Elbit Systems has announced the signing of a founder's agreement (the "Agreement") with Israel Aerospace Industries ("IAI") to establish a joint company and a limited partnership (collectively the "Joint Entity") to perform a potential project of purchasing and maintenance of advanced training aircraft, as well as additional services (the "Project"), for the Israeli Ministry of Defense (the "MoD").

The Joint Entity established under the Agreement, will be equally owned (subject to required regulatory approvals), and will supply the MoD with the products and services required for the Project's execution. Certain portions of the Project's work scope will be acquired from IAI and Elbit Systems, respectively, in accordance with a work sharing plan determined by the two sides.

To the best of Elbit Systems' knowledge, the MoD is currently reviewing contractual possibilities with regards to the Project, and in this context has provided to Elbit Systems and IAI a request for information (RFI). It is the intention of the two companies to submit a response to the RFI in the coming days through the Joint Entity.

To the extent that there will be a contract between the Joint Entity and the MoD with regards to the Project, it is expected that its scope will be significant and that it will be performed over a long-term period.

In the framework of a contract for the Project, it is also expected that the Joint Entity will seek sources of financing for the establishment of infrastructure and for the operation of the Project, as well as to purchase from aircraft manufacturers and other suppliers the aircraft and additional equipment required for the Project.

It is noted that at the time of this announcement, the Joint Entity and MoD have not yet signed an agreement for the Project and that there is no certainty that an agreement will be signed.

According to the Agreement, the scope of the Project will be divided to the extent possible equally between Elbit Systems and IAI, and if required, balancing arrangements will be established between the two companies.