lien shall extend to all dividends from time to time declared or
          paid in respect of such share. Unless otherwise provided, the
          registration by the Company of a transfer of shares shall be deemed to
          be a waiver on the part of the Company of the lien (if any) existing
          on such shares immediately prior to such transfer.

     (b)  The Board of Directors may cause the Company to sell a share subject
          to such a lien when the debt, liability or engagement giving rise to
          such lien has matured, in such manner as the Board of Directors deems
          fit, but no such sale shall be made unless such debt, liability or
          engagement has not been satisfied within fourteen (14) days after
          written notice of the intention to sell shall have been served on such
          member, his executors or administrators.

     (c)  The net proceeds of any such sale, after payment of the costs thereof,
          shall be applied in or toward satisfaction of the debts, liabilities
          or engagements of such member in respect of such share (whether or not
          the same have matured), and the residue (if any) shall be paid to the
          member, his executors, administrators or assigns.

16.  SALE AFTER FORFEITURE OR SURRENDER OR IN ENFORCEMENT OF LIEN

     Upon any sale of a share after forfeiture or surrender or for enforcing a
     lien, the Board of Directors may appoint any person to execute an
     instrument of transfer of the share so sold and cause the purchaser's name
     to be entered in the Register of Members in respect of such share. The
     purchaser shall be registered as the shareholder and shall not be bound to
     see to the regularity of the sale proceedings, or to the application of the
     proceeds of such sale, and after his name has been entered in the Register
     of Members in respect of such share, the validity of the sale shall not be
     impeached by any person, and the remedy of any person aggrieved by the sale
     shall be in damages only and against the Company exclusively.


                                     - 8 -
<PAGE>


17.  REDEEMABLE SHARES

     The Company may, subject to applicable law, issue redeemable shares and
     redeem the same.

18.  [RESERVED]

                               TRANSFER OF SHARES

19.  REGISTRATION OF TRANSFER

     (a)  No transfer of shares shall be registered unless a proper writing or
          instrument of transfer (in any customary form or any other form
          satisfactory to the Board of Directors) has been submitted to the
          Company (or its transfer agent), together with the share
          certificate(s) and such other evidence of title as the Board of
          Directors may reasonably require. Until the transferee has been
          registered in the Register of Members in respect of the shares so
          transferred, the Company may continue to regard the transferor as the
          owner thereof. The Board of Directors, may, from time to time,
          prescribe a fee for the registration of a transfer.

     (b)  The Board of Directors may, in its discretion to the extent it deems
          necessary, close the Register of Members for registrations of
          transfers of shares during any year for a period determined by the
          Board of Directors, and no registrations of transfers of shares shall
          be made by the Company during any such period during which the
          Register of Members is so closed.

20.  RECORD DATE FOR NOTICES OF GENERAL MEETINGS AND OTHER ACTION

     (a)  Notwithstanding any provision of these Articles to the contrary, and
          to allow the Company to determine the members entitled to notice of,
          or to vote at, any Annual or Extraordinary General Meeting or any
          adjournment thereof, or to express consent to or dissent from any
          corporate action in writing without a meeting, or entitled to receive
          payment of any dividend or other distribution or allotment of any
          rights, or entitled to exercise any rights in respect of, or to take
          or be the subject to, any other action, the Board of Directors may
          fix, a record date, which shall not be more than forty (40), or any
          longer period permitted under the Companies Law, nor less than four
          (4) days before the date of such meeting or other action. A
          determination of members of record entitled to notice of or to vote at
          a meeting shall apply to any adjournment of the meeting: provided,
          however, that the Board of Directors may fix a new record date for the
          adjourned meeting.


                                     - 9 -
<PAGE>


     (b)  Any Shareholder or Shareholders of the Company holding, at least, one
          percent (1%) of the voting rights in the issued share capital of the
          Company may, pursuant to the Companies Law, request that the Board of
          Directors include a subject in the agenda of a General Meeting to be
          held in the future. Any such request must be in writing, must include
          all information related to subject matter and the reason that such
          subject is proposed to be brought before the General Meeting and must
          be signed by the shareholder or shareholders making such request. In
          addition subject to the Companies Law and the provisions of Article
          39, the Board of Directors may include such subject in the agenda of a
          General Meeting only if the request has been delivered to the
          Secretary of the Company not later than sixty (60) days and not more
          than one hundred and twenty (120) days prior to the General Meeting in
          which the subject is to be considered by the shareholders of the
          Company. Each such request shall also set forth: (a) the name and
          address of the shareholder making the request; (b) a representation
          that the shareholder is a holder of record of shares of the Company
          entitled to vote at such meeting and intends to appear in person or by
          proxy at the meeting; (c) a description of all arrangements or
          understandings between the shareholder and any other person or persons
          (naming such person or persons) in connection with the subject which
          is requested to be included in the agenda; and (d) a declaration that
          all the information that is required under the Companies Law and any
          other applicable law to provided to the Company in connection with
          such subject, if any, has been provided. Furthermore, the Board of
          Directors, may, in its discretion to the extent it deems necessary,
          request that the shareholders making the request provide additional
          information necessary so as to include a subject in the agenda of a
          General Meeting, as the Board of Directors may reasonably require.

                             TRANSMISSION OF SHARES

21.  DECEDENTS' SHARES

     (a)  In case of death of a registered holder of a share registered in the
          names of two or more holders, the Company may recognize the
          survivor(s) as the sole owner(s) thereof unless and until the
          provisions of Article 21(b) have been effectively invoked.


                                     - 10 -
<PAGE>


     (b)  Any person becoming entitled to a share in consequence of the death of
          any shareholder, upon producing evidence of the grant of probate or
          letters of administration or declaration of succession (or such other
          evidence as the Board of Directors may reasonably deem sufficient),
          shall be registered as a member in respect of such share, or may,
          subject to the regulations as to transfer herein contained, transfer
          such share.

22.  RECEIVERS AND LIQUIDATORS

     (a)  The Company may recognize any receiver, liquidator or similar official
          appointed to wind-up, dissolve or otherwise liquidate a corporate
          member, and a trustee, manager, receiver, liquidator or similar
          official appointed in bankruptcy or in connection with the
          reorganization of, or similar proceeding with respect to a member or
          its properties, as being entitled to the shares registered in the name
          of such member.

     (b)  Such receiver, liquidator or similar official appointed to wind-up,
          dissolve or otherwise liquidate a corporate member and such trustee,
          manager, receiver, liquidator or similar official appointed in
          bankruptcy or in connection with the reorganization of, or similar
          proceedings with respect to a member or its properties, upon producing
          such evidence as the Board of Directors may deem sufficient as to his
          authority to act in such capacity or under this Article, shall with
          the consent of the Board of Directors (which the Board of Directors
          may grant or refuse in its absolute discretion), be registered as a
          member in respect of such shares, or may, subject to the regulations
          as to transfer herein contained, transfer such shares.

