---

---

Exhibit 4.9

LOAN AGREEMENT

THIS
LOAN AGREEMENT (this Agreement) is made as of the 8th day of March, 2005, by and between Arel
Communications and Software Ltd., a company organized under the laws of the
State of Israel (the Company) and Cetus Corp., an Ohio corporation (the Lender).

W I T N E S S E T H:

WHEREAS,
the Company wishes to obtain a revolving credit facility from the Lender; and

WHEREAS,
the Lender is willing to make available a revolving credit facility to the
Company on the terms and conditions set forth in this Agreement.

NOW
THEREFORE, in consideration of the mutual covenants and agreements contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:

1.            Definitions.

1.1.    When used in
this Agreement, the following terms shall have the respective meanings set
forth below:

1.1.1.     Adjusted
Gross Revenues
Amount shall mean the Audited Gross Revenues Amount, as adjusted
pursuant to Section 2.1.4.

1.1.2.     Affiliate shall
mean, with respect to any
Person, any other Person directly or indirectly controlling or controlled by,
or under direct or indirect common control with, such Person.  A Person shall be deemed to control another
Person if such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other Person,
whether through the ownership of voting securities or other ownership
interests, by contract or otherwise.

1.1.3.     Audited
Gross Revenues Amount shall mean the Gross Revenues as reported in the
Companys audited financial statements for the year ending December 31, 2005.

1.1.4.     Availability
Period shall mean the period
commencing on the Closing Date and ending on the third anniversary of the
Closing Date, unless earlier terminated pursuant to the terms of this
Agreement.

1.1.5.     Authority shall
mean any government, any
governmental, regulatory or administrative body, agency or authority, any court
of judicial authority, any arbitrator or any public, private or industry
regulatory authority, whether international, national, state, municipal or
local.

1.1.6.     Board shall mean the Board of Directors of the
Company.

1.1.7.     Business
Day shall mean any day that is a business day in both the
State of Israel and the State of New York.

---

---



1.1.8.     Change
of Control shall mean: (i) the
dilution of Mathiles direct and indirect holdings in the Company to below
twenty-five percent (25%) of the outstanding voting rights in the Company, but
not as a result of an Event (as defined in Section 1.1.8.1 below; (ii) the
acquisition by any Person and its Affiliates, other than Persons and their
Affiliates who as of the date of this Agreement or as of the Closing Date are
beneficial shareholders of the Company, of more than twenty percent (20%) of
the outstanding voting rights in the Company, but not as a result of any of the
Events set forth in (2), (3) and (4) in Section 1.1.8.1 below; and (iii) the
sale by the Company of all or substantially all of its assets to any Person
other than to its subsidiaries and other than to Persons and their Affiliates
who as of the date of this Agreement or as of the Closing Date are beneficial
shareholders of the Company.

1.1.8.1.     For
the purposes of the definition of a
Change of Control, an Event shall
be: (1) the issuance of shares of the Company (including upon the exercise of
options or warrants) to bona fide employees, directors, officers, consultants,
service providers, suppliers of the Company or any subsidiary thereof; (2) the
sale of shares of the Company by Mathile or such entities or persons through
which Mathile holds shares in the Company; (3) the issuance of shares of the
Company to a Person in connection with a financing which is not primarily an
equity financing (an equity credit line shall be deemed to be a financing which
is not primarily an equity financing); or (4) the issuance of shares of the
Company to a third party with whom the Company is or could benefit from a
strategic relationship as determined by the Board in good faith.

1.1.9.     Charge shall
mean the fixed charge and
the floating charge and the other security interests to be created by the
Company for the benefit of the Lender and the fixed charge on Intellectual
Property Assets owned by the Subsidiaries (if any), the floating charge and the
other security interests to be created by the Subsidiaries for the benefit of
the Lender as contemplated by the Charge Agreements.

1.1.10.   Charge
Agreements shall mean the Charge
Agreements and the other security agreements to be entered into by and between
the Company and its subsidiaries and the Lender on the Closing Date, in a form
acceptable to the Lender and the Company.

1.1.11.   Closing shall
mean the consummation of the transactions contemplated in this Agreement as
set forth in Section 2.2.

1.1.12.   Closing
Date shall mean the date upon
which the Closing occurs.

1.1.13.   Company shall
mean Arel Communications
and Software Ltd.

1.1.14.   Company
Disclosure Schedule shall mean the
schedule to be delivered to the Lender by the Company at the Closing which is
arranged in sections corresponding to the subsections of Section 7.1 of this
Agreement which shall be modified and supplemented by such schedule.

1.1.15.   Disbursement
Date shall mean the date upon which the Company
receives an Installment from the Lender.

1.1.16.   Disbursement
Request shall mean a written request by the Company to the Lender
for the receipt of an Installment.

---

---



1.1.17.   Dollars shall
denote the lawful currency of the
United States of America. US $, USD,  $, dollars, US Dollars, U.S.
Dollars shall likewise be construed.

1.1.18.   Effective
Time shall
mean 12:01 a.m. Tel-Aviv,
Israel time on the Closing Date.

1.1.19.   Event
of Acceleration shall mean each of
the events described in Section 10.3.

1.1.20.   Exchange
Act or Securities Exchange Act shall mean the
United States Securities Exchange Act of 1934, as amended.

1.1.21.   Gross
Revenues shall mean the
consolidated revenues of the Company as reported in the Companys audited
financial statements or reviewed financial statements, as applicable.

1.1.22.   Installment shall
mean the principal amount on account of the
Maximum Available Principal Amount received by the Company from the Lender
pursuant to a Disbursement Request.

1.1.23.   Intellectual
Property Assets shall mean
such intellectual property assets owned by the Company and its Subsidiaries as
more fully described on the Company Disclosure Schedule or in the Charge
Agreements.

1.1.24.   Interest shall
have the meaning ascribed
to such term in Section 6.1.

1.1.25.   Law shall
mean any applicable law,
statute, regulation, treaty, ordinance, rule, requirement, official directive,
announcement or other binding action or requirement of an Authority.

