Annual Report 2002 - BIRD Foundation

w w w . b i r d f . c o mBIRD Israel-U.S. Binational Industrial Research and Development FoundationStudio Diana ChurgesBIRD Foundationy ears1977 2002of growthAccelerating growth through strategic partnershipsAnnual Report 20021977 - 1982 1982 - 1987 1987 - 1992 1992 - 1997 1997 - 2003

25 YearsBIRD was founded in 1977 by the American andthe Israeli governments. Today, 25 years later,of LeadershipBIRD is operating in a different environment withBIRD Offices and Other RepresentativesBIRD Foundation HeadquartersOffice Address 3 Tevuot Ha’aretz Street, Tel Aviv 69546, IsraelMailing Address P.O. Box 39104, Tel Aviv 61390, Israeltel 972-3-647-0710fax 972-3-649-8341web site www.birdf.comExecutive Director Dov Hershberge-mail dov@birdf.comPrograms Director Uri Attire-mail uri@birdf.comAccountant Assistant Ruth Baume-mail ruti@birdf.comOffice Managere-mailInfo. Systems Managere-mailSecretarye-mailChava Doukhanchava@birdf.comMaha Mansourmaha@birdf.comYael Sherbourneyael@birdf.comChief Financial Officere-mailShlomo Cohenshlomo@birdf.comChief Business Officere-mailYuval Weissyuval@birdf.comnew challenges and demands. Relying on itsvast experience and expert resources, BIRDlooks ahead with optimism.U.S. OfficesSanta Clara, CAWest Coast Representative Yael HollanderSilicon Valley Representative Michal Miasniktel 408-727-6777fax 408-727-6166e-mail yaelh@birdf.come-mail michalm@birdf.comChicago, ILEast Coast Representative Limor Nakar-Vincenttel 312-255-1550fax 312-203-2178e-mail limorn@birdf.comU.S. RepresentativesAtlanta, GA - Government of IsraelEconomic Mission Grechen Cohentel 404-487-6504fax 404-487-6555e-mail grechenc@birdf.comChicago, IL - Government of IsraelEconomic Mission Inbar Greenfeldtel 312-332-2160fax 312-332-2163e-mail inbarg@birdf.comBoston, MA - Government of IsraelEconomic Mission Benjamin Soffertel 617-451-1810fax 617-451-2677e-mail benjamins@birdf.comCleveland, OH - Ohio-Israel Chamber of CommerceHoward A. Gudelltel 216-621-6832fax 216-621-6862e-mail howardg@birdf.comPhiladelphia, PA - America-IsraelChamber of Commerce Paula Joffetel 215-790-3722fax 215-790-3600e-mail paulaj@birdf.comWashington, D.C. - Embassy of IsraelLiana Foksheneanutel 202-364-5694fax 202-364-5647e-mail lianaf@birdf.com

Distribution of BIRD Projects in 2002 by Industry3%17%31%7%31% Communications7% Electronics35% Life Sciences7% Semiconductors17% Software3% Other35%7%Activity SummaryDirect Sales2002 $115 millionCumulative $4 billionProject StartsFull-scale (2002)Cumulative28 projects480 projectsRepayments2002 $2.7 millionCumulative (from 305 projects) $72 millionMini projects (2002)Cumulative1 projects167 projectsGrant Payments022002 $10.1 millionCumulative $205 millionTotal Projects (2002)Cumulative29 projects647 projects

