Document:

LICENSE AGREEMENT

      This License Agreement is entered into as of this 15 day of February, 2006
(the "Effective Date"), by and between  TraceGuard  Technologies Ltd., a company
organized under the laws of the State of Israel, having a place of business at 6
Ravnitzki St., Petach Tikva, Israel ("Licensee") and Tracetrack Technology Ltd.,
a company  organized under the laws of Israel,  having a place of business at 94
Yigal Alon Street, Tel-Aviv, Israel ("Licensor").

      WHEREAS,  Licensor is the owner of rights in the Licensed  Technology  (as
hereinafter defined); and

      WHEREAS,  Licensee  wishes to obtain an exclusive  license with respect to
such Licensed  Technology,  and Licensor wishes to grant Licensee a license with
respect to such Licensed  Technology,  all in accordance with and subject to the
terms and conditions of this Agreement.

      NOW, THEREFORE,  the parties hereto, intending to be legally bound, hereby
agree as follows:

1.    Definitions.

      The  capitalized  terms  defined in this  Section 1,  whether  used in the
singular or the plural, shall have the meanings specified below:

      "Affiliate" shall mean, with respect to a party, any person,  organization
or entity  controlling,  controlled by or under common control with, such party.
For purposes of this definition only, "control" of another person,  organization
or entity shall mean the  possession,  directly or  indirectly,  of the power to
direct or cause the direction of the activities,  management or policies of such
person,  organization  or  entity,  whether  through  the  ownership  of  voting
securities,  by contract or otherwise.  Without limiting the foregoing,  control
shall be  presumed  to exist when a person,  organization  or entity (i) owns or
directly controls fifty percent (50%) or more of the outstanding voting stock or
other ownership interest of the other organization or entity, or (ii) possesses,
directly or  indirectly,  the power to elect or appoint  fifty  percent (50%) or
more of the members of the governing body of the organization or other entity.

      "Calendar  Quarter"  shall  mean  the  respective  periods  of  three  (3)
consecutive  calendar  months  ending  on March  31,  June 30,  September  30 or
December 31, for so long as this Agreement is in effect.

      "Dollars" or "$" shall mean United States Dollars.

      "Fair Market  Value" shall mean the fair market value as  determined  by a
recognized appraisal or accounting firms with experience in appraising assets in
similar industries mutually agreed to by Licensee and Licensor.

      "First  Commercial Sale" means the first sale by Licensee or its Affiliate
for use of the  Product in the United  States,  the State of Israel or any Major
Country.

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      "Grant Amount" shall mean as defined in Section 9.1 below.

      "ISA" shall mean the Israel  Security  Agency or other Israeli  government
body serving a purpose similar thereof.

      "License" shall mean the license granted pursuant to Section 2.

      "Licensed  Know-How" shall mean any know-how,  discoveries,  improvements,
inventions  (whether or not patentable) and methods,  instructions,  techniques,
practices, procedures, data, results, processes, formulas and other information,
to the extent relating to collection of traces developed, owned or controlled by
Licensor or its  Affiliates  as of the  Effective  Date;  and all  improvements,
updates,  modification  and  enhancements  to same,  to the extent  relating  to
collection  of  traces,  developed,  owned  or  controlled  by  Licensor  or its
Affiliates subsequent to the Effective Date.

      "Licensed  Patents" shall mean (i) the Patents and/or Patent  applications
set forth on  Exhibit A hereto,  and all  additions,  divisions,  continuations,
continuations-in-part,   reissues,   reexaminations,   supplementary  protection
certificates  and extensions  thereof,  and any patents that issue thereon,  and
(ii) any other  current or future  Patents of Licensor or its  Affiliates to the
extent relating to the Licensed  Know-How.  Exhibit A shall include and shall be
updated  from time to time to  reflect  inclusion  of new  Licensed  Patents  as
provided under (ii) herein.

      "Major  Country"  shall mean any one of the following  countries:  Canada,
Japan, Australia, India, China, Singapore and any country in the European Union.

      "Product"  shall  mean  any  product,  product  component  and/or  product
supplement,  device or method that  comprises,  contains or  incorporates in any
manner whatsoever, any part of the Licensed Technology.

      "Licensed Technology" shall mean,  collectively,  the Licensed Patents and
the Licensed Know-How.

      "OCS Grants" shall mean grants received by Licensor from the Office of the
Chief  Scientist  of  the  Israeli  Ministry  of  Industry  and  Trade  for  the
development of Licensed Technology,  including, without limitation,  pursuant to
File Nos. 32181 and 28435.

      "Milestones" shall mean the milestones set forth in Section 7.2.

      "Net Sales" shall mean the gross amounts invoiced and actually received by
or on behalf of Licensee  and/or its  Affiliates  for the sale,  supply or other
disposition of Products; less the following:  (a) credits,  refunds,  rebates or
trade, quantity, or cash discounts to the extent actually allowed and taken; (b)
amounts  repaid  or  credited  by  reason of actual  rejection  or  return;  (c)
commissions (including commissions paid to sales representatives and/or agents);
(d) any royalties, lump sums or monetary awards actually paid by the Licensee as
a result of the  infringement  by the Licensee of the rights of a third party by
the  manufacture,  use or sale of the Products,  provided and to the extent that
such infringement of third party rights is the result of the infringement by the
Licensed Technology; (e) any taxes or other governmental charges directly levied
on the production,  sale,  transportation,  import, export, delivery or use of a
Product; and (f) invoiced outbound transportation, packing and delivery charges,
as well as prepaid freight  (including  shipping  insurance)  actually incurred;
provided however, that:

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            (i) In any transfers of Products between Licensee and its Affiliate,
Net Sales shall be only the total amount invoiced by such Affiliate on resale to
an independent third party purchaser, in each case, after appropriate deductions
as set forth above;

            (ii)  In  the  event  that  Licensee,  or  its  Affiliate,  receives
non-monetary consideration for any Products, Net Sales shall be calculated based
on the Fair Market Value of such consideration; and

            (iii) In the event that Licensee or its Affiliate sells, supplies or
otherwise  disposes of Product not on  arm's-length  equivalent  terms (it being
acknowledged  that there may be a range of prices at which  Products are sold on
arms-length  equivalent terms depending on the  circumstances of such sale), Net
Sales  shall be  adjusted  based on the Fair  Market  Value of such  Products to
reflect consideration that would have been due on arms-length equivalent terms.

      "Patent"  shall  mean  (i)  patents  in  any  jurisdiction,   (ii)  patent
applications in any jurisdiction, foreign equivalents, provisional applications,
continuations,  continuations-in-part,  divisions,  reissues,  renewals, and all
patents granted thereon, and (iii) patents-of-addition, reissues, reexaminations
and extensions or  restorations  by existing or future  extension or restoration
mechanisms, including, without limitation, supplementary protection certificates
or the equivalent thereof.

      "Regulatory  Force Majeure  Event" shall mean a delay to the extent caused
by the  TSA or ISA or  similar  governmental  authority  in any  Major  Country,
excluding any delay to the extent caused by Licensee's acts or omissions.

      "R&D Law" shall mean the Israeli Law for the Encouragement of Research and
Development in Industry (1984) and related regulations, as may be in effect from
time to time.

      "Royalty  Payments"  shall mean  payments made pursuant to Section 8.2, as
defined therein.

      "Sublicensee"  shall mean a person or entity that receives a sublicense of
part or all of the rights granted to Licensee  under the Licensed  Technology as
referred to in Section 6.

      "Sublicense Payments" shall mean payments made pursuant to Section 8.2, as
defined therein.

      "Sublicense   Proceeds"  shall  mean  the  actual  cash  income  or  other
consideration  actually  received by Licensee or its Affiliates in consideration
of any  sublicense  of the rights under the License,  other than any  sublicense
from Licensee to any  Affiliate,  and shall not include any amounts  received by
Licensee or its  Affiliates in respect of Net Sales.  In the event that Licensee
or its  Affiliates  receives  non-monetary  consideration  for any sublicense of
rights as aforesaid, Sublicense Proceeds shall be based on the Fair Market Value
of such consideration.

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      "TSA" shall mean the United States Transportation  Security Administration
or other federal body serving a purpose similar thereof.

2.    License Grant.

      2.1.  Subject  to the terms and  conditions  set forth in this  Agreement,
            Licensor   hereby  grants  to  Licensee  an  exclusive,   worldwide,
            perpetual license to Licensor's rights in the Licensed Technology to
            make any and all uses of the Licensed Technology, including, without
            limitation,  the right to use the Licensed  Technology  for research
            and  development,  to commercialize  the Licensed  Technology in any
            manner,  to research,  have  researched,  develop,  have  developed,
            manufacture,  have manufactured,  use, market, distribute, offer for
            sale,  sell,  have sold,  export and import  Products and/or provide
            services  relating  thereto,  and to grant sublicenses and secondary
            sublicenses to third parties (the  "License").  For purposes of this
            Section 2, the term "exclusive" means that Licensor shall not itself
            nor shall it grant  licenses  or rights to any third party to engage
            in any of the foregoing.

      2.2.  For the sake of  clarity,  Licensor  shall  refrain  from  using the
            Licensed  Technology  in any manner  whatsoever,  including  without
            limitation  development,  research or manufacture  thereof,  or from
            granting  third  party  rights  therein,   other  than  pursuant  to
            Licensee's written  instructions in relation to research programs of
            the Product.

