Document:

Agreement
                                    ---------

Made and entered into on the ............. day of ............. ...199 ;

By and Between:               Ofek Le-Oleb Foundation
                              P.O.B. 73, Migdal Ha-Emek 10550
                              Tel: 972-66543081 Fax: 972-66543082
                              (hereinafter "The Foundation")         First Party
                                                                     -----------
and:                          V. Stankevitch and V. Fairberg
                              I.D. No.: 310642467   302299428

                              Address: 32/8 Dren St.   11/20 Na-Prahim St.
                                   P.O.B. 3305 Wesher 36760   Haifa
                              Tel: 04-32000161         06-8247538
                              Fax:      -              06-8247538
                              (hereinafter "The Initiator")         Second Party
                                                                    ------------

and:                          KRH Ltd.
                              I.D. No.:
                              Address: Weisbadeher Str. 17a, Berlin
                              Tel: 49-30-7465209
                              Fax: 49-3074681914
                              (hereinafter "The Investor")           Third Party
                                                                     -----------

Whereas           the Initiator has declared that he invented the invention in
                  the field of .................... in respect whereof he has
                  applied for patent rights (patent application No. ...... ) and
                  wishes to conduct research and development in respect thereof
                  in accordance with the program approved by the Chief Scientist
                  under project No. (hereinafter "the Project") copy whereof is
                  hereto annexed marked "A";
**

And Whereas       the Initiator has declared that he is the sole and exclusive
                  owner of the invention and of all the rights, title and
                  interest thereto and that he has the necessary knowledge
                  qualification and experience for the research and development
                  of the Project;

And Whereas       the Foundation has declared that it is a legal body approved
                  by the Chief Scientist of the Ministry of Commerce and
                  Technology and the Steering Committee of

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                                      -2-

                  the Center for Technological Initiative and any other related
                  body and/or authorized institution under the Law for the
                  Support of Research and Development in Industry, 1984
                  (hereinafter "the RDL") for the purposes of the Chief
                  Scientist's R & D program in Technological Initiatives;

And Whereas       the Initiator has declared that he has filed a proposal with
                  the Foundation for the execution of the Project in the
                  Foundation's framework in accordance with and subject to the
                  Chief Scientist's program which has been approved by the
                  Foundation's projects committee;

And Whereas       the Investor has undertaken to obtain supplementary finance
                  for the Project as hereunder defined as also to promote, the
                  project subject to the terms of this agreement;

And Whereas       the Initiator has declared that he has disclosed to the
                  Parties hereto all the information at his disposal relating
                  to the Project and that he is not under any restriction,
                  whether by contract or in law, prohibiting him from entering
                  into this contract or carrying out his obligations hereunder;

And Whereas       the Parties are desirous of regulating their respective rights
                  and obligations for the execution of the Project in the
                  framework of the Foundation as set out in this agreement:

Now Therefore the parties do hereby declare and agree as follows:
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1. Preamble and Definitions
   ------------------------

         a)  The Preamble and Annexures to this Agreement form and integral part
             thereof.

         b)  The terms specified herein shall have the following definitions: -

             (i)   Holding Company Yosmot Ha-Emek Initiatives
                   Incubator LTD (Co No 51-183764-3) a company wholly

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                                      -3-

                   controlled by the Foundation which manages and operates the
                   Incubator for the Foundation. It is hereby agreed that the
                   Foundation is entitled to take all necessary steps and
                   decisions and to exercise all its rights in terms of this
                   agreement by way of and through the Holding Company;

             (ii)  The Development Period - the period during which the
                   Foundation and/or the Holding Company receives financial
                   assistance from the State for the Project and/or for the
                   period during which the Project is within the Foundation's
                   framework, control and/or responsibility.

2. RDL Approval
   ------------

   a)    This agreement is subject to the RDL and the Regulations thereunder,
         the Chief Scientist's instructions, directives and procedures as also
         to the terms and conditions of the Chief Scientist's program as also to
         the various agreements between the Chief Scientist, the State and the
         Foundation.

   b)    This agreement is subject to the granting of all the necessary
         approvals in terms of the RDL and the Chief Scientist's program as also
         to the Chief Scientist's approval.

3. Formation of company for the implementation of the project
   ----------------------------------------------------------

   a)    During the first year of the Development of the Period a limited
         private company shall be formed for the implementation of the Project
         (hereinafter "the Company"). The Memorandum and Articles of the Company
         shall be formulated in terms of this agreement or any agreement that
         may replace this agreement.

   b)    Upon registration of the Company, the Parties shall immediately take
         the necessary steps for the approval of this Agreement by the Company
         and for the signature at an agreement between the Company and the
         Foundation and/or the Holding Company, ratifying this Agreement.
         Such agreement shall in no way diminish the Initiator's obligations
         under this agreement.

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                                       -4-

4. Company structure and decisions:
   --------------------------------

   a)    Shares: Class and distribution:
         -------------------------------

         The Company shall have two classes of shares:

         (i)   Ordinary shares granting the shareholder the rights to dividends
               and a share in any residue upon liquidation of the Company.

         ii)   Management Shares granting the holder voting rights at the
               general meeting and the right to elect or be elected to the Board
               of Directors of the Company.

   b)    Both the Ordinary and Management Shares shall be issued as follows:
         -------------------------------------------------------------------

         The Initiator: 50%.

         EMPLOYEES: (excluding the Initiator): 10%.

         During the Development Period the employees' shares shall be held in
         trust by the Foundation.
         Upon termination of the Development Period, the Foundation shall
         transfer such shares to the employees entitled thereto subject to the
         directives of the Chief Scientist and in the Foundation's discretion.
         Should any of such shares remain unallocated, they shall be allocated
         to the Parties to this Agreement in proportion of each Party's share
         holding upon this Agreement.

         The Foundation: 20%.

         The Investor: 20%.

   c)    Issue and\or allocation of further shares
         -----------------------------------------

         should a general meeting of the company decide to issue and or allocate
         further sahres whether of one or both of the classes defined above,
         such decision shall require a majority vote of 80%.

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                                      -5-

   d)    Board of Directors:
         -------------------

         (i)   The Board of Directors shall he comprised of no less then 4
               directors and until decided otherwise by the unanimous vote of
               the General Meeting of the Company. There shall not be more than
               ten directors.

         (ii)  Notwithstanding clause (d)(i) above, during the Development
               Period, the Board of Directors shall be comprised as follows:

               The General Manager of the Foundation and a further
               representative of the Foundation, the Initiator or his
               representative and the Investor's representative. The manager or
               the other representative of the Foundation shall be the chairman
               of the Board.

         (iii) Upon termination of the Development Period, the directors shall
               be appointed by the shareholders; each shareholder holding at
               least 20% of the Management Shares shall be entitled to appoint
               one director, but subject to each Party to this Agreement being
               entitled to appoint at least one director if such party owns at
               least 10% of the issued Management Shares.

   e)    Board meetings and Decisions:
         -----------------------------

         (i)   During the Development Period, the legal quorum for Board
               meetings and Board decisions, shall be not less than 3 directors;
               at least one director representing each Party to this Agreement.

