EXHIBIT 10.7
THE ISRAELI AERONAUTICAL INDUSTRIES LTD.              Commercial Confidentiality
Military Aviation Appliances Section-MALAT Plant           Grade B and D-Enertec

                         CHAPTER III - CONTRACTUAL TERMS

ARTICLE  1:  DEFINITIONS

The  following terms shall be interpreted as defined aside, unless other meaning
shall  be  explicitly  stated:

1.1  SUPPLIER  /  SELLER  /  CONTRACTOR  -  ENERTEC  Ltd.

1.2  MALAT  -  The  plant  MALAT  of  the  I.A.I.  Ltd

1.3  I.A.I.  -  The  Israeli  Aeronautical  Industries  Ltd.

1.4  CUSTOMER  - all final customers purchasing products from MALAT from time to
     time.

1.5  THE  SIDES  -  MALAT  and  the  Supplier.

1.6  CONTRACT  /  THE PRESENT CONTRACT / THE AGREEMENT / THE PRESENT AGREEMENT -
     These  general  terms, the terms of the order as well as any other document
     enclosed  thereto  and/or  that  these  general  terms  refer to and/or the
     appendices  of  the  present  document refers to as well as any document to
     which  the  present  general  terms  is  enclosed  to.

1.7  MAIN  CONTRACT  - the contract signed from time to time by MALAT/I.A.I. and
     the  customer  in  view  of  purchase  of  the  product and/or MALAT system
     comprehending  the  product.

                                                                            E-36
<PAGE>
1.8  THE  PRODUCT  /  SUPPLIES - the development and/or goods and/or spare parts
     and/or  the  product  file  (including documentation and literature) and/or
     services that the Supplier is to develop and/or to produce and/or to supply
     and/or  to  grant  within  the  framework  of  the  present  contract.

1.9  SERVICES  -  technical  assistance,  maintenance  of the product, training,
     documentation  and  literature  and  all  other  services  supplied  by the
     Supplier  as  detailed in the present contract and the specification of the
     work.

1.10 JOBS  -  tasks undertaken by the Supplier to be effected in conformity with
     the  present  contract.

1.11 SPECIFICATION  OF  WORK  (S.O.W.)  -  specification  of work in the present
     contract,  including  all its parts and appendices, as updated from time to
     time  in  conformity  with  the  instructions  in  the  present  contract.

1.12 SPECIFICATION  - chapter defining the technical requirements, among others,
     the  shape  of  the product and its performances, as these shall be updated
     from  time  to  time,  in  conformity  with the instructions in the present
     contract.

1.13 DELIVERY  -  Signature on receipt by MALAT after receipt of confirmation as
     to  suitability from the Supplier and after completion of the final control
     and successful reception processes of the product as defined in the present
     contract  and  in  the  S.O.W.

1.14 TIME-TABLE  -  the  time-table appendix of the present contract, as updated
     from  time  to  time,  in  conformity  with the instructions in the present
     contract.

1.15 US  DOLLAR  -the  Dollar  of  U.S.A.

1.16 EQUIPMENT  CFE  - the equipment, documentation and services detailed in the
     appendix S.O.W. and delivered and/or to be delivered to the seller by MALAT
     and/or  as  per its instructions and/or by the customer, for the purpose of
     implementation  of  the  present  contract.

                                                                            E-37
<PAGE>
Words  at  singular  shall mean also plural, unless content indicates otherwise.

ARTICLE  2:  MANUFACTURER'S  GUARANTEE

2.1  The  Supplier  guarantees  to  I.A.I./MALAT  that the product or its parts,
     supplied  by  him,  including the equipment supplied by his sub-contractors
     shall  operate properly and shall fulfill the performances required and the
     other  features,  all  in  conformity with the technical specification, the
     S.O.W.  and  the  terms in the present contract, all subject to the details
     hereinafter.

2.2  Without  derogation  from  the  generalities above, the Supplier guarantees
     that the product and/or its parts shall operate properly and in combination
     with  all  assemblies with the other systems (between them themselves), all
     as detailed in the technical specification, S.O.W. and the others documents
     of  the  present  contract.

