S-8

    As filed with the Securities and Exchange Commission on January 28 , 2005
                                                    Registration No. 333-
================================================================================

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                                   ----------

                       LIPMAN ELECTRONIC ENGINEERING LTD.
             (Exact Name of Registrant as Specified in Its Charter)

                ISRAEL                                 NOT APPLICABLE
    (State or Other Jurisdiction of           (I.R.S. Employer Identification
    Incorporation or Organization)                        Number)

                           11 HAAMAL STREET, PARK AFEK
                                ROSH HAAYIN 48092
                                     ISRAEL

          (Address, including zip code, of principal executive offices)

            LIPMAN ELECTRONIC ENGINEERING LTD. 2004 SHARE OPTION PLAN
                            (Full Title of the Plan)

                               LIPMAN U.S.A., INC.
                                 50 GORDON DRIVE
                                SYOSSET, NY 11791
                                 (516) 484-9898
       (Name, address, including zip code, and telephone number, including
                        area code, of agent for service)

                                   ----------

     Copies of all communications, including all communications sent to the
agent for service, should be sent to:

          NEIL GOLD, ESQ.                          DAVID GOTLIEB, ADV.
    FULBRIGHT & JAWORSKI L.L.P.              SHNITZER, GOTLIEB, SHARON & CO.
         666 FIFTH AVENUE                          7 MENACHEM BEGIN RD.
     NEW YORK, NEW YORK 10103                    RAMAT-GAN 52521, ISRAEL
          (212) 318-3000                            (972-3) 754-9922
     FACSIMILE: (212) 318-3400                 FACSIMILE: (972-3) 754-9920

                                   ----------

                         CALCULATION OF REGISTRATION FEE



- ------------------------------------------------------------------------------------------------------------------------------------
                                                                  PROPOSED MAXIMUM        PROPOSED MAXIMUM
    TITLE OF EACH CLASS OF                                       OFFERING PRICE PER      AGGREGATE OFFERING         AMOUNT OF
 SECURITIES TO BE REGISTERED      AMOUNT TO BE REGISTERED (1)         SHARE (2)                 PRICE           REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------

Ordinary Shares, NIS 1.00
nominal value per share                    700,000                      $28.70               $20,090,000            $2,364.59
- ------------------------------------------------------------------------------------------------------------------------------------


(1)  THIS REGISTRATION STATEMENT SHALL ALSO COVER AN ADDITIONAL INDETERMINABLE
     NUMBER OF ORDINARY SHARES AS MAY BE REQUIRED PURSUANT TO THE LIPMAN
     ELECTRONIC ENGINEERING LTD. 2004 SHARE OPTION PLAN, IN THE EVENT OF A STOCK
     DIVIDEND, STOCK SPLIT, RECAPITALIZATION OR OTHER SIMILAR CHANGE IN THE
     ORDINARY SHARES.

(2)  PURSUANT TO RULE 457(C), THE PROPOSED MAXIMUM OFFERING PRICE PER SHARE WAS
     CALCULATED BASED ON THE AVERAGE OF HIGH AND LOW PRICES OF THE REGISTRANT'S
     ORDINARY SHARE ON THE NASDAQ NATIONAL MARKET ON JANUARY 25, 2005.



                                     PART I

              INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS

         The documents containing the information specified in Part I of Form
S-8 will be delivered to employees, directors and others as specified by Rule
428(b)(1). In accordance with the rules and regulations of the Securities and
Exchange Commission (the "Commission") and the instructions to Form S-8, such
documents are not being filed with the Commission either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424.







                                      I-1


                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

         The following documents filed by Lipman Electronic Engineering Ltd.
(the "Company" or the "Registrant") with the Commission pursuant to the
Securities Act of 1933, as amended (the "Securities Act") and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") are incorporated by
reference in this Registration Statement:

         (a) Our Annual Report on Form 20-F for year ended December 31, 2003
     (File No. 000-50544.

         (b) All Reports of Foreign Issuer on Form 6-K filed by the Registrant
     with the SEC since December 31, 2003, including its Reports on Form 6-K
     filed on March 31, 2004, April 21, 2004, May 11, 2004, June 14, 2004, June
     22, 2004, August 10, 2004, August 18, 2004, October 5, 2004, October 26,
     2004, October 27, 2004, December 8, 2004 and January 13, 2005.

         (c) The description of Lipman's ordinary share, par value NIS 1 per
     share, contained in the Registrant's registration statement on Form F-1
     (File No. 333-111849) and registration statement on Form 8-A filed pursuant
     to the Exchange Act filed on January 12, 2004.

         All reports and other documents filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the date
hereof and prior to the filing of a post-effective amendment which (i) indicates
that all securities offered under this Registration Statement have been sold or
(ii) which deregisters all securities remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part of
this Registration Statement from the date of filing of such documents.

         Any statement contained in a document incorporated or deemed to be
incorporated by reference shall be deemed to be modified or superseded for
purposes of this Registration Statement to the extent that a statement contained
herein or in any other subsequently filed document which is incorporated or
deemed to be incorporated by reference modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.

         You may obtain copies of these documents free of charge by contacting
us at our address or telephone number set forth below:

         Lipman Electronic Engineering, Ltd.
         11 Haamal Street
         Park Afek, Rosh Haayin 48092, Israel
         972-3-902-9730

ITEM 4.  DESCRIPTION OF SECURITIES.

         Not applicable.

                                      II-1


ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.

         Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

         Under the Israeli Companies Law, a company is prohibited from
exculpating an officer or director from liability for the breach of his duty of
loyalty. The company may exculpate an officer or director from liability for the
breach of his duty of care, may insure his liability for a breach of these
duties, or indemnify him for a breach, but only according to the following
provisions:

         A company may provide in its articles of association that an officer or
a director of the company may be exculpated, to the extent provided in the
articles, from liability for the breach of his duty of care.

