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<SEC-DOCUMENT>0001178913-06-001652.txt : 20060907
<SEC-HEADER>0001178913-06-001652.hdr.sgml : 20060907
<ACCEPTANCE-DATETIME>20060907093406
ACCESSION NUMBER:		0001178913-06-001652
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20060907
FILED AS OF DATE:		20060907
DATE AS OF CHANGE:		20060907

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:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-14184
		FILM NUMBER:		061078171

	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>6-K
<SEQUENCE>1
<FILENAME>zk62888.htm
<TEXT>
<HTML>
<HEAD>
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     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\62888\a62888.eep -->
     <!-- Control Number: 62888                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
</HEAD>
<BODY>

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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>FORM 6 &#150; K</B> </FONT> </P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>SECURITIES AND EXCHANGE
COMMISSION</B> </FONT> </P>

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<P ALIGN=CENTER><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=2>Report of Foreign Issuer </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to Rule 13a
&#150; 16 or 15d - 16<BR>of the Securities Exchange Act of 1934 </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For the Month of
September 2006 </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="5"><U><B>B.O.S. Better Online
Solutions Ltd.</B></U> </FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Translation of
Registrant&#146;s Name into English) </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>100 BOS Road,
Teradyon 20179, Israel </U></FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Address of Principal
Corporate Offices) </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark whether the
registrant files or will file annual reports under cover Form 20-F or Form 40-F. </FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form 20-F <FONT size="3" face="Wingdings">x
</font> Form 40-F <FONT size="3" face="Wingdings">o
</font></FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark if the
 registrant is submitting  the Form 6-K in paper as permitted by Regulation  S-T Rule
101(b)(1): ___________ </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark if the
 registrant is submitting  the Form 6-K in paper as permitted by Regulation  S-T Rule
101(b)(7): ___________ </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark whether the registrant
by furnishing the information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934. </FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Yes <FONT size="3" face="Wingdings">o
</font>No <FONT size="3" face="Wingdings">x
</font></FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">If &#147;Yes&#148; is marked,
indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): <U>N/A</U> </FONT></P>

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

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THIS FORM 6-K IS HEREBY INCORPORATED
BY REFERENCE INTO THE REGISTRANT&#146;S REGISTRATION STATEMENTS ON FORM F-3 (NO.
333-130048) AND FORM S-8 (NOS. 333-136957, 333-110696, 333-100971 AND 333-11650), AND TO
BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS SUBMITTED, TO THE EXTENT NOT
SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attached hereto and incorporated by
reference herein is the Registrant&#146;s notice of meeting and proxy statement for the
special general meeting of shareholders to be held on October 19, 2006. </FONT></P>

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

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


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<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 Online Solutions Ltd.<BR>(Registrant)<BR>
<BR>By: /s/ Nehemia Kaufman<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Nehemia Kaufman<BR>CFO</FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: September 7, 2006 </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>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>B.O.S. Better Online Solutions Ltd.
<BR>Beit Rabin
<BR>Teradyon Industrial Zone
<BR>Misgav, Israel</B> </FONT>
</P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>NOTICE OF SPECIAL GENERAL MEETING OF SHAREHOLDERS</B> </FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>To Be Held on October 19, 2006</B> </FONT></P>



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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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;You
are invited to attend a Special General Meeting of Shareholders of B.O.S. Better Online
Solutions Ltd. (the &#147;Company&#148;) to be held in Israel at the offices of Amit,
Pollak, Matalon &amp; Co., NYP Tower, 19<SUP>th</SUP> floor, 17 Yitzhak Sadeh Street,
Tel-Aviv, Israel, on October 19, 2006 at 11 a.m. local time, and thereafter as it may be
adjourned from time to time (the &#147;Meeting&#148;) for the following purpose (as well
as to transact such other business as may properly come before the Meeting or any
adjournments thereof): </FONT></P>

