Exhibit 1.2

                                                                      April 2004

                        RESTATED ARTICLES OF ASSOCIATION

                                       OF

                               ELBIT SYSTEMS LTD.

                               TABLE OF CONTENTS
                               -----------------


ARTICLE



1.  INTERPRETATION.............................................................3

2.  PUBLIC COMPANY.............................................................5

3.  PERMISSIBLE OBJECTIVES.....................................................5

4.  NAME AND REGISTERED OFFICE.................................................5

5.  SHARE CAPITAL..............................................................6

6.  SHARE RIGHTS...............................................................7

7.  SHARE REGISTER AND SHARE CERTIFICATES......................................8

8.  SHARE WARRANTS, OPTIONS AND DEBENTURES.....................................8

9.  LIEN ON SHARES.............................................................9

10. REDEEMABLE SHARES AND WARRANTS.............................................9

11. CALLS ON SHARES; FORFEIT OF SHARES.........................................9

12. TRANSFER OF SHARES........................................................11

13. TRANSMISSION OF SHARES ON DEATH, BANKRUPTCY OR DISSOLUTION................11

14. REGISTRATION OF COMPANY SECURITIES FOR TRADING ON SECURITIES EXCHANGES....12

15. BORROWING POWERS..........................................................12

16. DIVIDENDS AND RESERVES....................................................12

17. CAPITALIZATION OF RESERVES................................................13

18. CONVENING OF GENERAL MEETINGS.............................................14



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19. PROCEEDINGS AT GENERAL MEETINGS...........................................15

20. VOTING AT GENERAL MEETINGS; VOTING INSTRUMENTS............................16

21. PROXY STATEMENTS..........................................................18

22. ROLE AND COMPOSITION OF THE BOARD OF DIRECTORS............................18

23. ELECTION, APPOINTMENT AND REMOVAL OF DIRECTORS............................19

24. EXTERNAL DIRECTORS........................................................20

25. BOARD OF DIRECTORS MEETINGS...............................................21

26. COMMITTEES OF THE BOARD OF DIRECTORS......................................22

27. PRESIDENT.................................................................22

28. SECRETARY.................................................................23

29. SIGNATURE AUTHORITY.......................................................23

30. ACCOUNTS..................................................................24

31. INDEPENDENT CERTIFIED ACCOUNTANTS.........................................24

32. INTERNAL AUDITOR..........................................................24

33. NOTICES...................................................................24

34. INSURANCE AND INDEMNITY...................................................25

35. RECONSTRUCTION AND WINDING-UP.............................................27

36. AMENDMENTS TO ARTICLES....................................................27



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1.   INTERPRETATION

(a)  In these Articles of Association the following terms will have the meanings
     described below:

     TERM                                 MEANING

     (1)  Annual Meeting           The annual General Meeting.

     (2)  Articles                 These  Articles  of  Association,  as  may be
                                   amended from time to time.

     (3)  Audit Committee          The audit committee of the Board of Directors
                                   established  according to these  Articles and
                                   the Law.

     (4)  Board or                 The  Company's  supervisory  governing  board
          Board of Directors       appointed according to these Articles and the
                                   Law.

     (5)  Chairman of the          The  chairman  of  the  Board  of  Directors,
          Board of Directors       appointed according to these Articles.

     (6)  Company                  Elbit Systems Ltd.

     (7)  Director                 A member of the Company's Board of Directors.

     (8)  Extraordinary Meeting    A  General   Meeting  other  than  an  Annual
                                   Meeting.

     (9)  General Meeting          A  meeting  of  the  Company's   Shareholders
                                   convened  according to these Articles and the
                                   Law.

     (10) Independent Certified    The    Company's     independent    certified
          Accountants              accountants   appointed  according  to  these
                                   Articles and the Law.


     (11) Internal Auditor         The Company's  internal auditor  appointed in
                                   accordance with these Articles and the Law.

     (12) Law                      The [Israel] Companies Law - 1999,  including
                                   any   regulations   and   regulatory   orders
                                   relating thereto,  and any successor laws and
                                   regulations,  as will be in effect  from time
                                   to time.

     (13) NIS                      New Israeli Shekels.

     (14) Ordinary Shares          Shares  nominal value NIS 1 per Share,  which
                                   carry all ordinary  rights  Shareholders  are
                                   entitled to under these Articles and the Law.



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     (15) President                The  president  and  general  manager  of the
                                   Company   appointed    according   to   these
                                   Articles.

     (16) Proxy                    A  person  appointed,  as  provided  in these
                                   Articles,   by  a  Shareholder   to  vote  or
                                   otherwise act on the Shareholder's  behalf at
                                   a General Meeting.

     (17) Proxy Statement          A document  issued by the Board of  Directors
                                   to Shareholders  soliciting the  Shareholders
                                   to vote for a General Meeting.

     (18) Register                 The register of  Shareholders,  including any
                                   branch  registers  the Company may  maintain,
                                   kept according to the Law.

     (19) Registered Office        The Company's registered office.

     (20) Secretary                The Company's corporate secretary.

     (21) Securities Law           The  [Israel]  Securities  Law - 1968 and any
                                   regulations  and regulatory  orders  relating
                                   thereto,   and   any   successor   laws   and
                                   regulations,  as will be in effect  from time
                                   to time.

     (22) Share Capital            The  Company's  registered  Share  capital as
                                   authorized by its  Memorandum of  Association
                                   and these Articles.

     (23) Shareholder              Any  person  or  entity  that  is the  owner,
                                   according to these Articles and the Law, of a
                                   Share.

     (24) Shares                   Proportional  allocations to  Shareholders of
                                   rights  in  the  Company's   Share   Capital,
                                   whether   Ordinary   Shares   or   otherwise,
                                   according to these Articles and the Law.

     (25) Special Majority         A majority  of at least  sixty-seven  percent
                                   (67%) of all votes properly cast at a General
                                   Meeting,    without   taking   into   account
                                   abstentions.

     (26) Treasury Shares          Shares that have been  acquired,  redeemed or
                                   otherwise   received  by  the  Company  or  a
                                   Company   subsidiary  and  allocated  by  the
                                   Company to a reserve for future allocation or
                                   sale.

     (27) Voting Instrument        A  written  form  for  Shareholders  to  use,
                                   according  to these  Articles and the Law, in
                                   voting at General Meetings.

     (28) Writing                  A handwriting, typewriting, facsimile, print,
                                   e-mail and any other legally  recognized form
                                   of communication that can be read.



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(b)  In these Articles, unless the context otherwise requires, expressions
     defined in the Law will have the meanings so defined. In addition, words
     importing the singular will include the plural, and vice versa. Words
     importing the masculine gender will include the feminine, and words
     importing persons will include companies, partnerships, associations and
     all other legal entities. Days, months and years refer to the Gregorian
     calendar.

(c)  In the event that an Article is revised or a new Article is added to these
     Articles, which contradicts an original Article, the revised or added
     Article(s) will take precedence.

(d)  In any place in these Articles that specifies the provisions will apply
     according or subject to the provisions of the Law and/or any other law, the
     intention is to provisions of the Law and/or of any other law that are not
     elective, unless the context requires otherwise.


2.   PUBLIC COMPANY

     The Company is a public company as defined in the Law. Therefore:

(a)  No limitations will apply to the transfer of its Shares.

(b)  The number of Shareholders is unlimited.

(c)  The  Company  may issue any form of its Shares or other  securities  to the
     public.

(d)  Liability  of the  Shareholders  is limited to the  payment of the  nominal
     (par) value of the unpaid issued Share Capital of the Company.


3.   PERMISSIBLE OBJECTIVES

(a)  The  permissible  objectives  of the Company  may  include  any  objectives
     permitted by law.

(b)  The Company may  contribute,  from time to time,  reasonable sums to worthy
     causes even if the cause is not within the specific  scope of the Company's
     business.


4.   NAME AND REGISTERED OFFICE

(a)  The name of the Company is Elbit Systems Ltd.

(b)  The  Registered  Office  will be at such  place in  Israel  as the Board of
     Directors will from time to time select.