                                GENERAL MEETINGS

23.  ANNUAL GENERAL MEETING

     (a)  An Annual General Meeting shall be held once in every calendar year at
          such time (within a period of not more than fifteen (15) months after
          the last preceding Annual General Meeting) and at such place, either
          within or without the State of Israel, as may be determined by the
          Board of Directors.

     (b)  Subject to the provisions of these Articles, the function of the
          Annual General Meeting shall be to elect the members of the Board of
          Directors; to receive the Financial Statements, the ordinary reports
          and accounts of the Company's directors and auditors; to appoint the
          Company's auditors and to fix their remuneration and to transact any
          other business which under these Articles or the Companies Law are to
          be transacted at a General Meeting.


                                     - 11 -
<PAGE>


24.  EXTRAORDINARY GENERAL MEETINGS

     All General Meetings other than Annual General Meetings shall be called
     "Extraordinary General Meetings". The Board of Directors may, whenever it
     thinks fit, convene an Extraordinary General Meeting, at such time and
     place, within or out of the State of Israel, as may be determined by the
     Board of Directors, and shall be obliged to do so upon a requisition in
     writing in accordance with Section 63 of the Companies Law.

25.  NOTICE OF GENERAL MEETINGS; OMISSION TO GIVE NOTICE

     (a)  Not less than twenty-one (21) days' prior notice shall be given of
          every General Meeting. Each such notice shall specify the place and
          the day and hour of the meeting and the general nature of each item to
          be acted upon thereat, said notice to be given to all members who
          would be entitled to attend and vote at such meeting. Anything therein
          to the contrary notwithstanding, with the consent of all members
          entitled to vote thereon, a resolution may be proposed and passed at
          such meeting although a lesser notice than hereinabove prescribed has
          been given.

     (b)  The accidental omission to give notice of a meeting to any member, or
          the non-receipt of notice sent to such member, shall not invalidate
          the proceedings at such meeting.

                         PROCEEDINGS AT GENERAL MEETINGS

26.  QUORUM

     (a)  No business shall be transacted at a General Meeting, or at any
          adjournment thereof, unless the quorum required under these Articles
          for such General Meeting or such adjourned meeting, as the case may
          be, is present when the meeting proceeds to business.

     (b)  In the absence of contrary provisions in these Articles, two or more
          members (not in default in payment of any sum referred to in Article
          32(a) hereof), present in person or by proxy and holding shares
          conferring in the aggregate more than thirty three and a third (33 1\3
          %) percent of the voting power of the Company, shall constitute a
          quorum of General Meetings.

     (c)  If within half an hour from the time appointed for the meeting a
          quorum is not present, the meeting, if convened upon requisition under
          Sections 64 or 65 of the Companies Law, shall be dissolved, but in any
          other case it shall be adjourned to the same day in the next week, at
          the same time and place, or to such day and at such time and place as
          the Chairman may determine. No business shall be transacted at any
          adjourned meeting except business which might lawfully have been
          transacted at the meeting as originally called. At such adjourned
          meeting (other than an adjourned separate meeting of a particular
          class of shares as referred to in Article 6 of these Articles), any
          two (2) members (not in default as aforesaid) present in person or by
          proxy, shall constitute a quorum.


                                     - 12 -
<PAGE>


     (d)  The Board of Directors may determine, in its discretion, the matters
          that may be voted upon at the meeting by proxy in addition to the
          matters listed in Section 87(a) to the Companies Law.

27.  CHAIRMAN

     The Chairman, if any, of the Board of Directors, shall preside as Chairman
     at every General Meeting of the Company. If at any meeting the Chairman is
     not present within fifteen (15) minutes after the time fixed for holding
     the meeting or is unwilling to act as Chairman, the Co-Chairman shall
     preside at the meeting. If at any such meeting both the Chairman and the
     Co-Chairman are not present or are unwilling to act as Chairman, the
     members present shall choose someone of their number to be Chairman. The
     office of Chairman shall not, by itself, entitle the holder thereof to vote
     at any General Meeting nor shall it entitle such holder to a second or
     casting vote (without derogating, however, from the rights of such Chairman
     to vote as a shareholder or proxy of a shareholder if, in fact, he is also
     a shareholder or such proxy).

28.  ADOPTION OF RESOLUTIONS AT GENERAL MEETINGS

     (a)  (i)  An Ordinary Resolution shall be deemed adopted if approved by the
               holders of a majority of the voting power represented at the
               meeting in person or by proxy and voting thereon.

          (ii) A Special Resolution shall be deemed adopted if approved by the
               holders of not less than seventy-five percent (75%) of the voting
               power represented at the meeting in person or by proxy and voting
               thereon.

     (b)  Every resolution of the General Meeting shall be an Ordinary
          Resolution, unless these Articles specifically require a Special
          Resolution. Every question submitted to a General Meeting shall be
          decided by a show of hands, but the Chairman of the Meeting may
          determine that a resolution shall be decided by a written ballot. A
          written ballot may be implemented before the proposed resolution is
          voted upon or immediately after the declaration by the Chairman of the
          results of the vote by a show of hands. If a vote by written ballot is
          taken after such declaration, the results of the vote by a show of
          hands shall be of no effect, and the proposed resolution shall be
          decided by such written ballot.

     (c)  A declaration by the Chairman of the meeting that a resolution has
          been carried unanimously, or carried by a particular majority, or
          lost, and an entry to that effect in the minute book of the Company,
          shall be conclusive evidence of the fact without proof of the number
          or proportion of the votes recorded in favor of or against such
          resolution.


                                     - 13 -
<PAGE>


29.  RESOLUTIONS IN WRITING

     A resolution in writing signed by all members of the Company then entitled
     to attend and vote at General Meetings or to which all such members have
     given their written consent (by letter, telegram, telex, facsimile or
     otherwise) shall be deemed to have been unanimously adopted by a General
     Meeting duly convened and held.

30.  POWER TO ADJOURN

     (a)  The Chairman of a General Meeting at which a quorum is present may,
          with the consent of the holders of a majority of the voting power
          represented in person or by proxy and voting on the question of
          adjournment (and shall if so directed by the meeting), adjourn the
          meeting from time to time and from place to place, but no business
          shall be transacted at any adjourned meeting except business which
          might lawfully have been transacted at the meeting as originally
          called.

     (b)  It shall not be necessary to give notice of an adjournment, whether
          pursuant to Article 26(c) or Article 30(a), unless the meeting is
          adjourned for twenty one (21) days or more in which event notice
          thereof shall be given in the manner required for the meeting as
          originally called.

