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<SEC-DOCUMENT>0001178913-07-001599.txt : 20070801
<SEC-HEADER>0001178913-07-001599.hdr.sgml : 20070801
<ACCEPTANCE-DATETIME>20070801060458
ACCESSION NUMBER:		0001178913-07-001599
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20070801
FILED AS OF DATE:		20070801
DATE AS OF CHANGE:		20070801

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SILICOM LTD
		CENTRAL INDEX KEY:			0000916793
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-23288
		FILM NUMBER:		071014294

	BUSINESS ADDRESS:	
		STREET 1:		08 HANAGAR ST
		CITY:			KFAR-SAVA ISRAEL
		STATE:			L3
		ZIP:			44000
		BUSINESS PHONE:		97297644555

	MAIL ADDRESS:	
		STREET 1:		P.O.BOX 2164
		CITY:			KFAR-SAVA
		STATE:			L3
		ZIP:			44000
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>zk74029.htm
<TEXT>
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     <!-- Control Number: 74029                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=4>SECURITIES AND
EXCHANGE COMMISSION </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>WASHINGTON, D.C. 20549 </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=4>FORM 6-K </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>REPORT OF FOREIGN
PRIVATE ISSUER </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>PURSUANT TO RULE
13a-16 OR 15d-16 OF </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>THE SECURITIES
EXCHANGE ACT OF 1934 </font></h1>

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<P Align=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>For the month of July,
2007</I></B> </FONT> </p>

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<Hr Size="1" Noshade Width="15%" Align="Center">

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=5>SILICOM LTD. </font></h1>

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<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>(Translation of
Registrant&#146;s name into English) </font></p>

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<Hr Size="1" Noshade Width="20%" Align="Center">

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>8 Hanagar St., P.O.Box
2164, Kfar-Sava 44425, Israel </font></h1>

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<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>(Address of Principal
Executive Offices) </font></p>

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<Hr Size="1" Noshade Width="20%" Align="Center">

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<P><Font Face="Times New Roman, Times, Serif" Size=2>Indicate by check mark whether the
registrant files or will file annual reports under cover of Form 20-F or Form 40-F: </font></p>

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<h1 Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2>Form 20-F <FONT size="3" face="Wingdings">x
</font>       Form 40-F  <FONT size="3" face="Wingdings">o
</font></font></h1>



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<P><Font Face="Times New Roman, Times, Serif" Size=2>Indicate by check mark whether the registrant
by furnishing the information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934: </font></p>

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<h1 Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2>Yes <FONT size="3" face="Wingdings">o
</font>                No <FONT size="3" face="Wingdings">x
</font></font></h1>


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<font size=2></font></p>
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     <P><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd.
          (the &#147;Registrant&#148;) will hold its Annual and Extraordinary General
          Meeting of Shareholders on September 16, 2007 at 10:00 a.m. (Israel time) at the
          Registrant&#146;s offices at 8 Hanagar Street, Kfar Sava 44000, Israel. In
          connection with the meeting, on or about August 7, 2007, the Registrant will
          mail to shareholders the Notice of Annual and Extraordinary General Meeting,
          Proxy Statement, Proxy Card and the Consolidated Balance Sheet and Profit and
          Loss Statement of the Registrant for the year ended December 31, 2006. Attached
          hereto as Exhibits 1, 2, 3 and 4 are, the Notice of Annual and Extraordinary
          General Meeting, Proxy Statement, Proxy Card and Consolidated Balance Sheet and
          Profit and Loss Statement, respectively. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>This report on Form 6-K is
incorporated by reference into the Registrant&#146;s Registration Statement on Form F-3,
Registration Statement No. 333-143565. This report on Form 6-K is also incorporated by
reference into all other effective registration statements filed by the Registrant under
the Securities Act of 1933. </font></p>

<p align=center>
<font size=2></font></p>
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<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>Signature </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized. </font></p>


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<td Width=40%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=10%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=50%><Font Face="Times New Roman, Times, Serif" Size=2>SILICOM  Ltd.<Br>(Registrant)<Br><Br>
<br>By: /s/ Eran Gilad<br>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
Eran Gilad<br>CFO</font></td>
</tr>
</table>
<br>

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<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Dated: August 1, 2007 </font></p>

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<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>exhibit_1.htm
<TEXT>
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     <!-- Project:        \\Backup\office\EDGAR Filing\Silicom Ltd\74029\a74029.eep        -->
     <!-- Control Number: 74029                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
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<P Align="Right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 1</B></U> </FONT> </P>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>SILICOM LTD. <Br>
NOTICE OF ANNUAL AND
EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS </font><Br>
<Font Face="Times New Roman, Times, Serif" Size=2>September 16, 2007 </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notice
is hereby given that an Annual and Extraordinary General Meeting (the
&#147;<B>Meeting</b>&#148;) of Shareholders of Silicom Ltd. (the
&#147;<B>Company</b>&#148;) will be held at the offices of the Company at 8 Hanagar
Street, Kfar Sava 44000, Israel, on September 16, 2007, at 10.00 a.m., Israel time. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company is a Dual Company, as such term is defined in the Israeli Companies Regulations
(Concessions for Public Companies Traded on Stock Markets Outside of Israel) &#150; 2000. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Meeting is being called for the following purposes: </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;1. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act upon a proposal to elect Messrs. Avi Eizenman, Yehuda           Zisapel
and Yeshayahu (&#145;Shaike&#146;) Orbach to hold office as directors           until the
next annual general meeting of shareholders and until their successors           have
been duly elected and qualified.  </font></p>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;2. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act upon a proposal to extend the appointments of Ms. Einat
          Domb-Har and Mr. Ilan Kalmanovich as External Directors of the Company for
          additional three-year terms.  </font></p>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;3. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act upon a proposal to approve the procurement of an insurance
          policy for the coverage of directors and officers of the Company.  </font></p>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;4. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act upon a proposal to approve an increase in the salary of, and
          the grant of a bonus to, Yeshayahu (&#145;Shaike&#146;) Orbach, the
          Company&#146;s Chief Executive Officer.  </font></p>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;5. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act upon a proposal to approve the grant of a bonus to Avi
          Eizenman, the Chairman of the Company&#146;s Board of Directors.  </font></p>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;6. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act upon a proposal to approve the appointment of Somekh           Chaikin,
Certified Public Accountants (Isr.), a member of KPMG International, as           the
independent public accountants of the Company for the period commencing           January
1, 2007 and until the next annual shareholders meeting, and to authorize           the
audit committee of the Board of Directors to fix the remuneration of such
          auditors in accordance with the volume and nature of their services.  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;7. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
receive management&#146;s report on the business of the Company for the year
          ended December 31, 2006.  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of proposals numbered one, three, four, five and six requires the affirmative vote of
shareholders present in person or by proxy and holding Ordinary Shares of the Company
nominal value New Israeli Shekels 0.01 each (&#147;<B>Ordinary Shares</b>&#148;) amounting
in the aggregate to at least a majority of the votes actually cast by shareholders with
respect to such proposals. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of proposal number two requires the affirmative vote of shareholders present in person or
by proxy and holding Ordinary Shares amounting in the aggregate to at least a majority of
the votes actually cast with respect to each of such proposals, provided that if the total
number of Ordinary Shares voted against any such proposal by shareholders of the Company
that are not controlling shareholders (as such term is defined in the Israeli Securities
Law &#150; 1968) in the proposal exceeds one per cent (1%) of the aggregate voting rights
in the Company, such majority must include the affirmative vote of at least one-third of
the votes actually cast with respect to such proposal by shareholders of the Company
present in person or by proxy at the Meeting that are not controlling shareholders. </font></p>

