Document:

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                                                                    Exhibit 10.3

                       TERAYON COMMUNICATION SYSTEMS, INC.

                           1997 EQUITY INCENTIVE PLAN

                             ADOPTED MARCH 26, 1997
                     APPROVED BY SHAREHOLDERS JULY 27, 1997
                              AMENDED JUNE 9, 1998
                      APPROVED BY SHAREHOLDERS JULY 8, 1998
                              AMENDED JUNE 13, 2000
                              AMENDED JULY 31, 2000

1.      PURPOSES.

        (a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its Affiliates,
may be given an opportunity to benefit from increases in value of the stock of
the Company through the granting of (i) Incentive Stock Options, (ii)
Nonstatutory Stock Options, (iii) stock bonuses, and (iv) rights to purchase
restricted stock, all as defined below.

        The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company or
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.

        The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options or (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and in such form as issued pursuant to Section 6,
and a separate certificate or certificates will be issued for shares purchased
on exercise of each type of Option.

2.      DEFINITIONS.

        (a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.

        (b) "BOARD" means the Board of Directors of the Company.

        (c) "CODE" means the Internal Revenue Code of 1986, as amended.

        (d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.

                                       1.
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        (e) "COMPANY" means Terayon Communication Systems, Inc., a Delaware
corporation.

        (f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.

        (g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
that the service of an individual to the Company, whether as an Employee,
Director or Consultant, is not interrupted or terminated. The Board or the chief
executive officer of the Company may determine, in that party's sole discretion,
whether Continuous Status as an Employee, Director or Consultant shall be
considered interrupted in the case of: (i) any leave of absence approved by the
Board or the chief executive officer of the Company, including sick leave,
military leave, or any other personal leave; or (ii) transfers between the
Company, Affiliates or their successors.

        (h) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

        (i) "DIRECTOR" means a member of the Board.

        (j) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.

        (k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

        (l) "FAIR MARKET VALUE" means, as of any date, the value of the common
stock of the Company determined as follows"

                (1) If the common stock is listed on any established stock
exchange or traded on the Nasdaq National Market or The Nasdaq SmallCap Market,
the Fair Market Value of a share of common stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Company's common stock) on the day of determination (or the
last market trading day prior to the day of determination, if the day of
determination is not a market trading day), as reported in The Wall Street
Journal or such other source as the Board deems reliable.

                (2) In the absence of such markets for the common stock, the
Fair Market Value shall be determined in good faith by the Board.

        (m) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

                                       2.
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        (n) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.

        (o) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.

        (p) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

        (q) "OPTION" means a stock option granted pursuant to the Plan.

        (r) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.

        (s) "OPTIONEE" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.

        (t) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

        (u) "PLAN" means this 1997 Equity Incentive Plan.

        (v) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect with respect to the Company at the time discretion
is being exercised regarding the Plan.

        (w) "SECURITIES ACT" means the Securities Act of 1933, as amended.

        (x) "STOCK AWARD" means any right granted under the Plan, including any
Option, any stock bonus, and any right to purchase restricted stock.

        (y) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

                                       3.
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3.      ADMINISTRATION.

        (a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).

        (b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

                (1) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock,
or a combination of the foregoing; the provisions of each Stock Award granted
(which need not be identical), including the time or times when a person shall
be permitted to receive stock pursuant to a Stock Award; and the number of
shares with respect to which a Stock Award shall be granted to each such person.

                (2) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

                (3) To amend the Plan or a Stock Award as provided in Section
13.

                (4) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.

        (c) The Board may delegate administration of the Plan to a committee of
the Board composed of two (2) or more members (the "Committee"), all of the
members of which Committee may be, in the discretion of the Board, Non-Employee
Directors and/or Outside Directors. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee of two (2) or more Outside Directors any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or such a
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. In addition, notwithstanding anything in this
Section 3 to the contrary, the Board or the Committee may delegate to a
committee of one or more members of the Board the authority to grant Stock
Awards to eligible persons who (x) are not then subject to Section 16 of the
Exchange Act and/or (y) are either (i) not then Covered Employees and are not
expected to be Covered Employees at the time of recognition of income resulting
from such Stock Award, or (ii) not persons with respect to whom the Company
wishes to comply with Section 162(m) of the Code.

                                       4.
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4.      SHARES SUBJECT TO THE PLAN.

        (a) Subject to the provisions of Section 12 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate Twelve Million Seven Hundred Fifty Four Thousand
Five Hundred Twenty Eight (12,754,528) shares of the Company's Common Stock
(includes the 2 for 1 stock split effective May 5, 2000). Notwithstanding the
foregoing, on each January 1, commencing with January 1, 2001 and continuing
through and including January 1, 2007, the number of shares that may be issued
pursuant to Stock Awards shall be increased automatically by the lesser of (i)
five percent (5%) of the total number of shares of Common Stock outstanding,
including for this purpose outstanding shares of capital stock convertible to
Common Stock, on such January 1 or (ii) Three Million (3,000,000) shares of
Common Stock. If any Stock Award shall for any reason expire or otherwise
terminate, in whole or in part, without having been exercised in full, the stock
not acquired under such Stock Award shall revert to and again become available
for issuance under the Plan.

        (b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

        (c) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of the Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan.

5.      ELIGIBILITY.

        (a) Incentive Stock Options may be granted only to Employees. Stock
Awards other than Incentive Stock Options may be granted only to Employees,
Directors or Consultants.

        (b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of such stock at the date of
grant and the Option is not exercisable after the expiration of five (5) years
from the date of grant.

        (c) Subject to the provisions of Section 12 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Options covering
more than Five Hundred Thousand (500,000) shares of the Company's common stock
in any calendar year.

6.      OPTION PROVISIONS.

        Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

                                       5.
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        (a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

        (b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Incentive Stock Option on the date of grant; the exercise price
of each Nonstatutory Stock Option shall be not less than eighty-five percent
(85%) of the Fair Market Value of the stock subject to the Nonstatutory Stock
Option on the date of grant. Notwithstanding the foregoing, an Option (whether
an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an
exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.

        (c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other common stock of the Company, (B)
according to a deferred payment arrangement (however, in the event the Company
is then incorporated in the state of Delaware, then payment of the common
stock's "par value" as defined in the Delaware General Corporation Law shall not
be made by deferred payment), or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other common stock of the
Company) with the person to whom the Option is granted or to whom the Option is
transferred pursuant to subsection 6(d), or (C) in any other form of legal
consideration that may be acceptable to the Board. In the case of any deferred
payment arrangement, interest shall be compounded at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts other than
amounts stated to be interest under the deferred payment arrangement.

        (d) TRANSFERABILITY. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Option is granted only
by such person. A Nonstatutory Stock Option may be transferable to the extent
provided in the Option Agreement; provided, however, that if the Option
Agreement does not specifically provide for transferability, then such
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution. Notwithstanding the foregoing, the person to
whom the Option is granted may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in the event of
the death of the Optionee, shall thereafter be entitled to exercise the Option.

        (e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem

                                       6.
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appropriate. The provisions of this subsection 6(e) are subject to any Option
provisions governing the minimum number of shares as to which an Option may be
exercised.

        (f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise the Option (to the extent that the
Optionee was entitled to exercise it as of the date of termination) but only
within such period of time ending on the earlier of (i) the date ninety (90)
days following the termination of the Optionee's Continuous Status as an
Employee, Director or Consultant (or such longer or shorter period as specified
in the Option Agreement), or (ii) the expiration of the term of the Option as
set forth in the Option Agreement; provided, however, if the Optionee is
terminated for cause, then the Option shall terminate on the date Optionee's
Continuous Status as an Employee, Director or Consultant ceases. If, at the date
of termination, the Optionee is not entitled to exercise the entire Option, the
shares covered by the unexercisable portion of the Option shall revert to and
again become available for issuance under the Plan. If, after termination, the
Optionee does not exercise the Option within the time specified in the Option
Agreement, the Option shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance under the Plan.

        An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Status as an
Employee, Director, or Consultant (other than upon the Optionee's death or
disability) would result in liability under Section 16(b) of the Exchange Act,
then the Option shall terminate on the earlier of (i) the expiration of the term
of the Option set forth in the Option Agreement, or (ii) the tenth (10th) day
after the last date on which such exercise would result in such liability under
Section 16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may
also provide that if the exercise of the Option following the termination of the
Optionee's Continuous Status as an Employee, Director or Consultant (other than
upon the Optionee's death or disability) would be prohibited at any time solely
because the issuance of shares would violate the registration requirements under
the Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in the first paragraph of this
subsection 6(f), or (ii) the expiration of a period of three (3) months after
the termination of the Optionee's Continuous Status as an Employee, Director or
Consultant during which the exercise of the Option would not be in violation of
such registration requirements.

        (g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status
as an Employee, Director or Consultant terminates as a result of the Optionee's
disability, the Optionee may exercise the Option (to the extent that the
Optionee was entitled to exercise it as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, at the date of termination, the Optionee is
not entitled to exercise the entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise the Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.

                                       7.
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        (h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a period specified in the Option Agreement after the termination of,
the Optionee's Continuous Status as an Employee, Director or Consultant, the
Option may be exercised (to the extent the Optionee was entitled to exercise the
Option as of the date of death) by the Optionee's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionee's death pursuant to
subsection 6(d), but only within the period ending on the earlier of (i) the
date eighteen (18) months following the date of death (or such longer or shorter
period specified in the Option Agreement), or (ii) the expiration of the term of
such Option as set forth in the Option Agreement. If, at the time of death, the
Optionee was not entitled to exercise the entire Option, the shares covered by
the unexercisable portion of the Option shall revert to and again become
available for issuance under the Plan. If, after death, the Option is not
exercised within the time specified herein, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.

        (i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate.

        (j) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options hereunder, the Board
or Committee shall have the authority (but not an obligation) to include as part
of any Option Agreement a provision entitling the Optionee to a further Option
(a "Re-Load Option") in the event the Optionee exercises the Option evidenced by
the Option Agreement, in whole or in part, by surrendering other shares of
common stock in accordance with this Plan and the terms and conditions of the
Option Agreement. Any such Re-Load Option (i) shall be for a number of shares
equal to the number of shares surrendered as part or all of the exercise price
of such Option; (ii) shall have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to such Re-Load
Option; and (iii) shall have an exercise price which is equal to one hundred
percent (100%) of the Fair Market Value of the stock subject to the Re-Load
Option on the date of exercise of the original Option. Notwithstanding the
foregoing, a Re-Load Option which is granted to a 10% shareholder (as described
in subsection 5(b)), shall have an exercise price which is equal to one hundred
ten percent (110%) of the Fair Market Value of the stock subject to the Re-Load
Option on the date of exercise of the original Option and shall have a term
which is no longer than five (5) years.

        Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate at the time
of the grant of the original Option; provided, however, that the designation of
any Re-Load Option as an Incentive Stock Option shall be subject to the one
hundred thousand dollar ($100,000) annual limitation on exercisability of
Incentive Stock Options described in subsection 11(e) of the Plan and in Section
422(d) of the Code. There shall be no Re-Load Options on a Re-Load Option. Any
such Re-Load Option shall be subject to the availability of sufficient shares
under subsection 4(a) and the limits on the grants of Options under subsection
5(c) and shall be subject to such other terms and conditions as

                                       8.
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the Board or Committee may determine which are not inconsistent with the express
provisions of the Plan regarding the terms of Options.

7.      TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.

        Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate. The terms and conditions of stock bonus or restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate agreements need not be identical, but each stock bonus or
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions as appropriate:

        (a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such Stock Award Agreement, but in no event shall the
purchase price be less than eighty-five percent (85%) of the stock's Fair Market
Value on the date such Stock Award is made. Notwithstanding the foregoing, the
Board or the Committee may determine that eligible participants in the Plan may
be awarded stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company or for its benefit.

        (b) TRANSFERABILITY. Rights under a stock bonus or restricted stock
purchase agreement shall be transferable only by will or the laws of descent and
distribution, so long as stock awarded under such Stock Award Agreement remains
subject to the terms of the agreement.

        (c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to a
deferred payment arrangement (however, in the event the Company is then
incorporated in the state of Delaware, then payment of the common stock's "par
value" as defined in the Delaware General Corporation Law shall not be made by
deferred payment), or other arrangement with the person to whom the stock is
sold; or (iii) in any other form of legal consideration that may be acceptable
to the Board or the Committee in its discretion. Notwithstanding the foregoing,
the Board or the Committee to which administration of the Plan has been
delegated may award stock pursuant to a stock bonus agreement in consideration
for past services actually rendered to the Company or for its benefit.

        (d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.

        (e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of stock held by that person which have not
vested as of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between the Company and such person.

                                       9.
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8.      CANCELLATION AND RE-GRANT OF OPTIONS.

        (a) The Board or the Committee shall have the authority to effect, at
any time and from time to time, (i) the repricing of any outstanding Options
under the Plan and/or (ii) with the consent of the affected holders of Options,
the cancellation of any outstanding Options under the Plan and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of shares of stock, but having an exercise price per share not
less than eighty-five percent (85%) of the Fair Market Value (one hundred
percent (100%) of the Fair Market Value in the case of an Incentive Stock
Option) or, in the case of a 10% shareholder (as described in subsection 5(b))
receiving a new grant of an Incentive Stock Option, not less than one hundred
ten percent (110%) of the Fair Market Value) per share of stock on the new grant
date. Notwithstanding the foregoing, the Board or the Committee may grant an
Option with an exercise price lower than that set forth above if such Option is
granted as part of a transaction to which section 424(a) of the Code applies.

        (b) Shares subject to an Option canceled under this Section 8 shall
continue to be counted against the maximum award of Options permitted to be
granted pursuant to subsection 5(c) of the Plan. The repricing of an Option
under this Section 8, resulting in a reduction of the exercise price, shall be
deemed to be a cancellation of the original Option and the grant of a substitute
Option; in the event of such repricing, both the original and the substituted
Options shall be counted against the maximum awards of Options permitted to be
granted pursuant to subsection 5(c) of the Plan. The provisions of this
subsection 8(b) shall be applicable only to the extent required by Section
162(m) of the Code.

9.      COVENANTS OF THE COMPANY.

        (a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.

        (b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Stock Award; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such Stock Awards
unless and until such authority is obtained.

10.     USE OF PROCEEDS FROM STOCK.

        Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.

11.     MISCELLANEOUS.

        (a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest

                                      10.
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pursuant to subsection 6(e) or 7(d), notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during
which it will vest.

        (b) Neither an Employee, Director or Consultant nor any person to whom a
Stock Award is transferred under subsection 6(d) or 7(b) shall be deemed to be
the holder of, or to have any of the rights of a holder with respect to, any
shares subject to such Stock Award unless and until such person has satisfied
all requirements for exercise of the Stock Award pursuant to its terms.

        (c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Director, Consultant or
other holder of Stock Awards any right to continue in the employ of the Company
or any Affiliate (or to continue serving as a Director or Consultant) or shall
affect the right of the Company or any Affiliate to terminate the employment of
any Employee with or without cause, the right of the Company's Board of
Directors and/or the Company's shareholders to remove any Director as provided
in the Company's Bylaws and the provisions of the applicable laws of the
Company's state of incorporation, or the right to terminate the relationship of
any Consultant subject to the terms of such Consultant's agreement with the
Company or any Affiliate.

        (d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
the Plan and all other stock plans of the Company and its Affiliates exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof which
exceed such limit (according to the order in which they were granted) shall be
treated as Nonstatutory Stock Options.

        (e) The Company may require any person to whom a Stock Award is granted,
or any person to whom a Stock Award is transferred pursuant to subsection 6(d)
or 7(b), as a condition of exercising or acquiring stock under any Stock Award,
(1) to give written assurances satisfactory to the Company as to such person's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (2) to
give written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Stock Award for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under
a then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.

                                      11.
<PAGE>

        (f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold
shares from the shares of the common stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the Stock Award; or
(3) delivering to the Company owned and unencumbered shares of Company common
stock.

12.     ADJUSTMENTS UPON CHANGES IN STOCK.

        (a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the type(s) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person during any calendar year pursuant to subsection 5(c), and
the outstanding Stock Awards will be appropriately adjusted in the type(s) and
number of securities and price per share of stock subject to such outstanding
Stock Awards. Such adjustments shall be made by the Board or the Committee, the
determination of which shall be final, binding and conclusive. (The conversion
of any convertible securities of the Company shall not be treated as a
"transaction not involving the receipt of consideration by the Company.")

        (b) In the event of a Change in Control (as defined herein): (i) any
surviving corporation or acquiring corporation shall assume any Stock Awards
outstanding under the Plan or shall substitute similar stock awards (including
an award to acquire the same consideration paid to the shareholders in a Change
in Control) for those outstanding under the Plan, or (ii) in the event any
surviving corporation or acquiring corporation refuses to assume such Stock
Awards or to substitute similar stock awards for those outstanding under the
Plan, (A) with respect to Stock Awards held by persons then performing services
as Employees, Directors or Consultants (and subject to any applicable provisions
of the California Corporate Securities Law of 1968 and related regulations), the
vesting (and, if applicable, the exercisability) of such Stock Awards shall be
accelerated prior to such event and the Stock Awards terminated if not exercised
at or prior to such event, and (B) with respect to any other Stock Awards
outstanding under the Plan, such Stock Awards shall be terminated if not
exercised prior to such event.

        (c) For purposes of the Plan, a "Change in Control" shall mean: (1) a
dissolution, liquidation or sale of all or substantially all of the assets of
the Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; or (4) the
acquisition by any person, entity or group within the meaning of Section 13(d)
or 14(d) of the Exchange Act, or any comparable successor provisions (excluding
any employee benefit plan, or related trust, sponsored or maintained by the
Company or any Affiliate of the Company) of the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or

                                      12.
<PAGE>

comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors.

13.     AMENDMENT OF THE PLAN AND STOCK AWARDS.

        (a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the shareholders of
the Company to the extent shareholder approval is necessary for the Plan to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 under the
Exchange Act or any Nasdaq or securities exchange listing requirements.

        (b) The Board may in its sole discretion submit any other amendment to
the Plan for shareholder approval, including, but not limited to, amendments to
the Plan intended to satisfy the requirements of Section 162(m) of the Code and
the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.

        (c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible Employees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance therewith.

        (d) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the Stock Award was
granted and (ii) such person consents in writing.

        (e) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however, that the rights and obligations
under any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.

14.     TERMINATION OR SUSPENSION OF THE PLAN.

        (a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on March 25, 2007, which is the day
prior to the tenth anniversary of the date the Plan was adopted by the Board or
approved by the shareholders of the Company, whichever is earlier. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.

        (b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the written consent of the person to whom the Stock Award was
granted.

                                      13.
<PAGE>

15.     EFFECTIVE DATE OF PLAN.

        The Plan shall become effective as determined by the Board, but no Stock
Awards granted under the Plan shall be exercised unless and until the Plan has
been approved by the shareholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board,
and, if required, the Stock Awards have been qualified or exempted from
qualification under the laws of the State of California.

                                      14.<PAGE>
                                                                   EXHIBIT 10.14

--------------------------------------------------------------------------------
NOTE:  This Agreement and the  negotiations  conducted in respect thereof do not
obligate the Lessor as long as the authorized signatories of the Lessor have not
yet signed the Agreement.
--------------------------------------------------------------------------------

                                 AZRIELI CENTER

                             OFFICES LEASE AGREEMENT

               SIGNED IN TEL AVIV ON THE 23RD DAY OF JANUARY 2000

                                     BETWEEN

               Canit HaShalom Investments Ltd.
               Private Company 51-163315-8
               Whose address for the purpose of this Agreement is:

               Azrieli Center
               132 Petah Tikva Road, Tel-Aviv
               (hereinafter: "the Lessor")

                                                               OF THE FIRST PART

                                       AND

               Terayon Communication System Inc.
               (hereinafter: "the Lessee")
               Whose address for the purpose of this Agreement is:
               c/o Attorney Arieh Hagai
               18 HaYetzira Street, Ramat Gan
               Telephone: 03-7513625  Fax: 03-7514036

                                                              OF THE SECOND PART

WHEREAS:            The Lessor is the owner of the right to be registered as the
                    lessee of the land at Block 7106, Parcel 5 in Tel Aviv
                    (hereinafter: "the Land");

AND WHEREAS:        The Lessor is constructing a project on the Land which will
                    include buildings designed for offices, commerce, stores,
                    residential, hotel, parking lots and additional uses, known
                    by the name "The Azrieli Center" (hereinafter: "the
                    Project");

AND WHEREAS:        The Lessee wishes to rent the Premises situated in
                    the Project from the Lessor by way of an unprotected Lease
                    and to sign, inter alia, a management agreement with the
                    Management Company, as well as the appendices to this
                    Agreement, the same subject to and pursuant to all the
                    provisions of this Agreement;

AND WHEREAS:        The Lessor agrees to lease the Premises to the Lessee by way
                    of an unprotected lease, the same subject to and pursuant to
                    all the provisions of this Agreement;

AND WHEREAS:        The parties wish to define, arrange and entrench in writing
                    all their rights and obligations in connection with the
                    Lease of the Premises, the same as specified below in this
                    Lease Agreement;

    ACCORDINGLY IT IS DECLARED, STIPULATED AND AGREED BETWEEN THE PARTIES AS
                                    FOLLOWS:

1.      PREAMBLE AND INTERPRETATION

        1.1     The preamble and appendices to this Agreement constitute an
                inseparable part thereof.

<PAGE>

                                                                               2

        1.2     The section headings in this Agreement are for the purpose of
                orientation and convenience only, they are not part of the
                Agreement and shall not be used in the interpretation thereof.

        1.3     In this Agreement the singular implies the plural and vice
                versa. In this Agreement the masculine implies the feminine and
                vice versa.

2.      DEFINITIONS AND APPENDICES

        2.1     In this Agreement and the appendices thereto the following terms
                shall have the meaning appearing alongside them:

        "THE LAND"                    The Land in Block 7106 Parcel 5 in Tel
                                      Aviv;

        "URBAN BUILDING PLAN"         Master Plan No. T.A. 2401 in Tel Aviv and
                                      its regulations and appendices, including
                                      any amendment variation or addition
                                      thereto subsisting from time to time;

        "THE PROJECT"                 Buildings for offices, commerce, stores,
                                      residential, storerooms, hotel, parking
                                      lots and other uses as the Lessor may see
                                      fit and also Public Areas, which shall be
                                      constructed on the Land in stages
                                      according to the Lessor's discretion;

        "THE PROPERTY", "THE          The unit in the Project to be leased to
        PREMISES"                     the Lessee pursuant to this Agreement, as
                                      specified in the Special Conditions
                                      Appendix APPENDIX "A", in the sketch
                                      APPENDIX "B", and in accordance with the
                                      technical description APPENDIX "C";

        "THE TOWER"                   The tower in the Project, wherein the
                                      Premises are situated, as specified in the
                                      Special Conditions Appendix APPENDIX "A";

        "THE RENT"                    The sums the Lessee owes the Lessor in
                                      respect of the Lease pursuant to this
                                      Agreement, and any sum supposed to be
                                      added thereto pursuant to the provisions
                                      of this Agreement;

        "PURPOSE OF THE LEASE"        As specified in section 5 of the
                                      Agreement.

        "THE MANAGEMENT               The Lessor and/or any person, company or
        COMPANY"                      other legal entity appointed by the Lessor
                                      for the purpose of the management and
                                      maintenance of the Project as specified in
                                      section 17 below, who will take upon
                                      itself the obligations and rights of the
                                      Management Company by virtue of the
                                      Management Agreement - Appendix "D".

        "THE MANAGEMENT               The agreement for the maintenance,
        AGREEMENT"                    management and operation of the Project by
                                      the Lessor or the Management Company,
                                      attached as APPENDIX "D" to this
                                      Agreement;

        "HOLDERS OF AREAS IN THE      Lessees, tenants, owners, or licensees of
        PROJECT", "LESSEES",          areas and of particular parts of the
        "HOLDERS"                     Project.

        "PUBLIC AREAS"                All the areas within the boundary of the
                                      Land, including all the structures,
                                      additions and variations which may be
                                      added thereto from time to time, and also
                                      roofs, external walls, passages, entrances
                                      and exits, service areas and rooms,
                                      internal streets, service corridors,
                                      technical areas such as electricity,
                                      pumps, and air conditioning rooms, loading
                                      and unloading bays, elevators, escalators,
                                      stairs, and any other area within the
                                      boundaries of the Land and the Project
                                      designed to serve the general public
                                      including all the areas outside the Land
                                      and the Project which border the Land and
                                      the Project and which are designed to
                                      serve Holders of Areas in the Project and
                                      their customers, including entrances,
                                      sidewalks, gardens and signs, all
                                      exclusive of areas in the Project held by

<PAGE>
                                                                               3

                                      Holders and/or areas attached to the
                                      Premises and all as may be prescribed and
                                      defined according to the Lessor's sole
                                      discretion, and in such manner so as not
                                      to interfere with the reasonable use of
                                      the Premises by the Lessee. Concerning the
                                      payments which apply to the Lessee in
                                      relation to the Public Areas, the
                                      definition of the Public Areas as it
                                      appears in the Management Agreement and
                                      not the above definition shall apply;

        "DESIGNATED PUBLIC AREAS"     Parts of the Public Areas designated to
                                      serve a particular part of the Holders of
                                      Public Areas in the Project, such as:
                                      stairways, elevators, service rooms and
                                      entrance lobbies, and the other Public
                                      Areas inside a particular building or a
                                      particular part of the Project, which is
                                      leased or held by one Holder and/or a
                                      number of Holders, and all as may be
                                      defined and prescribed according to the
                                      Lessor's sole discretion and in such
                                      manner so as not to interfere with the
                                      reasonable use of the Premises by the
                                      Lessee;

        "DATE OF DELIVERY OF          The date on which possession in the
        POSSESSION", "DATE OF         Premises is delivered to the Lessee, as
        DELIVERY"                     specified in the Special Conditions
                                      Appendix and subject to the contents of
                                      section 11 below;

        "DATE OF GRANTING LICENCE"    The date on which the Lessor permits the
                                      Lessee to commence preparatory works in
                                      the Premises as Licensee, as specified in
                                      section 9 below;

        "THE AGREEMENT", "THE         This agreement, including the preamble and
        CONTRACT"                     appendices thereto; inclusive of any
                                      amendment to be made pursuant to the
                                      provisions of this Agreement;

        "THE INDEX"                   The Consumer Price Index including fruit
                                      and vegetables published by the Central
                                      Bureau for Statistics and Economic
                                      Research, including that Index even if it
                                      is published by another government body or
                                      institution, and also any official index
                                      which may replace it, whether or not it is
                                      based on the same statistics as the
                                      existing Index is based. If another index
                                      is introduced, and the ratio between the
                                      indices is not determined by the Central
                                      Bureau for Statistics, then the ratio
                                      between the indices shall be determined by
                                      the Lessor's accountants and their
                                      determination shall be final and bind the
                                      parties;

        "THE BASE INDEX"              As specified in the Special Conditions
                                      Appendix Appendix "A";

        "THE KNOWN INDEX"             The last known Index at the time any
                                      payment is actually made;

        "LINKAGE DIFFERENTIALS"       The sum obtained by multiplying the
                                      relevant sum by the difference between the
                                      Known Index and the Base Index, and
                                      divided by the Base Index;

        "THE AREA OF THE PREMISES"    As defined in section 4 below;

        "THE TERM OF LEASE"           As defined in section 6 below, including
                                      all additional Terms of Lease, as the case
                                      may be;

        "QUARTER"                     Periods of three months each - commencing
                                      on 1st January, 1st April, 1st July and
                                      1st October, in each calendar year;

        "THE ARCHITECT, "THE          The architect or engineer or project
        ENGINEER"                     manager appointed from time to time by the
                                      Lessor;

        THE LESSOR'S                  Whoever is appointed from time to time as
        REPRESENTATIVE"               the Lessor's Representative and where
                                      notification of his appointment has been
                                      sent to the Lessee;

<PAGE>
                                                                               4

        "MANAGEMENT FEES",            Sums of money which the Lessee is obliged
        MAINTENANCE FEES"             to pay the Management Company pursuant to
                                      the Management Agreement;

        "THE REGULATIONS"             The Project Regulations Appendix "F" to
                                      the Agreement or any other regulations
                                      which may replace them pursuant to the
                                      provisions of the Agreement;

        2.2     This Agreement includes the following appendices which
                constitute an inseparable part thereof, including any Appendix
                which is attached, or which may be attached, with the consent of
                the parties:

                2.2.1   APPENDIX "A" - Special Conditions Appendix (hereinafter:
                                       "Appendix "A"" or "the Special Conditions
                                       Appendix ");

                2.2.2   APPENDIX "B" - The sketch of the Premises (hereinafter:
                                       "Appendix "B"" or "the Sketch");

                2.2.3   APPENDIX "C" - Technical description of the Premises and
                                       a detailing of the specification works in
                                       the Premises (hereinafter: "Appendix "C""
                                       or "the Technical Description");

                2.2.4   APPENDIX "D" - The Management Agreement (hereinafter:
                                       "Appendix "D"" or "the Management
                                       Agreement");

                2.2.5   APPENDIX "E" - Plans and specification of the Lessee's
                                       changes and adjustments in the Premises
                                       and details of the Lessor's works and the
                                       Lessee's works in the Premises, shall be
                                       attached to the Agreement following their
                                       preparation;

                2.2.6   APPENDIX "F" - The Project Regulations;

                2.2.7   APPENDIX "G" - Form of certificate of insurance for
                                          the Lessee's works;

                        APPENDIX "G" - Form of certificate of the Lessee's
                                          insurance;

                        APPENDIX "G" - Fire prevention safety measures
                                          guidelines;

                2.2.8   APPENDIX "H" - Form of bank guarantee;

                2.2.9   APPENDIX "I" - Car parking agreement (hereinafter:
                                       "Appendix "I"" or "the Car Parking
                                       Agreement");

                2.2.10  APPENDIX "J" - Irrevocable Notarized Power of Attorney
                                       for the removal of a Notice of Caution
                                       that is registered in favor of the
                                       Lessee, if it is so registered,
                                       concerning the Lessor's rights in the
                                       Tower.

3.      THE LEASE TRANSACTION AND THE PARTIES' DECLARATIONS

        3.1     The Lessor hereby undertakes to lease to the Lessee, and the
                Lessee hereby undertakes to rent from the Lessor, the Premises
                for the Term of Lease as specified in this Agreement.

        3.2     The Lease pursuant to this Agreement is conditional upon the
                fulfillment of all the Lessee's undertakings pursuant to this
                Agreement including making all the payments in respect of the
                Premises during the Term of Lease as entailed by this Agreement.

        3.3     The Lessee declares:

                3.3.1   Subject to the veracity of the Lessor's declaration in
                        section 3.4 below, that it has seen and inspected the
                        Land and its vicinity, the plans of the Project and the
                        Premises, the Urban Building

<PAGE>
                                                                               5

                        Plan, the Sketch Appendix "B" and the Technical
                        Description of the Premises Appendix "C", and it has
                        also inspected the planning status of the Land, the
                        Project and the Premises with the planning authorities
                        and with any other body as it thinks fit, and that it is
                        acquainted with and aware of all the details relating
                        thereto, and certifies that it has found the Project,
                        the Premises, the Sketch, the plans and the Technical
                        Description on the date of the signing of this Agreement
                        to be suitable for its purposes and objects from every
                        aspect whatsoever and it renounces any contention of
                        inconsistency, defect and any other contention in
                        connection therewith, save for contentions in connection
                        with hidden defects and/or faults.

                3.3.2   Canceled.

                3.3.3   That it is aware that the Lessor shall be entitled to
                        introduce changes into the Urban Building Plan, in the
                        Project plans, in the Premises and its Technical
                        Description - at its absolute discretion, or as a result
                        of technical or other exigencies, or the instructions of
                        the competent authorities. The Lessee certifies and
                        declares that the introduction of changes as aforesaid,
                        shall not derogate from its declarations and consents as
                        specified in this section above provided that they do
                        not cause substantial harm to its rights under this
                        Agreement and do not derogate from the Lessee's ability
                        to make use of the Premises in accordance with the
                        Purpose of the Lease as defined below.

                        The Lessor shall report to the Lessee its intention to
                        introduce changes in the Urban Building Plan, if these
                        changes, as aforesaid, affect the Premises and/or the
                        Purpose of the Lease. For the avoidance of doubt, it is
                        clarified that changing the Urban Building Plan as
                        aforesaid shall not restrict or limit the Purpose of the
                        Lease and/or infringe upon the Lessee's rights.

        3.4.    The Lessor declares

                3.4.1   That the Tower has been constructed in accordance with
                        the provisions of a Building Permit that was issued for
                        its construction.

