May 18, 2010 NY2-672999 © 2010 Morrison & Foerster LLP All Rights Reserved | mofo.com IPOs: Is the Window Open? Panelists Nicholas Pettifer, Americas Editor, IFLR Grant Miller, Managing Director - Equity Capital Markets, Cowen and Company, LLC David Ryan, Assurance Partner, PricewaterhouseCoopers LLP David Lynn, Partner, Morrison & Foerster LLP This is MoFo. | 2 I. Financing Environment U.S. Macro Economic Drivers Real GDP was positive for the third consecutive quarter in Q1 2010, growing at an annualized pace of 3.2%, as consumer spending rebounded to its highest level in three years I. FINANCING ENVIRONMENT After bottoming at 9.9x forward earnings in late 2008, the S&P 500 now trades at 13.7x twelve-month forward earnings Home prices were flat in February and are currently perched above their April 2009 low point after falling 30% from their July 2006 highs U.S. Economic Growth S&P 500 Earnings Power (GDP QoQ % Change) 6.0% 5.0 4.0 3.0 2.0 1.0 0.0 (1.0) (2.0) (3.0) (4.0) (5.0) (6.0) (7.0) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 Actual 2008 2009 Expected (Forward P/E) 20.0x 20.0 18.0 15.0 16.0 10.0 14.0 5.0 12.0 0.0 10.0 (5.0) 8.0 (10.0) 6.0 (15.0) 4.0 (20.0) (25.0) 2010 2.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 S&P / Case-Shiller Home Price Index (Index) (Monthly % Chng) 250 3.0% 2.0 1.0 150 2008 Actual 2009 Expected 0.0 (% Unemployment) (Initial Jobless Claims) 9.9% 10.5% 100 (2.0) Jan-00 (3.0) Feb-02 Feb-04 Feb-06 Feb-08 Source: Bloomberg and FactSet as of May 14, 2010. 2 Feb-10 700 9.5 650 8.5 600 7.5 550 6.5 500 5.5 450 4.5 (1.0) 50 0.0 2010 U.S. Unemployment 200 Initial jobless claims are down 3% since the beginning of the year and have fallen 32% since peaking in March 2009 (Reported EPS) $25.0 444 3.5 400 2.5 350 1.5 300 0.5 250 Jan-07 Jul-07 Feb-08 Aug-08 Mar-09 Oct-09 Apr-10 Euro Zone Debt Crisis Threatening Economic Growth “PIIGS” – Intra European Lending Web EU Deficits as a % of GDP (Deficit as a % of 2010 GDP) 0.0% GREECE (2.0) ITALY (4.0) (6.0) EU Average: (7.5)% IRELAND (8.0) (8.0)% (10.0) (10.1)% (12.0) Portugal Spain Ireland (16.0) Greece (14.7)% Great Britain (12.8)% (14.0) (12.3)% Euro / US$ Exchange Rate (Euro / USD Exchange Rate) I. FINANCING ENVIRONMENT $1.55 1.50 PORTUGAL 1.45 1.40 1.35 1.30 Current: $1.243 1.25 SPAIN 1.20 01/01/09 05/03/09 09/03/09 01/04/10 05/07/10 Source: New York Times, SeekingAlpha. 3 Equity Market Internals The Dow Jones Industrial Average has risen 19% since the beginning of 2009 and 63% since its March 2009 lows, representing the most powerful rebound since the epic crash of 1929 (Indexed) 100 (Indexed) 170 90 160 80 150 44.2% 70 140 28.7% 130 23.5% 18.5% 60 50 (37.8)% (44.1)% 1973 Oil Crisis 1/11/73 - 10/3/74 (47.9)% 40 The VIX recently touched its lowest point since 2007 and despite recent sharplyincreased volatility, overall recessionary concerns have ebbed and systemic risk in the financial system has dissipated Tech Crash 1/14/00 - 10/9/02 110 100 (53.9)% 30 90 Global Financial Crisis 10/9/07 - ??? 20 120 Crash of '29 9/3/29 - 7/8/32 10 (89.2)% 0 80 70 60 Day 0 250 500 750 Crash of 1929 Tech Crash 1,000 1,250 01/01/09 1973 Oil Crisis Global Financial Crisis 05/05/09 S&P 500 Broad Market Volatility – Since 2009 09/07/09 DJIA 01/09/10 NASDAQ 05/14/10 Russell 2000 Sector Performance – Since 2009 (% Change) (VIX) 60.0% 60 57.7% 53.6% 50.0 50 38.8% 40.0 40 31.1% 30.0 22.3% 20.0 30 LTM Avg. = 23.6 20 13.8%12.0% 10.0 8.9% 5-Yr Avg. = 21.9 2.3% Source: Bloomberg and FactSet as of May 14, 2010. (a) Based on number of calendar days from bull market peak to bear market trough. 4 Telecom (5.9)% Utilities (10.0) Energy 05/14/10 Cons. Stp. 01/09/10 Financials 09/07/09 Industrials 05/05/09 Cons. Disc. 01/01/09 Materials 10 Health Care 0.0 Info Tech. I. FINANCING ENVIRONMENT Though the equity market had rallied recently, the recent spike in volatility and broad market sell-off left one sectors in the red (since the start of 2009) Indices – Since 2009 Bear Markets Recoveries(a) Lower Volatility Enhanced Equity Financing Conditions Although the May 14th 32.9% increase in volatility represents the highest single-day spike since September 2008, news of the EU’s financial support package stabilized recessionary concerns and will likely revitalize the equity financing market NASDAQ versus VXN (NASDAQ ) (VXN) March Lows in Equity Markets 3,000 85 75 2,500 65 55 2,000 45 35 1,500 25 15 1,000 5 I. FINANCING ENVIRONMENT Jan-07 The equity financing environment has been particularly active since May 2009, corresponding with a narrowing of discounts as financial markets have rallied Apr-07 Jul-07 Nov-07 Feb-08 May-08 Sep-08 Dec-08 Mar-09 Jul-09 Oct-09 Jan-10 May-10 Equity Financings by Product Type (# of Deals) 120 107 64 92 86 81 84 90 75 108 98 105 69 55 60 62 58 66 98 79 89 81 78 70 61 58 43 45 23 30 49 27 61 42 33 35 25 58 58 55 36 32 24 18 21 17 21 19 15 0 Jan-07 May-07 Sep-07 Jan-08 Follow-Ons Source: ECM Analytics, FactSet and PlacementTracker as of May 14, 2010. Note: Excludes strategic transactions and deals with proceeds raised and market values below $5 million. 