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Israel Aerospace Industries Ltd.

Israel Aircraft Industries and B.V.R. Systems reached a Definitive Agreement

Aug 10, 1999

MLM division of Israel Aircraft Industries Ltd. (IAI\MLM) a world leader in defense and civil aerospace technology and BVR Systems (1998) Ltd. (NASDAQ:BVRS) , a diversified world leader in advanced military training and simulation systems, today announced that they have concluded a definitive agreement to end all commercial disputes and intellectual property and related commercial litigation between the parties.

BVR and IAI\MLM have agreed that the EHUD ACMI products will be marketed by each of the parties in various territories in consideration of the payment of various royalties to the other party. IAI\MLM and BVR will work together to maintain the interoperability between their communication protocols to enable users of either of their EHUD systems to effectively communicate with one another.

IAI\MLM and BVR believe that keeping the interoperability between their communication protocols will contribute to their mutual goal to position these protocols as a worldwide "de-facto" standard in the ACMI global market.

Zeev Nahmoni, IAI Corporate Vice President and General Manager of the Electronics Group, said: "IAI is very pleased with the new agreement which we have reached with BVR. We believe that it provides a fair and balanced result to the dispute between our companies, recognizing the joint contribution of the Parties in the development of this Product and its markets during the period of our cooperation. The agreement settles our disputes and enables each company to focus its resources in the development of its markets and business in the ACMI area. We hope to develop opportunities for future cooperation between the two companies."

Aviv Tzidon, BVR's Chairman of the Board commented, "We are very pleased that the two year dispute between BVR and IAI over the EHUD ACMI system has come to a successful conclusion. BVR?s management will now be able to refocus its attention on developing new products to maintain the Company's rapid growth rate."

"One of the important consequences of this agreement is that in certain existing and future ACMI projects, BVR will transfer its technology to IAI, in consideration of payment of royalties, in lieu of acting as the prime contractor. This may affect BVR's financial statements by decreasing expected revenues, but in the long run we expect the royalties to increase our profitability level and have a positive effect on gross margin and consequently on net margin and earnings per share", added Mr. Tzidon.

Conclusion of the Cooperation Agreement announced today is subject to receipt of approvals from certain Israeli authorities.

Israel Aircraft Industries (IAI) is a world leader in defense and civil aerospace technology. Established in 1953, IAI has played an integral role in the emergence of Israel as a regional superpower. IAI has supplied the IDF with unique and cost effective solutions for a board spectrum of needs in the air, on land and at sea. IAI has acquired a reputation as one of the most advanced aerospace enterprises worldwide by combining traditional aeronautical skills with high-tech knowhow. For more information visit IAI's web-site

For more information, contact:
Doron Suslik
Deputy Corp VP for Communications
Tel: 972 (3) 93 5-8509
Fax: 972 (3) 935-8512

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