The Office of the Chief Scientist - An Overview

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1 The Office of the Chief Scientist - An Overview Introduction Israel derives great strength and technological excellence from its human capital along with the academic and technological infrastructure it has developed. In order to maximize the exploitation of this human potential and convert it into a competitive advantage, there is a pressing need to invest in industrial research and development. Such an investment has both direct and ancillary effects on the market and becomes the engine that drives the Israeli economy. The Office of the Chief Scientist (OCS) within the Ministry of Industry, Trade and Labor is responsible for executing the government policy relating to industrial R&D support. The OCS objectives are to support industrial R&D, encourage entrepreneurs in high-tech start-up companies, leverage Israel's highly capable scientific and tecnological labor force, facilitate the academic industrial interface for the transfer scientific know-how and technology and in general to stimulate cooperation in state of the art R&D at national and international levels. Law for the Encouragement of Industrial Research and Development constitutes the general mandate of the OCS. The OCS also offers a range of additional support programs within the framework of directives from the Director-General of the Ministry of Industry, Trade and Labor. The revised law allows, but does not encourage, the transfer of both know-how and manufacturing rights abroad under clearly defined costs and conditions. International Activities The Government of Israel, through the OCS, has signed agreements and created funds together with other governments to actively support and encourage industrial R&D cooperation between Israeli and industry overseas. Mutual benefits of international cooperation in industrial R&D are based on the strength of each of the cooperating companies. It will usually include access to know-how and technologies that are not otherwise readily available to the participants as well as access to new markets and the needs of the captive market of each industry. Potential strategic partners can be identified, resulting in heightened awareness of market opportunities in partnering countries, and enhanced identification of potential trade strategies. Israel can act as a trade bridge for companies wishing to expand their activities into these markets via its free trade agreements with North America, the EU and more. The government's policies and OCS activities have created an environment of good investment opportunities and support that has attracted hundreds of international companies including well-known multinationals, to set up research centers and enterprises in Israel. Activities of the O.C.S. Activities in Israel R&D Fund Technological Incubators Tnufa Seed Fund (HEZNEK) Magnet Maagneton (MiniMagnet) Nofar Support for Research Institutes Chief Scientist Dr. Eli Opper International Activities Bi-National Funds Bi-National Agreements European Union Programs EP-6 EUREKA U.S-Israel Science & Technology Commission 35

2 MATIMOP - Israeli Industry Center For R&D MATIMOP is a public non-profit organization founded by the two manufacturers associations in Israel to promote the development of advanced technologies in Israel and to create fruitful international partnerships through industrial cooperation and joint ventures. MATIMOP acts as the national center in charge of encouraging and assisting participation of Israeli enterprises in international bi-lateral or multi-lateral cooperation programs for industrial R&D. MATIMOP implements most of the bilateral R&D cooperation agreements on behalf of the OCS and thus serves as a contact point for various agreements. As such, MATIMOP is in constant contact with most Israeli Hi Tech companies and maintains a database listing more than 3,000 companies of all sizes, interested in international cooperation. One may search the database by technology, application, keyword or alphabetically at: MATIMOP s monthly electronic news bulletin "Advanced Technologies from Israel" is ed to nearly 20,000 addresses all over the world. The newsletter presents the essence of accomplishments achieved by the innovative entrepreneurs and medium-sized businesses wishing to find opportunities for collaboration in joint ventures and has evoked much interest and is quoted widely. Thousands of inquiries are received each year, several hundred of which result in mutually satisfactory contacts. MATIMOP Yair Amitay, Director Tel: Fax: rdinfo@matimop.org.il Web: A. Bi-National Funds Two nations contribute a pre-determined sum in a bi-national fund intended to support cooperative projects. In the proven model, each fund establishes its own criteria and procedures, usually within a similar framework. A board of directors is appointed by the two governments, which is sovereign in its decision making. The funds are managed and grants payments administered by a non-profit organization. It requires no equity in the companies supported and no intellectual property rights in their products; nor does it interfere in formulating or running the relationship between the partnering companies Besides financial support to R&D projects, the foundations also engage in searches for business partners in both countries, for the purposes of collaboration in technology development projects. Mr. Azriel (Azi) Hemar Director Division of International Relations and Cooperation, OCS Tel: Fax: azi@actcom.co.il 36