                3.4.2   That there is no impediment to making use of the
                        Premises for the purpose of operating a high-tech
                        company, and generally for the development of software
                        as well as software laboratories and/or inspection
                        laboratories. It is to be clarified that the aforesaid
                        does not apply to production, which is prohibited in the
                        Premises.

                3.4.3   That Form 4 has been received in respect of the
                        Premises, and that until the Date of Delivery of
                        Possession in the Premises, there shall be no legal
                        estoppel or other impediment to occupation of the
                        Premises.

4.      AREA OF THE PREMISES

        The area of the Premises for the purposes of this Agreement is the area
        of the Premises as marked in the Special Conditions Appendix. The area
        of the Premises includes the area of the Premises defined in Appendix
        "A". For the avoidance of doubt, it is hereby clarified that the area of
        the Premises does not constitute a basis for the calculation of the
        Rental Fees fixed in Appendix "A". The parties agree that the area of
        the Premises fixed in Appendix "A" is the final area for the purposes of
        this Agreement and that any additional measurement of the Premises shall
        not oblige the Parties.

5.      PURPOSE OF THE LEASE

        5.1     The Lessee hereby rents the Premises solely and exclusively for
                the purpose as specified in the Special Conditions Appendix, and
                not for any other purposes and/or other requirements of any
                nature whatsoever, unless the Lessor's authorization for the
                amendment has been obtained in advance and in writing. For the
                avoidance of doubt, it is clarified that subject to the contents
                of section 5.2 below, the Lessor is not obliged to consent to
                the Lessee's requests for an addition to and/or amendment of the
                Purpose of the Lease.

        5.2     The Lessee hereby undertakes not to use the Premises or any part
                thereof for any other purpose other than the Purpose of the
                Lease. The Lessee undertakes that it shall not alter the Purpose
                of the Lease without the Lessor's consent in writing and in
                advance. The Lessor's consent shall not unreasonably be
                withheld.

<PAGE>
                                                                               6

        5.3     A breach of this section and all stipulations thereof
                constitutes a fundamental breach of the Agreement.

6.      THE TERM OF LEASE

        6.1     The Term of Lease pursuant to this Agreement is as specified in
                the Special Conditions Appendix and commences on the Date of
                Delivery of Possession in the Premises on the date stated in the
                Special Conditions Appendix (hereinafter: "The Term of Lease").
                For the avoidance of doubt, it is clarified that in any event
                the Term of Lease shall not exceed a period of twenty-four years
                and eleven months.

        6.2     Should the Special Conditions Appendix grant the Lessee the
                rights to extend the Lease, the Lessee shall be entitled to rent
                the Premises for additional Terms of Lease (in this Agreement:
                "the Additional Term of Lease" or "the Additional Terms of
                Lease") the same as specified in the Special Conditions
                Appendix. The Additional Term of Lease, shall commence upon
                expiration of the First Term of Lease and every Additional Term
                of Lease, if any, shall commence upon expiration of the
                preceding Term of Lease provided that in no event shall the
                total number of Terms of Lease pursuant to this Agreement exceed
                twenty-four years and eleven months.

        6.3     Extension of the Term of Lease after the expiration of the First
                Term of Lease or after the expiration of every Additional Term
                of Lease is conditional upon the fulfillment of all the
                following accumulative conditions:

                6.3.1   The Lessee has given the Lessor advance notice in
                        writing at least nine months before the commencement of
                        each Additional Term of Lease, of its desire to extend
                        the Term of Lease.

                6.3.2   Upon commencement of the Additional Term of Lease, the
                        Lessee has fulfilled all its undertakings pursuant to
                        this Agreement, and has not committed a fundamental
                        breach or repeated breach of the Agreement.

                6.3.3   The Lessee provides the Lessor with all the certificates
                        and documents required concerning the extension of
                        validity of all the sureties and insurance policies it
                        has given the Lessor to the Lessor's complete
                        satisfaction, before the commencement of the Additional
                        Lease.

        6.4     If all the conditions for the extension of the Lease for the
                Additional Term of Lease have not been fulfilled, the Lessor
                shall be entitled, by notifying the Lessee, to terminate the
                Agreement upon expiration of the preceding Term of Lease, and
                the Lessee shall vacate the Premises upon the expiration of the
                Term of Lease pursuant to the provisions of the Agreement.

        6.5     If the Lessee has given the Lessor notice of extension of the
                Lease for an Additional Term of Lease as aforesaid, but the
                Lease has not been extended due to the non-fulfillment of one or
                more of the above-mentioned conditions or if the Lessee has
                changed its mind and revoked its notice expressly or generally
                then, without derogating from the fact that this shall
                constitute a breach of this Agreement, and the Lessor shall be
                entitled to any relief available to it pursuant to this
                Agreement and/or by law and/or without derogating from the
                Lessor's right to demand that the Lessee vacate the Premises on
                the date of expiration of the Term of Lease, the Lessee shall be
                obliged to pay Rental Fees also following the expiration of the
                Term of Lease, so that in all the Lessee shall pay Rental Fees,
                Management Fees and all other expenses which apply to it in
                respect of the Premises pursuant to this Agreement, for the
                entire period of nine months, which shall be counted commencing
                upon the date of revocation of the option due to the
                non-fulfillment of any one of the above conditions or from the
                date of its revocation by the Lessee as a result of its having
                changed its mind, as aforesaid, whichever is the earlier of the
                two (hereinafter: "the Additional Payment"). It is clarified
                that there is nothing in the aforesaid implying the imposition
                on the Lessee double payment of Rental Fees and/or Management
                Fees, in respect of the period prior to the expiration of the
                Term of Lease.

                Notwithstanding the aforesaid, the parties agree, that if the
                Lessor rents the Premises to any alternate lessee whatsoever,
                who rents the entire Premises or any part thereof, during the
                period in respect therefor the Lessee has paid or is to pay the
                Additional Payment, then the Lessee shall not be obliged to pay
                the same part of the Additional Payment in respect of the period
                for which the alternate lessee is to pay Rental Fees, Management
                Fees and all other expenses in respect of the Premises, but only
                in respect of the difference, insofar as there is a difference,
                between the rental fees the alternate Lessee pays and the Rental
                Fees and Management Fees which the Lessee had been required to
                pay.

<PAGE>
                                                                               7

        6.6     If the Agreement has been extended for an Additional Term of
                Lease and/or for Additional Terms of Lease, all the provisions
                of this Agreement, with the changes entailed thereby, shall
                apply to the Lease in these periods.

        6.7     The Lessee shall not be entitled to terminate the Lease and/or
                vacate the Premises before the expiration of the Term of Lease,
                and if notwithstanding the aforesaid the Lessee vacates the
                Premises prior to the expiration of the Term of Lease the Lessee
                shall be obliged to make all the payments levied on it pursuant
                to this Agreement, the same until the expiration of the Term of
                Lease.

                This section shall not apply in the event the Lessee's rights
                are transferred as stated in section 22 below and/or in the
                event this Agreement is statutorily revoked by one of the
                parties. For the avoidance of doubt, it is clarified that
                nothing in the aforesaid infringes on any relief and/or right
                which the parties possess pursuant to this Agreement and/or
                pursuant to law, including the parties' right to damages, to
                which they are entitled pursuant to this Agreement and/or by
                law.

                Nothing in the aforesaid derogates from the Lessor's rights
                pursuant to this Agreement and/or by law to instruct the Lessee
                to vacate the Premises before the expiration of the Term of
                Lease.

7.      RENTAL FEES

        7.1     The Lessee shall pay the Lessor Rental Fees as specified in the
                Special Conditions Appendix in respect of the Lease commencing
                from the Date of Delivery of Possession, with the addition of
                statutory Value Added Tax. The Rental Fees as stated in Appendix
                "A" in dollars shall be paid in new Israeli shekels in
                accordance with the latest representative rate of the U.S.
                dollar published by the Bank of Israel prior to actual payment.

        7.2     The Rental Fees shall be linked to the Index. However, it is
                hereby expressly agreed between the parties that in any event
                the Rental Fees paid in respect of any quarter whatsoever shall
                not be less than the Rental Fees paid in respect of the
                preceding quarter.

        7.3     The Rental Fees in respect of each quarter shall be paid by the
                Lessee to the Lessor in advance, on the first day of each
                quarter. In any event where the date of payment is not a working
                day (the Sabbath, festivals, etc.), the payment shall be
                deferred to the first subsequent working day.

                At the time of signature of the Agreement the Lessee shall pay
                the Lessor: three months Rental Fees with the addition of
                statutory Value Added Tax, and at the time of Delivery of
                Possession in each and every section of the Premises, the Lessee
                shall pay an additional three months Rental Fees with the
                addition of statutory Value Added Tax.

        7.4     Payment of the Rental Fees by the Lessee shall be made by way of
                debiting the Lessee's bank account or in any other way as the
                Lessor may instruct. For the purpose of collecting the Rental
                Fees and Linkage Differentials thereon and also any other sum
                the Lessee may owe the Lessor, the Lessee undertakes to provide
                the Lessor, on the date appointed by the Lessor and in any event
                within 30 days of the date of signature of this Agreement or 7
                days before the Date of Delivery, whichever is the earlier, with
                authorization to debit its account in the bank's usual form.

                For the avoidance of doubt it is hereby clarified that receipt
                of the authorization and any use thereof made by the Lessor
                shall only be deemed payment if all the payments have been made
                in full and on the appointed date.

        7.5     The Rental Fees in respect of each Additional Term of Lease
                shall be updated at the rates and according to the formula
                prescribed in the Special Conditions Appendix.

        7.6     Subject to the contents of the second paragraph of section 6.7
                above and without derogating from the contents thereof, and
                subject to the fact that the Lessee's rights have not been
                transferred to an alternate lessee in accordance with the
                provisions of section 22.3 below, the Lessee undertakes to pay
                the Rental Fees, the Management Fees and all the additional
                taxes and payments levied on it, throughout the whole Term of
                Lease, unconditionally, whether or not it has used the Premises.
                For the avoidance of doubt, it is clarified that the Lessee
                shall pay the aforesaid payments in respect of the Term of Lease
                only and/or in respect of any period wherein the Lessee did not
                return possession in the Premises to the Lessor following the
                expiration of the Term of Lease, contrary to the provisions of
                this Agreement. Nothing in the

<PAGE>
                                                                               8

                aforesaid shall derogate from the Lessor's right to any relief
                it is entitled thereto pursuant to any law and/or this
                Agreement.

        7.7     The provisions of this section 7.1, 7.3, and 7.6 are principal
                and fundamental provisions of this Agreement, and the breach
                thereof constitutes a fundamental breach of the Agreement.

        7.8     The parties agree that as long as the Lessee has not received
                any other notice from Bank Leumi l'Israel Ltd. and from Bank
                Hapoalim Ltd., the Lessee undertakes to pay the Rental Fees, as
                aforesaid in section 7.4, directly into account no. 199999 at
                Bank Hapoalim Ltd., Montifiore Branch, Branch Number 781, in Tel
                Aviv.

8.      TAXES AND ADDITIONAL PAYMENTS

        8.1     Throughout the entire Term of Lease, the Lessee shall pay all
                the payments, levies, municipal rates, taxes and compulsory
                payments of any kind whatsoever, municipal and/or government
                and/or others, including any fee, license and permit fee of any
                kind whatsoever and which pertain to the Premises and/or the
                operation thereof and/or the maintenance thereof, the same in
                addition to all the payments expressly levied on it pursuant to
                this Agreement, and all the taxes or levies and/or Betterment
                Levy which may be levied on the Premises as a result of
                exceptional use of the Premises contrary to the Purpose of the
                Lease applicable to the Premises in connection with the use of
                the Premises and the operation and maintenance thereof, or in
                connection with the Rental Fees to be imposed in the future and
                which do not exist at the time of signature of this Agreement,
                shall be levied on the Lessee. Notwithstanding the aforesaid,
                all the taxes levied by law on property owners and not on
                possessors, shall apply to the Lessor, inclusive of various
                development levies, the betterment levy which does not apply to
                the Lessee in accordance with section 12.6 below, construction
                fees in respect of the Specification Works, etc.

                Notwithstanding the aforesaid, the parties agree that until the
                Date of Delivery of Possession in the Premises, the payments
                specified above in respect of the Premises shall be paid by the
                Lessor. For the avoidance of doubt, it is clarified that nothing
                in the aforesaid imposes any obligation whatsoever on the Lessor
                to make any payment related to the operation of the Lessee's
                business in the Premises.

                For the avoidance of doubt, it is clarified that the Lessee
                shall bear the expense of the municipal rates (arnona) in
                respect of the entire area of the Premises, without exception.
                The area of the Premises for the purposes of municipal rates
                shall be determined in accordance with the Municipal Rates Order
                of the Tel Aviv Municipality, in respect of the area described
                in the sketch in Appendix "B".

                The parties agree that in any event the undertaking to pay
                municipal rates shall apply to the Lessee and even if the law is
                changed in such a manner that payment of municipal rates will be
                levied on property owners and not on possessors, this shall not
                derogate from the Lessee's obligation to pay the full amount of
                municipal rates in respect of the Premises, as aforesaid.

        8.2     Without derogating from the generality of the aforesaid, the
                Lessee shall be responsible for all the payments in respect of
                the supply of water, electricity, telephone, municipal rates,
                Business Tax, Signage Tax, or any other expense pertaining to
                the use and operation of the Premises, throughout the entire
                Term of Lease.

                The Lessor has installed a meter to measure the water
                consumption in the Premises The Lessee shall pay for the water
                consumption in accordance with the meter reading in accordance
                with the Lessor's and/or the Management Company's determination.
                A meter as aforesaid shall be installed by the Lessor at the
                Lessee's expense.

                The payment for water, insofar as it is to be made to the
                Lessor, will be made by way of an irrevocable power of attorney
                to debit the Lessee's account by the Lessor who will submit it
                to the bank. The payments to be made by the Lessee in respect of
                water consumption in the Premises shall be in accordance with
                the tariffs of the Tel Aviv Municipality, as they change from
                time to time.

                The Lessee declares that it is aware that water consumption in
                the Premises does not include the water consumption in the
                public areas and that the payments in respect of water
                consumption in the public areas shall be added to the Management
                Expenses and be collected by the Management Company within the
                framework of the Management Fees.

<PAGE>
                                                                               9

                The Lessee shall be responsible to connect the Premises to the
                water meters, insofar as a water meter will be installed in the
                Premises, and to the telephone in the Premises, subject to the
                contents of Appendix "C" and shall bear the expense of their
                installation. The Lessor shall be responsible for bringing the
                water and telephone lines to the entrance of the Premises, at
                its own expense.

        8.3     The Lessee shall pay, throughout the entire Term of Lease, on
                the due dates, all the payments it owes for maintenance and
                management of the Project as specified in the Management
                Agreement. The Lessee shall also pay on the due dates all the
                payments it owes for use of the parking lots in accordance with
                the provisions of the car parking agreement it is due to sign
                and in respect of any other auxiliary payment levied on it
                pursuant to this Agreement and its appendices.

        8.4     The Lessee undertakes to notify the local authority and other
                relevant bodies in writing that it has rented the Premises and
                also to specify in the notice as aforesaid the area of the
                Premises as it appears in the Special Conditions Appendix. The
                Lessee undertakes to see to it that all the Municipality
                accounts and/or any other account relating to a payment and/or
                tax levied on the Lessee as stated in this Agreement shall be
                issued to the Lessee. Upon the expiration of the Term of Lease
                and hence, the Lessee shall return those accounts into the name
                of the Lessor or into any name it has been instructed to do so.

                For the purpose of executing the contents of this sub-section,
                the parties undertake to sign any form and/or application
                vis-a-vis the bodies mentioned above, insofar as may be
                required.

        8.5     Valued Added Tax shall be added to each one of the payments
                which the Lessee is obliged to pay the Lessor and/or the
                Management Company pursuant to the provisions of this Agreement,
                when the payment is made, at the rate in force from time to time
                by law and/or any tax which may replace it and/or any tax which
                by the law imposing it may apply to any payment whatsoever which
                the Lessee is obliged to pay pursuant to the provisions of this
                Agreement. A statutory tax invoice in respect of the payment of
                the V.A.T. shall be sent to the Lessee by the Lessor shortly
                prior to making the Rental Fees payment.

        8.6     The Lessee undertakes to present the Lessor, from time to time
                at the Lessor's request, with all the receipts and/or
                certificates testifying that all the payments levied on it
                pursuant to this Agreement have indeed been paid by it, the same
                within 7 days from receiving the Lessor's request as aforesaid.

        8.7     In the event where the Lessor pays, for any reason whatsoever,
                any payment whatsoever which pursuant to the provisions of this
                Agreement is levied on the Lessee, the Lessee shall be obliged
                to repay the Lessor any sum it has paid as aforesaid,
                immediately upon its first demand. The Lessor's accounts with
                regard to the payment as aforesaid shall constitute prima facie
                evidence of their veracity. Nothing in the aforesaid may remove
                the Lessee's right to object to the Lessor's demand pursuant to
                the provisions of this Agreement, by way of application to an
                arbitration procedure. Insofar as it is possible, the Lessor
                shall provide the Lessee with written notice 14 days prior to
                making payments that apply to the Lessee, as aforesaid.

        8.8     The Lessor shall submit to the Lessee certification by the tax
                assessor concerning exemption from withholding tax at source and
                a certificate in accordance with the Transactions of Public
                Bodies (Enforcement of Accounting and Payment of Tax Debts) Law,
                5736-1976.

9.      WORKS AND ADJUSTMENTS IN THE PREMISES

        9.1     In this Agreement:

                9.1.1   "THE SPECIFICATION WORKS" - the works which the Lessor
                        has undertaken to perform at its expense pursuant to the
                        sketch Appendix "B" and the technical description
                        Appendix "C" to this Agreement.

                9.1.2   "THE LESSOR'S WORKS" - works and adjustments in the
                        Premises beyond the Specification Works which the Lessor
                        agrees, at the Lessee's request, to perform for the
                        Lessee, as specified in Appendix "E".

                9.1.3   "THE LESSEE'S WORKS" - various works in the Premises
                        beyond the Specification Works and the Lessor's Works
                        which the Lessee wishes to make in the Premises by
                        itself and/or by means of any person on its behalf,
                        insofar as works will be performed, as aforesaid, by the
                        Lessee.

<PAGE>
                                                                              10

        9.2     No later than the date specified in the Special Conditions
                Appendix, the Lessee shall submit technical specifications and
                adjusted performance plans signed by the Lessee to the Lessor
                for its inspection and approval, for all the works and
                adjustments required in the Premises with an itemized inventory
                of the Lessor's Works and the Lessee's Works. Without derogating
                from the generality of the aforesaid, the plans shall include
                plans of the deployment of partitions and the division of the
                Premises into rooms, the location of the electricity, telephone,
                communications, air conditioning, computers etc. points and
                connections, deployment of the lighting elements and any other
                item connected to the Lessor's Works and the Lessee's Works.

        9.3     The Lessor shall be entitled to approve the afore-mentioned
                plans and technical specifications, to request further details
                in connection therewith, to make amendments therein or refuse to
                approve them provided that refusal to approve the Lessee's
                specifications and plans shall be on reasonable grounds only,
                related to the Tower's facades, the Tower's structure or to any
                other part of the plans and/or specifications that may affect
                the external appearance of the Tower or the Tower's systems. It
                is clarified that the Lessor shall be entitled to refuse to
                perform part or all of the works which the Lessee wishes to
                include within the definition of the Lessor's Works. The Lessee
                shall be entitled to perform these works as part of the Lessee's
                Works. In any event where the Lessee applies for the Lessor's
                approval, the Lessor shall provide its reply within 21 days. To
                the extent that the Lessee shall use the Lessor's consultants to
                plan the systems in the Premises, the Lessor's authorization
                will not be required for these plans and the authorization of
                the Lessor's consultants will be sufficient. Where the Lessor
                has not replied within the aforesaid 21 days, the Lessee shall
                notify the Lessor at the expiration of the 21 days that it has
                not yet received its reply. If the Lessor does not respond
                within an additional 7 days from the date it received the
                aforesaid notice from the Lessee, the Lessor shall be seen as
                having authorized the Lessee's plans.

                If the specifications and plans have not been approved or the
                Lessor has demanded amendments, variations or further details in
                connection therewith, the Lessee shall provide the Lessor with
                new and/or complementary technical specifications and plans
                according to the Lessor's reasonable directives and the same
                within 14 days from the date it received the Lessor's remarks.
                The afore-mentioned plans and technical specifications, after
                they have been approved by the Lessor, if approved, and subject
                to the amendments made or demanded by it, all as aforesaid,
                shall be attached as Appendix "E" to this Lease Agreement and
                shall constitute an inseparable part thereof.

                It is clarified that the certificates from the Lessor and/or any
                person on its behalf, do not impose any liability on the Lessor
                in connection with the specifications and plans submitted by the
                Lessee as stated above, and the Lessee alone shall be liable for
                any defect, inconsistency, and error in the specifications and
                plans mentioned above and also for any damage which may be
                caused as a result thereof to the Lessee and/or the Lessor.

                For the avoidance of doubt, it is clarified that the
                specifications and plans that the Lessee prepares shall be in
                accordance with the provisions of law and the Lessor is not
                entitled to request changes and/or repairs in the specifications
                and/or plans which are contrary to the provisions of law.

        9.4     The parties shall reach an agreement between themselves as to
                the amount of the payment in respect of the Lessor's Works, the
                payment terms and the other terms connected to the performance
                of the Lessor's Works and the Lessee shall pay the Lessor the
                afore-mentioned payment in the manner agreed upon between
                themselves with the statutory addition of Value Added Tax. For
                the avoidance of doubt, it is hereby clarified that the Lessor's
                Works are subject to express consent between the parties and the
                fulfillment of all the Lessee's undertakings in connection with
                these consents.

        9.5     The Lessor shall permit the Lessee to perform the Lessee's
                Works, insofar as they shall be performed, in the Premises at
                the same time as the Lessor is performing various works in the
                Project via its contractors and also the Specification Works and
                the Lessor's Works in the Premises.

        9.6     The parties agree that performance of the Specifications Works,
                the Lessor's Works, and the Lessee's Works and the dates for
                their performance, shall be performed in coordination between
                the parties. The Lessee shall be entitled to commence
                performance of the Lessee's Works in the Premises prior to the
                Date of Delivery of Possession in the Premises, the same
                commencing from the date of granting the permission notified by
                the Lessor to the Lessee as specified in Appendix "A". The
                Lessee shall be obliged to perform and complete part of the
                Lessee's Works as shall be coordinated between the parties
                taking into account the needs of the Lessor, in order to enable
                it to perform the Specification Works and the Lessor's Works.
                The Lessor shall be entitled to interrupt the grant of
                permission to the Lessee every so often, after advance

<PAGE>
                                                                              11

                notice has been given, for certain periods in various parts of
                the Premises provided that this may be required for the purpose
                of performance and completion of the Specification Works and the
                Lessor's Works which cannot be performed at the same time as the
                Lessee's Works.

                Subject to the contents of this Agreement, the Lessor undertakes
                to complete all the Specification Works and the Lessor's Works
                by the Date of Delivery of Possession in the Premises, in such a
                manner as to enable full use of the Premises for the Lessee's
                purposes.

        9.7     The Lessee's status at the Premises and the Project throughout
                the period between the date of granting the permission and the
                Date of Delivery shall be the status of licensee on behalf of
                the Lessor when the permission is expressly limited to the
                performance of the Lessee's Works in the Premises only for the
                purpose of preparing and adapting the Premises to its
                requirements.

                The Lessor shall be entitled to halt or revoke provision of
                permission to the Lessee, in accordance with this section, only
                in the event of a fundamental breach of this Agreement by the
                Lessee, and the same only after having given seven days' warning
                in advance and in writing, in the course of which the breach has
                not been rectified.

        9.8     The Lessee declares that it is aware that performance of the
                Specification Works and the Lessor's Works is dependent, inter
                alia, on the Lessee sending the plans and specifications and
                obtaining approval therefor as aforesaid on time, in particular
                in all matters pertaining to the planning and installation of
                partitions, air conditioning systems, lighting, electricity,
                telephones, and also the other systems in the Premises and the
                same insofar as they are included in the Specification Works and
                the Lessor's Works, and also the additional works required for
                completion of the Premises. Accordingly the Lessor shall not be
                liable for any deferral or delay in completion of the Premises
                and/or in delivery of possession therein to the Lessee which may
                occur as a result of a delay on the part of the Lessee in
                sending the plans and specifications it is obliged to send for
                the Lessor's approval as aforesaid or a delay in adapting them
                to the Lessor's requirements, unless these have been caused by a
                negligent act and/or omission of the Lessor, and all within the
                time period of the delay caused in delivery of the plans and
                specifications and/or their adaptation by the Lessee, as
                aforesaid.

                Without derogating from the aforesaid, in any event of delay in
                the approval of the Lessee's plans as aforesaid, which has not
                been caused by a negligent act and/or omission of the Lessor,
                the Lessor shall be entitled to progress with the Project
                construction works and in those same parts in the Premises
                insofar as may be required for the purpose of continuation of
                building and completing the Project and the Premises, at its
                discretion without any connection to the plans and
                specifications which the Lessee must send it as aforesaid,
                provided it sends the Lessee written notice of its intention to
                do so 14 days in advance. The Lessee shall be liable for any
                damage caused as a result of the aforesaid and will bear the
                expense of any change or repair required as a result. The Lessor
                undertakes not to act in accordance with the aforesaid, unless
                the delay in the performance of the works causes the Lessor
                substantial damage.

        9.9     In all that is connected with performance of the Lessee's works,
                insofar as they are performed, the following provisions shall
                apply:

                9.9.1   The Lessee shall perform the Lessee's Works in such
                        manner as to cause as minimal disturbance as possible to
                        the other works to be performed simultaneously in the
                        Premises and the Project either by the Lessor or by any
                        person on its behalf or by other lessees.

                9.9.2   The Lessee shall be responsible for coordinating the
                        Lessee's Works with the Lessor and its contractors as
                        well as with any other party connected to the
                        performance of the works in the Premises and the
                        Project. The Lessee undertakes to report to the Lessor's
                        Representative on a day-to-day basis on the progress of
                        the Lessee's Works as well as to provide it every so
                        often with a schedule in connection with the performance
                        of the Lessee's Works for the approval of the Lessor's
                        Representative, at its demand. Insofar that it is under
                        its control, the Lessee undertakes that the Lessee's
                        Works shall be performed according to the schedules and
                        it undertakes to report to the Lessor's Representative
                        beforehand of any anticipated inconsistency with or
                        significant deviation therefrom.

                9.9.3   The Lessor is entitled to supervise the performance of
                        the Lessee's Works. The Lessee undertakes that during
                        the course of the period of granting the permission and
                        performance of the Lessee's Works it and any worker on
                        its behalf shall obey the Lessor's Representative's

<PAGE>
                                                                              12

                        reasonable instructions and act according to his
                        instructions, provided that these instructions conform
                        to the provisions of this Agreement.

                9.9.4   It is hereby clarified that the Lessee's deviation from
                        the plans and specifications which have been approved by
                        the Lessor shall constitute a fundamental breach of this
                        Agreement and in such event the Lessor shall be entitled
                        to prevent the performance and/or continuation of
                        performance of the Lessee's Works which exceed the
                        conditions of the approval and to require that the
                        Lessee return the Premises to their former state without
                        this derogating from any other right of the Lessor
                        pursuant to this Agreement and/or by law.

                        For the purposes of this section, "deviation from the
                        plans and specifications" shall be considered only if it
                        is a substantial deviation from the specifications
                        and/or plans and/or any deviation whatsoever from the
                        specifications and plans insofar as the deviation is
                        related to the Tower's facades, central systems, and/or
                        structure.

                        If the Lessee has not returned the Premises to their
                        former state or has not rectified the deviation, the
                        Lessor is entitled, but not obliged, to return the
                        Premises to their former state by itself and to charge
                        the Lessee all the expenses and damages incurred by the
                        Lessor as a result thereof and the Lessor shall also be
                        entitled to realize any surety given to it to ensure the
                        fulfillment of the Lessee's undertakings pursuant to
                        this Agreement including any guarantee and/or other
                        surety it holds.

                9.9.5   For the purpose of performance of the Lessor's and
                        Lessee's Specification Works, the parties undertake to
                        use solely and exclusively skilled and authorized
                        professionals, proper equipment and materials as
                        specified in the specifications and plans approved as
                        aforesaid by the Lessor. Each party shall be responsible
                        for the equipment and materials brought by it or by any
                        person on its behalf for the purpose of performing the
                        works and the installations it is performing, throughout
                        the entire time they are situated at the Project.

                9.9.6   The Lessee and/or any person on its behalf shall not be
                        entitled to store or place equipment and materials in
                        the Project areas outside the Premises, or to use them
                        for the purpose of performing the works, without express
                        authorization therefor from the Lessor in advance and in
                        writing, exclusive of an authorized and defined platform
                        to be allocated to the Lessee for the purpose of
                        unloading and loading.

                9.9.7   The Lessee and it alone shall be legally liable
                        vis-a-vis the Lessor vis-a-vis any third party
                        whatsoever, in respect of any damage which may be caused
                        to the Premises and/or the Project and/or the other
                        premises and/or lessees in the Project and/or the Lessor
                        and/or any third party whatsoever in connection with the
                        performance of the Lessee's Works, unless the damage
                        and/or loss and/or forfeiture was caused as a result of
                        a negligent act and/or omission of the Lessor and/or its
                        employees and/or any person on its behalf.

                9.9.8   The Lessee shall insure its liability as aforesaid and
                        if the Lessee employs any contractors whatsoever in the
                        performance of any of the Lessee's Works, the Lessee
                        undertakes to ascertain that those contractors also
                        insure their activity with appropriate insurance cover
                        for the relevant risk amounts and that the amount of the
                        cover as aforesaid in any event shall not be less than
                        that stated in the provisions of this Agreement. A
                        condition for the commencement of the performance of any
                        works whatsoever in the Premises by the Lessee is that
                        the Lessee provides the Lessor with a certificate that
                        insurance has been arranged for the construction works
                        mentioned in section 25 below.

                        The Lessee undertakes that it or any person on its
                        behalf (including contractors and sub-contractors
                        employed in the performance of the Lessee's Works) shall
                        take all the reasonable safety and cautionary measures
                        required for the prevention of loss, injury, or damage
                        to the person and/or property of any person and/or
                        corporation whatsoever in connection with the
                        performance of the Lessee's Works as aforesaid. Without
                        derogating from the aforesaid, the Lessee undertakes
                        that it or any person on its behalf shall take
                        reasonable cautionary measures and comply with the
                        provisions of any law regulating the performance of the
                        Lessee's Works and also comply with the provisions of
                        APPENDIX "G(3)" - Fire Prevention Safety Measures
                        Procedure.

<PAGE>
                                                                              13

                9.9.9   If a building permit or any other license or permit is
                        required pursuant to any law or custom for the
                        performance of any works whatsoever within the framework
                        of the Lessee's Works, the Lessee shall be obliged to
                        duly obtain it before it commences performance of the
                        works. The Lessor shall cooperate and sign all the
                        documents required for the purpose of obtaining the
                        permits as aforesaid.

                9.9.10  The Lessor shall supply the Lessee with water and
                        electricity, against payment, during the performance of
                        the Lessee's Works, the same at the Lessee's request and
                        after prior arrangement with the Project Manager and the
                        works contractor, with the Lessee paying for the water
                        and electricity it shall consume as per the cost price
                        to the Lessor.

        9.10    It is hereby agreed that the Lessee's delay in the completion of
                the Lessee's Works which has not been caused as a result of the
                Lessor's act or omission shall not defer the date for
                commencement of the Term of Lease.

        9.11    Without derogating from the generality of the aforesaid, the
                Lessee shall pay the Rental Fees and bear all the other payments
                which it is obliged to bear pursuant to this Agreement and shall
                fulfill all its other undertakings as specified in this
                Agreement - if Delivery of Possession in the Premises is
                deferred owing to delays caused solely by an act and/or omission
                of the Lessee.

10.     RIGHT OF REVOCATION

        The Lessee may revoke this Agreement in the event of a fundamental
        breach of this Agreement by the Lessor, which was not rectified after
        the Lessee sent written notice of it to the Lessor at least 30 days in
        advance, or in the event of a breach that is not fundamental, which was
        not rectified by the Lessor after the Lessee sent written notice of it
        to the Lessor at least 60 days in advance or a longer period, as
        required by the circumstances of the event, as long as under the
        circumstances of the event it would not be unjustified to revoke the
        Agreement.