3.    New Technology; Improvements.

      Unless  otherwise  agreed to in writing  by the  parties  with  respect to
      certain  inventions or projects,  (i) unless prohibited under the terms of
      the OCS  Grants  all  rights,  title  and  interest  in and to any and all
      improvements,  developments or inventions  relating to Licensed Technology
      or arising from the license of the Licensed Technology hereunder, that are
      made,  arrived at or discovered  solely by or on behalf of Licensee or its
      Affiliates, are and shall be owned solely and exclusively by Licensee; and
      (ii) all rights,  title and  interest in and to any and all  improvements,
      developments or inventions  relating to Licensed Technology that are made,
      arrived at or discovered solely by or on behalf of Licensor (if and to the
      extent  Licensee  requests  Licensor  to carry  out same  pursuant  to the
      provisions  of  Section  2.2 above)  shall be  automatically  licensed  to
      Licensee on the terms hereof  applicable to Licensed  Technology.  For the
      avoidance of doubt,  (x) any technology  independently  developed by or on
      behalf of Licensee that is not based on or does not require the use of the
      Licensed Technology,  including all rights, title and interest therein and
      thereto,  shall be owned  exclusively by Licensee,  and (y) any technology
      independently  developed by or on behalf of Licensor  that is not based on
      or does not  require the use of the  Licensed  Technology,  including  all
      rights, title and interest therein and thereto, shall be owned exclusively
      by Licensor.

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4.    Patent Filing and Maintenance

      4.1.  The  parties   agree  that  their  joint  policy  will  be  to  seek
            comprehensive   patent  protection  for  the  Licensed   Technology.
            Licensee shall be responsible for the filing,  prosecution,  defense
            and maintenance of the Licensed  Patents as from the Effective Date,
            including  payment of all  applicable  costs and fees in  connection
            therewith.  Licensor  shall  execute all  documents and perform such
            other acts as Licensee may  reasonably  request from time to time in
            connection with the filing, prosecution,  defense and maintenance of
            the Licensed Patents.

      4.2.  Licensee  shall  deliver  to  Licensor  copies of all  documentation
            relating to the filing,  maintenance  or prosecution of the Licensed
            Patents.

      4.3.  Should Licensee decide not to file,  maintain,  prosecute and defend
            the rights  under the  Licensed  Patents as set forth in Section 4.1
            above in  Israel,  the  United  States  or any  Major  Country  (the
            "Excluded  Country") and such decision  shall cause Licensor to lose
            the ability to file, maintain, prosecute or defend the rights of the
            Licensed  Patents  at a later  date,  it shall  notify  Licensor  in
            writing no less than One hundred and twenty  (120) days prior to the
            last  applicable  date  (the  "Last  Date")  and  Licensor  shall be
            entitled  to enforce  such rights at its own expense and for its own
            benefit in such  Excluded  Country,  provided  however that Licensor
            shall have  rendered  Licensee  notice of its  intention to do so no
            less than  sixty  (60) days  prior to the Last  Date,  during  which
            Licensee  shall  have  the  right to  reconsider  its  decision  and
            undertake to pursue the enforcement of such rights;  it being agreed
            and understood that for as long as Licensor enforces in the Excluded
            Country the rights under the  Licensed  Patents,  Licensee's  rights
            under the License shall in the Excluded Country be non-exclusive.

5.    Patent Litigation

      5.1.  Should any of the following  events occur:  (i) Licensee  determines
            that a third  party is  infringing  any of the  Licensed  Patents or
            misappropriating any of the Licensed Know-How, or (ii) Licensee or a
            Sublicensee  is sued on the  grounds  that  its use of the  Licensed
            Patents and/or the Licensed  Know-How is infringing  upon the rights
            of a third party, then Licensee or the Sublicensee shall be entitled
            (but not  obligated)  to sue for such  infringement  or defend  such
            action  (as the  case  may  be),  and,  to the  extent  required  by
            applicable law, Licensor,  at Licensee's request and expense,  shall
            consent  to be named as a party in such  litigation  or  proceedings
            (and if not  required  as  aforesaid,  Licensor  may,  to the extent
            permitted by law, elect to join as a party to such action) and shall
            cooperate with Licensee in the  prosecution or defense of such claim
            or proceeding; provided that: (a) any expenses and/or costs incurred
            in  connection   therewith  and  with  such  litigation   (including
            attorneys'  fees,  costs and other sums awarded to the counter party
            in such  action)  shall be borne by  Licensee,  who shall  indemnify
            Licensor  against any such  expenses or costs;  and (b) in the event
            that Licensor shall be named as a party in any such litigation,  the
            selection of the legal  counsel  representing  Licensee;  and (c) no
            settlement, consent order, consent judgment or other voluntary final
            disposition  of such  action may be entered  into  without the prior
            written consent of Licensee.  Any monetary award in such proceeding,
            if actually  received by  Licensee,  shall first be applied to cover
            costs and thereafter be treated as Net Sales.

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      5.2.  Should  Licensee decide not to enforce its rights under the Licensed
            Patents  or  with  respect  to  the  Licensed  Know-How  against  an
            infringing third party, it shall promptly notify Licensor in writing
            and  Licensor  shall then be entitled to enforce  such rights at its
            own expense and for its own benefit.  If Licensor  shall decide that
            it is interested in enforcing such rights at its own expense and for
            its own  account,  it shall  render  Licensee 60 (sixty) days notice
            during  which  Licensee  shall  have  the  right to  reconsider  its
            decision and undertake to pursue the enforcement of its rights under
            the Licensed Patents or with respect to the Licensed Know-How.

      5.3.  If Licensee  initiates  any action  pursuant to Section 5.1 above or
            becomes aware of any action  initiated by any third party concerning
            any alleged  infringement,  or discovers  any  allegation by a third
            party of  infringement  resulting  from the Licensed  Patents,  then
            Licensee shall so notify Licensor  promptly in writing,  giving full
            particulars thereof.  Licensee shall promptly keep Licensor informed
            and provide  copies to Licensor of all documents  regarding all such
            actions  or  proceedings   instituted  by  or  against  Licensee  as
            contemplated  under any of the  provisions  of Section  5.1 and this
            Section 5.4.

6.    Sublicenses.

      6.1.  Right to Grant  Sublicenses.  Licensee  shall be  entitled  to grant
            sublicenses of the Licensed  Technology to third  parties,  provided
            however that Licensee  shall remain  responsible  toLicensor for the
            payment of Sublicense Payments due with respect to Licensee's or its
            Affiliates'  Sublicense  Proceeds  resulting  from such  sublicenses
            pursuant  to the  provisions  of  Section  8.2  below  and the other
            provisions of this Section 6.

      6.2.  Sublicenses  to  Affiliates.  Where  Licensee  sublicenses  Licensed
            Technology to an Affiliate, Sublicense Payments shall be made on the
            Affiliate's Net Sales or Sublicense Proceeds.

      6.3.  Sublicense  Agreements.  Sublicenses  shall be granted  pursuant  to
            written   agreements,   which  shall  be  in   compliance   and  not
            inconsistent  with  the  terms  and  conditions  of this  Agreement.
            Sublicenses  shall be on bona fide arm's  length  commercial  terms,
            shall obligate Sublicensees to comply with the applicable provisions
            of this  Agreement,  including,  without  limitation,  protection of
            Confidential  Information,  sales  reporting and compliance with the
            R&D Law and related regulations to the extent applicable.

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      6.4.  Termination  of License.  In the event of termination of the License
            prior  to the  date  contemplated  by  Section  14.1,  any  existing
            agreements  that  contain a  sublicense  of, or other grant of right
            with respect to, Licensed  Technology  shall terminate to the extent
            of such sublicense or other grant of right; provided, however, that,
            for each Sublicensee,  upon termination of the sublicense  agreement
            with such Sublicensee,  if Sublicensee is not then in breach of such
            sublicense agreement with Licensee such that Licensee would have the
            right to terminate such sublicense,  Licensor shall be obligated, at
            the request of such Sublicensee,  to enter into a new agreement with
            such Sublicensee on substantially  the same terms as those contained
            in such sublicense agreement.

      6.5.  Sublicenses  by  Sublicensees.  Sublicensees  shall be  entitled  to
            sublicense rights under a sublicense  agreement,  provided that such
            secondary  sublicense  shall  be  subject  to  a  written  agreement
            consistent with the terms of this Section 6.

7.    Development, Commercialization and Milestones

      7.1.  Development Plan. Licensee shall use commercially reasonable efforts
            to develop and  commercialize  Products in accordance with the terms
            and  conditions  of  the  Development  and  Commercialization   Plan
            attached hereto as Exhibit B (the "Plan").

      7.2.  Milestones.  Licensee shall meet the performance  dates set forth in
            the Plan,  including without  limitation,  the following  milestones
            (each a "Milestone"):

            7.2.1.      Milestone  I:   Submission/filing,   by  no  later  than
                        eighteen  (18)  months  from the  Effective  Date,  of a
                        prototype  of  Product  with TSA,  ISA or an  equivalent
                        governmental  body in any one of the Major Countries for
                        regulatory approval.

            7.2.2.      Milestone II: the effecting of a First  Commercial  Sale
                        by  no  later  than   forty-two  (42)  months  from  the
                        Effective Date.

            Notwithstanding the aforesaid, it is hereby agreed that in the event
            of a Strategic  Transaction,  the Milestones  shall no longer apply.
            For the purposes hereof,  "Strategic  Transaction"  shall mean (i) a
            commercial  transaction  between  Licensee  and a Strategic  Partner
            expected to  generate,  during the initial four (4) year period from
            the closing  thereof,  proceeds to Licensee in an amount equal to or
            exceeding Five Million  (USD$5,000,000)  US dollars or (ii) a merger
            with or  acquisition  of  Licensee or its  Affiliate  by a Strategic
            Partner  for the purpose of which the  valuation  of Licensee or its
            Affiliate are set at no less than Fifty Million  (USD$50,000,000) US
            dollars.  For the purposes of this  Agreement,  "Strategic  Partner"
            shall mean a  large-scale  manufacturing,  marketing or  integration
            company).

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      7.3.  Professional  Support.  Licensor shall for a period of two (2) years
            from the Effective Date provide professional assistance by providing
            the services of Mr. Fredy Ornath as reasonably  required by Licensee
            to assist it in utilizing the License granted  hereunder,  against a
            service fee at a rate to be agreed upon .