5 May-08 Sep-08 Registered Directs Jan-09 May-09 Sep-09 Equity PIPEs Jan-10 May-10 IPO Market Activity Despite substantial improvements in the IPO market, recent lower-thanexpected IPO pricings (relative to filing range midpoints) suggests that investors continue to take a disciplined approach to their deal selections and push for wider discounts SEC Registered IPO Volume (US$ in billions) $21.0 18.0 15.0 $0.0 12.0 9.0 6.0 3.0 $4.5 $5.2 $6.9 $6.3 $4.8 $0.0 $11.5 $3.1 $0.7 $5.2 $7.4 0.0 Q1 Q2 Q3 Q4 $0.2 $0.7 $3.3 Q1 Q2 $0.4 $0.9 $0.1 Q3 Q4 $0.2 $1.2 $4.4 $5.0 $0.8 Q1 Q2 Q3 Q4 2008 2007 $2.2 Non-Growth Sector Proceeds $0.7 $1.9 $1.2 Q1 2009 Growth Sector Proceeds The one-year rolling IPO backlog has grown in recent weeks, with 7 companies submitting their initial S-1/F-1 filings during the week ended May 14 and 10 IPOs expected to price prior to May 20 $0.0 $19.7 Q2 2010 Visa IPO IPO Pricings, Filings and Withdrawals (# of Deals) 100 Current IPO Backlog: 89 Filings for $20.1 BN 87 78 80 64 58 60 54 51 47 42 38 40 28 16 20 10 10 10 24 19 15 12 9 5 40 31 31 31 30 30 24 26 46 5 1 1 3 10 15 6 12 18 11 11 10 5 0 A. IPO Q1 Q2 Q3 Q4 Q1 Q2 2007 Q3 Q4 2008 Pricings Filings Q1 Q2 Q3 2009 Withdrawn Q4 Q1 Q2 2010 Marketed and Failed to Price Source: ECM Analytics as of May 14, 2010. Excludes closed-end funds, REITs, units, best efforts offerings, non-U.S. offerings and offerings less than $10 million. Proceeds include over-allotment amount. Note: Growth sectors defined as aerospace and defense, alternative energy, consumer, health care, technology and telecommunications. 8 IPO Pricing Trends The IPO pricing environment has improved since March 67% of IPOs since March 1st Pricing Dynamics(a)(b) have priced within or (% of Total) above their ranges 100.0% 70% of deals in Jan-Feb priced below their ranges 10.0% 50.0% 60.0 22.2% 60.0% 55.6% 20.0 40.0% Q1 Q2 Q3 Q4 Q1 120.0% 102.2% 16.7% 10.0% Q3 Q4 Q1 25.0% 19.4% 0.0 27.8% 22.2% Q1 Q2 2010 Above Range Q2 56.0% 23.2% (3.9)% 6.5% Q4 Q1 (6.4)% (57.6)% (80.0) Q3 10.1% 5.2% 0.0% 3.1% 5.1% 0.6%2.3% 1.3% 0.0% (2.1)% (1.3)% (15.2)% (40.0) 0.0% 2009 % Downsized Q4 109.7% 40.0 40.0% 2008 53.3% 36.4% Median % Returns 58.3% Q2 33.3% (Median %) 60.0 Q1 Q3 Within Range 80.0 0.0% 0.0% 0.0% 0.0% 0.0% 13.3% 45.5% 2009 Below Range 80.0 0.0 18.2% 16.7% Q2 2008 100.0% 33.3% 22.2% 20.0%20.0% 45.2% 10.0% % Downsized / Upsized(a) A. IPO 75.0% 30.0% 40.0% 0.0 “clinical” risk of drug approval 20.0 38.7% 100.0% 100.0% Pre-commercial biotech IPOs have struggled due to 40.0 16.1% 60.0% 40.0 Tech IPOs have priced well and generally traded up 100.0% 8.3% 22.2% 80.0 IPO pricing conditions remain situation specific, with investors pressuring valuations in cases where growth prospects are more binary (% of Total) 0.0% 0.0% 0.0% 0.0% Q1 Q2 2010 Q2 (48.9)% Q3 Q4 Q1 2008 % Upsized Q3 2009 Offer/1 Day Source: ECM Analytics as of May 14, 2010. Excludes closed-end funds, REITs, units, best efforts offerings, non-U.S. offerings and offerings less than $10 million. (a) Based on number of pricings/filings. (b) Excludes life sciences offerings. 9 Q2 Offer/Current Q4 Q1 Q2 2010 IPO Structural Trends Number of IPOs by Sector Number of IPOs by Market Cap (% of Total) (% of Total) 100.0% 100.0% 7.7% 8.1% 15.2% 31.0% 31.5% 32.0% 80.0 80.0 39.9% 24.0% 40.0 19.7% 20.0 14.2% 21.7% 31.0% 8.7% 0.0 4.4% 2006 A&D 4.5% 4.0% 2007 Alt. Energy 3.7% 8.0% 1.5% Consumer 38.1% 16.7% 16.0% 0.0% 2008 3.7% 3.7% 14.3% 2.4% 0.0% 2.4% Health Care 20.0 31.5% 50.8% 11.9% 19.2% 2006 2010 YTD TMT Other 2008 $250MM - $500MM 2009 $500MM - $2BN 2010 YTD >$2BN Number of IPOs by % Secondary (% of Total) 100.0% 16.0% 30.9% 100.0% 9.3% 23.8% 33.9% 80.0 4.4% 6.6% 15.8% 4.0% 6.1% 12.0% 11.6% 4.0% 16.0% 14.2% 24.7% 60.0 60.0 84.0% 69.1% 2.4% 2.4% 19.0% 22.2% 16.7% 12.0% 14.8% 40.0 76.2% 66.1% 9.3% 13.0% 90.7% 59.0% 53.5% 59.5% 56.0% 20.0 20.0 40.7% 0.0 0.0 2006 2007 "Large or Profitable" A. IPO 13.0% 2007 <$250MM (% of Total) 40.0 28.6% 28.0% 0.0 2009 Finance 28.0% 34.3% Number of “Small and Unprofitable” IPOs(a) 80.0 37.0% 40.0 16.7% 4.0% 2.2% 24.0% 19.7% 38.1% 12.0% 13.1% 60.0 24.1% 28.0% 2.4% 21.9% 38.4% 60.0 18.5% 20.0% 26.8% 2008 2009 2006 2010 YTD "Small and Unprofitable" No Secondary 2007 <25% 2008 25% - 50% 2009 50% - 75% Source: ECM Analytics as of May 14, 2010. Excludes closed-end funds, REITs, units, best efforts offerings, non-U.S. offerings and offerings less than $10 million. (a) “Small and Unprofitable” designation based on issuers that are not profitable and have less than $100 million in revenue for the most recent year end data at the time of IPO. 10 2010 YTD >75% A. IPO U.S. IPO Activity – 2010 Year-to-Date Pricing Date Issuer 05/14/10 05/13/10 05/13/10 05/13/10 05/12/10 05/12/10 05/04/10 05/04/10 04/28/10 04/28/10 04/21/10 04/21/10 04/21/10 04/21/10 04/21/10 04/21/10 04/09/10 04/08/10 03/31/10 03/30/10 03/30/10 03/30/10 03/25/10 03/23/10 03/23/10 03/23/10 03/15/10 03/11/10 03/11/10 03/10/10 03/09/10 03/01/10 02/10/10 02/10/10 02/10/10 02/02/10 01/28/10 01/27/10 01/25/10 01/25/10 01/21/10 01/21/10 Kingtone Wireless info Solution Software JinkoSolar Alt. Energy Noranda Aluminum Metal & Steel -Processing TeleNav Navigation Products Express Specialty Retail Roadrunner Transportation Systems Transportation -Services CharmCommunications Avertising Douglas Dynamics Automobile Equipment Alpha & Omega Semiconductor Semiconductors Convio Software Alimera Sciences Life Sciences