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                                                                     Exhibit 1.2

                             THE COMPANIES LAW- 1999
                           A COMPANY LIMITED BY SHARES
                             ARTICLES OF ASSOCIATION
                                       OF
                                  VIRYANET LTD.

                                   PRELIMINARY

1.   In these Articles, unless the context otherwise requires:


     "these Articles" shall mean these Articles of Association of the Company as
     shall be amended from time to time;

     "Auditors" shall mean the auditors of the Company, from time to time;

     The "Board" shall mean the Company's board of directors;

     The "Company" shall mean ViryaNet Ltd.;

     "Director" shall mean a director of the Company, form time to time;

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

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

     "Month" shall mean a Gregorian month;

     The "Office" shall mean the registered Office of the Company as it shall be
     from time to time;

     "Office Holder" shall mean every director and every other person defined,
     under the Law as a "Nosei Misra," including specified executive officers of
     the Company;

     The "Ordinance" shall mean the Companies Ordinance [New Version] 1983, as
     amended, and any regulations promulgated thereunder, and those provisions
     of the Ordinance which are still in effect from time to time;

     The "Register" shall mean the Register of Shareholders that is to be kept
     pursuant to section 127 of the Law or, if the Company shall keep branch
     registers, any such branch register, as the case may be;

     A "Shareholder" shall mean any person or entity that is the owner of at
     least one share, or any fraction thereof, in the Company, as registered in
     the Register;

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     "Writing" shall mean handwriting, typewriting, facsimile, print,
     lithographic printing and any other mode or modes of presenting or
     reproducing words in visible form;

     "Year" shall mean a Gregorian year.

     In these Articles, subject to this Article and unless the context otherwise
     requires, expressions defined in the Law or any modification thereof in
     force at the date on which these Articles become binding on the Company,
     shall have the meaning so defined; and words importing the singular shall
     include the plural, and vice versa; words importing the masculine gender
     shall include the feminine; and words importing persons shall include
     companies, partnerships, associations and all other legal entities. The
     titles of the Articles or of a chapter containing a number of Articles are
     not part of the Article.

     In the event that an Article has been added to these Articles which
     contradicts an original Article found in these Articles, the Articles added
     shall take precedence.


                    LIMITED LIABILITY AND COMPANY OBJECTIVES

2.   The Company is a public company as such term is defined in Section 1 of the
     Law. The liability of the Company's shareholders is limited and accordingly
     each shareholder's responsibility for the Company's obligations shall be
     limited to the payment of the par value of the shares held by such
     shareholder, subject to the provisions of these Articles and the Law.

3.   The Company's objectives are to carry on any business and do any act which
     are not prohibited by law. The Company may also make contributions of
     reasonable sums to worthy purposes even if such contributions are not made
     on the basis of business considerations.


                                     CAPITAL

4.   The share capital of the Company shall consist of NIS 4,200,000 consisting
     of 4,200,000 Ordinary Shares (the "Ordinary Shares"), each having a nominal
     value of NIS 1.0. The powers, preferences, rights, restrictions, and other
     matters relating to the Ordinary Shares are as set forth in the following
     Articles. Warrants and options shall not be considered as shares for
     purposes of these Articles. The Ordinary Shares all rank pari passu in all
     respects except as set forth in the warrant itself.

5.   Subject to the Law and these Articles and to the terms of any resolution
     creating new shares, the unissued shares from time to time shall be under
     the control of the Board which may, subject as aforesaid, allot the same to
     such persons, against cash, or for such other considerations which is not
     cash, with such restrictions and conditions, in excess of their nominal
     value, or at their nominal value, or at a discount to their nominal value,
     and at such times as the Board shall deem appropriate. Subject as
     aforesaid, the Board shall have the power to cause the Company to grant to
     any person the option to acquire from the Company any unissued shares or
     issue to any person other securities convertible or exercisable to or
     rights to acquire shares or other securities of the Company, and on such
     terms as the Board shall deem appropriate.


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6.   The Board shall have the power, to the extent permitted under the Law and
     these Articles, to cause the Company to purchase shares of the Company
     during such period, for such consideration and on such terms as the Board
     shall deem fit.

7.   The Company shall not issue bearer shares or exchange a share certificate
     for a bearer share certificate.

8.   Subject to the Law and these Articles, and without prejudice to any special
     rights previously conferred upon the holders of any existing shares or
     class of shares, the Company may, from time to time, create shares with
     such preferential, deferred, qualified or other special rights, privileges,
     restrictions or conditions, whether in regard to dividend, voting,
     repayment of capital of otherwise as may be stipulated in the resolution or
     other instrument authorizing such new shares.

9.   The Company shall have the power to issue redeemable shares and redeem the
     same all in accordance with, and subject to, the provisions of the Law.


                                  SHAREHOLDERS

10.  If two or more persons are registered in the Register as joint holders of a
     share, they shall be jointly and severally liable for any calls or any
     other liability with respect to such share. However, with respect to
     voting, power of attorney and furnishing of notices, the one registered
     first in the Registers shall be deemed to be the sole owner of the share,
     unless all the registered joint holders notify the Company in writing to
     treat another one of them as the sole owner of the share, unless
     registered, subject to the provisions of Article Error! Reference source
     not found. hereof.

     If two or more persons are registered together as holders of a share, each
     one of them shall be permitted to give receipts binding all the joint
     holders for dividends or other monies or property received from the Company
     in connection with the share and the Company shall be permitted to pay all
     the dividend or other monies or property due with respect to the share to
     one or more of the joint holders, as it shall choose.

11.  Except upon court order so directing, the Company shall not recognize the
     holder of a share as a trustee, and shall not be obligated to recognize a
     right based upon the rules of equity or a right dependent upon a condition
     or a future right or a partial right in a share, or any other right
     whatsoever with respect to the share, except for the exclusive right of the
     registered holder with respect to the share.


                               SHARE CERTIFICATES

12.

     12.1.  A shareholder shall be entitled to receive from the Company
            without payment, one or more certificate(s) that shall state the
            number of shares owned by him, their serial numbers and the amount
            paid on account of their par value. However, in the event of more
            than one person holding a share, the Company shall not be
            obligated to issue more than one certificate to all of the joint
            holders, and the delivery of such a certificate to one of the
            joint holders shall be deemed to be a delivery to all of the
            partners.



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            Where a shareholder has transferred only a part of the shares
            represented in a certificate, the old certificate shall be
            cancelled and he shall be entitled, without charge, to a new
            certificate representing the balance of shares.

     12.2.  Each certificate shall carry the signature or signatures of those
            persons appointed by the Board for this purpose and the stamp or
            seal of the Company.

            A Registration Company (as such term is defined in the Securities
            Law 5728-1968) shall be entitled, without payment, to receive,
            within such time as may be prescribed under the Statutes or, if
            not prescribed as aforesaid, within such time period as the Board
            may deem fit, a certificate that specifies the number and class of
            shares, together with any other details the Company is required,
            under the Law, for inclusion therein that are registered in its
            name in the Register.

            If a share certificate is defaced, lost or destroyed, it may be
            renewed on payment of such fee, if any, not exceeding one United
            States dollar or the New Israeli Shekel equivalent thereof on the
            date of payment and on such terms, if any, as to evidence and
            indemnity as the Board thinks fit.


                                     PLEDGE

13.  The Company shall have a lien and first pledge on any share that is
     registered in the name of any Shareholder (whether registered in the
     Shareholder's name only or together with another or others), but not fully
     paid, for any amount still outstanding with respect to that share, whether
     or not presently payable. Any such pledge shall apply to all dividends and
     other moneys, if any payable in connection with such share. The Board may
     at any time release any share, wholly or in part, temporarily or
     permanently, from the provisions of this Article. Unless otherwise
     provided, registration by the Company of a share transfer shall be deemed
     to be a waiver by the Company of its lien and pledge on those shares.

14.  The Company may sell, in such manner and at such time as the Board thinks
     fit, any pledged shares when the debt, liability or other obligation giving
     rise to the lien has matured, but no sale shall be made unless a written
     request has been furnished to the Shareholder or person who has acquired a
     right in the shares, setting out the amount or obligation or commitment due
     and demanding payment or, fulfillment of the debt, liability or other
     obligation within seven days of service of the notice, and the person fails
     to fulfill his obligation pursuant to the notice within such seven days
     period.

15.  The net proceeds of any such sale of pledged shares shall be applied in
     satisfaction of the debt, liability or other obligation relating to the
     pledged share, and the remainder (if any) shall be paid to the Shareholder
     or to the person who had acquired a right in the share sold, pursuant to
     the above.

16.  After execution of a sale of pledged shares as provided for in Articles 13
     and 14, the Board shall be permitted to sign or to appoint any person to
     sign a deed of transfer of the shares sold and to register the buyer's name
     in the Register as the owner of the shares. Such buyer shall not be
     obligated to supervise the application of monies nor will his right in the
     shares be affected by a defect or illegality in the sale proceedings after
     his name has been registered in the Register with respect to those shares.
     The sole remedy of any person aggrieved by the sale shall be in damages
     only and against the Company exclusively.



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                  TRANSFER OF SHARES AND THE MANAGEMENT THEREOF

17.  The shares of the Company are transferable subject to the restrictions
     contained in these Articles and the Law. Each transfer shall be made in
     writing in any usual or common form, or in any form approved by the Board
     from time to time. Such form shall be delivered to the office, or such
     other place that the Board may from time to time approve, together with the
     transferred share certificates, if share certificates have been issued with
     respect to the shares to be delivered, and any other proof of the
     transferor's title that the Board may require under the Law. The Board may,
     in its absolute discretion, refuse to register a transfer of any share
     which is not fully paid.