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5.   SHARE CAPITAL

(a)  The Share  Capital of the  Company is NIS  80,000,000  (eighty  million New
     Israeli Shekels) divided into 80,000,000  (eighty million)  ordinary shares
     of NIS 1 nominal (par) value each.

(b)  The Company may, by a resolution of a Special Majority of Shareholders at a
     General Meeting:

     (1)  increase the Share  Capital,  including  by classes of Shares,  as the
          General Meeting may determine; or

     (2)  annul Share  Capital that has not yet been issued,  provided  that the
          Company has no undertaking,  including a provisional  undertaking,  to
          allot such Shares.

(c)  Subject to the provisions of the Law, the Company may, by a resolution of a
     majority of the  Shareholders  voting in a General  Meeting  without taking
     into account abstentions:

     (1)  consolidate  all or part of the Shares  and/or divide them into Shares
          of a greater par value than the par value of the existing Shares;

     (2)  split all or part of the Shares, by way of subdivision, into Shares of
          lesser par value than the par value of the existing Shares; or

     (3)  decrease the capital or any reserve fund from redemption of capital.

(d)  In executing any resolution  adopted  according to Article 5(c) above,  the
     Board may, at its discretion, resolve any related issues.

(e)  Subject  to  any  contrary   decision  in  a  General  Meeting   resolution
     authorizing  an increase in Share  Capital,  any new Share  Capital will be
     subject to the same provisions  regarding payment of calls,  liens,  title,
     forfeiture,  transfer and otherwise as apply to the original Share Capital.
     Such General Meeting  resolution may also determine that the new Shares, or
     any part of them, will first be offered,  at par value or at a premium,  to
     all the  existing  Shareholders  in  proportion  to the par  value of their
     Shares or may determine  other  provisions  with regard to the issuance and
     allotment  of  the  new  Shares.   However,   in  the  absence  of  such  a
     determination in the General Meeting  resolution,  the Board may allot such
     Shares as provided in Article 6(a) below.

(f)  If as a result of a consolidation or split of Shares authorized under these
     Articles, fractions of a Share will stand to the credit of any Shareholder,
     the Board is authorized at its discretion, to act as follows:



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     (1)  determine that fractions of Shares that do not entitle their owners to
          a whole Share,  will be sold by the Company and that the consideration
          for the sale be paid to the  beneficiaries,  on terms  the  Board  may
          determine;

     (2)  allot to every Shareholder,  who holds a fraction of a Share resulting
          from a  consolidation  and/or split,  Shares of the class that existed
          prior to the  consolidation  and/or split,  in a quantity  that,  when
          consolidated  with the fraction,  will  constitute a whole Share,  and
          such  allotment  will be  considered  valid  immediately  prior to the
          consolidation or split;

     (3)  determine  the manner  for  paying  the  amounts to be paid for Shares
          allotted in  accordance  with  Article  5(f)(2)  above,  including  on
          account of bonus Shares; and/or

     (4)  determine  that the owners of fractions of Shares will not be entitled
          to receive a whole  Share in respect of a Share  fraction or that they
          may receive a whole Share with a different  par value than that of the
          fraction of a Share.


6.   SHARE RIGHTS

(a)  Subject  to  these  Articles  and  to the  terms  of  any  General  Meeting
     resolution  creating new Shares,  the allotment and issue of Shares will be
     as  determined  by the Board of  Directors,  who may  allot and issue  such
     Shares to persons on terms and conditions and at times as determined by the
     Board of Directors, including the allotment of bonus Shares.

(b)  Each Ordinary Share will entitle its owner to receive notices of, to attend
     and to cast one vote at a General Meeting.

(c)  The  rights  granted to  Shareholders  of any class of Shares  issued  with
     preferred or other  rights will not,  unless  specifically  provided by the
     terms of issue of the Shares of that class,  be deemed to be changed by the
     creation or issue of other Shares of the same rank.

(d)  Unless  otherwise  provided  for by the terms of issuance  of a  particular
     class of Shares,  the  Company  may create or change  rights,  preferences,
     restrictions  and  provisions  related  to one or  more of the  classes  of
     Shares,  after receipt of the consent in writing of all Shareholders of the
     affected class, or a resolution  passed at a General Meeting of such class,
     approved by a Special  Majority of the  Shareholders of the affected class.
     These Articles will apply,  as applicable,  to every such separate  General
     Meeting of a class.

(e)  Treasury  Shares will not carry voting or dividend rights while they remain
     in the Company's Treasury Share reserve. Conversion of Treasury Shares into
     Ordinary  Shares or Ordinary Shares into Treasury Shares will be subject to
     approval of the Board of Directors and any applicable provisions of the Law
     and Securities Law.

(f)  The rights applicable to any Shares,  whether in the original Share Capital
     or any increased  Share Capital,  may be changed  according to the terms of
     these Articles.



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7.   SHARE REGISTER AND SHARE CERTIFICATES

(a)  The Company will maintain a Register of Shareholders  according to the Law.
     The Company may maintain one or more branch registers of  Shareholders,  in
     Israel or another  jurisdiction,  which will be  considered  as part of the
     Register.

(b)  No person  will be  recognized  by the Company as holding any Share under a
     trust unless he is so  registered  in the Register  according to applicable
     provisions of the Law.

(c)  The Company will not be bound by or required to recognize, even when having
     notice,  any right or interest in any Share other than rights or  interests
     of the Shareholder  duly registered in the Register or otherwise  proven in
     accordance with these Articles and the Law.

(d)  Every person whose name duly  appears as a  Shareholder  in the Register or
     who  otherwise  establishes  proof of  ownership in  accordance  with these
     Articles  and the Law,  will have the right  without  payment  to  receive,
     within two (2) months after allotment or  registration of transfer  (unless
     the  conditions of allotment or transfer  provide for a longer  period),  a
     stamped  certificate  for  all  the  Shares  registered  in his  name.  The
     certificate  will  specify  the  number of Shares  for which it is  issued.
     However,  in case of joint Shareholders the Company will not be required to
     issue more than one certificate to all the joint Shareholders.  Delivery of
     a certificate to any of the joint Shareholders will be sufficient  delivery
     to all. Every certificate will be signed by a Director and countersigned by
     the Secretary or some other person  nominated by the Board of Directors for
     that purpose.  The Company may withhold the issue of Share certificates for
     Shares not fully paid up.

(e)  If any Share certificate will be defaced,  worn out,  destroyed or lost, it
     may be renewed  following  production  of any  evidence,  provision  of any
     indemnity and payment of any of the Company's out of pocket expenses as the
     Board of Directors  will  require.  In case of  defacement  or wearing out,
     renewal will require delivery of the old certificate.

(f)  The Company may destroy Share  certificates  which have been canceled if at
     least seven (7) years have passed from the  cancellation  date. The Company
     may also destroy Share transfer forms or certificates if at least seven (7)
     years have passed from the Share transfer date.


8.   SHARE WARRANTS, OPTIONS AND DEBENTURES

     The Company may issue from time to time Share warrants,  options on Shares,
     debentures and similar forms of securities. The price, terms and conditions
     of any such securities will be determined by the Board of Directors.



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9.   LIEN ON SHARES

(a)  The  Company  will  have a lien on  every  Share  for all  moneys,  whether
     currently  payable or not,  called or  payable  in  respect of that  Share.
     However,  the Board of  Directors  may at any time  declare any Share to be
     wholly or partly exempt from the provisions of this Article.  The Company's
     lien,  if any,  on a Share  will  extend to all  dividends  payable on that
     Share.

(b)  The  Company  may sell any  Shares  on which it has a lien at such time and
     manner as will be determined by the Board of  Directors.  However,  if some
     sum on which  there is a lien is  currently  payable,  no sale will be made
     until  fourteen  (14)  days  after  sending  a  notice  in  writing  to the
     registered Shareholders, demanding payment of such sum and giving notice of
     the  Company's  intention  to sell in  default.  To give effect to any such
     sale,  the Board of Directors may authorize  transfer of the Shares sold to
     the  purchaser  who will be  registered  as the holder of the  Shares.  The
     Company  will receive the net proceeds of the sale which will be applied in
     payment  of the sum then  payable  on the  lien.  The  balance  of the sale
     proceeds, if any, will be paid to the person holding the Shares immediately
     before  the sale,  subject  to any lien for sums  that  were not  currently
     payable for the Shares before the sale.


