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<SEC-DOCUMENT>0001178913-05-001740.txt : 20051201
<SEC-HEADER>0001178913-05-001740.hdr.sgml : 20051201
<ACCEPTANCE-DATETIME>20051201135723
ACCESSION NUMBER:		0001178913-05-001740
CONFORMED SUBMISSION TYPE:	F-3
PUBLIC DOCUMENT COUNT:		12
FILED AS OF DATE:		20051201
DATE AS OF CHANGE:		20051201

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BOS BETTER ONLINE SOLUTIONS LTD
		CENTRAL INDEX KEY:			0001005516
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				0000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		F-3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-130048
		FILM NUMBER:		051237095

	BUSINESS ADDRESS:	
		STREET 1:		100 BOS RD
		CITY:			TERADION ISRAEL
		STATE:			L3
		ZIP:			00000

	MAIL ADDRESS:	
		STREET 1:		TERADION INDUSTRIAL PARK
		CITY:			BEIT RABIN
		STATE:			L3
		ZIP:			20179
</SEC-HEADER>
<DOCUMENT>
<TYPE>F-3
<SEQUENCE>1
<FILENAME>zk52030.htm
<TEXT>
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     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\52030\a52030.eep -->
     <!-- Control Number: 52030                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
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     <TD WIDTH="70%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">As filed with the Securities and Exchange Commission on December 1, 2005</FONT></TD>
     <TD WIDTH="30%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Registration No. [&nbsp;&nbsp;&nbsp;]</FONT></TD></TR>
</TABLE>
<BR>


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<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>UNITED STATES</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>SECURITIES AND EXCHANGE COMMISSION</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">Washington, D.C. 20549 </FONT> </P>

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<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>FORM F-3</B> </FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="3">REGISTRATION STATEMENT </FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="3">UNDER THE SECURITIES ACT OF 1933 </FONT></P>

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<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="5"><B>B.O.S BETTER ONLINE SOLUTIONS LTD.</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>(Exact name of Registrant as specified in its charter)</I> </FONT> </P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Israel</B> </FONT></TD>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Not Applicable</B> </FONT></TD></TR>
<TR>
      <TD>&nbsp; </TD>
      <TD> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>(State or other jurisdiction of</I> </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>(I.R.S. Employer</I> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>incorporation or organization)</I> </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>Identification No.)</I> </FONT></TD></TR>
</TABLE>
<BR>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Beit Rabin, Teradyon Industrial Park,<BR>
Misgav, 20179, Israel<BR>
(+972) 4-990-7555<BR>
     <I>(Address and Telephone Number of Registrant's principal executive offices)</I>
</FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Corporation Service Company<BR>
1133 Avenue of the Americas, Suite 3100<BR>
New York, NY 10036<BR>
Tel: (212) 299-9100<BR>
<I>(Name, address and telephone number of agent for service)</I> </FONT>
</P>


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     <TD WIDTH="100%"><HR SIZE="1" NOSHADE WIDTH="15%" ALIGN="CENTER"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Copies To:</FONT></TD></TR>
</TABLE>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=44% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Brian Brodrick, Esq.</B> </FONT> </TD>
     <TD WIDTH=55% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Shlomo Landress, Adv.</B> </FONT> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Phillips Nizer LLP</B> </FONT> </TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Amit, Pollak, Matalon &amp; Co.</B> </FONT> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>666 Fifth Avenue</B> </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>NYP Tower, 17 Yitzhak Sadeh Street</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>New York, New York 10103</B> </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Tel Aviv 67775, Israel</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>(212) 841-0700</B> </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>972-3-561-5268</B> </FONT></TD></TR>
</TABLE><BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Approximate
date of commencement of proposed sale to the public</B>: From time to time after this
registration statement becomes effective. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the only securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. <FONT size="3" face="Wingdings">o
</font> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the
following box. <FONT size="3" face="Wingdings">x</font> </FONT></P>

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

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the
same offering. <FONT size="3" face="Wingdings">o
</font> _______ </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities
Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. <FONT size="3" face="Wingdings">o
</font> ________ </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a registration statement pursuant to General Instruction I.C. or a
post-effective amendment thereto that shall become effective upon filing with the
Commission pursuant to Rule 462(e) under the Securities Act, check the following
box. <FONT size="3" face="Wingdings">o
</font> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.C. filed to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities Act, check the following box. <FONT size="3" face="Wingdings">o
</font> </FONT></P>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%"><HR SIZE="1" NOSHADE WIDTH="15%" ALIGN="CENTER"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>CALCULATION OF REGISTRATION FEE</B> </FONT></TD></TR>
</TABLE>
<BR>







<TABLE CELLPADDING="3" CELLSPACING="0" BORDER="1" WIDTH="100%">
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Title of Each Class<BR>of Securities to be Registered</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Amount to be<BR>Registered</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Proposed Maximum<BR>Offering Price<BR>Per Share</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Proposed Maximum<BR>Aggregate Offering<BR>Price</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Amount of<BR>Registration<BR>Fee</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ordinary Shares, nominal value NIS 4.00 per share</FONT></TD>
     <TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>953,698(1)(2)</FONT></TD>
     <TD WIDTH="15%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$2.42(3)</FONT></TD>
     <TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$2,307,949(3)</FONT></TD>
     <TD WIDTH="15%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$247&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ordinary Shares, nominal value NIS 4.00 per share</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>572,219(2)(4)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$3.03(5)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$1,733,824(5)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$186&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ordinary Shares, nominal value NIS 4.00 per share</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>625,000(6)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$4.04(5)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$2,525,000(5)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$270&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,150,917 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$6,566,773&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$703&nbsp;</FONT></TD></TR>
</TABLE>
<BR>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents
ordinary shares registered for resale by the selling shareholders. </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant
to Rule 416 of the Securities Act of 1933, as amended, this
                    Registration Statement also includes additional ordinary shares
issuable upon                     stock splits, stock dividends or similar transactions. </FONT></TD>
</TR>
</TABLE>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Estimated
solely for the purpose of determining the registration fee pursuant to
                    Rule 457(c) of the Securities Act on the basis of the average of the
high and                     low sales prices of the Registrant&#146;s ordinary shares on
The Nasdaq National                     Market on November 29, 2005 </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents
shares issuable upon exercise of warrants that were issued to the
                    selling shareholders. The exercise price under the warrants is $2.50
per                     ordinary share during the first year from the issuance, and
increasing to $2.75                     per ordinary share and $3.03 per ordinary share,
on the first and second                     anniversaries of the issuance, respectively. </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Calculated
pursuant to Rule 457(g) of the Securities Act. </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(6) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents
shares issuable upon conversion of $1.5 million in principal amount
                    of the Registrant&#146;s Secured Convertible Term Note due September
29, 2008                     (the &#147;Note&#148;) and shares issuable upon conversion
of interest thereon                     solely to the extent of the mandatory interest
conversion feature set forth in                     Section 2.1(b) of the Note, at a
fixed conversion price (subject to adjustments)                     of $3.08 per share
and upon exercise of warrants that were issued to the                     purchaser of
the Note, at an exercise price of $4.04 per ordinary share. </FONT></TD>
</TR>
</TABLE>
<BR>

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


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to Rule 429 under the
Securities Act, this Registration Statement contains a combined prospectus that also
relates to: (a) 130,000 ordinary shares issuable upon exercise of a warrant that was
issued to the purchaser of the Registrant&#146;s note in a private placement transaction
on June 10, 2004; and (b) 357,143 ordinary shares issued in a private placement
transaction on December 14, 2003. These shares were registered pursuant to the Registrant&#146;s
Registration Statement on Form F-3 (File No. 333- 117529). The Filing fee associated with
these shares was previously paid with such earlier registration statement.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Registrant hereby amends this
Registration Statement on such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance with Section
8(a) of the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a), may
determine. </FONT></P>

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

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
<B>THE INFORMATION IN THIS PROSPECTUS
IS NOT COMPLETE AND MAY BE CHANGED. NO SELLING SHAREHOLDER MAY SELL THESE SECURITIES UNTIL
THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER
TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.</B>
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT"><HR SIZE="1" NOSHADE WIDTH="100%" ALIGN="CENTER"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">SUBJECT TO COMPLETION, DATED December 1, 2005</FONT></TD></TR>
</TABLE>
<BR>







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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROSPECTUS </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S BETTER ONLINE
SOLUTIONS LTD. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up to 2,638,060
Ordinary Shares </FONT></H1>

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<HR SIZE="1" NOSHADE WIDTH="20%" ALIGN="CENTER">

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The selling shareholders identified
in this prospectus, may offer to sell up to an aggregate of 2,638,060 of our ordinary
shares, consisting of the following: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>953,698
ordinary shares that were issued to the selling shareholders in a private placement in
June 2005. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 572,219 ordinary shares issuable upon the exercise of warrants which were issued to
the selling shareholders in the abovementioned private placement transaction. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 625,000 ordinary shares issuable upon the conversion of a convertible note due
September 29, 2008 and upon the exercise of a warrant, both of which were issued by BOS
to the selling shareholder, Laurus Master Fund, in a private placement transaction on
September 29, 2005 and shares that are to be issued in lieu of cash interest payments on
the convertible note solely pursuant to the mandatory interest conversion feature of such
note. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 130,000 ordinary shares issuable upon the exercise of a warrant, which was issued to
Laurus Master Fund in connection with a private placement offering on June 10, 2004. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>357,143
ordinary shares that were issued to the selling shareholders in a private placement
completed in December 2003. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOS is filing the registration
statement of which this prospectus is a part at this time primarily to fulfill a
contractual obligations to do so, which the company undertook at the time of the sale of
the shares and warrants. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our ordinary shares are traded on the
Nasdaq National Market, or NMS, under the symbol &#147;BOSC&#148; and on the Tel-Aviv
Stock Exchange under the symbol &#147;BOSC&#148;. On November 29, 2005, the last reported
sale price of our ordinary shares on the NMS was $2.42 per share. You are urged to obtain
current market quotations for the ordinary shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We will not receive any of the
proceeds from the sale of these ordinary shares other than the exercise price payable to
us upon the exercise of the warrants held by the selling shareholders. We have agreed to
bear all of the expenses in connection with the registration and sale of these ordinary
shares other than underwriting discounts and sales commissions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>You should read both this prospectus
and any prospectus supplement, together with the additional information described under
the heading &#147;Incorporation of Certain Documents by Reference&#148; before you decide
to invest in our ordinary shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>INVESTING
IN OUR ORDINARY SHARES INVOLVES A HIGH DEGREE OF RISK. SEE &#147;RISK FACTORS&#148;
BEGINNING ON PAGE <U>5 </U>OF THIS PROSPECTUS TO READ ABOUT FACTORS YOU SHOULD CONSIDER
BEFORE PURCHASING OUR ORDINARY SHARES.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Neither
the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense</B>. </FONT></P>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%"><HR SIZE="1" NOSHADE WIDTH="25%" ALIGN="CENTER"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The date of this prospectus is ________, 2005</FONT></TD></TR>
</TABLE>
<BR>


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

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TABLE OF CONTENTS </FONT></H1>












<TABLE CELLPADDING=3 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=90% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk101">Prospectus Summary</a></FONT></TD>
     <TD WIDTH=10% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk102">The Offering</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk103">Risk Factors</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk104">Forward-Looking Statements</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk105">Recent Developments</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk106">Use of Proceeds</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk107">Selling Shareholders</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk108">Description of Ordinary Shares</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk109">Plan of Distribution</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk110">Validity of Securities</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk111">Experts</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk112">Where You Can Find More Information</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk113">Incorporation of Certain Documents by Reference</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk114">Enforceability of Civil Liabilities</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25&nbsp;</FONT></TD></TR>
</TABLE><BR>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
should rely only on the information contained or incorporated by reference in this
prospectus or any supplement. We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not, and any underwriter or agent is not, making an
offer to sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this prospectus is accurate
only as of the date on the front cover of this prospectus. Our business, financial
condition, results of operations and prospects may have changed since that date. </FONT></P>

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

<a name=zk101></a>



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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROSPECTUS SUMMARY </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ABOUT THIS PROSPECTUS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
prospectus is part of a registration statement that we filed with the United States
Securities and Exchange Commission, or the SEC, utilizing a &#147;shelf&#148; registration
process. Under this shelf process, the selling shareholders may offer up to a total of
2,638,060 ordinary shares, from time to time, in one or more offerings in any manner
described under the section in this prospectus entitled &#147;Plan of Distribution.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
prospectus does not contain all of the information set forth in the registration
statement, certain parts of which are omitted in accordance with the rules and regulations
of the SEC. Accordingly, you should refer to the registration statement and its exhibits
for further information about us and our ordinary shares. Copies of the registration
statement and its exhibits are on file with the SEC. Statements contained in this
prospectus concerning the documents we have filed with the SEC are not intended to be
comprehensive, and in each instance we refer you to copy of the actual document filed as
an exhibit to the registration statement or otherwise filed with the SEC. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have not authorized anyone to provide you with information different from that contained
or incorporated by reference in this prospectus. The selling shareholders are offering to
sell, and seeking offers to buy, our ordinary shares only in jurisdictions where offers
and sales are permitted. The information contained in this prospectus is accurate only as
of the date of this prospectus, regardless of the time of delivery of this prospectus or
of any sale of ordinary shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
the context otherwise requires, all references in this prospectus to &#147;BOS,&#148;
&#147;we,&#148; &#147;our,&#148; &#147;our company,&#148; &#147;us&#148; and the
&#147;Company&#148; refer to BOS Better Online Solutions Ltd. and its consolidated
subsidiaries. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references in this prospectus to &#147;ordinary shares&#148; refer to our ordinary shares,
nominal value NIS 4.00 per share. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references in this prospectus to &#147;dollars&#148; or &#147;$&#148; are to United States
dollars. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references in this prospectus to &#147;shekels&#148; or &#147;NIS&#148; are to New Israeli
Shekels. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THE COMPANY </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We were incorporated in Israel in
1990 and are subject to the Israel Companies Law 1999 &#150; 5759. We design, integrate
and test our products in our facilities in three locations in Israel. Our headquarters and
manufacturing facilities are located at Teradyon Industrial Zone, Misgav 20179 Israel. The
facilities of our subsidiaries, Odem Electronic Technologies 1992 Ltd. and Quasar Telecom
(2004) Ltd., are located in the center of Israel. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our telephone number is
972-4-990-7555 and our website address is www.boscorporate.com. The information contained
on, or linked from, our website is not a part of this prospectus. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We currently manage our operation
through our three wholly-owned subsidiaries: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font></FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOScom
Ltd. that is engaged in connectivity solutions and communication solutions that are based
on VoIP technology; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font></FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Quasar
 Telecom  (2004)  Ltd.  that is  engaged  in  communication  solutions  that are based on
 cellular          technology; and </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>3</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Odem
 Electronic  Technologies  1992 Ltd.  that is  engaged in the supply of  electronic
 components  and          solutions.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Through our wholly owned
subsidiaries, our activities are focused on two divisions: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Connectivity division, </B>with
products<B> </B>marketed under the BOSaNOVA brand name. These products deliver instant and
transparent connectivity from IBM iSeries computers to personal computers, thin clients
and browsers. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Electronic Components division,
</B>based on Odem Electronic Technologies 1992 Ltd., providing solutions in RFID,
semiconductors, electronic components, CCD, imaging, networking, telecom and automation. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>An additional focus has been on the
<B>Communications division,</B> providing easy to install and affordable VoIP and cellular
gateways solutions for businesses. The Company entered into a definitive agreement for the
sale of the Communications Division&#146;s assets in October 2005. See Recent Developments
below. </FONT></P>

<a name=zk102></a>


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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THE OFFERING </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This prospectus relates to 2,638,060
ordinary shares that may be offered for sale by the selling shareholders, as follows: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>953,698
ordinary shares that were issued to the selling shareholders in a private placement in
June 2005. The ordinary shares were issued at a price per share of $2.30. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 572,219 ordinary shares are issuable upon the exercise of warrants which were issued
by BOS to the selling shareholders in the abovementioned private placement. The warrants
are exercisable for three years from their date of issuance. The exercise price is $2.50
per ordinary share during for the first year from the issue date, and increasing to $2.75
per ordinary share and $3.03 per ordinary share, on the first and second anniversaries of
the issue date, respectively. The warrant exercise price is subject to adjustment in
certain circumstances. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 625,000 ordinary shares are issuable upon the conversion of a convertible note due
September 29, 2008 and upon the exercise of warrants, both of which were issued by BOS to
Laurus Master Fund in a private placement transaction on September 29, 2005, and shares
that are to be issued in lieu of cash interest payments on the convertible note solely
pursuant to the mandatory interest conversion feature of such note. For additional
details see &#147;Selling Shareholders&#148;. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 130,000 ordinary shares are issuable upon the exercise of a warrant which was issued
by BOS to Laurus Master Fund in a private placement transaction on June 10, 2004. The
exercise price of the warrant is $4.04 per share, and it is subject to adjustment in
certain circumstances. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>357,143
ordinary shares that were issued to the selling shareholders in a private placement
completed in December 2003. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOS is filing the registration
statement of which this prospectus is a part at this time primarily to fulfill its
contractual obligations to do so. Registration of the ordinary shares does not necessarily
mean that all or any portion of such ordinary shares will be offered for sale by the
selling shareholders. </FONT></P>

<p align=center>
<font size=2>4</font></p>
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<page>

<a name=zk103></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RISK FACTORS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>You
should carefully consider the risks described below and all the information contained or
incorporated by reference into this prospectus before making an investment decision
regarding our ordinary shares. The risks described below are not the only risks facing our
company. Our business, financial condition or results of operations could be materially
adversely affected by any of these risks. The trading price of our ordinary shares could
decline due to any of these risks, and you may lose all or part of your investment.</I> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Risks related to our business: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>The sales of our connectivity products in the US depend on
one master distributor. In the event that we encounter problems working with the master
distributor, we may experience an interruption in sales until an alternative source of
distribution can be found, which may have a material adverse effect on our business.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up until the fourth quarter of 2002,
we marketed our BOScom products in the USA through a US subsidiary (the BOS US division of
PacInfo). Currently, we market our products in the USA through one master distributor. In
2004 and the first nine months of 2005, sales of our BOScom products in the US market
accounted for 39% and 10%, respectively, of our sales. In the event that we cease working
with the master distributor, we may experience an interruption in sales until an
alternative source of distribution can be found, which may have a material adverse effect
our business. </FONT></P>




<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B><I>A significant part of&nbsp;the
revenues generated by our wholly owned subsidiary, Odem Electronic Technologies 1992 Ltd.
(&#147;Odem&#148;), is from one major customer. An interruption in our business
relationship which such customer&nbsp;would&nbsp;adversely impact our financial results.</I></B>
</FONT></P>





<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
One of Odem&#146;s major customers
accounted for 11% of our revenues in the first nine months of 2005. An interruption in our
business relationship with such customer&nbsp;would result in a write-off of inventory and
would have an adverse effect on our business and results of operations.
</FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>In 2004 we completed the
acquisitions of most of the assets of Quasar Communication Systems Ltd. (which were
transferred to our subsidiary, Quasar Telecom (2004) Ltd. (&#147;Quasar Telecom&#148;))
and a controlling stake of Odem. In
September 2005, we acquired another 23.9% of Odem&#146;s shares and in November 2005, we
increased our holdings in Odem to 100%. The integration may interrupt the activities of
one or more of the combined companies and could have an adverse effect on the business,
results of operations, financial condition or prospects of the Company.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The abovementioned acquisitions
involved the integration of companies that had previously operated independently. The
difficulties of combining the companies&#146; operations included, and continue to be, but
are not limited to: the necessity of coordinating geographically separate organizations
and integrating personnel with diverse business backgrounds, potential difficulties in
retaining employees and the associated adverse effects on relationships with existing
partners. The integration may interrupt the activities of one or more of the combined
company&#146;s businesses and may result in the loss of key personnel. This could have an
adverse effect on our business, results of operations, financial condition or prospects. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We are engaged in a highly
competitive industry, and if we are unable to keep up with or ahead of the technology our
sales could be adversely affected. Additionally, we are fairly new players in the highly
competitive VOIP sector, and there are no assurances that we will be able to effectively
compete with the more established businesses in the sector.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>IBM sells competing products to our
own, and can exercise significant customer influence and technology control in the IBM
host connectivity market. We may experience increased competition in the future from IBM
or other companies, which may adversely affect our ability to continue to market our
products and services successfully. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We also compete against various
companies that offer computer communications products based on other technologies that in
certain circumstances can be competitive in price and performance to our products. There
can be no assurance that these or other technologies will not capture a significant part
of the existing or potential IBM midrange computer communications market. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The market for our products is also
characterized by significant price competition. We may therefore face increasing pricing
pressures. There can be no assurance that competitors will not develop features or
functions similar to those of our products, or that we will be able to maintain a cost
advantage or that new companies will not enter these markets. </FONT></P>

