© 2007 Morrison & Foerster LLP All Rights Reserved Attorney Advertising Trends in Capital Transactions and Global Exit Strategies for Israeli Companies Bruce Alan Mann, Senior Partner The Annual Morrison & Foerster Global Capital Markets Seminar July 18, 2007 – Gam Oranim, Tel Aviv

2 Overview Growing Globalization of Capital Markets Reasons for establishing multiple trading markets Despite higher transaction costs, NASDAQ remains the favorite market for IPOs by Israeli companies Continued Strength of U.S. IPO Market in 2007 Increased efforts by U.S. regulators to prevent loss of favorite market status Improved Litigation Climate Vibrant market for exit through both strategic and financial buyer acquisitions

3 Growing Globalization of Capital Markets Vibrant IPO market for Israeli tech companies – more IPOs and more money raised in 2006 than any year since 2000 More dual listing with more exchanges involved – TASE, NASDAQ, NYSE, AIM, LSE, HONG KONG AND FRANFURT Increased combination of home country IPO and global institutional private placement with trading in 144A market

4 Reasons to Establish Multiple Trading Markets Access to individuals in home market and institutions based there Access to institutions requiring ability to trade in PORTAL or other major global market Dual listing facilitates exercise and sale by optionees in both home and foreign countries Potential cost savings of home market listing and 144A private placement

5 Despite Higher Transaction Costs, NASDAQ Remains the Favorite Market for IPOs by Israeli Companies Greater depth and liquidity than any other market permits better secondary sale pricing Access to U.S. institutions that must invest in domestically traded securities U.S. market premium – study shows that from foreign shares traded in U. S. markets enjoyed a 14.3% premium over their non cross-listed peers (no LSE premium) U.S. share of IPOs actually grew from 8% in 2001 to 15% in 2005

6 Continued Strength of U.S. IPO Market in 2007 Number of IPOs completed up 25% in first half of 2007 compared to 2006 More than 75% of 2007 IPOs have priced above the range Tech and telecom IPOs have lead the way, up 27% and 14% respectively 20% of U.S. IPOs in 2007 have been by non-U.S. companies

7 Increased Efforts by U.S. Regulators to Prevent Loss of Favorite Market Status Proposal by SEC to reduce holding period for restricted securities from 1 year to 6 months Proposal to eliminate volume limitations on resales by non-affiliates after 1 year Proposed expansion of short form registration (S-3 and F-3) to permit offerings of up to 20% of float even if $75 million public float requirement is not met Hearings to accept IFRS without US GAAP reconciliation for foreign private issuers and moves toward convergence

8 Increased Efforts by U.S. Regulators to Prevent Loss of Favorite Market Status (cont.) Revision of Section 404 rules to reduce compliance costs by permitting top-down risk-based approach to evaluation Narrowing of definition of “material weakness” from “more than a remote likelihood” to a “reasonable possibility” of a material misstatement Effective June 4, 2007, new rules to facilitate deregistration by foreign private issuers

9 Improved Litigation Climate Less receptivity of US courts to investor class action litigation – Tellabs Supreme Court opinion requires allegation of facts supporting inferences of fraudulent intent. This should reduce missed projection litigation.

10 Vibrant Market for Exit Through both Strategic and Financial Buyer Acquisitions 2006 M&A activity – 76 deals with $10.58 billion value more than any year since 2000 and at least 4 times value of any year since then Continued growth of capital in private equity funds with public offerings generating more capital Increased willingness of private equity funds to acquire technology companies

© 2007 Morrison & Foerster LLP All Rights Reserved Attorney Advertising Questions? Bruce Alan Mann +1 (415) sf