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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0001178913-08-002182.txt : 20080814
<SEC-HEADER>0001178913-08-002182.hdr.sgml : 20080814
<ACCEPTANCE-DATETIME>20080814152140
ACCESSION NUMBER:		0001178913-08-002182
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20080814
FILED AS OF DATE:		20080814
DATE AS OF CHANGE:		20080814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BOS BETTER ONLINE SOLUTIONS LTD
		CENTRAL INDEX KEY:			0001005516
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-14184
		FILM NUMBER:		081018415

	BUSINESS ADDRESS:	
		STREET 1:		20 FREIMAN STREET
		CITY:			RISHON LEZION
		STATE:			L3
		ZIP:			75100
		BUSINESS PHONE:		011-972-3-954-1000

	MAIL ADDRESS:	
		STREET 1:		20 FREIMAN STREET
		CITY:			RISHON LEZION
		STATE:			L3
		ZIP:			75100
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>zk85685.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        F:\EDGAR Filing\BOS better online solutions Ltd\85685\a85685.eep -->
     <!-- Control Number: 85685                                                            -->
     <!-- 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>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Report of Foreign Issuer </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For the Month of August
2008 </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Center Underline-TNR" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Head Center Underline-TNR" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>20 Freiman Street,
Rishon LeZion, 75100, 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>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<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>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<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>
<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>THE PROXY STATEMENT&nbsp;ATTACHED TO
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
Annual General Meeting of Shareholders to be held on September 24, 2008. </FONT></P>

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

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<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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<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 Online Solutions Ltd.<BR>(Registrant)<BR>
<BR>By: /s/ Shmuel Koren<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Shmuel Koren<BR>President and CEO</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>Dated: August 14, 2008 </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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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S. Better Online
Solutions Ltd.<BR>20 Freiman Street<BR>Rishon Le Zion 75101<BR>Israel  </FONT></H1>

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

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR"  -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To Be Held on
September 24, 2008 </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 an Annual Meeting of Shareholders of B.O.S. Better Online Solutions
Ltd. (the &#147;Company&#148;) to be held in Israel at the offices of Catalyst Fund L.P.,
at 3 Daniel Frisch St., 11th floor, Tel-Aviv, Israel, on September 24, 2008 at 14:00 p.m.
local time, and thereafter as it may be adjourned from time to time (the
&#147;Meeting&#148;) for the following purposes: </FONT></P>

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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>To reelect Messrs. Edouard Cukierman, Joel Adler, Ronen Zavlik and Dan Hoz and
          to elect Messrs. G&eacute;rard Limat, Guillaume Binder and Jacob Neuhof to the
          Company&#146;s Board of Directors, to serve until the next annual general
          meeting of shareholders and until their successors have been duly elected and
          qualified.  </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
elect two external directors to the Company&#146;s Board of Directors, to           hold
office for three years, starting from the respective expiration of the           terms of
the Company&#146;s existing external directors.  </FONT></TD>
</TR>
</TABLE>
<BR>

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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>
The
candidates recommended by the Board are:  Ms. Nelly Assouline and Mr. David Golan. </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>3. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
approve the compensation to be paid to the Company&#146;s external directors.  </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>4. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To approve the compensation to be
paid to the Company&#146;s directors who are not Company employees or consultants. </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>5. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
reappoint Kost, Forer, Gabbay, and Kasierer, a member of Ernst &amp; Young
          International Ltd., as the Company&#146;s Independent Auditors.  </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>6. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
receive the Auditor&#146;s Report and the Company&#146;s Consolidated           Financial
Statements for the fiscal year ended December 31, 2007.  </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>7. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
transact such other business as may properly come before the Meeting or any
          adjournments thereof.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has fixed the close of business on August 19, 2008 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;Proposals
1,3,4 and 5 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. 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;Proposal
2 is a special resolution which requires 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, provided that such majority must either include at least one third
of the shares of Non-Controlling Shareholders voted on the matter, or the total shares of
Non-Controlling Shareholders voted against the election may not represent more than one
percent of the voting rights of 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
presentation to our shareholders for consideration of our audited Consolidated Financial
Statements for the fiscal year ended December 31, 2007 described in Proposal 6 does not
involve a vote of our shareholders. </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;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 Annual 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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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By Order of the Board of
Directors, </FONT></P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman"></FONT></TH>
     <TH><FONT FACE="Times New Roman"></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>Edouard Cukierman</FONT></TD>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>Shmuel Koren</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>Chairman of the Board of Directors</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>President and Chief Executive Officer</FONT></TD></TR>
</TABLE>
<BR>


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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 NO
LATER THAN 48 HOURS PRIOR TO THE MEETING.</B> </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>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S. Better Online
Solutions Ltd. </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20 Freiman Street<BR>Rishon
Le Zion 75101 <BR> Israel </FONT></H1>

