<DOCUMENT>
<TYPE>EX-1.2
<SEQUENCE>3
<FILENAME>c32537_ex1-2.txt
<TEXT>
                             THE COMPANIES ORDINANCE

                           A COMPANY LIMITED BY SHARES

                             ARTICLES OF ASSOCIATION

                                       OF

                                  SUPERCOM. Ltd

                                   PRELIMINARY

1.       SECOND SCHEDULE EXCLUDED

         The  regulations  contained  in the second  schedule  to the  Companies
         Ordinance [New Version],  5743-1983 (the "Companies  Ordinance")  shall
         not apply to the Company.

2.       DEFINITIONS

         In these  Articles the words  standing in the first column of the table
         next hereinafter  contained shall bear the meaning set opposite to them
         respectively in the second column thereof, if not inconsistent with the
         subject or context.

         The "Company" -    the aforementioned company.

         The "Statutes"  -  the  Companies  Ordinance  and every  other  Israeli
                            statute  in  force  from  time  to  time  concerning
                            companies   limited  by  shares  and  affecting  the
                            Company.

         These "Articles" - these Articles of Association as originally  drafted
                            or  as   amended   from  time  to  time  by  Special
                            Resolution.

         The "Office" -     the current registered office of the Company.

         "Year" and
         "Month" -          a Gregorian year or month.

         The "Market
         Authority"  -      The body within EASDAQ that is  responsible  for the
                            transparency, integrity and security of EASDAQ.
<PAGE>

                                       2


3.       INTERPRETATION

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

                                  SHARE CAPITAL

4.       SHARE CAPITAL

         (a)      The  authorized  share  capital of the  Company is NIS 265,000
                  (two hundred  sixty five  thousand)  divided  into  26,500,000
                  (twenty six million five hundred  thousand)  Ordinary  Shares,
                  nominal value NIS 0.01 each.

         (b)      The Ordinary Shares all rank pari passu.

5.       INCREASE OF AUTHORIZED SHARE CAPITAL

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

         (b)      Except  to the  extent  otherwise  provided  in  such  Special
                  Resolution,  any new shares  included in the authorized  share
                  capital  increased  as  aforesaid  shall be subject to all the
                  provisions of these Articles which are applicable to shares of
                  such class  included in the  existing  share  capital  without
                  regard to class (and, if such new shares are of the same class
                  as a class of shares  included in the existing  share capital,
                  to all of the  provisions  which are  applicable  to shares of
                  such class included in the existing share capital).

6.       SPECIAL RIGHTS: MODIFICATION OF RIGHTS

         (a)      Subject to the  provisions of the Memorandum of Association of
                  the  Company,  and without  prejudice  to any  special  rights
                  previously  conferred  upon the holders of existing  shares in
                  the Company,  the Company may,  from time to time,  by Special
                  Resolution, provide for shares with such preferred or deferred
                  rights or rights of redemption or other special  rights and/or
                  such  restrictions,  whether in regard to



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                                       3


                  dividends,  voting,  repayments of share capital or otherwise,
                  as may be stipulated in such Special Resolution.

         (b)      (i)      If at any time the  share  capital  is  divided  into
                           different  classes of shares,  the rights attached to
                           any  class,   unless  otherwise   provided  by  these
                           Articles,   may  be  modified  or  abrogated  by  the
                           Company,  by  Special  Resolution,   subject  to  the
                           consent  in writing  of the  holders of  seventy-five
                           percent  (75%) of the issued  shares of such class or
                           the  sanction  of a  Special  Resolution  passed at a
                           separate General Meeting of the holders of the shares
                           of such class.

                  (ii)     The provisions of these Articles  relating to General
                           Meetings  shall,  mutatis  mutandis,   apply  to  any
                           separate General Meeting of the holders of the shares
                           of a particular class,  provided,  however,  that the
                           requisite  quorum  at any  separate  General  Meeting
                           referred  to in  clause  (i)  shall  be two  or  more
                           members  present in person or proxy and  holding  not
                           less than  seventy-five  per cent (75%) of the issued
                           shares of such class, provided that if within half an
                           hour  from  the  time   appointed  for  such  General
                           Meeting, a quorum is not present,  then Article 26(c)
                           hereof shall apply.

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

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

         (a)      The  Company  may,  from time to time,  by Special  Resolution
                  (subject,  however,  to the  provisions of Article6 (b) hereof
                  and to applicable law):

                  (i)      consolidate  and divide all or any part of its issued
                           or unissued authorized share capital into shares of a
                           per share  nominal value which is larger than the per
                           share nominal value of its existing shares;

                  (ii)     subdivide  its shares  (issued or unissued) or any of
                           them,  into shares of smaller  nominal  value than is
                           fixed  by the  Memorandum  of  Association  (subject,
                           however,  to the  provisions of Section 144(4) of the
                           Companies Ordinance);

                  (iii)    cancel any shares which,  at the date of the adoption
                           of such  Special  Resolution,  have not been taken


<PAGE>
                                       4


                           or agreed to be taken by any person, and diminish the
                           amount  of its  share  capital  by the  amount of the
                           shares so canceled; or,

                  (iv)     reduce its share  capital in any manner  permitted by
                           law.

         (b)      With respect to any consolidation of issued shares into shares
                  of a larger  nominal value per share,  and with respect to any
                  other action which may result in fractional  shares, the Board
                  of Directors  may settle any  difficulty  which may arise with
                  regard thereto,  as its deems fit, and, in connection with any
                  such  consolidation  or other  action  which  could  result in
                  fractional shares, may, without limiting its aforesaid power:

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

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

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

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

                                     SHARES

8.       REGISTERED HOLDER

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

9.       ALLOTMENT OF SHARES

         The unissued shares from time to time shall be under the control of the
         Board of  Directors,  who  shall  have the  power  to  allot,  issue or
         otherwise  dispose  of


<PAGE>
                                       5


         shares to such persons, on such terms and conditions (including,  inter
         alia,  terms  relating to calls as set forth in Article 11(f)  hereof),
         and either at par or at a premium, or, subject to the provisions of the
         Companies  Ordinance,  at a discount and/or with payment of commission,
         and at such times,  as the Board of Directors  deems fit, and the power
         to give any person the option to acquire  from the  Company any shares,
         either at par or at a premium or,  subject as aforesaid,  at a discount
         and/or  with  payment  of  commission,  during  such  time and for such
         consideration as the Board of Directors deems fit.

