Document:

(Multicurrency — Cross Border)

(Multicurrency — Cross Border)

ISDA®

International Swap Dealers Association, Inc.

MASTER AGREEMENT

dated as of   December 14, 2006 

			
	JPMorgan Chase Bank, N.A.

	and

	The Bank of New York, not in its individual capacity but solely as securities administrator on behalf of the J.P. Morgan Mortgage Acquisition Trust 2006-CH2 supplemental interest trust

	 
	 
	 

have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that are or will be governed by this Master Agreement, which includes the schedule (the “Schedule”), and the documents and other confirming evidence (each a “Confirmation”) exchanged between the parties confirming those Transactions.

Accordingly, the parties agree as follows: —

1.

Interpretation

(a)

Definitions.  The terms defined in Section 14 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement.

(b)

Inconsistency.  In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail.  In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will prevail for the purpose of the relevant Transaction.

(c)

Single Agreement.  All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this “Agreement”), and the parties would not otherwise enter into any Transactions.

2.

Obligations

(a)

General Conditions.

(i)

Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement.

(ii)

Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency.  Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement.

Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement.

(b)

Change of Account.  Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change.

(c)

Netting.  If on any date amounts would otherwise be payable:—

(i)

in the same currency; and

(ii)

in respect of the same Transaction,

by each party to the other, then, on such date, each party’s obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction.  The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election, together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date).  This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries.

(d)

Deduction or Withholding for Tax.

(i)

Gross-Up.  All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect.  If a party is so required to deduct or withhold, then that party (“X”) will:—

(1)

promptly notify the other party (“Y”) of such requirement;

(2)

pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y;

(3)

promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this  Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required.  However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:—

(A)

the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or

(B)

the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law.

(ii)

Liability.  If: —

(1)

X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4);

(2)

X does not so deduct or withhold; and

(3)

a liability resulting from such Tax is assessed directly against X,

then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).

(e)

Default Interest; Other Amounts.  Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment, at the Default Rate.  Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed.  If, prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement.

3.

Representations

Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at all times until the termination of this Agreement) that:—

(a)

Basic Representations.

(i)

Status.  It is duly organised and validly existing under the laws of the jurisdiction of its organisation or incorporation and, if relevant under such laws, in good standing;

(ii)

Powers.  It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorise such execution, delivery and performance;

(iii)

No Violation or Conflict.  Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets;

(iv)

Consents.  All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and

(v)

Obligations Binding.  Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

(b)

Absence of Certain Events.  No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party.

(c)

Absence of Litigation.  There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document.

(d)

Accuracy of Specified Information.  All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect.

(e)

Payer Tax Representation.  Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true.

(f)

Payee Tax Representations.  Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true.

4.

Agreements

Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:—

(a)

Furnish Specified Information.  It will deliver to the other party or, in certain cases under subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs:—

(i)

any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation;

(ii)

any other documents specified in the Schedule or any Confirmation; and

(iii)

upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification,

in each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable.

(b)

Maintain Authorisations.  It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future.

(c)

Comply with Laws.  It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party.

(d)

Tax Agreement.  It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure.

(e)

Payment of Stamp Tax.  Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, organised, managed and controlled, or considered to have its seat, or in which a branch or office through which it is acting for the purpose of this Agreement is located (“Stamp Tax Jurisdiction”) and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party’s execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party.

5.

Events of Default and Termination Events

(a)

Events of Default.  The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an “Event of Default”) with respect to such party:—

(i)

Failure to Pay or Deliver.  Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure is not remedied on or before the third Local Business Day after notice of such failure is given to the party;

(ii)

Breach of Agreement.  Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party;

(iii)

Credit Support Default.

(1)

Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed;

the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or

(2)

the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document;

(iv)

Misrepresentation.  A representation (other than a representation under Section 3(e) or (f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated;

(v)

Default under Specified Transaction.  The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an  acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);

(vi)

Cross Default.  If “Cross Default” is specified in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar condition or event (however described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than the applicable Threshold Amount under such agreements or instruments (after giving effect to any applicable notice requirement or grace period);

(vii)

Bankruptcy.  The party, any Credit Support Provider of such party or any applicable Specified Entity of such party: —

(1)

is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or

(viii)

Merger Without Assumption.  The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer: —

(1)

the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or

(2)

the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement.

(b)

Termination Events.  The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes an Illegality if the event is specified in (i) below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon Merger if the event is specified in (iii) below, and, if specified to be applicable, a Credit Event

Upon Merger if the event is specified pursuant to (iv) below or an Additional Termination Event if the event is specified pursuant to (v) below:—

(i)

Illegality.  Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party): —

(1)

to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or

(2)

to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction;

(ii)

Tax Event.  Due to (x) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Payment Date (1) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B));

(iii)

Tax Event Upon Merger.  The party (the “Burdened Party”) on the next succeeding Scheduled Payment Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Indemnifiable Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets to, another entity (which will be the Affected Party) where such action does not constitute an event described in Section 5(a)(viii);

(iv)

Credit Event Upon Merger.  If “Credit Event Upon Merger” is specified in the Schedule as applying to the party, such party (“X”), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or transferee entity is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or

(v)

Additional Termination Event.  If any “Additional Termination Event” is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation).

(c)

Event of Default and Illegality.  If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it will be treated as an Illegality and will not constitute an Event of Default.

6.

Early Termination

(a)

Right to Terminate Following Event of Default.  If at any time an Event of Default with respect to a party (the “Defaulting Party”) has occurred and is then continuing, the other party (the “Non-defaulting Party”) may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions.  If, however, “Automatic Early Termination” is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b)

Right to Terminate Following Termination Event.

(i)

Notice.  If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and will also give such other information about that Termination Event as the other party may reasonably require.

(ii)

Transfer to Avoid Termination Event.  If either an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, excluding immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist.

If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i).

Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party’s policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed.

(iii)

Two Affected Parties.  If an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event.

(iv)

Right to Terminate.  If: —

(1)

a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i); or

(2)

an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party,

either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there is more than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not more than 20 days notice to the other party and provided that the relevant Termination Event is then continuing, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions.

(c)

Effect of Designation.

(i)

If notice designating an Early Termination Date is given under Section 6(a) or (b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing.

(ii)

Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement.  The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e).

(d)

Calculations.

(i)

Statement.  On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving details of the relevant account to which any amount payable to it is to be paid.  In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation, the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation.

(ii)

Payment Date.  An amount calculated as being due in respect of any Early Termination Date under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective (in the case of an Early Termination Date which is designated as a result of a Termination Event).  Such amount will be paid together with (to the extent permitted under applicable law) interest thereon (before as well as after judgment) in the Termination Currency, from (and including) the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate.  Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed.

(e)

Payments on Early Termination.  If an Early Termination Date occurs, the following provisions shall apply based on the parties’ election in the Schedule of a payment measure, either “Market Quotation” or “Loss”, and a payment method, either the “First Method” or the “Second Method”.  If the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that “Market Quotation” or the “Second Method”, as the case may be, shall apply.  The amount, if any, payable in respect of an Early Termination Date and determined pursuant to this Section will be subject to any Set-off.

(i)

Events of Default.  If the Early Termination Date results from an Event of Default: —

(1)

First Method and Market Quotation.  If the First Method and Market Quotation apply, the Defaulting Party will pay to the Non-defaulting Party the excess, if a positive number, of (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party over (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party.

(2)

First Method and Loss.  If the First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting Party, if a positive number, the Non-defaulting Party’s Loss in respect of this Agreement.

(3)

Second Method and Market Quotation.  If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party.  If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party.

(4)

Second Method and Loss.  If the Second Method and Loss apply, an amount will be payable equal to the Non-defaulting Party’s Loss in respect of this Agreement.  If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party.

(ii)

Termination Events.  If the Early Termination Date results from a Termination Event: —

(1)

One Affected Party.  If there is one Affected Party, the amount payable will be determined in accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being terminated, Loss shall be calculated in respect of all Terminated Transactions.

(2)

Two Affected Parties.  If there are two Affected Parties: —

(A)

if Market Quotation applies, each party will determine a Settlement Amount in respect of the Terminated Transactions, and an amount will be payable equal to (I) the sum of (a) one-half of the difference between the Settlement Amount of the party with the higher Settlement Amount (“X”) and the Settlement Amount of the party with the lower Settlement Amount (“Y”) and (b) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency Equivalent of the Unpaid Amounts owing to Y; and

(B)

if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Terminated Transactions) and an amount will be payable equal to one-half of the difference between the Loss of the party with the higher Loss (“X”) and the Loss of the party with the lower Loss (“Y”).  

If the amount payable is a positive number, Y will pay it to X; if it is a negative number,  X will pay the absolute value of that amount to Y.

(iii)

Adjustment for Bankruptcy.  In circumstances where an Early Termination Date occurs because “Automatic Early Termination” applies in respect of a party, the amount determined under this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii).

(iv)

Pre-Estimate.  The parties agree that if Market Quotation applies an amount recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty.  Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses.

7.

Transfer

Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that: —

(a)

a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and

(b)

a party may make such a transfer of all or any part of its interest in any amount payable to it from a Defaulting Party under Section 6(e).  Any purported transfer that is not in compliance with this Section will be void.

8.

Contractual Currency

(a)

Payment in the Contractual Currency.  Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the “Contractual Currency”).  To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in a reasonable manner and in good faith in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement.  If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall.  If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess.

(b)

Judgments.  To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually received by such party.  The term “rate of exchange” includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency.

(c)

Separate Indemnities.  To the extent permitted by applicable law, these indemnities constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement.

(d)

Evidence of Loss.  For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made.

9.

Miscellaneous

(a)

Entire Agreement.  This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto.

(b)

Amendments.  No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system.

(c)

Survival of Obligations.  Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction.

(d)

Remedies Cumulative.  Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law.

(e)

Counterparts and Confirmations.

(i)

This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original.

(ii)

The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise).  A Confirmation shall he entered into as soon as practicable and may he executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement.  The parties will specify therein or through another effective means that any such counterpart, telex or electronic message constitutes a Confirmation.

(f)

No Waiver of Rights.  A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege.

(g)

Headings.  The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement.  

10.

Offices; Multibranch Parties

(a)

If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to the other party that, notwithstanding the place of booking office or jurisdiction of incorporation or organisation of such party, the obligations of such party are the same as if it had entered into the Transaction through its head or home office.  This representation will be deemed to be repeated by such party on each date on which a Transaction is entered into.

(b)

Neither party may change the Office through which it makes and receives payments or deliveries for the purpose of a Transaction without the prior written consent of the other party.

(c)

If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the Office through which it makes and receives payments or deliveries with respect to a Transaction will be specified in the relevant Confirmation.

11.

Expenses

A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection.

12.

Notices

(a)

Effectiveness.  Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated:—

(i)

if in writing and delivered in person or by courier, on the date it is delivered;

(ii)

if sent by telex, on the date the recipient’s answerback is received;

(iii)

if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender’s facsimile machine);

(iv)

if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or

(v)

if sent by electronic messaging system, on the date that electronic message is received,

unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day.

(b)

Change of Addresses.  Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it.

13.

Governing Law and Jurisdiction

(a)

Governing Law.  This Agreement will be governed by and construed in accordance with the law specified in the Schedule.

(b)

Jurisdiction.  With respect to any suit, action or proceedings relating to this Agreement (“Proceedings”), each party irrevocably:—

(i)

submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the non-exclusive jurisdiction of the courts of the State of  New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and

(ii)

waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party.

Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.

(c)

Service of Process.  Each party irrevocably appoints the Process Agent (if any) specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings.  If for any reason any party’s Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party.  The parties irrevocably consent to service of process given in the manner provided for notices in Section 12.  Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by law.

(d)

Waiver of Immunities.  Each party irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings.

14.

Definitions

As used in this Agreement:—

“Additional Termination Event” has the meaning specified in Section 5(b).

“Affected Party” has the meaning specified in Section 5(b).

“Affected Transactions” means (a) with respect to any Termination Event consisting of an Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination Event, all Transactions.

“Affiliate” means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person.  For this purpose, “control” of any entity or person means ownership of a majority of the voting power of the entity or person.

“Applicable Rate” means:—

(a)

in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

(b)

in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate;

(c)

in respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and

(d)

in all other cases, the Termination Rate.

“Burdened Party” has the meaning specified in Section 5(b).

“Change in Tax Law” means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs on or after the date on which the relevant Transaction is entered into.

“consent” includes a consent, approval, action, authorisation, exemption, notice, filing, registration or exchange control consent.

“Credit Event Upon Merger” has the meaning specified in Section 5(b).

“Credit Support Document” means any agreement or instrument that is specified as such in this Agreement.

“Credit Support Provider” has the meaning specified in the Schedule.

“Default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum.