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

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To be held on
September 24, 2008 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROXY STATEMENT </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
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 of proxies to be voted at
the Annual Meeting of Shareholders of the Company (the &#147;Meeting&#148;) to be held in
Israel at the offices of Catalyst Fund L.P., at 3 Daniel Frisch St., 11th floor, Tel-Aviv,
Israel, on September 24, 2008 at 14:00 p.m. local time, and thereafter as it may be
adjourned from time to time. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>At the Meeting, shareholders of
the Company will be asked to vote upon the following matters:</B> </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>1. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To reelect Messrs. Edouard Cukierman, Joel Adler, Ronen Zavlik and Dan Hoz and
          to elect Messrs. G&eacute;rard Limat, Guillaume Binder and Jacob Neuhof to the
          Company&#146;s Board of Directors, to serve until the next annual general
          meeting of shareholders and until their successors have been duly elected and
          qualified.  </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>2. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
elect two external directors to the Company&#146;s Board of Directors, to           hold
office for three years, starting from the respective expiration of the           terms of
the Company&#146;s existing external directors.  </FONT></TD>
</TR>
</TABLE>
<BR>

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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>
The candidates recommended by the Board are:  Ms. Nelly Assouline and Mr. David Golan.  </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>3. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
approve the compensation to be paid to the Company&#146;s external directors.  </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>4. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To approve the compensation to be paid to the Company&#146;s directors who are
          not Company employees or consultants. </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>5. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
reappoint Kost, Forer, Gabbay, and Kasierer, a member of Ernst &amp; Young
          International Ltd., as the Company&#146;s Independent Auditors.  </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>6. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
receive the Auditor&#146;s Report and the Company&#146;s Consolidated           Financial
Statements for the fiscal year ended December 31, 2007.  </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>7. </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
transact such other business as may properly come before the Meeting or any
          adjournments thereof.  </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 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 Annual 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. Beneficial owners who hold their shares through
members of the Tel Aviv Stock Exchange (&#147;TASE&#148;) may either vote their shares in
person at the Meeting by presenting a certificate signed by a member of the TASE which
complies with the Israeli Companies Regulations (Proof of Ownership for Voting in General
Meeting), 2000 as proof of ownership of the shares, or send such certificate along with a
duly executed proxy to the Company at 20 Freiman Street, Rishon Le Zion, 75101 Israel,
Attention: Mr. Eyal Cohen. 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>


<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;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, in Israel, 20 Freiman Street, Rishon Le Zion,
75101 Israel or in the United States, c/o American Stock Transfer &amp; Trust Company,
6201 15th Avenue, Brooklyn, New York 11219, 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 August 21, 2008. 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 August 19, 2008 are entitled to notice of and to vote at the Meeting. The Company had
12,211,187<B> </B>Ordinary Shares issued and outstanding on August 12, 2008, 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>. Proposals 1,3,4 and 5 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. 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;Proposal
2 is a special resolution which requires 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, provided that such majority must either include at least one third
of the shares of Non-Controlling Shareholders voted on the matter, or the total shares of
Non-Controlling Shareholders voted against the election may not represent more than one
percent of the voting rights of 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
presentation to our shareholders for consideration of our audited Consolidated Financial
Statements for the fiscal year ended December 31, 2007 described in Proposal 6 does not
involve a vote of our shareholders. </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"><B>I.</B> </FONT> </TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>PRINCIPAL
SHAREHOLDERS</B></U> </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 August 12, 2008, 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 12,211,187 shares outstanding as of August 12, 2008. </FONT></P>