11.     DELIVERY OF THE PREMISES

        11.1    The Lessor shall deliver possession of the Premises to the
                Lessee on the date set forth in Appendix "A". The Lessor shall
                give the Lessee notice concerning the Date of Delivery of
                Possession in the Premises at least 30 days before the Date of
                Delivery. The Lessor undertakes that at the Date of Delivery of
                Possession, the central systems in the Tower will be operational
                (air conditioning, electricity, plumbing, fire detection and
                fire fighting), at least half of the elevators installed in the
                Tower and which constitute all the elevators are operational and
                there will be reasonable avenues of access to the Premises.

        11.2    The parties expressly agree that the Lessor shall be entitled to
                defer the Date of Delivery of Possession in the Premises, for
                not more than 30 (thirty) days, without this being deemed a
                breach of this Agreement on its part, provided that if the
                deferral exceeds 14 days, the Lessor shall bear the actual
                additional expenses that will apply to the Lessee as a result of
                the deferral in Delivery of Possession, which came into being
                after the first 14 days of delay, and until the Date of Delivery
                of Possession in the Premises to the Lessee. The Lessor's
                aforesaid right to defer the Date of Delivery of Possession
                shall not apply to the 14th floor of the Premises.

                Without derogating from the aforesaid, if the Date of Delivery
                pursuant to this Agreement is deferred consequent upon the
                Lessor's deferral of completion of construction of the Premises
                and/or if occupancy is deferred for reasons of force majeure,
                including unusual conscription of reserve forces, an exceptional
                shortage of construction materials, equipment or workers,
                weather factors or other natural phenomena, orders (which have
                not been issued due to act or omission of the Lessor and/or any
                person on its behalf), regulations or statutes which delay the
                construction or extend its period of performance, freezing of
                construction as a result of administrative orders, nationwide
                strikes or nationwide industrial action, or any other factor
                which is not under the Lessor's control. In any such event, the
                Date of Delivery shall be deferred for the period of time
                entailed by the existence of the afore-mentioned conditions or
                any of them, as the case may be and with the addition of the
                time period required for organization, which shall not exceed
                seven days. The Lessor shall notify the Lessee concerning the
                development of circumstances as aforesaid immediately after it
                learns of the development of these circumstances, as aforesaid,
                which may cause the deferral of the Date of Delivery of
                Possession.

                If the Date of Delivery of Possession in the Premises has been
                deferred pursuant to this section, the date of commencement of
                the Term of Lease shall be deferred for an identical period, and
                the Lessee shall be

<PAGE>
                                                                              14

                entitled to notify the Lessor of its wish to extend the date of
                expiration of the Term of Lease for an identical period as
                aforesaid.

        11.3    The Lessee hereby undertakes to appear at the Premises on the
                Date of Delivery of Possession in the Premises and accept
                possession in the Premises, subject to the Premises being
                completed in accordance with the sketch and the technical
                description, insofar as this concerns the Specification and
                Lessor's Works and subject to the contents of this Agreement.

        11.4    On the Date of Delivery of Possession in the Premises, the
                Lessor's Representative shall make a delivery protocol and this
                protocol shall serve as prima facie proof that the Lessee has
                received the Premises pursuant to the conditions of this
                Agreement, subject to the Lessor's undertakings to perform the
                finishes and repairs specified in the delivery protocol, if any,
                in the Premises, and subject to any hidden defect. If the Lessee
                fails to appear at the Date of Delivery of Possession, another
                date to make the delivery protocol will be set which shall not
                be later than 72 hours after the Date of Delivery of Possession.
                Should the Lessee also fail to appear at this time, the Lessee
                hereby expressly agrees that the delivery protocol be made in
                its absence and all the provisions specified above shall apply
                to this protocol.

                For the avoidance of doubt, it is clarified that making a
                delivery protocol at a later date than the Date of Delivery of
                Possession does not change the Date of Delivery of Possession.

        11.5    For the avoidance of doubt, it is clarified that the Lessee's
                failure to accept the Premises or to appear at the Date of
                Delivery or to cooperate with the Lessor in making the protocol
                as aforesaid and/or the existence of any defects whatsoever
                and/or the necessity of completing works in the Premises by the
                Lessor which would not prevent reasonable use of the Premises,
                shall not serve to prevent acceptance of possession in the
                Premises and, in any event as aforesaid, possession in the
                Premises shall be deemed to have been delivered on the due date
                and the Lessee shall be obliged to accept possession in the
                Premises, unless the Architect has determined that the defects
                or necessity for completion of the works as aforesaid prevents
                acceptance of possession in the Premises, in order to make use
                of it for the Purpose of the Lease. If the Lessee disagrees with
                the Architect's decision as aforesaid, then the decision
                concerning the dispute will be assigned to an engineer whom the
                parties shall appoint and in the absence of agreement regarding
                the identity of the engineer, an engineer will be appointed by
                the chairman of the Architects and Engineers Association.

        11.6    Acceptance of possession in the Premises by the Lessee shall
                constitute certification on its part that the Premises have been
                delivered to it in full compliance with the provisions of this
                Agreement and its absolute satisfaction, subject to that which
                is specified in the delivery protocol and the fulfillment of the
                Lessor's undertakings pursuant to this Agreement, except for
                hidden defects.

        11.7    Without derogating from the generality of the aforesaid,
                delivery of possession in the Premises to the Lessee is
                conditional upon the fulfillment of all the Lessee's
                undertakings pursuant to this Agreement, including payment of
                the Rental Fees, providing authorization to debit its account,
                insofar as is required, providing sureties, providing
                certificates that insurance has been arranged etc.

        11.8    Subject to that which is stated in section 11.5 above, the
                Lessee undertakes to accept possession on the Date of Delivery.
                The Lessee certifies that in any event where it does not come to
                accept possession on the Date of Delivery, as stated in section
                11.4 above, or in the event that possession is not delivered to
                the Lessee as a result of the non-fulfillment of one or more of
                the Lessee's undertakings, it shall be deemed to have accepted
                possession in the Premises on the due date without any
                reservations regarding its condition, except for hidden defects,
                and the obligation to pay Rental Fees, Management Fees and any
                other payment pursuant to this Agreement shall apply to the
                Lessee commencing from the date set forth in this Agreement.

        11.9    The Lessor shall perform the repairs of the defects contained in
                the delivery protocol within a reasonable time period, with the
                aim of performing all the repairs, if any, simultaneously.
                Defects entailing urgent repairs shall be repaired by the Lessor
                in an urgent manner.

                If the Lessor has failed to repair the faults which are its
                responsibility, as aforesaid, and, pursuant to the Architect's
                decision, these faults prevent the Lessee from making use of the
                entire Premises or any part thereof wherein repairs are
                required, the Lessee shall be exempt from Rental Fees,
                Management Fees, and municipal rates in respect of that part
                that it can not use. If the Lessee disagrees with the
                Architect's decision, as aforesaid, then the decision concerning
                the dispute shall be assigned to an engineer to be

<PAGE>
                                       15

                appointed by the parties and in the absence of agreement
                regarding the identity of the engineer, an engineer will be
                appointed by the chairman of the Architects and Engineers
                Association.

                If the Lessor fails to repair the faults which are its
                responsibility, as aforesaid, within a reasonable period of time
                following the decision of the Architect or the engineer
                arbitrator, as the case may be, then the Lessee shall be
                entitled, after he has given written notice of this to the
                Lessor seven days in advance, to perform the repairs itself and
                the Lessor shall repay the expenses the Lessee expended to
                perform the repairs against the presentation of receipts.

        11.10   The Lessor shall be liable to repair faults in the Premises that
                were not caused by an act and/or omission of the Lessee, but
                rather ensue from faulty workmanship and/or flawed materials. It
                is clarified that the aforesaid applies only in relation to
                works performed in the Premises by the Lessor and/or any person
                on its behalf and does not apply in relation to works performed
                by the Lessee and/or any person on its behalf.

12.     PERMITS AND LICENSES

        12.1    The Lessee and it alone shall be liable for obtaining the
                permits and licenses required by law for running its business in
                the Premises and to maintain their validity, the same at its
                sole expense and liability.

                Insofar as obtaining certification that must be obtained by the
                Lessee requires the performance of any actions and/or obtaining
                any certification whatsoever which is the responsibility of the
                Lessor pursuant to this Agreement, the Lessor shall perform the
                required actions in such a manner as to enable the Lessee to
                obtain the required certification.

        12.2    The Lessee declares that it is conversant and familiar with the
                business it intends to run at the Premises and the entire matter
                of the licensing and permits required for the purpose of running
                the business as aforesaid. The Lessee has examined and is aware
                of the requirements of the various authorities including the
                local authority, the Civil Guard, the Sanitation Department, the
                Ministry of Health, the Ministry of the Environment, etc., and
                it has taken the above-mentioned requirements into account when
                signing the Agreement and for the purpose of planning the
                adaptations in the Premises and specifications of the Lessor's
                Works and the Lessee's Works.

        12.3    The Lessor undertakes to sign, at the Lessee's request, any
                document and/or application which may be required for the
                purpose of obtaining the business license and/or other permit
                required for the operation of the business by virtue of any law
                and subject to the provisions of the law insofar as required
                from it as owner of the Premises and on condition that the
                signature as aforesaid does not impose any liability of any kind
                whatsoever on it.

        12.4    Without derogating from the aforesaid, the Lessee undertakes to
                run its business and comply with all the requirements under The
                Business Licensing Law 5728 - 1968, to obtain any license and
                permit required by law for the purpose of running the Lessee's
                business at the Premises in accordance with the purpose of the
                Lease, and to renew it every year or every other period as
                required by law.

        12.5    The Lessee shall be liable for civil and/or criminal liability
                in any event of commission of offenses and/or breaches of the
                law in the Premises, unless the offense and/or breach of the law
                in the Premises were committed by the Lessor and/or the
                Management Company and/or any person on its behalf. Criminal
                liability shall be imposed on the Lessee only insofar as
                pursuant to law the Lessee is liable for criminal liability.
                However, this will not derogate from any obligation of the
                Lessee to indemnify the Lessor and/or the Management Company in
                respect of any expenses and/or fine to be imposed on them in
                respect of any offense committed in the Premises, exclusive of
                offenses as aforesaid that were committed by the Lessor and/or
                the Management Company and/or any person on its behalf.

        12.6    The Lessee shall bear by itself any payment, levy, Betterment
                Levy in respect of exceptional use, fine and/or penalty imposed
                in respect of running the business and/or the use of the
                Premises by the Lessee and/or its employees and/or agents and/or
                customers without a permit or while derogating from the permit,
                or contrary to the Urban Building Plan, or contrary to any law,
                whether imposed on the Lessor or the Management Company or
                imposed on the Lessee.

        12.7    None of the contents of this Agreement nor any act or
                certificate or consent on behalf of the Lessor shall be deemed
                to be the Lessor's authorization for the Lessee to use the
                Premises and/or to run businesses therein without a permit
                and/or while deviating therefrom and/or contrary to any law.

<PAGE>
                                                                              16

        12.8    It is agreed that failure to obtain any license whatsoever
                required for the Lessee to run its business in the Premises or
                the revocation of the license as aforesaid shall not release the
                Lessee from any undertaking whatsoever of its undertakings
                pursuant to this Agreement, unless the failure to obtain the
                license and/or revocation thereof is caused by negligence of the
                Lessor and it is not possible to make use of the Premises for
                the Purpose of the Lease due to the failure to obtain a license
                as aforesaid. Non-use of the Premises at the time of
                commencement of the Term of Lease due to failure to obtain any
                license, certificate or permit, by the Lessee, shall not
                derogate from the Lessee's undertakings to pay the Lessor the
                Rental Fees, Management Fees and any other payment which the
                Lessee is obliged to pay pursuant to this Agreement. The Lessee
                hereby renounces any contention of frustration, justification,
                or any other contention in connection with failure to obtain a
                license or certificate or the disqualification or revocation
                thereof as aforesaid, unless the failure to obtain the license
                is due to a negligent act and/or omission of the Lessor.

        12.9    The provisions of sections 12.1, 12.3, 12.4, and 12.8 above
                shall be deemed fundamental and principal provisions of this
                Agreement and the breach thereof by the Lessee shall constitute
                a fundamental breach of the Agreement.

13.     MAINTENANCE AND MANAGEMENT OF THE PREMISES AND ITS SYSTEMS

        13.1    The Lessee undertakes to preserve the Premises throughout the
                entire Term of Lease. Without derogating from the generality of
                the aforesaid, the Lessee undertakes as follows:

                13.1.1  To use the Premises and its systems with caution, not to
                        overload its floors beyond what is permitted according
                        to the specification in the appendices to this
                        Agreement.

                13.1.2  To be punctilious about the cleanliness of the immediate
                        vicinity of the Premises including the unique Public
                        Areas of the Lessee and to run its business solely and
                        exclusively within the confines of the Premises, unless
                        it has received the prior written authorization of the
                        Lessor to conduct its business outside of the Premises.

                13.1.3  Not to place junk, boxes, objects, chattels, refuse
                        and/or obstacles outside the Premises, including in the
                        service corridors, except however in places which will
                        be allocated, if any, for the purpose by the Lessor
                        and/or the Management Company according to their sole
                        discretion, and not to cause any unreasonable nuisance,
                        noise, smells, or pollution to the visiting public
                        and/or employees in the Project and/or other occupants
                        in the Project.

                13.1.4  The Lessee undertakes not to interfere with and not to
                        damage cleanliness and good neighborly relations in the
                        Project.

                The Lessee shall be responsible for the payment of all damages
                and all the fines imposed by the authorities, if any, in respect
                of a breach of the provisions of this section and/or a breach of
                any law. If fines have been imposed on the Lessor in respect of
                the acts or omissions of the Lessee as aforesaid, the Lessee
                shall indemnify the Lessor with the full amount of the fines as
                aforesaid, upon its first demand. Nothing in the aforesaid shall
                derogate from the Lessee's right to defend itself against fines,
                as aforesaid, imposed by the authorities. The Lessor shall
                notify the Lessee regarding the aforesaid fines and will enable
                it to conduct a Defense against them.

                The Lessor shall act in a reasonable manner to enforce the
                aforesaid undertakings on other lessees in the Project as well.

        13.2    The Lessee undertakes to use solely and exclusively the fixed
                and marked access roads as determined by the Lessor and/or the
                Management Company for the purpose of access to the Premises.
                The Lessee undertakes to park any vehicle and van solely and
                exclusively in the places designated therefor.

        13.3    The Lessee undertakes to maintain the Premises and all its
                systems in a good state of repair as it received them from the
                Lessor, subject to reasonable wear and tear. The Lessee declares
                that it is aware that the care of the electricity, plumbing, air
                conditioning, and fire detection and extinguishing systems
                infrastructure installed by the Lessor in the Premises and all
                the leased and/or areas designated for lease in the tower
                (hereinafter: "the Systems") shall be performed and maintained
                by the Management Company and that all the costs of looking
                after the Systems as aforesaid shall constitute part of the
                Management Expenses.

<PAGE>
                                                                              17

        13.4    For the avoidance of doubt, it is clarified that the Management
                Company shall be responsible just for the expenses of day-to-day
                care and maintenance of the Systems and that only these expenses
                shall be included in the Management Company's expenses. Any
                treatment of the Systems required as a result of careless use of
                the Systems and/or due to damage to the Systems caused due to
                the negligent act and/or omission of the Lessee and/or its
                employees, visitors, guests and/or any persons on its behalf
                shall be performed by the Management Company, but shall be paid
                by the Lessee according to an invoice to be submitted to it by
                the Management Company, within seven days from the date of
                receiving a demand in writing from the Management Company and/or
                the Lessor. The Management Company's accounts shall be prima
                facie evidence of their veracity.

        13.5    Subject to the contents of sections 13.3 and 13.4 above, the
                Lessee undertakes to perform in the Premises, at its own expense
                and at its own liability, day-to-day repairs and maintenance.
                Without derogating from the generality of the aforesaid, any
                malfunction or damage which may be caused to the Premises by the
                Lessee, its employees, agents, visitors or customers shall be
                repaired by the Lessee immediately, at its own expense and after
                it has reported any malfunction or substantial damage to the
                Lessor and received its approval for the steps it intends to
                take.

                The parties agree that the Lessee is not obligated to repair
                day-to-day wear and tear caused to the Premises, unless the
                aforesaid wear and tear may affect the facade of the Premises,
                and/or may cause any disturbance whatsoever to the Management
                Company and/or the use of the Tower by other lessees.

                Maintenance of the Premises and performance of all the repairs
                therein shall be carried out by means of certified skilled
                professionals and under the close supervision of the Lessor
                and/or the Management Company. In the event of a malfunction or
                damage whose repair cannot be postponed until a report has been
                sent to the Lessor and its approval obtained, the Lessee may
                repair whatever requires repair and report to the Lessor
                immediately thereafter.

                For the avoidance of doubt it is clarified that the provisions
                of this sub-section do not relate to systems which shall be
                treated and maintained as aforesaid in sections 13.3 and 13.4.

        13.6    If the Lessee does not immediately repair any damage or
                malfunction applying to it as aforesaid the Lessor shall be
                entitled, but not obliged, to repair them and the Lessee shall
                bear all the expenses of the repairs which the Lessor performs
                and pay them to the Lessor within 7 (seven) days from the date
                the invoice issued in connection with the above-mentioned
                repairs is sent to it.

        13.7    The Lessee undertakes to permit the Lessor and/or the Management
                Company and/or any person on their behalf to enter the Premises
                at any reasonable time and hour, after prior arrangement, in
                order to inspect the Premises and/or in order to perform any
                works and repairs of any kind whatsoever in or through them. The
                performance of repair works from within the Premises for other
                properties shall be made in coordination with the Lessee in a
                manner and at a time and in a way that will restrict as much as
                possible the disturbance to the Lessee's running his business in
                the Premises.

        13.8    The Lessee shall manage its business in the Premises while
                scrupulously observing the provisions of the Regulations -
                Appendix "F" to the Agreement and all the procedures and
                instructions prescribed by the Management Company by virtue of
                its power pursuant to this Agreement and in this regard without
                derogating from the generality of the aforesaid, the Lessee
                shall be extremely punctilious in complying with all the
                instructions of the Management Company and/or the Lessor in
                connection with the transportation, entry and removal of
                merchandise and packages to and from the Premises, and in
                particular in relation to the hours and modus operandi of these
                acts.

        13.9    The Lessee declares that it is aware that the Lessor holds
                rights vis-a-vis the Municipality and any other body in all
                matters pertaining to infrastructures for the supply of water to
                the Project and that the rights as aforesaid are the sole
                property of the Lessor. The right granted to the Lessee pursuant
                to this Agreement is a temporary right of use for the Term of
                Lease and subject to any other condition and provision in this
                Agreement.

                The parties agree that the Lessee shall be responsible for
                connecting the Premises to the telephone lines of the
                communications services provider to the Premises and the Lessee
                shall be the owner of these telephone lines and the
                communications exchange in the Premises.

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                                                                              18

        13.10   Whereas the area of the Premises also includes secure spaces on
                each floor (hereinafter: the "Secure Space"), it is hereby
                clarified that the right of use of these Secure Spaces is
                subject to orders of the Home Front Command and the provisions
                of law. Without derogating from the generality of the aforesaid,
                the Lessee undertakes to maintain the Secure Space and to use it
                in accordance with the provisions of law, the orders of the Home
                Front Command, and the instructions of the Management Company
                which ensue from the provisions of law.]

                In times of emergency, the Lessee undertakes to vacate the
                Secure Space immediately and to place it at the public's
                disposal. For the avoidance of doubt, it is clarified that the
                Lessee will continue to pay, also for the whole period that the
                Secure Space is at the public's disposal, all payments
                pertaining to the Secure Spaces and determined in this Agreement
                and in the Management Agreement.

                The Lessee is entitled to lock the Secure Space, at its own
                discretion, provided that in this event, he leaves a key with
                the Management Company that will allow entry to the Secure
                Space solely in emergencies or for the purpose of inspection,
                after prior arrangement.

14.     SIGNAGE

        14.1    The Lessee shall not erect any sign outside of the Premises
                including its walls and external windows and/or roofs and/or
                within the confines of the Land and its vicinity and/or within
                the Premises in such a manner that it is visible from outside
                the Premises. The Lessor shall install signage in the Tower
                lobby as specified in Appendix "C". For the avoidance of doubt,
                it is clarified that the Lessee is entitled to place signage in
                the lobby of each floor of the Premises, as it deems proper and
                at its own discretion.

        14.2    The erection and maintenance of the signage in the Project that
                is not within the confines of the Premises areas shall be done
                all together by the Lessor and/or via the Management Company.
                Day-to-day expenses of caring for signage as aforesaid shall be
                part management expenses.

        14.3    Without derogating from the aforesaid, the Lessor and/or the
                Management Company shall be entitled, at the Lessee's expense,
                to remove and destroy any sign and/or poster and/or display
                erected or hung in contravention of that which is stated in
                section 14.1 above, and the Lessee hereby renounces any claim or
                contention in connection with their removal or in connection
                with any damage which it may incur consequent thereto.

        14.4    The provisions of section 14.1 above are fundamental and
                principal provisions of this Agreement and the breach thereof
                shall constitute a fundamental breach of the Agreement.

15.     ELECTRICITY

        15.1    Definitions

                In this section:    "THE ENGINEER" - a certified electrical
                                    engineer or electrician who shall be
                                    responsible for the electricity network in
                                    the Project on behalf of the Lessor.

                                    "THE ELECTRICITY SERVICES" - the supply of
                                    electricity including operation, maintenance
                                    and insurance of the electrical apparatus
                                    and control systems to be installed in the
                                    Project and the Premises by the Lessor.

        15.2    General:

                15.2.1  The Lessee declares that it is aware that the Lessor
                        holds the rights vis-a-vis the Electric Corporation, and
                        any other body in all matters pertaining to the
                        infrastructures for the supply of electricity to the
                        Project and that the rights as aforesaid are the sole
                        property of the Lessor. The right granted to the Lessee
                        pursuant to this Agreement is the temporary right of use
                        for the Term of Lease and subject to any condition and
                        other provision in this Agreement.

                15.2.2  The Lessee shall be responsible for the costs of
                        connecting the electricity meters subject to the
                        contents of Appendix "C".

        15.3    Supply in Bulk

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                                                                              19

                The Lessee declares that it is aware that the Lessor has entered
                into a contract with the Electric Corporation for the supply of
                electricity in bulk (hereinafter: "the Electricity Supply
                Contract") in accordance with the Electric Corporation's usual
                rules and it undertakes and declares that:

                15.3.1  The Lessee shall not be entitled to apply to the
                        Electric Corporation and/or any other party apart from
                        the Lessor for a direct and/or separate electricity
                        supply and neither shall it be entitled to apply to the
                        Electric Corporation with a request to install a
                        separate meter for it or to pay the Electric Corporation
                        directly.

                15.3.2  The Lessee hereby renounces any claim and/or contention
                        of any cause of action whatsoever against the Electric
                        Corporation in respect of failure to supply electrical
                        current and/or interruptions in its supply. The Lessee
                        undertakes to indemnify the Electric Corporation in
                        respect of any expense and damage it may incur as a
                        result of a claim in respect of failure to supply
                        electrical current and/or interruptions in its supply
                        which may be filed against the Electric Corporation by
                        any guest and/or licensee on behalf of the Lessee.

                15.3.3  Without derogating from the aforesaid, if the Lessee
                        installs any electronic or electric equipment
                        whatsoever, the Lessee shall not be entitled to bring
                        any claim or contention whatsoever against the Electric
                        Corporation following a failure in the electricity
                        supply and/or interruptions in its supply as a
                        consequence of use or installation of said equipment.

                15.3.4  The Lessee is not entitled to supply and/or sell
                        electricity and/or provide any electricity services
                        whatsoever to any third party whatsoever for or without
                        consideration directly or indirectly.

                The Lessee is aware that the Electric Corporation is entitled to
                introduce amendments into the Electricity Supply Contract and it
                agrees in advance to any amendment which may be made in the
                conditions of this Contract as a result of the demands for
                amendments on the part of the Electric Corporation provided that
                the Lessee's ability to use the Premises in its entirety for the
                Purpose of the Lease shall not be harmed.

        15.4    The Electricity Supply

                15.4.1  The supply of electricity to the Premises shall be at
                        the strength prescribed in Appendix "C" of the Agreement

                15.4.2  The Lessee is not entitled to make any expansions or
                        changes and/or additions to the electricity supply
                        apparatus supplied to the Premises, unless done with the
                        prior authorization of the Lessor. The Lessor shall be
                        entitled to immediately disconnect and/or dismantle any
                        expansion, change, addition, etc., made without the
                        Lessor's authorization, at the Lessee's expense, the
                        same without derogating from the Lessee's liability for
                        any damage which may be caused to the electricity supply
                        apparatus as a result of work as aforesaid.

                15.4.3  If the Lessee is interested in receiving an additional
                        allocation of electricity to that supplied to the
                        Premises in accordance with the contents of the
                        technical description, Appendix "C", the Lessor shall
                        examine the possibility of increasing the allocation of
                        electricity to the Premises according to the electricity
                        capacity of the Project and it shall be entitled to
                        refuse or agree to the request at its professional
                        discretion in regard to the technical ability to perform
                        the said expansion and taking into account the needs of
                        the Project at the time of the request or in the future.

                        The Lessee hereby declares that it is aware that the
                        Lessor is not committed to supply electricity beyond the
                        quantity specified in the technical description and it
                        shall nave no claims or contentions vis-a-vis the Lessor
                        if its request is rejected provided that the Lessor
                        shall not reject the Lessee's request on irrelevant or
                        unreasonable grounds.

                        The payment in respect of connecting additional
                        electricity as aforesaid shall apply to the Lessee and
                        it shall be paid by the Lessee within 7 days from the
                        Lessor's demand. The Lessee shall be solely liable for
                        the installation of any wiring or additional systems
                        involved in the additional electricity allocation as
                        aforesaid and they shall be performed at its own expense
                        and liability only.

        15.5    Safety

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                                                                              20

                15.5.1  The Lessor and/or the Engineer and/or any person on
                        their behalf shall be entitled to visit the Premises at
                        any reasonable time, subsequent to advance notice, and
                        inspect the various types of electrical apparatus,
                        examine its safety and compatibility with the normal
                        safety standards.

                15.5.2  If the Engineer is of the opinion that any electrical
                        apparatus whatsoever which has been installed in the
                        Premises is liable to cause damage to the general
                        electricity supply system in the Project and/or it
                        constitutes a safety hazard and risk and/or does not
                        comply with the normal safety standards and/or the load
                        it imposes on the electricity supply services system is
                        liable to cause problems for the system - the Engineer
                        shall be entitled to demand repair and/or replacement
                        and/or change in the apparatus, and the Lessee
                        undertakes to take all the measures required to comply
                        with the Engineer's demand within 20 days, provided that
                        if the reason for the Engineer's demand ensues from
                        faulty workmanship performed by the Lessor and/or a
                        defective or insufficient electrical apparatus that was
                        supplied by the Lessor, then the replacement and/or
                        repair and/or change as aforesaid, shall be performed
                        urgently by the Lessor and at its expense.

                15.5.3  The Lessee shall be liable for any damage which may be
                        caused to the equipment and/or electrical apparatus in
                        the Premises and/or the electricity network outside the
                        Premises as a result of the operation by the Lessee or
                        any person on its behalf of an electrical apparatus
                        which is not in good working condition as specified
                        above, unless the damage is caused due to a negligent
                        act and/or omission of the Lessor and/or the Management
                        Company and/or any person on their behalf.

        15.6    Maintenance of Electrical Apparatus

                15.6.1  The Lessee shall permit access to any authorized
                        employee on behalf of the Lessor at any reasonable hour
                        for any electrical apparatus in the Premises, for the
                        purpose of inspection, checking, installation, repair,
                        replacement of defective parts, removal, dismantling,
                        assembly etc. of works which in the Lessor's opinion are
                        required in the electrical apparatus supplying
                        electricity services to the Premises. The Lessee shall
                        arrange to vacate and/or move any apparatus which might
                        hinder performance of the works as specified above.

                15.6.2  For the purpose of performing the works as aforesaid,
                        the Lessor shall be entitled to temporarily disconnect,
                        for the time required, the electricity supply to the
                        Premises, provided that the time during which the
                        electricity supply to the Premises is disconnected shall
                        be reasonable, taking into account the type of work in
                        the Premises. The Lessor shall coordinate as much as
                        possible the interruptions to the electricity supply
                        with those aforesaid with the Lessee. Insofar as the
                        electricity supply is disconnected only in the Premises,
                        the Lessor shall make an effort to coordinate the times
                        the electricity supply will be disconnected so that it
                        will be at times convenient to the Lessee.

                15.6.3  The Lessor shall connect the Premises to the Tower's
                        emergency generator which will supply electricity
                        services to the Premises in an emergency, as it will be
                        supplied to the other parts of the Tower.

        15.7    Electrical Apparatus

                15.7.1  All appliances, parts and other equipment, connected to
                        the electricity services supply system (hereinafter:
                        "the Electrical Apparatus"), are the sole property of
                        the Lessor, whether or not the Lessee has contributed to
                        the expenses of their purchase and/or installation
                        and/or connection. It is clarified that the aforesaid
                        does not apply to electrical equipment that constitutes
                        movables, inclusive of UPS.

                15.7.2  The Lessee shall be forbidden to perform any work of any
                        kind whatsoever on the Electrical Apparatus which may
                        impact the electrical system of the Tower and/or the
                        Project, unless it has obtained approval in writing and
                        in advance from the Lessor for the performance of works
                        as aforesaid other than by the Lessor. Urgent electrical
                        works within the area of the Premises shall be performed
                        by the Lessee even without the Lessor's authorization,
                        insofar as it was impossible to obtain the Lessor's
                        authorization within a reasonable time.

        15.8    Limitation of the Lessor's Liability in the Event of Electricity
                Failures

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                                                                              21

                The Lessor shall be entitled to interrupt or restrict the supply
                of electricity services to the Premises and other places in the
                Project, in the instances specified below:

                15.8.1  In any event of interruption or restriction in the
                        electricity supply originating from an internal and/or
                        external malfunction in the central electricity services
                        supply system in the Project, for example national or
                        regional electricity failures originating from the
                        Electric Corporation's network or the Project's internal
                        electricity system. The Lessor shall make an effort to
                        prevent interruptions to the electricity supply as
                        aforesaid, insofar as the matter is under its control.

                15.8.2  In any event where there is danger to person or real
                        danger to property.

                15.8.3  In any other event where the Engineer has ordered that
                        the interruption as aforesaid is necessary.

                In any event, where it is possible to notify the Lessee of the
                anticipated interruption in the electricity services supply,
                notice thereof shall be given by the Lessor in advance, in the
                manner prescribed by the Lessor. The Lessor shall not be liable
                for and shall not pay for any damage which may be caused to the
                Lessee in respect of the electricity failure, in the instances
                specified above and/or in any other instance over which the
                Lessor has no control.

        15.9    Unanticipated Changes

                If as a result of any statute, regulation, order or act of a
                competent authority, the necessity arises, to make any changes
                whatsoever in the electricity services supply system to the
                Premises, the Lessor and/or the Lessee shall make the
                afore-mentioned changes. Insofar as the required changes are to
                electricity apparatus that was installed by the Lessor outside
                of the area of the Premises, the Lessor shall perform the
                changes at its own expense; insofar as the changes necessary
                will be within the area of the Premises, these changes shall be
                performed by the Lessee, at its own expense.

        15.10   Termination of Electricity Services

                Without derogating from the provisions of section 20.9 below, it
                is clarified and the parties agree that in the event where the
                Lessee has not made the payments for electricity consumption
                which he owes the Lessor pursuant to this Agreement, the Lessor
                is entitled to disconnect the electricity supply to the
                Premises, the same after giving warning in writing fourteen days
                before the disconnection. In the event of termination of
                electricity as aforesaid, all the costs, damages and losses in
                respect of such termination shall be the liability of the Lessee
                alone.

        15.11   Termination of the Bulk Supply

                Notwithstanding all the aforesaid, the Lessor and/or the
                Management Company is entitled, after obtaining the prior
                approval of the Electric Corporation, to instruct the Lessee to
                be connected to the electricity network and the electricity
                supply provided on behalf of the Israel Electric Corporation
                Ltd., and in such event, the stipulations and rules of the
                Electric Corporation, in all matters pertaining to the contract
                for and supply of electricity to the Lessee, shall apply. All
                the expenses arising from the contract as aforesaid with the
                Electric Corporation and connection of the Premises to the
                Electric Corporation's electricity network shall apply to the
                Lessee alone. For the avoidance of doubt, it is clarified that
                the expenses of connecting the Tower to the electricity network
                apply to the Lessor and the Lessee shall bear only the expenses
                of connecting the Premises to the electricity network, as
                aforesaid. Notwithstanding the aforesaid, insofar as the
                termination of the bulk supply, during the Term of Lease, is due
                solely to a demand by the Lessor and not owing to the constraint
                of an administrative authority and/or the Electric Corporation
                and/or a judicial authority and/or any government body
                whatsoever, all the expenses ensuing from the connection with
                the Electric Corporation shall apply to the Lessor. Likewise,
                the Lessor is obligated in such an event, and only in such an
                event, to take care that the Electric Corporation supplies the
                Premises with electricity of the same power as the Lessor
                supplied the Lessee.

