Ethical Code Ethics at RAFAEL

The Way of Values RAFAEL's Ethical Code Ethics at RAFAEL

We are proud to present RAFAEL’s updated Ethical Code, which was devised as part of "The Way of Values" program – a program formulating the values and ethics of the company. Table of Contents RAFAEL’s vision is to be a significant part of Israel's security; to be a global, innovative, growing and profitable company, which develops, produces and supports combat systems on the front lines of operational needs and technology. The Ethical Code serves as a declaration of the way in which we strive to realize our vision and the way RAFAEL will continue to succeed in an ethical and moral manner. RAFAEL, as a leading defense company, requires that its managers and employees choose a moral code of action that matches the core values that guide us: to contribute to the Introduction 03 resilience of the State of Israel, to choose excellence and professionalism as a way of life, to strive towards daring, creativity and innovation, and to support our employees and customers at all times. RAFAEL's values 06 The Ethical Code is intended to serve as a moral compass for appropriate behavior for employees and managers in all units and at all levels, and as a tool in decision-making and Ethical Code 14 choosing what is good and right, when encountering dilemmas in our daily activities. The Code defines our expectations of ourselves – managers and employees alike – and the behavior that we all adopt and aspire to carry out between ourselves and towards our customers, suppliers, and other stakeholders. We believe that an inspiring organizational culture, which encourages managers and employees to engage in value-driven behavior at the highest level, is a vital and essential component for an organization's success. RAFAEL’s strength is built on business successes, technological capabilities, our reputation as a company for which business and human ethics and integrity are a guiding light, and on the confidence that our customers have in us, our employees and our business partners. RAFAEL’s Board of Directors and Executives are committed to act in light of the Ethical Code, to implement the values and ethics , to strive for business and technological excellence and to meet objectives.

2 CEO of Rafael Chairman of the Board of Directors 3 Our Vision Our Mission

RAFAEL’s vision is to be a significant To be a leader in the development of advanced, groundbreaking systems in the defense field, at the forefront of technology in part of Israel's security; a global, Israel and worldwide; to continue to be a national center for innovative, growing and profitable defense research and development and a central part of Israel's capability to deter, defend and defeat. To be a leading, company which develops, produces inspirational force of attraction for outstanding personnel in all and supports combat systems on the of the company's fields of operation. front lines of operational needs and at the forefront of technology. Our Uniqueness

A governmental defense company, the largest employer in the north of Israel. A leading, R&D-intensive national laboratory and business company in Israel and worldwide.

4 5 Commitment to the State of THE COMPANY Israel's Resilience VALUES THAT RAFAEL will continue to be committed to the security of the State of Israel and the Israel Defense Forces as a strategic customer. RAFAEL will always strive to maintain the State of Israel's clear military advantage in the region, and to foster GUIDE OUR the IDF's ability to deter and defeat its adversaries. At the same time, RAFAEL is also committed to Israel's social and economic resilience, to contribute to Israel's economy and to BEHAVIOR be a proﬁtable company. RAFAEL will keep the main part of its activity in the north of Israel and will continue to be the largest employer in the north, aspiring to strengthen the economic and social resilience of the north of Israel.

6 7 “One Rafael” The Customer Comes First

We will continue to grow as an organization that is fair to its We are committed to bringing significant value to our employees, that respects each employee, whoever and wherever customers. We will be a leader in the development and he/she is. We will serve as a professional home for our employees production of defense systems, solutions and products that and as a source of pride for them and their families. We will will help our customers in Israel and abroad to achieve cultivate the RAFAEL spirit, which reflects shared responsibility, technological and operational superiority and to fulfill their teamwork, uncompromising quality and professional ethics. own objectives. We will develop systems for them that will address the challenges of the future. We will foster ongoing relationships with our customers, based on fairness, integrity and professionalism; we will learn and understand their challenges, requirements and intentions, and provide them with continuous service for systems procured from RAFAEL.