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          <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>
          To approve the raise of equity by the Company, by way of a public offering in
          Israel, and to authorize the Company&#146;s Board of Directors to negotiate and
          finalize its terms. </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>
          To approve, as an alternative to the public offering, at management&#146;s
          discretion, the raise of equity by the Company, by way of a private placement
          and to authorize the Company&#146;s Board of Directors to negotiate and finalize
          its terms. </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;Pursuant
to the Company&#146;s Articles of Association, the Board of Directors has fixed the close
of business on September 12, 2006 as the date for determining the holders of record of
Ordinary Shares entitled to notice of and to vote at the Meeting and any adjournments
thereof. </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
proposals are ordinary resolutions, which require the affirmative vote of a majority of
the Ordinary Shares of the Company voted in person or by proxy at the Meeting on the
matter presented for passage. Additionally, they must also meet certain other conditions for
passage, as detailed in the proxy statement. The votes of all shareholders voting on the
matter will be counted. </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 believes that the shareholders of the Company should be represented as
fully as possible at the Meeting and encourages your attendance. Whether or not you plan
to be present kindly complete, date and sign the enclosed proxy exactly as your name
appears on the envelope containing this Notice of Special General Meeting and mail it
promptly so that your votes can be recorded. No postage is required if mailed in the
United States. Return of your proxy does not deprive you of your right to attend the
Meeting, to revoke the proxy or to vote your shares in person. All proxy instruments and
powers of attorney must be delivered to the Company no later than 48 hours prior to the
meeting. The Company&#146;s Proxy Statement is furnished herewith. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Joint
holders of Ordinary Shares should take note that, pursuant to Article 14.13 of the
Articles of Association of the Company, the vote of the senior of joint holders of any
share who tenders a vote, whether in person or by proxy, will be accepted to the exclusion
of the vote(s) of the other joint holder(s) of the share, and for this purpose seniority
will be determined by the order in which the names stand in the shareholders&#146;
register. </FONT></P>

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<TR>
      <TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">By Order of the Board of Directors,</FONT> </TD>
</TR>
<TR>
      <TD> &nbsp;</TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR VALIGN=TOP>
<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Edouard Cukierman<BR>Chairman of the Board of Directors</FONT></TD>
<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Adiv Baruch<BR>President and Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
<BR>




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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September, 2006 </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>YOUR VOTE IS IMPORTANT. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE DATE AND SIGN THE PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE FOR WHICH NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. YOU CAN LATER REVOKE YOUR PROXY, ATTEND THE MEETING AND VOTE YOUR SHARES IN
PERSON. ALL PROXY INSTRUMENTS AND POWERS OF ATTORNEY MUST BE DELIVERED TO THE
COMPANY&#146;S CORPORATE OFFICE NO LATER THAN 48 HOURS PRIOR TO THE MEETING.</B> </FONT></P>

<p align=center>
<font size=2>1</font></p>
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<page>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>B.O.S. Better Online Solutions Ltd.
<BR>Beit Rabin
<BR>Teradyon Industrial Zone
<BR>Misgav, Israel
<BR>
<BR>SPECIAL GENERAL MEETING OF SHAREHOLDERS
<BR>
<BR>To be held on October 19, 2006
<BR>
<BR>PROXY STATEMENT</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;This
Proxy Statement is furnished to the holders of Ordinary Shares, NIS 4.00 nominal value
(the &#147;Ordinary Shares&#148;), of B.O.S. Better Online Solutions Ltd. (&#147;BOS&#148;
or the &#147;Company&#148;) in connection with the solicitation by the Board of Directors
for use at the Special General Meeting of Shareholders of the Company to be held in Israel
at the offices of Amit, Pollak, Matalon &amp; Co., NYP Tower, 19<SUP>th</SUP> floor, 17
Yitzhak Sadeh Street, Tel-Aviv, Israel, on October 19, 2006 at 11 a.m. local time, and
thereafter as it may be adjourned from time to time (the &#147;Meeting&#148;). At the
Meeting, shareholders of the Company will be asked, to vote upon the following matters (as
well as any such other business as may properly come before the Meeting or any
adjournments thereof): </FONT></P>

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          <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>
          To approve the raise of equity by the Company, by way of a public offering in
          Israel, and to authorize the Company&#146;s Board of Directors to negotiate and
          finalize its terms. </FONT></TD>
          </TR>
          </TABLE>
          <BR>

