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PROSPECTUS	Filed Pursuant to Rule 424(B)(3)

	Registration No. 333-128042

	•	each outstanding share of Elscint will be exchanged for 0.53 ordinary shares of EMI; and
	•	current EMI shareholders will continue to own their existing shares after the merger.

For EMI Shareholders:		For Elscint Shareholders:
October 27, 2005		October 27, 2005
at 10:00 a.m. Israel time		at 11:00 a.m. Israel time
at Elbit Medical Imaging Ltd.		at Elscint Ltd.
13 Mozes Street		13 Mozes Street
Tel Aviv 67442, Israel		Tel Aviv 67442, Israel

Mordechay Zisser		Abraham (Rami) Goren
Executive Chairman of the Board of		Executive Chairman of the Board of
Directors of Elbit Medical Imaging Ltd.		Directors of Elscint Ltd.

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	Elbit Medical Imaging Ltd.
	13 Mozes Street
	Tel Aviv 67442, Israel
	Telephone: 972-3-608-6000
	Facsimile: 972-3-695-3080

	Attention:	Shimon Yitzhaki, President and Chief Financial Officer

	Elscint Ltd.
	13 Mozes Street
	Tel Aviv 67442, Israel
	Telephone: 972-3-608-6020
	Facsimile: 972-3-696-2022

	Attention:	Abraham (Rami) Goren, Executive Chairman of the Board of Directors

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	To consider and vote upon a proposal to:

	•	adopt the terms and conditions of the Agreement and Plan of Merger, dated as of August 21, 2005, by and between EMI and Elscint Ltd., and
	•	approve the merger of EMI and Elscint by way of share exchange, in accordance with the merger agreement.

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	By Order of the Board of Directors,
	Mordechay Zisser
	Executive Chairman of the
	Board of Directors

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	To consider and vote upon a proposal to:

	•	adopt the terms and conditions of the Agreement and Plan of Merger, dated as of August 21, 2005, by and between Elbit Medical Imaging Ltd. (“EMI”) and Elscint, and
	•	approve the merger of EMI and Elscint, under which the Elscint shareholders, other than EMI and Elscint, will receive 0.53 EMI ordinary shares in exchange for each of their Elscint ordinary shares, in accordance with the merger agreement.

	(i) the majority vote at the special meeting includes at least one-third of the total votes of shareholders having no personal interest in the proposal, participating at the special meeting in person or by proxy (votes abstaining shall not be taken into account in counting the above-referenced shareholders’ votes); or
	(ii) the total number of shares of the shareholders mentioned in clause (i) above that are voted against such proposal does not exceed one percent (1%) of the total voting rights in Elscint.

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	(i) a personal interest of that person’s relative (i.e. spouse, brother or sister, parent, grandparent, child, child of such person’s spouse or the spouse of any of the above); or
	(ii) a personal interest of another entity in which that person or his or her relative (as defined above) holds five percent (5%) or more of such entity’s issued shares or voting rights, has the right to appoint a director or the chief executive officer of such entity, or serves as director or chief executive officer of such entity.

	By Order of the Board of Directors,
	Abraham (Rami) Goren
	Executive Chairman of the
	Board of Directors

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			Page
QUESTIONS AND ANSWERS ABOUT THE EMI/ ELSCINT MERGER				iv
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS				viii
SUMMARY				1
	The Companies (See Pages 73 and 74)			1
	The Merger (see Page 39)			1
	Our Recommendations to Shareholders (See Page 41)			2
	Opinions of Financial Advisors (See Pages 43 through 54)			2
	The EMI Special Meeting and Vote Required (See Page 32)			3
	The Elscint Special Meeting and Vote Required (See Page 35)			3
	What Shareholders Will Receive in the Merger (See Page 66)			4
	Treatment of Elscint Options (See Page 56)			5
	Our Reasons for the Merger (See Page 41)			5
	Conditions to the Merger (See Page 71)			5
	Termination of the Merger Agreement (See Page 72)			6
	Ownership of EMI Following the Merger			7
	Interests of Officers, Directors and Affiliates of EMI in the Merger (See Page 54)			7
	Interests of Officers, Directors and Affiliates of Elscint in the Merger (See Page 54)			7
	Required Approvals (See Page 68)			7
	Accounting Treatment (See Page 56)			8
	Material Tax Considerations (See Page 57)			8
	Objection and Appraisal Rights (See Page 65)			9
	Comparative Per Share Market Price Information			9
	Listing of EMI Ordinary Shares			10
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF EMI AND ELSCINT				11
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION OF EMI AND ELSCINT				17
RISK FACTORS				20
	Risks Relating to the Merger			20
	Risks Relating to EMI Following the Merger			22
	Risks Affecting Elscint’s Businesses			29
THE EMI SPECIAL MEETING				32
	General			32
	Purpose of the EMI Special Meeting			32
	Date, Place and Time			32
	Record Date			32
	Voting Rights; Quorum; Objection and Appraisal Rights			32
	Recommendation of EMI’s Board of Directors			33
	Vote Required			33
	Voting by Proxy			34
	Solicitation of Proxies			34

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			Page
THE ELSCINT SPECIAL MEETING				35
	General			35
	Purpose of the Elscint Special Meeting			35
	Date, Place and Time			35
	Record Date			35
	Voting Rights; Quorum; Objection and Appraisal Rights			35
	Recommendation of Elscint’s Board of Directors			36
	Vote Required			36
	Voting by Proxy			37
	Solicitation of Proxies			38
THE MERGER				39
	Background of the Merger			39
	Recommendations of the Board of Directors			41
	Our Reasons for the Merger			41
	Opinion of EMI Financial Advisor			43
	Opinion of Elscint Financial Advisor			49
	Interests of Certain Persons in the Merger			54
	Accounting Treatment			56
	Tax Considerations			57
	Consequences of the Merger			60
	Ownership of EMI Ordinary Shares			62
	Regulatory Filings and Approvals			64
	Listing of EMI Ordinary Shares			65
	Resale of EMI Ordinary Shares			65
	Objection and Appraisal Rights			65
THE MERGER AGREEMENT				66
	Structure of the Merger			66
	What Shareholders Will Receive in the Merger			66
	Assets and Liabilities; Business			66
	Fractional Shares			66
	Surrender and Exchange Procedure			66
	Transfers of Shares			68
	Options			68
	Representations and Warranties			68
	Required Approvals			68
	Closing			69
	Covenants			69
	Conditions to the Merger			71
	Actions After the Closing of the Merger			72
	Expenses			72
	Modification or Termination of the Merger Agreement			72

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		Page
INFORMATION ABOUT EMI			73
INFORMATION ABOUT ELSCINT			74
DESCRIPTION OF EMI SHARE CAPITAL FOLLOWING THE MERGER			75
COMPARISON OF SHAREHOLDER RIGHTS			76
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION			77
OTHER MATTERS			82
LEGAL MATTERS			82
EXPERTS			82
WHERE YOU CAN FIND MORE INFORMATION			83
Annex A       Agreement and Plan of Merger By and Between Elbit Medical Imaging Ltd. and Elscint Ltd. dated as of August 21, 2005			A-1
Annex B  Opinion of C.E. Unterberg, Towbin			B-1
Annex C  Opinion of Oppenheimer & Co. Inc.			C-1

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Q:		What is the proposed transaction?
A:		The merger agreement provides for the merger of EMI, an Israeli company whose shares are traded on the NASDAQ and TASE, and Elscint, an Israeli company whose shares are traded on the NYSE, by way of a share exchange. As a result of the merger, Elscint will become a wholly-owned subsidiary of EMI.
Q:		Will Elscint survive the proposed merger?
A:		Yes, except that it will become a private company that is wholly owned by EMI.
Q:		Why are EMI and Elscint proposing the merger?
A:		The merger is intended to allow the merging companies to exploit opportunities which may have been unavailable to either EMI or Elscint separately and is anticipated to result in increased organizational and business efficiency and reduce operational costs. The reasons why each of EMI and Elscint are proposing the merger are discussed in more detail later in this document. See “The Merger — Our Reasons for the Merger” beginning on page 41.
Q:		Are there risks I should consider in deciding whether to vote for the merger?
A:		Yes. You should review the risks as discussed in the section “Risk Factors” beginning on page 20. These risks include, among others, possible difficulties in integrating two companies that have previously operated independently and in achieving the merger’s objectives.
Q:		What will Elscint shareholders receive for their shares?
A:		If the merger is completed, Elscint shareholders, other than EMI and Elscint, will receive 0.53 ordinary shares of EMI in exchange for each outstanding ordinary share of Elscint that they hold. This ratio is called the exchange ratio. We expect that, immediately after completion of the merger, the current shareholders of Elscint, other than EMI and Elscint, will own approximately 13.71% of the outstanding ordinary shares of EMI and approximately 13.88% of the voting rights in EMI.
Q:		When do you expect the merger to be completed?
A:		We are working towards completing the merger as quickly as possible and are currently targeting the end of the fourth quarter of 2005 for a closing. We anticipate completing the merger soon after the satisfaction of the conditions to the merger, including the receipt of the approval of the shareholders of EMI and Elscint and the receipt of the final court order approving the merger.
Q:		Should I send in my Elscint share certificates now?
A:		No. After the merger is completed, EMI will send Elscint shareholders written instructions explaining how to exchange their share certificates for one or more certificates representing the appropriate number of EMI shares. EMI shareholders will keep their share certificates.
Q:		Will I have to pay brokerage commissions when I exchange my shares?
A:		If you are the record owner of your Elscint shares and you exchange your Elscint shares for EMI shares in the merger, you will not have to pay brokerage fees or similar expenses. If you own your Elscint shares through a broker or other nominee and your broker exchanges your Elscint shares on your behalf, your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine whether any charges will apply. Neither EMI nor Elscint will be obligated to pay for or reimburse you for any broker or nominee charges.

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Q:		What periodic reports can I expect to receive as an EMI shareholder?
A:		After the merger, former Elscint shareholders will be entitled to receive the same periodic reports that are currently available to EMI shareholders under Israeli law, U.S. law and NASDAQ rules. These reports include annual reports with audited annual consolidated financial statements and proxy statements and related materials for annual and special meetings of shareholders.
Q:		What shareholder approval is needed to approve the merger?
A:		EMI — The affirmative vote of a majority in number of the shareholders participating, in person or by proxy, at the special meeting, excluding abstentions, who collectively hold seventy-five (75%) of the shares represented at the voting is required to approve the merger and the merger agreement.
		Elscint — The affirmative vote of a majority in number of the shareholders participating, in person or by proxy, at the special meeting, excluding abstentions, who collectively hold seventy-five (75%) of the shares represented at the voting, is required to approve the merger and the merger agreement. In addition, either:
		(i)  the majority vote at the special meeting must include at least one-third of the total votes of shareholders having no personal interest in the proposal, participating at the special meeting in person or by proxy (votes abstaining shall not be taken into account in counting the above-referenced shareholders’ votes); or
		(ii) the total number of shares of the shareholders mentioned in clause (i) above that are voted against the proposal does not exceed one percent (1%) of the total voting rights in Elscint.

