Exhibit 1.2

                                THE COMPANIES LAW

                           A COMPANY LIMITED BY SHARES

                  AMENDED AND RESTATED ARTICLES OF ASSOCIATION
                                       of
                             COMMTOUCH SOFTWARE LTD.


1.       Preliminary

1.1. Construction. In these Articles, each of the following terms shall have the
respective meaning appearing next to it, if not inconsistent with the subject or
context:

1.1.1. "Articles" - These Articles of Association, as amended from time to time.

1.1.2. "Board" - the board of directors appointed under these Articles.

1.1.3. "Company" - Commtouch Software Ltd.

1.1.4.  "Companies  Law" - The  Companies  Law,  5759-1999  and any  regulations
promulgated thereunder.

1.1.5.  "General Meeting" - an Annual Meeting or a Special Meeting as defined in
Article 10.2.1.

1.1.6.  "New Securities" - any shares of the Company and all rights,  options or
warrants to purchase  capital shares and securities of any type  whatsoever that
are, or may become, convertible into shares, except for shares, rights, options,
warrants or other  securities  issued upon conversion of any New Securities into
shares of the  Company,  or upon the  exchange of any shares  exchangeable  into
shares of another class.

1.1.7. "Shareholder" -

(a) A holder of one or more of the shares of the Company; or

(b) a person registered as such in the Register of Shareholders; or

(c) a person who holds a share certificate.

1.1.8.  "Register of  Shareholders" - The Register of  Shareholders  pursuant to
Article 13.

1.1.9. "Year and Month" - A Gregorian month or year.

1.2. Any capitalized term used but not otherwise defined in these Articles shall
have the meaning ascribed to it in the Companies Law.

3. Public Company

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

4. Share Capital

4.1. The authorized  share capital of the Company is NIS 2,750,000  divided into
fifty-five  million  (55,000,000)  Ordinary Shares of nominal value NIS 0.05 per
share.

4.2.  The  Ordinary  Shares  shall have all the rights,  powers and  authorities
associated  with the  shares of the  Company,  including  the  power to  appoint
directors,  to  receive  notice  of,  and to vote in,  General  Meetings  of the
Company,  and to receive  dividends and any surplus upon the  liquidation of the
Company.

4.3.  If at any time the share  capital is  divided  into  different  classes of
shares,  then,  unless  the  conditions  of  allotment  of  such  class  provide
otherwise,  the  rights,   additional  rights,   advantages,   restrictions  and
conditions  attached  or not  attached to any class,  at any given time,  may be
modified, enhanced, added or abrogated by the Company by resolution at a meeting
of the holders of the shares of such class.
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5. Issuance of Securities

5.1. The unissued shares of the Company shall be under the control of the Board.

5.2.  The Board  shall have the power to allot,  issue or  otherwise  dispose of
shares to such persons, at such times, on such terms and conditions,  and either
at par or less than par, at a premium, for cash or other consideration, in whole
or in part, at a discount or with payment of commission,  with such preferred or
deferred  rights,  restrictions  or  conditions,  all  in  accordance  with  the
provisions  of the  Companies  Law and as the Board  shall deem fit from time to
time,  provided that such shares do not exceed the  registered  share capital of
the Company. The Board of Directors shall also have the power to give any person
the option to acquire  from the Company  any shares,  either at par or less than
par, at a premium,  for cash or other  consideration,  in whole or in part, at a
discount or with payment of commission, all in accordance with the provisions of
the Companies Law and as the Board shall deem fit from time to time.

5.3. The Board may resolve to issue one or more series of  debentures;  however,
such  borrowing  power  shall be  limited to  actions  that do not  unreasonably
jeopardize  the Company's  ability to pay its debt or to conduct its business as
an entity that seeks to maximize profits.

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

6. Reorganization of Capital

6.1. Increase of Capital

6.1.1.The  Company may, from time to time,  by  resolution of the  Shareholders,
whether or not all the shares then authorized  have been issued,  and whether or
not all the shares issued have been called for payment,  increase its authorized
share  capital.  Any such increase  shall be in such amount and shall be divided
into  shares of such  nominal  amounts,  with such  rights and  preferences  and
subject to such restrictions,  as such resolution shall provide.

6.1.2.Except to the extent otherwise provided in such resolution, any new shares
included in the authorized share capital  increased under Article 6.1.1 shall be
subject to all the  provisions of these  Articles which are applicable to shares
included in the existing  share  capital,  without regard to class (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  that are applicable to shares of such
class included in the existing share capital).

6.2. Consolidation, Subdivision, Cancellation and Reduction of Capital

The Company may, from time to time, by resolution of the  Shareholders  (subject
to applicable law):

6.2.1.  consolidate all or any part of its issued or unissued share capital into
shares of a per share  nominal  value that is greater than the per share nominal
value of its existing shares;

6.2.2.  subdivide its shares  (issued or unissued) or any of them into shares of
lesser nominal value than is fixed by these Articles;

6.2.3.  cancel any  shares  that have not been  issued or  subscribed  for,  and
decrease the amount of its authorized  share capital by the amount of the shares
so canceled,  subject to any  commitment  (including a  conditional  commitment)
given by the Company in respect of such shares.

6.2.4.  reduce its share  capital  in any  manner,  and with and  subject to any
consent required by law.

