SC 13D

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

                                  SCHEDULE 13D

                    Under the Securities Exchange Act of 1934
                           (Amendment No.            )
                                          -----------

                          GILAT SATELLITE NETWORKS LTD.
        -----------------------------------------------------------------
                                (Name of Issuer)

                 Ordinary Shares, par value NIS 0.20 per share *
        -----------------------------------------------------------------
                         (Title of Class of Securities)

                                    M51474100
        -----------------------------------------------------------------
                                 (CUSIP Number)


                                   Meir Shamir
                          Mivtach Shamir Holdings Ltd.
                           Beit Sharvat 4 Koyfman st.
                            Tel - Aviv 68012, Israel
                                972 - 3 - 5162626
        -----------------------------------------------------------------
                  (Name, Address and Telephone Number of Person
                Authorized to Receive Notice and Communications)

                                  July 18, 2005
        -----------------------------------------------------------------
             (Date of Event which Requires Filing of this Statement)


If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), (f) or (g), check the following
box [].

Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.

The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).

* "NIS" represents the New Israeli Shekel, the currency of the State of Israel.






CUSIP No. M51474100

1        NAME OF REPORTING PERSON: Mivtach Shamir Holdings Ltd.
         S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: Not Applicable

2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [x ]

3        SEC USE ONLY:

4        SOURCE OF FUNDS: WC

5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
         ITEMS 2(d) or 2(e) [ ]

6        CITIZENSHIP OR PLACE OF ORGANIZATION:

                  Israel

         NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:

7        SOLE VOTING POWER

                           0 shares

8                 SHARED VOTING POWER

                           2,216,945 shares (1)


9                 SOLE DISPOSITIVE POWER

                           0 shares

10                SHARED DISPOSITIVE POWER

                           2,216,945 shares (2)


11       AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

                           2,216,945 shares (2)

12       CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
         [ ]

13       PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

                  9.9%

14       TYPE OF REPORTING PERSON*:

                  CO






(1)  As set forth in the agreement attached hereto as Exhibit 7(b), Mr. Meir
Shamir and Ashtrom Industries Ltd. share voting power with respect to their
shares of Mivtach Shamir Holdings Ltd.

(2)  For purposes of Section 13(d) or Section 13(g) of the Securities Exchange
Act of 1934,, Mr. Meir Shamir may be deemed to beneficially own 2,216,945 shares
held by Mivtach Shamir Holdings Ltd., of which Mr. Shamir is the Chairman.





CUSIP No. M51474100

1        NAME OF REPORTING PERSON: Meir Shamir (Israel)
         S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: Not Applicable

2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [x ]

3        SEC USE ONLY:

4        SOURCE OF FUNDS: WC

5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
         ITEMS 2(d) or 2(e) [ ]

6        CITIZENSHIP OR PLACE OF ORGANIZATION:

                  Israel

         NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:

7                 SOLE VOTING POWER

                           0 shares

8                 SHARED VOTING POWER

                           2,216,945 shares (1)


9                 SOLE DISPOSITIVE POWER

                           0 shares

10                SHARED DISPOSITIVE POWER

                           2,216,945 shares (2)


11       AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

                  2,216,945 shares (2)

12       CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
         [ ]

13       PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

                  9.9%

14       TYPE OF REPORTING PERSON*:

                  IN



(1)  As set forth in the agreement attached hereto as Exhibit 7(b), Mr. Meir
Shamir and Ashtrom Industries Ltd. share voting power with respect to their
shares of Mivtach Shamir Holdings Ltd.

(2)  For purposes of Section 13(d) or Section 13(g) of the Securities Exchange
Act of 1934,, Mr. Meir Shamir may be deemed to beneficially own 2,216,945 shares
held by Mivtach Shamir Holdings Ltd., of which Mr. Shamir is the Chairman.





Item 1: Security and Issuer.

         The securities to which this Schedule 13D relates are the Ordinary
Shares, par value NIS 0.20 per share, of Gilat Satellite Networks Ltd., a
corporation organized under the laws of the State of Israel (the "Issuer"). The
address of the Issuer's principal executive office is Gilat House, 21 Yegia
Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva, 49130 Israel.