2.3  The  Supplier guarantees all deficiencies, incompliance or other defects in
     the job or in the product ordered, or of any part thereof, derived from the
     planning  or  work  or  materials  or services that are defective or do not
     comply  with  the  level  of  the requirements as detailed in the technical
     specification,  the  S.O.W.  and  in  the  other  conditions of the present
     contract.

     To  avoid  any  doubt:

     The Supplier's guarantee refers to the compliance of the work or product to
     the  instructions  in  the documents of the present contract (including the
     technical  specifications  and  other  technical documents by virtue of the
     present  contract)  or  the  quality or features required thereof, be it in
     detail  or  implied,  as per correct and logical meaning as it appears from
     the  above-mentioned  documents.

2.4  PERIOD  OF  THE  GUARANTEE
     --------------------------

     2.4.1  The  period of the guarantee as per the present contract shall be of
          eighteen months (18) as of the delivery of the product to the customer

                                                                            E-38
<PAGE>
          and  in any case - not less than 12 months as of the date of operation
          of  the  product  by  the  customer.

     2.4.2  Without  derogation  from content in art. 1 above and in addition to
          the  content  therein,  the  period  of  the  guarantee  regarding the
          planning shall be of up to twenty (20) years as of the delivery of the
          product  to  I.A.I./MALAT  by  the  Supplier.

2.5  By  virtue  of  the  Supplier's  guarantee  as per the present article, the
     Supplier  undertakes  to  repair and/or to replace, as he shall be see fit,
     any  of the components found deficient, incompatible or having other defect
     as  stated  above  (hereinafter:  "the  deficiency").

2.6  The  Supplier  shall  start  the organization in view of performance of the
     repairs and/or replacements as stated immediately upon having been informed
     of  the  failure.  The  Supplier  undertakes,  further  to  request  from
     I.A.I./MALAT,  to  repair  or  replace the defective part as defined in the
     S.O.W.  (and  in any case the period of the repair shall not exceed 17 days
     as  of  the date of transfer of the product to the Supplier). The transport
     of  the  items  from I.A.I./MALAT to the Supplier and back shall be made by
     the  Supplier and on his account and liability. The Supplier shall transfer
     to  I.A.I/MALAT together with the updated item, a report stating the nature
     of  the  failure,  reason  having  caused it and steps taken further to the
     repair of the failure and prevention of repetition of such failure in other
     products. In addition, the Supplier shall report the failures in conformity
     with  the  instructions  of  the  quality  control section of I.A.I./MALAT.

2.7  When  the Supplier had repaired and/or replaced within the framework of his
     obligations  as  per  article  2.5 a defective component, the period of the
     original  guarantee  for the product repaired, as determined in article 2.4
     above  shall  be prolonged for a period as of the date when the product had
     been  received  for repair in the Supplier's warehouse and until the supply
     of  the  repaired  product to MALAT and additional thirty (30) days. If the
     period  of  the  guarantee  left  as  of the date of supply of the repaired
     product is less than twelve (12) months, then the Supplier shall prolong on

                                                                            E-39
<PAGE>
     his  account the period of guarantee for repair and/or replacement as above
     to  twelve  (12)  months  regarding  that  same  failure.

2.8  Repairs  and/or replacements for the purpose of this article shall mean any
     action having as purpose to bring the unit or of any of its parts to normal
     operation  and  to  have  them  perform it as well as the other features in
     conformity  with  the  present  contract,  including:  location of failure,
     transport,  installation,  connection, replacement of components, technical
     amendment,  tuning,  test,  etc.  The Supplier shall receive a confirmation
     from  IAI/MALAT  in  advance  and  in  writing on any change derived and/or
     required due to the repair and/or replacement as stated above. It is hereby
     clarified  that subject to the maintenance regulations of the applications,
     IAI/MALAT  customer  shall  do the utmost in order to isolate the defective
     product.

2.9  The  transport  of  the items and their insurance, and in general, from the
     customer's  country  to  the  site  of  delivery  in  view  of  repair  or
     replacement,  as  the case may be, and back to the customer's country shall
     be  made  on  the  Supplier's  account.

2.10 It  is  hereby  agreed  that  in  cases when the Supplier shall advance the
     transfer  of  any  product  whatsoever,  the  start  of  the  period of the
     guarantee  shall  not  be  advanced  thereon,  and  such shall start on the
     planned  date.  To  avoid  doubts,  changes  in  the  time-table, including
     advancement  of  the  supply,  are  subject  to approval, in writing and in
     advance,  from  MALAT.