6.3. With respect to any action that may result in fractional  shares, the Board
may settle any  difficulty  that may arise with regard  thereto as it deems fit,
and in connection with any such consolidation or other action that may result in
fractional shares may, without limitation:

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

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

6.3.3.  redeem,  in the case of  redeemable  shares and subject to the Companies
Law,  such  shares  or  fractional  shares  sufficient  to  preclude  or  remove
fractional share holdings;  or
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6.3.4. cause the transfer of fractional shares by certain  Shareholders to other
Shareholders so as most  expediently to preclude or remove any fractional  share
holdings,  and  cause  the  transferees  of such  fractional  shares  to pay the
transferors of such fractional  shares the fair value thereof,  and the Board 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 purpose of  implementing  the  provisions of this Article
6.3.

7. Transfer of Shares

7.1. Registration of Transfer

7.1.1. No transfer of shares shall be registered in the Register of Shareholders
unless one of the following conditions has been met:

7.1.1.1.  a proper  writing or instrument of transfer (in any customary  form or
any other form  satisfactory  to the  Board)  signed by the  transferee  and the
transferor,  together with the share  certificate(s)  and such other evidence of
title as the Board may reasonably  require,  were submitted to the Company,  and
the relevant  provisions  in these  Articles to effect a transfer of shares have
been fully  complied  with.  Until the  transferee  has been  registered  in the
Register of Shareholders  in respect of the shares so  transferred,  the Company
may continue to regard the transferor as the owner thereof.

7.1.1.2. The Company received a court order requiring the change in the Register
of Shareholders.

7.1.1.3.  The  Company  received  proof  that  the  legal  requirements  for the
assignment of rights to any Shares were fulfilled.

7.1.1.4. The occurrence of a condition that is sufficient, under these Articles,
to effect the change in the Register of Shareholders.

7.2. Decedent's Shares

7.2.1.  In case 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 7.2.2 have been effectively invoked.

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

7.3. Receivers and Liquidators

7.3.1.The  Company may recognize any  receiver,  liquidator or similar  official
appointed to wind up, dissolve or otherwise  liquidate a corporate  Shareholder,
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 Shareholder or its properties, as being entitled to the shares
registered in the name of such Shareholder.

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

8.Limitation of Liability

The  liability of each  Shareholder  shall be limited to at least the payment of
the  nominal  value  of  its  shares,  unless  the  Company  issues  shares  for
consideration  that is less than the nominal value of such shares, in accordance
with,  and subject to, the terms and  conditions set forth in Section 304 of the
Companies Law.

9. Amendments to the Articles
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The Company may amend these Articles by resolution of the Shareholders.

The Company shall not amend the Articles in a manner that adversely  affects the
rights of a Shareholder  without  obtaining the consent of all Shareholders that
are adversely  affected by such  modification.  For the avoidance of doubt,  any
amendment  that  affects all the  Shareholders  in the same manner  shall not be
deemed to constitute a modification of rights associated with specific shares.

10. General Meetings

10.1. The Powers of the General Meeting

The following  matters of the Company  shall be decided in a General  Meeting of
Shareholders:

10.1.1. Amendment of these Articles.

10.1.2.  Exercise of the powers  vested in the Board in the event that the Board
is unable to exercise such powers, as provided in Section 52(a) of the Companies
Law.

10.1.3. Appointment and termination of the Company's auditors.

10.1.4.  Approval  of actions and  transactions  that are  required  pursuant to
Sections 254 and 255, and 270 through 275, of the Companies Law.

10.1.5. Increase and reduction of the authorized share capital of the Company in
accordance with Sections 286 and 287 of the Companies Law.

10.1.6.  Approval of a merger in accordance with Section 320(a) of the Companies
Law.

10.1.7.  Discussion of the financial statements at an Annual Meeting (as defined
below).

10.1.8.  Appointment of Outside  Directors in accordance  with Section 239(b) of
the Companies Law.

10.2. Annual Meetings and Special Meetings

10.2.1.  An Annual General Meeting shall be held at least once in every calendar
year (within a period of not more than 15 months after the last preceding Annual
General  Meeting),  at such time and at such place as  determined  by the Board.
Such Annual  General  Meetings  shall be referred to as "Annual  Meetings".  Any
other Shareholders meetings shall be referred to as "Special Meetings".

10.2.2. The agenda at an Annual Meeting shall include a discussion of the annual
financial  statements  of the Company and of the report  submitted  by the Board
that shall  include  explanations  concerning  the  various  events  that had an
influence on the financial statements.

10.3. Convening a General Meeting

10.3.1.  The Board may,  whenever it thinks fit, convene a Special  Meeting,  at
such time and place as may be determined  by the Board,  and shall be obliged to
do so upon the receipt of a written  request  from (i) either 2 directors or 25%
of the directors  then in office,  (ii) a Shareholder  or group of  Shareholders
that holds at least 5% of the issued and  outstanding  shares of the Company and
at least 1% of the voting rights in the Company,  or a  Shareholder  or group of
Shareholders  that holds at least 5% of the  voting  rights in the  Company,  as
provided in Section 63 of the Companies Law.