“Defaulting Party” has the meaning specified in Section 6(a).

“Early Termination Date” means the date determined in accordance with Section 6(a) or 6(b)(iv).

“Event of Default” has the meaning specified in Section 5(a) and, if applicable, in the Schedule.

“Illegality” has the meaning specified in Section 5(b)(i).

“Indemnifiable Tax” means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organised, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document).

“law” includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority) and “lawful” and “unlawful” will be construed accordingly.

“Local Business Day” means, subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment, (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction.

“Loss” means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and a party, the Termination Currency Equivalent of an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them).  Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies.  Loss does not include a party’s legal fees and out-of-pocket expenses referred to under Section 11.  A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable.  A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets.

“Market Quotation” means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market-makers.  Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the “Replacement Transaction”) that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have 15 ISDAÒ 1992 been required after that date.  For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included.  The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree.  The party making the determination (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date.  The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other.  If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values.  If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations.  For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded.  If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined.

“Non-default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount.

“Non-defaulting Party” has the meaning specified in Section 6(a).  

“Office” means a branch or office of a party, which may be such party’s head or home office.

“Potential Event of Default” means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.

“Reference Market-makers” means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city.

“Relevant Jurisdiction” means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organised, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made.

“Scheduled Payment Date” means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction.

“Set-off” means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer.

“Settlement Amount” means, with respect to a party and any Early Termination Date, the sum of: —

(a)

the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; and

(b) such party’s Loss (whether positive or negative and without reference to any Unpaid Amounts) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result.

“Specified Entity” has the meanings specified in the Schedule.

“Specified Indebtedness” means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money.

“Specified Transaction” means, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation.

“Stamp Tax” means any stamp, registration, documentation or similar tax.

“Tax” means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax.

“Tax Event” has the meaning specified in Section 5(b)(ii).

“Tax Event Upon Merger” has the meaning specified in Section 5(b)(iii).

“Terminated Transactions” means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if “Automatic Early Termination” applies, immediately before that Early Termination Date).

“Termination Currency” has the meaning specified in the Schedule.

“Termination Currency Equivalent” means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the “Other Currency”), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case may be), is determined as of a later date, that later date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m.  (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date.  The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties.

“Termination Event” means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event.

“Termination Rate” means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts.

“Unpaid Amounts” owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate.  Such amounts of interest will be calculated on the basis of daily compounding and the actual number of days elapsed.  The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it shall be the average of the Termination Currency Equivalents of the fair market values reasonably determined by both parties.

IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document.

		
	JPMorgan Chase Bank, N.A.

	The Bank of New York, not in its individual capacity but solely as securities administrator on behalf of the J.P. Morgan Mortgage Acquisition Trust 2006-CH2 supplemental interest trust

	(Name of Party)

	(Name of Party)

	By:  

/s/ Robert Mock

	By:  

/s/ Pei Huang

	Name: Robert Mock

	Name: Pei Huang

	Title: VP

	Title: Assistant Vice President

	Date: 12-14-06

	Date: 12-14-06EXHIBIT 4.2

                                THE COMPANIES LAW

                           A COMPANY LIMITED BY SHARES

                           THIRD AMENDED AND RESTATED
                             ARTICLES OF ASSOCIATION
                                       OF

                       TTI TEAM TELECOM INTERNATIONAL LTD.

                              ____________________
                        (as amended through Aug 10, 2006)

                               GENERAL PROVISIONS

1.   OBJECT AND PURPOSE OF THE COMPANY

          (a) The object and purpose of the Company shall be as set forth in the
     Company's Memorandum of Association, as the same shall be amended from time
     to time in accordance with applicable law.

          (b) In accordance with Section 11(a) of the Companies Law, 5759-1999
     (the "Companies Law"), the Company may contribute a reasonable amount to a
     worthy cause.

2.   LIMITATION OF LIABILITY

     The liability of the shareholders is limited to the payment of the nominal
value of the shares in the Company allotted to them and which remains unpaid,
and only to that amount. If the Company's share capital shall include at any
time shares without a nominal value, the shareholders' liability in respect of
such shares shall be limited to the payment of up to NIS 0.50 for each such
share allotted to them and which remains unpaid, and only to that amount.

<PAGE>

3.   INTERPRETATION

          (a) Unless the subject or the context otherwise requires: words and
     expressions defined in the Companies Law in force on the date when these
     Articles or any amendment thereto, as the case may be, first became
     effective shall have the same meanings herein; words and expressions
     importing the singular shall include the plural and vice versa; words and
     expressions importing the masculine gender shall include the feminine
     gender; and words and expressions importing persons shall include bodies
     corporate.

          (b) The captions in these Articles are for convenience only and shall
     not be deemed a part hereof or affect the construction of any provision
     hereof.

3A.  AMENDMENT.

     The approval of a resolution adopted in a General Meeting approved by a
simple majority of the voting power represented at the meeting in person or by
proxy and voting thereon (a "Shareholders Resolution") is required to approve
any amendment to these Articles.

                                  SHARE CAPITAL

4.   SHARE CAPITAL

          4.1 The share capital of the Company is Eighteen Million Three Hundred
     and Eighteen Thousand One Hundred Ninety-Five Point Five New Israeli
     Shekels (NIS 18,318,195.5) divided into Thirty Million (30,000,000)
     Ordinary Shares, of a nominal value of One Half of One New Israeli Shekel
     (NIS 0.50) each, and Six Million Six Hundred and Thirty-Six Thousand Three
     Hundred and Ninety-One (6,636,391) Series A Convertible Preferred Shares,
     of a nominal value of One Half of One New Israeli Shekel (NIS 0.50) each
     (the "PREFERRED SHARES")."

          4A. The Preferred Shares

               The Preferred Shares confer on the holders thereof all rights
          accruing to holders of Ordinary Shares in the Company, and in
          addition, bear the following rights:

               (a) Subject to any provisions hereof conferring special rights as
          to voting, or restricting the right to vote, every holder of Preferred
          Shares shall have one vote for each Ordinary Share into which the
          Preferred Shares held by him of record could be converted (as provided
          in this Article), on every resolution, without regard to whether the
          vote thereon is conducted by a show of hands, by written ballot or by
          any other means. For this purpose, the holders of Preferred Shares
          shall be given notice of any meeting of shareholders as to which the
          holders of Ordinary Shares are given notice in accordance with these
          Articles and applicable law.

<PAGE>

               (b) Subject to the registration of the Ordinary Shares underlying
          the Preferred Shares pursuant to an effective registration statement
          (the "Registration Statement"), commencing two years after the
          effective date of the Registration Statement, at any time that the
          Ordinary Shares trade at a closing ask price of $4.40 (as adjusted for
          share splits, consolidations, share dividends, bonus share issuances
          and other recapitalizations of the Company's shares) or higher for a
          20 consecutive trading day period, with an average daily trading
          volume of at least 100,000 shares per day during such period, each
          Preferred Share shall automatically be converted into such number of
          fully paid and non-assessable Ordinary Shares as is determined by
          dividing the applicable Original Issue Price (as defined in Article
          4A(d)) by the applicable Conversion Price (as defined in and subject
          to adjustment under Article 4A(d)) at the time in effect for such
          share (as adjusted for share splits, consolidations, share dividends,
          bonus share issuances and other recapitalizations of the Company's
          shares) (an "AUTOMATIC CONVERSION"). Holders of record of Preferred
          Shares shall be given written notice on the date on which an Automatic
          Conversion was triggered or, if later, the date designated for such
          Automatic Conversion (the "AUTOMATIC CONVERSION DATE") and the place
          designated for Automatic Conversion of all such Preferred Shares
          pursuant to this Article 4A. Such notice shall be provided in
          accordance with Article 69(a) of these Articles to each record holder
          of Preferred Shares. Upon receipt of such notice, each holder of
          Preferred Shares subject to such Automatic Conversion, shall surrender
          his or its certificate or certificates for all such shares to the
          Company at the place designated in such notice, and shall thereafter
          receive certificates for the number of Ordinary Shares to which such
          holder is entitled pursuant to this Article 4A. On the Automatic
          Conversion Date, all outstanding Preferred Shares, subject thereto,
          shall be deemed to have been converted into Ordinary Shares, which
          shall be deemed to be outstanding of record, and all rights with
          respect to the Preferred Shares so converted, including the rights, if
          any, to receive notices and vote (other than as a holder of Ordinary
          Shares) will terminate, except only the rights of the holders thereof,
          upon surrender of their certificate or certificates therefor, to
          receive certificates for the number of Ordinary Shares into which such
          Preferred Shares have been converted, and payment of any declared but
          unpaid dividends thereon. As soon as practicable after the Automatic
          Conversion Date, as applicable, and the surrender of the certificate
          or certificates for Preferred Shares, the Company shall cause to be
          issued and delivered to such holder, or on his or its written order, a
          certificate or certificates for the number of full Ordinary Shares
          issuable on such conversion in accordance with the provisions hereof
          and cash as provided in Section 4A(f) in respect of any fraction of an
          Ordinary Share otherwise issuable upon such conversion.

               (c) Each Preferred Share shall be convertible at the option of
          the holder thereof, at any time after the date of issuance of such
          share, at the office of the Company, into such number of fully paid
          and non-assessable Ordinary Shares as is determined by dividing the
          applicable Original Issue Price (as defined in and subject to
          adjustment under Article 4A(d)) by the applicable Conversion Price at
          the time in effect for such share. Before any holder of Preferred
          Shares shall be entitled (in the case of a conversion at such holder's
          option) to convert the same into Ordinary Shares, he/she/it shall
          surrender the certificate or certificates therefor, duly endorsed, at
          the office of the Company, and shall give written notice by mail,
          postage prepaid, to the Company at its principal corporate office, of
          the election to convert the same and shall state therein the name or
          names of any nominee for such holder in which the certificate or
          certificates for Ordinary Shares are to be issued. Such conversion (in
          the case of a conversion at such holder's option) shall be deemed to
          have been made immediately prior to the close of business on the date
          of such surrender of the certificate representing the Preferred Shares
          to be converted, and the person or persons entitled to receive the
          Ordinary Shares issuable upon such conversion shall be treated for all
          purposes as the record holder or holders of such Ordinary Shares as of
          such date. The Company shall, as soon as practicable after the
          conversion and tender of the certificate for the Preferred Shares
          converted, issue and deliver at such office to such holder of
          Preferred Shares or to the nominee or nominees of such holder of
          Preferred Shares or to the nominee or nominees of such holder, a
          certificate or certificates for the number of Ordinary Shares to which
          such holder shall be entitled as aforesaid.

<PAGE>

               (d) The Original Issue Price of the Preferred Shares is US$2.20.
          The initial Conversion Price for the Preferred Shares shall be the
          Original Issue Price (subject to any adjustments under this Article
          4A(d)) (the "CONVERSION PRICE"). Subject and pursuant to the
          provisions of this Section 4A(d), the Conversion Price and number of
          Ordinary Shares into which the Preferred Shares shall be convertible
          shall be subject to adjustment from time to time as set forth
          hereinafter.

                    (i) If the Company shall, at any time or from time to time
               pay a dividend or make a distribution on its Ordinary Shares in
               additional Ordinary Shares, subdivide its outstanding Ordinary
               Shares into a greater number of shares or combine its outstanding
               Ordinary Shares into a smaller number of shares or issue by
               reclassification of its outstanding Ordinary Shares any shares of
               its capital stock (including any such reclassification in
               connection with a consolidation or merger in which the Company is
               the continuing entity), then the number of Ordinary Shares into
               which the Preferred Shares are convertible and the Conversion
               Price in effect immediately prior to the date upon which such
               change shall become effective, shall be adjusted by the Company
               so that the holder of Preferred Shares thereafter converting the
               Preferred Shares shall be entitled to receive the number of
               Ordinary Shares or other capital stock which such holder would
               have received if such Preferred Shares had been exercised
               immediately prior to such event upon payment of a Conversion
               Price that has been adjusted to reflect a fair allocation of the
               economics of such event to such Preferred Shares. Such
               adjustments shall be made successively whenever any event listed
               above shall occur.