<p align=center>
<font size=2>5</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The VOIP market is very competitive
with large companies such as Cisco competing for the same market segment. There can be no
assurance that we will be able to successfully penetrate the market or realize significant
revenues from our line of products and become profitable. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Some of our current and potential
competitors have longer operating histories, greater name recognition, access to larger
customer bases and significantly greater financial, technical and marketing resources than
ours. As a result, they may be able to adapt more quickly to new or emerging technologies
and changes in customer requirements or to devote greater resources to the promotion and
sale of their products, than us. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>In late 2002 we decided
to wind up the business of our subsidiary, Pacific Information Systems, Inc.
(&#147;PacInfo&#148;),due to its severe financial situation. PacInfo has already
settled with a majority of its external creditors.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The wind up process was accompanied
by settlements with a majority of PacInfo&#146;s creditors, however, there can be no
assurance that such a settlement will be reached with the remainder of the creditors, thus
resulting in additional costs to the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Furthermore, certain actions
involving PacInfo, if occurred before the end of 2003, may have triggered a tax event for
PacInfo former owners (the &#147;Sellers&#148;), who sold PacInfo to the Company in 1998.
In such event, we may be obligated, under the purchase agreement, to grant the Sellers a
loan on a full recourse basis for certain tax payments the Sellers may be liable for,
currently estimated at approximately $2 million. The purchase agreement provides that the
Company is to receive a security interest in shares of the Company that the Sellers hold
at the time of the loan with a fair market value as of the date of the loan of at least
125% of the amount of the loan as security for the repayment of the loan. In addition, in
the event we are required to loan such sum to the Sellers, we may also be required to
reimburse the Sellers for certain interest on taxes that they may owe. It is possible that
the windup of PacInfo during 2002 and 2003 may have triggered such a tax event for the
Sellers, which would result in our obligation to loan the Sellers such amount and to
reimburse them for interest expenses incidental to the tax event. Such a loan and
reimbursement may have a material adverse affect on our business condition and results of
operations. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>If actual market
conditions prove less favorable than those projected by management, additional inventorywrite-downs
<BR>may be required</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Inventories may be written down for
estimated obsolescence based upon assumptions about future demand and market conditions
and could adversely affect our business condition and results of operations. As of
September 30, 2005, inventory is presented net of $240,000 general provision for
technological obsolescence and slow moving items. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>Reduction in connectivity
fees may adversely affect our sales of cellular communication gateways.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our cellular communication gateways,
based on the technology we had purchased from Quasar Communication Systems Ltd. in
September 2004, are used, among other things, to reduce those costs of cellular calls
related to the connectivity between the cellular network and the Public Switched Telephony
Network (&#147;PSTN&#148;), known as connectivity fees. A reduction in such connectivity
fees may decrease the appeal of our cellular communication gateways and adversely affect
our revenues generated by these products. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>We have had a history of
losses and our future levels of sales and ability to achieve profitability are unpredictable.</I></B> </FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have incurred net losses of
approximately $3.6 million for the first nine months of 2005, $2.1 million in 2004, $21
thousand in 2003 and $8.5 million in 2002. Our ability to maintain and improve future
levels of sales and to achieve profitability depends on many factors. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>These factors include: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font></FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
continued demand for our existing products;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to develop and sell new products to meet customer needs;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>management's
ability to control costs and successfully implement our business strategy; and</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>6</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to manufacture and deliver products in a timely manner.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There can be no assurance that we
will experience any growth in sales or achieve profitability in the future or that the
levels of historic sales or profitability experienced during previous years will continue
in the future or that our net losses will not increase in the future. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>We depend on certain key
products for the bulk of our sales and if sales of these products decline, it would have a material adverse effect on us.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We anticipate that our IBM midrange
related products will continue to account for a significant portion of our sales and
profitability. If sales of our IBM midrange products were to decline significantly for any
reason, or the profit margins on such products were to decrease significantly for any
reason (including in response to competitive pressures), our financial results would be
adversely affected. Over the past few years there has been a continuous global decrease in
sales and revenues from the connectivity solutions sector (also known as the legacy family
products). Although our revenues in this sector have decreased as a result, in comparison
to other players in this field, we have fared quite well, but there can be no assurance
that we will continue to do so. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To reduce the risk of such a decline
or decrease due to competitive pressures or technical obsolescence, we are continually
seeking to reduce costs, upgrade and expand the features of our IBM related products,
expand the applications for which the products can be used and increase marketing efforts
to generate new sales. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Although we are developing and
introducing new remote communications products and increasing our marketing efforts, there
can be no assurance that the planned enhancements or the new developments will be
commercially successful, or that we will be able to increase sales of our IBM midrange
products. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>If we are unsuccessful in
developing and introducing new products, we may be unable to expand our business.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The market for some of our products
is characterized by rapidly changing technology and evolving industry standards. The
introduction of products embodying new technology and the emergence of new industry
standards can render existing products obsolete and unmarketable and can exert price
pressure on existing products. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We established our subsidiary Lynk, a
Division of B.O.S. Ltd., which is now known as BOScom, for the purpose of developing,
manufacturing and marketing new products for remote networking connectivity and VOIP.
However, the VOIP market has been unstable and vulnerable over the past years, and
competing in such a market may be a risky endeavor. The VOIP market has suffered from low
image due to availability, reliability and quality problems. As such, there can be no
assurance that we will realize significant revenues from products developed and introduced
by BOScom. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our ability to anticipate changes in
technology and industry standards and successfully develop and introduce new and enhanced
products as well as additional applications for existing products, in each case on a
timely basis, will be critical in our ability to grow and remain competitive. Although
these products are related to, and even incorporate our existing products, there can be no
assurance that we will be able to successfully develop and market any such new products.
If we are unable to develop products that are competitive in technology and price and
responsive to customer needs, for technological or other reasons, our business will be
materially adversely affected. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>We depend on key
personnel and need to be able to retain them and our other employees.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our success depends, to a significant
extent, on the continued active participation of our executive officers, other members of
management and key technical and sales and marketing personnel. In addition, there is
significant competition for employees with technical expertise in our industry. Our
success will depend, in part on: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to retain the employees who have assisted in the development of our products;</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>7</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
 ability to attract and retain  additional  qualified  personnel  to provide
 technological  depth and          support to enhance existing products and develop new
products; and</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to attract and retain highly skilled computer operating, marketing and financial
personnel.</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We cannot make assurances that we
will be successful in attracting, integrating, motivating and retaining key personnel. If
we are unable to retain our key personnel and attract additional qualified personnel as
and when needed, our business may be adversely affected. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>Indemnification of
Directors and Officers</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has agreements with its
directors and senior officers which provide, subject to Israeli law, for the Company to
indemnify these directors and senior officers for (a) monetary liability imposed upon them
in favor of a third party by a judgment, including a settlement or an arbitral award
confirmed by the court, as a result of an act or omission of such person in his capacity
as a director or officer of the Company, and (b) reasonable litigation expenses, including
attorney&#146;s fees, incurred by such a director or officer or imposed on him by a court,
in a proceeding brought against him by or on behalf of the Company or by a third party, or
in a criminal action in which he was acquitted, or in a criminal action which does not
require criminal intent in which he was convicted, in each case relating to acts or
omissions of such person in his capacity as a director or officer of the Company. Such
indemnification may materially adversely affect our financial condition. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We may be unable to
effectively manage our growth and expansion, and as a result, our business results may be adversely affected.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our goal is to grow over the next few
years. The management of our growth, if any, will require the continued expansion of our
operational and financial control systems, as well as a significant increase in our
manufacturing, testing, quality control, delivery and service capabilities. These factors
could place a significant strain on our resources. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our inability to meet our
manufacturing and delivery commitments in a timely manner (as a result of unexpected
increases in orders, for example) could result in losses of sales, our exposure to
contractual penalties, costs or expenses, as well as damage to our reputation in the
marketplace. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our inability to manage growth
effectively could have a material adverse effect on our business, financial condition and
results of operations. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We have limited
experience in making acquisitions.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We may wish to pursue the acquisition
of businesses, products and technologies that are complementary to ours. However, to date,
our management has had limited experience in making acquisitions. In June 1998, we
acquired PacInfo, which was based in Portland, Oregon, and in 2001 PacInfo acquired Dean
Technologies LLC (&#147;Dean Tech&#148;), which was based in Grapevine, Texas. Both
businesses have since ceased operations. In September 2004, we acquired the majority of
the assets of Quasar Communications Systems Ltd. In November 2004 we acquired 63.8% of the
outstanding shares of Odem Electronic Technologies 1992 Ltd. from its existing
shareholders. In September 2005, we acquired an additional 23.9% of Odem&#146;s shares and
in November 2005 we increased our holdings in Odem to 100%. Acquisitions involve a
number of other risks, including the difficulty of assimilating geographically diverse
operations and personnel of the acquired businesses or activities and of maintaining
uniform standards, controls, procedures and policies. There can be no assurance that we
will not encounter these and other problems in connection with any acquisitions we may
undertake. There can be no assurance that we will ultimately be effective in executing
additional acquisitions. Any failure to effectively integrate future acquisitions could
have an adverse effect on our business, operating results or financial condition.  </FONT></P>

<p align=center>
<font size=2>8</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>The measures we take in
order to protect our intellectual property may not be efficient or sufficient.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our success is dependent upon our
proprietary rights and technology. We currently rely on a combination of trade secrets,
copyright and trademark law, together with non-disclosure and invention assignment
agreements, to establish and protect the proprietary rights and technology used in our
products. Much of our proprietary information is not patentable. We generally enter into
confidentiality agreements with our employees, consultants, customers and potential
customers and limit the access to and the distribution of our proprietary information.
Despite these precautions, it may be possible for a third party to copy or otherwise
obtain and use our technology without authorization, or to develop similar technology
independently. We do not believe that our products and proprietary rights infringe upon
the proprietary rights of others. However, there can be no assurance that any other party
will not argue otherwise. The cost of responding and adequately protecting ourselves
against any such assertion may be material, whether or not the assertion is valid.
Further, the laws of certain countries in which we sell our products do not protect our
intellectual property rights to the same extent as do the laws of the United States.
Substantial unauthorized use of our products could have a material adverse effect on our
business. We cannot make assurances that our means of protecting our proprietary rights
will be adequate or that our competitors will not independently develop similar
technology. Additionally, there are risks that arise from the use of intranet networks and
the Internet. Although we utilize firewalls and protection software, we cannot be sure
that our proprietary information is secured against penetration. Such penetration, if
occurs, could have an adverse affect on our business. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We rely on certain key
suppliers for the supply of components in our products.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We purchase certain components and
subassemblies used in our existing products from a single supplier or a limited number of
suppliers. In the event that any of our suppliers or subcontractors becomes unable to
fulfill our requirements in a timely manner, we may experience an interruption in
production until an alternative source of supply can be obtained, although we are of the
opinion that the level of inventory held by us would probably be sufficient to cover such
a period. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>Fluctuations in our
operating results could result in lowered prices.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our sales and profitability may vary
in any given year, and from quarter to quarter. In order to increase sales and enter into
new markets with new products we may find it necessary to decrease prices in order to be
competitive. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We have limited capital
resources and we may encounter difficulties raising capital.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Continued expansion requires additional
resources and especially working capital. We may encounter difficulties raising capital
and securing credit lines. If our efforts to raise capital do not succeed, our efforts to
increase the business and to compete with our competitors may be seriously jeopardized,
thus having a materially adverse effect on our business. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>There can be no assurance
that we will not be classified as a passive foreign investment company (a
&#147;PFIC&#148;).</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based upon its current and projected
income, assets and activities, we do not believe that at this time the Company is a
passive foreign investment company (a &#147;PFIC&#148;) for US federal income tax
purposes, but there can be no assurance that we won&#146;t be classified as such in the
future. Such classification may have grave tax consequences for US shareholders. One
method of avoiding such tax consequences is by making a &#147;qualified electing
fund&#148; election for the first taxable year in which the Company is a PFIC. However,
such an election is conditioned upon our furnishing US shareholders annually with certain
tax information. We do not presently prepare or provide such information, and such
information may not be available to US shareholders if we are subsequently determined to
be a PFIC. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We may be required to pay
stamp taxes on documents executed by us on or after June&nbsp;2003.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Israeli Stamp Tax on Documents
Law, 1961, or the &#147;Stamp Tax Law&#148;, provides that certain documents signed by
Israeli companies are subject to a stamp tax, generally at a rate of between 0.4% and 1%
of the value of the subject matter of the applicable document. As a result of an amendment
to the Stamp Tax Law that came into effect in June&nbsp;2003, the Israeli tax authorities
have commenced enforcement of the provisions of the Stamp Tax Law. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consequently, we may be liable to pay
stamp taxes on some or all of the documents we have signed since June&nbsp;2003, which
could have a material adverse effect on our results of operations. </FONT></P>

<p align=center>
<font size=2>9</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Recently promulgated regulations
provide for a gradual phase-out of the stamp tax by 2008. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We have significant sales
worldwide and could encounter problems if conditions change in the places where we market our products.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have sold and intend to continue
to sell our products in markets through distributors in North America, Europe and Asia. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A number of risks are inherent in
engaging in international transactions, including &#150; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>international
sales and operations being limited or disrupted by longer sales and payment cycles,</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>possible
encountering of problems in collecting receivables,</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>governmental
controls, or export license requirements being imposed,</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>political
and economic instability in foreign countries,</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>trade
restrictions or changes in tariffs being imposed, and</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>laws
and legal issues concerning foreign countries.</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If we should encounter such
difficulties in conducting our international operations, it may adversely affect our
business condition and results of operations. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>As part of a global slow
down in technology markets, technology-focused corporations have suffered and as a result their shares have declined in value.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our Company, like other technology
companies, has been significantly impacted by the current market slowdown in the
technology industry. Lately, the industry has been showing initial signs of recovery,
however, there can be no assurance that the technology market will fully recover or that
our operating results will not continue to suffer as a consequence. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>Inflation and foreign
currency fluctuations significantly impact on our business results.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The vast majority of our sales are
made in US Dollars and most of our expenses are in US Dollars and New Israel Shekels
(&#147;NIS&#148;). The Dollar cost of our operations in Israel is influenced by the extent
to which any increase in the rate of inflation in Israel over the rate of inflation in the
United States is offset by the devaluation of the NIS in relation to the Dollar. Our
Dollar costs in Israel will increase if inflation in Israel exceeds the devaluation of the
NIS against the Dollar or if the timing of such devaluations lags behind inflation rate
increases in Israel. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Risks related to our location in
Israel: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>Political, economic, and
security conditions in Israel affect our operations and may limit our ability to produce and
sell our products or provide our services.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We are incorporated under the laws of
the State of Israel, where we also maintain our headquarters and our principal
manufacturing, research and development facilities. Political, economic, security and
military conditions in Israel directly influence us. We could be adversely affected by any
major hostilities involving Israel, the interruption or curtailment of trade between
Israel and its trading partners or a significant downturn in the economic or financial
condition of Israel. The future of the &#147;peace process&#148; with the Palestinians is
uncertain and has deteriorated due to Palestinian violence. Furthermore, the threat of a
large-scale attack by Palestinians on Israeli civilians and key infrastructure remains a
constant fear. The past four years of renewed terrorist attacks by the Palestinians has
severely affected the Israeli economy in many ways. In addition, several countries still
restrict business with Israel and with companies doing business in Israel. We could be
adversely affected by adverse developments in the &#147;peace process&#148; or by
restrictive laws or policies directed towards Israel or Israeli businesses. </FONT></P>

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

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Generally, all nonexempt male adult
citizens and permanent residents of Israel, including some of the our officers and
employees, are obligated to perform military reserve duty annually, and are subject to
being called to active duty at any time under emergency circumstances. While we have
operated effectively under these requirements since its incorporation, we cannot predict
the full impact of such conditions on us in the future, particularly if emergency
circumstances occur. If many of our employees are called for active duty, our business may
be adversely affected. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Additionally, in recent years Israel
has been going through a period of recession in economic activity, resulting in low growth
rates and growing unemployment. Our operations could be adversely affected if the economic
conditions in Israel continue to deteriorate. Also, due to significant economic reforms
proposed by the Israeli government, there have been several general strikes and work
stoppages in 2003 and 2004, affecting all banks, airports and ports. These strikes have
had an adverse effect on the Israeli economy and on business. Following the passing of
laws to implement economic measures, the Israeli trade unions have threatened further
strikes or work stoppages, and these may have an adverse effect on the Israeli economy and
our business. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Furthermore, Israel is a party to
certain trade agreements with other countries, and material changes to these agreements
could have an adverse affect on our business. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>If the Israeli Government
programs that we benefit from are reduced or terminated, our costs and taxes may increase.</I></B> </FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under the Israeli Law for
Encouragement of Capital Investments, 1959, facilities that meet certain conditions can
apply for &#147;Approved Enterprise&#148; status. This status confers certain benefits
including tax benefits. Our existing facilities have been designated as Approved
Enterprises. If we attain taxable income in Israel, these tax benefits will help reduce
our tax burden. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In addition, in order to maintain our
eligibility for the grants and tax benefits we receive, we must continue to satisfy
certain conditions, including making certain investments in fixed assets and operations
and achieving certain levels of exports. If we fail to satisfy such conditions in the
future, we could be required to refund tax benefits which may have been received with
interest and linkage differences to the Israeli Consumer Price Index. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Israeli Government authorities
have indicated that the government may reduce or eliminate these benefits in the future. A
termination or reduction of certain programs and tax benefits (particularly benefits
available to the Company as a result of the Approved Enterprise status of the
Company&#146;s facilities and programs) or a requirement to refund the tax benefits
already received, would have a material adverse effect on the Company&#146;s business,
operating results and financial condition. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under the Law for the Encouragement
of Industrial Research and Development, 1984 (the &#147;Research Law&#148;), research and
development programs approved by a research committee appointed by the Israeli Government
are eligible for grants in exchange for payment to the Government of royalties from the
sale of products developed in accordance with the Program. Regulations issued under the
Research Law generally provide for the payment of royalties to the Office of the Chief
Scientist equal to 3.5% of sales of products developed as a result of a research project
so funded until 100% of the dollar-linked grant is repaid. Royalties payable with respect
to grants received under programs approved by the OCS after January 1, 1999, are subject
to interest on the U.S. dollar-linked value of the total grants received at the annual
rate of LIBOR applicable to U.S. dollar deposits on the date the grants were received. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Research Law requires that the
manufacture of any product developed as a result of research and development funded by the
Israeli Government take place in Israel. It also provides that know-how from the research
may not be transferred to third parties without the approval of the Israeli Office of the
Chief Scientist in the Ministry of Industry, Trade &amp; Labor. </FONT></P>

<p align=center>
<font size=2>11</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>The anti-takeover effects
of Israeli laws may delay or deter a change of control of the Company.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under the Israeli Companies Law, a
merger is generally required to be approved by the shareholders and Board of Directors of
each of the merging companies. Shareholder approval isn&#146;t required if the company
that will not survive is controlled by the surviving company. Additionally, the law
provides some exceptions to the shareholder approval requirement in the surviving company.
Shares held by a party to the merger and certain of its affiliates are not counted toward
the required approval. If the share capital of the company that will not be the surviving
company is divided into different classes of shares, the approval of each class is also
required. A merger may not be approved if the surviving company will not be able to
satisfy its obligations. At the request of a creditor, a court may block a merger on this
ground. In addition, a merger can be completed only after all approvals have been
submitted to the Israeli Registrar of Companies, provided that 30 days have elapsed since
shareholder approval was received and 50 days have passed from the time that a proposal
for approval of the merger was filed with the Registrar. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Israeli Companies Law provides
that an acquisition of shares in a public company must be made by means of a tender offer,
if as a result of the acquisition, the purchaser would become a holder of 25% or more of
the voting power at general meetings, and no other shareholder owns a 25% stake in the
Company. Similarly, the Israeli Companies Law provides that an acquisition of shares in a
public company must be made by means of a tender offer if, as a result of the acquisition,
the purchaser would become a holder of 45% or more of the voting power at general
meetings, unless someone else already holds 45% of the voting power. An acquisition from a
25% or 45% holder, which turns the purchaser into a 25% or 45% holder respectively, does
not require a tender offer. An exception to the tender offer requirement may also apply
when the additional voting power is obtained by means of a private placement approved by
the general meeting of shareholders. These rules also do not apply if the acquisition is
made by way of a merger. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Israeli Companies Law provides
specific rules and procedures for the acquisition of shares held by minority shareholders,
if the majority shareholder holds more than 90% of the outstanding shares. Israeli tax law
treats specified acquisitions, including a stock-for-stock swap between an Israeli company
and a foreign company, less favorably than does U.S. tax law. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>These laws may have the effect of
delaying or deterring a change in control of the Company, thereby limiting the opportunity
for shareholders to receive a premium for their shares and possible affecting the price
that some investors are willing to pay for the Company&#146;s securities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>All of our directors and
officers are non-U.S. residents and enforceability of civil liabilities against them is uncertain.</I></B> </FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All of our directors and officers
reside outside of the United States. Service of process upon them may be difficult to
effect within the United States. Furthermore, because the majority of our assets are
located in Israel, any judgment obtained in the United States against us or any of our
directors and officers may not be collectible within the United States. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Risks related to our ordinary shares: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>Our share price has been
and may continue to be volatile, which could result in substantial losses for individual shareholders</I></B> </FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The market price of our ordinary
shares has been and may continue to be highly volatile and subject to wide fluctuations.
Since January 2004 through November 2005, the daily closing price of our ordinary shares
has ranged from $1.62 to $4.00 per share. We believe that these fluctuations have been in
response to a number of factors including the following, some of which are beyond our
control: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>actual
or anticipated variations in our quarterly operating results;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>announcements
of technological  innovations or new products or services or new pricing  practices by us
or          our competitors;</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>12</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>increased
market share penetration by our competitors;</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>announcements
 by us or  our  competitors  of  significant  acquisitions,  strategic  partnerships,
 joint          ventures or capital commitments;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>additions
or departures of key personnel; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>sales
of additional ordinary shares.</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In addition, the stock market in
general, and stocks of technology companies in particular, have from time to time
experienced extreme price and volume fluctuations. This volatility is often unrelated or
disproportionate to the operating performance of these companies. These broad market
fluctuations may adversely affect the market price of our ordinary shares, regardless of
our actual operating performance. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>The Company&#146;s shares
may be delisted from the Nasdaq National Market for failure to meet Nasdaq&#146;s
requirements. </I></B></FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In late 2002 and early 2003 the
Company received notice from the Nasdaq Stock Market that its ordinary shares were subject
to delisting from the Nasdaq National Market for failure to meet Nasdaq&#146;s minimum bid
price and shareholders&#146; equity requirements ($10 million) for continued listing on
the National Market. As a result of the hearing requested by the Company and supplemental
information presented by the Company to the Nasdaq Listing Qualifications Panel, the Panel
determined to continue the listing of the Company&#146;s securities on the Nasdaq National
Market pursuant to a detailed exception to the Nasdaq National Market Rules, and the
Company successfully met all the conditions set forth in the exception. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On August 30, 2004, we received
notice from the Nasdaq Stock Market that our ordinary shares are subject to delisting from
the Nasdaq National Market for failure to meet Nasdaq&#146;s minimum market value of
publicly held shares requirement ($5 million) for continued listing on the National
Market. On November 4, 2004 we were notified by Nasdaq that we have regained compliance
with this requirement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On January 25, 2005, we received
notice from the Nasdaq Stock Market that we were not in compliance with the minimum $10
million shareholders&#146; equity requirement for continued listing on the National
Market. Following that notice, on January 28, 2005, we received an additional notice
indicating that based on further review of our financial statements as they appeared in
our filing on Form 6-K dated January 10, 2005, it was determined that the
shareholders&#146; equity was $10,601,000 on a pro forma basis as of September 30, 2004.
Therefore we were in compliance with the stockholders&#146; equity requirement for
continued listing on the National Market and the matter had been closed. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On June 2, 2005, the Company again
received notice from the Nasdaq Stock Market indicating that based on the results for the
period ended March 31, 2005, the shareholders&#146; equity was $9,425,000, and accordingly
not in compliance with the minimum $10,000,000 shareholders&#146; equity requirement for
continued listing on the National Market. The Company was requested to provide by June 17,
2005, its specific plan to achieve and sustain compliance with the listing requirements.
The Company subsequently submitted a proposed plan of compliance to Nasdaq based upon
completing a previously announced private placement offering of its ordinary shares. On
July 11, 2005, the Company was advised by the Nasdaq Staff that contingent upon completion
of the private placement by August 11, 2005, the Staff believed that the Company had
provided a definitive plan evidencing its ability to achieve and sustain compliance with
the listing requirements. The private placement took place in June 2005, and consequently
the Company believes it has regained compliance with Nasdaq&#146;s minimum $10,000,000
shareholders&#146; equity requirement for continued listing on the National Market.
However, the Company has been advised by Nasdaq Staff that the Staff will continue to
monitor its ongoing compliance with the stockholder&#146;s equity requirement and, if at
the time of the Company&#146;s next periodic report, the Company does not evidence
compliance, it may be subject to delisting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There can be no assurance that we
will be able to meet and continue to meet these or other Nasdaq requirements to maintain
our Nasdaq National Market listing, in which case we will have the right to apply for a
transfer of our ordinary shares to the Nasdaq Small Cap Market. </FONT></P>

<p align=center>
<font size=2>13</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<a name=zk104></a>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORWARD-LOOKING
STATEMENTS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This prospectus contains
forward-looking statements that are intended to be, and are hereby identified as, forward
looking statements for the purposes of the safe harbor provisions of the Private
Securities Reform Act of 1995. These statements address, among other things: our strategy;
the anticipated development of our products; our anticipated use of proceeds; our
projected capital expenditures and liquidity; our development of additional revenue
sources; our development and expansion of relationships; the market acceptance of our
products; and our technological advancement. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of various factors,
including all the risks discussed below and elsewhere in this prospectus. You should
therefore not rely on these forward-looking statements, which are applicable only as of
the date hereof. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
urge you to consider that statements which use the terms &#147;believe&#148;, &#147;do not
believe&#148;, &#147;expect&#148;, &#147;plan&#148;, &#147;intend&#148;,
&#147;estimate&#148;, &#147;anticipate&#148;, &#147;projections&#148;,
&#147;forecast&#148; and similar expressions are intended to identify forward-looking
statements. These statements reflect our current views with respect to future events and
are based on assumptions and are subject to risks and uncertainties. Except as required by
applicable law, including the federal securities laws of the United States, we do not
intend to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. We disclaim any obligation to publicly revise any
such statements to reflect any change in expectations or in events, conditions, or
circumstances on which any such statements may be based. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market
data and forecasts used in this prospectus have been obtained from independent industry
sources. We have not independently verified the data obtained from these sources and we
cannot assure you of the accuracy or completeness of the data. Forecasts and other
forward-looking information obtained from these sources are subject to the same
qualifications and additional uncertainties accompanying any estimates of future market
size. </FONT></P>

<a name=zk105></a>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RECENT DEVELOPMENTS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
July 18, 2005 our wholly-owned subsidiary, BOScom Ltd., signed an asset purchase agreement
with Consist Technologies Ltd. and Consist International Inc., for the sale of our
PrintBOS product line, including all related intellectual property rights, costumer and
supplier agreements, distribution channels, goodwill and workstations. BOScom shall also
transfer employees to Consist. In consideration, BOScom shall receive $500,000, of which
$125,000 have been placed is escrow, pending repayment of royalties related to PrintBOS to
the Office of the Chief Scientist. In addition BOScom shall receive in each of the next
three years a contingent payment, equal to 6-10% of the future revenues exceeding $1
million per year, that Consist generates from the PrintBOS activities. The transaction
closed on September 29, 2005. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
September 29, 2005, we purchased an additional 23.9% of the issued and outstanding shares
of Odem Electronic Technologies 1992 Ltd. from Odem&#146;s existing shareholders. The
consideration for Odem&#146;s shares was comprised of cash in the amount of $716,422 and
of 232,603 of our ordinary shares. On November 1, 2005, we acquired the remaining share
capital of Odem in consideration for $554,105, thus increasing our holdings in Odem to
100%. Odem, an Israeli company, is an international solution provider and distributor of
electronics components and advance technologies in the Israeli market. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
additional information on the Odem transaction, see our filing on Form 6-K, filed with the
SEC on September 29, 2005, which is incorporated by reference into this prospectus. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
October 27, 2005 we entered into a definitive agreement with Qualmax Inc., a US VoIP
service and equipment provider, for the sale of the assets of our Communications Division
to Qualmax. The consideration payable to us is approximately 4,150,000 Qualmax shares and
4% royalties from future revenues Qualmax generates from the sold business, up to
$800,000. One quarter of the Qualmax shares to be received by BOS in the transaction,
shall be deposited in escrow and shall be released to BOS at the end of four consecutive
fiscal quarters following the closing of the transaction, contingent upon Qualmax
generating by then certain revenues from the sold business. </FONT></P>

<p align=center>
<font size=2>14</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The closing of the transaction is
subject to certain closing conditions, including the merger of Qualmax into a US publicly
traded company. This merger closed on November 30, 2005.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
additional information on the Qualmax transaction, see our filing on Form 6-K, filed with
the SEC on October 27, 2005, which is incorporated by reference into this prospectus. </FONT></P>

<a name=zk106></a>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>USE OF PROCEEDS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of the proceeds from the sale of the ordinary shares offered under this prospectus are for
the account of the selling shareholders. Accordingly, we will not receive any proceeds
from the sales of these shares other than the exercise price payable to us upon the
exercise of warrants held by the selling shareholders. </FONT></P>