<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" 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" SIZE=1>Name and Address</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Number</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" 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" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD WIDTH="71%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Catalyst Fund, L.P.(1)(2)</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT" COLSPAN="7"><FONT FACE="Times New Roman" SIZE=2>3 Daniel Frisch Street,</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Tel-Aviv 64731, Israel</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,117,252</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>17.34</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>SITA SA(3)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>27 Route de GY,</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>1252 Meinier, Geneva</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;Switzerland</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>878,670</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>7.20</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT" COLSPAN="7"><FONT FACE="Times New Roman" SIZE=2>D.S. Apex Holdings Ltd.(4)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="Left" COLSPAN="7"><FONT FACE="Times New Roman" SIZE=2>Discount Tower,
23 Yehuda Halevi St.,</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Tel-Aviv 65136, Israel</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,347,692</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>11.04</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Officers and directors as a group (5)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>434,615</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>3.56</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></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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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) &nbsp;&#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. Mr. Edouard Cukierman, the           Chairman
of the Company&#146;s Board of Directors, may be deemed to have sole           voting and
dispositive power with respect to the shares held by Catalyst Fund.           Mr.
Cukierman disclaims beneficial ownership in such shares, except to the           extent
of his proportionate interest in them as an indirect shareholder in the           general
partner of Catalyst Fund.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) &nbsp;Does
not include 270,907 warrants to purchase Ordinary Shares of the Company.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3) &nbsp;G&eacute;rard
Limat, a member of our board of Directors is the Chairman of SITA SA and may be deemed to
have sole voting and dispositive power with respect to the shares held by SITA SA. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4) &nbsp;Refers
to the holdings of D.S. Apex Holdings Ltd. and its subsidiaries. Does not
          include 270,907 warrants to purchase Ordinary Shares of the Company.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5) &nbsp;Does
not include 1,671,588<B></B>options to purchase Ordinary Shares of the           Company
granted and currently held by officers and/or directors of the Company.  </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>ELECTION
OF DIRECTORS</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;At
the Meeting, the shareholders are requested to elect seven nominees to serve on the Board
of Directors, Messrs. Edouard Cukierman, Joel Adler, Ronen Zavlik and Dan Hoz will be
nominated for reelection. In addition, Messrs. G&eacute;rard Limat, Guillaume Binder and
Jacob Neuhof are nominated for election. At the election of the Board, in accordance with
its authority pursuant to the Company&#146;s Articles of Association, Mr. Limat and Mr.
Binder have been serving on the Board since April 2, 2008 and July 3, 2008 respectively. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
239 of the Israeli Companies Law, 1999, requires that companies whose shares are publicly
traded have at least two external directors on the board of directors. Their term of
service is three years, and they may be elected to serve for up to two three-year terms.
Dr. Yael Ilan and Prof. Adi Raveh currently serve as external directors and their terms of
service shall expire in November 2008 and February 2009, respectively. The election of new
external directors is presented in Proposal 2 below. </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
rest of the directors are elected at the annual general meeting of shareholders to serve
until the next annual general meeting of shareholders and until their respective
successors are duly elected and qualified. </FONT></P>

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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 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. 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></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is the intention of the persons
named in the proxy to vote for the election of the seven nominees named below, each to
hold office until the next annual general meeting of shareholders and until their
respective successors are duly elected and qualified, unless any office is vacated earlier
pursuant to the relevant provisions of the Articles of Association of the Company. The
Company is unaware of any reason why any nominee, if elected, should be unable to serve as
a director. If any of the nominees are unable to serve, the persons named in the proxy
will vote the shares for the election of such other nominees as the Board of Directors may
propose. All nominees listed below have advised the Board of Directors that they intend to
serve as directors if elected. </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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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Nominees for the Board
of Directors </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certain information concerning the
nominees: </FONT></P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN="3" ALIGN="Left"><FONT FACE="Times New Roman" SIZE=1>Name</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Age</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN="3" ALIGN="Left"><FONT FACE="Times New Roman" SIZE=1>Position</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Ordinary Shares<BR>
beneficially owned*</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD WIDTH="35%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Mr. Edouard Cukierman</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>43</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Chairman of the Board</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>40,690</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>**</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>of Directors</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Mr. Joel Adler</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>54</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Director</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>140,925</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>***</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Ronen Zavlik</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>47</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Director</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Mr. Dan Hoz</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>37</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Director</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Mr. Gerard Limat</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>68</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Director</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Mr. Guillaume Binder</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>53</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Director</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Mr. Jacob Neuhof</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>63</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>275,567</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*  &nbsp;does not include options held by the directors.</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**&nbsp;
Mr. Edouard Cukierman holds 21,666 Ordinary Shares directly and an additional 6,424
          Ordinary Shares through a wholly owned company, E.D.I European Development and
          Investments Ltd. and additional 12,600 Ordinary Shares through Cukierman &amp;
          Co. Investment House Ltd. Mr. Edouard Cukierman may be deemed to have sole
          voting and dispositive power with respect to the shares held by Catalyst Fund.
          Mr. Cukierman disclaims beneficial ownership in such shares, except to the
          extent of his proportionate interest in them as an indirect shareholder in the
          general partner of Catalyst Fund. Mr. Edouard Cukierman serves as the Chairman
          of the Board and holds 648,876 options to purchase the Company&#146;s Ordinary
          Shares.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*** Includes
140,925 Ordinary Shares held by Brada Investments Limited. Brada Investments Limited is
discretionary trust of which Mr. Joel Adler, a director of the Company, is one of the
beneficiaries </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 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>Mr.
Edouard Cukierman</B> has been a director since May 2003, and Chairman of the
          Company since June 2003. Mr. Cukierman is the founder and CEO of Catalyst
          Investments and Chairman of Cukierman &amp; Co. Investment House. Since 1993,
          Cukierman &amp; Co. Investment House realized &#128; 2.7 billion of Corporate
          Finance transactions. Mr. Cukierman is a former Board member of Orex, MTI
          Wireless and other technology companies. He was the President and CEO of the
          Astra Fund. He served as a Board member of Otto Capital, a Singapore based VC
          fund. He was the former President of the Supervisory Board of Citec-Environment
          and Services in Paris. He is currently a Board member of Lamina Technologies in
          Switzerland. He is also on the Board of Sar-El, an Israeli Defense Forces
          volunteer organization. He serves as an Officer of the IDF Spokesman Unit, and
          is part of the Hostage &amp; Crisis Negotiation Team (Reserves). Mr. Cukierman
          holds an MBA from INSEAD, Fontainebleau, France and a B.Sc from the Technion
          &#150; Israel Institute of Technology.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para 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>Mr. Joel
Adler </B>has been a director since June 2005. Mr. Adler is a partner in
          Mishcon de Reya a leading law firm in London. He specializes in mergers &amp;          acquisitions
and corporate finance work, in particular international corporate           transactions.
Mr. Adler advises a number of major Israel based companies on           their business
activities in the UK and Europe and on IPO of foreign companies           on the London
Stock Exchange (AIM). Mr. Adler joined Mishcon de Reya as a           partner in 2006,
from the London law firm of Speechly Bircham, where he was a           partner from 1999.
Previously Mr. Adler was head of the corporate department of           Rakisons (now part
of U.S. law firm Steptoe &amp; Johnson). He gained his           experience with other
leading law firms in London: Herbert Oppenheimer Nathan           &amp; Vandyck (now
Denton Wilde Sapte) and DJ Freeman. He is a member of the           Israeli Bar and
worked for the well-known Israeli law firm Caspi &amp; Co. for           two years. Mr.
Adler holds a law degree from Bar Ilan University in Israel, and           an LLM from
London University. He was born and educated in Vienna.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para 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>Mr. Ronen
Zavlik</B> has been a director since May 2003. He is a partner in the CPA           firm
of Grinberg-Zavlik, which he founded in 1987. His firm provides a wide           range of
audit, tax consultancy and CFO services to a wide variety of companies.           Mr.
Zavlik provides internal auditing services to a number of large companies           whose
shares are traded on the Tel Aviv Stock Exchange, including Ma&#146;ariv
          Holdings Ltd., Extra Plastic Ltd., Rapid Vision Ltd., and Optima Management and
          Investments 66 Ltd. Mr. Zavlik holds a B.A. in Accountancy and Business
          Management from the College of Management in Tel-Aviv. Mr. Zavlik is a licensed
          CPA in Israel and a member of the Institute of Certified Public Accountants in
          Israel.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para 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>Mr. Dan
Hoz</B> serves as CEO of Valor Computerized System Ltd., a provider of
vertically integrated manufacturing productivity solutions to the PCB industry
since 2002, following 5 years as the company&#146;s CFO. Mr. Hoz also serves on
the board of directors of Frontline PCB Solutions, a joint venture company
between Valor and Orbotech. Previously, Mr. Hoz was the Vice President of
Operations and Finance of CAM Division (Frontline), in Orbotech-Valor. Mr. Hoz
is also a former Senior Auditor in the High Tech group of Deloitte Touche
Tohmatsu. Mr. Hoz holds a B.A. in Accounting and Economics and an MBA (major in
Finance) from Ben Gurion University of the Negev, and is a certified CPA. </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>