Codexis Life Sciences DynaVox Software Global Geophysical Services Oil & Gas Mitel Networks Comm. Equipment SPS Commerce Software Tengion Life Sciences Metals USA Metal Distributor Primerica Life Insurance Meru Networks Comm Equipment Scorpio Tankers Shipping SS&C Technologies FinTech China Lodging Group Hotels & Motels Calix Comm. Equipment First Interstate BancSystem Commercial Ban ks MaxLinear Semiconductor Financial Engines Financial Technology AVEO Pharmaceuticals Life Sciences Crude Carriers Shipping Sensata Technologies Industrial Technology Baltic Tradin g Ltd Shipping Anthera Pharmaceuticals Inc Life Sciences Generac Holdings Inc Electrical Machinery Graham Packaging Co Inc Industrial QuinStreet Inc Internet Marketing Ironwood Pharmaceuticals Inc Life Sciences China Electric Motor Inc Industrial Technology IFM Investments Ltd (Century 21 China) Mortgage Broker Andatee China Marine Fuel Services Corp Oil & Gas China Hydroelectric Corp Electric Power Cellu Tissue Holdings Inc Pulp & Paper Symetra Financial Corp Life Insurance Sector Company Characteristics Critial Mass > 40%Rev. ($100m+ Rev) Growth Profitability Proceeds — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Mean Median 11 — — — — — — — — — — — — — — — $ Market Value 16.0 64.2 80.0 56.0 272.0 148.4 74.2 112.5 105.3 53.1 72.1 78.0 140.6 90.0 147.4 49.2 31.0 240.0 368.5 75.7 168.4 185.0 126.8 94.6 166.8 103.8 146.3 89.7 256.5 654.1 228.2 46.2 269.1 182.3 150.0 215.6 25.9 87.4 22.7 96.0 107.9 419.5 $ $ 145.6 106.6 $ Above/ Below/ Proceeds/ % Mkt Value Secondary In Range 56.0 239.1 430.3 339.0 1,602.0 435.9 371.1 239.1 336.4 146.5 341.6 440.8 444.2 430.5 623.0 131.1 31.8 777.1 1,125.0 233.3 241.0 1,062.0 738.1 484.2 619.8 436.6 482.9 275.5 294.5 3,080.9 314.5 155.3 876.0 630.1 673.7 1,095.9 90.5 116.6 60.5 766.9 261.6 1,415.9 28.6% 26.9 18.6 16.5 17.0 34.0 20.0 47.0 31.3 36.3 21.1 17.7 31.7 20.9 23.7 37.5 97.5 30.9 32.8 32.4 69.9 17.4 17.2 19.5 26.9 23.8 30.3 32.6 87.1 21.2 72.6 29.8 30.7 28.9 22.3 19.7 28.6 75.0 37.5 12.5 41.2 29.6 0.0% 0.0 0.0 21.4 34.4 15.1 0.0 35.0 33.2 29.2 0.0 0.0 0.0 6.7 0.0 39.0 0.0 0.0 100.0 18.5 0.0 23.3 0.0 34.2 0.0 20.1 44.6 0.0 0.0 16.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 67.8 31.9 546.3 430.4 33.2% 29.3 13.6% 0.0 Below Above Below Below Below In Range In Range Below In Range Below Below In Range In Range Below Below In Range Below Above Above In Range Below In Range In Range In Range In Range Above Above Below In Range In Range In Range Below Below Below Below Below Below Below Above In Range Below In Range % Chng Offer/ 1 Day Current (1.5)% 0.1 10.0 22.5 (1.5) (1.8) (1.1) 0.4 (1.7) 13.8 0.0 2.0 0.0 0.0 (12.1) 13.3 0.4 (8.6) 31.0 27.8 (3.4) 0.5 13.6 16.2 8.3 33.6 43.8 (0.1) (2.4) 2.8 (0.3) 0.1 (1.2) 2.0 0.0 3.6 (1.1) 4.3 (8.4) (6.1) (8.5) 6.3 (1.5)% 0.1 10.0 15.0 (6.7) (1.1) (4.1)% 2.8 (18.3) 6.8 (4.5) 0.2 (2.1) (12.8) (17.8) 8.3 (19.4) (25.1) 63.7 1.3 (14.5) 11.3 19.8 (16.2) 9.2 12.4 29.5 (5.6) (5.8) 6.9 (8.3) (1.4) 3.7 22.3 9.0 17.4 66.4 (26.4) (11.9) (35.9) (26.9) 6.6 4.7% 0.1 1.3% (0.5) © 2010 Morrison & Foerster LLP All Rights Reserved | mofo.com Considerations in Deciding to Go Public Considerations in Deciding to Go Public Why you should go public: Access to cash and capital markets for future financings and growth. Create a currency for future tax free acquisitions. Liquidity for investors (after lock-up period). Provide a vehicle for performance-linked employee compensation. Raise the company’s profile and credibility with customers and suppliers. Potentially maintain founder and management control of the company’s future. This is MoFo. | 13 Considerations in Deciding to Go Public Pre-IPO exit strategy as an alternative: Possible higher valuation if technology is strong but earnings potential is weak. More certain cash-out of existing investors. Avoiding time and cost of the going public process. Avoiding the burdens of living as a public company. Ability to keep things confidential. No need to fill out management team. This is MoFo. | 14 Going Public—Additional Considerations Upfront costs. Management time—both before and after. Increased disclosure and reporting obligations. Corporate governance requirements. Trading restrictions on insiders and directors. Compliance costs. Public shareholders—activism and litigation threats. Investor relations. Uncertainty—legislative and regulatory changes. This is MoFo. | 15 © 2010 Morrison & Foerster LLP All Rights Reserved | mofo.com Launching a Successful IPO Launching a Successful IPO Get your corporate house in order before running up your costs: Assemble an experienced management team. Recruit independent members of the board of directors. Prepare necessary financial statements. Implement appropriate executive compensation policies. Clean up the capital structure. Organize corporate records, minute books and stock ledgers. Document material agreements. Adopt appropriate defensive measures. Identify potential issues early—no surprises. This is MoFo. | 17 Launching a Successful IPO Get your business in order before you get distracted by the IPO process Make sure your intellectual property is protected. Make sure your balance sheet is strong enough to withstand delays and expenses. Will your results be impacted by