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<SEC-DOCUMENT>0000910680-04-000793.txt : 20040802
<SEC-HEADER>0000910680-04-000793.hdr.sgml : 20040802
<ACCEPTANCE-DATETIME>20040802151155
ACCESSION NUMBER:		0000910680-04-000793
CONFORMED SUBMISSION TYPE:	SC 13D/A
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20040802
GROUP MEMBERS:		BEIT BELLA LTD.
GROUP MEMBERS:		BEIT FEDERMANN LTD.
GROUP MEMBERS:		BEIT YEKUTIEL LTD.
GROUP MEMBERS:		FEDERMANN ENTERPRISES LTD.
GROUP MEMBERS:		HERIS AKTEINGESELLSCHAFT
GROUP MEMBERS:		MICHAEL FEDERMANN

FILED BY:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FEDERMANN MICHAEL
		CENTRAL INDEX KEY:			0001260118

	FILING VALUES:
		FORM TYPE:		SC 13D/A

	BUSINESS ADDRESS:	
		STREET 1:		HAYARKON 87 TEL AVIV
		STREET 2:		TEL AVIV
		CITY:			ISRAEL
		STATE:			L3
		ZIP:			63432

SUBJECT COMPANY:	

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ELBIT SYSTEMS LTD
		CENTRAL INDEX KEY:			0001027664
		STANDARD INDUSTRIAL CLASSIFICATION:	AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			L3
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		SC 13D/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	005-50156
		FILM NUMBER:		04944849

	BUSINESS ADDRESS:	
		STREET 1:		ADVANCED TECHNOLOGY CENTER
		STREET 2:		PO BOX 539
		CITY:			HAIFA, ISRAEL
		STATE:			L3
		ZIP:			31053
		BUSINESS PHONE:		01197248316626
</SEC-HEADER>
<DOCUMENT>
<TYPE>SC 13D/A
<SEQUENCE>1
<FILENAME>sc13da080204.txt
<DESCRIPTION>SCHEDULE 13D/A  (AMENDMENT NO. 2)
<TEXT>
================================================================================

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                  SCHEDULE 13D

                                (AMENDMENT NO. 2)

             INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
     TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)

                                   ----------

                               ELBIT SYSTEMS LTD.

                                (Name of Issuer)

Ordinary Shares, Nominal Value 1.00 New Israeli Shekels             M3760D101
                   per share                                        ---------
- -------------------------------------------------------
                 (Title of class of securities)

                               Zvi Firon, Advocate
- --------------------------------------------------------------------------------

                     M. Firon & Co., Advocates and Notaries
                           16 Abba Hillel Silver Road
                                Ramat Gan, Israel
                                  972-3-7540000
- --------------------------------------------------------------------------------
 (Name, address and telephone number of person authorized to receive notices and
                                communications)

                             (See Explanatory Note)
- --------------------------------------------------------------------------------
             (Date of event which requires filing of this statement)


If the filing person has previously filed a statement on schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rules 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [_].


<PAGE>

CUSIP No. M3760D101                   13D/A                               Page 2
- --------------------------------------------------------------------------------
1.      Names of Reporting Person:  Michael Federmann
        I.R.S. Identification Nos. of above persons (entities only).

- --------------------------------------------------------------------------------
2.      Check the Appropriate Box if a Member of a Group (See Instructions)

        (a)    [X]

        (b)    [ ]
- --------------------------------------------------------------------------------
3.      SEC Use Only


- --------------------------------------------------------------------------------
4.      Source of Funds: BK


- --------------------------------------------------------------------------------
5.     Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
       2(d) or 2(e) [ ]


- --------------------------------------------------------------------------------
6.     Citizenship or Place of Organization             Israel


- --------------------------------------------------------------------------------

Number of         7.      Sole Voting Power             -0-
Shares Bene-              ------------------------------------------------------
ficially Owned    8.      Shared Voting Power           19,938,469/1/
By Each                   ------------------------------------------------------
Reporting         9.      Sole Dispositive Power        -0-
Person With               ------------------------------------------------------
                  10.     Shared Dispositive Power      19,915,448

- --------------------------------------------------------------------------------
11.     Aggregate Amount Beneficially Owned by Each Reporting Person

        19,938,469/1/
- --------------------------------------------------------------------------------
12.     Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
        Instructions) [  ]

- --------------------------------------------------------------------------------
13.     Percent of Class Represented by Amount in Row (11)

        49.88%
- --------------------------------------------------------------------------------
14.     Type of Reporting Person (See Instructions)

        IN
- --------------------------------------------------------------------------------

1        The 19,938,469 Ordinary Shares beneficially owned by the Reporting
         Person consist of an aggregate 19,915,448 Ordinary Shares beneficially
         owned by the Reporting Person and 23,021 Ordinary Shares held by a
         wholly owned subsidiary of the Issuer (as defined in Item 1 below)
         which, under Israeli law, are considered or, prima facie, deemed to be
         beneficially owned by the Reporting Person.

                                       2
<PAGE>

CUSIP No. M3760D101                   13D/A                               Page 3
- --------------------------------------------------------------------------------
1.      Names of Reporting Person:  Federmann Enterprises Ltd.
        I.R.S. Identification Nos. of above persons (entities only).