                    (ii) If any capital reorganization, reclassification of the
               capital stock of the Company, consolidation or merger of the
               Company with another corporation in which the Company is not the
               surviving entity, or sale, transfer or other disposition of all
               or substantially all of the Company's assets to another
               corporation shall be effected, then, as a condition of such
               reorganization, reclassification, consolidation, merger, sale,
               transfer or other disposition, lawful and adequate provision
               shall be made whereby each holder of Preferred Shares shall
               thereafter have the right to purchase and receive upon the basis
               and upon the terms and conditions herein specified and in lieu of
               the Ordinary Shares immediately theretofore issuable upon
               conversion of such Preferred Shares, such shares of stock,
               securities or assets as would have been issuable or payable with
               respect to or in exchange for a number of Ordinary Shares equal
               to the number of Ordinary Shares immediately theretofore issuable
               upon conversion of the Preferred Shares, had such reorganization,
               reclassification, consolidation, merger, sale, transfer or other
               disposition not taken place, and in any such case appropriate
               provision shall be made with respect to the rights and interests
               of each holder of Preferred Shares to the end that the provisions
               hereof (including, without limitation, provision for adjustment
               of the Conversion Price) shall thereafter be applicable, as
               nearly equivalent as may be practicable in relation to any shares
               of stock, securities or assets thereafter deliverable upon the
               exercise hereof. The Company shall not effect any such
               consolidation, merger, sale, transfer or other disposition unless
               prior to or simultaneously with the consummation thereof the
               successor corporation (if other than the Company) resulting from
               such consolidation or merger, or the corporation purchasing or
               otherwise acquiring such assets or other appropriate corporation
               or entity shall assume the obligation to deliver to each holder
               of Preferred Shares, at the last address of such holder appearing
               on the books of the Company, such shares of stock, securities or
               assets as, in accordance with the foregoing provisions, such
               holder may be entitled to purchase, and the other obligations
               under the terms hereof. The provisions of this paragraph (ii)
               shall similarly apply to successive reorganizations,
               reclassifications, consolidations, mergers, sales, transfers or
               other dispositions.

<PAGE>

                    (iii) In case the Company shall fix a payment date for the
               making of a distribution to all holders of Ordinary Shares
               (including any such distribution made in connection with a
               consolidation or merger in which the Company is the continuing
               corporation) of evidences of indebtedness or assets (other than
               cash dividends or cash distributions payable out of consolidated
               earnings or earned surplus or dividends or distributions referred
               to in Section 4A(d)(i)), or subscription rights or warrants, the
               Conversion Price to be in effect after such payment date shall be
               determined by multiplying the Conversion Price in effect
               immediately prior to such payment date by a fraction, the
               numerator of which shall be the total number of Ordinary Shares
               outstanding multiplied by the Market Price (as defined below) per
               share of Ordinary Shares immediately prior to such payment date,
               less the fair market value (as determined by the Company's Board
               of Directors in good faith) of said assets or evidences of
               indebtedness so distributed, or of such subscription rights or
               warrants, and the denominator of which shall be the total number
               of Ordinary Shares outstanding multiplied by such Market Price
               per Ordinary Shares immediately prior to such payment date.
               "MARKET PRICE" as of a particular date (the "VALUATION DATE")
               shall mean the following: (a) if the Ordinary Shares are then
               listed on a national stock exchange, the closing sale price of
               one Ordinary Share on such exchange on the last trading day prior
               to the Valuation Date; (b) if the Ordinary Shares are then quoted
               on The Nasdaq Stock Market, Inc. ("NASDAQ"), the National
               Association of Securities Dealers, Inc. OTC Bulletin Board (the
               "BULLETIN BOARD") or such similar exchange or association, the
               closing sale price of one Ordinary Share on Nasdaq, the Bulletin
               Board or such other exchange or association on the last trading
               day prior to the Valuation Date or, if no such closing sale price
               is available, the average of the high bid and the low asked price
               quoted thereon on the last trading day prior to the Valuation
               Date; or (c) if the Ordinary Shares are not then listed on a
               national stock exchange or quoted on Nasdaq, the Bulletin Board
               or such other exchange or association, the fair market value of
               one Ordinary Share as of the Valuation Date, shall be determined
               in good faith by the Board of Directors of the Company and the
               holders of the Preferred Shares. If the Ordinary Shares are not
               then listed on a national securities exchange, the Bulletin Board
               or such other exchange or association, the Board of Directors of
               the Company shall respond promptly, in writing, to an inquiry by
               a holder of the Preferred Shares prior to the exercise hereunder
               as to the fair market value of an Ordinary Share as determined by
               the Board of Directors of the Company. In the event that the
               Board of Directors of the Company and the holders of the
               Preferred Shares are unable to agree upon the fair market value
               in respect of subpart (c) hereof, the Company and the holders of
               the Preferred Shares shall jointly select an appraiser, who is
               experienced in such matters. The decision of such appraiser shall
               be final and conclusive, and the cost of such appraiser shall be
               borne equally by the Company and the holders Preferred Shares.
               Such adjustment shall be made successively whenever such a
               payment date is fixed.

<PAGE>

                    (iv) An adjustment to the Conversion Price shall become
               effective immediately after the payment date in the case of each
               dividend or distribution and immediately after the effective date
               of each other event which requires an adjustment.

                    (v) In the event that, as a result of an adjustment made
               pursuant to this Article 4A, the holder of the Preferred Shares
               shall become entitled to receive any shares of capital stock of
               the Company other than Ordinary Shares, the number of such other
               shares so receivable upon conversion of the Preferred Shares
               shall be subject thereafter to adjustment from time to time in a
               manner and on terms as nearly equivalent as practicable to the
               provisions with respect to the Ordinary Shares contained herein.

                    (vi) Except as provided in subsection (vii) hereof, if and
               whenever the Company shall issue or sell, or is, in accordance
               with any of subsections (vi)(A) through (vi)(G) hereof, deemed to
               have issued or sold, any Ordinary Shares for no consideration or
               for a consideration per share less than the Conversion Price in
               effect immediately prior to the time of such issue or sale, then
               and in each such case (a "TRIGGER ISSUANCE") the then-existing
               Conversion Price, shall be reduced, as of the close of business
               on the effective date of the Trigger Issuance, to a price
               determined as follows:

                    ADJUSTED CONVERSION PRICE = (A X B) + D

                                                  A+C

                    where

                    "A" equals the number of Ordinary Shares outstanding,
               including Additional Ordinary Shares (as defined below) deemed to
               be issued hereunder, immediately preceding such Trigger Issuance;

<PAGE>

                    "B" equals the Conversion Price in effect immediately
               preceding such Trigger Issuance;

                    "C" equals the number of Additional Ordinary Shares issued
               or deemed issued hereunder as a result of the Trigger Issuance;
               and

                    "D" equals the aggregate consideration, if any, received or
               deemed to be received by the Company upon such Trigger Issuance;

PROVIDED, HOWEVER, that in no event shall the Conversion Price after giving
effect to such Trigger Issuance be greater than the Conversion Price in effect
prior to such Trigger Issuance.

          For purposes of this subsection (vi), "ADDITIONAL ORDINARY SHARES"
     shall mean all Ordinary Shares issued by the Company or deemed to be issued
     pursuant to this subsection (vi), other than Excluded Issuances (as defined
     in subsection (vii) hereof).

          For purposes of this subsection (vi), the following subsections
     (vi)(A) to (vi)(G) shall also be applicable:

                         (vi)(A) Issuance of Rights or Options. In case at any
                    time the Company shall in any manner grant (directly and not
                    by assumption in a merger or otherwise) any warrants or
                    other rights to subscribe for or to purchase, or any options
                    for the purchase of, Ordinary Shares or any stock or
                    security convertible into or exchangeable for Ordinary
                    Shares (such warrants, rights or options being called
                    "Options" and such convertible or exchangeable stock or
                    securities being called "CONVERTIBLE SECURITIES") whether or
                    not such Options or the right to convert or exchange any
                    such Convertible Securities are immediately exercisable, and
                    the price per share for which Ordinary Shares are issuable
                    upon the exercise of such Options or upon the conversion or
                    exchange of such Convertible Securities (determined by
                    dividing (1) the sum (which sum shall constitute the
                    applicable consideration) of (x) the total amount, if any,
                    received or receivable by the Company as consideration for
                    the granting of such Options, plus (y) the aggregate amount
                    of additional consideration payable to the Company upon the
                    exercise of all such Options, plus (z), in the case of such
                    Options which relate to Convertible Securities, the
                    aggregate amount of additional consideration, if any,
                    payable upon the issue or sale of such Convertible
                    Securities and upon the conversion or exchange thereof, by
                    (2) the total maximum number of Ordinary Shares issuable
                    upon the exercise of such Options or upon the conversion or
                    exchange of all such Convertible Securities issuable upon
                    the exercise of such Options) shall be less than the
                    Conversion Price in effect immediately prior to the time of
                    the granting of such Options, then the total number of
                    Ordinary Shares issuable upon the exercise of such Options
                    or upon conversion or exchange of the total amount of such
                    Convertible Securities issuable upon the exercise of such
                    Options shall be deemed to have been issued for such price
                    per share as of the date of granting of such Options or the
                    issuance of such Convertible Securities and thereafter shall
                    be deemed to be outstanding for purposes of adjusting the
                    Conversion Price. Except as otherwise provided in subsection
                    (vi)(C), no adjustment of the Conversion Price shall be made
                    upon the actual issue of such Ordinary Shares or of such
                    Convertible Securities upon exercise of such Options or upon
                    the actual issue of such Ordinary Shares upon conversion or
                    exchange of such Convertible Securities.

<PAGE>

                         (vi)(B) Issuance of Convertible Securities. In case the
                    Company shall in any manner issue (directly and not by
                    assumption in a merger or otherwise) or sell any Convertible
                    Securities, whether or not the rights to exchange or convert
                    any such Convertible Securities are immediately exercisable,
                    and the price per share for which Ordinary Shares are
                    issuable upon such conversion or exchange (determined by
                    dividing (1) the sum (which sum shall constitute the
                    applicable consideration) of (x) the total amount received
                    or receivable by the Company as consideration for the issue
                    or sale of such Convertible Securities, plus (y) the
                    aggregate amount of additional consideration, if any,
                    payable to the Company upon the conversion or exchange
                    thereof, by (2) the total number of Ordinary Shares issuable
                    upon the conversion or exchange of all such Convertible
                    Securities) shall be less than the Conversion Price in
                    effect immediately prior to the time of such issue or sale,
                    then the total maximum number of Ordinary Shares issuable
                    upon conversion or exchange of all such Convertible
                    Securities shall be deemed to have been issued for such
                    price per share as of the date of the issue or sale of such
                    Convertible Securities and thereafter shall be deemed to be
                    outstanding for purposes of adjusting the Conversion Price,
                    PROVIDED that (a) except as otherwise provided in subsection
                    (d)(vi)(C), no adjustment of the Conversion Price shall be
                    made upon the actual issuance of such Ordinary Shares upon
                    conversion or exchange of such Convertible Securities and
                    (b) no further adjustment of the Conversion Price shall be
                    made by reason of the issue or sale of Convertible
                    Securities upon exercise of any Options to purchase any such
                    Convertible Securities for which adjustments of the
                    Conversion Price have been made pursuant to the other
                    provisions of subsection (d)(vi).

<PAGE>

                         (vi)(C) Change in Option Price or Conversion Rate. Upon
                    the happening of any of the following events, namely, if the
                    purchase price provided for in any Option referred to in
                    subsection (d)(vi)(A) hereof, the additional consideration,
                    if any, payable upon the conversion or exchange of any
                    Convertible Securities referred to in subsections (d)(vi)(A)
                    or (d)(vi)(B), or the rate at which Convertible Securities
                    referred to in subsections (d)(vi)(A) or (d)(vi)(B) are
                    convertible into or exchangeable for Ordinary Shares shall
                    change at any time (including, but not limited to, changes
                    under or by reason of provisions designed to protect against
                    dilution), the Conversion Price in effect at the time of
                    such event shall forthwith be readjusted to the Conversion
                    Price which would have been in effect at such time had such
                    Options or Convertible Securities still outstanding provided
                    for such changed purchase price, additional consideration or
                    conversion rate, as the case may be, at the time initially
                    granted, issued or sold. On the termination of any Option
                    for which any adjustment was made pursuant to this
                    subsection 8(f) or any right to convert or exchange
                    Convertible Securities for which any adjustment was made
                    pursuant to this subsection 4A(d)(vi) (including without
                    limitation upon the redemption or purchase for consideration
                    of such Convertible Securities by the Company), the
                    Conversion Price then in effect hereunder shall forthwith be
                    changed to the Conversion Price which would have been in
                    effect at the time of such termination had such Option or
                    Convertible Securities, to the extent outstanding
                    immediately prior to such termination, never been issued.

                         (vi)(D) Stock Dividends. Subject to the provisions of
                    this Section 4A((d)(vi), in case the Company shall declare a
                    dividend or make any other distribution upon any stock of
                    the Company (other than the Ordinary Shares) payable in
                    Ordinary Shares, Options or Convertible Securities, then any
                    Ordinary Shares, Options or Convertible Securities, as the
                    case may be, issuable in payment of such dividend or
                    distribution shall be deemed to have been issued or sold
                    without consideration.

