Vertex Management Israel Venture Capital FundsJanuary 18, 2001

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The Vertex Group Manages over US$ 1B in 7 VC funds since 1983Offices in: Redwood City, CA SingaporeTel AvivLondon

Invested in over 245 companies of which 82 have exited via M&A or IPO on: NASDAQEASDAQ Neuer Markt Vertex Israel manages US$ 250M in 3 Israeli VC fundsTaipeiBeijingHong Kong Nouveau March Singapore Stock Exchange Taiwan Stock Exchange2

Focus on seed & early stage Israeli / Israeli-related Target investment transactions leadership Investment size of US$ 2M to US$ 5M and up to US$ 10M per company (in special cases upper limit is higher)Invest in companies that contribute to the growth of the Internet Economy and Information Networking:BitwaysCommunications Software & Enhanced ServicesInternet and E-commerce Applications Emerging IT Technologies

Investment Strategy - General3

Bitways: Intelligent networksBroadband networkingInternet appliancesCommunications Software & Enhanced Services: OSSSecurityEnhanced services enabling software platformsApplications: Content delivery networks Mobile-commerce enabling technologiesEmerging image and video distribution technologiesSpecial opportunities in core Information Technologies

Investment Strategy Portfolio Focus Broadband access (Cable, xDSL, fixed wireless) Photonics (components & systems) Voice & data convergence Streaming & Compression QoS and Traffic Management Peer to Peer distributed processing4

ExitsStatistics for the last 5 years in Israel :60-80% Mergers & Acquisitions (M&A) 20-40% Initial Public Offerings (IPO)5

M&A Activity in IsraelStatistics from Dolev&Abramovitch6

Sheet1

M&A Activity in Israel

YearNo of dealsAmts M$

19954168

19966633

19973543

1998112527

1999162812

2000*2511627

IPO & follow-on Offerings in Israeli Hi-Tech Companies

YearAggregate amounts raisedNo of IPOs

19951206

199655919

19971909

19984139

1999179716

2000*429026

Sheet2

Sheet3

MBD00059FBB.xls

IPO Activity in IsraelStatistics from Dolev&Abramovitch7

Sheet1

M&A Activity in Israel

YearNo of dealsAmts M$

19954168

19966633

19973543

1998112527

1999162812

2000*2511627

IPO & follow-on Offerings in Israeli Hi-Tech Companies

YearAgg Amts RaisedNo of IPOs

19951206

199655919

19971909

19984139

1999179716

2000*429026

Sheet2

Sheet3

MBD00059FBB.xls

Israeli Hi-Tech M&A and IPO Activity 1995-2000

Statistics from Dolev&Abramovitch8

YearNo of dealsAmount in $M199541681996663319973543199811252719991628122000*2511627

YearAggregate Amount RaisedNo. IPOs19951206199655919199719091998413919991797162000429026

M&AsAn M&A is a real alternativeM&A is not a default to IPOIn the long term, failure rate is high for both9

Factors for M&AsManagement difficultiesDistance from marketsAvailability of resourcesPolitical situation

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M&As- Best of Both Worlds The acquired company becomes the Israeli arm of this larger, established foreign company and enjoys the following benefits:Financial backingName recognitionMarket and distribution channels that would have been next to impossible to have achieved alone11

Best of Both Worlds contdIncreased employment in IsraelIncreased economic activity in Israel Increased opportunities for stakeholdersRevenues for shareholders

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M&AsStock or Cash?13

TelegateDevelops and markets MultiGate which enables CATV operators to offer telephone and data services over their HFC infrastructureCurrent customers in Belgium, Germany & Pacific Rim with an aggregate sales potential of US$ 150MECI and GI were strategic partners and shareholdersExit: Company sold to Terayon Inc. for US$ 400M

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Telegate Ltd. sold to TerayonDecember 1999100 employees$3M sales15

TradeumXML-based Software engine for hosted on-line exchanges Seed investmentCompany recruited a US-based management teamIn 8 months the company staff grew from 10 to 100 Exit: Company was sold to VerticalNet Inc. for US$ 478M16

Tradeum sold to VerticalNetApril 2000 60 employees (of 150 intl)$ 0 sales 1999

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MoreComInteractive TV infrastructure softwareThe President was a senior executive in GI and Philips in the Cable and HDTV businesses Strategic investments by Divicom/C-CubeInvested in seed & 2 follow-on investmentsExit: Company was sold to Liberate for US$ 561M

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Morecom sold to LiberateApril 200046 employees$100K revenues 199919

VisionTechDevelops and markets advanced MPEG-2 Coding VLSI components for PVR, DVR, PauseTV and Internet STBsHighest quality MPEG-2 encoding silicon realizationMajor design wins and customer signup with: WebTVAOL-TVGIExit: Company was sold to Broadcom Corp. Scientific Atlanta Haupauge Vestel ReplayTV Panasonic Fast20

VisionTech sold to BroadcomDecember 200037 employees$1.5M sales 1999

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Portfolio Companies

www.vertexisrael.co.il 1 HaShikma St. P.O.Box 89 Savyon 56530Israel

Tel: +972 3 535 7621 Fax: +972 3 535 7622

Mr. Yoram Oron, President yoron@vertexmgt.co.il Dr. Gideon Shichman, VP gideon@vertexmgt.co.il

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