- --------------------------------------------------------------------------------
2.      Check the Appropriate Box if a Member of a Group (See Instructions)

        (a)    [X]

        (b)    [ ]
- --------------------------------------------------------------------------------
3.      SEC Use Only


- --------------------------------------------------------------------------------
4.      Source of Funds: BK


- --------------------------------------------------------------------------------
5.     Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
       2(d) or 2(e) [ ]


- --------------------------------------------------------------------------------
6.     Citizenship or Place of Organization             Israel


- --------------------------------------------------------------------------------

Number of         7.      Sole Voting Power             -0-
Shares Bene-              ------------------------------------------------------
ficially Owned    8.      Shared Voting Power           19,938,469/1/
By Each                   ------------------------------------------------------
Reporting         9.      Sole Dispositive Power        -0-
Person With               ------------------------------------------------------
                  10.     Shared Dispositive Power      19,915,448

- --------------------------------------------------------------------------------
11.     Aggregate Amount Beneficially Owned by Each Reporting Person

        19,938,469/1/
- --------------------------------------------------------------------------------
12.     Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
        Instructions) [  ]

- --------------------------------------------------------------------------------
13.     Percent of Class Represented by Amount in Row (11)

        49.88%
- --------------------------------------------------------------------------------
14.     Type of Reporting Person (See Instructions)

        IN
- --------------------------------------------------------------------------------

1        The 19,938,469 Ordinary Shares beneficially owned by the Reporting
         Person consist of an aggregate 19,915,448 Ordinary Shares beneficially
         owned by the Reporting Person and 23,021 Ordinary Shares held by a
         wholly owned subsidiary of the Issuer (as defined in Item 1 below)
         which, under Israeli law, are considered or, prima facie, deemed to be
         beneficially owned by the Reporting Person.

                                       3
<PAGE>

CUSIP No. M3760D101                   13D/A                               Page 4
- --------------------------------------------------------------------------------
1.      Names of Reporting Person:  Heris Aktiengesellschaft
        I.R.S. Identification Nos. of above persons (entities only).

- --------------------------------------------------------------------------------
2.      Check the Appropriate Box if a Member of a Group (See Instructions)

        (a)    [X]

        (b)    [ ]
- --------------------------------------------------------------------------------
3.      SEC Use Only


- --------------------------------------------------------------------------------
4.      Source of Funds: N/A


- --------------------------------------------------------------------------------
5.     Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
       2(d) or 2(e) [ ]


- --------------------------------------------------------------------------------
6.     Citizenship or Place of Organization             Liechtenstein


- --------------------------------------------------------------------------------

Number of         7.      Sole Voting Power             -0-
Shares Bene-              ------------------------------------------------------
ficially Owned    8.      Shared Voting Power           3,836,458
By Each                   ------------------------------------------------------
Reporting         9.      Sole Dispositive Power        -0-
Person With               ------------------------------------------------------
                  10.     Shared Dispositive Power      3,836,458

- --------------------------------------------------------------------------------
11.     Aggregate Amount Beneficially Owned by Each Reporting Person

        3,836,458
- --------------------------------------------------------------------------------
12.     Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
        Instructions) [  ]

- --------------------------------------------------------------------------------
13.     Percent of Class Represented by Amount in Row (11)

        9.59%
- --------------------------------------------------------------------------------
14.     Type of Reporting Person (See Instructions)

        CO
- --------------------------------------------------------------------------------

                                       4
<PAGE>

CUSIP No. M3760D101                   13D/A                               Page 5
- --------------------------------------------------------------------------------
1.      Names of Reporting Person:  Beit Federmann Ltd.
        I.R.S. Identification Nos. of above persons (entities only).

- --------------------------------------------------------------------------------
2.      Check the Appropriate Box if a Member of a Group (See Instructions)

        (a)    [X]

        (b)    [ ]
- --------------------------------------------------------------------------------
3.      SEC Use Only


- --------------------------------------------------------------------------------
4.      Source of Funds: BK


- --------------------------------------------------------------------------------
5.     Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
       2(d) or 2(e) [ ]


- --------------------------------------------------------------------------------
6.     Citizenship or Place of Organization             Israel


- --------------------------------------------------------------------------------

Number of         7.      Sole Voting Power             -0-
Shares Bene-              ------------------------------------------------------
ficially Owned    8.      Shared Voting Power           19,938,469/1/
By Each                   ------------------------------------------------------
Reporting         9.      Sole Dispositive Power        -0-
Person With               ------------------------------------------------------
                  10.     Shared Dispositive Power      19,915,448

- --------------------------------------------------------------------------------
11.     Aggregate Amount Beneficially Owned by Each Reporting Person

        19,938,469/1/
- --------------------------------------------------------------------------------
12.     Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
        Instructions) [  ]

- --------------------------------------------------------------------------------
13.     Percent of Class Represented by Amount in Row (11)

        49.88%
- --------------------------------------------------------------------------------
14.     Type of Reporting Person (See Instructions)

        CO
- --------------------------------------------------------------------------------

1        The 19,938,469 Ordinary Shares beneficially owned by the Reporting
         Person consist of an aggregate 19,915,448 Ordinary Shares beneficially
         owned by the Reporting Person and 23,021 Ordinary Shares held by a
         wholly owned subsidiary of the Issuer (as defined in Item 1 below)
         which, under Israeli law, are considered or, prima facie, deemed to be
         beneficially owned by the Reporting Person.



                                       5
<PAGE>

CUSIP No. M3760D101                   13D/A                               Page 6
- --------------------------------------------------------------------------------
1.      Names of Reporting Person:  Beit Bella Ltd.
        I.R.S. Identification Nos. of above persons (entities only).

- --------------------------------------------------------------------------------
2.      Check the Appropriate Box if a Member of a Group (See Instructions)

        (a)    [ ]

        (b)    [ ]
- --------------------------------------------------------------------------------
3.      SEC Use Only


- --------------------------------------------------------------------------------
4.      Source of Funds: BK


- --------------------------------------------------------------------------------
5.     Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
       2(d) or 2(e) [ ]


- --------------------------------------------------------------------------------
6.     Citizenship or Place of Organization             Israel


- --------------------------------------------------------------------------------

Number of         7.      Sole Voting Power             -0-
Shares Bene-              ------------------------------------------------------
ficially Owned    8.      Shared Voting Power           19,938,469/1/
By Each                   ------------------------------------------------------
Reporting         9.      Sole Dispositive Power        -0-
Person With               ------------------------------------------------------
                  10.     Shared Dispositive Power      19,915,448

- --------------------------------------------------------------------------------
11.     Aggregate Amount Beneficially Owned by Each Reporting Person

        19,938,469/1/
- --------------------------------------------------------------------------------
12.     Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
        Instructions) [  ]

- --------------------------------------------------------------------------------
13.     Percent of Class Represented by Amount in Row (11)

        49.88%
- --------------------------------------------------------------------------------
14.     Type of Reporting Person (See Instructions)

        CO
- --------------------------------------------------------------------------------

1        The 19,938,469 Ordinary Shares beneficially owned by the Reporting
         Person consist of an aggregate 19,915,448 Ordinary Shares beneficially
         owned by the Reporting Person and 23,021 Ordinary Shares held by a
         wholly owned subsidiary of the Issuer (as defined in Item 1 below)
         which, under Israeli law, are considered or, prima facie, deemed to be
         beneficially owned by the Reporting Person.