                         (vi)(E) Consideration for Stock. In case any Ordinary
                    Shares, Options or Convertible Securities shall be issued or
                    sold for cash, the consideration received therefor shall be
                    deemed to be the net amount received by the Company
                    therefor, after deduction therefrom of any expenses incurred
                    or any underwriting commissions or concessions paid or
                    allowed by the Company in connection therewith. In case any
                    Ordinary Shares, Options or Convertible Securities shall be
                    issued or sold for a consideration other than cash, the
                    amount of the consideration other than cash received by the
                    Company shall be deemed to be the fair value of such
                    consideration as determined in good faith by the Board of
                    Directors of the Company, after deduction of any expenses
                    incurred or any underwriting commissions or concessions paid
                    or allowed by the Company in connection therewith. In case
                    any Options shall be issued in connection with the issue and
                    sale of other securities of the Company, together comprising
                    one integral transaction in which no specific consideration
                    is allocated to such Options by the parties thereto, such
                    Options shall be deemed to have been issued for such
                    consideration as determined in good faith by the Board of
                    Directors of the Company. If Ordinary Shares, Options or
                    Convertible Securities shall be issued or sold by the
                    Company and, in connection therewith, other Options or
                    Convertible Securities (the "ADDITIONAL RIGHTS") are issued,
                    then the consideration received or deemed to be received by
                    the Company shall be reduced by the fair market value of the
                    Additional Rights (as determined using the Black-Scholes
                    option pricing model or another method mutually agreed to by
                    the Company and the holders of the Preferred Shares). The
                    Board of Directors of the Company shall respond promptly, in
                    writing, to an inquiry by any holder of the Preferred Shares
                    as to the fair market value of the Additional Rights. In the
                    event that the Board of Directors of the Company and the
                    holder of the Preferred Shares are unable to agree upon the
                    fair market value of the Additional Rights, the Company and
                    the holders of the Preferred Shares shall jointly select an
                    appraiser, who is experienced in such matters. The decision
                    of such appraiser shall be final and conclusive, and the
                    cost of such appraiser shall be borne evenly by the Company
                    and the holders of the Preferred Shares.

<PAGE>

                         (vi)(F) Record Date. In case the Company shall take a
                    record of the holders of its Ordinary Shares for the purpose
                    of entitling them (i) to receive a dividend or other
                    distribution payable in Ordinary Shares, Options or
                    Convertible Securities or (ii) to subscribe for or purchase
                    Ordinary Shares, Options or Convertible Securities, then
                    such record date shall be deemed to be the date of the issue
                    or sale of the Ordinary Shares deemed to have been issued or
                    sold upon the declaration of such dividend or the making of
                    such other distribution or the date of the granting of such
                    right of subscription or purchase, as the case may be.

                         (vi)(G) Treasury Shares. The number of Ordinary Shares
                    outstanding at any given time shall not include shares owned
                    or held by or for the account of the Company or any of its
                    wholly-owned subsidiaries, and the disposition of any such
                    shares (other than the cancellation or retirement thereof)
                    shall be considered an issue or sale of Ordinary Shares for
                    the purpose of this subsection 4A(d)(vi).

                    (vii) Anything herein to the contrary notwithstanding, the
               Company shall not be required to make any adjustment of the
               Conversion Price in the case of the issuance of (A) Ordinary
               Shares, Options or Convertible Securities issued to employees of
               the Company in connection with their employment by the Company
               pursuant to an equity compensation program approved by the Board
               of Directors of the Company or the compensation committee of the
               Board of Directors of the Company, (B) Ordinary Shares issued
               upon the conversion or exercise of Options or Convertible
               Securities issued prior to the date hereof, (C) securities issued
               pursuant to that certain Purchase Agreement dated November 29,
               2004, among the Company and the Investors named therein (the
               "PURCHASE AGREEMENT"), including securities issued to the
               placement agent in connection with the transactions contemplated
               by the Purchase Agreement, and securities issued upon the
               exercise or conversion of those securities, (D) Ordinary Shares
               issued or issuable by reason of a dividend, stock split or other
               distribution on Ordinary Shares (but only to the extent that such
               a dividend, split or distribution results in an adjustment in the
               Conversion Price pursuant to the other provisions hereof), and
               (E) Ordinary Shares or Convertible Securities issued in a
               strategic transaction approved by the Board of Directors of the
               Company the primary purpose of which is not the raising of
               capital (collectively, "EXCLUDED ISSUANCES").

<PAGE>

                    (viii) Upon any adjustment to the Conversion Price pursuant
               to Section 4A(d)(vi) above, the number of Ordinary Shares into
               which the Preferred Shares are convertible shall be adjusted by
               multiplying such number by a fraction, the numerator of which
               shall be the Conversion Price in effect immediately prior to such
               adjustment and the denominator of which shall be the Conversion
               Price in effect immediately thereafter.

                    (ix) If the Company subdivides or combines its Ordinary
               Shares, the Conversion Price shall be proportionately reduced, in
               case of subdivision of shares, as at the effective date of such
               subdivision, or if the Company fixes a record date for the
               purpose of so subdividing, as at such record date, whichever is
               earlier, or shall be proportionately increased, in the case of
               combination of shares, as the effective date of such combination,
               or, if the Company fixes a record date for the purpose of so
               combining, as at such record date, whichever is earlier.

               (e) The Company will not, by amendment of these Articles or
          through any reorganization, recapitalization, transfer of assets,
          consolidation, merger, dissolution, issue or sale of securities or any
          other voluntary action, avoid or seek to avoid the observance or
          performance of any of the terms to be observed or performed hereunder
          in this Article 4A by the Company, but will at all times in good faith
          assist in the carrying out of all the provisions of this Article 4A
          and in taking of all such action as may be necessary or appropriate in
          order to protect the conversion rights of the holders of the Preferred
          Shares against impairment.

               (f) No fractional shares shall be issued upon conversion of the
          Preferred Shares, and the number of shares of Ordinary Shares to be
          issued shall be rounded to the nearest whole share. No adjustment to
          the Conversion Price shall be made in an amount less than one cent
          ($0.01) per share. No adjustment to the Conversion Price shall be made
          if it has the effect of increasing the Conversion Price beyond the
          applicable Conversion Price immediately prior to such adjustment. In
          the event that any conversion of a Preferred Share results in the
          issuance of more than one Ordinary Share, then a portion of the share
          premium paid upon the original issuance of such Preferred Share shall
          be deemed to have been paid as capital on the additional Ordinary
          Shares so issued.

               (g) Upon the occurrence of each adjustment or readjustment of the
          Conversion Price pursuant to this Article 4A, the Company, at its
          expense, shall promptly compute such adjustment or readjustment in
          accordance with the terms hereof and prepare and furnish to each
          holder of Preferred Shares a certificate setting forth each adjustment
          or readjustment and showing in detail the facts upon which such
          adjustment or readjustment is based. The Company shall furnish or
          cause to be furnished to such holder a like certificate setting forth
          (A) such adjustment or readjustment, (B) the Conversion Price at the
          time in effect, and (C) the number of shares of Ordinary Shares and
          the amount, if any, of other property which at the time would be
          received upon the conversion of a Preferred Share.

<PAGE>

               (h) In the event of any taking by the Company of a record of the
          holders of any class of securities for the purpose of determining the
          holders thereof who are entitled to receive any dividend (including a
          cash dividend) or other distribution, any right to subscribe for,
          purchase or otherwise acquire any shares of any class or any other
          securities or property, or to receive any other right, the Company
          shall mail to each holder of Preferred Shares, at least twenty (20)
          days prior to the date specified therein, a notice specifying the date
          on which any such record is to be taken for the purpose of such
          dividend, distribution or right, and the amount and character of such
          dividend, distribution or right.

               (i) The Company shall at all times reserve and keep available out
          of its authorized but unissued Ordinary Shares, solely for the purpose
          of effecting the conversion of the Preferred Shares, such number of
          its Ordinary Shares as shall from time to time be sufficient to effect
          the conversion of all issued and outstanding Preferred Shares; and if
          at any time the number of authorized but unissued Ordinary Shares
          shall not be sufficient to effect the conversion of all then
          outstanding Preferred Shares, in addition to such other remedies as
          shall be available to the holders of such Preferred Shares, the
          Company will take such corporate action as may, in the opinion of its
          counsel, be necessary to increase its authorized but unissued Ordinary
          Share capital to such number of shares as shall be sufficient for such
          purposes.

               (j) The Company shall not declare, pay or set aside any dividends
          (other than dividends payable in Ordinary Shares to all holders of
          stock of the Company where the amount of such dividend is based on
          their ownership of Ordinary Shares and Ordinary Share Equivalents) on
          the Ordinary Shares unless the holders of the Preferred Shares then
          outstanding shall first receive, or simultaneously receive, a dividend
          on each outstanding Preferred Share to the product of (i) the per
          share dividend to be declared, paid or set aside for the Ordinary
          Shares, as the case may be, multiplied by (ii) the number of Ordinary
          Shares into which each Preferred Share is then convertible.

               (k) In the event of any voluntary or involuntary liquidation,
          dissolution or winding up of the Company, the holders of shares of
          Preferred Shares then outstanding shall be entitled to be paid out of
          the assets of the Company available for distribution to its
          shareholders, before any payment shall be made to the holders of
          Ordinary Shares or any other class or series of stock ranking on
          liquidation junior to the Preferred Shares by reason of their
          ownership thereof, an amount equal to the greater of: (i) $2.20 per
          share (subject to appropriate adjustment in the event of any stock
          dividend, stock split, combination or other similar recapitalization
          affecting such shares), plus any dividends declared but unpaid
          thereon, or (ii) such amount per share as would have been payable had
          each such share been converted into Ordinary Shares pursuant to this
          Section 4A immediately prior to such liquidation, dissolution or
          winding up (the greater of (i) or (ii) is hereafter referred to as the
          "PREFERRED LIQUIDATION AMOUNT").

               (l) After the payment of the Preferred Liquidation Amount in full
          to the holders of Preferred Shares pursuant to the foregoing
          subsection (k), any remaining assets and funds of the Company
          available for distribution to its shareholders upon the dissolution,
          liquidation or winding up of the Company shall be distributed pro rata
          to the holders of Ordinary Shares."

<PAGE>

5.   INCREASE OF SHARE CAPITAL

          (a) Subject to the terms of these Articles, the Company may, from time
     to time, by a Shareholders Resolution, whether or not all shares then
     authorized have been issued, and whether or not all the shares theretofore
     issued have been called up for payment, increase its share capital by the
     creation of new shares. Any such increase shall be in such amount and shall
     be divided into shares of such nominal amounts, and such shares shall
     confer such rights and preferences, and shall be subject to such
     restrictions, as such resolution shall provide.

          (b) Except to the extent otherwise provided in such resolution, such
     new shares shall be subject to all the provisions applicable to the shares
     of the original capital.

6.   SPECIAL RIGHTS; MODIFICATIONS OF RIGHTS

          (a) Without prejudice to any special rights previously conferred upon
     the holders of existing shares in the Company, the Company may, from time
     to time, by Shareholders Resolution, provide for shares with such preferred
     or deferred rights or rights of redemption or other special rights and/or
     such restrictions, whether in regard to dividends, voting, repayment of
     share capital or otherwise, as may be stipulated in such Shareholders
     Resolution.

          (b) (i) If at any time the share capital is divided into different
     classes of shares, the rights attached to any class, unless otherwise
     provided by these Articles, may be modified or abrogated by the Company, by
     Shareholders Resolution passed by the holders of a majority of the issued
     shares of such class present and voting at a separate General Meeting of
     the holders of the shares of such class.

               (ii) The provisions of these Articles relating to General
          Meetings shall, mutatis mutandis, apply to any separate General
          Meeting of the holders of the shares of a particular class.

               (iii) Unless otherwise provided by these Articles, the
          enlargement of an existing class of shares, or the issuance of
          additional shares thereof, shall not be deemed, for purposes of this
          Article 6(b), to modify or abrogate the rights attached to the
          previously issued shares of such class or of any other class.

<PAGE>

7.   CONSOLIDATION, SUBDIVISION, CANCELLATION AND REDUCTION OF SHARE CAPITAL

          (a) The Company may, from time to time, by Shareholders Resolution
     (subject, however, to the provisions of Article 6(b) hereof and to
     applicable law):

               (i) consolidate and divide all or any of its issued or unissued
          share capital into shares of larger nominal value than its existing
          shares,

               (ii) subdivide its shares (issued or unissued) or any of them,
          into shares of smaller nominal value than is fixed by these Articles
          of Association (subject, however, to the provisions of the Companies
          Law), and the Shareholders Resolution whereby any share is subdivided
          may determine that, as among the holders of the shares resulting from
          such subdivision, one or more of the shares may, as compared with the
          others, have any such preferred or deferred rights or rights of
          redemption or other special rights, or be subject to any such
          restrictions, as the Company has power to attach to unissued or new
          shares.

               (iii) cancel any shares which, at the date of the adoption of
          such resolution, have not been taken or agreed to be taken by any
          person, and diminish the amount of its share capital by the amount of
          the shares so cancelled, or

               (iv) reduce its share capital in any manner, and with and subject
          to any incident authorized, and consent required, by law.