         (ii)  Decisions shall be by majority vote of those present.

         (iii) Notwithstanding clause (e)(ii) above, during the Development
               Period, the chairman shall have the deciding vote in regard to
               differences of opinion that may arise relating to the
               Foundation's duties, the Foundation's Supervision of the Company
               and Project and the fulfillment of the provisions of the RDL,
               agreements between the Chief Scientist and the Foundation and the
               instructions, regulations and directives of the Chief Scientist.
               The Chairman's

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                                       -6-

               decision that a subject included in the Board's meeting agenda
               falls within the ambit of his deciding vote, shall be binding
               upon the Parties to this Agreement.

   f)    General meeting decisions during the Development Period:
         --------------------------------------------------------

         During the Development Period the parties hereto shall endeavour to
         co-ordinate their voting rights in the General Meeting of the Company
         in order to give full support to the Foundation's stand in matters
         relating to the Foundation a duties and management of the Company
         according to the RDL, the agreements between the Foundation and the
         Chief Scientist and the Chief Scientist's directives and regulations
         from time to time.

   g)    Authorized signatories:
         -----------------------

         i)    During the Development Period the signatures of two directors,
               namely the Foundation's general manager or representative or the
               representative of the Holding Company and the signature of either
               the Initiator or the Investor, shall bind the company and/or the
               Project in every respect.
               Notwithstanding the above, during the Development Period, the
               following shall apply:

               (1)   Payments in excess of 20,000 NIS shall be made only after
                     prior co-ordination with the Investor or his
                     representative.

               (2)   Orders by the Project from third parties shall require
                     written confirmation signed by two signatories, namely, the
                     Foundation's manager or his representative and the Project
                     manager.

         (ii)  Upon termination of the Development Period, the authorized
               signatories shall be appointed by the unanimous vote of the Board
               of Directors. Until such appointment clause (g)(i) above shall
               apply.

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                                      -7-

5. Company operations
   ------------------

   a)    All the Company activities shall be subject to the RDL, its laws and
         regulations, the instructions and directives of the Chief Scientist,
         programs prepared by him and to all agreements that may be entered into
         from time to time between the Foundation and the Chief Scientist.

   b)    All the rights, in existing know-how patents, copyrights and
         intellectual in the Project, as also every result and document relating
         to the execution of the Project, in the Foundation's framework,
         including all research by the Company in regard to the Project, shall
         vest exclusively in the Project and upon registration of the Company,
         in the Company. The Initiator hereby cedes and transfers all his rights
         as set out above, free of consideration, to the Project and to the
         Company as aforesaid.

   c)    The Foundation and/or the Holding Company shall make suitable
         accommodation available to the Company for the purposes of the Project,
         subject to the terms, conditions and reasonable payment as stipulated
         by the Foundation and/ or Holding Company. The Foundation and/or
         Holding Company shall in addition, provide various services to the
         Company upon such terms to be agreed upon between the Foundation and/or
         Holding Company and the company.

         The Project and/or the Company shall pay a proportionate share of the
         insurance premiums in respect of the accommodation aforesaid.

         All the aforesaid services and costs in respect thereof shall be
         determined according to the Project budget.

   d)    The Company shall keep proper accounting records as is required by law
         and accepted in similar ventures, and shall furnish reports from time
         to time to the Foundation and to the Chief Scientist as requested by
         them.

   e)    The Company shall carry out and comply with all its representations,
         obligations and time schedules in terms of and as represented to the
         Foundation and the Chief Scientist in order to obtain the necessary
         consent for carrying out the Project, and as confirmed by them, and/or

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                                      -8-

         as may be presented and/or confirmed by them during the execution of
         the Project.

   f)    At least 50% of all employees shall be new immigrants. Professional
         employees shall be appointed during the Development Period by the
         Initiator with the approval of the Foundation's general manager. The
         rest of the employees and the Initiator shall be employed in terms of
         the Foundation's standard personal employment agreement.

   g)    The Company shall conduct its business in accordance with the approved
         and/or to be approved budgets for the Project by the Foundation and/or
         the Holding Company and the Chief Scientist. The Project and/or Company
         shall be obliged to operate strictly within the framework of the said
         budget and any deviation therefrom shall not be recognized or allowed
         by the Foundation and/or Chief Scientist.
         The budget shall be financed by means of the financial assistance of
         the Chief Scientist as allocated to the Project and by the
         supplementary finance of the Investor as hereinafter set forth.

   h)    The Investor hereby undertakes to provide the sum of US$60,000 for
         the purpose of financing portion of the budget of the project,
         specifically excluding employees salaries, (hereinafter "the
         supplementary finance"). Such sum of US$60,000 shall not be returned or
         repaid to the Investor. The supplementary finance aforesaid shall be
         made available to the company and/or project as follows:

         4 equal payments of US$15,000 each, in NIS according to the known
         dollar exchange rate on the date of each payment:

         The first payment of US$15,000 shall be made an the 1 day of
         199 .

         The second payment of US$15,000 shall be made on the 1 day of
         199 .

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                                       -9-

         The third payment of US$15,000 shall be made on the 1 day of .

         The final payment of US$15,000 shall be made on the 1 day of

         It is hereby agreed that in the event of the project and/or company
         requiring further finance in addition to the supplementary finance as
         set out above, the parties hereto shall be entitled to introduce an
         additional investor to this agreement subject to the Investor (the
         third party to this agreement as set out in the preamble) having the
         first right of refusal to invest such further finance as is required.

   i)    The Initiator shall present both the Foundation and the Investor with a
         bi-annual technical report. The Foundation shall be entitled to demand
         additional technical reports during the Development Period. The
         Initiator shall provide and furnish, both during and after the
         Development Period, all such information as may be required, to the
         Foundation and/or the Holding Company in order to fulfil their
         obligations to the Chief Scientist and to third parties.

   j)    The Initiator shall maintain a full and detailed written record of each
         and every stage of the research and development carried out by him and
         furnish copies thereof to the Foundation, the Company and the Investor
         as requested from time to time.

   k)    Upon registration of the Company, the Company shall register a Floating
         Charge of the first preference in respect of all of its assets as also
         a permanent Charge over its equipment and fixed assets, in favor of the
         Foundation and/ or Holding Company in order to secure its obligations
         as hereunder set forth in clause 6.