18.  The share transfer deed shall be executed both by the transferor and
     transferee, and the transferor shall be deemed to remain a holder of the
     share until the name of the transferee is entered into the register in
     respect thereof. The share transfer deed with respect to a share that has
     been fully paid may be signed by the transferor only.

19.  Every instrument of transfer of a share must be in respect of only one
     class of share.

20.  Subject to Article 23, all instruments of transfer which shall be
     registered in the Register shall (except in case of fraud) be retained by
     the Company, but any instrument of transfer which the Board may refuse to
     register in the Register shall (except in case of fraud) be returned to the
     party presenting the same.

21.  No fee shall be charged:

     21.1.  for registration of a transfer; or

     21.2.  on the registration of any probate, letters of administration,
            certificate of death or marriage, power of attorney, notice or
            other instrument relating to or affecting the title any shares.

22.  The Company shall maintain a Register and, if applicable, a register of
     Substantial Shareholders (as defined in the Law) as required by the Law.
     Subject to and in accordance with the provisions of the Law, the Company
     may cause branch registers to be kept in any other country, and to exercise
     all the other powers mentioned in the Law relating to such branch
     registers. The Company shall also be entitled to appoint a transfer agent,
     whose records shall be deemed a branch register.

23.  The Company shall be entitled to destroy: (a) all instruments of transfer
     of shares and all other documents on the faith of which entries are made in
     the Register at any time after the expiration of six (6) years from the
     date of registration of the same; (b) all dividend mandates and
     notifications of change of name or address at any time after the expiration
     of two (2) years from the date of recording; and (c) all share certificates
     which have been cancelled at any time after the expiration of one (1) year
     from the date of cancellation. If the Company destroys a document in good
     faith and without notice of any claim (regardless of the parties) to which
     the document might be relevant, it shall conclusively be presumed in favor
     of the Company that every instrument of transfer so destroyed was a valid
     and effective instrument duly and properly registered, every share
     certificate so destroyed was a valid and effective document duly and
     properly cancelled and every other document mentioned above so destroyed
     was a valid and effective document in accordance with the recorded
     particulars in the books or records of the Company. Nothing in this Article
     shall be



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     construed as imposing upon the Company any liability in respect of the
     destruction of any document at an earlier date than that provided above or
     if the condition as to good faith and absence of notice is not met.
     References in these Articles to the destruction of any document include
     references to its disposal in any manner.


                             TRANSMISSION OF SHARES

24.  Upon the death of a Shareholder, the remaining partners (in the event that
     the deceased was a partner in a share) or the administrators or executors
     or heirs of the deceased (in the event the deceased was the sole holder of
     the share or was the only one of the joint holders of the share to remain
     alive) shall be recognized by the Company as the sole holders of any title
     to the shares of the deceased. However, nothing herein shall release the
     estate of a deceased holder (whether sole or joint) of a share from any
     obligation to the Company with respect to any share held by the deceased.

25.  Any person becoming entitled to a share as a consequence of the death or
     bankruptcy or liquidation of a Shareholder shall, upon such evidence being
     produced as may from time to time be required by the Board, have the right
     either to be registered as a Shareholder in respect of the share upon the
     consent of the Board or, to transfer such share to another person, subject
     to the provisions contained in these Articles with respect to transfers.

26.  A person becoming entitled to a share because of the death, bankruptcy or
     liquidation of a Shareholder shall be entitled to receive, and to give
     receipts for, dividends or other payments paid with respect to the share
     but shall not be entitled to exercise any of the rights or privileges of
     Shareholder unless and until such person becomes a Shareholder in respect
     of the share.


                                      CALLS

27.  Subject to the provisions of these Article and to the terms of allotment of
     any shares, the Board may from time to time make such calls on the
     Shareholders in respect of all moneys unpaid on their shares (whether on
     account of the nominal amount of the shares or by way of premium or, if the
     shares shall have been issued at a discount to their nominal value, on
     account of all moneys unpaid on such shares) as it may think fit, provided
     that at least 14 (fourteen) days' notice is given of each call. Each
     Shareholder shall be liable to pay the amount of every call so made on him
     to the Board. A call may be wholly or in part revoked or the time fixed for
     its payment postponed by the Board. A Shareholder upon whom a call is made
     shall remain liable for calls made upon him notwithstanding the subsequent
     transfer of the shares in respect of which the call was made. Unless
     otherwise stipulated by the Board in the notice given in respect of the
     call, each payment in response to a call shall be deemed to constitute a
     pro rata payment on account of all the shares in respect of which such call
     was made.

28.  A call shall be deemed to have been made at the time when the resolution of
     the Board authorizing such call was passed.

29.  The joint holders of a share shall be jointly and severally liable for the
     payment of all calls and installments in respect hereof.



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30.  If a call or installment payable in respect of a share is not paid before
     or on the day appointed for payment thereof, the Shareholder from whom the
     call or installment is due shall pay interest on the amount of the call or
     installment from the day such call or installment is payable to the time of
     actual payment at such rate as the Board shall fix, but the Board may waive
     payment of such interest wholly or in part. The provisions of this Articles
     shall not deprive the Company of, or derogate from, any other rights or
     remedies the Company may have against such person pursuant to these
     Articles or applicable law.

31.  No Shareholder shall be entitled to receive any dividend or other payment
     or distribution or be present or vote at any General Meeting either
     personally or (save as proxy for another Shareholder) by proxy, or by any
     other means as may be permitted under the Law, or be reckoned in a quorum,
     or to exercise any other privilege as a Shareholder until such Shareholder
     shall have paid all calls then due and payable on every share registered in
     such Shareholder's name, whether registered alone or jointly with any other
     person, (as referred to in Article 29), together with interest and
     expenses.

32.  Any sum which by the terms of issue of a share is made payable upon
     allotment or at any fixed date, whether on account of the nominal value of
     the share or by way of premium, or, if such share shall have been issued at
     a discount to its nominal value, on account of the amount payable in
     respect of such share, shall for all purposes of these Articles be deemed
     to be a call duly made and payable on the date fixed for payment, and in
     case of non-payment all the relevant provisions of these Articles as to
     payment of interest and expenses, forfeiture or otherwise shall apply as if
     such sum were a call duly made and notified.

33.  The Board may, at its discretion, receive from any Shareholder willing to
     pay in advance all or a part of the amounts then due on account of such
     Shareholder's shares, in addition to any amounts requested for payment. The
     Board shall be permitted to pay such Shareholder: (1) interest at such rate
     as the Board and the Shareholder shall agree upon for the amounts paid in
     advance as aforesaid, or upon the part thereof which is in excess of the
     amounts whose payment was at the time requested on account of the
     Shareholder's shares, and (2) any dividends that may be paid for that part
     of the shares for which the Shareholder has paid in advance.

34.  The Board may at any time cause the Company to repay the amount so advanced
     upon the least three (3) months' written notice to such Shareholder of its
     instruction to do so, unless before the expiration of such notice the
     amount so advanced shall have been called up on the share in respect of
     which it was advanced.


                              FORFEITURE OF SHARES

35.  If a Shareholder fails to pay all or any part of a call or installment of a
     call on or prior to the day appointed for payment thereof, the Board may,
     so long as such amount remains unpaid, serve notice on the Shareholder
     requiring payment of such unpaid amount, together with any interest which
     may have accrued and any expenses that were incurred as a result of such
     non-payment.

36.  The notice shall specify a date not less than seven (7) days from the date
     of the notice, on or before which the payment of the call or installment or
     part thereof is to be made together with interest and any expenses incurred
     as a result of such non-payment. The notice shall also state the place the
     payment is to be made and that in the event of non-payment at or



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     before the time appointed, the share in respect of which the call was made
     will be liable to forfeiture.

37.  If the requirements of any such notice as aforesaid are not complied with,
     any share in respect of which the notice has been given may at any time
     thereafter, before the payment required by the notice has been made, be
     forfeited by a resolution of the Board to that effect. Any such forfeiture
     shall apply to dividends that were declared but not yet distributed with
     respect to the forfeited shares.

38.  Forfeited shares shall be deemed the property of the Company and may be
     sold or otherwise disposed of, on such terms and in such manner as the
     Board sees fit. At any time prior to the sale or disposition of forfeited
     shares, the forfeiture may be canceled on such terms as the Board sees fit.
     Notwithstanding the foregoing, no such cancellation shall stop the Board
     from adopting a subsequent resolution of forfeiture in respect of a failure
     to amounts due in respect of the shares.

39.  The Company may, by resolution of the Board, accept a surrender of any
     share liable to be forfeited hereunder. A surrendered share shall be
     treated as if it has been forfeited.

40.  A person whose shares have been forfeited or surrendered shall cease to be
     a shareholder in respect of them but shall notwithstanding the forfeiture
     or surrender remain liable to pay to the Company all calls made and not
     paid on such shares at the time of forfeiture or surrender, and interest
     thereon to the date of payment in the same manner in all respects as if the
     shares had not been forfeited or surrendered, and to satisfy all (if any)
     claims and demands which the Company might have enforced in respect of the
     shares at the time of forfeiture or surrender without any reduction or
     allowance for the value of the shares at the time of forfeiture. In the
     event of any 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 shares, whether registered in his name or registered jointly
     with any other person forfeited or surrendered as aforesaid.

