The Challenge Funds I and II - ETGAR L.P.

The Challenge Funds are two Delaware limited partnerships focused on equity investments in Israel-related privately held and publicly traded companies.

The Funds seek to invest in companies with superior management teams and unique technologies in rapidly growing markets.

The Funds' investments are based on two major categories:

• The high-tech sector and related areas. 
• Traditional industries.

The Funds' policy is to work closely with portfolio companies in order to build highly successful enterprises.

History
The Challenge Fund - Etgar L.P. ("Challenge Fund I") was founded in July 1995. After Challenge Fund I invested over 90% of its capital, a second fund, The Challenge Fund - Etgar II L.P. ("Challenge Fund II"), was established in 1999.

Challenge Funds I and II are registered in the State of Delaware, with offshore affiliate funds. Currently, the Funds have a capital base in excess of $200 million, making them one of Israel's leading sources of private investment capital.

Investors in the Challenge Funds include a highly distinguished group of American and European investors. In addition to new investors, most of the parties who invested in Challenge Fund I also invested in Challenge Fund II.

Mission
The purpose of the Challenge Funds is to generate superior returns for investors by building a diversified portfolio of Israel-related companies.

Investment Scale
Challenge Funds I & II have invested more than $150 million in over 70 companies. To date, the Funds realized 35 successful exits including 10 IPOs on NASDAQ and 4 successful sales. Investments are limited to 25% of a company's equity or $15 million, whichever is greater. Additionally, the Funds may not invest more than 20% of their committed capital in any single company. Investments are generally made on a preferred equity basis.

The Funds seek representation on the Board of Directors of their portfolio companies, but do not aim to actively manage them.

Criteria for Investment
The Funds' investment professionals take into consideration a number of factors when making investment decisions:

• A unique product or technology aimed at rapidly growing markets. 
• Superior management team and board of directors.
• Potential strategic partners or investors in the company.
• Growth potential of the company.
• Competition and barriers to entry and/or unique patents.
• Financing required for further expansion and cash flow needs.
• Likelihood of attractive return on investment
• Liquidity channels to provide suitable exits within a reasonable time frame.
• Ability to monitor the company's activities.

Management
The Funds are managed by Challenge Partners (the "General Partner"), headed by Joseph Ciechanover and a team of experienced professionals (the "Management Team"). The Management Team's executives come from diverse professional backgrounds, including high tech, industry, finance and law.

The Funds' distinguishing characteristics are the unparalleled experience and breadth of contacts of their principals. These assets are marshaled to locate and evaluate high-quality investment opportunities and to assist the Funds' portfolio companies through board representation, close consultation with management and targeted industry introductions.