   1)    Property and equipment purchased with the finance of the Chief
         Scientist and/or with his assistance, shall represent security for the
         repayment of the State's investment in the Project and/or Company.
         Until registration of the aforesaid Charges, neither the Parties nor
         the Company shall be entitled to dispose of or cede any rights in any
         manner in

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                                      -10-

         and to the assets and property of the Project and/or Company which were
         acquired with the Chief Scientist's finance.

   m)    The Initiator and Investor hereby declare and confirm that they are
         aware of the fact that the Foundation and the Holding Company have no
         personal obligation in regard to financing the project. In order to
         avoid any misunderstanding, the Foundation hereby undertakes to hand
         over to the Project and/or Company all sums received from the Chief
         Scientist and in accordance with the Chief Scientist's directions.

   n)    The Initiator and Investor hereby confirm that they are aware of the
         fact that the Chief Scientist's approval for the Project is for a
         period of one financial year only and the continuation of the Project
         thereafter is subject to renewal of such approval by the Chief
         Scientist.

   o)    The Initiator and Investor shall take all such steps as are necessary
         for the commercialization and/or application of the results of the
         Project in the framework of the Company. The Foundation shall give all
         possible assistance in this respect to the Initiator, Investor and the
         Company.

   p)    The Initiator shall work in the Project and/or Company on a full-time
         basis and he shall not be entitled to work in any other manner of
         employment unless he receives the prior written consent of the
         Foundation and the Investor and subject to their conditions.

6. Completion of the Project:
   --------------------------

   Upon completion of the Development Period, the Parties shall act as follows:

   a)    The Company shall pay the Chief Scientist royalties derived from the
         consideration received from sales of the product and/or know-how
         developed by the Company, until the full repayment of the real value of
         the sum paid by the Chief Scientist in respect of the Project, such
         royalties to be paid in terms of the Chief Scientist's instructions.

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                                      -11-

         The Parties declare that they know that as at the date hereof the Chief
         Scientist's regulations in respect of royalties, provide for the
         Company to pay the Chief Scientist and/or the Foundation for transfer
         to the Chief Scientist, royalties at the rate of 3% of the total annual
         sales of the Company in respect of the Project during the first three
         years;
         4% for the following three years and 5% for the seventh year until the
         full repayment of all monies received from the Chief Scientist
         according to their real value - such monies to be repaid shall be
         linked to the U.S. dollar in this respect.
         The above directives may be changed from time to time by the Chief
         Scientist.
         In regard to the above, sales shall be deemed to be and shall include
         all income derived from products of the Project and/or that have been
         developed, or relating to their sale and/or the sale of any rights
         thereto, including the obligation to provide services, all the above
         subject to the Chief Scientist's directives.

   b)    Without detracting from its obligations as set out in clause (a) above,
         the Company and/or its shareholders, according to the circumstances,
         shall pay the Chief Scientist or the Foundation for transfer, to the
         Chief Scientist, 25% of the value received for the sale of shares to a
         non-shareholder, and which value has not been invested in the Company
         within three months of such sale. Such repayment shall be limited to
         the aforesaid true value of the amount financed by the Chief Scientist.

   c)    The Company, with the Initiator's assistance, shall file a bi-annual
         report with the Foundation approved by a Certified Accountant in
         relation to the sales of the Company as set out above, until such time
         as all the royalties have been paid in terms of clause (a) above.

   d)    All the books of account and documents relating to the Project of the
         Company and/or Project shall be open to the inspection of the
         Foundation until the final payment as set out in clause (a) above.

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                                      -12-

   e)    Upon completion of the final payment aforesaid, the liens shall be
         cancelled.

   f)    The Company and its employees shall vacate the Foundations premises
         occupied by it.

   g)    The Company shall present final financial and technical reports in
         respect of the project within three months of the termination of the
         Development Period.

   h)    The Foundation shall not be obliged to invest any monies in the future
         in the Company, nor to sign security for the obligations of the Company
         nor to provide security to enable the Company to obtain finance or
         credit.
         The Company shall not be entitled to make any such demands of the
         Foundation.

   i)    The products developed in the Project shall be manufactured in Israel
         alone, unless the Chief Scientist has given contrary permission.

7. The investor's right to acquire the Foundation's shares
   -------------------------------------------------------

   a)    The Foundation hereby grants the Investor an option to purchase its
         shares upon termination of the Development Period. Such option shall be
         exercised by the investor in writing to the Foundation within 90 days
         of the termination of the Development Period.

8. Confidentiality
   ---------------

   The parties hereto undertake to maintain strict confidentiality and secrecy
   in regard to all the present and future knowledge and information relating to
   the Project, whether of the Foundation that is divulged to the Initiator or
   knowledge and information acquired and/or accumulated by the Company,
   including all proprietary knowledge and/or secrets of the Company and/or the
   Foundation and/or of the Project, that may be divulged to one or more of the
   Parties.

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                                      -13-

9. Non-Competition
   ---------------

   a)    The Initiator and Investor undertake not to directly or indirectly
         compete with the business of the Project and/or Company and/or
         Foundation. Such prohibition and undertaking shall remain in force
         while the said Initiator and Investor are shareholders in the Company,
         and should they cease to be shareholders, in any event, for a period of
         three years after they cease to be employed by the Company - such
         prohibition and undertaking aforesaid remaining in effect until the
         later of such two eventualities, namely: date of ceasing to be
         shareholder or 3 years after ceasing to be employed as aforesaid.
         Such prohibition and undertaking shall include direct or indirect
         dealings in the development and/or manufacture and/or sale and/or
         marketing of products of the Project and/or the use in any manner
         whatsoever of the knowledge and information and/or being connected
         directly or indirectly in any manner whatsoever in the present or
         future, in the field of the Project and/or Company, which may compete
         with their business or occupations.

   b)    The Initiator undertakes to co-ordinate the activities of the Project
         and/or Company in respect of the fields relating to them, whether
         directly or indirectly, lie furthermore undertakes not to copy and/or
         to make use of knowledge and/or information in regard to the products
         to be developed by the Company or Project, in any manner whatsoever
         which is contrary to the framework of the Project and/or Company, nor
         to receive any profit and/or benefits therefrom contrary to this
         agreement.

   c)    The present and future knowledge and information relating to the
         Project and/or the rights thereto, shall not be ceded in any manner
         whatsoever, directly or indirectly, unless the Chief Scientist has
         given written permission so to do.

10. This agreement in general and clauses 9 and 11 in particular shall in no way
    prohibit the Investor from engaging in the development of products and using
    such information that is public knowledge, including the knowledge that was
    available to him prior to the execution of this agreement and/or information

<PAGE>
                                      -14-

    obtained by him which is not related to nor as a result of this agreement.

11. Cession of rights
    -----------------

    a)(i)   During the Development Period the Initiator shall not be entitled to
            transfer and/or cede any of their rights or obligations in terms of
            this agreement to another nor to transfer their shares in any manner
            without the specific written consent of the Foundation (in case of
            third party).