          (b) With respect to any consolidation of issued shares into shares of
     larger nominal value, and with respect to any other action which may result
     in fractional shares, the Board of Directors may settle any difficulty
     which may arise with regard thereto, as it deems fit, including, INTER
     ALIA, resort to one or more of the following actions:

               (i) determine, as to the holder of shares so consolidated, which
          issued shares shall be consolidated into each share of larger nominal
          value;

               (ii) allot, in contemplation of or subsequent to such
          consolidation or other action, such shares or fractional shares
          sufficient to preclude or remove fractional share holdings;

<PAGE>

               (iii) redeem, in the case of redeemable preference shares, and
          subject to applicable law, such shares or fractional shares sufficient
          to preclude or remove fractional share holdings;

               (iv) cause the transfer of fractional shares by certain
          shareholders of the Company to other shareholders thereof so as to
          most expediently preclude or remove any fractional shareholdings, and
          cause the transferees to pay the transferors the fair value of
          fractional shares so transferred, and the Board of Directors is hereby
          authorized to act as agent for the transferors and transferees with
          power of substitution for purposes of implementing the provisions of
          this sub-Article 7(b)(iv).

                                     SHARES

8.   ISSUANCE OF SHARE CERTIFICATES; REPLACEMENT OF LOST CERTIFICATES

          (a) Share certificates shall be issued under the seal or stamp of the
     Company and shall bear the signatures of two Directors (or if there be only
     one Director, the signature of such Director), or of any other person or
     persons authorized thereto by the Board of Directors.

          (b) Each member shall be entitled to one numbered certificate for all
     the shares of any class registered in his name, and if reasonably requested
     by such member, to several certificates, each for one or more of such
     shares.

          (c) A share certificate registered in the names of two or more persons
     shall be delivered to the person first named in the Registrar of Members in
     respect of such co-ownership.

          (d) If a share certificate is defaced, lost or destroyed, it may be
     replaced, upon payment of such fee, and upon the furnishing of such
     evidence of ownership and such indemnity, as the Board of Directors may
     think fit.

          (e) The Company may issue bearer shares.

<PAGE>

9.   REGISTERED HOLDER

     Except as otherwise provided in these Articles, the Company shall be
entitled to treat the registered holder of any share as the absolute owner
thereof, and, accordingly, shall not, except as ordered by a court of competent
jurisdiction, or as required by statute, be bound to recognize any equitable or
other claim to, or interest in such share on the part of any other person.

10.  ALLOTMENT OF SHARES

     The unissued shares from time to time shall be under the control of the
Board of Directors, who shall have the power to allot shares or otherwise
dispose of them to such persons, on such terms and conditions (including inter
alia terms relating to calls as set forth in Article 12(f) hereof), and either
at par or at a premium, or, subject to the provisions of the Companies Law, at a
discount, and at such times, as the Board of Directors may think fit, and the
power to give to any person the option to acquire from the Company any shares,
either at par or at a premium, or, subject as aforesaid, at a discount, during
such time and for such consideration as the Board of Directors may think fit.

11.  PAYMENT IN INSTALLMENTS

     If by the terms of allotment of any share, the whole or any part of the
price thereof shall be payable in installments, every such installment shall,
when due, be paid to the Company by the then registered holder(s) of the share
of the person(s) entitled thereto.

12.  CALLS ON SHARES

          (a) The Board of Directors may, from time to time, make such calls as
     it may think fit upon members in respect of any sum unpaid in respect of
     shares held by such members which is not, by the terms of allotment thereof
     or otherwise, payable at a fixed time, and each member shall pay the amount
     of every call so made upon him (and of each installment thereof if the same
     is payable in installments), to the person(s) and at the time(s) and
     place(s) designated by the Board of Directors, as any such time(s) may be
     thereafter extended and/or such person(s) or place(s) changed. Unless
     otherwise stipulated in the resolution of the Board of Directors (and in
     the notice hereafter referred to), each payment in response to a call shall
     be deemed to constitute a pro rata payment on account of all shares in
     respect of which such call was made.

<PAGE>

          (b) Notice of any call shall be given in writing to the member(s) in
     question not less than fourteen (14) days prior to the time of payment,
     specifying the time and place of payment, and designating the person to
     whom such payment shall be made, provided, however, that before the time
     for any such payment, the Board of Directors may, by notice in writing to
     such member(s), revoke such call in whole or in part, extend such time, or
     alter such person and/or place. In the event of a call payable in
     installments, only one notice thereof need be given.

          (c) If, by the terms of allotment of any share or otherwise, any
     amount is made payable at any fixed time, every such amount shall be
     payable at such time as if it were a call duly made by the Board of
     Directors and of which due notice had been given, and all the provisions
     herein contained with respect to such calls shall apply to each such
     amount.

          (d) The joint holders of a share shall be jointly and severally liable
     to pay all calls in respect thereof and all interest payable thereon.

          (e) Any amount unpaid in respect of a call shall bear interest from
     the date on which it is payable until actual payment thereof, at such rate
     (not exceeding the then prevailing debitory rate charged by leading
     commercial banks in Israel), and at such time(s) as the Board of Directors
     may prescribe.

          (f) Upon the allotment of shares, the Board of Directors may provide
     for differences among the allottees of such shares as to the amount of
     calls and/or the times of payment thereof.

13.  PREPAYMENT

     With the approval of the Board of Directors, any member may pay to the
Company any amount not yet payable in respect of his shares, and the Board of
Directors may approve the payment of interest on any such amount until the same
would be payable if it had not been paid in advance, at such rate and time(s) as
may be approved by the Board of Directors. The Board of Directors may at any
time cause the Company to repay all or any part of the money so advanced,
without premium or penalty. Nothing in this Article 13 shall derogate from the
right of the Board of Directors to make any call before or after receipt by the
Company of any such advance.

<PAGE>

14.  FORFEITURE AND SURRENDER

          (a) If any member fails to pay any amount payable in respect of a
     call, or interest thereon as provided for herein, on or before the day
     fixed for payment of the same, the Company, by resolution of the Board of
     Directors, may at any time thereafter, so long as the said amount or
     interest remains unpaid, forfeit all or any of the shares in respect of
     which said call had been made. Any expense incurred by the Company in
     attempting to collect any such amount or interest, including, inter alia,
     attorneys' fees and costs of suit, shall be added to, and shall, for all
     purposes (including the accrual of interest thereon), constitute a part of
     the amount payable to the Company in respect of such call.

          (b) Upon the adoption of a resolution of forfeiture, the Board of
     Directors shall cause notice thereof to be given to such member, which
     notice shall state that, in the event of the failure to pay the entire
     amount so payable within a period stipulated in the notice (which period
     shall not be less than fourteen (14) days and which may be extended by the
     Board of Directors), such shares shall be ipso facto forfeited, provided,
     however, that, prior to the expiration of such period, the Board of
     Directors may nullify such resolution of forfeiture, but no such
     nullification shall estop the Board of Directors from adopting a further
     resolution of forfeiture in respect of the non-payment of the same amount.

          (c) Whenever shares are forfeited as herein provided, all dividends
     theretofore declared in respect thereof and not actually paid shall be
     deemed to have been forfeited at the same time.

          (d) The Company, by resolution of the Board of Directors, may accept
     the voluntary surrender of any share.

          (e) Any share forfeited or surrendered as provided herein shall become
     the property of the Company, and the same, subject to the provisions of
     these Articles, may be sold, re-allotted or otherwise disposed of as the
     Board of Directors thinks fit.

          (f) Any member whose shares have been forfeited or surrendered shall
     cease to be a member in respect of the forfeited or surrendered shares, but
     shall, notwithstanding, be liable to pay, and shall forthwith pay, to the
     Company, all calls, interest and expenses owing upon or in respect of such
     shares at the time of forfeiture or surrender, together with interest
     thereon from the time of forfeiture or surrender until actual payment, at
     the rate prescribed in Article 12(e) above, and the Board of Directors, in
     its discretion, may enforce the payment of such moneys, or any part
     thereof, but shall not be under any obligation to do so. In the event of
     such forfeiture or surrender, the Company, by resolution of the Board of
     Directors, may accelerate the date(s) of payment of any or all amounts then
     owing by the member in question (but not yet due) in respect of all shares
     owned by such member, solely or jointly with another, and in respect of any
     other matter or transaction whatsoever.

<PAGE>

          (g) The Board of Directors may at any time, before any share so
     forfeited or surrendered shall have been sold, re-allotted or otherwise
     disposed of, nullify the forfeiture or surrender on such conditions as it
     thinks fit, but no such nullification shall estop the Board of Directors
     from re-exercising its powers of forfeiture pursuant to this Article 14.

15.  LIEN

          (a) Except to the extent the same may be waived or subordinated in
     writing, the Company shall have a first and paramount lien upon all the
     shares registered in the name of each member (without regard to any
     equitable or other claim or interest in such shares on the part of any
     other person), and upon the proceeds of the sale thereof, for his debts,
     liabilities and engagements arising from any cause whatsoever, solely or
     jointly with another, to or with the Company, whether the period for the
     payment, fulfillment or discharge thereof shall have actually arrived or
     not. Such lien shall extend to all dividends from time to time declared in
     respect of such share. Unless otherwise provided, the registration by the
     Company of a transfer of shares shall be deemed to be a waiver on the part
     of the Company of the lien (if any) existing on such shares immediately
     prior to such transfer.

          (b) The Board of Directors may cause the Company to sell any shares
     subject to such lien when any such debt, liability or engagement has
     matured, in such manner as the Board of Directors may think fit, but no
     such sale shall be made unless such debt, liability or engagement has not
     been satisfied within fourteen (14) days after written notice of the
     intention to sell shall have been served on such member, his executors or
     administrators.

          (c) The net proceeds of any such sale, after payment of the costs
     thereof, shall be applied in or toward satisfaction of the debts,
     liabilities or engagements of such member (whether or not the same have
     matured), or any specific part of the same (as the Company may determine),
     and the residue (if any) shall be paid to the member, his executors,
     administrators or assigns.

<PAGE>

16.  SALE AFTER FORFEITURE OR SURRENDER OR IN ENFORCEMENT OF LIEN

     Upon any sale of shares after forfeiture or surrender or for enforcing a
lien, the Board of Directors may appoint some person to execute an instrument of
transfer of the shares so sold and cause the purchaser's name to be entered in
the Register of Members in respect of such shares, and the purchaser shall not
be bound to see to the regularity of the proceedings, or to the application of
the purchase money, and after his name has been entered in the Register of
Members in respect of such shares, the validity of the sale shall not be
impeached by any person, and the remedy of any person aggrieved by the sale
shall be in damages only and against the Company exclusively.

17.  REDEEMABLE SHARES

     The Company may, subject to applicable law, issue redeemable shares and
redeem the same.

18.  Reserved.

                               TRANSFER OF SHARES

19.  EFFECTIVENESS AND REGISTRATION

     No transfer of shares shall be registered unless a proper instrument of
transfer (in form and substance satisfactory to the Board of Directors) has been
submitted to the Company or its agent, together with any share certificate(s)
and such other evidence of title as the Board of Directors may reasonably
require. Until the transferee has been registered in the Register of Members in
respect of the shares so transferred, the Company may continue to regard the
transferor as the owner thereof. The Board of Directors, may, from time to time,
prescribe a fee for the registration of a transfer.

<PAGE>

20.  RECORD DATE FOR GENERAL MEETINGS

     Notwithstanding any provision to the contrary in these Articles, for the
determination of the members entitled to receive notice of and to participate in
and vote at a General Meeting, or to express consent to or dissent from any
corporate action in writing, or to receive payment of any dividend or other
distribution or allotment of any rights or to exercise any rights in respect of
shares of the Company, the Board of Directors may fix, in advance, a record
date, which, subject to applicable law, shall not be earlier than ninety (90)
days prior to the General Meeting or other action, as the case may be. No
persons other than holders of record of shares as of such record date shall be
entitled to notice of and to participate in and vote at such General Meeting, or
to exercise such other right, as the case may be. A determination of members of
record with respect to a General Meeting shall apply to any adjournment of such
meeting, provided that the Board of Directors may fix a new record date for an
adjourned meeting.

                             TRANSMISSION OF SHARES

21.  DECEDENTS' SHARES

          (a) In case of a share registered in the names of two or more holders,
     the Company may recognize the survivor(s) as the sole owner(s) thereof
     unless and until the provisions of Article 21(b) have been effectively
     invoked.

          (b) Any person becoming entitled to a share in consequence of the
     death of any person, upon producing evidence of the grant of probate or
     letters of administration or declaration of succession (or such other
     evidence as the Board of Directors may reasonably deem sufficient that he
     sustains the character in respect of which he proposes to act under this
     Article or of his title), shall be registered as a member in respect of
     such share, or may, subject to the regulations as to transfer herein
     contained, transfer such share.