41.  The forfeiture or surrender of a share shall involve the extinction at the
     time forfeiture or surrender of all interest in and all claims and demands
     against the Company in respect of the share as between the Shareholder
     whose share is forfeited or surrendered and the Company, except only such
     of those rights and liabilities as are by these Articles expressly saved,
     or as are by the Law given or imposed in the case of past Shareholders.

42.  A declaration in writing by a director or secretary of the Company that a
     share in the Company has been duly forfeited on the date stated in the
     declaration shall be conclusive evidence of the facts therein stated
     against all persons claiming to be entitled to the share. That declaration,
     together with the receipt of the Company for the consideration, if any,
     given for the share on the sale or disposition thereof and specifying the
     place of payment of the consideration, shall constitute good title to the
     share. The person to whom the share is sold or disposed of shall be
     registered as the holder of the share and shall not be bound to see to the
     application of the purchase money, if any, nor shall his title to the share
     be affected by any irregularity or invalidity in the proceedings in
     reference to the forfeiture, sale or disposal of the share.

43.  The provisions of these Articles as to forfeiture shall apply in the case
     of non-payment of any sum which, by the terms of issue of a share, becomes
     payable at a fixed time, whether



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     on account of the amount of the share, or by way of premium, as if the same
     had been payable by virtue of a call duly made and notified.


                              ALTERATION OF CAPITAL

44.  With regard to its capital the Company may:

     44.1.  From time to time, by resolution of its Shareholders subject to
            these Articles and the Law:

            44.1.1.  Consolidate and divide all or any of its issued or
                     unissued share capital into shares of larger nominal
                     value than its existing shares;

            44.1.2.  Cancel any shares which at the date of the adoption
                     of such resolution have not been taken or agreed to
                     be taken by any person, and diminish the amount of
                     its share capital by the amount of the shares so
                     cancelled;

            44.1.3.  Subject to applicable laws, subdivide its shares
                     (issued or outstanding) or any of them, into shares
                     of smaller nominal value than is fixed by the
                     Memorandum of Association (if applicable) or these
                     Articles. The resolution whereby any share is
                     subdivided may determine that, as among the holders
                     of the shares resulting from such subdivision, one or
                     more of the share may, as compared with the others,
                     have special rights, or be subject to any such
                     restrictions, as the Company has power to attach to
                     unissued or new share;

            44.1.4.  Reduce its share capital and any capital redemption
                     reserve fund in any way that may be considered
                     expedient and, in particular, exercise any or all of
                     the powers conferred under the Law in relation to
                     such reduction of share capital or capital redemption
                     reserve.

     44.2.  Upon any consolidation or subdivision of shares, settle any
            difficulty which may arise with regard thereto, as it deems fit,
            including (but without prejudice to the generality of the
            foregoing), in the event of a consolidation or any action which
            may result in fractional shares:

            44.2.1.  Allotting, in contemplation of, or subsequent to,
                     such consolidation or other action, such shares or
                     fractional shares sufficient to preclude or remove
                     fractional shareholdings;

            44.2.2.  Subject to Section 295 of the Law, making such
                     arrangements for the sale or transfer of the
                     fractional shares to such person or persons at such
                     times and at such price as the Board thinks fit so as
                     to most expeditiously preclude or remove any
                     fractional shareholdings. The Board shall cause the
                     Company to distribute the net proceeds of any such
                     sale in due proportion among the Shareholders who
                     would have been entitled to the fractional shares so
                     sold or transferred;

            44.2.3.  To the extent as may be permitted under the law
                     redeem or purchase such fractional shares sufficient
                     to preclude and remove such fractional shareholding
                     and the Board shall cause the Company to distribute
                     the net



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                     proceeds payable in connection with such redemption
                     or purchase in due proportion among the shareholders
                     who would have been entitled to such fractional
                     shares; and

            44.2.4.  Determining, as to the holders of shares so
                     consolidated, which issued shares shall be
                     consolidated into each share of a larger nominal
                     value.


                               INCREASE OF CAPITAL

45.  The Company may from time to time, whether or not all the shares then
     authorized have been issued, and whether or not all the shares theretofore
     issued have been fully called up for payment, increase its share capital by
     the creation of new shares. Any such new share capital shall be of such
     amount and divided into shares of such nominal amounts and (subject to any
     special rights then attached to any existing class of shares) bear such
     rights or preferences or be subject to such conditions or restrictions (if
     any) as the resolution approving such share capital increase shall provide.

46.  Except so far as otherwise provided in such resolution or pursuant to these
     Articles, such new shares shall be subject to all the provisions applicable
     to the shares of the original capital of the same class and par value.


                            VARIATION OF CLASS RIGHTS

47.  If at any time the share capital of the Company is divided into different
     classes of shares, the right attached to any class (unless otherwise
     provided by the terms of issue of the shares of that class) may be varied
     only upon consent of a separate General Meeting of the holders of the
     shares of that class. The provisions of these Articles relating to General
     Meetings shall mutatis mutandis apply to every such separate General
     Meeting.

48.  Unless otherwise provided by these Articles, the enlargement of an
     authorized class of shares, or the issuance of additional shares thereof
     out of the authorized and unissued share capital, shall not be deemed, for
     the purposes of Article 47 to vary, modify or abrogate the rights attached
     to previously issued shares of such class or of any other class of shares.


                                BORROWING POWERS

49.  Subject to these Articles and the Law the Board may from time to time,
     cause the Company to borrow or secure the payment of any sum of money for
     the purposes of the Company and raise or secure the repayment of any such
     sum upon such terms and conditions as it sees fit, and, in particular,
     issue bonds, perpetual or redeemable debentures, or other securities or
     mortgage, charge, its undertaking property and assets of the property of
     the Company, both present and future, including its uncalled capital and
     its called but unpaid capital whether outright or as collateral security
     for any debt, liability or obligation of the Company or of any third party.


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                                GENERAL MEETINGS

50.


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

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

51.  All General Meetings other than Annual General Meeting shall be called
     Extraordinary General Meetings. The Board, whenever it sees fit, may, and
     upon a demand in writing as provided for in Section 63(b) of the Law, shall
     convene an Extraordinary General Meeting. Every such demand shall include
     the purposes for which the meeting is called, shall be signed by those
     making the demand (the "Petitioners") and shall be sent to the Office. Any
     such demand may consist of several documents in like form, each signed by
     one or more Petitioners. The date of a meeting called by the Board pursuant
     hereto must be no later than 56 days from the date of submission of the
     demand. If the Board does not call a meeting within 21 days from the date
     of submission of the demand, the Petitioners, or any of them representing
     more than one half of the voting rights held by the Petitioners, may
     convene the meeting by themselves. However, any such meeting shall not be
     held after three months have passed since the date of the submission of the
     demand.

52.  Subject to these Articles, applicable law and regulations, prior notice of
     at least 21 days of any General Meeting, specifying the place, date and
     hour of the meeting, shall be given as, hereinafter provided, to the
     Shareholders thereunto entitled pursuant to these Articles and the Law.
     Non-receipt of any such notice shall not invalidate any resolution passed
     or the proceedings held at that meeting. With the consent of all the
     Shareholders entitled to receive notice thereof, a meeting may be convened
     upon shorter notice or without any notice and in such manner, generally, as
     shall be approved by such Shareholders.

53.  Notice of a General Meeting shall include:

     53.1.  The agenda for such meeting. The contents of such agenda shall
            include, among other things as determined by the Board and subject
            to the Law and these Articles, the following:

            53.1.1.  if such meeting is being held pursuant to a
                     requisition of Shareholders or Directors in the
                     manner as provided by the Law, particulars of the
                     objectives for which such meeting has been called;

            53.1.2.  any subject as may be requested for inclusion in the
                     manner referred to in Article 54;

            53.1.3.  the methods or mechanisms available for submitting
                     written votes; and

            53.1.4.  any other particulars as may be required under the
                     Law.


                                      -11-


<PAGE>

     53.2.  The text of any resolution which is proposed to be put and voted
            upon at such meeting, unless the Law permits a general description
            of the text; and

     53.3.  Any other matter as so required, under the Law, for inclusion in
            any such notice.

54.

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


     54.2.  Any Shareholder or Shareholders of the Company holding, at least,
            one percent (1%) of the voting rights in the issued share capital
            of the Company may, pursuant to the Law, request that the Board
            include a subject in the agenda of a General Meeting to be held in
            the future. Any such request must be in writing, give particulars
            of the subject which is requested to be included in such agenda,
            be signed by the Shareholder or Shareholders making such request
            and must be deposited at the Office and addressed to the Board. In
            addition subject to the Law and the provisions of Article 89, the
            Board shall be required to include such subject in the agenda of
            the meeting only if the request has been delivered to the
            Secretary of the Company not later than (i) with respect to an
            Annual General Meeting of Shareholders, not less than ninety (90)
            days and not more than one hundred and twenty (120) days prior to
            the anniversary date of the immediately preceding annual meeting
            and (ii) with respect to an Extraordinary General Meeting of
            Shareholders, not less than ninety (90) days and not more than one
            hundred and twenty (120) days prior to the proposed date of such
            meeting, provided, however, that in the event that less than
            ninety (90) days notice or prior public disclosure of the date of
            any such meeting is given, such request must have been delivered
            to the Secretary of the Company not later than the close of
            business on the 10th day following the day on which notice or
            prior public disclosure of the meeting was given, provided that
            the preceding provision shall not derogate from the Company's
            obligations pursuant to Section 69(b) of the Law. Each such
            request shall also set forth: (a) the name and address of the
            Shareholder making the request; (b) a representation that the
            Shareholder is a holder of record of shares of the Company
            entitled to vote at such meeting and intends to appear in person
            or by proxy at the meeting; (c) a description of all arrangements
            or understandings between the Shareholder and any other person or
            persons (naming such person or persons) in connection with the
            subject which is requested to be included in the agenda; and (d) a
            declaration that all the information that is required under the
            Law and any other applicable law to be provided to the Company in
            connection with such subject, if any, has been provided. The
            Chairman of the General Meeting may refuse to acknowledge the
            nomination of any person not made in compliance with



                                      -12-

<PAGE>

            the foregoing procedure. The Board will include in the agenda for
            a General Meeting a subject as requested if the Board deems that
            subject suitable for discussion at a General Meeting.