the focus of management on the IPO? Do your projections take into account the costs of being a public company? Address risk management and insurance issues. Deal with potential “cheap stock” issues. This is MoFo. | 18 Launching a Successful IPO The Business of being a public company—act like a public company, starting now! Does your board look and feel like a public company board? Are your internal controls adequate for public company requirements? Will your executive compensation programs and policies withstand scrutiny? Are there related party transactions that must be eliminated? Are you prepared to deal with public stockholders? This is MoFo. | 19 Launching a Successful IPO Five ways to make your IPO a success: 1. Every team needs a captain that plays the whole game. 2. Don’t hold your organizational meeting until people have seen a good draft of the business section of your prospectus. 3. Know what kind of shape your financial statements are in, and develop reasonable expectations about when the audit will be completed. 4. Establish a realistic timetable that involves no more drafting sessions than are really required. 5. Avoid surprises. This is MoFo. | 20 II. IPO Valuation and Structure A. IPO Example #1: GTEC Global Defense Technology & Systems, Inc. (GTEC) Overview Situation Overview and Objectives Global Defense Technology & Systems, Inc. (GTEC) provides mission-critical technology-based systems, solutions, and services for national security agencies and programs of the U.S. government The Company’s services and solutions address counter-terrorism and intelligence analysis, command, control and decision support systems and solutions for the design, engineering and integration of highly mobile mission support system A. IPO EXAMPLE #1: GTEC Global’s objective was to create a liquidity event for certain insiders and their parent company GLOBAL while using the remaining proceeds raised from primary shares to deleverage the Company's balance sheet 13 Consensus Estimates Revenues EBITDA EPS 2008A $ 189.4 18.4 $ 0.18 2009E $ 212.0 15.6 $ 1.01 2010E $ 250.0 20.3 $ 1.01 Transaction and Marketing Highlights Global filed its S-1 on September 1, 2009 and launched its roadshow on November 9, 2009 Management marketed for 9 days in 13 European and U.S. cities, with 48 investor one-on-ones and 7 group meetings Represented the first defense services IPO since SAIC in October 2006 GTEC: Valuation Driven by EBITDA and Earnings Comparable Company Valuation (US$ in millions, except per share data) EV as Multiple of A. IPO EXAMPLE #1: GTEC (US$ in millions) Stock Price % of (11/3/09) 52W High Market Value(a) Enterprise Value(a)(b) EBITDA(c) CY09E Price/ Adju Earnings(c) CY10P CY09E Ear CY10P CACI International ManTech SAIC Inc. SRA International $48.29 44.82 17.84 18.97 99% 74 87 82 $1,465 1,616 7,159 1,073 $1,795 1,564 7,314 1,073 7.0x 7.6 6.8 7.1 6.6x 7.0 6.2 6.5 15.1x 14.4 14.0 16.6 13.8x 13.2 12.2 14.3 ICF International NCI Stanley $28.54 26.40 29.29 92% 77 81 $445 369 725 $663 411 865 9.6x 10.0 9.7 8.0x 8.7 9.1 21.2x 17.6 15.9 17.3x 15.6 14.8 Overall Median Mean 7.6x 8.3 7.0x 7.4 15.9x 16.4 14.3x 14.4 Core Peer Group: Micro Cap Median Mean 9.7x 9.8 8.7x 8.6 17.6x 18.2 15.6x 15.9 8.3x 8.8 9.2 6.4x 6.7 7.1 NM NM NM 14.0x 15.0 16.0 GTEC GTEC GTEC $14.00 15.00 16.00 NA NA NA $129 138 148 14 $130 136 143 IPO Valuation 2010 EBITDA IPO Valuation (US$ in millions, except per share data) IPO Step-up Valuation Low 2010E EBITDA $ EBITDA Trading Multiple Public Market Equity Valuation Fully-Traded Enterprise Value Less: Pre-IPO Net Debt(a) Fully-Traded Equity Value Less: IPO discount Equity Value at Pricing New Investor % Ownership A. IPO EXAMPLE #1: GTEC Enterprise Value at Pricing Enterprise Value at Pricing Implied EBITDA Multiple at Pricing Marketing Range Valuation Metric $ 20.3 High $ 20.3 7.4x 7.7x 8.2x $ 149.6 $ 156.6 $ 166.0 (21.3) Plus: Net IPO Proceeds to GNA Equity Value at Pricing 20.3 Mid (21.3) (21.3) 22.8 22.8 22.8 $ 151.0 $ 158.0 $ 167.4 15.0% 15.0% 15.0% $ 131.3 $ 137.4 $ 145.5 38.1% 36.4% 34.4% $ 129.9 $ 136.0 $ 144.1 6.4x 6.7x 7.1x (US$ in millions, except per share data) GTEC Statistic Median Core Group Comp Multiple $14.00 Range of Prices $15.00 $16.00 2010P EBITDA Multiple Premium/(Discount) to Core Peer Group Comparables $20.3 8.7x 6.4x (26.2%) 6.7x (22.3%) 7.1x (18.5%) 2010P Adjusted P/E Multiple Premium/(Discount) to Core Peer Group Comparables $11.3 14.1x 11.4x (19.3%) 12.2x (13.3%) 13.0x (7.4%) (a) Includes $12.6 million in term loans, $8.6 million drawn on line of credit, $0.3 million deferred interest and $0.1 million of cash as of December 31, 2008. 15 Global Defense Technology & Systems, Inc. (GTEC) — $62.9 Million IPO Transaction and Marketing Highlights Global priced a full size offering at $13.00, or 7.1% below the low end of the range The offering was well-received by investors The order book was almost 1.5x subscribed 25% of conference calls/meetings resulted in orders Transaction Overview November 19, 2009 Base Shares Offered 4,600,000 Green Shoe (Exercised) 236,726 Filing Range $14.00 - $16.00 Issue Price $13.00 Total Amount Raised $62,877,438 Mkt Val at Issue $117,473,616 Proceeds as a % of Mkt Val 50.9% NCI Inc, one of Global’s closest comps, traded down (6.1)% the day before pricing and (7.3)% over the marketing period creating an additional challenge in pricing the deal % Secondary Multiples at Pricing(a) EBITDA Multiple P/E Multiple A. IPO EXAMPLE #1: GTEC 34.8% 2008A 2009E 2010E NA 7.7x 5.9x NA NM 12.9 (Multiples) Median Peer EBITDA 8.7x Median Peer P/E 17.3 (a) Comparable Companies include: CACI International, ICF International, ManTech, NCI, SAIC, SRA International and Stanley. 