10.      PAYMENT IN INSTALLMENTS

         If pursuant to the terms of allotment or issue of any share, all or any
         portion of the price  thereof shall be payable in  installments,  every
         such  installment  shall be paid to the Company on the due date thereof
         by the then  registered  holder(s) of the share or the  person(s)  then
         entitled thereof.

11.      BEARER SHARES

         (a)      The Company may,  regarding  each fully paid-up  share,  Issue
                  abearer share  certificate;  and,  accordingly,  the Directors
                  may,  after  the  registered  Shareholder  of the said  shares
                  presents  a  written  application  and all  required  proof of
                  identity of the person  making the request,  and after receipt
                  of the bearer share certificate (if issued), together with the
                  required stamp duties for a bearer share certificate,  issue a
                  stamped  bearer share  certificate,  with the  Company's  seal
                  and/or stamp and bearing the necessary stamps required by law,
                  in recognition that the said bearer holds the shares mentioned
                  therein.

         (b)      A bearer share certificate  provides its holder with the right
                  to the  shares  stated  therein.  The  said  shares  shall  be
                  transferable   by  means  of  transfer  of  the  bearer  share
                  certificate from one person to another.  The provisions of the
                  Company's Articles of Association  concerning the transfer and
                  delivery of shares will not apply to the shares  listed in the
                  bearer share certificate.

         (c)      The Directors may determine the manner of payment of dividends
                  regarding bearer shares;  and they may determine the procedure
                  governing  the  issuance of new bearer share  certificates  to
                  replace any that were destroyed, defaced, lost or spoiled. The
                  Directors  shall be entitled,  upon request by the holder of a
                  bearer  shares  and upon his  submission  to the  Company of a
                  bearer share certificate for its cancellation, to register his
                  name as a Member in the  Register  of Members,  regarding  the
                  shares listed in the bearer share certificate.

         (d)      The holder of a bearer  share shall be entitled to deposit the
                  certificate in the office of the Company or in a bank. So long
                  as the certificate is deposited in the foregoing  manner,  the
                  depositor will retain the right to participate and vote in any
                  meeting  conducted,  upon two days after said deposit,  and to
                  execute any other right granted to a Shareholder  as


<PAGE>
                                       6


                  stated  in these  Articles,  as if he were  registered  in the
                  Register as the holder of the share indicated in the deposited
                  certificate.  In the  event of  deposit  of the  bearer  share
                  certified  in  the  bank.   The   shareholder   shall  present
                  confirmation  that  the  certificate  was  in  fact  deposited
                  therein.  No more than one  person  shall be  recognized  as a
                  depositor  of a  bearer  share  certificate.  Subject  to  the
                  aforementioned,  the holder of a bearer share certificate will
                  not be  entitled  to  appear  or to vote in a  meeting  of the
                  Company, or to receive notices from same.

12.      CALLS ON SHARES

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

         (b)      Notice of any call for  payment by a member  shall be given in
                  writing to such member not less than  fourteen (14) days prior
                  to the time of payment fixed in such notice, and shall specify
                  the time and place of payment.  Prior to the time for any such
                  payment  fixed in a notice of a call  given to a  member,  the
                  Board of Directors may in its absolute  discretion,  by notice
                  in writing  to such  member,  revoke  such call in whole or in
                  part, extend the time fixed for payment thereof,  or designate
                  a different  place of payment.  In the event of a call payable
                  in installments, only one notice thereof need be given.

         (c)      If pursuant to the terms of  allotment  or issue of a share or
                  otherwise,  an amount is made payable at a fixed time (whether
                  on account of such share or by way of  premium),  such  amount
                  shall be payable at such time as if it were  payable by virtue
                  of a call made by the Board of Directors  and for which notice
                  was given in  accordance  with  paragraph  (a) and (b) of this
                  Article 11, and the  provisions of these  Articles with regard
                  to calls (and the non-payment  thereof) shall be applicable to
                  such amount (and the non-payment thereof).

         (d)      Joint holders of a share shall be jointly and severally liable
                  to pay all calls for  payment in respect of such share and all
                  interest payable thereon.
<PAGE>
                                       7

         (e)      +Any  amount  called for  payment  which is not paid when due,
                  shall  bear  interest  from the date fixed for  payment  until
                  actual payment  thereof,  at such rate (not exceeding the then
                  prevailing  debitory rate charged by leading  commercial banks
                  in  Israel),  and  payable  at such  time(s)  as the  Board of
                  Directors may prescribe.

         (f)      Upon the  allotment  of  shares,  the Board of  Directors  may
                  provide for differences  among the allottees of such shares as
                  to the  amounts  and times for payment of calls for payment in
                  respect of such shares.

13.      PREPAYMENT

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

14.      FORFEITURE AND SURRENDER

         (a)      If any  member  fails to pay an amount  payable by virtue of a
                  call,  or  interest  thereon  as  provided  for in  accordance
                  herewith,  on or before the day fixed for payment of the same,
                  the Board of  Directors  may,  at any time after the day fixed
                  for  such  payment,  so long as such  amount  (or any  portion
                  thereof) or interest  thereon (or any portion thereof) remains
                  unpaid,  forfeit  all or any of the shares in respect of which
                  such  payment was called  for.  All  expenses  incurred by the
                  Company in  attempting  to collect any such amount or interest
                  thereon,  including,  without limitation,  attorney's fees and
                  costs of legal proceedings,  shall be added to, and shall, for
                  all  purposes  (including  the accrual of  interest  thereon),
                  constitute  a part of,  the amount  payable to the  Company in
                  respect of such call.

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


<PAGE>
                                       8


         (c)      Without  derogating  from Articles 54 and 59 hereof,  whenever
                  shares are forfeited as herein  provided,  all  dividends,  if
                  any,  theretofore declared in respect thereof and not actually
                  paid, shall be deemed to have been forfeited at the same time.