8 9 Cooperation as a Force People at the Center Multiplier

We believe that our employees are RAFAEL’s most valuable RAFAEL will promote and encourage partnerships and resource and that they are the main strength and leverage for the integration of capabilities and products between divisions organization's success. We are committed to creating for our and branches, with other companies, with academia, and employees a challenging and meaningful work environment that with our subsidiaries, and at the same time will continue to allows them to develop their capabilities over time, encourages cultivate the differences and uniqueness of each unit in the their differences, cultivates their sense of belonging to the company, as a vital basis for future breakthroughs. All this in company, and appreciates them for their performance and order to achieve excellent business results based on the successes. We are committed to providing them with the desire to maximize productivity in all fields – technological, knowledge, tools, conditions and leadership necessary to fulfill business and operational – and to increase customer their potential and success. satisfaction. This combination of activities will take place through management and leadership that creates shared objectives, reduces barriers, increases transparency and prioritizes projects that combine capabilities and systems from a variety of fields.

10 11 Excellence Daring and Innovation

We will strive to be the best in every ﬁeld and we will not settle We will aspire to successfully cope with every new challenge. for less. We will maximize the full potential inherent in our We will explore problems requiring a solution, we will be a employees and managers, and in our knowledge and leader in providing a valuable response, and we will sow the capabilities, in order to attain achievements and to cope with seeds of future success. future challenges. We will aspire to carry out every activity, with high quality and high standards, at cost and on time. We will strive to develop new knowledge; we will encourage personal skills, innovation, and creative, groundbreaking thinking. We will adopt changes that challenge our present level of success.

We will learn from both our successes and our failures, and we will encourage leadership that is based on managerial courage and calculated risk-taking, based on the understanding that these will bring RAFAEL to new heights.

12 13 The Ethical Code for RAFAEL and The Core of its employees is based on the company's vision and values. the Code We aspire to continue to be a signiﬁcant part of Israel's security; to be a global, innovative, growing and proﬁtable company which develops, produces and supports defense systems on the front lines of operational needs and at the forefront of technology.

As such, we must adopt ethical rules of behavior, adhere to high standards and insist on fairness, integrity, credibility, transparency, morality and scrupulousness inside and outside of the company. We must do so, in order to safeguard organizational quality and encourage our employees' identiﬁcation with RAFAEL and their willingness to continue to belong to a leading, value-driven organization.

Ethics interfaces with all activity at the organization – relationships between each employee and his colleagues, between managers and their employees, between the company's employees and its customers, suppliers and partners, and the company's responsibility towards its employees and their responsibility towards it.

14 15 Our Responsibility to The Managers' Commitment Our Customers

We, the managers, recognize the fact that our behavior and conduct as The company's values reflect a customer-oriented approach that places managers has a great influence on the behavior of our employees and the customer first. The customer's choice of us and confidence in us are on their perception of the company as a fair and ethical company. the driving force for Rafael's existence and success. We see the customer Therefore, it is our responsibility to apply the ethical code to ourselves experience as a central objective, and we build long-term reciprocal and to conduct ourselves in a manner that serves as a good personal relationships with our customers. Accordingly, we: example, to develop and implement the company's values and ethical Aspire for our products and services to be of the highest quality and culture in our managerial activity, in the standards implemented, and in standards, while continuously improving the quality of performance, the routines of employees and teams. Our management principles are products and services. based on RAFAEL’s management and leadership model, on the company's values, and on the Ethical Code. Provide our customers with the relevant information for making informed decisions, and respect commitments and promises made We will speak professionally and openly, directly and respectfully to them by authorized representatives of RAFAEL. with our employees, while encouraging feedback and criticism. Are attentive to our customers' needs and requests, and stay in close We will encourage discussion of deviations from the code and we and continuous contact with them; provide them with service and will deal with any such deviations in a practical and support, and learn the environment in which they operate, in order uncompromising manner. to respond professionally and to develop advanced, high-quality technological solutions that are customized to their needs. We will create a safe and secure environment for our employees to work in and to express their opinions. Verify that all of the company's various publications and marketing materials are reliable, accurate and trustworthy. We will represent the company's policies and decisions to our employees, even if this does not correspond with our personal Maintain the confidentiality of our customers' private, proprietary opinions on every matter. and business information and do not allow it to be transferred to any other party without the approval of the owner of the information. We will represent the company to our customers and business partners in a way that implements the company's values and Ethical Code and serves as a good personal example for our employees.