<p align=center>
<font size=2>- 1 -</font></p>
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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders
of record at the close of business on August 7, 2007 will be entitled to vote at the
Meeting or any postponements or adjournments thereof. Shareholders who do not expect to
attend the meeting in person are requested to mark, date, sign and mail the enclosed proxy
as promptly as possible. In the event that proxies are sent directly to the Company, they
must be received at least 24 hours prior to the commencement of the Meeting in order for
the proxy to be qualified to participate in the Meeting. Shareholders who hold shares of
the Company through members of the Tel Aviv Stock Exchange and who wish to participate in
the Meeting, in person or by proxy, are required to deliver proof of ownership to the
Company, in accordance with the Israeli Companies Regulations (Proof of Ownership of a
Share For Purposes of Voting at General Meetings) &#150; 2000. Such shareholders wishing
to vote by proxy are requested to attach their proof of ownership to the aforementioned
proxy. </font></p>



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<td Width=40%><Font Face="Times New Roman, Times, Serif" Size=2><Br><Br><Br><Br><Br><Br><Br><Br>Date: August 1, 2007</font></td>
<td Width=10%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=50%><Font Face="Times New Roman, Times, Serif" Size=2>By Order of the Board of Directors<Br><Br><B> SILICOM LTD.</b><Br><Br>
<br>By: /s/ Shaike Orbach<br>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
Yeshayahu (&#145;Shaike&#146;) Orbach<br>President and Chief Executive Officer</font></td>
</tr>
</table>
<br>

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<font size=2>- 2 -</font></p>
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<TYPE>EX-99
<SEQUENCE>3
<FILENAME>exhibit_2.htm
<TEXT>

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     <!-- Control Number: 74029                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
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<P Align="Right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 2</B></U> </FONT> </P>

<P Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>PROXY STATEMENT</B> </FONT></P>


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<Td Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>
SILICOM
LTD.</B> </FONT> </td>
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<br>

<P Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>8 Hanagar St.
<Br><Br>Kfar Sava
<Br><Br>Israel</B> </FONT></P>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>ANNUAL AND
EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>September 16, 2007 </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
enclosed proxy is being solicited by the board of directors (the &#147;<B>Board of
Directors</b>&#148;) of Silicom Ltd. (the <B>&#147;Company</b>&#148;) for use at the
Company&#146;s Annual and Extraordinary General Meeting of Shareholders (the
&#147;<B>Meeting</b>&#148;) to be held on September 16, 2007, or at any adjournment or
postponement thereof. Upon the receipt of a properly executed proxy in the form enclosed,
the persons named as proxies therein will vote the ordinary shares, par value New Israeli
Shekels (&#147;NIS&#148;) 0.01 each, of the Company (the &#147;<B>Ordinary
Shares</b>&#148;) covered thereby in accordance with the directions of the shareholders
executing the proxy. In the absence of such directions, the Ordinary Shares represented
thereby will be voted in accordance with the recommendations of the Company&#146;s
management. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Proxy solicited hereby may be revoked at any time prior to its exercise, by means of a
written notice delivered to the Company, by substitution of a new proxy bearing a later
date or by a request for the return of the proxy at the Meeting. The Company expects to
solicit proxies by mail and to mail this proxy statement and the accompanying proxy card
to shareholders on or about August 7, 2007. Directors, officers and employees of the
Company may also solicit proxies by telephone, facsimile and personal interview. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company will bear the cost of the preparation and mailing of its proxy materials and the
solicitation of proxies. Copies of solicitation materials will be furnished to brokerage
firms, nominees, fiduciaries and other custodians for forwarding to their principals, and
the reasonable fees and expenses of such forwarding agents will be borne by the Company.
Only holders of record of Ordinary Shares at the close of business on August 7, 2007 are
entitled to vote at the Meeting. On July 27, 2007, 6,495,553 Ordinary Shares were
outstanding and entitled to vote. Each Ordinary Share is entitled to one vote on each
matter to be voted at the Meeting. The Company&#146;s Articles of Association do not
permit cumulative voting for the election of directors or for any other purpose. Two
shareholders present, personally or by proxy, holding at least fifty one per cent (51%) of
the Company&#146;s outstanding ordinary shares, shall constitute a quorum for the Meeting.
If within half an hour from the time the meeting is convened a quorum is not present, the
meeting shall stand adjourned until September 23, 2007 at 10:00 a.m. If a quorum is not
present at the second meeting within half an hour from the time appointed for the meeting,
any two or more shareholders present personally or by proxy shall be deemed a quorum, and
shall be entitled to deliberate and to resolve in respect of the matters for which the
meeting was convened. Abstentions and broker non-votes are counted as Ordinary Shares
present for the purpose of determining a quorum. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of proposals numbered one, three, four, five and six stated in this proxy statement and to
be proposed at the Meeting requires the affirmative vote of shareholders present in person
or by proxy and holding Ordinary Shares amounting in the aggregate to at least a majority
of the votes actually cast by shareholders with respect to such proposals (hereinafter an
&#147;<B>Ordinary Majority</b>&#148;). </font></p>




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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of proposal number two stated in this proxy statement requires the affirmative vote of
shareholders present in person or by proxy and holding Ordinary Shares amounting in the
aggregate to at least a majority of the votes actually cast with respect to each of such
proposals, provided that if the total number of Ordinary Shares voted against such
proposal by shareholders of the Company that are not controlling shareholders (as such
terms is defined in the Israeli Securities Law &#150; 1968) exceeds one per cent (1%) of
the aggregate voting rights in the Company, such majority must include the affirmative
vote of at least one-third of the votes actually cast with respect to such proposal by
shareholders of the Company present in person or by proxy at the Meeting that are not
controlling shareholders (hereinafter an &#147;<B>Ordinary One-Third Non-Controlling
Shareholder Majority</b>&#148;). </font></p>