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

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

         (f)      Any member  whose shares have been  forfeited  or  surrendered
                  shall  cease to be a member in  respect  of the  forfeited  or
                  surrendered shares, but shall,  notwithstanding,  be liable to
                  pay,  and shall  forthwith  pay,  to the  Company,  all calls,
                  interest and expenses  owing upon or in respect of such shares
                  at the time of forfeiture or surrender, together with interest
                  thereon from the time of forfeiture or surrender  until actual
                  payment,  at the rate  prescribed in Article 11(e) above,  and
                  the Board of Directors, in its discretion,  may, but shall not
                  be obligated  to,  enforce the payment of such moneys,  or any
                  part  thereof.  In the event of such  forfeiture or surrender,
                  the Company,  by  resolution  of the Board of  Directors,  may
                  accelerate  the date(s) of payment of any or all amounts  then
                  owing to the  Company by the member in  question  (but not yet
                  due) in respect of all shares owned by such member,  solely or
                  jointly with  another.  (g) The Board of Directors  may at any
                  time,  before any share so forfeited or surrendered shall have
                  been sold,  re-allotted or otherwise  disposed of, nullify the
                  forfeiture  or surrender on such  conditions  as it deems fit,
                  but no such  nullification  shall estop the Board of Directors
                  from  re-exercising its powers of forfeiture  pursuant to this
                  Article 14.

15.      LIEN

         (a)      Except to the extent the same may be waived or subordinated in
                  writing,  the Company  shall have a first and  paramount  lien
                  upon all the  shares  registered  in the  name of each  member
                  (without regard to any equitable or other claim or interest in
                  such  shares  on the part of any other  person),  and upon the
                  proceeds of the sale thereof,  for his debts,  liabilities and
                  engagements to the Company  arising from any amount payable by
                  such  member in respect of any  unpaid or partly  paid  share,
                  whether or not such debt, liability or engagement has matured.
                  Such  lien  shall  extend to all  dividends  from time to time
                  declared  or paid in respect of such share.  Unless  otherwise
                  provided,  the  registration  by the  Company of a transfer of
                  shares  shall  be  deemed  to be a  waiver  on the part of the
                  Company  of  the  lien  (if  any)   existing  on  such  shares
                  immediately prior to such transfer.


<PAGE>
                                       9


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

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

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

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

17.      REDEEMABLE SHARES

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

                               TRANSFER OF SHARES

18.      REGISTRATION OF TRANSFER

         (a)      The Shares of the  Company  are  transferable.  No transfer of
                  shares  shall  be  registered   unless  a  proper  writing  or
                  instrument  of  transfer  (in  the  customary  form  described
                  hereunder  or any  other  form  satisfactory  to the  Board of
                  Directors)  has been submitted to the Company (or its transfer
                  agent),  together  with such  other  evidence  of title as the
                  Board of Directors may reasonably require.  The share transfer
                  deed  shall  be  executed  by  both  the  transferor  and  the
                  transferee and until the transferee has been registered in the
                  Register  of Members in respect of the shares so  transferred,
                  the Company may continue to regard the transferor as the owner
                  thereof.


<PAGE>
                                       10


         (b)      The  Board of  Directors  may,  in its  discretion  and to the
                  extent it deems  necessary,  close the Register of Members for
                  registrations  of  transfers  of shares  during any year for a
                  period   determined  by  the  Board  of   Directors,   and  no
                  registrations  of  transfers  of  shares  shall be made by the
                  Company  during any period in which the Register of Members is
                  so closed.

                               SHARE TRANSFER DEED

                  I/we ___________,  of ___________,  for valuable consideration
                  paid to  me/us  by  ___________  of  ___________  (hereinafter
                  called  the  "Transferee")  do  hereby  transfer  to the  said
                  transferee  ____ share (shares)  having a nominal value of NIS
                  ____  each one  numbered  ____  until  ____  inclusive  in the
                  Company called Supercom Ltd. to hold unto the said transferee,
                  his  executors,  administrators,  and assigns,  subject to the
                  several  conditions on which I/We held the same at the time of
                  the  execution  hereof,  and I/We said  transferee,  do hereby
                  agree  to take the  said  share  (or  shares)  subject  to the
                  conditions  aforesaid.  As  witness we have  hereunto  set our
                  hands the __ day of ______, ____.

                  ---------------------             ---------------------
                       Transferee                        Transferor

                  ---------------------             ---------------------
                  Address & Profession              Address & Profession

                  ---------------------             ---------------------
              Witness to the transferee's         Witness to the transferee's

                  ---------------------             ---------------------
                       Signature                           Signature

                  ---------------------             ---------------------
                    Address of Witness               Address of Witness

19.      RECORD DATE FOR NOTICES OF GENERAL MEETING

         Notwithstanding  any other contrary  provision of these  Articles,  the
         Board of Directors may fix a date, not exceeding ninety (90) days prior
         to  the  date  of  any  General  Meeting,  as  the  date  as  of  which
         shareholders entitled to notice of and to vote at such meeting shall be
         determined, and all persons who were holders of record of voting shares
         on such date and no others  shall be  entitled to notice of and to vote
         at such meeting.

20.      SIGNIFICANT SHAREHOLDERS

         Any natural or legal person who  acquires or disposes  of,  directly or
         indirectly, shares of the Company is obliged to notify the Company on a
         form prescribed


<PAGE>
                                       11


         by the  Market  Authority  within  five  days (a day shall  mean  every
         weekday,  Monday to  Friday,  except  those  days on which  the  Market
         Authority has previously  declared that EASDAQ will be closed) from the
         date of such acquisition or disposal of the total number of shares held
         by such person  following such  acquisition  or disposal,  in all cases
         where the  proportion  of shares held  directly or  indirectly  by such
         person  following the transaction  exceeds or falls below the threshold
         of at  least  five  percent  or any  multiple  of five  percent  of all
         outstanding shares of the Company.

         Such person who fails to comply with the aforesaid provisions shall not
         be  entitled  to vote at  shareholders  meetings  for a period  of time
         beginning at the date on which his shareholdings  shall become known to
         the Company and ending on the date which is the later of (i) six mounts
         thereafter, or (ii) the day following the next Annual General Meeting.

                             TRANSMISSION OF SHARES

21.      DECEDENT'S SHARES

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

         (b)      Any person becoming  entitled to a share in consequence of the
                  death of any person,  upon producing  evidence of the grant of
                  probate  or  letters  of   administration  or  declaration  of
                  succession  (or such other  evidence as the Board of Directors
                  may  reasonably  deem  sufficient),  shall be  registered as a
                  member  in  respect  of such  share,  or may,  subject  to the
                  regulations  as to transfer  herein  contained,  transfer such
                  share.