<a name=zk107></a>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SELLING SHAREHOLDERS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This prospectus relates to 2,638,060
ordinary shares that may be offered for sale by the selling shareholders, as follows: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
total of 953,698 ordinary shares were issued to the selling shareholders in a private
placement in June 2005. The ordinary shares were issued at a price per share of $2.30. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 572,219 ordinary shares are issuable upon the exercise of warrants, which were issued
by BOS to the selling shareholders in the abovementioned private placement. The warrants
are exercisable for three years from their date of issuance. The exercise price is $2.50
per ordinary share during for the first year from their issue date, and increasing to
$2.75 per ordinary share and $3.03 per ordinary share, on the first and second
anniversaries of the issue date, respectively. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 2-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
warrants may be exercised in whole or in part, and payment of the exercise price may be
made either in cash or in a &#147;cashless&#148; exercise (or in a combination of both
methods). The warrant exercise price is also subject to proportional adjustment in the
event of combinations, subdivisions of the ordinary shares or if dividend is paid on the
ordinary shares in ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 2-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
our registration rights agreement with the selling shareholders, a delay in the
effectiveness of the registration of our ordinary shares beyond a certain date subjects
us to payment to the selling shareholders of liquidated damages. The liquidated damages
are equal to 1.0% of the value of the shares subject to registration, less any shares
that can then be freely sold by the selling shareholders pursuant to any available
exemption. The abovementioned value shall be determined on the basis of the average
closing price of the ordinary shares on the market. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 2-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Selling Shareholders include Catalyst Fund L.P., our biggest shareholder. In March 2003,
we purchased from Catalyst most of the shares it held in Surf Communications Solutions
Ltd., in consideration of $1,755,000 by the issuance of our ordinary shares, and as a
result Catalyst held 16.6% of our outstanding shares, after the issuance. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 625,000 ordinary shares are issuable upon the conversion of a convertible note due
September 29, 2008 and upon the exercise of warrants, both of which were issued by BOS to
Laurus Master Fund in a private placement transaction on September 29, 2005, and shares
that are to be issued in lieu of cash interest payments on the convertible note solely
pursuant to the mandatory interest conversion feature of such note. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
convertible note has an aggregate principal amount of $1.5 million and a conversion price
of $3.08 per share. The principal amount of the note is repayable in monthly installments
commencing as of January 1, 2006, in the initial amount of $15,000 eventually increasing
to $55,200. The interest on the note is payable in monthly installments, together with
the principal monthly repayment. The principal and the interest may be paid in cash or,
under certain conditions described below, in ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>15</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 2-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
note conversion price is subject to proportional adjustment in the event of stock splits,
combinations, subdivisions of the ordinary shares or if dividend is paid on the ordinary
shares in ordinary shares. In addition, if BOS issues stock in certain types of
transactions at a price lower than the initial conversion price, then the conversion
price will be adjusted to a lower price based on a weighted average formula. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 2-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
convertible note bears interest at a fluctuating interest rate equal at all times to the
prime rate plus 1.5%, subject to reduction in any particular month, if the average
closing price of our ordinary shares for any five consecutive trading days during the
fifteen days immediately prior to the last business day of the previous month, exceeded
the conversion price by at least 25%. The interest reduction rate is 100 basis points
(1.0%) for each incremental twenty five percent increase, or 200 basis points (2.0%) for
such increase, if the ordinary shares shall have already been, at that time, registered
pursuant to an effective registration statement. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 2-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Each
month, the note holder may elect to convert all or a portion of the convertible note
monthly payments (comprised of principal amortization and interest) into ordinary shares.
If the market price of the ordinary shares at the time of payment is at least 10% greater
than the conversion price per ordinary share, the monthly payment shall be made in the
form of ordinary shares, and the ordinary shares issuable upon such mandatory interest
conversion are registered hereunder for sale by Laurus. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 2-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
our registration rights agreement with Laurus, a delay in the effectiveness of the
registration of our ordinary shares beyond a certain date subjects us to payment to
Laurus of liquidated damages equal to 1.0% of the outstanding principal amount of the
note for each thirty day period of delay (prorated for partial periods). </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
note is secured by a first priority floating charge on all of our company&#146;s assets
and by a first priority fixed charge on all of our company&#146;s right, title and
interest in our wholly-owned subsidiaries, BOScom Ltd. and Quasar Telecom (2004) Ltd. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
warrants are exercisable at $4.04 per share. The warrants may be exercised in whole or in
part, and payment of the exercise price may be made either in cash or in a &#147;cashless&#148; exercise
(or in a combination of both methods). The warrant exercise price is also subject to
proportional adjustment in the event of combinations, subdivisions of the ordinary shares
or if dividend is paid on the ordinary shares in ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 2-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Conversion
of the note and exercise of the warrants are limited as follows: at no time shall the
note be convertible (or the warrants be exercised) into that number of ordinary shares
which, when added to the number of ordinary shares otherwise beneficially owned by the
note (or warrants) holder, exceed (i) 4.99% of our outstanding ordinary shares, or (ii)
25% of the aggregate dollar trading volume of the ordinary shares for the 30-day trading
period immediately preceding the conversion or exercise notice. These limitations expire,
however, in an event of default under the note or with 75 days prior notice by the
holder, provided that in no time shall the holder&#146;s beneficial ownership of ordinary
shares exceed 19.9% of our ordinary shares. In addition, the number of ordinary shares
issuable under the note and/or the warrants shall not exceed an aggregate of 625,000
ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 130,000 ordinary shares are issuable upon the exercise of a warrant which was issued
by BOS to Laurus Master Fund in a private placement transaction on June 10, 2004. The
exercise price of the warrant is $4.04 per share, which is subject to adjustment in
certain circumstances. Exercise of the warrant is limited as follows: at no time shall
the warrant be exercised into that number of ordinary shares which, when added to the
number of ordinary shares otherwise beneficially owned by holder, exceed (i) 4.99% of our
outstanding ordinary shares, or (ii) 25% of the aggregate dollar trading volume of the
ordinary shares for the 30-day trading period immediately preceding the exercise notice.
These limitations expire, however, with 75 days prior notice by the holder, provided that
in no time shall the holder&#146;s beneficial ownership of ordinary shares exceed 19.9%
of our ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>16</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
total of 357,143 ordinary shares were issued to certain selling shareholders in a private
placement that was completed on December 14, 2003. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The table below sets forth certain
information concerning the number of ordinary shares and warrants owned by the selling
shareholders as of September 30, 2005, and the number of ordinary shares and warrants that
may be offered from time to time by the selling shareholders under this prospectus.
Because the selling shareholders may offer all or some portion of the ordinary, BOS has
assumed for the purposes of the table below that the selling shareholders will sell all of
the ordinary shares they have acquired from us. </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH ><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares Owned or Underlying<BR>Convertible Securities<BR>
Prior to Offering</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares Being<BR>
Offered</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares Beneficially Owned<BR>
After the Offering</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percent (1)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percent</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=32% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Catalyst Fund L.P.</B>(2) </FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3 Daniel Frish St</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel Aviv 64731,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Israel</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,499,275&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.06%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>552,000&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>947,275&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.94%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Brada Investments</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Limited </B>(3) </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>57/63 Line Wall Road</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PO Box 199</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GIBRALTAR</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>173,912&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.61%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>173,912&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Many Weiss</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o Manro-Haydan</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1 Knightsbridge</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SW1X 7LX</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>69,565&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.05%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>69,565&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>H J M and Hilda Levy</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>(as trustees of the</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Herne Hill</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Settlement)</B>(3) </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>57/63 Line Wall Road</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PO Box 199</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GIBRALTAR</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>69,565&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.05%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>69,565&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Daniel Tannen</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>36 Brampton Grove,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London NW4, England</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.13%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Sylvie Tannen</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>36 Brampton Grove,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London NW4, England</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.13%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
</TABLE>
<BR>


<p align=center>
<font size=2>17</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=30% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Emmanuel Tannen</B></FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
     <TD WIDTH=2%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>36 Brampton Grove,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London NW4, England</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.13%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Yuri Tannen</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>36 Brampton Grove,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London NW4, England</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,695 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.13%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,695 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Arizona Maritime</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Inc.</B> (4)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o Lyras Financial</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Services Ltd.,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24-26 Baltic St.,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London, EC1Y 0RP,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>England</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>139,130 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.09%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>139,130 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Egean Financiera</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Corporation </B>(5)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o Halkdon Shipping</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Corp.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>85 Akti Mlaouli &amp; 2</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Flessa St., 185 38</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Piraeus, Greece</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>139,130 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.09%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>139,130 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Meitav Gemel Ltd.</B> (6)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4 Berkowitz St.,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>P.O. Box 18096</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel Aviv 61180</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Israel</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>173,920 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.61%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>173,920 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Vamos Inc.</B> (7)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o GISE</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>37 G. Sisini Street</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Athens 115 28</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Greece</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>263,198 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.96%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>263,198 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Hillswood Holdings</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ltd.</B> (8)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PO Box 3136, Akara</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Building, Suite 8,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Wickams Cay 1, Road</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Town, Tortola BVI</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>297,719 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.52%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>267,857 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29,862 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.45%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Laurus Master Fund,</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ltd.</B> (9)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>825 Third Avenue,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14th Floor</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>New York, NY 10022</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>755,000</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10)</FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.28%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>755,000 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    Calculated
based upon 6,589,385 ordinary shares outstanding as of September 30,           2005.
&nbsp; &nbsp;  </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>18</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;Catalyst
Fund&#148; refers collectively to           Catalyst Fund L.P., Catalyst Fund II L.P. and
Catalyst Fund III, L.P., all of which are limited partnerships organized and existing
under the laws of the State of Israel, and which share the same general partner, Catalyst
Investments L.P.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Brada
Investments Limited and Herne Hill Settlement are controlled by Mr. H J M           Levy. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Arizona
Maritime Inc. is controlled by Mrs. Maria Hadjilias. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Egean
Financiera Corporation is beneficially owned by Ms. Olympia Kedros. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(6)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Meitav
Gemel Ltd. is controlled by Messrs Zvi Stepak and Shlomo Simanovski. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(7)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Vamos
Inc.<B></B>is controlled by Mr. Minos A. Zombanakis, who may be deemed to           have
sole dispositive power over the shares owned by Vamos Inc. The ordinary           shares
being offered by Vamos include 89,286 ordinary shares purchased in a           private
placement completed in December 2003 and 108,700 ordinary shares and           65,200
ordinary shares that are issuable upon exercise of warrants purchased in           a
private placement in June 2005. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(8)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Hillswood
Holdings Ltd. is indirectly owned by a trust whose principal           beneficiary is Mr.
Robert Haggiag. By virtue of such relationship, Mr. Haggiag           may be deemed to
have sole dispositive power over the shares owned by Hillswood           Holdings Ltd. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(9)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Laurus
Capital Management, LLC is the investment manager of Laurus Master Fund           Ltd.,
and in accordance with Rule 13d-3 under the Securities Exchange Act of           1934, as
amended, may be deemed a control person of the ordinary shares owned by           Laurus
Master Fund Ltd. Messrs. David Grin and Eugene Grin are the managing           members of
Laurus Capital Management, LLC and as such share sole voting and           investment
control over the ordinary shares owned by Laurus Master Fund Ltd.,           and each
disclaims beneficial ownership of such shares. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(10)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Number
of shares represents the maximum number of shares receivable by Laurus           Master
Fund, Ltd. upon the full conversion of the note and exercise of the           warrants
into ordinary shares. However, the terms of the note and the warrants           expressly
limit the number of shares into which Laurus can convert or exercise,           and
beneficially own at any one time pursuant to such conversion or exercises           (as
defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended) to
          4.99% of the total outstanding ordinary shares. These limitations expire,
          however, with 75 days prior notice by Laurus, provided that in no time shall
          Laurus&#146; beneficial ownership of ordinary shares exceed 19.9% of our
          ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>

<a name=zk108></a>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>DESCRIPTION OF
ORDINARY SHARES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following is a summary
description of our Ordinary Shares under our Articles of Association. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Dividend and Liquidation Rights.
</I> All holders of paid-up Ordinary Shares of the Company have an equal right to
participate in a distribution of (i) dividends, whether by cash or by bonus shares; (ii)
Company assets; and (iii) the Company&#146;s surplus assets upon winding up, all pro rata
to the nominal value of the shares held by them. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors may issue shares and other securities, which are convertible or
exercisable into shares, up to the limit of the Company&#146;s authorized share capital. </FONT></P>

<p align=center>
<font size=2>19</font></p>
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<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s Board of Directors is the organ authorized to decide upon the distribution
of dividends or bonus shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Voting, Shareholders&#146;
Meetings, Notices and Resolutions. </I> Holders of paid-up Ordinary Shares have one vote
for each share held on all matters submitted to a vote of shareholders. Such voting rights
may be affected in the future by the grant of any special voting rights to the holders of
a class of shares with preferential rights. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
quorum required for a general meeting of shareholders (whether annual or special) consists
of at least two shareholders present in person or by proxy/voting instrument and holding,
or representing, at least 33 1/3% of the voting rights of the issued share capital. A meeting
adjourned for lack of quorum shall be postponed by one week, to the same day, time and
place, or to a later time if stated in the invitation to the meeting or in the notice of
the meeting. The quorum for the commencement of the adjourned meeting shall be any number
of participants. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
otherwise determined by the Israeli Companies Law 1999 or the Company&#146;s Articles of
Association, a resolution requires approval by the holders of a majority of the shares
represented at the meeting, in person or by proxy, and voting thereon. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Companies Law 1999 requires that certain transactions, actions and arrangements be
approved by shareholders, including (i) arrangements with a director as to the terms of
his office and compensation and arrangements for insurance, exemption and indemnity of
directors; (ii) certain Extraordinary Transactions (as defined in the Companies Law) of
the Company with its controlling shareholders or any Extraordinary Transaction in which a
controlling shareholder has a personal interest; (iii) certain private placements; and
(iv) any action or Extraordinary Transaction in which the majority of the members of the
Board of Directors have a personal interest. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
shareholder of record is entitled to receive at least a 21 day prior notice of
shareholders&#146; meetings. 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 meeting. For purposes of determining the shareholders entitled to
notice and to vote, the Board of Directors may fix a record date subject to the provisions
of the law. Currently, Israeli law provides that the record date not be any earlier than
40 days prior to the meeting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Transfer of Shares. </I> Fully
paid Ordinary Shares may be transferred freely. The transfer of Ordinary Shares not fully
paid up requires the approval of the Board of Directors. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Modification of Class Rights. </I>
Subject to the provisions of any law, the rights attached to any class (unless otherwise
provided by the terms of issue of such class), such as voting, rights to dividends and the
like, may be altered after a resolution is passed by the Company, with the approval of a
resolution passed by a majority of the voting power present by person or proxy and voting
hereon at a general meeting of the holders of the shares of such class, or the written
agreement of all the class holders. The rights vested in the holders of shares of a
particular class that were issued with special rights shall not be deemed to have been
altered by the creation or issue of further shares ranking equally with them, unless
otherwise provided in such shares&#146; issue terms. </FONT></P>

<p align=center>
<font size=2>20</font></p>
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<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Election of Directors</I>. The
Company&#146;s directors are elected by the shareholders at a shareholders&#146; meeting.
The Ordinary Shares do not have cumulative voting rights in the election of directors. The
holders of Ordinary Shares conferring more than 50% of the voting power present by person
or by proxy at the shareholders&#146; meeting, have the power to elect the directors. The
directors elected shall hold office until the next annual meeting, or sooner if they cease
to hold office pursuant to the provisions of the Company&#146;s Articles. In addition, the
Board of Directors may appoint a director (to fill a vacancy or otherwise) between
shareholder meetings, and such appointment shall be valid until the next annual meeting or
until such appointee ceases to hold office pursuant to the provisions of the
Company&#146;s Articles. In compliance with the Companies Law, the Company has two
external directors. The external directors are also appointed by the shareholders and
their term of office is three years. </FONT></P>

<a name=zk109></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PLAN OF DISTRIBUTION </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The selling shareholders and any of
their pledgees, donees, assignees, transferees, and successors in interest, may sell any
or all of their securities from time to time on any stock exchange or automated
interdealer quotation system on which the securities are listed, in the over-the-counter
market, in privately negotiated transactions or otherwise, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to prevailing
market prices or at prices otherwise negotiated. The selling shareholders may sell the
securities by one or more of the following methods, without limitation: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>block
trades in which the broker or dealer so engaged will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to facilitate the
transaction; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>purchases
 by a broker or dealer as  principal  and  resale by the  broker or dealer  for its own
 account          pursuant to this prospectus;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
exchange  distribution  in accordance  with the rules of any stock exchange on which the
securities are          listed;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchases,
which may include long sales or short sales effected after the effective date of the
prospectus of which this registration statement is part; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>privately
negotiated transactions;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>"at
the market" or through market makers or into an existing market for the shares;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>through
the writing or settlement  of options or other hedging  transactions  on the  securities,
 whether          through an options exchange or otherwise;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>through
 the  distribution  of the  securities  by any selling  shareholder  to its  partners,
 members or          shareholders;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>one
or more underwritten offerings on a firm commitment or best efforts basis;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any
combination of any of these methods of sale; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any
other method permitted pursuant to applicable law.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A selling shareholder may also
transfer the securities by gift. We do not know of any arrangements by any of the selling
shareholders for the sale of any of the securities. </FONT></P>

<p align=center>
<font size=2>21</font></p>
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<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A selling shareholder may engage
brokers and dealers, and any brokers or dealers may arrange for other brokers or dealers
to participate in effecting sales of the securities. These brokers, dealers or
underwriters may act as principals, or as an agent of the selling shareholder.
Broker-dealers may agree with the selling shareholder to sell a specified number of the
securities at a stipulated price per security. If the broker-dealer is unable to sell
securities acting as agent for the selling shareholder, it may purchase as principal any
unsold securities at the stipulated price. Broker-dealers who acquire securities as
principals may thereafter resell the securities from time to time in transactions in any
stock exchange or automated interdealer quotation system on which the securities are then
listed, at prices and on terms then prevailing at the time of sale, at prices related to
the then-current market price or in negotiated transactions. Broker-dealers may use block
transactions and sales to and through broker-dealers, including transactions of the nature
described above. A selling shareholder may also sell the securities in accordance with
Rule 144 under the Securities Act, rather than pursuant to this prospectus, regardless of
whether the securities are covered by this prospectus. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>From time to time, a selling
shareholder may pledge, hypothecate or grant a security interest in some or all of the
securities owned by it. The pledgees, secured parties or persons to whom the securities
have been hypothecated will, upon foreclosure in the event of default, be deemed to be
selling shareholders. The number of the selling shareholder&#146;s securities offered
under this prospectus will decrease as and when it takes such actions. The plan of
distribution for a selling shareholder&#146;s securities will otherwise remain unchanged. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To the extent required under the
Securities Act, the aggregate amount of the selling shareholder&#146;s securities being
offered and the terms of the offering, the names of any agents, brokers, dealers or
underwriters and any applicable commission with respect to a particular offer will be set
forth in an accompanying prospectus supplement. Any underwriters, dealers, brokers or
agents participating in the distribution of the securities may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from the selling
shareholder and/or purchasers of selling shareholders&#146; securities, for whom they may
act (which compensation as to a particular broker-dealer might be in excess of customary
commissions). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The selling shareholder and any
underwriters, brokers, dealers or agents that participate in the distribution of the
securities may be deemed to be &#147;underwriters&#148; within the meaning of the
Securities Act, and any discounts, concessions, commissions or fees received by them and
any profit on the resale of the securities sold by them may be deemed to be underwriting
discounts and commissions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A selling shareholder may enter into
hedging transactions with broker-dealers and the broker-dealers may engage in short sales
of the securities in the course of hedging the positions they assume with that selling
shareholder, including, without limitation, in connection with distributions of the
securities by those broker-dealers. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The anti-manipulation provisions of
Regulation M under the Exchange Act will apply to purchases and sales of ordinary shares
by the selling shareholders. Under Regulation M, the selling shareholders or their agents
may not bid for, purchase, or attempt to induce any person to bid for or purchase our
ordinary shares while such selling shareholders are distributing ordinary shares covered
by this prospectus. The selling shareholders are not permitted to cover short sales by
purchasing ordinary shares while the distribution is taking place. Furthermore, Regulation
M provides for restrictions on market-making activities by persons engaged in the
distribution of the ordinary shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A selling shareholder may enter into
option or other transactions with broker-dealers that involve the delivery of the
securities offered hereby to the broker-dealers, who may then resell or otherwise transfer
those securities. A selling shareholder may also loan or pledge the securities offered
hereby to a broker-dealer and the broker-dealer may sell the securities offered hereby so
loaned or upon a default may sell or otherwise transfer the pledged securities offered
hereby. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have agreed to indemnify in
certain circumstances the selling shareholders of the securities covered by the
registration statement, against certain liabilities, including liabilities under the
Securities Act. The selling shareholders have agreed to indemnify us in certain
circumstances against certain liabilities, including liabilities under the Securities Act. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The securities offered hereby were
originally issued to the selling shareholders pursuant to an exemption from the
registration requirements of the Securities Act. </FONT></P>

<p align=center>
<font size=2>22</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have agreed to pay certain fees
and expenses in connection with this offering, not including any selling commissions. We
will not receive any proceeds from sales of any securities by the selling shareholder. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We cannot assure you that the selling
shareholder will sell all or any of the securities offered for sale under this prospectus. </FONT></P>

<a name=zk110></a>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>VALIDITY OF SECURITIES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
validity of the ordinary shares, including the ordinary shares issuable upon conversion of
the note and the exercise of the warrants, will be passed upon for us by Amit, Pollak,
Matalon &amp; Co., our Israeli counsel. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXPERTS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
consolidated financial statements, included in our Annual Report on Form 20-F for the year
ended December 31, 2004, have been audited by Kost Forer Gabbay &amp; Kasierer,
independent registered public accounting firm and a member of Ernst &amp; Young Global as
set forth in their report thereon included therein and incorporated herein by reference.
Such consolidated statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in auditing and accounting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
consolidated financial statements of Odem Electronic Technologies 1992 Ltd., included
herein have been audited by Kesselman &amp; Kesselman, independent registered public
accounting firm and a member of PricewaterhouseCoopers, as set forth in their report
thereon included herein. Such consolidated statements are included herein in reliance upon
such report given on the authority of such firm as experts in auditing and accounting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
consolidated financial statements of Surf Communication Solutions Ltd., included in our
Annual Report for the year ended December 31, 2004, have been audited by Kost Forer Gabbay
&amp; Kasierer, independent registered public accounting firm and a member of Ernst &amp;
Young Global as set forth in their report thereon included therein and incorporated herein
by reference. Such consolidated statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in auditing and
accounting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
financial statements of Surf Communication Solutions, Inc. and of Surf Communication
Solutions BV. have been audited by Walter Fey, CPA and by Mazars Paardekooper Hoffman,
respectively. The reports of these independent auditors are included in our Annual Report
for the year ended December 31, 2004, which is incorporated by reference herein. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The value attributed to our holdings
in Surf Communication Systems Ltd., was supported by an external valuation prepared by
Variance Economic Consulting Ltd. </FONT></P>

<a name=zk112></a>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>WHERE YOU CAN FIND
MORE INFORMATION </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have filed with the SEC a registration statement on Form F-3 under the Securities Act,
with respect to the securities offered by this prospectus. However, as is permitted by the
rules and regulations of the SEC, this prospectus, which is part of our registration
statement on Form F-3, omits certain non-material information, exhibits, schedules and
undertakings set forth in the registration statement. For further information about us,
and the securities offered by this prospectus, please refer to the registration statement. </FONT></P>

<p align=center>
<font size=2>23</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, that are applicable to a foreign private issuer. In
accordance with the Exchange Act, we file reports, including annual reports on Form 20-F
by June 30 of each year. We also furnish to the SEC under cover of Form 6-K material
information required to be made public in Israel, filed with and made public by any stock
exchange or distributed by us to our shareholders. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
registration statement on Form F-3 of which this prospectus forms a part, including the
exhibits and schedules thereto, and reports and other information filed by us with the SEC
may be inspected without charge and copied at prescribed rates at the SEC&#146;s Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of this material
are also available by mail from the Public Reference Section of the SEC, at 450 Fifth
Street, N.W., Washington D.C. 20549, at prescribed rates. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers, such as us, that file
electronically with the SEC (http://www.sec.gov). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing
the furnishing and content of proxy statements to shareholders and our officers, directors
and principal shareholders are exempt from the &#147;short-swing profits&#148; reporting
and liability provisions contained in Section 16 of the Exchange Act and related Exchange
Act rules. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
SEC allows us to &#147;incorporate by reference&#148; the information we file with or
submit to it, which means that we can disclose important information to you by referring
to those documents. The information incorporated by reference is considered to be part of
this prospectus, and later information filed with or submitted to the SEC will update and
supersede this information. We incorporate by reference into this prospectus the documents
listed below: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our
annual report on Form 20-F for the fiscal year ended December 31, 2004,           filed
with the SEC on June 27, 2005 (SEC File No. 001-14184); </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
description of our ordinary shares contained in our registration statement           on
Form 8-A filed with the SEC on April 1, 1996. The prospectus includes an
          updated description of our ordinary shares, reflecting changes due to
amendments           to the Articles of Association adopted by our shareholders, at the
Annual           Meetings held on March 13, 2002 and on August 5, 2004; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our
current reports on Form 6-K filed with the SEC on January 10, 2004 (only           items
A(iii) and D), on July 5, 2005, on July 14, 2005, on July 18, 2005, on           July 25,
2005, on August 23, 2005, on September 29, 2005, on October 27, 2005,           and on
November 29, 2005. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, all subsequent annual reports on Form 20-F filed prior to the termination of
this offering and any reports on Form 6-K subsequently submitted to the SEC or portions
thereof that we specifically identify in such forms as being incorporated by reference
into the registration statement of which this prospectus forms a part, shall be considered
to be incorporated into this prospectus by reference and shall be considered a part of
this prospectus from the date of filing or submission of such documents. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
you read the above documents, you may find inconsistencies in information from one
document to another. If you find inconsistencies between the documents and this
prospectus, you should rely on the statements made in the most recent document. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
will deliver to each person (including any beneficial owner) to whom this prospectus has
been delivered a copy of any or all of the information that has been incorporated by
reference into this prospectus but not delivered with this prospectus. We will provide
this information upon written or oral request, and at no cost to the requester. Requests
should be directed to: </FONT></P>