	Under the Israeli Companies Laws of 1999, or the Israeli Companies Law, each shareholder that attends the special meeting in person shall, prior to exercising such shareholder’s voting rights at the special meeting advise Elscint whether or not that shareholder has a personal interest in the approval of the merger and the merger agreement. Each shareholder that delivers a signed proxy card to Elscint must indicate on the proxy card whether or not that shareholder has a personal interest in the approval of the merger and the merger agreement. Shareholders who do not indicate whether or not they have a personal interest in the approval of the merger and the merger agreement will not be eligible to vote their shares as to such proposal.
	Under the Israeli Companies Law, a personal interest means a personal interest of a person in an act or transaction of a company, including:

		(i)  a personal interest of that person’s relative (i.e. spouse, brother or sister, parent, grandparent, child, child of such person’s spouse or the spouse of any of the above); or
		(ii) a personal interest of another entity in which that person or his or her relative (as defined above) holds five percent (5%) or more of such entity’s issued shares or voting rights, has the right to appoint a director or the chief executive officer of such entity, or serves as director or chief executive officer of such entity.

	A personal interest resulting merely from holding Elscint’s shares will not be deemed a personal interest.

		EMI, which owns directly and through its wholly-owned subsidiary, Elbit Medical Holdings Ltd., approximately sixty-one percent (61%) of Elscint’s outstanding shares, has agreed to vote in favor of the merger.
Q:		What if I don’t vote?
A:		EMI shareholders — If you fail to vote by proxy or in person, your shares that are represented by your proxy or owned by you will be deemed not to have been cast for the purpose of the approval of the merger and the merger agreement and, accordingly, such shares shall not be counted in calculating the percentage of affirmative votes required for approval of the merger and the merger agreement.
		Elscint shareholders — If you fail to vote by proxy or in person, or fail to indicate whether you have a personal interest in the proposed merger and merger agreement in Elscint’s special meeting, the shares represented by your proxy or owned by you will be deemed not to have been cast for the purpose of the approval of the merger

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		and the merger agreement and, accordingly, such shares shall not be counted in calculating the percentage of affirmative votes required for approval of the merger and the merger agreement.
Q:		What do I need to do now?
A:		After you have carefully read this joint proxy statement/ prospectus, please fill out and sign the enclosed proxy card, and then mail it in the enclosed return envelope as soon as possible, so that your shares may be voted at the appropriate shareholders meeting. In order for your shares to be voted at each special meeting if you choose to vote by proxy, your proxy card must be received by EMI at least 24 hours prior to the special meeting and your proxy card must be received by Elscint at least 48 hours prior to the special meeting. The chairman of each special meeting may, at his or her discretion, accept a proxy after such time. If a proxy is not received in the manner described above, it will not be valid at the special meeting. You can also attend the appropriate special meeting and vote in person if you are the record holder of the shares. If your shares are held in “street name” in order to vote your shares in person you should obtain a legal proxy from the record holder to vote the shares at the special meeting on behalf of the record holder as well as a statement from such record holder that it did not vote such shares.

	If you hold EMI ordinary shares through the nominee company of Bank Discount Le’Israel Ltd. you must deliver EMI an ownership certificate confirming your ownership of EMI’s shares on the record date approved by a recognized financial institution.

Q:		What does my board of directors recommend?
A:		EMI: The EMI board of directors unanimously (without the participation of directors who have personal interests in the approval of the merger) recommends that you vote “FOR” approval of the merger and the merger agreement.
		Elscint Elscint: The Elscint board of directors unanimously (without the participation of directors who have personal interests in the approval of the merger) recommends that you vote “FOR” approval of the merger and the merger agreement.
Q:		Am I entitled to appraisal rights?
A:		Under Israeli Law, which governs the merger, you are not entitled to formal appraisal rights. However, since the merger will be effected pursuant to sections 350 and 351 of the Israeli Companies Law, it is subject to approval of an Israeli District Court, and the District Court (in our case, the Tel Aviv-Jaffa District Court) may provide you a remedy if you object to the merger within the timeframe and in the manner prescribed by the Israeli Companies Law, the regulations promulgated thereunder and the District Court.
		Pursuant to regulations promulgated under the Israeli Companies Law, unless the District Court determines otherwise, you may raise your objections to the merger by filing an application with the Court no later than 10 days following the filing by EMI and Elscint of the second motion with the District Court, which is expected to occur promptly following the approval of the merger by EMI’s and Elcint’s shareholders at the special meetings to be convened on October 27, 2005 and the fulfillment of all of the conditions precedent set forth in the merger agreement.
		The application would typically be filed as a written application supported by an affidavit.
		You should be aware that neither the Israeli Companies Law nor the regulations promulgated under that law specify the remedies available to you in connection with the merger.
Q:		If my shares are held in “street name” by my broker, will my broker vote my shares for me?
A:		Your broker will vote your shares only if you provide instructions to him or her on how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. Your broker will not be able to vote your shares without instructions from you, including, if you are a shareholder of Elscint, as to whether or not you have a personal interest in the approval of the merger and the merger agreement.

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Q:		How will abstentions be treated in calculating a quorum and in tallying the votes at the special meetings?
A:		Abstentions are taken into account for purposes of determining whether the shareholders present at each special meeting constitute a quorum. Abstentions will not be considered as either a vote “for” or “against” the proposal considered at either special meeting.
Q:		Who is the exchange agent for the merger?
A:		American Stock Transfer & Trust Company will act as the exchange agent.
Q:		Where can I find more information about the companies?
A:		You can find more information about EMI and Elscint from various sources described under “Where You Can Find More Information” beginning on page 83 and the description of the businesses beginning on page 73.
Q:		Whom can I contact with questions about the merger or on how to submit a proxy or if I need additional copies of the joint proxy statement/ prospectus or accompanying documents?
A:		If you are an EMI shareholder, you should contact:

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	Elscint shareholders, other than EMI and Elscint, will receive 0.53 EMI ordinary shares for each share of Elscint they own regardless of changes in the market price of EMI ordinary shares or Elscint ordinary shares.

	•	the business, operations or prospects of EMI or Elscint may change;
	•	market assessments of the likelihood that EMI and Elscint will complete the merger and the timing of the completion;
	•	the prospects of EMI and Elscint following the merger;
	•	regulatory considerations; and
	•	general market, political and economic conditions.

	The merger may not result in the benefits that EMI and Elscint currently anticipate.

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	Shareholders of EMI will experience an immediate dilution of their relative holdings upon completion of the merger.

	The merger is subject to the receipt of consents and approvals from various entities, which may impose conditions on, jeopardize or delay completion of the merger or reduce the anticipated benefits of the merger.

	If Elscint is a passive foreign investment company, the merger may be a taxable transaction for U.S. Holders of Elscint ordinary shares.

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	The ultimate tax consequences of the merger will not be known at the time of the shareholder vote.

	The violation of certain conditions determined by the Ordinance and/or the pre-ruling to be issued by the Israeli tax authorities may result in the merger not being treated as tax exempt by the Israeli tax authorities and the imposition of capital gains tax on the exchange of shares.

	The market prices of EMI ordinary shares have been and may continue to be volatile.

	•	a significant number of shareholders who receive EMI ordinary shares in the merger may sell those shares on the open market after the merger is completed;
	•	factors that generally affect the market for stocks of companies engaged in the fields in which EMI operates;
	•	political, economic or other developments affecting Israel and other countries;
	•	economic and other external factors;
	•	quarter-to-quarter fluctuations in EMI’s financial results; and
	•	changes in financial estimates by securities analysts following the merger.

	EMI and Elscint have significant capital needs and additional financing may not be available.

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	EMI’s and Elscint’s high leverage could adversely affect EMI’s and Elscint’s ability to operate their businesses.

	•	EMI and Elscint could be more vulnerable to general adverse economic and industry conditions;
	•	EMI and Elscint may find it more difficult to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements;
	•	EMI and Elscint will be required to dedicate a substantial portion of their cash flow from operations to the payment of principal and interest on our debt, reducing the available cash flow to fund other projects;
	•	EMI and Elscint may have limited flexibility in planning for, or reacting to, changes in their businesses and in their industries; and
	•	EMI and Elscint may have a competitive disadvantage relative to other companies in their business segments with less debt.

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	One of EMI’s shareholders beneficially owns a substantial amount of EMI ordinary shares and therefore, effectively controls EMI’s affairs.

	EMI and Elscint are subject to various risks related to EMI’s and Elscint’s operations in Eastern Europe, including economic and political instability, political and criminal corruption and the lack of experience and unpredictability of the civil justice system.

	Security and economic conditions in Israel may affect EMI’s and its subsidiaries’ operations.

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	Many of EMI’s and Elscint’s directors, officers and employees are obligated to perform annual military reserve duty in Israel. EMI and Elscint cannot assess the potential impact of these obligations on their businesses.

	It may be difficult to enforce a U.S. judgment against EMI, Elscint and their officers and directors or to assert U.S. securities laws claims in Israel or serve process on EMI and substantially all of its officers and directors.

	(i) adequate service of process has been effected and the defendant has had a reasonable opportunity to be heard;
	(ii) such judgment and the enforcement thereof are not contrary to the law, public policy, security or sovereignty of the State of Israel;
	(iii) such judgment was not obtained by fraud and does not conflict with any other valid judgment in the same matter between the same parties;
	(iv) an action between the same parties in the same matter is not pending in any Israeli court at the time the lawsuit is instituted in the foreign court; and
	(v) the judgment is no longer subject to a right of appeal.

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	If EMI is characterized as a passive foreign investment company for U.S. federal income tax purposes, EMI’s U.S. shareholders may suffer adverse tax consequences.

	Pending litigation could harm EMI’s and Elscint’s businesses.

	EMI is dependent on engaging third parties to enter into lease agreements, and on obtaining and retaining attractive, high customer traffic locations.

	Suitable locations are critical to the success of a commercial and entertainment mall.

	•	within the city center, with well-developed transportation infrastructures (road and rail) in close proximity to facilitate customer access; and
	•	within local areas with sufficient population to support the malls. EMI cannot be certain that it will be able to find sites in the target cities which meet these criteria, either at all or at viable prices.

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	Competition is increasing rapidly in Eastern Europe.

	Delays in the completion of construction projects could affect EMI’s success.

	•	delays in obtaining zoning and other approvals;
	•	the unavailability of materials and labor;
	•	the abilities of sub-contractors to complete work competently and on schedule;
	•	the surface and subsurface condition of the land underlying the project;
	•	environmental uncertainties;
	•	extraordinary circumstances or acts of god; and
	•	ordinary risks of construction that may hinder or delay the successful completion of a particular project.

	InSightec is currently dependent on sales of the ExAblate 2000 for the treatment of uterine fibroids for virtually all of its revenue.

	If the ExAblate 2000 does not achieve broad market acceptance for the treatment of uterine fibroids, InSightec will not be able to generate sufficient sales to support InSightec’s business.

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	If physicians, hospitals and other healthcare providers are unable to obtain coverage and sufficient reimbursement from third party healthcare payors for treatment procedures using the ExAblate 2000, InSightec may be unable to generate sufficient sales to support its business.

	InSightec’s future growth substantially depends on its ability to develop and obtain regulatory clearance for additional treatment applications for the ExAblate 2000.