10.3.2.  Subject  to  the  provisions  of  Companies  Law  and  any  regulations
promulgated  thereunder,  a notice of a General Meeting need not be delivered to
each Shareholder.  A resolution may be proposed and adopted at a General Meeting
even though the notice prescribed in this Article has not been given, subject to
the consent of all of the Shareholders entitled to vote thereon.

10.3.3.  The accidental  omission to give notice of a meeting to any Shareholder
or Shareholders,  or the non-receipt of notice sent to such  Shareholder,  shall
not invalidate the proceedings at such meeting.

10.4. Proceedings at a General Meeting

10.4.1.  The Agenda: The agenda for a General Meeting shall be determined by the
Board, and shall include (i) in the case of a Special  Meeting,  the matters for
which the Special  Meeting was convened  pursuant to Section 63 of the Companies
Law, and (ii) matters  requested by a Shareholder  or  Shareholders  holding not
less than (1%) of the voting rights in the General  Meeting,  provided that such
proposed  matter  is  appropriate  for  discussion  in a General  Meeting.  Only
resolutions on matters that are specified in the agenda shall be adopted at such
Special Meeting.

10.4.2. Quorum:
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                             10.4.2.1.    No business  shall be  transacted at a
                                          General  Meeting unless a legal quorum
                                          is present,  and no resolution  may be
                                          passed   unless  a  legal   quorum  is
                                          present at the time such resolution is
                                          voted upon.

                             10.4.2.2.    In the absence of a contrary provision
                                          in these  Articles or in the Companies
                                          Law, two or more Shareholders, present
                                          in  person  or by  proxy  and  holding
                                          shares  conferring in the aggregate at
                                          least  25% of the  outstanding  voting
                                          power of the Company shall  constitute
                                          a legal quorum at General Meetings.

                             10.4.2.3.    If  within  half an hour from the time
                                          scheduled  for  a  General  Meeting  a
                                          legal  quorum  is  not  present,   the
                                          meeting shall be adjourned to the same
                                          day in the next week, at the same time
                                          and place, or to such other day and at
                                          such other time and other place as the
                                          Board may determine in a notice to the
                                          Shareholders.  If within  half an hour
                                          from  the  time   scheduled   for  the
                                          adjourned  meeting  a legal  quorum is
                                          not present, then any two Shareholders
                                          entitled to vote, present in person or
                                          by  proxy,  shall  constitute  a legal
                                          quorum for such adjourned  meeting and
                                          shall  be   entitled  to  resolve  any
                                          matters on the agenda of the meeting.

10.4.3.  Chairman:  The  Chairman  of the Board shall  preside at every  General
Meeting of the Company  and shall be  appointed  as the  Chairman of the General
Meeting. If a Chairman of the Board was not appointed, or if the Chairman of the
Board is not present  within 15 minutes after the time scheduled for the meeting
or is unwilling to take the chair, the Shareholders present shall choose someone
of their number to be the chairman of such meeting.  The office of Chairman of a
General Meeting shall not, by itself,  entitle the holder to vote at any General
Meeting  nor shall it grant him a second or casting  vote  (without  derogating,
however,  from the right of such Chairman to vote as a shareholder or proxy of a
shareholder if, in fact, he is also a shareholder or such proxy).

10.4.4. Power to Adjourn: 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 that might lawfully have been transacted at the meeting
as originally called.

10.4.5.  Voting Power:  Every matter  submitted to the General  Meeting shall be
decided  by a  vote.  Any  vote in a  General  Meeting  shall  be  conducted  in
accordance  with the voting  rights  that each  Shareholder  is  entitled  to in
accordance  with the number of shares  granting  voting  rights that are held by
such Shareholder.

10.4.6.  Adoption of Resolutions at General Meetings:  Subject to the provisions
of the  Companies  Law, a resolution  proposed at any General  Meeting  shall be
deemed  adopted if approved by a majority of the voting  shares  represented  at
such meeting in person or by proxy. A declaration by the Chairman of the General
Meeting  that a  resolution  has  been  carried  unanimously,  or  carried  by a
particular majority, or defeated, 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.

10.5. Resolutions in Writing.

A resolution in writing signed by the Shareholders  holding at such time all the
issued shares having the right to vote at General Meetings, or to which all such
Shareholders  had agreed to in  writing  (by  letter,  telegram,  email,  telex,
facsimile or otherwise),  shall have the same force, for any purpose whatsoever,
as if unanimously adopted by a General Meeting duly convened and held.

10.6. Voting Rights and Proxies

10.6.1.  No Shareholder  shall be entitled to vote in any General Meeting (or be
counted as a part of the quorum)  unless he fully paid any amounts due,  whether
with or without any demand for payment for his shares.

10.6.2.  In the  absence of  contrary  provisions  in these  Articles  or in any
condition  or  term  annexed  to any  shares  of  any  class,  each  Shareholder
participating  in a General  Meeting shall have one vote for each share giving a
right to vote in a General Meeting that is held by such Shareholder.

10.6.3. If two or more persons are registered as joint holders of any share, the
vote of the person first
<PAGE>

registered in the Register of Shareholders shall be accepted to the exclusion of
the vote(s) of the other joint holder(s).

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

10.6.5. Any Shareholder entitled to vote may vote either in person or by ballot,
as provided in Sections 87 to 89 of the Companies Law or by proxy (and the proxy
need  not be a  Shareholder)  or,  if the  Shareholder  is a  company  or  other
corporate body, by a representative authorized pursuant to Article 10.6.4.