3 A.1. BIRD (Bi-National Industrial R&D) AmericanIsraeli Foundation Dov Hershberg, Executive Director Tel: Fax: Website: Introduction: Accelerating growth through strategic partnerships, BIRD is a key catalyst for joint Research & Development between American and Israeli companies. BIRD brings together promising Israeli companies with their medium-to-large U.S. counterparts, focusing on emerging industries and novel technologies. The approval of the BIRD Foundation Board of Governors is based on a review by the U.S. National Institute of Standards and Technology (NIST) and the Office of the Chief Scientist (OCS) of Israel's Ministry of Industry and Trade. Criteria: Any pair of companies, one Israeli, one American, may jointly apply for BIRD support so long as they have the combined capability and infrastructure to define, develop, manufacture, market, sell and support an innovative product based on industrial R&D. Typically, the Israeli company is involved in the development of cutting-edge technologies, while the American company offers large-scale product development and commercialization. Details: The BIRD Foundation offers conditional grants for joint development projects on a risk-sharing basis. The Foundation funds up to 50% of each company s R&D expenses associated with the joint project. Royalties are due only if commercial revenues are generated as a direct result of the project. If the project fails, BIRD claims no repayments. Since its inception 26 years ago, BIRD funded over 650 projects with leading companies in the U.S., including: General Electric, Applied Materials, Motorola, Bayer, Johnson & Johnson, Harris, Becton Dickinson, Foxboro, Guidant, American Red Cross, Bausch & Lomb, Cleveland Clinic Foundation, Bio-Rad, Enzo Biochem, Texas Instruments, Molex, Agilent and others. Contact persons: Mr. Tony Warwick BRITECH - UK Tel: Fax: tony.warwick@britech.org Ms. Adi Riza BRITECH-Israel Tel: Fax: adi.riza@britech.co.il Website: A. 2. BRITECH - Britain-Israel Industrial R&D Foundation Introduction: The UK and Israeli Governments have established the BRITECH Fund in November The total contribution to the BRITECH Fund is 15.5 million over five years given equally by the UK and Israeli governments. Britech's Head Office is located in Reading, UK with an Israeli office located at Ramat-Gan. Criteria: Eligible companies for funding are firms operating and headquartered in the U.K and Israel. At least 30% of the R&D work must be done in either the U.K or Israel. Details: BRITECH's support includes funding of up to 50% of the eligible R&D costs of joint projects. BRITECH also engages in searches for business partners in Israel and the UK, for the purposes of collaboration in technology development projects. 37

4 Canada - Israel Industrial Research & Development Foundation A.3. RD& CIIRDF - Canada-Israel Industrial R&D Foundation Introduction: The CIIRDF was established in 1994 to promote and support collaborative R&D between firms in both countries. The Foundation offers grants for joint R&D projects, as well as engaging in searches for business partners in Canada and Israel, for the purposes of collaboration in technology development projects. The Foundation's Head Office is located in Ottawa, Canada with an Israeli office in Ramat-Gan. Criteria: Eligible companies for CIIRDF's funding are firms operating and headquartered in Canada and Israel. At least 30% of the R&D work must be done in either Canada or Israel. Details: CIIRDF's support includes funding of up to 50% of the eligible R&D costs of joint projects. Contact persons: Dr. Henri Rothschild, President CIIRDF - Canada Tel: Fax: HRothschild@ciirdf.ca Ms. Adi Riza, Foundation Manager in Israel CIIRDF - Israel Tel: Fax: adi.riza@ciirdf.co.il Website: A.4. KORIL-RDF - Korea-Israel Industrial R&D Foundation Introduction: The Korea-Israel Industrial R&D Foundation (KORIL-RDF) was jointly incorporated by the Korean and Israeli governments in 2001 based on an agreement concluded in The KORIL-RDF aims to advance Korea-Israel science and technology, business-to-business, and ultimately overall economic and trade relations by promoting, facilitating and supporting joint industrial R&D projects between Korean and Israeli high-tech companies. The Foundation offers grants for joint R&D projects, as well as engaging in searches for business partners in Korea and Israel, for the purposes of collaboration in technology development projects. Criteria: At least 30% of R&D development must be done in either Korea or Israel. Joint technology development can range from a few weeks, in the case of a feasibility study; up to a maximum of three years in the case of a full scale project. Details: Financial support for the joint R&D projects is divided into three categories - feasibility study; mini-project & full scale project. In the case of a full-scale project, support can reach a maximum of 50% of the allowed joint R&D expenditure, up to a ceiling of $500,000. Contact persons: Mr. Jong B. Lee, Chief Executive KORIL-RDF Korea Tel: Fax: jblee@mail.itep.re.kr Mr. Kaymen Kim, Program & Planning Coordinator KORIL-RDF kaymen@mail.itep.re.kr Ms. Deborah Schabes KORIL-RDF Israel Tel: Ext Fax: dvora@matimop.org.il 38