<!-- MARKER FORMAT-SHEET="Para 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>Mr.
G&eacute;rard Limat </B>has been a director of the Company since April 2008.
          Since 1968, Mr. Limat has held various managerial positions with the Dassault
          group, which operates in the civil aviation and the military sectors. Mr. Limat
          is also the founder and CEO of Dasnair, a business plane charter company. In
          addition, Mr. Limat serves as a director in G&eacute;n&eacute;rale
          Immobili&egrave;re Dassualt and in Cendres &amp; M&eacute;taux SA, a company
          that produces semi-finished and finished products for the dental, jewellery and
          heavy industries. Mr. Limat is a French certified public accountant.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para 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>Mr.
Guillaime Binder</B> has been a director of the Company
since July 2008. Mr. Binder is a licensed lawyer in France and holds a Masters in Law from
Paris University, a certificate of specalization in Corporate and Tax Law and a degree of
superior accounting study (DECS). Mr. Binder serves as a director in several seed and
startup companies, including First Care products and Neuronix.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para 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>Mr. Jacob
Neuhof </B> founded Odem Electronic Technologies 1992 Ltd.&nbsp;in May 2002           and
managed the company for 16 years. Between 2005-2007, Mr. Neuhof served as           the
Chairman of the Board of Odem Electronic Technologies. Odem was purchased by the Company in 2004-2005 and is its wholly owned subsidiary. &nbsp;In
the past, Mr. Neuhof served as Country Manager for Texas Instruments in Israel for a
period of ten years and as a design engineer at General Signal Corp. Mr. Neuhof holds an
Electrical Engineering degree from&nbsp;McGill University, Canada and an MBA with a
specialization in Marketing from the University of Bridgeport, Connecticut.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Information regarding the incumbent
external directors: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 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>Dr. Yael Ilan</B>  has been
an external director since November 2002.           Dr. Ilan is the president of Yedatel
Ltd., an economic consulting company, and           serves as a director of CI Systems in
the technology sector. Until 1998, she           served on the board of Bezeq &#150; Israel&#146;s
Telecommunication Company in           which she headed the committee of technological
policy and infrastructure and           was a member of the audit committee and the
committee for strategic planning and           investment. From 1998 through 2000 she
served as an external director of Elron           Industries. In 2000-01 she founded and
managed Optichrom, an optical component           start-up. From 1995 through 2000 Dr.
Ilan served as the head of program of the           Broad Band Communication, a
consortium of MAGNET &#150; the Israeli Government           hi-tech cooperation
initiative. From 2002, Dr. Ilan serves as the industrial           coordinator in the
Electrical Engineering Department of the Technion. In           addition, from 2008, she
serves as Ismart, MAGNET consortium, program manager.           Dr. Ilan holds a Ph.D. in
industrial engineering from Stanford University, a           Ph.D. in physical chemistry
from the Hebrew University and a Masters degree in           business administration from
the Hebrew University.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para 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>Prof.
Adi Raveh</B> has been an external
director since February 2003. Prof. Raveh is           a professor and head of the B.A.
Program at the School of Business           Administration, Hebrew University, Jerusalem.
Since 2007 he has been serving as           a director in Sialo Technology Israel Ltd. In
2006 he was elected as an external           director at Clal Insurance Company Ltd.
Since 2002 he serves as the Chairman of           the Board of Jerusalem Capital Markets
Underwriting limited. He also served           until 2008 as a director of Meitav &#150; a
Mutual Funds Management company           (since 1995), and as a director of Peilim &#150; a
Portfolio Management company           &#150; part of Bank Hapoalim Group (since 1996).
Since 1992 he is a director who           represents the Hebrew University at Hi-Tech
&#150; a Technology Entrepreneurship           located at Har-Hahotzvim, Jerusalem. Prof.
Raveh also serves as a director of           two start-up companies: A.D.M (Advanced
Dialysis Methods Ltd.) and Virtouch Ltd.           Between 1994-1999 he served as a
director and a member of the executive           committee of the Bank of Jerusalem, Ltd.
Between 1996-1998 he served as a member           of an ad-hoc committee of the Council
of Higher Education. In 1999 he served as           a member of the Budget Committee for
Research at the Israel Science Foundation.           Prof. Raveh holds a Ph.D. from the
Hebrew University. He is the author of about           50 professional publications, was
a visiting professor at Stanford University,           Columbia University and Baruch
College, N.Y., and has received a number of           grants and honors.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr.
Ilan&#146;s term as an external
director ends on November 13, 2008 and Prof. Adi           Raveh&#146;s term as an
external director ends on February 17, 2009.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Compensation of
Directors and Officers </FONT></H1>