2.11 To  avoid any doubt, it is hereby agreed that in case it is not possible to
     repair  any  failure  whatsoever in the product, the Supplier shall replace
     the  product  with  the  defect as mentioned, by another product that shall
     comply  with  the  requirements  in  the  specification.

2.12 Should  a  dispute arise between the sides if the failure in the product is
     within  the  framework of the seller's guarantee as stated in this chapter,
     MALAT  shall be entitled to ask the seller to repair the failure within the
     period  stated in article 2.6 above and the dispute shall be transferred to
     the  decision  of  an  arbitrator.

                                                                            E-40
<PAGE>
2.13 SYSTEMATIC  DEFECT
     ------------------

     2.13.1 The meaning of a systematic defect is an identical defect discovered
          during  the  period  of the guarantee more than 3 times in any certain
          product  or  in  more  than  at least 3 products in each type, even if
          these  have  successfully  passed  the  acceptance  tests.

     2.13.2  If a systematic defect is discovered, as stated, the Supplier shall
          immediately  act in view of "identification of the defect", i.e. shall
          take all steps as required in order to identify its source and reasons
          and  in  view  of  determination  of  the way of repair and its future
          prevention  (including  change  in  the  acceptance  tests)  and shall
          transfer  to  IAI/MALAT  a  written  report  in  the  matter.

     2.13.3  If  a  defect is identified as stated in par 2.13.1 above or if the
          defect  is  discovered  more than 10 times, the Supplier undertakes to
          replace  and/or repair on his account all the products at the disposal
          of  IAI/MALAT,  the  customer  of  IAI/MALAT  and  in  the  Supplier's
          possession.

     2.13.4  The Supplier shall start the organization in view of performance of
          the  repairs  and/or  replacements, as stated, immediately upon having
          been  informed  of  the systematic failure. The duration of the repair
          shall  be  fixed  by  the  Supplier and confirmed by IAI/MALAT. In any
          case,  the  Supplier  undertakes  to  complete  the  repair  and/or
          replacement  within  a  reasonable  period  of  time.

     2.13.5  All  references  to  the  Supplier's  obligations  regarding  the
          systematic  defects  are in addition to his guarantee as per the other
          articles  in  this  chapter.

                                                                            E-41
<PAGE>
2.14 To avoid any doubt, it is hereby clarified that all expenses related to the
     implementation  of  the  article  on  the Supplier's guarantee (article 2),
     including  expenses  on  personnel,  components,  transportation  and other
     expenses,  are  an  integral  part  of  the  work  and  are included in the
     consideration.

2.15 The  given  guarantee shall be in favor of IAI/MALAT and/or the customer of
     IAI/MALAT.

ARTICLE  3:  OVERALL  SUPPORT  FOR  THE  PRODUCT

During  a  period  of  twenty  (20) years as of the delivery of the last item of
hardware  to  the  customer,  the  Supplier  undertakes  to:

3.1  To  supply  to MALAT and/or the customer maintenance services and repair as
     defined  in  the  S.O.W.  at  prices  agreed  upon  by  the  sides.

3.2  To  sell  to  IAI/MALAT, at their request, and in conformity with the terms
     agreed  upon  by  the  sides  from  time to time, additional systems and/or
     sub-systems  as  well as additional parts and equipment. The prices and the
     payment  terms  to  be  agreed shall not be worse than those granted to the
     Supplier's  preferential  customers  for  these  or  similar items for same
     quantities  or  similar  quantities.

     In  addition,  the  Supplier undertakes that the overall price of all spare
     parts,  components of the product, shall not exceed in any case the present
     price of one unit of the product to MALAT. All spare parts ordered by MALAT
     shall  be supplied to MALAT per the general delivery terms and shipment for
     the  products  and  shall  be  accompanied  by  suitable  documentation.

     The  seller's  obligation comprehends components manufactured by him and/or
     by  his  sub-contractors  as well as components purchased by him and/or his
     sub-contractors  as  shelf  components.

3.3  To  execute,  at  the  request  of  IAI/MALAT,  changes  in  the product in
     conformity  with  the  terms  and  prices  agreed  upon  by  the  sides.