22.  RECEIVERS AND LIQUIDATORS

          (a) The Company may recognize the receiver or liquidator of any
     corporate member in winding-up or dissolution, or the receiver or trustee
     in bankruptcy of any member, as being entitled to the shares registered in
     the name of such member.

          (b) The receiver or liquidator of a corporate member in winding-up or
     dissolution, or the receiver or trustee in bankruptcy of any member, upon
     producing such evidence as the Board of Directors may deem sufficient that
     he sustains the character in respect of which he proposes to act under this
     Article or of his title, shall with the consent of the Board of Directors
     (which the Board of Directors may grant or refuse in its absolute
     discretion), be registered as a member in respect of such shares, or may,
     subject to the regulations as to transfer herein contained, transfer such
     shares.

<PAGE>

                                GENERAL MEETINGS

23.  ANNUAL GENERAL MEETING

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

24.  EXTRAORDINARY GENERAL MEETINGS

     All General Meetings other than Annual General Meetings shall be called
"Extraordinary General Meetings." The Board of Directors may, whenever it thinks
fit, convene an Extraordinary General Meeting at such time and place, within or
without the State of Israel, as may be determined by the Board of Directors, and
shall be obliged to do so upon a requisition in writing in accordance with
Section 63(b)(1) or (2) and 63(c) of the Companies Law.

25.  NOTICE OF GENERAL MEETINGS

     The Company is not required to give notice under Section 69(b) of the
Companies Law.

                         PROCEEDINGS AT GENERAL MEETINGS

26.  QUORUM

          (a) Two or more members (not in default in payment of any sum referred
     to in Article 32(a) hereof), present in person or by proxy and holding
     shares conferring in the aggregate a majority of the voting power of the
     Company (subject to rules and regulations, if any, applicable to the
     Company), shall constitute a quorum at General Meetings. No business shall
     be transacted at a General Meeting, or at any adjournment thereof, unless
     the requisite quorum is present when the meeting proceeds to business.

<PAGE>

          (b) If within an hour from the time appointed for the meeting a quorum
     is not present, the meeting, if convened upon requisition under Sections
     63(b)(1) or (2), 64 or 65 of the Companies Law, shall be dissolved, but in
     any other case it shall stand adjourned to the same day in the next week,
     at the same time and place, or to such day and at such time and place as
     the Chairman may determine with the consent of the holders of a majority of
     the voting power represented at the meeting in person or by proxy and
     voting on the question of adjournment. No business shall be transacted at
     any adjourned meeting except business which might lawfully have been
     transacted at the meeting as originally called. If at such reconvened
     meeting a quorum is not present within half an hour from the time appointed
     for holding the meeting, any two (2) members (not in default as aforesaid)
     present in person or by proxy, shall constitute a quorum (subject to rules
     and regulations, if any, applicable to the Company).

          (c) The Board of Directors may determine, in its discretion, the
     matters that may be voted upon at the meeting by proxy in addition to the
     matters listed in Section 87(a) of the Companies Law.

27.  CHAIRMAN

     The Chairman, if any, of the Board of Directors shall preside as Chairman
at every General Meeting of the Company. If there is no such Chairman, or if at
any meeting he is not present within fifteen (15) minutes after the time fixed
for holding the meeting or is unwilling to act as Chairman, the members present
shall choose someone of their number to be Chairman. The office of Chairman
shall not, by itself, entitle the holder thereof to vote at any General Meeting
nor shall it entitle such holder to a second or casting vote (without
derogating, however, from the rights of such Chairman to vote as a shareholder
or proxy of a shareholder if, in fact, he is also a shareholder or such proxy).

28.  ADOPTION OF RESOLUTIONS AT GENERAL MEETINGS

          (a) A Shareholders Resolution shall be deemed adopted if approved by
     the holders of a majority of the voting power represented at the meeting in
     person or by proxy and voting thereon.

          (b) A Shareholders Resolution approving a merger (as defined in the
     Companies Law) of the Company shall be deemed adopted if approved by the
     holders of a majority of the voting power represented at the meeting in
     person or by proxy and voting thereon.

<PAGE>

          (c) Every question submitted to a General Meeting shall be decided by
     a show of hands, but if a written ballot is demanded by any member present
     in person or by proxy and entitled to vote at the meeting, the same shall
     be decided by such ballot. A written ballot may be demanded before the
     proposed resolution is voted upon or immediately after the declaration by
     the Chairman of the results of the vote by a show of hands. If a vote by
     written ballot is taken after such declaration, the results of the vote by
     a show of hands shall be of no effect, and the proposed resolution shall be
     decided by such written ballot. The demand for a written ballot may be
     withdrawn at any time before the same is conducted, in which event another
     member may then demand such written ballot. The demand for a written ballot
     shall not prevent the continuance of the meeting for the transaction of
     business other than the question on which the written ballot has been
     demanded.

          (d) A declaration by the Chairman of the meeting that a resolution has
     been carried unanimously, or carried by a particular majority, or lost, and
     an entry to that effect in the minute book of the Company, shall be
     conclusive evidence of the fact without proof of the number or proportion
     of the votes recorded in favor of or against such resolution.

29.  RESOLUTIONS IN WRITING

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

30.  POWER TO ADJOURN

          (a) The Chairman of a General Meeting at which a quorum is present
     may, with the consent of the holders of a majority of the voting power
     represented in person or by proxy and voting on the question of adjournment
     (and shall if so directed by the meeting), adjourn the meeting from time to
     time and from place to place, but no business shall be transacted at any
     adjourned meeting except business which might lawfully have been transacted
     at the meeting as originally called.

          (b) It shall not be necessary to give any notice of an adjournment,
     whether pursuant to Article 26(b) or Article 30(a), unless the meeting is
     adjourned for thirty (30) days or more in which event notice thereof shall
     be given in the manner required for the meeting as originally called.

<PAGE>

31.  VOTING POWER

     Subject to the provisions of Article 32(a) and subject to any provision
hereof conferring special rights as to voting, or restricting the right to vote,
every member shall have one vote for each share held by him of record, on every
resolution, without regard to whether the vote hereon is conducted by a show of
hands, by written ballot or by any other means.

32.  VOTING RIGHTS

          (a) No member shall be entitled to vote at any General Meeting (or be
     counted as a part of the quorum thereat), unless all calls and other sums
     then payable by him in respect of his shares in the Company have been paid,
     but this Article shall not apply to separate General Meetings of the
     holders of a particular class of shares pursuant to Article 6(b).

          (b) A company or other corporate body being a member of the Company
     may, by resolution of its directors or any other managing body thereof,
     authorize any person to be its representative at any meeting of the
     Company. Any person so authorized shall be entitled to exercise on behalf
     of such member all the power which the latter could have exercised if it
     were an individual shareholder. Upon the request of the Chairman of the
     meeting, written evidence of such authorization (in form acceptable to the
     Chairman) shall be delivered to him.

          (c) Any member entitled to vote may vote either personally or by proxy
     (who need not be a member of the Company), or, if the member is a company
     or other corporate body, by a representative authorized pursuant to Article
     32(b).

          (d) If two or more persons are registered as joint holders of any
     share, the vote of the senior who tenders a vote, in person or by proxy,
     shall be accepted to the exclusion of the vote(s) of the other joint
     holder(s); and for this purpose seniority shall be determined by the order
     in which the names stand in the Register of Members.

<PAGE>

                                     PROXIES

33.  INSTRUMENT OF APPOINTMENT

          (a) The instrument appointing a proxy shall be in writing and shall be
     substantially in the following form:

"I _____________________ of __________________________________
   (Name of Shareholder)         (Address of Shareholder)

being a member of ___________________________ hereby appoint
                     (Name of the Company)

________________________of _____________________________
   (Name of Proxy)              (Address of Proxy)

as my proxy to vote for me and on my behalf at the General Meeting of the
Company to be held on the _____ day of ___________, ____ and at any
adjournment(s) thereof.

          Signed this ______ day of ____________, ____.

                                                       _________________________
                                                       (Signature of Appointer)"

or in any usual or common form or in such other form as may be approved by the
Board of Directors. It shall be duly signed by the appointer or his duly
authorized attorney or, if such appointer is a company or other corporate body,
under its common seal or stamp or the hand of its duly authorized agent(s) or
attorney(s).

          (b) The instrument appointing a proxy (and the power of attorney or
     other authority, if any, under which such instrument has been signed) shall
     be delivered to the Company (at its Registered Office, or at its principal
     place of business or at the offices of its registrar and/or transfer agent
     or at such place as the Board of Directors may specify) not less than
     seventy-two (72) hours (or such shorter period as determined by the Board
     of Directors) before the time fixed for the meeting at which the person
     named in the instrument proposes to vote.

<PAGE>

34.  EFFECT OF DEATH OF APPOINTOR OR REVOCATION OF APPOINTMENT

     A vote cast pursuant to an instrument appointing a proxy shall be valid
notwithstanding the previous death of the appointing member (or of his
attorney-in-fact, if any, who signed such instrument), or the revocation of the
appointment or the transfer of the share in respect of which the vote is cast,
provided no written intimation of such death, revocation or transfer shall have
been received by the Company or by the Chairman of the meeting before such vote
is cast and provided, further, that the appointing member, if present in person
at said meeting, may revoke the appointment by means of a writing, oral
notification to the Chairman, or otherwise.

                               BOARD OF DIRECTORS

35.  POWERS OF BOARD OF DIRECTORS

          (a) IN GENERAL

               The management of the business of the Company shall be vested in
          the Board of Directors, which may exercise all such powers and do all
          such acts and things as the Company is authorized to exercise and do,
          and are not hereby or by law required to be exercised or done by the
          Company in General Meeting. The authority conferred on the Board of
          Directors by this Article 35 shall be subject to the provisions of the
          Companies Law, of these Articles and any regulation or resolution
          consistent with these Articles adopted from time to time by the
          Company in General Meeting, provided, however, that no such regulation
          or resolution shall invalidate any prior act done by or pursuant to a
          decision of the Board of Directors which would have been valid if such
          regulation or resolution had not been adopted.

          (b) BORROWING POWER

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

<PAGE>

          (c) RESERVES

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

36.  EXERCISE OF POWERS OF DIRECTORS

          (a) A meeting of the Board of Directors at which a quorum is present
     shall be competent to exercise all the authorities, powers and discretions
     vested in or exercisable by the Board of Directors.

          (b) A resolution proposed at any meeting of the Board of Directors
     shall be deemed adopted if approved by a majority of the Directors present
     when such resolution is put to a vote and voting thereon.

          (c) A resolution may be adopted by the Board of Directors without
     convening a meeting if all Directors then in office and lawfully entitled
     to vote thereon (as conclusively determined by the Chairman of the Audit
     Committee , and in the absence of such determination - by the Chairman of
     the Board of Directors) have given their consent (in any manner whatsoever)
     not to convene a meeting. Such a resolution shall be adopted if approved by
     a majority of the Directors entitled to vote thereon (as determined as
     aforesaid). The Chairman of the Board of Directors shall sign any
     resolutions so adopted, including the decision to adopt such resolutions
     without a meeting.

<PAGE>

37.  DELEGATION OF POWERS

          (a) The Board of Directors may, subject to the provisions of the
     Companies Law, delegate any or all of its powers to committees, each
     consisting of two or more persons (all of whose members must be Directors),
     and it may from time to time revoke such delegation or alter the
     composition of any such committee. Any Committee so formed (in these
     Articles referred to as a "Committee of the Board of Directors"), shall, in
     the exercise of the powers so delegated, conform to any regulations imposed
     on it by the Board of Directors. The meetings and proceedings of any such
     Committee of the Board of Directors shall, mutatis mutandis, be governed by
     the provisions herein contained for regulating the meetings of the Board of
     Directors, so far as not superseded by any regulations adopted by the Board
     of Directors under this Article. Unless otherwise expressly provided by the
     Board of Directors in delegating powers to a Committee of the Board of
     Directors, such Committee shall not be empowered to further delegate such
     powers.

          (b) Without derogating from the provisions of Article 50, the Board of
     Directors may, subject to the provisions of the Companies Law, from time to
     time appoint a Secretary to the Company, as well as officers, agents,
     employees and independent contractors, as the Board of Directors may think
     fit, and may terminate the service of any such person. The Board of
     Directors may, subject to the provisions of the Companies Law, determine
     the powers and duties, as well as the salaries and emoluments, of all such
     persons, and may require security in such cases and in such amounts as it
     thinks fit.

          (c) The Board of Directors may from time to time, by power of attorney
     or otherwise, appoint any person, company, firm or body of persons to be
     the attorney or attorneys of the Company at law or in fact for such
     purpose(s) and with such powers, authorities and discretions, and for such
     period and subject to such conditions, as it thinks fit, and any such power
     of attorney or other appointment may contain such provisions for the
     protection and convenience of persons dealing with any such attorney as the
     Board of Directors may think fit, and may also authorize any such attorney
     to delegate all or any of the powers, authorities and discretions vested in
     him.