5 Contact persons: Mr. Chua Hwee Song, General Manager SIIRD- Singapore Mr. Chan Eng Chye, Assistant General Manager Tel: Fax: Mr. Gavin Kong, Executive Tel: Shirley Refuah, Adv. SIIRD-ISRAEL Tel: Ext. 4 Fax: shirleyr@matimop.org.il Website: A. 5. B. SIIRD - Singapore-Israel Industrial R&D Foundation Introduction: SIIRD was established in 1997 to promote, facilitate and support joint commercially viable, industrial R&D projects between Singaporean and Israeli high-tech companies. The Economic Development Board (EDB) of Singapore and the Office of the Chief Scientist (OCS), Ministry of Industry, Trade and Labor of Israel are the two co-operating government agencies responsible for setting up of this joint non-profit foundation. Criteria: Joint technology projects may include technology and knowledge applications, product's development towards beta-site testing and innovative systems integration. Eligible companies for SIIRD's funding are firms operating and headquartered in Singapore and Israel with at least 30% of the R&D work handled in either Singapore or Israel. Details: SIIRD's support includes funding of up to 50% of the eligible R&D costs of joint projects up to a ceiling of $750,000 and not more than $500,000 in one year. Joint technology development is preferably under 12 months and geared towards commercialization of the developed technologies. Parallel Funding Agreements Introduction: These agreements provide guidelines for granting support to joint R&D projects. The appropriate authorities in the respective countries participating in the project implement the approval process. Currently, there are 14 Bi-National agreements, with the following countries: Belgium Finland France Germany Holland Ireland Italy Mr. Azriel (Azi) Hemar Director Division of International Relations and Cooperation, OCS Tel: Fax: azi@actcom.co.il Portugal Spain Sweden China Hong Kong India Taiwan Details: In Israel, the OCS is in charge for the operating methods and approval procedures. MATIMOP (the national center in charge of encouraging and assisting participation of Israeli enterprises in international bi-lateral or multi-lateral cooperation programs for industrial R&D) is in charge of implementing these agreements, by raising the awareness for international cooperation among Israeli enterprises, by assisting to identify foreign partners and by assisting in creating joint R&D projects between Israeli and foreign companies. 39

6 C. US-Israel Science & Technology Commission Introduction: This program was a joint initiative launched in 1994 by US President Bill Clinton and the late Prime Minister Yitzhak Rabin. The Commission provides a unique and highly beneficial environment for promoting bi-national cooperation at the highest levels of government and industry. Through its binational strategic panels in Biotechnology, Information Technology and Harmonization of Regulations and Standards, the Commission performs the task of identifying and removing impediments and building the infrastructure for mutually beneficial economic and technological cooperation. Contact: US-Israel Science & Technology Commission, ISRAEL Tel: Fax: edith@usistc.org Website: USA Technology Administration, Tel: Fax: cathleen.campbell@ta.doc.gov D. Multinational Agreements The Israel - Europe R&D Directorate For EU FP D.1. Israeli Participation in the Sixth Framework Program for R&D of the European Union (Fp6) Introduction: Following Israel s participation in the Fourth and Fifth Framework Programs, Israel is now participating in the Sixth Framework Program for R&D of the European Union. FP6 is the prime vehicle for Research and Technological Development and Demonstration (RTD) of the European Union and provides funding for the following areas: Life Sciences, Genomics and Biotech; IST (Information Technologies); Nanontech, Nanosciences, Materials and Production Processes; Aeronautics and Space; Food Quality and Safety; Energy; Transport; Global Change and Ecosystems; and Citizens and Governance. Israel is the only 40