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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>
          To approve, as an alternative to the public offering, at management&#146;s
          discretion, the raise of equity by the Company, by way of a private placement
          and to authorize the Company&#146;s Board of Directors to negotiate and finalize
          its terms. </FONT></TD>
          </TR>
          </TABLE>
          <BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
form of proxy for use at the Meeting and a return envelope for the proxy are also
enclosed. By appointing &#147;proxies,&#148; shareholders may vote their Ordinary Shares
at the Meeting whether or not they attend. Upon the receipt of a properly signed and dated
proxy in the form enclosed, the persons named as proxies therein will vote the Ordinary
Shares represented thereby in accordance with the instructions of the shareholder
indicated thereon, or, if no direction is indicated, in accordance with the
recommendations of the Board of Directors of the Company. The Company knows of no other
matters to be submitted at the Meeting other than as specified in the Notice of Special
General Meeting of Shareholders enclosed with this Proxy Statement. If any other business
is properly brought before the Meeting, however, it is the intention of the persons named
as proxies to vote in respect thereof in accordance with their best judgment. Shares
represented by executed and unrevoked proxies will be voted. On all matters considered at
the Meeting, abstentions and broker non-votes will not be treated as either a vote
&#147;for&#148; or &#147;against&#148; the matter, although they will be counted to
determine if a quorum is present. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
proxy solicited hereby may be revoked at any time prior to its exercise by means of a
written notice delivered to the Company at its mailing address, which is c/o American
Stock Transfer &amp; Trust Company, 59 Maiden Lane &#150; Plaza Entrance, New York, New
York 10038, USA, by the substitution of a new proxy bearing a later date or by a request
for the return of the proxy at the Meeting. All proxy instruments and powers of attorney
must be delivered to the Company no later than 48 hours prior to the meeting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company expects to mail this Proxy Statement and the enclosed form of proxy to
shareholders on or about September 13, 2006. All expenses of this solicitation will be
borne by the Company. In addition to the solicitation of proxies by mail, directors,
officers and employees of the Company, without receiving additional compensation
therefore, may solicit proxies by telephone, telegraph, in person or by other means.
Brokerage firms, nominees, fiduciaries and other custodians have been requested to forward
proxy solicitation materials to the beneficial owners of Ordinary Shares of the Company
held of record by such persons, and the Company will reimburse such brokerage firms,
nominees, fiduciaries and other custodians for reasonable out-of-pocket expenses incurred
by them in connection therewith. </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>Shareholders
Entitled to Vote</B>. Only holders of record of Ordinary Shares at the close of business
on September 12, 2006 are entitled to notice of and to vote at the Meeting. The Company
had 6,717,002 Ordinary Shares issued and outstanding on September 1, 2006, each of which
is entitled to one vote on each matter to be voted on at the Meeting. The Articles of
Association of the Company do not provide for cumulative voting for the election of the
directors or for any other purpose. The presence, in person or by proxy, of at least two
shareholders holding at least 33<SUP>1</SUP>/<SUB>3</SUB>%<B> </B>of the voting rights, will constitute a quorum
at the Meeting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Votes
Required</B>. The proposals are ordinary resolutions which require the affirmative vote
of a majority of the Ordinary Shares of the Company voted in person or by proxy at the
Meeting on the matter presented for passage. Additionally, they must also meet certain other
conditions for passage, as detailed below. The votes of all shareholders voting on the
matter will be counted. </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>

