1.

Participation and funding of legal entities established in Israel in indirect actions of the Seventh EC Framework Programme shall follow the conditions laid down for ‘associated countries’ in Regulation (EC) No 2321/2002 modified by Regulation (EC) No 1906/2006. In case the Community makes provisions for the implementation of Articles 169 and 171 of the Treaty establishing the European Community, Israel shall be allowed to participate in the legal structures created under these provisions subject to the decisions and regulations that will be adopted for the establishment of these legal structures and provided that these decisions and regulations will become applicable in Israel. The Joint Committee shall decide on the applicability of these decisions and regulations in Israel.

Legal entities established in Israel shall be eligible for participation in indirect actions based on Articles 169 and 171 of the Treaty establishing the European Community under the same conditions as legal entities established in the Member States.

Legal entities established in Israel shall be eligible, under the same conditions as legal entities established in the Member States, for loans the EIB makes in support of research objectives set out under the Seventh EC Framework Programme (Risk-Sharing Finance Facility).

2.

Legal entities of Israel shall be taken into consideration, alongside those of the European Community, for the selection of an adequate number of independent experts for the tasks and under the conditions foreseen in Articles 17 and 27 of Regulation (EC) No 1906/2006 and for participation in various groups and advisory Committees of the Seventh EC Framework Programme taking into account the skills and knowledge appropriate to the tasks assigned to them.

3.

In conformity with Regulation (EC) No 1906/2006 and the European Community's Financial Regulations, a grant agreements and/or contracts concluded by the Community with any legal entity of Israel in order to perform an indirect action shall provide for controls and audits to be carried out by, or under the authority of, the Commission or the Court of Auditors of the European Communities. In a spirit of cooperation and mutual interest, the relevant authorities of Israel shall provide any reasonable and feasible assistance as may be necessary or helpful under the circumstances to perform such controls and audits.

1.

The participation of legal entities established in the Community, created under the national law of one of the Member States of the European Union or under Community law, in projects of Israel research and development programmes may require the joint participation of at least one Israeli legal entity. Proposals for such participation shall be submitted jointly, where required, with the Israeli legal entity/ies.

2.

Subject to paragraph 1 and to Annex II, the rights and obligations of legal entities established in the Community participating in Israel's research projects within research and development programmes, the terms and conditions applicable for the submission and evaluation of proposals and for the granting and conclusion of grant agreements and/or contracts in such projects shall be subject to Israel' laws, regulations and government directives governing the operation of research and development programmes, as well as national security constraints where applicable, as applicable to Israeli legal entities and assuring equitable treatment, taking into account the nature of the cooperation between Israel and the Community in this field.

Funding of legal entities established in the Community participating in Israel' research projects within research and development programmes shall be subject to Israel's laws, regulations and government directives governing the operation of research and development programmes, as well as national security constraints where applicable, as applicable to non-Israeli legal entities participating in Israel's research projects within research and development programmes. In the case where funding is not provided to the non-Israeli legal entities, Community legal entities shall cover their own costs, including their relative share of the project's general management and administrative costs.

3.

Depending on the nature of the project, proposals may be submitted to:

4.

Israel shall regularly inform the Community and Israeli legal entities of current Israeli programmes and participation opportunities for legal entities established in the Community.

1.

Each Party shall ensure that the intellectual property rights of legal entities of the other Party participating in activities carried out pursuant to this Agreement, and the related rights and obligations arising from such a participation, shall be consistent with the relevant international conventions that are applicable to the Parties, including the TRIPS Agreement (Agreement on trade-related aspects of intellectual property rights administered by the World Trade Organisation) as well as the Berne Convention (Paris Act 1971) and the Paris Convention (Stockholm Act 1967).

2.

Legal entities of Israel participating in an indirect action of the Seventh EC Framework Programme shall have rights and obligations on intellectual property under the conditions laid down in Regulation (EC) No 1906/2006 and in the grant agreements and/or contracts concluded with the European Community accordingly, and that shall comply with paragraph 1. Where Israel participates in an indirect action of the Seventh EC Framework Programme implemented pursuant to Article 169 of the Treaty establishing the European Community, Israel shall have the same rights and obligations on intellectual property as those of the participating Member States laid down in the relevant decision of the European Parliament and the Council and the grant agreement and/or contract concluded with the European Community accordingly, and that shall comply with paragraph 1.

3.

Legal entities of the Community participating in Israel’s research programme or projects shall have the same rights and obligations on intellectual property as those of legal entities established in Israel participating in such research programme or projects, and that shall comply with paragraph 1.

1.

Except if otherwise specifically agreed by the Parties, the following rules shall apply to knowledge generated by the Parties in the course of activities carried out within Article 1(2) of this Agreement:

2.

Except if otherwise specifically agreed by the Parties, the following rules shall apply to scientific literary works of the Parties:

3.

Except if otherwise specifically agreed by the Parties, the following rules shall apply to undisclosed information of the Parties:

1.

The financial contribution of Israel to the Seventh EC Framework Programme shall be established on a yearly basis in proportion to, and in addition to, the amount available each year in the general budget of the European Union for commitment appropriations needed for the implementation, management and operation of the Seventh EC Framework Programme.

2.

The proportionality factor governing the contribution of Israel shall be obtained by establishing the ratio between the gross domestic product of Israel, at market prices, and the sum of gross domestic products, at market prices, of the Member States of the European Union and Israel. This ratio shall be calculated on the basis of the latest statistical data pertaining to the same year from the International Bank for Reconstruction and Development, available at the time of publication of the preliminary draft budget of the European Union.

3.

The Commission shall communicate to Israel, as soon as possible, and at the latest on 1 September of the year before each financial year, the following information together with relevant background material:

Once the general budget has been finally adopted, the Commission shall communicate to Israel, in the statement of expenditure corresponding to Israel’s participation, the final amounts referred to in the first subparagraph.

