Elron, RDC and Rafael have executed an agreement (the "Addendum") amending the existing agreement between the parties pertaining to the rights granted to RDC to commercialize technologies of Rafael and settling the claim filed in September 2006 by Rafael against RDC in the Tel Aviv District Court. The Addendum will come into effect on January 1, 2008.

Pursuant to the Addendum, RDC's rights to commercialize certain technologies of Rafael will continue without time restrictions. Elron will make a one time investment in RDC of 4 million dollars and has committed to make further investments of $750,000 in RDC for each company established by RDC based on Rafael's technologies. The Addendum settles all claims between Rafael and RDC, as well as resolves many other issues which will facilitate cooperation between the parties.