7 Mr. Marcel Shaton, General Manager Tel: Fax: Website: non-european Associated State, fully participating in the program. It s participation in the FP6 is approximately 200 million euro. Details: The Israeli Directorate for the Framework Program (ISERD) was established in 1996 to promote and advance R&D co-operation between the EU and Israel. ISERD is a non-profit organization operated by Israel s Ministries of Industry, Trade & Labour, Science and Technology, Foreign Affairs and Finance and the Planning and Budget Committee of the Council for Higher Education. ISERD s mission is to disseminate information about EU R&D programs, industrial co-operation, partnerships search and training, and to serve as Israel's official National Contact Point (NCP) with the EU. ISERD provides assistance to Israeli and European corporations and organizations wishing to conduct research within the Sixth Framework Program or publish information within the program. EUREKA Office Israel Udo J. Mannes, National Project Coordinator Tel: Ext. 31/32 Fax: udo@matimop.org.il Website: D. 2. EUREKA Introduction: EUREKA is a pan-european network for market-oriented, industrial R&D with the objective to leverage cooperation to bring high-quality R&D efforts to market. Israeli companies participating in EUREKA projects are eligible to apply to the OCS for funding of their R&D. Details: Umbrellas are thematic networks within the EUREKA framework, which focus on a specific technology area or business sector. The main goal of an umbrella is to facilitate the generation of EUREKA projects in its own target area. The new umbrella E13038 EUROAGRI+, covering the agriculture, food and feed production sector, is chaired by Israel. Clusters are industry-led project initiative in a particular area of strategic interest for transnational, cooperative, pre-competitive R&D. Cluster projects are mostly initiated by major companies which first develop road-maps to lay out future directions for industrial R&D in selected areas. Cluster projects such as E12023 ITEA, focusing on Information Technology or E12365 MEDEA + focusing on Microelectronics usually publish calls for proposals to generate consortia to execute larger projects with participation of major players as well as small and medium sized industries. 41

8 D. 3. IRC - Innovation Relay Centers Introduction: The Innovation Relay Centre advises primarily small businesses - on technology and innovation. It also helps them identify technology needs; identify suitable technologies to match these needs; give assistance on exploitation and advice on the EU Research and Technology programs. Each Relay Centre is an independent office backed by funding from the European Union s Innovation Program. Through each centre companies and institutions establish links to many other relay centers located across Europe. The primary goal of all Innovation Relay Centers is to create an exchange of information between organizations across Europe. This gives the organization a direct link to partners and potential buyers of the technologies developed, or potential sellers of the technologies the company may need. Mr. Chanan Shiloh, IRC Coordinator Tel: Ext. 43 Fax: chanan@matimop.org.il Website: 42

9 Activities in Israel A. Competitive R&D Dr. Shaul Freireich, Deputy Director OCS Tel: Fax: Web site: A.1. The R&D Fund Introduction: The R&D Fund is the main support channel of the OCS, in terms of budget, and it is open to all Israeli registered firms wishing to engage in technological research and development. The proposals are screened by technological evaluators, the final approval being that of the Research Committee, chaired by the Chief Scientist. The annual budget of $300 million is spent on about 1,000 projects being undertaken by 500 companies. Details: Grants are provided as a percentage (up to 50%) of the total approved R&D expenditures. The grants are a conditional loan - in case of a technological and commercial success, it is subject to royalties (3% - 5% of the sales); in case of non-commercialization no repayment is required. The Law stipulates that the royalties received will, in turn, be returned to the R&D Fund, in other words used to fund future grants to encourage and support industrial R&D. Criteria: An approved R&D program is one with technological novelty and economic justification, resulting in the development of a new product, or process or a significant improvement to an existing product or process. There is no limitation as to the scientific field of the R&D, proposals are accepted in the entire technological spectrum, such as communications, IT, biotechnology, etc Figure 43: OSC - Annual Budget (million $) Source: OCS, Ministry of Industry, Trade & Labor Figure 44: OSC Grants by Technological Sectors, 2003 Life Sciences, 22.3% Other 4.1% Electronics 8.8% Electro - Optics, 8.3% Chemicals 2.7% Software 17.2% Source: OCS, Ministry of Industry, Trade & Labor. Communications, 36.6% Figure 45: OSC - Annual Royalties of Sales, million US$ (deriving from OCS supported projects) Source: OCS, Ministry of Industry, Trade & Labor