        15.12   Payment in Respect of Electricity Services

                15.12.1 The Lessee certifies that it is aware that the charge
                        for electricity consumption will be performed in
                        accordance with a reading of a meter, to be installed by
                        the Lessee at its own expense. The type of meter will be
                        determined by the Lessor at its discretion. The rate in
                        respect of the meter

<PAGE>
                                                                              22

                        reading will be the customary rate at the Electric
                        Corporation in respect of electricity at the low voltage
                        load-time rate.

                15.12.2 The Lessee certifies that it is aware that the charge
                        for electricity consumption on the Floor also includes,
                        in addition to the electricity consumption in the leased
                        areas on the Floor, the electricity consumption in
                        respect of the air conditioning system on the Floor.
                        Electricity consumption in respect of the Public Areas
                        and the public systems in this regard and without
                        derogating from the generality of the aforesaid,
                        elevators, and central air conditioning systems etc.
                        shall be charged via the Management Company in
                        accordance with the rate set forth in section 15.12.1.

                15.12.3 The Lessee undertakes to pay the Lessor in respect of
                        the electricity consumption throughout the Term of Lease
                        the meter reading in accordance with the rate set forth
                        in section 15.12.1 above, the same by way of giving an
                        irrevocable authorization for the Lessor to debit the
                        Lessee's account, which shall be sent to the bank as
                        specified in section 7 above.

                        The Lessee declares that it is aware that the payments
                        in respect of electricity consumption are in addition to
                        and not instead of other payments pursuant to this
                        Agreement.

        15.13   The Lessee declares that it is aware of an auxiliary station of
                the Electric Corporation that exists and operates in the
                Project, as well as all the accompanying apparatus and/or
                apparatus connected to the auxiliary station, as aforesaid.

        15.14   Failure to supply electricity to the Premises, due to a
                negligent act and/or omission of the Lessor, for a period
                exceeding five consecutive business days, which occurs not under
                the circumstances described in sections 15.8 and 15.10 above,
                and subject to the contents of section 21 below, shall
                constitute a fundamental breach of this Agreement. It is
                clarified that insofar as it is a failure in the Project's
                internal electrical system, the aforesaid regarding a
                fundamental breach shall apply, if the failure ensues from a
                negligent act and/or omission of the Lessor.

16.     ADDITIONS AND CHANGES IN THE PREMISES

        16.1    The Lessee shall not be entitled to make any changes or
                additions whatsoever, either internal changes or external
                changes, in the Premises, its facilities and systems, which may
                constitute a structural change, a change in the Tower facades, a
                change in the central systems of the Tower and/or any other
                change which could impact on other lessees n the Project,
                without obtaining the Lessor's consent in advance and in writing
                (hereinafter: "Changes and Additions"). The Lessor shall only
                refuse his consent on reasonable grounds. For the avoidance of
                doubt, it is clarified that architectonic grounds shall also be
                considered reasonable grounds.

                For the avoidance of doubt, it is clarified that the Lessee is
                not obliged to obtain the Lessor's authorization for Changes and
                Additions to movables in the Premises, as long as the aforesaid
                change does not affect the Tower's facades.

        16.2    Subject to that which is stated in section 16.1 above, without
                derogating from the aforesaid, if and when the Lessee makes
                and/or performs Changes and Additions in the Premises as
                aforesaid, the Lessor shall have the right and option to demand
                their removal and return of the Premises to their former
                physical state as they were at the Date of Delivery without the
                Changes and Additions.

                If the Lessor does not demand the removal of the Changes and
                Additions, these shall become the property of the Lessor without
                any consideration, and the Lessee shall have no claim and/or
                demand against the Lessor in respect of the Changes and
                Additions and/or in respect of its investment therein.

                For the avoidance of doubt, it is clarified that movables shall
                remain the property of the Lessee.

        16.3    It is agreed that in the event the Lessor permits the Lessee to
                perform any Changes and Additions whatsoever in the Premises the
                provisions of section 9 of this Agreement in connection with
                works and adaptations in the Premises by the Lessee shall apply
                thereto, with the necessary changes.

17.     MANAGEMENT OF THE TOWER

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                                                                              23

        17.1    The tower shall be managed by the Lessor or by the Management
                Company appointed by the Lessor and which shall engage in the
                management and maintenance of the tower. The Lessor shall be
                entitled at any time from time to time to transfer the
                management from the Management Company appointed by it to
                another management company, all at its sole discretion and the
                Lessee undertakes to sign the Management Agreement attached
                hereto as Appendix "D" to this Agreement, provided that the
                Lessee's rights are not infringed pursuant to this Agreement
                and/or pursuant to the Management Agreement.

                The Lessee's signature of this Agreement constitutes a direct
                undertaking vis-a-vis the Management Company, when it is
                appointed, insofar as pertaining to matters concerning it, and
                also the Lessee's undertaking vis-a-vis the Lessor to fulfill
                all its undertakings vis-a-vis the Management Company whether
                specified in this Agreement or as may be specified in the
                Management Agreement.

        17.2    As long as no management company has been appointed as
                aforesaid, the Lessor shall act as the Management Company for
                the purposes of this Agreement.

        17.3    From the date the Lessor has notified the Lessee that the
                management services will be supplied to the tower by the
                Management Company, the Lessee undertakes to fulfill all its
                obligations vis-a-vis the Lessor pursuant to the Management
                Agreement vis-a-vis the Management Company and at the Lessor's
                demand shall sign the Management Agreement and all its
                appendices with the Management Company.

        17.4    Without derogating from the contents of the Management
                Agreement, the Management Company shall prescribe reasonable
                arrangements and procedures concerning the management and
                maintenance of the tower and shall prescribed Regulations which
                shall apply to the various lessees and users of the tower and
                shall supervise their implementation. The Regulations attached
                as Appendix "F" to the Agreement shall be valid in this format
                as long as the Management Company has not published any changes
                therein.

        17.5    The Management Company shall supply management and maintenance
                services to the tower by itself and/or via sub-contractors as
                specified in the Management Agreement.

        17.6    The Lessee shall pay Management Fees to the Management Company
                as specified in the Management Agreement. On the Date of
                Delivery of Possession in the Premises the Lessee shall pay the
                Management Company an advance according to the estimate
                prescribed by the Management Company, on account of the
                Management Fees in respect of the first quarter.

        17.7    The Lessee declares that it is aware that the payment of the
                Management Fees and the strict fulfillment of the Management
                Agreement, the Regulations and the instructions of the
                Management Company are an essential basis for the smooth
                management of the Project at a high standard and quality, and it
                is for the Lessee's benefit and the benefit of all the users of
                and visitors to the Project.

        17.8    The Lessee declares that it is aware that the Lessor is entitled
                to perform any act pursuant to this Agreement via the Management
                Company, including collection of the Rental Fees and any other
                payment and also to make the Management Company be the Lessor's
                Representative in connection with all matters pursuant to this
                Agreement.

                Any approach, demand or act of the Management Company to the
                Lessee in the name of the Lessor shall be deemed to be an
                approach, demand or act of the Lessor, and the Lessee undertakes
                to act vis-a-vis the Management Company in all matters as
                aforesaid as it is obliged to act vis-a-vis the Lessor pursuant
                to this Agreement.

        17.9    The Lessee declares that it is aware that the aforesaid does not
                derogate from any provision in the Management Agreement but is
                in addition thereto and any breach of undertaking pursuant to
                section 17.6 above shall be deemed a fundamental breach of this
                Agreement and the Management Agreement.

        17.10   The Lessor undertakes to manage the Project at a high level as
                is suitable for a project of the class and standard of this
                Project.

18.     PARKING LOTS

        18.1    The Lessee is aware that there are existing car parking areas
                (hereinafter: "the Parking Lots") in the Project.

<PAGE>
                                                                              24

        18.2    The Lessor shall be entitled, at its absolute discretion, to
                decide from time to time to operate the Parking Lots or any part
                of them as pay parking lots, either by itself or via others, to
                lease them or rent them to sub-contractors for the purpose of
                their operation as pay parking lots and/or to prescribe
                arrangements for the use, operation, parking, entrance and exit,
                and hours of operation in the Parking Lots and to vary all these
                from time to time, provided that in every event the Lessee shall
                be eligible to make use of the means of entrance to the Parking
                Lot, which it receives from the Lessor in accordance with the
                contents of the Parking Agreement, provided that its remaining
                rights pursuant to the Parking Agreement are not infringed.

        18.3    If the Parking Lots are operated as pay parking lots, the Lessor
                and/or the Management Company and/or the parking lots operator
                (hereinafter: "the Parking Lot Operator") shall be entitled to
                prescribed from time to time the amount of the parking fees and
                also the procedures for operating the Parking Lots, all subject
                to the provisions of the parking agreement.

        18.4    The Lessee undertakes to comply with any determination as
                aforesaid and all the arrangements and procedures prescribed by
                the Parking Lot Operator in this matter and to use the Parking
                Lots in such manner as not to harm the other users, to obey the
                reasonable instructions of the Parking Lot Operator, to observe
                the signage and marking prescribed in the Parking Lots, not to
                block passages, to park solely and exclusively in the places and
                areas designated for parking and also not to cause any damage to
                the Parking Lots and the equipment situated therein. In the
                event of blocking passages or parking other than in accordance
                with the instructions of the Parking Lot Operator, the Parking
                Lot Operator shall be entitled to take all the measures required
                in order to remove the disturbance and in this regard to tow the
                vehicle away, to move it and to perform any act which it thinks
                fit for the purpose of preserving the proper order and operation
                of the Parking Lots.

                The Parking Lot Operator and/or the Lessor and/or any person on
                their behalf shall not be liable for any damage that is caused
                to the Lessee's vehicles as a result of the aforesaid
                performance, unless these were caused due to the negligence of
                the Parking Lot Operator and/or the Lessor and/or any person on
                their behalf. The Parking Lot Operator shall make an effort to
                notify the Lessee prior to exercising its authority as specified
                above, insofar as it is possible to do so.

        18.5    The provisions of this section constitute direct undertakings
                vis-a-vis the Lessor and/or the Management Company and/or any
                other person or body which may operate the Parking Lots from
                time to time, as the case may be.

        18.6    It is clarified that the Rental Fees and the Management Fees do
                not include a payment in respect of the use of the Parking Lots,
                and the Lessee declares that the mere fact that it is a lessee
                does not grant it or any person on its behalf any right of use
                of the Parking Lots, unless granted such right in the agreement
                Appendix "I". The Lessee's use of the Parking Lots on a
                permanent basis or within the framework of a subscription shall
                require a separate agreement to be signed with the Lessor and/or
                the Management Company and/or the Parking Lot Operator, in the
                format attached as Appendix "I" to this Agreement.

        18.7    If Appendix "I" which has been signed with the Lessee prescribes
                that the Lessee shall be entitled to park vehicles in a
                particular area in the Parking Lots, the Lessee undertakes to
                use the Parking Lots solely and exclusively in the area defined
                as aforesaid, and according to the rules prescribed by the
                Parking Lot Operator subject to the contents of Appendix "I".

        18.8    The Lessee is aware that the use of the Parking Lots within the
                framework of the Parking Agreement or within any other framework
                is the granting of permission to park vehicles only. Parking
                vehicles in the Parking Lots is at the sole liability of the
                vehicle owner or driver and no obligation to guard the vehicles
                or any other liability in connection therewith and/or in
                connection with their contents is imposed on the Lessor and/or
                the Management Company and/or the Parking Lot Operator.
                Notwithstanding the aforesaid, the Lessor and/or the Management
                Company and/or the Parking Lot Operator shall be liable for
                damages caused as a result of their negligence.

        18.9    The Lessor undertakes that the Parking Lots shall operate 24
                hours a day, seven days a week, exclusive of Yom Kippur [the Day
                of Atonement].

        18.10   The Lessor undertakes that as long as the parking lot procedures
                remain unchanged, vehicles may remain in the Parking Lots no
                more than twenty minutes without payment.

<PAGE>
                                                                              25

19.     CONTINUATION OF CONSTRUCTION IN THE PROJECT

        19.1    The Lessee hereby declares and certifies that it is aware that
                the construction of the Project is being performed in stages and
                that parts or stages of the Project will not have been completed
                on the Date of Delivery of Possession in the Premises and the
                Lessor is entitled to perform them and complete them at any time
                and at its sole discretion, provided the Lessee's opportunity to
                make use of the Premises for the Purpose of the Lease is not
                damaged, and reasonable and proper access to the Premises is
                maintained.

        19.2    The Lessee hereby renounces all claims and contentions vis-a-vis
                the Lessor in respect of any noise, nuisance, disturbance,
                discomfort etc., which, in consideration of the Purpose of the
                Lease, are not unreasonable, and which may be caused to it or
                the business it is to manage in the Premises as a result of the
                performance of construction works or the construction and
                installation of any systems and apparatus whatsoever of any kind
                whatsoever in the Project and its vicinity, provided that the
                Lessee's opportunity to use the Premises, in consideration of
                the Purpose of the Lease, is not damaged.

                To the extent possible, the Lessor shall coordinate the
                performance of the works to be performed in the Tower following
                the Date of Delivery of Possession with the Lessee.

        19.3    The Lessor shall be entitled at any time, without the necessity
                of any consent whatsoever on the part of the Lessee, to make any
                change or addition in the Project, at its sole discretion,
                either before commencement of the Term of Lease or thereafter,
                including, but not limited to, the addition or reduction of
                areas, the addition of floors, areas or wings in the Project,
                converting Public Areas into areas for the sole use of various
                users provided that these are not areas given over for the sole
                use of the Lessee, a change in apertures and passages, various
                kinds of building additions and any other change in the building
                or plans of the Project, provided that this does not prevent the
                Lessee from the capability of making use of the Premises
                according to the Purpose of the Lease.

                Subject to such that the use of the Premises shall not be
                prevented from the Lessee, the Lessee undertakes not to
                interfere with and not to object to any change or addition as
                aforesaid for any reason whatsoever.

        19.4    Without derogating from the aforesaid, the Lessor is entitled to
                request from time to time changes in the Urban Building Plan in
                all matters pertaining to the plans for the Project and the uses
                therein including the addition of construction areas etc., and
                the Lessee hereby declares that it undertakes not to object to
                any change as aforesaid and not to participate in the filing of
                objections with the planning committees, either directly or
                indirectly, provided that the rights of the Lessee under this
                Agreement shall not be substantially harmed as a result of such
                change.

        19.5    Should the Lessor be granted the opportunity to act as aforesaid
                in this section 19 and below, the Lessor undertakes to act in
                such manner as to prevent interference with the Lessee's
                day-to-day use of the Premises as much as possible and shall
                allow the Lessee to make use of the Premises in accordance with
                the Purpose of the Lease. The Lessor shall immediately repair
                any damage it causes to the Premises and/or caused by any person
                on its behalf due to the performance of the aforesaid works.

        19.6    The Lessor is entitled, without the Lessee's consent being
                required, to pass through the Premises and install by itself or
                via any person on its behalf, insofar as is required, all kinds
                of piping, including air conditioning ducts, water pipes, cables
                and electrical wires, communications and television cables etc.,
                whether or not they serve the Lessee and/or the Premises and/or
                the Project, and the Lessee undertakes to allow the Lessor or
                any person on the Lessor's behalf to enter the Premises for the
                purpose of performing the works as aforesaid and everything
                involved therein provided that the works are performed by prior
                arrangement and in such manner as to permit the Lessee to make
                use of the Premises in accordance with the Purpose of the Lease.
                After the works have been completed the Lessor shall return the
                Premises to their former state and repair any damage which has
                been caused to the Premises during the course of the works. The
                Lessor shall act to complete the aforesaid works with the utmost
                speed, and in an attempt to limit the disturbance to the Lessee
                as much as possible. Insofar as it will be possible to perform
                the aforesaid works outside the area of the Premises at the same
                cost and/or for less, the aforesaid works shall be performed
                outside the area of the Premises.

                The Lessor undertakes that the transfer of the infrastructures
                shall be made in the places designated for this in the Tower.

<PAGE>
                                                                              26

        19.7    The Lessee is aware that throughout the duration of construction
                of the Project changes are likely in the access road to the
                Project and the Premises, including the main access road which
                transverses the Project, and also the access roads and entrance
                to the Parking Lots, and the Lessor shall be entitled to make
                the access changes as aforesaid provided that it does not harm
                the Lessee's capability to make use of the Premises for the
                Purpose of the Lease and will allow reasonable and proper access
                to the Premises.

20.     VACATION OF THE PREMISES

        20.1    The Lessee undertakes that upon expiration of the Term of Lease
                or upon the revocation of this Agreement for any reason
                whatsoever (in this Agreement: "Date of Vacation of the
                Premises"), it shall vacate the Premises and deliver possession
                therein to the Lessor, when the Premises are free of any person
                and object and clean and orderly as they were when it received
                them from the Lessor or in their state after completion of the
                Lessee's Works exclusive of reasonable wear and tear in
                consideration of the designation of the Premises. The Premises
                shall be returned to the Lessor after being repainted in the
                original color and free of any occupation, lease and/or other
                right of any third parties whatsoever including any
                refurbishment, improvement, addition, change, fixture even if
                not installed by the Lessor. Without derogating from the
                generality of the contents below, it is clarified that movables
                which are not affixed permanently to the Premises shall not be
                considered the Lessor's property, but rather the property of the
                Lessee.

                For the avoidance of doubt, it is clarified that any object
                and/or equipment and/or appliances and/or stock which does not
                fall within the definition of the Lessor's property pursuant to
                this Agreement and which remains in the Premises after the
                Lessee has vacated them, shall be deemed the Lessor's property
                upon the vacation and the Lessee renounces any contention and/or
                demand and/or claim in respect thereof.

                Notwithstanding the aforesaid, the parties agree that at the
                expiration of the Term of Lease, the Lessee shall be permitted
                to dismantle installations that are permanently affixed to the
                Premises yet do not constitute part of the central systems of
                the Premises (inclusive of air conditioning apparatus which does
                not constitute part of the central air conditioning of the
                Premises), and were installed in the Premises by the Lessee and
                at its expense, provided that the Lessee shall repair any damage
                that is caused to the Premises, due to the dismantling of the
                installations as aforesaid.

        20.2    One month prior to the return of the Premises to the Lessor by
                the Lessee on the date which the Lessee is informed by written
                notice, the Engineer shall conduct an inspection of the Premises
                in the presence of the Lessee's representative. The Engineer
                shall make a list of repairs which the Lessee is obliged to
                perform pursuant to the provisions of this Agreement, if any,
                including repairs of damage and malfunctions connected to the
                return of the Premises to their former state in accordance with
                the provisions of section 20.1 above. If the Lessee's
                representative is absent and not present during the inspection
                of the Premises by the Engineer as aforesaid, this shall not
                derogate from the validity of the inspection and the findings
                contained in the list of repairs and the Lessee's undertaking to
                repair them as specified below.

        20.3    If the Lessee has not performed the repairs mentioned above
                within thirty days from the expiration of the Term of Lease, the
                Lessor shall be entitled to repair the Premises at the Lessee's
                expense. The period of time reasonably required for performing
                the repairs, commencing from the date of expiration of the Term
                of Lease as prescribed by the Engineer, shall be deemed to be
                the period in which the Lessee has delayed in the vacation of
                the Premises. The Lessee shall pay the Lessor, at the Lessor's
                first demand, the cost of the repairs according to the
                Engineer's determination, and also the Rental Fees in respect of
                the repair period as aforesaid, whether or not the repairs were
                performed. The Lessor will enable the Lessee to enter the
                Premises for the purpose of performing the aforesaid repairs
                until thirty days after the expiration of the Term of Lease. For
                the avoidance of doubt, it is clarified that during the 30
                aforesaid days, the Lessee will not be obligated to pay twice
                the appropriate use fees, as stated in section 20.4 below. If
                the Lessee disagrees with the Engineer's determination in
                connection with the cost of the repairs and/or the required
                duration of their performance, as aforesaid, then the decision
                concerning the dispute shall be assigned to an engineer to be
                appointed by the parties, and in the absence of consensus in
                respect of the engineer's identity, the engineer will be
                appointed by the chairman of the Architects and Engineers
                Association.

        20.4    The Lessee undertakes that if it does not vacate the Premises
                upon expiration of the Term of Lease as aforesaid it shall pay
                the Lessor, in respect of the period between the date prescribed
                in this Agreement for vacation of the Premises and the date of
                their actual vacation, appropriate use fees in the amount of the
                Rental Fees which the Lessee would have paid the Lessor in
                respect of the month preceding the date appointed for vacation
                of the Premises multiplied by two, or the proportionate part
                thereof in respect of a

<PAGE>
                                                                              27

                period shorter than one month, the same without any proof of
                damage (hereinafter: "the Appropriate Use Fees"). The Lessee
                declares that this sum has been fixed as agreed damages between
                the parties in advance and after due consideration, as a
                cautious and reasonable estimate of the damage which may be
                caused to the Lessor as a result of failure to vacate the
                Premises on time, the same without derogating from any right
                and/or other relief available to the Lessor pursuant to this
                Agreement or by law provided that the Lessor is not entitled to
                receive double compensation for its damages.

        20.5    The Lessee declares and undertakes that if it does not vacate
                the Premises on the date as aforesaid, then the Lessor and/or
                the Management Company shall be entitled to sue for and receive
                from the Lessee, in addition to the Appropriate Use Fees, all
                the payments the Lessee is obliged to pay for the Premises as
                per this Agreement, except Rental Fees, regarding which the
                Appropriate Use Fees replace, and any payment for damages which
                will be caused to the Lessor as a result of the failure to
                vacate the Premises on time, on account of the period between
                the date of vacation of the Premises pursuant to this Agreement
                and the date of their actual vacation, as if the Term of Lease
                had continued, until the date of actual vacation. The Lessor
                and/or the Management Company shall be entitled to realize the
                sureties given to the Lessor and/or the Management Company
                pursuant to this Agreement, the same without releasing the
                Lessee from the obligation to vacate the Premises on time and/or
                derogating from any other relief available to the Lessor and/or
                the Management Company pursuant to this Agreement or by law
                provided that the Lessor shall not be entitled to receive double
                compensation for its damages.

        20.6    For the avoidance of doubt, the Lessee declares that the payment
                and/or receipt of the Appropriate Use fees and other payments as
                aforesaid, does not create a lease relationship between the
                parties with regard to the period following the date of vacation
                of the Premises.

21.     FORCE MAJEURE

        21.1    The Lessee declares and undertakes that the Lessor and/or the
                Management Company shall not be deemed to have committed a
                breach of this Agreement and/or not to have fulfilled any of its
                conditions if the reason therefor is force majeure.

                Force majeure for the purposes of this Agreement means, without
                derogating from the provisions of any law, also fire, explosion
                which has not been caused due to Lessor negligence, as well as
                natural disaster, strike, lock-out, war, a defense state of
                emergency, and widespread conscription of reserves.

        21.2    The Lessee agrees that a breach of the Agreement and/or failure
                to fulfill any of its conditions due to force majeure shall not
                constitute a cause of action for the Lessee to revoke this
                Agreement, wholly or partly, and shall not constitute a cause of
                action for any claim whatsoever on the part of the Lessee
                against the Lessor and/or the Management Company. The parties
                agree that if the Lessee is unable to use the Premises due to an
                event of force majeure as aforesaid, and in actuality the Lessee
                does not make use of the Premises due to this event of force
                majeure, then the Lessee shall not be obliged to pay Rental Fees
                and/or Management Fees in respect of the Premises in respect of
                the period in which it was prevented from making use of the
                Premises.

                In addition to the aforesaid, the parties agree that if due to
                an event of force majeure as aforesaid, the Tower collapses,
                then the Lessee shall be entitled to revoke this Agreement
                immediately, without either of the parties having any contention
                and/or claim vis-a-vis the other.

                If, as a result of an event of force majeure as aforesaid, the
                Lessee is prevented from using the Premises for a period that
                exceeds six months, then the Lessee shall be entitled to revoke
                this Agreement without either of the parties having any
                contention and/or claim vis-a-vis the other. If the period of
                estoppel as aforesaid does not exceed six months, then the
                Lessee shall not be entitled to revoke this Agreement, subject
                thereto that the Lessor will restore the Premises at its own
                expense by means of the insurance funds received due to the
                aforesaid event of force majeure.

        21.3    The parties agree that insofar as the Lessor receives
                compensation from the property tax authorities in respect of
                damage caused to the Premises, then the Lessor shall assign to
                the Lessee the same portion of the compensation that relates to
                the part of the Premises that was constructed by the Lessee
                within the framework of the Lessee's Works against the
                restoration of the same damage by the Lessee.

22.     TRANSFER OF RIGHTS

<PAGE>
                                                                              28

        22.1    The Lessor and any one of the Lessor's units are entitled to
                mortgage and/or charge and/or endorse and/or sell and/or rent
                and/or lease and/or transfer all or some of their rights and/or
                obligations pursuant to this Agreement, and/or their rights in
                the Project and/or in any part thereof, wholly or partly, and
                also to join any party or body in the management and/or
                ownership of the Project as they see fit, provided that the
                Lessee's rights pursuant to this Agreement shall not be
                adversely affected, and all in such manner as they think fit, at
                their sole and absolute discretion and without the Lessee having
                any claims or contentions in connection therewith.

        22.2    Unless stated otherwise in this section 22 or its sub-clauses,
                the Lessee undertakes not to transfer and/or assign and/or
                endorse and/or mortgage and/or charge directly or indirectly its
                rights pursuant to this Agreement or any of them in any manner
                or form whatsoever to any party whatsoever, and also not to
                permit another person to use or occupy the Premises or any part
                thereof, as a sub-lessee or in any other way whatsoever,
                directly or indirectly, whether nor not the use, permission or
                easement are defined, and whether or not for consideration.

                Notwithstanding that which is stated above, The Lessee shall be
                entitled, without the need to obtain the prior consent of the
                Lessor, to join in the occupation and/or operation and/or
                management of the Premises and/or to grant occupation and/or
                permission to use the Premises or any part thereof, either as
                licensee, for or without consideration, or in any other manner
                any other entity or company belonging to the Terayon group as
                defined below, and this subject to sections 22.4.3-22.4.5 below
                with the relevant changes.

                In the matter of this section, the Terayon group means
                subsidiary companies and/or sister companies of the Lessee
                and/or the holding company of the Lessee and/or a company
                connected to the Lessee, as these companies are defined in the
                Securities Act, 5728-1968.

        22.3    Notwithstanding the contents of this Agreement, the parties
                agree that the Lessee may transfer its rights pursuant to this
                Agreement to an alternate lessee provided the following
                conditions are fulfilled:

                22.3.1  The Lessor has authorized in advance and in writing the
                        transfer of the rights as aforesaid. The Lessor shall
                        only refuse on reasonable grounds.

                22.3.2  The alternate lessee shall make use of the Premises in
                        accordance with the Lease Purpose pursuant to this
                        Agreement and/or another purpose which the Lessor
                        authorizes in advance and in writing, provided that this
                        purpose suits the character of the Project, and it is in
                        accordance with the provisions of the entire zoning plan
                        that applies to the land and the building permit issued
                        for the construction of the Premises. The Lessor shall
                        only refuse on reasonable grounds.

                22.3.3  The Lessor has authorized in advance and in writing the
                        identity of the alternate lessee. The Lessor shall only
                        refuse on reasonable grounds.

                22.3.4  The alternate lessee and the Lessor sign a lease
                        agreement with the terms of this Agreement at least and
                        it provides the Lessor with all the securities required
                        pursuant to this Agreement. The Lessor is entitled to
                        make its consent to the transfer of rights to an
                        alternate lessee conditional on other terms, inclusive
                        of the addition of reasonable sureties as it deems
                        proper. The Lessor shall use its right to demand a
                        change in the terms of the Agreement and/or to add
                        sureties in good faith and in a reasonable manner and
                        only if circumstances require it.

                22.3.5  Following the signature of the alternate lessee on this
                        lease agreement, after the alternate lessee has provided
                        all the required sureties upon the commencement of the
                        term of lease of the alternate lessee, the Lessee will
                        be released from all its undertakings pursuant to this
                        Agreement, subject thereto that it has fulfilled to this
                        date all its undertakings pursuant to this Agreement.

                22.3.6  For the avoidance of doubt, it is clarified that in
                        every instance of a transfer of rights to an alternate
                        lessee as aforesaid, the Lessee shall be entitled to
                        collect from the alternate lessee sums, as it deems
                        proper, in respect of the Lessee's investments in the
                        Premises, insofar as there are such. For the avoidance
                        of doubt, it is clarified that this right is not
                        available to the Lessee on the expiration of the Term of
                        Lease or its termination due to a statutory revocation
                        of the Agreement due to circumstances other than those
                        specified in section 22.3 above.

<PAGE>
                                                                              29

        22.4    Notwithstanding the aforesaid, yet subject to the contents of
                the second paragraph of section 22.2 above, the Lessee shall be
                entitled to sub-let part of the Premises on fulfillment of the
                conditions specified here below:

                22.4.1  The Lessor has authorized in advance and in writing the
                        sub-lease as aforesaid and the identity of the
                        sub-lessee. The Lessor shall only refuse on reasonable
                        grounds.

                22.4.2  The Lessee shall be entitled to sub-let parts of the
                        Premises, provided that the entire area of the areas
                        actually sub-let does not exceed 50% of the area of the
                        Premises.

                22.4.3  The sub-lessee shall make use of the Premises in
                        accordance with the Purpose of the Lease pursuant to
                        this Agreement and/or any other purpose that suits the
                        character and standard of the Project, and that the
                        Lessor has authorized in advance. The Lessor shall only
                        refuse on reasonable grounds.

                22.4.4  The Lessee shall be liable and a guarantor thereto that
                        the sub-lessee fulfills all the Lessee's undertakings
                        pursuant to this Agreement, inclusive of the Appendices,
                        and any breach of this Agreement by the sub-lessee shall
                        be considered a breach of the Agreement by the Lessee.

                22.4.5  The Lessee shall remain liable for the fulfillment of
                        all its undertakings pursuant to this Agreement directly
                        vis-a-vis the Lessor.

                22.4.6  The Lessee undertakes that in any event the provisions
                        of this Agreement shall constitute an inseparable part
                        of the sub-lease agreement.

        22.5    The Lessee undertakes to notify the Lessor of any change of
                control in the Lessee.

                Control of the company, for the purposes of this Agreement,
                means holding at least 51% of the shares and rights in the
                company and also the right to appoint at least 51% of the
                directors of the company.

        22.6    If the Lessee's rights have been transferred contrary to the
                aforesaid in sections 22.1, 22.2, 22.3, and/or 22.4, this shall
                be deemed a fundamental breach of this Agreement.

23.     INAPPLICABILITY OF THE TENANT PROTECTION LAWS

        23.1    The Lessee hereby declares that it is aware that the Project is
                a new building which was built after 28th August 1968 and that
                on this date there was no lessee entitled to occupy the Premises
                as a protected tenant and since then, the Premises have not been
                leased for key money to any party whatsoever, and that no key
                money whatsoever has been paid or received in connection with
                the Premises or the lease relationship created pursuant to this
                Agreement directly or indirectly. Any repair and/or change or
                addition or investment which may be made in the Premises, if
                any, by the Lessee or any person on its behalf shall not
                constitute and shall not be deemed to be the payment of key
                money and accordingly the provisions of the Tenant Protection
                Law (Consolidated Version), 5732 - 1972, or any other law which
                may replace the above-mentioned law shall not apply to this
                Agreement and the lease thereunder.

        23.2    Under no circumstances shall the Lessee be deemed to be a
                protected tenant and it shall not be entitled to the payment of
                key money or other payment when it vacates the Premises and it
                shall be obliged to vacate the Premises on the date of
                evacuation and return them to the Lessor as specified in section
                20.1 above.

        23.3    It is agreed and declared that the contents of this section are
                a condition precedent and fundamental term for the parties
                entering into this Agreement and any contrary contention raised
                by the Lessee or any person on its behalf shall constitute a
                fundamental breach of the Agreement.

24.     LIABILITY AND INDEMNITY

        24.1    The Lessor and/or the Management Company and anyone coming
                and/or acting on their behalf shall not be liable in any manner
                whatsoever for any damage and/or loss and/or injury which may be
                caused to the Lessee and/or its business and/or its property, as
                a result of a negligent act and/or omission by the Lessor and/or
                the Management Company and/or any person on their behalf.
                Negligence means also any other wrongdoing in accordance with
                the provisions of any law.