10.  REDEEMABLE SHARES AND WARRANTS

     Subject to the applicable  provisions of the Law, the Company may issue and
     redeem redeemable preference Shares and redeemable warrants.


11.  CALLS ON SHARES; FORFEIT OF SHARES

(a)  The Board of Directors may, in its discretion,  from time to time authorize
     the amount and manner of the  consideration  to be given to the Company for
     Shares. The Board may also make calls on Shareholders for any moneys unpaid
     on their Shares. Each Shareholder will be liable to pay the amount of every
     call  so  made  on  him to  the  persons  and  at  the  times,  places  and
     installments  specified by the Board. A call may be revoked or postponed as
     the Board may determine.

(b)  A call  will be  considered  to have  been  made at the time  the  Board of
     Directors approves the resolution authorizing such call.

(c)  The joint  Shareholders of a Share will be jointly and severally liable for
     the payment of all calls and related installments.

(d)  The  Board of  Directors  may,  at its  discretion,  authorize  receipt  of
     advances from any Shareholder relating to future calls on Shares. The Board
     may  authorize  interest  to be paid as may be  agreed  with the  advancing
     Shareholder.

(e)  Any sum that, by the terms of a Share, is payable on the Share's  allotment
     or at any fixed date, will be considered to be a call duly made and payable
     on the date fixed for  payment.  In case of  non-payment  of such sum,  the
     relevant provisions of these Articles will apply as if such sum were a call
     duly made and notified according to these Articles.



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(f)  The Board of Directors may, on the issue of Shares,  differentiate  between
     the  Shareholders  as to the  amount  of calls to be paid and the  times of
     payment.

(g)  If any Shareholder fails to pay all or part of any call or installment of a
     call on or  before  the day  appointed  for  such  payment,  the  Board  of
     Directors may serve a notice on such  Shareholder.  The notice will require
     payment of the amount remaining unpaid together with interest, at such rate
     as the Board will  determine,  and any  expenses  that may have  accrued by
     reason of such  non-payment.  The  notice  will name a date,  not less than
     fourteen  (14) days from the date of the  notice,  on or before  which such
     call or  installment,  and all interest  and expenses  that have accrued by
     reason  of such  non-payment  are to be paid.  It will  also name the place
     where  payment  is to be  made,  and  will  state  that  in  the  event  of
     non-payment  on or before the time and at the place  appointed,  the Shares
     for  which  such  call was made  will be  liable  to be  forfeited.  If the
     requirements  of any such  notice  are not met,  any Share  for which  such
     notice has been given may,  before the  payment  required by the notice has
     been made,  be  forfeited by a  resolution  of the Board to that effect.  A
     forfeiture  of Shares will include all  dividends  applicable to the Shares
     not  actually  paid before the  forfeiture,  even if the  dividend has been
     declared.

(h)  When any Shares have been  forfeited  in  accordance  with these  Articles,
     notice of the forfeiture  will be promptly  given to the  Shareholder or to
     the person entitled to the Shares by  transmission,  as the case may be. An
     entry of such notice having been given and of the date of the forfeiture of
     the applicable Shares will be made in the Register.  However,  a forfeiture
     will not be invalid  due to not giving  such notice or making such entry in
     the Register.

(i)  Following a forfeiture,  the Board of Directors may, at any time before the
     forfeited  Share has been  otherwise  disposed of, revoke the forfeiture on
     terms determined by the Board.

(j)  Every forfeited  Share may be sold or reallotted or otherwise  disposed of,
     to any other person, on such terms as the Board of Directors may determine.
     Any  forfeited  Share held by the Company will be  considered as a Treasury
     Share.

(k)  A person whose Shares have been  forfeited will remain liable to pay to the
     Company  all  calls  made  and  not  paid  on such  Shares  at the  time of
     forfeiture, and interest thereon to the date of payment, in the same manner
     in all  respects  as if the  Shares  had not been  forfeited.  He will also
     remain  liable to satisfy  any claims and demands  which the Company  might
     have enforced  regarding the Shares at the time of forfeiture,  without any
     deduction  or  allowance  for  the  value  of the  Shares  at the  time  of
     forfeiture.  However,  if the Company chooses to sell the forfeited  Shares
     then the net consideration  accepted by the Company for such Shares will be
     deducted  from the amount the person  whose  Shares have been  forfeited is
     liable to pay the Company.

(l)  The  forfeiture  of a  Share  will  cause  the  extinction  at the  time of
     forfeiture all claims and demands against the Company  regarding the Share,
     and all other rights and  liabilities  relating to the Share as between the
     forfeiting Shareholder and the Company, except as provided by law.



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(m)  A written  declaration,  that the  declarant is a Director and that a Share
     has been duly forfeited according to these Articles and stating the date of
     forfeiture,  will  be  conclusive  evidence  of  the  facts  stated  in the
     declaration  against any persons  claiming to be entitled to the  forfeited
     Shares.  Such  declaration,  together  with the  Company's  receipt for the
     consideration,  if any,  given for the  forfeited  Shares on their  sale or
     disposition, and a duly signed Share certificate delivered to the purchaser
     will constitute good title to the Shares. Such purchaser will be registered
     as the holder of the Shares.


12.  TRANSFER OF SHARES

(a)  Subject to the restrictions in these Articles, Shares will be transferable.
     Every  transfer  must be in writing in any usual or common form, or in such
     other form as the Board of  Directors  may from time to time  approve.  The
     written  form of  transfer  will be  delivered  to the  Registered  Office,
     accompanied  by a  true  copy  of  the  certificate  of  the  Shares  to be
     transferred,  and any other  evidence as the Board may require to prove the
     title of an intending transferor.

(b)  The  written  form of  transfer  of a Share  will be  executed  both by the
     transferor and the transferee.  The transferor will be considered to remain
     the Shareholder until the name of the transferee is entered in the Register
     for the applicable Shares.

(c)  The Board of  Directors  may  decline to register  any  transfer of Shares,
     which have not been fully paid up.

(d)  The Board of Directors may  determine a fee to be charged for  registration
     of a transfer.

(e)  The  registration  of transfers may be suspended at such times and for such
     periods as the Board of Directors may determine,  not to exceed thirty (30)
     days in any calendar year.


13.  TRANSMISSION OF SHARES ON DEATH, BANKRUPTCY OR DISSOLUTION

(a)  In the case of death,  bankruptcy or  dissolution  of a  Shareholder,  that
     Shareholder's  rightful  successor  in  interest  will be  entitled  to the
     Shareholder's Shares by transmission as provided in this Article.

(b)  If a deceased  Shareholder  was a joint  Shareholder,  his surviving  joint
     Shareholder  will be the successor in interest.  If a deceased  Shareholder
     was a sole  Shareholder,  or  has  no  surviving  joint  Shareholders,  the
     executors  or  administrators  of the  deceased,  or in their  absence  the
     legally declared heirs,  will be recognized by the Company as the successor
     in interest to the Shares.  If the  Shareholder was a legal entity declared
     bankrupt or  otherwise  declared  dissolved,  then its  legally  recognized
     successor in interest will be recognized by the Company as receiving  title
     to the applicable Shares.

(c)  Nothing  in  these  provisions  will  release  the  estate  of  a  deceased
     Shareholder  from  any  liability  for  any  Shares  held  by the  deceased
     Shareholder.



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<PAGE>

(d)  Any person  becoming  entitled to a Share in consequence of a Shareholder's
     death, bankruptcy or dissolution may, upon producing such evidence of title
     as the Board of Directors will require,  be registered  himself as a holder
     of the Share,  or  subject to  provisions  regarding  transfers  of Shares,
     transfer the same to some other person.