                                       6
<PAGE>

CUSIP No. M3760D101                   13D/A                               Page 7
- --------------------------------------------------------------------------------
1.      Names of Reporting Person:  Beit Yekutiel Ltd.
        I.R.S. Identification Nos. of above persons (entities only).

- --------------------------------------------------------------------------------
2.      Check the Appropriate Box if a Member of a Group (See Instructions)

        (a)    [X]

        (b)    [ ]
- --------------------------------------------------------------------------------
3.      SEC Use Only


- --------------------------------------------------------------------------------
4.      Source of Funds: BK


- --------------------------------------------------------------------------------
5.     Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
       2(d) or 2(e) [ ]


- --------------------------------------------------------------------------------
6.     Citizenship or Place of Organization             Israel


- --------------------------------------------------------------------------------

Number of         7.      Sole Voting Power             -0-
Shares Bene-              ------------------------------------------------------
ficially Owned    8.      Shared Voting Power           19,938,469/1/
By Each                   ------------------------------------------------------
Reporting         9.      Sole Dispositive Power        -0-
Person With               ------------------------------------------------------
                  10.     Shared Dispositive Power      19,915,448

- --------------------------------------------------------------------------------
11.     Aggregate Amount Beneficially Owned by Each Reporting Person

        19,938,469/1/
- --------------------------------------------------------------------------------
12.     Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
        Instructions) [  ]

- --------------------------------------------------------------------------------
13.     Percent of Class Represented by Amount in Row (11)

        49.88%
- --------------------------------------------------------------------------------
14.     Type of Reporting Person (See Instructions)

        CO
- --------------------------------------------------------------------------------

1        The 19,938,469 Ordinary Shares beneficially owned by the Reporting
         Person consist of an aggregate 19,915,448 Ordinary Shares beneficially
         owned by the Reporting Person and 23,021 Ordinary Shares held by a
         wholly owned subsidiary of the Issuer (as defined in Item 1 below)
         which, under Israeli law, are considered or, prima facie, deemed to be
         beneficially owned by the Reporting Person.



                                       7

<PAGE>
                                Explanatory Note

         This Amendment No. 2 to the Schedule 13D amends and restates Schedule
13D and Amendment No. 1 to the Schedule 13D previously filed with the Securities
and Exchange Commission (collectively, the "Prior Schedule").

Item 1.  Security and Issuer.

         The title and class of equity security to which this Amendment No. 2 to
the Schedule 13D relates is ordinary shares, nominal value 1.00 New Israeli
Shekels per share (the "Ordinary Shares"), of the Elbit Systems Ltd. (the
"Issuer"), a corporation existing under the laws of the State of Israel. The
address of the Issuer's principal executive offices is Advanced Technology
Center, Haifa, Israel 31053.

         The Ordinary Shares are traded on the NASDAQ National Market System and
the Tel Aviv Stock Exchange.

         The CUSIP number for the Ordinary Shares is M3760D101.

Item 2.  Identity and Background.

         This statement is being filed by Michael Federmann, for and on behalf
of himself, Federmann Enterprises Ltd. ("FEL"), Heris Aktiengesellschaft ("HF"),
Beit Federmann Ltd. ("BFL"), Beit Bella Ltd. ("BBL") and Beit Yekutiel Ltd.
("BYL") (collectively, the "Reporting Persons" or the "Federmann Group").
Michael Federmann is the controlling shareholder of each of BBL and BYL; BBL and
BYL are the controlling shareholders of BFL; BFL is the controlling shareholder
of FEL; and FEL is the controlling shareholder of HF. The Reporting Persons are
making this single joint filing pursuant to Rule 13d-1(k) under the 1934 Act. An
agreement among the Reporting Persons with respect to the filing of this
statement is attached hereto as Exhibit 1.

         The business address of Mr. Michael Federmann is c/o Federmann
Enterprises Ltd., 87 Hayarkon Street, Tel-Aviv, Israel. Mr. Michael Federmann is
the Chairman of the Board of Directors of each of FEL (see description below)
and Dan Hotels Corp. Ltd., which is principally engaged in the business of
operating luxury hotels in Israel. The address of Dan Hotels Corp. Ltd. is 111
Hayarkon Street, Tel Aviv, Israel. Mr. Michael Federmann is also the Chairman of
the Board of Directors of the Issuer, which is principally engaged in the
development, manufacturing and integration of advanced, high-performance defense
electronics systems. The address of the Issuer is set forth in Item 1 above. Mr.
Michael Federmann is a citizen of the State of Israel.

         FEL is a corporation existing under the laws of the State of Israel
with its principal executive offices located at 87 Hayarkon Street, Tel-Aviv,
Israel. The principal business activity of FEL is the holding and managing of
investments in private and public companies.

         HF is a corporation existing under the laws of the State of
Liechtenstein with its principal executive offices located at Aeulestrasse 38
F1-9490 Vaduz Forstentum Liechtenstein, c/o Prasidial-Anstalt. The principal
business activity of HF is the holding of investments in private and public
companies.

                                       8
<PAGE>

         Each of BFL, BBL and BYL is a corporation existing under the laws of
the State of Israel with its registered offices located at 16 Abba Hillel Silver
Road, Ramat Gan, Israel, c/o M. Firon & Co., Advocates and Notaries. The
principal business activity of each of BFL, BBL and BYL is the holding of
investments in private companies.

         The name, present business address, present principal occupation or
employment and citizenship of each director and executive officer of FEL, HF,
BFL, BBL and BYL are set forth on Schedules A, B, C, D and E attached hereto,
respectively.