<PAGE>
                                                                              30

        24.2    For the avoidance of doubt and without derogating from the
                aforesaid, it is clarified that the Lessor and/or the Management
                Company and anyone coming and/or acting on their behalf shall
                not bear any liability whatsoever and/or obligation whatsoever
                for personal injuries and/or loss and and/or damage to property
                of any kind whatsoever which may be caused to the Lessee and/or
                its employees and/or anyone on its behalf, and/or any third
                party whatsoever including and without derogating from the
                generality of the aforesaid, employees, agents, contractors,
                customers, visitors and any other person inside the Premises or
                other area occupied by the Lessee unless the damage and/or loss
                were caused as a result of a negligent act and/or omission by
                the Lessor and/or the Management Company and/or any person on
                their behalf. Negligence means also any other wrongdoing in
                accordance with the provisions of any law.

        24.3    Subject to the aforesaid in sections 24.1 and 24.2 and without
                derogating from the generality of the aforesaid in them, the
                Lessee alone shall bear liability for any loss and/or damage
                which may be caused to the Premises and/or the Project and/or
                their contents and/or any person and/or corporation including
                its employees and/or the Lessor and/or the Management Company
                and/or anyone on their behalf and/or the customer public and/or
                visiting public in the Project and/or any other third party,
                which may arise from the management of the Lessee's business in
                the Premises and/or the occupation and/or use of the Premises,
                and/or from any other activity of the Lessee and all those
                acting on its behalf unless the damages are caused as a result
                of a negligent act and/or omission by the Lessor and/or the
                Management Company and/or any person on their behalf. Negligence
                means also any other wrongdoing in accordance with the
                provisions of any law..

        24.4    The Lessee undertakes to compensate and/or indemnify the Lessor
                and/or the Management Company in respect of any damages and/or
                expense which they are liable to undertake to pay or be
                compelled to pay or which they have paid in respect of any
                damage connected to the Premises or its maintenance by the
                Lessee and the use therein as aforesaid and for which the
                responsibility therefor is to borne by the Lessee as per the
                provisions of this Agreement, including in respect of any damage
                or expense which may be caused to them as a result of a civil or
                criminal claim filed against them, and as a result of the
                necessity to conduct a Defense against the claim as aforesaid,
                insofar as this claim arises from the non-fulfillment or breach
                of the Lessee's undertaking or its liability pursuant to this
                Agreement. The Lessor will notify the Lessee in advance of a
                claim as aforesaid, immediately after receiving it, and shall
                give the Lessee an opportunity to conduct a Defense against it.

        24.5    The Lessor and/or the Management Company shall be liable for any
                damage caused to the Lessee and its employees and/or any person
                on its behalf and/or any third party for any negligent act
                and/or omission on their parts and/or any person on their
                behalf. Negligence means also any other civil tort in accordance
                with statutory provisions.

                The Lessor and/or the Management Company shall indemnify and/or
                compensate the Lessee in respect of any damage the Lessee shall
                be compelled to bear inclusive in respect of any claim and/or
                damage caused it by a claim filed against it, insofar as the
                liability for damage as aforesaid is placed on the Lessor
                pursuant to this section 24.5, provided that the Lessee notifies
                the Lessor of the said claim immediately upon receiving it, and
                gives the Lessor an opportunity to conduct a defense against it.

25.     INSURANCE

        25.1

                25.1.1  Without derogating from the Lessee's liability pursuant
                        to this Agreement and/or by law, and in particular
                        without derogating from the aforesaid in section 9 of
                        this Agreement, before the date of commencement of
                        performance of the Lessee's Works in the Premises the
                        Lessee undertakes to arrange and maintain contractor
                        works insurance in the name of the Lessee, contractors
                        and sub-contractors, the Lessor and the Management
                        Company, the same as specified in the certificate of
                        arranging insurance attached to this Agreement and which
                        constitutes an inseparable part thereof and which is
                        marked AS APPENDIX "G(1)" (hereinafter: "Certificate of
                        Arranging Insurance for the Lessee's Works").

                25.1.2  Without the necessity for any demand on the part of the
                        Lessor, the Lessee undertakes to provide the Lessor, no
                        later than the date of commencement of performance of
                        the Lessee's Works in the Premises, with the
                        "Certificate of Arranging Insurance for the Lessee's
                        Works", signed by the insurer. The Lessee declares that
                        it is aware that provision of the "Certificate of
                        Arranging Insurance for the Lessee's Works" as aforesaid
                        is a condition precedent for the performance of

<PAGE>
                                                                              31

                        the works in the Premises, and the Lessor shall be
                        entitled to prevent the Lessee performing the works in
                        the Premises if the certificate as aforesaid is not
                        provided before the date of commencement of the works.

                25.1.3  The limitations of the third party insurance arranged by
                        the Lessee, as aforesaid in section (2) of the
                        Certificate of Arranging Insurance for the Lessee's
                        Works (Appendix "G(1)") are the sum of not be less than
                        $5,000,000 (five million US dollars) and shall not
                        exceed $1,000,000 (one million US dollars) per incident
                        and accumulating throughout an insurance period; all the
                        above-mentioned is subject to the contents of section
                        25.11 below.

        25.2

                25.2.1  Without derogating from the Lessee's liability pursuant
                        to this Agreement and/or by law, the Lessee undertakes
                        to arrange and maintain, throughout the validity of this
                        Agreement, the insurance policies specified in the
                        Certificate of Arranging insurance attached to this
                        Agreement and constituting an inseparable part thereof
                        and marked AS APPENDIX "G(2)" (hereinafter: "Certificate
                        of Arranging the Lessee's Insurance") and/or other
                        insurance's and/or additional insurance that the Lessor
                        demands the Lessee maintain during the Term of Lease and
                        which are customary to arrange in these kind of
                        engagements, with a duly authorized reputable insurance
                        company (hereinafter: "the Lessee's Insurance"). It is
                        clarified that the provisions of section 25.2.6 below
                        apply to this section. The Lessee shall be entitled to
                        arrange the insurance mentioned in this section 25 with
                        a duly authorized reputable insurance company in the
                        United States, which shall be certified by the Lessor's
                        insurance consultants.

                25.2.2  Without the necessity of any demand on the part of the
                        Lessor, the Lessee undertakes to provide the Lessor, no
                        later than the date of opening the Lessee's business in
                        the Premises or before the date of bringing any property
                        whatsoever into the Premises (excluding property
                        included in the works insured pursuant to section 25.1
                        above) - whichever of the two dates is the earlier -
                        with a Certificate of Arranging the Lessee's Insurance
                        as aforesaid and/or another certificate in its stead
                        which reflects the changes in the insurance
                        requirements, as detailed in this Agreement below,
                        signed by the insurer. The Lessee declares that it is
                        aware that the provision and/or updating of the
                        Certificate of Arranging the Lessee's Insurance is a
                        condition precedent for the opening of the Lessee's
                        business in the Premises and/or bringing any property
                        whatsoever into the Premises (excluding property
                        included in the works insured pursuant to section 25.1
                        above), and the Lessor shall be entitled to prevent the
                        Lessee opening its business in the Premises and/or
                        bringing property as aforesaid in the event that the
                        certificate is not provided before the date mentioned
                        above.

                25.2.3  The limitations of the third party insurance arranged by
                        the Lessee, as aforesaid in section (2) of the
                        Certificate of Arranging the Lessee's Insurance policies
                        (Appendix "G(2)") are the sum of not less than
                        $5,000,000 (five million US dollars) per incident and
                        accumulating throughout a yearly insurance period; all
                        the above-mentioned is subject to the contents of
                        section 25.11 below. The parties do hereby agree and
                        declare that the Lessor is entitled to demand of the
                        Lessee during the Term of Lease, at its discretion, that
                        it increase the limitation of liability of the policy in
                        accordance with changes in insurance marketing and/or in
                        accordance with changes in standards of coverage and
                        limitations of liability demanded of lessees, and that
                        are customary in these kinds of engagements.

                25.2.4  It is agreed that the Lessee is entitled not to arrange
                        loss of income insurance, as specified in section (4) of
                        the Certificate of Arranging the Lessee's Insurance
                        policies (Appendix "G(2)"), but the contents of section
                        25.4 below shall apply to any loss of income as
                        aforesaid as if the insurance in respect thereof had
                        been arranged.

                25.2.5  It is agreed that the Lessee is entitled not to arrange
                        insurance against broken glass, as required by section
                        (1) of the Certificate of Arranging the Lessee's
                        Insurance policies (Appendix "G(2)"), but the contents
                        of section 25.4 below shall apply to any loss or damage
                        as a result of broken glass as if insurance in respect
                        thereof had been arranged.

                25.2.6  If in the Lessee's opinion it is necessary to arrange
                        additional and/or complementary insurance to the
                        Lessee's Insurance policies as aforesaid, and/or if it
                        should be customary during the Term of Lease to demand
                        of lessees the maintenance of additional insurance to
                        those specified in

<PAGE>
                                                                              32

                        Appendix "G2", and/or the insurance market offers a
                        policy range and/or terms that are broader than those
                        specified in Appendix "G2", the Lessor shall be entitled
                        to demand the Lessee maintain additional insurance as
                        aforesaid, and/or to demand the extension of insurance
                        policies as aforesaid, and the Lessee undertakes to act
                        within a reasonable time in accordance with the Lessor's
                        instructions, and to arrange and maintain the additional
                        and/or complementary insurance as aforesaid. The
                        provisions of sections 25.2.1 and 25.2.2 above shall
                        apply to the insurance policies as aforesaid. Any
                        additional or complementary insurance to the Lessee's
                        Insurance policies as aforesaid shall contain a clause
                        concerning waiver of the right of substitution vis-a-vis
                        the Lessor and the Management Company, with regard to
                        the property insurance and/or the name of the insured
                        shall be expanded to include the Lessor and the
                        Management Company, with regard to the obligations
                        insurance, the same subject to a cross-liability clause.

                The parties hereby expressly agree that the arrangement of the
                insurance specified above, shall not add to the Lessee's
                liability beyond the contents of the Lease Agreement and/or the
                Management Agreement and/or derogate from the Lessor's liability
                pursuant to these Agreements, exclusive of the contents of
                section 25.4 below.

        25.3    The Lessee undertakes to update the insurance sums in respect of
                the insurance arranged under sections (1) and (4) of the
                Certificate of Arranging the Lessee's Insurance (Appendix
                "G(2)"), from time to time, or as per demand by the Lessor, in
                order that they shall always reflect the full value of the
                subject of the insurance insured thereunder.

        25.4    The Lessee declares that it shall have no contention and/or
                demand and/or claim against the Lessor, the Management Company
                and also vis-a-vis other tenants and/or lessees in the Project,
                where their lease agreements or any other agreement granting
                them rights in the Project contains an identical exemption
                vis-a-vis the Lessee, in respect of damage in respect of which
                it is entitled to an indemnity (or would have been entitled to
                an indemnity in respect thereof were it not for the deductible
                amount prescribed in the policy) under the insurance arranged
                pursuant to section (1) of the Certificate of Arranging
                Insurance for the Lessee's Works (Appendix "G(1)") and sections
                (1) and (4) of the Certificate of Arranging the Lessee's
                Insurance (Appendix "G(2)"), and the Lessee hereby exempts those
                specified above from any liability for damage in respect of
                which it is entitled to an indemnity as aforesaid. The aforesaid
                concerning exemption from liability shall not apply in favor of
                a person who has caused damage maliciously.

        25.5    For the avoidance of doubt, it is clarified that failure to
                provide the insurance certificates on time, as aforesaid in
                sections 25.1.2 and 25.2.2, shall not derogate from the Lessee's
                undertaking pursuant to this Agreement, including, and without
                derogating from the generality of the aforesaid, any payment
                obligation applicable to the Lessee. The Lessee undertakes to
                fulfill all its undertakings pursuant to the Agreement even if
                it is prevented from performing the works and/or receiving
                possession in the Premises and/or bringing property into the
                Premises and/or opening its business in the Premises, on account
                of failure to provide the certificates on time.

        25.6    No later than 7 days subsequent to the date of expiration of the
                Lessee's Insurance period, the Lessee undertakes to deposit a
                Certificate of Arranging Insurance as aforesaid in section
                25.5.2 with the Lessor in respect of extension of validity
                thereof for an additional year. The Lessee undertakes to
                repeatedly deposit the Certificate of Arranging the Insurance on
                the appointed dates, every insurance year and for as long as
                this Agreement is valid.

        25.7    The Lessor is entitled to examine the insurance certificates
                provided by the Lessee as aforesaid in sections 25.1.2, 25.2.2
                and 25.6 and the Lessee undertakes to make any change or
                amendment which may be required in order to adapt them to the
                Lessee's undertakings as stated in this section 25. The Lessee
                declares that the Lessor's right of control in relation to the
                insurance certificates and its right to order an amendment to
                the Lessee's Insurance as specified above does not impose any
                obligation and any liability whatsoever on the Lessor or anyone
                on its behalf in all matters pertaining to the insurance
                certificates as aforesaid, the quality, scope and validity of
                the Lessee's Insurance, or pertaining to the lack thereof, and
                it does not derogate from any obligation whatsoever imposed upon
                the Lessee pursuant to this Agreement.

        25.8    The Lessee undertakes to comply with the conditions of the
                insurance policies it has arranged, to pay the premiums in full
                and on time, and to see to and ascertain that the Lessee's
                Insurance are renewed from time to time as necessary and that
                they are valid throughout the entire Term of Lease.

<PAGE>
                                                                              33

        25.9    The Lessee undertakes to comply with the safety procedures
                published from time to time by the Lessor and/or the Management
                Company and it also undertakes to make its best effort not to do
                and/or permit another to do any act or omission in the Premises
                and/or in the Project which are liable to cause an explosion
                and/or fire and/or which might endanger human life or the
                Project.

        25.10   The Lessee undertakes that if the Lessor and/or the Management
                Company are compelled to pay additional premiums beyond the
                norm, as a result of the Lessee's irregular activity, beyond the
                ordinary and accepted activity of the Lessee for the Purpose of
                the Lease, as specified in the Special Conditions Appendix, the
                Lessee shall pay the Lessor and/or the Management Company, as
                the case may be, the afore-mentioned addition, immediately upon
                their first demand.

        25.11   For the avoidance of doubt, it is hereby agreed that
                determination of the limit of liability as specified in sections
                25.13 and 25.2.3 above is regarded as a minimal requirement
                imposed on the Lessee, and the Lessee is obliged to examine the
                extent of its liability potential and determine the limits of
                liability accordingly. The Lessee declares and certifies that it
                shall be prevented from raising any contention and/or demand
                vis-a-vis the Lessor and/or the Management Company and/or anyone
                on their behalf, in all matters pertaining to the minimal limits
                of liability as aforesaid.

        25.12   The Lessor undertakes to arrange and maintain, either by itself
                or via the Management Company, throughout the validity of this
                Agreement, the insurance specified below in this section,
                subject to that which is stated to the effect that during the
                course of the Term of Lease it shall be reasonable to maintain
                these insurance policies with liability limits specified below
                (hereinafter: "the Project Insurance") with a reputable duly
                authorized insurance company and/or the other insurance's that
                will replace them, subject to the considerations that there will
                be, if there are such, in the insurance markets during the Term
                of Lease for these types of engagements.

                25.12.1 The Project building insurance (including glass
                        breakage) at full reinstatement value, against loss as a
                        result of the normal risks in extended fire insurance,
                        including fire, smoke, lightning, explosion,
                        earthquakes, storm and gale, flooding, liquids and burst
                        pipes damages, damage by vehicles, damage by aircraft,
                        riots, strikes, malicious damage and any break-in
                        damage. The insurance as aforesaid shall include a
                        clause concerning waiver of the right of substitution
                        vis-a-vis the Lessees and vis-a-vis the partners
                        (insofar as the Lessee is a partnership) and vis-a-vis
                        their employees, in respect of damage caused by them,
                        provided that the aforesaid regarding waiver of the
                        right of substitution shall not apply in favor of a
                        person who has caused damage maliciously. It is
                        expressly agreed that for the purpose of this section
                        the term "the Project building" shall not include the
                        contents of the Premises and shall not include any
                        addition, improvement or extension made in the Premises
                        by or for the Lessees (other than via the Lessor or the
                        Management Company).

                25.12.2 Third Party Liability insurance with the limit of
                        liability of no less than the sum of $10,000,000 (ten
                        million US dollars) for one incident and accumulative
                        throughout the yearly insurance period, which insures
                        the Lessor's and the Management Company's obligation.
                        The insurance shall be expanded to indemnify the Lessee
                        in respect of damage or injury liable to be caused to
                        the person and/or property of any person within the
                        confines of the Project, but outside the area of the
                        Premises, subject to a clause concerning cross
                        liability, whereunder the insurance shall be considered
                        to have been arranged separately for each one of the
                        units of the insured. It is expressly agreed that this
                        insurance is residual and constitutes surplus cover over
                        and above any third party liability insurance which the
                        Lessee has arranged or undertaken to arrange, and this
                        insurance shall not be deemed to be joint insurance
                        together with any insurance which has been arranged by
                        the Lessee as aforesaid.

                25.12.3 Employers Liability Insurance insuring the Management
                        Company's obligation vis-a-vis its employees in respect
                        of injury caused during the course of and consequent
                        upon their employment by the Management Company, with a
                        limit of liability which is no less than the customary
                        standard liability limit in Israel on the date of
                        arranging and/or renewing the insurance.

                25.12.4 Loss of Rental Fees and management expenses insurance
                        due to damage caused to the Project building consequent
                        upon the risks as aforesaid in section 25.12.1, the same
                        throughout an indemnity period of not less than 12
                        months. The insurance as aforesaid shall contain an
                        express clause concerning waiver of the right of
                        substitution in favor of the Lessee, its partners
                        (insofar as

<PAGE>
                                                                              34

                        the Lessee is a partnership) and its employees, provided
                        that the aforesaid concerning waiver of the right of
                        substitution shall not apply in favor of a person who
                        has caused damage maliciously.

                        It is hereby expressly agreed that when the insurance
                        specified above are arranged they shall not add to the
                        Lessor's and/or the Management Company's liability over
                        and above the contents of the Lease Agreement and/or the
                        Management Agreement and/or derogate from the Lessee's
                        liability pursuant to the aforesaid agreements
                        (exclusive of the contents of section 25.13 below).

        25.13   The Lessor declares, in its name and in the name of the
                Management Company, that they shall have no contention and/or
                demand and/or claim against the Lessee in respect of damage for
                which they are entitled to an indemnity (or for which they would
                have been entitled to an indemnity if it were not for the
                deductible amount prescribed in the policy) pursuant to the
                insurance they arranged as aforesaid in sections 25.12.1 and
                25.12.4 and 25.14 below, and they hereby exempt the Lessee from
                any liability for damage as aforesaid. The aforesaid concerning
                exemption from liability shall not apply in favor of a person
                who has caused damage maliciously.

                If an insurance incident insured as aforesaid in section 25.12
                has been caused under circumstances in respect of which the
                Lessee is liable as aforesaid in section 24, the Lessee shall
                pay the deductible amount pursuant to the policies as aforesaid,
                on condition that the Lessee's contribution in respect of any
                incident as aforesaid shall not exceed the sum of $10,000 (ten
                thousand US dollars).

        25.14   Without derogating from the Lessee's liability pursuant to this
                Agreement and/or by law, and without having the Lessor incur any
                liability whatsoever vis-a-vis the Lessee, the Lessor declares
                that it is arranging an erection insurance policy in connection
                with the establishment of the Project (hereinafter: "the
                Erection Insurance"). The Erection Insurance comprises the
                chapters specified here below:

                25.14.1 Chapter 1 - Work Damage - Unexpected loss or physical
                        damage caused on a works site throughout the period of
                        performance of the works.

                25.14.2 Chapter 2 - Third Parties Liability - Third party
                        liability in respect of bodily injury or property damage
                        caused on the site throughout the period of performance
                        of the works with the limit of liability no less than
                        the sum of $20,000,000.

                25.14.3 Chapter 3 - Employers Liability - Liability toward
                        employees in respect of bodily injury caused on the site
                        throughout the period of performance of the works during
                        and owing to performance of the works with the limit of
                        liability no less than the sum of $20,000,000.

                All the aforesaid is subject to terms, restrictions, insurer's
                limits of liability and deductibles included in the Erection
                Insurance.

                The parties expressly agree that the arrangement of Erection
                Insurance by the Lessor does not have the Lessor incur any
                liability whatsoever and the Lessee is estopped from bringing
                any contention whatsoever vis-a-vis the Lessor in respect of the
                maintenance and/or the range of the Erection Insurance. The
                Lessor reserves the right to make various changes in the
                Erection Insurance, as it deems fit. The Erection Insurance
                shall be valid as long as works are being performed for the
                establishment of the Project.

                The Erection Insurance shall include a clause concerning a
                waiver of the right of substitution vis-a-vis the Lessee, its
                partners (insofar as the Lessee is a partnership) and its
                employees in respect of damage they have caused, provided that
                the aforesaid concerning a waiver of the right of substitution
                shall not apply in favor of a person who has caused damage
                maliciously.

        25.15   The failure to prepare all the insurance in accordance with the
                provisions of this section constitutes a fundamental breach of
                the Agreement.

26.     GUARANTEE

        26.1    As surety for the fulfillment of all the Lessee's undertakings
                pursuant to this Agreement and pursuant to the Management
                Agreement, the Lessee undertakes to provide the Lessor, at the
                signing of this Agreement, a bank guarantee in the form attached
                as Appendix "H" to this Agreement as specified below
                (hereinafter: "the Guarantee").

<PAGE>
                                                                              35

                26.1.1  The Guarantee shall be an Dollar-linked, unconditional,
                        endorseable, bank guarantee, made out in favor of the
                        Lessor, which may be forfeited completely or in
                        installments at any time, and duly stamped.

                26.1.2  The Guarantee shall be in the sum equivalent to the
                        Rental Fees in respect of three Lease months, with the
                        addition of V.A.T., as specified in the Special
                        Conditions Appendix.

                26.1.3  The validity of the Guarantee shall be until the
                        expiration of three months following the expiration of
                        the Term of Lease. If the Agreement grants the Lessee
                        the right to extend the Term of Lease for additional
                        Lease periods and the Lessee has utilized its right to
                        extend the Lease, the Lessee shall extend the validity
                        of the Guarantee as aforesaid no later than the date of
                        commencement of the additional Term of Lease and/or
                        shall update its amount as entailed by the conditions of
                        the Lease extension.

                26.1.4  All the expenses involved in issuing the Guarantee,
                        including commissions, Stamp Duty, and so forth, shall
                        be levied on the Lessee alone.

                26.1.5  The Lessor shall be entitled to forfeit the guarantee or
                        any part thereof at its sole discretion in any event of
                        a fundamental breach of the Agreement and/or the
                        Management Agreement by the Lessee and/or in any event
                        where the Lessee owes any money whatsoever to the Lessor
                        and/or the Management Company, therefore the Lessee has
                        an express undertaking in this Agreement to pay and has
                        not paid it on time, provided that the Lessee has been
                        notified in writing 10 (ten) days prior to the
                        forfeiture of the guarantee as aforesaid. The sum of the
                        guarantee to be forfeited shall not exceed the amount of
                        the Lessor's damages and/or the Lessee's debts to the
                        Lessor and/or the Management Company.

        26.2    Failure to provide the Guarantee as specified in this section
                including making it up in the event that it has been realized
                shall be deemed a fundamental breach of this Agreement and shall
                grant the Lessor the right to revoke the Agreement and/or defer
                the Date of Delivery of Possession in the Premises until the
                Guarantee has been provided without this derogating from the
                Lessee's obligations pursuant to the Agreement, including its
                obligation to pay the Rental Fees, Management Fees and all the
                other payments which it is obliged to pay pursuant to this
                Agreement, and without derogating from any other relief
                available to the Lessor pursuant to this Agreement and/or by
                law.

        26.3    In any event where the above-mentioned Guarantee or any part
                thereof has been realized, before the fulfillment of all of the
                Lessee's obligations as stated in section 26.6 below, the Lessee
                shall be obliged to make up the Guarantee and provide the Lessor
                with a new bank guarantee in the amount of the sum forfeited
                within 14 days from the date of realization as aforesaid.

        26.4    The Lessee declares and undertakes that it is aware that
                providing the Guarantee pursuant to this Agreement and/or the
                realization thereof by the Lessor does not constitute a waiver
                and/or derogation of any right whatsoever of the Lessor,
                including, and without derogating from the generality of the
                aforesaid, its right to any other relief granted to it pursuant
                to this Agreement or by law provided that the Lessor is not
                entitled to double compensation for its damages.

        26.5    The Lessor's realization of the Guarantee, as aforesaid, shall
                not grant the Lessee any rights whatsoever in the Premises and
                it does not constitute a waiver or stipulation of any of the
                Lessor's rights or the Lessee's undertakings pursuant to the
                provisions of this Agreement and it does not replace any of
                them.

        26.6    Upon expiration of the Term of Lease and after complete
                fulfillment of all the Lessee's undertakings pursuant to the
                Agreement, including its undertakings to vacate the Premises,
                the payment of the whole amount of the Rental Fees, the payment
                of taxes, expenses and any other sum which the Lessee is obliged
                to pay pursuant to the provisions of this Agreement, the Lessor
                shall return the Guarantee to the Lessee.

27.     BREACHES AND RELIEFS

        27.1    The provisions of the Contracts (Remedies for Breach of
                Contract) Law, 5731 - 1970, shall apply to a breach of this
                Agreement, even in instances where this Agreement grants
                specific reliefs or remedies for such a breach, the same without
                derogating from the provisions of this Agreement or the
                provisions of any law.

<PAGE>
                                                                              36

        27.2    The Lessee hereby renounces any right to set-off or the
                contention of set-off against the Lessor and/or the Management
                Company in connection with the sums it owes the Lessor and/or
                the Management Company pursuant to this Agreement and the
                Management Agreement.

        27.3    Without derogating from any other relief and in addition to any
                right of the Lessor pursuant to this Agreement and by law, the
                Lessor shall be entitled to revoke the Agreement,
                notwithstanding any provision concerning the Term of Lease and
                the Lessee shall be obliged, in such instance, to vacate the
                Premises not later than thirty days from receipt of the Lessor's
                notice or on a later date prescribed by the Lessor and return
                possession in the Premises to the Lessor as aforesaid in the
                provisions of this Agreement, in any one of the following
                instances:

                27.3.1  The Lessee has committed a fundamental breach of the
                        Agreement and the breach has not been rectified within
                        30 days of receipt of the Lessor's written notice
                        concerning the breach of the Agreement. The aforesaid
                        notice will not be required insofar as the Lessee has
                        deferred making the payments that apply to it, and in
                        relation to the deferral in payments, the contents of
                        section 27.5.5 below shall apply.

                27.3.2  The Lessee has committed a breach of the Agreement or
                        any one of its provisions which is not a fundamental
                        breach and has not rectified the breach within 60 days
                        from the day it received notice in writing from the
                        Lessor, or an earlier date as entailed by the
                        circumstances of the matter, provided that the aforesaid
                        revocation shall not be unjustified in consideration of
                        the circumstances of the matter.

                27.3.3  A petition has been filed in court for the dissolution
                        of the Lessee, to declare it bankrupt, to appoint a
                        trustee, receiver, liquidator, temporary liquidator,
                        pre-liquidator, or receiver for a substantial part of
                        its assets, a petition for an order pursuant to section
                        233 of the Companies Ordinance [New Version], or for the
                        attachment of a substantial part of its assets and an
                        order has been given pursuant to the petition or the
                        petition has not been revoked or rejected within 90 days
                        from the date it was filed in court.

        27.4    If the Lessor has revoked the Agreement as aforesaid in section
                27.3, in addition to any other provision in connection with
                eviction of the Premises and return of possession therein to the
                Lessor, the following provisions shall also apply from the day
                the revocation becomes effective:

                27.4.1  The Lessor shall have a right of lien on the Lessee's
                        equipment and stock as surety for the payment of any sum
                        and/or compensation owing or which may be owing to the
                        Lessor and/or the Management Company in connection with
                        the Agreement and/or the breach thereof. The Lessor
                        and/or the Management Company shall be entitled to
                        forfeit the equipment and stock and/or to be reimbursed
                        from them by way of sale or by any other method for the
                        purpose of paying the Lessee's debts if they have not
                        been paid in full within 30 days from the date they are
                        demanded. The aforesaid shall not apply in relation to
                        the Lessee's computer software and/or patents and/or
                        integrated circuits and/or models in stages of
                        development.

                27.4.2  The Lessor shall be entitled to disconnect the Premises
                        from the electricity current, the water supply, the
                        communications network as well as from any other service
                        or network to which the Premises is connected and/or
                        which operates in the Premises subsequent to giving
                        advance notice of 48 hours.

                27.4.3  The Lessor shall be entitled to prevent the Lessee or
                        anyone on its behalf from entering the Premises, and all
                        parts of the Project, including the Parking Lots and
                        Public Areas, other than for the purpose of vacating the
                        Premises and returning them to the Lessor pursuant to
                        the Agreement.

                27.4.4  The Lessee shall pay the Lessor predetermined liquidated
                        damages, in the amount of the Rental Fees which the
                        Lessee would have owed the Lessor pursuant to this
                        Agreement in respect of the month preceding the breach,
                        multiplied by six, the same without the necessity of
                        proving damage. The parties declare that they have
                        determined the above-mentioned compensation after
                        appraising the amount of the damage liable to be caused
                        to the Lessor as a result of the breach of the Agreement
                        by the Lessee and the revocation thereof. The aforesaid
                        does not derogate from any other right available to the
                        Lessor by law and/or pursuant to the Agreement,
                        inclusive of the Lessor's right to sue the Lessee for
                        additional damages, insofar as the Lessor's damages
                        shall

<PAGE>
                                                                              37

                        exceed the above amount of predetermined liquidated
                        damages, provided that the Lessor shall not be entitled
                        to double compensation in respect of its damages.

        27.5    In any event where the Lessee pays any sum which it is obliged
                to pay pursuant to this Agreement to the Lessor and/or the
                Management Company in arrears, this payment shall carry interest
                on arrears as specified below:

                27.5.1  The Lessee shall pay the Lessor and/or the Management
                        Company, as the case may be, interest on arrears on the
                        sum in arrears at the rate customary at Bank Leumi
                        l'Israel Ltd. for non-approved overdrafts in debitory
                        current accounts; the interest shall be calculated for
                        the period from the third day subsequent to the day on
                        which the Lessee should have paid the sum in arrears
                        until the date on which it actually pays it.

                27.5.2  If the arrears in payment relate to a sum paid by the
                        Lessor and/or by the Management Company to a third party
                        instead of the Lessee and which the Lessee should have
                        paid to that third party, the interest shall be
                        calculated for the period from the date the Lessor
                        and/or the Management Company paid the sum in arrears to
                        the third party until it has been repaid by the Lessee.
                        If the Lessor and/or the Management Company have paid
                        interest and/or an arrears penalty to a third party on
                        account of the Lessee's delay in payment, the interest
                        and/or the arrears penalty shall be deemed to be part of
                        the principal of the debt which the Lessee is obliged to
                        repay the Lessor and/or the Management Company, as the
                        case may be.

                27.5.3  If the Lessee is in arrears in the payment of any sum
                        whatsoever which it is obliged to pay the Lessor and/or
                        the Management Company pursuant to this Agreement, any
                        sum which has been paid by the Lessee shall first be
                        applied to the interest account, afterwards to the
                        principal account. If the collection of any sum as
                        mentioned above involves expenses and/or lawyers' fees
                        on behalf of the Lessor and/or on behalf of the
                        Management Company, any sum which has been paid as
                        aforesaid shall first be applied to the payment of
                        expenses and/or lawyers' fees account and thereafter
                        according to the aforesaid order.

                27.5.4  The payment of interest pursuant to this section does
                        not derogate from the Lessor's and/or the Management
                        Company's right to any other relief prescribed in this
                        and/or or by law. Receipt of interest as aforesaid shall
                        not be interpreted as a wavier on the part of the Lessor
                        and/or the Management Company of any other relief and/or
                        a derogation of any right whatsoever bestowed upon them
                        pursuant to the Agreement and/or by law provided that
                        the Lessor is not entitled to double compensation for
                        its damages.