10.6.6. Instrument of Appointment:  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 Shareholder of Commtouch Software 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 ____________,
              ______ and at any adjournment(s) thereof.

              Signed this ______ day of  _______, _______,

                                                 (Signature of Appointor)"

or in any usual or common  form or in such other form as may be  approved by the
Board.  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) in accordance with its constitutional documents.

10.6.7.  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
delivered to the Company (at its  principal  place of business or at the offices
of its registrar or transfer  agent,  or at such place as the Board may specify)
not less than 24 hours before the time fixed for the meeting at which the person
named in the  instrument  proposes to vote, or presented to the Chairman at such
General  Meeting.  An instrument  appointing a proxy that is not limited in time
shall expire 12 months after the date of its execution. If the appointment shall
be for a specified period, whether in excess of 12 months or not, the instrument
shall be valid for the period stated therein.

10.6.8. A vote cast in accordance with an instrument appointing a proxy shall be
valid despite the prior death or bankruptcy of the appointing Shareholder (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
General Meeting prior to such vote being cast.

10.6.9.  An  instrument  appointing  a proxy  shall be deemed  revoked  (i) upon
receipt by the Company of an instrument  or written  notice signed by the person
who signed such instrument or by the Shareholder 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,  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 10.6.7, or (ii) if the appointing  Shareholder
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  Shareholder  of the  revocation of such  appointment,  or if and when such
Shareholder votes at such meeting.  A vote cast in accordance with an instrument
appointing  a  proxy  shall  be  valid  despite  the   revocation  or  purported
cancellation  of the
<PAGE>

appointment,  or the presence in person or vote of the appointing Shareholder 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
10.6.9 at or prior to the time such vote was cast.

11. The Board of Directors

11.1. Number of Directors

The number of Directors  shall be fixed by the General  Meeting by resolution of
the Shareholders. Until otherwise resolved in a General Meeting, the Board shall
initially consist of 10 directors.

11.2. Election and Removal of Directors

Directors  shall be  elected at the  Annual  General  Meeting 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,  and each  Director  shall
serve,  subject to Article 11.8 hereof, and with respect to a Director appointed
pursuant  to  Article  11.4  hereof  subject to such  Article,  until the Annual
General  Meeting next following the Annual General Meeting or General Meeting at
which such Director was elected  pursuant to this Article or Article 11.4 hereof
and until his  successor is elected,  or until his earlier  removal  pursuant to
this Article 11.2. The holders of a majority of the voting power  represented at
a General Meeting in person or by proxy and voting thereon at such meeting shall
be entitled to remove any Director(s) from office, to elect Directors instead of
Directors  so removed or to fill any vacancy,  however  created  (including  any
position to which a director was not elected),  in the Board.  In the case of an
outside  director or any other  director for whom the Companies Law prescribes a
different  method  of  election  or  removal  from  that  specified  above,  the
provisions of the Companies Law shall govern.

11.3. Qualification of Directors

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

11.4. Continuing Directors in the Event of Vacancies

In the event of one or more  vacancies in the Board of Directors,  the remaining
Directors  may continue to act in every  matter and,  pending the filling of any
vacancy  pursuant to the  provisions of Article 11.2,  may appoint  Directors to
fill any such vacancy temporarily;  provided,  however, that if they number less
than a  majority  of the number  determined  pursuant  to Article  11.1 of these
Articles,  they may act only in an  emergency  or to fill the office of Director
that has become  vacant up to the  minimum  number or 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 a majority  of the number of  Directors  determined
pursuant to Article 11.1 are in office as a result of such meeting.

11.5. Remuneration of Directors

A Director  shall be paid  remuneration  by the  Company  for his  services as a
Director,  to the extent such remuneration shall have been approved by a General
Meeting of the Company.

11.6. Conflict of Interests

Subject  to  the   provisions  of  the  Companies  Law,  no  Director  shall  be
disqualified  by virtue of his office from holding any office or relationship of
profit  with the  Company or with any  company in which the  Company  shall be a
shareholder or have another  interest,  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 in any way be  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  relationship  of profit or realized
from such contract or arrangement by


<PAGE>

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 no later than the first  meeting of
the Board of Directors after the acquisition of his interest.

11.7. Alternate Directors

11.7.1. A Director may, by written notice to the Company given in the manner set
forth in Article

11.7.2  below,  appoint  any  individual  (whether  or not such person is then a
member of the Board of Directors) as an alternate for himself (in these Articles
referred to as an  "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.  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.

11.7.2.  Any notice to the Company  pursuant to Article 11.7.1 shall be given in
person to, or by sending the same by mail to the  attention  of, the Chairman of
the Board of the Company at the principal office of the Company or to such other
person or place as the Board 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 specified above,  whichever is later.

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

11.7.4.  The  office  of an  Alternate  Director  shall  be  vacated  under  the
circumstances,  mutatis  mutandis,  set forth in Article  11.8,  and such office
shall ipso facto be vacated if the director for whom the Alternate  Director was
appointed ceases to be a director.