10 A. 2. Technological Incubators: Introduction: The Technological Incubators program was introduced in the beginning of the 90s, in view of the great Aliya from the Soviet Union. Since then, and up until now, the program has been open to all beginning Israeli entrepreneurs. The incubators, with an annual budget of $30 million, are supportive frameworks that enable novice entrepreneurs, with innovative concepts, to translate those ideas into commercial products and to establish their own company. The incubators support the earliest stages of technological entrepreneurship that are not yet ready for private investors, such as the VC funds, thereby preventing commercially viable technological ideas from going to waste due to lack of resources. The technological Incubator program provides entrepreneurs with the following benefits: R & D grant R& D infrastructure Business guidance Administrative assistance Details: The R&D grant provides 85% of the approved R&D expenditures (budget of $300,000 - $500,000 for two years), with the remainder to be raised by the entrepreneur. The grants are subject to royalties upon sales, in case of commercial success only. Currently, there are 23 Technological Incubators in Israel, with approximately 200 R&D projects being carried out at any given moment. 12 of the existing incubators were privatized, with the intent to enhance the involvement of private investors in the incubator s activity. Mrs. Rina Pridor, Director Tel: Fax: incubators@actcom.co.il Website: A. 3. Pre-seed Fund - the TNUFA Program Introduction: TNUFA encourages and supports technological entrepreneurship and innovation by assisting individual inventors and start-up companies during the pre-seed stage. Support includes assistance in evaluating the concept s technological and economic potential, patent proposal preparation, prototype construction, business plan preparation, establishing contact with the appropriate industry representative, and attracting investors. Details: Grants are up to 85% of approved expenses are available to a maximum of $50,000 for each project. TNUFA Mr. Jacob Fisher, Director Tel: Fax: mail@tnufa.org.il Website: 44

11 A.4. Seed Fund - the HEZNEK Program Mr. Itamar Dar, Manager Seed Fund Tel: Fax: itamar@ocs.moital.gov.il Introduction: In order to encourage investments and increase the number of new companies, this new vehicle has been initiated to provide a positive signal to private investors, thus mobilizing funds for the establishment of start-up companies. The program is based on the government matching an investment in start-up company in exchange for equity in the company, and on giving an option to the private investor to purchase the government shares in the start-up at the initial price. Criteria: A start-up is defined as a company that has been in existence for 6 months or less, and has not incurred more than $250,000 in expenses since its establishment. An investor is defined as a venture capital fund or corporation whose basic activity is venture capital investments, has adequate equity to mobilize funds and the ability to manage the company. The government's investment will not exceed 1 million US$ over two years and 50% of the start-ups working program. The investor will have an option to buy-out the government at any time within the first seven years in exchange for the investment plus interest and cost-of-living linkage. B. Generic R&D B. 1. The MAGNET Program Introduction: The MAGNET program is intended to provide a competitive position for Israel's industry with regard to state-of-the-art technologies of global interest. The new technologies are to be developed in a cooperative venture between the industry and leading academic scientific research institutions in the field, and will provide the basis for new high-tech products and processes. Criteria: The R&D programs entitled to support from the MAGNET fund must be of a generic nature. Generic pre-competitive technologies refer to a broad spectrum of common technologies, components, materials, design and manufacturing methods and processes, standards and protocols - which have wideranging applications in numerous industries. Details: The MAGNET program includes 31 consortia made 45

12 up of industrial companies and academic institutes. Grants of up to 66% of the approved budget are available with no royalty payments due. MAGNET's annual budget is about $60 million per year. B.2. MINI-MAGNET (MAGNETON) Program Within the MAGNET umbrella, Mini-Magnet promotes technology transfer from academia to industry via the mutual cooperation of individual companies and specific academic research programs. Grants of up to 66% of the approved budget are available with no royalty repayments. B.3. NOFAR Program Nofar is a new route under the umbrella of the MAGNET program, which aims to bridge the gap between basic and applied research - a problem that characterizes biotechnology. A pilot program is being carried out by academic institutes. Grants of up to 90% will be given to biotechnology projects with the remaining 10% coming from outside sources. The maximum grant is approximately $100,000 per project, no royalties are required. Contact person for all MAGNET programs: Mr. Ilan Peled, Director Tel: Fax: info@magnet.org.il Website: B.4. Support for Research Institutes This program is designed for research institutions with clear links to industry, to strengthen their technology infrastructure and develop relevant technologies and products for industry. A research institute entitled to support must be an independent legal entity, employ a team of researchers with a proven scientific & technology ability, have equipment for conducting and testing R&D in industry, and earn 30% of its revenue from industry. Dr. Shaul Freireich, Deputy Director OCS Tel: Fax: shaulf@ocs.moital.gov.il Web site: 46