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	The ExAblate 2000 is compatible only with certain of GE Healthcare’s Magnetic Resonance Imaging (MRI) systems, which may limit InSightec’s potential market.

	The value of Elscint’s investment in its hotel properties is subject to various risks related to ownership and operation of real property.

	•	changes in global and national economic conditions, including global or national recession;
	•	a general or local slowdown in the real property market which would make it difficult to sell a property;
	•	political events that may have a material adverse effect on the hotel industry;
	•	competition from other lodging facilities, and over-supply of hotel rooms in a specific location;
	•	material changes in operating expenses, including real property tax systems or rates;
	•	changes in the availability, cost and terms of financing;
	•	the effect of present or future environmental laws;
	•	the ongoing need for capital improvements and refurbishments; and
	•	material changes in governmental rules and policies.

	The failure to comply with government regulation may adversely affect Elscint’s business and results of operations.

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	The hotels and leisure industry may be affected by economic conditions, oversupply, travel patterns, weather and other conditions beyond Elscint’s control which may adversely affect Elscint’s business and results of operations.

	Competition in the hotels and leisure industry could have a material adverse effect on Elscint’s business and results of operations.

	•	convenience of location and accessibility to business centers;
	•	room rates;
	•	quality of accommodations;
	•	name recognition;
	•	quality and nature of service and guest facilities provided;
	•	reputation;
	•	convenience and ease of reservation systems; and
	•	the supply and availability of alternative lodging.

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	Elscint is dependent on engaging third parties to enter into lease agreements, and on obtaining and retaining high customer traffic for its entertainment and commercial center in Herzliya, Israel, known as the Arena.

	Elscint is dependent on the presence of anchor tenants in the Arena.

	Elscint’s investment in Gamida Cell Ltd. is speculative in nature and Elscint may never realize any revenues or profits from this investment.

	•	The period of time which may elapse between the initial stage and the stage of development of marketable biotechnology products or services may be protracted.
	•	Products in the biotechnology field are required to undergo clinical tests, either in compliance with the requirements of the FDA or the requirements of competent regulatory authorities in other countries where target markets are identified. Failure to obtain regulatory approvals for the marketing of such products could have a material adverse effect on Gamida’s business and on Elscint’s investment in Gamida.
	•	The products and services of Gamida may face competition from alternative sources, many of which have greater financial resources than it, and have well developed marketing networks which Gamida currently lack.
	•	The ability to receive financial resources for the further development of Gamida’s products.

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	Note to shareholders in street name

	Appraisal rights

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	•	complete and submit a properly executed new proxy card bearing a later date, no later than 24 hours prior to the special meeting; or
	•	revoke the proxy, by providing written notice of such revocation to EMI no later than 24 hours prior to the special meeting, or by appearing and voting at the special meeting. If the shareholder holds the shares in street name he or she must follow the “Note for shareholders in street name” above. Merely attending the special meeting will not revoke the proxy.

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	Note to shareholders in street name

	Appraisal rights

	(i) the majority vote at the special meeting includes at least one-third of the total votes of shareholders having no personal interest in the proposal, participating at the special meeting in person or

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	by proxy (votes abstaining shall not be taken into account in counting the above-referenced shareholders’ votes); or
	(ii) the total number of shares of the shareholders mentioned in clause (i) above that are voted against such proposal does not exceed one percent (1%) of the total voting rights in Elscint.

	•	a personal interest of that person’s relative (i.e. spouse, brother or sister, parent, grandparent, child, child of such person’s spouse or the spouse of any of the above); or
	•	a personal interest of another entity in which that person or his or her relative (as defined above) holds 5% or more of such entity’s issued shares or voting rights, has the right to appoint a director or the chief executive officer of such entity, or serves as director or chief executive officer of such entity.

	•	complete and submit a properly executed new proxy card bearing a later date, no later than 48 hours prior to the special meeting; or
	•	revoke the proxy, by providing written notice of such revocation to Elscint no later than 48 hours prior to the special meeting, or by appearing and voting at the special meeting. If the shareholder holds the shares in street name, he or she must follow the “Note for shareholders in street name” above. Merely attending the special meeting will not revoke the proxy.

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	•	The view that the merger is intended to allow the merging companies to exploit opportunities which may have been unavailable to either EMI or Elscint separately due to the increased resources and use of their relative advantages and accumulated experience and knowledge of the two companies;
	•	The view that the merger is expected to result in increased organizational and business efficiency of the merged company by joining management headquarters and the common use of their joint financial resources and business capabilities;
	•	The anticipated reduction in operational costs, including by reason of the joining of the management headquarters of EMI and Elscint and by reason of the elimination of costs resulting from holding and operating a separate public company whose shares are traded on a stock exchange in the United States

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		(as the merger will result in the de-listing and deregistration of the shares of Elscint from the NYSE and will result in Elscint becoming a wholly-owned subsidiary of EMI);
	•	The belief that a combination of EMI and Elscint will result in greater resources and scope of operations than either EMI or Elscint separately enjoys;
	•	The prospect of gaining additional financial leverage;
	•	The contribution of the merger to higher liquidity and tradability of EMI ordinary shares;
	•	The risks associated with the merger of EMI and Elscint as described above under the section entitled “Risk Factors” beginning on page 20;
	•	The information concerning the financial performance and condition, business operations, capital levels, asset quality and prospects of EMI and Elscint, and each company’s future financial performance as a separate entity and on a combined basis;
	•	The various regulatory filings and approvals required to complete the merger and the likelihood of obtaining these approvals;
	•	The terms of the merger agreement;
	•	The current and historical market prices of the EMI ordinary shares and the Elscint ordinary shares;
	•	The challenges and costs of combining the businesses of two companies of this size and the related risk of diverting management resources from other strategic opportunities and from operational matters;
	•	The expected tax treatment of the merger for Israel and United States federal income tax purposes;
	•	The continuance of substantially the same reporting requirements by EMI which will be available to current Elscint shareholders; and
	•	The recommendation of the respective managements of EMI and Elscint.

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	•	the relative merits of the merger and the other business strategies that EMI’s board of directors has considered or may be considering; or
	•	the decision of EMI’s board of directors to proceed with the merger, or any alternative transaction.

	•	the value of any employee agreement or other arrangement, if any, entered into in connection with the merger,
	•	any tax or other consequences that might result from the merger; or
	•	the value of EMI shares when issued to Elscint shareholders pursuant to the merger or the price at which shares of EMI may trade in the future.

	•	dispositions of EMI shares by shareholders within a short period of time after the effective time of the merger;
	•	changes in prevailing interest rates and other factors which generally influence the price of securities;
	•	adverse changes in the current capital markets, generally and/or in the sectors of which either EMI or Elscint are a part;
	•	the occurrence of adverse changes in the financial condition, business, assets, results of operations or prospects of EMI or Elscint or in their respective product markets;
	•	any necessary actions by or restrictions of federal, state or other governmental agencies or regulatory authorities; and
	•	timely completion of the merger on terms and conditions that are acceptable to all parties involved.

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	•	reviewed and analyzed the terms and structure of the transaction;
	•	for each of EMI and Elscint, reviewed and analyzed:

	•	publicly available financial statements and other information
	•	price and trading activity of ordinary shares;

	•	compared valuation multiples of comparable public companies and financial terms of other business combinations in the hotel industry, majority owner privatization, relative deal size and other Israeli M&A transactions;
	•	met with management of EMI to discuss the strategic rationale for and potential benefits of the transaction; and
	•	visited primary EMI and Elscint offices in Tel Aviv, Israel.

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	Summary of C.E. Unterberg, Towbin’s Financial Analyses

	•	Sunstone Hotel Investors, Inc.
	•	Equity Inns, Inc.
	•	Innkeepers USA Trust
	•	Strategic Hotel Capital, Inc.
	•	Ashford Hospitality Trust, Inc.
	•	Eagle Hospitality Properties Trust, Inc.
	•	MeriStar Hospitality Corporation
	•	Highland Hospitality Corporation
	•	Winston Hotels, Inc.
	•	Boykin Lodging Company

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Elscint

Purchase Price of

Current Price of

$9.58(a)

$8.77(b)

Mean

Median

High

Low

Enterprise Value/ Revenue:

Calendar Year 2004 Actual

6.9x

6.7x

5.0x

4.6x

11.9x

1.6x

Last Twelve Months Actual

6.8x

6.6x

4.1x

4.2x

6.9x

1.6x

Calendar Year 2005 Estimates

NA

NA

3.5x

3.3x

4.5x

2.8x

Calendar Year 2006 Estimates

NA

NA

3.0x

2.7x

4.0x

2.6x

Enterprise Value/ EBITDA:

Calendar Year 2004 Actual

46.3x

44.9x

25.5x

18.1x

58.4x

10.8x

Last Twelve Months Actual

47.3x

45.9x

18.9x

16.9x

29.4x

12.1x

Calendar Year 2005 Estimates

NA

NA

13.0x

12.3x

14.5x

12.0x

Calendar Year 2006 Estimates

NA

NA

10.4x

10.5x

11.2x

9.1x

Price/ FFO Per Share:

Calendar Year 2004 Actual

NM

NM

24.2x

21.3x

60.9x

11.0x

Last Twelve Months Actual

NM

NM

14.8x

15.1x

19.5x

10.2x

Calendar Year 2005 Estimates

NA

NA

13.2x

11.8x

22.6x

9.9x

Calendar Year 2006 Estimates

NA

NA

9.8x

9.7x

11.8x

7.9x

Market Value/ Tangible Book Value

0.8x

0.7x

1.8x

1.3x

4.6x

0.9x

(a)	Assumes equity value of Elscint based on an assumed exchange ratio of 0.53 and a purchase price of $9.58

(b)		Assumes equity value of Elscint based on a closing price of $8.77 on August 19, 2005.