16 7.5x 15.1 6.9x 13.6 GTEC: Current Valuation Compared to Comparables GTEC Valuation (US$ in millions, except per share data) Enterprise Value as a Multiple of Stock Price (5/14/10) % of Market (a) 52W High Value Enterprise Value(b) Revenue(c) CY10E CY11P EBIT(c) CY10E Price/ EBITDA(c) CY11P CY10E CY11P Earnings(c) CY10E CY11P Defense Services CACI International Dynamics Research Global Defense Tech & Systems ManTech NCI SAIC Inc. SRA International $48.39 12.43 15.20 43.43 21.31 17.22 21.79 91% 87 90 79 62 87 91 $1,479 125 139 1,571 298 6,710 1,246 $1,833 146 139 1,679 327 6,955 1,205 A. IPO EXAMPLE #1: GTEC Median Mean 17 0.6x 0.5 0.6 0.6 0.6 0.6 0.7 0.5x 0.5 0.5 0.6 0.5 0.6 0.7 9.2x 6.8 9.7 7.8 8.4 7.7 9.7 8.2x 6.4 7.8 7.1 7.4 7.1 8.4 7.2x 5.4 7.1 6.9 7.4 6.9 7.9 6.5x 5.2 6.2 6.4 6.5 6.4 7.0 13.6x 10.0 15.5 12.7 12.7 12.8 15.8 12.2x 9.2 13.2 11.9 11.5 11.0 14.5 0.6x 0.6 0.5x 0.6 8.4x 8.5 7.4x 7.5 7.1x 7.0 6.4x 6.3 12.8x 13.3 11.9x 11.9 B. IPO Example #2: ALIM Alimera Sciences, Inc. (ALIM) Overview Situation Overview and Objectives Alimera Sciences, Inc. is a Phase III biopharmaceutical company developing ophthalmic pharmaceuticals focused on diseases affecting the back of the eye, or retina Lack of effective treatment for retinal damage creates large market opportunity for Alimera Alimera’s lead product Iluvien potential to be first drug approved for Diabetic Macular Edema (DME) B. IPO EXAMPLE #2: ALIM Phase III data in DME in hand at the time of IPO; revenues beginning in 2011 There were six Iluvien trials ongoing at the time of the IPO, as the Company evaluated the drug’s use in the treatment of a variety of ophthalmic diseases Wet age-related macular degeneration (AMD), dry AMD, and retinal vein occlusion (RVO) 19 Financials 2010A 2011E 2012E Revenue $ 0.0 $ 15.0 $ 65.0 EBITDA (26.0) (22.8) 7.2 Net Inc $ (25.5) $ (22.5) $ 4.8 2012E $ 110.0 35.3 $ 23.3 Marketing Re-Cap Alimera filed an amended S-1 on April 9th, signaling they were planning to offer 6,000,000 shares in a range of $15-$17 Management marketed for 10 days in 12 European and U.S. cities, with 57 investor one-on-ones and 4 group meetings Alimera Valuation Based On Various Methodologies — Summary(a) Alimera Valuation Based On Various Methodologies — Summary Methodology (US$ in millions) Pre-Money Equity Value Range Mean Low High Comparable Company Analysis: Revenue (2011 Estimates) $ 285.2 $ 343.2 $ 401.3 Net Income (2011 Estimates)(b) $ 455.0 $ 492.9 $ 530.7 Historical Analysis of Companies with Phase III Data $ 176.0 $ 414.9 $ 976.4 IPOs of NDA Stage Companies $ 131.7 $ 304.5 $ 774.4 (a) (b) Supporting schedules on following pages. Value discounted back 1 year at 25%. 1 ALIM: Valuation Driven by Revenue Comparable Company Valuation (US$ in millions) Ophthalmology Companies Inspire Pharmaceuticals QLT Inc. Ista Pharmaceuticals InSite Vision Inc (US$ in millions, except per share data) Stock Price % of (11/3/09) 52W High $6.23 5.25 3.96 0.42 B. IPO EXAMPLE #2: ALIM Median Mean Near Term New Drug Comparnies Auxilium Pharmaceuticals Acorda Therapeutics Savient Pharmaceuticals VIVUS Inc Affymax Inc Cadence Pharmaceuticals Arena Pharmaceuticals Orexigen Therapeutics $30.63 35.90 14.61 8.82 23.33 9.00 3.19 5.99 Median Mean ALIM ALIM ALIM $15.00 16.00 17.00 Market Value(a) Enterprise Value(a)(b) EV as Multiple of Revenue CY10E CY11P CY12P CY13P 88% 96 58 64 $518 282 132 40 $414 94 92 75 3.8x 1.9 0.6 NA 3.4x 1.9 0.5 NA 2.3x 2.5 0.5 NA 1.7x 1.4 0.4 NA 76% 76% $243 $207 $169 $93 2.1x 1.9 1.9x 1.9 1.7x 2.3 1.2x 1.4 82% 98 88 69 91 71 54 55 $1,481 1,433 1,008 731 569 463 323 286 $1,296 1,166 900 543 397 386 342 201 5.5x 9.6 NM 14.7 2.9 NM 17.9 10.0 3.5x 4.4 8.3 6.9 2.0 6.5 3.5 4.3 2.7x 3.0 5.2 4.0 1.6 2.6 3.2 1.9 2.2x 2.2 3.7 2.9 1.1 1.5 2.0 1.0 76% 77% $787 $650 $654 $470 10.1x 9.8 4.9x 4.3 3.0x 2.9 2.1x 2.1 NA NA NA $489 522 554 $571 609 648 NA NA NA NA NA NA 8.8x 9.4 10.0 5.2x 5.5 5.9 20 Historical Analysis of Companies With Phase III Data(a) Historical Analysis of Companies With Phase III Data Comparable Companies Pre-Money Enterprise Value Less: 20% IPO Discount Low Mean High $ 217.3 $ 503.9 $ 1,166.9 20.0% Pre-Money Enterprise Value 20.0% $ 181.1 (b) Plus: Cash Pre-Money Equity Valuation Plus: Gross Proceeds Implied Post-Money Equity Valuation (15.0) $176.0 $414.9 972.4 9.9 (15.0) $ 967.4 75.0 75.0 75.0 $ 251.0 $ 489.9 $ 1,042.4 (US$ in millions) Date(c) Price One Day Post Ann.(d) Post Equity Value Cash Debt Enterprise Value Savient Pharmaceuticals Inc. 05/08/08 $ 23.90 $ 1,293.8 $ 127.1 $ 0.2 $ 1,166.9 AMAG Pharmaceuticals Inc. 04/12/07 71.34 1,009.5 190.0 — 819.5 AcordaTherapeutics Inc. 09/16/09 25.15 957.3 212.7 7.0 751.6 Allos Therapeutics Inc. 12/08/08 5.04 409.0 92.3 — 316.6 VIVUS Inc. 11/19/09 8.34 671.8 226.9 20.1 465.0 Arena Pharmaceuticals Inc. 10/28/09 3.85 356.6 143.5 86.7 299.8 Cadence Pharmaceuticals Inc . 