         During the last five years none of the Reporting Persons, nor, to the
best of their knowledge, any of their directors or executive officers, has been
(i) convicted of any criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to federal or
state securities laws or finding any violation with respect to such laws.

Item 3.  Source and Amount of Funds or Other Consideration.

         On December 19, 1999, the Issuer, FEL, HF, Rehovot Instruments Ltd. and
Elop Electro-Optics Industries Ltd. ("Elop") entered into a Merger Agreement
(the "Merger Agreement"), pursuant to which Elop would be merged into and become
a subsidiary of the Issuer in exchange for the issuance by the Issuer of an
aggregate of 12,100,000 Ordinary Shares to FEL and HF. The merger transaction
contemplated under the Merger Agreement was completed on July 5, 2000.

         Concurrently with the signing of the Merger Agreement, on December 19,
1999 Elron Electronic Industries Ltd. ("Elron"), FEL and HF entered into a
Shareholders' Agreement (the "Shareholders Agreement") which governed the
relations between Elron, FEL and HF as shareholders of the Issuer following the
merger. Pursuant to the Shareholders Agreement, should any party to the
Shareholders Agreement desire to transfer any of its Ordinary Shares and the
rights associated with such shares ("Associated Rights") to a third party, it
must first offer such Ordinary Shares and Associated Rights to the other parties
of the Shareholders Agreement. On July 8, 2004, Elron entered into an agreement
with Tadiran Communications Ltd. to sell its 7,815,448 Ordinary Shares and
Associated Rights for 196.5 million U.S. Dollars, subject to Elron's obligations
under the Shareholders Agreement to first offer the Ordinary Shares and
Associated Rights to FEL and HF on the same terms and conditions as were agreed
between Elron and Tadiran Communications Ltd. After Elron made the offer to FEL
and HF, FEL exercised on July 28, 1004 its rights to purchase the 7,815,448
Ordinary Shares and Associated Rights from Elron.

         In order to obtain some of the funds to purchase the 7,815,448 Ordinary
Shares and Associated Rights from Elron, FEL entered into a loan agreement with
Bank Leumi Le'Israel B.M. (the "Lender"), dated July 28, 2004 (the "Loan
Agreement") and two related security agreements with the Lender, each dated July
28, 2004 (each, a "Security Agreement"). The remainder of the purchase price was
paid by FEL from its own funds. Under the Loan Agreement, the Lender made the
following loans to FEL:

                                       9
<PAGE>

         (1) a loan in an amount of approximately 111 million U.S. Dollars ,
which is secured by 4,915,448 Ordinary Shares pledged in favor of the Lender.

         (2) two loans in the total amount of 51 million U.S. Dollars which are
secured by 2,900,000 Ordinary Shares pledged in favor of the Lender.

         The shares so pledged are registered in the name of a trust company
which is an affiliate of the Lender (the "Trustee"). The Trustee has granted FEL
a proxy to vote the pledged Ordinary Shares. This proxy can be revoked by the
Lender upon the occurrence of an event of default under the Loan Agreement. In
addition, FEL agreed, if necessary to make payments under the Loan Agreement, to
sell up to approximately 4 million Ordinary Shares previously held by it and to
use the proceeds for payment of the Loan. The Loan Agreement contains customary
events of default.

         Pursuant to Israeli law, the Reporting Persons, together with the
Issuer, may be considered, or prima facie deemed, to beneficially own the
Ordinary Shares held by a wholly owned subsidiary of the Issuer. A wholly owned
subsidiary of the Issuer holds 23,021 Ordinary Shares which are entitled to be
voted. Therefore, the Reporting Persons may have the right to direct the vote of
such Ordinary Shares and may be considered, or prima facie deemed, to
beneficially own such Ordinary Shares. Each of the Reporting Persons currently
beneficially owns 19,938,469 Ordinary Shares, except for HF which beneficially
owns 3,836,458 Ordinary Shares.

         Subsequent to the sale of Elron's Ordinary Shares to FEL, the
Shareholder's Agreement is of no more force and effect.

Item 4.  Purpose of Transaction.

         The Reporting Persons acquired the Ordinary Shares referred to in the
first paragraph of Item 3 above on July 5, 2000 upon completion of the merger
transaction contemplated by the Merger Agreement. At that time, the Reporting
Persons were beneficial owners of shares of capital stock of Elop and therefore
were entitled under the Merger Agreement to receive the Ordinary Shares upon the
effectiveness of the merger in exchange for their shares of Elop.

         On July 28, 2004, the Reporting Persons acquired an additional
7,815,448 Ordinary Shares and Associated Rights when FEL exercised its rights
under the Shareholders Agreement to purchase such Ordinary Shares from Elron
under the same terms and conditions as Elron had previously agreed to sell such
Ordinary Shares to Tadiran Communications Ltd.

         Potential Sale of Ordinary Shares. FEL is considering
selling approximately 4.4 million Ordinary Shares of Issuer to an appropriate
third-party investor in a private transaction.

         Changes in the Issuer's Board and Management. Immediately prior to the
purchase of the Ordinary Shares and Associated Rights from Elron, eleven
directors served on the Issuer's Board of Directors. These directors included
two Independent (External) Directors, four directors nominated by Elron, four
directors nominated by the Reporting Persons, and the President, who is a member
of the Board of Directors.

                                       10
<PAGE>

         Immediately after the purchase of Elron's Ordinary Shares by FEL, two
members of the Board of Directors originally nominated by Elron, Avi Fischer and
Doron Birger, resigned. At the next meeting of the Board of Directors, another
member of the Board of Directors nominated by Elron, Ami Erel, is expected to
resign. Mr. Avraham Ashery, another member of the Board of Directors, originally
nominated by Elron, is anticipated to remain a director of the Issuer. The
remaining members of the Board of Directors may fill any or all of the vacancies
created by the resignations of the resigning members of the Board of Directors.