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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"><B><U>I.</U></B> </FONT> </TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>PRINCIPAL
SHAREHOLDERS</U></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;The
following table sets forth, as of September 1, 2006, information to the best of the
Company&#146;s knowledge, as to each person known to the Company to be the beneficial
owner of more than five percent (5%) of the Company&#146;s outstanding Ordinary Shares and
as to all directors and officers of the Company as a group. Except where indicated, to the
best of the Company&#146;s knowledge based on information provided by the owners, the
beneficial owners of the Ordinary Shares listed below have sole investment and voting
power with respect to those shares. Applicable percentage ownership in the following table
is based on 6,717,002 shares outstanding as of September 1, 2006. </FONT></P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares Beneficially Owned</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN="3" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Name and Address</FONT><HR WIDTH=20% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><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 COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD WIDTH="70%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Catalyst Fund, LP</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT" COLSPAN=7><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3 Daniel Frisch Street,</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel-Aviv 64731, Israel</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,292,275</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19.2</FONT></TD>
        <TD ALIGN="LEFT"><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>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><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>Touareg Consulting Ltd.</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><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>Omar Hodge Building, Wickhams Cay 1</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><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>Road Town, Tartola, British Virgin Islands</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>541,150</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.1</FONT></TD>
        <TD ALIGN=LEFT><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>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT" COLSPAN=7><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Jacob and Sara Neuhof (2)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT" COLSPAN=7><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5 Yitzhak Berger Street,</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Rishon Letzion 75260, Israel</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>450,135</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.7</FONT></TD>
        <TD ALIGN="LEFT"><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>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><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>Officers and directors as a group (3)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>195,361</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.9</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>%</FONT></TD></TR>
</TABLE>
<BR>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)
          Does not include 207,000 warrants to purchase Ordinary Shares of the Company. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)
          Jacob Neuhof holds 225,861 ordinary shares and his spouse, Sara Neuhof, holds
          224,274 ordinary shares. As they are husband and wife, each is deemed to
          indirectly hold the shares of the other, however, each disclaims beneficial
          ownership of these shares. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)
          Does not include 859,758 options to purchase Ordinary Shares of the Company
          granted and currently held by Officers and/or Directors of the Company. Does not
          include 65,217 options of Brada Investments Limited, a shareholder of the
          Company owned by a discretionary trust of which Mr. Joel Adler, a director of
          the Company, is one of the beneficiaries. </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><B>II.</B> </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><U>RESOLUTIONS</U></B></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><B>1.</B> </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>PUBLIC
OFFERING IN ISRAEL</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;The
Audit Committee and the Board of Directors have approved, subject to shareholder approval,
a public offering in Israel, in order to raise equity by the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
amount to be raised shall be no less than $3,000,000 and no more than $5,000,000, by way
of a public offering in Israel of the Company&#146;s Ordinary Shares NIS 4.00 nominal
value each, and of warrants to purchase a number of Ordinary Shares amounting to up to 70%
of the number of Ordinary Shares offered (i.e. 70% warrant coverage), with a warrant
exercise price above Market Price (as defined below) (the &#147;Offering&#148;). The
Ordinary Shares&#146; offering price shall be no less than the average trading price of
the Company&#146;s Ordinary Shares on the Nasdaq Global Market during the 20 trading days
prior to issuance (the &#147;Market Price&#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;The
Catalyst Fund, LP (&#147;Catalyst&#148;), the Company&#146;s largest shareholder, has
indicated that it intends to participate in the institutional investors tender, prior to
the Offering to the public, and will thus be granted a commitment commission commensurate
with the commission granted to the other institutional investors participating in the
Offering (the &#147;Commitment Fees&#148;). Catalyst has not yet determined its exact
commitment. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cukierman
&amp; Co. Investment House Ltd., a company (indirectly) controlled by Mr. Edouard
Cukierman, the Company&#146;s Chairman of the Board, and the Chief Executive Officer of
the general managing partner of Catalyst, shall be granted placement fees, together with
the underwriters, as part of the underwriting agreement that the Company shall enter