16 17 The Company's Responsibility to its Employees

Our employees are the company's most important asset and the main Maintains the conﬁdentiality of personal information stored on the partners in its success. RAFAEL is responsible for the professional company's databases and safeguards the employee's right to development of its employees and for creating the conditions for their privacy. success. In addition, we are committed to ensuring an appropriate, fair Encourages a balance between work and leisure, family and personal and respectful work environment that reﬂects RAFAEL’s commitment to development (work-life balance), and offers a variety of programs its employees, and the employees' commitment to their colleagues and and arrangements for supporting this balance. to business partners. Accordingly, the company: Respects the diverse human mosaic, multiplicity of cultures, beliefs Creates a safe, respectful, healthy work environment without any and customs of RAFAEL’s employees in Israel and worldwide, who kind of harassment, including sexual harassment, verbal violence, together create RAFAEL’s uniqueness. abuse and expressions of bullying. Creates a culture that encourages exposing faults honestly and Works towards their professional and personal development, the bravely, and takes responsibility for learning lessons that can be enhancement of their capabilities, their training and their welfare. applied. Hires, employs, advances, relocates and compensates employees, based on professional and practical considerations, without discrimination or preference of any kind.

Engages in open communication with employees, listens to their needs and strives to provide appropriate responses to professional and personal requests and needs.

Makes their rights accessible and transparent, and ensures that these rights are upheld.

18 19 Our Responsibility as Company Employees

We, the employees, are committed to the company's success and to our Engage in healthy business competition between the units, and shared success together, and have RAFAEL’s best interests at heart. We ensure that this competition does not harm partnerships and the cooperate, share knowledge, think and create together, in order to build shared view of the good of the company. the company's present and future products and solutions. We must Work collegially with our fellow workers (including employees of develop relationships of trust, respect and care, and ensure that the subsidiaries and contract workers), base the reciprocal relationships company's interests are fulfilled. In light of this, we, the employees: between us on mutual respect, open and collaborative communication, a safe work environment free of harassment, and Take personal responsibility for our actions, our decisions and their maintain a proper culture of speech and discussion, including via consequences, out of concern and a real desire for the company's email and the Internet. success and its empowerment as a growing and profitable company. Assess our behavior and our cooperation with third parties, so that Are committed to optimal utilization of work hours and invest all of they enhance stakeholders' confidence in the company and have a our capabilities, skills and energy, in loyalty and dedication, towards positive impact on the company's good name and its reputation as a advancing the company's goals and objectives, while ensuring professional company characterized by fairness, integrity and high compliance with work plans. ethical standards. Develop an overall culture of excellence, and strive to achieve Demonstrate care and responsibility for the company's resources and excellence in all areas of our work. assets, and only use them to advance the company's goals. This See the importance of innovation at the core of our professional and includes maintaining the confidentiality of intellectual property, technological activity, aspire to be at the forefront of current knowledge and information, and preventing waste. knowledge and technology, and encourage original thinking, Come to work dressed in a manner that is appropriate, respectful and learning and development of organizational knowledge, considerate of our diverse mosaic and of those with whom we have groundbreaking initiatives and creativity. work interfaces. Expand the areas of cooperation within and between units, and Take action to stop inappropriate behavior that causes violations of refrain from emphasizing the boundaries of each unit's activity and the ethical rules, by dialogue with our colleagues or by contacting the from keeping to a narrow intra-organizational perspective. authorized ethical representatives listed below.

20 21 Our Responsibility to the Business Environment

RAFAEL works in a diverse and challenging business Our Responsibility for Fair Competition environment and has extensive relationships with business We engage in fair competition, while highlighting our unique partners, suppliers and competitors. Regarding all of these technologies, the quality of our products and the excellent parties, the company is committed to acting in accordance with service that we provide to our customers. Any cooperation with ethical rules and principles. competitors strictly adheres to economic competition laws. We gather business and professional information only in Our Responsibility to Suppliers appropriate ways and refrain from obtaining information on We see our suppliers as partners, and work with them in a spirit competitors in an illegal or unethical manner. of mutual trust, fairness and cooperation. We choose suppliers based solely on professional and practical criteria; transparently Our Responsibility to the Community and to provide suppliers with the relevant information for preparing the Environment their tenders and with the rules according to which the selection We are proud to be an inseparable part of Israeli society in of suppliers takes place, and give equal and fair opportunities to general and of the community in the north where we work in suitable suppliers. particular. Therefore, we act responsibly towards the community We maintain professional relationships with suppliers and and the environment. We encourage social involvement and refrain from creating any conﬂict of interest, such as engaging in contributing to the community both on the organizational level a personal business and commercial relationship with a supplier. and on the part of each employee on a personal level. We see importance in implementing an environmental protection and sustainable development policy.

