MAASTRICHT, The Netherlands--Jan. 15, 2002--Indigo has reached an agreement with the Office of the Chief Scientist (OCS) of the Israeli Ministry of Industry and Commerce for the early repayment of royalties. Pursuant to the agreement, Indigo will pay the OCS approximately $15 million in 2002 in settlement of potential future royalty obligations. This amount will be reflected as a one-time charge to P&L in the fourth quarter of 2001. The Government of Israel encourages research and development projects through special funding from the OCS. Indigo, through its Israeli subsidiary, Indigo Electronic Printing Systems Ltd., has received grants from the OCS for the development of certain of its products. Under the terms of the OCS' participation, a royalty equal to a percentage of the net sales of products, including related service revenues, developed in an OCS-funded project must be paid, beginning with the commencement of sales of products developed with grant funds. In October 2001, pursuant to a special OCS-initiated program aimed at large companies, Indigo applied to make a discounted prepayment of future royalties, which would end its obligation to make royalty payments for past grants received. The agreement reached between the OCS and Indigo this week will end Indigo's obligation to make royalty payments with respect to grants received from the OCS during the years 1993-2001, and will enable Indigo to join an OCS-funded program for the development of generic projects with no royalty repayment obligations.