12/18/08 6.90 264.7 63.3 15.8 217.3 Orexigen Therapeutics Inc. 07/21/09 7.52 260.9 46.0 13.0 227.9 Dyax Corp. 08/18/08 5.00 303.2 63.8 31.1 270.5 $ 17.45 7.52 $ 614.1 409.0 $ 129.5 127.1 $ 19.3 13.0 $ 503.9 316.6 Company B. IPO EXAMPLE #2: ALIM $ 9.9 (15.0) Historical Analysis of Companies With Phase III Data Mean Median (a) (b) (c) (d) 20.0% $ 419.9 9.9 Less: Debt(b) (US$ in millions) Includes Companies with Phase III data announcements. Pre-Money Enterprise Value based on day after final Phase III data announcement. Cash and debt figures as of October 21, 2009 per Alimera Sciences Management. Represents the day after Phase III data announcement. Represents the company’s stock price one day after their Phase III data announcement. 22 IPOs of NDA Stage Companies — 2004–2010 YTD(a) IPOs of NDA Stage Companies — 2004–2010 YTD Pre-Money Equity Valuation at Pricing Plus: Gross IPO Proceeds Implied Post-Money Equity Valuation (US$ in millions) Low Mean High $131.7 $304.5 $774.4 75.0 75.0 75.0 $ 206.7 $ 379.5 $ 849.4 IPOs of NDA Stage Companies — 2004–2010 YTD Initial Public Offering Filing Offer Amount Price(c) Price Filed Amount Offered (US$ in millions) % Change From File (d) to Offer Development Status Diluted Valuation Trans. Indications of Pre-Mon. Post-Mon. IPO Price Amount Lead Product (s) Value Value Step-Up(f) % Change Offer to Current Price Issuer Pricing Date(b) Targanta Therapeutics 10/10/07 13.00 10.00 $ 74.8 57.5 (23.1)% (23.1)% Gram-Positive Infections $ 166.3 $ 223.8 1.1 Replidyne 06/28/06 15.00 10.00 75.0 45.0 (33.3) (40.0) Sinusitis, Pneumonia 231.8 276.8 1.2 NA Momenta Pharmaceuticals 06/22/04 14.00 6.50 74.9 34.8 (53.6) (53.6) Deep Vein Thrombosis 131.7 166.5 1.0 124.6% Santarus 04/01/04 12.00 9.00 85.2 54.0 (25.0) (36.6) Heartburn 218.5 272.5 2.0 (58.1) Eyetech Pharmaceuticals 01/30/04 19.00 21.00 123.5 136.5 10.5 10.5 Wet AMD 774.4 910.9 2.9 NA 75.0 86.7 54.0 65.6 (25.0) (24.9) (36.6) (28.5) 218.5 304.5 272.5 370.1 1.2 1.7 33.3 33.3 $ NA 2004–2010 YTD Median Mean (a) (b) Includes NDA stage companies at time of IPO. Cash and debt figures as of October 21, 2009 per Alimera Sciences Management. 7 Alimera Sciences, Inc. (ALIM) – $72.0 Million IPO Transaction and Marketing Highlights Alimera priced a full size offering at $11.00, representing a 26.7% discount to the low end of the range Investors placed a lower than expected valuation on Alimera due to the precommercial status of its lead product and current lack of tangible revenue The Company was marketed as prepared for an NDA filing imminently, with an FDA decision on Iluvien’s approval status pending B. IPO EXAMPLE #2: ALIM Insiders contributed $20 million to the order book, helping the Company achieve a minimum proceed threshold 23 Financials April 21, 2010 Base Shares Offered 6,550,000 Green Shoe (Not exercised) 982,500 Filing Range $15.00 - $17.00 Issue Price $11.00 Total Amount Raised $72,050,000 Mkt Val at Issue $341,561,605 Proceeds as a % of Mkt Val 21.1% % Secondary 0.0% Multiples at Pricing(a) EV / R evenue 2009E 2010E 6.9x 4.1x © 2010 Morrison & Foerster LLP All Rights Reserved | mofo.com The IPO Process Outside Lawyers—What Do They Do? Company counsel Underwriter counsel Pre-IPO housekeeping and preparation. Prepare the company for due diligence process. Legal requirements. Manage drafting. Submit filings and responses to SEC. Post-IPO obligations and disclosure. •Conduct due diligence. •FINRA filings. •Assist in drafting. This is MoFo. | 36 Selling stockholder counsel •Legal opinion. •Selling stockholder documentation. Typical IPO Timeline—Nasdaq/NYSE 3-6 weeks before first SEC filing 4-6 months before IPO 6-12 months before IPO Company rounds out management team (if necessary); focus on “corporate cleanup” Company formally decides to do IPO • appoint underwriter • publicity restrictions commence • print final prospectus and close offering This is MoFo. | 37 • due diligence • prospectus drafting • adopt public co. policies/ controls/ procedures if not done already • complete audit and review of interim financials • corporate governance matters • price deal • commence public offering Initial filing • file Form S1 with SEC and submit application to exchange • file confidential treatment request, if necessary 4 weeks after filing • receive first round of comments from SEC 1-2 weeks after receipt of comments • resubmit revised S-1 Typically 3-5 months after first filing Typically 2-3 weeks road show • resolve material SEC comments • listing approval • bulk print preliminary (“red”) prospectus Comments at 2-4 week intervals • respond to 2nd (and 3rd, 4th and 5th) round of comments from SEC SEC Review Process Insider’s View of SEC’s Division of Corporation Finance Structure – lawyers and accountants Underlying focus is on shareholder protection Assignment of filing within SEC groups Autonomy of Corp Fin Offices Review focus – full scope, limited scope or special review Secondary reviewer structure Key to understand – nothing special about your filing Gifts to SEC Staff This is MoFo. | 38 SEC Review Process Points to consider prior to and during the SEC’s review of the company’s Form S-1 Pre-IPO Filing Considerations Post-IPO Filing Considerations This is MoFo. | 39 • Brainstorming