         A company may provide in its articles of association that the company
may indemnify an officer or a director in such capacity, for:

         o   a monetary liability incurred pursuant to a judgment, including a
             settlement or arbitration decision approved by a court, in an
             action brought by a third party;

         o   reasonable legal expenses incurred in an action brought against the
             director or officer by or on behalf of the company or others; and

         o   reasonable legal expenses incurred in defending criminal charges of
             which the director or officer was acquitted, or as a result of a
             criminal charge that does not require proving criminal intent of
             which the director or officer was convicted.

         The indemnification provision in a company's articles of association
may be a blanket obligation to indemnify in advance, provided it is limited to
events the board of directors can foresee when providing the obligation and that
it is limited to a sum the board of directors determines is reasonable in the
circumstances, or a provision permitting the company to indemnify an officer or
a director on an ad hoc basis after the fact.

         A company may provide in its articles of association that the company
may insure an officer or a director. This insurance may cover liability for
breach of the duty of care or, to the extent the officer or director acted in
good faith and has a reasonable basis to believe that the act would not
prejudice the company, for the breach of the duty of loyalty. A company's
articles of association may also allow it to insure officers and directors for
monetary liabilities incurred as a result of an act or omission committed in
connection with his serving as an officer or director of the company.

         All of these provisions are specifically limited in their scope by the
Israeli Companies Law, which provides that a company may not indemnify an
officer or director nor enter into an insurance contract that would provide
coverage for any monetary liability incurred as a result of any of the
following:

         o   a breach by the officer or director of the duty of loyalty, unless
             the officer or director acted in good faith and has a reasonable
             basis to believe that the act would not prejudice the company;

                                      II-2


         o   an intentional or reckless breach by the officer or director of the
             duty of care;

         o   any act of omission done with the intent to derive an illegal
             personal benefit; or

         o   any fine levied against the director or officer.

         The Registrant's Articles of Association, as amended, provides as
follows:

         The Company may exempt, in advance, an officer of the Company from his
liability, in whole or in part, in respect of damage following breach of his
duty of care towards the Company.

         Subject to the provisions of the Companies Law, the Company may engage
in a contract to insure the liability of an officer of the Company, including an
officer of the Company who is serving or has served on its behalf or at its
request as a director of another company in which the Company holds shares,
direct or indirectly, or in which the Company has any interest (hereinafter
"Director of Another Company") in respect of any liability imposed upon him
following an act which he carried out in his capacity as an officer of the
Company in any one of the following events:

         o   Breach of the duty of care towards the Company or towards any other
             person.

         o   Breach of fiduciary duty towards the Company, provided that the
             officer acted in good faith and had reasonable grounds to assume
             that the act would not prejudice the Company's interests.

         o   Financial liability which shall be imposed upon him in favor of
             another person.

         The Company may indemnify an officer of the Company on account of a
liability or, expense as specified below, which was imposed upon him following
an act which he carried out in his capacity as an officer of the Company.

         o   Financial liability imposed upon him in favor of another person
             pursuant to a judgment, including a compromise judgment, or an
             arbitrator's award approved by a court.

         o   Reasonable litigation expenses, including legal fees paid by an
             officer or which he war required to pay by a court, in a proceeding
             filed against him by the Company or in its behalf or by another
             person, or in criminal charges from which he was acquitted, or in
             criminal charges in which he was convicted of an offense which does
             not require proof of mens rea.

         The Company may give an undertaking in advance to indemnify an officer
in respect of a liability or expense as specified above, provided that the
undertaking is limited to types of events which, in the opinion of the Board of
Directors, may be foreseen, at the time of giving the undertaking for indemnity,
and to such amount as the Board of Directors shall determine to be reasonable
given the circumstances of the matter, and provided that the total amount of the
indemnity shall not exceed 25% of the shareholders' equity of the Company at the
time of the indemnity, according to the last financial statements, as of the
date of making the actual payment of the indemnity.

         The Company may also indemnify an officer of the Company retroactively.

                                      II-3


         Subject to the provisions of the Companies Law, the Company may
indemnify any person, including an officer of the Company, who is serving or has
served on its behalf or at its request as a Director of Another Company in
respect of any liability or expense as specified above, which shall be imposed
on him following an act which he carried out in his capacity as a Director of
Another Company, by means of retroactive indemnity or by means of giving an
undertaking to indemnify such person, provided that the said undertaking is
limited to types of events which, in the opinion of the Board of Directors, may
be foreseen, at the time of giving the undertaking for indemnity, and to such
amount as the Board of Directors shall determine to be reasonable given the
circumstances of the matter.

         The above provisions of the Registrant's Articles of Association do not
apply in respect of any of the following events:

         o   Breach of fiduciary duty, with the exception of when an officer
             acted in good faith and had reasonable grounds to assume that the
             act would not prejudice the Company's interests.

         o   Breach of duty of care performed deliberately or recklessly.

         o   An action committed with the intention of making personal gain,
             unlawfully.

         o   A penalty or fine imposed on an officer.

         Resolutions with respect to giving an exemption, insurance, indemnity
or giving an undertaking for indemnity to a director and/or officer who is not a
director shall be passed subject to any law.

         A resolution to approve an exemption, insurance or indemnity in the
Articles of Association of the Company and the alteration thereof shall be
passed with such majority as specified in the Companies Law.

         The Company's Board of Directors may resolve to indemnify and insure
the Company's office holders with respect to liabilities resulting from this
offering to the extent that these liabilities are not covered by insurance. In
the opinion of the Commission, however, indemnification of directors and office
holders for liabilities arising under the Securities Act is against public
policy and therefore unenforceable.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

         Not applicable.

ITEM 8. EXHIBITS.

Exhibit
  No.             Description
  ---             -----------

4.1               Lipman Electronic Engineering Ltd. 2004 Share Option Plan.

5.1               Opinion of Shnitzer, Gotlieb, Sharon & Co. (filed herewith).

23.1              Consent of Counsel (contained in Exhibit 5.1).

                                      II-4


23.2              Consent of Independent Auditors (filed herewith).

24.1              Power of Attorney (filed herewith).

ITEM 9. UNDERTAKINGS.