The BIRD ModelBudgetIsraeliCompany $XSharingRisk 1/2Grant $ to Conditional UpProposal$ (X+Y)(X)+AmericanCompany $Y“Proposer”Repayments from100% up to 150%of Grant uponcommercializationBIRDBudgetConditional Grant RiskSharingUp to$1/2(Y)OverviewAny two companies, one registered in Israel and the otherin the U.S., may jointly apply for BIRD support, as long asthey have the combined capability and infrastructure to define,develop, manufacture, sell and support an innovative productor service, referred to as “the Product”. The two partneringcompanies, collectively referred to as “the Proposer”, maysimply cooperate on an ad-hoc basis, linked through a corporatejoint venture, or may even share common ownership. Onekey criterion is that each company shall have the demonstratedability to carry out its part of the Product’s joint developmentprogram, referred to as “the Project”, as well as its part inthe commercialization. Another key criterion is that the natureof the business relationship between the two companies isthat of sharing, both in the Product’s development programand in the revenue derived from its commercialization.BIRD participates in the Project’s development cost, referredto as “the Budget”, with the Proposer, by funding up to 50%of the Project’s budget, referred to as “the Conditional Grant”.The two companies, separately and together, are obligatedto repay BIRD the total Conditional Grant received, referredto as “the Repayment”, but almost always only from revenuegenerated by the Product’s sales upon successfulcommercialization. (Please see a schematic diagram of BIRD’smodel of payments-repayments in the figure above.)The ProductThe jointly developed product(s) or service(s) must have significanttechnological innovation or must introduce an innovativebusiness/marketing concept. Ideally, one or both companiesshall possess intellectual property rights to the technology to bedeveloped and to the product commercialization. The Productshould target an attractive and growing market that is geographicallynon-specific, and is familiar to and serviced by at least one ofthe two partnering companies.The ProjectThe Project is defined as the scope and duration of the developmentprogram undertaken jointly by both companies, at the end ofwhich the Product should be close to market-ready. All activitiesrequired for subsequent commercial manufacturing and marketintroduction should be detailed in the Project, including beta-sitetesting, regulatory approvals, and test marketing.The ProposerThe U.S. company and the Israeli company are collectively referredto as the Proposer. Both companies should have the necessaryoperations required for the Project in their respective countries,whether R&D, manufacturing or marketing. The two companiesshould have the combined, proven capability and infrastructureto define, develop, manufacture, sell and support the Productdefined by the Project.BIRD’s Conditional GrantBIRD will cost-share the joint development by extending to theProposer a conditional grant totaling up to 50% of the ProjectBudget (X+Y in the diagram). Each partner directly receives theportion of the total grant that is relative to its share in the budget.04

Grant RepaymentsUpon product commercialization, the revenue (and not the profit)derived by either partner from sales of the Product or subsequentproducts based on the technology developed in the Project, formthe main basis for repayment of the BIRD’s Conditional Grant .Repayments are made at the rate of 5% of each $ of reportedsales revenue. Only revenue generated from sales to third partiesis applicable, so sales between the two partners are not considereda basis for repayments.Additional sources of repayments to BIRD are from any revenuederived by either partner from extending licensing rights to thetechnology, at the rate of 30% of the revenue earned, or from theoutright sale of the technology to any third party, at the rate of50% of the sales value. The maximum repayment amount dueby the Proposer is dependent on the length of time that it takesto complete the repayments, but the maximum repayment obligationthat the Proposer can ever assume is 150% of the total sumgranted by BIRD.If the commercialization of the Product is unsuccessful, and nosales revenue is generated, whether due to technological ormarketing failure, BIRD will not seek repayment of the ConditionalGrant. Thus, BIRD participates with the Proposer in the risk ofan unsuccessful product development investment.Major Advantages of BIRD ProjectsMajor Risk SharingBy providing a conditional grant, BIRD cost-shares up to 50%of a Project’s development expenses. If a Project fails, BIRD willclaim no repayments. Therefore, BIRD is a major risk-sharer withthe Project partners.No Equity and No Intellectual Property RightsBIRD acquires neither equity nor any rights to intellectual propertyin BIRD-funded Projects.Off-Balance Sheet FinancingBIRD’s Conditional Grant is a form of off-balance sheet financing.Grant payments are usually recorded as a reduction of R&Dexpenses, and grant repayments are recorded as a royaltyexpense. Because both transactions are P&L items and therepayment obligation is not recorded as a liability, they do nothave any impact on the balance sheet. In addition, repaymentsare considered as pre-tax expenses.No Interference in Company – Company RelationshipBIRD is not involved in formulating the nature of the relationshipbetween the partnering companies. Likewise, the precise conditionsand terms of this relationship are not subject to BIRD approval.The two companies may simply cooperate on an ad hoc basis,linked through a corporate joint venture, or be commonly owned.Seal of ApprovalProject proposals submitted to BIRD are subject to a confidentialreview by qualified and experienced experts from the US NationalInstitute of Standards and Technology (NIST) and from the Officeof the Chief Scientist (OCS) of Israel’s Ministry of Industry andTrade. Their professional recommendations, together with BIRD’sfamiliarity with the participating companies, are further endorsementsof the decision to undertake the joint venture.05