<p align=center>
<font size=2>24</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>



<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">

     <TH WIDTH="5%"> </TH>
     <TH WIDTH="10%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH WIDTH="85%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">B.O.S. Better Online Solutions Ltd.</FONT></TD>
</TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Beit Rabin, BOS Road</FONT></TD>
</TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Teradyon Industrial Park,</FONT></TD>
</TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Misgav 20179, Israel</FONT></TD>
</TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Tel.:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(+972) 4-990-7555</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fax:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(+972) 4-999-0334</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Attn.:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Nehemia Kaufman, CFO</FONT></TD></TR>
</TABLE>
<BR>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ENFORCEABILITY OF
CIVIL LIABILITIES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have been informed by our legal counsel in Israel, Amit, Pollak, Matalon &amp; Co., that
there is doubt concerning the enforceability of civil liabilities under the Securities Act
and the Exchange Act in original actions instituted in Israel. However, subject to
specified time limitations, Israeli courts may enforce a United States final executory
judgment in a civil matter, including a monetary or compensatory judgment in a non-civil
matter, obtained after due process before a court of competent jurisdiction according to
the laws of the state in which the judgment is given and the rules of private
international law currently prevailing in Israel. The rules of private international law
currently prevailing in Israel do not prohibit the enforcement of a judgment by Israeli
courts provided that: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
judgment is enforceable in the state in which it was given;</FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>adequate
 service of process has been effected and the defendant has had a reasonable  opportunity
 to                 present his arguments and evidence;</FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
judgment and the enforcement of the judgment are not contrary to the law, public policy,
 security                 or sovereignty of the State of Israel;</FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
 judgment was not  obtained by fraud and does not  conflict  with any other valid
 judgment in the                 same matter between the same parties; and</FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
action between the same parties in the same matter is not pending in any Israeli court at
the time the lawsuit is instituted in the foreign court. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have appointed Corporation Service Company<B> </B>as our agent to receive service of
process in any action against us in any competent court of the United States arising out
of this offering or any purchase or sale of securities in connection with this offering. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
a foreign judgment is enforced by an Israeli court, it generally will be payable in
Israeli currency, which can then be converted into non-Israeli currency and transferred
out of Israel. The usual practice in an action before an Israeli court to recover an
amount in a non-Israeli currency is for the Israeli court to issue a judgment for the
equivalent amount in Israeli currency at the rate of exchange in force on the date of the
judgment, but the judgment debtor may make payment in foreign currency. Pending
collection, the amount of the judgment of an Israeli court stated in Israeli currency
ordinarily will be linked to the Israeli consumer price index plus interest at an annual
statutory rate set by Israeli regulations prevailing at the time. Judgment creditors must
bear the risk of unfavorable exchange rates. </FONT></P>

<p align=center>
<font size=2>25</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOS BETTER ONLINE
SOLUTIONS LTD. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up to 2,638,060 Ordinary
Shares </FONT></H1>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>PROSPECTUS</B> </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD WIDTH="100%"><HR SIZE="1" NOSHADE WIDTH="100%" ALIGN="CENTER"></TD></TR>
</TABLE>
<BR>

<p align=center>
<font size=2>26</font></p>
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<page>




<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II<BR>INFORMATION NOT REQUIRED
IN PROSPECTUS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 8.
INDEMNIFICATION OF DIRECTORS AND OFFICERS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consistent
with the provisions of the Israeli Companies Law, 1999 (the &#147;Companies Law&#148;),
the amended Articles of Association of the Registrant (the &#147;Articles&#148;) include
provisions permitting the Registrant to procure insurance coverage for its &#147;office
holders&#148;, exempt them from certain liabilities and indemnify them, to the maximum
extent permitted by law. An &#147;office holder&#148; is defined in the Companies Law and
the Articles as a director, managing director, chief business manager, executive vice
president, vice president, other manager reporting directly to the managing director and
any other person assuming the responsibilities of any of the foregoing positions without
regard to such person&#146;s title. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INSURANCE </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Companies Law, a company may obtain insurance for any of its office holders for: (i) a
breach of his duty of care to the company or to another person; (ii) a breach of his duty
of loyalty to the company provided that the office holder acted in good faith and had
reasonable cause to assume that his act would not prejudice the company&#146;s interests;
or (iii) a financial liability imposed upon him in favor of another person concerning an
act preformed by him in his capacity as an office holder. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have obtained directors&#146; and officers&#146; liability insurance covering our officers
and directors and those of our subsidiaries. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INDEMNIFICATION </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Companies Law provides that a company may indemnify an officer holder against: (i) a
financial liability imposed on him in favor of another person by any judgment concerning
an act preformed in his capacity as an office holder; (ii) reasonable litigation expenses,
including attorneys&#146; fees, expended by the office holder or charged to him by a court
relating to an act preformed in his capacity as an office holder in connection with: (a)
proceedings the company institutes against him or instituted on its behalf or by another
person; (b) a criminal charge from which he was acquitted; (c) a criminal charge in which
he was convicted for a criminal offence that does not require proof of criminal intent;
and (d) an investigation or a proceeding instituted against him by an authority competent
to administrate such an investigation or proceeding that ended without the filing of an
indictment against the office holder and, either without any financial obligation imposed
on the office holder in lieu of criminal proceedings; or with financial obligation imposed
on him in lieu of criminal proceedings, in a crime which does not require proof of
criminal intent. The Articles of the Registrant authorize the Registrant to indemnify its
office holders to the fullest extent permitted under the law, except for indemnification
under subsection (d) above, which is a recent amendment to the Companies Law with respect
to which Registrant intends to update its Articles. The Companies Law also authorizes a
company to undertake in advance to indemnify an office holder with respect to events
specified above, provided that, with respect to indemnification under sub-section (i)
above, the undertaking: (a) is limited to events which the board of directors determines
can be anticipated, based on the activity of the Company at the time the undertaking is
given; (b) is limited in amount or criteria determined by the board of directors to be
reasonable for the circumstances; and (c) specifies the abovementioned events, amounts or
criteria. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have entered into indemnification
agreements with directors and some officers providing for indemnification under certain
circumstances for acts and omissions which may not be covered (or not be covered in full)
by any directors&#146; and officers&#146; liability insurance. Such indemnification
agreement appears in our Current Report on Form 6-K as filed with the Securities and
Exchange Commission on January 17, 2003. </FONT></P>

<p align=center>
<font size=2>27</font></p>
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<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EXEMPTION </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under the Companies Law, an Israeli
company may not exempt an office holder from liability for a breach of his duty of
loyalty, but may exempt in advance an office holder from his liability to the company, in
whole or in part, for a breach of his duty of care, provided that in no event shall the
office holder be exempt from any liability for damages caused as a result of a breach of
his duty of care to the company in the event of a &#147;distribution&#148; (as defined in
the Companies Law). The Articles authorize the Registrant to exempt any office holder from
liability to the Registrant to the extent permitted by law. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Both the Companies Law and the
Articles provide that the Registrant may not exempt or indemnify an office holder nor
enter into an insurance contract which would provide coverage for liability incurred as a
result of any of the following: (a) a breach by the office holder of his duty of loyalty
(however, the Registrant may insure against such breach if the office holder acted in good
faith and had a reasonable basis to assume that the act would not harm the Registrant);
(b) a breach by the office holder of his duty of care if the breach was done intentionally
or recklessly, unless made in negligence only; (c) any act of omission done with the
intent to derive an illegal personal benefit; or (d) any fine or monetary penalty levied
against the office holder. </FONT></P>

<p align=center>
<font size=2>28</font></p>
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<page>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 9. EXHIBITS </FONT></H1>


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<TR VALIGN=TOP>
<TD WIDTH="10%" ALIGN="CENTER"> <FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Exhibit No.</B> </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE> </TD>
<TD WIDTH="90%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Description</B> </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE> </TD>
</TR>
</TABLE>

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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.1*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Articles
of Association </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.1**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Form
of] Ordinary Shares Purchase Warrant (June 2005 private placement). </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Secured
Convertible Term Note (September 2005 private placement). </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.3*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ordinary
Shares Purchase Warrant (September 2005 private placement). </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2***  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form
of share certificate. </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.1*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Opinion
of Amit,  Pollak,  Matalon &amp; Co.  Israeli  counsel for B.O.S Better  Online  Solutions
                        Ltd., as to the validity of the ordinary shares. </FONT></TD>
</TR>
</TABLE>


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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.1*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Amit, Pollak, Matalon &amp; Co. (included in Exhibit 5.1). </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.2*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Kost Forer Gabbay &amp; Kasierer, a Member Firm of Ernst &amp; Young Global. </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.3*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Kesselman &amp; Kesselman, a member of PricewaterhouseCoopers International Limited. </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.4*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Walter Fey, CPA </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.5*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Mazars Paardekooper Hoffman </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.6*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Variance Economic Consulting Ltd. </FONT></TD>
</TR>
</TABLE>


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<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24.1*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Power
of Attorney (included on signature page). </FONT></TD>
</TR>
</TABLE>
<BR>



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<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Filed
herewith. </FONT></TD>
</TR>
</TABLE>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Previously
filed with the SEC on June 27, 2005 as Exhibit 4.12 to the Company&#146;s Annual Report
on Form 20-F, and incorporated herein by reference. </FONT></TD>
</TR>
</TABLE>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>***  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Previously
filed with the SEC on November 24, 2003 as Exhibit 4.1 to the Company&#146;s Registration
Statement on Form S-8, SEC File Number 333-110696, and incorporated herein by reference. </FONT></TD>
</TR>
</TABLE>
<BR>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 10. UNDERTAKINGS </FONT></H1>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)</FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        The
undersigned registrant hereby undertakes: </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
file, during any period in which offers or sales are being made, a
          post-effective amendment to this registration statement:  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(i) &nbsp;&nbsp;To include any prospectus required by Section 10(a)(3) of the Securities Act
of           1933; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(ii) &nbsp;&nbsp;           To reflect in the prospectus any facts or events arising after the effective
          date of the registration statement (or the most recent post- effective
amendment           thereof) which, individually or in the aggregate, represent a
fundamental change           in the information set forth in the registration statement.
Notwithstanding the           foregoing, any increase or decrease in volume of securities
offered (if the           total dollar value of securities offered would not exceed that
which was           registered) and any deviation from the low or high end of the
estimated maximum           offering range may be reflected in the form of prospectus
filed with the           Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume           and price represent no more than a 20% change in the maximum
aggregate offering           price set forth in the &#147;Calculation of Registration Fee&#148; table
in the           effective registration statement; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(iii) &nbsp;&nbsp;             To include any material information with respect to the plan of distribution
          not previously disclosed in the registration statement or any material change
to           such information in the registration statement; <I>provided,
however,</I> that Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not
apply if the registration statement is on Form S-3 or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement, or is contained in a form of prospectus filed
pursuant to Rule 424(b) that is part of the registration statement.</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>29</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>



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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>That,
for the purpose of determining any liability under the Securities Act of           1933,
each such post-effective amendment shall be deemed to be a new           registration
statement relating to the securities offered therein, and the           offering of such
securities at that time shall be deemed to be the initial bona           fide offering
thereof.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
remove from registration by means of a post-effective amendment any of the
          securities being registered which remain unsold at the termination of the
          offering.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
file a post-effective amendment to the registration statement to include any
          financial statements required by Item 8.A of Form 20-F at the start of any
          delayed offering or throughout a continuous offering. Financial statements and
          information otherwise required by Section 10(a)(3) of the Act need not be
          furnished, provided that the registrant includes in the prospectus, by means of
          a post-effective amendment, financial statements required pursuant to this
          paragraph (a)(4) and other information necessary to ensure that all other
          information in the prospectus is at least as current as the date of those
          financial statements. Notwithstanding the foregoing, with respect to
          registration statements on Form F-3, a post-effective amendment need not be
          filed to include financial statements and information required by Section
          10(a)(3) of the Act Item 8.A of Form 20-F if such financial statements and
          information are contained in periodic reports filed with or furnished to the
          Commission by the registrant pursuant to Section 13 or Section l5(d) of the
          Securities Exchange Act of 1934 that are incorporated by reference in the Form
          F-3.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>That,
for the purpose of determining liability under the Securities Act of 1933           to
any purchaser:  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i)</FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        If
the registrant is relying on Rule 430B (Sec 230.430B of this chapter):  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A. </FONT></TD>
<TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be           deemed
to be part of the registration statement as of the date the filed           prospectus
was deemed part of and included in the registration statement; and  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B. </FONT></TD>
<TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or           (b)(7)
as part of a registration statement in reliance on Rule 430B relating to           an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
          providing the information required by section 10(a) of the Securities Act of
          1933 shall be deemed to be part of and included in the registration statement
as           of the earlier of the date such form of prospectus is first used after
          effectiveness or the date of the first contract of sale of securities in the
          offering described in the prospectus. As provided in Rule 430B, for liability
          purposes of the issuer and any person that is at that date an underwriter, such
          date shall be deemed to be a new effective date of the registration statement
          relating to the securities in the registration statement to which that
          prospectus relates, and the offering of such securities at that time shall be
          deemed to be the initial bona fide offering thereof. Provided, however, that no
          statement made in a registration statement or prospectus that is part of the
          registration statement or made in a document incorporated or deemed
incorporated           by reference into the registration statement or prospectus that is
part of the           registration statement will, as to a purchaser with a time of
contract of sale           prior to such effective date, supersede or modify any
statement that was made in           the registration statement or prospectus that was
part of the registration           statement or made in any such document immediately
prior to such effective date;           or  </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>30</font></p>
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<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii) </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the registrant is subject to Rule 430C, each prospectus filed pursuant to           Rule
424(b) as part of a registration statement relating to an offering, other           than
registration statements relying on Rule 430B or other than prospectuses           filed
in reliance on Rule 430A, shall be deemed to be part of and included in           the
registration statement as of the date it is first used after effectiveness.
          Provided, however, that no statement made in a registration statement or
          prospectus that is part of the registration statement or made in a document
          incorporated or deemed incorporated by reference into the registration
statement           or prospectus that is part of the registration statement will, as to
a purchaser           with a time of contract of sale prior to such first use, supersede
or modify any           statement that was made in the registration statement or
prospectus that was           part of the registration statement or made in any such
document immediately           prior to such date of first use.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(6) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>That,
for the purpose of determining liability of the registrant under the           Securities
Act of 1933 to any purchaser in the initial distribution of the           securities: The
undersigned registrant undertakes that in a primary offering of           securities of
the undersigned registrant pursuant to this registration           statement, regardless
of the underwriting method used to sell the securities to           the purchaser, if the
securities are offered or sold to such purchaser by means           of any of the
following communications, the undersigned registrant will be a           seller to the
purchaser and will be considered to offer or sell such securities           to such
purchaser:  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i) </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
preliminary prospectus or prospectus of the undersigned registrant relating           to
the offering required to be filed pursuant to Rule 424;  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii) </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
free writing prospectus relating to the offering prepared by or on behalf           of
the undersigned registrant or used or referred to by the undersigned
          registrant;  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iii) </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
portion of any other free writing prospectus relating to the offering
          containing material information about the undersigned registrant or its
          securities provided by or on behalf of the undersigned registrant; and  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iv) </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
other communication that is an offer in the offering made by the           undersigned
registrant to the purchaser.  </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>31</font></p>
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<page>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
undersigned registrant hereby undertakes that, for purposes of determining
               any liability under the Securities Act of 1933, each filing of the
               registrant&#146;s annual report pursuant to Section 13(a) or Section 15(d)
of                the Securities Exchange Act of 1934 (and, where applicable, each filing
of an                employee benefit plan&#146;s annual report pursuant to Section l5(d)
of the                Securities Exchange Act of 1934) that is incorporated by reference
in the                registration statement shall be deemed to be a new registration
statement                relating to the securities offered therein, and the offering of
such securities                at that time shall be deemed to be the initial bona fide
offering thereof. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Insofar
as indemnification for liabilities arising under the Securities Act of
               1933 may be permitted to the directors, officers and controlling persons
of the                registrant pursuant to the provisions described under &#147;Item 8.
               Indemnification of Directors and Officers&#148; above, or otherwise, the
               registrant has been advised that in the opinion of the Securities and
Exchange                Commission such indemnification is against public policy as
expressed in the Act                and is, therefore, unenforceable. In the event that a
claim for indemnification                against such liabilities (other than the payment
by the registrant of expenses                incurred or paid by a director, officer or
controlling person of the registrant                in the successful defense of any
action, suit or proceeding) is asserted by such                director, officer or
controlling person in connection with the securities being                registered, the
registrant will, unless in the opinion of our counsel the matter                has been
settled by controlling precedent, submit to a court of appropriate
               jurisdiction the question whether such indemnification by it is against
public                policy as expressed in the Act and will be governed by the final
adjudication of                such issue. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>32</font></p>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to the requirements of the
Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form F-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Misgav, in the State of Israel, on December 1, 2005. </FONT></P>




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<TD ><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>B.O.S. Better Online Solutions Ltd.</B></U></FONT> </TD>
</TR>
<TR>
      <TD> &nbsp;</TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR VALIGN=TOP>
<TD WIDTH=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR>
<BR>BY: /s/ Adiv Baruch<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Adiv Baruch<BR>President and Chief<BR>Executive Officer</FONT></TD>
<TD WIDTH=30%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR>
<BR>/s/ Nehemia Kaufman<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Nehemia Kaufman<BR>Chief Financial <BR>Officer</FONT></TD>
</TR>
</TABLE>
<BR>





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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>POWER OF ATTORNEY </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>KNOW ALL PERSONS BY THESE PRESENTS,
that each individual whose signature appears below constitutes and appoints Adiv Baruch
and Nehemia Kaufman, and each of them, his or her true and lawful attorneys-in-fact and
agents with full power of substitution and re-substitution, for him or her and in his or
her name, place and stead, in any and all capacities, to (i) act on, sign and file with
the Securities and Exchange Commission any and all amendments (including post-effective
amendments) to this Registration Statement, together with all schedules and exhibits
thereto, and any subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (ii)
act on, sign and file such certificates, instruments, agreements and other documents as
may be necessary or appropriate in connection therewith, (iii) act on, sign and file any
supplement to any prospectus filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended, and (iv) take any and all actions which may be necessary or appropriate
to be done, as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them,
or their or his or her substitutes, may lawfully do or cause to be done by virtue hereof. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to the requirements of the
Securities Act of 1933, as amended, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated: </FONT></P>



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<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=33% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Signature</U></B> </FONT> </TD>
     <TD WIDTH=45% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Title</U></B> </FONT> </TD>
     <TD WIDTH=22% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Date</U></B> </FONT> </TD></TR>
</TABLE>
<BR>

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<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ Edouard Cukierman<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Edouard Cukierman</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chairman of the Board of Directors</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>December 1, 2005</FONT></TD>
</TR>
</TABLE>
<BR>




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<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Adiv Baruch<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Adiv Baruch </FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>President, Chief Executive Officer and Director<BR>(Principal Executive Officer)</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>December 1, 2005</FONT></TD>
</TR>
</TABLE>
<BR><BR>




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<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ Nehemia Kaufman<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Nehemia Kaufman</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chief Financial Officer<BR>(Principal Financial and Accounting Officer)</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>December 1, 2005</FONT></TD>
</TR>
</TABLE>
<BR><BR>

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

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<TR VALIGN=TOP>
<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ Joel Adler<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Joel Adler</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2> December 1, 2005</FONT></TD>
</TR>
</TABLE>
<BR><BR>




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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ Ronen Zavlik<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Ronen Zavlik</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>December 1, 2005</FONT></TD>
</TR>
</TABLE>
<BR><BR>




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<TR VALIGN=TOP>
<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<BR>/s/ Andrea Mandel-Mantello<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Andrea Mandel-Mantello</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>December 1, 2005</FONT></TD>
</TR>
</TABLE>
<BR><BR>



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<TR VALIGN=TOP>
<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ Avishai Gluck<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Avishai Gluck</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>December 1, 2005</FONT></TD>
</TR>
</TABLE>
<BR><BR>





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<TR VALIGN=TOP>
<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ Yael Ilan<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Dr. Yael Ilan</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>December 1, 2005</FONT></TD>
</TR>
</TABLE>
<BR><BR>



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<TR VALIGN=TOP>
<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ Adi Raveh<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Prof. Adi Raveh</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>December 1, 2005</FONT></TD>
</TR>
</TABLE>
<BR><BR>