(e)  A person entitled to a Share by  transmission  will be entitled to receive,
     and may give a release for, any  dividends or other moneys  payable for the
     Share.  However,  he will not have the right to receive  notices  of, or to
     attend or vote at  General  Meetings  or,  except  as  provided  above,  to
     exercise any of the rights or privileges of a Shareholder  unless and until
     he becomes a Shareholder of the applicable Shares.


14.  REGISTRATION OF COMPANY SECURITIES FOR TRADING ON SECURITIES EXCHANGES.

     The Board of Directors  may authorize  Shares or any other duly  authorized
     Company securities to be registered for trading on securities  exchanges in
     Israel and/or in other jurisdictions.


15.  BORROWING POWERS

     The Board of Directors may, from time to time, at its discretion, determine
     a framework  of credit or a specific sum the Company may raise or borrow or
     secure the payment of such credit or sum for  Company  purposes.  The Board
     may  authorize  securing the repayment of such sum in such manner and terms
     as it may  decide.  This may  include  the issue of  debentures  or similar
     instruments  of the  Company  secured by all or any part of the present and
     future property of the Company,  including its then existing uncalled Share
     Capital.


16.  DIVIDENDS AND RESERVES

(a)  The Board of Directors  may approve  dividends to be paid from time to time
     to the Shareholders  according to the  Shareholders'  respective rights and
     may fix the record date and time for payment. The dividend will be reported
     to the next  Annual  Meeting.

(b)  Subject to any  preferential  or limited rights to receive  dividends,  all
     dividends  will be  declared  and paid  according  to the  amounts  paid or
     credited  as  paid  on  the  applicable   Shares.  All  dividends  will  be
     apportioned  and paid  proportionately  to the amounts  paid or credited as
     paid on the Shares  during any portion of the period for which the dividend
     is paid.  However,  a Share may be issued on terms  providing  that it will
     qualify for dividends only from a particular date.

(c)  No dividend will be paid other than out of surplus earnings as permitted by
     the applicable  provisions of the Law relating to capital  preservation and
     allocation.  However,  the  Company  may request a court to allow it to pay
     dividends under other terms permitted by the Law.



                                       12
<PAGE>

(d)  Dividends  will  be paid  to  Shareholders  recognized  by the  Company  in
     accordance  with Article 7(c) above,  at the time the dividend is declared,
     as the  Shareholders  for the  Shares  for  which  the  dividend  has  been
     declared.

(e)  Notice of the  declaration of any dividend,  whether  interim or otherwise,
     will be given to the entitled Shareholders in the manner described in these
     Articles for notices to Shareholders.

(f)  Unless  otherwise  directed by the Board of Directors,  any dividend may be
     paid by check,  warrant or bank transfer to the  registered  address of the
     person entitled,  or in case of joint Shareholders to the one of them first
     named in the  Register  regarding  the joint  holding.  The  receipt of the
     person  whose name on the date of the dividend  declaration  appears on the
     Register as the owner of any Share,  or in the case of joint  Shareholders,
     of anyone  of such  joint  Shareholders,  will be a good  discharge  to the
     Company of all payments made for such Share. All dividends unclaimed for up
     to seven (7) years after having been  declared may be invested or otherwise
     used as directed by the Board for the benefit of the Company until claimed.
     After such time the Company will have no  obligation  to pay the  unclaimed
     dividend.  No unclaimed dividend or interest will bear interest against the
     Company.

(g)  The  Board of  Directors  may  deduct  from  any  dividend  payable  to any
     Shareholder  all sums of money,  if any, then payable by him to the Company
     on account of calls or otherwise in relation to the Company Shares.


17.  CAPITALIZATION OF RESERVES

(a)  The Board of Directors may, from time to time, direct the setting aside out
     of the profits of the Company and the  allocation  to reserves of such sums
     as the Board may decide.  All sums  allocated to any such reserve  will, at
     the discretion of the Board, be applicable for:

     (1)  meeting contingencies;

     (2)  the liquidation of any debt or liability of the Company;

     (3)  maintaining any properties of the Company;

     (4)  meeting losses on realization of, or writing down, investments (either
          individually or in the aggregate);

     (5)  equalizing or paying dividends or bonus Shares; or

     (6)  any other purpose to which Company profits may be properly applied.

(b)  All sums  allocated  to a  reserve  may,  pending  any  other  applications
     authorized by these Articles,  be invested  together with any other Company
     funds in the ordinary  course of business and without it being necessary to
     distinguish  between the investments of the reserves and investments of the
     other moneys of the Company or between investments of reserves of different
     types.



                                       13
<PAGE>

(c)  The Board of  Directors  may  direct  establishment  of a  capital  reserve
     account and apply such account in any manner  authorized by these  Articles
     or by law.

(d)  Subject to any legal requirements, the General Meeting may at any time pass
     a resolution that any sum be capitalized, provided that it is:

     (1)  not required  for the payment or  provision of any fixed  preferential
          dividend;

     (2)  not then  allocated  to any  reserve  fund or  reserve  account of the
          Company,  including  premiums  received  on the  issue of any  Shares,
          debentures or similar Company securities; and

     (3)  undivided net profit held by the Company.

(e)  If a  resolution  as  provided  in  Article  17(d)  above  is  passed,  the
     resolution  will also provide that such sum be available  for  distribution
     and be  appropriated  as capital to the  Shareholders  in the proportion in
     which they would have been entitled to receive dividends and in such manner
     as the resolution may direct.

(f)  In accordance with the specific resolution adopted according to Articles 17
     (d) and (e) above,  the Board of Directors will apply such sum in paying up
     in full any unissued  Shares in the Share  Capital of the Company on behalf
     of the Shareholders. The Board will direct appropriation of such Shares and
     then  distribution  credited  as fully  paid up  proportionally  among such
     Shareholders   in  satisfaction  of  their  Shares  and  interests  in  the
     capitalized sum. Alternatively, the Board will direct application of all or
     part of such sum on behalf of such Shareholders in paying up all or part of
     any uncalled  balance that will then be unpaid  regarding any issued Shares
     held by such  Shareholders,  or otherwise deal with such sum as directed by
     such  resolution.  Where  difficulty  arises  in  connection  with any such
     distribution, the Board may resolve the matter as it sees fit.


18.  CONVENING OF GENERAL MEETINGS

(a)  General  Meetings will be held at least once in every  calendar year at the
     time and place,  and with an agenda,  as may be  determined by the Board of
     Directors.  Shareholders  representing  at least one  percent  (1 %) of the
     Company's  voting  power  may  request  the  Chairman  of the  Board to add
     appropriate  items to a General  Meeting  agenda.  Each such annual General
     Meeting  will be called an "Annual  Meeting",  and any other  Shareholders'
     meeting will be called an "Extraordinary Meeting".

(b)  Each Annual Meeting will take place no later than fifteen (15) months after
     the previous  Annual  Meeting,  but no later than the end of the applicable
     calendar year. The Board may convene an  Extraordinary  Meeting whenever it
     finds it necessary.

(c)  The Board of Directors will convene an Extraordinary  Meeting on receipt of
     a written request from any of:

     (1)  two (2) Directors or twenty-five percent (25%) of the total number of,
          Directors;



                                       14
<PAGE>

     (2)  one (1) or more  Shareholders,  holding at least five  percent (5%) of
          the  issued  Share  Capital  and at  least  one  percent  (1%)  of the
          Shareholders' voting power; or

     (3)  one (1) or more Shareholders holding no less then five percent (5%) of
          the Company's issued voting Shares.

(d)  An  Extraordinary  Meeting  requested  under  Article  18(c)  above will be
     convened within fifty-six (56) days of submission of the Board's receipt of
     a proper written request to convene an Extraordinary  Meeting. If the Board
     of  Directors  fails to convene such meeting  within such time,  then,  the
     required  Extraordinary  Meeting may be convened, in the same manner as for
     other   Extraordinary   Meetings,   by  any  of  the  Directors  and/or  by
     Shareholders  (representing at least one-half of such Shareholders'  voting
     rights), who requested the convening; provided it is convened no later than
     three (3) months after submission of the written request to the Board.

(e)  The Board of Directors will establish a record date in accordance  with the
     requirements of the Law for Shareholders  entitled to receive notice of and
     vote at a General Meeting.

