REGISTRATION RIGHTS AGREEMENT





THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and entered into

as of the 25th day of July, 2002 by and among RED BEND LTD., an Israeli company

(the "COMPANY"), the founders of the Company (the "FOUNDERS") and the persons

and entities identified in Annex 1 attached hereto (together with the Founders,

the "NON-INVESTING SHAREHOLDERS")- And - CARMEL VENTURES FUNDS (collectively the

"CARMEL FUNDS") and the persons and entities identified in Annex 2 attached

hereto (each an "INVESTING SHAREHOLDER" or "INVESTOR" and collectively the

"INVESTORS") (the Non-Investing Shareholders and the Investors shall hereinafter

be referred to as the "SHAREHOLDERS").





                                   WITNESSETH



        WHEREAS, the Company and the Shareholders are parties to a certain

Registration Rights Agreement dated October 10, 2000 as amended on August 1,

2001 ("PRIOR REGISTRATION RIGHTS AGREEMENT"); and



        WHEREAS, concurrent with this Agreement, the Company and the Investors

are entering into a certain Share Purchase Agreement in relation to which the

parties hereto wish to cancel the Prior Registration Rights Agreement and set

forth herein certain rights to registration of the Company's Series A Preferred

Shares, Series B1 Preferred Shares and Series B Preferred Shares, and shares

that may be issued upon exercise of preemptive and anti-dilution rights with

respect to the above detailed shares, all as shall be converted into Ordinary

Shares (the "SHARES"); and



        NOW THEREFORE, in consideration of the mutual covenants and undertakings

herein contained, and other consideration received by the parties, the

sufficiency and adequacy of which is hereby acknowledged, the parties hereby

agree as follows:





        1. Nullification of Registration Rights. The parties hereby cancel all

registration rights granted pursuant to the Prior Registration Rights Agreement

which agreement shall be null and void, and substitute same with the rights set

out in this Agreement.





        2. Demand Registration. Subject to the terms hereof, and provided any

securities of the Company are publicly traded over the counter or on any

recognized stock exchange in the United States or any other recognized stock

exchange, the holders of the majority of the Shares shall have the right, to

demand that the Company shall effect up to two (2) registrations of their Shares

(a "DEMAND REGISTRATION") (provided that no more than one request may be made in

any six-month period), provided that (i) such demand is not made





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                                       2







before termination of six (6) months from the first date the Company's shares

are registered for trade as aforesaid and not following five (5) years from such

date, and (ii) the shares that are registered have a total market value of at

least three million United States dollars ($3,000,000) under the United States

Securities Act of 1933, as amended (the "SECURITIES ACT"), or other applicable

law of all or part of the Shares.



In this section 2 "the holders of majority of the Shares" shall mean only

holders of Preferred B Shares and Preferred B1 Shares in the share capital of

the Company, which were converted into Ordinary Shares and shall exclude holders

of Preferred A Shares of the Company.



        3. Piggyback Registrations



               3.1 Whenever the Company or any of its affiliates proposes to

register any of its securities under the Securities Act or other applicable law

and the registration form to be used is suitable for the registration of the

Shares (a "PIGGYBACK REGISTRATION") (it being understood that Form S-8 and Form

F-4 may not be used for such purposes), the Company will give written notice to

the holders of Shares (each a "HOLDER" and collectively, the "HOLDERS") of its

intention to effect such a registration (which notice shall describe the

proposed registration and distribution, including those jurisdictions where

registration under the securities or blue sky laws in intended) and will include

in such registration all Shares with respect to which the Company has received

written requests for inclusions therein within thirty (30) days after the

Company gives such notice. Such notice will be delivered to the Holders at least

thirty (30) days prior to the initial filing of a registration statement with

the Securities and Exchange Commission or other similar regulatory agency.



               The Holders shall have the right to exercise their Piggyback

Registration rights pursuant to the provisions of this Section on any number of

occasions that the Company shall determine to file a Registration Statement.



               3.2 If a Piggyback Registration is an underwritten offering of

the Company's securities and the managing underwriters advise the Company in

writing that in their opinion the number of securities requested to be included

in such registration exceeds the number that can be sold in such offering

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