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<TD WIDTH=100%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Authorized Representative in the U.S.:</B><BR><BR>Corporation Service Company
<BR><BR>BY: /s/ John H. Pelletier<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
John H. Pelletier<BR><BR>Assistant Secretary<BR><BR>December 1, 2005</FONT></TD>
</TR>
</TABLE>
<BR>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>2
<FILENAME>exhibit_3-1.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\52030\a52030.eep -->
     <!-- Control Number: 52030                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 3.1</B></U> </FONT> </P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>B.O.S BETTER ON-LINE
SOLUTIONS LTD.</U> </FONT> </H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLES OF ASSOCIATION </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>IN ACORDANCE WITH THE
COMPANIES LAW, 5759-1999 </FONT></H1>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>The
Company&#146;s Name</B></U> </FONT> </TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company&#146;s name is &#147;B.O.S Better On-Line Solutions Ltd&#148;.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>The
Company&#146;s Objects</B></U> </FONT> </TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company&#146;s object is to engage in any legal business.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Interpretation</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Everything
mentioned in the singular shall include the plural and vice versa, and everything
mentioned in the masculine shall include the feminine and vice versa. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Unless
these articles include special definitions for certain terms, every word and expression
herein shall bear the meaning attributed thereto in the Companies Law, 5759-1999
(hereinafter referred to as &#147;the Companies Law&#148;), unless the context otherwise
admits. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For
the avoidance of doubt, it is expressed that in respect of matters regulated in the
Companies Law such that it is possible to qualify the arrangements in respect thereof in
articles, and these articles do not include in respect thereof provisions different from
those of the Companies Law &#151; the provisions of the Companies Law shall apply in
respect thereof. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>The
Company&#146;s Share Capital and the Rights Attached to Shares</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         4.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The
Company's authorized capital is NIS 35,000,000 divided into 8,750,000 ordinary
shares of NIS 4 n.v. each. (<I>amended May 2003</I>) </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         4.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
ordinary shares shall vest the holders thereof with -</FONT></TD>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2.1 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
equal right to participate in and vote at the Company&#146;s general meetings, whether
ordinary or special, and each of the shares in the Company shall entitle its holder,
present at the meeting and participating in the vote, himself, by proxy or through a
voting instrument, to one vote;  </FONT></TD>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2.2 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
equal right to participate in a distribution of dividends, whether in cash or by way of
bonus shares, in a distribution of assets or in any other distribution, pro rata to the
nominal value of the shares held by them;  </FONT></TD>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2.3 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
equal right to participate in a distribution of the Company&#146;s surplus assets on
winding up pro rata to the nominal value of the shares held by them.  </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
board of directors may issue shares and other securities which are convertible or
exercisable into shares up to the limit of the Company&#146;s authorised share capital.
With regard to computing the limit of the authorised capital, securities convertible or
exercisable into shares shall be deemed to have been converted or exercised on the date
of their issue. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Limited
Liability</B></U> </FONT> </TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
shareholders&#146; liability for the Company&#146;s debts shall be limited to the full
amount (nominal value plus premium) they are required to pay the Company for the shares
and not yet paid by them. </FONT></TD>
</TR>
</TABLE>
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<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Joint
Shareholders and Share Certificates</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Where
two or more persons are listed in the shareholders&#146; register as the joint holders of
a share, each of them may give binding receipts for any dividend or other monies in
connection with such share. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
shareholder who is listed in the shareholders&#146; register may receive from the
Company, without payment, within three months of the allotment or registration of the
transfer, one share certificate bearing a seal in respect of all the shares registered in
his name, which shall specify the number of shares. In the case of a jointly held share,
the Company shall issue one share certificate to all the joint shareholders, and the
delivery of such a certificate to one of the joint shareholders shall be deemed delivery
to all of them. </FONT></TD>
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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Each
share certificate shall bear the signature of at least one director together with the
Company&#146;s stamp or its printed name.  </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
share certificate which has been defaced, destroyed or lost may be renewed in reliance
upon proof and guarantees as required by the Company from time to time. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>The
Company&#146;s Reliefs in relation to Shares Not Paid in Full</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the consideration which the shareholder undertook to pay the Company for his shares or
any part thereof is not paid at the time and on the terms prescribed in the shares&#146;allotment
terms and/or in the payment call mentioned in paragraph 7.2 below, the Company may,
pursuant to the board of directors&#146; resolution, forfeit the shares whose
consideration has not been paid in full. The shares shall be forfeited, provided that the
Company has sent the shareholder written warning of its intention to forfeit his shares,
at least seven days from the date of receiving the warning if the payment is not effected
during the period specified in the warning letter. </FONT></TD>
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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
board of directors may, at any time prior to the date on which a share forfeited is sold,
re-allotted or otherwise transferred, cancel the forfeiture on such terms as it deems
fit.  </FONT></TD>
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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
shares forfeited shall be held by the Company as dormant shares or shall be sold to
another.  </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
pursuant to the issue terms of shares there is no fixed date for payment of any part of
the price payable therefor, the board of directors may from time to time make calls for
payment on the shareholders in respect of the monies not yet paid for the shares held by
them, and every shareholder shall be liable to pay the Company the amount of the call
made on him on the date specified as aforesaid, provided that he receives 14 days&#146; notice
of the date and place for payment (hereinafter referred to as &#147;call&#148;). The
notice shall state that non-payment on the date specified or prior thereto at the place
specified might result in the forfeiture of the shares in relation to which the call was
made. A call may be cancelled or postponed to another date, as resolved by the board of
directors. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In
the absence of another provision in the shares&#146; allotment terms, a shareholder shall
not be entitled to receive dividend or to exercise any right as a shareholder in respect
of shares not yet paid up in full. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Persons
who are joint holders of a share shall be jointly and severally liable for payment of the
amounts due to the Company in respect of the share. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.5 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
provisions of this paragraph are not such as to derogate from any other relief available
to the Company vis-a-vis a shareholder who has not paid his debt to the Company in
respect of his shares. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Transfer
of Shares</B></U> </FONT> </TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         8.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company's shares may be transferred.</FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         8.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
share transfer shall be effected in writing and shall not be registered unless -</FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.2.1 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a
due share transfer instrument is furnished to the Company at its registered office
together with the certificates relating to the shares to be transferred, if issued. The
transfer instrument shall be signed by the transferor and a witness verifying the
transferor&#146;s signature. In the case of a transfer of shares which are not fully paid
up on the date of the transfer, the transfer instrument shall also be signed by the
transferee and a witness verifying the transferee&#146;s signature; or  </FONT></TD>
</TR>
</TABLE>
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<p align=center>
<font size=2>- 2 -</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    8.2.2 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
Company is given a court order to amend the registration; or </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    8.2.3 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>it
 is  proved  to  the   Company   that  the  legal   conditions   for
                                transmission of the right to the share have been
fulfilled. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
transfer of shares which are not fully paid up requires the approval of the board of
directors, which may refuse to grant its approval in its absolute discretion and without
giving grounds therefor. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
transferee shall be deemed the shareholder in relation to the shares being transferred
from the moment his name is listed in the shareholders&#146; register. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Alteration
to Capital</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
general meeting may increase the Company&#146;s authorized share capital by creating new
shares of an existing class or of a new class, as determined in the general meeting&#146;s
resolution. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
general meeting may cancel authorized share capital which has not yet been allotted,
provided that the Company has not undertaken, including conditionally, to allot the
shares. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         9.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
general meeting may, subject to the provisions of any law:</FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    9.3.1 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>consolidate
 and  re-divide  its share  capital,  or any part  thereof,
                                into  shares  of a nominal  value  greater  than  that of
the  existing                                 shares; </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.3.2 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>sub-divide
its existing shares, or any of them, or its share capital, or any part thereof, into
shares of a nominal value smaller than that of the existing shares;  </FONT></TD>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.3.3 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>reduce
its share capital and any capital redemption reserve fund in such manner and on such
terms and conditions and with the receipt of such approval as the Companies Law requires.  </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Alteration
of the Rights Attached to Classes of Shares</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>So
long as not otherwise provided in the shares&#146; issue terms and subject to the
provisions of any law, the rights attached to a particular class of shares may be
altered, after a resolution is passed by the Company and with the approval of a
resolution passed at a general meeting of the holders of the shares of such class or the
written agreement of all the class holders. </FONT></TD>
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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
provisions of the Company&#146;s articles regarding general meetings shall apply, mutatis
mutandis, to a general meeting of the holders of a particular class of shares.  </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
rights vested in the holders of shares of a particular class that were issued with
special rights shall not be deemed to have been altered by the creation or issue of
further shares ranking equally with them, unless otherwise provided in such shares&#146;issue
terms. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>General
Meetings</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         11.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company's  resolutions on the following  matters shall be passed at the general meeting</FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    11.1.1 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>alterations
to the articles; </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    11.1.2 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
 exercise  of the  board of  directors'  powers  when the  board of
                                directors is unable to function; </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    11.1.3 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
appointment and dismissal of the Company's auditor; </FONT></TD>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    11.1.4 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
appointment of directors, including external directors; </FONT></TD>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    11.1.5 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
approval of acts and transactions  requiring the general  meeting's
                                approval  pursuant  to the  provisions  of the  Companies
 Law  and any                                 other law; </FONT></TD>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    11.1.6 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>increasing
and reducing the authorized share capital; </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    11.1.7 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a
merger as defined in the Companies Law. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>- 3 -</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Convening
General Meetings</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>General
meetings shall be convened at least once a year at such place and time as determined by
the board of directors but no later than 15 months from the last general meeting. Such
general meetings shall be called &#147;annual meetings&#148;. The Company&#146;s other
meetings shall be called &#147;special meetings&#148;. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
annual meeting&#146;s agenda shall include a discussion of the board of directors&#146; reports
and the financial statements as required at law. The annual meeting shall appoint an
auditor, appoint the directors pursuant to these articles and discuss all the other
matters which must be discussed at the Company&#146;s annual general meeting, pursuant to
these articles or the Law, as well as any other matter determined by the board of
directors. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
board of directors may convene a special meeting pursuant to its resolution and it must
convene a general meeting if it receives a written requisition from any one of the
following (hereinafter referred to as &#147;requisition&#148;): </FONT></TD>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    12.3.1 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>two
directors or one quarter of the directors holding office; and/or </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    12.3.2 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>one
or more  shareholders  holding  at least 5% of the  issued  capital
                                and at least 1% of the voting rights in the Company;
and/or </FONT></TD>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    12.3.3 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>one
or more  shareholders  holding at least 5% of the voting  rights in the Company. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
requisition must detail the objects for which the meeting must be convened and shall be
signed by the persons requisitioning it and sent to the Company&#146;s registered office.
The requisition may be made up of a number of documents in an identical form of wording,
each of which shall be signed by one or more of the persons requisitioning the meeting. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12.5 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Where
the board of directors is required to convene a special meeting, it shall do so within 21
days of the requisition being submitted to it, for a date that shall be specified in the
invitation pursuant to paragraph 12.6 below and subject to the law. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12.6 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notice
to the Company&#146;s members regarding the convening of a general meeting shall be sent
to all the shareholders listed in the Company&#146;s shareholders&#146; register at least
21 days prior to the meeting and shall be published in other ways insofar as required by
the law. The notice shall include the agenda, proposed resolutions and arrangements with
regard to a written vote. </FONT></TD>
</TR>
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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
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 meeting.  </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>The
Discussion at the General Meetings</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         13.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">No
discussions may be commenced at the general meeting unless a quorum is present
at the time of the discussion's commencement. A quorum is the
presence of at least two shareholders holding at least 33 1/3% of the
voting rights (including presence through a proxy or a voting
instrument), within half an hour of the time fixed for the meeting's
commencement. (<I>amended August 2004</I>) </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
no quorum is present at a general meeting within half an hour of the time fixed for the
commencement thereof, the meeting shall be adjourned for one week, to the same day, time
and place, or to a later time if stated in the invitation to the meeting or in the notice
of the meeting (hereinafter referred to as &#147;the adjourned meeting&#148;.) </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         13.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
quorum for the  commencement  of the  adjourned  meeting shall be any number of
participants.</FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
board of directors&#146; chairman shall serve as the general meeting&#146;s chairman. If
the board of directors&#146; chairman is not present at the meeting within 15 minutes of
the time fixed therefor or if he refuses to chair the meeting, the chairman shall be
elected by the general meeting. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.5 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
general meeting at which a quorum is present may resolve to adjourn the meeting to
another place and time determined by it, and in such case notices and invitations in
respect of the adjourned meeting shall be given as provided in paragraph 12.6 above. </FONT></TD>
</TR>
</TABLE>
<BR>

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

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Voting
at the General Meeting</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         14.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
shareholder of the Company may vote at the general  meetings himself or through a
                    proxy or a voting instrument.</FONT></TD>
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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
shareholders entitled to participate in and vote at the general meeting are the
shareholders on the date specified by the board of directors in the resolution to convene
the general meeting, and subject to the law.  </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In
every vote each shareholder shall have a number of votes according with the number of
shares held by him. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
resolution at the general meeting shall be passed by an ordinary majority unless another
majority is specified in the Companies Law or these articles. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
declaration of the meeting&#146;s chairman that a resolution has been passed unanimously
or by a particular majority, or that it has been defeated or not passed by a particular
majority, shall constitute prima facie proof of that stated therein. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.5 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the votes at a meeting are tied, the chairman of the meeting shall not have an additional
or deciding vote, and the resolution that was put to the vote shall be defeated. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.6 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company&#146;s shareholders may, in respect of any matter on the meeting&#146;s agenda,
vote at a general meeting (including a class meeting) through a voting instrument,
provided that the board of directors does not, subject to any law, rule out the
possibility of voting through a proxy instrument on such matter in its resolution to
convene the general meeting. </FONT></TD>
</TR>
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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
If
the board of directors prohibits voting through a voting instrument, the fact that the
possibility of voting through a voting instrument has been ruled out shall be stated in
the notice of the meeting pursuant to paragraph 12.6 above.  </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.7 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
shareholder may state the way in which he is voting in the voting instrument and send it
to the Company&#146;s registered office at least 48 hours prior to the meeting&#146;s
commencement. A voting instrument in which a shareholder states the way in which he is
voting, which reaches the Company&#146;s registered office at least 48 hours prior to the
meeting (including the adjourned meeting), shall be deemed presence at the meeting for
the purpose of constituting the quorum as provided in paragraph 13.1 above. <I>(amended
May 2003)</I></FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.8 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
proxy shall be appointed in a written instrument signed by the appointor. A corporation
shall vote through its representatives who shall be appointed by a document duly signed
by the corporation. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.9 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Voting
in accordance with the terms and conditions of a proxy instrument shall be legal even if
prior thereto the appointor dies or becomes legally incapacitated, is wound up, becomes
bankrupt, cancels the proxy instrument or transfers the share in relation to which it was
given, unless written notice is received at the office prior to the meeting that the
shareholder has died, become legally incapacitated, been wound up, become bankrupt,
cancelled the appointment instrument or transferred the share as aforesaid. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.10 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
proxy instrument and the power of attorney or a copy certified by an attorney shall be
deposited at the Company&#146;s registered office at least 48 hours prior to the time
fixed for the meeting or the adjourned meeting at which the person mentioned in the
document intends voting pursuant thereto. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.11 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
shareholder of the Company shall be entitled to vote at meetings of the Company through a
number of proxies appointed by him, provided that each proxy is appointed in respect of
different parts of the shares held by the shareholder. There shall not be any impediment
to any proxy as aforesaid voting differently at meetings of the Company. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.12 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
a shareholder is legally incapacitated, he may vote by his board of trustees, receiver,
natural guardian or other legal guardian, and they may vote themselves or by proxy or
through a voting instrument. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.13 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Where
two or more persons are the joint holders of a share, in a vote on any matter the vote of
the person whose name appears first in the shareholders&#146; register as the holder of
such share shall be accepted, himself or by proxy, and he is entitled to give the Company
voting instruments. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>- 5 -</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>The
Board of Directors</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
board of directors shall delineate the Company&#146;s policy and supervise the performance
of the Managing Director&#146;s duties and actions. Any power of the Company which has not
been vested in another organ pursuant to the Companies Law or the articles may be
exercised by the board of directors. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Appointment
and Dismissal of Directors</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
number of directors in the Company (including external directors) shall be determined
from time to time by the annual general meeting, provided that it shall not be less than
four nor more than eleven. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company&#146;s directors shall be elected at the annual meeting and/or at a special
meeting, and shall hold office until the end of the next annual meeting or until they
cease to hold office pursuant to the provisions of the articles. If at a general meeting
of the Company new directors in the minimum amount specified pursuant to the articles are
not elected, the directors who held office until such time shall continue to hold office,
until they are replaced by the Company&#146;s general meeting. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In
addition to the provisions of paragraph 16.2 above, the board of directors may appoint a
director instead of a director whose office has been vacated and/or as an additional
director, subject to the maximum number of directors on the board of directors as
provided in paragraph 16.1 above. The appointment of a director by the board of directors
shall be valid until the next annual meeting or until he ceases to hold office pursuant
to the provisions of the articles. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         16.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
director whose term of office has come to an end may be re-elected.</FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.5 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
office of a director shall commence on the date of his appointment by the annual meeting
and/or the special meeting and/or the board of directors or on a later date if specified
in the appointment resolution of the annual meeting and/or special meeting and/or board
of directors. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.6 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
board of directors shall elect a board of directors&#146; chairman from amongst its
members. If a chairman is not elected or if the chairman is not present at the end of 15
minutes from the time fixed for the meeting, the directors present shall elect one of
their number to chair such meeting, and the person chosen shall conduct the meeting and
sign the discussion minutes. </FONT></TD>
</TR>
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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
board of directors&#146; chairman shall not be the Company&#146;s MD save on fulfillment
of the conditions mentioned in section 121(c) of the Companies Law.  </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.7 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
general meeting may remove any director from his office before the end of his term of
office, whether the director was appointed by it by virtue of paragraph 16.2 above or by
the board of directors by virtue of paragraph 16.3 above, provided that the director is
given a reasonable opportunity to state his case before the general meeting. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.8 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Where
the office of a director is vacated, the remaining directors may continue to act so long
as their number has not fallen below the minimum specified in the articles. Where the
number of directors has fallen below the aforementioned minimum, the remaining directors
may only act in order to fill the place of the director which has been vacated as
mentioned in paragraph 16.3 above or in order to convene a general meeting of the
Company, and until the general meeting is convened as aforesaid they may act to manage
the Company&#146;s business only in respect of matters that cannot bear delay. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.9 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Every
board of directors&#146; member may appoint an alternate for himself, provided that such
an appointment shall not be for a period exceeding one month, and that someone who was
appointed as an alternate for another director and/or who is already serving as a
director of the Company may not be appointed as an alternate. The appointment or
termination of the office of an alternate shall be effected in a written document signed
by the director who appointed him; however, in any event, the office of an alternate
shall terminate if one of the events specified in paragraph 16.10 below befalls the
alternate or if the office of the board of directors&#146; member for whom he is acting
as alternate is vacated for whatsoever reason. </FONT></TD>
</TR>
</TABLE>
<BR>



<p align=center>
<font size=2>- 6 -</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>

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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
An
alternate shall be treated as a director and all the provisions of the law and these
articles shall apply to him, save for the provisions regarding the appointment and/or
dismissal of a director specified herein. <I>(amended May 2003)</I> </FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         16.10 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
office of a director shall be vacated in any one of the following cases:</FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    16.10.1 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>he
resigns  from his office by a letter  signed  him and  submitted  to
                                the Company which specifies the reasons for his
resignation; </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    16.10.2 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>he
is removed from his office by the general meeting; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    16.10.3 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>he
is  convicted  of an  offence  as  provided  in  section  232 of the Companies Law;  </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    16.10.4 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>pursuant
 to a  court  decision,  as  provided  in  section  233 of the Companies Law; </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    16.10.5 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>he
is declared legally incapacitated; </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.10.6 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>he
is declared bankrupt, and in the case of a corporation &#151; it is resolved to wind it
up voluntarily or a winding up order is given in respect thereof.  </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.11 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
terms of office of the board of directors&#146; members shall be approved by the audit
committee, the board of directors and the general meeting, in this chronological order. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Board
of Directors&#146; Meetings</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
board of directors shall convene in accordance with the Company&#146;s requirements and
at least once every three months. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
board of directors&#146; chairman may convene the board of directors at any time. In
addition, the board of directors shall hold a meeting, on a matter that shall be
detailed, in the following cases: </FONT></TD>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17.2.1 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>on
the demand of two directors; however, if at such time the board of directors consists of
five directors or less &#151; on the demand of one director;  </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17.2.2 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>on
the demand of one director if he states in his demand to convene the board of directors
that he has learned of a matter involving the Company in which a prima facie
contravention of the Law or an infringement of proper business procedure has been
discovered;  </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    17.2.3 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a
notice or  report  of the  managing  director  obliges  action by the
                                board of directors; </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    17.2.4 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
 auditor  has  notified  the  board  of   directors'   chairman  of
                                materials deficiencies in the audit of the Company's
accounts. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notice
of a board of directors&#146; meeting shall be sent to all its members at least three
days prior to the date of the meeting. The notice shall be sent to the address of the
director which was furnished to the Company in advance, and shall state the date, time
and place of the meeting, and reasonable details of all the matters on the agenda. </FONT></TD>
</TR>
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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Notwithstanding
the aforegoing, the board of directors may convene a meeting without notice, with all the
directors&#146; agreement.  </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
quorum for the commencement of a board of directors&#146; meeting shall be a majority of
the members of the board of directors. If no quorum is present at the board of directors&#146; meeting
within half an hour of the time fixed for the meeting&#146;s commencement, the meeting
shall be adjourned to another date decided upon by the board of directors&#146; chairman,
or in his absence by the directors present at the meeting, provided that three days&#146; notice
shall be given to all the directors of the date of the adjourned meeting. The quorum for
the commencement of an adjourned meeting shall be any number of participants.
Notwithstanding the aforegoing, the quorum for discussions and resolutions at the board
of directors on the auditor&#146;s dismissal or suspension shall be a majority of the
board of directors&#146; members. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17.5 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
board of directors may hold meetings using any communications means, provided that all
the directors participating may hear each other simultaneously. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17.6 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
board of directors may also pass written resolutions without actually convening, provided
that all the directors entitled to participate in the discussion and vote on a matter
that is brought for resolution agree thereto. </FONT></TD>
</TR>
</TABLE>
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<p align=center>
<font size=2>- 7 -</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>18.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Voting
at the Board of Directors</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         18.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In
a vote at the board of directors, each director shall have one vote.</FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>18.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
board of directors&#146; resolutions shall be passed on a majority. The board of directors&#146; chairman
shall not have an additional or deciding vote and where the votes are tied, the
resolution that was put to the vote shall be defeated. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Board
of Directors&#146; Committees</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
board of directors may establish committees and appoint members from the board of
directors thereto (hereinafter referred to as &#147;board of directors&#146;committee&#148;),
and it may from time to time revoke such delegation or alter the composition of such
committee. If board of directors&#146; committees are established, the board of directors
shall determine in their terms of authority whether certain powers of the board of
directors will be delegated to the board of directors&#146; committee such that a
resolution of the board of directors&#146; committee shall be deemed a resolution of the
board of directors or whether a resolution of the board of directors&#146;committee shall
merely amount to a recommendation which is subject to the board of directors&#146; approval,
provided that powers to resolve on the matters specified in section 112 of the Companies
Law shall not be delegated to a committee. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
meetings and discussions of any board of directors&#146; committee composed of two or
more members shall be governed by the provisions of these articles regarding board of
directors&#146; meetings and the voting thereat, mutatis mutandis, and subject to the
board of directors&#146; resolutions regarding arrangements for the committee&#146;s
meetings (if any). </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Audit
Committee</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company&#146;s board of directors shall appoint an audit committee from amongst its
members. The number of members on the audit committee shall not be less than three and
all the external directors shall be members thereof. The board of directors&#146; chairman
and any director employed by the Company or providing services to it on a permanent basis
and/or a control owner or his relative shall not be appointed as members of the
committee. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         20.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
duties of the audit committee shall be -</FONT></TD>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20.2.1 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>to
detect deficiencies in the Company&#146;s business management, inter alia through
consultation with the Company&#146;s internal auditor or with the auditor, and to propose
to the board of directors ways of rectifying them;  </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20.2.2 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>to
resolve whether to approve acts and transactions requiring the audit committee&#146;s
approval pursuant to the Companies Law.  </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Managing
Director</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company&#146;s board of directors shall appoint a managing director and may appoint more
than one managing director. The managing director shall be responsible for the routine
management of the Company&#146;s affairs within the framework of the policy determined by
the board of directors and subject to its guidelines. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exemption,
Insurance and Indemnity</B></U> </FONT> </TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company may exempt an Office Holder therein in advance for his liability, or any part
thereof, for damage in consequence of a breach of the duty of care vis-a-vis it. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company may indemnify an Office Holder retroactively for an obligation or expense as
specified in sub-paragraphs 22.2.1 and 22.2.2 below, imposed on him in consequence of act
done in his capacity as an officer in the Company. </FONT></TD>
</TR>
</TABLE>
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<p align=center>
<font size=2>- 8 -</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.2.1</FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a
monetary obligation imposed on him in favor of another person pursuant to a judgment,
including a judgment given in settlement or an arbitrator&#146;s award that has been
approved by a court;  </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.2.2</FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>reasonable
litigation expenses, including advocates&#146; professional fees, incurred by the Office
Holder or which he is ordered to pay by a court, in proceedings filed against him by the
company or on its behalf or by another person, or in a criminal indictment in which he is
acquitted, or in a criminal indictment in which he is convicted of an offence that does
not require proof of criminal intent.  </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company may give an advance undertaking vis-a-vis an Office Holder to indemnify him in
respect of an obligation or expense as specified in paragraph 22.2 above, provided that
the undertaking is limited to types of events which in the board of directors&#146;opinion
may be anticipated at the time of giving the indemnity undertaking, and to an amount
which the board of directors determines is reasonable in the circumstances of the case. </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
company may enter into a contract to insure the liability of an Office Holder therein for
an obligation imposed on him in consequence of an act done in his capacity as an Office
Holder therein, in any of the following cases: </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    22.4.1 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a
 breach  of the  duty of care  vis-a-vis  the  Company  or  vis-a-vis
                                another person; </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.4.2 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a
breach of the duty of fidelity vis-a-vis the Company, provided that the Office Holder
acted in good faith and had reasonable basis to assume that the act would not harm the
Company;  </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    22.4.3 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a
monetary obligation imposed on him in favor of another person. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         22.5 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Paragraphs
22.1 to 22.4 shall not apply in any of the following cases -</FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    22.5.1 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a
 breach  of the  duty of  fidelity,  save as  provided  in  paragraph 22.4.2 above; </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    22.5.2 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
intentional or rash breach of the duty of care; </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    22.5.3 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
act done with the  intention  of  unlawfully  producing  a  personal
                                profit; </FONT></TD>
</TR>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                    22.5.4 </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a
fine imposed on an Office Holder. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.6 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Resolutions
regarding the grant of exemption, insurance, indemnity or the grant of an undertaking to
indemnify an Office Holder shall be passed subject to the law. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.7 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;Office
Holder&#148; in this section shall include directors and officers as defined in the
Companies Law 1999. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Internal
Auditor</B></U> </FONT> </TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company&#146;s board of directors shall appoint an internal auditor in accordance with
the audit committee&#146;s proposal. Interested parties in the Company, officers in the
Company, relatives of any of the aforegoing and the auditor or someone on his behalf may
not hold office as the Company&#146;s internal auditor. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
board of directors shall determine what officer shall be the organ to whom the internal
auditor is subordinate, and in the absence of such a determination it shall be the board
of directors&#146; chairman. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
internal audit plan prepared by the auditor shall be submitted for the audit committee&#146;s
approval; however, the board of directors may determine that the plan shall be submitted
for the board of directors&#146; approval. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Auditor</B></U> </FONT> </TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
annual meeting shall appoint an auditor for the Company. The auditor shall hold office
until the end of the following annual meeting, or for a longer term as determined by the
annual meeting, provided that his term of office shall not extend beyond the end of the
third annual meeting following the one at which he was appointed. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
auditor&#146;s remuneration for the audit shall be determined by the board of directors.
The board of directors shall report to the annual meeting on the auditor&#146;s
remuneration. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>- 9 -</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Signatory
Rights</B></U> </FONT> </TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
rights to sign on the Company&#146;s behalf shall be determined from time to time by the
Company&#146;s board of directors. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
signatory on the Company&#146;s behalf shall sign together with the Company&#146;s stamp
or its printed name. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Dividend
and Bonus Shares</B></U> </FONT> </TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company&#146;s board of directors shall be the organ authorized to decide upon the
distribution of a dividend and/or the distribution of bonus shares. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
shareholders who are entitled to dividend are the shareholders on the date of the
resolution on the dividend or on a later date if another date is specified in the
resolution on the dividend&#146;s distribution. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the board of directors does not otherwise determine, any dividend may be paid by way of a
cheque or payment order that shall be sent by mail in accordance with the registered
address of the shareholder or person entitled thereto, or in the case of registered joint
shareholders to the shareholder whose name appears first in the shareholders&#146;register
in relation to the joint shareholding. Every such cheque shall be drawn up to the order
of the person to whom it is being sent. The receipt of a person who on the date of the
dividend&#146;s declaration is listed in the shareholders&#146; register as the holder of
any share or, in the case of joint shareholders, of one of the joint shareholders shall
serve as confirmation of all the payments made in connection with such share. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For
the purpose of implementing any resolution pursuant to the provisions of this paragraph,
the board of directors may settle, as it deems fit, any difficulty arising in relation to
the distribution of the dividend and/or bonus shares, including determine the value for
the purpose of the said distribution of certain assets and resolve that payments in cash
shall be made to members in reliance upon the value thus determined, determine
regulations in relation to fractions of shares or in relation to non-payment of amounts
less than NIS&nbsp;200. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>27.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Redeemable
Securities</B></U> </FONT> </TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company may, subject to any law, issue redeemable securities on such terms as determined
by the board of directors, provided that the general meeting approves the board of
directors&#146; recommendation and the terms determined. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>28.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Contributions</B></U> </FONT> </TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company may contribute a reasonable sum of money for an worthy object, even if the
contribution is not within the scope of business considerations conducive to the
Company&#146;s profits. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Accounts</B></U> </FONT> </TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company shall keep accounts and draw up financial statements pursuant to the Securities
Law and any other law. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
books of account shall be kept at the office or at such other place as the directors deem
fit, and shall always be open for the directors&#146; inspection. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30.  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Notices</B></U> </FONT> </TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30.1</FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Subject to any law, notice or any other document which the Company sends and which it may
or is required to give pursuant to the provisions of these articles and/or the Companies
Law shall be sent by the Company to any person personally, by mail in a letter addressed
in accordance with the registered address of such shareholder in the shareholders&#146;
register or in accordance with any address which the shareholder specifies in a letter to
the Company as the address for the sending of notices or other documents, or by facsimile
in accordance with the number specified by the shareholder as the number for sending
notices by facsimile. Should the Company publish notice in at least two Israeli daily
newspapers, notice shall be deemed to have been given to any member whose address as
registered in the Company&#146;s Register is in Israel.</FONT></TD>
</TR>
</TABLE>
<BR>