1.1.26.   Lender shall
mean Cetus Corp.

1.1.27.   Loan
Documents shall have the meaning
ascribed to such term in Section 7.1.2.

1.1.28.   Material
Adverse Effect shall mean a material adverse effect on the business, operations, properties or
condition (financial or other) of the Company and its subsidiaries, taken as a
whole.

1.1.29.   Maximum
Available Principal
Amount shall mean the
maximum aggregate principal amount of credit available to the Company under
this Agreement as set forth in Section 2.1.

1.1.30.   Mathile shall
mean Mr. Clayton L.
Mathile, Mrs. Mary A. Mathile, any Affiliate of Mr. Clayton L. Mathile and/or
Mary A. Mathile, any relative (by blood, marriage or adoption) of Mr. Clayton
L. Mathile and/or Mrs. Mary A. Mathile, and/or any trust established for the
benefit of any of the foregoing.

1.1.31.   Nominees shall
have the meaning ascribed to such
term in Section 11.1.

1.1.32.   Order shall
mean any decree, decision,
order, judgment, writ, award, injunction, rule or consent of or by an
Authority.

---

---



1.1.33.   Outstanding
Principal
Amount means the principal
amount on account of the Maximum Available Principal Amount outstanding and
unpaid from time to time.

1.1.34.   Person shall
mean any entity,
corporation, company, association, limited liability company, joint venture,
joint stock company, partnership, trust, organization, individual (including
personal representatives, executors and heirs of a deceased individual),
nation, state, government (including agencies, departments, bureaus, boards,
divisions and instrumentalities thereof), trustee, receiver or liquidator.

1.1.35.   Prepayment
Notice shall
have the meaning ascribed to such term in Section 6.4.

1.1.36.   Repayment
Date shall have the meaning ascribed to such term
in Section 6.3.

1.1.37.   SEC shall
mean the United States
Securities and Exchange Commission.

1.1.38.   Securities
Act shall mean the United
States Securities Act of 1933, as amended.

1.1.39.   Specified
Rate shall mean, with respect to each Installment, a
rate of interest per annum equal to 9.00% plus the one month London Interbank
Offered Rate (LIBOR) as published in The Wall Street Journal on the Business Day immediately prior to the date
of the relevant Disbursement Request (or, if The Wall Street Journal is
not published on such Business Day, on the next succeeding Business Day on
which The
Wall Street Journal is published). With respect to each Installment, the Specified Rate, shall be
adjusted, upwards or downwards, effective as of the first Business Day of each
subsequent calendar month to a rate of interest per annum equal to 9.00% plus
the one month London Interbank Offered Rate (LIBOR) as published in The Wall
Street Journal on such Business Day (or, if The Wall Street Journal is
not published on such Business Day, on the next succeeding Business Day on
which The
Wall Street Journal is published), but only in the event that such
monthly adjustment shall cause the rate of interest per annum comprising the
then Specified Rate to increase or decrease, as the case may be, by a minimum
of 1% per annum as illustrated by the following table:

---

---



|               |                                         |                                   |                                 |                                  |                                |                                   
|-------------- | --------------------------------------- | --------------------------------- | ------------------------------- | -------------------------------- | ------------------------------ | ----------------------------------
|               | March 5
  (Disbursement
  Request date) | First
  Business
  Day of
  April | First
  Business
  Day of
  May | First
  Business
  Day of
  June | First
  Business
  Day of July | First
  Business
  Day of
  August
|1 Month Libor  | 2%                                      | 2.5%                              | 3.5%                            | 1.5%                             | 1%                             | 2%                                
|Fixed rate     | 9%                                      | 9%                                | 9%                              | 9%                               | 9%                             | 9%                                
|Specified Rate | 11%                                     | 11%                               | 12.5%                           | 10.5%                            | 10.5%                          | 10.5%                             

1.1.40.   Termination
Letter shall have the meaning ascribed to such term
in Section 12.

2.            Loan.

2.1.    Subject to
there having been a Closing, during the Availability Period, the Lender will
make available to the Company a revolving credit facility of an aggregate
principal amount of up to ten million US dollars (US $ 10,000,000) (the Maximum Available Principal Amount)  in
accordance with the terms and conditions set forth in this Section 2 and this Agreement.

2.1.1.     Subject
to Sections 2.1.2, 2.1.3 and 2.1.4, the Lender shall transfer Installments to
the Company by wire transfer, in immediately available US dollars and in
accordance with wire instructions to be provided in writing to the Lender by
the Company from time to time, upon the later of: (i) seven (7) Business Days
following the date on which the Company shall have delivered a Disbursement
Request to the Lender; or (ii) such other date specified in the Disbursement
Request, provided that such specified date is not later than fourteen (14) days
of the date of delivery of the Disbursement Request. Each Disbursement Request
shall state the amount of the Installment to be transferred by the Lender to
the Company, provided that such amount shall be no less than one hundred
thousand US dollars (US $ 100,000) or shall be in an amount which is a multiple
of one hundred thousand US dollars (US $ 100,000).

2.1.2.     Until
January 1, 2006, the Outstanding Principal Amount may not exceed five million
US dollars (US $ 5,000,000) at any one time.

2.1.3.     Commencing
January 1, 2006, the Outstanding Principal Amount may equal up to the amount in
Column B of Schedule 2.1.3 hereto set forth opposite the Audited Gross Revenues
Amount in Column A of Schedule 2.1.3 hereto.

---

---



2.1.4.     In
addition, in the event that the Company achieves Gross Revenues equal to or
exceeding three million US dollars (US $ 3,000,000) in each of any two (2)
consecutive calendar quarters commencing with the quarter ending March 31,
2006,  then the Company shall be deemed
to have achieved the next level of Gross Revenues for the year ending December
31, 2005, as set forth in Column A of Schedule 2.1.3 hereto immediately below
the actual Audited Gross Revenues Amount (the Adjusted Gross Revenue Amount) and accordingly the Outstanding Principal Amount (as set forth in Column B) may
then equal up to the corresponding amount set forth opposite the next level of
the Adjusted Gross Revenue Amount. The mechanism set forth in this Section
2.1.4 shall apply each time the Company achieves Gross Revenues equal to or
exceeding three million US dollars (US $ 3,000,000) in each of any two (2)
consecutive calendar quarters as aforesaid. By way of example, if the Audited
Gross Revenues Amount for the year-ending December 31, 2005 is $ 7,000,000 and
in each of the first three calendar quarters of 2006 the Company achieves Gross
Revenues of $ 3,000,000, then following the second quarter of 2006, the
Outstanding Principal Amount may then equal up to $ 6,700,000 and following the
third quarter of 2006, the Outstanding Principal Amount may then equal up to
$ 8,400,000.