      7.4.  Regulatory  Approvals.  Licensee shall be responsible for completing
            the  necessary  filings  to  obtain,  under  Licensee's  name and at
            Licensee's  cost,  any  regulatory  approvals  by ISA  and/or TSA or
            similar governmental authority in any other country, to sell, market
            and  otherwise  distribute  the  Product in the USA,  Israel and any
            other country,  and Licensor  shall  reasonably  assist  Licensee in
            obtaining  same.  Licensee  shall  reimburse  Licensor for its costs
            associated with such assistance,  provided that such costs have been
            approved  in writing by Licensee  prior to their  being  incurred by
            Licensor.

8.    Consideration.

      In consideration of the License, Licensee shall pay Licensor the following
      amounts:

      8.1.  Up Front  Payment.  Licensee and  Licensor  herby  acknowledge  that
            Licensee  has paid  Licensor  a  non-refundable  fee of One  Hundred
            Thousand U.S. Dollars ($100,000), prior to the Effective Date,.

      8.2.  Royalties; Sublicense Payments. Licensee shall pay to Licensor (i) a
            royalty  payment (the  "Royalty  Payments") of three percent (3%) of
            Licensee's or its  Affiliates' Net Sales and (ii) an amount equal to
            ten  percent  (10%)  of  Licensee's  or its  Affiliates'  Sublicense
            Proceeds (the "Sublicense  Payments").  The Royalty Payments and the
            Sublicense  Payments shall be paid on a quarterly basis within sixty
            (60) days of the end of each  Calendar  Quarter  with respect to the
            Net Sales and Sublicense Proceeds, as applicable,  of such preceding
            Calendar Quarter.  Licensee's commitment to pay Royalty Payments and
            Sublicense  Payments  to  Licensor  shall  remain in full  force and
            effect  until the  earlier  of: (i) the lapse of five (5) years from
            the First  Commercial  Sale, or (ii) the aggregate amount of Royalty
            Payments and Sublicense  Payments (including any Additional Amounts,
            as defined in Section 9.4 below) paid by Licensee to Licensor  shall
            be  equal  to  Two  Million  and  Five  Hundred   Thousand   Dollars
            ($2,500,000) (the "Maximum Payment Obligation").

            Notwithstanding  anything  contained  in  the  Section  8.2  to  the
            contrary,  the parties hereby agree that until  repayment in full of
            the Grant  Amount by the  Licensor in  accordance  with Section 9.1,
            payment of Royalty  Payments and Sublicense  Payments by Licensee to
            Licensor shall (rather than being made on a quarterly basis) be paid
            on the same basis for payment of the Grant Amount required from time
            to time pursuant to the OCS (`Keren  Tmura')  rules and  regulations
            (which is currently paid on a semi-annual basis).

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9.    OCS Grants.

      9.1.  The parties  acknowledge  that  Licensor has received the OCS Grants
            from the Office of the Chief  Scientist  of the Israeli  Ministry of
            Industry and Trade ("OCS") in connection with the development of the
            Licensed Technology. Licensor hereby represents and warrants that it
            has received grants from the OCS up to an aggregate principal amount
            which does not exceed Five Hundred Thousand U.S dollars  ($500,000),
            and it has not received in connection  with the Licensed  Technology
            any other grants from any third party.  Subject to the provisions of
            Sections  9.3  and  9.4  below,   Licensor   shall  continue  to  be
            responsible  for complying,  at its own expense,  with the terms and
            conditions applicable to such OCS Grants and to payment of royalties
            due to the OCS with respect  thereof,  up to the aggregate amount of
            such OCS Grants,  adjusted to the Israeli  consumer  price index and
            bearing interest as applicable (the "Grant Amount").

      9.2.  The parties further acknowledge that Licensor has applied to the OCS
            for the approval of the  License,  which  approval in principal  was
            obtained  prior to the Effective  Date, a copy of which  approval in
            principal  is  attached  hereto as  Exhibit C.  Licensee  agrees and
            undertakes  to  comply  with the  provisions  of the  aforementioned
            approval, including without limitation, to execute and submit to the
            OCS the documents  specified  therein for the purpose of obtaining a
            final approval of the License,  and the parties each agree to comply
            with  the  provisions  of the  final  OCS  approval  which  shall be
            obtained thereupon.

      9.3.  In the  event of  Licensor's  failure  to pay any part of the  Grant
            Amount due to the OCS, other than failure to pay resulting from such
            amounts  being in dispute  between  Licensor  and the OCS,  Licensee
            shall be  entitled  to make  such  payments  on  Licensor's  behalf,
            provided that Licensee  notifies Licensor no less than fourteen (14)
            days prior to effecting  such  payment and Licensor  does not remedy
            such default  within such period.  Any payments  made by Licensee to
            repay  the Grant  Amount as  aforesaid  shall be deemed  payment  on
            account of the Royalty Payments and Sublicense Payments.

      9.4.  In the event that the Royalty Payments and Sublicense Payments shall
            in the  aggregate be lower than the  royalties  due from Licensor to
            the OCS in  connection  with the  repayment  of the OCS Grants (such
            difference  being referred to herein as the  "Additional  Payment"),
            Licensee shall pay the  Additional  Payment to the OCS on Licensor's
            behalf together with payment of the Royalty  Payments and Sublicense
            Payments,  provided  however that the Royalty  Payments,  Sublicense
            Payments and Additional Payments shall not, in the aggregate, exceed
            the Maximum Payment  Obligation.  For the avoidance of doubt, in the
            event Licensee is required to make payments to the OCS, on behalf of
            Licensor, in excess of the Maximum Payment Obligation, Licensor will
            indemnify  Licensee  for any  excess  payments  made  in  connection
            therewith.

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      9.5.  Notwithstanding  the aforesaid  provisions of this Section 9, in the
            event that  pursuant to the final OCS approval  mentioned in Section
            9.2  above,   Licensee  shall  be  required  and  shall  accordingly
            undertake  towards the OCS to directly  repay to the OCS all or part
            of the Grant Amount, any such payments made by Licensee to OCS shall
            be  deemed  payment  on  account  of the  Royalty  Payments  and the
            Sublicense  Payments.  For the sake of  clarity,  in the event  that
            repayments  made by  Licensee  to the OCS on  account  of the  Grant
            Amount as aforesaid  shall in any given Calendar  Quarter exceed the
            aggregate amount of Royalty Payments and Sublicense  Payments due to
            Licensor hereunder with respect to such quarter, no Royalty Payments
            or Sublicense Payments shall be due to Licensor with respect to such
            Calendar Quarter; it being agreed and understood that as long as the
            Grant Amount has not been fully repaid, the provisions of the second
            paragraph  of  Section  8.2  above  shall  apply  and the  aforesaid
            calculations shall be effected on the same basis as required at such
            time for  repayment of the Grant Amount  pursuant to the OCS (`Keren
            Tmura') rules and regulations, rather than on a quarterly basis.

      9.6.  Licensee  shall comply with the R&D Law and the OCS  regulations  to
            the extent  applicable to the Licensed  Technology in such manner as
            to ensure Licensor's compliance with the terms and conditions of the
            OCS Grants.  Sublicenses of Licensed  Technology shall be subject to
            the receipt of any  consents or approvals  required  pursuant to the
            R&D Law and/or the OCS Grants, to the extent required.

      9.7.  Licensee  shall  be  responsible   for  payment  of  any  additional
            royalties due to the OCS and/or payments due pursuant to the R&D Law
            in addition to the Grant Amount, each relating to the OCS Grants, to
            the extent  resulting from  Licensee's  grant of rights to any third
            party with respect to the  Licensed  Technology,  including  without
            limitation  grant by Licensee of any right to  manufacture  Products
            outside of Israel,  or any other grant of right that shall result in
            an increase of the Grant Amount by the OCS.  Licensor  undertakes to
            use its best efforts at its own expense to secure any such  required
            consents or approvals and Licensee  shall assist and cooperate  with
            Licensor with respect to same.

10.   Reports; Payments; Records.

      10.1. Reports.  Within  sixty  (60)  days  after  the  conclusion  of each
            Calendar Quarter commencing with the first Calendar Quarter in which
            Licensee or an  Affiliate  of Licensee  first  receives Net Sales or
            Sublicense  Proceeds,  Licensee  shall  deliver to Licensor a report
            certified  as  being  correct  by the  chief  financial  officer  of
            Licensee containing the following information:

            10.1.1.     with respect to Net Sales (which  information shall, for
                        the sake of clarity,  not include any  transfer of units
                        of Products between Licensee and any of its Affiliates):

                           (a)      the  number  of  units of  Products  sold by
                                    Licensee and its  Affiliates in each country
                                    for the applicable Calendar Quarter;

                           (b)      the gross  amount  invoiced  for the Product
                                    sold by Licensee and its  Affiliates  during
                                    the applicable Calendar Quarter;

                                       10
<PAGE>

                           (c)      a   calculation   of  Net   Sales   for  the
                                    applicable  Calendar  Quarter,  including  a
                                    listing of applicable deductions; and

                           (d)      the  total  amount  of  Royalties   Payments
                                    payable to Licensor in currency  received on
                                    Net  Sales  for  the   applicable   Calendar
                                    Quarter.

            10.1.2.     with respect to Sublicense Proceeds,  calculation of any
                        Sublicense  Proceeds for the applicable Calendar Quarter
                        and the total amount of Sublicense  Payments  payable to
                        Licensor for the applicable Calendar Quarter.

                        If no  amounts  are due to  Licensor  for  any  Calendar
                        Quarter,  the report shall so state.  Together  with the
                        reports  set forth  above,  Licensee  shall  forward  to
                        Licensor  any  reports  received  during  such  Calendar
                        Quarter  from  its   Sublicensees  in  respect  of  such
                        entities'  sales  of  Products.  The  provisions  of the
                        second  paragraph  of  Section  8.2 above  shall  apply,
                        mutatis  mutandis,  so long as the Grant  Amount has not
                        been fully repaid to the OCS and the  aforesaid  reports
                        shall be  effected on the same basis as required at such
                        time for  reporting is required in relation to the Grant
                        Amount  pursuant  to the OCS (`Keren  Tmura')  rules and
                        regulations.