13 TEVA PHARMACEUTICAL INDUSTRIES LTD. Company Overview Teva Pharmaceutical Industries Ltd. headquartered in Israel, is among the top 25 pharmaceutical companies and among the leading generic pharmaceutical companies in the world. Teva develops, manufactures and markets generic and innovative human pharmaceuticals and active pharmaceutical ingredients. Close to 90% of Teva s sales are in North America and Europe. In 2003, Teva posted an impressive $3.276 billion in sales generating a net income of $617.8 million. The company has more than 13,000 employees worldwide and production facilities in Israel, North America, Europe and Mexico. Research and Development Teva maintains an unparalleled expertise in the development and launching of new generic products. Teva s broadest product portfolio offering over 450 different products worldwide and the largest pipeline in the industry with approximately 120 products. Teva's innovative R&D efforts, based on cooperation with Israeli scientific institutions, have resulted in Copaxone, the first Israeli innovative product and a breakthrough treatment for Multiple Sclerosis. Copaxone was launched in 1997, currently approved for marketing in 43 countries worldwide. Two phase III clinical trials of Agilect (Azilect in Europe), a novel product for the treatment of Parkinson s Disease (PD) patients. Agilect proved it s effectiveness in both early and advanced stages of PD. Agilect was submitted for regulatory approval in North America and Europe during 2003 and its files are currently being reviewed. Teva also has a robust and attractive pipeline of potential treatments for neurological and autoimmune diseases in various phases of development. Teva s Vision Teva's vision is to become one of the world s leading pharmaceutical companies, by being the undisputed leader in the global Generics industry and by developing a global franchise in selected Innovative products originating from Israeli science. Teva differentiates itself by balancing its portfolio with Generic and Innovative activities, by the strategic depth of its vertical integration, by combining local customer responsiveness with a global edge and by successfully managing increasing profitable growth and complexity. Teva s success lies in the leadership of our management, the skills and devotion of our people, the quality of our offerings and our focus on customers and patients. 47

14 TM Check Point SOFTWARE TECHNOLOGIES LTD. Check Point SOFTWARE TECHNOLOGIES LTD. We Secure the Internet. We Secure the Internet. About Check Point Software Technologies Ltd. Check Point Software Technologies Ltd. ( the worldwide leader in securing the Internet, is the confirmed market leader of both the worldwide VPN and firewall markets. Check Point develops, markets and supports Internet security solutions for enterprise and high- end networks, service providers, small and medium businesses, and consumers. Check Point solutions secure hundreds of thousands of customers, including 100 percent of the Fortune 100. Through its Next Generation product line, the company delivers a broad range of intelligent Perimeter, Internal and Web security solutions that protect business communications and resources for corporate networks and applications, remote employees, branch offices and partner extranets. The company s Zone Labs ( division is one of the most trusted brands in Internet security, creating award-winning endpoint security solutions that protect millions of PCs from hackers, spyware and data theft. Extending the power of the Check Point solution is its Open Platform for Security (OPSEC), the industry s framework and alliance for integration and interoperability with best-of-breed solutions from over 350 leading companies. Check Point Software was founded in 1993 and has been traded on the NASDAQ National Market since Today the company employs approximately 1,400 employees. The company has operations around the world, and its solutions are sold, integrated and serviced by a network of more than 2,300 Check Point partners in 92 countries. Making Internet communications secure, reliable and available everywhere has been and continues to be the company s ongoing vision. Check Point Software is committed to staying focused on addressing real customer needs, developing new and innovative security solutions and redefining the Internet security landscape. "Through Check Point's Next Generation product line, the company delivers a broad range of Perimeter, Internal and Web security solutions that protect business communications and resources for corporate networks and applications, remote employees, branch offices and partner extranets". Intelligent Security 48