                                                                            E-42
<PAGE>
3.4  To supply to MALAT, at its request, technical assistance for the operation,
     installation  and  maintenance of the product, as defined in the S.O.W. and
     per  the terms agreed upon by the sides. The prices agreed shall not exceed
     those  collected  from  the  Supplier's preferential customers for the same
     work.  The  other  terms  also shall not be worse than those granted by the
     Supplier  to  his  preferential  customers.

3.5  The  Supplier  undertakes  to  supply  to  MALAT,  for  the  customer's
     representatives,  training and courses and/or information and assistance as
     to the "essence", or any other factor selected by MALAT to perform training
     for,  referring  to  the  operation  and  maintenance  of  the  products in
     reference,  in  an  extent  and  for  terms  as  detailed in the S.O.W. and
     specification.  The  training  shall  be performed at the Supplier's and/or
     MALAT's factory and/or in the customer's country, all as detailed in S.O.W.
     If  the  training  cannot  be  performed  for  the products destined to the
     customer,  the  Supplier  undertakes to execute it by means of its training
     auxiliaries.  Upon  completion of the training, the Supplier shall issue to
     MALAT  a  graduation  certificate  signed  by  the Director of the Training
     Program  or  his  deputy  and counter-signed also by MALAT representatives.

3.6  The  Supplier  undertakes  to  supply to MALAT documentation and literature
     and/or  information  and assistance as to the "essence" or any other factor
     selected  by  MALAT, to prepare the literature all as defined in the S.O.W.
     and  technical  specifications.  When  the  last  copy of documentation and
     literature  had  been  handed  over,  the  Supplier  shall issue to MALAT a
     completion  certificate  signed  by the Director of the Training Program or
     his  deputy  and counter-signed also by MALAT representatives. The Supplier
     shall  be liable entirely for the documentation during a period of five (5)
     years  as  of  the  date  of  issue  of  the  completion  certificate.

3.7  To  inform  IAI/MALAT  on  due  time  of  any information in the Supplier's
     knowledge  or at least two years in advance (the earliest among them) as to
     end of production of any component, sub-system and/or technologies required
     for  the  production and/or current maintenance of the product. Such notice
     shall  be  granted in order to enable IAI/MALAT a reasonable period of time
     for  estimate  of  the  situation  and  selection  of  the possibilities to

                                                                            E-43
<PAGE>
     purchase  a  suitable  quantity of the said component or to replace it by a
     new  component  or  development  and  production  of  new  sub-system/s.

3.8  Without  prejudice  to  the  other instructions in the present contract, in
     case  the  Supplier  shall  not  be  able to continue the production of the
     product  and  its  supply  to  MALAT due to reasons independent of him, the
     Supplier  shall  inform  MALAT  forty  eight (48) month at least before the
     planned date when the Supplier intends to stop the work. In such a case the
     Supplier  shall  supply  to  MALAT  or  to  MALAT proxies in Israel all the
     drawings,  information,  technical  documentation  (hereinafter:  "the
     know-how')  as well as the training and technical support required by MALAT
     or  its proxies in order to manufacture the product in Israel. The Supplier
     undertakes  to  grant  MALAT and/or its proxies permanent irrevocable right
     (proprietary  right)  and  the  license  to manufacture the product and the
     spare  parts  in  Israel, taking advantage of the know-how, and to sell the
     product  and  spare  parts  in  Israel and in other countries in the world.

ARTICLE  4:  COMPENSATION  DUE  TO  BREACH  OF  PATENT

4.1  The  Supplier  declares  and  undertakes that during the performance of the
     present  contract  he shall not breach any patent or third party whatsoever
     right,  be  it proprietary or other, by virtue of the law or by virtue of a
     contract.

4.2  The  Supplier  declares  and  undertakes  that  if  a claim should be filed
     against  IAI/MALAT  and/or  any person on behalf of IAI/MALAT (hereinafter:
     "IAI/MALAT  and  their  customers") due to breach of patent or right that a
     third  party  claims  as  his  in  relation  with the present contract, the
     Supplier undertakes to ascertain the drop of this claim as soon as possible
     so  that  not  to  delay the performance of his obligations, in totality or
     partly,  as  per  the  present  contract and/or to obtain permit to use the
     product  and/or  to  replace immediately the product forbidden to use by an
     alternative  product  whose use is permitted and that shall comply with the
     requirements  in  the  present  contract.