         Change in Dividend Policy. The Reporting Persons plan to recommend to
the Issuer's Board of Directors that it declare an extraordinary cash dividend
at the next board meeting.

         Except as set forth above, none of the Reporting Persons, nor, to the
best of their knowledge, any of their directors or executive officers, has any
present plans or proposals which relate to or would result in any of the actions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

Item 5.  Interest in Securities of the Issuer.

         (a) The responses of the Reporting Persons to Rows (11) through (13) of
the cover pages of this Schedule 13D are incorporated herein by reference. As of
August 2, 2004, each of the Reporting Persons beneficially owns an aggregate of
19,938,469 Ordinary Shares, representing approximately 49.88% of the outstanding
Ordinary Shares of the Issuer (based on an aggregate of 39,972,255 Ordinary
Shares outstanding as of June 30, 2004, excluding 385,900 Ordinary Shares held
in treasury by the Issuer), except for HF which beneficially owns 3,836,458
Ordinary Shares, representing approximately 9.59% of the outstanding Ordinary
Shares of the Issuer (based on an aggregate of 39,972,255 Ordinary Shares
outstanding as of June 30, 2004, excluding 385,900 Ordinary Shares held in
treasury by the Issuer).

         Except as disclosed in this Item 5(a), none of the Reporting Persons,
nor, to the best of their knowledge, any of their directors or executive
officers, beneficially owns any Ordinary Shares.

         (b) The responses of the Reporting Persons to (i) Rows (7) through (10)
of this Schedule 13D and (ii) Item 5(a) hereof are incorporated herein by
reference.

         Except as disclosed in this Item 5(b), none of the Reporting Persons,
nor, to the best of their knowledge, any of their directors or executive
officers, presently has the power to vote or to direct the vote or to dispose or
direct the disposition of any of the Ordinary Shares which they may be deemed to
beneficially own.

         (c) On July 28, 2004, pursuant to its rights under the Shareholders
Agreement, FEL exercised its right to purchase 7,815,448 Ordinary Shares from
Elron on the same terms and conditions that were agreed to by Elron and Tadiran
Communications Ltd. As a result, each of the Reporting Persons beneficially owns
19,938,469 Ordinary Shares, except for HF which beneficially owns 3,836,458
Ordinary Shares.

         (d) Pursuant to Israeli law, the Reporting Persons, together with the
Issuer, may be considered, or prima facie deemed, to beneficially own Ordinary
Shares held by a wholly

                                       11
<PAGE>

owned subsidiary of the Issuer. A wholly owned subsidiary of the Issuer holds
23,021 Ordinary Shares which are entitled to be voted. Therefore, the Reporting
Persons may have the right to direct the vote of such Ordinary Shares and may be
considered, or prima facie deemed, to beneficially own such Ordinary Shares. The
7,815,448 Ordinary Shares and Associated Rights purchased from Elron are
registered in the name of the Trustee, which is an affiliate of the Lender. The
Trustee granted FEL a proxy to vote the pledged Ordinary Shares. This proxy can
be revoked upon the occurrence of an event of default under the Loan Agreement.
Upon the termination of the Loan Agreement, such Ordinary Shares will be
re-registered under the name of FEL. Each of the Reporting Persons currently
beneficially owns 19,938,469 Ordinary Shares, except for HF which beneficially
owns 3,836,458 Ordinary Shares. The wholly owned subsidiary of the Issuer,
however, retains the right to dispose of the Ordinary Shares held by it.

         Under the Loan Agreement, FEL undertook to oppose any amendment of the
Issuer's organizational documents that would adversely affect the Lender's
rights in connection with the pledged Ordinary Shares and Associated Rights.
Failure to do so will be considered to be a default under the Loan Agreements.

         (e) Not applicable.

Item 6.  Contracts, Arrangements, Understandings or Relationships With Respect
         to Securities of the Issuer.

         The information set forth in Items 3 and 4 hereof is incorporated
herein by reference.

         On July 5, 2000, upon consummation of the merger transaction
contemplated by the Merger Agreement, Elron, FEL and HF entered into a
Registration Rights Agreement which governs the rights and obligations of the
parties with respect to the registration of their Ordinary Shares for sale in
the United States. Elron's rights under the Registration Rights Agreement were
assigned to FEL on July 28, 2004. A copy of that agreement is set forth on
Exhibit 3.

         An agreement among the Reporting Persons with respect to the filing of
this Schedule 13D and any amendments hereto is attached as Exhibit 1.

         Immediately upon the purchase by the Reporting Persons and the sale by
Elron of the 7,815,448 Ordinary Shares and the Associated Rights and pursuant to
the terms of the Shareholders Agreement, the Associated Rights were transferred
to the Reporting Persons and the Shareholders Agreement terminated.

         Under the Loan Agreement, FEL undertook to oppose any amendment of the
Issuer's organizational documents that would adversely affect the Lender's
rights in connection with the pledged Ordinary Shares and Associated Rights.
Failure to do so will be considered to be a default under the Loan Agreements.

         Pursuant to the Security Agreements, the 7,815,448 Ordinary Shares and
Associated Rights purchased from Elron are pledged to the Lender. Such Ordinary
Shares are registered in the name of the Trustee, which is a trust company and
an affiliate of the Lender. The Trustee granted FEL a proxy to vote the pledged
Ordinary Shares. This proxy can be revoked by the Lender upon the occurrence of
an event of default under the Loan Agreement.

                                       12
<PAGE>

Upon the termination of the Loan Agreement, such Ordinary Shares will be
re-registered under the name of FEL.

         Except as disclosed in this Item 6, none of the Reporting Persons, nor,
to the best of their knowledge, any of their directors or executive officers,
are parties to any contract arrangement, understanding or relationship (legal or
otherwise) with respect to securities of the Issuer.

Item 7.  Materials to be Filed as Exhibits.

