North Atlantic Overview North Atlantic Capital, based in Portland, Maine, is currently investing out of its fifth fund. North Atlantic targets rapidly growing business-to-business technology companies with revenue rates above $10 million, including strong recurring revenue. North Atlantic generally makes initial investments of between $5 and $10 million structured as subordinated debt with warrants. North Atlantic Capital’s subordinated debt offering can be an appropriate financing option to more expensive equity capital or less patient mezzanine or venture debt. Subordinated Debt Features The characteristics described below are typical of North Atlantic’s subordinated debt investment structure, although terms may vary somewhat depending upon the capital structure of the company being financed. • • • Five or six year term with no principal payments due until maturity No financial covenants Deeply subordinated, junior collateral position For companies considering subordinated debt funding, these features provide more permanence in their capital structure and enhanced access to senior debt. North Atlantic’s subordinated debt is more expensive that traditional mezzanine or venture debt. North Atlantic’s objective is to at least double its invested capital over the life of the investment. The primary pricing elements are as follows: • • • Current pay interest rates in the range of 10% to 12% p.a. Prepayment charge of 5% in year one, declining by 1% each year Nominally priced warrants in the most recent equity financing Typical Applications North Atlantic’s subordinated debt has been utilized in the following situations: • • • • Bridge capital toward an exit within next one to two years Investors and management want to avoid ownership dilution from outside equity Refinance existing mezzanine or venture debt that has begun to amortize Finance acquisitions For more information contact either David Coit or Mark Morrissette at 207-772-4470 or visit www.northatlanticcapital.com.