         (a) The undersigned Registrant hereby undertakes:

             (1) To file, during any period in which offers or sales are being
                 made, a post-effective amendment to this Registration
                 Statement:

                 (i)   To include any prospectus required by Section 10(a)(3) of
                       the Securities Act;

                 (ii)  To reflect in the prospectus any facts or events arising
                       after the effective date of the Registration Statement
                       (or the most recent post-effective amendment thereof)
                       which, individually or in the aggregate, represent a
                       fundamental change in the information set forth in the
                       Registration Statement. Notwithstanding the foregoing,
                       any increase or decrease in volume of securities offered
                       (if the total dollar value of securities offered would
                       not exceed that which was registered) and any deviation
                       from the low or high end of the estimated maximum
                       offering range may be reflected in the form of prospectus
                       filed with the Commission pursuant to Rule 424(b) if, in
                       aggregate, the changes in volume and price represent no
                       more than 20 percent change in the maximum aggregate
                       offering price set forth in the "Calculation of
                       Registration Fee" table in the effective registration
                       statement; and

                 (iii) To include any material information with respect to the
                       plan of distribution not previously disclosed in the
                       Registration Statement or any material change to such
                       information in the Registration Statement;

                 provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
                 not apply if the information required to be included in a
                 post-effective amendment by those paragraphs is contained in
                 periodic reports filed with or furnished to the Commission by
                 the Registrant pursuant to Section 13 or Section 15(d) of the
                 Exchange Act that are incorporated by reference in the
                 Registration Statement.

             (2) That, for the purpose of determining any liability under the
                 Securities Act, each such post-effective amendment shall be
                 deemed to be a new registration statement relating to the
                 securities offered therein, and the offering of such securities
                 at that time shall be deemed to be the initial bona fide
                 offering thereof;

             (3) To remove from registration by means of a post-effective
                 amendment any of the securities being registered which remain
                 unsold at the termination of the offering.

         (c) Insofar as indemnification for liabilities arising under the
             Securities Act may be permitted to directors, officers and
             controlling persons of the Registrant pursuant to the

                                      II-5


             foregoing provisions, or otherwise, the Registrant has been advised
             that in the opinion of the Commission such indemnification is
             against public policy as expressed in the Securities Act and is,
             therefore, unenforceable. In the event that a claim for
             indemnification against such liabilities (other than the payment by
             the Registrant of expenses incurred or paid by a director, officer
             or controlling person of the Registrant in the successful defense
             of any action, suit or proceeding) is asserted by such director,
             officer or controlling person in connection with the securities
             being registered, the Registrant will, unless in the opinion of its
             counsel the matter has been settled by controlling precedent,
             submit to a court of appropriate jurisdiction the question whether
             such indemnification by it is against public policy as expressed in
             the Securities Act and will be governed by the final adjudication
             of such issue.

         (c) The undersigned Registrant hereby undertakes that, for purposes of
             determining any liability under the Securities Act, each filing of
             the Registrant's annual report pursuant to Section 13(a) or Section
             15(d) of the Exchange Act (and, where applicable, each filing of an
             employee benefit plan's annual report pursuant to Section 15(d) of
             the Exchange Act) that is incorporated by reference in the
             registration statement shall be deemed to be a new registration
             statement relating to the securities offered therein, and the
             offering of such securities at that time shall be deemed to be the
             initial bona fide offering thereof.






                                      II-6


                                   SIGNATURES

         Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in City of Rosh Haayin, Israel, on this 28 day of January 2005.

                                            LIPMAN ELECTRONIC ENGINEERING LTD.

                                            By: /s/ Mike Lilo
                                                -------------------------------
                                                    Mike Lilo
                                                    Chief Financial Officer


                                POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Isaac Angel and Mike Lilo, or either of
them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including pre- or post-
effective amendments) to this Registration Statement and any additional
registration statement pursuant to Rule 462 under the Securities Act and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

         Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:

      SIGNATURE                            TITLE                        DATE
      ---------                            -----                        ----

   /s/ Jacob Perry            Chairman of the Board of
   ---------------
     JACOB PERRY              Directors                             Jan 28, 2005

   /s/ Isaac Angel            President and Chief Executive
   ---------------            Officer (Principal
     ISAAC ANGEL              Executive Officer)                    Jan 28, 2005

    /s/ Mike Lilo             Chief Financial Officer
    -------------             (Principal Financial and
      MIKE LILO               Accounting Officer)                   Jan 28, 2005

   /s/ Meir Shamir            Director                              Jan 28, 2005
   ---------------
     MEIR SHAMIR

  /s/ Ishay Davidi            Director                              Jan 28, 2005
  ----------------
    ISHAY DAVIDI

                                      II-7


  /s/ Aharon Lipman
    AHARON LIPMAN             Director                              Jan 28, 2005

   /s/ Rami Lipman
     RAMI LIPMAN              Director                              Jan 28, 2005

/s/ Mordecai Gorfung
  MORDECAI GORFUNG            Director                              Jan 28, 2005

  /s/ Linda Harnevo                                                 Jan 28, 2005
  -----------------
    LINDA HARNEVO             Director

  /s/ Izhak Davidi            Director                              Jan 28, 2005
  ----------------
    IZHAK DAVIDI

 /s/ Jonathan Kaplan          Director                              Jan 28, 2005
 -------------------
   JONATHAN KAPLAN

Authorized Representative
in the United States:

LIPMAN U.S.A., INC.

By: /s/ Robert Striano
    ----------------------------------
    Name:  Robert Striano
    Title: President & Chief
           Executive Officer






                                      II-8


                                INDEX TO EXHIBITS

Exhibit
  No.             Description
  ---             -----------

4.1               Lipman Electronic Engineering Ltd. 2004 Share Option Plan.

5.1               Opinion of Shnitzer, Gotlieb, Sharon & Co. (filed herewith).

23.1              Consent of Counsel (contained in Exhibit 5.1).

23.2              Consent of Independent Auditors (filed herewith).

24.1              Power of Attorney (filed herewith).

EX-4.1

                       LIPMAN ELECTRONIC ENGINEERING LTD.