Exhibit 1   Joint Filing Agreement by and among Michael Federmann, Federmann
            Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd.,
            Beit Bella Ltd. and Beit Yekutiel Ltd. (Incorporated by reference to
            Amendment No. 1 to the Schedule 13D filed by Michael Federmann on
            August 19, 2003.)
Exhibit 2   English translation of Shareholders' Agreement dated December 19,
            1999 by and between Elron Electronic Industries Ltd., Federmann
            Enterprises Ltd. and Heris Finanz Aktiengesellschaft (now known as
            Heris Aktiengesellschaft). (Incorporated by reference to Amendment
            No. 1 to the Schedule 13D filed by Michael Federmann on August 19,
            2003.)
Exhibit 3   Registration Rights Agreement dated July 5, 2000 by and among
            Elbit Systems Ltd., Elron Electronic Industries Ltd., Federmann
            Enterprises Ltd. and Heris Finanz Aktiengesellschaft (now known as
            Heris Aktiengesellschaft). (Incorporated by reference to Amendment
            No. 1 to the Schedule 13D filed by Michael Federmann on August 19,
            2003.)
Exhibit 4   English Summary of Loan Agreement dated July 28, 2004 by and among
            Michael Federmann, Federmann Enterprises Ltd. and Bank Leumi
            Le-Israel B.M.
Exhibit 5   English Summary of Security Agreements, dated July 28, 2004, by
            and between Federmann Enterprises Ltd. and Bank Leumi Le-Israel B.M.


                                       13
<PAGE>


                                    SIGNATURE

            After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.

Dated:  August 2, 2004

                                                /s/ Michael Federmann
                                           --------------------------------
                                                       Michael Federmann


                                           FEDERMANN ENTERPRISES LTD.


                                           By:  /s/ Michael Federmann
                                                ---------------------------
                                                Name:  Michael Federmann
                                                Title: Chairman of the Board


                                           HERIS AKTIENGESELLSCHAFT


                                           By:  /s/ Michael Federmann
                                                ---------------------------
                                                Attorney in Fact


                                           BEIT FEDERMANN LTD.


                                           By:  /s/ Michael Federmann
                                                ---------------------------
                                                Name:  Michael Federmann
                                                Title:  Director


                                           BEIT YEKUTIEL LTD.


                                           By:  /s/ Michael Federmann
                                                ---------------------------
                                                Name:  Michael Federmann
                                                Title:  Director


                                           BEIT BELLA LTD.

                                           By:  /s/ Michael Federmann
                                                     ---------------------------
                                                     Name:  Michael Federmann
                                                     Title:  Director


                                       14
<PAGE>

                          SCHEDULE A TO SCHEDULE 13D/A


            Filed by Michael Federmann for and on behalf of himself, Federmann
Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd., Beit Bella Ltd.
and Beit Yekutiel Ltd.

                           FEDERMANN ENTERPRISES LTD.
                        DIRECTORS AND EXECUTIVE OFFICERS


<TABLE>
<CAPTION>
                                         PRESENT                                PRESENT
                                         BUSINESS                               PRINCIPAL
NAME*                                    ADDRESS                                OCCUPATION
- ----                                     -------                                ----------
Directors

<S>                                      <C>                                    <C>
Bella Federmann                          87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel

Michael Federmann                        87 Hayarkon St.                        Chairman of the Board
                                         Tel-Aviv, Israel                       of each of Federmann Enterprises
                                                                                Ltd.,
                                                                                Dan Hotels Corp. Ltd. and Elbit
                                                                                Systems Ltd.

Samuel Federmann                         87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel

Irit Federmann                           87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel

Liora Federmann                          87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel

Officers

Dov Ninveh                               87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel

Aharon Beth-Halachmi                     87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel
</TABLE>


* Each person listed in this Schedule is a citizen of the State of Israel.


                                       15
<PAGE>


                          SCHEDULE B TO SCHEDULE 13D/A


            Filed by Michael Federmann for and on behalf of himself, Federmann
Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd., Beit Bella Ltd.
and Beit Yekutiel Ltd.


                            HERIS AKTIENGESELLSCHAFT
                        DIRECTORS AND EXECUTIVE OFFICERS


<TABLE>
<CAPTION>
                                         PRESENT                                PRESENT
NAME AND                                 BUSINESS                               PRINCIPAL
CITIZENSHIP                              ADDRESS                                OCCUPATION
- -----------                              -------                                ----------

Directors

<S>                                      <C>                                    <C>
Prasidial                                Aeulestrasse 38                        Management Company
Management Anstalt                       Fl-9490 Vaduz
                                         Forstentum Liechtenstein

Tim Schneider                            Joseph-Rheinberger-Str. 9,             Manager
Liechtenstein                            Vaduz, Liechtenstein

Dr. Christof Ebersberg                   Schlatt Str. 441 A Ruggell             Manager
Liechtenstein
</TABLE>




Officers

None


                                       16
<PAGE>


                          SCHEDULE C TO SCHEDULE 13D/A


            Filed by Michael Federmann for and on behalf of himself, Federmann
Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd., Beit Bella Ltd.
and Beit Yekutiel Ltd.

                               BEIT FEDERMANN LTD.
                        DIRECTORS AND EXECUTIVE OFFICERS


<TABLE>
<CAPTION>
                                         PRESENT                                PRESENT
                                         BUSINESS                               PRINCIPAL
NAME*                                    ADDRESS                                OCCUPATION
- ----                                     -------                                ----------
Directors

<S>                                      <C>                                    <C>
Bella Federmann                          87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel

Michael Federmann                        87 Hayarkon St.                        Chairman of the Board
                                         Tel-Aviv, Israel                       of each of Federmann Enterprises
                                                                                Ltd., Dan Hotels Corp. Ltd. and
                                                                                Elbit Systems Ltd.

Samuel Federmann                         87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel

Irit Federmann                           87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel

Officers

None
</TABLE>


* Each person listed in this Schedule is a citizen of the State of Israel.


                                       17
<PAGE>

                          SCHEDULE D TO SCHEDULE 13D/A


            Filed by Michael Federmann for and on behalf of himself, Federmann
Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd., Beit Bella Ltd.
and Beit Yekutiel Ltd.