22.      RECEIVERS AND LIQUIDATORS

         (a)      The Company may recognize any receiver,  liquidator or similar
                  official appointed to wind-up, dissolve or otherwise liquidate
                  a  corporate  member,  and  a  trustee,   manager,   receiver,
                  liquidator or similar  official  appointed in bankruptcy or in
                  connection with the  reorganization  of, or similar proceeding
                  with respect to, a member or its properties, as being entitled
                  to the shares registered in the name of such member.

         (b)      Such  receiver,  liquidator or similar  official  appointed to
                  wind-up,  dissolve or otherwise  liquidate a corporate member,
                  and such  trustee,  manager,  receiver,  liquidator or similar
                  official  appointed in bankruptcy  or in  connection  with the
                  reorganization  of, or similar  proceedings with respect to, a
                  member or its properties,  upon producing such evidence as the
                  Board of Directors may deem  sufficient as to his authority to
                  act in such  capacity  or under this  Article,  shall with the
                  consent  of  the  Board  of  Directors  (which  the  Board  of
                  Directors may grant or refuse in its


<PAGE>
                                       12


                  absolute discretion),  be registered as a member in respect of
                  such shares, or may, subject to the regulations as to transfer
                  herein contained, transfer such shares.

                                GENERAL MEETINGS

23.      ANNUAL GENERAL MEETING

         An Annual General Meeting shall be held once in every calendar year not
         later than 15 months after the last annual general meeting at such time
         and at such place, either within or without the State of Israel, as may
         be determined by the Board of Directors.

24.      EXTRAORDINARY GENERAL MEETINGS

         All General Meetings other than Annual General Meetings shall be called
         "Extraordinary  General Meetings" and reference to "General  Meetings".
         The  Board of  Directors  may,  whenever  it  thinks  fit,  convene  an
         Extraordinary General Meeting, at such time and place, within or out of
         the State of Israel,  as may be  determined  by the Board of Directors,
         and  shall  be  obliged  to do so  upon a  requisition  in  writing  in
         accordance with Section 109 of the Companies Ordinance.

25.      NOTICE OF GENERAL MEETINGS: OMISSION TO GIVE NOTICE

         (a)      Not less than  twenty-one  (21) days'  prior  notice  shall be
                  given of every General Meeting, whether it is proposed to pass
                  a special  resolution  thereat or not.  Each such notice shall
                  specify  the place and the day and hour of the meeting and the
                  general  nature of each item to be acted  upon  thereat,  said
                  notice to be given to all  members  who would be  entitled  to
                  attend  and  vote  at  such   meeting.   Notwithstanding   the
                  foregoing,  with the consent of all  members  entitled to vote
                  thereon,  a  resolution  may be  proposed  and  passed at such
                  meeting although a lesser notice than  hereinabove  prescribed
                  has been given.

         (b)      The  accidental  omission  to give  notice of a meeting to any
                  member,  or the  non-receipt  of notice  sent to such  member,
                  shall not invalidate the proceedings at such meetings.

                         PROCEEDINGS AT GENERAL MEETINGS

26.      QUORUM

         (a)      No business  shall be transacted at a General  Meeting,  or at
                  any  adjournment  thereof,  unless the quorum  required  under
                  these  Articles  for such  General  Meeting or such  adjourned
                  meeting,  as the  case may be,  is  present  when the  meeting
                  proceeds to business.

<PAGE>
                                       13

         (b)      In the absence of contrary  provisions in these Articles,  two
                  or more members (not in default in payment of any sum referred
                  to in Article 32(a) hereof), present in person or by proxy and
                  holding  shares  conferring  in the  aggregate 33 1/3% (thirty
                  three  and one  third  percent)  of the  voting  power  of the
                  Company, shall constitute a quorum at General Meetings.

         (c)      If within half an hour from the time appointed for the meeting
                  a quorum is not present,  the meeting  shall be adjourned  for
                  lack of quorum,  in such case the  Company  shall  immediately
                  issue a notice of a reconvened  meeting which shall take place
                  21 days following the date of such notice at the same time and
                  place,  or any  time  and  place  as the  Board  of  Directors
                  designated in the notice to the members.  No business shall be
                  transacted at any  reconvened  meeting  except  business which
                  might  lawfully  have  been   transacted  at  the  meeting  as
                  originally  called.  At such  adjourned  meeting,  any two (2)
                  members (not in default as aforesaid)  present in person or by
                  proxy, shall constitute a quorum.

27.      CHAIRMAN

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

28.      ADOPTION OF RESOLUTION AT GENERAL MEETINGS

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

                  (ii)     A Special or Extraordinary Resolution shall be deemed
                           adopted if  approved  by the holders of not less than
                           seventy-five   percent  (75%)  of  the  voting  power
                           represented  at the meeting in person or by proxy and
                           voting thereon.

         (b)      Every question submitted to a General Meeting shall be decided
                  by a show of hands, but if a written ballot is demanded by any
                  member  present in person or by proxy and  entitled to vote at
                  the  meeting,  the same  shall be decided  by such  ballot.  A
                  written ballot may be demanded before the proposed  resolution
                  is voted  upon or  immediately  after the  declaration  by the
                  Chairman of the result of the vote by show of hands. If a vote
                  by written ballot is taken after such declaration, the results
                  of the vote by a show of hands shall be of no effect, and the

<PAGE>
                                       14



                  proposed  resolution  shall be decided by such written ballot.
                  The demand for a written  ballot may be  withdrawn at any time
                  before the same is conducted,  in which event  another  member
                  may then demand such written ballot.  The demand for a written
                  ballot  shall not prevent the  continuance  of the meeting for
                  the  transaction  of business other than the question on which
                  the written ballot has been demanded.

         (c)      A declaration by the Chairman of the meeting that a resolution
                  has been  carried  unanimously,  or  carried  by a  particular
                  majority,  or lost,  and an entry to that effect in the minute
                  book of the  Company,  shall  be  conclusive  evidence  of the
                  number  or  proportion  of the votes  recorded  in favor of or
                  against such resolution.

29.      RESOLUTIONS IN WRITING

         A  resolution  in writing  signed by all  members of the  Company  then
         entitled  to attend and vote at General  Meetings  or to which all such
         members have given their written consent (by letter,  telegram,  telex,
         facsimile,   e-mail  or  otherwise)   shall  be  deemed  to  have  been
         unanimously adopted by a General Meeting duly convened and held.