                                                                            E-44
<PAGE>
4.3  The  Supplier  shall  compensate  and/or indemnify IAI/MALAT for any damage
     caused  and  derived  to  IAI/MALAT further to the breach of the Supplier's
     obligations  as  stated  in  art.  4.1  above.

4.4  IAI/MALAT  shall  inform  the Supplier on any claim and/or argument derived
     from  the breach of the Supplier's obligations as stated in art. 4.1 above,
     immediately  after  its first receipt by IAI/MALAT. The Supplier shall have
     the  sole  competence  to  conduct  the  defense  against  any claim and/or
     argument  as  stated. IAI/MALAT shall assist the Supplier in the conduct of
     the  defense.  The  Supplier  shall  cover the expenses of IAI/MALAT in the
     grant  of  such  assistance.

4.5  The content above refers to elements of the product that are not defined in
     the  specification and that the Supplier had added on his own opinion only.

 ARTICLE  5:  ARBITRATION

5.1  All  disputes  and  arguments raised between the sides in relation with the
     instructions  and  the  execution  of  the  contract,  except  breach  of
     confidentiality  and  safety,  shall  be transferred to the decision of one
     single  arbitrator  to  be nominated by the Deputy Director of the Military
     Aviation  Section.

5.2  The law of this article is identical to the law of an arbitration agreement
     as  per  the  Law  on  Arbitration,  1968.

5.3  The  sides  undertake  to continue and fulfill their obligations as per the
     contract  also  at  the  time of the arbitration and all its phases, but if
     otherwise  instructed  by  the  arbitrator.

5.4  The  arbitrator  shall  decide  in  the  dispute brought to his decision in
     conformity  with  the  valid  substantive  law but shall not be beholden to
     conduct it as per the procedures and law of evidence fixed per any law. The
     decision  of  the arbitrator shall be final and definitive and shall commit
     both  sides.

                                                                            E-45
<PAGE>
ARTICLE  6:  MALAT'S  RIGHTS  ON  THE  PRODUCT

6.1  To avoid any doubt, the Supplier is hereby transferring to MALAT/I.A.I. all
     rights  that  he had had and/or has and/or shall have on the product and on
     the  file  of the product, including the license to manufacture, copyright,
     intellectual  assets,  and/or  any  other  right  and MALAT/I.A.I. shall be
     entitled  to  make use of the product and its rights as well as to transfer
     any right whatsoever of a third party per its sole and definite discretion.

ARTICLE  7:  TECHNOLOGICAL  IMPROVEMENTS

7.1  The Supplier undertakes to inform MALAT as to any technological improvement
     that  the  Supplier  is  developing  on  the product. After approval by the
     competent  factors  at  MALAT,  the  Supplier  undertakes  to  perform such
     improvements  on  the  product  per  conditions  determined  by  the sides.

ARTICLE  8:  BANK  GUARANTEE

8.1  According  to  the  policy  at  MALAT/I.A.I.  and in order to ascertain any
     advance  payment  if  paid  to  the  Supplier before the performance of the
     Supplier's  obligations  as  per  the  present contract, the Supplier shall
     deposit  with  MALAT/I.A.I. an irrevocable, unconditional bank guarantee on
     the  whole  sum of the advance payment and in conformity with the customary
     terms  at  MALAT/I.A.I.  This  bank guarantee shall be in supplement to the
     performance  bond  to  be  deposited  by  the Supplier with MALAT/I.A.I. as
     defined  in  the  terms  of  the  order.

ARTICLE  9:  MANAGEMENT  OF  THE  PROJECT

9.1  Within 30 days after the signature of the present contract, the sides shall
     select  the  Directors  of  the projects for the period of execution of the
     present  contract,  in  order to ascertain the efficient application of all
     terms  in  the  contract.  Should  disputes  arise  between the two Project
     Directors as to the performance of the contract, the issue shall be jointly
     solved  by  meetings  of  both  sides.

                                                                            E-46
<PAGE>
9.2  The  Supplier  shall  transfer  monthly  to  MALAT  a  detailed  report  to
     comprehend most of the particulars on the progression of performance of the
     contract  and  related  to  various  problems occurring during its running.