2.2.    Closing and Closing Date.

2.2.1.     Time
and Place. The Closing shall take place at the offices of Yigal Arnon &
Co., One Azrieli Center, Tel-Aviv, Israel, at 10:30 a.m. local time on the
Business Day that all the conditions set forth in Section 3 have been satisfied
or waived or at such other time and place as the Company and the Lender
mutually agree in writing, such transactions to be effective as of the
Effective Time, provided, however, that without the prior written consent of
the Company and the Lender, the Closing shall not occur after June 30,
2005.

2.2.2.     Transactions
at the Closing. At the Closing, the following transactions shall occur,
which transactions shall be deemed to take place simultaneously and no
transaction shall be deemed to have been completed or any document delivered
until all such transactions have been completed and all required documents
delivered, unless waived in accordance with Sections 3.1 and 3.2:

2.2.2.1.     The
obligations of the Company to be performed on or before the Closing Date
pursuant to the terms of this Agreement, including but not limited to, those
obligations set forth in Section 3.1.

2.2.2.2.     The
obligations of the Lender to be performed by it on or before the Closing Date
pursuant to the terms of this Agreement, including but not limited to, those
obligations set forth in Section 3.2.

3.            Conditions to
Closing

3.1.    The
obligation of the Lender to consummate the transactions contemplated herein
shall be subject to the fulfillment, at or before the Closing Date, of all of
the conditions set forth below in this Section 3.1 to the satisfaction of the Lender. The Lender
may waive in its sole discretion any or all of such conditions in whole or in
part without prior notice.

3.1.1.     The
Company and each of its direct and indirect subsidiaries (hereafter referred to
as Subsidiaries) and the Lender
shall have executed the Charge Agreements and the Company shall have caused its
Subsidiaries to register a Charge on all of their respective assets in favor of
the Lender;

---

---



3.1.2.     The
representations and warranties of the Company and its Subsidiaries contained in
the Loan Documents shall be true in all material respects on and as of the
Closing Date.

3.1.3.     The
Lender shall have received from the Company:

3.1.3.1.     true
and correct copies of forms for registering the Charge with the Israeli
Registrar of Companies, stamped to indicate filing thereof, and a certificate
of registration of the Charge with the Israeli Registrar of Companies and
similar evidence of the registration of a Charge on all of the Companys
Subsidiaries respective assets in favor of the Lender;

3.1.3.2.     true
and correct copies of resolutions of the Companys audit committee, Board and
shareholders authorizing the Company to enter into the Loan Documents;

3.1.3.3.     the
Company Disclosure Schedule, in such form and substance reasonably acceptable
to the Lender; and

3.1.3.4.     an
opinion of Yigal Arnon & Co., counsel to the Company, dated as of the
Closing Date, addressed to the Lender in a form acceptable to the Lender and
the Company.

3.1.4.     The
Company and each of its Subsidiaries shall have obtained all regulatory
approvals and third party consents required to enter into, execute and deliver
this Agreement and the Charge Agreements, including, but not limited to, the
consent of the Israeli Office of the Chief Scientist.

3.2.    The
obligation of the Company to consummate the transactions contemplated herein
shall be subject to the fulfillment, at or before the Closing Date, of all of
the conditions set forth below in this Section 3.2 to the satisfaction of the Company. The Company
may waive in its sole discretion any or all of such conditions in whole or in
part without prior notice.

3.2.1.     The
Company and its Subsidiaries and the Lender shall have executed the Charge
Agreements;

3.2.2.     The
Lender shall have confirmed in writing that all corporate action on the part of
the Lender necessary for the execution, delivery and performance of this
Agreement and the other Loan Documents shall have been taken;

3.2.3.     The
Companys audit committee, Board and shareholders shall have approved the
transactions contemplated by the Loan Documents as required by Law and the
Companys Articles of Association; and

3.2.4.     The
Company shall have obtained all regulatory approvals and third party consents
required to enter into, execute and deliver this Agreement and the Charge
Agreements, including, but not limited to, the consent of the Israeli Office of
the Chief Scientist and the Companys Subsidiaries shall have obtained all
regulatory approvals and third party consents required to register a floating
Charge on all of their respective assets in favor of the Lender.

---

---



3.3.    Conditions Precedent to Each Installment. 
The obligation of the Lender to disburse each Installment is subject, at
the time of the disbursement of such Installment, to the satisfaction of the
following conditions, with the disbursement by the Lender and the receipt of
such Installment by the Company constituting a representation and warranty by
the Company that the conditions specified in Section 3.3.1 and 3.3.2 are then
satisfied:

3.3.1.     No
Event of Acceleration.  At the time
of the disbursement of each Installment, and as a result of the making thereof,
there shall exist no Event of Acceleration or no event, act or condition which
with the giving of notice or the lapse of time or both would constitute an
Event of Acceleration.

3.3.2.     At
the time of the disbursement of each Installment, and after giving effect
thereto, the Borrower shall inform the Lender to the extent that any of the representations
and warranties of the Company or any of its Subsidiaries contained in the Loan
Documents or otherwise made (or deemed made) in connection therewith are no
longer correct in a material manner at such time.

4.
           Security.

4.1.    In accordance
with the terms and the conditions of the Charge Agreements, the Company agrees
to secure the repayment of the Outstanding Principal Amount, and any accrued
and unpaid Interest thereon, by creating a first priority fixed charge on the
Intellectual Property Assets of the Company and its Subsidiaries and a floating
charge on all of the assets of the Company and its Subsidiaries, including
cash, inventory, accounts receivable, tangible and intangible assets, and
intellectual property other than the Intellectual Property Assets, if any, for
the benefit of the Lender.