30.      POWER TO ADJOURN

         The  Chairman  of a General  Meeting at which a quorum is present  may,
         with the  consent  of the  holders of a  majority  of the voting  power
         represented  in  person  or by proxy  and  voting  on the  question  of
         adjournment,  adjourn the  meeting  from time to time and from place to
         place,  but no business  shall be transacted  at any adjourned  meeting
         except  business  which  might  lawfully  have been  transacted  at the
         meeting as originally called provided,  however,  that a Notice thereof
         shall be given in the manner specified in section 25 hereinabove.

31.      VOTING POWER

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

32.      VOTING RIGHTS

         (a)      No member shall be entitled to vote at any General Meeting (or
                  be counted as a part of the quorum thereat),  unless all calls
                  then  payable by him in  respect of his shares in the  Company
                  have been  paid,  but this  Article  32(a)  shall not apply to
                  separate General Meetings of the holders of a particular class
                  of shares pursuant to Article 6(b).
<PAGE>
                                       15


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

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

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

                                     PROXIES

33.      INSTRUMENT OF APPOINTMENT

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

                  "I ________________ of ______________________
                  (Name of Shareholder)  (Address of Shareholder)
                  being a member of the SUPERCOM LTD., hereby appoint
                  ___________________ of _____________________
                  (Name of Proxy)          (Address of Proxy)
                  as my  proxy to vote for me and on my  behalf  at the  General
                  Meeting of the Company to be held on the _____day of ________,
                  _____________ and at any adjournment(s) thereof.
                  Signed this _____ day of __________, _____,

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

         (b)      The  instrument  appointing a proxy (and the power of attorney
                  or other  authority,  if any, under which such  instrument has
                  been signed) shall be delivered to the Company (at the Office,
                  at its principal  place of business,  or at the offices of its
                  registrar or transfer agent, or at such

<PAGE>
                                       16


                  other place as the Board of  Directors  may  specify) not less
                  than  twenty-four (24) hours before the time fixed for meeting
                  at which the person named in the instrument proposes to vote.

34.      EFFECT OF DEATH OF APPOINTOR OF PROXY OR REVOCATION OF APPOINTMENT

         (a)      A vote cast in  accordance  with an  instrument  appointing  a
                  proxy  shall  be  valid  notwithstanding  the  prior  death or
                  bankruptcy   of   the    appointing    member   (or   of   his
                  attorney-in-fact,  if any, who signed such instrument), unless
                  written notice thereof shall have been received by the Company
                  or by the  Chairman of such  meeting  prior to such vote being
                  cast

         (b)      An instrument  appointing a proxy shall be deemed  revoked (I)
                  upon  receipt by the Company or the  Chairman,  subsequent  to
                  receipt by the Company of such  instrument,  of written notice
                  signed by the person signing such  instrument or by the member
                  appointing such proxy canceling the appointment thereunder (or
                  the authority pursuant to which such instrument was signed) or
                  of an instrument  appointing a different proxy (and such other
                  documents,  if any,  required  under  Article  33 for such new
                  appointment),   provided  such  notice  of   cancellation   or
                  instrument  appointing  a different  proxy were so received at
                  the place and within the time for  delivery of the  instrument
                  revoked  thereby as referred to in Article  33(b)  hereof,  or
                  (ii) if the  appointing  member  is  present  in person at the
                  meeting for which such instrument of proxy was delivered, upon
                  receipt by the Chairman of such meeting of written notice from
                  such member of the revocation of such  appointment,  or if and
                  when  such  member  votes  at  such  meeting.  A vote  cast in
                  accordance  with an  instrument  appointing  a proxy  shall be
                  valid notwithstanding the revocation of purported cancellation
                  of the  appointment,  or the presence in person or vote of the
                  appointing  member  at a meeting  for  which it was  rendered,
                  unless such  instrument of  appointment  was deemed revoked in
                  accordance with the foregoing provisions of this Article 34(b)
                  at or prior to the time such vote was cast.

                               BOARD OF DIRECTORS

35.      POWERS OF BOARD OF DIRECTORS

         (a)      In General

                  The  management of the business of the Company shall be vested
                  in the Board of Directors,  which may exercise all such powers
                  and do all such acts and things as the  Company is  authorized
                  to exercise  and do, and are not hereby or by law  required to
                  be  exercised  or done by the Company by action of its members
                  at a General Meeting.  The authority conferred on the Board of
                  Directors   by  this  Article  35  shall  be  subject


<PAGE>
                                       17


                  to the provisions of the Companies  Ordinance,  these Articles
                  and  any  regulation  or  resolution   consistent  with  these
                  Articles adopted from time to time by the Company by action of
                  its members at a General Meeting,  provided,  however, that no
                  such regulation or resolution  shall  invalidate any prior act
                  done by or pursuant  to a decision  of the Board of  Directors
                  which would have been valid if such  regulation  or resolution
                  had not been adopted.

         (b)      Borrowing Power

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

         (c)      Reserves

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

36.      EXERCISE OF POWERS OF BOARD OF DIRECTORS

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

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

         (c)      A resolution in writing  signed by all the  Directors  then in
                  office and  lawfully  entitled  to vote  thereon  (as shall be
                  conclusively determined by the Chairman of the Audit Committee
                  of  the  Board  of  Directors  and


<PAGE>
                                       18


                  in the absence of such  determination - by the Chairman of the
                  Board of Directors)  or to which all the Directors  have given
                  their written consent (by letter, telegram,  telex, facsimile,
                  electronic  mail or  otherwise)  shall be  deemed to have been
                  unanimously  adopted  by a meeting  of the Board of  Directors
                  duly convened and held.

37.      DELEGATION OF POWERS

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

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

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

38.      NUMBER OF DIRECTORS

         The Board of Directors of the Company  shall  consist of such number of
         Directors  (not  less  than two (2) nor more  than  eight (8) as may be
         fixed from time to time, by Ordinary Resolution at any General Meeting.


<PAGE>
                                       19


39.      ELECTION AND REMOVAL OF DIRECTORS

         (a)      Directors shall be elected at the Annual General  Meeting,  by
                  the vote of the  holders  of a majority  of the  voting  power
                  represented  at such  meeting in person or by proxy and voting
                  on the election of Directors.