                                 BEIT BELLA LTD.
                        DIRECTORS AND EXECUTIVE OFFICERS


<TABLE>
<CAPTION>
                                         PRESENT                                PRESENT
                                         BUSINESS                               PRINCIPAL
NAME*                                    ADDRESS                                OCCUPATION
- ----                                     -------                                ----------
Directors
<S>                                      <C>                                    <C>
Bella Federmann                          87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel

Michael Federmann                        87 Hayarkon St.                        Chairman of the Board
                                         Tel-Aviv, Israel                       of each of Federmann Enterprises
                                                                                Ltd., Dan Hotels Corp. Ltd. and
                                                                                Elbit Systems Ltd.

Samuel Federmann                         87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel


Officers

None
</TABLE>


* Each person listed in this Schedule is a citizen of the State of Israel.


                                       18
<PAGE>

                          SCHEDULE E TO SCHEDULE 13D/A


            Filed by Michael Federmann for and on behalf of himself, Federmann
Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd., Beit Bella Ltd.
and Beit Yekutiel Ltd.

                               BEIT YEKUTIEL LTD.
                        DIRECTORS AND EXECUTIVE OFFICERS


<TABLE>
<CAPTION>
                                         PRESENT                                PRESENT
                                         BUSINESS                               PRINCIPAL
NAME*                                    ADDRESS                                OCCUPATION
- ----                                     -------                                ----------
Directors

<S>                                      <C>                                    <C>
Bella Federmann                          87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel

Michael Federmann                        87 Hayarkon St.                        Chairman of the Board
                                         Tel-Aviv, Israel                       of each of Federmann Enterprises
                                                                                Ltd., Dan Hotels Corp. Ltd. and
                                                                                Elbit Systems Ltd.

Samuel Federmann                         87 Hayarkon St.                        Manager
                                         Tel-Aviv, Israel


Officers

None
</TABLE>


* Each person listed in this Schedule is a citizen of the State of Israel.


                                       19
<PAGE>


                                  EXHIBIT INDEX


Exhibit No.

Exhibit 1   Joint Filing Agreement by and among Michael Federmann, Federmann
            Enterprises Ltd., Heris Aktiengesellschaft, Beit Federmann Ltd.,
            Beit Bella Ltd. and Beit Yekutiel Ltd. (Incorporated by reference to
            Amendment No. 1 to the Schedule 13D filed by Michael Federmann on
            August 19, 2003.)
Exhibit 2   English translation of Shareholders' Agreement dated December 19,
            1999 by and between Elron Electronic Industries Ltd., Federmann
            Enterprises Ltd. and Heris Finanz Aktiengesellschaft (now known as
            Heris Aktiengesellschaft). (Incorporated by reference to Amendment
            No. 1 to the Schedule 13D filed by Michael Federmann on August 19,
            2003.)
Exhibit 3   Registration Rights Agreement dated July 5, 2000 by and among
            Elbit Systems Ltd., Elron Electronic Industries Ltd., Federmann
            Enterprises Ltd. and Heris Finanz Aktiengesellschaft (now known as
            Heris Aktiengesellschaft). (Incorporated by reference to Amendment
            No. 1 to the Schedule 13D filed by Michael Federmann on August 19,
            2003.)
Exhibit 4   English Summary of Loan Agreement dated July 28, 2004 by and among
            Michael Federmann, Federmann Enterprises Ltd. and Bank Leumi
            Le-Israel B.M.
Exhibit 5   English Summary of Security Agreements, dated July 28, 2004, by
            and between Federmann Enterprises Ltd. and Bank Leumi Le-Israel B.M.


                                       20

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>2
<FILENAME>ex4-sc13da080204.txt
<DESCRIPTION>LOAN AGREEMENT
<TEXT>

                                    EXHIBIT 4

            ENGLISH SUMMARY OF LOAN AGREEMENT BETWEEN FEL AND LENDER
                               DATED 28 JULY, 2004

In this summary capitalized terms not defined herein shall have the meaning
attached to them in Schedule 13-D (Amendment 2) to which this summary is
attached.

1.          Under the Loan Agreement, FEL undertook customary representations
            regarding its corporate existence, authority, legality, lack of
            contradicting agreements, the necessary approvals to enter into the
            Loan Agreement, its registered and issued share capital, the
            Issuer's registered and issued share capital, the validity of the
            purchase by FEL of 7,815,448 Ordinary Shares (the "Purchased
            Shares") and of the Associated Rights from Elron, the rights granted
            to FEL by virtue of the purchase of the Purchased Shares, the
            completeness of FEL's Financial Statements, the ownership by FEL of
            12,100,000 Ordinary Shares (prior to the purchase of the Purchased
            Shares) (the "Former Holdings") which are free and clear of any
            third party rights other than capital gain tax in the event of a
            sale, and FEL's right to create a pledge on the Purchased Shares.
            FEL also represented that the remainder of the purchase price paid
            for the Purchased Shares, in excess of the Loan, was paid by FEL,
            not as the result of a loan from any financial or banking
            institution. FEL undertook certain restrictions regarding its
            capital transactions, making of certain loans by it and its
            distribution of dividends and management fees.

2.          FEL has undertaken to use its best efforts to cause the Issuer to
            consent to the assignment of its rights under the Registration
            Rights Agreement with respect to the Purchased Shares to a third
            party who will purchase the Purchased Shares in the event of
            realization of the pledge. FEL also undertook, if so requested by
            the Lender, in the event of realization of the Pledge, to exercise
            its rights under the Registration Rights Agreement with respect to
            the Purchased Shares, not to exercise the piggy-back rights with
            respect to the Former Holdings, and not to exercise or transfer or
            assign its rights under the Registration Rights Agreement before the
            full repayment of the Loan.

3.          Subject to the provision of any law, FEL undertook to oppose any
            amendment to the Issuer's organizational documents that could
            adversely affect FEL's rights with respect to the Purchased Shares,
            or the Lender's rights, including without derogation, any amendment
            limiting the Issuer's right to distribute cash dividends.