<!-- 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;The
following table sets forth the aggregate compensation paid to or accrued on behalf of all
directors and officers of the Company as a group for the year ended December 31, 2007: </FONT></P>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Salaries, Directors' Fees, Service<BR>
Fees, Commissions and Bonuses</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Pension, Retirement and Similar<BR>
Benefits</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=65% ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>All directors and officers as a</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=13% ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=13% ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>group (then 16 persons)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2> 1,551,790</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>   108,907</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>
<BR>



<p align=center>
<font size=2>7</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;Such
remuneration does not include amounts expended by the Company for expenses, including
business association dues and expenses, reimbursed to said officers, and other fringe
benefits commonly reimbursed or paid by companies. Figure includes consulting and other
fees paid to Cukierman &amp; Co. Investment House Ltd., of which Mr. Edouard Cukierman,
the Company&#146;s Chairman, is (indirectly) a controlling shareholder. </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 proposes that the following resolution be adopted: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<B>RESOLVED</B>, to elect the
following persons to serve as members of the Board of Directors of the Company: Edouard
Cukierman, Joel Adler,<B> </B>Ronen Zavlik, Dan Hoz, Gerard Limat, Guillaume Binder and
Jacob Neuhof, to serve until the next Annual General Meeting of Shareholders and until
their successors have been duly elected and qualified.&#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
in accordance with the votes designated therein.  </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>ELECTION
OF EXTERNAL DIRECTORS</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;At
the Meeting, the Board of Directors will propose that Ms. Nelly Assouline and Mr. David
Golan be appointed to serve as external directors of the Company, each for a term of three
years. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr. Yael Ilan and Prof. Adi Raveh currently serve as external directors of the
          Company and their term of service shall expire in November 2008 and February
          2009, respectively. Ms. Nelly Assouline shall replace Dr. Yael Ilan and Mr.
          David Golan shall replace Prof. Adi Raveh. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 239 of the Israel
Companies Law, 1999, requires that companies whose share are publicly traded have at least
two external directors on the board of directors. Under the Companies Law, the service
term of an external director is three (3) years, and it may be extended for an additional
three-year term. All other directors are elected annually. No person may be appointed as
an external director if the person or the person&#146;s relative, partner, employer, any
other person to whom he is, directly or indirectly, subordinated or any entity under the
person&#146;s control, has or had within the preceding two years any affiliation with the
Company or its controlling shareholder. The term &#147;relative&#148; means a spouse,
sibling, parent, grandparent, child or child of spouse or spouse of any of the above. The
term &#147;affiliation&#148; includes: (1) an employment relationship; (2) a business or
professional relationship maintained on a regular basis; (3) control; and (4) service as
an office holder, including as a director. Furthermore, no person may serve as an external
director if the person&#146;s position or other business activities create, or may create,
a conflict of interest with the person&#146;s responsibilities as an external director or
may otherwise interfere with the person&#146;s ability to serve as director, or if the
person is an employee of the Israel Securities Authority or of an Israeli Stock Exchange.
If at the time of election of an external director, all the others directors are of the
same gender, at least one of the external directors nominated to be elected must be of the
other gender. Under the Companies Law, an external director may be removed from office at
the initiative of the board of directors at a special general meeting of shareholders, if
the board resolves that the statutory requirements for his or her appointment as external
director no longer exist, or that the external director has violated his or her duty of
loyalty to the company. The shareholder resolution regarding the termination of office of
an external director requires the same majority that is required for the election of an
external director. The court may order the termination of the office of an external
director on the same grounds, following a motion filed by a director or a shareholder of
the company. If an external directorship becomes vacant, the board of directors is
required under the Israeli Companies Law to convene a shareholders meeting immediately to
appoint a new external director. </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 audit committee must include
all of the external directors and any committee of the board of directors that is
authorized to exercise any powers of the board of directors must include at least one
 external director. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set
forth below is information about Ms. Nelly Assouline and Mr. David Golan, including their
principal occupation, business history and any other directorships held. </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>Ms.
Nelly Assouline</B> has been holding various positions in Dexia since 1989, most
recently in Paris. Between the years 2001-2007 she has served as Deputy General
Manager and Chief Financial Officer of Dexia Israel. She has set up and served
as a board member of Dexia Israel Issuance Ltd. and of Dexia Operational
Financing Ltd. Between the years 1989&#150;2001 she was the senior executive
funding director &#151; Financial Markets in the Dexia Funding Department. Ms.
Assouline holds a Post Graduate degree in Mathematics and Finance from the
Dauphine University and an International Executive MBA from the Kellog
University of Management (Northwestern and Tel-Aviv University). </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>Mr. David Golan </B>provides private investment banking, consulting and brokerage