         (b)      Each director  shall hold office until the next Annual General
                  Meeting  or  until  his  office  is  vacated  pursuant  to the
                  provisions of section 41 hereof.

         (c)      Any increase in the number of Directors constituting the board
                  of Directors, shall be deemed to create a vacancy in the board
                  of Directors,  which may be filled only pursuant to Article 40
                  hereof.

         (d)      The Company may, by an Ordinary Resolution,  remove a Director
                  from his  office  before the end of his term of  service,  and
                  may, by an Ordinary  Resolution passed within thirty (30) days
                  thereafter,  elect  another in his stead;  and such  successor
                  shall hold office  until the Annual  General  Meeting at which
                  the term of the removed Director would have expired.

40.      VACANCIES

         If a Director's  office becomes vacant,  for whatever reason (including
         by reason of removal from office, if the vacancy created thereby is not
         filled by the members  during the period  prescribed  in Article  39(d)
         hereof),  the Board of  Directors  may,  by the  affirmative  vote of a
         majority of the Directors  then in office (even if less than the quorum
         otherwise  required  under  these  Articles),  elect a person  for such
         vacant office, provided such elected person shall retire on the date of
         the first Annual General Meeting thereafter.

         If the position of a Director is vacated,  the other Directors shall be
         entitled  to act in every  matter  so long as their  number is not less
         than the quorum  required  at the time for  meetings of  Directors.  If
         their number  decrease below said quorum,  they will not be entitled to
         act except in order to fill vacant  positions on the Board of Directors
         or to call a General Meeting of the Company.

41.      VACATION OF OFFICE

         (a)      The office of a Director  shall be vacated,  ipso facto,  upon
                  his  death,  or if he be found  lunatic  or become of  unsound
                  mind,  of if he  becomes  bankrupt,  or if the  Director  is a
                  company,  upon its winding-up or upon removal by the companies
                  general  meeting  pursuant to the  provisions of Article 39(d)
                  hereinabove.

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


<PAGE>
                                       20


42.      QUALIFICATION OF DIRECTORS

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

43.      REMUNERATION OF DIRECTORS

         A Director shall be paid  remuneration  by the Company for his services
         as Director to the extent such remuneration shall have been approved by
         a General Meeting of the Company.

44.      APPROVAL OF CERTAIN TRANSACTIONS

         The Board of  Directors  will be  authorized  to  approve  transactions
         pursuant to Sections 96(30) and 96(31) of the Companies Ordinance.

45.      ALTERNATE DIRECTORS

         (a)      A Director may, by written  notice to the Company given in the
                  manner set forth in Article  45(b)  below,  appoint one of the
                  directors  as an  alternate  for  himself  (in these  Articles
                  referred to as "Alternate  Director"),  remove such  Alternate
                  Director,  and appoint another Alternate  Director in place of
                  any Alternate  Director appointed by him whose office has been
                  vacated  for any  reason  whatsoever.  Unless  the  appointing
                  Director,  by the instrument  appointing an Alternate Director
                  or by written notice to the Company,  limits such  appointment
                  to a specified  period of time or  restricts it to a specified
                  meeting  or  action of the Board of  Directors,  or  otherwise
                  restricts  its  scope,   the  appointment   shall  be  for  an
                  indefinite period, and for all purposes.

         (b)      Any notice to the Company  pursuant to Article  45(a) shall be
                  given in  person  to,  or by  sending  the same by mail to the
                  attention  of, the  Secretary  or the  General  Manager of the
                  Company  as the  principal  office of the  Company  or to such
                  other  person or place as the Board of  Directors  shall  have
                  determined for such purpose and shall become  effective on the
                  date fixed therein, or upon the receipt thereof by the Company
                  (at the place as aforesaid), whichever is later.

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

<PAGE>
                                       21

         (d)      Any natural person, whether or not he be a member of the Board
                  of Directors, may act as an Alternate Director. One person may
                  act as Alternate Director for several  Directors,  and in such
                  event he shall have a number of votes (and shall be treated as
                  the number of persons for purposes of  establishing  a quorum)
                  equal to the number of Directors for whom he acts as Alternate
                  Director.  If an Alternate  director is also a Director in his
                  own right,  his rights as an  Alternate  director  shall be in
                  addition to his rights as a Director.

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

         (f)      The office of an Alternate Director shall be vacated under the
                  circumstances,  mutatis mutandis, set forth in Article 41, and
                  such office  shall ipso facto be vacated if the  Director  who
                  appointed such Alternate Director ceases to be Director.

                      PROCEEDINGS OF THE BOARD OF DIRECTORS

46.      MEETINGS

         (a)      The Board of  Directors  may meet and adjourn its meetings and
                  otherwise  regulate  such  meetings  and  proceedings  as  the
                  Directors think fit.

         (b)      Any Director may at any time, and the Chairman of the Board of
                  Directors, upon the request of such Director, shall, convene a
                  meeting of the Board of  Directors,  but not less than two (2)
                  days' notice shall be given of any meeting so convened. Notice
                  of any such  meeting may be given  orally,  by  telephone,  in
                  writing or by mail,  e-mail,  telex,  cablegram or  facsimile.
                  Notwithstanding  anything to the contrary  herein,  failure to
                  deliver notice to a Director of any such meeting in the manner
                  required hereby may be waived by such Director,  and a meeting
                  shall be deemed to have  been  duly  convened  notwithstanding
                  such  defective  notice,  if such  failure or defect is waived
                  prior to action being taken at such  meeting by all  Directors
                  entitled to participate at such meeting to whom notice was not
                  duly given as aforesaid.

47.      QUORUM

         Until otherwise unanimously decided by the Board of Directors, a quorum
         at a meeting  of the Board of  Directors  shall be  constituted  by the
         presence in person or by telephone conference of at least two Directors
         constituting  a  majority  of the  Directors  then  in  office  who are
         lawfully  entitled  to  participate  in the  meeting  (as  conclusively
         determined  by the  Chairman  of the  Audit  Committee  of the Board of
         Directors,  or, in the absence of such  determination - by the Chairman
         of the Board of Directors). No business shall be transacted

<PAGE>
                                       22


         at a meeting of the Board of Directors  unless the requisite  quorum is
         present  (in  person  or by  telephone  conference)  when  the  meeting
         precedes to business.