SemiconductorsWafer Defect Removal in Semiconductor ManufacturingThe CompaniesOrAmir Semiconductor Equipment Ltd. — Applied Materials, Inc.The Project06OrAmir was established in 1992 to utilize laser technology forsemiconductor applications. The company's roots andtechnology originated with RAFAEL, Israel's defensedevelopment organization. Prior to its acquisition by AppliedMaterials, OrAmir developed a dry, single step process solutionfor damage-free semiconductor wafer cleaning, based on aunique laser technology. This technology was targeted forsingle-step dry photo resist stripping in semiconductor wafermanufacturing. Leading edge semiconductor manufacturersthroughout the world, as well as organizations such asSEMATECH (USA) and ASET (Japan) have tested OrAmir'sprocess and have acknowledged that it is complete, effectiveand damage-free.Applied Materials, a Fortune 500 Global Growth Company,is the largest supplier of products and services to the globalsemiconductor industry. Applied Materials manufacturessystems that perform chemical and physical vapor deposition,epitaxial and polysilicon deposition, rapid thermal processing,plasma etching, ion implantation, metrology, inspection andchemical mechanical polishing. Applied Materials maintainsresearch, development and manufacturing centers in the U.S.,Israel, Europe and Japan, as well as technology centers inSouth Korea and Taiwan. More than a year ago, AppliedMaterials acquired OrAmir and has integrated it to become akey product unit of the company.In the last few years, cleaning of particles and defects hasbecome a much more challenging process for thesemiconductor industry, and there are a variety of techniquesbeing developed to help increase its effectiveness. In addition,customers are realizing that the role of inspection, onceconsidered a non-added-value necessity, has become muchmore important and are willing to substantially invest more inorder to improve the manufacturing process.These two trends provide the driving force for combining theadvanced inspection capabilities of Applied Materials andOrAmir's unique laser cleaning process into an integratedinspection cleaning concept. By combining the capabilitiesof inspection at Applied Materials, with the selective cleaningprocess from OrAmir, the resulting synergy of the two systemshas led to a unique and innovative solution for an urgentindustry problem.The BIRD project between Applied Materials and OrAmir,initiated at the beginning of 2000, led to the development ofa state-of-the-art laser cleaning system capable of effectivelyremoving defects from the most demanding applications inthe semiconductor area. The fully manufacturable systemmeets the strict standards of the semiconductor industry andis currently being field-tested at some of the most sophisticated,high-end customers in the world.Through the BIRD-funded collaboration, the relationshipbetween the two companies continued to develop, ultimatelyleading to the full acquisition of OrAmir by Applied in June2001, just 18 months following the initiation of the project.

“I believe that the BIRD Foundation played an important role”in bringing Applied Materials and OrAmir together through asuccessful joint development program that ultimately led tothe acquisition of OrAmir by Applied Materials.Dan MaydanPresident, Applied MaterialsCompetitive manufacturing process foradvanced semiconductor devicesDan Maydan President, Applied MaterialsMinimizes unseen defectsImproves final waferand device yieldsIntegration of a small wafer-cleaningmodule in a sophisticated inspection toolSelective treatment ofcontaminated locationsInspection tool identifies defect locations07