                             2004 SHARE OPTION PLAN

     1. Purposes of the Plan. This Plan, which shall be known as the Lipman
Electronic Engineering Ltd. 2004 Share Option Plan (the "PLAN") is intended to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants, and to promote the success of the business of the Company by
providing such persons with the opportunity to purchase shares of stock of
Lipman Electronic Engineering Ltd. Options granted under the Plan to (a) Service
Providers subject to Israeli tax law may contain such terms as will qualify them
for special tax treatment under Amended Section 102 of the Israeli Income Tax
Ordinance, or may be granted as 3(I) Options under Section 3(i) of the Ordinance
(as defined below); (b) Service Providers subject to the tax laws of the United
States may be Incentive Stock Options or Nonstatutory Stock Options (as defined
below); or (c) Employees or Service Providers subject to the tax laws of any
jurisdiction other than Israel or the United States may be granted pursuant to
the applicable tax laws of such jurisdiction; all as determined by the Board at
the time of grant.

     2. Definitions. As used in this Plan, the following definitions shall
apply:

         (a) "3(I) Option" means an Option which is subject to taxation pursuant
to Section 3(I) of the Ordinance.

         (b) "102 Capital Gains Track" means the tax alternative set forth in
Amended Section 102(b)(2) of the Ordinance pursuant to which income resulting
from the sale of Shares derived from Options is taxed as a capital gain.

         (c) "102 Capital Gains Track Option" means an Option qualifying for the
special tax treatment under the 102 Capital Gains Track set forth in Amended
Section 102 of the Ordinance, specifically subsection (b)(2) thereof.

         (d) "Amended Section 102" shall mean the provisions of Section 102 of
the Ordinance, as amended by the Law Amending the Income Tax Ordinance (Number
132) 2002, effective January 1, 2003.

         (e) "Applicable Laws" means the requirements relating to the creation,
existence, and administration of stock option plans under Israeli corporate and
securities laws, U.S. state corporate laws, U.S. federal and state securities
laws, the Code, the Ordinance, any stock exchange or quotation system on which
the Ordinary Shares are listed or quoted and the applicable laws of any other
country or jurisdiction where Options are granted and/or Ordinary Shares are
issued under the Plan.

         (f) "Board" means the board of directors of the Company.

         (g) "Code" means the United States Internal Revenue Code of 1986, as
amended.



         (h) "Company" means Lipman Electronic Engineering Ltd., an Israeli
company, together with any Subsidiary existing from time to time.

         (i) "Consultant" means any person or corporate or other entity which is
engaged by the Company or any Parent or Subsidiary to render consulting or
advisory services to such entity.

         (j) "Director" means a member of the board of directors of the Company
or of any Subsidiary.

         (k) "Disability" means the inability of the Optionee, in the opinion of
a qualified physician acceptable to the Company, to perform the major duties of
the Optionee's position with the Company because of the sickness or injury of
the Optionee.

         (l) "Employee" means any natural person who is an employee of the
Company or of any Parent or Subsidiary. An Optionee shall not cease to be an
Employee in the case of (i) any leave of absence approved in advance by the
Company or (ii) a transfer between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director's fee by the Company, or both, shall be
sufficient to constitute "employment" by the Company.

         (m) "Exchange Act" means the United States Securities Exchange Act of
1934, as amended.

         (n) "Fair Market Value" means, as of any date, the value of Ordinary
Shares determined as follows:

               (i) For Ordinary Shares listed on any established stock exchange
or a national market system, including without limitation the NASDAQ or the Tel
Aviv Stock Exchange, the closing sales price therefore (or the closing bid, if
no sales were reported) as quoted on such exchange or system on the date of
grant, as reported in The Wall Street Journal or such other source as the Board
deems reliable;

               (ii) If the Ordinary Shares are regularly quoted by a recognized
securities dealer, but selling prices are not reported, Fair Market Value shall
be the mean between the high bid and low asked prices therefore on the last
market trading day prior to such date; or

               (iii) In the absence of an established market for Ordinary
Shares, the Fair Market Value thereof shall be determined in good faith by the
Board.

         (o) "Incentive Stock Option" means an Option granted under U.S. tax
laws which is intended to qualify as an incentive stock option within the
meaning of Code Section 422.

         (p) "Nonstatutory Stock Option" means an Option granted under U.S. tax
laws which does not qualify as an Incentive Stock Option.

         (q) "Officer" means a person who is an officer of the Company or a
Subsidiary.


                                       2


         (r) "Option" means a stock option granted pursuant to the Plan.

         (s) "Option Agreement" means a written or electronic agreement between
the Company and an Optionee evidencing the terms and conditions of an individual
Option grant. An Option Agreement is subject to the terms and conditions of the
Plan.

         (t) "Optioned Stock" means Ordinary Shares subject to an Option.

         (u) "Optionee" means the holder of an outstanding Option granted under
the Plan.

         (v) "Ordinance" means the Israeli Income Tax Ordinance (New Version)
1961, as amended, and the Rules.

         (w) "Ordinary Shares" means ordinary shares of Lipman Electronic
Engineering Ltd.

         (x) "Parent" means any corporation (other than the employer
corporation) in an unbroken chain of corporations ending with the employer
corporation if, at the time of the granting of the option, each of the
corporations other than the employer corporation owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

         (y) "Plan" means this 2004 Share Option Plan, as the same may be
amended from time to time.

         (z) "Required Holding Period" means the requisite period prescribed by
the Ordinance, particularly Amended Section 102 thereof, or such other period as
may be required by the Israeli Income Tax Authorities, during which the Trustee
must hold an Option or the Shares acquired upon the exercise thereof.

         (aa) "Rules" means the rules, regulations, orders or procedures
promulgated under the Ordinance, including specifically those which are
ultimately promulgated in connection with the Law Amending the Income Tax
Ordinance (Number 132) 2002.

         (bb) "Service Provider" means an Employee, Officer, Director or
Consultant.