<p align=center>
<font size=2>- 1 -</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>



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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PRINCIPAL SHAREHOLDERS </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth, as of July 27, 2007, the number of Ordinary Shares, including
options and warrants to purchase Ordinary Shares exercisable within 60 days, owned by (i)
all shareholders known to the Company to own more than five per cent (5%) of the
Company&#146;s Ordinary Shares and (ii) all directors and officers as a group (based on
6,495,553 Ordinary Shares outstanding on that date): </font></p>





<Table Cellpadding="0" Cellspacing="0" Align="Center" Width="100%">
<TR VALIGN=Bottom>
     <Th> </th>
     <Th Colspan="3" Align="Left"><FONT FACE="Times New Roman" SIZE=1>Name and Address</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Number of<BR>
Shares Owned</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Percent of Class</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="4%"> </td>
     <Td Width="66%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>Yehuda Zisapel</FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="3%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>555,940</FONT></TD>
        <Td Width="2%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>8.56</FONT></TD>
        <Td Width="2%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Zohar Zisapel</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>673,723</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>10.37</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td> </td>
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Sussman Robert <Sup>(1)</sup></FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>348,600</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>5.37</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Bjurman, Barry &amp; Associates and related entities <Sup>(2)</sup></FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>331,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>5.10</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td> </td>
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>All directors and officers as a group</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>834,255</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>12.52</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
</TABLE>
<Br>


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<td><Font Face="Times New Roman, Times, Serif" Size=2>
(1)
          As reported on the Schedule 13G filed by Robert Sussman with the Securities and
          Exchange Commission on July 20, 2007.  </font></td>
</tr>
</table>

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<td><Font Face="Times New Roman, Times, Serif" Size=2>
(2)
          As reported on the Schedule 13 G/A filed by Bjurman, Barry &amp; Associates,
          George Andrew Bjurman and Owen Thomas Barry III with the Securities and
Exchange           Commission on June 27, 2007.  </font></td>
</tr>
</table>
<br>

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<Hr Size="1" Noshade Width="15%" Align="Center">

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PROPOSAL I </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>ELECTION OF DIRECTORS </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
management of the Company has selected the persons named below for election as directors
to serve for a period of one year and until their respective successors are duly elected
and shall qualify. In the absence of instructions to the contrary, the persons named in
the enclosed proxy will vote the Ordinary Shares represented thereby &#147;FOR&#148; the
election of the nominees listed below. If any of these nominees is unable to serve, the
persons named in the proxy shall vote the Ordinary Shares for the election of such other
nominees as management may propose. The Company&#146;s Articles of Association specify
that the number of directors may be determined from time to time by the general meeting of
the shareholders of the Company. The following nominees who are currently directors of the
Company have advised the Company that they will continue to serve as directors if
re-elected. The following table provides certain relevant information concerning the
nominees, including their principal occupation during the past five years. </font></p>










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     <Td Width="20%" Align="Left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><U>Nominee</U></B> </FONT> </td>
     <Td Width="10%" Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Age</U></B> </FONT> </td>
     <Td Width="70%" Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Principal Occupation</U></B> </FONT> </td></tr>
</table>
<Br>



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     <td Width="20%"><Font Face="Times New Roman, Times, Serif" Size="2">Yehuda Zisapel </font></td>
     <Td Width="10%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2">64  </font></td>
     <td Width="70%"><Font Face="Times New Roman, Times, Serif" Size="2">Mr.  Zisapel is a co-founder of the Company.  He has served as a Director  since its inception and served as
Chairman of the Board of Directors  from 1999 until March 2001. Mr. Zisapel is also a founder and a director
of Rad Data Communications  Ltd. ("Rad"),  Bynet Data Communications Ltd. ("Bynet") and its subsidiaries and
other companies in the Rad Group.  The Company has certain dealings with members of the Rad Group (see "Item
7. Major  Shareholders  and Related Party  Transactions" of the Company's Annual Report on Form 20-F for the
year  ended  December  31,  2006).  In 1966 and 1968,  Mr.  Zisapel  received a B.Sc.  and an M.Sc.  degree,
respectively,  in Electrical Engineering from the Technion. In 1975, Mr. Zisapel received an M.B.A. from Tel
Aviv University.
</font></td></tr>
</table>
<Br>


 <p align=center>
<font size=2>- 2 -</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>














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     <th></th>
     <th></th></tr>
<Tr Valign="Top">
     <td Width="20%"><Font Face="Times New Roman" Size="2">Avi Eizenman </font></td>
     <Td Width="10%" Align="Center"><Font Face="Times New Roman" Size="2">50  </font></td>
     <td Width="70%"><Font Face="Times New Roman" Size="2">Mr.  Eizenman  co-founded  the Company in 1987 and has served as its President and as a Director,  since its
inception.  Mr. Eizenman also served as Chief Executive Officer from the Company's  inception until April 1,
2001, and on such date, he resigned from his position as Chief  Executive  Officer and was appointed  Active
Chairman of the Board of Directors.  Mr.  Eizenman  served as head of the ASIC  department at Scitex Ltd. in
1986. From 1979 until 1985, Mr. Eizenman held various positions,  including project manager, ASIC specialist
and engineer,  with the Electronic Research &amp; Development Department of the Israeli Ministry of Defense. Mr.
Eizenman holds a B.Sc. degree, with honors, in Electrical  Engineering from the Technion, and an M.B.A. from
Tel Aviv University.
</font></td></tr>
</table>
<Br>











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     <th></th>
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     <td Width="20%"><Font Face="Times New Roman" Size="2">Yeshayahu <Br>('Shaike') Orbach</font></td>
     <Td Width="10%" Align="Center"><Font Face="Times New Roman" Size="2">56</font></td>
     <td Width="70%"><Font Face="Times New Roman" Size="2">Mr.  Orbach has been  President  and Chief  Executive  Officer of the Company  since April 2001. In December
2001, Mr. Orbach was named a Director,  replacing  Zohar Zisapel,  who resigned from the Board of Directors.
Prior to that,  for a period of four and a half years,  Mr.  Orbach was  President  and CEO of Opgal Ltd., a
high-tech  subsidiary  of Israel's  Rafael and El-Op  corporations.  Previously,  he was General  Manager of
Edusoft,  an Israeli  company the shares of which were traded on the NASDAQ  National  Market,  and Managing
Director of Tecsys Ltd. He holds a B.Sc degree in Mechanical Engineering from the Technion.
</font></td></tr>
</table>
<Br>