11.8. Termination of Office

Without derogating from any law, the office of a director shall automatically be
vacated,  ipso  facto,  prior  the end of the term of his  appointment  upon the
following:

11.8.1.  Upon  resignation,  which shall become  effective on the date a written
notice  of such  resignation  is  delivered  to the  Company,  or a  later  date
specified in the notice.

11.8.2.  If convicted of a felony,  as provided in Section 232 of the  Companies
Law.

11.8.3.  Pursuant  to a court's  decision,  as  provided  in Section  233 of the
Companies Law.

11.8.4. Upon death or when declared bankrupt.

11.8.5. If he be found lunatic or becomes of unsound mind.

11.9. No Corporate Director

11.9.1. A corporation will not be qualified to act as a director.
<PAGE>


11.10.   Chairman of the Board of Directors

The Board may from time to time elect one of its  members to be  Chairman of the
Board,  remove such Chairman from office,  and appoint another in his place. The
Chairman of the Board shall preside at every meeting of the Board,  but if there
is no such Chairman,  or if at any meeting the Chairman is not present within 15
minutes  after the time fixed for holding the meeting or is  unwilling to act as
Chairman,  the  Directors  present  shall  choose  someone of their number to be
chairman of such  meeting.  The Chairman will not have any casting or additional
vote by reason of his position as Chairman of the Board.

11.11. Powers of the Board and Delegation of Powers

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

11.11.2  Subject to the provisions of the Companies Law, the Board 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 deems
fit,  and may also  authorize  any such  attorney to delegate  all or any of the
powers, authorities and discretions vested in him.

11.12. Proceedings of the Board

11.12.1. Meetings

11.12.1.1.  The Board may meet and adjourn its meetings and  otherwise  regulate
such meetings and proceedings in accordance with the Company's needs;  provided,
however, that the Board must meet at least once every 3 months.

11.12.1.2.  The  Chairman of the Board may convene a meeting of the Board at any
time,  and shall be  required  to convene a meeting to be held not later than 14
days following a request by any Director of the Company;  provided,  that in the
event that a meeting is convened  under the  circumstances  described in Section
122(d),  169 or 257 of the  Companies  Law,  the  meeting of the Board  shall be
convened without delay.

Notice of any such meeting shall be given by telephone or by mail, email, telex,
telegram or facsimile or other form of  electronic  communication,  a reasonable
time before the meeting.

11.12.2.  Failure to Deliver Notices:  Despite anything to the contrary in these
Articles,  failure to deliver  notice to a Director  of any such  meeting may be
waived  by such  Director,  and a  meeting  shall be  deemed  to have  been duly
convened despite such defective notice if such failure or defect is waived prior
to action being taken at such meeting by all Directors  entitled to  participate
and vote in such  meeting to whom  notice  was not duly  given.

11.12.3.  Board Meetings by Means of  Telecommunication:  A meeting of the Board
may be conducted by using any communication device,  provided that all directors
participating  in such  meeting can  simultaneously  hear each  other.

11.12.4.  Quorum:  No  business  shall be  transacted  at a meeting of the Board
unless the requisite  legal quorum is present (by means  provided under Articles
11.12.3) when the meeting proceeds to business.  Until otherwise  decided by the
Board,  a legal  quorum at a meeting of the Board  shall be  constituted  by the
presence (by means provided  under Article  11.12.4) of a majority of the number
of directors then in office.

11.12.5.  Exercise of Powers of the Board: A resolution  proposed at any meeting
of the Board shall be deemed  adopted if approved by a majority of the Directors
present when such resolution is put to a vote and voting thereon.
<PAGE>

11.12.6.  The Agenda:  The agenda for a meeting of the Board shall be determined
by the  Chairman  of the Board,  and shall  include  matters  determined  by the
Chairman  of the Board,  matters  for which a meeting of the Board was  convened
pursuant to Article  11.12.1.2,  and any matter  requested  by a director or the
General Manager at least 3 days before the meeting.

11.13. Resolutions in Writing

A resolution  in writing  signed all the  directors  then in office and lawfully
entitled to vote thereon, or to which all the directors have given their written
consent (by letter,  email,  telegram,  telex,  facsimile or otherwise) shall be
deemed to have been unanimously  adopted by a meeting of the Board duly convened
and held.

11.14. Audit Committee

11.14.1.  The Board shall appoint an Audit  Committee  that shall be composed of
three  members of the Board.  The Chairman of the Board,  any  director  that is
employed by the Company or who provides  the Company with  services on a regular
basis,  and  any  controlling  shareholder  (or  a  relative  of  a  controlling
shareholder) may not be members of the Audit Committee.

11.14.2.  The Audit  Committee shall have the duties set forth in Section 117 of
the Companies Law.

11.14.3. Approval by the majority of the members of the Audit Committee shall be
deemed approval of the Audit Committee.

11.15. Committees of the Board

11.15.1.  Subject to the provisions of the Companies Law, the Board may 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")  shall,  in the exercise of
the powers so delegated,  conform to any regulations imposed on it by the Board.
The meetings and  proceedings of any such Committee of the Board shall,  mutatis
mutandis,  be governed by the  provisions  of these  Articles  that regulate the
meetings  of the Board.  Unless  otherwise  expressly  provided  by the Board in
delegating  powers to a  Committee  of the Board,  such  Committee  shall not be
empowered to further delegate such powers.