services. He currently serves as a director in several companies, including the
Investec Bank since 1992, Clal Tourism Ltd., Cimatron Ltd. and Zoko Enterprises
Ltd. In the years 1998-2000 he served as president of the Zeevi Investments
group. Between 1997-1998, Mr. Golan served as president of Clal Trading Ltd. and
between 1992-1997 he served as vice president Clal Trading Ltd. Between the
years 1988-1992 Mr. Golan served as managing director of Gal Industries Ltd. Mr.
Golan holds a bachelors degree in Economics and Statistics from the Hebrew
University, an MBA from New York University and took part in a senior management
course in IMD Lausaunne. </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;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the Israeli Companies Law, at least one of the elected external directors must have
&#147;accounting and financial expertise&#148; and any other external director must have
&#147;professional qualifications&#148; and/or &#147;accounting and financial
expertise&#148; as such terms are defined by regulations promulgated under the law. </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 nominee for a position of an external director shall have
declared to the Company that he or she complies with the qualifications for appointment as
an external director. Both of the proposed nominees have declared to the Company that they
comply with the qualifications for appointment as external directors and that they intend to
serve as an external directors if elected. </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 has determined that the nominees meet the legal requirements for an
external director. Our Board of Directors has further determined that each of Ms.
Assouline and Mr. Golan has accounting and financial expertise, as well as professional
qualifications. </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 proposes that the following resolution be adopted: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<B>RESOLVED</B>, to appoint Ms.
Nelly Assouline as an external director of the Company, to hold office for a three year
term commencing November 14, 2008 and to appoint Mr. David Golan as and external director
of the Company, to hold office for a three year term commencing February 18, 2009.&#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;According
to the Companies Law, the affirmative vote of a majority of the Ordinary Shares
represented at the meeting in person or by proxy and voting thereon is required to elect
an external director, including at least one-third of the shares voted at the meeting by
Non-Controlling Shareholders, or the total shares of the Non-Controlling Shareholders
voted against the resolution do not represent more than one percent of the voting rights
in the Company. For this purpose, abstentions are not counted as Non-Controlling
Shareholder votes. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
&#147;Controlling Shareholder&#148; is defined by the Israeli Companies Law as a person or
entity that has the ability to direct the actions of the company (other than such ability
that derives solely from a position as a director or officer), and including in particular
the ability to nominate more than half of the Company&#146;s directors or the ability to
appoint the chief executive officer of the company. A person who holds at least 25% of the
voting power is deemed to be a Controlling Shareholder, unless another person holds more
than 50% of the voting power. Each shareholder should seek legal counsel as to whether
such shareholder is deemed a &#147;Controlling Shareholder&#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 in
accordance with the votes designated therein. </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>3.</B> </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>APPROVAL
OF COMPENSATION TO BE PAID TO THE COMPANY&#146;S EXTERNAL DIRECTORS</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;Under
the Israeli Companies Law, the payment of compensation to an external director, within the
meaning of the Israeli Companies Law, is required to be approved by the audit committee,
board of directors and the shareholders, in that order. The form and amount of
compensation of an external director, is governed by regulations promulgated under the
Israeli Companies Law, and an external director is otherwise prohibited from receiving any
other compensation, directly or indirectly, in connection with such service. According to
the applicable regulations, in general, all external directors are required to receive the
same compensation, an external director must be informed of the compensation prior to his
or her acceptance of the nomination to serve as an external director and the compensation
may not be modified during each three year term of service as an external director (other
than to conform to the terms of a newly appointed external director). Under the applicable
regulations, a company must pay its external directors compensation in the form of an
annual fee and a per meeting attendance fee in an amount determined in such regulations. </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;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to and effective as of the election of each of Ms. Assouline and Mr. Golan as external
directors for the three-year term at the Meeting (see Proposal 2), and for the duration of
their service in such capacity, it is proposed to pay to Ms. Assouline and Mr. Golan
compensation in the form of an annual fee and a per meeting attendance fee equal to the
&#147;fixed&#148; statutory amount applicable to companies of our size, as set forth from
time to time, in the applicable regulations. Such compensation has been approved by our
Audit Committee and the Board of Directors, subject to shareholder 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;
In addition, in accordance with the resolutions of the Company&#146;s shareholders on
August 5, 2004 and June 29, 2005 the external directors shall receive 7,500 options to
purchase the Company&#146;s Ordinary Shares and if applicable, an additional amount of
7,500 options to purchase the Company&#146;s Ordinary Shares on the third anniversary of
their service as directors of the Company. The terms of the options are: </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>
EXERCISE
PRICE &#150; equal to the average closing price of the shares on the Nasdaq Global
Market on the 20 trading days preceding the appointment of the director. </FONT></TD>
</TR>
</TABLE>
<BR>