         (cc) "Share" means an Ordinary Share, as adjusted in accordance with
Section 11 below.

         (dd) "Subsidiary" means any corporation (other than the employer
corporation) in an unbroken chain of corporations beginning with the employer
corporation if, at the time of the granting of the option, each of the
corporations other than the last corporations in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.


                                       3


         (ee) "Treasury Regulations" means the most current permanent,
temporary, proposed, and proposed and temporary, regulations of the United
States Treasury Department under the Code, as amended.

     3. Stock Subject to the Plan. Subject to the provisions of Section 11
hereunder, the maximum aggregate number of Shares which may be subject to Option
and sold under this Plan is 700,000 (seven hundred thousand) Shares.
Notwithstanding the foregoing, the maximum number of Shares that may be issued
through Incentive Stock Options is 200,000 (two hundred thousand) Shares. The
Shares may be authorized but unissued, or reacquired, Ordinary Shares.


     If an Option expires or becomes unexercisable without having been exercised
in full, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan. However, Shares that have
actually been issued under the Plan, upon exercise of an Option, shall not be
returned to the Plan and shall not become available for future distribution
under this Plan.

     4. Administration of the Plan.

         (a) Administration. The Plan shall be administered by the Board or,
subject to Applicable Laws, a committee of the Board. All references in the Plan
to the Board shall include a committee of the Board if authorized by the Board.

         (b) Powers of the Board. Subject to the provisions of the Plan, and
subject to the approval of any relevant authorities, the Board shall have the
authority in its discretion to:

               (i)       determine the Fair Market Value;

               (ii)      select the Service Providers to whom Options may from
                         time to time be granted hereunder;

               (iii)     determine the number of Shares to be covered by each
                         such grant hereunder, and the exercise price per share;

               (iv)      approve forms of agreement for use under the Plan;

               (v)       determine, alter and adjust the terms and conditions of
                         any Option granted hereunder including without
                         limitation to accelerate the right of an Optionee to
                         exercise in whole or in part Options granted under the
                         Plan, or to reprice the exercise price of an Option
                         granted under the Plan; and

               (vi)      construe, interpret, alter, revise or otherwise adjust
                         the terms of the Plan and the Option Agreement as may
                         be required by applicable laws of local or foreign
                         jurisdictions, or otherwise, and determine any other
                         matter which is necessary or desirable for, or
                         incidental to, the administration of the Plan.


                                       4


         (c) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees.


         (d) No Liability of Board. No member of the Board of Directors shall be
liable for any action or determination made in good faith with respect to the
Plan or any Options granted there under. Subject to the provisions of Applicable
Law, each member of the Board shall be indemnified and held harmless by the
Company against any cost or expense (including counsel fees) reasonably incurred
by him, or any liability (including any sum paid in settlement of a claim with
the approval of the Company) arising out of any act or omission to act in
connection with the Plan unless arising out of such member's own fraud or bad
faith, to the extent permitted by applicable law. Such indemnification shall be
in addition to any rights of indemnification the member may have as a director
or otherwise under the Company's Certificate of Incorporation, any agreement,
any vote of shareholders or disinterested directors, insurance policy or
otherwise.

     5. Eligibility.

         (a) With respect to Options which are granted subject to the Ordinance,
102 Capital Gains Track Options may be granted only to Employees, Officers and
Directors; Options granted to other Service Providers shall be 3(I) Options.
Notwithstanding the foregoing, 102 Capital Gains Track Options may not be
granted to Employees, Officers or Directors who are "controlling shareholders",
as defined in the Ordinance. With respect to Options which are granted subject
to the Code, Non statutory Stock Options may be granted to Service Providers,
and Incentive Stock Options may be granted only to Employees.

         (b) The type of Option granted shall be identified and designated in
the Option Agreement.

         (c) Notwithstanding the designation of an Option as an Incentive Stock
Option, to the extent that the aggregate Fair Market Value of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by
the Optionee during any calendar year (under all plans of the Company and any
Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Non
statutory Stock Options. For purposes of this Section 5(c)(i), Incentive Stock
Options shall be taken into account in the order in which they were granted. The
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.

         (d) Neither the Plan nor any Option shall confer upon any Optionee any
right to continue the Optionee's relationship as a Service Provider with the
Company, nor shall it be construed to impose any obligation on the Company to
continue the Optionee's relationship with the Company as a Service Provider, nor
shall it interfere in any way with the Company's right to terminate such
relationship at any time, with or without Cause (as hereinafter defined). The
vesting of the Option pursuant to the vesting schedule set forth in the Option
Agreement is earned only by continuing as a Service Provider at the will of the
Company, not through the act of being hired, being granted an Option or
acquiring Shares. In the event that an Optionee ceases to be a Service Provider
with the Company, the unvested portion of his or her Options shall not vest and
shall not become exercisable.


                                       5


     6. Terms and Conditions of Options

         (a) Terms and Conditions of 102 Capital Gains Track Options.

               (i) Effectiveness of 102 Capital Gains Track Options. In no event
shall a 102 Capital Gains Track Option be granted prior to the expiration of a
period of thirty (30) days following submission to the Israeli Tax Commissioner
of the Company's (i) election to use the Capital Gains Track pursuant to Amended
Section 102, (ii) request for approval of the Plan, and (iii) request for
approval of the Trustee.

               (ii) Delivery to Trustee; Release by Trustee. Each 102 Capital
Gains Track Option granted to an Optionee and each certificate for Shares
acquired pursuant to the exercise thereof shall be issued to and registered in
the name of a Trustee and shall be held in trust for the benefit of the Optionee
(the "Trust") for the Required Holding Period. After termination of the Required
Holding Period, the Trustee may release such 102 Capital Gains Track Option and
any such Shares, provided that (A) the Trustee has received an acknowledgment
from the Israeli Income Tax Authority that the Optionee has paid any applicable
tax due pursuant to the Ordinance; (B) the Trustee withholds any applicable tax
due pursuant to the Ordinance; or (C) the Company undertakes to the Trustee that
it will deduct any applicable tax from the salary of those Optionees who are
employees of the Company, in accordance with an approval received from the
Income Tax Authority. The Trustee shall not release any 102 Capital Gains Track
Option or Shares issued upon exercise of such Option prior to the full payment
of the Optionee's tax liabilities.