1.

The Commission shall issue, at the latest in January and June of each financial year, a call for funds to Israel corresponding to its contribution under this Agreement. These calls for funds shall provide, respectively, for the payment:

of six-twelfths of Israel’s contribution not later than 60 days after receipt of the calls for funds. However, the six-twelfths to be paid not later than 60 days after receipt of the call issued in January shall be calculated on the basis of the amount set out in the statement of revenue of the preliminary draft budget: the regularisation of the amount thus paid shall occur with the payment of the six-twelfths not later than 30 days after receipt of the call for funds issued at the latest in June.

For the first year of implementation of this Agreement, the Commission shall issue a first call for funds within 30 days of its provisional application. Should this call be issued after 15 June, it shall provide for the payment of twelve/twelfths of Israel’s contribution within 60 days, calculated on the basis of the amount set out in the statement of revenue of the budget.

2.

The contribution of Israel shall be expressed and paid in euro. Payment by Israel shall be credited to the Community programmes as budgetary revenue allocated to the appropriate budget heading in the statement of revenue of the general budget of the European Union. The Financial Regulation applicable to the general budget of the European Union shall apply to the management of the appropriations.

3.

Israel shall pay its contribution under this Agreement according to the schedule in paragraph 1. Any delay in the payment of the contribution shall give rise to the payment of default interest by Israel on the outstanding amount from the due date. The interest rate shall be the rate applied by the European Central Bank to its main refinancing operations in euro on the due date, increased by 1,5 percentage points.

In case the delay in the payment of the contribution is such that it may significantly jeopardise the implementation and management of the programme, participation in the programme of Israel for the concerned financial year will be suspended by the Commission following the absence of payment 20 working days after a formal letter of reminder sent to Israel, without prejudice to the Community’s obligations according to grant agreements and/or contracts already concluded pertaining to the implementation of selected indirect actions.

4.

At the latest on 31 May of the year following a financial year, the statement of appropriations for the Seventh EC Framework Programme that financial year shall be prepared and transmitted to Israel for information, according to the format of the Commission’s revenue and expenditure account.

5.

The Commission, at the time of the closure of the accounts relating to each financial year, within the framework of the establishment of the revenue and expenditure account, shall proceed to the regularisation of the accounts with respect to the participation of Israel. This regularisation shall take into consideration modifications which have taken place, either by transfer, cancellations, carryovers, decommitments, or by supplementary and amending budgets during the financial year. This regularisation shall occur at the time of the second payment for the next financial year, and for the last financial year in July 2014. Further regularisation shall occur every year until July 2016.

1.

In accordance with Council Regulation (EC, Euratom) No 1605/2002, amended by Council Regulation (EC, Euratom) No 1995/2006 (1) on the Financial Regulation applicable to the general budget of the European Communities and Commission Regulation (EC, Euratom) No 1248/2006 (2) amending Regulation (EC, Euratom) No 2342/2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities and with the other rules referred to in this Agreement, the grant agreements and/or contracts concluded with participants in the programme established in Israel may provide for scientific, financial, technological or other audits to be conducted at any time on the premises of the participants and of their subcontractors by Commission agents or by other persons mandated by the Commission.

2.

Commission agents, the European Court of Auditors and other persons mandated by the Commission shall have appropriate access to sites, works and documents and to all the information required in order to carry out such audits, including in electronic form, subject to the inclusion of this right of access that shall be stated explicitly in the grant agreements and/or contracts concluded to implement the instruments referred to in this Agreement with participants from Israel.

3.

The audits may be conducted after the Seventh EC and Euratom Framework Programmes or this Agreement expire, on the terms laid down in the grant agreements and/or contracts in question.

4.

The competent Israeli authority designated by the Israeli government shall be informed in advance of the audits conducted on Israeli territory. Such notification shall not be a legal precondition for carrying out such audits.

1.

Within the framework of this Agreement, the Commission (OLAF) shall be authorised to carry out on-the-spot checks and inspections in the premises of participants and their subcontractors from Israel, in accordance with the terms and conditions laid down in Council Regulation (Euratom, EC) No 2185/96 (3).

2.

On-the-spot checks and inspections shall be prepared and conducted by the Commission in close collaboration with the competent Israeli authority designated by the Israeli government as stipulated in Appendix A of this Annex. The designated authority shall be notified a reasonable time in advance of the object, purpose and legal basis of the checks and inspections, so that they can provide assistance. To that end, the officials of the competent Israeli authorities may participate in the on-the-spot checks and inspections.

3.

If the Israeli authorities concerned so wish, the on-the-spot checks and inspections may be carried out jointly by the Commission and them.

4.

Where the participants in the Seventh EC Framework Programme resist an on-the-spot check or inspection, the Israeli authorities, acting in accordance with national rules and regulations, shall assist the Commission inspectors, to a reasonable extent as needed to allow them to fulfil their duty in carrying out an on-the-spot check or inspection.

5.

The Commission shall report as soon as possible to the competent Israeli authority any fact or suspicion relating to an irregularity which has come to its notice in the course of the on-the-spot check or inspection. In any case, the Commission shall be required to inform the abovementioned authority of the result of such checks and inspections.

1.

For the purposes of proper implementation of this Annex, the competent Israeli and Community authorities shall regularly exchange information, unless forbidden or unauthorized by national rules and regulations and, at the request of one of the Parties, shall conduct consultations.

2.

The competent Israeli authorities shall inform the Commission within reasonable time of any fact or suspicion which has come to their notice relating to an irregularity in connection with the conclusion and implementation of the grant agreements and/or contracts concluded in application of the instruments referred to in this Agreement.