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Premiums Paid		1-Day				5-Day				30-Day
Pre-Announcement(1)			8.4	%			54.5	%			67.4	%
Post-Announcement(2)			16.8	%			16.8	%			19.9	%

(1)	Average prices are as of the close on 6/7/2005
(2)	Average prices are as of the close on 8/19/2005

Premiums Paid			Mean				Median				High				Low
Premium 1 day Prior to Announcement
	Hotel Transactions			10.4	%			2.0	%			81.0	%			(9.0	)%
	Majority Buy-In			41.4	%			30.0	%			114.0	%			(17.0	)%
	Comparably Sized M&A			36.6	%			30.0	%			230.0	%			0.0	%
	Israeli M&A			33.6	%			19.0	%			186.0	%			1.0	%
	Blended			38.3	%			30.0	%			230.0	%			(17.0	)%
Premium 5 day Prior to Announcement
	Hotel Transactions			9.8	%			1.0	%			63.0	%			(7.0	)%
	Majority Buy-In			50.1	%			36.0	%			150.0	%			(9.0	)%
	Comparably Sized M&A			41.6	%			33.0	%			202.0	%			3.0	%
	Israeli M&A			36.4	%			24.0	%			150.0	%			5.0	%
	Blended			42.1	%			31.0	%			202.0	%			(9.0	)%
Premium 30 day Prior to Announcement
	Hotel Transactions			10.9	%			8.0	%			73.0	%			(13.0	)%
	Majority Buy-In			48.3	%			36.0	%			144.0	%			(6.0	)%
	Comparably Sized M&A			43.8	%			35.0	%			361.0	%			(42.0	)%
	Israeli M&A			41.5	%			33.0	%			163.0	%			(13.0	)%
	Blended			41.6	%			33.0	%			361.0	%			(42.0	)%

	•	Enterprise Value/ LTM Revenue
	•	Enterprise Value/ LTM EBITDA
	•	Enterprise Value/ LTM EBIT
	•	Equity Value/ LTM Net Income
	•	Equity Value/ Tangible Book Value

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Elscint Transaction Price Based Upon

Assumed Conversion Ratio of 0.53

Mean

Median

High

Low

Enterprise Value/ LTM Revenue:

Hotel Transactions

3.1x

3.0x

5.2x

1.5x

Majority Buy-in

1.5x

0.8x

8.7x

0.1x

Comparably Sized M&A

2.3x

1.8x

6.8x

0.1x

Israeli M&A

4.8x

2.5x

22.4x

0.7x

Blended

6.8

x

2.6x

1.8x

22.4x

0.1x

Enterprise Value/ LTM EBITDA:

Hotel Transactions

47.6x

11.6x

305.3x

4.7x

Majority Buy-in

43.0x

7.7x

495.1x

1.7x

Comparably Sized M&A

11.5x

8.7x

111.0x

1.0x

Israeli M&A

28.0x

17.5x

129.0x

4.1x

Blended

47.3

x

26.4x

9.4x

495.1x

1.0x

Enterprise Value/ LTM EBIT:

Hotel Transactions

46.9x

19.4x

312.6x

5.6x

Majority Buy-in

18.2x

12.0x

84.0x

1.8x

Comparably Sized M&A

15.8x

10.8x

116.5x

1.5x

Israeli M&A

22.4x

17.1x

53.5x

4.2x

Blended

NM

22.0x

12.1x

312.6x

1.5x

Equity Value/ LTM Net Income:

Hotel Transactions

22.3x

14.6x

59.3x

1.6x

Majority Buy-in

7.1x

4.3x

17.2x

0.9x

Comparably Sized M&A

43.2x

20.9x

691.7x

3.6x

Israeli M&A

26.1x

21.2x

63.2x

2.7x

Blended

NM

31.2x

18.3x

691.7x

0.9x

Equity Value/ Tangible Book Value:

Hotel Transactions

2.0

x

1.1

x

7.6

x

0.1x

Majority Buy-in

1.0

x

0.5

x

9.3

x

0.1x

Comparably Sized M&A

4.9

x

2.6

x

67.7

x

1.1x

Israeli M&A

4.8

x

3.2

x

16.1

x

0.5x

Blended

0.8

x

3.6

x

2.1

x

67.7

x

0.1x

	Other Factors and Comparative Analysis.

	•	the history of trading prices and volume for EMI ordinary shares for the period from July 1, 2004, to August 19, 2005; and
	•	the history of trading prices and volume for Elscint ordinary shares for the period from July 1, 2004, to August 19, 2005.

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	•	reviewed the draft dated August 18, 2005 of the merger agreement between Elscint and EMI;
	•	reviewed certain publicly available financial statements and other information relating to Elscint and EMI;
	•	reviewed estimates, independent appraisals and projections prepared by the management of Elscint;
	•	compared implied historical exchange ratios between Elscint’s ordinary shares and EMI’s ordinary shares;
	•	discussed with the management of each of EMI and Elscint the past and current operations and financial condition and prospects of Elscint and EMI, including, but not limited to, a review of Elscint’s and EMI’s recent operating history, financial performance and prospects and, with respect to Elscint, certain financial forecasts;
	•	participated in certain discussions (but not all discussions and negotiations) regarding the negotiation of the exchange ratio with representatives of Elscint’s independent committee;
	•	reviewed the historical prices, trading multiples and trading volume of the ordinary shares of Elscint and EMI;
	•	reviewed publicly available financial data, stock market performance data and trading multiples of companies that Oppenheimer deemed generally comparable to Elscint and EMI;
	•	reviewed and analyzed publicly available information with respect to the terms of recent transactions that Oppenheimer deemed generally comparable to the merger or involving companies that it deemed comparable to Elscint; and
	•	conducted such other studies, analyses, inquiries and investigations, and reviewed such other information, as Oppenheimer deemed appropriate.

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	•	all of the EMI shares to be received by Elscint’s shareholders would be registered under the Securities Act and the shareholders would receive the EMI shares on a tax free basis; and
	•	the merger would be consummated in a timely manner and in all material respects in accordance with the terms of the merger agreement, without any waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining any regulatory or third-party consents, approvals or agreements in connection with the merger, no limitations, restrictions or conditions would be imposed that would have an adverse effect on Elscint, EMI or the contemplated benefits of the merger.

	Summary of reviews and analyses.

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			Premium Paid
			One-Day				One-Week				One-Month
			Prior				Prior				Prior
All Stock Consideration Transactions
	Average			31.1%				35.5%				44.2%
	Median			23.1%				24.2%				28.7%
Real Estate/ Hotel Transactions
	Average			15.3%				16.5%				17.5%
	Median			11.1%				14.2%				13.8%
Acquisition of Remaining Interest
	Average			27.9%				29.4%				37.6%
	Median			24.0%				23.8%				31.4%

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	Miscellaneous

	Directors and Officers

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	Insurance

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	Treatment of Elscint Options

	Personal Interests of Certain Shareholders in the Merger

	(i) the majority vote at the special meeting includes at least one-third of the total votes of shareholders having no personal interest in the proposal, participating at the special meeting in person or by proxy (abstentions shall not be taken into account in counting the above-referenced shareholders’ votes); or
	(ii) the total number of shares of the shareholders mentioned in clause (i) above that are voted against such proposal does not exceed one percent (1%) of the total voting rights in Elscint.

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	Israeli Tax Considerations with Respect to the Merger

	•	The “controlling shareholders” (i.e. a shareholder who either (i) owns 5% or more of the share capital; (ii) has 5% or more of the voting rights; (iii) has the right to receive at least 5% of the company profits or 5% of its assets upon liquidation; (iv) has the power to nominate a director) of either EMI or Elscint (excluding provident funds as defined in section 47 of the Ordinance and mutual funds as defined in the Joint Investment Trust Law) will not sell or transfer EMI shares held or received upon the merger for a successive duration of two years from the end of the tax year in which the merger was completed (or a shorter period under certain conditions).
	•	Most of the assets held by Elscint and EMI prior the merger and most of the assets transferred upon the merger will not be sold and will be used in a manner that, under the circumstances, is customary in the conduct of Elscint’s business for a period of two years from the end of the tax year at which the merger was completed.
	•	The main economic activity of EMI and Elscint before the merger will continue for a period of two years from the end of the tax year at which the merger was completed.
	•	EMI will issue shares with equal rights to all Elscint shareholders, other than EMI and Elscint, in proportion to their holdings in Elscint, and no additional direct or indirect consideration (except with respect to cash, if any, received in lieu of fractional share interests in EMI ordinary shares), will be given in the course of the merger by EMI or any other person.
	•	A withholding tax at a rate which will be set forth in the pre-ruling will be withheld from any cash payment received in lieu of fractional share interests in EMI ordinary shares, unless the shareholder

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		(including non-Israeli shareholder) will provide EMI in advance with an approval from the Israeli tax authorities for an exemption from, or reduced rate of, withholding tax.

	•	No income, gain or loss will be recognized by EMI or Elscint as a result of the issuance of EMI ordinary shares to Elscint shareholders (other than EMI and Elscint) pursuant to the merger;
	•	Neither EMI’s nor Elscint’s shareholders will recognize any income, gain or loss as a result of the receipt of EMI ordinary shares in exchange for Elscint ordinary shares pursuant to the merger, except with respect to cash received in lieu of fractional shares;
	•	The aggregate tax basis to Elscint shareholders in the EMI ordinary shares received in exchange for Elscint ordinary shares pursuant to the merger, will equal any such Elscint shareholder’s aggregate tax basis in the Elscint ordinary shares surrendered in exchange therefor;
	•	The holding period of Elscint shareholders with respect to the EMI ordinary shares received pursuant to the merger will include the holding period of the Elscint ordinary shares surrendered in exchange therefor; and
	•	An Elscint shareholder that receives cash in lieu of fractional shares pursuant to the merger will be treated as having received such cash in exchange for such fractional shares and generally will recognize capital gain or loss on such deemed exchange in an amount equal to the difference between the amount of cash received and the tax basis of Elscint ordinary shares allocable to such fractional shares. A withholding tax at a rate which will be set forth in the pre-ruling will be withheld from any cash payment received in lieu of fractional share interests in EMI ordinary shares, unless the shareholder (including any non-Israeli resident shareholder) will provide to EMI in advance an approval from the Israeli tax authorities for an exemption from, or reduced rate of, withholding tax.

	Material United States Federal Income Tax Considerations with Respect to the Merger and Ownership of EMI Ordinary Shares

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	•	insurance companies, banks or other financial institutions;
	•	tax-exempt organizations;
	•	broker-dealers;
	•	persons who hold Elscint ordinary shares as part of a hedge, straddle, constructive sale or conversion transaction;
	•	persons who received Elscint ordinary shares pursuant to the exercise of employee stock options or otherwise as compensation;
	•	persons who hold directly, indirectly or constructively 10% or more of the voting power of Elscint ordinary shares;
	•	persons who will hold directly, indirectly or constructively at least 5% of the total value and total voting power of EMI ordinary shares immediately after the merger;
	•	persons who have a functional currency other than the U.S. dollar;
	•	persons subject to the alternative minimum tax;
	•	real estate investment trusts and regulated investment companies;
	•	individual retirement and other deferred tax accounts;
	•	expatriates or other former long-term residents of the U.S.; and
	•	partnerships and persons who own their Elscint ordinary shares through a partnership or other pass-through entity.

	•	a citizen or individual resident of the U.S.;
	•	a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S. or any political subdivision thereof;
	•	an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
	•	a trust (i) if the trust has elected validly to be treated as a U.S. person for U.S. federal income tax purposes or (ii) if a U.S. court is able to exercise primary supervision over the trust’s administration and one or more U.S. persons have the authority to control all of the trust’s substantial decisions.

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	In General

	•	The merger will be treated for U.S. federal income tax purposes as a reorganization within the meaning of section 368(a) of the Code; and
	•	Each of EMI and Elscint will be a party to the reorganization within the meaning of section 368(b) of the Code.

	•	A U.S. holder will not recognize any income, gain or loss as a result of the receipt of EMI ordinary shares in exchange for Elscint ordinary shares pursuant to the merger, except with respect to cash received in lieu of fractional shares;
	•	The aggregate tax basis to a U.S. holder in the EMI ordinary shares received in exchange for Elscint ordinary shares pursuant to the merger, including any fractional share interest in EMI ordinary shares for which cash is received, will equal such U.S. holder’s aggregate tax basis in the Elscint ordinary shares surrendered in exchange therefor;
	•	The holding period of a U.S. holder for the EMI ordinary shares received pursuant to the merger will include the holding period of the Elscint ordinary shares surrendered in exchange therefor;
	•	A U.S. holder who receives cash in lieu of fractional shares pursuant to the merger will be treated as having received such cash in exchange for such fractional shares and generally will recognize capital gain or loss on such deemed exchange in an amount equal to the difference between the amount of cash received and the tax basis of Elscint ordinary shares allocable to such fractional shares; and
	•	No income, gain or loss will be recognized by EMI or Elscint as a result of the transfer to Elscint shareholders of EMI ordinary shares by EMI pursuant to the merger.