session on disclosure matters • Strategy on pre-filing letters • Cold review of Form S-1 • SEC’s knowledge of company based on Form S-1 and website • • • • • • Initial communication – establish contact with SEC reviewer Edgar search on SEC reviewer comments Calls with SEC to discuss specific issues Issues management Comment letters Appeals process SEC Review Process: Who is Behind the Curtain? The Division of Corporation Finance Review Team Legal (Examiner and Reviewer) Accounting (Examiner and Reviewer) Branch Chiefs, Assistant Chief Accountant, Senior Assistant Chief Accountant, Special Counsel and Assistant Director What are they looking for? How does the staff review your registration statement? What is the comment letter process? What are the timing considerations? How do you manage the review process? This is MoFo. | 40 © 2010 Morrison & Foerster LLP All Rights Reserved | mofo.com Public Company Financial Reporting and Sarbanes-Oxley Key Phases of the IPO Process The basic financial reporting timeline for an IPO Phase I - Assessing readiness allows for increased accuracy in management’s IPO planning and timing. Phase II - Planning to set overall horizon and key milestones. - Going public activities, including preparation and audit of relevant historical financial data, prospectus drafting and SEC review process. Pre-Filing Phase 1 Phase 2 Readiness Assessment Phase II and III – Being public involves corporate governance, 404 compliance, developing and sustaining quarterly close procedures. Post-Filing Phase 3 “Going Public” Activities Planning “Being Public” Activities This is MoFo. | 42 Assessing Readiness Benefits of assessing readiness at start of IPO process Anticipate issues and avoid untimely delays in external financial reporting process that can lead to: A decrease in the market’s confidence in management, - Damage brand image, - Difficulties in raising capital, and - Ultimately a lower market value for current and future capital market transactions. Assess state of readiness for life as public company in following areas: Accounting Financial Close and Reporting Governance Internal Control Legal Information Technology Other Accounting standards and uniformity Close efficiency / effectiveness Structure of Board and committees Controls over financial reporting and other key areas General counsel Governance Investor relations Gap to GAAP Consolidation process Code of business conduct 404 – Monitoring Securities counsel General and application controls Treasury and risk management Technical accounting and issue resolution External reporting Risk management 302 processes Fraud oversight Information system resources Income taxes This is MoFo. | 43 SEC Financial Reporting Registrant would be required to meet the following reporting requirements: SEC Reporting Requirements Baseline statements 3 years Unaudited interim statements Updated after 135 days of previous period Disclosures Full US GAAP and SEC compliant Selected financial data 5 years MD&A 2 years + interim Pro-forma financial statements Most recent balance sheet date and year-end and interim income statement Significant acquisitions Required - S-X 3-05 Significant equity investees Required - S-X 3-09 and 4-08(g) This is MoFo. | 44 SEC Financial Reporting Common complex accounting and reporting matters that companies often address during the IPO offering process (including the SEC review process): Differences between SEC GAAP and US GAAP (e.g., push down, carve-out, and disclosure rules) Quarterly financial data Stock compensation and “cheap stock” issues Other complex equity transactions with shareholders Segment disclosures Earnings per share Business combinations, intangible asset recognition and valuations Revenue recognition Complex or numerous pro forma adjustments This is MoFo. | 45 Sarbanes-Oxley Act of 2002 Section 302 302 reporting begins once a company is an SEC registrant Requires quarterly certification by the CEO/CFO regarding the completeness and accuracy of reports filed under Section 13(a) and 15(d) of the Securities Act of 1934 as well as the nature and effectiveness of internal controls supporting the quality of information included in such reports. Section 404 404 reporting begins with second annual filing with SEC Requires an annual report by both management and external auditors regarding the effectiveness of the company’s internal controls over financial reporting. This is MoFo. | 46 Internal Control and Process Considerations Key process and internalcontrols considerations Ensure Sarbanes-Oxley success begins prior to the filing Gain common understanding of key business risks Focus on key process and systems beyond financial reporting Address systems and process scalability Understand overall compliance requirements Develop key policies and related management practices Plan for training and education Set up monitoring processes Develop communication practices This is MoFo. | 47 Internal Control Considerations Avoiding surprises is key to success as a public company Requires quarterly certification by the CEO/CFO regarding the completeness and accuracy of reports filed under Section 13(a) and 15(d) of the Securities Act of 1934 as well as the nature and effectiveness of internal controls supporting