5.            Seniority.

Subject
to there having been a Closing, the Company undertakes that its obligations
under the Loan Documents and with respect to the Charge will at all times rank
senior in right of payment and priority to all its other present and future
unsecured and unsubordinated obligations, other than obligations which are
mandatorily preferred by law applying to companies generally and subject to
obligations imposed by Law, including the Israeli Office of the Chief
Scientist.

5.1.    Without
derogating from the foregoing, neither the Company nor any of its Subsidiaries
may grant any security interest, whether fixed or floating, to a third party in
any of its assets without the prior written consent of the Lender, unless
permitted under Section 9 hereof.

6.            Interest; Repayment.

6.1.    Each
Installment shall bear interest from the Disbursement Date thereof to the date
of repayment in full at a rate per annum equal to the Specified Rate in effect
from time to time (the Interest).

---

---



6.2.    All accrued
Interest shall be due and payable on the last Business Day of each calendar
month and the Company shall pay such Interest on such date in accordance with
Section 6.7 below. The Interest shall accrue from day to day and shall be
calculated on the basis of the actual number of days elapsed and a 360 (three
hundred and sixty) day year.

6.3.    The
Outstanding Principal Amount and any accrued and unpaid Interest thereon, if
any, shall be due and payable, in US dollars, six (6) months from the
expiration of the Availability Period (the Repayment
Date).

6.4.    Notwithstanding anything to the contrary
herein, the Company may, in its sole discretion and without penalty, prepay all
or any portion of the Outstanding Principal Amount, at any time, provided that:

6.4.1.     the
Company shall have provided the Lender
with three (3) days prior written notice of such intention to prepay (the
Prepayment Notice);

6.4.2.     prepayments
shall be in amounts of no less
than one hundred thousand US dollars (US $ 100,000); and

6.4.3.     the
Company shall pay all accrued and unpaid Interest on the Outstanding Principal Amount prepaid
hereunder on the date of prepayment.

6.5.    In the Prepayment Notice, the Company shall
designate on account of which Installment(s) it is prepaying, at its sole
discretion. In the absence of such designation, the prepayment shall be first
used on account of Installment(s) whose Disbursement Date is earlier in time.

6.6.    Any Outstanding Principal Amount prepaid by
the Company shall again be available for disbursement during the Availability
Period.

6.7.    All payments
to be made by the Company to the Lender under this Agreement, shall be made by
means of wire transfer in immediately available US dollars in accordance with
wire instructions to be provided in writing to the Company by the Lender from
time to time.

6.8.    All payments
by the Company to or for the account of the Lender hereunder shall be made free
and clear of and without deduction for any and all Taxes.  Notwithstanding anything to the contrary
above or in this Agreement, the Company may withhold the Permitted Withholding Tax which is the
withholding tax, not in excess of 17.5% of a payment, permitted under The
Convention Between the Government of the United States of America and the
Government of the State of Israel with respect to Taxes on Income (the Tax Treaty).  If the Company shall be
required by law to deduct any Taxes
(other than the Permitted Withholding Tax) from or in respect of any sum
payable hereunder to the Lender, (a) the sum payable shall be increased as necessary
so that making all required deductions (including deductions applicable to
additional sums payable under this Section 6.8) the Lender receives an amount
equal to the sum it would have received had no such deductions been made, (b)
the Company shall make such deductions, (c) the Company shall pay the full
amount deducted to the relevant authority in accordance with applicable law and
(d) the Company shall furnish to the Lender the original copy of a receipt
evidencing payment thereof within 30 days after such payment is made. Taxes means any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings levied or
imposed by any Authority, and any and all liabilities with respect to the
foregoing.

---

---



6.8.1.     In
addition, if a
competent Israeli tax Authority shall require this Agreement to be stamped for
Israeli stamp tax purposes, the
Company shall pay such Israeli stamp tax.
The Company hereby agrees to pay any other present or future stamp or documentary
taxes and any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution or delivery of, or
otherwise with respect to, this Agreement (Other Taxes).

6.8.2.     The
Company hereby agrees to indemnify the Lender for the full amount of Taxes or
Other Taxes (other than any Permitted Withholding Tax), including, without
limitation, any Taxes or Other Taxes imposed on amounts payable under this
Section 6.8,
paid by the Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, other than penalties,
interest and expenses imposed due to the fault of the Lender.  Payments due under this Indemnification
shall be made within 30 days of the date Lender makes demand therefore.

7.            Representations and
Warranties

7.1.    Representations
and Warranties of the Company. The Company represents and warrants to the
Lender as of the Closing Date as follows:

7.1.1.     Due
Incorporation. The Company and each of
its Subsidiaries is duly organized and validly existing company under the Laws
of the jurisdiction under which it was incorporated or organized and has all
requisite power and authority to own, lease and operate its assets, properties
and business and to carry on its business as now conducted or proposed to be
conducted and to execute, deliver and perform its obligations under the Loan
Documents to which it is a party and is duly licensed or qualified to do business
under the laws of each jurisdiction in which the nature of the business
conducted or the ownership of its assets makes such qualification or licensing
necessary. Except as set forth in Companys Disclosure Schedule, the Company
has no businesses, entities, enterprises or organizations in which the Company
has any ownership, voting or profit and loss sharing percentage interest.  The Companys Disclosure Schedule shall set
forth a list of jurisdictions in which each Subsidiary of the Company is incorporated
or qualified as a foreign entity.

7.1.2.     Prior
to the Closing, all corporate action on the part of the Company and each of its
Subsidiaries necessary for the execution, delivery and performance of this
Agreement, the Charge Agreements and the other agreements, documents and
instruments to be executed and delivered by the Company and its Subsidiaries in
connection therewith (collectively, the Loan
Documents) shall have been taken. Except as set forth in the
Companys Disclosure Schedule, no consent, approval or authorization of,
exemption by, or filing with, any governmental or regulatory authority or any
third party is required in connection with the execution, delivery and
performance by the Company or any of its Subsidiaries of the Loan Documents to
which it is a party and the consummation of the transactions contemplated
thereby. The Loan Documents when executed and delivered by or on behalf of the
Company and each of its Subsidiaries a party thereto, shall constitute the valid
and legally binding obligations of the Company and its Subsidiaries a party
thereto, legally enforceable against the Company and/or its Subsidiaries in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other laws
relating to creditors rights generally and general principles of equity.