Item 2: Identity and Background.

         (i)   Mivtach Shamir Holdings Ltd. is a corporation organized under the
               laws of the State of Israel traded in the Tel Aviv Stock
               Exchange. Its principal business is investment in securities and
               companies.

         (ii)  Messrs. Meir Shamir, Yeheskel Dovrat, Avraham Nussbaum, Uri Shani
               and Ariela Goldman, the sole directors of Mivtach Shamir Holdings
               Ltd., are citizens of the State of Israel. Messrs. Uri Shani and
               Ariela Goldman are the external directors of Mivtach Shamir
               Holdings Ltd. according to the Companies Law of the State of
               Israel.

         The principal business address for each of the reporting and other
enumerated persons is Mivtach Shamir Holdings Ltd., Beit Sharvat, 4 Koyfman st.
Tel Aviv 68012, Israel.

         During the last five years, none of the reporting and other enumerated
persons has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) nor was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which a
reporting or other enumerated person was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.

Item 3: Source and Amount of Funds or Other Consideration.

         Mivtach Shamir Holdings Ltd. acquired 1,250,000 shares of the Issuer on
July 18, 2005 from Bank Hapoalim in a private transaction. Prior to July 18,
2005, Mivtach Shmair Holdings owned 966,945 shares, or approximately 4.3% of the
outstanding voting securities of the Issuer. Mivtach Shamir Holdings Ltd. used
working capital funds to fund 100% of the purchase price for the shares of the
Issuer it acquired.

Item 4: Purpose of the Transaction.

         The shares were acquired for investment purposes only.

         In connection with the share purchase from Bank Hapoalim on July 18,
2005, Mivtach Shamir Holdings Ltd. agreed to appoint York Capital Management as
its sole and exclusive proxy to vote its 1,250,000 shares of the Issuer until
July 18, 2007.

Item 5: Interest in Securities of the Issuer.

         Each of Meir Shamir and Mivtach Shamir Holdings Ltd. beneficially owns
2,216,945 shares, which constitutes approximately 9.9% of the class, based on
22,312,487 shares outstanding as reported in the Issuer's Form 20-F for the year
ended December 31, 2004. The reporting persons have shared power to direct the
vote, dispose of and direct the disposition of the 2,216,945 shares held by
Mivtach Shamir Holdings Ltd, subject to the sole and exclusive proxy granted to
York Capital Management as set forth in Item 4 above.

         Mivtach Shamir Holdings Ltd. acquired 1,250,000 shares of the Issuer on
July 18, 2005 from Bank Hapoalim for an aggregate consideration of $7,875,000,
or $6.30 per share, in a private transaction.



Mivtach Shamir Holdings agreed to pay Bank Hapoalim additional consideration
equal to (a) 20% of the share price above $6.30, if Mivtach Shamir sells any of
the 1,250,000 shares purchased from Bank Hapoalim during 18 months after July
18, 2005 and (b) 20% of the average closing price (during 30 trading days
immediately preceding the end of such 18 month period) above $6.30, if Mivtach
Shamir is still holding any of the 1,250,000 shares purchased from Bank Hapoalim
after 18 months after July 18, 2005.

Item 6: Contracts, Arrangements, Understandings or Relationship with Respect to
Securities of the Issuer.

         The information set forth in Items 3, 4 and 5 is incorporated in this
Item 6 by reference.

Item 7: Exhibits.

         (a)   Joint Filing Agreement.

         (b)   Voting Agreement between Meir Shamir and Ashtrom Industries Ltd.,
               dated as of December 22, 1997, and amended on April 22, 2002.

         (c)   Share Sale Agreement between Bank Hapoalim B.M. and Mivtach
               Shamir Finance Ltd, a wholly-owned subsidiary of Mivtach Shamir
               Holdings, Ltd., dated June 23, 2005.

                        ---------------------------------

Signatures

         After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.


Date: July 28, 2005

MIVTACH SHAMIR HOLDINGS LTD.

By: /s/ MEIR SHAMIR
    ---------------

Name:    Meir Shamir
Title:   Chairman

/s/ MEIR SHAMIR
- ---------------
Mr. Meir Shamir

Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).