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	Special Rules Applicable to PFICs

	(i) made for the first year in which such U.S. holder owned Elscint ordinary shares or in which Elscint was a PFIC, whichever is later, a “qualifying electing fund” election; or
	(ii) has during the period the U.S. holder owned Elscint ordinary shares and in which Elscint was a PFIC made a “mark-to-market” election (such elections are discussed below under “Material United States Federal Income Tax Considerations with Respect to the Merger and Ownership of EMI Ordinary Shares — Ownership of EMI Ordinary Shares — Passive Foreign Investment Company Status”).

	•	The U.S. holder will be required to treat the entire amount of gain realized in the merger as an “excess distribution,” which is subject to special tax rules discussed in greater detail below under “Material United States Federal Income Tax Considerations with Respect to the Merger and Ownership of EMI Ordinary Shares — Ownership of EMI Ordinary Shares — Passive Foreign Investment Company Status;”
	•	The EMI ordinary shares acquired by the U.S. holder pursuant to the merger will not be treated as shares of a PFIC, unless EMI subsequently becomes a PFIC;
	•	The U.S. holder’s basis in the EMI ordinary shares received pursuant to the merger will equal such U.S. holder’s aggregate tax basis in the Elscint ordinary shares surrendered in the exchange therefor, plus the amount of gain recognized in the exchange; and
	•	The holding period of EMI ordinary shares will commence the day after the merger.

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	Distributions

	Dispositions

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	Passive Foreign Investment Company Status

	•	Excess distributions made by the foreign corporation to the U.S. holder are taxed in a special way. “Excess distributions” are amounts received by a U.S. holder in any taxable year that exceeds 125% of the average distributions received by such U.S. holder from the foreign corporation in the shorter of either the three previous years or such U.S. holder’s holding period before the present taxable year. Excess distributions must be allocated ratably to each day that a U.S. holder has held its shares in the foreign corporation. A U.S. holder must include amounts allocated to the current taxable year and any taxable period in the U.S. holder’s holding period before the foreign corporation was a PFIC, but after 1986, in its gross income as ordinary income for the year realized. A U.S. holder must pay tax on amounts allocated to other prior taxable years at the highest rate in effect for that year on ordinary income and the tax is subject to an interest charge at the rate applicable to deficiencies for income tax.
	•	The entire amount of gain realized by a U.S. holder upon the sale or other disposition of stock in the foreign corporation will generally also be treated as an excess distribution and will be subject to tax as described above.
	•	A U.S. holder’s tax basis in its stock in the foreign corporation that was acquired from a decedent would not receive a step-up to fair market value as of the date of the decedent’s death but would instead be equal to the decedent’s basis, if lower.

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	Information Reporting and Backup Withholding

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	•	further registration under the Securities Act;
	•	compliance with Rule 145 under the Securities Act or, in the case of those persons who become affiliates of EMI or Elscint, Rule 144 under the Securities Act; or
	•	the availability of another exemption from registration under the Securities Act.

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	At or promptly following the closing of the merger, EMI will deliver to the exchange agent the appropriate number of ordinary shares of EMI and cash paid in lieu of fractional shares of EMI to be issued in exchange for Elscint shares. The notice and letter of transmittal to be sent by the exchange agent to the holders of Elscint ordinary shares will specify the circumstances under which the risk of loss and title to certificates evidencing Elscint shares will pass and having such form and provisions as EMI may reasonably specify, and will include instructions for use in surrendering Elscint share certificates in exchange for certificates representing EMI ordinary shares and cash in lieu of fractional EMI ordinary shares.
	Upon surrender of Elscint share certificates to the exchange agent, together with a properly executed letter of transmittal, the holder of the surrendered certificates will be entitled to receive, following the closing of the merger, a certificate representing that number of whole ordinary shares of EMI as determined according to the provisions of the merger agreement and, if applicable, a check representing the cash amount for fractional shares that he or she has a right to receive in accordance with the merger agreement.
	Until a holder of Elscint shares surrenders his or her certificates representing those shares together with a properly executed letter of transmittal, the holder will not receive any EMI shares the holder is entitled to receive in the merger or any dividends or other distributions with respect to those shares that are declared or made after the closing of the merger. In addition, no cash payment in lieu of fractional EMI shares will be paid to any such holder until he or she surrenders his or her certificate representing the Elscint shares together with the properly executed letter of transmittal.
	Former Elscint shareholders will be entitled to receive EMI dividends after the closing of the merger. The payment of dividends to the former Elscint shareholders will occur only after the former Elscint shareholders have surrendered and exchanged their share certificates representing Elscint shares. No interest will be paid on the dividends. Payments of cash in lieu of fractional EMI ordinary shares will occur after the closing of the merger.
	All cash paid in lieu of fractional shares and EMI ordinary shares issued in exchange for Elscint shares in connection with the merger will have been paid and issued in full satisfaction of all rights pertaining to Elscint shares.
	The exchange agent will deliver EMI ordinary shares in exchange for lost, stolen or destroyed certificates representing Elscint shares if the owner of such certificates signs an affidavit of loss, theft or destruction, as appropriate. The exchange agent or EMI also may, in their discretion, require the holder of such lost, stolen or destroyed certificates to deliver a bond in such a reasonable sum as indemnity against any claim that might be made against EMI and the exchange agent with respect to the lost, stolen or destroyed certificates.
	EMI will be entitled to deduct and withhold from the merger consideration (i.e. the respective EMI ordinary shares and cash payment in lieu of fractional shares) any amounts required to be so deducted and withheld with respect to the making of any payment under any applicable tax law; however, EMI does not believe that any such taxes will be required to be withheld, except for with respect to payments of cash in lieu of fractional shares. Such amounts will be treated as if paid to the Elscint shareholder in accordance with the merger agreement.
	The rights of Elscint shareholders, other than EMI and Elscint, will cease, and their rights as EMI shareholders will commence, at the closing of the merger.

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	•	due organization and qualification of each party;
	•	capitalization;
	•	those relating to material subsidiaries;
	•	financial statements and undisclosed liabilities;
	•	required filings with the SEC and under the Israeli Securities Law (with respect to EMI);
	•	tax matters;
	•	material litigation and governmental proceedings;
	•	opinion of each party’s financial advisor; and
	•	compliance with laws.

	•	the final court order from the Tel Aviv-Jaffa District Court or other competent court in Israel; and
	•	the receipt of tax rulings from the Israeli Tax Authority and the compliance of the merger with the relevant provisions of the Israeli Tax Ordinance [New Version] of 1961.

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	Access

	Share Capital

	•	Elscint and its material subsidiaries will not make any change to their authorized, issued and outstanding share capital, other than upon exercise of options granted prior to the date hereof;
	•	Elscint will not make any change with respect to the period or acceleration of exercisability of any options or other securities; or
	•	Elscint and its material subsidiaries will not repurchase, redeem or otherwise acquire any Elscint shares.

	•	make any change to its authorized, issued and outstanding share capital; or
	•	repurchase, redeem or otherwise acquire any EMI shares.

	Governmental Authorities

	Litigation

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	Quarterly Statements

	Proxy Statements

	Information for Filings

	Listing of EMI Shares on the NASDAQ and the TASE

	Affiliates

	S-8 Registration Statement

	Satisfaction of Conditions to Closing

	Advice of Changes

	•	any notice or other communication from any person or entity alleging that the consent of such person or entity is required in connection with the merger;
	•	any notice or other communication from any governmental or regulatory agency or authority in connection with the merger; and
	•	any material adverse effect on EMI or on Elscint, as the case may be.

	Regulatory Approvals

	Certain Filings

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	Officers and Directors Insurance

	U.S. Tax Treatment

	•	the representations and warranties in the merger agreement must be true and correct in all material respects at the closing of the merger, except to the extent that they relate to a particular date;
	•	each party must have performed and complied in all material respects with all the material covenants, agreements and conditions required by the merger agreement to be performed or complied with on or prior to the closing of the merger;
	•	each party must have delivered a certificate certifying that the above conditions have been satisfied;
	•	the shareholders and, if required, other constituencies of EMI and Elscint must have approved the merger and the consummation of the transactions contemplated by the merger agreement by the requisite votes required under Israeli law;
	•	the final court order approving the merger pursuant to section 351 to the Companies Law must have been obtained;
	•	the Registration Statement on Form F-4 must have been declared effective by the Securities and Exchange Commission;
	•	a tax ruling from the Israeli tax authority that the merger is a tax exempted transaction and an additional tax ruling from the Israeli tax authority that securities granted under Elscint’s incentive plans as a result of the conversion to EMI securities did not change their tax status must have been obtained;
	•	the TASE must have approved for listing of the EMI shares to be issued pursuant to the merger agreement and EMI must have sent an official notice of issuance to NASDAQ for listing of such shares;
	•	each of EMI, Elbit Medical Holdings and Elscint must have received all required approvals from financing institutions for the consummation of the merger in accordance with financing agreements entered into between the financing institutions and each of EMI, Elbit Medical Holdings and Elscint;
	•	no judicial decision shall have been issued against EMI, Elscint or their respective material subsidiaries, which has the effect of making the merger illegal or otherwise prohibited or substantially restrains consummation of the merger and the transactions contemplated by the merger agreement;

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	•	each party must have taken all corporate and other material proceedings required to be taken, including the final court order, to carry out the merger and the transactions contemplated by the merger agreement; and
	•	there must have been no change, event or development with respect to either party or any of their subsidiaries which, individually or together, would result in a material adverse effect on such party.

	Modification

	Termination

	•	by mutual written consent of EMI and Elscint; or
	•	by either EMI or Elscint:

	•	if any court of competent jurisdiction or other governmental body issues a final and non-appealable order, decree or ruling or takes any action permanently restraining, enjoining or otherwise prohibiting the merger;
	•	if the shareholders or, if required by a binding court order, other constituencies, of either party do not approve the merger by the requisite majority; or
	•	if the merger is not consummated by March 31, 2006, provided that the party seeking the termination under the termination clause has not been the cause of the failure to consummate the merger by such date; or
	•	if any representation or warranty of the other party becomes untrue or the other party breaches any covenant or agreement set forth in the merger agreement and such breach or misrepresentation, not capable of being cured within 21 days, causes the closing conditions not to be satisfied.

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	Elbit Medical Imaging Ltd.
	13 Mozes Street
	Tel Aviv 67442 Israel
	Telephone: 972-3-608-6010

	•	ownership, operation, management, acquisition, expansion and development, through a wholly-owned subsidiary of commercial and entertainment malls in Europe, primarily in Eastern and Central Europe;
	•	the activities of its subsidiary, Elscint, described below under the heading “Information About Elscint”; and
	•	research and development in the image guided focused ultrasound activities through its subsidiary, InSightec Image Guided Treatment Ltd.