---

---



7.1.3.     No
Violation. Except as set forth in Companys Disclosure
Schedule, neither the execution
and delivery of the Loan Documents by the Company or any of its Subsidiaries
nor the consummation of the transactions contemplated therein that are
to be performed by the Company or any
of its Subsidiaries will: (i) violate any provision of the Articles of
Association of the Company or other governing or constituent document of the
Company or any of its Subsidiaries; (ii) violate, conflict with, or constitute
a default under any agreement to which the Company or any of its Subsidiaries
is a party or by which it or its property is bound or affected; (iii) require
the consent of any party to any agreement to which the Company or any of its
Subsidiaries is a party by which it or its property is bound or affects; or
(iv) violate any Laws or Orders to which the Company or any of its Subsidiaries
or any of its property is subject, the effect of which, in the case of this
clause (iv) only, would have a Material Adverse Effect.

7.1.4.     SEC
Filings. The Company has filed all forms, reports, registration statements
and documents required to be filed by it with the SEC since December 31, 2002.
The Company has made available to the Lender all such forms, reports, and
documents in the form filed with the SEC since such date, but not the exhibits
and schedules thereto or the documents incorporated therein, by virtue of
having filed them on the SECs Electronic Data Gathering, Analysis, and
Retrieval (EDGAR) system. All such required forms, reports and documents
(including those that Company may file subsequent to the date hereof and the
financial statements filed therewith) are referred to herein as the Company SEC Reports provided that any
Company SEC Report shall be deemed to include all amendments to such
report.  As of their respective filing
dates (or if amended or superseded by a filing then on the date of such
filing), the Company SEC Reports: (i) complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such Company
SEC Reports; and (ii) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except to the extent corrected by
subsequently filed documents with the SEC. 
Except as set forth in, or reflected by, the Company SEC Reports
including the audited financial statements for the period ending December 31,
2004 provided to the Lender, since December 31, 2003, no material adverse
change has occurred in the business, operations, properties or conditions
(financial or other) of the Company and its Subsidiaries, taken as a whole.

7.1.5.     No
Broker.  No broker, finder, agent or
similar intermediary has acted for or on behalf of the Company in connection
with this Agreement or the transactions contemplated hereby, and no broker,
finder, agent or similar intermediary is entitled to any brokers, finders
similar fee or other commission in connection therewith based on any agreement,
arrangement or understanding with the Company.

7.1.6.     Ownership. 
Except as set forth in the Companys
Disclosure Schedule, the
Company and each of its Subsidiaries has good, valid and marketable title to
all of its assets, free and clear of all mortgages, liens, pledges, charges,
security interests or other encumbrances. 
The Companys Disclosure Schedule sets forth a list of all material assets
owned by Company and each of its subsidiaries.

---

---



7.1.7.     Compliance
with Laws.  The Company and each of
its Subsidiaries is in compliance in all respects with all laws, regulations
and requirements applicable to it or to the operation of its business or the
ownership of its assets, except as would not have a Material Adverse
Effect.  The Company and each of its
Subsidiaries has obtained all governmental permits, licenses and the like
necessary to the conduct of its business and all such permits, licenses and the
like are in full force and effect and no default exists thereunder which would
have a Material Adverse Effect.

7.1.8.     Litigation. 
Except as disclosed in the Company SEC Reports and as set forth in the Companys
Disclosure Schedule, there are
no actions, suits or proceedings pending or threatened against the Company, its
Subsidiaries, or any of their assets before or by any court, government agency
or body or arbitrator which would have a Material Adverse Effect.

7.1.9.     Taxes. 
Except as set forth in the Companys
Disclosure Schedule, the
Company and each of its Subsidiaries has filed all tax returns required to be
filed by it and has paid all taxes, assessments, levies and other governmental
charges which are pursuant to such returns and all other taxes, assessments,
levies and other governmental charges which have become due, including all
interest and penalties, the failure to file any such return or to pay
any such tax would, individually or in the aggregate, have a Material Adverse Effect.

7.1.10.  Intellectual
Property.  The Company and its Subsidiaries own all
Intellectual Property Assets, including, but not limited to, patents,
trademarks, trade names, trade dress, services marks, services names,
copyrights, software, licenses, know how, trade secrets, methodologies,
franchises, formulas, good will, internet domain names and other intangible or
intellectual property rights (or rights with respect to the foregoing) necessary
for the conduct of their business and as more fully described in the Company
Disclosure Schedule, without any conflict with, or violation of, the rights of
others which would have a Material Adverse Effect.

8.            Affirmative
Covenants.

8.1.    General
Covenants.  Until such time that (i)
all amounts payable by the Company under this Agreement shall have been paid in
full and (ii) the Lender shall not be under any obligation under this Agreement
to provide Installments to the Company, the Company shall and shall cause each of its Subsidiaries to:

8.1.1.     Existence. 
Do all things necessary and proper to
preserve and keep in full force and effect its existence and its material
rights to all material Intellectual Property Assets.

8.1.2.     Books
and Records.  Keep proper books of
record and account in which full, true and correct entries in conformity with
generally accepted accounting principles and all requirements of law shall be
made of all dealings and transactions in relation to its business and affairs.

8.1.3.     Property. 
Keep all property useful and necessary in
its business in good working order and condition and, from time to time, make
all necessary and proper repairs, renewals, replacements, additions and
improvements thereto.

8.1.4.     Compliance
with Laws.  Comply in all
material respects with all applicable laws, statutes, rules, regulations and
orders of, and all applicable restrictions imposed by, any governmental
authority in respect of the conduct of its business and the ownership or
operation of its property or assets.

---

---



8.1.5.     Insurance. 
Maintain at all times adequate insurance
against such risks as are customarily insured against, and in amounts
customarily carried by, persons operating similar businesses and effect all
such insurance under valid and enforceable policies issued by insurers of
recognized responsibility.