                27.5.5  Notwithstanding the aforesaid in this Agreement, yet
                        without derogating from the Lessee's obligation to pay
                        interest in respect of arrears in making payments, as
                        aforesaid in section 27.5 and its sub-sections, the
                        Lessee's payment arrears in any payment whatsoever that
                        it is obliged to pay the Lessor and/or the Management
                        Company pursuant to this Agreement, which do not exceed
                        7 (seven) business days, provided that they do not
                        cumulatively exceed 21 (twenty-one) business days in
                        each Lease year, shall not be considered a breach of the
                        Agreement. However, notwithstanding the aforesaid, the
                        parties agree that repeated arrears, which exceed 7
                        (seven) business days, and/or cumulative arrears which
                        exceed 21 (twenty-one) business days in each Lease year,
                        in any payment whatsoever which the Lessee is obliged to
                        pay the Lessor and/or the Management Company pursuant to
                        this Agreement, shall be deemed a fundamental breach of
                        this Agreement, granting the Lessor all the reliefs
                        bestowed upon it pursuant to this Agreement and by law
                        in connection with a fundamental breach of the
                        Agreement.

28.     JURISDICTION AND ARBITRATION

        28.1    Subject to that which is stated in section 28.2 below, it is
                hereby agreed by the parties that solely and exclusively the
                competent court in Tel Aviv-Yafo, and no other court, shall have
                sole jurisdiction in all matters pertaining to this Agreement
                and arising therefrom.

        28.2    All disagreements and disputes which may arise, if any, between
                the parties in all matters pertaining to the provisions of this
                Agreement and/or arising therefrom shall be referred solely and
                exclusively to the decision of a single arbitrator, as follows:

<PAGE>
                                                                              38

                28.2.1  The arbitrator shall be a retired judge appointed by the
                        parties by mutual consent. In the absence of consent as
                        to the appointment as aforesaid within seven days from
                        the date on which one of the parties to the Agreement is
                        required to submit to arbitration proceedings by the
                        other party, the arbitrator, who as aforesaid shall be a
                        retired judge, shall be appointed by the Chairperson of
                        the Israel Bar Association.

                28.2.2  The arbitrator shall fix the first meeting before him
                        within 7 (seven) days from the date he is appointed and
                        he shall give his ruling within 60 (sixty) days from the
                        date of the first meeting he has fixed.

                28.2.3  The arbitrator shall be subject to the provisions of
                        this Agreement, to substantive law, and to the laws of
                        evidence, and he shall be obliged to give reasons for
                        his ruling.

                28.2.4  The arbitrator shall be authorized to hear a claim for
                        eviction and issue eviction orders. If the relief of
                        eviction is claimed, the arbitrator shall hear it first
                        before any other cause of action or claim and shall give
                        his decision concerning the eviction within 30 days from
                        the date of the first meeting he has fixed. For the
                        avoidance of doubt, it is clarified that all contentions
                        of the Lessee and/or the Lessor connected to eviction
                        shall be heard at the same time.

        28.3    The provisions of this section shall be deemed an arbitration
                agreement between the parties pursuant to the Arbitration Law,
                5728 - 1968.

29.     GENERAL PROVISIONS

        29.1    This Agreement formulates all the agreements, understandings,
                stipulations, declarations, and intentions between the parties
                and replaces any document and/or draft and/or representation
                and/or assurance, verbal or written, express or implied, given
                by any of the parties to the other before the signature of this
                Agreement for all intents and purposes connected to this
                Agreement.

        29.2    By its signature of this Agreement which constitutes the
                complete and binding agreement between the parties, any contract
                and/or memorandum of agreement and/or consent and/or declaration
                and/or prospectus and/or assurance and/or advertisement and/or
                previous drafts of this Agreement made, if any, by the parties
                or their representatives or any person on their behalf shall be
                null and void and the parties shall not be committed in respect
                of any of these.

        29.3    Any conduct, extension, waiver, authorization, receipt of money,
                amendment or the making of a new contract shall not indicate any
                intention of any party whatsoever, to renounce and/or vary any
                of its rights pursuant to this Agreement, and they shall have no
                legal validity unless the waiver or variation has been made
                expressly, in writing and signed with the signature of the
                renouncing or varying party.

        29.4    Failure to exercise any right whatsoever of the parties pursuant
                to this Agreement shall under no circumstances constitute a
                waiver thereof or as a basis for the contention of estoppel or
                stay vis-a-vis themselves on the part of the other party.

        29.5    The consent on behalf of any one of the parties to a waiver or
                deviation of any of the conditions of this Agreement in a
                particular instance does not constitute a precedent and it shall
                not be applied in any other instance. If any party has failed to
                exercise any right granted to it pursuant to this Agreement in a
                particular instance, this should not be regarded as a waiver of
                that right in that instance and/or in any other similar or
                dissimilar instance and no conclusions should be drawn of any
                waiver whatsoever of any right whatsoever of that party.

        29.6    Any payment levied on the Lessee pursuant to the provisions of
                this Agreement shall be paid on the date appointed therefor. If
                no date has been appointed for payment thereof in this
                Agreement, the payment shall be made on the date appointed
                therefor by law (if a statutory provision exists) or within
                seven (7) days from the date of the Lessor's first demand.

        29.7    The Lessee shall not be entitled to set off the sums or rights
                to which it is entitled from the Lessor and/or the Management
                Company from the sums it owes the Lessor and/or the Management
                Company and the Lessee hereby renounces the right of set-off as
                aforesaid notwithstanding the provisions of any law.

<PAGE>
                                                                              39

        29.8    The Lessee shall not be entitled to make any payment or
                fulfillment of undertakings pursuant to this Agreement and/or
                the Management Agreement conditional upon the prior performance
                or fulfillment of any undertaking whatsoever of the Lessor
                and/or the Management Company.

        29.9    No provision and/or condition and/or stipulation contained in
                this Agreement and its appendices shall derogate from any other
                condition or provision in this Agreement, but shall add to it.

        29.10   The Lessee shall not be entitled to register a Notice of Caution
                by virtue of its rights pursuant to this Agreement and/or to
                register its rights pursuant to this Agreement in the Land
                Registry Office. The Lessee shall submit to the Lessor's
                attorneys an irrevocable power of attorney, in the form attached
                hereto as Appendix "L" to this Agreement, which will enable the
                Lessor to erase the Notice of Caution, in the event this
                Agreement is statutorily revoked by one of the parties.

                If the Lessee should act contrary to the aforesaid provisions
                and register a Notice of Caution in respect of this Agreement,
                the Lessor shall be entitled to request its attorneys, who have
                power of attorney, and the Lessor's attorneys shall be obliged
                to erase the Notice of Caution which is registered in favor of
                the Lessee, and for this purpose to make use of the
                afore-mentioned power of attorney.

        29.11   It is hereby agreed between the parties that the provisions of
                the Hire and Loan Law 5731 - 1971 shall not apply to this
                Agreement, exclusive of the provisions of the law which cannot
                be made subject to conditions.

30.     STAMP DUTY

        Stamp Duty and the stamping of this Agreement, insofar as it is
        required, shall be levied on the Lessee alone.

31.     NOTICES

        31.1    All notices pursuant to this Agreement shall be in writing only.

        31.2    The addresses of the parties for the purpose of this Agreement
                are as specified at the beginning thereof and any notice sent by
                one party to the other according to its above-mentioned address
                shall be deemed to have reached its destination within 72 hours
                from the date it was sent by registered mail or on the first
                working day after it was sent by fax, and if it was delivered
                personally, at the time of the actual delivery.

     IN WITNESS WHEREOF THE PARTIES HAVE SIGNED IN THE PLACE AND ON THE DATE
                       FIRST MENTIONED IN THIS AGREEMENT:

   ------------------------                            --------------------
          The Lessor                                        The Lessee

<PAGE>

                                 AZRIELI CENTER

                                  APPENDIX "A"

                                  SPECIAL TERMS

to the Agreement dated January 23rd, 2000 (hereinafter: the "Main Agreement")
with Terayon Communication System Inc.

The terms, definitions and all of the provisions hereof are intended to add to
and complement the contents of the Main Agreement, but not to derogate
therefrom, and shall be deemed an integral part thereof. Each term not expressly
defined in this Schedule shall have the meaning assigned thereto in the Main
Agreement.

All of the amounts quoted herein in Dollars shall be paid in NIS according to
the representative rate of the U.S. Dollar as last published by the Bank of
Israel prior to the actual remittance of any payment.

SECTIONS IN THE AGREEMENT

SECTION 2.1     the "PROPERTY" or the "PREMISES" - the area marked in the
                sketch, Schedule "B", located on the 11th, 12th, 13th, 14th and
                24th floors of the round Tower in the Project.

SECTION 2.1     the "BASIC INDEX" - canceled.

SECTION 4       the "PREMISES' AREA" - for the purposes of this Agreement, the
                gross area of the Premises shall be 7,600 sq. m.

SECTION 5.1     the "PURPOSE OF THE LEASE" - for the purpose of operating a
                hi-tech company, including developing software, and for a
                software and/or examining laboratory. It is clarified that the
                foregoing shall not apply to production activity, which is
                forbidden on the Premises.

SECTION 6       "TERMS OF LEASE"

                The "First Term of Lease" - a period of 60 months.

                An "Additional Term of Lease" - a period of 60 months.

SECTION  7.1    The "FIRST TERM OF LEASE RENTAL FEES" - an amount of $152,000
                (one hundred and fifty-two thousand U.S. Dollars) per month,
                with the addition of V.A.T. as provided by law.

SECTION 7.3     The "FIRST PAYMENT UPON THE EXECUTION HEREOF" - upon the
                execution hereof, the Lessee shall pay the Lessor the Rental
                Fees in respect of three months of lease, with the addition of
                V.A.T., and upon the delivery of possession of the section of
                the Premises.

SECTION 7.5     The "ADDITIONAL TERMS OF LEASE RENTAL FEES" - whereas the Lessee
                has been granted the right to extend the Term of Lease by an
                Additional Term of Lease, the Rental Fees and the Parking Fees
                in respect of the Additional Term of Lease shall be increased by
                5% compared with the Rental Fees and the Parking Fees paid by
                the Lessee in respect of the last month of the First Term of
                Lease, ended on the eve of the commencement of the Additional
                Term of Lease.

SECTION 9.2     The "LAST DATE FOR DELIVERING THE LESSEE'S WORK PLANS" - The
                Lessee undertakes to submit to the Lessor the final and approved
                plans for coordinating the different sections of the Premises,
                no later than the dates set forth hereinbelow:

                14th Floor - no later than February 24th, 2000.

                11th-12th Floors - no later than March 16th, 2000.

                24th Floor - no later than March 23rd, 2000.

                13th Floor - no later than July 6th, 2000.

<PAGE>
                                                                               2

SECTION 9.6     The "ESTIMATED DATE FOR GRANT OF APPROVAL" - no later than
                thirty days prior to the delivery of possession of each of the
                sections of the Premises, as provided for hereinbelow, the
                Lessee shall be entitled to inspect the performance rate of the
                work carried out by the Lessor, starting on the date such
                performance had commenced.

SECTION 11      The "DELIVERY OF POSSESSION DATE" - The possession of the
                different sections of the Premises shall be transferred to the
                Lessee on the following dates:

                14th Floor - on May 24th, 2000.

                11th-12th Floors - on June 15th, 2000.

                24th Floor - on June 23rd, 2000.

                13th Floor - on October 1st, 2000.

SECTION 26      The "BANK GUARANTY" - a bank guaranty for the whole Term of
                Lease and for a period of 3 months thereafter - in an amount
                equaling, at any time, the Rental Fees in respect of 3 (three)
                months, with the addition of VAT, in the amount of $533,520
                (five hundred and thirty-three thousand, five hundred and twenty
                Dollars). The Bank Guaranty shall be linked to the Dollar.

SPECIAL TERMS

1.    Notwithstanding the provisions of the Lease Agreement, it is agreed by the
      parties that the Lessee shall not be required to pay Rental Fees to the
      Lessor in respect of the 11th to 14th floors, for a three months' period
      commencing on the date set forth hereinabove as the Delivery of Possession
      Date for each of such floors, and in respect of the 24th floor - for a
      four months' period commencing on the Delivery of Possession Date of such
      floor. It is clarified that the foregoing shall not derogate from the
      Lessee's obligation to fulfill the rest of his undertakings hereunder in
      connection with the Premises, including the Lessee's obligations to pay
      the Management Fees and the rest of the payments payable by the Lessee in
      respect of the Premises.

2.    It is agreed by the parties that the Lessee shall not be required to pay
      agency fees to Anglo-Saxon real estate agents in respect hereof, and that
      any claim by Anglo-Saxon against the Lessee shall be dealt with and
      arranged by the Lessor and on its account.

3.    The Lessee is hereby granted a right of first refusal for renting the area
      of the 15th floor of the round Tower, with an area of 1,520 sq. m., and an
      additional area of 760 sq. m. located on the 25th floor of the round
      Tower, as described in the sketch attached as Schedule "B1" (hereinafter:
      the "Refusal Right Area").

      Such right is granted to the Lessee for a period of 18 months commencing
      on the date of signing hereof, and the following provisions shall apply
      thereto:

      3.1   The Lessor shall notify the Lessee in writing of its intention to
            lease the Refusal Right Area or any part thereof.

      3.2   Insofar as the Lessor's notice was delivered to the Lessee within 12
            months of the signing hereof, then the Lessee undertakes to answer
            the Lessor in writing no later than thirty days following receipt of
            the Lessor's notice, whether or not the Lessee is interested in
            exercising the Refusal Right granted thereto and rent the Refusal
            Right Area.

      3.3   Insofar as the Lessor's notice was delivered to the Lessee
            subsequent to 12 months of the signing hereof, then the Lessee
            undertakes to answer the Lessor in writing no later than seven
            business days following receipt of the Lessor's notice, whether or
            not the Lessee is interested in exercising the Refusal Right granted
            thereto and rent the Refusal Right Area.

      3.3   In the event that the Lessee shall not deliver any notice within the
            periods provided for hereinabove, or delivered a notice whereby it
            is not interested in renting the Refusal Right Area, then the Lessor
            shall be entitled to lease the Refusal Right Area to any third party
            at such terms as it shall so see fit.

      3.4   It is agreed by the parties that in the event that the Lessee shall
            rent the Refusal Right Area or any part thereof, then all of the
            provisions hereof shall apply in respect of the Refusal Right Area,
            including the technical specifications attached hereto, mutatis
            mutandis. The Rental Fees which shall be paid by the Lessee in
            respect of the Refusal Right Area shall be in an amount in NIS
            equaling $20 (twenty dollars) for each sq. m. of the Refusal Right
            Area per month, with the addition of linkage differentials and
            V.A.T. as

<PAGE>
                                                                               3

            provided by law. To remove any doubt it is clarified that the First
            Term of Lease of the Refusal Right Area shall be concurrent to the
            Term of Lease of the Premises' Area - it shall commence on the date
            possession of the Refusal Right Area is transferred to the Lessee,
            and shall end on the date the First Term of Lease of the Premises'
            Area ends.

      3.3   The Lessee undertakes to deliver to the Lessor the final and
            approved plans for coordinating the Refusal Right Area no later than
            30 days following the exercise date of the Refusal Right. The Lessor
            shall transfer possession of the Refusal Right Area no later than
            three months following the date the Lessee's plans were delivered,
            all subject to and in accordance with the provisions of the Lease
            Agreement.

      3.4   It is agreed by the parties that in the event that the Lessee shall
            exercise the Refusal Right and shall rent the area of the 15th
            floor, then the Lessee shall be exempt from paying the Rental Fees
            in respect of the area of such floor for a period of four months
            commencing on the date possession of such floor is transferred to
            the Lessee.

      3.5   Insofar as the Lessee shall exercise the aforesaid Refusal Right,
            the Lessee shall be entitled to receive from the Lessor 36 parking
            spaces per each additional floor it shall rent pursuant hereto, in
            addition to the spaces allotted it under the Parking Agreement, of
            which 9 parking spaces shall block other parking spaces. In
            addition, the Lessee shall receive 36 means of entry to the parking
            lot. The additional parking spaces allotted to the Lessee as
            aforesaid shall be adjacent to the parking area defined in the
            Parking Agreement. The Lessee shall be required to pay Parking Fees
            only in respect of 32 of the additional parking spaces allotted
            thereto as aforesaid. All of the provisions of the Parking Agreement
            shall apply to the additional parking spaces.

4.    The Lessee declares that it is aware of the fact that stairwells in the
      Tower shall in time of emergency serve all of the tenants of the Tower,
      and the Lessee undertakes to allow such usage. The Lessee declares that it
      shall have no claim and/or demand against the Lessor in respect of such
      usage.

5.    Notwithstanding the foregoing, it is agreed by the parties that the Lessee
      shall be entitled to notify the Lessor in writing of its wish to end the
      ADDITIONAL Term of Lease (but not the First Term of Lease) regarding a
      single continuous area not to exceed 50% of the Premises' Area at the end
      of only 36 months of lease, provided that the Lessee shall so notify the
      Lessor in writing at least nine months in advance. In the event that the
      Lessee shall not so notify the Lessor at least nine months prior to the
      end of thirty six months of lease (of the Additional Term of Lease), the
      Lessee shall be deemed as if it had notified the Lessor of its wish to
      rent the full Premises' Area for the whole of the Additional Term of
      Lease. In its notice as aforesaid, the Lessee shall set forth the area it
      wishes to return to the Lessor, by way of a sketch which shall be appended
      to the Lessee's notice; such area shall be continuous.

      In the event that the Lessee shall so notify the Lessor, all of the
      provisions hereof regarding vacating the Premises shall apply to such part
      of the Premises in respect of which the Term of Lease shall have ended.
      The Rental Fees payable by the Lessee to the Lessor shall be decreased
      proportionately according to the size of the area returned by the Lessee.

6.    Notwithstanding the provisions of the Management Agreement, it is agreed
      by the parties that the Management Fees payable by the Lessee to the
      Management Company in respect of every sq. m. of the Premises' Area shall
      in no event exceed the average of the Management Fees paid by the three
      largest Lessees in the Round Tower (excluding the Lessee) in respect of
      each sq. m. of the area of their leased property.

7.    The Lessor undertakes, that at the Lessee's written demand, it will be
      possible to operate the air conditioning system in the Premises 24 hours a
      day seven days a week (excluding Yom Kippur). Insofar as the Lessee shall
      wish to operate the air conditioning system on Saturdays and holidays,
      starting on Friday (or the holiday eve, as the case may be) at 18:00 until
      Sunday (or the first workday following the holiday, as the case may be) at
      07:00, then the Lessee shall have to pay the Lessor an additional payment
      of NIS 60 in respect of each additional operating hour of the air
      conditioning system, with the addition of linkage differentials and V.A.T.
      as provided by law. Such sum refers to the operating of the air
      conditioning system for the whole of the Premises' Area.

8.    It is agreed by the parties that the technical specifications shall be
      signed by the parties and shall be appended hereto as Appendix "C" no
      later than seven days following the signing hereof. The specifications
      which shall be appended shall be based on the current condition of the
      area leased to the RAD company on the 10th floor of the "Atidim" tower in
      Tel Aviv, excluding the very low tension communications work and the
      computerization which shall not be performed by the Lessor, but rather by
      the Lessee on its own account. In any event of a dispute

<PAGE>
                                                                               4

      between the parties regarding such specifications, such dispute shall be
      settled by an engineer which shall be appointed by the parties by mutual
      consent, and lacking such consent by the Chairman of the Architects and
      Engineers Bureau. The ruling of such engineer shall be based on the
      existing condition of the 10th floor of the "Atidim" tower, in the area
      leased to the RAD company, excluding very low tension communications work
      and computerization.

      It is clarified that the pipe system for the low tension communications
      and the computerization shall be carried out by the Lessor as part of the
      specifications' work.

9.    It is agreed by the parties that in the event that the Lessee shall be
      interested in changes and/or additions to the technical specifications
      which shall be appended as Appendix "C", then the following provisions
      shall apply:

      The Lessor shall submit to the Lessee proposals by several contractors,
      who shall be nominated for carrying out such work, and the Lessee shall be
      entitled to submit to the Lessor additional proposals by contractors on
      its behalf. The choice of the contractor who shall carry out the work
      shall be done by the Lessor and the Lessee jointly. The Lessee shall pay
      the Lessor the cost of such changes and/or additions, according to the
      cost to the Lessor of the work involved in such changes and additions,
      with the addition of overhead at the rate of 15% of such cost.

10.   It is agreed by the parties that in the event that the Lessee shall elect
      not to carry out some of the work included in the specifications to be
      appended as Appendix "C", then insofar as such work shall not be beyond
      the scope of the work contained in the Lessor's standard specifications,
      the Lessee shall be credited for the cost to the Lessor of such articles.
      The standard technical specifications is attached hereto as Appendix "C1".
      It is clarified that the Lessee shall not be entitled to credit in respect
      of work contained in the specifications (Appendix "C") which are beyond
      the scope of work contained in the standard specifications (Appendix
      "C1").

      -------------------                                  ---------------
           The Lessor                                        The Lessee

<PAGE>
                                                                               5

                                 AZRIELI CENTER

                                  APPENDIX "C"

                            TECHNICAL SPECIFICATIONS

      SHALL BE APPENDED NO LATER THAN SEVEN DAYS FOLLOWING EXECUTION HEREOF

<PAGE>
                                                                               6

                                 AZRIELI CENTER

                                  APPENDIX "D"

                              MANAGEMENT AGREEMENT

          MADE AND SIGNED IN TEL-AVIV ON THEY 23RD DAY OF JANUARY 2000

                     BETWEEN

                    AZRIELI CENTER TOWERS (VENTURES AND MANAGEMENT) LTD.

                    whose address for the purpose of this Agreement is:
                    Azrieli Center
                    132 Petah Tikva Road, Tel-Aviv
                    (hereinafter: "the Management Company")
                                                               Of the first part

                                       AND
                    TERAYON COMMUNICATION SYSTEM INC.
                    (hereinafter: "the Lessee")
                    whose address for the purpose of this Agreement is:
                    c/o Attorney Arieh Hagai
                    18 HaYetzira Street Ramat-Gan
                    Telephone: 03-7513625, Fax: 03-7514036
                                                              Of the second part

WHEREAS        The Lessee has entered into an Unprotected Tenancy Agreement
               (hereinafter: "the Lease Agreement") with Canit HaShalom
               Investments Ltd. (hereinafter: "the Lessor") which grants the
               Lessee the right to occupy the premises in the Project known as
               the Azrieli Center as defined in the Lease Agreement
               (hereinafter: "the Premises");

AND WHEREAS    The Lessee and the Lessor have agreed that the management of the
               tower in the Project, wherein the Premises are situated, shall be
               entrusted to a company established by the Lessor for the purpose
               of supplying the services required for the proper maintenance and
               smooth management of the Tower;

AND WHEREAS    The Lessor has entrusted the management of the Tower as aforesaid
               to the Management Company in consideration for the payment of the
               Management Fees, as specified below in this Agreement;

AND WHEREAS    As part of the undertakings which the Lessee has undertaken in
               the Lease Agreement, the Lessee has undertaken to sign a
               management agreement with the Management Company, and to act in
               accordance with the conditions of the Management Agreement and
               pay the Management Fees;

                ACCORDINGLY IT IS DECLARED, STIPULATED AND AGREED
                         BETWEEN THE PARTIES AS FOLLOWS:

1.      PREAMBLE

        1.1     The preamble to this Agreement constitutes an inseparable part
                thereof.

        1.2     This Agreement shall constitute an appendix to the Lease
                Agreement, and the provisions thereof shall be read in the
                accumulative to the provisions of the Lease Agreement. This
                Agreement shall be interpreted as much as possible as compatible
                and consistent with the Lease Agreement.

<PAGE>
                                                                               7

        1.3     The terms in this Agreement shall be interpreted in accordance
                with their definition in the Lease Agreement unless otherwise
                stated in this Agreement.

        1.4     For the avoidance of doubt, it is clarified that notwithstanding
                the contents of this section above and notwithstanding that this
                Management Agreement constitutes an appendix to the Lease
                Agreement, the Lease Agreement and the Management Agreement
                shall be viewed as two contracts separate from each other and
                accordingly the following provisions shall apply:

                1.4.1   The Lessee shall not be entitled to set off sums the
                        Lessor owes it from sums it owes the Management Company,
                        and it shall not be entitled to set off sums the
                        Management Company owes it from sums it owes the Lessor.

                1.4.2   The Lessee hereby declares that it is aware of the fact
                        that a violation of Section 6 hereinbelow shall be
                        deemed a fundamental breach of the Lease Agreement, and
                        that the lawful termination hereof by the Management
                        Company due to the breach hereof by the Lessee shall
                        entitle the Lessor to the option of terminating the
                        Lease Agreement.

                1.4.3   The Management Company does not guarantee the Lessor's
                        undertakings and the Lessor does not guarantee the
                        Management Company's undertakings.

                1.4.4   Notwithstanding the foregoing, it is agreed by the
                        parties that in the event that the Lessee shall lawfully
                        terminate the Management Agreement due to the breach
                        thereof by the Management Company, then such termination
                        shall also constitute a termination of the Lease
                        Agreement and its Appendices, and in the event that the
                        Lessee shall lawfully terminate the Lease Agreement due
                        to the breach thereof by the Lessor, then such
                        termination shall also constitute a termination of the
                        Management Agreement.

                        The termination of the Agreements by the Lessee as
                        aforesaid shall be done in accordance with the
                        provisions of section 10 of the Lease Agreement.

        1.5     In any place in the Lease Agreement where a right is bestowed
                upon the Management Company, the same right shall also be
                bestowed upon the Management Company pursuant to this Agreement.

2.      DEFINITIONS

"THE MANAGEMENT         The Management Company and/or any person, company or
COMPANY"                other legal  entity apart from itself, as the Lessor may
                        instruct in writing from time to time including the
                        Lessor, at the Lessor's discretion;

"THE TOWER"             The Tower constructed in the Project or any part
                        thereof, and which is managed by the Management Company;

"THE APPARATUS"         The air conditioning, elevators, escalators, electricity
                        panels, plumbing, lighting, water, sewage, drainage
                        apparatus, including other apparatus in the Tower;

"THE PUBLIC AREAS"      All the areas within the confines of the Tower,
                        including all the structures, additions and changes
                        which may be added thereto from time to time, and also
                        roofs, external walls, passages, entrances and exits,
                        service rooms and areas, internal streets, service
                        corridors, technical areas such as electricity, pumps,
                        air conditioning rooms, loading and unloading bays,
                        elevators, escalators, stairs, any other area within the
                        confines of the Tower and the Project designated to
                        serve the public using the Tower, including all the
                        areas outside the Tower and the Project bordering on the
                        Tower and the Project and which are designated to serve
                        the occupants of the areas in the Tower and their
                        customers, including entrances, sidewalks, gardens and
                        signs, the same exclusive of areas in the Tower and the
                        Project occupied by occupants and all as may be
                        prescribed and defined at the Lessor's sole discretion,
                        and in such manner as to not harm the reasonable use of
                        the Premises by the Lessee;

"MANAGEMENT" OR         The operation, repair and maintenance of the apparatus
"MANAGEMENT OF THE      and also the cleaning, gardening, maintenance and
                        guarding of the Public Areas, as specified in this

<PAGE>
                                                                               8

TOWER"                  Agreement;

"MANAGEMENT FEES"       All the sums which the Lessee is obliged to pay the
                        Management Company pursuant to the provisions of this
                        Agreement.

3.      DURATION OF THE AGREEMENT

        3.1     The duration of this Management Agreement shall be from the date
                of commencement of the Lease Period and it shall remain valid as
                long as the Lessee has rights in the Premises pursuant to the
                Lease Agreement and as long as it has not been terminated.

        3.2     In addition to the aforesaid, the Lessee's undertakings in the
                Agreement shall apply as long as it occupies the Premises or any
                part thereof even if it is not entitled to do so.

4.      FUNCTIONS OF THE MANAGEMENT COMPANY

        4.1     The Management Company shall supply by itself and/or via
                sub-contractors, management and maintenance services for the
                Tower including cleaning, lighting, gardening, maintenance,
                inspection and repairs of the electricity network, the lighting,
                air conditioning, elevators, escalators and other systems and
                apparatus in the Public Areas, installation, use and maintenance
                of the various apparatus for the use and welfare of all the
                tenants and/or visitors to the Tower, signage in the area of the
                Tower, the payment of municipal and government taxes levied on
                the Public Areas, maintenance of public roads and thoroughfares.

                The Management Company may, at its sole discretion, for reasons
                of efficiency and savings on the one hand but without derogating
                from the high level of maintenance and operations required in
                the management of the Tower, resolve that the Tower or any part
                thereof shall be managed separately from the part of the Tower
                wherein the Premises are situated and/or resolve that additional
                towers constructed in the Project, or any part thereof, shall be
                managed together with the Tower or any part thereof, via the
                Management Company. In this case, any part which is managed
                separately, as aforesaid, shall not be included within the
                definition of the Tower in Section 2 above, and any part whose
                management is added as aforesaid shall be included within the
                definition of the Tower. To prevent any doubt, it is clarified
                that such change, if carried out, shall not be carried out
                solely for the reason that the areas added to the management of
                the Tower are, in whole or in part, empty areas, the addition of
                which to the Tower shall increase the Management Fees which the
                Lessee shall be obligated to pay. To prevent any doubt, it is
                clarified that in any event the mall shall not be included
                within the scope of the Management Company's management.

        4.2     Without derogating from the generality of the aforesaid in
                Section 4.1, the Management Company shall be authorized, within
                the framework of the Management of the Tower, to supply services
                and care for various matters, as specified below:

                4.2.1   From time to time and for the purpose of the smooth
                        operation of the Tower, to determine, within the
                        framework of the Regulations, procedures and/or
                        instructions in all matters pertaining to the Management
                        of the Tower, the scope of the provision of the various
                        services in the Tower, the maintenance and use thereof,
                        with regard to all the units and/or any part thereof,
                        and/or the properties and/or public areas, all at its
                        discretion, including in any matter pertaining to the
                        entrance and exit arrangements, direction, access,
                        pedestrian passage, lighting operation hours and
                        intensity of the lighting, regulating the use of the
                        parking lot, operation of the air conditioning systems,
                        operation of the loudspeaker and music systems, signage,
                        posting notices, etc.

                        The Management Company shall notify the Lessee and
                        publish from time to time its resolutions and
                        determinations as aforesaid within the framework of the
                        Regulations, and from the date it has notified thereof,
                        its instructions shall bind the Lessee for all intents
                        and purposes. Nothing in such instructions of the
                        Management Company shall derogate from the Lessee's
                        rights hereunder and/or under the Management Agreement
                        and/or limit its use of the Premises for the Purpose of
                        the Lease.

                4.2.2   To employ a variety of technical, professional,
                        administrative and other workers for the fulfillment of
                        its undertakings pursuant to this Agreement and/or to
                        sign agreements to

<PAGE>
                                                                               9

                        receive services as aforesaid, wholly or partly via
                        contractors, sub-contractors or in any other way
                        prescribed by the Management Company, including the
                        employment of part-time or full-time workers, according
                        to a special contract or on conditions as it thinks fit
                        and also to employ as aforesaid consultants,
                        accountants, lawyers and other professionals as shall be
                        necessary for the purpose of fulfillment of its
                        functions pursuant to this Agreement.

                4.2.3   Cleaning, refuse collection, garbage disposal, etc. in
                        the Public Areas such as entrances, stairwells,
                        elevators, the washrooms on the floors and service
                        corridors.

                4.2.4   The supply of inspection and maintenance, water and
                        electricity services for the apparatus including for the
                        lighting, sewage, elevators, escalators, and air
                        conditioning, inspection and repairs of the
                        above-mentioned systems and the Public Areas.

                4.2.5   General repairs as necessary and repairs of damage
                        caused for any reason whatsoever including weather
                        damage and day-to-day wear and tear.

                4.2.6   Guarding and security services.

                4.2.7   The operation of the generator and emergency lighting.

                4.2.8   The installation and maintenance of fire extinguishing
                        equipment.

                4.2.9   The installation, maintenance, and operation of the
                        paging equipment in the Tower.

                4.2.10  Installation of the signage and direction in the Tower.

                4.2.11  Gardening of the designated parts of the Public Areas.

                4.2.12  The payment of taxes, payments and levies imposed on the
                        Public Areas, including but without derogating from the
                        generality of the aforesaid, general arnona, business
                        taxes and sign taxes insofar as they do not relate
                        directly to the tenants by the Municipality.

                4.2.13  The Management Company shall care for and maintain the
                        air conditioning, electricity, plumbing and fire
                        extinguishing systems installed both in the Public Areas
                        and the premises' areas and/or areas designated for
                        lease in the Tower (hereinafter: "the Systems"). For the
                        avoidance of doubt, it is clarified that all the
                        Management Company's expenses in connection with the
                        day-to-day treatments and maintenance of the Systems
                        shall be included in the Management Fees.