EX-7.(A)

                                                                    Exhibit 7(a)

                             JOINT FILING AGREEMENT

         In accordance with Rule 13d-1(k) under the Securities Exchange Act of
1934, as amended, the undersigned agree to the joint filing on behalf of each of
them of a statement on Schedule 13D (including amendments thereto) with respect
to the Ordinary Shares of Gilat Satellite Networks Ltd. and further agree that
this agreement be included as an exhibit to such filing. Each party to the
agreement expressly authorizes each other party to file on its behalf any and
all amendments to such statement. Each party to this agreement agrees that this
joint filing agreement may be signed in counterparts.

         In evidence whereof, the undersigned have caused this Agreement to be
executed on their behalf of the date indicated:


/s/ MEIR SHAMIR
- ---------------
Meir Shamir


Mivtach Shamir Holdings Ltd

      By:  /s/ MEIR SHAMIR
           ---------------
           Chairman

EX-7.(B)

                                                                    Exhibit 7(b)

                                    AGREEMENT
                                    ---------
                    MADE IN TEL AVIV ON THE 22 OF APRIL, 2002
             AS AN AMENDMENT TO AN AGREEMENT DATE DECEMBER 22, 1997

BETWEEN:          MEIR SHAMIR
                  Of 23 Yoav Street, Zahala
                  (hereinafter: "Meir Shamir")

AND:              ASHTROM INDUSTRIES LTD. (AND/OR AFFILIATED COMPANY)
                  Company no. 52 - 003715 - 1
                  Of 10 Kremnitski Street, Tel Aviv
                  (hereinafter: "Ashtrom")

WHEREAS:          Meir Shamir is a shareholder in Mivtach Shamir Holdings Ltd.
                  (hereinafter: "Mivtach Shamir" or the "Company");

WHEREAS:          Ashtrom is a shareholder in Mivtach Shamir;

AND WHEREAS:      The parties wish to engage in an agreement pursuant
                  to which they shall formalize the relations between them as
                  shareholders in Mivtach Shamir,

   THE FOLLOWING HAS THEREFORE BEEN STIPULATED AND AGREED BETWEEN THE PARTIES:

PREAMBLE
- --------

1.       The Preamble to this Agreement forms an integral part hereof.

COOPERATION BETWEEN THE PARTIES AT THE GENERAL MEETINGS OF MIVTACH SHAMIR
- -------------------------------------------------------------------------

2.       a.    Meir Shamir and Ashtrom undertake to vote at the general meetings
               of Mivtach Shamir, in such a manner and in accordance with the
               joint resolution which the parties shall reach prior to the date
               of the convening of the preliminary meeting or prior to the
               passing thereby of any other resolution at Mivtach Shamir,
               respectively; and in the absence of consent with regard to such a
               resolution, the



               parties shall apply to Mr. Yoni Caplan (hereinafter: the
               "Arbitrator") in order for him to determine, in keeping with the
               joint interest of Meir Shamir and Ashtrom as shareholders in
               Mivtach Shamir, given the circumstances of the matter, which is
               the more appropriate resolution which the parties should pass,
               and his decision shall be binding upon the parties for all
               intents and purposes and the parties shall have no possibility of
               appealing against his said decision.

         b.    Should the Arbitrator be unable to render his award, as stated
               above, the parties shall apply to Mr. Zeev Feldman (hereinafter:
               the "Alternate Arbitrator") and his decision shall be binding
               upon the parties for all intents and purposes and the parties
               shall have no possibility of appealing against his said decision.

         c.    Should the Alternate Arbitrator be unable to render his award, as
               stated above, the parties shall apply to Mr. Amos Epstein
               (hereinafter: the "Additional Arbitrator") and his decision shall
               be binding upon the parties for all intents and purposes and the
               parties shall have no possibility of appealing against his said
               decision.

         d.    Should the Arbitrators be unable to render their award by the
               date of the convening of the general meeting, then the parties
               shall act to procure the adjournment of the date of the convening
               of the said general meeting.