55.  Subject to the Law, all General Meetings shall be held at such time and
     place as the Board may determine. The Board may, in its absolute
     discretion, resolve to enable persons entitled to attend a General Meeting
     to do so by simultaneous attendance and participation at the principal
     meeting place and a satellite meeting place or places anywhere in the world
     and the Shareholders present in person, by proxy or by written ballot at
     satellite meeting places shall be counted in the quorum for and entitled to
     vote at the General Meeting in question, and that meeting shall be duly
     constituted and its proceedings valid, provided that the Chairman of the
     General Meeting is satisfied that adequate facilities are available
     throughout the General Meeting to ensure that Shareholders attending at all
     the meeting place able to:

     55.1.  participate in the business for which the meeting has been
            convened;

     55.2.  hear all persons who speak (whether by the use of microphones,
            loudspeakers audio-visual communications equipment or otherwise)
            in the principal meeting place and any satellite meeting place,
            and

     55.3.  be heard by all other persons so present in the same way.

56.  The Chairman of the General Meeting shall be present at, and the meeting
     shall be deemed to take place at, the principal meeting place.

57.  The officer of the Company who has charge of the Register shall prepare and
     make, at least ten (10) days before every meeting of the Shareholders, a
     complete list of the Shareholders entitled to vote at the meeting, arranged
     in alphabetical order, and showing the address of each Shareholder and the
     number of shares registered in the name of each Shareholder. Such list
     shall be open to the examination of any Shareholder, for any purpose
     germane to the meeting, during ordinary business hours, for a period of at
     least ten (10) days prior to the meeting at a place specified in the notice
     of the meeting or at the place where the meeting is to be held. The list
     shall also be present at the meeting during the whole time thereof, and may
     be inspected by any Shareholder who is present.


                         PROCEEDINGS AT GENERAL MEETINGS

58.  No business shall be transacted at any General Meeting unless a quorum is
     present when the meeting proceeds to business. For all purposes, the quorum
     shall not be less than two (2) Shareholders present in person, or by proxy,
     or deemed by the Law, to be present at such meeting, holding, in the
     aggregate, at least, thirty-three and one-third percent (33 1/3%) of the
     voting rights in the issued share capital of the Company.

59.  If within half an hour from the time appointed for the meeting a quorum is
     not present (or within such longer time not exceeding one (1) hour as the
     Chairman of the meeting may decide), the meeting, if convened upon the
     requisition of the Shareholders, shall be dissolved; in any other case, it
     shall stand adjourned to the same day in the next week at the same place
     and time (unless such day shall fall on a public holiday either in Israel
     or the United States, in which case the meeting will be adjourned to the
     first day, not being a



                                      -13-

<PAGE>

     Friday, Saturday or Sunday, which follows such public holiday), or any
     other day, hour and/or place as the Directors shall notify the Shareholders
     in the notice of General Meeting delivered by the Company pursuant to
     Article 52 in connection with the meeting from which the adjournment
     occurred. If a quorum is not present at the second meeting within half an
     hour from the time appointed for the meeting, any two Shareholders present
     personally or by proxy or any other valid instrument shall Constitute a
     quorum, and shall be entitled to deliberate and to resolve in respect of
     the matters for which the meeting was convened.

60.  The Chairman (if any) of the Board shall preside as Chairman at every
     General Meeting of the Company. If there is no Chairman or if at any
     meeting he is not present within fifteen (15) minutes from the time
     appointed for the meeting, or if he refuses to preside as Chairman of the
     meeting, the deputy Chairman (if any) shall, if present and willing to act,
     preside at the meeting but if neither the Chairman and deputy Chairman are
     present and willing to preside, the Directors present shall choose a
     Director to preside, or if there is only one director present he shall
     preside if willing to act. If there is no Director present and willing to
     preside, the Shareholders present and entitled to vote shall choose a
     Shareholder to be Chairman of the meeting. The Chairman of any General
     Meeting shall not, by virtue of such office, be entitled to vote at any
     General Meeting nor shall the Chairman of a meeting have a second or
     casting vote (without derogation, however from the rights of such Chairman
     to vote as a Shareholder or proxy of a Shareholder if, in fact, he is also
     a Shareholder or a duly appointed proxy).

61.  The Chairman may, with the consent of any meeting at which a quorum is
     present, and shall if so directed by the meeting, adjourn the meeting from
     time to time and from place to place, as the meeting shall decide. The
     Chairman may, at his sole discretion and without the requirement for the
     consent of the meeting, adjourn or otherwise make alternative appropriate
     arrangements for any General Meeting at which in his opinion the venue
     arrangements cannot cater in an orderly fashion so as to enable the
     shareholders present adequately to hear, speak and vote on the matters
     before the meeting. Without prejudice to the generality of the foregoing,
     the Chairman may in such circumstances direct that the meeting be held
     simultaneously in two or more venues connected for the duration of the
     meeting by audio or audio-visual links or in two or more consecutive
     sessions with the votes taken being aggregated or that it be adjourned to a
     later time on the same day or a later date at the same or any other venue.

62.  Notwithstanding anything in these Articles to the contrary, if a meeting
     shall be adjourned for twenty-one (21) days or more, a notice shall be
     given of the adjourned meeting as in the case of an original meeting.
     Except as aforesaid no Shareholder shall be entitled to receive any notice
     of an adjournment or of the business to be transacted at the adjourned
     meeting. At an adjourned meeting no matters shall be discussed except for
     those which could properly have been discussed at the meeting from which
     the adjournment occurred.

63.  Subject to these Articles and the Law, a resolution of the Company in a
     General Meeting shall be deemed adopted if passed by Shareholders present,
     in person, by proxy, or by written ballot, or deemed under the Law to be
     present, holding greater than fifty percent (50%) of the total voting power
     attached to the shares whose holders were present, in person, by proxy, or
     by written ballot, or deemed under the Law to be present, at such General
     Meeting, and voted thereon. Every vote at a General Meeting shall be
     conducted according to the number of votes to which each Shareholder is
     entitled on the basis of the number of shares held by him which confer on
     him a right to vote at a General Meeting.



                                      -14-

<PAGE>

64.  At any General Meeting, a resolution, in respect of any business, put to
     vote of the meeting shall be decided by a poll. Such poll shall be held in
     the manner, at the time and place as the Chairman of the General Meeting
     directs (including the use of ballots or tickets), whether immediately or
     after an interval or postponement, or in any other way, and, subject to the
     other provisions of these Articles and the Law, the results of the poll
     shall be deemed to be a resolution of the General Meeting. The holding of a
     poll shall not prevent the continued business of the General Meeting.

65.  A resolution in writing signed by all Shareholders of the Company then
     entitled to attend and vote at General Meetings or to which all such
     Shareholders have given their written consent (by letter, facsimile
     telecopier, telegram, telex or otherwise), or their oral consent by
     telephone (provided that a written summary thereof has been approved and
     signed by the Chairman of the meeting) shall be deemed to have been
     unanimously adopted by a General Meeting duly commenced and held.

66.  A declaration by the Chairman of the meeting that a resolution has been
     passed, or has been passed unanimously or by a particular majority, lost,
     or not passed by a particular majority shall be conclusive and entry to
     that effect in the minute book of the Company signed by the Chairman of the
     meeting shall be conclusive evidence thereof, without proof of the number
     or proportion of the votes recorded in favor of or against such resolution.
     Without derogating from the generality of the foregoing, if:

     (a)  any objection shall be raised to the qualification of any voter; or

     (b)  any votes have been counted which ought not to have been counted or
          which might have been rejected; or

     (c)  any votes are not counted which ought to have been counted,


     the objection or error shall not vitiate the decision of the meeting or
     adjourned meeting on any resolution unless it is raised or pointed out at
     the meeting or, as the case may be, the adjourned meeting at which the vote
     objected to is given or tendered or at which the error occurs. Any
     objection or error shall be referred to the Chairman of the meeting; and
     shall only vitiate the decision of the meeting on any resolution if the
     Chairman decides that it may have affected the decision of the meeting. The
     decision of the Chairman on such matters shall be final and conclusive.


                              VOTES OF SHAREHOLDERS

67.  Subject to any rights or restrictions then attached to any class or classes
     of shares and to these Articles, every Shareholder who is present, in
     person, by proxy, or by written ballot or is deemed under the Law to be
     present shall be entitled to one vote for each share of which he is the
     holder.

68.  In the case of joint holders the vote of the senior who tenders a vote,
     whether in person or by proxy, shall be accepted to the exclusion of the
     votes of the other joint holders. For the purpose of this Article seniority
     shall be determined by the order in which the names appear in the Register.
     The appointment of a proxy to vote on behalf of a share held by joint
     holders shall be executed by the signature of the senior of the joint
     holders.