                4.2.14  To prevent any doubt it is clarified that, excluding the
                        cleaning of the floor bathroom facilities located in the
                        Tower's core within the Premises' Area, the Management
                        Company's duties do not include internal cleaning of the
                        office areas, and the Management Fees paid by the Lessee
                        do not include payment for such internal cleaning.

                4.2.15  It is agreed that the repairs in the definition of the
                        Management Company's duties include, without limitation,
                        renewal and/or improvement and/or replacement and/or
                        addition of the systems located in the Tower and/or the
                        Project which serve the Tower and/or the Project, e.g.,
                        air conditioning, elevators, sprinklers, etc.
                        (hereinafter: the "Systems"), including repairing same,
                        to the extent needed in the Management Company's opinion
                        for maintaining same in proper order, and the Management
                        Company shall be entitled, if it shall so elect, to
                        finance same, in whole or in part, with the help of an
                        equipment renewal and/or replacement fund, the monies
                        for which shall be currently collected by the Lessee in
                        accordance with the provisions of section 6.4
                        hereinbelow, as part of the maintenance and management
                        costs (hereinafter: the "Renewal Fund"). Such monies
                        shall be invested by the Management Company in low-risk
                        investments, and shall not be refunded to the Lessee.
                        Such monies shall be invested by the Management Company
                        in one of the banks and/or with the Lessor, at the
                        Lessor's sole discretion.

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                                                                              10

                        The Lessee declares that it is aware of the fact that
                        the ownership of the Renewal Fund is solely the Lessor's
                        and the Lessee shall have no claim in connection with
                        monies deposited in the Fund and with the use to which
                        such monies were put, so long as such use complies with
                        the provisions hereof.

                        The Lessee declares that it is aware of the fact that
                        all monies paid by the Lessee to the Renewal Fund shall
                        not be refunded to it at any stage, whether or not the
                        Lessor shall have made use of the Renewal Fund monies.

                4.2.16  Cleaning and extermination services for the public
                        areas.

                4.2.17  Cleaning and repairing the screen walls and the roof.

                4.2.18  The Management Company shall draw the insurance policies
                        detailed in section 25.12 of the Lease Agreement. It is
                        hereby expressly agreed that drawing such insurance
                        policies shall not increase the Management Company's
                        responsibility beyond the provisions hereof and/or of
                        the Lease Agreement and/or derogate from the Lessee's
                        obligations thereunder.

        4.3     The services shall be provided by the Management Company
                frequently and at a high level, as befits the Project and its
                quality. In all matters pertaining to the Management Company's
                activity and duties, the Management Company shall act with
                maximum efficiency for the benefit of all of the tenants of the
                Tower, and in such a manner so as not to disrupt the current
                activity of the Lessee.

                The Management Company shall repair as early as possible any
                deficiency and/or malfunction which is under its responsibility
                hereunder. Urgent repairs which are under the Management
                Company's responsibility shall be undertaken forthwith. In the
                event of a malfunction or damage, the repair of which cannot be
                postponed until a report is submitted to the Management Company
                and its consent obtained, the Lessee shall be entitled to carry
                out the required repairs and to report same to the Management
                Company immediately thereafter. Insofar as the Lessee shall have
                carried out the repairs by itself as aforesaid, the Lessor shall
                refund the Lessee for the reasonable costs incurred thereby in
                so carrying out the repairs, against the Lessee's presenting
                receipts, and against a tax invoice issued by law.

                It is agreed by the parties that the Lessee shall be entitled to
                carry out, by itself and/or through any person on its behalf,
                services within the Premises which are not provided by the
                Management Company.

        4.5     For the purpose of fulfillment of the Management Company's
                undertakings, the Management Company may occupy an office in the
                Project, where it shall coordinate its activities pursuant to
                this Agreement, to which the Lessee may refer during normal
                working hours in all matters pertaining to the Management
                Company's activity pursuant to the provisions of this Agreement.

        4.6     It is agreed that the Management Company shall be entitled at
                its sole discretion to choose that some or all of the services
                pursuant to this Agreement, shall be supplied by the Management
                Company itself and/or by any legal entity on its behalf and/or
                by third parties including contractors, sub-contractors,
                maintenance companies, etc. provided that the Tower shall be
                managed at a good level of service as befits the quality of the
                Project.

5.      THE LESSEE'S UNDERTAKING

        5.1     Unless expressly stated otherwise in this Agreement and/or in
                the Lease Agreement, the Lessee declares that it is aware that
                the Management Company has the sole authority to manage the
                Tower and provide the services for it as aforesaid in this
                Agreement and the Lease Agreement and the Lessee undertakes not
                to perform by itself or via others apart from the Management
                Company, any act which is within the authority of the Management
                Company as aforesaid.

        5.2     The Lessee and any person on its behalf shall cooperate with the
                Management Company, and shall assist it insofar as required for
                the purpose of the regular, smooth and fitting Management of the
                Tower.

<PAGE>
                                                                              11

        5.3     Without derogating from the generality of the aforesaid, the
                Lessee undertakes as follows:

                5.3.1   To fulfill all the reasonable instructions of the
                        Management Company, as given from time to time, in
                        connection with the Public Areas, the apparatus and
                        equipment in the Tower, including concerning the
                        procedures for unloading and freight of merchandise and
                        cargo, refuse collection and the use of the various
                        kinds of auxiliary apparatus, the arrangements for
                        entrance and exit to and from the Premises, the
                        transportation of merchandise thereto and the collection
                        of refuse and objects therefrom, the safety, signage and
                        lighting arrangements, cleaning, noise, nuisances
                        created by the use thereof, the behavior of the Lessee's
                        employees, customers and any person on its behalf and
                        any other matter which in the Management Company's
                        opinion is required to preserve the high quality of the
                        Project.

                        The Management Company's instructions, insofar as such
                        are given, shall take the nature of the Lessee's
                        activity in the Premises into consideration, and shall
                        not infringe upon the Lessee's rights under the Lease
                        Agreement and hereunder.

                5.3.2   To act in accordance with all the provisions of the
                        Lease Agreement and the provisions of the Management
                        Agreement, and to participate in the expenses involved
                        in the performance and provision of the management
                        services in accordance with the contents of this
                        Agreement and the Lease Agreement.

                5.3.3   That it and those acting by virtue thereof and on its
                        behalf shall cooperate with the Management Company and
                        assist it in all instances where such cooperation or
                        assistance is required in order to permit the regular
                        and effective management and performance of the services
                        and also to comply with all the requirements of the
                        various authorities and the undertakings arising
                        directly or indirectly from this Agreement.

                5.3.4   To authorize the Management Company and those acting on
                        its behalf to enter the Premises - after prior
                        arrangement insofar as is possible - for the purpose of
                        performing the functions of the Management Company
                        pursuant to this Agreement, whether this is required for
                        the Lessee itself or for another tenant or for the
                        purpose of carrying out repairs which may be required in
                        other premises in the Tower, inter alia, to open walls,
                        floors, ceilings and other parts, to replace and repair
                        plumbing and piping and to perform any work which may be
                        required, in the Management Company's opinion, for the
                        purpose of fulfilling its functions and exercising its
                        powers pursuant to this Agreement and the Lessee shall
                        have no contention vis-a-vis the Management Company in
                        respect of any disturbance caused to it as a result of
                        the aforesaid provided that the reasonable use of the
                        Premises by the Lessee shall not be prevented, taking
                        into account the designation of the Premises. In any
                        event of any action as mentioned above, the Management
                        Company shall endeavor that the disturbance to the
                        Lessee shall be as minimal as possible and that the
                        Premises shall be returned to their former state as soon
                        as possible and that the duration of time for carrying
                        out the repairs shall not exceed the reasonable time
                        entailed by the type of repair. To the extent that such
                        work can be carried out outside the Premises' Area, at
                        the same and/or lower cost, such work shall be carried
                        out outside the Premises' Area. The Management Company
                        shall attempt to carry out such work in such a manner so
                        as to minimize the Lessee's harm as far as possible, and
                        as much as possible during hours of low activity in the
                        Premises.

                        To prevent any doubt, it is clarified that the
                        Management Company shall be liable for damages caused
                        due to its negligence in performing the aforesaid.

                5.3.5   To notify the Management Company of any malfunction
                        requiring action on the part of the Management Company.

                5.3.6   To abstain by itself and/or via any other third party
                        from any act or treatment which pursuant to this
                        Agreement have been entrusted solely to the Management
                        Company unless the Management Company has consented
                        thereto in writing before performance of the act or
                        treatment, with the exception of urgent instances
                        regarding which it would not be possible to obtain the
                        Management Company's prior consent.

                5.3.7   To coordinate with the Management Company and obtain its
                        consent before the performance of any work that impacts
                        on the facade of the Tower and/or work that may

<PAGE>
                                                                              12

                        impact on the common systems in the Tower, the same in
                        addition to and not instead of the Lessor's consent, if
                        such consent is required pursuant to the Lease
                        Agreement.

                5.3.8   Subject to and without derogating from the provisions of
                        section 14 of the Lease Agreement and/or other
                        provisions in the Lease Agreement, insofar as such
                        differ from the following, to refrain from posting
                        signs, including advertising signs and/or other
                        advertising, any articles and object, on a temporary or
                        permanent basis, outside the Premises and/or in the
                        Public Areas, including placing stalls, packaging,
                        tables, etc., without obtaining the Management Company's
                        prior written consent, and to clear away any such items
                        promptly upon the Management Company's first demand. The
                        Management Company's consent shall not be unreasonably
                        withheld.

        5.4     It is agreed that the Lessee shall not be entitled to refuse to
                receive any service whatsoever and/or to terminate the
                management and performance of the services and/or to release
                itself from its undertakings to pay the Management Fees and
                performance of the services subject to the provisions of this
                Agreement.

6.      MANAGEMENT FEES

        6.1     The Lessee undertakes to pay the Management Company the
                Management Fees, which shall be calculated according to its
                proportionate part of the Premises' Area out of the inclusive
                area of the actual leased and occupied premises in the Tower,
                out of all the Management Company's expenses in the Management
                of the Tower and the Public Areas including investment in the
                renewal, improvement, and repair of equipment and systems as
                required for the Management of the Tower and the provision of
                the services, financing expenses, and any other direct expense
                involved in the Management of the Tower, together with an
                overhead at the rate of 15% of the total expenses as aforesaid
                plus statutory Value Added Tax (all together hereinafter: "the
                Management Expenses").

        6.2     Notwithstanding the aforesaid, if the total actual leased areas
                in the Tower is less than 75% (seventy five percent) of the
                areas designated for lease in the Tower, the Lessor shall bear a
                portion of the fixed expenses of the Management Company in the
                management of the Tower, as shall be determined by the
                Management Company, in respect of the part constituting the
                difference between the actual leased and occupied areas in the
                Tower and 75% of the total areas designated for lease and/or
                leased in the Tower.

        6.3     The Management Company has the discretion to determine a
                different distribution of the burden of the Management Fees
                according to the types of particular tenants and also according
                to the locations of the various premises, all insofar as
                entailed as a result of the over-burdening of services on
                particular units in the Tower as aforesaid in accordance with
                the uses of those units and the nature of their use of the
                Public Areas and the Tower.

        6.4     As part of the payment of the Management Fees, the Lessee shall
                also pay sums which are to be set aside for the Renewal Fund in
                respect of systems located in the Tower and/or the Project which
                serve the Tower and/or the Project, e.g., air conditioning,
                elevators, sprinklers, etc. (hereinafter: "the Systems"). The
                payments to the Renewal Fund shall be at the rate customarily
                accepted in the Income Tax Regulations for depreciation of
                Systems of such type. The sums so set aside shall be transferred
                to the Lessor, held by it and used for adding, renewing,
                refurbishing and replacing Systems, as required.

                In the event that the Renewal Fund shall not suffice for
                carrying out such renewal, refurbishing or replacement of a
                System, then the Management Company shall be entitled to collect
                one-time sums from all of the tenants, to cover the expense. It
                is agreed by the parties that in such case, the Management
                Company shall refrain from collecting, as part of the future
                Management Fees' collection, sums for the Renewal Fund, up to
                the sum which was paid by the Lessee as such one-time payment is
                reached. Notwithstanding the foregoing, it is agreed by the
                parties that in the event that the Management Company shall wish
                to collect such a one-time payment within the last six months
                prior to the termination of the Term of Lease (and only in such
                event), then the Management Company shall collect from the
                Lessee only a proportionate part of such one-time payment in
                respect of the remainder of the Lessee's Term of Lease (in the
                same proportion as the remainder of the Term of Lease is to the
                full period during which the Lessee would have been exempt from
                contributing to the Depreciation Fund, as aforesaid).

<PAGE>
                                                                              13

                The Lessee's share of the Renewal Fund shall be determined in
                accordance with the provisions of section 6.1 hereinabove.

                It is agreed by the parties, that if all the Systems shall be
                depreciated, and no sums shall be paid in respect thereof from
                the Renewal Fund, then the Management Company shall not set
                aside any additional sums for the Renewal Fund. Upon the
                purchase of new Systems and/or upon incurring any expense in
                respect of the Systems from the Renewal Fund, the Management
                Company shall be entitled to once again collect monies for the
                Renewal Fund.

        6.5     The calculation of the estimate of the Lessee's share and the
                Management Fees levied on it shall be made once quarter or any
                other period resolved upon by the Management Company. The
                calculation shall be made on the basis of the expenses actually
                expended and also on the basis of an estimate of the anticipated
                expenses.

        6.6     On the Date of Delivery of Possession in the Premises, the
                Lessee shall pay the Management Company an advance payment
                according to the estimate prescribed by the Management Company,
                on account of the Management Fees in respect of the first
                quarter.

        6.7     Unless otherwise prescribed by the Management Company, the
                payments on account of the Management Fees during the Lease
                Period shall be paid in advance every quarter. The payments on
                account of the Management Fees shall be paid according to the
                estimate as aforesaid in accordance with the written demand of
                the Management Company sent to the Lessee by the Management
                Company.

        6.8     Within six months from the end of each calendar year, the
                Management Company shall draft a financial report for the said
                year, which shall be certified by the Management Company's
                auditor (hereinafter: "the Financial Report"). The Management
                Company shall issue an annual account to the Lessee based on the
                Financial Report. The Lessee's accountant shall be entitled to
                inspect the Financial Report.

        6.9     The Lessee undertakes to pay the Management Company within 7
                days of the date of receiving the annual account any difference
                standing to its debit, if any, between what it owes in the light
                of the Financial Report and the sums it has paid on account as
                specified above. If the annual account has shown a credit
                balance in favor of the Lessee, the balance shall be credited to
                the Lessee until the next date of payment of its share in the
                Management Expenses. To prevent any doubt, it is clarified that
                calculating such outstanding credit or debit, as aforesaid,
                shall also include linkage differentials.

        6.10    The calculations of the Management Company's accountant, the
                Financial Report and the Management Company's books shall
                constitute prima facie evidence of the amount of the management
                expenses, the Management Fees and the payment the Lessee must
                pay the Management Company. The Lessee, using an accountant on
                its own behalf, shall be entitled to inspect the Management
                Company's books after prior coordination with the Management
                Company.

        6.11    Sums of money which shall be paid to the Management Company on
                account of the Management Fees which may remain in the
                possession of the Management Company for interim periods shall
                be invested by it in low-risk investments in accordance with its
                sole discretion.

        6.12    To facilitate the collection of the Management Fees and also any
                other sum which the Lessee may owe the Management Company, the
                Lessee shall send the Management Company an authorization to
                debit its account in the bank's usual form.

                For the avoidance of doubt, it is hereby declared that obtaining
                the authorization and any use thereof made by the Management
                Company shall not be deemed to be payment unless all the
                payments the Lessee owes have been paid in full and on time.

        6.13    The Lessee undertakes to pay the Management Fees as well as all
                the payments levied on it throughout the entire Lease Period,
                subject to the provisions of section 7.6 of the Lease Agreement.

        6.14    To prevent any doubt it is clarified that the provisions of
                section 27.5.5 of the Lease Agreement, regarding late payment of
                the Rental Fees shall also apply to the Management Fees.

<PAGE>
                                                                              14

7.      LIABILITY FOR DAMAGES

        It is agreed by the parties that the liability of the Lessee and the
        Management company for damages shall be in accordance with the
        provisions of section 24 of the Lease Agreement.

8.      TRANSFER OF THE MANAGEMENT COMPANY'S RIGHTS

        Without derogating from the Lessor's right to replace the Management
        Company or to perform the Management of the Tower by itself as stated in
        the Lease Agreement, the Management Company shall be entitled at its
        sole discretion, to transfer all its rights and obligations pursuant to
        this Agreement to another person/s without receiving the Lessee's
        approval therefor, provided that the recipient of the rights assumes all
        the undertakings of the Management Company vis-a-vis the Lessee pursuant
        to this Agreement.

9.      REMEDIES AND RELIEFS

        9.1     Without derogating from the contents of the Lease Agreement and
                of section 6.14 above, in any event where the Lessee is in
                arrears in any payment whatsoever it owes or may owe the
                Management Company pursuant to this Agreement, the Management
                Company shall be entitled, without derogating from its right to
                any other statutory relief, to take one or more of the following
                steps:

                9.1.1   To add interest on arrears at the rate and on the
                        conditions specified in the Lease Agreement to any
                        payment or expenses the Lessee owes and which have not
                        been paid on time.

                9.1.2   To demand repayment of all the expenses and damages
                        incurred by the Management Company as a result of the
                        failure to make any of the payments on time.

                9.1.3   To terminate the provision of the management services to
                        the Lessee, wholly or partly, following advance written
                        warning of 21 days to the Lessee.

        9.2     The Management Company shall be entitled to levy on the Lessee
                repayment of the expenses and damages caused as a result of the
                Lessee's non-compliance with the Management Company's
                instructions. The repayment of expenses and damages shall be
                effected within 7 days of the date the account is submitted to
                the Lessee and the provisions of this section with regard to
                effecting payments shall apply to the payment as aforesaid.
                Nothing of the foregoing shall prevent the Lessee from objecting
                to the Management Company's demand in accordance with the
                provisions hereof, by submitting to an arbitration proceeding.

        9.3     The termination of the provision of services to the Lessee,
                under the circumstances specified in section 9.1 above, does not
                release the Lessee and/or derogate from its obligations to
                comply with the provisions of this Agreement and in particular
                to pay the Management Fees and any account which may be
                submitted to it by the Management Company pursuant to the
                provisions of the Agreement.

        9.4     Any sum expended by the Management Company for the Lessee, and
                which is payable by the Lessee hereunder, shall be repaid by the
                Lessee to the Management Company with the addition of linkage
                differentials. If such sum was expended by the Management
                Company due to the fact that the Lessee did not pay such sum
                itself, such sum shall, in addition to linkage differentials,
                accrue interest on arrears as aforesaid.

        9.5     The provisions of the Contracts Law (Remedies for Breach of
                Contract), 5731-1970 shall apply to violations hereof, even in
                such cases when a specific relief or remedy is granted hereunder
                for such violation, without derogating from the provisions
                hereof or of any law.

10.     SURETIES

        10.1    All the sureties given by the Lessee to the Lessor within the
                framework of the Lease Agreement shall also serve to ensure its
                undertakings vis-a-vis the Management Company.

        10.2    The Management Company shall be entitled to exercise the
                above-mentioned sureties in any event where the Lessee shall
                commit a fundamental breach of this Agreement, without
                derogating from its right to any further relief pursuant to any
                statutory provision.

<PAGE>
                                                                              15

11.     JURISDICTION AND ARBITRATION

        11.1    Subject to that which is stated in section 11.2 below, it is
                hereby agreed by the parties that the competent court in Tel
                Aviv-Yafo, and no other court, shall have sole jurisdiction in
                all matters pertaining to this Agreement and arising therefrom.

        11.2    All disagreements and disputes which may arise between the
                parties, if any, in connection with and/or arising from the
                provisions hereof shall be submitted first to resolution by the
                CEO of the Lessor and the CEO of the Lessee. If the parties
                shall not resolve such disputes, the matter shall be referred
                solely and exclusively to the ruling of a single arbitrator, as
                follows:

                11.2.1  The arbitrator shall be a retired judge designated by
                        the parties by mutual consent. In the absence of consent
                        as to the appointment as aforesaid within seven days
                        from the date on which one of the parties to the
                        Agreement is required to submit to arbitration
                        proceedings by the other party, the arbitrator shall be
                        designated by the Chairperson of the Israel Bar
                        Association.

                11.2.2  The arbitration proceedings shall be conducted in Tel
                        Aviv.

                11.2.3  The arbitrator shall fix the first meeting before him
                        within 7 (seven) days from the date he is appointed and
                        he shall give his ruling within 60 (sixty) days from the
                        date of the first meeting he has fixed.

                11.2.4  The arbitrator shall be subject to substantive law and
                        the laws of evidence and he shall be obliged to give
                        reasons for his ruling.

                11.2.5  The arbitrator shall be authorized to hear a claim for
                        eviction and issue eviction orders. If the relief of
                        eviction is claimed, the arbitrator shall hear it first
                        before any other cause of action or claim and shall give
                        his decision concerning the eviction within 30 days from
                        the date of the first meeting he has fixed. To prevent
                        any doubt it is clarified, that all claims of the Lessee
                        and/or the Lessor regarding eviction will be heard
                        concurrently.

        11.3    The provisions of this section shall be deemed an arbitration
                agreement between the parties pursuant to the Arbitration Law,
                5728-1968.

12.     GENERAL

        12.1    Any stay and/or delay and/or lack of response and/or failure to
                take any action by any of the parties shall in no way be
                interpreted as a waiver of any right whatsoever of that party or
                any undertaking whatsoever of the other party unless the waiver
                has been made expressly and in writing.

        12.2    The addresses of the parties are as specified at the beginning
                of this Agreement. Commencing from the date of commencement of
                the Lease, the Lessee's address is at the Premises. Any notice
                which is sent by registered mail, according to one of the above
                addresses, shall be deemed to have arrived at its destination 72
                hours after being sent at the Post Office by registered mail or
                within 24 hours if it was delivered personally or sent by
                facsimile transmission.

                   IN WITNESS WHEREOF THE PARTIES HAVE SIGNED:

     -----------------------                              ----------------
     The Management Company                                  The Lessee

<PAGE>
                                                                              16

                                 AZRIELI CENTER

                                  APPENDIX "F"

                               PROJECT REGULATIONS

The following Regulations include regulations, rules and instructions applicable
to all the business owners, tenants and occupants of areas in the Project, and
observance of the rules and instructions therein constitutes a substantial
condition in the Lease Agreement between the Lessee and the Lessor.

The aim of the Regulations is to ensure that the businesses in the Project are
managed at a high standard and quality. The necessity for uniform rules of
behavior is derived by the management of the Project as one complex, in such
manner that the standard and quality of the management of the businesses in each
of the premises has an immediate impact on the Project's reputation as a quality
business center, and the ability of every tenant to extract the business
potential and the benefit from managing a business within the framework of the
Project.

1.      The Lessee shall abstain from doing any act, activity or omissions
        liable in one way or another to cause:

        1.1     Damage, loss, or injury to the Lessor's or other tenants'
                property and in this regard in the Public Areas and the Project
                and its installations.

        1.2     The risk of injury to the person and/or property of any person
                among the public using the Project including any visitor or
                customer among the general public.

        1.3     Any nuisance or other disturbance of any kind whatsoever
                including making noise and/or announcements on the loudspeaker
                and/or any form of advertising liable to disturb the other
                business owners in the Project and the general public.

        1.4     Without derogating from the generality of the aforesaid, the
                Lessee shall abstain from causing unreasonable noise and/or
                smells within the context of the management of its business in
                the Premises and it shall not permit another to cause noise
                and/or smells as aforesaid from the Premises' Area.

                At the demand of the Lessor and/or the Management Company and/or
                any person on their behalf, the Lessee shall cease and/or remove
                forthwith any nuisance and/or disturbance as aforesaid.

                If the Lessee has not complied with the demand of the Lessor
                and/or the Management Company, any of them has the authority to
                cause the termination or removal of the nuisance and/or
                disturbance and the Lessee shall have no contention in
                connection therewith.

        1.5     Notwithstanding the contents of the Lease Agreement and even if
                the Lessee has been given a license or permit and any authority
                whatsoever, it undertakes not to make any use in the Premises
                which is not consistent with the character of the Project and/or
                related to one of the businesses specified in the following
                list:

                1.5.1   Processing works for stone or building materials or any
                        other material which creates dust.

                1.5.2   Uses connected to the use of toxic materials and/or the
                        injection of toxic materials into the sewage and
                        drainage system in the project.

                1.5.3   The operation of machines which cause noise beyond what
                        is permitted or in such manner as to create a nuisance
                        or disturbance to the neighbors and other users in the
                        Project.

                1.5.4   The operation of a factory for food manufacture and/or
                        meat processing.

                1.5.5   A factory for processing raw leather or other materials
                        emitting smells and noise.

                1.5.6   Use connected to the breeding or holding of livestock.

<PAGE>
                                                                              17

2.      The Lessee shall not keep any merchandise, packages of any kind and
        nature whatsoever, objects, tools, equipment and apparatus in the Public
        Areas, in the Parking Lots and passageways unless it received advance
        written authorization to do so by the Management Company.

3.      The Lessor and/or the Management Company and/or their attorneys acting
        in their name or on their behalf have the authority to remove without
        any advance warning any object, tool, equipment or any other item which
        may be situated outside the Premises' Area and which in their opinion
        may constitute a nuisance and/or disturbance, and to oblige the Lessee
        to pay the expenses involved in removal of the nuisance.

4.      The Lessee shall abstain from any overloading in the Premises' Area, or
        in the Public Areas, which is liable to cause damage to the floors or
        which exceeds the permitted weight.

5.      The Lessee undertakes that the Premises and their vicinity shall be kept
        clean and orderly throughout all hours of the day.

6.      At the demand of the Lessor and/or the Management Company, any act,
        activity, or management of a business, which in the Lessor's opinion may
        constitute a safety or health risk to the general public and/or the
        other business owners in the Project shall cease immediately.

7.      The Lessee shall abstain from destroying defective merchandise or any
        object of any kind whatsoever by making a fire in the Project area or
        vicinity.

8.      The Lessee shall not leave any refuse, garbage, or any undesirable
        object within the confines of the Project or the areas adjacent thereto,
        and it shall remove any refuse or garbage solely and exclusively
        according to the method of refuse collection instituted in the Project
        and which shall be published by the Management Company.

9.      (canceled).

10.     The Lessee and any person on its behalf or its visitors are obliged to
        use, solely and exclusively, the official Parking Lot spaces in the
        Parking Lots. There is an absolute prohibition on parking in the places
        designated for loading and unloading and/or on the sidewalks and/or in
        the Public Areas in the Project and its vicinity.

11.     The Lessee, its employees and visitors shall obey the instructions of
        the signage and direction and shall use only the roads and entrances
        designated therefor by the Management Company for the purpose of access
        to the Premises and the various places in the Project.

        The Regulations shall be subject to the Lease Agreement so that all the
        terms therein shall have the meaning attributed to them by the Lease
        Agreement and in any event of inconsistency between the provisions of
        the Regulations and the provisions of the Lease Agreement the latter
        shall prevail unless the provisions of the Regulations add to the
        provisions of the Lease Agreement.

<PAGE>
                                                                              18

                                 AZRIELI CENTER

                                 APPENDIX "G(1)"

            CERTIFICATE OF ARRANGING INSURANCE ON THE LESSEE'S WORKS

                                                            Date: ______________

TO

Canit HaShalom Investments Ltd. (hereinafter: "the Lessor")
Azrieli Center Towers (Ventures and Management) Ltd. (hereinafter:
  "the Management Company")
Azrieli Center, 132 Petah Tikva Rd.
Tel-Aviv

Dear Sir or Madam,

                 RE: Azrieli Center (hereinafter: "the Project")
                     Lease Agreement signed between yourselves and
                     _________________ ___ (hereinafter: "the Lessee")

We are honored to certify herewith that commencing on _______ our company
arranged insurance on contractor works in the name of the Lessee, contractors
and sub-contractors, the Lessor and the Management Company which insures the
works performed by the Lessee and/or on its behalf as specified below, while the
extent of the coverage given under the insurance as aforesaid is no less than
the coverage given pursuant to the form of the policy known as Bit/_____________
in force at the date of commencement of the insurance period:

1.      Chapter 1 - All Risks Insurance which insures loss or damage caused to
        the Lessee's works, at their full value, and also loss or damage caused
        to the equipment used for the performance of the works as aforesaid.
        This chapter includes a clause concerning waiver of substitution
        vis-a-vis all the other tenants and/or lessees in the Project whose
        insurance policies contain a parallel clause concerning waiver of
        substitution vis-a-vis the Lessee, provided that what is stated
        concerning waiver of the right of substitution shall not apply in favor
        of a person who has caused damage with malicious intent. The chapter
        includes an extension concerning property being worked on and/or
        adjacent property, with a limit of liability which does not fall below
        the sum of $50,000 (fifty five thousand US dollars).

2.      Chapter 2 - Third Party Liability Insurance with a limit of liability as
        specified below. The chapter as aforesaid includes a cross-liability
        clause whereby the insurance is deemed to have been arranged separately
        for each one of the Insured's units.

        Limit of liability: $5,000,000 (five million dollars) per incident in
        the accumulative throughout the annual insurance period.

3.      Chapter 3 - Employers Liability Insurance in respect of liability
        vis-a-vis all those employed in the performance of the works with a
        limit of liability which shall not be less than the normal standard
        maximum limit of liability in Israel at the date of arranging the
        insurance, as specified below. This insurance does not contain any
        restriction concerning works in high places and below ground, working
        hours, baits and toxins, contractors, sub-contractors and their works
        nor concerning the employment of youth.

        Limit of liability: $5,000,000 (five million dollars) per claimant, per
        incident and in the accumulative throughout the annual insurance period.

The above insurance contains an express condition whereby it has priority over
any other insurance arranged by the Lessor and/or the Management Company, and we
waive any contention and/or demand concerning participation of the insurance
policies of the Lessor and/or the Management Company. Likewise, we undertake
that the insurance mentioned above shall not be reduced in scope, and shall not
be canceled for the duration of performance of the Lessee's works, unless
written notice is sent by registered mail to the Lessor, 60 days in advance.

<PAGE>
                                                                              19

Subject to the conditions and reservations of the original policies insofar as
not expressly varied by the aforesaid.

<TABLE>
<S>                           <C>                   <C>                    <C>

-----------------------       ---------------       --------------------   ---------------------
(Insurer's signature)           (Insurer's          (Signatory's name)             (Signatory's
                                  seal)                                             position)
</TABLE>

<PAGE>
                                                                              20

                                 AZRIELI CENTER

                                 APPENDIX "G(2)"

                 CERTIFICATE OF ARRANGING THE LESSEE'S INSURANCE

                                                            Date: ______________

TO

Canit HaShalom Investments Ltd. (hereinafter: "the Lessor")
Azrieli Center Towers (Ventures and Management) Ltd. (hereinafter:
  "the Management Company")
Azrieli Center, 132 Petah Tikva Rd.
Tel-Aviv

Dear Sir or Madam,

                 RE: Azrieli Center (hereinafter: "the Project")
                     Lease Agreement signed between yourselves and
                     _______________________ (hereinafter: "the Lessee")

We are honored to certify herewith that commencing on _______ our company
arranged the insurance policies specified below, in the Lessee's name,
pertaining to the Premises in the Project (hereinafter: "the Lessee's
Insurance").

1.      Insurance insuring the contents of the Premises as well as the equipment
        serving the Premises under the ownership and/or liability of the Lessee
        and which is situated outside the Premises within the confines of the
        Project, at their full value, and also any change and addition to the
        Premises made and/or which may be made by the Lessee and/or anyone on
        its behalf (as specified, exclusive of any change and addition which
        have been invested via the Lessor and/or the Management Company),
        against loss or damage as a result of the normal risks in extended fire
        insurance including fire, smoke, lightning, explosion, earthquake, gale
        and storm, flooding, liquids and burst pipes damage, injury by vehicles,
        injury by aircraft, strikes, riots, malicious damage, broken glass and
        break-in.

        The insurance contains an express condition whereby the Insured waives
        any right of substitution vis-a-vis the Lessor, the Management Company
        as well as vis-a-vis the other lessees and/or tenants in the Project
        (whose insurance policies contain a parallel clause concerning waiver of
        substitution vis-a-vis the Lessee) and all those acting on behalf of
        those specified above, provided that the aforesaid concerning waiver of
        the right of substitution shall not apply in favor of a person who has
        caused damage with malicious intent.

2.      Third Party Liability Insurance with a limit of liability as specified
        below. The insurance is not subject to any restriction concerning
        liability arising from fire, explosion, panic, lifting, loading and
        unloading instruments, defective sanitary apparatus, poisoning, any
        harmful substance in food or drink, strikes and lock-outs as well as
        substitution claims on the part of the National Insurance Institute. The
        insurance has been extended to indemnify the Lessor and the Management
        Company in respect of their liability for the acts and/or omissions of
        the Lessee, the same subject to a cross-liability clause whereby the
        insurance is deemed to have been arranged separately for each one of the
        Insured's units.