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	Elscint Ltd.
	13 Mozes Street
	Tel Aviv 67442 Israel
	Telephone: 972-3-608-6020

	•	ownership and operation of hotels in Europe and elsewhere and construction of hotel projects through wholly owned and jointly controlled subsidiary companies;
	•	leasing of a real estate asset;
	•	the ownership, operation and development of a commercial and entertainment center in Israel;
	•	an investment in Gamida Cell Ltd., a biotechnology company that engages in the expansion of hematopoietic (blood) stem cell therapeutics in clinical development for cancer and autoimmune diseases, as well as future regenerative cell-based medicines including cardiac and pancreatic repair; and
	•	the ownership and operation of an apparel company, Mango Israel Clothing & Footwear Ltd.

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	•	Quorum requirements — the quorum required at EMI’s general meeting is at least two shareholders, present in person or by proxy, and holding or representing, in the aggregate, at least thirty-three and one-third percent (33.33%) of the issued and outstanding voting shares and at EMI’s adjourned meeting the quorum requirement is two shareholders. However, at Elscint’s general meetings the quorum requirement is two shareholders who hold or represent, in the aggregate, not less than fifty-one percent (51%) of the issued and outstanding shares and at Elscint’s adjourned meeting the quorum required is two shareholders who represent, in the aggregate, not less than twenty-six percent (26%) of the issued and outstanding shares.
	•	Quorum at class meetings — the quorum required at a meeting of EMI’s class of securities for the adoption of a resolution to change the rights of that class of securities is two persons holding or representing by proxy at least two-thirds of the issued shares of that class. However, the quorum requirement for the adoption of a resolution to change rights of Elscint’s class of securities is two person holding or representing by proxy at least one-third of the issued shares of that class.
	•	Required majority at general meetings — Unless required by law, resolutions at EMI’s general meetings concerning the share capital of EMI (such as the increase of authorized share capital and alterations of share capital) are required to be approved by an ordinary majority, whereas resolutions at Elscint’s general meetings concerning share capital of Elscint are required to be approved by a special majority of seventy-five percent (75%) of the shareholders present and voting.
	•	Amendments to Articles of Association — while amendments to EMI’s articles of association require the approval of shareholders by an ordinary majority, amendments to Elscint’s articles of association require the approval of shareholders by a special majority of seventy-five percent (75%) of the shareholders present and voting.

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	(a) To record (i) the ordinary shares of EMI issued having a value of NIS 293.5 million ($68.1 million) against purchase price; (ii) the allocation of the Negative Initial Difference to Elscint’s intangible assets and non-monetary tangible assets (mainly real estate); (iii) deferred tax arising from the merger, in respect of the Negative Initial Difference when applicable according to generally acceptable accounting principles; and (iv) the elimination of the historical minority interest in Elscint’s equity;
	(b) To record estimated transaction costs, which include all costs of EMI and Elscint to be incurred directly as a result of the merger, including, but not limited to, fees for the financial advisors, accountants, attorneys and other related costs;
	(c) To classify the loans granted by Elscint to its employees, in the amount of NIS 13.5 million ($3.1 million) for the purchase of its own shares, as a reduction of EMI’s shareholders equity.

		Selected Consolidated Balance Sheet Information
		in Accordance with Israeli GAAP
		As
		Reported				Pro Forma				Pro Forma				Convenience
		(Historical)				AdjustmentDecember 31, 20				04ombined				Translation(*)
														U.S. $
		In thousand NIS												(In Thousands)
		(Unaudited)
Fixed Assets			3,527,988				(109,786	)(a)(ii)			3,418,202				793,455
Other Assets and Deferred Expenses			55,859				(1,275	)(a)(ii)			54,584				12,670
Total Assets			4,520,279				(111,061	)(a)(ii)			4,409,218				1,023,495
Payables and Other Credit Balances			183,446				4,477	(b)			187,923				43,622
Long Term Liabilities — Deferred Taxes on Income			31,522				3,757	(a)(iii)			35,279				8,189
Minority Interest			430,687				(398,234	)(a)(iv)			32,453				7,533
Shareholders’ Equity			803,968				278,939	(a)(i);(b);(c)			1,082,907				251,371

(*)	Using the representative exchange rate as of December 31, 2004 ($1.00 = NIS 4.308).

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		Selected Consolidated Balance Sheet Information
		in Accordance with U.S. GAAP
		December 31, 2004
		As				Pro Forma				Pro Forma				Convenience
		Reported(**)				Adjustments				Combined				Translation(*)
														U.S. $
		In thousand NIS												(In Thousands)
		(Unaudited)
Fixed Assets			3,369,112				(136,873	)(a)(ii)			3,232,239				750,288
Total Assets			4,676,008				(136,873	)(a)(ii)			4,539,135				1,053,652
Payables and Other Credit Balances			183,446				4,477	(b)			187,923				43,622
Long Term Liabilities — Deferred Taxes on Income			141,925				2,005	(a)(iii)			143,930				33,410
Minority Interest			451,719				(422,294	)(a)(iv)			29,425				6,830
Shareholders’ Equity			770,335				278,939	(a)(i);(b);(c)			1,049,274				243,564

	(*)	Using the representative exchange rate as of December 31, 2004 ($1.00 = NIS 4.308).

(**)	In Note 25 to the consolidated financial statements of EMI for the year ended December 31, 2004.

	(a) To recognize a decrease in periodic amortization as a result of the allocation of the Negative Initial Difference to Elscint’s intangible assets and identified non-monetary tangible assets, throughout their estimated economic useful lives;
	(b) To reflect the elimination of the minority interest in Elscint’s continuing results of operations.

		Selected Consolidated Statement of Operations Information
		in Accordance with Israeli GAAP
		Year Ended December 31, 2004
		As Reported				Pro Forma				Pro Forma				Convenience
		(Historical)				Adjustments				Combined				Translation(*)
														U.S. $
		In thousand NIS												(In Thousands)
		(Unaudited)
Cost of revenues			413,883				(2,888	)(a)			410,995				95,403
Operating profit (loss) before financial expenses, net			(2,478	)			2,888	(a)			410				95
Minority interest in results of subsidiaries, net			27,448				(28,172	)(b)			(724	)			(168	)
Profit from continuing operations			36,537				(25,284	)			11,253				2,612

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		Selected Consolidated Statement of Operations Information
		in Accordance with U.S. GAAP
		Year Ended December 31, 2004
		As Reported				Pro Forma				Pro Forma				Convenience
		(Historical)				Adjustments				Combined				Translation(*)
														U.S. $
		In thousand NIS												(In Thousands)
		(Unaudited)
Cost of revenues			360,715				(2,140	)(a)			358,575				83,235
Operating loss before financial expenses, net			(116,885	)			2,140	(a)			(114,745	)			(26,635	)
Minority interest in results of subsidiaries, net			25,098				(25,822	)(b)			(724	)			(168	)
Loss from continuing operations			(185,798	)			(23,682	)			(209,480	)			(48,626	)

Selected Consolidated Statement of Operations Information

in Accordance with Israeli GAAP

Year Ended December 31, 2004

As Reported

Pro Forma

Pro Forma

Convenience

(Historical)

Adjustments

Combined

Translation

U.S. $

In NIS

(Unaudited)

Basic data per share:

Earnings Per Share from continuing operations

1.59

0.46

0.11

Weighted average number of shares (in thousands)

23,025

26,531

Diluted data per share:

Earnings Per Share from continuing operations

1.56

0.46

(**)

0.11

Weighted average number of shares (in thousands)

23,925

27,431

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Selected Consolidated Statement of Operations Information

in Accordance with U.S. GAAP

Year Ended December 31, 2004

As Reported

Pro Forma

Pro Forma

Convenience

(Historical)

Adjustments

Combined

Translation

U.S. $

In NIS

(Unaudited)

Basic data per share:

Loss Per Share from continuing operations

(8.07

)

(8.02

)

(1.86

)

Diluted data per share:

Loss Per Share from continuing operations

(8.07

)(**)

(8.02

)(**)

(1.86

)

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EMI Filings (File No. 000-28996)		Filing Date
• Annual Report on Form 20-F		June 30, 2005
• Reports on Form 6-K		February 22, 2005; February 22, 2005; February 28, 2005; March 8, 2005; April 5, 2005; April 14, 2005; May 9, 2005; May 24, 2005; June 6, 2005; June 15, 2005; June 20, 2005; August 3, 2005; August 22, 2005; September 12, 2005
• Report on Form 8-K		August 24, 2005
• Description of the Ordinary Shares of EMI contained in Item 14 of the Annual Report on Form 20-F		November 22, 1996

Elscint Filings (File No. 001-08781)		Filing Date
• Annual Report on Form 20-F/ A		July 14, 2005
• Reports on Form 6-K		February 22, 2005; February 24, 2005; April 4, 2005; April 14, 2005; April 28, 2005; May 9, 2005; June 6, 2005; June 15, 2005; June 20, 2005; June 28, 2005; August 15, 2005; August 22, 2005; September 20, 2005
• Description of the Ordinary Shares of Elscint contained in the Registration Statement on Form 8-A		August 28, 1984

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Elbit Medical Imaging Ltd.		Elscint Ltd.
13 Mozes Street		13 Mozes Street
Tel Aviv 67442, Israel		Tel Aviv 67442, Israel
Attention: Mr. Shimon Yitzhaki, President and		Attention: Mr. Abraham (Rami)
Chief Financial Officer		Goren, Executive Chairman of the
Telephone: 972-3-608-6010		Board of Directors
Facsimile: 972-3-695-3080		Telephone: 972-3-608-6020
		Facsimile: 972-3-696-2022

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1.		THE MERGER							A-8
			1.1			The Merger			A-8
			1.2			Closing			A-8
			1.3			Effects of Merger			A-8
			1.4			Assumption of Options			A-8
2.		MANNER AND BASIS FOR THE EXCHANGE OF SHARES							A-9
			2.1			The Exchange of ELSCINT Shares			A-9
			2.2			Fractional Shares			A-9
			2.3			Exchange Procedure			A-9
			2.4			Lost, Stolen or Destroyed Certificates			A-11
			2.5			Termination of Exchange Fund			A-11
			2.6			Taking of Necessary Action, Further Action			A-11
3.		PUBLICITY; CONFIDENTIAL INFORMATION							A-11
4.		REPRESENTATIONS AND WARRANTIES OF ELSCINT							A-12
			4.1			Organization of ELSCINT			A-12
			4.2			Capitalization			A-13
			4.3			Options, Warrants, Etc.			A-13
			4.4			Holding of ELBIT Shares			A-13
			4.5			Subsidiaries			A-13
			4.6			Financial Statements; No Undisclosed Liabilities			A-14
			4.7			SEC Filings; Sarbanes-Oxley Matters			A-14
			4.8			Proxy Statement Disclosures			A-15
			4.9			Taxes			A-15
			4.10			Ownership of Assets			A-15
			4.11			Permits			A-16
			4.12			Environmental Matters			A-16
			4.13			Listings			A-16
			4.14			Litigation			A-16
			4.15			Opinion of Financial Advisor			A-17
			4.16			Absence of Changes			A-17
			4.17			Authority for Merger Agreement			A-18
			4.18			Compliance with Laws			A-18
			4.19			Certain Corporate Resolutions and Board Recommendation			A-18
			4.20			No Breach			A-19
			4.21			Disclosure			A-19
5.		REPRESENTATIONS AND WARRANTIES OF ELBIT							A-19
			5.1			Organization of ELBIT			A-19
			5.2			Capitalization			A-20
			5.3			Options, Warrants, Etc.			A-20
			5.4			Holding of ELSCINT Shares			A-20
			5.5			Subsidiaries			A-20
			5.6			Financial Statements; No Undisclosed Liabilities			A-21
			5.7			SEC Filings, ISA Filings; Sarbanes-Oxley Matters			A-21
			5.8			Proxy Statement Disclosures			A-22
			5.9			Taxes			A-22
			5.10			Ownership of Assets			A-23
			5.11			Permits			A-23