SoftwareBridging the Gap Between Printed Information and the Online WorldThe CompaniesOlive Software — Online Computer Library CenterThe ProjectOlive Software Ltd. has developed a unique softwaretechnology that uses advanced artificial intelligence tounderstand the content of a scanned or PostScript newspaperpage and convert it to XML. Olive's automatic XML Publisheris the world's first and only transparent electronic bridgebetween newspapers’ complex, non-standardized print productsystems, and the e-Publishing world. The company has alsodeveloped innovative technologies that provideunprecedented accuracy in search and retrieval of complexstructured publications, thus providing access to digitalnewspaper archives via the Internet.Online Computer Library Center (OCLC), Inc. is a non-profit,membership-based, computer library service and researchorganization dedicated to facilitating pubic access to theworld's information at reduced library costs. It is the world'sleading supplier of information services for libraries, with over98% market share. Nearly 40,000 member libraries in 76countries and territories use OCLC’s services to locate, acquire,catalog, lend and preserve library materials. OCLC operatesthe largest cooperative cataloging and interlibrary loanservice in the world. OCLC's Preservation Resources Divisionis a world leader in preservation, microfilming, digitizationprocesses, and production. It has created more than 50 millionframes of microfilm for libraries, museums, archives, and otherinstitutions committed to preserving cultural heritagesworldwide.The Microfilm Online project provides publishers and librarieswith the world's first end-to-end solution for mass processingand online marketing of archived newspapers. This technologyis based on conversion of microfilm and paper archives intoXML format, transforming decaying archived material intoinstantly accessible, searchable, highly attractive onlinecontent. Olive and OCLC have developed a system that iscapable of mass processing microfilm-based content to XMLfor libraries and publishers around the globe. In thiscollaboration, Olive provided the basic technology andalgorithms, and OCLC contributed their vast experience inmanagement of large microfilm digitization facilities, "digitizationfactory" scanning tools, workflow management tools, buildinga digital library and e-commerce services.Olive and OCLC have successfully started marketing theprocess for creating searchable data from microfilmednewspapers. The companies are planning to pursuedevelopment of additional document types to process throughtheir respective delivery mechanisms in the near future. Theseadded capabilities will provide broader appeal for Olive'stechnology in the primary publishing market, in addition tothe newspaper industry.08

“OCLC is excited about the opportunity to bring Olive's unique technologyfor historical information discovery and delivery to the library and culturalheritage market. The combination of OCLC's leadership position in theworldwide library community, Olive's world class technology, and BIRD'sfinancial support has created an outstanding new service for the world'sresearchers and learners.Meg Bellinger Vice PresidentOCLC Digital & Preservation ResourcesWorking with the BIRD Foundation was a very positive experience. In thecourse of our cooperation, we were extremely impressed with BIRD's abilityto promote mutual understanding between the parties involved. This resultedin the establishment of a successful business partnership with OCLC, apartnership which already bears fruits.”Yoni SternCEO, Olive SoftwareOn-line digital newspapersYoni Stern CEO, Olive SoftwareMicrofilm digitization servicesPreservation of archivednewspaperse-publishingSearch & retrievalof microfilmed publicationsInformation services for libraries09

Life SciencesDevelopment of a Pharmaceutical Composition Containing Recombinant Factor VIII and LiposomesThe CompaniesOMRI Laboratories Ltd. — Bayer Corporation, Biological ProductsThe ProjectOMRI Laboratories Ltd. is a biopharmaceutical companylocated in the Weizmann Science Park, Nes-Ziona, Israel.The company focuses on the development of liposomes asa delivery vehicle for Factor VIII (FVIII) and other short half-lifeproteins. OMRI developed a formulation of FVIII and liposomesthat was evaluated pre-clinically in a hemophilic mousemodel. Results indicated an extension of half-life and enhancedstability of recombinant FVIII (rFVIII), as well as an increasein efficacy when FVIII is administrated in a liposome formulation.Further animal studies showed that the formulation is nontoxic.Bayer Biological Products is devoted to the discovery,manufacturing and marketing of plasma – derived therapiesand their recombinant (genetically engineered) and/or genetherapy replacements. Biological Products is a businessunit within Bayer's global Pharmaceutical Business Group,which is a part of Bayer Worldwide Group, a $32 billion chemicaland pharmaceutical company based in Leverkusen, Germany.The market for Factor VIII, a lifesaving drug for treatment ofhemophilia A patients, is rapidly growing from $2.5 billion/yearto $5 billion/year. Annual treatment costs of severe hemophilia(typically three injections/week) are very high, exceeding$150,000 per patient. This is due to the enormous cost ofmanufacturing of this very complex protein (the price of rFVIIIis about $5 million/gram).Advances in the treatment of hemophilia have been focusedon reducing safety risks (HIV, hepatitis, etc.), but there hasbeen no success in reducing dosage frequency.This project aims to develop a pharmaceutical compoundcontaining recombinant factor VIII and liposomes for thetreatment of hemophilia A patients in a formulation that willenable weekly injections instead of the current three timesper week. The commercial vial of freeze-dried FVIII isreconstituted in a mixture of proprietary liposomes and injected,as is currently done with FVIII.The project is now in a clinical trial with severe hemophilia Apatients. To date, four patients have received the newformulation; the drug has been well tolerated, and preventionof bleeding for over one week was observed in patients whotypically bleed every two to four days.10