31.  VOTING POWER

     Subject to the provisions of Article 32(a) and subject to any provision
     hereof conferring special rights as to voting, or restricting the right to
     vote, every member shall have one vote for each share held by him of
     record, on every resolution, without regard to whether the vote thereon is
     conducted by a show of hands, by written ballot or by any other means.

32.  VOTING RIGHTS

     (a)  No member shall be entitled to vote at any General Meeting (or be
          counted as a part of the quorum thereat), unless all calls and other
          sums then payable by him in respect of his shares in the Company have
          been paid, but this Article 32(a) shall not apply to separate General
          Meetings of the holders of a particular class of shares pursuant to
          Article 6(b).

     (b)  A company or other corporate body being a member of the Company may
          duly authorize any person to be its representative at any meeting of
          the Company or to execute or deliver a proxy on its behalf. Any person
          so authorized shall be entitled to exercise on behalf of such member
          all the power which the latter could have exercised if it were an
          individual shareholder. Upon the request of the Chairman of the
          meeting, written evidence of such authorization (in form acceptable to
          the Chairman) shall be delivered to him.


                                     - 14 -
<PAGE>


     (c)  Any member entitled to vote may vote either in person or by proxy (who
          need not be a member of the Company), or, if the member is a company
          or other corporate body, by a representative authorized pursuant to
          Article 32(b).

     (d)  If two or more persons are registered as joint holders of any share,
          the vote of the senior who tenders a vote, in person or by proxy,
          shall be accepted to the exclusion of the vote(s) of the other joint
          holder(s). For the purpose of this Article 32(d), seniority shall be
          determined by the order of registration of the joint holders in the
          Register of Members.

                                     PROXIES

33.  INSTRUMENT OF APPOINTMENTS

     (a)  An instrument appointing a proxy shall be in writing and shall be
          substantially in the following form:

               "I _______________________ of _______________________
                   (Name of Shareholder)    (Address of Shareholder)

               Being a member of VocalTec Ltd. hereby appoint

                  _______________________ of _______________________
                      (Name of Proxy)           (Address of Proxy)

               as my proxy to vote for me and on my behalf at the General
               Meeting of the Company to be held on the ___ day of _______, 20__
               and at any Adjournment(s) thereof.

               Signed this ____ day of ___________, 20__.

                                                       _________________________
                                                       (Signature of Appointor)"

     or in any usual or common form or in such other form as may be approved by
     the Board of Directors. Such proxy shall be duly signed by the appointor or
     such person's duly authorized attorney or, if such appointor is a company
     or other corporate body, under its common seal or stamp or the hand of its
     duly authorized agent(s) or attorney(s).


                                     - 15 -
<PAGE>


     (b)  The instrument appointing a proxy (and the power of attorney or other
          authority, if any, under which such instrument has been signed) shall
          either be presented to the Chairman at the meeting at which the person
          named in the instrument proposes to vote or be delivered to the
          Company (at its Registered Office, at its principal place of business,
          or at the offices of its registrar or transfer agent, or at such place
          as the Board of Directors may specify) not less than two (2) hours
          before the time fixed for such meeting, except that the instrument
          shall be delivered (i) twenty-four (24) hours before the time fixed
          for the meeting where the meeting is to be held in the United States
          and the instrument is delivered to the Company at its Registered
          Office or principal place of business, or (ii) forty-eight (48) hours
          before the time fixed for the meeting where the meeting is to be held
          outside of the United States of America and Israel and the instrument
          is delivered to the Company's registrar or transfer agent.
          Notwithstanding the above, the Chairman shall have the right to waive
          the time requirement provided above with respect to all instruments of
          proxies and to accept any and all instruments of proxy until the
          beginning of a General Meeting.

34.  EFFECT OF DEATH OF APPOINTOR OR TRANSFER OF SHARE OR REVOCATION OF
     APPOINTMENT

     (a)  A vote cast in accordance with an instrument appointing a proxy shall
          be valid notwithstanding the prior death or bankruptcy of the
          appointing member (or of his attorney-in-fact, if any, who signed such
          instrument), or the transfer of the share in respect of which the vote
          is cast, unless written notice of such matters shall have been
          received by the Company or by the Chairman of such meeting prior to
          such vote being cast.

     (b)  An instrument appointing a proxy shall be deemed revoked (i) upon
          receipt by the Company or the Chairman, subsequent to receipt by the
          Company of such instrument, of written notice signed by the person
          signing such instrument or by the member appointing such proxy
          canceling the appointment thereunder (or the authority pursuant to
          which such instrument was signed) or of an instrument appointing a
          different proxy (and such other documents, if any, required under
          Article 33(b) for such new appointment), provided such notice of
          cancellation or instrument appointing a different proxy were so
          received at the place and within the time for delivery of the
          instrument revoked thereby as referred to in Article 33(b) hereof, or
          (ii) if the appointing member is present in person at the meeting for
          which such instrument of proxy was delivered, upon receipt by the
          Chairman of such meeting of written notice from such member of the
          revocation of such appointment, or if and when such member votes at
          such meeting. A vote cast in accordance with an instrument appointing
          a proxy shall be valid notwithstanding the revocation or purported
          cancellation of the appointment, or the presence in person or vote of
          the appointing member at a meeting for which it was rendered, unless
          such instrument of appointment was deemed revoked in accordance with
          the foregoing provisions of this Article 34(b) at or prior to the time
          such vote was cast.


                                     - 16 -
<PAGE>


                               BOARD OF DIRECTORS

35.  POWERS OF BOARD OF DIRECTORS

     (a)  GENERAL

          The management of the business of the Company shall be vested in the
          Board of Directors, which may exercise all such powers and do all such
          acts and things as the Company is authorized to exercise and do, and
          are not hereby or by law required to be exercised or done by the
          Company by action of its members at a General Meeting. The authority
          conferred on the Board of Directors by this Article 35 shall be
          subject to the provisions of the Companies Law, these Articles and any
          regulation or resolution consistent with these Articles adopted from
          time to time by the Company by action of its members at a General
          Meeting, provided, however, that no such regulation or resolution
          shall invalidate any prior act done by or pursuant to a decision of
          the Board of Directors which would have been valid if such regulation
          or resolution had not been adopted.

     (b)  BORROWING POWER

          The Board of Directors may from time to time, at its discretion, cause
          the Company to borrow or secure the payment of any sum or sums of
          money for the purposes of the Company, and may secure or provide for
          the repayment of such sum or sums in such manner, at such times and
          upon such terms and conditions as it deems fit, and, in particular, by
          the issuance of bonds, perpetual or redeemable debentures, debenture
          stock, or any mortgages, charges, or other securities on the
          undertaking or the whole or any part of the property of the Company,
          both present and future, including its uncalled or called but unpaid
          capital for the time being.