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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>
OPTION
TERMS &#150; The Options will vest and become exercisable over a period of three years, in
three equal parts as follows: 33.33% after one year from the date of grant, with an
additional 33.33% becoming exercisable upon the expiration of each of the two years
thereafter. </FONT></TD>
</TR>
</TABLE>
<BR>

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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>
MAXIMUM
OPTION TERM &#150; Five years from grant.  </FONT></TD>
</TR>
</TABLE>
<BR>

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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>
PAYMENT
&#150; Payment for Ordinary Shares purchased upon exercise of Options must be made in
full upon exercise of the Option, by cash or check or cash equivalent, or by the
assignment of the proceeds of a sale of some or all of the shares being acquired upon
exercise of an Option, or by any combination of the foregoing.  </FONT></TD>
</TR>
</TABLE>
<BR>

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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>
RESTRICTIONS
ON TRANSFER OF PLAN SHARES &#150; Options are exercisable in whole or in part at such
times after the date of grant as set forth above. Options are exercisable during the
lifetime of the Option holder only by such Option holder, and may not be assigned or
transferred except by an advance approval of the Company&#146;s Audit Committee, by will
or by the laws of descent and distribution. Options shall be exercisable during the term
the Option holder holds office as a director of the Company or within 60 days after
leaving this position, with certain exceptions in the case of the Option holder&#146;s
death or disability. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At the Meeting, the Board of
Directors proposes that the following resolution be adopted:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;<B>RESOLVED</B>, subject to
and effective as of the appointment of Ms. Assouline and Mr. Golan as our external
directors and for the duration of their service in such capacity, to pay to Ms. Assouline
and Mr. Golan compensation in the form of an annual fee and per meeting attendance fee at
the &#147;fixed&#148; statutory amounts and to issue to each 7,500 options to purcase
ordinary shares as described in the proxy statement. &#147; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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 in accordance with the votes
designated therein. </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>4.</B> </FONT> </TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>APPROVAL
OF COMPENSATION TO BE PAID TO THE COMPANY'S DIRECTORS WHO ARE NOT COMPANY EMPLOYEES OR
CONSULTANTS</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;On
August 5, 2004 the Companies shareholders resolved that the remuneration to all directors
of the Company (except for external directors), including directors who are not employees
or consulting directors shall be in accordance with the rates paid to the Company&#146;s
external directors. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to a recent amendment to the Israeli regulations governing the rates paid to external
directors, the applicable rates were increased. </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;&nbsp;&nbsp;&nbsp;&nbsp;The
Board believes that it in the best interest of the Company to no longer link the non
employee/consulting directors&#146; compensation to the compensation paid to the external
directors. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consequently,
it is proposed that the compensation package for directors who are not employees or
consulting directors shall remain at its current rates, without reflecting an increase as
follows: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NIS
1,440 as a meeting attendance fee and NIS 27,816 as annual fee. These amounts shall be
linked to the Consumer Price Index as of June 2008. The directors shall be entitled to 60%
of the attendance fee for a Board meeting held via teleconference and to 50% of such fee
for a meeting held without convening (in accordance with section 103 of the Israeli
Companies Law). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, in accordance with the resolutions of the Company&#146;s shareholders on
August 5, 2004 and June 29, 2005 the non employee/consulting directors shall receive 7,500
options to purchase the Company&#146;s Ordinary Shares and if applicable, an additional
amount of 7,500 options to purchase the Company&#146;s Ordinary Shares on the third
anniversary of their service as directors of the Company.<SUP> *</SUP> As previously
resolved, in the Company&#146;s shareholders meetings on August 5, 2004 and June 29, 2005
the terms of such options are as set forth under Proposal 3 above. </FONT></P>