      (ii)  During the Development Period, any transfer of shares in the Company
            by the Investor to a third party, shall be subject to such transfer
            not in any way prejudicing the Company's obligations to the
            Foundation and/or to the Chief Scientist and shall be subject to the
            Chief Scientist's directions, as given by him from time to time.

    b)   The Parties hereto acknowledge that the transfer of 25% or more of the
         rights in the Project and/or Company requires the Chief Scientist's
         prior approval.
         In this respect, rights in the Company and/or Project, shall mean
         shares and/or the holding of one or more of the following methods of
         control:

         Voting rights at Company meetings.
         The right to elect directors of the Company.
         The right to participate in the profits and/or income of the Company.

    c)   Transfer and cession of one or more of such controlling rights to a
         foreign resident or foreign company, requires the prior written consent
         of the Research Committee of the Chief Scientist.

    d)   The Initiator and the Investor hereby acknowledge and consent to the
         Foundation having the right to transfer its rights and obligations
         under this Agreement to the holding Company and/or to carry out any
         obligation, to exercise any authority, right and/or discretion by means
         of the Holding Company.

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                                      -15-

12. Termination and cancellation of this Agreement and consequences
    ---------------------------------------------------------------

    a)   The Initiator and the Investor hereby declare that they are aware of
         the fact that the Chief Scientist and/or the State is entitled to
         withdraw from any agreement to which they are a party in regard to the
         Project, for governmental reasons, and in such event, every agreement
         between the Initiator and/or the Investor and/or the Company with the
         Foundation and/or the Holding Company, shall be cancelled.

    b)   The Initiator and the Investor acknowledge that during the Development
         Period, the Foundation shall be entitled to cancel this Agreement by
         prior written notice of 14 days in the event of one or more of the
         following occurring:

         i) The Chief Scientist has withdrawn his support of the project.

         ii) The State has withdrawn its support of the Foundation.

         iii) The Foundation has decided to terminate the Agreement on the
         grounds that the desired results were not achieved or that continuation
         of the Agreement would demand and entail substantial costs not covered
         by the budget or that the Foundation deems to be unjustified, and that
         the Chief Scientist has consented to the termination of the program.

    c)   in the event of the cancellation of this Agreement as set out in (a) or
         (b) above, and/or in the event that the Chief Scientist refuses to
         consent to the continuance of the Project in terms of his program, the
         Parties hereto shall be absolved of all their financial obligations in
         terms of this Agreement as also for the payment of any damages
         resulting from loss and/or damage to any of the Parties. In such event
         all the assets, rights, equipment, knowledge and information, both
         present and accumulated (hereinafter "the Assets") in the Project
         and/or Company, shall remain with the Foundation until such time as the
         amount owing to the Chief Scientist has been repaid and if necessary,
         such assets, in part or all, shall be realized to repay such debt.

<PAGE>
                                      -16-

         Upon payment in full to the Chief Scientist, the Charges shall be
         cancelled and the remaining assets shall he divided between the
         initiator, the Foundation and the Investor according to their
         respective shares in the Company and/or Project

13. a) Any Party to this Agreement shall be entitled to cancel same should one
       or more of the following events occur:

         (i)   Breach of a fundamental condition of this Agreement by one of the
               other Parties, which breach has not been rectified within a
               period of 30 days from receiving notice so to do.

         (ii)  In the event of insolvency or liquidation proceedings being
               instituted against one of the Parties or should a receiver be
               appointed in relation to his/its property - subject to prior
               notice of 30 days grace during which period the said proceedings
               have not been cancelled or the receiver released from his
               appointment.

         iii)  In the event of a party being convicted of a criminal offense
               involving dishonesty.

    b)   in the event of termination of this Agreement as set out in (a) above,
         the following shall apply:

         i)    The assets of the Project and/or Company shall be utilized as far
               as is necessary in order to repay the Chief Scientist in full.

         ii)   Upon repayment of the amount owing to the Chief Scientist the
               Charges shall be cancelled.

         iii)  The balance of monies received from the realization of the
               Project and the remaining assets, shall be divided between the
               Initiator, the Foundation and the Investor according to their
               respective shares in the Company and/or Project.

    c)   The Foundation and the Initiator, hereby declare that should the
         Foundation breach any one or more of the

<PAGE>
                                      -17-

         fundamental conditions of this agreement and fail to remedy such breach
         within 30 days of receiving written notice so to do, or in the event
         of the Investor coming to the conclusion that the results of the
         Project do not justify the Investor investing further monies in the
         Company, and the Investor will try to finds a new investor (hereinafter
         "the New Investor") who is acceptable to the Foundation and initiator
         and who is prepared to acquire shares in the Company by investing the
         remainder of the sum which the Investor undertook to invest, the
         Foundation and the initiator hereby undertake to make every effort to
         reach agreement with the New Investor in accordance with which the
         Investor is entitled to retain ownership of his proportionate share in
         the Company or that the New Investor will acquire all or a portion of
         the investor's shares in the Company.

14. Arbitration
    -----------

    a)   Any dispute whatsoever between the Parties arising out of or relating
         to this Agreement, shall be settled by arbitration by a single
         Arbitrator, appointed by the mutual consent of the parties.

    b)   In the event of the parties failing to agree upon the Arbitrator within
         14 days of a party requesting Arbitration, such Arbitrator shall be
         appointed by the sides.

    c)   The substantive law shall apply to the Arbitration, but not the laws of
         evidence nor the civil procedure regulations. The Arbitrator shall be
         obliged to give his reasons for his decision.

    d)   The Arbitrator shall be entitled to give such relief, decision or
         judgment, whether temporary or final, according to his sole dicision.

    e)   The provisions of this clause shall be and form the Arbitration
         Agreement between the Parties, in terms of the Arbitration Act of 1968.

<PAGE>
                                      -18-

15. General Conditions
    ------------------

         The entire agreement between the parties with respect to the subject
         matter hereof is stated herein and this Agreement cancels any other
         verbal or written agreements between the parties and may be
         amended only in writing signed by the duly authorized representatives
         of the Parties.

16. This agreement shall also apply to the State of Israel insofar as is
    provided in the Contract Law (General Part) act of 1973.

17. Wherever there appears in this Agreement the obligation of the Company, such
    obligation shall be deemed to be that of each of the Parties hereto to carry
    out all such steps as are necessary for the Company to fulfi11 its
    obligations hereunder.

18. The Law Courts at Afula and Nazareth shall have the sole and exclusive
    jurisdiction in all matters relating to this Agreement.

19. The cost and stamp duty relating to this Agreement shall be paid by the
    Project.

20. a)   The Foundation shall be entitled to deduct any monies due to the
         Foundation from monies payable to the Project and/or Company and/or
         Initiator.

    b)   The Foundation shall be entitled to require payment of linkage and
         interest on all amounts owing to the Foundation by the project and/or
         company and/or Initiator.

21. The addresses of the parties are as set out in the Preamble above.
    Any notice or letter sent by one of the Parties to another party hereto,
    shall be deemed to have been received within 3 working days from the date of
    dispatch thereof by registered mail.

In Witness whereof, the parties hereto, each by its duly authorized signatory
have set their hands on the date aforesaid.