3.       At the request of any of the parties to this Agreement, which holds at
         least 12% of the outstanding capital of Mivtach Shamir, Mivtach Shamir
         shall distribute a dividend at a rate of 50% of the profits that can
         legally be distributed as a dividend at the Company.

         APPOINTMENT OF THE BOARD OF DIRECTORS OF MIVTACH SHAMIR
         -------------------------------------------------------

4.       The Board of Directors of Mivtach Shamir shall appoint directors who
         shall be appointed in the manner described in this section.

         4.1   The parties shall cooperate at the general meetings of Mivtach
               Shamir for the purpose of appointing one director, who shall be
               recommended by Ashtrom and two directors who shall be recommended
               by Meir Shamir for the Board of Directors of Mivtach Shamir.

         4.2   The two additional directors shall be external directors and the
               parties shall


               cooperate at the general meetings of Mivtach Shamir to ensure
               that one of them shall be elected at the recommendation of Meir
               Shamir and the other shall be elected at the recommendation of
               Ashtrom.

5.       RIGHT OF FIRST REFUSAL OR TAG ALONG RIGHT
         -----------------------------------------

         5.1   Should a party to this Agreement wish to sell any of its shares
               in Mivtach Shamir (hereinafter: the "Seller") at a rate exceeding
               2% of the outstanding share capital of Mivtach Shamir each
               calendar year, it shall be required to give written notice
               thereof (hereinafter: the "Sale Notice") to the other party
               (hereinafter: the "Offeree") in which it shall specify the number
               and class of the shares which it wishes to sell as stated
               (hereinafter: the "Offered Shares"), the price for the Offered
               Shares and the rest of the terms of the sale pursuant to which
               the Seller wishes to sell the Offered Shares; in such an event,
               the Offeree shall have the right to purchase the Offered Shares,
               at such price and upon such terms as set forth in the Sale Notice
               or, alternatively, the right to include in the sale of the
               Offered Shares part of his own shares, as stated below.

         5.2   Should the Offeree wish to exercise right to purchase the Offered
               Shares, he shall give notice thereof to the Seller (hereinafter:
               the "Purchase Notice") within 7 (seven) business days from the
               date on which he received the Sale Notice that refers to all the
               Offered Shares. Should Purchase Notices (that refer to all the
               Offered Shares) be submitted to the Seller, within the period of
               time determined therefor as stated above, then the submission to
               the Seller of the Purchase Notices as stated by the Offeree shall
               be deemed to be the making of a binding agreement between him and
               the Seller, pursuant to which the Seller undertakes to sell to
               him and he undertakes to buy from the Seller the Offered Shares
               at such price and upon such terms as set forth in the Sale
               Notice. If the Offeree gave notice of his wish to exercise his
               right to purchase the Offered Shares, then the purchase shall be
               made by him of all the Offered Shares. The purchase shall be made
               in such a manner that within 3 (three) business days from the
               date of the submission of the Purchase Notice, the Seller shall
               submit to the Offerees a deed of transfer in respect of the
               Offered Shares and any other document that is required for the
               purpose of execution of the said transfer; and against the
               submission of the said



               documents, the Offeree shall pay to the Seller the consideration
               of the shares.

         5.3   Should the Offeree wish to exercise his right to include in the
               sale of the Offered Shares part of his own shares, notice thereof
               shall be submitted to the Seller (hereinafter: the "Tag Along
               Notice") within 7 (seven) business days from the date on which he
               received the Sale Notice. Should Tag Along Notices be submitted
               to the Seller, within the period of time determined therefor as
               stated above, then the submission to the Seller of the Tag Along
               Notices as stated by the Offeree shall be deemed to be the making
               of a binding agreement between him and the Seller, pursuant to
               which the Seller undertakes to let him participate, up to him
               proportionate share, in the sale of the Offered Shares, at such
               price and upon such terms as set forth in the Sale Notice. If the
               Offeree gave notice of its wish to exercise its right, as stated,
               then it shall participate in such a manner that the Seller and
               the participating Offeree shall take part in the sale of the
               Offered Shares according to the relative ratios of the shares
               held by the two of them in the Company on the date of the
               submission of the Sale Notices.