                                      -15-

<PAGE>

69.  A Shareholder in respect of whom an order has been made by any court having
     jurisdiction in matters concerning a mental disability may vote in person,
     by proxy or by written ballot, through the person authorized by such court
     or by law to act on such Shareholder's behalf, provided that such evidence
     as the Board, or some other person who may be authorized by the Board for
     such purpose, may require of the authority of the person claiming such
     authorization shall have been deposited at the Office, or at such other
     place as is specified in accordance with these Articles for the lodgment of
     instruments of proxy, not less than forty-eight (48) hours before the time
     appointed for holding the meeting or adjourned meeting.

70.  No Shareholder shall, unless the Board otherwise determines, be entitled in
     respect of any share held by that Shareholder, to vote at any General
     Meeting, personally or by proxy or by any other lawful means, or at any
     separate meeting of the holders of any class of shares, or to exercise any
     other right conferred by virtue of being a Shareholder in relation to any
     such meeting if any call or other sum presently payable by the Shareholder
     in respect of that share remains unpaid.

71.  Subject to the Law and the other provisions of these Articles, shares may
     be voted personally, by proxy, by ballot or by any other manner that the
     Company is required to recognize and a Shareholder entitled to more than
     one vote need not use all his votes or cast all the votes he uses in the
     same way. Any person (whether a Shareholder or not) may be appointed to act
     as a proxy.

72.  A Shareholder that is a corporation shall be entitled by a decision of its
     board of directors or by a decision of a person or other body, according to
     a resolution of its board of directors, to appoint a person who it shall
     deem fit to be its representative at every meeting of the Company. The
     representative appointed as aforesaid shall be entitled to perform on
     behalf of the corporation he represents all the powers that the corporation
     itself might perform as if it were an individual Shareholder.

73.  A vote pursuant to an instrument appointing a proxy shall be valid
     notwithstanding the death of the appointor or the appointor becoming of
     unsound mind or the cancellation of the proxy or its expiration in
     accordance with any law, or the transfer of the shares with respect to
     which the proxy was given, unless a notice in writing of the death,
     becoming of unsound mind, cancellation or transfer was received at the
     Office at least twenty-four (24) hours before the commencement of the
     meeting or adjourned meeting.

74.  A Shareholder is entitled to vote by a separate proxy with respect to each
     share held by him provided that each proxy shall have a separate letter of
     appointment containing the serial number of the share(s) with respect to
     which the proxy is entitled to vote. Where valid but differing instruments
     of proxy or other instrument which the Company is required, under the Law,
     to recognize in relation to the exercise of the voting rights in respect of
     a share, are delivered in respect of the same share for use at the same
     meeting, the instrument which is delivered last (regardless of its date or
     of the date of its execution) shall be treated as replacing and revoking
     the others as regards that share. However, if the Board, or some other
     person as may be authorized by the Board for such purpose, is unable to
     determine which was the last delivered, none of them shall be treated as
     valid in respect of that share. Delivery of an instrument appointing a
     proxy or any other instrument, as aforesaid, shall not preclude a
     Shareholder from attending and voting in person at the meeting.

75.  The Board may cause the Company to send, by mail or otherwise, instruments
     of proxy to Shareholders for use at any General Meeting.



                                      -16-

<PAGE>

76.  A letter of appointment of a proxy, power of attorney or other instrument
     pursuant to which a person is acting shall be in writing, and the signature
     of the appointor shall be confirmed by an advocate or notary or bank or in
     any other manner acceptable to the directors. Unless such confirmed
     instrument or a copy thereof is deposited in the Office, or at such other
     place in Israel or abroad as the directors may direct from time to time, at
     least twenty-four (24) hours before the time appointed for the meeting or
     adjourned meeting wherein the person referred to in the instrument is
     appointed to vote, that person shall not be entitled to vote that share. An
     instrument appointing a proxy and which is not limited in time shall expire
     12 months after the date of its execution. If the appointment shall be for
     a limited period, whether in excess of 12 months or not, the instrument
     shall be valid for the period stated therein.

77.  An instrument appointing a proxy

     (i)  shall:

          (a)  be in writing under the hand of the appointor or of his attorney
               duly authorized in writing, or if such appointor is a
               corporation, either under its seal or under the hand of some
               officer or attorney duly authorized in that behalf;

          (b)  be deemed to include the power to vote on any amendment of a
               resolution put to the meeting for which it is given as the proxy
               thinks fit; and

          (c)  unless the contrary is stated therein, be valid as well for any
               adjournment of the meeting as for the meeting to which it
               relates;

     (ii) (whether for a specific meeting or otherwise) may be in the following
          form or in any other similar form which is appropriate under the
          circumstances.

          Letter of Appointment of Proxy

          "I, ___________________, of ________________________, holding shares
          in _________________ and entitled to _________ votes hereby appoint
          __________________ of ________________________________ or in his place
          ___________________________ of ____________________ to vote in my name
          and in my place at the general meeting (regular, extraordinary,
          adjourned - as the case may be) of the Company to be held on the
          _____________ day of _________________ __ and at any adjournment
          thereof.

          In witness whereof, I have hereby affixed my signature the _________
          day of _____________, __.

                                            _________________________________
                                            Appointor's Signature

          I hereby confirm that the foregoing instrument was signed before me by
          the appointor


          ____________________________________________________________
          (name, profession and address)






                                      -17-


<PAGE>

                                    DIRECTORS

78.  The Board shall be composed of not more than nine (9) members and not less
     than three (3) members.

79.  Subject to the Law, no person shall be disqualified to serve as a director
     by reason of his not holding shares in the Company or by reason of his
     having served as a director in the past.

80.  Subject to the Law, the remuneration of a director shall be such sum (if
     any) as shall from time to time be approved by the Company in General
     Meeting. The directors and their alternates shall be entitled to be repaid
     all reasonable travelling, hotel and other expenses incurred by them
     arising from their travelling to and from Board meetings or meetings of any
     committee of the Board. If by any arrangement, approved by the Board, any
     director shall perform or render any special duties or services outside his
     ordinary duties as a director, the Board may cause the Company to pay him
     special remuneration, in addition to his ordinary remuneration, and such
     special remuneration may be by way of salary, commission, participation in
     profits, or otherwise as may be arranged, all subject to the provisions of
     the Law with regard to all such matters, including Shareholder and audit
     committee approvals required under the Law for various arrangements
     relating to director remuneration.

81.  The office of a director shall be vacated, ipso facto:

     (a)  if he becomes bankrupt or suspends payment or colludes or compounds
          with his creditors;

     (b)  if he be declared legally incompetent;

     (c)  if by notice in writing given to the Company he resigns his office;

     (d)  if he is removed from office by a resolution of the General Meeting of
          the Company approved by Shareholders holding more than 50% of the
          outstanding share capital of the Company;

     (e)  if, under the Law, his term otherwise automatically terminates; or

     (f)  upon his death.

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



                                      -18-

<PAGE>

     exists, or, in any other case, at no later than the first meeting of the
     Board after the acquisition of his interest.

83.  The entering into of a transaction by the Company with an Office Holder or
     a third party in which an Office Holder has a personal interest (as more
     fully described in Section 270(1) of the Law), which is not an
     Extraordinary Transaction (as defined in the Law) shall, if such Office
     Holder is a director or the General Manager, be approved in such manner as
     may be prescribed by the Board, from time to time, or otherwise by the
     Board itself. If such Office Holder is not a director, then such
     transaction shall be approved in such manner as may be prescribed by the
     General Manager from time to time and in the absence of any such
     determination, by the General Manager.


                         POWERS AND DUTIES OF DIRECTORS

84.

     84.1.  The business of the Company shall be managed by the Board, which
            may exercise all such powers of the Company and perform on behalf
            of the Company all such acts as may be exercised and performed by
            the Company as are not by the Law or by these Articles required to
            be exercised or done by the Company through a General Meeting or,
            if the Company is under an obligation under the Law to appoint a
            General Manager, the General Manager, subject to the provisions of
            the Law and of these Articles and to such regulations (not being
            inconsistent with such aforesaid provisions) as may be prescribed
            by the Company in General Meeting. Notwithstanding the foregoing,
            no regulation made by the Company in a General Meeting shall
            invalidate any prior act of the Board which would have been valid
            if such regulation had not been made. The general powers given by
            this Article shall not be limited or restricted by any special
            authority or power given to the Board by any other Article.

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

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



                                      -19-


<PAGE>

85.  Subject to the provisions of these Articles and the Law, the Board may at
     any time and from time to time, by power of attorney or otherwise, appoint
     any person to be the attorney or attorneys of the Company for such purposes
     and with such powers, authorities and responsibilities (not exceeding those
     vested in or exercisable by the Board under these Articles) and for such
     period and subject to such conditions as it may think fit, and any such
     power of attorney may contain such provisions for the protection and
     convenience of persons dealing with any such attorney as the Board may
     think fit, and may also authorize any such attorney to sub-delegate all or
     any of the powers, authorities and responsibilities vested in him.

86.  The Board may act at any time notwithstanding any vacancy in its body
     provided that in the event that the number of directors shall at any time
     be less than the minimum number prescribed by or in accordance with these
     Articles it shall be lawful for them to act as a Board for the purpose of
     filling any vacancies in their body or for summoning a General Meeting of
     the Company, but not for any other purpose.