     (c)  RESERVES

          The Board of Directors may, from time to time, set aside any amount(s)
          out of the profits of the Company as a reserve or reserves for any
          purpose(s) which the Board of Directors, in its absolute discretion,
          shall deem fit, including without limitation, capitalization and
          distribution of bonus shares, and may invest any sum so set aside in
          any manner and from time to time deal with and vary such investments
          and dispose of all or any part thereof, and employ any such reserve or
          any part thereof in the business of the Company without being bound to
          keep the same separate from other assets of the Company, and may
          subdivide or redesignate any reserve or cancel the same or apply the
          funds therein for another purpose, all as the Board of Directors may
          from time to time think fit.


                                     - 17 -
<PAGE>


36.  EXERCISE OF POWERS OF BOARD OF DIRECTORS

     (a)  A meeting of the Board of Directors at which a quorum is present shall
          be competent to exercise all the authorities, powers and discretion
          vested in or exercisable by the Board of Directors, whether in person
          or by any other means by which the Directors may hear each other
          simultaneously.

     (b)  A resolution proposed at any meeting of the Board of Directors shall
          be deemed adopted if approved by a majority of the Directors present
          when such resolution is put to a vote and voting thereon.

     (c)  The Board of Directors may adopt resolutions without holding a meeting
          of the Board of Directors, provided that all of the Directors then in
          office and lawfully entitled to vote thereon shall have agreed to vote
          on the matters underlying such resolutions without convening a meeting
          of the Board of Directors. If the Board of Directors adopts
          resolutions as set forth in the immediately preceding sentence,
          minutes including such resolutions, including a resolution to vote on
          such matters without convening a meeting of the Board of Directors,
          shall be prepared and the Chairman of the Board of Directors will sign
          such minutes.

37.  DELEGATION OF POWERS

     (a)  The Board of Directors may, subject to the provisions of the Companies
          Law, delegate any or all of its powers to committees, each consisting
          of one or more persons (who are Directors), and it may from time to
          time revoke such delegation or alter the composition of any such
          committee. Any Committee so formed (in these Articles referred to as a
          "Committee of the Board of Directors"), shall, in the exercise of the
          powers so delegated, conform to any regulations imposed on it by the
          Board of Directors. The meetings and proceedings of any such Committee
          of the Board of Directors shall, mutatis mutandis, be governed by the
          provisions herein contained for regulating the meetings of the Board
          of Directors, so far as not superseded by any regulations adopted by
          the Board of Directors under this Article. Unless otherwise expressly
          provided by the Board of Directors in delegating powers to a Committee
          of the Board of Directors, such Committee shall not be empowered to
          further delegate such powers.

     (b)  Without derogating from the provisions of Article 50, the Board of
          Directors may from time to time appoint a Secretary to the Company, as
          well as officers, agents, employees and independent contractors, as
          the Board of Directors deems fit, and may terminate the service of any
          such person. The Board of Directors may, subject to the provisions of
          the Companies Law, determine the powers and duties, as well as the
          salaries and emoluments, of all such persons, and may require security
          in such cases and in such amounts as it deems fit.


                                     - 18 -
<PAGE>


     (c)  The Board of Directors may from time to time, by power of attorney or
          otherwise, appoint any person, company, firm or body of persons to be
          the attorney or attorneys of the Company at law or in fact for such
          purpose(s) and with such powers, authorities and discretions, and for
          such period and subject to such conditions, as it deems fit, and any
          such power of attorney or other appointment may contain such
          provisions for the protection and convenience of persons dealing with
          any such attorney as the Board of Directors deems fit, and may also
          authorize any such attorney to delegate all or any of the powers,
          authorities and discretion vested in him.

38.  NUMBER OF DIRECTORS

     The Board of Directors of the Company shall consist of not less than two
     (2) nor more than fourteen (14) Directors.


                                     - 19 -
<PAGE>


39.  ELECTION AND REMOVAL OF DIRECTORS

     (a)  The Directors, except for External Directors, shall be classified,
          with respect to the time for which they severally hold office, into
          three classes, as nearly equal in number as possible, as determined by
          the Board of Directors, one class to hold office initially for a term
          expiring at the annual meeting of shareholders to be held in 2001,
          another class to hold office initially for a term expiring at the
          annual meeting of shareholders to be held in 2002, and another class
          to hold office initially for a term expiring at the annual meeting of
          shareholders to be held in 2003, with the members of each class to
          hold office until their successors are elected and qualified. At each
          annual meeting of the shareholders, the successors of the class of
          Directors whose term expires at that meeting shall be elected to hold
          office for a term expiring at the annual meeting of shareholders held
          in the third year following the year of their election. If the number
          of Directors constituting the Board is changed, any increase or
          decrease shall be apportioned among the classes so as to maintain the
          number of directors in each class as nearly as possible, and any
          additional directors of any class shall hold office for a term which
          shall coincide with the remaining term of such class, but in no case a
          decrease in the number of directors constituting the Board shall
          shorten the term of any incumbent director. Notwithstanding anything
          in these Articles to the contrary, the provisions of this Article
          39(a) may not be amended without approval of the greater of (i)
          holders of not less than seventy-five percent (75%) of the voting
          power represented at a meeting in person or by proxy and voting
          thereon, or (ii) holders of a majority of the outstanding voting power
          of all shares of the Company voting on such matter at a General
          Meeting.

     (b)  Directors shall be elected at the Annual General Meeting or an
          Extraordinary Meeting of the Company by the vote of the holders of a
          majority of the voting power represented at such meeting in person or
          by proxy and voting on the election of directors.


                                     - 20 -
<PAGE>


     (c)  Nominations for the election of Directors may be made by the Board of
          Directors or a committee appointed by the Board of Directors or by any
          shareholder holding at least 1% of the outstanding voting power in the
          Company. However, and without limitation of Section 63 of the
          Companies Law, any such shareholder may nominate one or more persons
          for election as Directors at a General Meeting only if a written
          notice of such shareholder's intent to make such nomination or
          nominations has been given to the Secretary of the Company not later
          than (i) with respect to an election to be held at an Annual General
          Meeting of shareholders, ninety (90) days prior to the anniversary
          date of the immediately preceding annual meeting, and (ii) with
          respect to an election to be held at a Extraordinary General Meeting
          of shareholders for the election of Directors, at least ninety (90)
          days prior to the date of such meeting. Each such notice shall set
          forth: (a) the name and address of the shareholder who intends to make
          the nomination and of the person or persons to be nominated; (b) a
          representation that the shareholder is a holder of record of shares of
          the Company entitled to vote at such meeting and intends to appear in
          person or by proxy at the meeting to nominate the person or persons
          specified in the notice; (c) a description of all arrangements or
          understandings between the shareholder and each nominee and any other
          person or persons (naming such person or persons) pursuant to which
          the nomination or nominations are to be made by the shareholder; and
          (d) the consent of each nominee to serve as a Director of the Company
          if so elected and a declaration signed by each of the nominees
          declaring that there is no limitation under the Companies Law for the
          appointment of such a nominee and that all the information that is
          required under the Companies Law to provided to the Company in
          connection with such an appointment has been provided. The Chairman of
          the meeting may refuse to acknowledge the nomination of any person not
          made in compliance with the foregoing procedure.