        Limit of liability: $5,000,000 (five million dollars) per incident in
        the accumulative throughout the annual insurance period.

3.      Employers Liability Insurance in respect of the Lessee's liability
        vis-a-vis all those employed by it and on its behalf with a limit of
        liability of $5,000,000 (five million dollars) per employee and per
        incident in the accumulative throughout the insurance period. This
        insurance does not contain any restriction concerning works in high
        places and below ground, working hours, baits and toxins, contractors,
        sub-contractors and their works nor concerning the employment of youth.
        The insurance as aforesaid has been extended to indemnify the Lessor and
        the Management Company if it is contended that the Lessor and/or the
        Management Company have a liability as employers vis-a-vis the Lessee's
        employees and/or any of them, with regard to the occurrence of any work
        accident whatsoever.

<PAGE>
                                                                              21

The above insurance policies contain an express condition whereby they have
priority over any other insurance arranged by the Lessor and/or the Management
Company, and we waive any contention and/or demand concerning participation of
the insurance policies of the Lessor and/or the Management Company. Likewise, we
undertake that the insurance policies mentioned above shall not be reduced in
scope, and shall not be canceled for the duration of the Lease, unless written
notice is sent by registered mail to the Lessor, 60 days in advance.

SUBJECT TO THE CONDITIONS AND RESERVATIONS OF THE ORIGINAL POLICIES INSOFAR
AS NOT EXPRESSLY VARIED BY THE AFORESAID.

                               Yours faithfully,

<TABLE>
<S>                          <C>                      <C>                     <C>

---------------------        ------------------       ------------------      ----------------------
(Insurer's signature)        (Insurer's stamp)        (Signatory's name)      (Signatory's position)
</TABLE>

<PAGE>
                                                                              22

                                 AZRIELI CENTER

                                 APPENDIX "G(3)"

                         FIRE SAFETY MEASURES PROCEDURE

1.      Refuse materials, empty boxes, wooden and paper refuse and packing shall
        be removed from the Premises to outside the structure of the Project and
        be stored in a place designed therefor, as the Management Company may
        prescribe.

2.      High temperature works shall be performed within the confines of the
        Premises or their vicinity only in accordance with the procedure
        specified below:

        2.1     The term "high temperature works" means: the performance of any
                works whatsoever by means of welding and/or cutting at high
                temperature and/or by means of open fire.

        2.2     Any contractor or sub-contractor whose performance of its works
                involves high temperature works shall appoint a supervisor
                (hereinafter: "the Supervisor"), whose duty is to ascertain that
                the high temperature works are performed solely and exclusively
                in accordance with the contents of this Procedure.

        2.3     Before commencement of performance of any high temperature works
                whatsoever the Supervisor shall survey the area intended for
                performance of the high temperature works and ascertain that
                flammable materials of any kind are placed at a distance of a
                radius of at least 10 meters from the site of the performance of
                the high temperature works, and fixed flammable objects, which
                cannot be moved, shall be covered with a flame-resistant casing.

        2.4     The Supervisor shall appoint a person who shall act as a fire
                observer (hereinafter: "the Fire Observer") who is equipped with
                appropriate fire extinguishing measures for the type of
                flammable materials situated in the vicinity of the site of
                performance of the high temperature works. The sole function of
                the Fire Observer shall be to oversee the performance of the
                high temperature works and immediately extinguish any combustion
                which is liable to arise from the performance of the high
                temperature works.

        2.5     The Fire Observer shall be present at the site of performance of
                the high temperature works from the commencement of their
                performance until after at least 30 minutes have elapsed since
                their completion, the same in order to ascertain that no sources
                of combustion remain.

<PAGE>
                                                                              23

                                 AZRIELI CENTER

                                  APPENDIX "H"

                             FORM OF BANK GUARANTEE

CANIT HASHALOM INVESTMENTS LTD. AND/OR
AZRIELI CENTER TOWERS (VENTURES AND MANAGEMENT) LTD.
AZRIELI CENTER
132 PETAH TIKVA RD.

TEL-AVIV

                      DEED OF GUARANTEE NO. _______________

1.      Pursuant to the request of ___________________ (hereinafter: "the
        Applicant") we the undersigned, hereby stand guarantee vis-a-vis
        yourselves for the payment of any sum up to the sum of _____________ new
        shekels (________________________________________ new shekels)
        (hereinafter: "the Principal Sum") with the addition of rate
        differentials to the representative rate of the US dollar (hereinafter:
        "the Guarantee Sum"), which is owing or likely to be owing to you from
        the Applicant in connection with the Lease Agreement of the property in
        "The Azrieli Center", the same on the conditions as specified below.

2.      (A)     We undertake to pay you the Guarantee Sum or any part thereof at
                your first demand, from time to time in writing, and the same
                within 7 (seven) days from the date we receive your demand.

        (B)     We shall pay you the Guarantee Sum, wholly or partly, including
                in installments - all as stated in your demand - and the same
                without your being required to prove and/or justify and/or base
                your demand in any way whatsoever, without any obligation being
                imposed upon you to first demand all or part of the Guarantee
                Sum from the Applicant and/or to take any action whatsoever
                vis-a-vis the Applicant and without making the aforesaid payment
                conditional on any condition whatsoever.

3.      The Guarantee Sum shall be calculated in the following manner:

        (A)     The Principal Sum shall be linked to the representative rate of
                the U.S. Dollar published by the Bank of Israel or any other
                authorized body which may replace it.

        (B)     The relevant representative rate for calculating the Guaranty
                Amount will be the representative rate known on the day of
                actual remittance (hereinafter: the "Determining Rate");

        (C)     The basic rate for calculating the Guaranty Amount shall be the
                representative rate of the Dollar, as published by the Bank of
                Israel, and which is known at the date of issuance hereof, and
                which is the amount of NIS ______ per Dollar (hereinafter: the
                "Basic Index").

        (D)     If on the date of actual remittance, the Determining Rate shall
                be higher than the Basic Index, then the Principal Sum shall be
                multiplied by the Determining Rate and the product shall be
                divided by the Basic Index. The result shall be the Guaranty
                Amount.

        (E)     In any event, the Guarantee Sum shall not be less than the
                Principal Sum.

4.      This our undertaking is irrevocable and shall be in effect until
        ________________.

5.      Our address for the purpose of serving the demand letter is
        _______________.

6.      This Guaranty is not transferable or endorsable.

                                                Yours faithfully,
                                       Bank
                                       Branch
                                                ------------------

<PAGE>
                                                                              24

                                 AZRIELI CENTER

                                  APPENDIX "I"

                            PARKING LOT USE AGREEMENT

                                     BETWEEN

                       Azrieli Center Parking Lot Ltd.
                       Whose address for the purpose of this Agreement is:
                       132 Petah Tikva Rd., Tel-Aviv
                       (hereinafter: "the Company")

                                                               Of the first part

                                       AND

                       Terayon Communication System Inc.
                       (hereinafter: "the User")
                       Whose address for the purpose of this Agreement is:
                       c/o Attorney Arieh Hagai
                       18 HaYetzira Street, Ramat Gan
                       Telephone: 03-7513625, Fax: 03-7514036

                                                              Of the second part

WHEREAS         Canit HaShalom Investments Ltd. (hereinafter: "the Lessor") is
                the owner of the right to be registered as lessee of the land in
                Block 7106 Parcel 5 in Tel Aviv (hereinafter: "the Land");

AND WHEREAS     The Lessor is constructing a project on the Land which
                shall include buildings designated for offices, commercial,
                stores, residential, parking lots and additional uses known by
                the name "Azrieli Center" (hereinafter: "the Project");

AND WHEREAS     The User has entered into an Unprotected Tenancy Agreement
                (hereinafter: "the Lease Agreement") with the Lessor which
                grants the User the right to occupy premises in the Project
                (hereinafter: "the Premises");

AND WHEREAS     The Project includes areas designated for use as a pay parking
                lot for vehicles (hereinafter: "the Parking Lot") and the User
                and the Lessor have agreed that the management and operation of
                the Parking Lot shall be entrusted to the Company for the
                purpose of the supply of the services required for the proper
                maintenance and smooth operation of the Parking Lot;

AND WHEREAS     The User wishes to use the Parking Lot to park vehicles as
                specified below and the Company has agreed to permit the User to
                park vehicles in the Parking Lot, the same subject to payment of
                the consideration and fulfilment of the other provisions of this
                Agreement;

ACCORDINGLY IT HAS BEEN DECLARED, STIPULATED AND AGREED BETWEEN THE PARTIES
AS FOLLOWS:

1.      PREAMBLE AND INTERPRETATION

        1.1     The preamble and appendices to this Agreement and the
                declarations of the parties thereto constitute an inseparable
                part thereof.

<PAGE>
                                                                              25

        1.2     The headings of the sections of the Agreement are for the
                purpose of ease of reference and convenience only, they do not
                form part of the Agreement, and they shall not be used for the
                purposes of its interpretation.

        1.3     All of the terms and definitions herein shall have the same
                meaning such have in the Lease Agreement, unless otherwise
                expressly stated herein.

2.      THE PARKING LOT

        2.1     The company shall assign the User a delimited and defined area
                which will enable parking for 180 vehicles on the User's behalf,
                of which 45 vehicles parked in such a fashion which blocks other
                vehicles of the User. The parking area assigned to the User as
                aforesaid shall be marked in a sketch which shall be prepared by
                the Company and attached as Schedule "B2" to the Lease Agreement
                (hereinafter: the "Parking Area"). The Company shall install an
                electric barrier and a separating fence in the Parking Area, at
                the User's expense, and anyone using the parking lot on the
                User's behalf will be obligated to enter the Parking Area within
                15 minutes of such person's entry into the Parking Lot.

                The Company shall be entitled, solely for reasonable causes, to
                change the location of the Parking Area, by a notice thereof
                delivered to the User 7 days in advance. Changing such marked
                area shall be coordinated with the User to the extent possible.
                Splitting the Parking Area shall require the User's prior
                consent.

                The User shall be entitled to place a person on its behalf in
                the Parking Area, to be responsible for arranging the parking of
                the User's cars in the Parking Area.

                The parking spaces shall be allocated to the User gradually, in
                accordance with the progress rate of delivering the various
                sections of the Premises to the User, according to the
                proportionate part of the parking spaces compared to the
                proportionate part of the parts of the Premises delivered to the
                User. It is agreed by the parties that following the transfer of
                possession of the entire Premises' Area, as provided for in
                Schedule "A", the Company shall assign the User the
                aforementioned Parking Area.

        2.2     Subject to the fulfillment of the provisions of this Agreement
                and the payment of the parking fees, the User shall receive 180
                means of entry to the Parking Lot enabling entrance to defined
                vehicles to the Parking Areas (hereinafter: "Means of Entry to
                the Parking Lot") on the days and during the hours the Parking
                Lot is operated.

        2.3     The User shall not be entitled to park vehicles in parking areas
                other than the Parking Area only. The User declares that it is
                aware that in every case that one of its vehicles shall remain
                in other parking areas in the Parking Lot, which are not the
                Parking Area, for more than 15 minutes, the User shall be
                charged an hourly rate for any such vehicle for payment of
                Parking Fees at a rate double the rate customarily in place at
                that time at full-day parking Parking Lots for casual customers.

        2.4     The User declares that it is aware that the Company and/or the
                Lessor are entitled to allot particular parking areas in the
                Parking Lot to tenants in the Project and/or to any other party
                at their sole discretion, and the User shall have no contention
                and/or claim in connection with the allocation of parking areas
                as aforesaid.

        2.5     The Company undertakes that as long as it has not notified the
                User otherwise, the Parking Lot shall operate 24 hours a day,
                seven days per week, except on Yom Kippur.

        2.6     Vehicle entrance to the Parking Lot shall be regulated, as
                aforesaid via Means of Entry to the Parking Lot which shall
                enable vehicle identification such as: parking stickers stuck on
                the windscreen of the vehicle and/or by means of an
                identification card and/or by means of a magnetic card issued to
                the User and/or by means of electronic devices installed in the
                vehicle and/or in any other way as the Company may see fit.

        2.7     The User undertakes to return all the Means of Entry to the
                Parking Lot to the Company immediately upon termination or
                expiry of this Agreement for any reason whatsoever. The User
                shall place a deposit with the Company, as customarily done with
                parking lot subscribers, to ensure the return of the Means of
                Entry to the Parking Lot to the Company. Upon return of the
                Means of Entry to the Parking

<PAGE>
                                                                              26

                Lot to the Company, the Company shall return the deposit to the
                User, such deposit linked to the Consumer Price Index as set
                forth in section 4.2 hereinbelow.

        2.8     Use of the Means of Entry to the Parking Lot is designated for
                vehicles which have been marked and defined in advance, as
                expressly agreed between the parties and where details thereof
                have been submitted by the User before commencement of use
                (hereinafter: "the Particular Vehicles"). If the User wishes to
                replace the identity of the Particular Vehicles or any part
                thereof, it shall be obliged to notify the Company thereof at
                least 24 hours in advance and the Company shall issue the User
                with Means of Entry to the Parking Lot for the new vehicle
                against cancellation of the Means of Entry to the Parking Lot of
                the vehicle which has been replaced.

                For the avoidance of doubt, it is hereby clarified that the User
                is entitled to Means of Entry to the Parking Lot for the
                Particular Vehicles only. The entry of other vehicles, which are
                not the Particular Vehicles, to the Parking Lot shall not be
                permitted within the framework of this Agreement and through the
                use of the Means of Entry to the Parking Lot issued thereunder,
                even if they are under the ownership and/or control of the User
                and/or anyone on its behalf and even if the User is not using
                the Means of Entry to the Parking Lot at that time.

        2.9     For the avoidance of doubt, it is clarified that the contents of
                this Agreement shall not be construed as preventing the User,
                its customers, guests, employees, and/or whomsoever on its
                behalf, from parking in the Project Parking Lots, on an
                available parking space basis, in accordance with the terms,
                tariffs, and rules in effect at that time for casual customers.

        2.10    Valet Parking Services

                2.10.1  The User declares that it is aware of the fact that the
                        Company, using the parking lot employees, is entitled to
                        operate in the parking lot, against additional payment,
                        a valet parking service arrangement for those amongst
                        Parking Lot Users who would be interested in such
                        (hereinafter: the "Valet Parking Service"). The User
                        declares that it is aware of the fact that this service
                        is one for which the Company collects additional payment
                        and that the Parking Fees paid by the User as provided
                        for in section 4.1 hereinbelow do not include payment
                        for the Valet Parking Service.

                2.10.2  In order to receive the Valet Parking Service, the User
                        must give the Company advance written notice, in which
                        will be specified the number of vehicles, including
                        their makes and license plate numbers, which the User
                        wishes to include in the Valet Parking Service, and also
                        the date on which the Valet Parking Service is requested
                        to commence.

                2.10.3  It is agreed that either of the parties may terminate
                        the Valet Parking Service by a 14 day prior written
                        notice, with no need of explaining the termination.
                        Neither of the parties shall have any claim and/or
                        demand in respect of the other party's exercising such
                        right to terminate the Valet Parking Service by advance
                        notice, as aforesaid.

                2.10.4  So long as the Company does not otherwise notify, the
                        Valet Parking Service will be provided by the Company
                        between 8:00 a.m. and 8:00 p.m. of the same day.

                2.10.5  The manner of operating the Valet Parking Service and
                        the various regulations in connection with its operation
                        shall be determined by the Company from time to time.

        2.11    The Company shall be entitled to publish a written notice, under
                which the Company is changing the parking regulations in the
                Parking Lot, whereby the User and/or whomsoever on its behalf
                must leave the car keys in the car, in order to enable double
                parking of vehicles in the parking lot. The User and/or
                whomsoever on its behalf undertake to act in accordance with
                such instructions published by the Company. It is agreed by the
                parties that in the event that the Parking Lot or any part
                thereof which the User shall use shall be operated in accordance
                with the foregoing, then the Company shall be responsible for
                any damage and/or loss caused to vehicles and/or their contents
                as a result of the Company's negligence and/or the negligence of
                whomsoever on its behalf. The Company shall ensure its being
                insured against such damages for which it shall be responsible.
                The foregoing shall not apply to the parking spaces which shall
                have been assigned to the User under section 2.2 hereinabove

3.      DURATION OF THE AGREEMENT

<PAGE>
                                                                              27

        3.1     This Agreement is for the entire Term of Lease.

        3.2     Notwithstanding the contents of section 3.1 above, this
                Agreement and the authority to use the Means of Entry to the
                Parking Lot thereunder, shall terminate in any case where the
                Lease Agreement is terminated, either as a result of expiry or
                for any reason whatsoever and without the necessity of giving
                separate notice.

4.      PARKING FEES

        4.1     In consideration for the right to use the Parking Lot enabling
                the entry to the Parking Lot of a pre-marked and pre-designated
                single private passenger vehicle, the User shall pay the Company
                an amount in NIS equaling $140 (one hundred and forty dollars)
                with the addition of V.A.T. as provided by law for each month of
                the use period (hereinafter: the "Parking Fees"). The Parking
                Fees shall be paid in accordance with the representative rate of
                the U.S. Dollar, as last published by the Bank of Israel prior
                to the actual remittance of any sum.

                It is agreed by the parties that the User shall pay Parking Fees
                in respect of 162 Means of Entry to the Parking Lot, and in
                respect of all of the Means of Entry to the Parking Lot the User
                shall pay the Company an aggregate sum of $22,680 (twenty-two
                thousand six hundred and eighty U.S. Dollars) per month, with
                the addition of V.A.T. as provided by law.

                The User undertakes to pay the Parking Fees even if it shall not
                in fact make use of the parking right granted to the vehicles as
                aforesaid, in whole or in part, during all or part of the use
                period, and so long as this Agreement shall be in force. It is
                clarified that, in addition to the Parking Fees, the User shall
                have to pay the Company or the Municipality of Tel-Aviv, at the
                Company's decision, the municipal taxes (arnona) in respect of
                the area of the Parking Area assigned to the User as provided in
                section 2.2 hereinabove.

        4.2     Insofar as the User and the Company have upon the signing hereof
                agreed on the provision of Valet Parking Service to the User,
                then the User shall pay the Company the sum of $50 per month in
                respect of any vehicle entitled to received the Valet Parking
                Service, with the addition of V.A.T. as provided by law,
                throughout the Service Period, as defined below (hereinafter:
                the "Service Fees").

                The "Service Period" - the period starting on the day of
                commencement of the Valet Parking Service as agreed by the
                parties, and ending on the earlier of the day this Agreement
                and/or the Valet Parking Service shall be terminated.

                All of the provisions of the Lease Agreement, including all of
                its Appendices, in relation to updating the Parking Fees, shall
                apply to the Service Fees, as well.

        4.3     The Parking Fees shall be updated on the updating date of the
                Rental Fees, and at the updating rate of the Rental Fees.

                For the avoidance of doubt and subject to the contents of
                section 27.5.5 of the Lease Agreement, it is clarified that the
                payment of the Parking Fees as aforesaid, constitutes a
                condition precedent for authority to use the Parking Lot and the
                Means of Entry to the Parking Lot.

        4.4     In the event of arrears in payment of the Parking Fees, interest
                at the rate in force at that time in respect of unapproved
                overdrafts in current loan accounts at Bank Leumi l'Israel Ltd.
                shall be added to the Parking Fees from the third day of arrears
                and the same without derogating from any other right of the
                Company and without derogating from its right to revoke the
                right of use of the Parking Lot and the Means of Entry to the
                Parking Lot subject to the provisions of section 27.5.5 of the
                Lease Agreement.

        4.5     For the avoidance of doubt, it is clarified that payment of the
                Parking Fees as aforesaid does not grant the User any right of
                possession and/or ownership and/or lease right and/or protected
                tenancy right in the Parking Lot and/or any other right in any
                parking spaces whatsoever in the Parking Lot beyond the
                authority to use the Parking Lot for the purpose of parking, as
                stated in this Agreement.

<PAGE>
                                                                              28

        4.5     The Service Fees shall be remitted by the User on the remittance
                day of the Parking Fees. The Service Fees shall be subject to
                the updating provisions applicable to the Parking Fees, and to
                the provisions regarding late payment of the Parking Fees, as
                provided for in Section 4.3 hereinabove.

5.      THE USER'S UNDERTAKINGS

        The User hereby undertakes vis-a-vis the Company as follows:

        5.1     To pay the Parking Fees and the Service Fees to the Company
                properly and on time.

        5.2     To park the vehicles in the Parking Lot solely and exclusively
                in the Parking Areas and not in any other place in the areas of
                the Parking Lot and the Project unless the Company permitted the
                User, in advance and in writing, to use other parking areas.

        5.3     The User declares that it is aware that the provisions of this
                Agreement are in addition to any other provision of the Company
                in the signage and/or road signs and/or the attendants'
                directives and it undertakes to obey the reasonable instructions
                of the Company and/or whomsoever on its behalf including the
                attendants and employees of the Parking Lot in all matters
                pertaining to the parking of vehicles and the use of the Parking
                Lot, as displayed in the appropriate signage in the entrance to
                the Parking Lot, and as given orally. The User is responsible
                for seeing to it that any person acting on its behalf and any
                driver of a vehicle entitled to use the Means of Entry to the
                Parking Lot complies with the operation procedures and
                instructions as aforesaid. The User declares that it is aware
                that the Traffic Ordinance [New Version] and the Traffic
                Regulations, 5721-1961, apply to driving in the Parking Lot and
                it undertakes to comply with the provisions of any law and the
                instructions of the road signs prescribed for the Parking Lot.

                The User undertakes to use the Parking Lots in such manner as
                not to harm other users, not to obstruct passageways, to park
                solely and exclusively in the areas designated for parking, to
                park vehicles only between the marked lines designated for
                parking one vehicle and also not to cause any damage to the
                Parking Lot and the equipment situated therein.

                The User hereby gives its express consent in advance that in any
                instance of obstruction of passageways and/or parking of
                vehicles on its behalf, other than in accordance with the
                Company's instructions, the Company and/or any person on its
                behalf shall be entitled to take all the steps required in order
                to remove the obstruction and in this regard to tow the car
                and/or to move it and/or put a Denver Boot on vehicles as
                aforesaid and/or to stick warning and marking labels on the
                windscreen of vehicles and to take any action which it thinks
                fit for the purpose of preserving the order and smooth operation
                of the Parking Lot.

                The Company and/or the Lessor and/or whomsoever on their behalf
                shall not be responsible for any damage caused to the vehicles
                as a result of the implementation of the aforesaid, unless such
                was caused due to the negligence of the Company and/or
                whomsoever on its behalf. The Company shall endeavor to notify
                the User prior to exercising its authority set forth
                hereinabove, insofar as is possible.

        5.4     The User declares that it is aware that notwithstanding that
                entry to and exit from the Parking Lot shall be possible 24
                hours a day, not all the entrances and exits of the Parking Lot
                shall be in operation 24 hours a day and that the Company is
                entitled, at its sole discretion, to decide which entrances to
                the Parking Lot shall operate during which hours, and the User
                shall have no contention and/or claim in connection with the
                decision as aforesaid.

        5.5     The User is aware that parking in the Parking Lot is restricted
                to a private car or commercial vehicle whose inclusive weight is
                up to 2 tons only and whose height does not exceed 210 cms.

6.      LIABILITY FOR DAMAGES

        6.1     The User declares that use of the Parking Lot and the Means of
                Entry to the Parking Lot is at its sole liability and that no
                liability for guarding vehicles in the Parking Lot and/or their
                contents and/or their external condition is imposed upon the
                Company and/or those acting on its behalf, and it is not liable
                for any damage, loss or deficiency which may be caused to
                vehicles, persons, or chattels in the Parking Lot for any reason
                whatsoever including and without derogating from the generality
                of the aforesaid,

<PAGE>
                                                                              29

                as a result of fire, smoke, earthquake, hostile acts, war,
                flood, theft, break-in, damage from other vehicles, unless these
                are caused due to negligent act and/or omission of the Company
                and/or the Lessor and/or the Management Company and/or
                whomsoever on their behalf.

                The User hereby releases the Company from any liability for
                damage as aforesaid. The User undertakes to indemnify the
                Company within 7 days of its first demand in respect of any
                expense and/or damage which the Company may incur and/or in
                respect of any sum which it may be obliged or demanded to pay as
                a result of a claim and/or damage, loss or deficiency as
                aforesaid, unless these are caused due to negligent act and/or
                omission of the Company and/or the Lessor and/or the Management
                Company and/or whomsoever on their behalf.

        6.2     The User shall be liable for any damage which it may cause to
                the Parking Lot and its apparatus and/or the Company and/or its
                employees and/or the operators of the Parking Lot and/or any
                third party as a result of the negligent act or omission of the
                User and/or any person on its behalf.

        6.3     The User hereby undertakes that the vehicles on its behalf which
                may be parked in the Parking Lot shall be insured with
                compulsory insurance as required by law and with comprehensive
                insurance, including third party insurance, and the use thereof
                shall be pursuant to any law.

        6.4     The User declares that it is aware that payment of the Parking
                Fees and the Service Fees is for the right to park only and does
                not include any guarding services whatsoever and that the
                presence of supervisors and/or inspectors and/or attendants
                and/or cashiers in the entrances and exits of the Parking Lot is
                designed for the purpose of collecting payment and providing the
                right to park only.

                The parties agree that the provisions of the Keepers Law,
                5727-1967, shall not apply to this Agreement and/or with regard
                to the parking of vehicles in the Parking Lot and the use
                thereof.

        6.5     The User declares that it is aware that under no circumstances
                should it leave the keys of the vehicle inside the vehicle
                and/or entrust them to any of the employees of the Parking Lot
                and that the Parking Lot employees are forbidden to order and/or
                offer and/or request the leaving or delivery of the keys as
                aforesaid.

                Notwithstanding the aforesaid, if the User, or any person on its
                behalf, decides, for any reason whatsoever, to leave the keys of
                the vehicle or to deposit the keys of the vehicle with any of
                the Parking Lot employees, then the User hereby declares that
                this is done at its sole liability and it is aware of the risks
                of delivering and/or leaving the keys as aforesaid, due to the
                possibility that they might be duplicated and/or copied and/or
                otherwise used, either maliciously or negligently, by the
                Parking Lot employees and/or by any person to whom the keys of
                the vehicle are entrusted or who has taken them either by
                mistake or intentionally including due to a case of mistaken
                identity. The User releases the Company and all those acting on
                its behalf from any liability for any loss, damage, injury or
                deficiency liable to be caused, directly or indirectly, to
                themselves and/or to the person of any individual and/or
                property whatsoever in the Parking Lot or outside it, consequent
                upon the deposit and/or leaving of the keys as aforesaid. The
                foregoing shall be contingent upon there having been no written
                notice published by the Company in this matter, as provided for
                in Section 2.10 hereinabove.

        6.6     The User declares that it is aware that the Company is entitled
                to vacate from the area of the Parking Lot any vehicle which has
                been parked without the Parking Fees in respect thereof being
                paid and/or any vehicle parked without authority and/or contrary
                to instructions and the Company and/or the Lessor and/or any
                person on their behalf shall not be liable for any damage of any
                type and nature whatsoever which may be caused as a result
                thereof.

7.      TRANSFER OF RIGHTS

        7.1     The User shall not be entitled to transfer the authority granted
                to it pursuant to this Agreement to use the Means of Entry to
                the Parking Lot, in whole or in part, to any third party without
                obtaining written consent from the Company and not to permit,
                directly or indirectly, the entry of additional vehicles into
                the Parking Lot beyond such as provided for in Section 2
                hereinabove. To prevent any doubt it is clarified that
                transferring the User's rights in the Premises, in accordance
                with the provisions of the Lease Agreement, shall be also deemed
                to be a transfer of the User's rights hereunder, and in any
                event of a sublease of part of the Premises, the User shall also
                be entitled to transfer a proportionate

<PAGE>
                                                                              30

                part of the Means of Entry to the Parking Lot, all subject to
                and in accordance with the provisions of the Lease Agreement
                regarding such transfer of rights.

        7.2     The Company and/or the Lessor shall be entitled to transfer
                their rights in the Parking Lot and/or the operation thereof
                and/or their rights and undertakings pursuant to this Agreement,
                in whole or in part, to any third party at their absolute
                discretion without obtaining the User's consent, and the User
                hereby gives its consent to the transfer of rights as aforesaid
                provided that the User's rights pursuant to this Agreement are
                not adversely affected.

8.      BREACHES AND REMEDIES

        The provisions of Sections 2, 4.1, 5.1, 5.2, 6.1, and 6.3 are
        fundamental provisions in this Agreement and the breach thereof shall
        enable the injured party to revoke this Agreement without derogating
        from any other right which the Company has pursuant to this Agreement
        and/or pursuant to any law.

     IN WITNESS WHEREOF THE PARTIES HAVE SIGNED ON THE DATE AND IN THE PLACE
                 MENTIONED AT THE BEGINNING OF THIS AGREEMENT :

-------------                                                     --------------
 The Company                                                         The User

<PAGE>
                                                                              31

                                 AZRIELI CENTER

                                  APPENDIX "J"

                          IRREVOCABLE POWER OF ATTORNEY

           UNDER ARTICLE 91 OF THE CHAMBER OF ADVOCATES LAW, 5721-1961

We, the undersigned, TERAYON COMMUNICATION SYSTEM INC., hereby appoint Advocates
Arieh Hagai and/or Michael Fox and/or Tuvia Ehrlich and/or Meir Linzen and/or
Alan Sacks and/or Yaacov Brandt and/or Yitzhak Herzog and/or Ehud Sol and/or
Aner Berger and/or Daniel Chinn and/or Janet Levy-Fahima and/or Cliff Felig
and/or Eldar Ben-Rubi and/or Amir Sraya and/or Yael (Neeman) Bar-Shai and/or
Idit Roth and/or Chaim Crown and/or Yaacov Sharvit and/or Zohar Barzilai and/or
Zohar Hadar and/or Baruch Katzman and/or David Ziller and/or Eliot Sacks and/or
Paul Rubenstein and/or Anat Shavit and/or Keren Heilig and/or Adam Eitan and/or
Orly Gerbi and/or Tzach Granit and/or Moshe Hardi and/or Gilead Vexelman and/or
Boaz Tal and/or David Barinson and/or Mark Philips and/or Liat Shaked and/or
Yaron Kupfer and/or Sharon Harlev-Segev and/or Rinat Shaprut-Nakdimon and/or
Orly Meron-Shaked (jointly or severally) to be our legal attorneys and to
perform in our name and in our place all or any of the following actions:

1.      To delete and cancel the Note of Warning registered in our benefit at
        the Land Registry over the lease rights of CANIT HASHALOM INVESTMENTS
        LTD. PR.C. 51-163315-8 (hereinafter - the "Third Party") to the property
        located in the ROUND TOWER AT THE AZRIELI CENTER, 132 PETAH TIKVA ROAD,
        TEL-AVIV, ALSO KNOWN AS PART OF PARCEL 5 OF BLOCK 7106 (hereinafter: the
        "Real Property").

2.      In order to perform such actions, to appear before the Land Registry,
        the Land Registration and Land Settlement Department, Courts of any
        instance, any governmental, municipal or other institution, as
        applicant, plaintiff, defendant, appellant, respondent, third party,
        complainant, objector and in any other manner, to sign requests, any
        land registration deeds, agreements, contracts, declarations,
        undertakings, claims, defenses, appeals, compromises, any other document
        and paper, and in general do any thing related to any transaction in
        respect of the Real Property or any action related to the Real Property,
        to sign any document and appear before any institution for settling by
        way of arbitration or any other way all of its obligations and rights in
        respect of the Real Property.

3.      Whereas this Power of Attorney is given for the benefit of the Third
        Party, the rights of which are contingent upon this Power of Attorney,
        this Power of Attorney shall be irrevocable, we shall not be entitled to
        cancel or change it, and it shall remain in force even after we are
        liquidated and/or a receiver shall be appointed over our assets, and it
        shall also bind any liquidator and/or receiver appointed over us.

4.      From time to time to transfer this Power of Attorney, in whole or in
        part, to other lawyers and persons, and to cancel any transfer so made,
        and to re-transfer same, at the discretion of our aforesaid attorney(s).

       IN WITNESS WHEREOF WE HAVE SET OUR HAND TODAY ____ OF ______, 2000

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

                        TERAYON COMMUNICATION SYSTEM INC.

Attorney's Certification

I, the undersigned, Arieh Hagai, Adv., hereby confirm the above signature of my
client.

-------------------
Arieh Hagai, Adv.

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