11.15.2.  The Board may revoke any  resolution  of any  Committee  of the Board;
provided,  however, that any such revocation shall not detract from the validity
of any  transaction  entered  into  with a  person  that  did  not  know of such
revocation.

11.16. Validity of Acts Despite Defects

Subject to the  provisions of the Companies  Law, all acts done bona fide at any
meeting of the Board, or of a Committee of the Board, or by any person(s) acting
as Director(s), shall, even if it is subsequently discovered that there was some
defect in the appointment of the  participants in such meeting 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.

12. General Manager

12.1. The Board shall from time to time appoint one or more persons,  whether or
not Directors,  as General Manager or General Managers, and may confer upon such
person(s), and from time to time modify, or revoke such title(s) and such duties
and  authorities  as the Board may deem fit,  subject  to such  limitations  and
restrictions as the Board may from time to time prescribe.  Such  appointment(s)
may be either for a fixed term or without any  limitation of time, and the Board
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, her or their salaries
and  emoluments,  remove or dismiss such persons from office and appoint another
or others in their place.

12.2.  Unless otherwise  determined by the Board, the General Manager shall have
the  authority  with respect to the day to day  management of the Company in the
ordinary  course of business,  in the  framework
<PAGE>

of, and subject to, the policy,  guidelines and  instructions  of the Board from
time to time.

12.3.  The General  Manager  shall have all the  management  and  implementation
authorities that are not expressly delegated in the Articles or by the Companies
Law, to another organ of the Company,  and will be subject to the supervision of
the Board.

12.4. The General Manager may, with the consent of the Board,  delegate  certain
of his duties to another person who is subject to his supervision.

12.5. The General  Manager shall notify the Chairman of the Board of any unusual
event that is material to the Company; if the office of Chairman of the Board is
vacant,  or the  Chairman  of the  Board  refuses  or is  unable  to  act,  such
notification shall be made to all the Directors then in office.

12.6. The General Manager shall  periodically  furnish the Board with reports in
matters,  times and format  determined  by the Board  from time to time.  When a
notification  or report of the General  Manager  require the  performance  of an
action by the Board, then a Board meeting shall be convened without delay.

12.7. The remuneration  payable to the General Manager for his services shall be
fixed from time to time (subject to any contract between the General Manager and
the Company) by the Board,  and may be fixed as a regular salary,  commission on
dividends,  profits or revenues of the Company or of any other  company in which
the Company has an  interest,  or by  participation  in the  Company's  profits,
combined or separately.

13. Register of Shareholders

13.1.  The  Company  shall  maintain a  Register  of  Shareholders  in which the
following shall be recorded:

13.1.1.  the name,  identification  card  number  (if any) and  address of every
Shareholder, as such details were provided to the Company;

13.1.2.  The number of shares and the  particular  class of Shares owned by each
Shareholder, noting the nominal value of such shares, if applicable, and in case
the payment for any shares was not fully satisfied, the unpaid amount.

13.1.3.  The  date on  which  the  shares  were  issued  or  transferred  to any
Shareholder,  as the case may be.

13.1.4. If the shares were serially numbered,  the Company will note next to the
name  of  each  Shareholder  the  serial  numbers  of the  shares  held  by such
Shareholder.

13.1.5.  As for  "Dormant  Shares" (as  defined in Section 308 of the  Companies
Law),  if any,  the  Register of  Shareholders  shall state the exact  number of
Dormant Shares and the date on which such shares became "Dormant Shares".

13.1.6.  A  Shareholder  holding  shares as a trustee  shall be  recorded in the
Register of Shareholder with a note of the trusteeship, and the Company shall be
entitled to treat such person as the Shareholder in all respects.

14. Auditors

14.1.  The Company shall appoint one or more  certified  public  accountants  to
audit, and provide a report on, the annual  financial  statements of the Company
(the "Auditors").

14.2.  The   appointment,   authorities,   duties,   responsibilities,   rights,
remuneration  and powers of the Auditors  shall be fixed by  applicable  law and
under these  Articles.  The General  Meeting shall have the power to appoint the
Auditors for the maximum time period provided under the Companies Law.

14.3.  The Board shall cause  accurate books of account to be kept in accordance
with the provisions of any  applicable  law. Such books of account shall be kept
at the principal office of the Company,  or at such other place or places as the
Board  may  deem  fit,  and  they  shall  always  be open to  inspection  by all
Directors.

15. Share Certificates
<PAGE>

15.1. Share certificates shall be issued under the corporate seal of the Company
(or facsimile  thereof) and shall bear the  signature (or facsimile  thereof) of
two Directors, or the signatures of a Director and the secretary of the Company,
specifically authorized by the Board for this purpose.

15.2. Each Shareholder shall be entitled to one numbered certificate for all the
shares of any class  registered  in his name,  and if the Board so approves,  to
several  certificates,  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.

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

15.4.  A share  certificate  that 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 in its discretion
deems fit.

16. 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.