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			5.12			Environmental Matters			A-23
			5.13			Listing			A-23
			5.14			Litigation			A-24
			5.15			Opinion of Financial Advisor			A-24
			5.16			Absence of Changes			A-24
			5.17			Authority for Merger Agreement			A-25
			5.18			Compliance with Laws			A-25
			5.19			Certain Corporate Resolutions and Board Recommendation			A-25
			5.20			No Breach			A-26
			5.21			Disclosure			A-26
6.		COURT APPROVAL							A-26
7.		COVENANTS							A-27
			7.1			Access			A-27
			7.2			Share Capital			A-27
			7.3			Other Actions			A-28
			7.4			Litigation			A-28
			7.5			Quarterly Statements			A-28
			7.6			Proxy Statements			A-28
			7.7			Information for Filings			A-29
			7.8			Listing of ELBIT Shares on NASDAQ and the TASE			A-29
			7.9			Affiliates			A-29
			7.10			S-8 Registration Statement			A-30
			7.11			Satisfaction of Conditions to Closing			A-30
			7.12			Advice of Changes			A-30
			7.13			Regulatory Approvals			A-30
			7.14			Certain Filings			A-30
			7.15			Officers’ and Directors’ Insurance			A-30
			7.16			U.S. Tax Treatment			A-31
8.		CONDITIONS TO CLOSING							A-31
9.		ACTIONS AFTER THE CLOSING DATE							A-32
			9.1			Survival of Representations and Warranties			A-32
			9.2			Further Acts			A-32
10.		EXPENSES; TAXES							A-33
11.		MODIFICATION OR TERMINATION; WAIVERS							A-33
			11.1			Modifications and Waivers			A-33
			11.2			Termination			A-33
12.		NOTICES							A-34
13.		GOVERNING LAW & JURISDICTION							A-35
14.		ENTIRE AGREEMENT							A-35
15.		SCHEDULES AND EXHIBITS							A-35
16.		COUNTERPARTS							A-35
17.		RULES OF CONSTRUCTION							A-35
18.		OTHER REMEDIES							A-36
19.		NO THIRD PARTY BENEFICIARIES							A-36
20.		NO WAIVER							A-36

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A-4

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Definition		Section
Affiliated Shareholders			7.9
Agreement			Whereas clauses
Certificate			2.3(c)
Closing			1.2
Closing Date			1.2
Code			Whereas clauses
Companies Law			1.1
Court			6(a)
ELBIT			Whereas clauses
ELBIT 2004 20F			5.6(a)
ELBIT Audited Financial Statements			5.6(a)
ELBIT Financial Statements			5.6(a)
ELBIT Condensed Interim Financial Statements			5.6(a)
ELBIT SEC AND ISA Reports			5.7
ELBIT Shareholders Meeting			6(a)
ELBIT Shares			Whereas clauses
ELBIT Taxes			5.9(a)
ELSCINT			Whereas clauses
ELSCINT 2004 20F			4.6(a)
ELSCINT Audited Financial Statements			4.6(a)
ELSCINT Disclosure Schedule			4
ELSCINT Financial Statements			4.6(a)
ELSCINT Condensed Interim Financial Statements			4.6(a)
ELSCINT SEC Reports			4.7
ELSCINT Shareholder Meeting			6(a)
ELSCINT Shares			Whereas clauses
ELSCINT Taxes			4.9(a)
Encumbrances			4.5(c)
Exchange			1.1(b)
Exchange Act			4.6(a)
Exchange Agent			2.3(a)
Exchange Fund			2.3(b)
Exchange Ratio			2.1
F-4 Registration Statement			7.6(a)
Final Court Order			6(c)
First Motion			6(a)
ISA			3(a)
Israeli GAAP			4.6(a)
Material Adverse Effect on ELBIT			5.1(b)
Material Adverse Effect on ELSCINT			4.1(b)

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Definition		Section
Material ELBIT Subsidiaries			5.5(b)
Material ELSCINT Subsidiaries			4.5(a)
Merger			Whereas clauses
Merger Agreement			Whereas clauses
NASDAQ			3(a)
NYSE			3(a)
Option			1.1(b)
Option Documents			1.4(a)
Pre-Closing Period			7.1(a)
Proxy Statement/ Prospectus			7.6(a)
SEC			3(a)
Second Motion			6(c)
TASE			3(a)
Taxes			4.9(a)
Tax Ordinance			Whereas clauses
Tax Ruling			8(g)
U.S. GAAP			4.6(a)

A-6

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A-7

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	(a) EMH shall distribute as a dividend in kind to ELBIT for no direct and/or indirect consideration all of the ELSCINT Shares held by it at that time, which shall constitute EMH’s entire holdings in ELSCINT at the Closing Date;
	(b) All issued and outstanding ELSCINT Shares (except for ELSCINT Shares held by ELBIT and any ELSCINT Shares held by or for the benefit of ELSCINT) will be converted into the right to receive fully paid, validly issued and non-assessable ELBIT Shares in the aggregate amount and in the manner set forth in Section 2.1 below (the “Exchange”), which Exchange shall be effected in the manner set forth in Section 2, and (2) each outstanding option to purchase ELSCINT Shares (each, an “Option”) shall be assumed by ELBIT and shall be deemed to constitute an option to acquire fully paid, validly issued and non-assessable ELBIT Shares in the amount and in the manner set forth in Section 1.4 below;
	(c) At the Closing, ELSCINT shall become a wholly-owned subsidiary of ELBIT and cease to be a public company and shall become a ’private company’ (as that term is defined in the Companies Law), held only by ELBIT, all upon the terms and subject to the conditions to Closing set forth herein.
	(d) Alternatively, instead of the distribution in kind of Elscint Shares held by EMH to EMI, as detailed in Section 1.1(a) above, EMI may elect, at its sole discretion, to execute the merger by causing EMH to purchase all of Elscint Shares (other than Elscint Shares held by EMI, EMH and Elscint) in consideration for the issuance of EMI Shares as detailed in this Merger Agreement. In such event, the provisions of this Merger Agreement shall apply, mutatis mustandis.

A-8

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	(i) encumbrances for current taxes not delinquent, or taxes being protested in good faith, and
	(ii) such imperfections in the title thereto and Encumbrances, if any, as do not materially detract from the value, or materially interfere with the present or continued use or occupancy, of the property of ELSCINT and the Material ELSCINT Subsidiaries; and
	(iii) with respect to real property, Encumbrances which would not result in a Material Adverse Effect on ELSCINT.

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	(i) issued or sold, or agreed to issue or sell, or purchased, or agreed to purchase, any of its share capital or securities convertible into or exchangeable for such share capital, or any options, warrants, rights or calls to purchase such share capital, or other corporate securities;
	(ii) incurred any material obligation or liability, absolute or contingent, except in the ordinary course of business consistent with past practice;
	(iii) made any wage or salary increase or granted any bonuses, except those made in the normal employee or executive review process carried on in the ordinary course of business consistent with past practice;
	(iv) mortgaged, pledged or subjected to Encumbrance any of its material properties or assets, other than in the ordinary course of business;
	(v) sold, assigned or transferred any of its material properties or assets, other than in the ordinary course of business;
	(vi) entered into any material transaction not in the ordinary course of business consistent with past practice;
	(vii) suffered any change, event or set of circumstances which has had, or is reasonably likely to have, a Material Adverse Effect on ELSCINT;
	(viii) waived any rights of substantial value, or cancelled, modified or waived any debts held by ELSCINT or any Material ELSCINT Subsidiary, other than rights or debts (A) in the ordinary course of business which are not in excess of U.S.$1,000,000 in the aggregate; and (B) other than in the ordinary course of business which are not in excess of U.S.$250,000 in the aggregate (ELSCINT and any Material ELSCINT Subsidiary, taken together, for the purposes of the amounts referenced in clauses (A) and (B));
	(ix) made or incurred capital expenditures in excess of an aggregate of U.S.$1,000,000 (ELSCINT and any Material ELSCINT Subsidiary, taken together), other than in the ordinary course of business;
	(x) declared, paid or set aside any dividends or other distributions or payments on its share capital or repurchased, redeemed or otherwise acquired any outstanding shares or other securities of, or other ownership interests in, ELSCINT or any Material ELSCINT Subsidiary;

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	(xi) made any loans or advances to any Person or assumed, guaranteed, endorsed or otherwise became responsible for the obligations of any Person, other than in the ordinary course of business;
	(xii) effected any merger, consolidation, recapitalization, share split, share dividend, reorganization or other transaction affecting the share capital of ELSCINT;
	(xiii) suffered any damage, destruction or other casualty or loss (whether or not covered by insurance) materially affecting the assets or business of ELSCINT and any Material ELSCINT Subsidiary as presently conducted;
	(xiv) materially changed any method or principle of accounting or accounting practice of ELSCINT, except for any such change required by reason of a concurrent change in the applicable generally accepted accounting principles and disclosed in the ELSCINT Financial Statements; or
	(xv) entered into any agreement or commitment relating to any of the foregoing.

	(i) the filing of the Final Court Order with the Registrar of Companies in Israel;
	(ii) the filing with the SEC of, and a declaration of effectiveness by the SEC of the F-4 Registration Statement, as defined in Section 7.6 herein;

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	(i) Encumbrances for current taxes not delinquent or taxes being protested in good faith;
	(ii) such imperfections in the title thereto and Encumbrances, if any, as do not materially detract from the value, or materially interfere with the present or continued use or occupancy, of the property of ELBIT and the Material ELBIT Subsidiaries; and
	(iii) with respect to real property, Encumbrances which would not result in a Material Adverse Effect on ELBIT.