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<P ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At the Meeting, the Board of
Directors proposes that the following resolution 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
proposed compensation to all directors of the Company (including directors appointed in
the future but excluding external directors) who are not employees or paid consultants of
the Company.&#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 in
accordance with the votes designated therein. </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>5.</B> </FONT> </TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>REAPPOINTMENT
OF INDEPENDENT AUDITORS</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
Board of Directors recommends that the shareholders reappoint Kost, Forer, Gabbay &amp;
Kasierer, a member of Ernst &amp; Young International, Ltd., as the independent auditors
of the Company, until the next annual general meeting of shareholders. Kost, Forer, Gabbay
&amp; Kasierer have served as the Company&#146;s independent auditors since the first
quarter of 2002. </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
table below summarizes the audit and other fees paid and accrued by the Company and its
consolidated subsidiaries to Kost Forer Gabbay &amp; Kasierer, during each of 2006 and
2007:  </FONT></P>







<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Year Ended December 31, 2007</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Year Ended December 31, 2006</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Amount</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Percentage</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Amount</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Percentage</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD WIDTH="36%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Audit Fees</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>108,200</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>94</FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>62,000</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>76</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Audit-Related Fees(1)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>20,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>24</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#cceeff">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>Tax Fees (2)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>6,500</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>6</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Total</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>114,700</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>100</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>82,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>100</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></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>&#147;Audit-related
fees&#148; are fees related to assurance and associated           services that
traditionally are performed by the independent auditor, including           consultation
concerning reporting standards. </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>(2) </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;Tax
fees&#148; are fees for professional services rendered by the           Company&#146;s
auditors with respect to tax advice related to acquisitions and           tax compliance
with the Israeli law for encouragement of investment, and           issuance of annual
tax reports. </FONT></TD>
</TR>
</TABLE>
<BR>







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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>*</SUP> &nbsp;Pursuant to the
shareholders resolution of November 7, 2007, Mr. Cukierman is entitled to receive 400,000
options to purchase the Company&#146;s ordinary shares for his services as active
Chairman, and is not entitled to any additional compensation for his service on the Board. </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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<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=95%><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 be
adopted:  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#147;RESOLVED</B>, that Kost,
Forer, Gabbay &amp; Kasierer be, and they hereby are, reappointed as independent auditors
of the Company, until the next Annual General Meeting of shareholders.&#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 in
accordance with the votes designated therein. </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>6.</B> </FONT> </TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>RECEIPT
OF AUDITOR&#146;S REPORT AND FINANCIAL STATEMENTS</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;At
the Meeting the shareholders shall receive and consider the Auditor&#146;s Report and the
Consolidated Financial Statements of the Company for the fiscal year ended December 31,
2007. The Company&#146;s Audited Consolidated Financial Statements were filed by the
Company under Form 20-F with the US Securities and Exchange Commission and with the
Israeli Securities Authority on June 30, 2008, and they appear on their respective
websites: www.sec.gov and www.magna.isa.gov.il, as well as on the Tel&#150;Aviv Stock
Exchange website: maya.tase.co.il. </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>7.</B> </FONT> </TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>OTHER
BUSINESS</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
Meeting is called for the purposes set forth in the Notice accompanying this Proxy
Statement. As of the date of the Notice, the Board of Directors knows of no business which
will be presented for consideration at the Meeting other than the foregoing matters. If
other matters not now known properly come before the Meeting, however, it is intended that
the persons named as proxies or their substitutes will vote the Ordinary Shares in
accordance with their best judgment with respect to such matters. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By Order of the Board of
Directors, </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>Edouard Cukierman</FONT></TD>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>Shmuel Koren</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>Chairman of the Board of Directors</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>President and Chief Executive Officer</FONT></TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>August 2008 </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">

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