“Having worked with Federal agencies such as the NIH, NSFand others, our experience with the BIRD Foundation hasbeen very gratifying. Responsiveness, flexibility and a highdegree of good will and professionalism characterized ourinteraction and contributed greatly to the project's successto date.”Dr. Moshe BaruHead, Research and DevelopmentOMRI LaboratoriesDevelopment of liposomes as a deliveryvehicle for factor VIII for the treatment ofhemophilia A patientsDr. David Naveh Chief Technical Officer,Bayer Cooperation, Biological ProductsExtension of half-life and stability,twice as long or moreNon-toxicIncrease in efficacyDr. Moshe BaruFewer injections will be neededNon-invasive therapeutic deviceIncreased qualityof the patient's lifeLonger protection against bleedingLower costFactor VIII isa blood-clotting factor11

CommunicationsDevelopment of the "ServoStar Family" — State-of-the-Art Digital Servo Motor DrivesThe CompaniesServotronix — KollmorgenThe ProjectServotronix was established in 1991 to develop, manufactureand sell products for the digital servo and motion controlmarket.Since its inception, Servotronix has shifted its corporate missionto emphasize product development and customization, tomatch exact customer needs. Servotronix has gained expertisein the development of very accurate digital control systems,especially in the areas of robotics and industrial machinebuilders for the semiconductor, electronics assembly, medicalimaging and packaging market sectors.Kollmorgen develops, manufactures and markets one of thebroadest and most respected lines of motors and electronicdrives in the world. Products developed and manufacturedby this group include direct-drive torque and servo motorsand electronics, servo and spindle systems, stepper motors,brushless motors and controllers, specialty pancake motorsand application-specific motors and systems.The objective of the BIRD project was the development of alow cost, high-performance digital servo motor drive servinga wider range of power requirements. The scope of theproject was to develop 23 different core products in the VPB2000 (ServoStar) family in order to replace a significant portionof Kollmorgen's existing line of drives, as well as to open upadditional market opportunities. As of today, this family ofproducts is considered one of the best high performance,competitive servo drives in the world.During the project, Kollmorgen's role was to develop thepower stages and power supplies, while Servotronix wasresponsible for design of the digital control board operatingsystem and control firmware. During commercialization,Kollmorgen marketed the VPB 2000 (ServoStar) in theAmericas, Asia and Europe. The companies jointly sold theservo drive in Israel, Europe and ROW.Subsequent to the completion of the project, Kollmorgenacquired Servotronix.12

“BIRD has been a major contributor to the growth, sales andworldwide recognition of Servotronix and we are very gratefulto them for their role in our success. As a result of the BIRDfundedjoint development program, Servotronix was acquiredby Kollmorgen, and the company was re-positioned as a leaderin the motion area.”Dr. Ilan CohenFounder, President & CEO, ServotronixDr. Ilan Cohen Founder, President & CEO, ServotronixNurit Barlev, Product Line Manager, KollmorgenPartnership (that) led to mergerServo Star FamilyMotion control products & services13Direct Drive Servo Motors

25 yearsAccelerating growththrough strategic partnershipsSemiconductorsBIRD proposal preparation guidelines executive summary of project proposal proposals for full-scale projectsSoftwaremajor advantages of projectsmajor risk sharingno equity and no intellectual property rights14The BIRD Foundationis established1977 1981 1984 1990First BIRD projectgenerates sales andmakes a repaymentFirst BIRDproject to fullyrepay itsobligationOriginal endowment hasbeen effectively repaid bytaxes to theU.S. and Israeligovernments

Life SciencesCommunicationscash-flow analysisproposals for mini-projectscash-flow analysisoff-balance sheet financingno interference in company – company relationshipseal of approvalIrit Manskleid, Director US Operations(1955-2002)1997 2000 2002Cumulative number ofapproved BIRD projectsexceeds 500Approximately40% of all Israelicompanies listed onNASDAQ have beenBIRD granteesCumulativeDirect Sales fromBIRD projectsreaches $4 Billion15