ARTICLE  10:  MISCELLANEOUS

10.1
     10.1.1  The  Supplier  declares  and undertakes that there is no prevention
          and/or  restriction,  per  law or other, to execute his obligations as
          per  the  present  contract  and  that as well, there is no prevention
          and/or  restriction,  per  law  or other, to sell the products and any
          part  thereof  and/or  to  use  these  in  Israel  as  well as abroad.

          To  avoid  any doubt, the Supplier hereby declares and undertakes that
          he  shall  develop and manufacture for I.A.I./MALAT products for which
          there  is  no end-users restriction as well as there is no restriction
          of  use  by  end-users  in  conformity  with the content in SOW, after
          having  successfully  been  tested as defined in the SOW, and above in
          quantities  and  per  time-tables  detailed  in  the present contract.

     10.1.2  Should any prevention or restriction as stated in art. 10.1.1 above
          be  created  after  the date of signature of the present contract, the
          Supplier  shall  inform  it  to  I.A.I./MALAT  immediately  upon
          acknowledgement.

10.2 The Supplier undertakes not to sell and/or not to offer for sale and/or not
     to  transfer in any way whatsoever to a customer and/or to any third party,
     directly  or  indirectly,  the product, improved product, derivation of the
     product,  parts and/or any service related thereof, when these are destined
     for  MALAT  systems.  In  view of the execution of this content, the Seller
     undertakes  not  to conduct any trade connections with the customer, by his
     initiative  or through the initiative of the customer, but upon approval in
     advance  and  in  writing from MALAT. If MALAT had approved the connections
     and/or  the  sale  as  stated  above, the Seller shall act according to the
     instructions  and  terms  fixed in the framework of the approval, including

                                                                            E-47
<PAGE>
     regarding  the  payment  of  remuneration  to  MALAT  for  the  sale to the
     customer,  in  a  rate  fixed  by  MALAT  in  the  said  approval.

10.3 To  avoid  any doubt, it is hereby clarified that "indirect sale" as stated
     in  art.  10.2  above, comprehends sale by the Supplier to a third party of
     the  products/services  detailed in the present contract, and sale of these
     products/services  by  that  same  third  party  to  the  customer.

10.4 The  sides  hereby  declare that the wording of the present contract is the
     final  and  beholding  form  of  the  contract  and such had been expressed
     jointly  and  on  consent  by  both  sides.

10.5 These  contractual  terms are in addition to any other terms in the present
     contract.  Whenever  there is contradiction between these contractual terms
     and  the  terms  of  the  order,  these  contractual  terms  shall prevail.

10.6 Information, approval, instruction, supervision and/or test by MALAT to any
     of  the  operations performed by the Supplier and/or his sub-contractors as
     well  as  MALAT's  participation and/or the customer's participation in the
     performance  of  the  Supplier's  tasks,  by  himself  or  through  his
     sub-contractors,  shall  not  exclude  and/or  derogate  from  the Seller's
     obligations,  but  if  agreed  upon  in  advance  and  in  writing.

10.7 Delays  by  the  Supplier  in the performance of his obligations as per the
     present  contract  shall  grant  MALAT  the  right to change the time-table
     defined  in  the  present  contract.  MALAT  shall  not  be  liable for any
     additional  payment  caused  further  to the Supplier's delay. The Supplier
     shall  cover  all  banks and other costs derived from the incompliance with
     the  time-table.

10.8 MALAT/I.A.I.  shall  be  entitled to deduct and/or to offset any sum due to
     MALAT  from  the  Supplier  as per the present contract or by virtue of any
     other  contract whatsoever or per law from the amounts that the Supplier is
     entitled  to  as  per the present contract and/or from any defined debt due
     from  I.A.I.  to  the  Supplier.

                                                                            E-48
<PAGE>
10.9 It  is  hereby  agreed  that  all  the  Supplier's  obligations  as per the
     instructions  in  art. 2, 3, 4, 5, 6, 10.2, 10.3 of these contractual terms
     and art. 10,17 of the orders terms shall continue to be cast also after the
     completion  of  all  the  Seller's works as per the present contract and/or
     full  receipt  of the consideration by him and/or in case of termination of
     the  present  contract  prior  to  its  completion.

                                                                            E-49
<PAGE>