      10.2. Payment.  Concurrently  with the  delivery of each report  delivered
            pursuant to Section  10.1,  Licensee  shall  remit to  Licensor  all
            Royalty  Payments  and  Sublicense  Payments due to Licensor for the
            applicable  Calendar Quarter.  All payments due under this Agreement
            shall be payable in the  currency in which they were  received.  All
            payments  due  under  this  Agreement  shall  be  effected   against
            Licensor's  invoice  and  shall  be  accompanied  by VAT at the rate
            prescribed by law, if applicable.

      10.3. Records and Audit.  Licensee  shall  maintain  complete and accurate
            records of Net Sales and any amounts payable to Licensor in relation
            to the same for at least three (3) years after the conclusion of the
            respective  Calendar  Quarter.  During  such three (3) year  period,
            Licensor shall have the right,  at Licensor's  expense,  to cause an
            independent,  nationally-recognized,   certified  public  accountant
            reasonably  acceptable  to  Licensee,  who is  bound  by a  suitable
            confidentiality  arrangement with Licensee, to inspect Licensee' and
            the relevant  Affiliates' records relating to Products during normal
            business  hours for the sole  purpose of  verifying  any reports and
            payments  delivered  under this  Agreement.  Such  audit  shall also
            include reports  submitted to Licensee by Licensee'  Sublicensees in
            respect of their sales of Products.  The parties shall reconcile any
            underpayment  or  overpayment  within  sixty  (60)  days  after  the
            accountant delivers the results of the audit.  Licensor may exercise
            its  rights  under this  Section  10.3 only once every year and only
            with at least sixty (60) days prior notice to Licensee.

                                       11
<PAGE>

      10.4. Withholding and Similar Taxes.  All payments by Licensee to Licensor
            under this Section 10 shall be paid in full,  without deductions for
            any sales,  use, excise,  value added, or other similar taxes or any
            other governmental fees or charges,  provided that in the event that
            Licensee is required to withhold any taxes on any amount  payable to
            Licensor under this Agreement under  applicable law,  Licensee shall
            deduct such amounts and furnish Licensor with official tax receipts,
            or other evidence of payment of such withholding  taxes,  sufficient
            to permit  Licensor to demonstrate  the payment of such  withholding
            taxes, in order to establish  Licensor's  right to a credit for such
            withholding taxes against Licensor's income tax liability.  Licensee
            shall provide Licensor with all assistance  reasonably  requested by
            Licensor in  connection  with any  application  to any competent tax
            authorities  to  qualify  for  the  benefit  of a  reduced  rate  of
            withholding taxation under applicable law or tax treaty. The parties
            shall  generally  cooperate  to  minimize  payments  due under  law,
            subject to and to the extent possible under applicable law.

11.   Confidential Information; Disclosure; Publicity

      11.1. It may,  from  time to  time,  be  necessary  for the  Parties  , in
            connection  with  performance  under  this  Agreement,  to  disclose
            Confidential  Information  to each other.  The Party  receiving such
            Confidential  Information  (the  "Receiving  Party")  shall  keep in
            strictest confidence the Confidential Information of the other Party
            (the  "Disclosing  Party") and shall not,  directly  or  indirectly,
            disclose,   communicate,   publish,   describe,   or   divulge   the
            Confidential  Information  to any third  party or use it directly or
            indirectly  for its own benefit or the  benefit of others  except as
            expressly  authorized  by prior  written  consent of the  Disclosing
            Party  or as  required  for  the  performance  of  its  undertakings
            hereunder.

      11.2. Notwithstanding  Section 11.1, the Receiving  Party may disclose the
            Confidential  Information  to any of its employees  and  consultants
            (the "Authorized Employees"),  on a "need to know" basis, and to the
            extent necessary for the performance of its undertakings  hereunder,
            subject to the conditions set forth below:-

            11.2.1.     Each  Authorized  Employee  will be  informed  that  the
                        Confidential    Information    disclosed    thereto   is
                        confidential   and  will  agree  not  to  disclose  such
                        information, or any part thereof, to others;

            11.2.2.     Each  Authorized  Employee  will agree not to use any of
                        the Confidential  Information  except for the purpose of
                        performance  of  the  Receiving   Party's   undertakings
                        hereunder.

      11.3. The  Receiving  Party's  obligation  hereunder  shall  not  apply to
            Confidential Information that the Receiving Party can show:

                                       12
<PAGE>

            11.3.1.     Is or later becomes part of the public domain through no
                        fault of the Receiving Party; or

            11.3.2.     Is received  in good faith from a third party  having no
                        obligations of  confidentiality to the Disclosing Party;
                        or

            11.3.3.     Is  required  by  law  or  regulation  to  be  disclosed
                        (including,   without  limitation,  in  connection  with
                        regulatory filings); or

            11.3.4.     Is independently developed by the Receiving Party.

      11.4. Each party may  disclose  the terms of this  Agreement to the extent
            required to comply with applicable laws,. Licensor shall be entitled
            to make  publications in scientific  journals which may refer to the
            Licensed  Technology,  provided that a draft of such  publication is
            made  available  to  Licensee  at least sixty (60) days prior to its
            intended  publication  date  for  its  approval  which  will  not be
            unreasonably   withheld,  and  provided  further  that  if  Licensee
            requests  modifications to the publication,  Licensor shall prior to
            publication  edit such  publication  to prevent  disclosure of trade
            secret or proprietary  business information or other information the
            disclosure  of  which  could  be  detrimental  to  Licensee  or  its
            Sublicensees.   In  publications  in  scientific  journals  made  by
            Licensee,   Licensee  shall  award  Licensor  scientific  credit  to
            Licensor,  as customary.  Except as expressly  permitted  under this
            subsection  11.4,  Licensor  agrees not to make any  disclosures  in
            respect of Licensed  Technology  without  Licensee's  prior  written
            consent in each instance.  Except as expressly  permitted under this
            subsection  11.4 or as required under  applicable law, no party will
            make,  directly  or  indirectly,   any  announcement,   publication,
            presentation or similar disclosure, regarding this Agreement without
            the prior approval of the other party,  except that either party may
            re-publicize   information   contained  in  a  previously   approved
            disclosure. In addition, Licensee may make disclosures regarding its
            development and commercialization efforts. Except as may be required
            pursuant to applicable law,  neither party shall use the name of the
            other  party  or  any  of  its  directors,  officers,  shareholders,
            employees,  Sublicensees  or agents in any  promotional  material or
            other  public  announcement  or  disclosure  relating to the subject
            matter of this  Agreement  without the prior written  consent of the
            other party,  except that either party may re-publicize  information
            contained in a previously approved disclosure.

12.   Warranties; Limitation of Liability.

      12.1. Representations   and  Warranties  by  Licensor.   Licensor   hereby
            represents and warrants that:

            12.1.1. It is the sole owner of the Licensed Patents;

                                       13
<PAGE>

            12.1.2.     It  possesses  all the right,  title and interest in the
                        Licensed Patents and the Licensed Know-How  currently in
                        existence  and has not  granted  any  rights in  respect
                        thereof;

            12.1.3.     It has not received written notice of any claims, liens,
                        attachments,  judgments or litigation relating to any of
                        the Licensed  Patents or the Licensed  Know-How,  has no
                        knowledge of any claims, liens,  attachments,  judgments
                        or litigation relating to any of the Licensed Patents or
                        the  Licensed  Know-How,  and it  hereby  undertakes  to
                        notify Licensee in writing,  immediately upon receipt of
                        any such notice or obtaining such knowledge;

            12.1.4.     It has not prior to the Effective Date of this Agreement
                        granted  and will not during the term of this  Agreement
                        grant to any person or entity, other than Licensee,  any
                        right, license or privilege with respect to the Licensed
                        Technology;

            12.1.5.     It has the legal power to enter into this Agreement, and
                        all  requisite   corporate  action  has  been  taken  to
                        authorize this Agreement,  and neither the execution nor
                        the  performance  of this  Agreement  will result in any
                        violation of any statute, regulation or judicial decree,
                        or breach of any  contractual  commitment by which it is
                        bound;

            12.1.6.     Neither the execution nor the delivery of this Agreement
                        nor  the  performance  by  Licensor  of its  obligations
                        hereunder will result in a violation of any provision of
                        law,  rule or  regulation,  or result in a breach of the
                        terms or conditions of, or conflict with or constitute a
                        default under, any agreement,  instrument,  undertaking,
                        governmental license,  order, writ, decree,  injunction,
                        judgment  or   regulatory   or  other   restriction   or
                        obligation to which it is party;

            12.1.7.     it has  received  grants from the OCS up to an aggregate
                        principal  amount  which  does not exceed  Five  Hundred
                        Thousand U.S dollars  ($500,000) and it has not received
                        in  connection  with the Licensed  Technology  any other
                        grants from any third party.

      12.2. Representations   and  Warranties  by  Licensee.   Licensee   hereby
            represents  and warrants that (i) it will use best efforts to comply
            with  all  local,  state,   federal,   and  international  laws  and
            regulations relating to the development,  manufacture, use, and sale
            of Products, (ii) it is free to enter into this Agreement in its own
            right and that  there are no rights  exercisable  by or  obligations
            owed to any  third  party  which may  prevent  or  restrict  it from
            entering  into this  Agreement;  and (iii) it has the legal power to
            enter into this Agreement,  and all requisite  corporate  action has
            been taken to authorize  this  Agreement,  and neither the execution
            nor the  performance  of this Agreement will result in any violation
            of any  statute,  regulation  or judicial  decree,  or breach of any
            contractual commitment by which it is bound.

                                       14
<PAGE>

      12.3. Limitation  of  Liability.  Notwithstanding  anything  else  in this
            Agreement or otherwise, neither Licensor nor Licensee will be liable
            to the other with  respect to any subject  matter of this  Agreement
            under any contract,  negligence,  strict liability or other legal or
            equitable   theory   for   any   indirect,   incidental,    special,
            consequential  or  punitive  damages  or lost  profits.  Except  for
            liability in connection with the indemnities set forth in Section 13
            or  claims  for  breach  of the  other  party's  confidentiality  or
            proprietary rights, each party's aggregate liability hereunder shall
            not  exceed an  amount  equal to the  amounts  paid by  Licensee  to
            Licensor hereunder.