/s/ signature                 /s/ signature                 /s/ signature
--------------------          --------------------          --------------------
The Foundation                The Initiator                 The InvestorAgreement
                                    ---------

Made and entered into on the ............. day of ............. ...199 ;

By and Between:               Ofek Le-Oleb Foundation
                              P.O.B. 73, Migdal Ha-Emek 10550
                              Tel: 972-66543081 Fax: 972-66543082
                              (hereinafter "The Foundation")         First Party
                                                                     -----------
and:                          Kleimer Leonid, IDN 313021917

                              Address: Yokheved g/b, 34674, Haifa
                              Tel: 04-8241323
                              Fax: 04-8241323
                              (hereinafter "The Initiator")         Second Party
                                                                    ------------

and:                          KRH Ltd.
                              I.D. No.:
                              Address: Weisbadeher Str. 17a, Berlin
                              Tel: 49-30-7465209
                              Fax: 49-3074681914
                              (hereinafter "The Investor")           Third Party
                                                                     -----------

Whereas           the Initiator has declared that he invented the invention in
                  the field of .................... in respect whereof he has
                  applied for patent rights (patent application No. ...... ) and
                  wishes to conduct research and development in respect thereof
                  in accordance with the program approved by the Chief Scientist
                  under project No. (hereinafter "the Project") copy whereof is
                  hereto annexed marked "A";
**

And Whereas       the Initiator has declared that he is the sole and exclusive
                  owner of the invention and of all the rights, title and
                  interest thereto and that he has the necessary knowledge
                  qualification and experience for the research and development
                  of the Project;

<PAGE>
                                      -2-

                  the Center for Technological Initiative and any other related
                  body and/or authorized institution under the Law for the
                  Support of Research and Development in Industry, 1984
                  (hereinafter "the RDL") for the purposes of the Chief
                  Scientist's R & D program in Technological Initiatives;

And Whereas       the Initiator has declared that he has filed a proposal with
                  the Foundation for the execution of the Project in the
                  Foundation's framework in accordance with and subject to the
                  Chief Scientist's program which has been approved by the
                  Foundation's projects committee;

And Whereas       the Investor has undertaken to obtain supplementary finance
                  for the Project as hereunder defined as also to promote, the
                  project subject to the terms of this agreement;

And Whereas       the Initiator has declared that he has disclosed to the
                  Parties hereto all the information at his disposal relating
                  to the Project and that he is not under any restriction,
                  whether by contract or in law, prohibiting him from entering
                  into this contract or carrying out his obligations hereunder;

And Whereas       the Parties are desirous of regulating their respective rights
                  and obligations for the execution of the Project in the
                  framework of the Foundation as set out in this agreement:

Now Therefore the parties do hereby declare and agree as follows:
-----------------------------------------------------------------

1. Preamble and Definitions
   ------------------------

         a)  The Preamble and Annexures to this Agreement form and integral part
             thereof.

         b)  The terms specified herein shall have the following definitions: -

             (i)   Holding Company Yosmot Ha-Emek Initiatives
                   Incubator LTD (Co No 51-183764-3) a company wholly

<PAGE>
                                      -3-

                   controlled by the Foundation which manages and operates the
                   Incubator for the Foundation. It is hereby agreed that the
                   Foundation is entitled to take all necessary steps and
                   decisions and to exercise all its rights in terms of this
                   agreement by way of and through the Holding Company;

             (ii)  The Development Period - the period during which the
                   Foundation and/or the Holding Company receives financial
                   assistance from the State for the Project and/or for the
                   period during which the Project is within the Foundation's
                   framework, control and/or responsibility.

2. RDL Approval
   ------------

   a)    This agreement is subject to the RDL and the Regulations thereunder,
         the Chief Scientist's instructions, directives and procedures as also
         to the terms and conditions of the Chief Scientist's program as also to
         the various agreements between the Chief Scientist, the State and the
         Foundation.

   b)    This agreement is subject to the granting of all the necessary
         approvals in terms of the RDL and the Chief Scientist's program as also
         to the Chief Scientist's approval.

3. Formation of company for the implementation of the project
   ----------------------------------------------------------

   a)    During the first year of the Development of the Period a limited
         private company shall be formed for the implementation of the Project
         (hereinafter "the Company"). The Memorandum and Articles of the Company
         shall be formulated in terms of this agreement or any agreement that
         may replace this agreement.

   b)    Upon registration of the Company, the Parties shall immediately take
         the necessary steps for the approval of this Agreement by the Company
         and for the signature at an agreement between the Company and the
         Foundation and/or the Holding Company, ratifying this Agreement.
         Such agreement shall in no way diminish the Initiator's obligations
         under this agreement.

<PAGE>

                                       -4-

4. Company structure and decisions:
   --------------------------------

   a)    Shares: Class and distribution:
         -------------------------------

         The Company shall have two classes of shares:

         (i)   Ordinary shares granting the shareholder the rights to dividends
               and a share in any residue upon liquidation of the Company.

         ii)   Management Shares granting the holder voting rights at the
               general meeting and the right to elect or be elected to the Board
               of Directors of the Company.

   b)    Both the Ordinary and Management Shares shall be issued as follows:
         -------------------------------------------------------------------

         The Initiator: 50%.

         EMPLOYEES: (excluding the Initiator): 10%.

         During the Development Period the employees' shares shall be held in
         trust by the Foundation.
         Upon termination of the Development Period, the Foundation shall
         transfer such shares to the employees entitled thereto subject to the
         directives of the Chief Scientist and in the Foundation's discretion.
         Should any of such shares remain unallocated, they shall be allocated
         to the Parties to this Agreement in proportion of each Party's share
         holding upon this Agreement.

         The Foundation: 20%.

         The Investor: 20%.

   c)    Issue and\or allocation of further shares
         -----------------------------------------

         should a general meeting of the company decide to issue and or allocate
         further sahres whether of one or both of the classes defined above,
         such decision shall require a majority vote of 80%.

<PAGE>
                                      -5-

   d)    Board of Directors:
         -------------------

         (i)   The Board of Directors shall he comprised of no less then 4
               directors and until decided otherwise by the unanimous vote of
               the General Meeting of the Company. There shall not be more than
               ten directors.

         (ii)  Notwithstanding clause (d)(i) above, during the Development
               Period, the Board of Directors shall be comprised as follows:

               The General Manager of the Foundation and a further
               representative of the Foundation, the Initiator or his
               representative and the Investor's representative. The manager or
               the other representative of the Foundation shall be the chairman
               of the Board.

         (iii) Upon termination of the Development Period, the directors shall
               be appointed by the shareholders; each shareholder holding at
               least 20% of the Management Shares shall be entitled to appoint
               one director, but subject to each Party to this Agreement being
               entitled to appoint at least one director if such party owns at
               least 10% of the issued Management Shares.

   e)    Board meetings and Decisions:
         -----------------------------

         (i)   During the Development Period, the legal quorum for Board
               meetings and Board decisions, shall be not less than 3 directors;
               at least one director representing each Party to this Agreement.