<PAGE>

38.  NUMBER OF DIRECTORS

     The Board of Directors shall consist of such number of Directors (not less
than three (3) nor more than seven (7)) as may be determined by Shareholders
Resolution of the Company.

39.  ELECTION AND REMOVAL OF DIRECTORS

          (a) If at any time, the Company shall be required to appoint
     independent or external directors such as a public director or directors of
     any other type as may be required by law ("External Directors") such
     directors shall serve on the Board according to the number required by law.
     External Directors will be appointed and removed pursuant to, and shall be
     governed by, the relevant provisions of the law which applies to External
     Directors. If permitted by applicable law, External Directors will be
     appointed by the Board.

          (b) The members of the Board of Directors shall be called Directors,
     and other than External Directors (who will be chosen and appointed, and
     whose term will expire, in accordance with applicable law,) they shall be
     appointed in accordance with the provisions of this Article.

          (c) Directors (other than External Directors and the Preferred
     Director, as defined below) shall be elected at the Annual General Meeting
     by vote of the holder of a majority of the voting power represented at such
     meeting in person or by proxy and voting on the election of directors, or
     by the Board of Directors. In the event that Directors are appointed by the
     Board of Directors, such appointment of Directors shall be adopted by
     Shareholders' Resolution at the first extraordinary or annual general
     meeting of the shareholders following the date upon which the Director was
     appointed by the Board of Directors. Each director shall serve, subject to
     section 39(d) and Article 42 hereof, and with respect to a Director
     appointed pursuant to Article 41 hereof, subject to such Article, until the
     Annual General Meeting following the Annual General Meeting at which such
     Director was appointed, or his early removal pursuant to this Article 39.
     The shareholders shall be entitled to remove any Director(s) from office,
     subject to section 29(d) and all subject to applicable law.

          (d) Notwithstanding anything to the contrary contained herein, for so
     long as at least 50% of the Preferred Shares issued under the Purchase
     Agreement remain outstanding, the holders of a majority of the outstanding
     Preferred Shares shall be entitled at any time to appoint, elect, remove
     and replace one Director (the "PREFERRED DIRECTOR") to the Board of
     Directors.

          `(e) Nothwithstanding anything to the contrary herein, the term of a
     Director may commence as of a date later than the date of the Shareholder
     Resolution electing said Director, if so specified in said Shareholder
     Resolution.

40.  QUALIFICATION OF DIRECTORS

     No person shall be disqualified to serve as a Director by reason of his not
holding shares in the Company or by reason of his having served as a Director in
the past.

<PAGE>

41.  CONTINUING DIRECTORS IN THE EVENT OF VACANCIES

     In the event of one or more vacancies in the Board of Directors, the
continuing Directors may continue to act in every matter, and may temporarily
fill any such vacancy until the next Annual General Meeting, provided, however,
that if they number less than a majority of the number provided for pursuant to
Article 38 hereof, they may only act in an emergency, and may call a General
Meeting of the Company for the purpose of electing Directors to fill any or all
vacancies, so that at least a majority of the number of Directors provided for
pursuant to Article 38 hereof are in office as a result of said meeting.

42.  VACATION OF OFFICE

          (a) The office of a Director shall be vacated, ipso facto, upon his
     death, or if he be found lunatic or become of unsound mind, or if he become
     bankrupt, or, if the Director is a company, upon its winding-up.

          (b) The office of a Director shall be vacated by his written
     resignation. Such resignation shall become effective on the date fixed
     therein, or upon the delivery thereof to the Company, whichever is later.

43.  COMPENSATION OF DIRECTORS

     No Director shall be granted any compensation by the Company for his
services as Director except as may be approved by the Company in a General
Meeting, except for reimbursement of expenses incurred in connection with
carrying out all duties as Director.

44.  CONFLICT OF INTERESTS

     Subject to the provisions of the Companies Law, the Company may enter into
any contract or otherwise transact any business with any Director in which
contract or business such Director has a personal interest, directly or
indirectly; and may enter into any contract of otherwise transact any business
with any third party in which contract or business a Director has a personal
interest, directly or indirectly.

<PAGE>

45.  ALTERNATE DIRECTORS

          (a) A Director may, by written notice to the Company, appoint a
     natural person who as an alternate for himself (in these Articles referred
     to as "Alternate Director"), remove such Alternate Director and appoint
     another Alternate Director in place of any Alternate Director appointed by
     him whose office has been vacated for any reason whatsoever. Unless the
     appointing Director, by the instrument appointing an Alternate Director or
     by written notice to the Company, limits such appointment to a specified
     period of time or restricts it to a specified meeting or action of the
     Board of Directors, or otherwise restricts its scope, the appointment shall
     be for an indefinite period, but will expire upon the expiration of the
     appointing Director's term, and shall be for all purposes.

          (b) Any notice given to the Company pursuant to Article 45(a) shall
     become effective on the date fixed therein, or upon the delivery thereof to
     the Company, whichever is later.

          (c) An Alternate Director shall have all the rights and obligations of
     the Director who appointed him, provided, however, that he may not in turn
     appoint an alternate for himself (unless the instrument appointing him
     otherwise expressly provides), and provided further that an Alternate
     Director shall have no standing at any meeting of the Board of Directors or
     any committee thereof while the Director who appointed him is present.

          (d) An Alternate Director shall alone be responsible for his own acts
     and defaults, and he shall not be deemed the agent of the Director(s) who
     appointed him.

          (e) The office of an Alternate Director shall be vacated under the
     circumstances, mutatis mutandis, set forth in Article 42, and such office
     shall ipso facto be vacated if the Director who appointed such Alternate
     Director ceases to be a Director.

          (f) Notwithstanding Article 45(a), (i) no person shall be appointed as
     the Alternate Director for more than one Director and (ii) except as
     otherwise specifically permitted by the Companies Law, (A) no External
     Director may appoint an Alternate Director, and (B) no director may serve
     as an Alternate Director.

<PAGE>

                      PROCEEDINGS OF THE BOARD OF DIRECTORS

46.  MEETINGS

          (a) The Board of Directors may meet and adjourn its meetings and
     otherwise regulate such meetings and proceedings as the Board of Directors
     think fit. Notice of meetings of the Board of Directors shall be sent to
     each Director at the last address that the Director provided to the
     Company, or via telephone, facsimile or email message.

          (b) Any Director may at any time, and the Secretary, upon the request
     of such Director, shall, convene a meeting of the Board of Directors, but
     not less than five (5) days' notice (oral or written) shall be given of any
     meeting so convened. The failure to give notice to a Director in the manner
     required hereby may be waived by such Director.

47.  QUORUM

     Until otherwise unanimously decided by the Board of Directors, a quorum at
a meeting of the Board of Directors shall be constituted by the presence of a
majority of the Directors then in office who are lawfully entitled to
participate in the meeting (as conclusively determined by the Chairman of the
Audit Committee and in the absence of such determination - by the Chairman of
the Board of Directors), but shall not be less than two.

48.  CHAIRMAN OF THE BOARD OF DIRECTORS

     The Board of Directors may from time to time elect one of its members to be
the Chairman of the Board of Directors, remove such Chairman from office and
appoint another in its place. The Chairman of the Board of Directors shall
preside at every meeting of the Board of Directors, but if there is no such
Chairman, or if at any meeting he is not present within fifteen (15) minutes of
the time fixed for the meeting, or if he is unwilling to take the chair, the
Directors present shall choose one of their number to be the chairman of such
meeting.

<PAGE>

49.  VALIDITY OF ACTS DESPITE DEFECTS

     Subject to the provisions of the Companies Law, all acts done bona fide at
any meeting of the Board of Directors, or of a Committee of the Board of
Directors, or by any person(s) acting as Director(s), shall, notwithstanding
that it may afterwards be discovered that there was some defect in the
appointment of the participants in such meetings or any of them or any person(s)
acting as aforesaid, or that they or any of them were disqualified, be as valid
as if there were no such defect or disqualification.

                                 GENERAL MANAGER

50.  GENERAL MANAGER

     The Board of Directors may from time to time appoint one or more persons,
whether or not Directors, as General Manager(s) of the Company and may confer
upon such person(s), and from time to time modify or revoke, such title(s)
(including Managing Director, Director General or any similar or dissimilar
title) and such duties and authorities of the Board of Directors as the Board of
Directors may deem fit, subject to such limitations and restrictions as the
Board of Directors may from time to time prescribe. Such appointment(s) may be
either for a fixed term or without any limitation of time, and the Board of
Directors may from time to time (subject to the provisions of the Companies Law
and of any contract between any such person and the Company) fix his or their
salaries and emoluments, remove or dismiss him or them from office and appoint
another or others in his or their place or places.

                                     MINUTES

51.  MINUTES

          (a) Minutes of each General Meeting and of each meeting of the Board
     of Directors shall be recorded and duly entered in books provided for that
     purpose. Such minutes shall, in all events, set forth the names of the
     persons present at the meeting and all resolutions adopted thereat.

          (b) Any minutes as aforesaid, if purporting to be signed by the
     chairman of the meeting or by the chairman of the next succeeding meeting,
     shall constitute prima facia evidence of the matters recorded therein.

<PAGE>

                                    DIVIDENDS

52.  DECLARATION OF DIVIDENDS

     The Board of Directors may from time to time declare, and cause the Company
to pay, such interim dividend as may appear to the Board of Directors to be
justified. The Board of Directors shall determine the time for payment of such
dividends and the record date for determining the shareholders entitled thereto.

53.  Reserved.

54.  AMOUNT PAYABLE BY WAY OF DIVIDENDS

     Subject to the rights of the holders of shares with special rights as to
dividends, any dividend paid by the Company shall be allocated among the members
entitled thereto in proportion to their respective holdings of the shares in
respect of which such dividend is being paid.

55.  INTEREST

     No dividend shall carry interest as against the Company.

56.  PAYMENT IN SPECIE

     Upon the recommendation of the Board of Directors approved by Ordinary
Resolution of the Company, a dividend may be paid, wholly or partly, by the
distribution of specific assets of the Company or by distribution of paid up
shares, debentures or debenture stock of the Company or of any other companies,
or in any one or more of such ways.

<PAGE>

57.  CAPITALIZATION OF PROFITS, RESERVES ETC.

     Upon the resolution of the Board of Directors, the Company -

          (a) may cause any moneys, investments, or other assets forming part of
     the undivided profits of the Company, standing to the credit of a reserve
     fund, or to the credit of a reserve fund for the redemption of capital, or
     in the hands of the Company and available for dividends, or representing
     premiums received on the issuance of shares and standing to the credit of
     the share premium account, to be capitalized and distributed among such of
     the shareholders as would be entitled to receive the same if distributed by
     way of dividend and in the same proportion, on the footing that they become
     entitled thereto as capital, or may cause any part of such capitalized fund
     to be applied on behalf of such shareholders in paying up in full, either
     at par or at such premium as the resolution may provide, any unissued
     shares or debentures or debenture stock of the Company which shall be
     distributed accordingly, in payment, in full or in part, of the uncalled
     liability on any issued shares or debentures or debenture stock; and

          (b) may cause such distribution or payment to be accepted by such
     shareholders in full satisfaction of their interest in the said capitalized
     sum.

58.  IMPLEMENTATION OF POWERS UNDER ARTICLES 56 AND 57

     For the purpose of giving full effect to any resolution under Articles 56
or 57, and without derogating from the provisions of Article 7(b) hereof, and
subject to applicable law, the Board of Directors may settle any difficulty
which may arise in regard to the distribution as it thinks expedient, and, in
particular, may issue fractional certificates, and may fix the value for
distribution of any specific assets, and may determine that cash payments shall
be made to any members upon the footing of the value so fixed, or that fractions
of less value than the nominal value of one share may be disregarded in order to
adjust the rights of all parties, and may vest any such cash, shares,
debentures, debenture stock or specific assets in trustees upon such trusts for
the persons entitled to the dividend or capitalized fund as may seem expedient
to the Board of Directors.

<PAGE>

59.  DEDUCTIONS FROM DIVIDENDS

     The Board of Directors may deduct from any dividend or other moneys payable
to any member in respect of a share any and all sums of money then payable by
him to the Company on account of calls or otherwise in respect of shares of the
Company and/or on account of any other matter of transaction whatsoever.

60.  RETENTION OF DIVIDENDS

          (a) The Board of Directors may retain any dividend or other moneys
     payable or property distributable in respect of a share on which the
     Company has a lien, and may apply the same in or toward satisfaction of the
     debts, liabilities, or engagements in respect of which the lien exists.