               (iii) Compliance with 102 Capital Gains Track. Each 102 Capital
Gains Track Option shall be subject to the terms of the 102 Capital Gains Track
of Amended Section 102, which shall be deemed an integral part of the 102
Capital Gains Track Option and which shall prevail over any term contained in
the Plan or Option Agreement which is not consistent therewith. Any provision of
the 102 Capital Gains Track and any approvals by the Income Tax Commissioner not
expressly specified in the Plan or Option Agreement which are necessary to
receive or maintain any tax benefit pursuant to the 102 Capital Gains Track
shall be binding on the Optionee. In addition, 102 Capital Gains Track Options
shall be subject to the following:

                    (A) The Trustee and the Optionee granted a 102 Capital Gains
Track Option shall comply with the Ordinance, and the terms and conditions of
the Trust Agreement entered into between the Company and the Trustee. For
avoidance of doubt, it is reiterated that compliance with the Ordinance
specifically includes compliance with the Rules. Further, the Optionee agrees to
execute any and all documents which the Company or the Trustee may reasonably
determine to be necessary in order to comply with the Ordinance and,
particularly, the Rules.

                    (B) Upon receipt of a 102 Capital Gains Track Option, the
Optionee shall sign an undertaking to release the Trustee from any liability in
respect of any action or decision duly taken and bona fide executed in relation
to this Plan, such Option or any shares acquired upon the exercise thereof.


                                       6


               (iv) Method of Exercise of 102 Capital Gains Track Options.
Exercise of a 102 Capital Gains Track Option shall be by written notice to the
Company, which must state the election to exercise the Option, the number of
whole Shares for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required pursuant to the provisions of the
Option Agreement. The written notice must be signed by the Optionee, and must be
delivered in person, by certified or registered mail, return receipt requested,
by confirmed facsimile transmission, or by such other means as the Company may
permit, to the Chief Financial Officer of the Company, the Controller of the
Company or the legal counsel of the Company, or other authorized representative
of the Company, prior to the termination of the Option. The exercise of a 102
Capital Gains Track Option must be accompanied by full payment of the aggregate
exercise price in a form authorized by the Plan for the number of Shares being
purchased. The Company shall provide notice to the Trustee of the exercise of a
102 Capital Gains Track Option in accordance with the requirements of Amended
Section 102.

               (v) Restrictions on Transfer of Shares. Shares resulting from the
exercise of 102 Capital Gains Track Options shall not be released from the Trust
before the completion of the Required Holding Period. Notwithstanding the
foregoing, the Trustee may, pursuant to a written request, release and transfer
such Shares to a designated third party, provided that both of the following
conditions have been fulfilled prior to such transfer: (A) payment has been
rendered to the tax authorities of all taxes required to be paid upon the
release and transfer of the shares, and confirmation of such payment has been
received by the Trustee and (B) the Trustee has received written confirmation
from the Company that all requirements for such release and transfer have been
fulfilled according to the terms of the Company's corporate documents, the Plan,
the Option Agreement and any applicable law.

               (vi) Meeting of Shareholders. Following the exercise of any 102
Capital Gains Track Option, the Optionee shall have all of the rights of a
shareholder at any meeting of the share holders of the Company or in connection
with any action to be taken without a meeting by written consent of the
shareholders of the Company, notwithstanding that the Shares acquired upon
exercise of such Option are held by the Trustee for the benefit of the Optionee.

         (b) Grants Made Under Section 3(i). The Board may choose to deposit the
Options granted pursuant to Section 3(i) with a trustee. In such event, the
trustee shall hold such Options in trust for the benefit of the Optionees, until
exercised by the Optionee, pursuant to the Company's instructions from time to
time. If determined by the Board, the trustee shall be responsible for
withholding any taxes for which an Optionee may become liable upon the exercise
of Options.


                                       7


     7. Term of Plan. The Plan shall become effective upon its adoption by the
Board. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 14 hereunder.

     8. Term of Option. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or of any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant or such shorter term as may be provided in the
Option Agreement.

     9. Option Exercise Price and Consideration.

         Unless otherwise provided by the Board, the per share exercise price
for each Share to be issued upon exercise of an Option, including the method of
payment, shall be its Fair Market Value, as determined by the Board, but shall
be subject to the following:

               (i) In the case of an Incentive Stock Option:

                    (A) granted to an Employee who at the time of such grant
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or of any Parent or Subsidiary, the exercise
price shall be no less than 110% of the Fair Market Value per Share on the date
of grant.

                    (B) Granted to an Employee other than an Employee described
in immediately preceding subsection (A), the per Share exercise price shall be
no less than 100% of the Fair Market Value per Share on the date of grant.

               (ii) Notwithstanding the foregoing, Options may be granted with a
per Share exercise price other than as required above pursuant to a merger or
other corporate transaction, as permitted by the relevant provisions of the Code
or of the Treasury Regulations.

         (b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Board (and, in the case of an Incentive Stock Option, shall be determined at
the time of grant). Such consideration may consist of (1) cash, (2) check, or
(3) any combination of the foregoing methods of payment. In making its
determination as to the type of consideration to accept, the Board shall
consider whether acceptance of such consideration may be reasonably expected to
benefit the Company.

     10. Exercise of Option.

         (a) Procedure for Exercise. Any Option granted hereunder shall be
exercisable according to the terms hereof at such times and under such
conditions as determined by the Board and set forth in the Option Agreement.
Options granted to Employees, Officers, Directors and Consultants shall become
exercisable at a rate determined by the Board at the date of grant.

                                       8


Unless the Board provides otherwise, vesting of Options granted hereunder shall
be tolled during any unpaid leave of absence. An Option may not be exercised for
a fraction of a Share.