(f)  A written  notice of the convening of a General  Meeting will be given,  as
     required by the Law, at least  twenty-one (21) days in advance.  The notice
     will  specify  the  place,  date and time of the  Meeting  as well as other
     requirements  specified  in the Law.  The place of the  meeting  will be in
     Israel. The date of any Extraordinary  Meeting convened under Article 18(c)
     above  will be not later than  thirty-five  (35) days after the date of the
     notice.


19.  PROCEEDINGS AT GENERAL MEETINGS

(a)  No business will be transacted  at any General  Meeting  unless a quorum is
     present. The quorum at any General Meeting, except an Extraordinary Meeting
     convened in accordance  with Article 18(c) above,  will be at least two (2)
     Shareholders  present in  person,  by Proxy or by a Voting  Instrument  and
     holding or representing between them at least one-third (1/3) of the issued
     voting Shares.

(b)  If within  one-half (1/2) hour from the time appointed for the holding of a
     General  Meeting a quorum is not present,  the meeting will be adjourned to
     the same day,  time and place in the next week,  or to such other day, time
     and place as will be  determined by the Board of Directors by notice to the
     Shareholders.  If at such adjourned  meeting a quorum is not present within
     one-half  (1/2) hour from the time  appointed  for  holding  the  adjourned
     meeting, then two (2) Shareholders  representing at least ten percent (10%)
     of the  Shareholders'  voting  power,  present in person,  by Proxy or by a
     Voting Instrument will be a quorum.

(c)  If the General Meeting  adjourned is an  Extraordinary  Meeting convened in
     accordance to Article  18(c) above,  then no business will be transacted at
     such adjourned  Extraordinary  Meeting unless a quorum is present comprised
     of:

     (1)  one (1) or more Shareholders holding no less then five percent (5%) of
          the issued  Share  Capital and one percent (1%) of the voting power of
          the Company; or



                                       15
<PAGE>

     (2)  one or more Shareholders holding no less then five percent (5%) of the
          issued voting Shares.

(d)  Except as provided in these  Articles,  the Law and the Securities Law, all
     business  transacted  at a General  Meeting will be decided by a resolution
     adopted by a simple majority of the votes cast at the General Meeting,  not
     taking into account abstentions.

(e)  The  Chairman  of the  Board of  Directors,  will  preside  at any  General
     Meeting,  but if  there  will be no  such  Chairman,  or if at any  General
     Meeting he will not be present  within  fifteen (15) minutes after the time
     appointed for holding the meeting, or is unwilling to act as chairman,  the
     Shareholders  present  will  choose any  Director to act as chairman of the
     meeting. If no Director is present, or if all the Directors present decline
     to take the chair,  the  Shareholders  present  will  choose a  Shareholder
     present to be chairman of the meeting.

(f)  The Chairman may, with the consent of any General Meeting at which a quorum
     is present,  (and will if so directed by the  meeting)  adjourn the meeting
     from time to time and from place to place.  Whenever  a General  Meeting is
     adjourned for twenty-one (21) days or more, notice of the adjourned General
     Meeting  will be given  in the  same  manner  as for the  original  General
     Meeting.  No  Shareholder  will have the  right to any  other  notice of an
     adjournment  or of the business to be transacted  at any adjourned  General
     Meeting  other than the business  which might have been  transacted  at the
     original General Meeting which was adjourned.


20.  VOTING AT GENERAL MEETINGS; VOTING INSTRUMENTS

(a)  Subject to the applicable  record date and any rights or restrictions  then
     existing for a particular  class of Shares,  each Shareholder will have the
     right to vote who is present at a General Meeting either  personally,  by a
     Voting  Instrument in such cases as required or permitted under the Law for
     voting by Voting Instrument, or by Proxy. A Shareholder may vote in respect
     of only part of his Shares, and he may vote in different ways in respect to
     portions of his Shares.

(b)  The vote may be by show of hands, by secret ballot, by Voting Instrument or
     by any other manner  authorized by the Board of Directors  consistent  with
     the Law. A  Shareholder  will have one (1) vote for each Share held by him.
     However,  unless otherwise  determined by the Board, no Shareholder will be
     permitted  to vote at a General  Meeting  or to  appoint a Proxy to so vote
     unless he has paid all calls for  payment and all moneys due to the Company
     from him with respect to his Shares.

(c)  A Proxy  present  at a  General  Meeting  will  have the same  rights  as a
     Shareholder with respect to voting at a General  Meeting.  A Proxy need not
     to be a Shareholder.

(d)  The vote of the senior of any joint  Shareholders,  whether  in person,  by
     Voting  Instrument  or by Proxy,  will be accepted to the  exclusion of the
     votes of other  joint  Shareholders.  For the  purpose  of these  Articles,
     seniority  will be determined by the order in which the names appear in the
     Register.



                                       16
<PAGE>

(e)  An objection  to a  Shareholder's  or a Proxy's  right to vote in a General
     Meeting must be raised at the applicable meeting or adjourned meeting where
     that person was  supposed to vote.  The chairman of the meeting will decide
     whether  to accept or  reject  any  objection  raised  at the  proper  time
     regarding the vote of a Shareholder or Proxy,  and the chairman's  decision
     will be final.  Every vote not disqualified as provided above will be valid
     for all matters at the General Meeting.

(f)  A Shareholder that is a corporation or other form of legal entity will have
     the  right to  appoint  a person to be its  representative  at any  General
     Meeting.  Such  appointment.  must be authorized in writing by the Board of
     Directors, president or general manager or similar body of such entity. The
     representative  so  appointed  will have the right to exercise on behalf of
     the entity he  represents  all the  powers  that the  entity  itself  might
     perform in connection with the General Meeting.

(g)  A Shareholder  who has been declared  legally  incompetent or has otherwise
     had a legally appointed guardian,  may, following a proof of appointment of
     a legal  guardian  or  similar  representative,  vote at a General  Meeting
     through  such  guardian  or  representative,  whether in person,  by Voting
     Instrument or by Proxy.

(h)  A vote by Proxy or a Voting  Instrument  will be  considered  valid even if
     there  has  been  the  death  or   declaration  of   incompetence   of  the
     appointee/signatory  or the cancellation of the Proxy appointment or Voting
     Instrument  or expiration of a Proxy  appointment  or Voting  Instrument in
     accordance  with any law, or the transfer of the Shares for which the Proxy
     appointment or Voting Instrument was given,  unless the Company receives at
     the  Registered  Office,  prior to a General  Meeting,  a written notice as
     specified below. For a Voting Instrument or Proxy appointment that has been
     provided  to the Company for a specific  General  Meeting to be  considered
     invalid,  a written notice of cancellation of a Voting  Instrument or Proxy
     appointment  must be duly signed by the applicable  Shareholder  specifying
     the applicable Shares, the name of the Shareholder, legal representative or
     successor  in  interest  and  nature  of the event  invalidating  the Proxy
     appointment or Voting Instrument. In the event of voting by a secret ballot
     or by Voting Instrument, a notice canceling the appointment of a Proxy will
     be valid it if is signed by the  appointee/signatory  and  received  at the
     Registered Office no later than one (1) hour before beginning the vote.

(i)  A  Shareholder  will  have  the  right,  where  permitted  or  required  by
     provisions of the Law relating to Voting  Instruments,  to vote by a Voting
     Instrument  as an  alternative  to voting  in  person  or by Proxy.  In all
     applicable cases, the Voting Instrument will be sent to Shareholders before
     the applicable General Meeting no later then the time required in the Law.

(j)  A  Shareholder  has the right to vote by a separate  Proxy with  respect to
     each  Share  held by him,  provided  that each  Proxy  will have a separate
     letter of appointment  containing the serial number of the Shares for which
     the Proxy is entitled to vote. If a specific Share is included in more than
     one (1)  letter of  appointment,  then no Proxy will have the right to vote
     such Share.

(k)  An  instrument  appointing a Proxy which is not limited in time will expire
     twelve (12) months after the date of its execution.  If the  appointment is
     for a limited period,  even if more than twelve (12) months, the instrument
     will be considered valid for the period specified in the instrument.