         5.4   Should no Purchase Notice in respect of all of the Offered Shares
               and no Tag Along Notice be submitted to the Seller within the
               period of 7 (seven) business days as specified above, the Seller
               shall be entitled, within a period of 30 (thirty) days after the
               end of the said period of 7 business days, to sell the Offered
               Shares to a third party, at such price and upon such terms that
               are not inferior, as far as the Seller is concerned, to those set
               forth in the Sale Notice. Should the Seller fail to sell the
               Offered Shares within the period of 30 (thirty) days as stated in
               the said terms, then the provisions of this section shall
               re-apply in the event that the Seller should wish to sell any of
               its shares in the Company.

         5.5   That stated in this section shall not apply to a transfer of
               shares to an entity of which the Seller has control, and for such
               time as it has such control, or to an entity that directly
               controls the Seller, and for such time as it controls the Seller
               as stated, or to an entity that is also controlled by the entity
               that directly controls the Seller, and for such time as it is so
               controlled, provided that the transferee took upon itself all the
               obligations of the transferor pursuant to this Agreement.



               For the purposes of this section, "control" means the holding of
               50% or more of the voting power and/or of the right to appoint
               the members of the Board of Directors.

         5.6   That stated in this section shall not apply to a transfer of
               shares to first-degree family members of the transferor, provided
               that the transferee took upon itself all the obligations of the
               transferor pursuant to this Agreement.

         5.7   The Tag Along right that is given in this section shall not be
               given to Meir Shamir, for such time as Meir Shamir holds shares
               of the Company, whether directly or indirectly through
               corporations in his control. For the avoidance of doubt, it is
               hereby clarified that the restriction set forth in the provision
               of this section shall not apply to any of the successors of Meir
               Shamir who shall hold the shares of Meir Shamir instead of him.

6.       Validity of the Agreement
         -------------------------

         6.1   The rights that are granted to Meir Shamir and to Ashtrom
               pursuant to the provisions of this Agreement shall remain in
               effect with regard to Meir Shamir as long as he holds at least
               25% of the outstanding share capital of Mivtach Shamir and with
               regard to Ashtrom, as long as it holds at least 12% of the
               outstanding share capital of Mivtach Shamir.

         6.2   The obligations of each party to this Agreement shall be
               cancelled when the holdings of the said party in the outstanding
               share capital of Mivtach Shamir shall be less than 5%. Without
               prejudice to the generality of the foregoing, it is hereby
               clarified that the foregoing shall not constitute an undertaking,
               whether express or implied, by either of the parties not to sell
               its shares in Mivtach Shamir, in whole or in part.

         6.3   For the purposes of this section, the holdings of the parties
               shall be deemed to include the direct holdings of the parties to
               this Agreement as well as their indirect holdings, through
               corporations held by them in their entirety.




7.       GENERAL PROVISIONS
         ------------------

         7.1   Each of the parties undertakes to submit any approval, to sign
               any document and to perform any act whereof the submission or
               performance by that party is required for the purpose of the
               granting validity to the provisions of this Agreement and to the
               execution thereof.

         7.2   The parties agree that any disputes that shall arise in
               connection with the validity and the execution of this Agreement
               shall be submitted for determination by a sole arbitrator who
               shall be appointed by the parties, with consent, and in the
               absence of consent between them, by the person who, at that time,
               shall be the Chairman of the Board of Directors of Bank Leumi
               LeIsrael Ltd. The arbitrator shall not be bound by the laws of
               evidence or the laws of civil procedure, however, he shall be
               required to render his award pursuant to the substantive law and
               to give reasons for his award.

         7.3   The addresses of the parties for the purpose of this Agreement
               are as set forth in the Preamble to this Agreement.

IN WITNESS WHEREOF THE PARTIES HERETO HAVE HEREUNTO SET THEIR HANDS:

                                                     /s/ Meir Shamir
                                                     ---------------
                                                     Meir Shamir



                                                     Ashtrom Industries Ltd.