8.1.6.     Payment
of Taxes and Other Claims.  Duly pay
and discharge when due all taxes, assessments, levies and other governmental
charges imposed upon it or its assets or upon its income, as well as all claims
for labor, materials or supplies, which if unpaid might by law become a lien
upon any of its assets, unless any such payment or discharge is being contested
in good faith by appropriate proceedings and as to which adequate reserves are
being maintained in accordance with generally accepted accounting principles.

8.1.7.     Notice. 
Promptly give notice to the Lender of: (i)
any condition, event or act which constitutes an Event of Acceleration or
which, with the giving of notice or lapse of time, or both, would constitute an
Event of Acceleration and (ii) any other event or fact that may likely have a
Material Adverse Effect.

8.1.8.     Inspection. 
Permit any person designated by the Lender
to visit and inspect any of its properties, to examine its books and records
and to discuss its affairs, finances and accounts with its officers and key
employees at such reasonable times and as often as may be reasonably requested
by Lender, provided that such person shall have entered into a confidentiality agreement with the Company in
customary form reasonably acceptable to the Company and the Lender.

8.1.9.     Information. 
Furnish to the Lender from time to time: (a)
as promptly as practical, such monthly, quarterly and annual financial
statements as Lender may request, all of which financial statements (i) shall be
prepared in accordance with generally accepted accounting principles
consistently applied and (ii) in the case of any annual financial statements,
shall be audited by the Companys independent certified public accountants, (b)
such annual or quarterly budgets and forecasts as Lender may reasonably request
from time to time, (c) as promptly as practical upon filing, all forms,
reports, registration statements, proxy statements and other documents filed by
it with the SEC, and (d) such other information concerning its business,
operations, properties, conditions (financial or other) or prospects as the
Lender may reasonably request.

8.2.    Use
of Installments.  The Installments
received by the Company hereunder shall only be used by the Company to fund the
working capital needs of the Company and/or its Subsidiaries as reasonably
determined by the Company.

9.            Negative Covenants.

9.1.    Covenants.  Until such time that (i) all
amounts payable by the Company under this Agreement shall have been paid in
full and (ii) the Lender shall not be under any obligation under this Agreement
to provide Installments to the Company, the Company shall not, and shall not permit any of the Subsidiaries
to:

9.1.1.     Liens. 
Create, incur, assume or permit to exist any
mortgage, deed of trust, pledge, security interest, lien or other encumbrance
upon or with respect to any of its property (real or personal, tangible or
intangible) whether now owned or hereafter acquired other than the security
interest granted under the Loan Documents, which are set forth in the Company
Disclosure Schedule, and such other security interests which may arise pursuant
to the terms of lease or license agreements entered into in the ordinary course
of business.

---

---



9.1.2.     Indebtedness. 
Other than pursuant to the Loan Documents
and other than as set forth in the Company Disclosure Schedule, create, incur
or become liable in respect of any indebtedness (other than trade accounts
payable and accrued expenses incurred in the ordinary course of business or
indebtedness among the Company and its Subsidiaries) or assume, guarantee or
become contingently liable upon any obligation or indebtedness of any person or
entity.

9.1.3.     Merger. 
(i) Wind up, liquidate or dissolve its
business or affairs, (ii) enter into any merger, consolidation or other
business combination transaction or (iii) other than in the ordinary course of
business, purchase or acquire any part of the property or assets of any other
person or entity, (iv) other than in the ordinary course of business, sell,
lease, transfer or otherwise dispose of any part of its property or assets or
(v) other than the Subsidiaries of the Company in existence on the date hereof,
organize or own any Subsidiaries (unless each such new Subsidiary grants the
Lender a security interest on all its assets and executes such agreements,
documents, and instruments and takes such other action as Lender may reasonably
request) or make any investment in any other Person. Nothing in this Agreement
shall prevent the liquidation, winding up or dissolution of any of the
Companys Subsidiaries or the merger, consolidation or other business
combination transaction among the Company and its Subsidiaries.

9.1.4.     Business. 
Engage (directly or indirectly) in any
business other than the business in which it is engaged on the date hereof or
businesses ancillary thereto.

10.          Acceleration.

10.1.  Upon the occurrence of
an Event of Acceleration and at any time thereafter, if any Event of
Acceleration shall then be continuing, the Lender, by written notice to the
Company, may (i) declare the Outstanding Principal Amount, and accrued Interest
thereon, to be, whereupon the same, together with any other amounts owing by
the Company under the Loan Documents shall become, forthwith due and payable
without further presentment, demand, protest or other notice of any kind, all
of which are expressly waived by the Company, whereupon the Lender may proceed
to exercise all of its rights and remedies against the Company under the Loan
Documents and under applicable law and/or (ii) declare its obligation to make
further Installments terminated, whereupon such obligations shall be
terminated; provided, however, that if an Event of Acceleration described in
Section 10.3.4. should occur, the result which would otherwise occur only upon
the giving of written notice to the Company, as specified above, shall occur
automatically without the giving of such notice.

10.2.  The Company shall
promptly notify the Lender of the occurrence of any Event of Acceleration.

10.3.  Each of
the events set out below in this Section 10.3 shall be an Event
of Acceleration:

---

---



10.3.1.   The
Company or any of its Subsidiaries does not pay any amount payable by it under
the Loan Documents when due and such default shall continue unremedied for more
than five (5) Business Days after written notice by the Lender to the Company;

10.3.2.   Default
shall be made by the Company or any of its Subsidiaries in the due observance
or performance of any other covenant or condition contained in any of the Loan
Documents required to be observed or performed by it which default is not
remedied within 30 days after written notice from Lender.