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


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
notices which must be given to the shareholders shall be given, in relation to shares
which are jointly held, to the person whose name appears first in the shareholders&#146;register
as the holder of such share, and any notice given in this manner shall be adequate notice
to the holders of such share. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
notice or other document that is sent shall be deemed to have reached its destination
within three business days &#151; if sent by registered mail and/or ordinary mail in
Israel, and if delivered by hand or sent by facsimile, it shall be deemed to have reached
its destination on the first business day following its receipt. When coming to prove the
delivery, it shall be adequate to prove that the letter that was sent by mail containing
the notice or document was correctly addressed and delivered to the post office as a
stamped letter or as a stamped registered letter, and in respect of a facsimile it is
sufficient to furnish the transmission confirmation from the sending instrument. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
entry effected in the ordinary way in the Company&#146;s register shall be deemed prima
facie proof regarding the dispatch, as entered in such register. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30.5 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Where
it is necessary to give prior notice of a particular number of days or notice that is
valid for any period, the date of delivery shall be taken into account in reckoning the
number of days or the period. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>- 11 -</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
</body>
</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.2
<SEQUENCE>3
<FILENAME>exhibit_4-2.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\backup\office\EDGAR Filing\BOS better online solutions Ltd\52030\a52030.eep -->
     <!-- Control Number: 52030                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

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<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 4.2</B></U> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THIS NOTE AND THE ORDINARY SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS NOTE AND THE ORDINARY SHARES ISSUABLE
UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
B.O.S. BETTER ON-LINE SOLUTIONS LTD. THAT SUCH REGISTRATION IS NOT REQUIRED. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>SECURED CONVERTIBLE
TERM NOTE</U> </FONT> </H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR
VALUE RECEIVED, B.O.S. BETTER ON-LINE SOLUTIONS LTD., a corporation incorporated under the
laws of the State of Israel (the &#147;<B>Borrower</B>&#148;), hereby promises to pay to
LAURUS MASTER FUND, LTD. a Cayman Islands company c/o Ironshore Corporate Services Ltd.,
P.O. Box 1234 G.T., Queensgate House, South Church Street, Grand Cayman, Cayman Islands,
Fax: 345-949-9877 (the &#147;<B>Holder</B>&#148;) or its registered assigns or successors
in interest, on order, the sum of One Million and Five Hundred Thousand United States
Dollars ($1,500,000), together with any accrued and unpaid interest hereon, on September
29, 2008 (the &#147;<B>Maturity Date</B>&#148;) if not sooner paid. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalized
terms used herein without definition shall have the meanings ascribed to such terms in
that certain Securities Purchase Agreement dated as of the date hereof between the
Borrower and the Holder (the &#147;<B>Purchase Agreement</B>&#148;). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following terms shall apply to
this Note: </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE I <BR>
INTEREST &amp;
AMORTIZATION </FONT></H1>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.1(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Interest Rate</U>. Subject to Section 4.11 and 5.6 hereof, interest payable
          on this Note shall accrue at a rate per annum (the &#147;Interest Rate&#148;)
          equal to the &#147;prime rate&#148; published in <U>The Wall Street Journal</U>
          from time to time, plus one and a half percent (1.5%). The Interest Rate shall
          be increased or decreased as the case may be for each increase or decrease in
          the prime rate in an amount equal to such increase or decrease in the prime
          rate; each change to be effective as of the day of the change in such rate and
          also subject to Section 1.1(b) hereof. In no event, however, shall the Interest
          Rate be less than zero percent (0.00%). Interest shall be (i) calculated on the
          basis of a 360 day year, (ii) payable monthly, in arrears, commencing on October
          1, 2005 and on the first business day of each consecutive calendar month
          thereafter until the Maturity Date (and on the Maturity Date), whether by
          acceleration or otherwise (each, a &#147;<B>Repayment Date</B>&#148;). </FONT></P>

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

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1
(b) <U>Interest Rate Adjustment</U>. The Interest Rate shall be calculated on the last
business day of each month hereafter until the Maturity Date (each a
&#147;<B>Determination Date</B>&#148;) and be subject to adjustment. If (i) the Borrower
shall have registered the Borrower&#146;s Ordinary Shares underlying the conversion of the
Note and that certain warrant issued to the Holder (the &#147;Warrant&#148;) on a
registration statement declared effective by the SEC, and (ii) the average closing price
of the Ordinary Shares as reported by Bloomberg, L.P. on the Principal Market (as defined
below) for any five (5) consecutive trading days during the fifteen (15) days immediately
preceding a Determination Date, exceeds the then applicable Fixed Conversion Price, then
the Interest Rate for the succeeding calendar month shall automatically be reduced by 200
basis points (2.0%) for each incremental twenty five percent (25%) increase in the market
price of the Ordinary Shares above the then applicable Fixed Conversion Price. If (i) the
Borrower shall not have registered the Borrower&#146;s Ordinary Shares underlying the
conversion of the Note and the Warrant on a registration statement declared effective by
the SEC, and (ii) the average closing price of the Ordinary Shares as reported by
Bloomberg, L.P. on the Principal Market (as defined below) for any five (5) consecutive
trading days during the fifteen (15) days immediately preceding a Determination Date
exceeds the Fixed Conversion Price, then the Interest Rate for the succeeding calendar
month shall automatically be reduced by 100 basis points (1.0%) for each incremental
twenty five percent (25%) increase in the market price of the Ordinary Shares above the
then applicable Fixed Conversion Price. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Minimum
Monthly Principal Payments</U>. Amortizing payments of the aggregate principal amount
outstanding under this Note at any time (the &#147;<B>Principal Amount</B>&#148;) shall
begin on January 1, 2006 and shall recur on the first calendar day of each succeeding
month thereafter until the Maturity Date (each, an &#147;<B>Amortization Date</B>&#148;)
as set forth in the table below:  </FONT></P>





<TABLE CELLPADDING=5 CELLSPACING=0 BORDER=1 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Date</U> </FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Principal Amount</U> </FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Date</U> </FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Principal Amount</U> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=27% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1/1/06</FONT></TD>
     <TD WIDTH=27% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD WIDTH=27% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3/1/07</FONT></TD>
     <TD WIDTH=18% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2/1/06</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4/1/07</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3/1/06</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5/1/07</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4/1/06</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6/1/07</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5/1/06</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7/1/07</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6/1/06</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8/1/07</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7/1/06</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9/1/07</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8/1/06</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$15,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10/1/07</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9/1/06</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11/1/07</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10/1/06</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12/1/07</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11/1/06</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1/1/08</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12/1/06</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2/1/08</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1/1/07</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3/1/08</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2/1/07</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4/1/08</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5/1/08</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6/1/08</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7/1/08</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8/1/08</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9/1/08</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$55,200</FONT></TD></TR>
</TABLE>
<BR>

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

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to Section 3 below, beginning on the first Amortization Date, the Borrower shall make
monthly payments to the Holder on each Repayment Date, each in the amount set forth above,
together with any accrued and unpaid interest to date on such portion of the Principal
Amount plus any and all other amounts which are then owing under this Note but have not
been paid (collectively, the &#147;<B>Monthly Amount</B>&#148;). All payments hereunder
shall be paid by wire transfer of immediately available funds to the account designated by
the Holder in a written notice delivered to the Borrower at least three business days in
advance of the Repayment Date. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE II <BR>
CONVERSION REPAYMENT </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
<U>Payment of Monthly Amount in Cash or Ordinary Shares</U>. Each month by the fifth (5<SUP>th</SUP>)
business day prior to each Amortization Date (the &#147;<B>Notice Date</B>&#148;), the
Holder shall deliver to Borrower a written Monthly Conversion Notice in the form of <U>Exhibit
B </U>attached hereto converting the Monthly Amount payable on the next Repayment Date in
either cash or Ordinary Shares, or a combination of both (each, a &#147;<B>Repayment
Notice</B>&#148;). If a Repayment Notice is not delivered by the Holder on or before the
applicable Notice Date for such Repayment Date, then, the Borrower shall pay the Monthly
Amount due on such Repayment Date in cash. Any portion of the Monthly Amount paid in cash
on a Repayment Date, shall be paid to the Holder an amount equal to 100% of such
unconverted portion of the Monthly Amount due and owing to Holder on the Repayment Date.
If the Holder converts all or a portion of the Monthly Amount into Ordinary Shares as
provided herein, the number of such shares to be issued by the Borrower to the Holder on
such Repayment Date shall be the number determined by dividing (x) the portion of the
Monthly Amount to be paid in shares of Ordinary Shares, by (y) the then applicable Fixed
Conversion Price. For purposes hereof, the initial &#147;<B>Fixed Conversion Price</B>&#148; means
$3.08. The Fixed Conversion Price may be adjusted in accordance with the provisions of
Section 3.4(b) below.  </FONT></P>

<p align=center>
<font size=2>3</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Monthly Amount Conversion Guidelines</U>. Subject to Sections 2.1(a), 2.2,
          and 3.2 hereof, the Holder shall convert all or a portion of the Monthly Amount
          due on each Repayment Date into Ordinary Shares if the average closing price of
          the Ordinary Shares as reported by Bloomberg, L.P. on the Principal Market for
          any five (5) consecutive trading days during the fifteen (15) days immediately
preceding such Repayment Date was greater than or equal to one hundred and ten percent
(110%) of the Fixed Conversion Price, provided, however, that such conversions shall be up
to but not exceed twenty five percent (25%) of the aggregate dollar trading volume of the
Ordinary Shares for the thirty (30) day trading period immediately preceding the Repayment
Date. Any part of the Monthly Amount due on a Repayment Date that the Holder has not
converted into Ordinary Shares, shall be paid by the Borrower in cash on such Repayment
Date. Any part of the Monthly Amount due on such Repayment Date which must be paid in cash
(as a result of the closing price of the Ordinary Shares on one or more of the five (5)
consecutive trading days during the fifteen (15) days immediately preceding the applicable
Repayment Date being less than 110% of the Fixed Conversion Price) shall be paid in cash
at the rate of 100% of the Monthly Amount otherwise due on such Repayment Date, within
three (3) business days of the applicable Repayment Date. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>No
Effective Registration</U>. Notwithstanding anything to the contrary herein, none of the
Borrower&#146;s obligations to the Holdermay be converted into Ordinary Shares unless (i)
an effective current Registration Statement (as defined in the Registration Rights
Agreement) covering the Ordinary Shares to be issued in connection with the satisfaction
of such obligations exists or an exemption from registration of the Ordinary Shares is
available pursuant to Rule 144 of the Securities Act and (ii) no Event of Default
hereunder exists and is continuing, unless such Event of Default is cured within any
applicable cure period or is otherwise waived in writing by the Holder in whole or in
part at the Holder&#146;s option.  </FONT></P>

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

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
amounts converted by the Holder pursuant to this Section 2.2 shall be deemed to constitute
payments of outstanding fees, interest and principal arising in connection with Monthly
Amounts for the remaining Repayment Dates, in chronological order. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Optional
Redemption in Cash</U>. The Borrower will have the option of prepaying this Note (&#147;<B>Optional
Redemption</B>&#148;) by paying to the Holder a sum of money equal to one hundred and
twenty percent (120%) of the then outstanding principal amount of this Note together with
accrued but unpaid interest thereon and any and all other sums due, accrued or payable to
the Holder arising under this Note, the Purchase Agreement, or any Related Agreement (the
&#147;<B>Redemption Amount</B>&#148;) outstanding on the day written notice of redemption
(the &#147;<B>Notice of Redemption</B>&#148;) is given to the Holder. The Notice of
Redemption shall specify the date for such Optional Redemption (the <B>&#147;Redemption
Payment Date</B>&#148;) which date shall be seven (7) business days after the date of the
Notice of Redemption (the &#147;<B>Redemption Period</B>&#148;). A Notice of Redemption
shall not be effective with respect to any portion of this Note for which the Holder has
a pending election to convert pursuant to Section 3.1, or for conversions initiated or
made by the Holder pursuant to Section 3.1 during the Redemption Period. The Redemption
Amount shall be determined as if such Holder&#146;s conversion elections had been
completed immediately prior to the date of the Notice of Redemption. On the Redemption
Payment Date, the Redemption Amount must be paid in good funds to the Holder. In the
event the Borrower fails to pay the Redemption Amount on the Redemption Payment Date as
set forth herein, then such Redemption Notice will be null and void.  </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE III <BR>
CONVERSION RIGHTS </FONT></H1>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Holder&#146;s Conversion Rights</U>. The Holder shall have the right, but not
          the obligation, to convert all or any portion of the then aggregate outstanding
          principal amount of this Note, together with interest and fees due hereon, into
          Ordinary Shares subject to the terms and conditions set forth in this Article
          III. The Holder may exercise such right by delivery to the Borrower of a written
          notice of conversion in the form of <U>Exhibit A </U>attached hereto (the
          &#147;Notice of Conversion&#148;) not less than one (1) business day prior to
          the date upon which such conversion shall occur. The date upon which such
          conversion shall occur is the &#147;<B>Conversion Date</B>&#148;. </FONT></P>

<p align=center>
<font size=2>5</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Conversion
Limitation</U>. Notwithstanding anything contained herein to the contrary, the Holder
shall not be entitled to convert pursuant to the terms of the Note an amount that would
(a) be convertible into that number of Ordinary Shares which, when added to the number of
Ordinary Shares otherwise beneficially owned by such Holder including those issuable upon
exercise of warrants held by such Holder would exceed 4.99% of the outstanding Ordinary
Shares of the Borrower at the time of conversion or (b) (ii) exceed twenty five percent
(25%) of the aggregate dollar trading volume of the Ordinary Shares for the thirty (30)
day trading period immediately preceding delivery of a Notice of Conversion to the
Borrower. For the purposes of the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the Exchange Act and Regulation
13d-3 thereunder. The conversion limitation described in this Section 3.2 shall
automatically become null and void without any notice to Borrower upon the occurrence and
during the continuance beyond any applicable grace period of an Event of Default, or upon
75 days prior notice to the Borrower, except that at no time shall the beneficial
ownership exceed 19.99% of the Borrower&#146;s outstanding Ordinary Shares as of the date
hereof. Notwithstanding anything contained herein to the contrary, the number of Ordinary
Shares issuable by the Borrower and acquirable by the Holder pursuant to the terms of
this Note and/or the Warrant issued by the Borrower to the Holder pursuant to the
Securities Purchase Agreement, shall not exceed an aggregate of 1,270,720 of the Borrower&#146;s
Ordinary Shares, (subject to appropriate adjustment for stock splits, stock dividends, or
other similar recapitalizations affecting the Ordinary Shares). Furthermore, Holder
acknowledges and agrees that the Company (i) shall, on or before September 30, 2006, use
its best efforts to solicit shareholder approval of the authorization and issuance of at
least such amount of Ordinary Shares as would permit the Holder to acquire all of the
Ordinary Shares issuable by the Company and acquirable by the Holder pursuant to the
terms of this Warrant and/or the Note, provided however, that until such shareholder
approval is granted, the Company shall not be required to issue an amount of Ordinary
Shares pursuant to the Warrant and/or the Note, which exceeds in the aggregate, 625,000
Ordinary Shares.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Mechanics
of Holder&#146;s Conversion</U>. (a) In the event that the Holder elects to convert this
Note into Ordinary Shares, the Holder shall give notice of such election by delivering an
executed and completed Notice of Conversion to the Borrower and such Notice of Conversion
shall provide a breakdown in reasonable detail of the Principal Amount, accrued interest
and fees being converted. On each Conversion Date (as herein defined) and in accordance
with its Notice of Conversion, the Holder shall make the appropriate reduction to the
Principal Amount, accrued interest and fees as entered in its records and shall provide
written notice thereof to the Borrower within two (2) business days after the Conversion
Date.  </FONT></P>

<p align=center>
<font size=2>6</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Pursuant to the terms of the Notice of Conversion, the Borrower will issue
          instructions to the transfer agent accompanied by an opinion of counsel within 2
          business days of the date of the delivery to Borrower of the Notice of
          Conversion and shall cause the transfer agent to transmit the certificates
          representing the Note Shares to the Holder by crediting the account of the
          Holder&#146;s designated broker with the Depository Trust Corporation
          (&#147;<B>DTC</B>&#148;) through its Deposit Withdrawal Agent Commission
          (&#147;<B>DWAC</B>&#148;) system within three (3) business days after receipt by
          the Borrower of the Notice of Conversion (the &#147;<B>Delivery Date</B>&#148;).
          In the case of the exercise of the conversion rights set forth herein the
          conversion privilege shall be deemed to have been exercised and the Note Shares
          issuable upon such conversion shall be deemed to have been issued upon the date
          of receipt by the Borrower of the Notice of Conversion. The Holder shall be
          treated for all purposes as the record holder of such Ordinary Shares. </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;3.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Conversion
Mechanics.</U> </FONT> </P></TD>
</TR>
</TABLE>
<BR>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The number of Ordinary Shares to be issued upon each conversion of this Note
          shall be determined by dividing that portion of the principal and interest and
          fees to be converted, if any, by the then applicable Fixed Conversion Price. In
          the event of any conversions of outstanding principal amount under this Note in
          part pursuant to this Article III, such conversions shall be deemed to
          constitute conversions of outstanding principal amount applying to Monthly
          Amounts for the remaining Repayment Dates in chronological order. No fractional
          shares shall be issued upon any conversion of this Note. The value of any
          fractional shares shall be paid in cash. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The Fixed Conversion Price and number and kind of shares or other securities to
          be issued upon conversion is subject to adjustment from time to time upon the
          occurrence of certain events, as follows: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Stock Splits, Combinations and Dividends.</U> If the Ordinary Shares are
          subdivided or combined into a greater or smaller number of Ordinary Shares, or
          if a dividend is paid on the Ordinary Shares in Ordinary Shares, the Fixed
          Conversion Price, as the case may be, shall be proportionately reduced in case
          of subdivision of shares or stock dividend or proportionately increased in the
          case of combination of shares, in each such case by the ratio which the total
          number of Ordinary Share outstanding immediately after such event bears to the
          total number of Ordinary Shares outstanding immediately prior to such event. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          During the period the conversion right exists, the Borrower will reserve from
          its authorized and unissued Ordinary Shares a sufficient number of shares to
          provide for the issuance of Ordinary Shares upon the full conversion of this
          Note. The Borrower represents that upon issuance, such shares will be duly and
          validly issued, fully paid and non-assessable. The Borrower agrees that its
          issuance of this Note shall constitute full authority to its officers, agents,
          and transfer agents who are charged with the duty of executing and issuing share
          certificates to execute and issue the necessary certificates for Ordinary Shares
          upon the conversion of this Note. </FONT></P>

<p align=center>
<font size=2>7</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Share Issuances</U>. Subject to the provisions of this Section 3.4, if the
          Borrower shall at any time prior to the conversion or repayment in full of the
          Principal Amount issue any Ordinary Shares or securities convertible into
          Ordinary Shares to a person other than the Holder (except (i) pursuant to
          Subsections A or B above; (ii) pursuant to options, warrants, or other
          obligations to issue shares outstanding on the date hereof as disclosed to
          Holder in writing; (iii) pursuant to any financing transaction in which the
          Holder (or any of its affiliates) participates or is entitled to any fees; (iv)
          pursuant to options that may be issued under any employee stock option plan
          adopted by the Borrower; or (v) grant of options to service provides against
          their services, issuances in connection with strategic alliances, and issuances
          in connection with merger and acquisition transactions approved by the board of
          directors of the Company, for a consideration per share (the &#147;Offer
          Price&#148;) less than the Fixed Conversion Price in effect at the time of such
          issuance, then the Fixed Conversion Price shall be adjusted at the time of
          issuance of such securities by multiplying the then applicable Fixed Conversion
          Price by the following fraction: </FONT></P>




<TABLE CELLPADDING="5" CELLSPACING="0" BORDER="1" WIDTH="300" ALIGN="CENTER">
<TR VALIGN=Bottom>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A + B</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(A + B) + [((C - D) x B) / C]</FONT></TD></TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
A
= Actual shares outstanding prior to such offering</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
B
=  Actual shares sold in the offering</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
C
= Fixed Conversion Price</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
D
= Offering Price</FONT></TD>
</TR>
</TABLE>
<BR>




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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Reclassification, etc.</U> If the Borrower at any time shall, by
          reclassification or otherwise, change the Ordinary Shares into the same or a
          different number of securities of any class or classes, this Note, as to the
          unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
          to evidence the right to purchase an adjusted number of such securities and kind
          of securities as would have been issuable as the result of such change with
          respect to the Note Shares immediately prior to such reclassification or other
          change. </FONT></P>

<p align=center>
<font size=2>8</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.5 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Issuance
of New Note</U>. Upon any partial conversion of this Note, a new Note containing the same
date and provisions of this Note shall, at the request of the Holder, be issued by the
Borrower to the Holder for the principal balance of this Note and interest which shall
not have been converted or paid. The Borrower will pay no costs, fees or any other
consideration to the Holder for the production and issuance of a new Note.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.6 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Rights
of Shareholders</U>. No Holder shall be entitled, as a Note holder, to vote or receive
dividends or be deemed the holder of the Note Shares or any other securities of the
Company which may at any time be issuable upon the conversion of this Note for any
purpose, nor shall anything contained herein be construed to confer upon the Holder, as
such, any of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of shares, reclassification of shares, change of nominal
value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings,
or to receive dividends or subscription rights or otherwise until the Note Shares
purchasable upon the conversion hereof shall have become deliverable, as provided herein.  </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE IV <BR>
EVENTS OF DEFAULT </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
the occurrence and continuance of an Event of Default beyond any applicable grace period,
the Holder may make all sums of principal, interest and other fees then remaining unpaid
hereon and all other amounts payable hereunder immediately due and payable. In the event
of such an acceleration, within five (5) days after written notice from Holder to Borrower
(each occurrence being a &#147;<B>Default Notice Period</B>&#148;) the amount due and
owing to the Holder shall be 120% of the outstanding principal amount of the Note (plus
accrued and unpaid interest and fees, if any) (the &#147;<B>Default Payment</B>&#148;).
If, with respect to any Event of Default, the Borrower cures the Event of Default by the
end of the Default Notice Period, the Event of Default will be deemed to no longer exist
and any rights and remedies of Holder pertaining to such Event of Default will be of no
further force or effect. The Default Payment shall be applied first to any fees due and
payable to Holder pursuant to the Note or the Related Agreements, then to accrued and
unpaid interest due on the Note and then to the outstanding principal balance of the Note. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
occurrence of any of the following events set forth in Sections 4.1 through 4.8,
inclusive, is an &#147;<B>Event of Default</B>&#148;: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Failure
to Pay Principal, Interest or other Fees</U>. The Borrower (i) fails to pay when due any
installment of principal, interest or other fees hereon in accordance herewith, or (ii)
the Borrower fails to pay when due any amount exceeding $200,000 due under any other
promissory note issued by Borrower (unless the Borrower shall in good faith contest the
validity of such amounts), and in any such case, such failure shall continue for a period
of three (3) days following the date upon which any such payment was due.  </FONT></P>