         (ii)  Decisions shall be by majority vote of those present.

         (iii) Notwithstanding clause (e)(ii) above, during the Development
               Period, the chairman shall have the deciding vote in regard to
               differences of opinion that may arise relating to the
               Foundation's duties, the Foundation's Supervision of the Company
               and Project and the fulfillment of the provisions of the RDL,
               agreements between the Chief Scientist and the Foundation and the
               instructions, regulations and directives of the Chief Scientist.
               The Chairman's

<PAGE>

                                       -6-

               decision that a subject included in the Board's meeting agenda
               falls within the ambit of his deciding vote, shall be binding
               upon the Parties to this Agreement.

   f)    General meeting decisions during the Development Period:
         --------------------------------------------------------

         During the Development Period the parties hereto shall endeavour to
         co-ordinate their voting rights in the General Meeting of the Company
         in order to give full support to the Foundation's stand in matters
         relating to the Foundation a duties and management of the Company
         according to the RDL, the agreements between the Foundation and the
         Chief Scientist and the Chief Scientist's directives and regulations
         from time to time.

   g)    Authorized signatories:
         -----------------------

         i)    During the Development Period the signatures of two directors,
               namely the Foundation's general manager or representative or the
               representative of the Holding Company and the signature of either
               the Initiator or the Investor, shall bind the company and/or the
               Project in every respect.
               Notwithstanding the above, during the Development Period, the
               following shall apply:

               (1)   Payments in excess of 20,000 NIS shall be made only after
                     prior co-ordination with the Investor or his
                     representative.

               (2)   Orders by the Project from third parties shall require
                     written confirmation signed by two signatories, namely, the
                     Foundation's manager or his representative and the Project
                     manager.

         (ii)  Upon termination of the Development Period, the authorized
               signatories shall be appointed by the unanimous vote of the Board
               of Directors. Until such appointment clause (g)(i) above shall
               apply.

<PAGE>
                                      -7-

5. Company operations
   ------------------

   a)    All the Company activities shall be subject to the RDL, its laws and
         regulations, the instructions and directives of the Chief Scientist,
         programs prepared by him and to all agreements that may be entered into
         from time to time between the Foundation and the Chief Scientist.

   b)    All the rights, in existing know-how patents, copyrights and
         intellectual in the Project, as also every result and document relating
         to the execution of the Project, in the Foundation's framework,
         including all research by the Company in regard to the Project, shall
         vest exclusively in the Project and upon registration of the Company,
         in the Company. The Initiator hereby cedes and transfers all his rights
         as set out above, free of consideration, to the Project and to the
         Company as aforesaid.

   c)    The Foundation and/or the Holding Company shall make suitable
         accommodation available to the Company for the purposes of the Project,
         subject to the terms, conditions and reasonable payment as stipulated
         by the Foundation and/ or Holding Company. The Foundation and/or
         Holding Company shall in addition, provide various services to the
         Company upon such terms to be agreed upon between the Foundation and/or
         Holding Company and the company.

         The Project and/or the Company shall pay a proportionate share of the
         insurance premiums in respect of the accommodation aforesaid.

         All the aforesaid services and costs in respect thereof shall be
         determined according to the Project budget.

   d)    The Company shall keep proper accounting records as is required by law
         and accepted in similar ventures, and shall furnish reports from time
         to time to the Foundation and to the Chief Scientist as requested by
         them.

   e)    The Company shall carry out and comply with all its representations,
         obligations and time schedules in terms of and as represented to the
         Foundation and the Chief Scientist in order to obtain the necessary
         consent for carrying out the Project, and as confirmed by them, and/or

<PAGE>
                                      -8-

         as may be presented and/or confirmed by them during the execution of
         the Project.

   f)    At least 50% of all employees shall be new immigrants. Professional
         employees shall be appointed during the Development Period by the
         Initiator with the approval of the Foundation's general manager. The
         rest of the employees and the Initiator shall be employed in terms of
         the Foundation's standard personal employment agreement.

   g)    The Company shall conduct its business in accordance with the approved
         and/or to be approved budgets for the Project by the Foundation and/or
         the Holding Company and the Chief Scientist. The Project and/or Company
         shall be obliged to operate strictly within the framework of the said
         budget and any deviation therefrom shall not be recognized or allowed
         by the Foundation and/or Chief Scientist.
         The budget shall be financed by means of the financial assistance of
         the Chief Scientist as allocated to the Project and by the
         supplementary finance of the Investor as hereinafter set forth.

   h)    The Investor hereby undertakes to provide the sum of US$60,000 for
         the purpose of financing portion of the budget of the project,
         specifically excluding employees salaries, (hereinafter "the
         supplementary finance"). Such sum of US$60,000 shall not be returned or
         repaid to the Investor. The supplementary finance aforesaid shall be
         made available to the company and/or project as follows:

         4 equal payments of US$15,000 each, in NIS according to the known
         dollar exchange rate on the date of each payment:

         The first payment of US$15,000 shall be made an the 1 day of April
         1999.

         The second payment of US$15,000 shall be made on the 1 day of October
         1999.

<PAGE>

                                       -9-

         The third payment of US$15,000 shall be made on the 1 day of .

         The final payment of US$15,000 shall be made on the 1 day of

         It is hereby agreed that in the event of the project and/or company
         requiring further finance in addition to the supplementary finance as
         set out above, the parties hereto shall be entitled to introduce an
         additional investor to this agreement subject to the Investor (the
         third party to this agreement as set out in the preamble) having the
         first right of refusal to invest such further finance as is required.

   i)    The Initiator shall present both the Foundation and the Investor with a
         bi-annual technical report. The Foundation shall be entitled to demand
         additional technical reports during the Development Period. The
         Initiator shall provide and furnish, both during and after the
         Development Period, all such information as may be required, to the
         Foundation and/or the Holding Company in order to fulfil their
         obligations to the Chief Scientist and to third parties.

   j)    The Initiator shall maintain a full and detailed written record of each
         and every stage of the research and development carried out by him and
         furnish copies thereof to the Foundation, the Company and the Investor
         as requested from time to time.

   k)    Upon registration of the Company, the Company shall register a Floating
         Charge of the first preference in respect of all of its assets as also
         a permanent Charge over its equipment and fixed assets, in favor of the
         Foundation and/ or Holding Company in order to secure its obligations
         as hereunder set forth in clause 6.