13.   Indemnification.

      13.1. Indemnity by Licensor.  Licensor shall indemnify,  defend,  and hold
            harmless Licensee and its respective directors, officers, employees,
            consultants and agents and their  respective  successors,  heirs and
            assigns  (the  "Licensee  Indemnitees")  from and against any claim,
            liability, damage, loss, or expense (including,  without limitation,
            reasonable attorney's fees) (collectively,  "Damage") incurred by or
            imposed upon any of the Licensee  Indemnitees  to the extent arising
            from or relating to (i) a breach of any  representation  or warranty
            made by  Licensor  hereunder;  (ii) a breach  of any  obligation  of
            Licensor   hereunder,   (iii)  any   infringement   of  third  party
            intellectual  property  rights  by  all  or  part  of  the  Licensed
            Technology,  or (iv) the gross  negligence or willful  misconduct of
            Licensor in  performing  this  Agreement.  Licensor's  obligation to
            indemnify  Licensee  Indemnities under Subsection (iii) as aforesaid
            shall be conditional upon the Damages being adjudicated  pursuant to
            a final court  judgment  and shall not exceed an amount equal to the
            Maximum Payment Obligation.

      13.2. Indemnity  by  Licensee.   Except  for  claims  for  which  Licensor
            indemnifies Licensee pursuant to Section 13.1 above,  Licensee shall
            indemnify,  defend,  and hold harmless  Licensor and its  respective
            directors,  officers,  employees,  and agents  and their  respective
            successors, heirs and assigns (the "Licensor Indemnitees"), from and
            against any Damage  incurred by or imposed  upon any of the Licensor
            Indemnitees  to the extent  arising from or relating to (i) the use,
            offer  for  sale,  or  supply  by  Licensee  or  its  Affiliates  or
            Sublicensees  of Products;  (ii) a breach of any  representation  or
            warranty made by Licensee  hereunder;  (iii) any failure of Licensee
            to  manufacture,   market  or  sell  Products  in  conformance  with
            applicable  laws and  regulations;  or (iv) the gross  negligence or
            willful  misconduct  of  Licensee.  Notwithstanding  anything to the
            contrary set forth  herein,  Licensee  shall have no  obligation  or
            liability  to  Licensor  to the extent  relating  to any third party
            claim  (including,  without  limitation,  costs or damages  relating
            thereto)  asserting  that all or part of the Licensed  Technology as
            such or use  thereof  infringes  third party  intellectual  property
            rights,  provided  however that  notwithstanding  the  provisions of
            Section 13.3 below in the event that Licensor  requests  Licensee to
            control the defense in such third party claim and Licensee  consents
            to same,  such claim shall be controlled  by legal counsel  selected
            and appointed by Licensee in the name of both Licensee and Licensor;
            and provided further that Licensee may retract its consent if in its
            reasonable  discretion it believes  such joint legal  representation
            results in a conflict of interests.

                                       15
<PAGE>

      13.3. Conditions for Indemnification. The parties' undertakings under this
            Section 13 shall be subject to: (a) receipt of prompt written notice
            of any claim by an  indemnitee  provided,  however,  that failure to
            give such notice promptly shall only relieve the indemnifying  party
            of any  indemnification  obligation  it may  have  hereunder  to the
            extent such failure diminishes the ability of the indemnifying party
            to respond to or to defend the  indemnitee  against such claim,  (b)
            the  cooperation  of the  indemnifying  party and the  indemnitee(s)
            regarding  the  response to and the defense of any such claim,  and,
            (c) subject to Section 5, the indemnifying  party's right to control
            the defense in respect of such Claim,  that shall  include the right
            to select and direct legal counsel and other  consultants  to appear
            in  proceedings   and  to  propose,   accept  or  reject  offers  of
            settlement,  all at its sole cost;  provided  however,  that no such
            settlement  shall  be  made  without  the  written  consent  of  the
            indemnitee,  such consent not to be unreasonably  withheld.  Nothing
            herein shall prevent the  indemnitee  from retaining its own counsel
            and participating in its own defense at its own cost and expense.

      13.4. Insurance.  Licensee  shall  maintain  insurance  that is reasonably
            adequate  to  fulfill  any  potential  obligation  to  the  Licensor
            Indemnitees hereunder consistent with industry standards,  including
            without  limitation  product liability to the extent consistent with
            industry standards.  Licensee shall provide Licensor,  upon request,
            with written evidence of such insurance.

14.   Term and Termination.

      14.1. Term.  Unless earlier ended or terminated  prior thereto pursuant to
            the provisions hereof, the term of this Agreement (the "Term") shall
            commence on the Effective Date and continue in full force and effect
            until the  expiration  of Royalty  Payment  and  Sublicense  Payment
            obligations  pursuant  to  Section  7. At the end of the  period for
            which any Royalty Payments  Sublicense  Payments are due pursuant to
            this  Agreement,  Licensee  shall  have  a  fully  paid,  exclusive,
            royalty-free  license,  with the right to sublicense any Patents and
            Know-How necessary to make, have made, use and sell Products.

                                       16
<PAGE>

      14.2. Termination.

            14.2.1.     Termination  Without Cause.  Licensee may terminate this
                        Agreement  upon sixty (60) days prior written  notice to
                        Licensor,  provided  however  that  Licensee  shall  pay
                        Licensor all Royalty  Payments and  Sublicense  Payments
                        due to  Licensor  pursuant to this  Agreement  until the
                        actual date of termination.

            14.2.2.     Termination  for Failure to Achieve  Milestones or Other
                        Agreed  Targets.  Licensor may terminate  this Agreement
                        upon sixty (60) days prior  written  notice to  Licensee
                        upon the  failure of  Licensee to either (i) achieve any
                        the First  Milestone set forth in Section 7.2.1, or (ii)
                        enter  into a  Strategic  Transaction  (as such  term is
                        defined in Section  7.2.2  above) or achieve  the Second
                        Milestone  set  forth  in  Section  7.2.2  above  within
                        forty-two (42) months from the Effective  Date, and such
                        failure  is not  remedied  within  such  sixty (60) days
                        notice period.

            14.2.3.     Termination for Default.  In the event that either party
                        commits a material breach of its obligations  under this
                        Agreement  and  fails to cure  that  breach  (where  the
                        breach is capable of cure)  within sixty (60) days after
                        receiving  written  notice  thereof,  the  non-breaching
                        party may  terminate  this  Agreement  immediately  upon
                        written notice.

            14.2.4.     Bankruptcy;  Receivership.  Either  Licensee or Licensor
                        may terminate this Agreement upon notice to the other if
                        the  other  party  is  adjudged  bankrupt,  applies  for
                        judicial   or   extra-judicial   settlement   with   its
                        creditors,  makes an  assignment  for the benefit of its
                        creditors,  voluntarily  files for  bankruptcy  or has a
                        receiver  or  trustee   (or  the  like)  in   bankruptcy
                        appointed by reason of its  insolvency,  or if the other
                        party becomes the subject of  liquidation or dissolution
                        proceedings or otherwise discontinues business, provided
                        that with  respect  to all  involuntary  proceedings  or
                        appointments  or  actions  filed  against a party,  such
                        proceeding is not dismissed within ninety (90) days.

      14.3. Effect of Termination. In the event of termination of this Agreement
            by Licensor  pursuant to Section 14.2.1,  14.2.2,  14.2.3 or 14.2.4,
            Licensee shall return and/or transfer to Licensor any and all rights
            and materials relating to the Licensed Technology, free and clear of
            any  encumbrance or third party right,  and shall be prohibited from
            making any further use thereof,  except that any existing agreements
            that contain a sublicense of the Licensed Technology shall terminate
            to the extent of such sublicense,  provided  however,  that for each
            Sublicensee,  upon termination of the sublicense agreement with such
            Sublicensee,  Licensor  shall be  obligated,  at the request of such
            Sublicensee,  to  enter  into  a new  license  agreement  with  such
            Sublicensee on  substantially  the same terms as those  contained in
            such  sublicense  agreement,  provided  that  such  terms  shall  be
            amended,  if necessary,  to the extent  required to ensure that such
            sublicense  agreement does not impose any obligations or liabilities
            on  Licensor  which  are  not  included  in  this   Agreement.   The
            termination  of this  Agreement  for any reason  shall not relieve a
            party of any  obligations,  which shall have  accrued  prior to such
            termination.

                                       17
<PAGE>

15.   Miscellaneous.

      15.1. Entire Agreement.  This Agreement is the sole agreement with respect
            to the  subject  matter  hereof  and except as  expressly  set forth
            herein,  supersedes all other agreements and understandings  between
            the parties with respect to same.

      15.2. Notices.   Unless  otherwise   specifically  provided,  all  notices
            required or permitted by this Agreement  shall be in writing and may
            be  delivered  personally,  or may be sent by facsimile or certified
            mail,  return receipt  requested,  to the addresses set forth in the
            preamble to this  Agreement,  unless the  parties  are  subsequently
            notified of any change of address in accordance with this Section.

            Any notice shall be deemed to have been received as follows:  (i) by
            personal delivery, upon receipt; (ii) by facsimile, one business day
            after transmission or dispatch; (iii) by airmail, three (3) business
            days after  delivery to the postal  authorities by the party serving
            notice.  If notice is sent by  facsimile,  a confirming  copy of the
            same shall be sent by mail to the same address.

      15.3. Governing Law and Jurisdiction.  This Agreement shall be governed by
            and  construed in  accordance  with the laws of the State of Israel.
            The parties  hereby consent to personal  jurisdiction  in Israel and
            agree that any lawsuit they file to enforce their respective  rights
            under this Agreement  shall be brought in the competent court in Tel
            Aviv, Israel.

      15.4. Binding  Effect.  This Agreement  shall be binding upon and inure to
            the   benefit   of  the   parties   and   their   respective   legal
            representatives, successors and permitted assigns.