<p align=center>
<font size=2>9</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Breach
of Covenant</U>. The Borrower breaches any covenant or any other term or condition of
this Note, the Purchase Agreement or the Registration Rights Agreement in any material
respect, or the Borrower or its Subsidiary, BOScom Ltd. (the &#147;Subsidiary&#148;),
breaches any covenant or any other term or condition of any Related Agreement in any
material respect and, any such case, such breach, if subject to cure, continues for a
period of fifteen (15) days after the occurrence thereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Breach
of Representations and Warranties</U>. Any representation or warranty made by the
Borrower in this Note or the Purchase Agreement, or by the Borrower or the Subsidiary in
any Related Agreement, shall, in any such case, be false or misleading in any material
respect on the date that such representation or warranty was made or deemed made that has
a material adverse effect on the Company&#146;s performance of its obligations to the
Holder, or the practical realization by the Holder of any benefit or remedy it may have
under the Note or the Related Agreements.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Receiver
or Trustee</U>. The Borrower shall make an assignment for the benefit of creditors, or
apply for or consent to the appointment of a receiver or trustee for it or for a
substantial part of its property or business; or such a receiver or trustee shall
otherwise be appointed.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.5 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Judgments</U>.
Any money judgment, writ or similar final process shall be entered or filed against the
Borrower or any of its Subsidiaries or any of their respective property or other assets
for more than $200,000 , and shall remain unvacated, unbonded or unstayed for a period of
thirty (30) days.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.6 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Bankruptcy</U>.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or
relief under any bankruptcy law or any law for the relief of debtors shall be instituted
by or against the Borrower or any of its Subsidiaries and such proceedings, solely if
instituted against the Borrower or any of its Subsidiaries, shall continue undismissed or
unstayed for ninety (90) business days. No cure period shall apply for proceedings or
relief under any bankruptcy law or any law for the relief of debtors instituted by the
Borrower.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.7 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Stop
Trade</U>. An SEC stop trade order or Principal Market trading suspension of the Ordinary
Shares shall be in effect for ten (10) consecutive days or five (5) trading days during a
period of ten (10) consecutive days, excluding in all cases a suspension of all trading
on a Principal Market, <U>provided</U> that the Borrower shall not have been able to cure
such trading suspension within thirty (30) days of the notice thereof or list the
Ordinary Shares on another Principal Market within sixty (60) days of such notice. The
&#147;Principal Market&#148; for the Ordinary Shares shall include the NASD OTC Bulletin
Board, NASDAQ SmallCap Market, NASDAQ National Market System, American Stock Exchange,
New York Stock Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Ordinary Shares), or any securities exchange or other
securities market on which the Ordinary Shares is then being listed or traded.
Notwithstanding the above, any suspension of trading on, or the delisting of the Ordinary
Shares of the Tel Aviv Stock Exchange shall not be deemed an Event of Default hereunder
or under the Related Agreements.  </FONT></P>

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

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.8 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Failure
to Deliver Ordinary Shares or Replacement Note</U>. The Borrower shall fail (i) to timely
deliver Ordinary Shares to the Holder pursuant to and in the form required by this Note,
and Section 10 of the Purchase Agreement, if such failure to timely deliver Ordinary
Shares shall not be cured within two (2) business days or (ii) to deliver a replacement
Note to Holder within seven (7) business days following the required date of such
issuance pursuant to this Note, the Purchase Agreement or any Related Agreement (to the
extent required under such agreements). Notwithstanding the foregoing, the Borrower will
not be deemed in default hereunder for any delay in the delivery of the Ordinary Shares
or a replacement Note, which is out of the control of the Borrower (including any delays
in processing by a transfer agent) and the Borrower is actively trying to cure the cause
of such delay.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp; 4.9 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Default
Under Related Agreements or Other Agreements.</U> The occurrence and continuance of any
Event of Default (as defined in any Related Agreement) or any event of default (or
similar term) under any other material indebtedness in excess of $200,000.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.10 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Reserved]</FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>DEFAULT RELATED
PROVISIONS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.11 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Payment
Grace Period</U>. Following the occurrence and continuance of an Event of Default beyond
any applicable cure period hereunder, and for as long as such Event of Default has not
been cured, the Borrower shall pay the Holder an additional default interest rate of five
and one half percent (5.5%) per annum on all amounts due and owing under the Note, which
default interest shall be payable upon demand.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.12 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Conversion
Privileges</U>. The conversion privileges set forth in Article III shall remain in full
force and effect immediately from the date hereof and until this Note is paid in full.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;4.13 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Cumulative
Remedies</U>. The remedies under this Note shall be cumulative. </FONT> </P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE V <BR>
MISCELLANEOUS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Failure
or Indulgence Not Waiver</U>. No failure or delay on the part of any party hereof in the
exercise of any power, right or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All rights
and remedies existing hereunder are cumulative to, and not exclusive of, any rights or
remedies otherwise available.  </FONT></P>

<p align=center>
<font size=2>11</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notices</U>.
Any notice herein required or permitted to be given shall be in writing and shall be
deemed effectively given: (a) upon personal delivery to the party notified, (b) when sent
by confirmed telex or facsimile if sent during normal business hours of the recipient, if
not, then on the next business day, (c) ten business days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d) two
business days after deposit with a internationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All communications
shall be sent to the Borrower at the address provided in the Purchase Agreement executed
in connection herewith, with a copy to Shlomo Landress, Esq. NYP Tower, 17 Yitzhak Sadeh
Street, 19<SUP>th</SUP> Floor, Tel Aviv 67775, facsimile number (972) 3 561-3620 and to
the Holder at the address provided in the Purchase Agreement for such Holder, with a copy
to John E. Tucker, Esq., 825 Third Avenue, 14<SUP>th</SUP> Floor, New York, New York
10022, facsimile number (212) 541-4434, or at such other address as the Borrower or the
Holder may designate by ten days advance written notice to the other parties hereto. A
Notice of Conversion shall be deemed given when made to the Borrower pursuant to the
Purchase Agreement.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Amendment
Provision</U>. The term &#147;Note&#148; and all reference thereto, as used throughout
this instrument, shall mean this instrument as originally executed, or if later amended
or supplemented, then as so amended or supplemented, and any successor instrument issued
pursuant to Section 3.5 hereof, as it may be amended or supplemented.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Assignability</U>.
This Note shall be binding upon the Borrower and its successors and assigns, and shall
inure to the benefit of the Holder and its successors and assigns, and may be assigned by
the Holder in accordance with the requirements of the Purchase Agreement. This Note shall
not be assigned by the Borrower without the consent of the Holder.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.5 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Governing
Law</U>. This Note shall be governed by and construed in accordance with the laws of the
State of New York, without regard to principles of conflicts of laws. Any action brought
by either party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the federal courts
located in the state of New York. Both parties and the individual signing this Note on
behalf of the Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable attorney&#146;s
fees and costs. In the event that any provision of this Note is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or unenforceability of any
other provision of this Note. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against the Borrower
in any other jurisdiction to collect on the Borrower&#146;s obligations to Holder, to
realize on any collateral or any other security for such obligations, or to enforce a
judgment or other court in favor of the Holder.  </FONT></P>

<p align=center>
<font size=2>12</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.6 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Maximum
Payments</U>. Nothing contained herein shall be deemed to establish or require the
payment of a rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest required to be paid or other
charges hereunder exceed the maximum permitted by such law, any payments in excess of
such maximum shall be credited against amounts owed by the Borrower to the Holder and
thus refunded to the Borrower.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.7 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Security
Interest and Guarantee</U>. The Holder has been granted a security interest in certain
assets of the Borrower as more fully described in the Master Security Agreement dated as
of the date hereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.8 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Construction</U>.
          Each party acknowledges that its legal counsel participated in the preparation
          of this Note and, therefore, stipulates that the rule of construction that
          ambiguities are to be resolved against the drafting party shall not be applied
          in the interpretation of this Note to favor any party against the other.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.9 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Cost
of Collection</U>. If default is made in the payment of this Note, the Borrower shall pay
to Holder reasonable costs of collection, including reasonable attorney&#146;s fees.  </FONT></P>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Balance
of page intentionally left blank; signature page follows.] </FONT></P>

<p align=center>
<font size=2>13</font></p>
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<page>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN
WITNESS WHEREOF</B>, the Borrower has caused this Convertible Term Note to be signed in
its name effective as of this 29<SUP>th</SUP> day of September, 2005. </FONT></P>









<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>B.O.S. BETTER ON-LINE SOLUTIONS LTD.</B><BR><BR>
<BR>By:<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Name: Adiv Baruch<BR>Title: CEO</FONT></TD>
</TR>
</TABLE>
<BR>





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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<BR>By:<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Name: Nehemia Kaufman<BR>Title: CFO</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>14</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2">EXHIBIT A<BR>
<U><B>NOTICE OF CONVERSION</B></U> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(To be executed by the Holder in
order to convert all or part of the Note into Ordinary Shares) </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Name and Address of
Holder] </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Undersigned hereby converts
$_________ of the principal and $_______ of accrued interest due on [specify applicable
Repayment Date] under the Convertible Term Note issued by B.O.S. BETTER ON-LINE SOLUTIONS
LTD. dated September 29, 2005 by delivery of Ordinary Shares of B.O.S. BETTER ON-LINE
SOLUTIONS LTD. on and subject to the conditions set forth in Article III of such Note. </FONT></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=5% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.</FONT></TD>
     <TD WIDTH=20% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Conversion Date</FONT></TD>
     <TD WIDTH=75% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>_______________________</FONT></TD></TR>
<TR>
      <TD> &nbsp;</TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fixed Conversion Price:</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$_______________________</FONT></TD></TR>
<TR>
      <TD> &nbsp;</TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Shares to Be Delivered:</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>_______________________</FONT></TD></TR>
</TABLE>
<BR>













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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: ____________</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>LAURUS MASTER FUND, LTD.<BR><BR>
<BR>By:_______________________________<BR>
Name:_____________________________<BR>Title:______________________________</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>15</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT B </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>MONTHLY CONVERSION
NOTICE</U> </FONT> </H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(To be executed by the Holder in
order to convert all or part of a Monthly Amount into Ordinary Shares) </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Name and Address of
Holder] </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Holder hereby converts $_________ of
the Monthly Amount due on [specify applicable Repayment Date] under the Convertible Term
Note issued by B.O.S. BETTER ON-LINE SOLUTIONS LTD. dated September 29, 2005 by delivery
of Ordinary Shares of B.O.S. BETTER ON-LINE SOLUTIONS LTD. on and subject to the
conditions set forth in Article III of such Note. </FONT></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=5% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1</FONT></TD>
     <TD WIDTH=20% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fixed Conversion Price:</FONT></TD>
     <TD WIDTH=75% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$_______________________</FONT></TD></TR>
<TR>
      <TD> &nbsp;</TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Amount to be paid:</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$_______________________</FONT></TD></TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=5% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.</FONT></TD>
     <TD WIDTH=35% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Shares To Be Delivered (2 divided by 1):</FONT></TD>
     <TD WIDTH=60% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>__________________</FONT></TD></TR>
<TR>
      <TD> &nbsp;</TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash payment to be made by Borrower:</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$_____________________</FONT></TD></TR>
</TABLE>


                                   <BR><BR>






<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: ____________</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>LAURUS MASTER FUND, LTD.<BR><BR>
<BR>By:_______________________________<BR>
Name:_____________________________<BR>Title:______________________________</FONT></TD>
</TR>
</TABLE>
<BR>


<p align=center>
<font size=2>16</font></p>
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</body>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.3
<SEQUENCE>4
<FILENAME>exhibit_4-3.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\52030\a52030.eep -->
     <!-- Control Number: 52030                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

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<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Exhibit 4.3</U></B> </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
THIS WARRANT AND THE ORDINARY SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THIS WARRANT AND THE ORDINARY SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO B.O.S. BETTER ON-LINE
SOLUTIONS LTD. THAT SUCH REGISTRATION IS NOT REQUIRED.</FONT></TD>
</TR>
</TABLE>
<BR>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Right to Purchase up to 73,052 Ordinary Shares of<BR>
<U>B.O.S. Better On-Line Solutions Ltd. </U><BR>
(subject to adjustment as provided herein) </FONT>
</P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ORDINARY SHARES
PURCHASE WARRANT </FONT></H1>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">No. _________________</FONT></TD>
     <TD WIDTH="50%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Issue Date:  September 29, 2005</FONT></TD></TR>
</TABLE>




<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.O.S.
          BETTER ON-LINE SOLUTIONS LTD. a corporation incorporated under the laws of the
          State of Israel hereby certifies that, for value received, LAURUS MASTER FUND,
          LTD., or assigns (the &#147;Holder&#148;), is entitled, subject to the terms set
          forth below, to purchase from the Company (as defined herein) from and after the
          Issue Date of this Warrant and at any time or from time to time before 5:00
          p.m., New York time, through the close of business September 29, 2012 (the
          &#147;Expiration Date&#148;), up to 73,052 fully paid and nonassessable Ordinary
          Shares (as hereinafter defined), NIS 4.00 nominal value per share, at the
          applicable Exercise Price per share (as defined below). The number and character
          of such Ordinary Shares and the applicable Exercise Price per share are subject
          to adjustment as provided herein. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
used herein the following terms, unless the context otherwise requires, have the following
respective meanings: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%></TD>
<TD WIDTH=95%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
term &#147;Company&#148; shall include B.O.S. Better On-Line Solutions Ltd.           and
any corporation which shall succeed, or assume the obligations of, B.O.S.
          Better On-Line Solutions Ltd. hereunder.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%></TD>
<TD WIDTH=95%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;       The
term &#147;Ordinary Shares&#148; includes (i) the Company&#146;s Ordinary
          Shares, nominal value NIS 4.00 per share; and (ii) any other securities into
          which or for which any of the securities described in (i) may be converted or
          exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
          of assets or otherwise.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%></TD>
<TD WIDTH=95%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(c) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  The
term &#147;Other Securities&#148; refers to any shares (other than Ordinary
          Shares) and other securities of the Company or any other person (corporate or
          otherwise) which the Holder of the Warrant at any time shall be entitled to
          receive, or shall have received, on the exercise of the Warrant, in lieu of or
          in addition to Ordinary Shares, or which at any time shall be issuable or shall
          have been issued in exchange for or in replacement of Ordinary Shares or Other
          Securities pursuant to Section 4 or otherwise.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

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

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%></TD>
<TD WIDTH=95%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(d) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;        The
&#147;Exercise Price&#148; applicable under this Warrant shall be a price           of
$4.04 per Ordinary Share acquired hereunder.  </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalized
terms used herein without definition shall have the meanings ascribed to such terms in
that certain Securities Purchase Agreement dated as of the date hereof between the
Borrower and the Holder. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Exercise
of Warrant</U>.  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Number
of Shares Issuable upon Exercise</U>. From and after the date hereof through and
including the Expiration Date, the Holder shall be entitled to receive, upon exercise of
this Warrant in whole or in part, by delivery of an original or fax copy of an exercise
notice in the form attached hereto as Exhibit A (the &#147;Exercise Notice&#148;) and
payment in accordance with Section 2.2 below, Ordinary Shares of the Company (the &#147;Warrant
Shares&#148;), subject to adjustment pursuant to Section 4. This Warrant may be exercised
in whole or in part. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Fair
Market Value</U>. For purposes hereof, the "Fair Market Value" of an Ordinary Share as of
a particular date (the "Determination Date") shall mean: </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the Company&#146;s Ordinary Shares are traded on the American Stock Exchange
               or another national exchange or are quoted on the National or SmallCap
Market of                The Nasdaq Stock Market, Inc.(&#147;Nasdaq&#148;), then the
closing or last sale                price, respectively, reported for the last business
day immediately preceding                the Determination Date.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the Company&#146;s Ordinary Shares are not traded on the American Stock
               Exchange or another national exchange or on the Nasdaq but is traded on
the NASD                OTC Bulletin Board, then the mean of the average of the closing
bid and asked                prices reported for the last business day immediately
preceding the                Determination Date.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Except
as provided in clause (d) below, if the Company&#146;s Ordinary Shares                are
not publicly traded, then as the Holder and the Company agree or in the
               absence of agreement, by arbitration in accordance with the rules then in
effect                of the American Arbitration Association, before a single arbitrator
to be chosen                from a panel of persons qualified by education and training
to pass on the                matter to be decided.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the Determination Date is the date of a liquidation, dissolution or winding
               up, or any event deemed to be a liquidation, dissolution or winding up
pursuant                to the Company&#146;s Articles of Association (the &#147;Articles&#148;),
then                all amounts to be payable per share to holders of the Ordinary Shares
pursuant                to the Articles in the event of such liquidation, dissolution or
winding up,                plus all other amounts to be payable per share in respect of
the Ordinary Shares                in liquidation under the Articles, assuming for the
purposes of this clause (d)                that all of the Ordinary Shares then issuable
upon exercise of the Warrant are                outstanding at the Determination Date.  </FONT></TD>
</TR>
</TABLE>
<BR>

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

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Company
Acknowledgment</U>. The Company will, at the time of the exercise of the Warrant, upon
the request of the Holder hereof acknowledge in writing its continuing obligation to
afford to such Holder any rights to which such Holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant. If the Holder shall fail
to make any such request, such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.4 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Trustee
for Warrant Holders</U>. In the event that a bank or trust company shall have been
appointed as trustee for the Holders of the Warrant pursuant to Subsection 3.2, such bank
or trust company shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company or such
successor person as may be entitled thereto, all amounts otherwise payable to the Company
or such successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Procedure
for Exercise</U>.  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Delivery
of Share Certificates, Etc., on Exercise</U>. The Company agrees that the Ordinary Shares
purchased upon exercise of this Warrant shall be deemed to be issued to the Holder as the
record owner of such shares as of the close of business on the date on which this Warrant
shall have been surrendered and payment made for such shares in accordance herewith. As
soon as practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) business days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in the name of
and delivered to the Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct in compliance with applicable securities laws, a
certificate or certificates for the number of duly and validly issued, fully paid and
nonassessable Ordinary Shares (or Other Securities) to which the Holder shall be entitled
on such exercise, plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair Market
Value of one full share, together with any other shares or other securities and property
(including cash, where applicable) to which such Holder is entitled upon such exercise
pursuant to Section 1 or otherwise. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>3</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Exercise</U>.
(a) Payment may be made either (i) in cash, by wire transfer or by certified or official
bank check payable to the order of the Company equal to the applicable aggregate Exercise
Price, (ii) by delivery of the Warrant, or Ordinary Shares receivable upon exercise of
the Warrant in accordance with Section (b) below, or (iii) by a combination of any of the
foregoing methods, for the number of Ordinary Shares specified in such Exercise Notice
(as such exercise number shall be adjusted to reflect any adjustment in the total number
of Ordinary Shares issuable to the Holder per the terms of this Warrant) and the Holder
shall thereupon be entitled to receive the number of duly authorized, validly issued,
fully-paid and non-assessable Ordinary Shares (or Other Securities) determined as
provided herein. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
          Notwithstanding any provisions herein to the contrary, if the Fair Market Value
          of one Ordinary Share is greater than the Exercise Price (at the date of
          calculation as set forth below), in lieu of exercising this Warrant for cash,
          the Holder may elect to receive shares equal to the value (as determined below)
          of this Warrant (or the portion thereof being exercised) by surrender of this
          Warrant at the principal office of the Company together with the properly
          endorsed Exercise Notice in which event the Company shall issue to the Holder a
          number Ordinary Shares computed using the following formula:  </FONT></P>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH WIDTH="5%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH WIDTH="80%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD ><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ><FONT FACE="Times New Roman, Times, Serif" SIZE="2">X=Y</FONT></TD>
     <TD ><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>&nbsp;&nbsp;&nbsp;(A-B)&nbsp;&nbsp;&nbsp;</U><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Where X =</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">the number of  Ordinary Shares to be issued to the Holder</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Y =</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">the number of Ordinary Shares  purchasable under the Warrant or, if only a portion of the
Warrant is being  exercised,  the portion of the Warrant being  exercised (at the date of
such calculation)
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">A =</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">the  Fair  Market  Value of one of the  Company's  Ordinary  Shares  (at the date of such<BR>
calculation)
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">B =</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exercise Price (as adjusted to the date of such calculation)</FONT></TD></TR>
</TABLE>
<BR>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Effect
of Reorganization, Etc.; Adjustment of Exercise Price</U>.  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Reorganization,
Consolidation, Merger, Etc</U>. In case at any time or from time to time, the Company
shall (a) effect a reorganization, (b) consolidate with or merge into any other person,
including the sale of substantially all of the Company&#146;s outstanding share capital
to a corporate third party, in consideration for such third party&#146;s securities, or
(c) transfer all or substantially all of its properties or assets to any other person
under any plan or arrangement contemplating the dissolution of the Company, then, in each
such case, as a condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant, on the
exercise hereof as provided in Section 1 at any time after the consummation of such
reorganization, consolidation or merger or the effective date of such dissolution, as the
case may be, shall receive, in lieu of the Ordinary Shares (or Other Securities) issuable
on such exercise prior to such consummation or such effective date, the shares and other
securities and property (including cash) to which such Holder would have been entitled
upon such consummation or in connection with such dissolution, as the case may be, if
such Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4. </FONT></TD>
</TR>
</TABLE>
<BR>

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

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Dissolution</U>.
In the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently with any
distributions made to holders of its Ordinary Shares, shall at its expense deliver or
cause to be delivered to the Holder the shares and other securities and property
(including cash, where applicable) receivable by the Holder of the Warrant pursuant to
Section 3.1, or, if the Holder shall so instruct the Company, to a bank or trust company
specified by the Holder and having its principal office in New York, NY as trustee for
the Holder of the Warrant (the &#147;Trustee&#148;). </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Continuation
of Terms</U>. Upon any reorganization, consolidation, merger or transfer (and any
dissolution following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable to the shares
and other securities and property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be binding upon
the issuer of any such shares or other securities, including, in the case of any such
transfer, the person acquiring all or substantially all of the properties or assets of
the Company, whether or not such person shall have expressly assumed the terms of this
Warrant as provided in Section 4. In the event this Warrant does not continue in full
force and effect after the consummation of the transactions described in this Section 3,
then the Company&#146;s securities and property (including cash, where applicable)
receivable by the Holders of the Warrant will be delivered to Holder or the Trustee as
contemplated by Section 3.2. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Extraordinary
Events Regarding Ordinary Shares</U>. In the event that the           Company shall (a)
issue additional Ordinary Shares as a dividend or other           distribution on
outstanding Ordinary Shares, (b) subdivide its outstanding           Ordinary Shares, or
(c) combine its outstanding Ordinary Shares into a smaller           number of Ordinary
Shares, then, in each such event, the Exercise Price shall,           simultaneously with
the happening of such event, be adjusted by multiplying the           then Exercise Price
by a fraction, the numerator of which shall be the number of           Ordinary Shares
outstanding immediately prior to such event and the denominator           of which shall
be the number of Ordinary Shares outstanding immediately after           such event, and
the product so obtained shall thereafter be the Exercise Price           then in effect.
The Exercise Price, as so adjusted, shall be readjusted in the           same manner upon
the happening of any successive event or events described           herein in this
Section 4. The number of Ordinary Shares that the Holder of this           Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be           entitled to
receive shall be increased or decreased, as the case may be, to a           number
determined by multiplying the number of Ordinary Shares that would           otherwise
(but for the provisions of this Section 4) be issuable on such           exercise by a
fraction of which (a) the numerator is the Exercise Price that           would otherwise
(but for the provisions of this Section 4) be in effect, and (b)           the
denominator is the Exercise Price in effect on the date of such exercise.  </FONT></P>