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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shareholders of the Company will be requested to adopt the following resolution at the
Meeting: </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>
RESOLVED, to elect Avi Eizenman and Yehuda Zisapel as directors of the Company for the
coming year until the next annual meeting of the Company&#146;s shareholders and to elect
Yeshayahu (&#145;Shaike&#146;) Orbach, as a director of the Company for the coming year
until the next annual meeting of the Company&#146;s shareholders, subject to his continued
employment as President and Chief Executive Officer of the Company.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Election
of Avi Eizenman, Yehuda Zisapel and Yeshayahu (&#145;Shaike&#146;) Orbach as directors
requires the affirmative vote of an Ordinary Majority (as defined in this proxy
statement). </font></p>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Board of Directors expresses no recommendation as to the vote on the above proposal.</I></B> </FONT> </p>




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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PROPOSAL II </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>EXTENSION OF THE
APPOINTMENT OF EXTERNAL DIRECTORS </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Israeli Companies Law requires Israeli companies with shares that have been offered to the
public in or outside of Israel to appoint no less than two External Directors. No person
may be appointed as an External Director if the person or the person&#146;s relative,
partner, employer or any entity under the person&#146;s control, has or had, on or within
the two years preceding the date of the person&#146;s appointment to serve as External
Director, any affiliation with the company or any entity controlling, controlled by or
under common control with the company. The term &#147;affiliation&#148; includes: </font></p>

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<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;</font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT>
 </font></td>
<td Width=90%><Font Face="Times New Roman, Times, Serif" Size=2>an
employment relationship;</font></td>
</tr>
</table>

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<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;</font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT>
 </font></td>
<td Width=90%><Font Face="Times New Roman, Times, Serif" Size=2>a
business or professional relationship maintained on a regular basis;</font></td>
</tr>
</table>

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<tr Valign=TOP>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;</font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT>
 </font></td>
<td Width=90%><Font Face="Times New Roman, Times, Serif" Size=2>control;
and</font></td>
</tr>
</table>

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<tr Valign=TOP>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;</font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2><FONT FACE="Wingdings 2" SIZE="2">&#151;</FONT>
 </font></td>
<td Width=90%><Font Face="Times New Roman, Times, Serif" Size=2>service
as an office holder.</font></td>
</tr>
</table>
<br>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
person shall be qualified to serve as an External Director only if he or she possesses
&#147;accounting and financial expertise&#148; or &#147;professional qualifications&#148;.
The conditions and criteria for possessing &#147;accounting and financial expertise&#148;
or &#147;professional qualifications&#148; were enacted in regulations promulgated under
the Israel Companies Law (Companies Law Regulations (Conditions and Tests for Determining
whether a Director has Expertise in Finance and Accounting and whether a Director is
Professionally Qualified) &#150; 2005 (the &#147;External Director Qualification
Regulations&#148;)). </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
person may serve as an External Director if the person&#146;s position or other business
activities create, or may create, a conflict of interest with the person&#146;s
responsibilities as an External Director or may otherwise interfere with the person&#146;s
ability to serve as an External Director. In addition, no person may serve as an External
Director if such person is an employee of the Israeli Securities Authority, or if such
person is an employee of an Israeli stock exchange. If, at the time External Directors are
to be appointed, all current members of the board of directors are of the same gender,
then at least one External Director must be of the other gender. </font></p>

<p align=center>
<font size=2>- 3 -</font></p>
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<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
initial term of an External Director is three years and may be extended for additional
three-year periods. External Directors may be removed only by the same percentage of
shareholders as is required for their election, or by a court, and then only if the
External Directors cease to meet the statutory qualifications for their appointment or if
they violate their duty of loyalty to the company. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ms.
          Einat Domb-Har and Mr. Ilan Kalmanovich were each appointed to serve as our
          External Directors in June 2004 for a period of three years.  </font></p>


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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s Board of Directors (with the exception of Ms. Domb-Har and Mr. Kalmanovich
who did not participate in the vote) has nominated Ms. Domb-Har and Mr. Kalmanovich for
re-appointment as External Directors, effective July 1, 2007, to serve for a period of
three years and until their respective successors are duly elected and shall qualify. Set
forth below is certain information concerning Ms. Domb-Har and Mr. Kalmanovich: </font></p>





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     <td Width="20%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><U>Nominee</U></B> </FONT> </td>
     <Td Width="10%" Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Age</U></B> </FONT> </td>
     <Td Width="70%" Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Principal Occupation</U></B> </FONT> </td></tr>
</table>
<Br>















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     <td Width="20%"><Font Face="Times New Roman, Times, Serif" Size="2">Einat Domb-Har  </font></td>
     <Td Width="10%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2">40</font></td>
     <td Width="70%"><Font Face="Times New Roman, Times, Serif" Size="2">Ms. Domb-Har has served as Chief Financial  Officer of Olista Ltd., a company providing unique solutions for
the  cellular  industry,  since June 2006.  From April 2004 to April 2006 Ms.  Domb-Har  served as the Chief
Financial  Officer of Stage One Venture Capital,  which focuses on seed investment in the telecom  industry.
From 2000 to 2004 Ms. Domb-Har served as a controller of Pitango Venture  Capital,  Israel's largest pool of
four venture capital funds.  From 1994 to 1999 Ms.  Domb-Har  served as a senior manager at Kost,  Forer and
Gabbay,  CPA,  a member  of  Ernst &amp; Young  International.  Ms.  Domb-Har  is an  Israeli  Certified  Public
Accountant and holds a BA in Economics and Accounting from Tel Aviv  University.  She also holds an MBA from
the Israeli extension of Bradford University.
</font></td></tr>
</table>
<Br>


















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     <td Width="20%"><Font Face="Times New Roman, Times, Serif" Size="2">Ilan Kalmanovich</font></td>
     <Td Width="10%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2">41</font></td>
     <td Width="70%"><Font Face="Times New Roman, Times, Serif" Size="2">Mr. Kalmanovich has managed Leader's Consulting &amp; Management,  a business consulting firm, since March 2006.
Mr. Kalmanovich acted as an independent  consultant from 2003 to February 2006 and as Vice President of Fahn
Kaneh  Consulting  from  2004 to  February  2006.  From  2001 to 2002,  Mr.  Kalmanovich  served as the vice
president of Igud Hashkaot  Ve'yizum  (A.S.I.) Ltd. of the Igud Bank Group. From 1996 to 2000 he served as a
senior  consultant at BDO Ziv Haft  Consulting  and  Management  Ltd. From 2003 to May 2004 Mr.  Kalmanovich
served as a director on the board of Satcom  Systems Ltd. and  previously  served as a director on the board
of Cukierman &amp; Co.  Investment House Ltd., and as an alternate  director at Catalyst  Investments  L.P., the
general partner of the Catalyst Fund L.P.  venture capital fund. Mr.  Kalmanovich  holds a B.Sc degree (with
honors) in Industrial  Engineering from Ben-Gurion  University and an MBA from Tel Aviv University.  He also
serves as a  court-certified  mediator  and holds a  license  for  investment  consulting  from the  Israeli
Securities Authority.
</font></td></tr>
</table>
<Br>