      15.5. Headings.   Section  and   subsection   headings  are  inserted  for
            convenience  of  reference  only  and do not  form  a part  of  this
            Agreement.

      15.6. Counterparts.  This Agreement may be executed  simultaneously in two
            or more counterparts, each of which shall be deemed an original.

                                       18
<PAGE>

      15.7. Amendment;   Waiver.  This  Agreement  may  be  amended,   modified,
            superseded or canceled,  and any of the terms may be waived, only by
            a written  instrument  executed  by both  parties or, in the case of
            waiver, by the party waiving compliance. The delay or failure of any
            party at any time or times to require  performance of any provisions
            hereof  shall in no manner  affect  the  rights  at a later  time to
            enforce the same.  No waiver by either party of any  condition or of
            the  breach of any term  contained  in this  Agreement,  whether  by
            conduct, or otherwise, in any one or more instances, shall be deemed
            to be, or considered as, a further or continuing  waiver of any such
            condition  or of the  breach of such term or any other  term of this
            Agreement.

      15.8. No Agency or Partnership.  Nothing contained in this Agreement shall
            give any party the right to bind another, or be deemed to constitute
            either party's  authorization  to act as agents for each other or as
            partners with each other or any third party.

      15.9. Assignment.   Neither   party  may  assign  any  of  its  rights  or
            obligations  pursuant to this  Agreement  without the prior  written
            consent of the other Party,  unless  consent  shall be required with
            respect to an assignment of this  Agreement by Licensee or Affiliate
            to an  acquirer  of  all  or  substantially  all  of  Licensee's  or
            Affiliate's  assets to a successor  corporation  resulting  from any
            merger or consolidation, provided, however, that Licensee shall give
            the Licensor prompt written notice of any such assignment and of the
            identity and address of such successor.

      15.10. Force  Majeure.  Neither  party  will  be  responsible  for  delays
            resulting from causes beyond the  reasonable  control of such party,
            including without  limitation fire,  explosion,  flood, war, strike,
            riot,  or delays in  receiving  approvals  required  pursuant to OCS
            Grants for the transfer, sublicense or assignment of technology to a
            third  party where an  agreement  has been  reached  with such third
            party,  provided that (i) the nonperforming  party uses commercially
            reasonable  efforts to avoid or remove such causes of nonperformance
            and  continues  performance  under this  Agreement  with  reasonable
            dispatch whenever such causes are removed;  and (ii) with respect to
            a Regulatory Force Majeure Event, the maximum excused delay pursuant
            to this subparagraph shall be one (1) year.

      15.11. Severability.  If any  provision  of this  Agreement  is or becomes
            invalid or is ruled  invalid by any court of competent  jurisdiction
            or is deemed unenforceable,  it is the intention of the parties that
            the remainder of this Agreement shall not be affected.

      IN WITNESS WHEREOF,  the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.

                                       19
<PAGE>

TraceGuard Technologies Ltd.                       Tracetrack Technology Ltd.

By:/s/ Meir Zucker                                 By: Dr. Fredy Ornath
   ------------------------                            -------------------------

Name: Meir Zucker                                  Name: Dr. Fredy Ornath
      ------------------------                           ----------------------

Title: President & CEO                             Title:General Manager
       ------------------------                          -----------------------

                                       20
<PAGE>

                                    Exhibit A
                                    ---------

                                Licensed Patents

1.    PCT/IL03/00041

2.    PCT/IL2004/000011

                                       21
<PAGE>

                                   Exhibit B
                                   ---------

                                Development Plan

                           Development Plans for 2006

      o     Development  of test benches of various  subsystems o Development of
            flow and capture simulations

      o     Development of test methods with trace amounts of substances.

      o     Integration of the subsystems into functional systems

      o     Experiments to define the system's 'envelope of capabilities'

      o     Optimizing collection performance for multiple scenarios.

                                       22
<PAGE>

                                    Exhibit C
                                    ---------

                            OCS Approval in Principal

                                       23CONSULTING AGREEMENT

This Consulting Agreement ("Agreement") is entered into this 16 day of February,
2006, by and between  TraceGuard  Technologies Ltd. ("TG IL" or the "Company") a
company  registered  in Israel,  having its  principal  place of  business  at 6
Ravnitzky Street,  P.O. Box 4708,  Segula Industrial Park, Petach Tikva,  Israel
and M.S. Materials Ltd., company No. 511360695,  a company registered in Israel,
having its principal place of business at 94 Igal Alon Street,  Tel Aviv, Israel
("M.S.").

Whereas, TG IL is in the business of development,  manufacture and production of
         products in the field of homeland security;

Whereas, TG IL desires to engage M.S to render it with  advisory and  consulting
         services  through its employee Dr.  Fredy Ornath (I.D.  No.  026777284)
         ("Dr.  Ornath") and M.S. has agreed to provide such  services to TG IL,
         all as more fully described herein;  and

Whereas, The Company and M.S. have reached an agreement  that the services to be
         provided to the Company by M.S. shall be provided solely by Dr. Ornath,
         with respect to all of the Company's activities.

Now, therefore, the parties agree as follows:

1.    Effective Date; Engagement

      1.1.  This Agreement shall enter into effect upon receipt of all approvals
            required under applicable law (the "Effective Date");

      1.2.  TG IL  shall  engage  M.S.  and  M.S.  shall  agree  that  as of the
            Effective  Date, Dr. Ornath shall be engaged as the Chief  Scientist
            of the Company and to hold itself available to render at the request
            of TG IL,  at such  dates  and  times as shall  be  mutually  agreed
            between the parties  from time to time,  non-exclusive,  independent
            advisory and  consulting  services,  to the best of its ability,  in
            compliance  with all applicable laws and the terms and condition set
            forth herein.

      1.3.  All consulting services shall be provided at all times solely by Dr.
            Ornath.  For the term of this Agreement,  and until otherwise agreed
            between the parties, M.S. shall dedicate such time equal to at least
            four (4) full working days  (notifying  in advance  whether and when
            Dr.  Ornath  will be absent)  for the  provision  of the  consulting
            services and shall not, during the term of this  Agreement,  without
            providing the Company a prior written notice,  be engaged,  directly
            or indirectly,  in any other business or professional  activity that
            is  competitive  to the  Company's  activity,  whether  or not  such
            activity is pursued for gain, profit or other pecuniary advantage.

      1.4.  Other than as expressly  authorized by the Board of Directors of the
            Company,  M.S.  and/or Dr.  Ornath shall have no authority and shall
            make no commitment or  representation  on behalf of TG IL without TG
            IL's prior written approval.

<PAGE>

2.    Services

      Within the framework of this  Agreement,  M.S.  shall render the following
      services to the Company through Dr. Ornath (the "Services"):

      2.1.  Aid and consult TG IL and render it with  technical  and  scientific
            advice and assistance, including but not limited to participation in
            experiments   conducted  by  TG  IL,   overseeing   experiments  and
            participation in conferences and meetings on behalf of TG IL.

      2.2.  Upon  Company's  request,  serve as a member of any committee of the
            Board of  Directors.

      2.3.  Dr.  Ornath shall devote such time and effort to the Services as the
            Company shall deem necessary and proper for the  fulfillment of M.S.
            obligations hereunder.

      2.4.  Dr. Ornath time commitment to attend meetings,  consult on an ad-hoc
            basis and render the  Services  shall be such time equal to at least
            four (4) full working days  (notifying  in advance  whether and when
            Dr.  Ornath  will be absent) as  customary  with  respect to similar
            positions  in the  industry,  at such  times and places to be agreed
            between the parties.

      2.5.  Dr. Ornath shall utilize the highest professional skill,  diligence,
            ethics and care to ensure that all  Services  are  performed  to the
            full  satisfaction  of the  Company  and to  provide  the  expertise
            required in connection  with such services.  M.S.  acknowledges  and
            agrees that the performance of the Services may require domestic and
            international travel.

      2.6.  In rendering  the  Services,  M.S. and anyone  acting on its behalf,
            including Dr.  Ornath shall comply with all policies and  procedures
            of the Company, as may be in effect from time to time.

3.    Compensation

      For and in  consideration  of the Services to be performed by M.S.,  TG IL
      agrees to pay M.S. as follows:

      3.1.  A monthly fee of $12,000 (Twelve Thousand U.S. Dollars)  accompanied
            by VAT (as specified below), payable on a monthly basis with respect
            to the preceding month (the "Fee").

      3.2.  TG IL agrees to reimburse M.S. for out of pocket  expenses  incurred
            by Dr.  Ornath in  connection  with the  rendering  of the  Services
            hereunder up to a total amount not to exceed $250 (Two Hundred Fifty
            U.S.  Dollars) per month,  provided  that such  expenses are against
            original  receipts  and  pre-approved  by  TG  IL  in  writing  (the
            "Expenses").

      3.3.  Payment  of the Fee  shall be made  against  M.S.  itemized  invoice
            within 30 days of receipt of the  relevant  invoice,  which  invoice
            shall  be  submitted  to TG IL  within  5 days  of the  end of  each
            calendar  month  during  the term of this  Agreement,  and  shall be
            accompanied  by VAT at the rate  prescribed  by law,  subject to any
            set-offs or other  deductions  of any nature as  required  under any
            applicable  law,  unless M.S.  provides TG IL with  appropriate  tax
            exemption documentation.

<PAGE>

      3.4.  For the avoidance of any doubt,  the Fee, the Options (as defined in
            Exhibit A and subject to the terms  thereof) and the  aforementioned
            Expenses  constitute  the  full  and  final  consideration  for  the
            Services,   and  M.S.  shall  not  be  entitled  to  any  additional
            consideration, of any form, for its services.

4.    Stock Options

      The Company and/or the Company's  parent company ("TG US"),  will grant to
      M.S.  options  to  purchase  shares  of  Common  Stock  of TG US upon  the
      principal  terms and  conditions  set forth  Exhibit "A" attached  hereto,
      constituting an integral part of this Agreement and in accordance with the
      terms and  conditions  of the Stock Option Plan that will be adopted by TG
      US.