I first heard about "BIRD F" during a visit toIsrael in 1978. I, along with most othermembers of the U.S.-Israel Advisory Council forIndustrial R&D – all more prominent than yours truly– was politely skeptical about the whole concept (Britishunderstatement!).About 18 months later, when I had been persuaded tobecome BIRD's Executive Director (I never did like theunpronounceable "BIRD F"), I needed to take a different viewof its potential. I'm glad I did!Now, 25 years later, BIRD is a much envied and emulatedexample of the mutual benefits to be derived from cooperationbetween technology companies, however physically distantfrom each other.Congratulations, BIRD, on your Silver Anniversary.Go for the Gold!Dr. Ed MlavskyChairman and Founding PartnerGemini Israel FundsFebruary 2003I believe that one of the most promisinggrowth strategies for Israeli and Americansmall and mid-size companies is cooperationwith strategic partners. BIRD's role as internationalindustrial matchmaker serves this strategy well.During my four years as Executive Director of the BIRDFoundation, the BIRD team was involved in about 160 jointventure programs. As expected, not all of them survivedthe business turmoil. Although some might have taken offindependently, BIRD's impact can be seen in the initiationof new business collaborations, follow-up, and coachingthat led to long-term successful relationships between theparticipating companies.In today's complex international business environment, theBIRD model plays an even greater role. It facilitatescooperation between Israeli high-tech companies with newproducts and innovative engineers/scientists and managers,but relatively low company valuations, with strategic Americanmarketing partners, to the benefit of both parties.Dan VilenskiChairmanApplied Materials IsraelFebruary 2003BIRD’s Executive Director 1979-1993BIRD’s Executive Director 1993-199717

List of Approved Projects in 2002CommunicationsEfficient video compression systemfor videoconferencing and other video transmission systems; Integrated variable optical attenuator for dynamicregulation of optical power in fiber-optic communication networks; Integrated, on-chip multi-wavelengths sourcetransmitter for electro-optic communications; Advertising system enabling storage and selective insertion ofdigital advertising into cable or satellite broadcast networks; Software-based modem for mobile phones;Integrated system-on-a-chip for fixed wireless and wire-line remote access communications; Micro-ring basedtunable laser for electro-optic communication networks; Digital variable optical attenuators for broadbandall-optical communication systems; Interactive residential home gateway delivering video, data and voiceover XDSL technology.Life SciencesPersonal, continuous, non-invasiveglucose monitor for diabetics; Drug candidates for the treatment of traumatic brain injury and neuro-degeneration;Cell therapy procedures and products for complete spinal cord injury treatment; Home monitoring device forage-related macular degeneration patients; Cell therapy technology in treatment of coronary artery and peripheralblood vessel diseases; High throughput diagnostic kits for early detection of pregnancy complications; Devicefor bio-particles separation out of a cell mixture for the biotechnology research market; Protein-glycan biochipsfor drug discovery applications; Advanced visualization integrated in medical surgical devices; Developmentof transgenic vegetable seeds with tolerance to herbicides.Analog Devices, Inc. (MA)GalayOr Networks Ltd.ACMI, Inc. (MA)CByond LtdEquator Technologies, Inc. (CA)VCON Telecommunication Ltd.BID Medical Center, Inc. (MA)Epigenesis Ltd.Equator Technologies, Inc. (CA)Inovia Telecoms Ltd.Carl Zeiss Ophthalmic Systems, Inc. (CA)Notal Vision Ltd.Finisar Corp. (CA)Lambda Crossing Ltd.Craig Hospital / Adaptive Equip. Co. (CO)Proneuron Biotechnologies (Israel) Ltd.Molex, Inc. (IL)KiloLambda Technologies Ltd.Eastman Kodak Co. (CT)Cellect Instruments Ltd.nCUBE Corp. (OR)BigBand Networks Ltd.Flextronics (CA)Glucon Medical Ltd.Texas Instruments, Inc. (CA)TranSwitch Corp. (CT)TranSwitch Corp. (CT)Comsys Communications andSignal Processing Ltd.Terra-Op Ltd.IC4IC Ltd.Verdia, Inc. (CA)Pharmacopeia, Inc. (NJ)Quest Diagnostics, Inc. (NJ)Schott Glass Technologies, Inc. (PA)Evogene Ltd.Ester Neurosciences Ltd.Diagnostic Technologies Ltd.Glycominds Ltd.ElectronicsSmart tag for applications inlocation finding systems; Efficiency and range improvements of power amplifiers in wireless communicationapplications.Remec Corp. (CA)Paragon Communications Ltd.18Symbol Technologies, Inc. (NY)Bluesoft Ltd.