                                                     By:
                                                        ---------------------
                                                     Name:
                                                     Title:

EX-7.(C)

                              SHARE SALE AGREEMENT

                  Made and signed in Tel Aviv on June 23, 2005


                                    BETWEEN:

                               BANK HAPOALIM B.M.
                          44 Rothschild Blvd., Tel Aviv
                                                                 of the one part
                           (Hereinafter: the "SELLER")


                                     A N D:

                           MIVTACH SHAMIR FINANCE LTD.
                          4 Kaufman St., Tel Aviv 68012
                                                               of the other part
                         (Hereinafter: the "PURCHASER")


WHEREAS  the Seller is the owner of 1,250,000 ordinary shares of NIS 0.2 nominal
         value each ("ORDINARY SHARES") of Gilat Satellite Networks Ltd., Public
         Co. 52-003893-6 (respectively the "SALE SHARES" and the "COMPANY"); and

WHEREAS  the Seller wishes to sell the Sale Shares to the Purchaser and the
         Purchaser wishes to purchase the Sale Shares from the Seller, upon the
         conditions stipulated below;


     THEREFORE, THE PARTIES HEREBY DECLARE, STIPULATE AND AGREE AS FOLLOWS:
     ----------------------------------------------------------------------

1.       PREAMBLE, INTERPRETATION AND DEFINITIONS
         ----------------------------------------

         1.1   The preamble to this contract and the appendices attached to the
               contract form an integral part thereof.

         1.2   "CLOSING DATE" - The closing date of the loan assignment
               agreement signed on June 23, 2005 by and between the Seller and
               York Capital Management (hereinafter respectively: the
               "ASSIGNMENT AGREEMENT" and "YORK"), in accordance with the
               conditions stipulated therein.

2.       THE TRANSACTION
         ---------------

         2.1   On the Closing Date, the Seller shall sell to the Purchaser and
               transfer to it (by means of a transfer deed or, at the Seller's
               discretion, through an electronic transfer to the bank



               account to be provided by the Purchaser) ownership of the Sale
               Shares, and the Purchaser shall purchase from the Seller the Sale
               Shares, being free from any third party rights (except for any
               restrictions imposed on them by law), in consideration of and
               against the immediate payment of a total sum of 7,875,000 US
               dollars (according to a price of 6.30 US dollars per Sale Share),
               which shall be paid on the Closing Date by the Purchaser to the
               Seller in cash, in US dollars, by a bank transfer to the bank
               account the details of which shall be provided by the Seller to
               the Purchaser before the Closing Date. The Purchaser hereby
               agrees and confirms that the sale of the Sale Shares shall be
               contingent on the closing of the Assignment Agreement, failing
               which the Sale Shares shall not be sold to the Purchaser under
               this Agreement.

         2.2   On the Closing Date, and as a condition for the sale of the Sale
               Shares, the Purchaser shall issue to York, in respect of the Sale
               Shares, a proxy instrument in the wording attached to this
               Agreement as APPENDIX 2.2, which shall be valid starting from the
               Closing Date and for a period of two years thereafter with
               respect to voting by virtue of the said shares in any general
               meeting (or adjournment thereof) of the Company's shareholders.

         2.3   The Seller hereby declares and warrants to the Purchaser that it
               is the owner of the Sale Shares and that, subject to fulfillment
               of the foregoing conditions, they shall be transferred on the
               Closing Date to the Purchaser's ownership, being free of any
               third party rights (except for restrictions imposed on them by
               law). All acts requiring to be done on the Closing Date shall be
               deemed to have been done simultaneously. No individual act shall
               be deemed to have been completed and no individual document shall
               be deemed to have been delivered, until all the acts on that date
               have been completed and all the documents have been delivered.

         2.4   Except as stipulated above, all the Sale Shares and all the
               rights therein shall be sold and transferred to the Purchaser on
               the Closing Date as is, without any other representation,
               warranty, declaration or confirmation by the Seller in regard to
               the Company and anything relating to it, its value, its
               profitability, the value of the shares and any other matter, and
               the Purchaser hereby waives, and releases and discharges the
               Seller from, any contention or claim which it had or could have
               in respect of the sale or non-sale of any rights of the Seller in
               the Company and/or in connection with the Company's position.