5.    Reports

      5.1.  Dr.  Ornath  shall  submit to the CEO and the  Board of the  Company
            reports at such times as  requested  by the Company  which shall set
            forth any information and data requested by the Company.

      5.2.  In the event that Dr. Ornath  participates in a conference on behalf
            of TG IL Dr. Ornath shall submit to TG IL a report on the subject of
            the  conference  within a week from  participation  therein,  unless
            requested otherwise by Company.

6.    Confidentiality

      6.1.  M.S.  and/or Dr. Ornath (for the purpose of this Section and for the
            purpose of Sections 7 and 11, M.S. and Dr.  Ornath shall be referred
            to together as  "Consultant")  shall not  disclose or put to its own
            use, or to the use of any third party,  any Proprietary  Information
            (as hereinafter  defined) of TG IL and/or TG US of which  Consultant
            has been or hereafter becomes informed,  whether or not developed by
            the Consultant.

            "Proprietary  Information"  shall mean  confidential and proprietary
            information  concerning the business and financial  activities of TG
            IL and/or TG US or any of their affiliates,  including,  inter alia,
            TG IL's  and/or TG US' product  research  and  development,  TG IL's
            and/or  TG  US'   banking,   investments,   investors,   properties,
            employees,  marketing  plans,  customers,  trade  secrets,  and test
            results,  processes,  data,  know-how,   improvements,   inventions,
            techniques and products  (actual or planned),  whether  documentary,
            written,  oral or computer  generated.  However,  excluded  from the
            above  definition  with  respect  to  Consultant's   confidentiality
            undertaking is any information that Consultant has evidence that (i)
            is or shall become part of the public  knowledge  except as a result
            of the  breach of  Consultant's  undertakings  towards  TG IL;  (ii)
            reflects  information  and data generally known in the industries or
            trades in which TG IL operates;  (iii) as shown by written  records,
            is  received  by   Consultant   from  a  third  party   exempt  from
            confidentiality  undertakings  towards  TG IL;  (iv)  Consultant  is
            compelled by court or government  action  pursuant to applicable law
            to disclose such  information,  provided,  however,  that Consultant
            provides  TG IL  prompt  notice  thereof  so  that  it  may  seek  a
            protective order or other appropriate remedy,  after providing TG IL
            with written notice.

<PAGE>

      6.2.  Consultant  will use the Proprietary  Information  solely to perform
            the Services for the benefit of the Company.  Consultant shall treat
            all  Proprietary  Information  with the same  degree  of care as the
            Consultant  accords  to  its  own  confidential  and/or  proprietary
            information, and the Consultant represents that it uses best efforts
            to protect its own confidential and/or proprietary information.

      6.3.  Upon  termination of its engagement  with TG IL,  Consultant will in
            due  course  deliver to TG IL all  documents  and  materials  of any
            nature pertaining to its engagement with TG IL.

      6.4.  Consultant  recognizes  that TG IL  and/or TG US  received  and will
            receive  confidential  and/or  proprietary  information  from  third
            parties  subject  to a duty  on the  part of TG IL  and/or  TG US to
            maintain the  confidentiality of such information and to use it only
            for  certain  limited  purposes.  At  all  times,  both  during  its
            engagement and after its termination,  the Consultant  undertakes to
            keep and hold all such  information in strict  confidence and trust,
            and it will not use or disclose any of such information  without the
            prior  written  consent  of TG IL,  except  as may be  necessary  to
            perform its duties  hereunder and consistent with TG IL and/or TG US
            agreement with such third party (as applicable). Upon termination of
            its engagement with TG IL, the Consultant shall act, with respect to
            such  information,  as set  forth in  Section  6.2 and 6.3,  mutatis
            mutandis.

      6.5.  Consultant's  undertakings under this Section 6 shall remain in full
            force and effect after  termination  or expiration of this Agreement
            or  of  any  renewal  thereof  for  a  period  of  seven  (7)  years
            thereafter.

7.    Intellectual Property Rights

      7.1.  Consultant shall disclose promptly to TG IL or its nominee,  any and
            all  inventions,  designs,  original works of authorship,  formulas,
            concepts,   techniques,    processes,   formulas,   trade   secrets,
            discoveries and improvements resulting, directly or indirectly, from
            the Services and/or conceived or made by the Consultant or anyone on
            its behalf in the course of providing TG IL with the Services during
            the term of this Agreement (the "Intellectual Property"), and hereby
            assigns  and  agrees  to  assign  to TG IL or its  nominee  all  its
            interest,  except for moral rights,  in any  Intellectual  Property.
            Consultant  agrees to assist TG IL or its nominee,  as instructed by
            TG IL in every proper way to obtain and enforce patents, copyrights,
            mask work rights,  and other legal  protections for the Intellectual
            Property in any and all countries. Whenever requested to do so by TG
            IL,  Consultant  will execute any documents  that TG IL or TG US may
            reasonably request for use in obtaining or enforcing or extending or
            renewing such patents,  copyrights,  mask work rights, trade secrets
            and other legal protections. The obligations in this Section 7 shall
            be  binding  upon  Consultant's   assigns,   executors,   employees,
            officers, administrators and other legal representatives.

      7.2.  Consultant  agrees that all the  Intellectual  Property is work made
            for hire and will be the sole and exclusive  property of TG IL or TG
            US, at TG IL's sole  discretion.  All Intellectual  Property,  which
            shall be reduced to practice during and/or within twelve (12) months
            after  termination of this  Agreement,  shall be deemed to have been
            invented during the term of this Agreement,  unless otherwise proved
            by the Consultant.

<PAGE>

      7.3.  Consultant's  undertakings under this Section 7 shall remain in full
            force and effect after  termination of this Agreement or any renewal
            thereof. TG IL shall compensate the Consultant at a reasonable rate,
            for time or expenses actually spent by him, at TG IL's request,  for
            such assistance after termination of this Agreement.

8.    Term and Termination

      8.1.  The  term  of  this  Agreement  shall  be  thirty  six  (36)  months
            commencing on the  Effective  Date,  unless and until  terminated by
            Company for any reason, as provided in Section 8.2 hereunder.

      8.2.  After a period of no less than twenty four (24) months commencing on
            the  Effective  Date,  this  Agreement  may be  terminated by either
            party,  at any time,  without  any  further  obligation  under  this
            Agreement  to the other  party  and/or any one on its behalf  (other
            than those obligations  surviving termination or expiration hereof),
            by ninety (90) days prior  written  notice,  unless  terminated as a
            result of a material  breach,  in which case this  Agreement  may be
            terminated  by either party upon  fourteen  (14) days prior  written
            notice to the other party if such a breach was not cured  during the
            fourteen (14) days period.

9.    Assurances; No Conflict

      9.1.  M.S. hereby  warrants,  represents and confirms to TG IL that on the
            date  hereof it and Dr.  Ornath are free to be engaged by TG IL upon
            the  terms  contained  in  this  Agreement  and  that  there  are no
            engagements,   contracts,   consulting   contracts  or   restrictive
            covenants preventing full performance of its duties hereunder.

      9.2.  M.S. hereby further represents warrants and confirms that nothing in
            this  Agreement  conflicts  with  any of M.S.  and/or  Dr.  Ornath`s
            current  affiliations or other current  relationships with any other
            entity.

      9.3.  Without  derogating  from any of the  provisions  of this Section 9,
            M.S.  represents  and warrants that it and/or Dr.  Ornath  currently
            render  consulting  services  to and/or is engaged  by the  entities
            listed on  Exhibit  "B" hereto  and that  nothing in this  Agreement
            conflicts with any of M.S. and/or Dr. Ornath  relationships with any
            of such  entities.  During  the term of this  Agreement  M.S.  shall
            promptly  notify TG IL in writing of any  additional  entity that it
            shall render consulting services to and/or engage with.

      9.4.  The Services performed  hereunder will not be conducted on time that
            is required to be devoted by M.S.  to any other  third  party.  M.S.
            shall not use the  funding,  facilities  and  resources of any third
            party to perform the  Services  hereunder  and shall not perform the
            Services  hereunder  in any manner  that would give any third  party
            rights to produce such work. Nothing done in M.S. work for any third
            party shall be considered part of the Services  performed  hereunder
            and M.S.  shall  not  use,  directly  or  indirectly,  the  funding,
            facilities  and  resources  of  the  Company  with  respect  to  its
            engagement  with  any  third  party.

<PAGE>

10.   Business Opportunities

      Consultant  shall be  obligated  to offer the  Company  the right of first
      negotiation for any business opportunity that comes to it, in the field of
      homeland security (the "Business  Opportunity").  In the event the Company
      does not  exercise  its right to  exploit a certain  Business  Opportunity
      within three (3) months,  Consultant  shall be free to do so in any manner
      it deems fit as long as Consultant  fulfilles its  obligations  under this
      Agreement.

11.   Competitive Activity; Non-Solicitation

      11.1. M.S. and/or Dr. Ornath will not, as long as M.S.  provides  services
            to TG IL  hereunder  and for a period  of 24  (Twenty  Four)  months
            thereafter,   directly  or  indirectly,  as  owner,  partner,  joint
            venturer, stockholder, employee, broker, agent, principal, corporate
            officer,  director,  consultant,  licensor or in any other  capacity
            whatsoever engage in, become financially  interested in, be employed
            by, or have any  connection  with any  business  or venture  that is
            engaged  in any  activities  which  are in direct  competition  with
            products or services  offered by TG IL at the prevailing  time or in
            direct  competition  with any  research and  development  efforts in
            connection  with  TG  IL  intended  products  and  services  at  the
            prevailing time without TG IL prior consent.

      11.2. During  the Term of this  Agreement  and for a period of 24  (twenty
            four) months thereafter,  M.S. and/or Dr. Ornath will not solicit or
            induce any employee,  advisor, contractor or customer of the Company
            to  terminate  or  breach  any  employment,   contractual  or  other
            relationship with the Company.