   1)    Property and equipment purchased with the finance of the Chief
         Scientist and/or with his assistance, shall represent security for the
         repayment of the State's investment in the Project and/or Company.
         Until registration of the aforesaid Charges, neither the Parties nor
         the Company shall be entitled to dispose of or cede any rights in any
         manner in

<PAGE>

                                      -10-

         and to the assets and property of the Project and/or Company which were
         acquired with the Chief Scientist's finance.

   m)    The Initiator and Investor hereby declare and confirm that they are
         aware of the fact that the Foundation and the Holding Company have no
         personal obligation in regard to financing the project. In order to
         avoid any misunderstanding, the Foundation hereby undertakes to hand
         over to the Project and/or Company all sums received from the Chief
         Scientist and in accordance with the Chief Scientist's directions.

   n)    The Initiator and Investor hereby confirm that they are aware of the
         fact that the Chief Scientist's approval for the Project is for a
         period of one financial year only and the continuation of the Project
         thereafter is subject to renewal of such approval by the Chief
         Scientist.

   o)    The Initiator and Investor shall take all such steps as are necessary
         for the commercialization and/or application of the results of the
         Project in the framework of the Company. The Foundation shall give all
         possible assistance in this respect to the Initiator, Investor and the
         Company.

   p)    The Initiator shall work in the Project and/or Company on a full-time
         basis and he shall not be entitled to work in any other manner of
         employment unless he receives the prior written consent of the
         Foundation and the Investor and subject to their conditions.

6. Completion of the Project:
   --------------------------

   Upon completion of the Development Period, the Parties shall act as follows:

   a)    The Company shall pay the Chief Scientist royalties derived from the
         consideration received from sales of the product and/or know-how
         developed by the Company, until the full repayment of the real value of
         the sum paid by the Chief Scientist in respect of the Project, such
         royalties to be paid in terms of the Chief Scientist's instructions.

<PAGE>
                                      -11-

         The Parties declare that they know that as at the date hereof the Chief
         Scientist's regulations in respect of royalties, provide for the
         Company to pay the Chief Scientist and/or the Foundation for transfer
         to the Chief Scientist, royalties at the rate of 3% of the total annual
         sales of the Company in respect of the Project during the first three
         years;
         4% for the following three years and 5% for the seventh year until the
         full repayment of all monies received from the Chief Scientist
         according to their real value - such monies to be repaid shall be
         linked to the U.S. dollar in this respect.
         The above directives may be changed from time to time by the Chief
         Scientist.
         In regard to the above, sales shall be deemed to be and shall include
         all income derived from products of the Project and/or that have been
         developed, or relating to their sale and/or the sale of any rights
         thereto, including the obligation to provide services, all the above
         subject to the Chief Scientist's directives.

   b)    Without detracting from its obligations as set out in clause (a) above,
         the Company and/or its shareholders, according to the circumstances,
         shall pay the Chief Scientist or the Foundation for transfer, to the
         Chief Scientist, 25% of the value received for the sale of shares to a
         non-shareholder, and which value has not been invested in the Company
         within three months of such sale. Such repayment shall be limited to
         the aforesaid true value of the amount financed by the Chief Scientist.

   c)    The Company, with the Initiator's assistance, shall file a bi-annual
         report with the Foundation approved by a Certified Accountant in
         relation to the sales of the Company as set out above, until such time
         as all the royalties have been paid in terms of clause (a) above.

   d)    All the books of account and documents relating to the Project of the
         Company and/or Project shall be open to the inspection of the
         Foundation until the final payment as set out in clause (a) above.

<PAGE>
                                      -12-

   e)    Upon completion of the final payment aforesaid, the liens shall be
         cancelled.

   f)    The Company and its employees shall vacate the Foundations premises
         occupied by it.

   g)    The Company shall present final financial and technical reports in
         respect of the project within three months of the termination of the
         Development Period.

   h)    The Foundation shall not be obliged to invest any monies in the future
         in the Company, nor to sign security for the obligations of the Company
         nor to provide security to enable the Company to obtain finance or
         credit.
         The Company shall not be entitled to make any such demands of the
         Foundation.

   i)    The products developed in the Project shall be manufactured in Israel
         alone, unless the Chief Scientist has given contrary permission.

7. The investor's right to acquire the Foundation's shares
   -------------------------------------------------------

   a)    The Foundation hereby grants the Investor an option to purchase its
         shares upon termination of the Development Period. Such option shall be
         exercised by the investor in writing to the Foundation within 90 days
         of the termination of the Development Period.

8. Confidentiality
   ---------------

   The parties hereto undertake to maintain strict confidentiality and secrecy
   in regard to all the present and future knowledge and information relating to
   the Project, whether of the Foundation that is divulged to the Initiator or
   knowledge and information acquired and/or accumulated by the Company,
   including all proprietary knowledge and/or secrets of the Company and/or the
   Foundation and/or of the Project, that may be divulged to one or more of the
   Parties.

<PAGE>
                                      -13-

9. Non-Competition
   ---------------

   a)    The Initiator and Investor undertake not to directly or indirectly
         compete with the business of the Project and/or Company and/or
         Foundation. Such prohibition and undertaking shall remain in force
         while the said Initiator and Investor are shareholders in the Company,
         and should they cease to be shareholders, in any event, for a period of
         three years after they cease to be employed by the Company - such
         prohibition and undertaking aforesaid remaining in effect until the
         later of such two eventualities, namely: date of ceasing to be
         shareholder or 3 years after ceasing to be employed as aforesaid.
         Such prohibition and undertaking shall include direct or indirect
         dealings in the development and/or manufacture and/or sale and/or
         marketing of products of the Project and/or the use in any manner
         whatsoever of the knowledge and information and/or being connected
         directly or indirectly in any manner whatsoever in the present or
         future, in the field of the Project and/or Company, which may compete
         with their business or occupations.

   b)    The Initiator undertakes to co-ordinate the activities of the Project
         and/or Company in respect of the fields relating to them, whether
         directly or indirectly, lie furthermore undertakes not to copy and/or
         to make use of knowledge and/or information in regard to the products
         to be developed by the Company or Project, in any manner whatsoever
         which is contrary to the framework of the Project and/or Company, nor
         to receive any profit and/or benefits therefrom contrary to this
         agreement.

   c)    The present and future knowledge and information relating to the
         Project and/or the rights thereto, shall not be ceded in any manner
         whatsoever, directly or indirectly, unless the Chief Scientist has
         given written permission so to do.

10. This agreement in general and clauses 9 and 11 in particular shall in no way
    prohibit the Investor from engaging in the development of products and using
    such information that is public knowledge, including the knowledge that was
    available to him prior to the execution of this agreement and/or information

<PAGE>
                                      -14-

    obtained by him which is not related to nor as a result of this agreement.

11. Cession of rights
    -----------------

    a)(i)   During the Development Period the Initiator shall not be entitled to
            transfer and/or cede any of their rights or obligations in terms of
            this agreement to another nor to transfer their shares in any manner
            without the specific written consent of the Foundation (in case of
            third party).