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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has determined that Ms. Einat Domb-Har has the requisite
&#147;expertise in finance and accounting&#148; and that Mr. Ilan Kalmanovich has the
requisite &#147;professional qualifications&#148;, under the External Director
Qualification Regulations. Ms. Domb-Har and Mr. Kalmanovich qualify as independent
directors under Nasdaq. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company intends to pay both External Directors fixed compensation as provided for in the
Companies Regulations (Rules Regarding Compensation and Expenses of Outside
Directors)-2000. In certain circumstances the Company may also reimburse its External
Directors for expenses associated with particular meetings. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the absence of instructions to the contrary, the person named in the enclosed proxy will
vote the Ordinary Shares represented thereby &#147;FOR&#148; the extension of the
appointments of Ms. Einat Domb-Har and Mr. Ilan Kalmanovich as External Directors for a
term of three years. If one or both of the above nominees are unable to serve, the person
named in the proxy shall vote the Ordinary Shares for the election of such other nominee/s
as the Board of Directors may propose. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shareholders of the Company are requested to adopt the following resolution: </font></p>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RESOLVED,
that the appointments of Ms. Einat Domb-Har and Mr. Ilan Kalmanovich as External Directors
(as defined in the Israeli Companies Law) are hereby extended for a three-year term
commencing as of July 1, 2007 and until their respective successors are duly elected and
shall qualify.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
appointment of External Directors requires the approval by an Ordinary One-Third
Non-Controlling Shareholder Majority (as defined in this proxy statement). </font></p>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Board of Directors, with the exception of Ms. Einat Domb-Har and Mr. Ilan Kalmanovich who
express no recommendation as to the vote on the above proposal, recommends a vote
&#147;FOR&#148; the extension of the appointment of Ms. Einat Domb-Har and Mr. Ilan
Kalmanovich as External Directors of the Company for a three-year term.</i></b> </font></p>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PROPOSAL III </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PROCUREMENT OF
INSURANCE POLICY FOR THE COMPANY&#146;S DIRECTORS AND OFFICERS </font></h1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
order to induce individuals to serve as directors and/or officers of the Company, it is
critical that the Company maintain adequate directors and officers insurance
(&#147;<B>D&amp;O Insurance</b>&#148;). Therefore, the Company, with the approval of its
shareholders, previously procured liability insurance for its directors and officers to
provide for coverage of up to $4 million. Such a D&amp;O Insurance policy was procured by
the Company from the Genesis Insurance Company on February 1, 2004 and was renewed for
successive 12-month periods on February 1, 2005 and February 1, 2006. </font></p>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the Companies Law -1999 (the &#147;<B>Companies Law</b>&#148;), the terms of
compensation of members of the Board of Directors, including the purchase of D&amp;O
Insurance, require the approval of the audit committee of the Board of Directors (the
&#147;<B>Audit Committee</b>&#148;), the Board of Directors and the shareholders of the
Company, in such order. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2007, the Audit Committee and Board of Directors approved the procurement of
D&amp;O Insurance from Navigators Management Company Inc. to provide for coverage of up to
$4 million for the period commencing February 1, 2007 until January 31, 2008 with an
annual premium of $35,000. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The
D&amp;O Insurance policy was procured by the Company as of February 1, 2007 and will
remain in effect until January 31, 2008.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company will renew this policy on an annual basis, or otherwise from time to time. Any
change to the policy, which materially departs from the key terms described above,
including the cost, will be submitted to the Company&#146;s Audit Committee and Board of
Directors for their approval but shall not, unless required by law or the Company&#146;s
Articles of Association, be presented to the General Meeting of the shareholders. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
above insurance policy provides coverage for, among others, Mr. Yehuda Zisapel, who is
deemed a &#147;controlling shareholder&#148; (as such term is defined in the Companies
Law). As announced by the Company in its registration statement on Form 6-K filed with the
Securities and Exchange Commission on February 27, 2007, with respect to procurement of
the D&amp;O Insurance for Mr. Zisapel, in January 2007, the Audit Committee and Board of
Directors each determined that the terms of such procurement are identical to the terms of
insurance of all of the Company&#146;s office holders, and that such procurement is on
market terms and is not likely to have a material effect on any of the Company&#146;s
profits, properties or commitments. The Company made such announcement, in accordance with
an exemption set forth in regulations promulgated under the Companies Law, according to
which, unless a request is made by a shareholder or shareholders holding at least one
percent of the Company&#146;s outstanding share capital or its voting rights, no special
majority of the shareholders will be required to approve such procurement. No such request
was made by any such shareholder or shareholders of the Company and therefore no special
majority will be required. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shareholders of the Company will be requested to adopt the following resolution at the
Meeting: </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RESOLVED,
that the procurement of Directors and Officers Insurance from the Navigators Management
Company Inc., providing for coverage of up to $4,000,000, and any further extensions,
renewals and increases of such policy, from time to time, as the Audit Committee and the
Board of Directors deem necessary, are hereby ratified and approved.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of the D&amp; O Insurance policy requires the vote of an Ordinary Majority (as defined in
this proxy statement). </font></p>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Board of Directors expresses no recommendation as to the vote on the above proposal.</I></B> </FONT> </p>