               (Four) The General Meeting may, by a Special Resolution, remove
          any Director(s) from office, and elect Directors instead of Directors
          so removed or fill any Vacancy (as defined in Article 41), however
          created, in the Board of Directors unless such Vacancy was filled by
          the Board of Directors under Article 41.

               (Five) Notwithstanding the provisions of this Article 39,
          External Directors shall be elected and hold office in accordance with
          the provisions of the Companies Law.

40.  QUALIFICATION OF DIRECTORS

     No person shall be disqualified to serve as a Director by reason of his not
     holding shares in the Company or by reason of his having served as a
     Director in the past.

41.  CONTINUING DIRECTORS IN THE EVENT OF VACANCIES

     In the event that , one or more vacancies is created in the Board of
     Directors, including without limitation a situation in which the number of
     Directors is less than the maximum number permitted under Article 38 (a
     "Vacancy"), the continuing Directors may continue to act in every matter,
     and, may appoint Directors to temporarily fill any such Vacancy, provided,
     however, that if the number of Directors is less than four (4), they may
     only act in (i) an emergency; or (ii) to fill the office of director which
     has become vacant; or (iii) in order to call a General Meeting of the
     Company for the purpose of electing Directors to fill any or all Vacancies,
     so that at least four (4) Directors are in office as a result of said
     meeting. Notwithstanding the foregoing, in the event of Vacancy of an
     External Director, the Company shall elect a new External Director or take
     such other action as required under the Companies Law.


                                     - 21 -
<PAGE>


42.  VACATION OF OFFICE

     (a)  The office of a Director shall be vacated, ipso facto, upon his or her
          death, or if he or she be found lunatic or become of unsound mind, or
          if he or she becomes bankrupt, or if the Director is a company, upon
          its winding-up, or if he is found by a court guilty of any of the
          felonies listed in Section 226 of the Companies Law.

     (b)  The office of a Director shall be vacated by his written resignation.
          Such resignation shall become effective on the date fixed therein, or
          upon the delivery thereof to the Company, whichever is later. Such
          written resignation shall include the reasons that lead the Director
          to resign from his office.

43.  REMUNERATION OF DIRECTORS

     A Director shall be paid remuneration by the Company for his services as
     Director to the extent such remuneration shall have been approved by the
     Company in accordance with the Companies Law.


                                     - 22 -
<PAGE>


44.  CONFLICT OF INTEREST

     Subject to the provisions of the Companies Law, no Director shall be
     disqualified by virtue of his office from holding any office or place of
     profit in the Company or in any company in which the Company shall be a
     shareholder or otherwise interested, or from contracting with the Company
     as vendor, purchaser or otherwise, nor shall any such contract, or any
     contract or arrangement entered into by or on behalf of the Company in
     which any Director shall be in any way interested, be avoided, nor, other
     than as required under The Companies Law, shall any Director be liable to
     account to the Company for any profit arising from any such office or place
     of profit or realized by any such contract or arrangement by reason only of
     such Director's holding that office or of the fiduciary relations thereby
     established, but the nature of his interest, as well as any material fact
     or document, must be disclosed by him at the meeting of the Board of
     Directors at which the contract or arrangement is first considered, if his
     interest then exists, or, in any other case, at no later than the first
     meeting of the Board of Directors after the acquisition of his interest.

45.  ALTERNATE DIRECTORS

     (a)  A Director may, by written notice to the Company given in the manner
          set forth in Article 45(b) below, appoint any individual who is
          qualified to serve as a director (provided that such individual is not
          a member of the Board of Directors and is not an Alternate Director)
          as an alternate for himself (in these Articles referred to as
          "Alternate Director"), remove such Alternate Director and appoint
          another Alternate Director in place of any Alternate Director
          appointed by him whose office has been vacated for any reason
          whatsoever. Notwithstanding the foregoing, a Director that is a member
          of a Committee of the Board of Directors may appoint as his Alternate
          Director on such Committee of the Board of Directors a member of the
          Board of Directors, but provided that such Director is not already a
          member of such Committee of the Board of Directors and further
          provided that if such person is appointed as an Alternate Director for
          an External Director, such Alternate Director shall have the same
          accounting and financial expertise or other professional expertise as
          possessed by the appointing Director (as such accounting, financial
          and professional expertise may be promulgated and amended from time to
          time). An External Director may not appoint an Alternate Director for
          himself except as set forth in the immediately preceding sentence. The
          appointment of an Alternate Director shall be subject to the consent
          of the Board of Directors. Unless the appointing Director, by the
          instrument appointing an Alternate Director or by written notice to
          the Company, limits such appointment to a specified period of time or
          restricts it to a specified meeting or action of the Board of
          Directors, or otherwise restricts its scope, the appointment shall be
          for all purposes, and for a period of time concurrent with the term of
          the appointing Director.


                                     - 23 -
<PAGE>


     (b)  Any notice to the Company pursuant to Article 45(a) shall be given in
          person to, or by sending the same by mail to the attention of the
          General Manager of the Company at the principal office of the Company
          or to such other person or place as the Board of Directors shall have
          determined for such purpose, and shall become effective on the date
          fixed therein, or upon the receipt thereof by the Company (at the
          place as aforesaid), whichever is later, subject to the consent of the
          Board of Directors if the appointee is not then a member of the Board
          of Directors, in which case the notice will be effective as of the
          date of such consent.

     (c)  An Alternate Director shall have all the rights and obligations of the
          Director who appointed him, provided however, that (i) he may not in
          turn appoint an alternate for himself (unless the instrument
          appointing him otherwise expressly provides), and (ii) that an
          Alternate Director shall have no standing at any meeting of the Board
          of Directors or any committee thereof while the Director who appointed
          him is present, and (iii) that the Alternate Director is not entitled
          to remuneration.

     (d)  An Alternate Director shall be responsible for his or her own acts and
          defaults.

     (f)  The office of an Alternate Director shall be vacated under the
          circumstances, mutatis mutandis, set forth in Article 42 and Article
          45(a), and such office shall ipso facto be vacated if the Director who
          appointed such Alternate Director ceased to be a Director.