<p align=center>
<font size=2>5</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Certificate
as to Adjustments</U>. In each case of any adjustment or           readjustment in the
Ordinary Shares (or Other Securities) issuable on the           exercise of the Warrant,
the Company at its expense will promptly cause its           Chief Financial Officer or
other appropriate designee to compute such adjustment           or readjustment in
accordance with the terms of the Warrant and prepare a           certificate setting
forth such adjustment or readjustment and showing in detail           the facts upon
which such adjustment or readjustment is based, including a           statement of (a)
the consideration received or receivable by the Company for any           additional
Ordinary Shares (or Other Securities) issued or sold or deemed to           have been
issued or sold, (b) the number of Ordinary Shares (or Other           Securities)
outstanding or deemed to be outstanding, and (c) the Exercise Price           and the
number of Ordinary Shares to be received upon exercise of this Warrant,           in
effect immediately prior to such adjustment or readjustment and as adjusted           or
readjusted as provided in this Warrant. The Company will forthwith mail a           copy
of each such certificate to the Holder of the Warrant and any Warrant agent           of
the Company (appointed pursuant to Section 13 hereof).  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Reservation
of Shares, Etc., Issuable on Exercise of Warrant</U>. The Company           will at all
times reserve and keep available, solely for issuance and delivery           on the
exercise of the Warrant, Ordinary Shares (or Other Securities) from time           to
time issuable on the exercise of the Warrant.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;7. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Representations
and Warranties by the Holder</U>. The Holder represents and           warrants to the
Company as follows:  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.1 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Holder
understands that the Warrant is being offered and sold pursuant to an exemption or
exemptions from registration requirements of Israeli and US Federal and state securities
laws and that the Company is relying upon the truth and accuracy of Holder&#146;s
representations contained in that Securities Purchase Agreement of even date herewith,
including, without limitation, that the Holder is an &#147;accredited investor&#148;within
the meaning of Regulation D under the Securities Act of 1933. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.2 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Holder
has substantial experience in evaluating and investing in private placement transactions
of securities in companies similar to the Company so that it is capable of evaluating the
merits and risks of its investment in the Company and has the capacity to protect its own
interests. Holder is able to bear the economic risk of this investment. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.3 </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Holder
is acquiring the Warrant and the Ordinary Shares issuable upon exercise of the Warrant
for its own account for investment only, and not as a nominee or agent and not with a
view towards or for resale in connection with their distribution. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>6</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;8. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Assignment;
Exchange of Warrant</U>. Subject to compliance with applicable           securities laws,
this Warrant, and the rights evidenced hereby, may be           transferred by any
registered Holder hereof (a &#147;Transferor&#148;) in whole           or in part. On the
surrender for exchange of this Warrant, with the           Transferor&#146;s endorsement
in the form of Exhibit B attached hereto (the           &#147;Transferor Endorsement Form&#148;)
and together with evidence reasonably           satisfactory to the Company demonstrating
compliance with applicable securities           laws, which shall include, without
limitation, a legal opinion from the           Transferor&#146;s counsel that such
transfer is exempt from the registration           requirements of applicable securities
laws, the Company at its expense (but with           payment by the Transferor of any
applicable transfer taxes) will issue and           deliver to or on the order of the
Transferor thereof a new Warrant of like           tenor, in the name of the Transferor
and/or the transferee(s) specified in such           Transferor Endorsement Form (each a
&#147;Transferee&#148;), calling in the           aggregate on the face or faces thereof
for the number of Ordinary Shares of           Ordinary Stock called for on the face or
faces of the Warrant so surrendered by           the Transferor.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;9. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Replacement
of Warrant</U>. On receipt of evidence reasonably satisfactory to           the Company
of the loss, theft, destruction or mutilation of this Warrant and,           in the case
of any such loss, theft or destruction of this Warrant, on delivery           of an
indemnity agreement or security reasonably satisfactory in form and amount           to
the Company or, in the case of any such mutilation, on surrender and
          cancellation of this Warrant, the Company at its expense will execute and
          deliver, in lieu thereof, a new Warrant of like tenor.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;10. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Registration
Rights</U>. The Holder of this Warrant has been granted certain           registration
rights by the Company. These registration rights are set forth in a
          Registration Rights Agreement entered into by the Company and the Purchaser
          dated as of even date of this Warrant.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;11. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Maximum
Exercise</U>. Notwithstanding anything contained herein to the           contrary, the
Holder shall not be entitled to convert pursuant to the terms of           the Note or
the Warrant an amount that would (a) be convertible into that number           of
Ordinary Shares which, when added to the number of Ordinary Shares otherwise
          beneficially owned by such Holder including those issuable upon exercise of
          warrants of the Company held by such Holder would exceed 4.99% of the
          outstanding Ordinary Shares of the Company at the time of conversion or (b)
(ii)           exceed twenty five percent (25%) of the aggregate dollar trading volume of
the           Ordinary Share for the thirty (30) day trading period immediately preceding
          delivery of a Notice of Conversion to the Company. For the purposes of the
          immediately preceding sentence, beneficial ownership shall be determined in
          accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
          thereunder. The conversion limitation described in this Section 11 shall
          automatically become null and void without any notice to Company upon the
          occurrence and during the continuance beyond any applicable grace period of an
          Event of Default, or upon 75 days prior notice to the Company, except that at
no           time shall the beneficial ownership exceed 19.99% of the borrower&#146;s
          Ordinary Shares as of the date hereof. Notwithstanding anything contained
herein           to the contrary, the number of Ordinary Shares issuable by the Company
and           acquirable by the Holder pursuant to the terms of this Warrant and/or the
Note           issued by the Company to the Holder pursuant to this Securities Purchase
          Agreement, shall not exceed an aggregate of 1,270,720 of the Company&#146;s
          Ordinary Shares, (subject to appropriate adjustment for stock splits, stock
          dividends, or other similar recapitalizations affecting the Ordinary Shares).
          Furthermore, Holder acknowledges and agrees that the Company (i) shall, on or
          before September 30, 2006, use its best efforts to solicit shareholder approval
          of the authorization and issuance of at least such amount of Ordinary Shares as
          would permit the Holder to acquire all of the Ordinary Shares issuable by the
          Company and acquirable by the Holder pursuant to the terms of this Warrant
          and/or the Note, provided however, that until such shareholder approval is
          granted, the Company shall not be required to issue an amount of Ordinary
Shares           pursuant to the Warrant and/or the Note, which exceeds in the aggregate,
625,000           Ordinary Shares.  </FONT></P>

<p align=center>
<font size=2>7</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;12. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Rights
of Shareholders</U>. No Holder shall be entitled, as a Warrant holder,           to vote
or receive dividends or be deemed the holder of the Ordinary Shares or           any
other securities of the Company, which may at any time be issuable upon the
          exercise of this Warrant for any purpose, nor shall anything contained herein
be           construed to confer upon the Holder, as such, any of the rights of a
shareholder           of the Company or any right to vote for the election of directors
or upon any           matter submitted to shareholders at any meeting thereof, or to give
or withhold           consent to any corporate action (whether upon any recapitalization,
issuance of           shares, reclassification of shares, change of nominal value,
consolidation,           merger, conveyance, or otherwise) or to receive notice of
meetings, or to           receive dividends or subscription rights or otherwise until the
Warrant shall           have been exercised and the Ordinary Shares issuable upon the
exercise hereof           shall have become deliverable, as provided herein.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;13. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Warrant
Agent</U>. The Company may, by written notice to each Holder of the           Warrant,
appoint an agent for the purpose of issuing Ordinary Shares (or Other
          Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
          this Warrant pursuant to Section 8, and replacing this Warrant pursuant to
          Section 9, or any of the foregoing, and thereafter any such issuance, exchange
          or replacement, as the case may be, shall be made at such office by such agent.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;14. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Transfer
on the Company&#146;s Books</U>. Until this Warrant is transferred           on the books
of the Company, the Company may treat the registered holder hereof           as the
absolute owner hereof for all purposes, notwithstanding any notice to the
          contrary.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;15. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notices,
Etc</U>. All notices and other communications from the Company to           the Holder of
this Warrant shall be mailed by first class registered or           certified mail,
postage prepaid, at such address as may have been furnished to           the Company in
writing by such Holder or, until any such Holder furnishes to the           Company an
address, then to, and at the address of, the last Holder of this           Warrant who
has so furnished an address to the Company.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;16. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Voluntary
Adjustment by the Company</U>. The Company may at any time during           the term of
this Warrant reduce the then current Exercise Price to any amount           and for any
period of time deemed appropriate by the Board of Directors of the           Company.  </FONT></P>

<p align=center>
<font size=2>8</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;17. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Miscellaneous</U>.
This Warrant and any term hereof may be changed, waived,           discharged or
terminated only by an instrument in writing signed by the party           against which
enforcement of such change, waiver, discharge or termination is           sought. This
Warrant shall be governed by and construed in accordance with the           laws of State
of New York without regard to principles of conflicts of laws. Any           action
brought concerning the transactions contemplated by this Warrant shall be
          brought only in the state courts of New York or in the federal courts located
in           the state of New York; provided, however, that the Holder may choose to
waive           this provision and bring an action outside the state of New York. The
Company           hereby agrees to submit to the jurisdiction of such courts and waive
trial by           jury. The prevailing party shall be entitled to recover from the other
party its           reasonable attorney&#146;s fees and costs. In the event that any
provision of           this Warrant is invalid or unenforceable under any applicable
statute or rule of           law, then such provision shall be deemed inoperative to the
extent that it may           conflict therewith and shall be deemed modified to conform
with such statute or           rule of law. Any such provision which may prove invalid or
unenforceable under           any law shall not affect the validity or enforceability of
any other provision           of this Warrant. The headings in this Warrant are for
purposes of reference           only, and shall not limit or otherwise affect any of the
terms hereof. The           invalidity or unenforceability of any provision hereof shall
in no way affect           the validity or enforceability of any other provision. Each of
the Company and           the Holder acknowledges that its legal counsel participated in
the preparation           of this Warrant and, therefore, stipulates that the rule of
construction that           ambiguities are to be resolved against the drafting party
shall not be applied           in the interpretation of this Warrant to favor any party
against the other           party.  </FONT></P>



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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[BALANCE OF PAGE
INTENTIONALLY LEFT BLANK;<BR>SIGNATURE PAGE FOLLOWS.] </FONT></H1>

<p align=center>
<font size=2>9</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above. </FONT></P>

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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S. BETTER ON-LINE SOLUTIONS LTD.<BR><BR>
<BR>BY: <BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Name: &nbsp;   Adiv Baruch<BR>Title: &nbsp;&nbsp;   CEO</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>
<BR>BY: <BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Name: &nbsp;Nehemia Kaufman<BR>Title: &nbsp;&nbsp;      CFO</FONT></TD>
</TR>
</TABLE>
<BR>

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



<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>EXHIBIT A</B> </FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>FORM OF SUBSCRIPTION</B><BR>
(To Be Signed Only On Exercise Of Warrant) </FONT>
</P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TO:  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S.
Better On-Line Solutions Ltd.</FONT></TD>
</TR>
</TABLE>
<BR>



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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         Attention: </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chief
Financial Officer</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned, pursuant to the provisions set forth in the attached Warrant (No.____),
hereby irrevocably elects to purchase (check applicable box): </FONT></P>



<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">________ <BR>
<BR>
________ <BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT></TD>
     <TD WIDTH="85%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">________ Ordinary Shares covered by such Warrant; or
<BR><BR>
the maximum  number of Ordinary  Shares covered by such Warrant  pursuant to the cashless  exercise
procedure set forth in Section 2.

</FONT></TD></TR>
</TABLE>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
 undersigned  herewith  makes payment of the full Exercise  Price for such shares at the
price per share provided for in such Warrant,  which is  $___________.  Such payment
takes the form of (check  applicable box or boxes): </FONT></P>



<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">________<BR>
<BR>
________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
<BR>
________
</FONT></TD>
     <TD WIDTH="85%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$__________ in lawful money of the United States; and/or<BR>
<BR>
the  cancellation of such portion of the attached  Warrant as is exercisable for a total of _______<BR>
Ordinary  Shares  (using  a  Fair  Market  Value  of  $_______  per  share  for  purposes  of  this<BR>
calculation); and/or<BR>
<BR>
the cancellation of such number of  Ordinary Shares as is necessary, in accordance with the formula set forth
in Section 2.2, to exercise this Warrant with respect to the maximum number of Ordinary Shares purchasable
pursuant to the cashless exercise procedure set forth in Section 2.
</FONT></TD></TR>
</TABLE>
<BR>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned  requests that the  certificates for such shares be issued in the name of,
and delivered to ________________________  whose
                  address                  is
__________________. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned represents and warrants that all offers and sales by the undersigned of the
securities issuable upon exercise of the within Warrant shall be made pursuant to
registration of the Ordinary Shares under the Securities Act of 1933, as amended (the
&#147;Securities Act&#148;) or pursuant to an exemption from registration under the
Securities Act. </FONT></P>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Dated: _______________________________
</FONT></TD>
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_____________________________________________<BR>
(Signature must conform to name of hHolder as <BR>
specified on the face of the Warrant)<BR>
<BR>
Address: ____________________________________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;____________________________________
</FONT></TD></TR>
</TABLE>


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




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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT B </FONT></H1>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>FORM OF TRANSFEROR
ENDORSEMENT</B> </FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>(To Be Signed Only On
Transfer Of Warrant) </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>FOR VALUE RECEIVED, THE
UNDERSIGNED HEREBY SELLS, ASSIGNS, AND TRANSFERS UNTO THE PERSON(S) NAMED BELOW UNDER THE
HEADING &#147;TRANSFEREES&#148; THE RIGHT REPRESENTED BY THE WITHIN WARRANT TO PURCHASE
THE PERCENTAGE AND NUMBER OF SHARES OF ORDINARY SHARES OF B.O.S. BETTER ON-LINE SOLUTIONS
LTD. INTO WHICH THE WITHIN WARRANT RELATES SPECIFIED UNDER THE HEADINGS &#147;PERCENTAGE
TRANSFERRED&#148; AND &#147;NUMBER TRANSFERRED,&#148; RESPECTIVELY, OPPOSITE THE NAME(S)
OF SUCH PERSON(S) AND APPOINTS EACH SUCH PERSON ATTORNEY TO TRANSFER ITS RESPECTIVE RIGHT
ON THE BOOKS OF B.O.S. BETTER ON-LINE SOLUTIONS LTD. WITH FULL POWER OF SUBSTITUTION IN
THE PREMISES.</B> </FONT></P>




<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="600" ALIGN="CENTER">
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Transferees</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Address</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percentage<BR>Transferred</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number Transferred</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>

<TR>
      <TD>&nbsp; </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD></TR><TR>
      <TD>&nbsp; </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
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</TABLE>
<BR>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="40%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>DATED: _______________________________</B> </FONT>
</TD>
     <TD WIDTH="60%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>_____________________________________________<BR>
(SIGNATURE MUST CONFORM TO NAME OF <BR>HOLDER AS
SPECIFIED ON THE FACE OF <BR>THE WARRANT)<BR>
<BR>
ADDRESS: ____________________________________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;____________________________________</B> </FONT>
</TD></TR>
</TABLE>



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

<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TD>
<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>SIGNED IN THE PRESENCE OF:<BR><BR>
<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
(NAME)</B> </FONT></TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
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<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>ACCEPTED AND AGREED:<BR>[TRANSFEREE]<BR>
<BR> &#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
(NAME)</B> </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
</TR>
</TABLE>
<BR>





<p align=center>
<font size=2>2</font></p>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>5
<FILENAME>exhibit_5-1.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\52030\a52030.eep -->
     <!-- Control Number: 52030                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

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<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 5.1</B></U> </FONT> </P>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="5%"><IMG SRC="apm.jpg"></TD>
     <TD WIDTH="95%" VALIGN="Middle"><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>Amit, Pollak, Matalon &amp; Co.</B></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Advocates and Notary</FONT></TD></TR>
</TABLE>
<BR>






<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>December 1, 2005 </FONT></P>


<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">B.O.S Better Online Solutions Ltd.<BR>
Beit Rabin,<BR>
Teradyon Industrial Park<BR>
<U>Misgav, 20179, Israel</U> </FONT>
</P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ladies and Gentlemen: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have acted as Israeli counsel to
B.O.S. Better Online Solutions Ltd., an Israeli company (the &#147;Company&#148;), in
connection with the Registration Statement on Form F-3 (the &#147;Registration
Statement&#148;), filed by the Company with the Securities and Exchange Commission on the
date hereof. The Registration Statement relates to the resale from time to time by the
selling shareholders identified therein of up to 2,638,060 ordinary shares of the Company,
par value NIS 4.00 per share (&#147;Ordinary Shares&#148;) as follows: (i) up to 1,310,841
Ordinary Shares, issued by the Company in private placements completed in December 2003
and July 2005 (the &#147;Outstanding Shares&#148;); and (ii) up to 1,327,219 Ordinary
Shares issuable upon conversion of a secured convertible term note (the &#147;Note&#148;)
and upon exercise of warrants (the &#147;Warrants&#148;) held by certain selling
shareholders (the &#147;Underlying Shares&#148;). </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In so acting, we have examined such
corporate documents and have made such investigation of matters of fact and law as we have
deemed relevant and necessary as a basis for the opinion hereinafter set forth. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In such examination, we have assumed
the genuineness of all signatures, the legal capacity of natural persons, the authenticity
of all documents submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of fact
material to this opinion, we have relied, without independent investigation, upon
statements and certificates or comparable documents of officers and representatives of the
Company and upon certificates of public officials. We have considered such questions of
Israeli law as we have deemed necessary for the purpose of rendering this opinion. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We are members of the Bar of the
State of Israel and, in rendering our opinion, we do not pass (expressly or by
implication) on the laws of any jurisdiction other than the State of Israel. Our opinion
relates only to Israeli laws. In addition, we render no opinion in relation to any
representation made or given in the Registration Statement. </FONT></P>

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

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="5%"><IMG SRC="apm.jpg"></TD>
     <TD WIDTH="95%" VALIGN="Middle"><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>Amit, Pollak, Matalon &amp; Co.</B></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Advocates and Notary</FONT></TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based upon the foregoing, we are of
the opinion that (i) the Outstanding Shares have been duly authorized and are validly
issued, fully paid and nonassessable, and (ii) the Underlying Shares, have been duly
authorized and upon conversion of the Note in accordance with its terms and exercise of
the Warrants in accordance with their terms, shall be validly issued, fully paid and
nonassessable. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This opinion is furnished to you
solely in connection with the Registration Statement and is not to be used, circulated,
quoted or otherwise referred to for any other purpose without our express prior written
permission. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We hereby consent to the filing of
this opinion with the Securities and Exchange Commission as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under the captions &#147;Validity
of Securities&#148; and &#147;Enforceability of Civil Liabilities&#148; in the related
Prospectus. The issuance of such consent does not concede that we are an
&#147;expert&#148; for the purposes of the Securities Act of 1933, as amended. </FONT></P>

<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Very truly yours,<BR><BR>
<BR>/s/ Amit, Pollak, Matalon &amp; Co.<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
<B>Amit, Pollak, Matalon &amp; Co.</B></FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2></font></p>
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</body>
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<SEQUENCE>6
<FILENAME>apm.jpg
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>7
<FILENAME>exhibit_23-2.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\52030\a52030.eep -->
     <!-- Control Number: 52030                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Scotch Rule Top-TNR" FSL="Workstation" -->
<HR ALIGN=LEFT WIDTH=100% SIZE=4 NOSHADE STYLE="margin-top: -5px">
<HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE STYLE="margin-top: -10px">

<!-- MARKER FORMAT-SHEET="Head Right-TNR" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 23.2</B></U> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We consent to the references to our
firm under the caption &#147;Experts&#148; in to the Registration Statement on Form F-3
and related prospectus of B.O.S Better Online Solutions Ltd. (&#147;BOS&#148;) for the
registration of up to 2,638,060 of its Ordinary shares and to the incorporation by
reference therein of our report dated March 30, 2005, with respect to the consolidated
financial statements of BOS included in its Annual Report on Form 20-F, for the year ended
December 31, 2004, filed with the Securities and Exchange Commission on June 27, 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We also consent to the incorporation
by reference to such Registration Statement and related Prospectus of our report dated
March 14, 2005 with respect to the consolidated financial statements of
Surf-Communications Solutions Ltd. included in the abovementioned Annual Report of BOS. </FONT></P>

<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="50%" VALIGN="Bottom"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel Aviv, Israel<BR>November 30, 2005</FONT></TD>
<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ Kost Forer Gabbay &amp; Kasierer<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Kost Forer Gabbay &amp; Kasierer<BR>A Member of Ernst &amp; Young Global</FONT></TD>
</TR>
</TABLE>
<BR><BR>



<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Default" -->
<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kost
Forer Gabbay &amp; kasierer is a member practice of Ernst &amp; Young Global </FONT></P>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
</body>
</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.3
<SEQUENCE>8
<FILENAME>exhibit_23-3.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\52030\a52030.eep -->
     <!-- Control Number: 52030                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>v</TITLE>
</HEAD>
<BODY>

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<HR ALIGN=LEFT WIDTH=100% SIZE=4 NOSHADE STYLE="margin-top: -5px">
<HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE STYLE="margin-top: -10px">

<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 23.3</B></U> </FONT> </P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2">CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We hereby consent to the
incorporation by reference in the Registration Statement on Form F-3&nbsp;of B.O.S. Better
Online Solutions Ltd. (&#147;BOS&#148;) of our reports dated December 12, 2004 and March
25, 2005 relating to the financial statements of Odem Electronic Technologies 1992 Ltd.,
which appear in BOS&#146; report on Form 6-K filed with the Securities and Exchange
Commission (&#147;SEC&#148;) on January 10, 2005 and in BOS&#146; Annual Report on Form
20-F, for the year ended December 31, 2004, filed with the SEC on&nbsp;June 27, 2005,
respectively. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We also consent to the references to
us under the heading &#147;Experts&#148; in such Registration Statement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="40%" VALIGN="Middle"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Jerusalem, Israel<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;December 1,  2005 </FONT></TD>
<TD WIDTH="60%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ Kesselman &amp; Kesselman<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Kesselman &amp; Kesselman<BR>Certified Public Accountants (Israel)<BR>A member of PricewaterhouseCoopers International Limited</FONT></TD>
</TR>
</TABLE>
<BR>
<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">


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<DOCUMENT>
<TYPE>EX-23.4
<SEQUENCE>9
<FILENAME>exhibit_23-4.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\52030\a52030.eep -->
     <!-- Control Number: 52030                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

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<HR ALIGN=LEFT WIDTH=100% SIZE=4 NOSHADE STYLE="margin-top: -5px">
<HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE STYLE="margin-top: -10px">

<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 23.4</B></U> </FONT> </P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3>WALTER FEY, CPA<BR>
223 Mass Ave.<BR>
Arlington, MA 02474<BR>
TEL (781) 641-9889<BR>
FAX (781) 641-9891<BR>
Email: wfcpa@aol.com
</FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I consent to the  reference to my
firm under the caption  "Experts"  and to the use of my report dated January 18, 2005
with respect to the  financial  statements  of  Surf-Communications  Solutions  Inc.,
which appears in the Annual Report on Form 20-F of B.O.S.  Better Online  Solutions  Ltd.
 ("BOS") for the year ended  December 31, 2004, in the  Registration  Statement on Form
F-3 and related  Prospectus of BOS for the registration of up to 2,638,060 of its
ordinary shares. </FONT></P>

<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=100%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Arlington, MA<BR><BR>November 29, 2005
<BR><BR>/s/ Walter Fey, CPA<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Walter Fey, CPA</FONT></TD>
</TR>
</TABLE>
<BR>


<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
</body>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.5
<SEQUENCE>10
<FILENAME>exhibit_23-5.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\backup\office\EDGAR Filing\BOS better online solutions Ltd\52030\a52030.eep -->
     <!-- Control Number: 52030                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Scotch Rule Top-TNR2" FSL="Workstation" -->
<HR ALIGN=LEFT WIDTH=100% SIZE=4 NOSHADE STYLE="margin-top: -5px">
<HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE STYLE="margin-top: -10px">

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Default" -->
<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 23.5</B></U> </FONT> </P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</FONT></P>



<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We consent to the reference to our
firm under the caption &#147;Experts&#148; and to the use of our report dated April 2,
2004 with respect to the financial statements of Surf-Communications Solutions BV, which
appears in the Annual Report on Form 20-F of B.O.S. Better Online Solutions Ltd.
(&#147;BOS&#148;) for the year ended December 31, 2004, in the Registration Statement on
Form F-3 and related Prospectus of BOS for the registration of up to 2,638,060 of its
ordinary shares. </FONT></P>


<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Amsterdam, November 29,
2005 </FONT></P>





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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<BR>/s/ MAZARS PAARDEKOOPER HOFFMAN<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
MAZARS PAARDEKOOPER HOFFMAN</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>F.D.N, Walta RA </FONT></P>


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


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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.6
<SEQUENCE>11
<FILENAME>exhibit_23-6.htm
<TEXT>

<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\52030\a52030.eep -->
     <!-- Control Number: 52030                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
</HEAD>
<BODY>

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<HR ALIGN=LEFT WIDTH=100% SIZE=4 NOSHADE STYLE="margin-top: -5px">
<HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE STYLE="margin-top: -10px">

<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 23.6</B></U> </FONT> </P>




&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<IMG SRC="var.jpg">

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<HR SIZE="1" NOSHADE WIDTH="90%" ALIGN="CENTER">

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>December 01, 2005 </FONT></H1>



<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mr. Nechemia Kaufman, CFO<BR>
B.O.S Better Online Solutions Ltd.<BR>
Teradyon, Misgav<BR>
Israel
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><HR SIZE=1 NOSHADE WIDTH=25% ALIGN=LEFT></TD></TR>
</TABLE>
<BR>




<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dear Mr. Kaufman: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Re: <U>Consent letter</U> </FONT> </H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We consent to the reference to our
firm under the caption &#147;Experts&#148; in the Registration Statement on Form F-3 and
related prospectus of BOS Better Online Solutions Ltd. for the registration of up to
2,638,060 ordinary shares. </FONT></P>


<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>
<BR>/s/ Variance Economic Consulting Ltd.<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
<BR>Variance Economic Consulting Ltd.</FONT></TD>
</TR>
</TABLE>
<BR>



<p align=center>
<font size=2></font></p>
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</DOCUMENT>
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<FILENAME>var.jpg
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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