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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PROPOSAL IV </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>APPROVING GRANT OF
BONUS AND SALARY INCREASE TO CHIEF EXECUTIVE OFFICER </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the Companies Law, the terms of compensation of members of the Board of Directors,
including with respect to the terms of such members&#146; employment in other positions in
the Company, require approval by each of the Audit Committee, the Board of Directors and
shareholders of the Company, in such order. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following
the approval by the Audit Committee and the Board of Directors (with the exception of Mr.
Avi Eizenman and Mr. Shaike Orbach who did not participate in the vote) in January 2007,
the shareholders of the Company are being asked to approve: (i) the grant of a bonus in
the amount of NIS 250,000 (the equivalent of approximately $58,000)
(&#147;<B>Shaike&#146;s Bonus</b>&#148;) to Mr. Orbach, the Company&#146;s Chief Executive
Officer, who is also a member of the Board of Directors; and (ii) an increase in Mr.
Orbach&#146;s monthly salary, whereby following such increase Mr. Orbach&#146;s monthly
salary shall be NIS 54,000 (the equivalent of approximately $13,000). </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shareholders of the Company will be requested to adopt the following resolution at the
Meeting: </font></p>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RESOLVED,
to approve the grant of a bonus in the amount of NIS 250,000, to the Company&#146;s Chief
Executive Officer, Mr. Yeshayahu (&#145;Shaike&#146;) Orbach and an increase in his
salary, such that Mr. Orbach&#146;s monthly salary shall be NIS 54,000.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of the grant of Shaike&#146;s Bonus and the increase in his salary require the vote of an
Ordinary Majority (as defined in this proxy statement). </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Board of Directors, with the exception of Mr. Shaike Orbach and Mr. Avi Eizenman who
express no recommendation as to the vote on the above proposal, recommends that the
shareholders vote &#147;FOR&#148; the approval of the grant of Shaike&#146;s Bonus and the
increase in his salary</i>.</b> </font></p>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PROPOSAL V </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>APPROVING GRANT OF
BONUS TO CHAIRMAN OF THE BOARD </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the Companies Law, the terms of compensation of members of the Board of Directors
require approval by each of the Audit Committee, the Board of Directors and shareholders
of the Company, in such order. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following
the approval by the Audit Committee and the Board of Directors (with the exception of Avi
Eizenman and Mr. Shaike Orbach who did not participate in the vote) in January 2007, the
shareholders of the Company are being asked to approve the grant of a bonus in the amount
of NIS 250,000 (the equivalent of approximately $58,000) (&#147;<B>Avi&#146;s
Bonus</b>&#148;) to Mr. Eizenman, Chairman of the Board of Directors. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shareholders of the Company will be requested to adopt the following resolution at the
Meeting: </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RESOLVED,
to approve the grant of a bonus in the amount of NIS 250,000, to the Chairman of the
Company&#146;s Board of Directors, Avi Eizenman.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of the grant of Avi&#146;s Bonus requires the vote of an Ordinary Majority (as defined in
this proxy statement). </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Board of Directors, with the exception of Mr. Avi Eizenman and Mr. Shaike Orbach who
express no recommendation as to the vote on the above proposal, recommends that the
shareholders vote &#147;FOR&#148; the approval of the grant of Avi&#146;s Bonus</i>.</b> </font></p>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PROPOSAL VI </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>APPOINTING INDEPENDENT
PUBLIC ACCOUNTANTS </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee and the Board of Directors have authorized the appointment of the
accounting firm of Somekh Chaikin, Certified Public Accountants (Isr.), a member of KPMG
International, as the independent certified public accountants of the Company for the
period commencing January 1, 2007 and until the next annual shareholders meeting. The
Audit Committee and Board of Directors believe that the selection of Somekh Chaikin as
independent accountants is appropriate and in the best interests of the Company and its
shareholders. Subject to the authorization of the shareholders of the Company, the Audit
Committee of the Board of Directors shall fix the remuneration of Somekh Chaikin in
accordance with the volume and nature of their services. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
representative of Somekh Chaikin will be invited to be present at the Meeting and the fees
paid to Somekh Chaikin for its audit services and non-audit services shall be reported to
the shareholders of the Company at the Meeting. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shareholders of the Company are requested to adopt the following resolution: </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RESOLVED,
to ratify the appointment of Somekh Chaikin as the independent public accountants of the
Company for the period commencing January 1, 2007 and until the next annual shareholders
meeting, and to authorize the Audit Committee of the Board of Directors to fix the
remuneration of such auditors in accordance with the volume and nature of their services.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
appointment of Somekh Chaikin requires the affirmative vote of an Ordinary Majority (as
defined in this proxy statement). </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Audit Committee and Board of Directors unanimously recommend that the shareholders vote
&#147;FOR&#148; the appointment of Somekh Chaikin as the independent public accountants of
the Company</i></b><I>.</i> </font></p>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>REVIEW OF THE
COMPANY&#146;S BALANCE SHEET AS OF DECEMBER 31, 2006 <Br>
AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE YEAR THEN ENDED </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the Meeting, shareholders will have an opportunity to review, ask questions and comment on
the Company&#146;s Consolidated Balance Sheet as of December 31, 2006 and the Consolidated
Statement of Income for the year then ended. You may request a copy of the Company&#146;s
audited financial statements for the fiscal year ended December 31, 2006. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
is not aware of any other matters to be presented at the Meeting. If, however, any other
matters should properly come before the Meeting or any adjournment or postponement
thereof, the proxy confers discretionary authority with respect to acting thereon, and the
persons named in the enclosed proxy will vote on such matters in accordance with their
best judgment. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Your
vote is important!</b> Shareholders are urged to complete and return their proxies
promptly in order to, among other things, ensure action by a quorum and to avoid the
expense of additional solicitation. If the accompanying proxy is properly executed and
returned in time for voting, and a choice is specified, the shares represented thereby
will be voted as indicated thereon. If no specification is made, the proxy will be voted
in favor of each of the proposals described in this Proxy Statement. In the event that
proxies are sent directly to the Company, they must be received at least 24 hours prior to
the commencement of the Meeting in order for the proxy to be qualified to participate in
the Meeting. Shareholders who hold shares of the Company through members of the Tel Aviv
Stock Exchange and who wish to participate in the Meeting, in person or by proxy, are
required to deliver proof of ownership to the Company, in accordance with the Israeli
Companies Regulations (Proof of Ownership of a Share For Purposes of Voting at General
Meetings) &#150; 2000. Such shareholders wishing to vote by proxy are requested to attach
their proof of ownership to the enclosed proxy. <B>Proxies and all other applicable
materials should be sent to the offices of the Company at 8 Hanagar Street, Kfar Sava
44000, Israel (telephone number: 972-9-764-4555, facsimile number: 972-9-765-1977)</b>. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to the accompanying proxy card, please find enclosed a copy of the Consolidated
Balance Sheet and Profit and Loss Statement of the Company for the year ended December 31,
2006. </font></p>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>ADDITIONAL INFORMATION </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are subject to the informational requirements of the Securities Exchange Act of 1934, as
amended (the &#147;<B>Exchange Act</b>&#148;), as applicable to foreign private issuers.
Accordingly, we file reports and other information with the SEC. Shareholders may read and
copy any document we file at the SEC&#146;s public reference rooms at 450 Fifth Street,
N.W., Washington, D.C. 20549. Shareholders can call the SEC at 1-800-SEC-0330 for further
information on using the public reference room. In addition, similar information
concerning us can be inspected and copied at the offices of the National Association of
Securities Dealers, Inc., 9513 Key West Avenue, Rockville, Maryland 20850 USA. All
documents which we will file on the SEC&#146;s EDGAR system will be available for
retrieval on the SEC&#146;s website at http://www.sec.gov. As a Dual Company (as defined
in the Israeli Companies Regulations (Concessions for Public Companies Traded on Stock
Markets Outside of Israel) &#150; 2000) we also file reports with the Israel Securities
Authority. Such reports can be viewed on the Israel Securities Authority website at
http://www.magna.isa.gov.il and the Tel Aviv Stock Exchange website at
http://www.maya.tase.co.il. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing
certain disclosure and procedural requirements for proxy solicitations. Also, our
officers, directors and principal shareholders are exempt from the reporting and
&#147;short-swing&#148; profit recovery provisions contained in Section 16 of the Exchange
Act and the rules thereunder, with respect to their purchases and sales of securities. In
addition, we are not required under the Exchange Act to file periodic reports and
financial statements with the SEC as frequently or as promptly as United States companies
whose securities are registered under the Exchange Act. </font></p>



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<td Width=50%>&nbsp;</td>
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<FONT FACE="Times New Roman, Times, Serif" SIZE="2">By Order of the Board of Directors

<Br>
<Br><B>SILICOM LTD.