                      PROCEEDINGS OF THE BOARD OF DIRECTORS

46.  MEETINGS

     (a)  The Board of Directors may meet and adjourn its meetings and otherwise
          regulate such meetings and proceedings as the Directors think fit.

     (b)  Any Director may at any time, and the Secretary, upon the request of
          such Director, shall, convene a meetings of the Board of Directors,
          but not less than two (2) days' notice shall be given of any meetings
          so convened. Notice of any such meeting shall be given to all the
          Directors and may be given orally, by telephone, in writing or by
          mail, telex, cablegram or facsimile. Notwithstanding anything to the
          contrary herein, failure to deliver notice to a director of any such
          meeting in the manner required hereby may be waived by such Director,
          and a meeting shall be deemed to have been duly convened
          notwithstanding such defective notice if such failure or defect is
          waived prior to action being taken at such meeting, by all Directors
          entitled to participate at such meeting to whom notice was not duly
          given as aforesaid.


                                     - 24 -
<PAGE>


47.  QUORUM

     Until otherwise unanimously decided by the Board of Directors, a quorum at
     a meeting of the Board of Directors shall be constituted by the presence in
     person or by telephone conference of half (50%) of the Directors then in
     office who are lawfully entitled to participate in the meeting. No business
     shall be transacted at a meeting of the Board of Directors unless the
     requisite quorum is present (in person or by telephone conference) when the
     meeting proceeds to business.

48.  CHAIRMAN OF THE BOARD OF DIRECTORS

     The Board of Directors may from time to time, elect one of its members to
     be the Chairman of the Board of Directors, and another of its members as
     Co-Chairman, remove such Chairman and Co-Chairman from office and appoint
     others in their place. The Chairman of the Board of Directors shall preside
     at every meeting of the Board of Directors, but if there is no such
     Chairman, or if at any meeting he is not present within fifteen (15)
     minutes of the time fixed for the meeting or if he is unwilling to take the
     chair, the Co-Chairman shall preside. If both the Chairman and the
     Co-Chairman are not present within such fifteen (15) minutes or are
     unwilling to take the chair the Directors present shall choose one of their
     number to be the Chairman of such meeting

49.  VALIDITY OF ACTS DESPITE DEFECTS

     All acts done bona fide at any meeting of the Board of Directors, or of a
     Committee of the Board of Directors, or by any person(s) acting as
     Director(s), shall, notwithstanding that it may afterwards be discovered
     that there was some defect in the appointment of the participants in such
     meetings or any of them or any person(s) acting as aforesaid, or that they
     or any of them were disqualified, be as valid as if there were no such
     defect or disqualification.

                      CHIEF EXECUTIVE OFFICER AND PRESIDENT

50.  CHIEF EXECUTIVE OFFICER AND PRESIDENT

     The Board of Directors may from time to time appoint one or more persons,
     whether or not Directors, as Chief Executive Officer or Officers, General
     Manager or Managers, or President of the Company and may confer upon such
     person(s), and from time to time modify or revoke, such title(s) and such
     duties and authorities of the Board of Directors as the Board of Directors
     may deem fit, subject to such limitations and restrictions as the Board of
     Directors may from time to time prescribe. Unless otherwise determined by
     the Board of Directors, the Chief Executive Officer shall have authority
     with respect of the management of the Company in the ordinary course of
     business. Such appointment(s) may be either for a fixed term or without any
     limitation of time, and the Board of Directors may from time to time
     (subject to the provisions of the Companies Law and of any contract between
     any such person and the Company) fix his or their salaries and emoluments,
     remove or dismiss him or them from office and appoint another or others in
     his or their place or places.


                                     - 25 -
<PAGE>


                                     MINUTES

51.  MINUTES

     (a)  Minutes of each General Meeting and of each meeting of the Board of
          Directors shall be recorded and duly entered in books provided for
          that purpose, and shall be held by the Company at its principal place
          of office or its Registered Office or such other place as shall have
          been determined by the Board of Directors. Such minutes shall, in all
          events, set forth the names of the persons present at the meeting and
          all resolutions adopted thereat.

     (b)  Any minutes as aforesaid, if purporting to be signed by the chairman
          of the meeting or by the chairman of the next succeeding meeting,
          shall constitute prima facie evidence of the matters recorded therein.

                                   DIVIDENDS

52.  DECLARATION OF DIVIDENDS

     The Board of Directors may, subject to the applicable provisions of the
     Companies Law, from time to time declare, and cause the Company to pay,
     such dividend as may appear to the Board of Directors to be justified by
     the profits of the Company. The Board of Directors shall determine the time
     for payment of such dividends, both interim and final, and the record date
     for determining the shareholders entitled thereto.

53.  FUNDS AVAILABLE FOR PAYMENT OF DIVIDEND

     No dividend shall be paid otherwise than out of the profits of the Company.

54.  AMOUNT PAYABLE BY WAY OF DIVIDENDS

     Subject to the provisions of these Articles and subject to any rights or
     conditions attached at that time to any share in the capital of the Company
     granting preferential, special or deferred rights or not granting any
     rights with respect to dividends, the profits of the Company which shall be
     declared as dividends shall be distributed according to the proportion of
     the nominal value paid up on account of the shares held at the date so
     appointed by the Company, without regard to the premium paid in excess of
     the nominal value, if any. No amount paid or credited as paid on a share in
     advance of calls shall be treated for purposes of this Article as paid on a
     share.


                                     - 26 -
<PAGE>


55.  INTEREST

     No dividend shall carry interest as against the Company.

56.  PAYMENT IN SPECIE

     Upon the determination of the Board of Directors, the Company (i) may cause
     any monies, investments, or other assets forming part of the undivided
     profits of the Company, standing to the credit of a reserve fund, or to the
     credit of a reserve fund for the redemption of capital, or in the hands of
     the Company and available for dividends, or representing premiums received
     on the issuance of shares and standing to the credit of the share premium
     account, to be capitalized and distributed among such of the shareholders
     as would be entitled to receive the same if distributed by way of dividend
     and in the same proportion, on the footing that they become entitled
     thereto as capital, or may cause any part of such capitalized fund to be
     applied on behalf of such shareholders in paying up in full, either at par
     or at such premium as the resolution may provide, any unissued shares or
     debentures or debenture stock of the Company which shall be distributed
     accordingly or in payment, in full or in part, of the uncalled liability on
     all issued shares or debentures or debenture stock if such liability
     exists, on a pro rata basis; and (ii) may cause such distribution or
     payment to be accepted by such shareholders in full satisfaction of their
     interest in the said capitalized sum.