                                       17
<PAGE>

     (l)  A Voting  Instrument,  letter  of  appointment  of a  Proxy,  power of
          attorney or other  instrument  relating to voting at a General Meeting
          must be in writing.  The form of the Voting  Instrument or the form of
          appointing  a  Proxy  will  be in  any  appropriate  form  as  may  be
          determined by the Board of  Directors.  The signature of the appointor
          or voting Shareholder will be confirmed by a lawyer,  notary,  bank or
          in any other manner acceptable to the Board. The original or a copy of
          such confirmed  instrument will be delivered to the Registered Office,
          or at such  other  place in Israel  or abroad as the Board may  direct
          from time to time,  at least  twenty-four  (24) hours  before the time
          appointed for the applicable  original or adjourned  General  Meeting.
          Otherwise, that person will not be entitled to vote that Share through
          the instrument.


21.  PROXY STATEMENTS

(a)  Subject to the  applicable  provisions  of the Law, the Board of Directors,
     and in the case of a General Meeting in accordance with Article 18(c) above
     those  Directors and  Shareholders  entitled to convene such  meeting,  may
     solicit the  Shareholders by a written Proxy Statement in order to persuade
     the  Shareholders  regarding  their  vote in a General  Meeting.  The Proxy
     Statement will be distributed by the Company,  at its own expense together,
     with the Voting Instrument, if any, relating to that General Meeting.

(b)  The persons  authorized to distribute  Proxy Statements under Article 21(a)
     above may send  additional  Proxy  Statements,  similarly  distributed,  in
     response  to any  other  solicitations  forwarded  to the  Shareholders  in
     connection with a General Meeting.


22.  ROLE AND COMPOSITION OF THE BOARD OF DIRECTORS

(a)  The Board of  Directors  will  determine  the  policies  of the Company and
     oversee the  performance of the duties of the President.  The duties of the
     Board will include,  among others,  any  mandatory  Board  responsibilities
     specified  in the Law or the  Securities  Law.  The  Board  will  have  all
     residual  powers not granted  under  these  Articles or by law to any other
     Company body.

(b)  The General  Meeting may assume powers  granted under these  Articles or by
     law to the Board of Directors.  However, any decision to assume such powers
     must specify the matters and time period for which such powers are assumed.

(c)  The number of Directors  may be  determined  from time to time at a General
     Meeting. The number of Directors comprising the Board will be at least five
     (5) and not more than seventeen  (17).  Until  otherwise  determined by the
     Board or at a General  Meeting,  the number of Directors  will be ten (10).
     The Board will  include at least two (2) External  Directors in  accordance
     with the  requirements of the Law. A Director need not to be a Shareholder.
     The  President  may serve as a Director in  accordance  with Article  27(c)
     below.



                                       18
<PAGE>

(d)  The  compensation  to the Directors will be approved at a General  Meeting.
     The Directors  will be entitled to be reimbursed  for  reasonable  expenses
     incurred by them in carrying out Company business.

(e)  No Director,  other than an External Director,  will be disqualified due to
     holding any office in the Company or any  affiliated  entity of the Company
     other  than  the  office  of  Internal  Auditor  or  Independent  Certified
     Accountant.  A Director may also contract with the Company or an affiliated
     entity of the Company either as vendor, purchaser or otherwise,  whether on
     his own behalf or as a director or  representative  of another  entity.  No
     such holding of office by a Director or such contract entered into by or on
     behalf of the  Company  in which a Director  will be in any way  interested
     will be voided,  nor will any  Director be liable to account to the Company
     for any profit arising from any such office,  or contract by reason only of
     such  Director  holding  that  office  or of  the  fiduciary  relations  so
     established.

(f)  A Director,  other than an External Director, need not be a resident of the
     State of Israel.


23.  ELECTION, APPOINTMENT AND REMOVAL OF DIRECTORS

(a)  Directors  will be  elected  annually  by the  Shareholders  at the  Annual
     Meeting. Directors will hold office until the conclusion of the next Annual
     Meeting or until  their  earlier  removal or  resignation.  However,  if no
     Directors are elected at an Annual Meeting,  then the persons who served as
     Directors immediately prior to the Annual Meeting will continue to serve as
     Directors  unless  otherwise  determined  by the  Annual  Meeting or by the
     Board. Except as provided in Article 24 below regarding External Directors,
     Directors will be eligible for re-election.

(b)  A person  nominated by the Board of Directors  may be elected at the Annual
     Meeting  or a  General  Meeting  to the  office  of  Director.  However,  a
     Shareholder  entitled to vote at that Annual Meeting or General Meeting may
     nominate a candidate  for Director by  submitting  a written  notice to the
     Company at the  Registered  Office,  no later than seven (7) days after the
     date  notice  is given of the  meeting,  signed by the  Shareholder  of his
     intention to propose at that  meeting a candidate  for Director to which is
     attached the written consent and resume of such nominee.

(c)  The  Chairman  of the Board of  Directors  will be  appointed  by a General
     Meeting from the  Directors who continue to hold office as Directors by the
     conclusion of such General  Meeting or from the Directors  elected to their
     office in such General Meeting. Such Director will serve as Chairman of the
     Board of Directors  until he ceases to hold the office of Director or until
     he is replaced by the General Meeting.

(d)  The Board of Directors will have the power to appoint additional  Directors
     if the current  number of Directors is less than ten (10) or other  maximum
     number  approved  at a General  Meeting or by the Board.  Any  Director  so
     appointed will hold office until the conclusion of the next Annual Meeting,
     unless he is removed or resigns earlier.  A Director will state the reasons
     for his resignation.

(e)  If the number of  Directors  is reduced  below ten (10) or any other number
     that may be determined by a General Meeting, and until additional Directors
     are elected or  appointed



                                       19
<PAGE>

     so that the  number  of  Directors  is ten  (10) or such  other  number  so
     determined by the General  Meeting,  the Board may continue to act. In such
     case, the majority  required for any act of the Board of Directors,  except
     for the calling of a General Meeting,  will be at least  seventy-five (75%)
     of the number of Directors before the reduction.

(f)  Subject  to the  terms of any  applicable  agreement,  a  Director  will be
     removed if he:

     (1)  becomes bankrupt or enters into similar status;

     (2)  becomes deceased or is declared legally incompetent;

     (3)  resigns his office by notice in writing given to the Company; or

     (4)  is removed by a resolution of a General Meeting.

(g)  A Director  may appoint a  substitute  director in his place.  A substitute
     Director must be qualified under the Law to serve as a substitute Director,
     and if his  appointment  is for more than one meeting it will be subject to
     the approval of the Board. Such person may not act as a substitute Director
     for more than one (1) Director at the same time. The same rules,  including
     compensation,  will apply to a  substitute  Director as to the Director who
     appointed  him, and the  substitute  Director may  participate in Board and
     Board  committee  meetings in the same manner as the Director who appointed
     him. Subject to the Law, a Director who has appointed a substitute Director
     may  revoke  the  appointment  at any time.  In  addition,  the office of a
     substitute  Director  will be  vacated  at any time that the  office of the
     Director  who  appointed  the  substitute  is vacated for any  reason.  Any
     appointment or revocation of the appointment of a substitute  Director will
     be made by notice in writing to the  substitute  Director  and the Company.
     The appointment or revocation, as the case may be, will become effective on
     the later of the date of receipt  of the above  notice or the date fixed in
     the notice.


24.  EXTERNAL DIRECTORS

(a)  The Board of Directors  will  include at least two (2)  External  Directors
     complying with the qualifications described in the Law.

(b)  An External  Directors  will be appointed  by a majority  vote at a General
     Meeting, provided that:

     (1)  The  majority  vote at the  General  Meeting  will  include  at  least
          one-third   (1/3)  of  the   total   number   of  the   votes  of  the
          non-controlling  Shareholders voting at the meeting.  For the purposes
          of this Article,  abstentions will not be taken into  consideration in
          counting the total number of the non-controlling Shareholders; and

     (2)  The total number of  non-controlling  Shareholders  voting against the
          resolution  appointing  an  External  Director,  is not more  than one
          percent (1%) of the overall voting rights in the Company.