</B><Br>
<Br>/s/ Shaike Orbach

<Br>
<Br>Yeshayahu (`Shaike') Orbach
<Br>PRESIDENT AND CHIEF EXECUTIVE OFFICER </FONT></td>
</tr>
</table>
<br>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kfar Sava, Israel
<Br>Date: August 1, 2007</FONT></P>

<p align=center>
<font size=2>- 8 -</font></p>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>exhibit_3.htm
<TEXT>
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     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\Silicom Ltd\74029\a74029.eep        -->
     <!-- Control Number: 74029                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
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<P Align="Right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 3</B></U> </FONT> </P>

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<td>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED HEREIN.</B> </FONT> </td>
</tr>
</table>



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<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>IF
NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS HEREIN.</B> </FONT> </td>
</tr>
</table>
<br>


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<td Width=10%>&nbsp;</td>
<td Width=90%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>Please
mark your vote as in this example </B> <FONT size="3" face="Wingdings">x
</font> </FONT> </td>
</tr>
</table>
<br>


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<Hr Size=3 Noshade color=black Width=100% Align=LEFT>

<Table Width="100%" Cellpadding="0" Cellspacing="0">
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     <th></th>
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     <Td Width="5%" ><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <Td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <Td Width="8%" Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>FOR</B> </FONT> </td>
     <Td Width="8%" Align="Center"> <FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>AGAINST</B> </FONT></td>
     <Td Width="8%" Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>ABSTAIN</B> </FONT></td></tr>
</table>
<Br>

<table Width="100%" Border="0" Cellpadding="3" Cellspacing="0">
<Tr Valign="Bottom">
     <th></th>
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<Tr Valign="Top">
     <td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2"> <B>PROPOSAL NO. 1:</b> ELECTION OF DIRECTORS   </font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font> </font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td></tr>
</table>

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     <Td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <Td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td></tr>
</table>


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     <td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2"><B>PROPOSAL NO. 2:</b> EXTENSION OF THE APPOINTMENT OF EXTERNAL DIRECTORS</font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font> </font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td></tr>
</table>

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     <Td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <Td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td></tr>
</table>



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<Tr Valign="Bottom">
     <th></th>
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     <td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2"> <B>PROPOSAL NO. 3:</b> PROCUREMENT OF INSURANCE POLICY FOR THE COMPANY'S DIRECTORS AND OFFICERS   </font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font> </font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td></tr>
</table>

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     <Td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <Td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td></tr>
</table>



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     <td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2"><B>PROPOSAL NO. 4:</b> APPROVING GRANT OF BONUS AND SALARY INCREASE TO CHIEF EXECUTIVE OFFICER </font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font> </font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td></tr>
</table>

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     <Td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <Td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td></tr>
</table>



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     <td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2"><B>PROPOSAL NO. 5:</b> APPROVING GRANT OF BONUS TO CHAIRMAN OF THE BOARD</font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font> </font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td></tr>
</table>

<Table Width="100%" Cellpadding="0" Cellspacing="0">
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     <Td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <Td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Width="8%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td></tr>
</table>


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     <td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td Width="71%"><Font Face="Times New Roman, Times, Serif" Size="2"> <B>PROPOSAL NO. 6:</b> APPOINTING INDEPENDENT PUBLIC ACCOUNTANTS</font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font> </font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;border-right:NONE; " Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td>
     <Td Width="8%" Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="Middle"><Font Face="Times New Roman, Times, Serif" Size="2"> <FONT size="3" face="Wingdings">o
</font></font></td></tr>
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<P><Font Face="Times New Roman, Times, Serif" Size=2>The  undersigned  hereby
 acknowledges  receipt of the Notice of the Annual and  Extraordinary  General  Meeting,
 revokes  any proxy or proxies  heretofore  given to vote upon or act with  respect to
the    undersigned's shares and hereby ratifies and confirms all that the proxies, their
substitutes, or any of them, may lawfully do by virtue hereof. </font></p>




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<Table Width=100% Cellspacing=0 Cellpadding=0 Border=0>
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<Td Width="33%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
(NAME OF SHAREHOLDER) </font></td>
<Td Width="34%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
 (SIGNATURE OF SHAREHOLDER)  </font></td>
<Td Width="33%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
(DATE)</font></td>
</tr>
</table>
<br>


<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>



<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>SILICOM LTD. </font></h1>

<!-- MARKER FORMAT-SHEET="Head Minor Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>Annual and
Extraordinary General Meeting of Shareholders to be held on September 16, 2007 </font></h1>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>THIS PROXY IS SOLICITED
ON BEHALF OF MANAGEMENT </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned shareholder of Silicom Ltd. (the &#147;<B>Company</b>&#148;) hereby appoints
Mr. Eran Gilad, the true and lawful attorney, agent and proxy of the undersigned, to
vote, as designated below, all of the Ordinary Shares of the Company which the
undersigned is entitled in any capacity to vote at the Annual and Extraordinary General
Meeting of Shareholders of the Company, to be held at the corporate offices of the
Company at 8 Hanager Street, Kfar Sava 44000, Israel on September 16, 2007, at 10:00
a.m., (local time), and all adjournments and postponements thereof.  </font></p>


<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Default" -->
<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>(CONTINUED AND TO BE
SIGNED ON REVERSE SIDE) </font></p>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">




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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>exhibit_4.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\Silicom Ltd\74029\a74029.eep        -->
     <!-- Control Number: 74029                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
</HEAD>
<BODY>

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<P Align="Right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 4</B></U> </FONT> </P>






<table Width="100%" Border="0" Cellpadding="0" Cellspacing="0">
<Tr Valign="Bottom">
     <th></th></tr>
<Tr Valign="Top">
     <Td Width="100%" Align="Right"><Font Face="Times New Roman, Times, Serif" Size="2">Silicom Ltd. and its Consolidated Subsidiary<Br><Br></font></td></tr>
<Tr Valign="Top">
     <Td Align="Left"><Font Face="Times New Roman, Times, Serif" Size="2"><B>Consolidated Balance Sheets as of December 31</b></font></td></tr>
<Tr Valign="Top">
     <td><Hr Size=1 Noshade Width=100% Align=LEFT></td></tr>
</table>
<Br>