57.  IMPLEMENTATION OF POWERS UNDER ARTICLE 56

     For the purpose of giving full effect to any resolution under Article 56,
     and without derogating from the provisions of Article 7(b) hereof, the
     Board of Directors may settle any difficulty which may arise in regard to
     the distribution as it thinks expedient, and, in particular, may issue
     fractional certificates, and may fix the value for distribution of any
     specific assets, and may determine that cash payments shall be made to any
     members upon the footing of the value so fixed, or that fractions of less
     value than the nominal value of one share may be disregarded in order to
     adjust the rights of all parties, and may vest any such cash, shares,
     debentures, debenture stock or specific assets in trustees upon such trusts
     for the persons entitled to the dividend or capitalized fund as may seem
     expedient to the Board of Directors.

58.  DIVIDEND ON UNPAID SHARES

     Without derogating from Article 54 hereof, the Board of Directors may give
     an instruction which shall prevent the distribution of a dividend to the
     registered holders of share the full nominal amount of which has not been
     paid up.


                                     - 27 -
<PAGE>


59.  RETENTION OF DIVIDENDS

     (a)  The Board of Directors may retain any dividend or other monies payable
          or property distributable in respect of a share on which the Company
          has a lien, and may apply the same in or towards satisfaction of the
          debts, liabilities, or engagements in respect of which the lien
          exists.

     (b)  The Board of Directors may retain any dividend or other monies payable
          or property distributable in respect of a share in respect of which
          any person is, under Article 21 or 22, entitled to become a member, or
          which any person, is, under said Articles, entitled to transfer, until
          such person shall become a member in respect of such share or shall
          transfer the same.

60.  UNCLAIMED DIVIDENDS

     All unclaimed dividends or other moneys payable in respect of a share may
     be invested or otherwise made use of by the Board of Directors for the
     benefit of the Company until claimed. The payment by the Directors of any
     unclaimed dividend or such other moneys into a separate account shall not
     constitute the Company a trustee in respect thereof . The principal (and
     only the principal) of an unclaimed dividend or such other moneys shall be
     if claimed, paid to a person entitled thereto.

61.  MECHANICS OF PAYMENT

     The Board of Directors may fix the mechanics for payment of dividends as it
     deems fit. However, if nothing to the contrary in the resolution of the
     Board of Directors, than all dividends or other moneys payable in cash in
     respect of a share may be paid by check or warrant sent through the post
     to, or left at, the registered address of the person entitled thereto or by
     transfer to a bank account specified by such person (or, if two or more
     persons are registered as joint holders of such share or are entitled
     jointly thereto in consequence of the death or bankruptcy of the holder or
     otherwise, to the joint holder whose name is registered first in the
     Register of Members or his bank account or the person who the Company may
     then recognize as the owner thereof or entitled thereto under Article 21 or
     22 hereof, as applicable, or such person's bank account), or to such person
     and at such other address as the person entitled thereto may by writing
     direct. Every such check or warrant shall be made payable to the order of
     the person to whom it is sent, or to such person as the person entitled
     thereto as aforesaid may direct, and payment of the check or warrant by the
     banker upon whom it is drawn shall be a good discharge to the Company.


                                     - 28 -
<PAGE>


62.  RECEIPT FROM A JOINT HOLDER

     If two or more persons are registered as joint holders of any share, or are
     entitled jointly thereto in consequence of the death or bankruptcy of the
     holder or otherwise, any one of them may give effectual receipts for any
     dividend or other moneys payable or property distributable in respect of
     such share.

                                    ACCOUNTS

63.  BOOKS OF ACCOUNT

     The Board of Directors shall cause accurate books of account to be kept in
     accordance with the provisions of the Companies Law and of any other
     applicable law. Such books of account shall be kept at the Registered
     Office of the Company, or at such other place or places as the Board of
     Directors may think fit, and they shall always be open to inspection by all
     Directors. No member, not being a Director, shall have any right to inspect
     any account or book or other similar document of the Company, except as
     conferred by law or authorized by the Board of Directors or by Ordinary
     Resolution of the Company.

64.  AUDIT

     At least once in every fiscal year the accounts of the Company shall be
     audited and the correctness of the profit and loss account and balance
     sheet certified by one or more duly qualified auditors.

65.  AUDITORS

     The appointment, authorities, rights and duties of the auditor(s) of the
     Company, shall be regulated by applicable law, provided, however, that in
     exercising its authority to fix the remuneration of the auditor(s), the
     members in General Meeting may, by Ordinary Resolution, act (and in the
     absence of any action in connection therewith shall be deemed to have so
     acted) to authorize the Board of Directors to fix such remuneration subject
     to such criteria or standards, , if any, as may be provided in such
     Ordinary Resolution, and if no such criteria or standards are so provided,
     such remuneration shall be fixed in an amount commensurate with the volume
     and nature of the services rendered by such auditor(s).

                                BRANCH REGISTERS

66.  BRANCH REGISTERS

     Subject to and in accordance with the provisions of Sections 71 to 80,
     inclusive, of the Companies Law and to all orders and regulation issued
     thereunder, the Company may cause branch registers to be kept in any place
     outside Israel as the Board of Directors may think fit, and, subject to all
     applicable requirements of law, the Board of Directors may from time to
     time adopt such rules and procedures as it may think fit in connection with
     the keeping of such branch registers.


                                     - 29 -
<PAGE>


                       INSURANCE, INDEMNITY AND EXEMPTION

Subject to the provisions of the Companies Law with regard to such matters and
to the maximum extent permitted under the Companies Law:

67.  INSURANCE

     The Company may enter into a contract for the insurance of the liability,
     in whole or in part, of any of its Office Holders with respect to an
     obligation imposed on such Office Holder due to an act performed by the
     Office Holder in the Office Holder's capacity as an Office Holder of the
     Company arising from any of the following:

          1.   a breach of duty of care to the Company or to any other person;

          2.   a breach of the duty of loyalty to the Company, provided that the
               Office Holder acted in good faith and had reasonable grounds to
               assume that the act that resulted in such breach would not harm
               the interests of the Company; and

          3.   a financial liability imposed on such Office Holder in favor of
               any other person.

68.  INDEMNITY

     (a)  Subject to the provisions of the Companies Law including the receipt
          of all approvals as required therein or under any applicable law, the
          Company may resolve retroactively to indemnify an Office Holder of the
          Company with respect to the following liabilities and expenses,
          provided that such liabilities or expenses were incurred by such
          Office Holder in such Office Holder's capacity as an Office Holder of
          the Company:

          (i)  a financial liability imposed on an Office Holder in favor of
               another person by any judgment, including a judgment given as a
               result of a settlement or an arbitrator's award which has been
               confirmed by a court in respect of an act performed by the Office
               Holder.