48.      CHAIRMAN OF THE BOARD OF DIRECTORS

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

49.      VALIDITY OF ACTS DESPITE DEFECTS

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

                                 GENERAL MANAGER

50.      CHIEF EXECUTIVE OFFICER, GENERAL MANAGER AND PRESIDENT

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

                                     MINUTES

51.      MINUTES

         (a)      Minutes of each  General  Meeting  and of each  meeting of the
                  Board of Directors  shall be  recorded,  whether in writing or
                  otherwise, in writing


<PAGE>
                                       23


                  and duly entered in books provided for that purpose, and shall
                  be held by the Company at its  principal  office or the Office
                  or such other place as shall have been determined by the Board
                  of Directors. Such minutes shall, in all events, set forth the
                  names  of  the   persons   present  at  the  meeting  and  all
                  resolutions adopted thereat.

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

                                    DIVIDENDS

52.      DECLARATION OF DIVIDENDS

         The Board of  Directors  may from time to time  declare,  and cause the
         Company to pay,  such  interim  dividend  as may appear to the Board of
         Directors  to be  justified  by the profits of the  Company.  The final
         dividend in respect of any fiscal period shall be proposed by the Board
         of Directors and shall be payable only after the same has been approved
         by Ordinary  Resolution of the Company,  but no such  resolution  shall
         provide for the payment of any amount  exceeding  that  proposed by the
         Board of Directors for the payment of such final dividend,  and no such
         resolution or any failure to approve a final  dividend shall affect any
         interim dividend  theretofore declared and paid. The Board of Directors
         shall  determine the time for payment of such  dividends,  both interim
         and  final,  and the  record  date  for  determining  the  shareholders
         entitled thereto.

53.      FUNDS AVAILABLE FOR PAYMENT OF DIVIDENDS

         No  dividend  shall be paid  otherwise  than out of the  profits of the
         Company.

54.      AMOUNT PAYABLE BY WAY OF DIVIDENDS

         (a)      Subject  to  the  rights  of  the  holders  of  shares  as  to
                  dividends, any dividend paid by the Company shall be allocated
                  among the members  entitled  thereto in proportion to the sums
                  paid up or credited as paid up on account of the nominal value
                  of their respective  holding of the shares in respect of which
                  such dividend is being paid,  without  taking into account the
                  premium paid up for the shares.  The amount paid up on account
                  of a shares  which  was not yet been  called  for  payment  or
                  fallen  due for  payment  and  upon  which  the  Company  pays
                  interest  to the  shareholder,  shall not be  deemed,  for the
                  purposes  of the  Article,  to be a sum paid on account of the
                  share.

         (b)      Whenever  the  rights  attached  to any shares or the terms of
                  issue of the shares do not provide otherwise, shares which are
                  fully paid up or which are  credited  as fully or partly  paid
                  within any period which in respect thereof  dividends are paid
                  shall entitle the holders thereof to a

<PAGE>
                                       24


                  dividend  in  proportion  to the amount paid up or credited as
                  paid up in respect of the nominal  value of such shares and to
                  the date of payment thereof (pro rata temporis).

55.      INTEREST

                  No dividend shall bear interest as against the Company.

56.      PAYMENT IN SPECIE

         A dividend,  whether interim or final,  may be paid in full or in part,
         by  the   distribution   of  specific  assets  of  the  Company  or  by
         distribution  of shares or  debentures  of the  Company or of any other
         company, or in any one or more such ways.

57.      CAPITALIZATION

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

58.      IMPLEMENTATION OF POWERS UNDER ARTICLES 56 AND 57

         For the purpose of giving full effect to any resolution  under Articles
         56 or 57, and without  derogating  from the  provisions of Article 7(b)
         hereof,  the Board of  Directors  may settle any  difficulty  which may
         arise in regard to the  distribution  as it thinks  expedient,  and, in
         particular,  may issue fractional  certificates,  and may fix the value
         for  distribution of any specific  assets,  and may determine that cash
         payments  shall be made to any members upon the footing of the value so
         fixed,  or that  fractions of less value than the nominal  value of one
         share may be  disregarded in order to adjust the rights of all parties,
         and may vest any such  cash,  shares,  debentures,  debenture  stock or
         specific assets in trustees upon trusts for the persons entitled to the
         dividend  or  capitalized  fund as may seem  expedient  to the Board of
         Directors.  Where  requisite,  a proper  contract  shall be  filled  in
         accordance with Section 130 of Companies

<PAGE>
                                       25


         Ordinance,  and the Board of  Directors  may appoint any person to sign
         such  contract  on behalf of the persons  entitled  to the  dividend or
         capitalized fund.

59.      DIVIDENDS ON UNPAID SHARES

         Without  derogating from Article 54 hereof,  the Board of Directors may
         give an instruction  which shall prevent the distribution of a dividend
         to the holders of shares the full nominal  amount of which has not been
         paid up.

60.      RETENTION OF DIVIDENDS

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

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

61.      UNCLAIMED DIVIDENDS

         All unclaimed  dividends or other moneys  payable in respect of a share
         may be invested or otherwise made use of by the Board of Directors from
         the benefit of the Company until claimed.  The payment by the Directors
         of any unclaimed  dividend or such other moneys into a separate account
         shall not  constitute  the  Company a trustee in respect  thereof.  The
         principal  (and only the  principal)  of an unclaimed  dividend or such
         other money shall be, if claimed, paid to a person entitled thereto.

62.      MECHANICS OF PAYMENT

         The Board of Directors may fix the mechanics of payment of dividends as
         it deems fit. However, if the resolution of the Board of Directors does
         not provide  otherwise,  then any dividend or other  moneys  payable in
         cash in respect of a share may be paid by check or warrant sent through
         the post to, or left at, the registered  address of the person entitled
         thereto or by transfer to a bank account  specified by such person (or,
         if two or more persons are registered as joint holders of such share or
         are entitled  jointly thereto in consequence of the death or bankruptcy
         of the  holder  or  otherwise,  to  the  joint  holder  whose  name  is
         registered  first in the Register of Members or his bank account or the
         person  who the  Company  may then  recognize  as the owner  thereof or
         entitled thereto under Article 21 or 22 hereof, as applicable,  or such
         person's bank account),  or to such person and at such other address as
         the person entitled thereto may be writing direct.  Every such check or
         warrant

<PAGE>
                                       26


         Shall be made payable to the order of the person to whom it is sent, or
         to such person as the person entitled  thereto as aforesaid may direct,
         and payment of the check or warrant by the banker upon whom it is drawn
         shall be a good discharge to the Company.