87.  The Board may delegate all or any of its powers, authorities and
     responsibilities (except for those powers, authorities and responsibilities
     which, under the Law (including, but not limited to, those listed in
     Section 112 of the Law), the Board is unable to delegate) to any committee
     consisting of such members of the Board as the Board may, from time to
     time, think fit, subject to applicable requirements of the Law (the
     "Committee of the Board"). The Board may, subject to the Law, widen,
     curtail or revoke such delegation of powers, authorities and
     responsibilities. To the fullest extent permitted by law, the Board, after
     determining a number of shares reserved for the issuance of shares, options
     or warrants to the Company's employees, directors, and consultants, may
     delegate the power to issue such options and shares to a committee of the
     Board. Any committee of the Board so formed shall in the exercise of the
     power, authorities and responsibilities so delegated conform to any
     regulations that may be lawfully imposed on it by the Board. The meetings
     and proceedings of a Committee of the Board shall be governed by the
     provisions herein contained for regulating the meetings and proceedings of
     the Board, so far as the same are applicable thereto and are not lawfully
     suspended or superseded by any regulations imposed by the Board. The Board
     shall appoint an audit committee consisting of at least three (3) members,
     the members of which and the authorities, powers and responsibilities of
     which shall be governed by the Law and any other applicable law or rule.


                        ELECTION OR REMOVAL OF DIRECTORS

88.  The members of the Board shall be elected and appointed at the Company's
     Annual General Meetings. At each Annual General Meeting of the
     Shareholders, successors to the Directors shall be elected for a one-year
     term (until the next Annual General Meeting) by a resolution of the General
     Meeting.

89.  (a)  Nominations for the election of Directors may be made by the Board or
          a committee appointed by the Board or by any Shareholder holding at
          least 1% of the outstanding voting power in the Company. However, any
          Shareholder entitled to vote in the election of directors generally
          may nominate one or more persons for election as directors at a
          meeting only if written notice of such Shareholder's intent to make
          such nomination or nominations has been given to the Secretary of the
          Company not later than (i) with respect to an election to be held at
          an Annual General Meeting of



                                      -20-


<PAGE>

          Shareholders, not less than ninety (90) days and not more than one
          hundred and twenty (120) days prior to the anniversary date of the
          immediately preceding annual meeting and (ii) with respect to an
          election to be held at an extraordinary meeting of Shareholders, not
          less than ninety (90) days and not more than one hundred and twenty
          (120) days prior to the proposed date of such meeting, provided,
          however, that in the event that less than ninety (90) days notice or
          prior public disclosure of the date of any such meeting is given, such
          request must have been delivered to the Secretary of the Company not
          later than the close of business on the 10th day following the day on
          which notice or prior public disclosure of the meeting was given,
          provided that the preceding provision shall not derogate from the
          Company's obligations pursuant to Section 69(b) of the Law. Each such
          notice shall set forth: (a) the name and address of the Shareholder
          who intends to make the nomination and of the person or persons to be
          nominated; (b) a representation that the Shareholder is a holder of
          record of shares of the Company entitled to vote at such meeting and
          intends to appear in person or by proxy at the meeting to nominate the
          person or persons specified in the notice; (c) a description of all
          arrangements or understandings between the Shareholder and each
          nominee and any other person or persons (naming such person or
          persons) pursuant to which the nomination or nominations are to be
          made by the Shareholder; and (d) the consent of each nominee to serve
          as a director of the Company if so elected and a declaration signed by
          each of the nominees declaring that there is no limitation under the
          Law or any other applicable law for the appointment of such a nominee
          and that all the information that is required under the Law to
          provided to the Company in connection with such an appointment has
          been provided. The Chairman of the meeting may refuse to acknowledge
          the nomination of any person not made in compliance with the foregoing
          procedure.

     (b)  To the extent required under the Law, the Company shall appoint or
          arrange the election of two (2) persons as External Directors. The
          appointment or election and removal of such directors shall be made in
          accordance with the Law, notwithstanding the provisions of these
          Articles. The provisions of Article 88 shall not apply to a Director
          who is an External Director.

     (c)  Notwithstanding the provisions of paragraphs (a) and (b) of this
          Article, no person shall be nominated or appointed to the office of a
          Director if such person is disqualified, under the Law, from being
          appointed as a director.

90.  Subject to the provisions of Articles 88, the Board may at any time appoint
     any other person as a director, whether to fill a vacancy or as an addition
     to the then current number of directors, provided that the total number of
     directors shall not at any time exceed any maximum number (if any) fixed by
     or in accordance with these Articles. Any director so appointed shall hold
     office until the Annual General Meeting of Shareholders at which the term
     for the other directors of his class expires, unless otherwise stated in
     the appointing resolution.




                                      -21-

<PAGE>

                               ALTERNATE DIRECTORS


91.  (a)  A director may, by written notice to the Company given in the manner
          set forth in Article 89(a), appoint any individual who is qualified to
          serve as a director, to act as alternate director (an "Alternate
          Director") at meetings of the Board or any committee of the Board of
          which the appointor is a member in his place during his absence (and,
          at his discretion, to revoke such nomination) provided that such
          individual is not a director or is a person acting as an Alternate
          Director for any other director or any other person disqualified by
          law.

     (b)  Any Director appointing an Altetrnate Director may remove such
          Alternate Director and appoint another Alternate Director in place of
          any Alternate Director appointed by him whose office has been vacated
          for any reason whatsoever. The appointment of an Alternate Director
          shall be subject to the consent of the Board. 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
          Borad, 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.

     (c)  Any appointment or removal of an Alternate Director shall be effected
          by an instrument in writing delivered at the Office and signed by the
          appointor or by such other method as may be approved by the Board.

     (d)  An Alternate Director shall be entitled to receive notice of meetings
          of the Board and of any committee of the Board of which the appointor
          is a member, to attend and to vote at any such meeting at which his
          appointor is not personally present and generally to perform all the
          functions of his appointor (except as regards power to appoint an
          alternate, unless the instrument of his appointment states otherwise)
          as a director in his absence. Save as otherwise provided in these
          Articles, an Alternate Director shall be deemed for all purposes to be
          a director and shall be responsible for his or her own acts and
          defaults.

     (e)  An Alternate Director shall not be entitled to receive from the
          Company in respect of his appointment as Alternate Director any
          remuneration.

     (f)  An Alternate Director shall ipso facto cease to be an Alternate
          Director if his appointor ceases for any reason to be a Director or on
          the happening of any event which, if he were a director, would cause
          him to vacate the office of Director.


                            PROCEEDINGS OF DIRECTORS

92.  Meetings of the Board will be convened in accordance with the needs of the
     Company and, in any event, shall be convened at least once every three (3)
     months. Save as aforesaid, the Board may meet, adjourn and otherwise
     regulate its meetings as it thinks fit. Board meetings may be convened at
     any time by the Chairman of the Board. The Chairman of the Board shall
     convene a Board meeting upon the request of any two directors as soon as
     practicable after receiving such request and shall otherwise convene a
     Board meeting as provided by the Law. If the Chairman of the Board does
     not, within fourteen (14) days after the date of receiving a request from
     two directors as aforesaid, convene a Board meeting, then the directors
     requesting the convening of such Board meeting may convene the Board



                                      -22-

<PAGE>

     meeting. If the Chairman of the Board does not, within fourteen (14) days
     after being obliged to convene a Board meeting as provided under the Law,
     convene a Board meeting, the person who, as provided in the Law in such
     circumstances, is entitled to convene the Board meeting, may convene such
     meeting. Notice of a Board meeting shall contain the information required
     by the Law and shall be delivered to the directors not less than seven (7)
     days before such meeting.

93.  Notice of a meeting of the Board may be given orally or in writing, and if
     given in writing, may be sent by hand, post, facsimile or electronic mail
     to a director at the address, facsimile number or electronic mail address
     given by such director to the Company for such purpose. Any such notice
     shall be deemed duly received, if sent by post, three (3) days following
     the day when any such notice was duly posted and if delivered by hand or
     transmitted by facsimile transmission or electronic mail, such notice shall
     be deemed duly received by the director on the date of delivery or, as the
     case may be, transmission of the same. Notwithstanding anything contained
     to the contrary herein, failure to deliver notice to a director of any such
     meeting in the manner required hereby may be waived by such director and a
     meeting shall be deemed to have been duly convened notwithstanding such
     defective notice if such failure or defect is waived prior to action being
     taken at such meeting, by all directors entitled to participate at such
     meeting to whom notice was not duly given as aforesaid.

94.  Any director may participate in a meeting of the Board by means of
     telephone or similar communication equipment whereby all the directors
     participating in the meeting can hear each other and the directors
     participating in this manner shall be deemed to be present in person at
     such meeting and shall be entitled to vote or be counted in a quorum
     accordingly. Such a meeting shall be deemed to take place where the largest
     group of those participating is assembled or, if there is no such group,
     where the Chairman of the meeting is then located.

95.  Until otherwise decided by the Board, a quorum at a meeting of the Board
     shall be constituted by the presence in person, by alternate or by
     telephone or similar communication equipment of a majority of the directors
     then in office who are lawfully entitled to participate and vote at the
     meeting. If within one-half an hour (or within such longer time not
     exceeding one (1) hour as the Chairman of the meeting may decide) from the
     time appointed for the holding of the Board meeting a quorum is not
     present, the Board meeting shall stand adjourned to the same day in the
     next week at the same time and place (unless such day shall fall on a
     public holiday either in Israel or the United States, in which case the
     meeting will be adjourned to the first day, not being a Friday, Saturday or
     Sunday, which follows such public holiday). If at such adjourned Board
     meeting a quorum is not present within half an hour from the time appointed
     for holding the meeting, the directors present, in person, by alternate or
     by telephone or similar communication equipment (as referred to in Article
     94) who are lawfully entitled to participate and vote at such meeting shall
     be a quorum. No business shall be transacted at a meeting of the Board
     unless the requisite quorum is present (in person, by alternate or by
     telephone as aforesaid) when the meeting proceeds to business. For the
     purpose of these Articles an Alternate Director shall be counted in a
     quorum if the director who appointed him is not present.