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	(i) issued or sold, or agreed to issue or sell, or purchased, or agreed to purchase, any of its share capital or securities convertible into or exchangeable for such share capital, or any options, warrants, rights or calls to purchase such share capital, or other corporate securities;
	(ii) incurred any material obligation or liability, absolute or contingent, except in the ordinary course of business consistent with past practice;
	(iii) made any wage or salary increase or granted any bonuses, except those made in the normal employee or executive review process carried on in the ordinary course of business consistent with past practice;
	(iv) mortgaged, pledged or subjected to Encumbrance any of its material properties or assets, other than in the ordinary course of business;
	(v) sold, assigned or transferred any of its material properties or assets, other than in the ordinary course of business;
	(vi) entered into any material transaction not in the ordinary course of business consistent with past practice;
	(vii) suffered any change, event or set of circumstances which has had, or is reasonably likely to have, a Material Adverse Effect on ELBIT;
	(viii) waived any rights of substantial value, or cancelled, modified or waived any debts held by ELBIT or any Material ELBIT Subsidiary, other than rights or debts (A) in the ordinary course of business which are not in excess of U.S. $2,000,000. in the aggregate; and (B) other than in the ordinary course of business which are not in excess of U.S. $500,000 in the aggregate (ELBIT and the Material ELBIT Subsidiaries, taken together, for the purposes of the amounts referenced in clauses (A) and (B));
	(ix) made or incurred capital expenditures in excess of an aggregate of U.S. $2,000,000 (ELBIT and any Material ELBIT Subsidiary, taken together), other than in the ordinary course of business;

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	(x) declared, paid or set aside any dividends or other distributions or payments on its share capital or repurchased, redeemed or otherwise acquired any outstanding shares or other securities of, or other ownership interests in, ELBIT or any Material ELBIT Subsidiary;
	(xi) made any loans or advances to any person or assumed, guaranteed, endorsed or otherwise became responsible for the obligations of any person, other than in the ordinary course of business;
	(xii) effected any merger, consolidation, recapitalization, share split, share dividend, reorganization or other transaction affecting the share capital of ELBIT;
	(xiii) suffered any damage, destruction or other casualty or loss (whether or not covered by insurance) materially affecting the business or assets of ELBIT and of any Material ELBIT Subsidiary as presently conducted;
	(xiv) materially changed any method or principle of accounting or accounting practice by ELBIT, except for any such change required by reason of a concurrent change in the applicable generally accepted accounting principles and disclosed in the ELBIT Financial Statements; or
	(xv) entered into any agreement or commitment relating to any of the foregoing.

	(i) the filing of the Final Court Order with the Registrar of Companies in Israel;
	(ii) the filing with the SEC of, and a declaration of effectiveness by the SEC of the F-4 Registration Statement, as defined in Section 7.6 herein; and
	(iii) the approval of the TASE for the registration of trading of the ELBIT Shares on the TASE.
	(iv) the receipt of the Israel Securities Authority’s position in writing that the offer of ELBIT Shares to ELSCINT Shareholders does not require the publication of a prospectus in Israel.

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	(a) Representations and Warranties. Each of the representations and warranties of each of ELBIT and ELSCINT contained in this Agreement shall be true and correct in all material respects (except for those heretofore qualified by materiality, in which case, no additional standard of materiality shall be applied) as of the date hereof and as of the Closing Date as though made on and as of the Closing Date (except that those representations and warranties which address matters only as of a particular date need only be true and correct as of such date).
	(b) Covenants. Each of ELBIT and ELSCINT shall have performed and complied, in all material respects, with all the material covenants, agreements and conditions required by this Merger Agreement to be performed or complied with by ELBIT and ELSCINT, respectively, prior to or at the Closing Date.
	(c) Certification. Each of ELBIT and ELSCINT shall have delivered to ELSCINT and ELBIT, respectively a certificate certifying that the conditions relating to ELBIT and ELSCINT set forth in sub-sections (a) and (b) above, respectively, have been duly satisfied.
	(d) Shareholders and Other Authorization. The shareholders of each of ELSCINT and ELBIT, and, if required, other constituencies of ELSCINT and ELBIT, shall have approved the Merger and the Merger Agreement and the consummation of the transactions contemplated hereby by the requisite votes required under Israeli law.
	(e) Final Court Order. The Final Court Order approving the Merger pursuant to Section 351 to the Companies Law shall have been obtained.
	(f) Effective Registration. The F-4 Registration Statement filed by ELBIT pursuant to Section 7 hereof shall have been declared effective under the Act and shall not be subject to a “stop order” and no proceedings shall have been instituted or threatened by the SEC to suspend the effectiveness thereof.
	(g) Tax Ruling. A tax ruling from the Israeli Tax Authority that the Merger is a tax exempted transaction subject to the compliance with the provisions of Sections 104C and 103K of the Tax Ordinance and an additional tax ruing from the Israeli Tax Authority to maintain continuity of securities

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	granted under Elscint’s incentive plans (collectively, the “Tax Rulings”) shall have been obtained. The Tax Rulings shall be attached hereto as Exhibit 8(g). It is hereby expressly agreed and understood that in the event the Israel Tax Authority conditions the grant of the Tax Rulings upon any condition whatsoever, other than a technical condition, the party to this Merger Agreement with respect to which such condition was imposed shall have sole discretion to either fulfill the said condition, or alternatively, to elect to terminate this Merger Agreement and in such event the other parties to this Merger Agreement shall have no claim or demand in connection with such termination.
	(h) Listing. The TASE shall have approved for listing of the ELBIT Shares to be issued pursuant to this Merger Agreement and ELBIT shall have sent an official notice of issuance to NASDAQ for the listing of such ELBIT Shares.
	(i) Financing Institutions’ Approvals. Each of ELBIT, EMH and ELSCINT shall have received any and all required approvals from financing institutions for the consummation of this Merger Agreement and the Merger in accordance with financing agreements entered into between such institutions and each of ELBIT, EMH and ELSCINT or any of their respective affiliates.
	(j) No Actions. No judicial decision shall have been issued against ELSCINT and/or any Material ELSCINT Subsidiary and/or against ELBIT and/or any Material ELBIT Subsidiary, which has the effect of making the Merger illegal or otherwise prohibited or otherwise substantially restrains consummation of the Merger and the transactions contemplated under this Merger Agreement.
	(k) Authority for Action. All corporate and other material proceedings required to be taken by or on behalf of or with respect to each of ELSCINT and ELBIT to authorize each of ELSCINT and ELBIT to enter into this Merger Agreement and to consummate the Merger and the other transactions contemplated hereby, including the issuance of the Final Court Order, shall have been duly and properly taken or obtained.
	(l) No Material Adverse Effect. As a condition to Closing for ELSCINT — there shall not have occurred any change, event or development in ELBIT and/or in any of the Material ELBIT Subsidiaries which individually or together would result in a Material Adverse Effect on ELBIT and as a condition to Closing for ELBIT — there shall not have occurred any change, event or development in ELSCINT and/or in any of the Material ELSCINT Subsidiaries which individually or together would result in a Material Adverse Effect on ELSCINT.

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	(i) By mutual consent of ELSCINT and ELBIT;
	(ii) By ELSCINT or ELBIT, if any court of competent jurisdiction or other governmental body shall have issued an order, decree, or ruling, or taken any other action permanently restraining, enjoining, or otherwise prohibiting the Merger and/or the Merger Agreement, and such order, license, ruling or other action shall have become final and non-appealable;
	(iii) By ELSCINT or ELBIT, if the Merger is not approved by the requisite majority by the shareholders of ELSCINT or ELBIT and, if required by a binding court order, by other constituencies of ELSCINT or ELBIT, at meetings duly convened therefore;
	(iv) By ELSCINT or ELBIT if the Merger is not consummated by March 31, 2006, provided that the right to terminate the Merger Agreement pursuant to this clause (iv) shall not be available to any party whose failure to fulfill any obligation under this Merger Agreement has been the cause of, or resulted in, the failure of the Merger to be consummated on or prior to such date;
	(v) By ELBIT, if (A) any representation or warranty of ELSCINT set forth in this Merger Agreement shall have become untrue or ELSCINT has breached any covenant or agreement of ELSCINT set forth in this Merger Agreement, (B) such breach or misrepresentation is not capable of being cured within 21 calendar days, and (C) such breach or misrepresentation would cause the conditions set forth in Section 8 not to be satisfied; or
	(vi) By ELSCINT, if (A) any representation or warranty of ELBIT set forth in this Merger Agreement shall have become untrue or ELBIT has breached any covenant or agreement of ELBIT set forth in this Merger Agreement, (B) such breach or misrepresentation is not capable of being cured within 21 calendar days, and (C) such breach or misrepresentation would cause the conditions set forth in Section 8 not to be satisfied.

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	Elbit Medical Imaging Ltd.
	13 Mozes St.
	Tel Aviv 67442, Israel
	Fax: +972-3-695-3080
	Attn.: Shimon Yitzhaki, President and Chief Financial Officer

	Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., Law Office
	1 Azrieli Center
	Round Building 39-40 Floors
	Tel Aviv 67021, Israel
	Fax: +972-3-607-4422
	Attn.: David Hodak, Adv.

	Elscint Limited
	13 Mozes St.
	Tel Aviv 67442, Israel
	Fax: +972-3-6086049
	Attn.: Abraham (Rami) Goren, Executive Chairman of the Board of Directors

	Goldfarb, Levy, Eran & Co.
	Europe-Israel Tower, 2 Weizmann Street
	Tel Aviv 64239, Israel
	Fax: +972-3-608-9909
	Attn.: Adam M. Klein, Adv.

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	Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., Law Office
	1 Azrieli Center
	Round Building 39-40 Floors
	Tel Aviv 67021, Israel
	Fax: +972-3-607-4422
	Attn.: David Hodak, Adv.

	13.	GOVERNING LAW & JURISDICTION.

	14.	ENTIRE AGREEMENT.

	15.	SCHEDULES AND EXHIBITS.

	16.	COUNTERPARTS.

	17.	RULES OF CONSTRUCTION.

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	19.	NO THIRD PARTY BENEFICIARIES.

	20.	NO WAIVER.

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				ELBIT MEDICAL IMAGING LTD.
		By:		/s/ Mordechay Zisser		/s/ Shimon Yitzhaki
				Name: Mordechay Zisser and Shimon Yitzhaki
				print
				Title: Chairman		President
		ELSCINT LIMITED
		By:		/s/ Rami Goren		/s/ Uri Levin
				Name: Rami Goren		Uri Levin
				print
				Title: Chairman		Chief Financial Officer

ELBIT MEDICAL HOLDINGS LTD.
By:		/s/ Shimon Yitzhaki		/s/ Mordechay Zisser
		Name: Shimon Yitzhaki		Mordechay Zisser
		print
		Title: President		Chairman

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	(i) reviewed the financial terms and conditions set forth in the last draft of the Agreement reviewed by us;
	(ii) reviewed certain publicly available financial statements and other business and financial information of Elbit and Elscint;
	(iii) reviewed the stock prices and trading activity of the Elbit Shares and the Elscint Shares;
	(iv) compared the financial terms of the Merger with the financial terms, to the extent publicly available, of other transactions that we deemed relevant;
	(v) held discussions with the respective managements of Elbit and Elscint concerning their views regarding the strategic rationale for the Merger and the potential benefits that are expected to result from the Merger as well as the businesses, past and current operations, financial conditions and future prospects of both Elbit and Elscint, independently and combined;
	(vi) visited the primary offices of Elbit and Elscint in Tel Aviv, Israel; and
	(vii) made such other studies and inquiries, and reviewed such other data, as we deemed relevant.

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	Very truly yours,
	/s/ C.E. Unterberg, Towbin

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	Oppenheimer & Co. Inc.
	125 Broad Street
	New York, NY 10004
	Member of All Principal Exchanges

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	Sincerely,
	/s/ Oppenheimer & Co. Inc.

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