63.      RECEIPT FROM A JOINT HOLDER

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

                                    ACCOUNTS

64.      BOOKS OF ACCOUNT

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

65.      AUDIT

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

66.      AUDITORS

         The  appointment,  authorities,  rights and duties of the auditor(s) of
         the Company shall be regulated by applicable  law,  provided,  however,
         that in  exercising  its  authority  to fix,  the  remuneration  of the
         auditor(s), the members in General Meeting may, by Ordinary Resolution,
         act (and in the absence of any action in connection therewith, shall be
         deemed to have so acted),  to  authorize  the Board of Directors to fix
         such remuneration subject to such criteria or standards, if any, as may
         be provided in such  Ordinary  Resolution,  and if no such  criteria or
         standards  are so  provided,  such  remunerations  shall be fixed in an
         amount commensurate with the volume and nature of the services rendered
         by such auditor(s).

                                BRANCH REGISTERS

67.      BRANCH REGISTERS



<PAGE>
                                       27


         Subject to and in accordance  with the provisions of Sections 71 to 80,
         inclusive, of the Companies Ordinance and to all orders and regulations
         issued thereunder, the Company may cause branch registers to be kept in
         any place outside  Israel as the Board of Directors may think fit, and,
         subject to all applicable  requirements  of law, the Board of Directors
         may from time to time adopt such rules and  procedures  as it may think
         fit in connection with the keeping of such branch registers.

                      RIGHTS OF SIGNATURE, STAMP AND SEAL

68.      RIGHTS OF SIGNATURE: SEAL

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

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

         (c)      The Company may exercise  the powers  conferred by Section 102
                  of the  Companies  Ordinance  regarding a seal for use abroad,
                  and such powers shall be vested in the Board of Directors.

                                     NOTICES

69.      NOTICES

         (a)      Any  written  notice  or other  document  may be served by the
                  Company upon any member either  personally or by sending it by
                  prepaid mail  (airmail if sent  internationally)  addressed to
                  such member at his  address as  described  in the  Register of
                  Members or such other  address  as he may have  designated  in
                  writing for the receipt of notices  and other  documents.  Any
                  written  notice or other  document may be served by any member
                  upon  the  Company  by  tendering  the same in  person  to the
                  Secretary  or  the  General  Manager  of  the  Company  at the
                  principal  office of the  Company  or by sending it by prepaid
                  registered  mail  (airmail  if posted  outside  Israel) to the
                  Company at the Office. Any such notice or other document shall
                  be deemed to have been served frothy-eight (48) hours after it
                  has   been   posted   (seven   (7)   business   days  if  sent
                  internationally),  or when actually  received by the addressee
                  if sooner than  frothy-eight  hours or seven days, as the case
                  may be, after it

<PAGE>
                                       28


                  has been posted,  or when actually tendered in person, to such
                  member (or to the  Secretary or the General  Manager).  Notice
                  sent by cablegram,  telex,  facsimile or electronic mail shall
                  be deemed to have been served when  actually  received by such
                  member (or by the Company).  If a notice is, in fact, received
                  by the addressee,  it shall be deemed to have been duly served
                  when  received,   notwithstanding   that  it  was  defectively
                  addressed or failed, in some other respect, to comply with the
                  provisions of this Article 69(a).

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

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

         (d)      Notwithstanding  anything to the  contrary  contained  herein,
                  notice by the Company of a General  Meeting which is published
                  in at least two daily newspapers in the State of Israel within
                  the time otherwise  required for giving notice of such meeting
                  under  Article  25  hereof  and  containing  the   information
                  required  to be set forth in such notice  under such  Article,
                  shall be deemed to be a notice of such meeting duly given, for
                  purposes  of these  Articles,  to any  member  who  address as
                  registered  in the Register of Members is located in the State
                  of Israel.

                             INDEMNITY AND INSURANCE

70.      INDEMNITY AND INSURANCE

         (a)      For purposes of these  Articles,  the term "Office Holder" (in
                  Hebrew "Noseh Misra") shall have the meaning ascribed to it in
                  Section 9624 of the Companies Ordinance.

         (b)      Subject to the  provisions  of Section  9644 of the  Companies
                  Ordinance, the Company may enter into a contract to insure all
                  or part of the  liability of an Office Holder by reason of any
                  one of the following:

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

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


<PAGE>
                                       29



                  (iii)    a  monetary  liability  imposed  upon him in favor of
                           another  person by  reason of an action  taken by the
                           Office Holder in his capacity as such; or

                  (iv)     any other  event for which the Company may be allowed
                           to insure the liability of an Office Holder.

         (c)      Subject to the provisions of Sections 96(43) and 96(44) of the
                  Companies  Ordinance,  the  Company  may  indemnify  an Office
                  Holder against:

                  (i)      a  monetary  liability  imposed  on him in  favor  of
                           another  person  pursuant to a judgment,  including a
                           settlement  judgment or an arbitrator  award approved
                           by a court,  by reason  of an action  taken by him in
                           his capacity as an Office Holder; and

                  (ii)     reasonable litigation expenses,  including attorney's
                           fees,  incurred by such  Office  Holder or imposed on
                           him by a court,  in a proceeding  brought against him
                           by or on behalf of the Company or by another  person,
                           or  in   criminal   proceeding   from  which  he  was
                           acquitted,  in each case by reason of an action taken
                           by him in his capacity as an Office Holder.

         (d)      The Company may (i) procure  insurance  for, or indemnify  any
                  Office Holder to the extent not  prohibited  by, any provision
                  of applicable law,  provided that, the procurement of any such
                  insurance  or provision  of any such  indemnification,  as the
                  case  may  be,  is  approved  by the  Audit  Committee  of the
                  Company;  and (ii)  procure  insurance  for or  indemnify  any
                  person  who  is  not  an  Office  Holder,  including,  without
                  limitation,  any employee,  agent, consultant or contractor of
                  the Company who is not an Office Holder, and the provisions of
                  Articles 70(a), 70(b) and 70(c) above are not intended to, and
                  shall not be construed to, restrict the Company from procuring
                  insurance or indemnifying as set forth in clauses (i) and (ii)
                  of this Article 70(d).

                                   WINDING UP

71.      WINDING UP

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

</TEXT>
</DOCUMENT>