          (b) The Board of Directors may retain any dividend or other moneys
     payable or property distributable in respect of a share in respect of which
     any person is, under Articles 21 or 22, entitled to become a member, or
     which any person is, under said Articles, entitled to transfer, until such
     person shall become a member in respect of such share or shall transfer the
     same.

61.  UNCLAIMED DIVIDENDS

     All unclaimed dividends or other moneys payable in respect of a share may
be invested or otherwise made use of by the Board of Directors for the benefit
of the Company until claimed. The payment by the Directors of any unclaimed
dividend or such other moneys into a separate account shall not constitute the
Company a trustee in respect thereof, and any dividend unclaimed after a period
of seven (7) years from the date of declaration of such dividend, and any such
other moneys unclaimed after a like period from the date the same were payable,
shall be forfeited and shall revert to the Company, provided, however, that the
Board of Directors may, at its discretion, cause the Company to pay any such
dividend or such other moneys, or any part thereof, to a person who would have
been entitled thereto had the same not reverted to the Company.

<PAGE>

62.  MECHANICS OF PAYMENT

     Any dividend or other moneys payable in cash in respect of a share may be
paid by check or warrant sent through the post to, or left at, the registered
address of the person entitled thereto or by transfer to a bank account
specified by such person (or, if two or more persons are registered as joint
holders of such share or are entitled jointly thereto in consequence of the
death or bankruptcy of the holder or otherwise, to any one of such persons or to
his bank account), or to such person and at such address as the person entitled
thereto may by writing direct. Every such check or warrant shall be made payable
to the order of the person to whom it is sent, or to such person as the person
entitled thereto as aforesaid may direct, and payment of the check or warrant by
the banker upon whom it is drawn shall be a good discharge to the Company. Every
such check or warrant shall be sent at the risk of the person entitled to the
money represented thereby.

63.  RECEIPT FROM A JOINT HOLDER

     If two or more persons are registered as joint holders of any share, or are
entitled jointly thereto in consequence of the death or bankruptcy of the holder
or otherwise, any one of them may give effectual receipts for any dividend or
other moneys payable or property distributable in respect of such share.

                                    ACCOUNTS

64.  BOOKS OF ACCOUNT

          (a) The Board of Directors shall cause accurate books of account to be
     kept in accordance with the provisions of the Companies Law and of any
     other applicable law. Such books of account shall be kept at the Registered
     Office of the Company, or at such other place or places as the Board of
     Directors may think fit, and they shall always be open to inspection by all
     Directors. No member, not being a Director, shall have any right to inspect
     any account or book or other similar document of the Company, except as
     conferred by law or authorized by the Board of Directors or by a
     Shareholders Resolution.

          (b) The Company shall make copies of its annual financial statements
     available for inspection by the shareholders at the principal offices of
     the Company. The Company shall not be required to send copies of its annual
     financial statements to shareholders, except upon request.

<PAGE>

65.  AUDIT

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

66.  AUDITORS

     The appointment, authorities, rights and duties of the auditor(s) of the
Company, shall be regulated by applicable law. The Audit Committee shall have
the authority to fix, in its discretion, the remuneration of the auditor(s) for
the auditing services.

                                BRANCH REGISTERS

67.  BRANCH REGISTERS

     Subject to and in accordance with the provisions of the Companies Law and
to all orders and regulations issued thereunder, the Company may cause branch
registers to be kept in any place outside Israel as the Board of Directors may
think fit, and, subject to all applicable requirements of law, the Board of
Directors may from time to time adopt such rules and procedures as it may think
fit in connection with the keeping of such branch registers.

                       RIGHTS OF SIGNATURE, STAMP AND SEAL

68.  RIGHTS OF SIGNATURE, STAMP AND SEAL

          (a) The Board of Directors shall be entitled to authorize any person
     or persons (who need not be Directors) to act and sign on behalf of the
     Company, and the acts and signature of such person(s) on behalf of the
     Company shall bind the Company insofar as such person(s) acted and signed
     within the scope of his or their authority.

          (b) The Company shall have at least one official stamp.

<PAGE>

          (c) The Board of Directors may provide for a seal. If the Board of
     Directors so provides, it shall also provide for the safe custody thereof.
     Such seal shall not be used except by the authority of the Board of
     Directors and in the presence of the person(s) authorized to sign on behalf
     of the Company, who shall sign every instrument to which such seal is
     affixed.

                                     NOTICES

69.  NOTICES

          (a) Any written notice or other document may be served by the Company
     upon any member either personally, or by facsimile transmission, or by
     sending it by prepaid mail (airmail or overnight air courier if sent to an
     address on a different continent from the place of mailing) addressed to
     such member at his address as described in the Register of Members or such
     other address as he may have designated in writing for the receipt of
     notices and other documents. Any written notice or other document may be
     served by any member upon the Company by tendering the same in person to
     the Secretary or the General Manager of the Company at the principal office
     of the Company, or by facsimile transmission, or by sending it by prepaid
     registered mail (airmail or overnight air courier if posted outside Israel)
     to the Company at its Registered Address. Any such notice or other document
     shall be deemed to have been served (i) in the case of mailing, two (2)
     business days after it has been posted (seven (7) business days if sent
     internationally), or when actually received by the addressee if sooner than
     two days or seven days, as the case may be, after it has been posted; (ii)
     in the case of overnight air courier, on the third business day following
     the day sent, with receipt confirmed by the courier, or when actually
     received by the addressee if sooner than three business days after it has
     been sent; (iii) in the case of personal delivery, on the date such notice
     was actually tendered in person to such member (or to the Secretary or the
     General Manager); or (iv) in the case of facsimile transmission, the date
     on which the sender receives automatic electronic confirmation by the
     recipient's facsimile machine that such notice was received by the
     addressee. If a notice is, in fact, received by the addressee, it shall be
     deemed to have been duly served, when received, notwithstanding that it was
     defectively addressed or failed, in some respect, to comply with the
     provisions of this Article 69(a).

          (b) All notices to be given to the members shall, with respect to any
     share to which persons are jointly entitled, be given to whichever of such
     persons is named first in the Register of Members, and any notice so given
     shall be sufficient notice to the holders of such share.

<PAGE>

          (c) Any member whose address is not described in the Register of
     Members, and who shall not have designated in writing an address for the
     receipt of notices, shall not be entitled to receive any notice from the
     Company.

          (d) Notwithstanding any contrary provision herein, notice by the
     Company of a General Meeting which is published in two daily newspapers in
     Israel, if at all, shall be deemed to have been duly given to any member
     whose address as registered in the Register of Members is located in the
     State of Israel. The mailing or publication date and the date of the
     meeting shall be counted as part of the days comprising any notice period.

                             INSURANCE AND INDEMNITY

70.  EXCULPATION, INDEMNITY AND INSURANCE

          (a) For purposes of these Articles, the term "Office Holder" shall
     mean every Director and every officer of the Company, including, without
     limitation, each of the persons defined as "Nosei Misra" in the Companies
     Law.

          (b) Subject to the provisions of the Companies Law, the Company may
     prospectively exculpate an Office Holder from all or some of the Office
     Holder's responsibility for damage resulting from the Office Holder's
     breach of the Office Holder's duty of care to the Company.

          (c) Subject to the provisions of the Companies Law, the Company may
     indemnify an Office Holder in respect of an obligation or expense specified
     below imposed on or incurred by the Office Holder in respect of an act
     performed in his capacity as an Office Holder, as follows:

               (i) a financial obligation imposed on him in favor of another
          person by a court judgment, including a compromise judgment or an
          arbitrator's award approved by a court;

               (ii) reasonable litigation expenses, including attorneys' fees,
          expended by the Office Holder as a result of an investigation or
          proceeding instituted against him by a competent authority, provided
          that such investigation or proceeding concluded without the filing of
          an indictment against him and either (A) concluded without the
          imposition of any financial liability in lieu of criminal proceedings
          or (B) concluded with the imposition of a financial liability in lieu
          of criminal proceedings but relates to a criminal offense that does
          not require proof of criminal intent; and

<PAGE>

               (iii) reasonable litigation expenses, including attorneys' fees,
          expended by an Office Holder or charged to the Office Holder by a
          court, in a proceeding instituted against the Office Holder by the
          Company or on its behalf or by another person, or in a criminal charge
          from which the Office Holder was acquitted, or in a criminal
          proceeding in which the Office Holder was convicted of an offense that
          does not require proof of criminal intent.

The Company may undertake to indemnify an Office Holder as aforesaid, (aa)
prospectively, provided that, in respect of Article 70(c)(i), the undertaking is
limited to events which in the opinion of the Board of Directors are foreseeable
in light of the Company's actual operations when the undertaking to indemnify is
given, and to an amount or criteria set by the Board of Directors as reasonable
under the circumstances, and further provided that such events and amount or
criteria are set forth in the undertaking to indemnify, and (bb) retroactively.

          (d) Subject to the provisions of the Companies Law, the Company may
     enter into a contract for the insurance of all or part of the liability of
     any Office Holder imposed on the Office Holder in respect of an act
     performed in his capacity as an Office Holder, in respect of each of the
     following:

               (i) a breach of his duty of care to the Company or to another
          person;

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

               (iii) a financial obligation imposed on him in favor of another
          person.

          (e) The provisions of Articles 70(a), 70(b), 70(c) and 70(d) above are
     not intended, and shall not be interpreted, to restrict the Company in any
     manner in respect of the procurement of insurance and/or in respect of
     indemnification (i) in connection with any person who is not an Office
     Holder, including, without limitation, any employee, agent, consultant or
     contractor of the Company who is not an Office Holder, and/or (ii) in
     connection with any Office Holder to the extent that such insurance and/or
     indemnification is not specifically prohibited under law; provided that the
     procurement of any such insurance and/or the provision of any such
     indemnification shall be approved by the Audit Committee of the Company.

<PAGE>

                                   WINDING UP

71.  WINDING UP

     If the Company be wound up, then, subject to applicable law and to the
rights of the holders of shares with special rights upon winding up, the assets
of the Company available for distribution among the members shall be distributed
to them in proportion to the nominal value of their respective holdings of the
shares in respect of which such distribution is being made.

72.  MAJOR DECISIONS.

     Notwithstanding any other provision of these Articles, for so long as at
least 65% of the Preferred Shares issued shall be outstanding, and no more than
35% of all Preferred Shares issued shall have been converted into Ordinary
Shares, the approval of the holders of 50% of the then outstanding Preferred
Shares shall be required prior to the Company taking any of the following
actions:

          (a) Amendment of the Company's Articles of Association which adversely
     affects the rights of the Preferred Shares or authorizes additional shares
     of the Company's share capital;

          (b) Alter or change the rights, preferences or privileges of the
     Preferred Shares;

          (c) Declare or pay any dividends or make any distributions on any of
     the Company's securities (other than on the Preferred Shares);

          (d) Redeem, purchase or otherwise acquire any of the Company's
     securities ranking junior or pari passu with the Preferred Shares (except
     for (i) repurchases of Ordinary Shares from employees upon termination of
     employment pursuant to arrangements approved by the Board of Directors of
     the Company and (ii) redemptions of Preferred Shares);

          (e) Authorize or issue any equity securities having rights or
     preferences senior to or pari passu with the Preferred Shares with respect
     to voting, dividends redemption or liquidation;

          (f) Sale of the Company by sale of all or substantially all of the
     Company's issued and outstanding securities, merger, consolidation, sale of
     assets or otherwise if sale is not a sale resulting in consideration to the
     holders of Preferred Shares of at least $6.00 per Preferred Share, as
     adjusted for share splits, consolidations, share dividends, bonus share
     issuances and other recapitalizations of the Company's shares;

          (g) Sale or transfer of all of substantially all of the Company's
     intellectual property assets;

          (h) Voluntary dissolution or cessation of operations of the Company;

<PAGE>

          (i) Any material change of the nature of the business of the Company;

          (j) Incur indebtedness (including any guarantees other than guarantees
     in the normal course of business, it being understood that such exclusion
     shall not include guarantees for borrowed monies) exceeding an aggregate
     principal amount of $3,000,000 outstanding at any time, except for bank
     debt which, when combined with other debt, may be incurred for up to
     $10,000,000 outstanding at any time;

          (k) Create or incur any material lien on the assets of the Company
     (other than liens for current taxes not yet payable or liens pursuant to
     permitted indebtedness);

          (l) Transaction with any director, officer, employee or affiliate
     (other than customary employment arrangements and benefit plans);

          (m) Enter into an agreement that would limit the Company's ability to
     perform its obligations in respect of the Preferred Shares or the Ordinary
     Shares issued upon conversion of the Preferred Shares;

          (n) Any other action, which pursuant to the Company's Articles of
     Association or the Companies Law requires the vote of the Preferred Shares
     as a separate class or series.

          (o) Create any subsidiary other than a wholly-owned subsidiary or
     permit any existing subsidiary to issue equity securities to any person or
     entity other than the Company.

          (p) Take any action relating to the above.

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