               (i) Exercise and Payment for Shares. An Option shall be deemed
exercised when the Company receives: (A) written or electronic notice of
exercise (in accordance with the Option Agreement) from the person entitled to
exercise the Option, and (B) full payment for the Shares with respect to which
the Option is exercised. Full payment may consist of any consideration and
method of payment authorized by the Board and permitted by the Option Agreement
and the Plan. Shares issued upon exercise of an Option shall be issued in the
name of the Optionee or, if requested by the Optionee, in the name of the
Optionee and his or her spouse.

               (ii) Rights as a Stockholder. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) no right to vote or right to receive
dividends or any other rights as a stockholder shall exist with respect to such
Shares, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right the record date for which
is prior to the date the Shares are issued, except as provided in Section 12 of
the Plan.

               (iii) Exercise of an Option in any manner shall result in a
decrease in the number of Shares thereafter available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

               (iv) Shares issued upon exercise of a 102 Capital Gains Track
Option during the required Holding Period shall be issued in the name of the
Trustee for the benefit of the Optionee. The Trustee shall have no rights to
equity participation as to the Shares held in escrow.

         (b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, unless due to such Optionee's death or
Disability, or unless the Optionee is terminated for "Cause", as defined below,
such Optionee may exercise his Option within such period of time as is specified
in the Option Agreement to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for one (1) year,
following the Optionee's termination; provided, however, that notwithstanding
the above, Incentive Stock Options shall remain exercisable for three (3) months
following the Optionee's termination and not one year. If, on the date of
termination, the Optionee is not vested as to his entire Option, the Shares
covered by the unvested portion of the Option shall revert to the Plan. If,
after termination, the Optionee does not exercise his Option within the time
specified by the Board, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

               (i) Cause. If an Optionee is terminated for Cause, then Options
which were previously granted shall not vest, and Options which had vested shall
no longer be exercisable and shall no longer be of any force or effect,
immediately upon termination of the Optionee for Cause. Unless otherwise
determined by the Board, Cause shall mean any of the

                                       9


following: (A) an act of dishonesty towards the Company; (B) Optionee's
conviction of a felony, unless the Board of Directors of the Company (without
the attendance or voting of the Optionee, (if applicable) reasonably determines
that such conviction will not adversely affect the Company or any of its
Subsidiaries or its reputation or the ability of the Optionee to effectively
serve the Company or any of its Subsidiaries; (C) Optionee's serious misconduct
related to the Company or any of its Subsidiaries; or (D) Optionee's continued
violations of his employment or service duties for a period of at least 30 days
after he has received a written demand for performance from the Company which
specifically sets forth the factual basis for the Company's belief that Optionee
has not substantially performed his duties.

               (ii) For purposes of this Plan, "termination" (whether or not for
Cause) shall be deemed to occur on the earlier of the date on which the Company
or the Optionee, as the case may be, gives notice of the Optionee's cessation to
be a Service Provider, and the date on which Optionee actually effectively
ceases to be a Service Provider.

         (c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
Option within such period of time as is specified in the Option Agreement to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for one (1) year following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his entire Option, the Shares covered by the unvested portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

         (d) Death of Optionee. If an Optionee dies while a Service Provider,
the Optionee's Option may be exercised within such period of time as is
specified in the Option Agreement to the extent that the Option is vested on the
date of death (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement) by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance.
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for one (1) year following the Optionee's termination If, at
the time of death, the Optionee is not vested as to the entire Option, the
Shares covered by the unvested portion of the Option shall immediately revert to
the Plan. If the Option is not so exercised within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

         (e) Buyout Provisions. The Board may at any time and from time to time
offer to buy out for a payment in cash or Shares, an Option previously granted,
based on such terms and conditions as the Board shall establish and communicate
to the Optionee at the time that such offer is made. No such offer shall
obligate such Optionee to relinquish his Option.

     11. Non-Transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner whatsoever
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by

                                       10


the Optionee. The restrictions set forth in this Section 11 shall not apply in
the case of the buy out of an Option pursuant to Section 10(e) above.

     12. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

         (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of Ordinary Shares covered by each
outstanding Option, and the number of Ordinary Shares which have been authorized
for issuance under the Plan or through Incentive Stock Options but as to which
no Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per share of
Ordinary Shares covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Ordinary Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Ordinary Shares, or any other
increase or decrease in the number of issued Ordinary Shares effected without
receipt of consideration by the Company. The conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the Board, whose
determination in all respects shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Ordinary Shares subject to an Option.

         (b) Merger, Acquisition, or Asset Sale. In the event of a merger of the
Company with or into another corporation or an acquisition of all or
substantially all of the shares of the Company, such that more than 50% of the
outstanding voting securities of the surviving or resulting company are owned in
the aggregate by persons or entities other than the shareholders of the Company,
or in the event of the sale of all or substantially all of the assets of the
Company (each such event, a "Transaction"), each outstanding Option shall be
assumed or an equivalent option or right substituted by the successor
corporation or by a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
Option, then the Board may, in its sole discretion, determine to accelerate, in
full or in part, all or a portion of the Options then outstanding. In the event
that the Board determines to fully or partly accelerate the Options of any
Optionee, then the Board shall notify the Optionee, in writing or
electronically, that such Options are exercisable to the extent accelerated for
a period of ten (10) days from the date of such notice, and that any unexercised
Options shall terminate upon the expiration of such period.

     13. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option, or such other date as is determined by the Board, as set forth in the
Option Agreement.

     14. Amendment and Termination of the Plan.

         (a) The Board may at any time amend, alter, suspend or terminate the
Plan.


                                       11


         (b) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Board, which
agreement must be in writing and executed by the Optionee and the Company.
Termination of the Plan shall not affect the Board's ability to exercise the
powers granted to it hereunder with respect to Options granted under the Plan
prior to the date of such termination.

     15. Conditions Upon Issuance of Shares - Legal Compliance

Shares shall not be issued pursuant to the exercise of an Option unless the
exercise of such Option and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be approved to counsel for the Company
with respect to such compliance.