<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2005</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2006</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Note</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>US$ thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>US$ thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="63%" Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Assets</B> </FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="3%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B></B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Current assets</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Cash and cash equivalents</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>3</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,276</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>4,513</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Marketable securities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>4</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>1,009</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT" colspan=10><FONT FACE="Times New Roman" SIZE=2>Accounts receivable:</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;Trade, net</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2,395</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>3,277</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;Other</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>5</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>444</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>301</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Inventories</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2,994</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>3,739</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Deferred taxes</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>16H</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>46</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Total current assets</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>8,109</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>12,885</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Marketable securities</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>4</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>3,811</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Assets held for employees' severance benefits</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>587</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>730</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Property, plant and equipment, net</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>7</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>292</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>379</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Other assets, net</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>8</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>57</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>48</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Total assets</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>9,045</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>17,853</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>




<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
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<Td Width="33%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2>By: /s/ Avi Eizenman<br>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
Avi Eizenman<Br>Chairman of the Board of Directors</font></td>
<Td Width="34%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2>By: /s/ Shaike Orbach<br>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
Shaike Orbach<Br>Chief Executive Officer</font></td>
<Td Width="33%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2>By: /s/ Eran Gilad<br>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
Eran Gilad<Br>Chief Financial Officer</font></td>
</tr>
</table>
<br>





<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kfar-Saba, Israel
<Br>May 29, 2007</FONT></P>



<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>The accompanying notes are an
integral part of these consolidated financial statements. </font></p>

<p align=center>
<font size=2>1</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>

<table Width="100%" Border="0" Cellpadding="0" Cellspacing="0">
<Tr Valign="Bottom">
     <th></th></tr>
<Tr Valign="Top">
     <Td Width="100%" Align="Right"><Font Face="Times New Roman, Times, Serif" Size="2">Silicom Ltd. and its Consolidated Subsidiary<Br><Br></font></td></tr>
<Tr Valign="Top">
     <Td Align="Left"><Font Face="Times New Roman, Times, Serif" Size="2"><B>Consolidated Balance Sheets as of December 31</b></font></td></tr>
<Tr Valign="Top">
     <td><Hr Size=1 Noshade Width=100% Align=LEFT></td></tr>
</table>
<Br>







<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2005</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2006</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Note</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>US$ thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>US$ thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="64%" Align="Left"><FONT FACE="Times New Roman" SIZE="2"><B>Liabilities and shareholders' equity</B> </FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE="2"><B></B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Current liabilities</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Short-term bank credit</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>10</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>500</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Trade accounts payable</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2,020</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>2,481</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Other accounts payable and accrued expenses</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>9</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>822</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>971</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Total current liabilities</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>3,342</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>3,452</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT" colspan=10><FONT FACE="Times New Roman" SIZE="2"><B>Long-term liability</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Liability for employees' severance benefits</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>11</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>1,031</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>1,220</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Total liabilities</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>4,373</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>4,672</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Commitments and contingencies</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>12</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Shareholders' equity</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>13</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Ordinary shares, NIS 0.01 par value; 10,000,000 shares</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>authorized; 4,351,050 and 5,213,600 issued as at</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;December 31, 2005 and 2006, respectively;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;4,336,079 and 5,198,629 outstanding as at</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;December 31, 2005 and 2006, respectively</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>14</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>16</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Additional paid-in capital</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>5,950</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>11,858</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Treasury shares (at cost) - 14,971 ordinary shares as at</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;December 31, 2005 and 2006</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(38</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>(38</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Retained earnings (accumulated deficit)</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(1,254</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,345</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Total shareholders' equity</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>4,672</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>13,181</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Total liabilities and shareholders' equity</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>9,045</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>17,853</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>






<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>The accompanying notes are an integral
part of these consolidated financial statements. </font></p>

<p align=center>
<font size=2>2</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>




<table Width="100%" Border="0" Cellpadding="0" Cellspacing="0">
<Tr Valign="Bottom">
     <th></th></tr>
<Tr Valign="Top">
     <Td Width="100%" Align="Right"><Font Face="Times New Roman, Times, Serif" Size="2">Silicom Ltd. and its Consolidated Subsidiary<Br><Br></font></td></tr>
<Tr Valign="Top">
     <Td Align="Left"><Font Face="Times New Roman, Times, Serif" Size="2"><B>Consolidated Statements of Income for the Year Ended December 31</b></font></td></tr>
<Tr Valign="Top">
     <td><Hr Size=1 Noshade Width=100% Align=LEFT></td></tr>
</table>
<Br>







<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2004</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2005</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2006</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Note</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=9><FONT FACE="Times New Roman" SIZE=1>US$ thousands<BR>
except for share and per share data</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="53%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Sales</FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>14</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>4,559</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>10,876</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>16,118</B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Cost of sales</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2,999</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6,507</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>9,827</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Gross profit</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,560</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>4,369</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>6,291</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Operating expenses</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Research and development costs, gross</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,596</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,561</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,820</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Less: grant participation</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>12A</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(145</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(98</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Research and development costs, net</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,451</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,463</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,820</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Selling and marketing expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>718</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>903</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>1,105</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>General and administrative expenses</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>614</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>695</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>980</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Total operating expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2,783</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>3,061</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>3,905</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Operating income (loss)</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(1,223</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,308</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>2,386</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Financial income (expenses), net</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>15</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(17</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>14</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>167</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Income (loss) before income tax benefit</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(1,240</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,322</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>2,553</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Income tax benefit</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>16</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>46</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Net income (loss)</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(1,240</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,322</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>2,599</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Income (loss) per share:</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Basic income (loss) per ordinary share</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(0.296</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>0.311</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>0.506</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Diluted income (loss) per ordinary share</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(0.296</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>0.303</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>0.487</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT" colspan=13><FONT FACE="Times New Roman" SIZE=2>Weighted average number of ordinary</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT" colspan=13><FONT FACE="Times New Roman" SIZE=2>&nbsp;shares used to compute basic income</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;(loss) per share (in thousands)</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>4,190</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>4,256</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>5,138</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Weighted average number of ordinary</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;shares used to compute diluted income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;(loss) per share (in thousands)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>4,190</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>4,364</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>5,341</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>



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<P><Font Face="Times New Roman, Times, Serif" Size=2>The
accompanying notes are an integral part of these consolidated financial statements. </font></p>

<p align=center>
<font size=2>3</font></p>
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