10.3.3.   Any
representation or warranty made by the Company or any of its Subsidiaries in
the Loan Documents is incorrect or misleading in any material respect when made
(or deemed made);

10.3.4.   The
Company or any of its Subsidiaries commences, or there is commenced against
either of the Company or any of its Subsidiaries (or any of its assets), any
proceedings under any bankruptcy, insolvency, reorganization, receivership,
relief of debtors, dissolution, liquidation or similar law of any jurisdiction
and, if such proceedings are commenced against the Company or any of its
Subsidiaries, such proceedings are not dismissed within 60 days after the
institution thereof; the Company or any of its Subsidiaries admits in writing
its inability to pay its debts generally as such debts become due; a court of
competent jurisdiction enters an order, judgment or decree appointing a
custodian, receiver, trustee, liquidator or conservator of the Company or any
of its Subsidiaries or of the whole or any substantial part of its properties
which order, judgment or decree is not dismissed within 60 days after the
giving thereof; or the Company or any of its Subsidiaries makes a general
assignment for the benefit of creditors;

10.3.5.   One
or more judgments for payment of money in excess of $ 250,000 in the aggregate
shall be rendered against the Company or any of its Subsidiaries and such
judgments, decrees or orders shall continue unsatisfied and in effect for a
period of 30 consecutive days without being vacated, discharged, satisfied or
stayed or bonded pending appeal;

10.3.6.   The
Company or any of its subsidiaries shall:  (i) fail to
pay any installment of principal of, or interest on, any other indebtedness for
borrowed money in a principal amount which exceeds $ 200,000 (Other Debt), whether now or at any time
hereafter outstanding, whether at maturity, by call for redemption,
acceleration, declaration or otherwise or (ii) fail to perform or observe any
term, covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any such Other Debt, when required to be
performed or observed, if the effect of such failure to perform or observe is
to accelerate, or to permit the acceleration of, the maturity of such Other
Debt or any such Other Debt shall be declared to be due and payable or required
to be prepaid (other than by a regularly scheduled required prepayment) prior
to the stated maturity thereof;

10.3.7.   A
breach by the Company of Section 11 herein which is not cured within 30 days after written notice from Lender;

10.3.8.   A
Change of Control shall have been consummated; or

10.3.9.   Any
event or series of events occur(s), which, in the reasonable opinion of the
Lender, after discussion with the Company, is likely to have a material adverse effect
on the ability of the Company to pay any amount payable by it under this
Agreement when due. This Section
10.3.9 shall only apply at such times that the Outstanding Principal Amount
exceeds five million US dollars (US $ 5,000,000).

---

---



11.          Nominees to the Board.

11.1.  Subject to Section 11.2
below, during the period commencing on the Closing Date and ending on such date
that (i) all amounts payable by the Company under this Agreement
shall have been paid in full and (ii) the Lender shall not be under any
obligation under this Agreement to provide Installments to the Company, the Lender shall have the right to
nominate up to two (2) persons to serve as directors on the Board (the Nominees). Subject to Section 11.2 below, a
Nominee shall be appointed by the
Board if permitted under the Companys Articles of Association and Law, or
shall be recommended for election as directors to the Board in a proxy
statement to the Companys shareholders. Mr. Leslie Banwart shall be considered
to be a Nominee for so long as he serves on the Board, it being recorded that
Mr. Leslie Banwart serves as a director on the Board on the date of this
Agreement. In the event that Mr. George Morris, who serves as a director on the
Board on the date of this Agreement, shall not serve as a director on the
Board, then, at such time or times, the Lender shall have the right to nominate
one (1) additional person (three (3) in total) as a Nominee, such that in such
case, the Lender shall have the right to nominate up to three (3) persons to
serve as directors on the Board pursuant to this Section 11.1.  In the event that the Board does not accept
a person named by Lender as a Nominee due to reasons set forth in Section 11.2,
Lender shall have the continuing right to nominate such additional persons
until such time as the Board shall appoint Lenders Nominee.

11.2.  A Nominee shall be
appointed to the Board as contemplated by Section 11.1 subject to each of the
following:

11.2.1.   The
identity of the Nominee shall be approved by the Board, which approval shall
not be unreasonably withheld;

11.2.2.   The
appointment of the Nominee must not, in the reasonable opinion of the Board,
cause or likely cause the Company not to qualify as a foreign private issuer
as such term is defined under Rule 3b-4 of the Exchange Act;

11.2.3.   The
appointment of the Nominee must not, in the reasonable opinion of the Board,
cause or likely cause the Company to be in breach of the NASDAQ Marketplace
Rules, including NASDAQ Marketplace Rule 4350(c); and

11.2.4.   The
appointment of the Nominee must not, in the reasonable opinion of the Board,
cause or likely cause the Company to be in breach of any other Law or Order
applicable to the Company.

Provided, however, that the Company shall
take reasonable steps to otherwise comply with the requirements of such Law or
Order prior to determining that a Nominee shall not be appointed or named, as
the case may be.

12.          Termination.

12.1.  The Company may
terminate this Agreement at any time by providing the Lender with a written
notice to such effect (the Termination Letter), provided that upon the
termination by the Company as aforesaid, all amounts payable by
the Company under this Agreement shall have been paid in full. Following such
termination, the Lender shall not be under any obligation under this Agreement
to provide Installments to the Company and the Availability Period shall
terminate.

---

---



13.          Miscellaneous.

13.1.  Each of
the parties hereto shall use commercially reasonable efforts to proceed
promptly with the transactions contemplated herein, to fulfill the conditions
precedent for such partys benefit and shall perform such further acts and execute such further documents as
may reasonably be necessary to carry out and give full effect to the provisions
of the Loan Documents and the intentions of the parties as reflected
therein.

13.2.  Except as otherwise
expressly limited herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors, and
administrators of the parties hereto.

13.3.  None of the rights,
privileges, or obligations set forth in, arising under, or created by this
Agreement may be assigned or transferred by either party hereto without the
prior consent in writing of the other party, which consent shall not be
unreasonably withheld.

13.4.  This Agreement, its
exhibits and schedules and the agreements, documents and
instruments to be executed and delivered pursuant hereto or thereto constitute
the final, complete and exclusive agreement among the parties with respect to
the subject-matters hereof and thereof, and supersede all prior agreements,
understandings and representations, written or oral, with respect thereto. The preamble, exhibits and schedules
hereto constitute an integral part hereof. 
The section headings of this Agreement are for convenience of
reference only and shall not be deemed to alter or affect any provision hereof.
Unless the context otherwise requires, references to (or to any specified
provision of) this Agreement or any other document shall be construed as
references to that provision or that document as in force for the time being
and as amended, supplemented, modified or replaced in accordance with the terms
thereof. Words importing the plural shall include the singular and vice versa.
Any reference in this Agreement to a Law or to a specific section thereof shall
be construed as a reference to such Law or section as the same may have been,
or may from time to time be, amended, succeeded or re-enacted.