17. Calls on Shares

17.1. The Board may, from time to time, as it in its discretion  deems fit, make
calls for payment upon Shareholders in respect of any sum that has not been paid
up in respect of shares held by such  Shareholder and which is not,  pursuant to
the terms of  allotment  or issuance of such shares or  otherwise,  payable at a
fixed time. Each Shareholder 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
person(s) and at the time(s)  designated  by the Board,  as any such time(s) may
subsequently be extended or such person(s) or place(s) changed. Unless otherwise
stipulated in the resolution of the Board (and in the notice referred to below),
each  payment in  response  to a call shall be deemed to  constitute  a pro rata
payment  on  account  of all the  shares of the  Shareholder  making  payment in
respect of which such call was made.

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

17.3.  If  pursuant  to the  terms of  allotment  or  issuance  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 this Article,  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).

17.4.  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.

17.5.  Any  amount  called  for  payment  that is not paid when due  shall  bear
interest from the date fixed for payment until actual payment, at such rate (not
exceeding the legal rate under any  applicable  law) and
<PAGE>

payable  at such  time(s)  as the Board may  prescribe.  The Board may waive any
payment of such interest under this Article.

17.6. With the consent of the Board,  any Shareholder may pay to the Company any
amount not yet payable in respect of his  shares,  and the Board 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.  The Board 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  shall  derogate  from the right of the Board to make any call for
payment before or after receipt by the Company of any such advance.

18. Forfeiture and Surrender

18.1. If any Shareholder  fails to pay an amount payable by virtue of a call, or
interest thereon as provided for in accordance with these Articles, on or before
the day fixed for  payment of the same,  the Board may at any time after the day
fixed for such payment,  so long as such amount or any portion  thereof  remains
unpaid,  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.

18.2.  Upon the adoption of a resolution as to the forfeiture of a Shareholder's
shares,  the Board shall cause notice  thereof to be given to such  Shareholder,
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 14 days after the date such  notice is given and which may be extended
by the Board), such shares shall ipso facto be forfeited; provided, however that
prior to such date the Board may nullify such  resolution of forfeiture,  but no
such  nullification  shall estop the Board from adopting a further resolution of
forfeiture in respect of the non-payment of the same amount.

18.3. Without derogating from any of the provisions of this Article 18, 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.

18.4. 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 deems
fit. From the date of forfeiture  until the date such forfeited shares are sold,
re-allotted  or  otherwise  disposed of, such  forfeited  shares shall be deemed
"Dormant Shares" as defined in Section 308 of the Companies Law.

18.5. Any  Shareholder  whose shares have been  forfeited or  surrendered  shall
cease to be a Shareholder in respect of the forfeited or surrendered shares, but
shall  nonetheless  be liable to pay, and shall promptly 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 this
Article 18, and the Board,  in its  discretion,  may 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,  may  accelerate the date(s) of payment of
any or all amounts then owing to the Company by the Shareholder in question (but
not yet due) in  respect  of all  shares  owned by such  Shareholder,  solely or
jointly with another.

18.6.  The Board 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 estop the Board from re-exercising its powers of forfeiture
pursuant to this Article 18.

18.7.  If  pursuant  to the  terms of  allotment  or  issuance  of a  share,  or
otherwise, an amount is made
<PAGE>

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 and for which  notice was given in  accordance  with this
Article,  and the provisions of these Article shall be applicable to such amount
as if a call was given at the date fixed for payment.

18.8.  Except  to the  extent  that 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  Shareholder  (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
obligations to the Company  arising from any amount payable by such  Shareholder
in  respect  of any  unpaid or partly  paid  share,  whether  or not such  debt,
liability or  obligation  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 any lien  existing  on such
shares immediately prior to such transfer.

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

18.10.  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
obligations  of such  Shareholder  in respect of such share  (whether or not the
same  have  matured),  and any  residue  shall be paid to the  Shareholder,  his
executors, administrators or assigns.

18.11. Upon any sale of a share after forfeiture or surrender or for enforcing a
lien,  the Board 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 Shareholders  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  Shareholders 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.

19.Indemnity and Insurance

19.1. Subject to the provisions of the Companies Law, the Company may enter into
a contract  for the  insurance of its Office  Holders,  for actions or omissions
done in  capacity  as Office  Holders,  in whole or in part,  against any of the
following:

19.1.1. breach of the duty of care owed to the Company or a third party;

19.1.2.  breach of the  fiduciary  duty owed to the Company,  provided  that the
Office  Holder acted in good faith and had a reasonable  grounds to believe that
his  action  would  not harm  the  Company's  interests;  and

19.1.3. monetary liability imposed on him in favor of a third party.

19.2.  Subject to the  provisions of the Companies  Law, the Company is entitled
retroactively to indemnify any Office Holder,  or provide a prior undertaking to
indemnify  an  Office  Holder,  where  such  prior  undertaking  is  limited  to
categories of events that the Board believes are foreseeable and to a reasonable
sum  determined  by the  Board in the  circumstances,  for any of the  following
events:

19.2.1. monetary liability imposed on an Office Holder in favor of a third party
in a judgment, including a settlement or an arbitral award confirmed by a court,
for an act that such Office  Holder  performed  by virtue of his being an Office
Holder of the Company;  and

19.2.2.  reasonable costs of litigation,  including attorney's fees, expended by
an Office Holder or for which an Office  Holder has been charged by a court,  in
an action  brought  against him by or on behalf of the Company or a third party,
or in a criminal  action in which an Office Holder was found  innocent,  or in a
criminal offense in which an Office Holder was convicted and in which a proof of
criminal  intent  is  not  required.
<PAGE>

19.3.  Subject to the provisions of the Companies Law, the Company may exculpate
an Office  Holder in  advance  from  liability,  or any part of  liability,  for
damages sustained by a breach of duty of care to the Company.