(c)  The compensation and indemnification of expenses of External Directors will
     be in accordance with the applicable provisions of the Law.



                                       20
<PAGE>

(d)  An External  Director will be appointed for a period of three (3) years and
     his office may be extended by a  resolution  of the General  Meeting for an
     additional  three (3) years.  An External  Director may be removed from his
     office only in accordance with the applicable provisions of the Law.


25.  BOARD OF DIRECTORS MEETINGS

(a)  The Board of  Directors  may  meet,  adjourn  and  otherwise  regulate  its
     meetings as it sees fit.  However,  the Board will meet at least once every
     three (3) months.  Unless otherwise determined by the Board, the quorum for
     a Board meeting will be not less than  two-thirds  (2/3) of the then number
     of Directors.

(b)  Except as provided below,  questions arising at any Directors' meeting will
     be  decided  by a majority  of votes  cast at the  meeting.  In cases of an
     equality of votes the Chairman will not have a second or casting vote.  Any
     resolution  regarding the following  issues will require a special majority
     of seven (7)  Directors,  and unless seven (7)  Directors  vote in favor of
     such resolution, the resolution will be considered rejected:

     (1)  the number of Directors and their appointment;

     (2)  amendment of these Articles;

     (3)  declaration of dividends;

     (4)  allotment of Shares;

     (5)  voluntary liquidation;

     (6)  reorganization of the Company;

     (7)  the purchase and sale of material Company assets;

     (8)  entering into a new line of business; or

     (9)  appointment of the Company's  Internal  Auditor or Independent  Public
          Accountants.

(c)  Each Director will receive reasonable prior notice of a Board meeting. Such
     notice  may be given by any means of  communication  as  determined  by the
     Secretary,  including,  among others, telephone or e-mail. Such notice will
     include the time and location of the meeting and a  reasonable  description
     of the meeting's agenda.

(d)  At the  request of a  Director,  the  Secretary  will at any time  summon a
     meeting  of the Board.  Reasonable  advance  notice of the time,  place and
     agenda of each Board meeting will be given to each Director.  The Directors
     may waive such notice requirement.

(e)  Directors may participate in a Board meeting or a Board  committee  meeting
     by means of a telephone conference or other communications  media, provided
     that all  participating



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<PAGE>

     Directors can hear each other  simultaneously.  Participation by such means
     will be considered as presence in person at a meeting.

(f)  All acts done bona fide by any  meeting of the Board or of a  committee  of
     the Board or by any person acting as a Director  will be valid,  even if it
     is later  discovered  that there was some defect in the  appointment of any
     Director, or that any Director was disqualified.

(g)  The Board of Directors  will cause proper minutes to be made of all General
     Meetings and of the  proceedings  of all meetings of Board of Directors and
     Board  committee  meetings.  Such  minutes  purporting  to be signed by the
     chairman  of  such  meeting,  or by the  chairman  of the  next  succeeding
     meeting,  will be considered conclusive evidence of the facts stated in the
     minutes.


26.  COMMITTEES OF THE BOARD OF DIRECTORS

(a)  Subject to the applicable  provisions of the Law regarding matters that the
     Board may not delegate to a committee,  the Board of Directors may delegate
     any of its powers to committees consisting of at least three (3) Directors,
     including at least one (1) External Director.  Any committee so formed will
     in the exercise of its powers conform to any directions  given to it by the
     Board.

(b)  A Board committee may elect a chairman.  If no such chairman is elected, or
     if at any meeting the chairman is not present  within  fifteen (15) minutes
     after the time  appointed for holding the meeting,  the  committee  members
     present may choose a committee member to be chairman of the meeting. Unless
     otherwise specifically directed by the Board of Directors, the meetings and
     proceedings  of  any  committee  will  be  governed  as  applicable  by the
     provisions in these Articles for regulating the meetings and proceedings of
     the Board.

(c)  A committee  may meet and adjourn as its members may  determine.  Questions
     arising at any  meeting  will be  determined  by a majority of votes of the
     members  present.  In case of an  equality  of  votes,  the  chairman  of a
     committee will not have a second or casting vote.

(d)  The Board of Directors will appoint an Audit Committee composed of at least
     three (3) Directors  qualified under the Law and under all other applicable
     laws,  regulations and rules to serve on the Audit Committee  including all
     External Directors.  The Audit Committee will act under a charter issued by
     the  Board  and  according  to the  requirements  of the Law and all  other
     applicable laws, regulations and rules.

(e)  A resolution in writing signed by the Secretary will serve as evidence of a
     resolution passed at a duly convened meeting of the Board of Directors.


27.  PRESIDENT

(a)  Subject to these  Articles and the Law,  the Board of  Directors  will from
     time to time appoint a President  for such  period,  on such terms and with
     such powers as the Board



                                       22
<PAGE>

     may determine. The appointment of a President is subject to the approval of
     a General  Meeting.  The  compensation of the President may be by salary or
     any other  consideration  as  determined  by the Board  and  approved  by a
     General Meeting.

(b)  A President will be subject to the  provisions of any contract  between him
     and the  Company,  the  terms of which  will be  approved  by the  Board of
     Directors and by the General Meeting, as required by the Law.

(c)  The President may hold, while he is President, the office of a Director, if
     he is elected or  appointed  in  accordance  with the  provisions  of these
     Articles.  If so elected the President is subject to the same provisions as
     resignation and removal as the other  Directors.  In regard to his position
     as President,  the President will be appointed as provided in Article 27(a)
     above and may be  removed by the Board of  Directors.  If he ceases to hold
     the  office of  President  for any  reason  and at that time he serves as a
     Director,  he will immediately cease to be a Director.  In any case, if the
     President does not serve as a Director,  he will be entitled to participate
     in any Board meeting.

(d)  Subject to the  supervision  of the Board of  Directors,  the President may
     exercise all powers of the Company and do on behalf of the Company all acts
     as may be exercised  and done by the Company and that are not by the Law or
     by these Articles required to be exercised or done by other Company bodies.
     No resolution  made by a General  Meeting will  invalidate any prior act of
     the President  that would have been valid if such  resolution  had not been
     made.

(e)  Subject to  applicable  law and the  specific  or general  approval  of the
     Board, the President may delegate any of his powers to another person.

(f)  The General Meeting and/or the Board of Directors may assume powers granted
     under  these  Articles  or by law  to the  President,  provided  that  such
     decision to assume  power  specifies  the matters and time period for which
     such powers are assumed.


28.  SECRETARY

     The Board of Directors  may appoint a Secretary of the Company on any terms
     the Board may  determine.  The Board may also from time to time  appoint an
     acting  Secretary,  who will be considered as the Secretary during the term
     of his appointment.


29.  SIGNATURE AUTHORITY

     The Company's  signature  authority will be in accordance  with a signature
     authority procedure approved by the Board of Directors. The Board may also,
     from time to time,  appoint any individual to sign on behalf of the Company
     for a particular matter. All checks, bank transfers, negotiable instruments
     and  similar  documents  will be signed in  accordance  with the  Company's
     signature authority procedure.



                                       23
<PAGE>

30.  ACCOUNTS

(a)  The Board of  Directors  will cause the  Company's  books of accounts to be
     kept in accordance  with legal  requirements.  The books of account will be
     kept at the  Registered  Office and will be open to the  inspection  of the
     Board of Directors and, as required by the Law, of the Shareholders.

(b)  The Company  will issue  financial  statements  as required by the Law, the
     Securities Law and other applicable  laws. The issued financial  statements
     will be available for inspection by the Board of Directors and Shareholders
     at the Registered Office during regular office hours.


31.  INDEPENDENT CERTIFIED ACCOUNTANTS

(a)  The Company will appoint  Independent  Certified  Accountants  at a General
     Meeting. The Independent  Certified  Accountants will hold office until the
     end of the next Annual  Meeting.  However,  the  Shareholders  at a General
     Meeting may remove the Independent Certified Accountants or extend the term
     of appointment for up to three (3) years.