     16. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

     17. Reservation of Shares. The Company, during the term of this Plan, shall
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     18. Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted by the Board. Such stockholder approval shall be obtained in the degree
and manner required under Applicable Laws.

     19. Information to Optionees. The Company shall not be required to provide
to each Optionee copies of annual financial statements or any other document
unless, in the opinion of legal counsel, Applicable Law requires such
disclosure.

     20. Tax Consequences. Any tax consequences arising from the grant or
exercise of any Options from the payment for Shares covered thereby or from any
other event or act (whether of the Optionee or of the Company or its
Subsidiaries) hereunder, shall be borne solely by the Optionee. Furthermore,
such Optionee shall agree to indemnify the Company or Subsidiary that employs
the Optionee, and the Trustee, if applicable, and hold them harmless against and
from any and all liability for any such tax or interest or penalty thereon,
including without limitation, liabilities relating to the necessity to withhold,
or to have withheld, any such tax from any payment made to the Optionee. Except
as otherwise required by law, the Company and the Trustee, if applicable, shall
not be obligated to exercise any Options on behalf of an Optionee until all tax
consequences arising from the exercise of such options are resolved in a manner
reasonably acceptable to the Company and the Trustee.

     21. Miscellaneous.

         (a) Rights Deriving from Employee-Employer Relationship. Any gain or
income credited or attributable to an Optionee (or deemed as such) as a result
of the grant or exercise of an

                                       12


Option will not be taken into account when calculating the basis for entitlement
of the Optionee to any social rights or benefits, or any other benefits deriving
from an employee-employer relationship between the Optionee and the Company or a
Subsidiary of the Company.

     (b) Multiple Agreements. The terms of each Option may differ from other
Options granted under the Plan at the same time, or at any other time. The Board
may also grant more than one Option to a given Optionee during the term of the
Plan, either in addition to, or in substitution for, one or more Options
previously granted to that Optionee. The grant of multiple Options may be
evidenced by a single grant or multiple grants, as determined by the Board.

     (c) Non-Exclusivity of the Plan. The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.

     (d) Construction. Whenever applicable in this Plan, the singular and the
plural, and the masculine, feminine and neuter shall be freely interchangeable,
as the context requires. The Section headings or titles shall not in any way
control the construction of the language herein, such headings or titles having
been inserted solely for the purpose of simplified reference. Words such as
"herein", "hereof", "hereto", "hereinafter", "hereby", and "hereinabove" when
used in this Plan refer to this Plan as a whole, unless otherwise required by
context.

     (e) Brokerage Activity; Commissions and other Expenses. The Company, at its
sole discretion, may determine that brokerage-related activity of the Plan
("BROKERAGE ACTIVITY") be handled by a third party. In such a case, each
Optionee may be required to, and if requested will, enter into an agreement with
such third party regarding the Brokerage Activity in his or her Optioned Stocks.
Any reasonable commissions and/or expenses arising from the exercise of any
Options and/or any disposition of the Optioned Stocks shall be borne solely by
the Optionee.

     (f) Governing Law and Jurisdiction. The Plan shall be governed, construed
and administered in accordance with the laws of the State of Israel, without
giving effect to the principles of conflicts of law thereof, but shall be
interpreted, to the extent possible, in order to maintain and preserve the tax
treatment and tax qualifications pursuant to the Ordinance, the Code and other
applicable foreign tax laws. It is the intention of the Company that Incentive
Stock Options granted under the Plan qualify as such under Section 422 of the
Code. The applicable courts of Tel Aviv, Israel shall have sole jurisdiction
over all matters arising in connection with any dispute or matter arising out of
or connected with this Plan and the Options granted hereunder.


                                       13

EX-5.1

                                                                     Exhibit 5.1

                                                     Date: January, 27th 2005
                                                     Ref:  186\116\2

SHNITZER, GOTLIEB, SHARON & CO.


To:
LIPMAN ELECTRONIC ENGINEERING LTD.
11 Haamal Street, Park Afek
Rosh Haayin 48092
Israel
- ------

         Re: Registration Statement on Form S-8

Ladies and Gentlemen:

We refer to the Registration Statement on Form S-8 (the "Registration
Statement") to be filed with the Commission under the Securities Act of 1933, as
amended (the "Act"), on behalf of Lipman Electronic Engineering Ltd., an Israel
corporation (the "Company"), relating to an 700,000 Ordinary Shares, NIS 1.00
nominal value (the "Ordinary Shares") to be issued under the Lipman Electronic
Engineering Ltd. 2004 Share Option Plan (the "Plan").

As counsel to the Company, we have examined such corporate records, other
documents and such questions of law as we have deemed necessary or appropriate
for the purposes of this opinion and, upon the basis of such examinations,
advise you that in our opinion all necessary corporate proceedings by the
Company have been duly taken to authorize the issuance of the Ordinary Shares
pursuant to the Plan and the Ordinary Shares being registered pursuant to the
Registration Statement, when issued and paid for in accordance with the terms of
the Plan, will be duly authorized, validly issued, fully paid and
non-assessable.

The opinion expressed herein is limited to Israeli law, and we do not express
any opinion as to the laws of any other jurisdiction.

We consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement. This consent is not to be construed as an admission that we are a
person whose consent is required to be filed with the Registration Statement
under the provisions of the Act.

                                             Very truly yours,


                                             /s/ Shnitzer, Gotlieb, Sharon & Co.
                                             -----------------------------------
                                             Shnitzer, Gotlieb, Sharon & Co.

EX-23.2

                                                                    Exhibit 23.2



            Consent of Independent Registered Public Accounting Firm


We consent to the incorporation by reference in the Registration Statements on
Form S-8 of our report dated February 22, 2004, with
respect to the consolidated financial statements of Lipman Electronic
Engineering Ltd., included in this Annual Report on Form 20-F for the year ended
December 31, 2003, filed with the Securities and Exchange Commission.








                                            /s/ KOST, FORER, GABBAY & KASIERER
January 27, 2005                              KOST, FORER, GABBAY & KASIERER
Tel-Aviv, Israel                             A Member of Ernst & Young Global