20. Dividends

20.1. No dividend shall be paid  otherwise than in accordance  with Chapter 2 of
Part 7 of the Companies Law.

20.2.  Subject to the rights of Shareholders as to dividends,  any dividend paid
by the Company shall be allocated among the Shareholders  entitled  thereto,  in
proportion  to the sums paid up or credited as paid up on account of the nominal
value of their  respective  holdings  of the  shares in  respect  of which  such
dividend is being paid  without  taking into account the premium paid up for the
shares.  The amount  paid up on account of a share that has not yet been  called
for payment or fallen due for payment and upon which the Company  pays  interest
to the shareholder shall not be deemed, for the purposes of this Article,  to be
a sum paid on account of the share.

20.3. Subject to the provisions of Section 303 of the Companies Law, no dividend
shall be paid  otherwise  than out of the Profits of the Company,  as defined in
Section 302(b) of the Companies Law.

20.4. No dividend shall carry interest as against the Company.

20.5.  Subject to the  provisions of these  Articles and the Companies  Law, the
Company may cause any moneys,  investments  or other assets  forming part of the
undivided distributable profits of the Company 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.

20.6. For the purpose of giving full effect to any resolution under this Article
20,  the  Board  may  settle  any  difficulty  that may  arise in  regard to the
distribution  as it deems  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  Shareholders  upon the
basis 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.

20.7. Without derogating from this Article 20, the Board may give an instruction
that shall  prevent the  distribution  of a dividend to the holders of shares on
which the full nominal amount has not been paid up.

20.8.  The Board may retain any  dividend  or other  moneys  payable or property
distributable  in respect  of shares on which the  Company  has a lien,  and may
apply  the  same  in  or  toward  satisfaction  of  the  debts,  liabilities  or
obligations in respect of which the lien exists.

20.9.  The Board may retain any  dividend  or other  moneys  payable or property
distributable  in respect  of a share in  respect of which any person is,  under
Article  7.2 or Article  7.3,  entitled  to become a  Shareholder,  or which any
person is, under such  Articles,  entitled to transfer,  until such person shall
become a Shareholder in respect of such share or shall transfer the same.

21. Minutes

21.1. Minutes of each General Meeting,  of each meeting of the Board and of each
meeting of a Committee  of the Board shall be recorded and duly entered in books
provided  for that  purpose,  and  shall be  maintained  by the  Company  at its
principal  office or such other place as shall be determined by the Board.  Such
minutes shall,  in all events,  set forth the name of the persons at the meeting
and all resolutions adopted at the meeting.
<PAGE>

21.2.  Any such  minutes,  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.

22.Charitable Contributions

To the  extent  permitted  by the  Companies  Law,  the  Company  may  elect  to
contribute reasonable amounts to worthy causes.

23. Notices

23.1. Any written notice or other document may be served by the Company upon any
Shareholder  either personally or by sending it by prepaid mail (airmail if sent
internationally)  addressed to such  Shareholder's  address as it appears in the
Register of  Shareholders  or such other  address as he may have  designated  in
writing for the receipt of notices and other  documents,  provided  however that
the Board may resolve that any such address must be located  within the State of
Israel.

23.2.  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 10.3.2 hereof and containing the information required
to be set forth in such notice under such Article shall be deemed to be a notice
of such meeting duly given,  for purposes of these Articles,  to any Shareholder
whose address as registered  in the Register of  Shareholders  is located in the
State of Israel.

23.3. Any written notice or other document may be served by any Shareholder upon
the  Company by  tendering  the same in person to the  Secretary  or the General
Manager of the Company at the  principal  office of the Company or by sending it
by prepaid registered mail (airmail if posted internationally) to the Company at
its principal office.  Any such notice or other document shall be deemed to have
been served when actually  tendered if hand  delivered,  or 48 hours (7 business
days if sent  internationally)  after  it has  been  posted  (or  when  actually
received by the addressee if sooner). Notice sent by telegram,  telex, facsimile
or e-mail  shall be deemed to have been  served  when  actually  received by the
addressee.  A notice that is defectively  addressed or that  otherwise  fails to
comply with the provisions of this Article 23.3 shall  nevertheless be deemed to
have been served if and when actually received by the addressee.

23.4.  All notices to be given to the  Shareholders  shall,  with respect to any
share to which such persons are jointly entitled,  be given to whichever of such
persons is named first in the Register of Shareholders,  and any notice so given
shall be sufficient notice to all the holders of such share.

23.5.  Any  Shareholder   whose  address  is  not  listed  in  the  Register  of
Shareholders,  and who shall not have  designated  in writing an address for the
delivery  of  notices,  shall not be  entitled  to receive  any notice  from the
Company.

23.6.  Notwithstanding any other contrary provision of these Articles, the Board
may fix a date, not exceeding  ninety (90) days prior to the date of any General
Meeting, as the date as of which shareholders  entitled to notice of and to vote
at such meetings shall be determined, and all persons who were holders of record
of voting shares on such date shall be entitled to notice of and to vote at such
meeting.