4.          Subject to the provisions of any law and without harming Issuer's
            interests, FEL undertook to use its best efforts so that Issuer
            would approve the distribution of

                                       1
<PAGE>

            dividends, including from capital gains resulting from a sale of
            assets or a sale of activities, and against resolutions for
            distribution of non-cash dividends.

5.          FEL also undertook not to make certain organizational changes in its
            own corporate organizational structure, or issue new securities,
            without the Lender's prior approval.

6.          FEL undertook not to sell and not to take any action resulting in
            the sale of the Purchased Shares, and not to take any action
            resulting in the dilution or reduction of the number of the
            Purchased Shares, without the Lender's consent.

7.          FEL undertook not to enter into a Shareholders Agreement with
            respect to the Issuer and not to sell or transfer any of its
            holdings in the Issuer, including the Former Holdings, without the
            prior written consent of the Lender.

8.          Under the Loan Agreement the Lender has granted FEL three loans, one
            in the amount of $111,273,000, secured by 4,915,448 Ordinary Shares
            of Issuer, and two loans for a total of $51,000,000, secured by
            2,900,000 Ordinary Shares; the shares so pledged were the shares
            purchased from Elron. The pledge on the Purchased Shares include
            also any yield of the Purchased Shares and consideration for the
            Purchased Shares, and any rights granted or to be granted by virtue
            of the Purchased Shares. The Purchased Shares were registered in the
            name of the Trustee, who gave FEL a proxy to vote the Purchased
            Shares, which can be terminated upon the occurrence of an event of
            default under the Loan Agreement.

9.          FEL undertook to provide the Lender with additional securities in
            certain events, and also undertook, if necessary to repay the loan,
            to sell additional shares from part of the Former Holdings if and
            when so requested by the Lender.

10.         FEL undertook to provide the Lender with certain information
            relating to it, as well as the financial statements of the Issuer,
            immediately upon publication thereof, and to report to the Lender of
            any General Meeting of the Issuer not later than seven days before
            such meeting is convened. In this respect, FEL undertook to report
            to the Lender any proposed resolution regarding any amendment to the
            organizational documents of the Issuer, any merger or reorganization
            of the Issuer, any sale or purchase of a major asset of Issuer, any
            issuance of securities or convertible securities of the Issuer, any
            approval of a transaction of the Issuer with office holders or a
            controlling shareholder of Issuer, any increase of the registered
            share capital of Issuer, any decrease of capital (including
            distribution) of Issuer, any resolution under Section 314 (merger),
            350 and 351 (compromise or settlement proceedings) of the Israeli
            Companies Law, and any resolution for the voluntary liquidation
            and/or changes of the corporate structure and/or changes in the main
            business of the Issuer.

                                       2
<PAGE>

11.         The Loan Agreement includes customary default provisions in the
            event of which the Lender can immediately call the entire loan for
            repayment, including a liquidation, receivership, recovery and
            similar proceedings of the Issuer, termination, or suspension for
            more than 7 days of the trade in the Issuer's Shares on the Tel-Aviv
            Stock Exchange, the issuance of securities, including convertible
            securities of the Issuer other than as a result of the exercise of
            existing employees stock options, merger and spin off of the Issuer,
            the increase of the Issuer's registered share capital and the
            approval of insiders transaction, all unless the Lender has
            consented to such act in advance, FEL entering into a Shareholders
            Agreement with a third party without the prior approval of the
            Lender, and the percentage of the Ordinary Shares in Issuer held by
            FEL being diluted other than as a result of the conversion of
            existing employee stock options, without the Lender's consent.

12.         FEL undertook that in the event the pledge on the Purchased Shares
            is realized, upon such realization - any buyer purchasing at least
            5% of the outstanding Ordinary Shares of Issuer will be entitled to
            enter into a shareholders agreement with FEL with rights similar to
            the rights that were held by Elron under its Shareholders Agreement
            with FEL and HF.


                                       3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>3
<FILENAME>ex5-sc13da080204.txt
<DESCRIPTION>PLEDGE OF SHARES AND RIGHTS THEREBY
<TEXT>
                                    Exhibit 5

              ENGLISH SUMMARY OF SECURED DEBENTURES/DEEDS OF PLEDGE
                      (PLEDGE OF SHARES AND RIGHTS THEREBY)
                               Dated July 28, 2004

In this summary capitalized terms not defined herein shall have the meaning
attached to them in Schedule 13-D (Amendment 2) to which this summary is
attached.

Pursuant to the Loan Agreement dated 28 July, 2004, FEL has entered into two
Secured Debentures/Deeds of Pledge whereby it pledged:
(1)    4,915,448 Ordinary Shares; and
(2)    2,900,000 Ordinary Shares
in favor of Bank Leumi Le-Israel B.M. (the "Lender").

Both Deeds of Pledge are identical in terms, except that one of them refers to
the number of Ordinary Shares specified in (1) and the other to the number of
Ordinary Shares specified in (2) above. The Deeds of Pledge secure the complete
repayment of all amounts due by FEL to the Lender with respect to the Loan
provided by the Lender for the purpose of purchasing 7,815,448 Ordinary Shares
from Elron.

The Pledge covers the said Ordinary Shares (the "Pledged Shares") and all yields
and rights therefrom. FEL made customary representations, undertook to transfer
the Pledged Shares to an affiliate of the Lender (the "Trustee"), not to
transfer in any way the Pledged Shares or any part thereof, not to enter into
any voting agreement with respect to the Pledged Shares without the prior
consent of the Lender, to provide the Lender with certain public information
with respect to the Issuer, to oppose any amendment to the Issuers
organizational documents which may adversely affect FEL's rights with respect to
the Pledged Shares and/or the Lender's rights.

The Trustee granted FEL a Proxy to participate and vote in General Meetings of
the shareholders of Issuer. The Proxy can be revoked by the Lender upon the
occurrence of an event of default under the Loan Agreement. In the event of such
default the Lender is entitled to call all amounts due to it from FEL for
immediate payment and exercise the Pledge. In addition, FEL has given the
Trustee irrevocable instructions in accordance with the Deeds of Pledge.

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
