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.
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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 3,750,000 divided
into seventy-five million (75,000,000) 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.

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.



<PAGE>
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

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:



<PAGE>
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

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.

<PAGE>

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:

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.


<PAGE>

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 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.
<PAGE>

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  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.
<PAGE>

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 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.
<PAGE>

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.

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.
<PAGE>

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.

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.

<PAGE>
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  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.
<PAGE>
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

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.
<PAGE>

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 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

<PAGE>

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 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.
<PAGE>

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.

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,

<PAGE>
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.

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.