SemiconductorsOn-line control of the chemicalmechanicalpolishing process in semiconductor manufacturing; In-line, dry process, semiconductor cleanstation for the wafer backside.Applied Materials, Inc. (CA)Coreflow Ltd.Applied Materials, Inc. (CA)Nova Measuring Instruments Ltd.SoftwareSoftware to protect copyright CD’sfrom unauthorized and illegal duplication; Prescreen assessment management system for the corporate andstaffing services market; Virtual mailroom print distribution system; A tool to automate the transfer, managementand provisioning of Linux applications in server consolidation applications; Product master catalog for enterpriseasset management applications.Roxio, Inc. (CA)Midbar Tech (1998) Ltd.Manpower, Inc. (WI)CareerHarmony Ltd.Vestcom International, Inc. (NJ)Send2Post Ltd.BMC Software, Inc. (TX)Aduva Israel Ltd.Cayenta, Inc. (CA)CardoNet – D.S.O. Ltd.OtherLaser-based wide-format digital printer.International Imaging Materials, Inc. (NY)LPT Technologies Ltd.19

BIRD StaffBIRD offers support in areas of special interestwith high potential, even when the technological1 2 3Dov HershbergExecutive Director1and/or marketing risks are great.4 56 7 8Uri AttirPrograms Director29 10 11Michal MiasnikSilicon Valley Representative3Shlomo CohenChief Financial Officer4Chava DoukhanOffice Manager5“hello”Maha MansourInfo. Systems Manager6Yael SherbourneSecretary7Yuval WeissChief Business Officer8Ruth BaumAccountant Assistant9Limor Nakar-VincentEast Coast Representative1020Yael HollanderWest Coast Representative11

Financial SummaryIncomeGrantsEndowment Repayments PaymentsYear (M$) Cum. (M$) Year (M$) Cum. (M$) Year (M$) Cum. (M$)FY1997 9 124 6 48 12 151FY1998 (15 months) 11 135 6 54 16 1671999 8 143 4 58 9 1762000 9 152 6 64 8 1842001 8 160 5 69 11 1952002 7 167 3 72 10 205IncomeBIRD’s annual income is comprised of interest on the Endowment Fund and Repayments from companies which haveparticipated in succesful projects. This annual income is at a level that makes BIRD self sufficient and permits it tomeet all its financial obligations including payments to approved projects, on time, without requiring additional fundingfrom the two governments.Since its inception BIRD has received interest of approximately $167 million on the Endowment Fund and Repaymentsof approximately $72 million from successful projects. Over this period Grant Payments to companies, reachedapproximately $205 million.21

Board of GovernorsThe Board of Governors meets semi-annually—in Washington, D.C. in June/July and in Jerusalemin November/December. Each government has three representatives on the Board and thereare currently four advisors to the Board.U.S. GovernorsU.S. Department of StateMr. Kay AnskeDirectorOffice of Science and Technology CooperationU.S. Department of TreasuryMr. C. Marshall MillsDeputy DirectorOffice of Middle East and South Asian NationsIsraeli GovernorsU.S. Department of CommerceIsrael Ministry of Industry and TradeMr. Marc StanleyActing DirectorAdvanced Technology Program, NISTMr. Ra'anan DinurDirector GeneralIsrael Ministry of FinanceMr. Ohad MaraniDirector GeneralIsrael Ministry of Industry and TradeDr. Eli OpperChief Scientist22Advisors to the BoardBoard members and other contributors during 2002Israel Ministry of Industry and TradeU.S. Department of TreasuryIsrael Ministry of Industry and TradeIsrael Ministry of FinanceU.S. Department of StateIsrael Ministry of FinanceU.S. Department of CommerceU.S. Department of the TreasuryDr. Jordan BaruchMr. Martin GerstelMr. Dan TolkowskyMr. Amos WilnaiMr. Amir Hayek – Board memberMr. Larry McDonald – Board memberMr. Josef DanconaMr. Yossi GordonMs. Shauntia HartMr. Yoel NavehMs. Magdalena NavarroMs. Tipanee Pipatanagul