13.5.  This
Agreement may not be amended, modified, altered or supplemented other than by
means of a written instrument duly executed and delivered on behalf of the
Company and the Lender.

13.6.  This
Agreement may be executed simultaneously in any number of counterparts
(including by facsimile), each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

13.7.  No
failure on the part of any party to exercise any power, right, privilege or
remedy under this Agreement, and no delay on the part of any party in
exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or the exercise of any other power,
right, privilege or remedy.

---

---



13.8.  All representations and
warranties made in this Agreement shall continue to remain in full force and
effect for as long as this Agreement is still in effect pursuant to its
terms.

13.9.  All notices and other
communications required or permitted hereunder to be given to a party to this
Agreement shall be in writing and shall be sent by facsimile or mailed by
registered or certified mail, postage prepaid, or by electronic mail, or
otherwise delivered by hand or by messenger, addressed to such partys address
as set forth below or such other address a party shall furnish to other party
in accordance with this Section 13.9:

| |                                      |  |                                            |                        
| | ------------------------------------ |  | ------------------------------------------ | -----------------------
| | if to the Company:                   |  | Arel Communications and Software Ltd.     
| |                                      |  | 22 Einstein St., Park Hamadah, Building 22
| |                                      |  | Kiryat Weizman, Nes Ziona,                
| |                                      |  | Israel                                    
| |                                      |  | 74140                                     
| |                                      |  | Fax:+972-8-940-8118                       
| |                                      |  | E-mail: dyelin@arelcom.com                
| |                                      |  | Attention: Chief Financial Officer        
| |                                      |  |                                           
| | with a copy to                       |  | Yigal Arnon & Co.                         
| | (which shall not constitute notice): |  | One Azrieli Center                        
| |                                      |  | 46th Floor - Round Tower                  
| |                                      |  | Tel-Aviv, Israel                          
| |                                      |  | 67021                                     
| |                                      |  | Fax: +972-3-608-7714                      
| |                                      |  | Attention:                                 | David H. Schapiro, Adv.
| |                                      |  |                                            | Ari Fried, Adv.        
| |                                      |  | E-mail: davids@arnon.co.il                
| |                                      |  | arif@arnon.co.il                          
| |                                      |  |                                           
| | if to the Lender:                    |  | Cetus, Corp.                              
| |                                      |  | 6450 Sand Lake Road, Suite 200            
| |                                      |  | Dayton, Ohio 45414-2645                   
| |                                      |  | USA                                       
| |                                      |  | Fax: 937-264-4635                         
| |                                      |  |                                           
| | with a copy to                       |  | Frederick J. Caspar, Esq.                 
| | (which shall not constitute notice): |  | Chernesky,
  Heyman & Kress P.L.L.        
| |                                      |  | 10
  Courthouse Plaza SW, Suite 1100      
| |                                      |  | Dayton, OH
  45402                        
| |                                      |  | Fax:
  937-449-2821                       
| |                                      |  | fjc@chklaw.com                            

Any notice sent in accordance with this Section 13.9 shall be effective
(i) if mailed, two (2) Business Days upon receipt, (ii) if sent by messenger,
upon delivery, and (iii) if sent via facsimile or electronic mail, upon
transmission and electronic confirmation of receipt or (if transmitted and
received on a non-Business Day on the first Business Day following transmission
and electronic confirmation of receipt).

---

---



13.10. Each
party shall bear its own expenses and costs in relation to the transactions
contemplated hereby (including in connection with the preparation, negotiation
and execution of this Agreement and all documents ancillary thereto),
including, but not limited to, reasonable fees of attorneys and financial
advisors (the Expenses). Notwithstanding the previous sentence, within seven
(7) Business Days of the Closing Date or the date set forth in Section 2.2.1, if the Closing has not occurred by such date, the
Company shall
reimburse the Lender for the Lenders Expenses in an amount that shall not
exceed fifty thousand US dollars ($ 50,000).

13.11. The
Company shall pay the Lenders reasonable expenses incurred in connection with
the enforcement of any of the Loan Documents or the collection of any of the
obligations thereunder, including reasonable fees and expenses of counsel
retained by the Lender.

13.12. This agreement shall be governed in all
respects by and construed and enforced in accordance with the laws of the State
of Israel, without application of the conflict of laws principles thereof. The
competent courts of Tel Aviv-Jaffa or Jerusalem shall have exclusive
jurisdiction upon any dispute arising hereunder and the parties hereto consent
to the jurisdiction of such courts (and of the appropriate appellate courts
therefrom).

13.13. If
any provision of this Agreement is held by a court of competent jurisdiction to
be unenforceable under applicable Law, then such provision shall be excluded
from this Agreement and the remainder of this Agreement shall be interpreted as
if such provision were so excluded and shall be enforceable in accordance with
its terms; provided, however, that in such event this Agreement shall be
interpreted so as to give effect, to the greatest extent consistent with and
permitted by applicable Law, to the meaning and intention of the excluded
provision as determined by such court of competent jurisdiction.

13.14. The
parties hereto acknowledge that the Company is a publicly traded company and as
such is entitled to disclose the existence, execution or the terms and conditions
of this Agreement
without
any further consent of the Lender. Subject to the previous sentence, no
publicity release or announcement concerning this Agreement or the transactions
contemplated herein may be made by either party without the advance written
approval as to its form and substance by the other party hereto.

IN
WITNESS WHEREOF the parties have signed this Loan Agreement in one or more
counterparts as of the date first appearing above.

|                                        |  | 
|--------------------------------------- |  | 
|Arel Communications and
  Software Ltd. | 
|                                        |  | 
|By:                                     |  | 
|                                        | 
|                                        | 
|Name:                                   | 
|                                        | 
|                                        |  | 
|Title:                                  |  | 
|                                        | 
|                                        |  | 
|Cetus Corp.                             | 
|                                        |  | 
|By:                                     |  | 
|                                        | 
|                                        | 
|Name:                                   | 
|                                        | 
|                                        |  | 
|Title:                                  |  | 
|                                        | 

---

---