22 23 Our Responsibility for Complying with the Law and with Company Procedures, and Refraining from Conﬂicts for Refraining from Conﬂicts of Interest of Interest

We fully adhere to maintaining our ethical standards, company policies, We ensure that we are not in a state of conflict of interest and aspire to and any other applicable laws and regulatory rules that we are obligated prevent even an appearance of a conflict of interest. Among other things, to obey, in Israel and abroad. We are aware of the fact that failure to and accordingly, we: adhere to the laws that apply in a relevant country exposes RAFAEL and us to risks and to criminal and civil liability. Among other things, and Provide full disclosure to managers in case of doubt or being in a accordingly, we: conflict of interest, and distance ourselves from the activity until receiving the appropriate approval or decision on the matter. Refrain from providing money or anything else of value to government officials in Israel and abroad so that they act for our Refrain from receiving gifts and favors from suppliers, customers and benefit, give us preferential treatment, grant us a competitive other stakeholders. advantage or promote RAFAEL’s businesses. Grant business courtesies only in accordance with RAFAEL’s Ensure that we do not allow any third party to do anything on our procedures. behalf that, ethically or legally, we would not do. We will refrain Make sure to receive prior approval, in accordance with RAFAEL’s from taking actions that are opposed to RAFAEL’s values and Ethical procedures, for additional work, and ensure that there is no conflict Code, even if such actions are likely to advance the company's of interest between our role at RAFAEL and our role at the other objectives in the short term. workplace. Are committed to implementing proper and appropriate rules of Refrain from personal, business and financial contracting and corporate governance and the company's compliance programs, activity with an organization that competes with the company, with a including economic competition laws and the prevention of bribery customer or with a supplier. and corruption.

Work with the authorities that supervise us and with the shareholders openly, transparently, cooperatively and through ongoing dialogue.

24 25 Our Responsibility for Our Behavior

When We Travel Abroad on Behalf of the Company In the Internal and External Digital Realm We represent RAFAEL during the whole time that we stay abroad on its We also operate, work and communicate in the digital realm. Therefore, behalf, including in our free time. Accordingly, we refrain from actions we also adopt the ethical rules for these realms, so that we: that violate Israeli and/or local law, RAFAEL’s values, its ethical rules and its procedures, even if local law or custom permits these actions. Among Adhere to a respectful discourse on social media and use clean other things, and accordingly, we: language, without harsh words or verbal violence.

Recognize and respect the laws, rules, culture, beliefs, customs and Refrain from offensive expressions, shaming and attacks against differences of our customers, suppliers and partners in foreign RAFAEL and against our colleagues. countries. At the same time, we do not act in violation of Israeli law, international conventions and relevant local laws. Send any publication or statement that could damage RAFAEL and that we think requires the company's response, to the company’s We safeguard RAFAEL’s image as a professional, serious, respectful spokesperson immediately. We do not respond personally, even if and respectable company, and therefore we behave in an we think we are defending the company. appropriate manner that corresponds with the company's ethical rules, including in the framework of our business trips abroad. Respect the privacy of our colleagues and do not post a photograph of anyone who has not given you permission to do so.

