Dear Faculty Members,

We have concluded two more of negotiation days in the national labor court in Jerusalem.

Let me start with a reminder that in this conflict we ask for both compensation for our past erosion and a
mechanism to avoid future erosion.

On Sunday Judge Adler suggested a certain BORERUT mechanism that would give us between 11% to
21% raise for the past erosion (until December 2009). He made no suggestion for the future. MoF adopted
Adler's suggestion for the past and repeated their old suggestion for the future, which altogether made their
proposal totally unacceptable. We then made our own proposal (extending our flexibility), which was not
accepted by MoF. In that stage Judge Adler gave up his efforts to reach an agreement, but finally agreed to
try one more day.

I would summarize the week of negotiations in court as follows: While we kept showing flexibility and
responded positively to quite a few suggestions made to us by Adler and by VERA, the only suggestion that
was accepted by MoF was Judge Adler's suggestion FOR THE PAST ONLY.

The difference between us and MoF is still big, and it is thus quite likely that court will soon discuss (and
decide) on VERA's request for TZAVEY MENIA against us. We keep trying to resolve the crisis, we shall
continue to be creative and open for suggestions, and we shall make every effort to reach a solution that will
answer our justified demands.

Danny.