(b)  The fee of the Independent  Certified  Accountants will be set and approved
     by the Board of Directors and reported to the next Annual Meeting.


32.  INTERNAL AUDITOR

(a)  The  Board  of  Directors,  subject  to the  recommendation  of  the  Audit
     Committee,  will appoint an Internal  Auditor for the  Company.  Within the
     organizational structure of the Company the Internal Auditor will report to
     the  President.  The  Internal  Auditor  may only be removed or replaced in
     accordance with the applicable provisions of the Law.

(b)  The  Internal  Auditor  will submit a yearly audit plan for the approval of
     the Audit Committee. The Internal Auditor will also submit a yearly account
     of his findings to the chairman of the Board of  Directors,  the  President
     and the chairman of the Audit Committee.


33.  NOTICES

(a)  A  notice  to a  Shareholder  may be  served  as a  general  notice  to all
     Shareholders,  by  publication  in a daily  Hebrew  newspaper  appearing in
     Israel.  The date of such newspaper  publication  will be considered as the
     date of service on all the  Shareholders.  The Board of Directors  may also
     decide  that  notice  be  served on each  Shareholder  individually  to his
     registered  address  by  hand,  by mail or by any  other  form of  media or
     transmission   permitted  by  law,  to  the  registered   address  of  each
     Shareholder, provided that such delivery and date thereof can be reasonably
     verified and recorded.  A notice  served on a  Shareholder  by mail will be
     considered as duly served the day after it was placed in the mail.



                                       24
<PAGE>

(b)  A notice  to joint  Shareholders  may be given by the  Company  only to the
     Shareholder named first in the Register for the applicable Shares.

(c)  The  Board  of  Directors  may   authorize   other  methods  of  notice  to
     Shareholders that are consistent with the Law.

(d)  Notices of General  Meetings will contain the  information  required by the
     Law.


34.  INSURANCE AND INDEMNITY

(a)  Subject to the  provisions of the Law, the Company may exempt in advance or
     retroactively,  any Director or Company  officer from any  liability to the
     Company  attributed to damage or loss caused by breach of the Director's or
     officer's duty of care owed to the Company.

(b)  Subject to the  provisions  of the Law, the Company may procure  Directors'
     and officers' liability insurance for the following:

     (1)  breach of duty of care by any  Director or officer owed to the Company
          or any other person;

     (2)  breach  of  fiduciary  duty by any  Director  or  officer  owed to the
          Company,  provided  that such  Director or officer acted in good faith
          and had a  reasonable  basis to assume that the action  would not harm
          the interests of the Company; or

     (3)  any other event for which insurance of a director or officer is or may
          be permitted.

(c)  Subject to the  provisions of the Law, the Company may undertake in advance
     or retroactively to indemnify a Director or Company officer in respect of a
     liability or expense as detailed in Article 34(d) below,  imposed on him as
     a result of an act  carried  out in his  capacity  as a Director or Company
     officer.  However,  such undertaking will be limited to the kinds of events
     that in the Board's opinion are foreseeable at the time of the issue of the
     undertaking  and  will be  limited  to the  amount  fixed  by the  Board as
     reasonable under the circumstances.

(d)  An indemnity,  as provided in Article 34(c) above, may be issued in respect
     of a liability or expense as follows:

     (1)  a monetary  liability imposed on the Director of officer in favor of a
          third  party  under  a  judgment,  including  a  judgment  by  way  of
          compromise or a judgment of an arbitrator approved by a court;

     (2)  reasonable  expenses  of  the  proceedings,  including  lawyers  fees,
          expended  by the  Director  or  officer or imposed on him by the court
          for:

          (a)  proceedings  issued against him by or on behalf of the Company or
               by a third party;

          (b)  criminal  proceedings  from which the  Director  or  officer  was
               acquitted; or



                                       25
<PAGE>

          (c)  criminal  proceedings  in which he was  convicted but that do not
               require proof of criminal intent; or

     (3)  any other  liability or expense for which it is or may be  permissible
          to indemnify a director or an officer.

(e)  Subject to the  provisions of the Law, the Company may issue an undertaking
     in advance or retroactively  to indemnity any person,  including a Director
     or a Company  officer,  who acts or acted on behalf of or at the request of
     the  Company  as a director  or  officer  of  another  company in which the
     Company, directly or indirectly, is a shareholder,  or in which the Company
     has any other interest. Such indemnity will be in respect of a liability or
     expense as detailed in Article  34(d) above,  imposed on him as a result of
     an act carried  out by him in his  capacity as a director or officer of the
     other company.  However,  such  undertaking will be limited to the kinds of
     events that in the Board's opinion are foreseeable at the time of the issue
     of the  undertaking and will be limited to the amount fixed by the Board as
     reasonable under the circumstances.

(f)  Subject to the provisions of the Law:

     (1)  The Company  may  indemnify  any  employee  or  representative  of the
          Company, who is not a Director or a Company officer, for any liability
          or  expense  paid  or  imposed  on him in his  capacity  as a  Company
          employee or  representative  in any legal  proceedings,  due to an act
          carried out by him in good faith in his  capacity as Company  employee
          or  representative.  However,  such  indemnity  may not be given for a
          criminal  indictment  in which he was  convicted  in an  offense  that
          requires proof of criminal intent and the convicting  judgment was not
          reversed on appeal or cannot be issued for an appeal.

     (2)  The Company may issue an undertaking in advance to indemnify a Company
          employee or representative,  who is not a Director or Company officer,
          or to indemnify him retroactively  for any monetary  liability imposed
          or that may be imposed  on him in favor of any third  party in respect
          of an act  carried  out by him in  good  faith  in his  capacity  as a
          Company employee or representative.

(g)  Subject to the provisions of the Law,  nothing in these Articles will limit
     the  Company,  in any manner,  in entering  into an  agreement of liability
     insurance, or in granting an exemption or indemnification in respect of:

     (1)  a Director  or Company  officer,  or a director  or officer of another
          company as provided  in Article  34(e)  above,  to the extent that the
          insurance, exemption or indemnity is not prohibited by law; or

     (2)  any person who is not a Director or Company officer,  or a director of
          another company as provided in Article 34(e) above,  including but not
          limited to employees and  representatives of the Company or such other
          company.

(h)  Notwithstanding the above, any indemnification granted by the Company under
     this  Article  34  shall  not  exceed  twenty-five  percent  (25%)  of  the


                                       26
<PAGE>

     consolidated  equity of the Company as reflected  in its last  consolidated
     Annual  Financial  Statements  published  prior  to  the  payment  of  such
     indemnification.


35.  RECONSTRUCTION AND WINDING-UP

(a)  If the Company will be wound up voluntarily the  liquidators  may, with the
     approval  of a Special  Majority  of the  Shareholders  voting at a General
     Meeting,  divide among the Shareholders  any part of the Company's  assets.
     Such  approval may also vest any part of the  Company's  assets to trustees
     under trusts for the benefit of the  Shareholders  as the  liquidators  may
     determine.

(b)  On any  sale  of the  Company  or  its  assets  through  a  liquidation  or
     winding-up,  a Special  Majority  of the  Shareholders  voting at a General
     Meeting may authorize the Board of Directors or liquidators to:

     (1)  accept fully or partly paid up Shares,  debentures,  or other  Company
          securities,  whether  registered  in  Israel  or other  jurisdictions,
          whether  existing or contingent,  for the purchase in whole or in part
          of  Company  property  and,  if the  profits  of the  Company  permit,
          distribute such Shares, securities or any other Company property among
          the Shareholders without requiring their realization, or vest the same
          in trustees for them; and/or

     (2)  distribute  or  appropriate   the  Company's   cash,   Shares,   other
          securities,  benefits  or  property  for  the  valuation  of any  such
          securities or property as so approved at the General Meeting.  In such
          case,  all  Shareholders  will be bound to  accept  any  valuation  on
          distribution  so authorized,  and will waive all rights in relation to
          such valuation, except where otherwise required by law.


36.  AMENDMENTS TO ARTICLES

     These Articles may be amended,  in whole or in part, by a Special  Majority
     of the Shareholders voting at a General Meeting.








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