15 ECI s Technological & Intellectual Assets ECI Telecom has been developing and supplying high quality telecom network solutions to network service providers all over the world for the last 25 years. The company focuses on two main areas, optical networks and broadband access networks (xdsl/pon). More than $6.5 billion worth of ECI Telecom advanced products have been installed at 150 customers worldwide. ECI Telecom, as a global player, has acquired the competence to identify emerging trends and to translate its customers needs into innovative, technologically cost-effective solutions. Our Broadband Access Division develops, manufactures, markets and sells innovative access products that enable telecommunications service providers to mass deploy broadband networks and offer a variety of new advanced services. This division s Multi-Service Access Gateway solution supports a variety of transmission technologies and networking protocols. Facilitating the demand for bandwidth and advanced services, the MSAG supports interactive TV, games, video, video on demand, teleworking and voice over DSL, among other residential subscriber applications. The Broadband Access Division s customers are principally local exchange carriers and large operators and include Deutsche Telekom AG and France Telecom. Our Optical Networks Division provides telecommunications service providers with metropolitan and regional intelligent and flexible multi-service optical transmission solutions. Its products enable end-to-end transport of voice and data circuits from the user s premises to high-capacity optical backbones, support the process of streamlining the use of optical networks and allow telecommunications service providers to offer additional services with greater efficiency. Its primary product, a multi-service provisioning platform, or MSPP, integrates, within a single shelf, the functions of DWDM, intelligent optical networking multiplexer, broadband, narrowband, wideband and digital cross connects, IP L2 switching and ATM, switching as well as support SDH add-drop multiplexers. This all-in-one optical platform facilitates significant savings in network deployment costs. The MSPP also serves as an optimal solution for cellular operators in deploying their backhaul infrastructure, particularly to support their new 3G networks. The Division's customer base includes wireline and cellular operators in Europe as well as in emerging markets such as Russia, Ukraine, India, China, Philippines and others. In addition, we hold a 43% interest in Veraz Networks Inc., a private company which designs, markets and sells carrier-class packet telephony solutions for Voice over IP applications. ECI Telecom has applied for approximately 500 patents in the United States, Europe, Asia, Latin America, and Israel of which approximately 170 have been granted. The patent applications include patents for a wide range of technologies in its areas of focus. ECI Telecom also has approximately 220 trademark applications for over 55 Multi-Service Protocol Platform XDM family different trademarks of which approximately 200 are registered. 49

16 Israel Aircraft Industries (IAI) is a world leader in defense and civil aerospace technology. Established in 1953, the company can reflect on its achievements in making Israel a regional superpower, developing the country's independent space capability, and supplying the Israel Defense Forces and defense forces worldwide with unique and cost-effective solutions for a wide range of military needs. IAI channels its innovativeness into integrated systems to combat global terror, space technology, and adapting systems for the commercial market. In the first half of 2004, sales totaled $1.034 billion, while backlog of orders was set to a new high of $5.5 billion. IAI has 10 areas of activity: Space; Theater Defense; Development & Manufacture of Commercial Aircraft; MRO & Conversion of Civil Aircraft; Military Aircraft & Helicopter Upgrades; Unmanned Aerial Vehicles (UAVs); Intelligence Systems; Command, Control & IT; Naval Systems; Ground Systems and Homeland Security. IAI consists of five independent operating groups: BEDEK AVIATION GROUP - Provides total aircraft engine and component repair, overhaul, retrofit, modification, conversion, and support services to airlines and leasing companies. It is the only organization outside of Boeing certified by the FAA to convert passenger jets to cargo jets. ELTA SYSTEMS GROUP - Full capabilities in radar, EW, and communication and IT. Products are designed for intelligence, surveillance and reconnaissance, Early Warning and control, self-protection and self-defense, target acquisitions and fire control applications. SYSTEMS MISSILES & SPACE GROUP - Develops and produces a wide range of products in: advanced weapon systems, space and IT- Information Technologies MILITARY AIRCRAFT GROUP - Develops and manufactures Unmanned Air Vehicles (UAV); integrates and upgrades military aircraft and helicopters; designs and manufactures helicopter structures, electrical harnesses and crash attenuating seats. COMMERCIAL AIRCRAFT GROUP - Designs, tests, certifies, and produces civil aircraft; hydraulic, electro-mechanical and pneumatic components; dynamic systems; composite material structures all backed by full computer-aided design, engineering, and manufacturing process. Two corporate units: the MHT Division providing custom, multilingual - technical publications, and training services; and the MAMAN Division operating and maintaining software for IAI's vast scope of activities. With a highly motivated workforce of 14,500, of whom one third are engineers and academics, IAI has acquired a reputation as one of the most advanced aerospace enterprises worldwide. IAI's products and technologies are fully backed by Integrated Logistic Support (ILS), training and aftersales services. 50