12.   Independent Contractor

      12.1. M.S.  agrees and  acknowledges  that it is  performing  the Services
            hereunder as an independent contractor and that no employer-employee
            relationship  exists or will exist between  either M.S. or anyone on
            its  behalf,  including  Dr.  Ornath  and the  Company,  and/or  its
            affiliates or investment portfolio companies.

      12.2. If,  despite  the  parties'  explicit  intent as  reflected  in this
            agreement,   a  competent  court  determines  the  existence  of  an
            employer-employee  relationship  between either the Company and M.S.
            or the Company and Dr.  Ornath and decides  that M.S. or Dr.  Ornath
            are entitled to payments  and/or other  benefits in connection  with
            such employment relationship, then the following shall apply:

<PAGE>

             12.2.1.      The gross  salary that M.S.  and/or Dr.  Ornath  would
                          have been  entitled to receive as an "employee" of the
                          Company  during  the term of this  Agreement  shall be
                          calculated as being equivalent to 70 % of the Fee; and

             12.2.2.      The  remaining  30% of the Fee (the "Extra  Payments")
                          shall  be  returned  by M.S.  and/or  Dr.  Ornath  (as
                          applicable)  to the  Company.  The  Company  shall  be
                          entitled  to set off the Extra  Payments  against  any
                          payment  and/or  benefit  that  the  Company  shall be
                          obliged,  if  obliged,  to pay M.S. as a result of, or
                          pursuant  to,  any such  court  decision  and/or  this
                          Agreement and/or applicable law; and

             12.2.3.      M.S.  and Dr.  Ornath,  jointly and  severally,  shall
                          indemnify  the Company  and hold it harmless  from any
                          loss or damage incurred by the Company as a result of,
                          or in connection with, such court decision,  including
                          reasonable expenses and legal fees.

      12.3. Dr. Ornath shall also take upon himself,  personally,  the above, by
            signing at the end of this Agreement.

      13.   Miscellaneous

      13.1. M.S.  shall not  assign  this  agreement  or any of its  rights  and
            privileges hereunder, whether voluntarily or by operation of law, to
            any person, firm or corporation without the prior written consent of
            TG IL.

      13.2. Without  derogating  Section 12 above, M.S.  acknowledges and agrees
            that  the  relationship  intended  by this  agreement  is that of an
            independent  contractor  and  not  that  of an  employee,  agent  or
            representative  of TG IL. M.S. shall be solely  responsible  for the
            payment of any taxes,  including  all business  taxes arising out of
            the M.S. activities.

      13.3. Except as otherwise provided herein, this Agreement  constitutes the
            entire  agreement  between the parties  with  respect to the matters
            referred  to  herein,  and no other  arrangement,  understanding  or
            agreement,  verbal or  otherwise,  shall be binding upon the parties
            hereto. This Agreement may not be amended,  modified or supplemented
            in any  respect,  except by a  subsequent  writing  executed by both
            parties hereto.

      13.4. No failure,  delay or  forbearance of either party in exercising any
            power or right  hereunder shall in any way restrict or diminish such
            party's  rights and powers  under  this  Agreement,  or operate as a
            waiver of any breach or  non-performance  by either  party of any of
            the terms or conditions hereof.

      13.5. If any  term  or  provision  of this  Agreement  shall  be  declared
            invalid, illegal or unenforceable, then such term or provision shall
            be  enforceable  to the extent that a court shall deem it reasonable
            to  enforce  such term or  provision  and if such term or  provision
            shall  be  unreasonable  to  enforce  to any  extent,  such  term or
            provision  shall be severed and all remaining  terms and  provisions
            shall be unaffected and shall continue in full force and effect.

      13.6. Any notice from one party to the other shall be  effectively  served
            if sent in  writing  by  recorded  delivery  to the  address  of the
            receiving party as stated in the preamble to this agreement,  unless
            said  party  informs  the  other  party in  writing  on a change  of
            address.

<PAGE>

IN WITNESS WHEREOF, THE PARTIES HAVE HEREUNTO SET THEIR HAND UPON THE DATE FIRST
ABOVE WRITTEN.

     -----------------------------                   ----------------------
     TRACEGUARD TECHNOLOGIES LTD.                    M.S.   MATERIALS LTD.
     By:  /s/ Meir Zucker                            By:  Dr. Fredy Ornath
          ---------------                                 ----------------
     Its: /s/ President & CEO                        Its: General Manager
          -------------------                             ---------------

I, the undersigned, Dr. Fredy Ornath, residing at 12 Beit Zuri Street, Tel Aviv,
Israel,  hereby represent and warrant, and undertake,  that I fully agree to the
provisions of this Agreement  (including  Sections 1.2, 1.3, 6, 7, 10, 11 and 12
hereinabove),  as if made by myself  and I  undertake  to  comply  with all such
provisions.

Signed on February 16, 2006

/s/ Dr. Fredy Ornath
----------------------
Dr. FREDY ORNATH

<PAGE>

                                    EXHIBIT A
                                    ---------

                           PRINCIPLE TERMS OF OPTIONS
                           --------------------------

1.    Number of Options.  Subject to the receipt of all consents  required under
      applicable law, M.S. shall be entitled to receive options for the purchase
      of  common  stock of TG US,  par value  $0.01  each  (the  "Options"),  as
      follows:

      1.1.  M.S.  will be  entitled  to  receive  Options  for the  purchase  of
            1,200,000 (One Million Two Hundred  Thousand) shares of common stock
            of TG  US,  par  value  $0.01  each,  according  to  the  terms  and
            conditions set forth in the Company's  Employee Stock Option Plan to
            be adopted by TG US. The exercise  price of such Options shall be as
            approved by TG US with respect to other employees and consultants of
            TG US and/or the Company at this time, at its sole  discretion,  but
            not less than seventy US Cents ($0.70).

      1.2.  Upon the receipt of the approval/certificate of the Israeli Security
            Agency and/or the US Transportation Security Administration (TSA) to
            the  CarrySafe  - M.S.  shall  receive  additional  Options  for the
            purchase of 1,200,000 (One Million Two Hundred  Thousand)  shares of
            common stock of TG US, par value $0.01 each, at an exercise price of
            US$1.00 (One U.S.  Dollar).  These Options shall be fully vested and
            exercisable  for a period of three (3) years  commencing on the date
            of their grant and shall expire immediately thereafter;

      1.3.  Upon the receipt of a purchase  order for  equipment in an aggregate
            amount of  1,000,000$  (One  Million  U.S.  Dollars)  during 1 (One)
            calendar year and/or entering into a Strategic Agreement (as defined
            below) - M.S. shall receive  additional  Options for the purchase of
            1,200,000  (One Million and Two Hundred  Thousand)  shares of common
            stock of TG US,  par  value  $0.01  each,  at an  exercise  price of
            US$1.50 (One U.S.  Dollar and Fifty  Cents).  These Options shall be
            fully  vested  and  exercisable  for a  period  of three  (3)  years
            commencing  on the date of their grant and shall expire  immediately
            thereafter;

      For   the  purpose  of  this  Section  a  "Strategic  Agreement"  means  a
            Meaningful Partnership (as defined herein) with one of the companies
            listed in Exhibit "C" or a similar transaction, as determined by the
            Company,  at its sole  discretion.;  and a "Meaningful  Partnership"
            means a joint venture with one of the companies  listed in Exhibit C
            in which such company  invests an amount of at least US$  10,000,000
            (Ten Million U.S.  Dollars) in such joint  venture or a an agreement
            with such company that it is  anticipated by the Company to generate
            revenues  to TG IL of at least  US$  10,000,000  (Ten  Million  U.S.
            Dollars) over a period of 5 (Five) years.

<PAGE>

      1.4.  Upon the Company's  achieving a gross profits of US$ 2,000,000  (Two
            Million U.S. Dollars), according to the audited financial statements
            of the Company (a "Profit") - M.S. shall receive  additional Options
            to purchase  1,500,000 (One Million Five Hundred Thousand) shares of
            common stock of TG US, par value $0.01 each, at an exercise price of
            US$1.75  (One U.S.  Dollar and Seventy Five  Cents).  These  Options
            shall be fully  vested  and  exercisable  for a period  of three (3)
            years  commencing  on the date of their  vesting  and  shall  expire
            immediately thereafter.

      2.    General Term of Options.  Without  derogating the aforesaid,  if the
            Employees Incentive Stock Option Plan that shall be adopted by TG US
            includes  additional  provisions  related to  expiration of Options,
            such provisions shall also apply with respect to the Options granted
            to M.S. under Section 1.1 of this Exhibit.

      3.    Tax.  All  options  will be granted to M.S.  under  Section  3(i) of
            Israeli Internal Revenue Ordinance.

<PAGE>

                                    EXHIBIT B
                                    ---------

         ENTITIES TO WHICH DR. ORNATH AND/OR M.S. ARE PROVIDING SERVICES
         ---------------------------------------------------------------

<TABLE>
<CAPTION>
----------------------------  -------------------------  ---------------------------------  ------------------
<S>                           <C>                        <C>                                <C>
Company Name                  Status of Engagement       Anticipated Termination of         Signature  of  Dr.
                                                         Engagement                         Ornath
----------------------------  -------------------------  ---------------------------------  ------------------

----------------------------  -------------------------  ---------------------------------  ------------------

----------------------------  -------------------------  ---------------------------------  ------------------

----------------------------  -------------------------  ---------------------------------  ------------------

----------------------------  -------------------------  ---------------------------------  ------------------

----------------------------  -------------------------  ---------------------------------  ------------------
</TABLE>

<PAGE>

                                    EXHIBIT C

                               STRATEGIC ENTITIES

      1)    GE

      2)    Smits Detection

      3)    L3

      4)    Boeing

      5)    Siemens

      6)    Lockheed Martin

      7)    Northrop Grumman Corp.

      8)    Rapsican

      9)    Any company that conducts  significant business in the United States
            with  sales  exceeding  an amount of US$  100,000,000  (One  Hundred
            Million U.S. Dollars) to the homeland security market.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]