96.  A resolution proposed at a meeting of the Board at which there is a quorum
     shall be deemed adopted if supported by a majority of the number of
     directors present at the meeting and lawfully entitled to vote on such
     resolution.



                                      -23-

<PAGE>

 97.  The Chairman of the Board shall not have a second or casting vote at any
      Board meeting.

 98.  A resolution in writing signed by all the directors then in office
      lawfully entitled to vote thereon, shall be as effective for all purposes
      as a resolution passed at a meeting of the Board duly convened, held and
      constituted and may consist of several documents in like form each signed
      by one or more of the directors. For the purpose of this Article, the
      signature of an Alternate Director, the appointer of which is entitled to
      vote on such resolution, shall suffice in lieu of the signature of the
      director appointing him.

 99.  The Board may from time to time elect by resolution or otherwise appoint a
      director to be Chairman or deputy Chairman and determine the period for
      which each of them is to hold office.

100.  The Chairman of the Board, or in his absence the deputy Chairman, shall
      preside at meetings of the Board, but if no such Chairman or deputy
      Chairman shall be elected or appointed, or if at any meeting the Chairman
      or deputy Chairman shall not be present within fifteen (15) minutes after
      the time appointed for holding such meeting, or if the Chairman, or, if
      applicable, deputy Chairman, is unwilling or unable to chair such meeting,
      the directors present shall choose one of their number to be Chairman of
      such meeting.

101.  Subject to the provisions of the Law, all bona fide actions of any meeting
      of the Board, or of a committee of the Board, or of any person acting as a
      director or Alternate Director or a member of such committee shall,
      notwithstanding that it be afterwards discovered that there was some
      defect in the appointment of any such director or such committee or person
      acting as aforesaid, or that they or any of them were disqualified, or had
      vacated office or were not entitled to vote, be as valid as if every such
      person had been duly appointed or had duly continued in office and was
      qualified and had continued to be a director or, as the case may be, an
      Alternate Director and had been entitled to vote.


                                 GENERAL MANAGER

102.  Subject to these Articles and the Law, the Board may from time to time
      appoint one or more persons, whether or not directors, as the General
      Manager, Chief Executive Officer, and/or President of the Company. Subject
      to the Law, the powers, authorities and responsibilities any such General
      Manager, Chief Executive Officer and/or President shall have shall be
      those that the Board may, at its discretion, lawfully confer on the same.
      The Board may, from time to time, as the Board may deem fit, modify or
      revoke, such title(s), duties and authorities the Board conferred as
      aforesaid. Subject to these Articles and the Law, any such appointment(s)
      and any such powers, authorities and responsibilities, conferred as
      aforesaid may be either for a fixed term or without any limitation of
      time, and may be made upon such conditions and subject to such limitations
      and restrictions as the Board may, from time to time, determine and the
      Board may from time to time (subject to the provisions of the Law and of
      any contract between any such person and the Company) fix his or their
      salaries and remove or dismiss him or them from office and appoint another
      or others in his or their place.


                                     MINUTES

103.  The Company shall cause minutes to be made of all General Meetings of the
      Company and also of all appointments of directors and Office Holders and
      of the proceedings of all



                                      -24-

<PAGE>

      meetings by the Board and any committees thereof, and of the persons
      present at any such meetings, and all business transacted at such
      meetings, (which shall include any written resolution of the directors
      pursuant to Article 98 above). Any such minute of any meeting, if
      purporting to be signed by the Chairman of such meeting, or by the
      Chairman of the Board, shall be prima facie evidence of the facts therein
      stated. Minutes of a meeting shall be kept at the Office for the period,
      and in the manner, prescribed in the Law.


                              STAMP AND SIGNATURES

104.  (a)   The Company may have one or more official stamps.

      (b)   The Company may keep an official stamp for documents made for
            foreign jurisdictional purposes, and may authorize, from time to
            time, a person appointed for this purpose to make use of such stamp.

      (c)   A document shall be deemed signed by the Company upon the
            fulfillment of all of the following:

            (1)   The Company's stamp was stamped on the document by a person
                  authorized therefor by the Board, or the document bears the
                  name of the Company in print;

            (2)   It bears the signature of one or more persons authorized,
                  generally or in the specific instance, to sign such document
                  by the Board.

      (d)   An authorization of one or more persons by the Board to sign a
            document on behalf of the Company shall be deemed to include the
            authority to stamp the Company's stamp thereon, unless otherwise
            provided by the Board.

      (e)   An authorization by the Board as provided in Article 104(d) may be
            for a specific document or for a certain sort of document or for all
            the Company's documents or for a definite period of time or for an
            unlimited period of time, provided that any such authority may be
            terminated by the Board, at any time.

      (f)   The provisions of this Article shall apply both to the Company's
            documents executed in Israel and the Company's documents executed
            abroad.


                                    SECRETARY

105.  The Board shall appoint a Secretary of the Company on any terms it thinks
      proper. The Board may from time to time by resolution appoint a temporary
      substitute for the Secretary.


                                LOCAL MANAGEMENT

106.  The directors may organize from time to time arrangements for the
      management of the Company's business in any particular place, whether in
      Israel or abroad, as they shall see fit, and the provisions of the next
      section shall not derogate from the general powers granted to the Board
      pursuant to this Article.



                                      -25-


<PAGE>

107.  The Board may from time to time convene any local management or agency to
      conduct the business of the Company in any particular place, whether in
      Israel or abroad, and may appoint any person to be a member of such local
      management, or to be a director or agent, and may decide his manner of
      compensation. The Board may from time to time grant a person so appointed
      any power, authority, or discretion that the Board has at that time, and
      may authorize any person acting at that time as a member of a local
      management to continue in his position notwithstanding that some position
      has been vacated there, and any such appointment or authorization may be
      made upon such conditions as the Board deems fit. The Board may from time
      to time relieve any person so appointed or revoke or change any such
      authorization.


                             DIVIDENDS AND RESERVES

108.  Subject to these Articles, the Company may declare and pay any dividend
      permitted under the Law.

109.  The Board may, before declaring any dividend, set aside, out of the
      profits of the Company, such sums as it thinks proper as a reserve or
      reserves, which shall, at the discretion of the Board, be applicable for
      any purpose to which the profits of the Company may be properly applied
      and pending such application may be employed in the business of the
      Company as the Board may, from time to time, deem fit. The Board may,
      alternatively, carry forward any profits which it may deem prudent not to
      distribute as a dividend.

110.  The Company may, by a resolution of the Board, declare a dividend in
      accordance with the respective rights of the Shareholders.

111.  The Board may, from time to time, cause the Company to pay to the
      Shareholders such interim dividends as appear to the Board to be justified
      by the profits of the Company. The validity of any interim dividend shall
      not be affected by the subsequent failure of the Board to declare a
      dividend.

112.  No dividend shall bear interest or linkage against the Company.

113.  All dividends unclaimed for one year, after having been declared, may be
      invested or otherwise made use of by the Company as the Board shall see
      fit, until the same is claimed. The Company shall not be deemed a trustee
      in respect of any such unclaimed dividends.

      Any dividend or other sum remaining unclaimed for a period of seven (7)
      years after having been declared shall be forfeited and shall revert to
      the Company.

114.  Subject to any special or restricted rights conferred upon the holders of
      shares as to dividends, all dividends shall be declared by the Board and
      paid in proportion to the amount paid up on account of the nominal value
      of the shares in respect of which the dividend is being paid. As regards
      shares not fully paid throughout the period in respect of which the
      dividend is paid, dividends in respect thereto shall be apportioned and
      paid pro rata according to amounts deemed under this Article to be paid up
      on account of the nominal value of such shares during any portion or
      portions of the period in respect of which the dividend is paid. For this
      purpose, the amount deemed to be paid on account on the nominal value of
      such partly paid shares shall be such proportion of the nominal value as
      the amount paid to the Company with respect to the share bears to its full
      issuance price. Subject to the terms of article 33 above, no amount paid
      on a share, in advance of a call, shall be treated as paid up on a share.




                                      -26-

<PAGE>

115.  Subject to the terms of any share issuance regarding the date or the
      occurrence of an event from which such shares are to be eligible for
      dividends, the persons registered in the Register as Shareholders on the
      record date for the declaration of a dividend shall be entitled to receive
      the dividend. A transfer of shares shall not transfer the right to a
      dividend which has been declared after the transfer but before the
      registration of the transfer.

116.  The Board may deduct from any dividend payable to any Shareholder all sums
      of money (if any) presently payable by such Shareholder to the Company on
      account of calls or otherwise in relation to the shares of the Company.
      The Board may retain any dividend or other moneys payable on or in respect
      of a share on which the Company has a lien, and may apply the same in or
      toward the satisfaction of the debts, liabilities or engagement in respect
      of which the lien exists.

117.  Subject to the provisions of the Law, any resolution of the Board
      declaring a dividend may, direct payment of such dividend wholly or partly
      by the distribution of specific assets of the Company, or by distribution
      of paid up shares, debentures, or debenture stock of the Company or any
      other companies or in any one or more of such ways, and the Board shall
      give effect to such resolution, and where any difficulty arises in regard
      to such distribution, the Board may settle the same as it thinks
      expedient, and in particular may fix the value for distribution of such
      specific assets or any part thereof and may determine that cash payments
      shall be made to any Shareholders on the basis of the value so fixed in
      order to adjust the rights of all parties, and may vest any such specific
      assets in trustees as may seem expedient to the Board.