      (ii)  During the Development Period, any transfer of shares in the Company
            by the Investor to a third party, shall be subject to such transfer
            not in any way prejudicing the Company's obligations to the
            Foundation and/or to the Chief Scientist and shall be subject to the
            Chief Scientist's directions, as given by him from time to time.

    b)   The Parties hereto acknowledge that the transfer of 25% or more of the
         rights in the Project and/or Company requires the Chief Scientist's
         prior approval.
         In this respect, rights in the Company and/or Project, shall mean
         shares and/or the holding of one or more of the following methods of
         control:

         Voting rights at Company meetings.
         The right to elect directors of the Company.
         The right to participate in the profits and/or income of the Company.

    c)   Transfer and cession of one or more of such controlling rights to a
         foreign resident or foreign company, requires the prior written consent
         of the Research Committee of the Chief Scientist.

    d)   The Initiator and the Investor hereby acknowledge and consent to the
         Foundation having the right to transfer its rights and obligations
         under this Agreement to the holding Company and/or to carry out any
         obligation, to exercise any authority, right and/or discretion by means
         of the Holding Company.

<PAGE>
                                      -15-

12. Termination and cancellation of this Agreement and consequences
    ---------------------------------------------------------------

    a)   The Initiator and the Investor hereby declare that they are aware of
         the fact that the Chief Scientist and/or the State is entitled to
         withdraw from any agreement to which they are a party in regard to the
         Project, for governmental reasons, and in such event, every agreement
         between the Initiator and/or the Investor and/or the Company with the
         Foundation and/or the Holding Company, shall be cancelled.

    b)   The Initiator and the Investor acknowledge that during the Development
         Period, the Foundation shall be entitled to cancel this Agreement by
         prior written notice of 14 days in the event of one or more of the
         following occurring:

         i) The Chief Scientist has withdrawn his support of the project.

         ii) The State has withdrawn its support of the Foundation.

         iii) The Foundation has decided to terminate the Agreement on the
         grounds that the desired results were not achieved or that continuation
         of the Agreement would demand and entail substantial costs not covered
         by the budget or that the Foundation deems to be unjustified, and that
         the Chief Scientist has consented to the termination of the program.

    c)   in the event of the cancellation of this Agreement as set out in (a) or
         (b) above, and/or in the event that the Chief Scientist refuses to
         consent to the continuance of the Project in terms of his program, the
         Parties hereto shall be absolved of all their financial obligations in
         terms of this Agreement as also for the payment of any damages
         resulting from loss and/or damage to any of the Parties. In such event
         all the assets, rights, equipment, knowledge and information, both
         present and accumulated (hereinafter "the Assets") in the Project
         and/or Company, shall remain with the Foundation until such time as the
         amount owing to the Chief Scientist has been repaid and if necessary,
         such assets, in part or all, shall be realized to repay such debt.

<PAGE>
                                      -16-

         Upon payment in full to the Chief Scientist, the Charges shall be
         cancelled and the remaining assets shall he divided between the
         initiator, the Foundation and the Investor according to their
         respective shares in the Company and/or Project

13. a) Any Party to this Agreement shall be entitled to cancel same should one
       or more of the following events occur:

         (i)   Breach of a fundamental condition of this Agreement by one of the
               other Parties, which breach has not been rectified within a
               period of 30 days from receiving notice so to do.

         (ii)  In the event of insolvency or liquidation proceedings being
               instituted against one of the Parties or should a receiver be
               appointed in relation to his/its property - subject to prior
               notice of 30 days grace during which period the said proceedings
               have not been cancelled or the receiver released from his
               appointment.

         iii)  In the event of a party being convicted of a criminal offense
               involving dishonesty.

    b)   in the event of termination of this Agreement as set out in (a) above,
         the following shall apply:

         i)    The assets of the Project and/or Company shall be utilized as far
               as is necessary in order to repay the Chief Scientist in full.

         ii)   Upon repayment of the amount owing to the Chief Scientist the
               Charges shall be cancelled.

         iii)  The balance of monies received from the realization of the
               Project and the remaining assets, shall be divided between the
               Initiator, the Foundation and the Investor according to their
               respective shares in the Company and/or Project.

    c)   The Foundation and the Initiator, hereby declare that should the
         Foundation breach any one or more of the

<PAGE>
                                      -17-

         fundamental conditions of this agreement and fail to remedy such breach
         within 30 days of receiving written notice so to do, or in the event
         of the Investor coming to the conclusion that the results of the
         Project do not justify the Investor investing further monies in the
         Company, and the Investor will try to finds a new investor (hereinafter
         "the New Investor") who is acceptable to the Foundation and initiator
         and who is prepared to acquire shares in the Company by investing the
         remainder of the sum which the Investor undertook to invest, the
         Foundation and the initiator hereby undertake to make every effort to
         reach agreement with the New Investor in accordance with which the
         Investor is entitled to retain ownership of his proportionate share in
         the Company or that the New Investor will acquire all or a portion of
         the investor's shares in the Company.

14. Arbitration
    -----------

    a)   Any dispute whatsoever between the Parties arising out of or relating
         to this Agreement, shall be settled by arbitration by a single
         Arbitrator, appointed by the mutual consent of the parties.

    b)   In the event of the parties failing to agree upon the Arbitrator within
         14 days of a party requesting Arbitration, such Arbitrator shall be
         appointed by the sides.

    c)   The substantive law shall apply to the Arbitration, but not the laws of
         evidence nor the civil procedure regulations. The Arbitrator shall be
         obliged to give his reasons for his decision.

    d)   The Arbitrator shall be entitled to give such relief, decision or
         judgment, whether temporary or final, according to his sole dicision.

    e)   The provisions of this clause shall be and form the Arbitration
         Agreement between the Parties, in terms of the Arbitration Act of 1968.

<PAGE>
                                      -18-

15. General Conditions
    ------------------

         The entire agreement between the parties with respect to the subject
         matter hereof is stated herein and this Agreement cancels any other
         verbal or written agreements between the parties and may be
         amended only in writing signed by the duly authorized representatives
         of the Parties.

16. This agreement shall also apply to the State of Israel insofar as is
    provided in the Contract Law (General Part) act of 1973.

17. Wherever there appears in this Agreement the obligation of the Company, such
    obligation shall be deemed to be that of each of the Parties hereto to carry
    out all such steps as are necessary for the Company to fulfi11 its
    obligations hereunder.

18. The Law Courts at Afula and Nazareth shall have the sole and exclusive
    jurisdiction in all matters relating to this Agreement.

19. The cost and stamp duty relating to this Agreement shall be paid by the
    Project.

20. a)   The Foundation shall be entitled to deduct any monies due to the
         Foundation from monies payable to the Project and/or Company and/or
         Initiator.

    b)   The Foundation shall be entitled to require payment of linkage and
         interest on all amounts owing to the Foundation by the project and/or
         company and/or Initiator.

21. The addresses of the parties are as set out in the Preamble above.
    Any notice or letter sent by one of the Parties to another party hereto,
    shall be deemed to have been received within 3 working days from the date of
    dispatch thereof by registered mail.

In Witness whereof, the parties hereto, each by its duly authorized signatory
have set their hands on the date aforesaid.

/s/ signature                 /s/ signature                 /s/ signature
--------------------          --------------------          --------------------
The Foundation                The Initiator                 The Investor

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