before the Offering (the &#147;Placement Fees&#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;The
Commitment Fees and the Placement Fees shall not exceed 7% of the Offering proceeds. </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 net
proceeds from the offering will be used to strengthen the Company&#146;s balance sheet and
for general corporate purposes. </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;&nbsp;&nbsp;&nbsp;&nbsp;According
to the Israeli Companies Law, 1999, (the &#147;Companies Law&#148;) in order to approve a
transaction of the Company with a Controlling Shareholder (as defined in the Companies
Law) or in which a Controlling Shareholder has a personal interest, the approval of the
audit committee, the Board of Directors and the Shareholders is required. At the
shareholders&#146; meeting, the affirmative vote of a majority of the Ordinary Shares
represented at the meeting in person or by proxy and voting thereon is required in order
to approve the transaction, including at least one-third of the shares voted at the
meeting by shareholders who do not have a personal interest in the transaction (unless the
total shares of the shareholders who do not have a personal interest, voted against the
transaction, do not represent more than one percent of the voting rights in the Company).
For this purpose, abstentions shall not be counted as votes of shareholders not having a
personal interest in the transaction. </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
Catalyst may be deemed to be a Controlling Shareholder as defined in the Companies Law,
having a personal interest in this proposed resolution, as detailed above, and as the
transaction may result in Catalyst holding more than 25% of the voting rights of the
Company and thus undoubtly become a Controlling Shareholder as defined in the Companies
Law, then for the avoidance of doubt the transaction is being brought before the
shareholders for approval. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the Meeting, the Board of Directors will propose that the following resolution (which has
been approved by the Audit Committee and the Board of Directors &#150; excluding Mr.
Edouard Cukierman and Mr. Avishai Gl&uuml;ck, who are both executive officers of Catalyst
and did not participate in the decision), be adopted: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<B>RESOLVED</B>, to approve the
public offering in Israel, under the abovementioned terms and conditions, as recommended
by the Board of Directors, and to authorize the Board of Directors to negotiate and
finalize its terms.&#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;Upon
the receipt of a properly signed and dated proxy and unless otherwise instructed in the
proxy, the persons named in the enclosed proxy will vote the shares represented thereby
FOR the above-mentioned proposal. </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"><B>2.</B> </FONT> </TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>PRIVATE
PLACEMENT</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;The
Audit Committee and the Board of Directors have also resolved, alternatively, at
management&#146;s discretion, and subject to shareholder approval, to approve the raise by
the Company of equity in the amount of no less than $3,000,000 and no more than $5,000,000
by way of a private placement of Ordinary Shares and warrants to take place and close no
later than December 31, 2006, in accordance with the terms set forth under the second
paragraph of Proposal 1 above, and to further approve (i) the participation of Catalyst in
such private placement; (ii) the payment of fees to Cukierman &amp; Co. Investment House
(&#147;CIH&#148;) in connection with such private placement, pursuant to Company&#146;s
Services Agreement with CIH; and (iii) the undertaking by the Company to file a
registration statement of Form F-3 covering the resale of the securities to be issued in
the private placement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due
to the personal interest of Catalyst in such a private placement, and for the reasons
stated above under Proposal 1, the affirmative vote of a majority of the Ordinary Shares
represented at the meeting in person or by proxy and voting thereon is required in order
to approve the private placement, including at least one-third of the shares voted at the
meeting by shareholders who do not have a personal interest in the transaction (unless the
total shares of the shareholders who do not have a personal interest, voted against the
transaction, do not represent more than one percent of the voting rights in the Company).
For this purpose, abstentions shall not be counted as votes of shareholders not having a
personal interest in the transaction. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the Meeting, the Board of Directors will propose that the following resolution (which has
been approved by the Audit Committee and the Board of Directors &#150; excluding Mr.
Edouard Cukierman and Mr. Avishai Gl&uuml;ck, who are both executive officers of Catalyst
and did not participate in the decision), be adopted: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<B>RESOLVED</B>, to approve, as
an alternative to the public offering, at management&#146;s discretion, the raise of
equity by the Company by way of a private placement, under the abovementioned terms and
conditions, as recommended by the Board of Directors, and to authorize the Board of
Directors to negotiate and finalize its terms.&#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;Upon
the receipt of a properly signed and dated proxy and unless otherwise instructed in the
proxy, the persons named in the enclosed proxy will vote the shares represented thereby
FOR the above-mentioned proposal. </FONT></P>

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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR>
      <TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">By Order of the Board of Directors,</FONT> </TD>
</TR>
<TR>
      <TD> &nbsp;</TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR VALIGN=TOP>
<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Edouard Cukierman<BR>Chairman of the Board of Directors</FONT></TD>
<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Adiv Baruch<BR>President and Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September, 2006 </FONT></P>

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