         2.5   During 18 months after the Closing Date, if the Purchaser sells
               any of the Sale Shares up to a quantity equivalent to 1,250,000
               of the Ordinary Shares (whether in or outside the stock
               exchange), then immediately upon the closing of the sale and
               receipt of the consideration in respect thereof, it shall
               transfer to the Seller a total sum (in cash, by a bank transfer
               to the Seller's bank account) equivalent to: (1) the number of
               Sale Shares that were sold (hereinafter: the "SOLD SHARES"),
               multiplied by (2) the following sum for



               each Ordinary Sold Share: (a) 20% of (b) the difference between
               the selling price of the Ordinary Sale Share (hereinafter: the
               "SELLING PRICE") and 6.30 US dollars (if the sales are carried
               out in New Israeli shekels ("NIS") the US dollar shall be
               converted into NIS according to the representative rate on that
               day, and the sum shall be transferred to the Seller in NIS). For
               the avoidance of doubt, should the Selling Price be lower than
               6.30 US dollars per share, no sum shall be paid to the Purchaser
               in respect of the aforesaid shares.

         2.6   At the end of the aforesaid 18 months (and in the event that the
               Purchaser sold in the course thereof from the Sale Shares a
               smaller quantity than 1,250,000 shares (hereinafter: the "UNSOLD
               SHARES"), the Purchaser shall transfer to the Seller (in cash, by
               a bank transfer to the Seller's bank account) a total sum
               equivalent to: (1) the number of Unsold Shares, multiplied by (2)
               the following sum for each Unsold Share: 20% of the difference
               between (a) the average of the closing price of the Company's
               ordinary shares on the NASDAQ on each of the last 30 trading days
               before the end of the 18 months (hereinafter:: "TRADING DAYS
               AVERAGE"), and (b) 6.30 US dollars. For the avoidance of doubt,
               should the Trading Days Average be lower than 6.30 US dollars per
               ordinary share, no sum shall be paid to the Purchaser in respect
               of the aforesaid shares.

3.       MISCELLANEOUS
         -------------

         3.1   This Agreement together with its appendices embodies the entire
               agreement between the parties, and shall, upon the signing
               thereof, cancel any previous agreement, undertaking and
               negotiations, whether written or oral, made or conducted between
               them.

         3.2   No conduct on the part of either of the parties to this Agreement
               shall be deemed as that party's waiver of any right conferred on
               it by this Agreement or in law, except if made expressly in
               writing. Exclusive jurisdiction in any matter entailed in or
               arising from this Agreement shall vest solely in the courts in
               Tel Aviv and in accordance with the laws of the State of Israel.

         3.3   No modification and/or waiver and/or deviation from the
               provisions of this Agreement shall be valid, unless made in
               writing under the hands of the parties hereto. A party's
               agreement to deviate from a condition of this Agreement in a
               particular case shall not serve as a precedent or analogy for any
               other case. A party's failure to exercise a right granted to it
               under this contract in a particular case, shall not be deemed as
               its waiver of that right in an identical case and/or in another
               similar or dissimilar case, and no inference may be drawn
               therefrom regarding that party's waiver of any of its rights.

         3.4   Nothing in this Agreement or in any of its stipulations
               constitutes a provision in favor of a third party, and the
               parties do not have an intention to vest any third party not



               being a party to this Agreement with any right. This Agreement
               may be signed by each of the parties separately, and the two
               signed documents shall be deemed to be a single document.

         3.5   The parties' addresses for purposes of this contract are as
               specified at its head, and any notice sent by one party to the
               other by registered post according to its above stated address
               (save where one party has notified the other in writing of a
               change therein) shall be deemed to have reached its destination
               and to have come to the knowledge of the addressee within 72
               hours from when it was put in the post, and on the same day if
               delivered by a messenger or by fax.


           IN WITNESS WHEREOF THE PARTIES HAVE SET THEIR HANDS HERETO:




                                                            ( - )
         ----------------------                  --------------------------
           BANK HAPOALIM B.M.                    MIVTACH SHAMIR FINANCE LTD.


         Per:                                    Per: Meir Shamir, Limor Avidor
             ------------------