118.  The Board may cause the Company to pay the dividends, interest or other
      moneys payable on shares in respect of which any person is by transmission
      entitled to be registered as holder to such person upon production of such
      certificate and evidence as would be required if such person desired to be
      registered as a Shareholder in respect of such shares.

119.  Any dividend, interest or other moneys payable in cash on or in respect of
      a share may be paid by check or money order sent through the post to the
      registered address of the holder or person entitled thereto and in the
      case of two or more persons being registered as joint holders of such
      share, to the registered address of that one of the joint holders who is
      first named on the Register, or to such person and to such address or by
      such other means offered by the Company as the holder or joint holders or
      person entitled thereto, as applicable, may agree in writing with the
      Company. Every such check or money order shall be made payable to the
      order of the person to whom it is sent or to such person as the
      Shareholder, person entitled or joint holders direct. Any one of two or
      more persons registered as joint holders of a share may give effectual
      receipts for any dividends or other moneys payable in respect of the
      shares held by them as joint holders. The Company shall not be responsible
      nor shall have any liability for any check or money order lost in
      transmission or in respect of sums lost or delayed in the course of
      payment by a method offered by the Company as aforesaid.


                         CAPITALIZATION OF RESERVE FUNDS

120.  The Board may from time to time resolve that any sum, investment or
      property not required as a source for payment of fixed preferential
      dividends and (a) standing credited at that time to any fund or to
      any reserve liability account of the Company, including also
      premiums received from issuance of shares, debentures, or debenture
      stock of the Company; or (b)



                                      -27-


<PAGE>

      being net profits not distributed and remaining in the Company, shall be
      capitalized, and that such investment sum or property be released for
      distribution and be distributed as capital among the Shareholders
      according to the proportion to which they would be entitled if such amount
      were distributed as dividends on shares, in the manner so directed by such
      resolution. The Board shall use such investment sum or property, according
      to such a resolution, for full payment of such shares of the Company's
      capital not issued to the Shareholders and to issue such shares and to
      distribute them as fully paid up shares among those Shareholders according
      to the pro rata rate for payment of the value of the shares and their
      rights in the amount capitalized, or as full payment of shares to be
      issued upon the exercise of warrants on a net issuance basis. The Board
      may also use such investment sum or property or any part thereof for the
      aforesaid Shareholders for full payment of those shares not issued, in
      proportion to such shares of the Company's capital issued and held by such
      Shareholders, or use such investment sum or property in any other manner
      permitted by such a resolution. If any difficulty shall arise with respect
      to such a distribution the Board may organize the distribution as it deems
      desirable. They shall particularly be permitted to determine the value of
      the property or investment for the purpose of distribution of all fully
      paid up shares, to pay money to any such Shareholder according to the
      value determined in this manner in order to coordinate and adjust the
      Shareholders' rights. The Board shall also be permitted to decide that
      parts with a value of less than one New Israel Shekel shall not be taken
      into account in order to adjust the rights of all parties, to give all
      such shares, cash or property to trustees to hold in escrow for such
      persons entitled to part of the allocation and the distribution in
      accordance with and against such securities as the Board deems desirable.


                               ACCOUNTS AND AUDIT

121.  The Board shall cause accounting records to be kept in accordance with
      applicable law. The books of account shall be kept at the Office, or at
      such other place or places as the Board shall deem fit (either within the
      State of Israel or elsewhere in the world) and shall be open for
      inspection by directors. No Shareholder (not being a director) shall have
      any right to inspect any account or book or document of the Company,
      except as conferred by applicable law or as authorized by the Board or a
      resolution of the Company's General Meeting.

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

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



                                      -28-

<PAGE>

                                     NOTICES

124.  Subject to the Law, notice to a Shareholder may be served, as general
      notice to all Shareholders, by publication in one of the daily Hebrew
      newspapers appearing in Israel and in one daily English language newspaper
      appearing in the City of New York, and otherwise in such manner as may be
      required under the Law, but in place of the publication of general notice
      as aforesaid, notice may be served on each Shareholder individually or by
      hand or by post to the registered address of each Shareholder. The date of
      such publication in the newspaper shall be deemed to be the date of
      service on all Shareholders. A notice served on a Shareholder not sent by
      post but left at the Shareholder's registered address shall be deemed duly
      served on the day it was left there. A notice served on a Shareholder
      through the post shall be deemed duly served on the third day following
      the day when the envelope containing it was posted. Proof that an envelope
      containing a notice was properly addressed, stamped and posted shall be
      conclusive evidence that notice was given.

125.  A notice may be given by the Company to the joint holders of a share by
      giving notice to the joint holder named in the Register in respect of the
      shares.

126.  Subject to the Law, where a given number of days' notice extending over
      any period is required to be given, the day of service shall be counted in
      such number of days or other period.

127.  Any Shareholder whose address is not contained in the Register and who
      shall not have designated in writing an address for receipt of notices
      shall not be entitled to receive any notice from the Company.

128.  Apart from the publication of any advertisement in the press, as mentioned
      in Article 124, a person entitled to a share in consequence of the death
      or bankruptcy of a Shareholder upon supplying to the Company such evidence
      as the Board may reasonably require as evidence of his title to the share,
      and upon supplying also an address in Israel or the United States for the
      service of notices, shall be entitled to have served upon or delivered to
      him at such address any notice or document to which the Shareholder but
      for his death or bankruptcy would be entitled, and such service or
      delivery shall for all purposes be deemed to be sufficient service for
      delivery of such notice or document on all persons interested (whether
      jointly with or as claiming through or under him) in the share. Save as
      aforesaid any notice or document delivered or sent by post to or left at
      the address of any Shareholder shall, notwithstanding that such
      Shareholder be then dead or bankrupt, and whether or not the Company shall
      have notice of his death or bankruptcy, be deemed to have been duly served
      or delivered in respect of any share registered in the name of such
      Shareholder as sole or first-named joint holder.

129.  Any notice or other document (including, but not limited to, a share
      certificate) may be served or delivered by the Company to the Shareholders
      listed in the Register as it stands at any time, as may be determined by
      the Board from time to time, provided that the date so determined by the
      Board shall not be more than fifteen (15) days prior to the date of
      posting (where the notice or other document is posted) or otherwise not
      more than fifteen (15) days before the date of service. No change in the
      Register after the time determined by the Board shall invalidate any such
      service or delivery. Every person who becomes entitled to a share shall be
      bound by any notice in respect of that share which, before his name is
      entered in the



                                      -29-


<PAGE>

      Register, has been duly given, or deemed to be duly given to the person
      from whom he received or became entitled to receive the share.


                       INSURANCE AND INDEMNITY OF OFFICERS

130.  Subject to the provisions of the Law with regard to such matters:

      130.1.  the Company may enter into a contract for the insurance of all
              or part of the liability of an Office Holder with respect to an
              obligation imposed on such Office Holder due to an act performed
              by him in his capacity as an Office Holder of the Company
              arising from any of the following:

              130.1.1.  a breach of his duty of care to the Company or to
                        another person;

              130.1.2.  a breach of his duty of loyalty to the Company,
                        provided that the Office Holder acted in good
                        faith and had reasonable cause to assume that such
                        act would not prejudice the interests of the
                        Company;

              130.1.3.  a financial liability imposed on such Office
                        Holder in favor of another person;

      130.2.  (a)   the Company may undertake, in advance, to indemnify, or
                    may indemnify, an Office Holder in respect of, a
                    liability or expense (as referred to in subparagraph
                    130.2(b) below) that may be imposed on such Office
                    Holder (due to an act performed by him in his capacity
                    as an Office Holder):

                    (1)   that arises from those types of events which the
                          Board deems to be forseeable, and limited to those
                          amounts determind by the Board to be reasonable
                          under the circumstances; or

                    (2)   that arises from an event that took place prior to
                          the Company's giving such indemnity;

              (b)   the liability and expense referred to in sub-paragraph
                    130.2(a) above are as follows:

                    (1)   a financial liability imposed on an Office Holder
                          in favor of another person by a court judgment,
                          including a compromise judgment given as a result
                          of a settlement or an arbitrator's award which has
                          been confirmed by a court;

                    (2)   reasonable litigation expences, including
                          attorneys' fees, expended by an Office Holder or
                          which were imposed on an Office Holder by a court
                          in proceedings instituted against him by the
                          Company or in its name or by any other person or
                          in a



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                          criminal charge from which he was acquitted or in a
                          criminal charge in which he was convicted for a
                          criminal offense that does not require proof of
                          criminal thought (as such term is defined by the
                          Penal Law, 5737-1977);

        130.3.  the Company may release exculpate and exempt, in advance, all or
                part of an Office Holder's liability to the Company for damage
                which arises from the breach of his duty of care to the Company
                (as such term is understood by Sections 252 and 253 of the Law).

        (iv)  The provisions of Articles 130.1, 130.2 and 130.3 above are
              not intended, and shall not be interpreted, to restrict the
              Company in any manner in respect of the procurement of
              insurance and/or in respect of indemnification (i) in
              connection with any person who is not an Office Holder,
              including, without limitation, any employee, agent, consultant
              or contractor of the Company who is not an Office Holder,
              and/or (ii) in connection with any Office Holder to the extent
              that such insurance and/or indemnification is not specifically
              prohibited under law; provided that the procurement of any
              such insurance and/or the provision of any such
              indemnification shall be approved by the Board or in such
              manner as may be required by the Law.



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