26 27 Our Responsibility for Applying the Code

In applying the Ethical Code, we must ask ourselves: How will we know if How Do We Cope with an Ethical Dilemma? a certain action is ethical or unethical? How will we cope with possible When we face a situation of a clash of values, we must examine ourselves tensions during our work? How will we overcome conﬂicts of interests and our motivations in accordance with the following four questions: that we face? To answer these questions, we must be able to identify ethical dilemmas and know how to handle them. The legal test: Is the proposed solution legal? If what is being considered is a concern about violating the law, then there is no dilemma. We are always obligated to uphold the law. What is an Ethical Dilemma? A dilemma is a clash between values which forces us to choose from The balance test: In the solution provided, is there a balance among various ways of acting that represent different considerations of between all the values and principles that appear in the Ethical appropriate behavior. Code? The proposed solution must enable a balance in fulﬁlling several of the code's values at the same time; the solution must Examples: enable a balance between partners/stakeholders. Having to decide between our commitment to provide the best service to a customer and our commitment to meet the objectives The mirror test: When I look in the mirror at the end of the day, that have been set. how will I feel about the decision that I have made? Will I be able to sleep well at night following my decision, and to explain it? Will I Having to decide between our commitment to practical have a clear conscience? Would I recommend to my children to considerations in promoting employees and the harm that might be behave in the way that I have behaved? caused as a result of promoting one of these employees and not another, or transferring one of them to a different position. The publicity test: Will I feel comfortable, if and when my decision Having to decide between the desire to supply what the customer is reported in the media? Will I be certain about my decision when I wants and the rules and principles set by the company. talk about it to the people closest to me, and, when the action is reported, will people believe that I acted appropriately?

28 29 Our Responsibility for Applying the Code

Managing RAFAEL’s Ethics Program Managing RAFAEL’s Ethics Program Mr. Daniel Benshabat, RAFAEL’s Chief Compliance Ofﬁcer and Ethics RAFAEL’s Chief Compliance Ofﬁcer, in consultation with the Ethics Supervisor, is responsible for the application, management and Advisory Committee and with the assistance of the Ethics Trustees, will implementation of the Ethical Code at RAFAEL. carry out an ethics implementation program.

Alongside the Chief Compliance Officer, RAFAEL has appointed an The implementation of the ethics program at RAFAEL may include, Ethical Advisory Committee, of which the Chief Compliance Officer, among other things, periodically updating the code; annual reporting to General Counsel, VP of Human Resources and Internal Auditor are the company’s management; carrying out explanatory and training members. The Advisory Committee's fields of activity include activities for employees and managers; distribution of ethics-related interpreting the Ethical Code; setting ethics policy at the organization; notices; information pages and queries; actions that aim to publicize setting the objectives of the ethics program; discussing ethics and distribute the Ethical Code; integration of ethics content in the implementation programs; discussing individual and annual programs; training of managers, and more. monitoring the effectiveness of the ethics program; discussing ethics incidents at the organization; and periodically updating the Ethical Code - all subject to privacy protection requirements and company procedures.

In addition to the Chief Compliance Ofﬁcer and the Advisory Committee, Ethics Trustees have been appointed in the various divisions at RAFAEL, whose role is to serve as a local professional authority for consultation on ethics issues, and to promote and implement the ethics program at the local level.

30 31 Ethics-Related Inquiries, Reports and Complaints

Each and every RAFAEL employee is personally responsible for acting Subject to RAFAEL’s procedures and the law, discreet ethics-related and behaving in a manner that corresponds with RAFAEL’s ethical reports and complaints that have been submitted in good faith (whether principles and values. In order to aid in complying with this submitted anonymously or whether the person has requested that his commitment, one can contact the Ethics Trustees in the divisions or name not be revealed), will be handled with maximum discretion, alternately, contact the Chief Compliance Ofﬁcer directly, in order to ensuring that the complainant is not harmed and is not exposed to receive advice or to report a violation of the Ethical Code. harassment due to his report/complaint.

An inquiry, report or complaint regarding ethical issues will be made via To be clear, discipline-related complaints will be submitted, discussed one of the following modes of communication: and handled in accordance with RAFAEL’s discipline procedure.

By contacting one of the Ethics Trustees in the divisions By using the report button on RAFAEL’s ethics website Anonymous ethics-related reports and complaints can be submitted in the following manner: By sending a letter to the Chief Compliance Ofﬁcer (Mr. Daniel Benshabat, Distribution Center 200, David Institute)

By contacting RAFAEL’s Internal Auditor or the Harassment Prevention Supervisor Such an inquiry will be passed on, without Clariﬁcation personal details of the complainant, to the Chief Compliance Ofﬁcer The role of the Ethical Code is to serve as a moral compass, even in cases (subject to the law and RAFAEL’s procedures). where RAFAEL’s procedures or the law do not provide a clear answer regarding the expected behavior, and an ethical judgement is required. At the same time, in the case of a contradiction and/or discrepancy between the Ethical Code and relevant RAFAEL procedures or the law, the relevant procedure or the law shall take precedence.

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