          (ii) reasonable litigation expenses, including attorneys' fees,
               expended by the Office Holder as a result of an investigation or
               proceeding instituted against him or her by an authority
               authorized to conduct such investigation or proceeding, provided
               that (i) no indictment (as defined in the Companies Law) was
               filed against such office holder as a result of such
               investigation or proceeding; and (ii) no financial liability as a
               substitute for the criminal proceeding (as defined in the
               Companies Law) was imposed upon him or her as a result of such
               investigation or proceeding or if such financial liability was
               imposed, it was imposed with respect to an offence that does not
               require proof of criminal intent.


                                     - 30 -
<PAGE>


          (iii) reasonable litigation costs, including attorney's fees, expended
               by an Office Holder or which were imposed on an Office Holder by
               a court in proceedings filed against the Office Holder by the
               Company or in its name or by any other person or in a criminal
               charge in respect of which the Office Holder was acquitted or in
               a criminal charge in respect of which the Office Holder was
               convicted for an offence which did not require proof of criminal
               intent.

     (b)  Subject to the provisions of the Companies Law including the receipt
          of all approvals as required therein or under any applicable law, the
          Company may undertake in advance to indemnify an Office Holder of the
          Company with respect to those liabilities and expenses described in
          the following Articles:

          (i)  Sub-Article 68(a)(ii) and 68(a)(iii); and

          (ii) Sub-Article 68(a)(i), provided that the undertaking to indemnify:

               (1)  is limited to such events which the Directors shall deem to
                    be likely to occur in light of the operations of the Company
                    at the time that the undertaking to indemnify is made and
                    for such amounts or criteria which the Directors may, at the
                    time of the giving of such undertaking to indemnify, deem to
                    be reasonable under the circumstances; and

               (2)  the undertaking to provide such indemnification shall set
                    forth such events which the Directors shall deem to be
                    likely to occur in light of the operations of the Company at
                    the time that the undertaking to indemnify is made, and the
                    amounts and/or criteria which the Directors may, at the time
                    of the giving of such undertaking to indemnify, deem to be
                    reasonable under the circumstances.


                                     - 31 -
<PAGE>


69.  EXEMPTION

     Subject to the provisions of the Companies Law including the receipt of all
     approvals as required therein or under any applicable law, the Company may
     release, in advance, any Office Holder from any liability for damages
     arising out of a breach of a duty of care towards the Company, other than
     breach of such duty of care towards the Company in a distribution (as such
     term is defined in the Companies Law).

70.

     (a)  Any amendment to the Companies Law adversely affecting the right of
          any Office Holder to be indemnified or insured pursuant to Articles 67
          and 68 shall be prospective in effect, and shall not affect the
          Company's obligation or ability to indemnify or insure an Office
          Holder for any act or omission occurring prior to such amendment.

     (b)  The provisions of Articles 67-69 are not intended, and shall not be
          interpreted so as to restrict the Company, in any manner, in respect
          of the procurement of insurance and/or in respect of indemnification
          and/or exculpation, in favor of any person who is not an Office
          Holder, including, without limitation, any employee, agent, consultant
          or contractor of the Company who is not an Office Holder; and/or any
          Office Holder to the extent that such insurance and/or indemnification
          is not specifically prohibited under law, provided that the
          procurement of any such insurance or the provision of any such
          indemnification shall be approved by the Board of Directors. Any
          modification of Articles 67-69 shall be prospective in effect and
          shall not affect the Company's obligation or ability to indemnify an
          Office Holder for any act or omission occurring prior to such
          modification.

                                   WINDING UP

71.  WINDING UP

     If the Company is wound up, then subject to applicable law and to the
     rights of the holders of shares with special rights upon winding up, the
     assets of the Company available for distribution among the members shall be
     distributed to them in proportion to the respective holdings of the shares
     in respect of which such distribution is being made.

                      RIGHTS OF SIGNATURE, STAMP, AND SEAL

72.  RIGHTS OF SIGNATURE, STAMP, AND SEAL

     (a)  The Board of Directors shall be entitled to authorize any person or
          persons (who need not be Directors) to act and sign on behalf of the
          Company, and the acts and signature of such person (s) on behalf of
          the Company shall bind the Company insofar as such person (s) acted
          and signed within the scope of his or their authority.


                                     - 32 -
<PAGE>


     (b)  The Board of Directors may provide for a seal. If the Board of
          Directors so provides, it shall also provide for the safe custody
          thereof. Such seal shall not be used except by the authority of the
          Board of Directors and in the presence of the person (s) authorized to
          sign on behalf of the Company, who shall sign every instrument to
          which such seal is affixed.

     (c)  The Company may exercise the powers conferred by Section 102 of the
          Companies Law regarding a seal for use abroad, and such powers shall
          be vested in the Board of Directors.

                                     NOTICES

73.  NOTICES

     (a)  Any written notice or other document may be served by the Company upon
          any member either personally or by sending it by prepaid mail (airmail
          if sent internationally) addressed to such member at his address as
          described in the Register of Members. Any written notice or other
          document may be served by any member upon the Company by tendering the
          same in person to the Secretary or the General Manager or Chief
          Executive Officer of the Company at the principal office of the
          Company or by sending it by prepaid registered mail (airmail if posted
          outside Israel) to the Company at it Registered Address. Any such
          notice or other document shall be deemed to have been served five (5)
          business days after it has been posted seven (7) business days if
          posted internationally), or when actually tendered in person, to such
          member ( or to the Secretary or the General Manager). Notice sent by
          cablegram, telex, or facsimile shall be deemed to have been served two
          business days after the notice is, sent to the addressee, or when in
          fact received, whichever is earlier, notwithstanding that it was
          defectively addressed or failed, in some other respect, to comply with
          the provisions of this Article 73 (a).

     (b)  All notices to be given to the members shall, with respect to any
          share to which persons are jointly entitled, be given to whichever of
          such persons is named first in the Register of Members, and any notice
          so given shall be sufficient notice to the holders of such share.


                                     - 33 -
<PAGE>


     (c)  Any member whose address is not described in the Register of Members,
          and who shall not have designated in writing delivered to the Company
          an address for the receipt of notices, shall not be entitled to
          receive any notice from the Company.

               (Four) Notwithstanding anything to the contrary contained herein,
          notice by the Company of a General Meeting which is published in at
          least two daily newspapers in the State of Israel within the time
          otherwise required for giving notice of such meeting under Article 25
          hereof and containing the information required to be set forth in such
          notice under such Article, shall be deemed to notice of such meeting
          duly given, for purposes of these Articles, to any member of the
          Company.

74.  AMENDMENTS

     Except as set forth in Articles 5, 6 and 7, these Articles may be amended,
     replaced or superseded only by a Special Resolution adopted by the General
     Meeting, unless a provision of these Articles requires a greater majority.


                                     - 34 -