the quality of information included in such reports. This is MoFo. | 48 III. IPO Execution Managing the IPO Process IPO Timing Considerations Targeted First Filing (whenever unaudited financials ready) Expected SEC Review (median for IPOs since 2009 is 75 days(a) Re-File With Range (at the outset of marketing, based on market conditions) Marketing (European / US roadshow over 2 week time period which does not interfere with any major market holidays) Potential for early lockup release follow-on (once full audit complete) Proposed IPO Timeline Pre-Filing Period Week 1 All Hands Organizational Meeting Management Due Diligence at Company Prospectus Drafting SEC Review Period Ongoing Due Diligence (Financial, Auditors, etc.) Roadshow Preparation Receive and Respond to SEC Comments and File Amendments III. IPO EXECUTION April 2010 F S 1 2 3 8 9 10 2 11 12 13 14 15 16 17 9 5 6 W 7 S M T W T June 2010 F S S M 1 3 4 5 6 7 8 6 7 W T F S 1 2 3 4 5 8 9 10 11 12 S 4 M 5 T 6 W 7 Weeks 20–21 Management Presentations to Underwriters’ Sales Forces International and Domestic Roadshow Registration Statement Declared Effective by SEC August 2010 July 2010 T Print and Distribute “Red Herring” Prospectus File Registration Statement with SEC May 2010 T 4 T Customer Due Diligence Post-Effective Period Weeks 19–20 M Weeks 9–18 Weeks 2–8 S Pre-Effective Period September 2010 T F S S M T W T F S 1 2 3 1 2 3 4 5 6 7 8 9 10 8 9 10 11 12 13 14 S 5 M 6 T 7 Price Offering and Begin Trading Closing 3 Days After Pricing Quiet Period Begins October 2010 W T F S 1 2 3 4 8 9 10 11 S 3 M 4 T 5 W 6 T 7 November 2010 F S 1 2 8 9 S 7 M T W T F S 1 2 3 4 5 6 8 9 10 11 12 13 10 11 12 13 14 15 13 14 15 16 17 18 19 11 12 13 14 15 16 17 15 16 17 18 19 20 21 12 13 14 15 16 17 18 10 11 12 13 14 15 16 14 15 16 17 18 19 20 18 19 20 21 22 23 24 16 17 18 19 20 21 22 20 21 22 23 24 25 26 18 19 20 21 22 23 24 22 23 24 25 26 27 28 19 20 21 22 23 24 25 17 18 19 20 21 22 23 21 22 23 24 25 26 27 25 26 27 28 29 30 23 24 25 26 27 28 29 27 28 29 30 25 26 27 28 29 30 31 29 30 31 26 27 28 29 30 24 25 26 27 28 29 30 28 29 30 30 31 (a) 31 Denotes market holiday. Denotes typical market slowdown. Excludes offerings put on hold due to market conditions. 25 Marketing Program: The Roadshow Marketing the Company Opportunity for company to articulate ‘story’ and investment opportunity face-to-face with investors U.S. Roadshow: • 8–10 days, with approximately 100+ one-on-one meetings International Roadshow: • 2–4 days, with approximately 20–50 one-on-one meetings Investors prepare for meeting by reading the offering prospectus, having discussions with research analysts and salespeople prior to meeting management Critical focus on MD&A and analysis of comparable companies Most sophisticated investors and institutions will spend time building earnings and valuation models to test investment thesis Market environment plays critical role in investment appetite Critical juncture in deal process Investors ask everything required to make an informed investment decision III. IPO EXECUTION 26 The Roadshow Presentation Elements of the Roadshow Presentation Company and Underwriters will develop the roadshow presentation during the weeks following initial filing with the SEC, and while awaiting the first round of SEC comments Key components of a roadshow presentation: Tagline or mission statement Brief overview of Company Description of the market opportunity Highlights of Company strategy Discussion of products/services and product/service roadmap Discussion of customers, design wins, partners, etc. Overview of competition and competitive differentiation/barriers to entry Review of historical financial results and projected financial model (i.e., gross margins, operating expenses as a % of revenues, operating margin, net margin) Roadshow presentation should be approximately 25 minutes long Critical to leave plenty of time during roadshow meetings for investor Q&A Company management and Underwriters will rehearse roadshow presentation and Q&A numerous times in advance of actual roadshow III. IPO EXECUTION 27 Illustrative Roadshow Schedule and Targeted Accounts San Francisco 7X7 Asset Mgmt. Artis Capital Mgmt. Ascend Capital Capital Research Global Cavalry Asset Mgmt. Crosslink Capital Farallon Capital Mgmt. Franklin Advisers J&W Seligman Palo Alto Investors Partner Fund Mgmt. Passport Capital RCM Capital RS Investment Mgmt. Security Global Investors Seattle/Portland Columbia Mgmt. Mazama Capital Mgmt. Rainier Investment Mgmt. Roxbury Capital Mgmt. Tygh Capital Midwest American Century Arbor Capital Mgmt. Artisan Partners Calamos Advisors Castleark Mgmt. Citadel Investment Group Columbia Wanger Cortina Asset Mgmt Driehaus Capital Mgmt FAF Advisors M&I Investment Mgmt. Magnetar Financial Next Century Growth Northern Trust Oberweis Asset Mgmt. Peregrine Capital Mgmt. RiverSource Investments Segall Bryant Hamill Skylands Capital Llc Thrivent Investment Mgmt. UBS O’Connor William Blair Boston Adage Capital Alydar Capital BlackRock Advisors Boston Partners Columbia Mgmt. Constitution Research Copper Rock Capital Partners Eaton Vance Mgmt. Essex Investment Mgmt. Evergreen Investment Mgmt. Fidelity Mgmt. & Research Fortis Private Investment Mgmt. Grantham, Mayo, Van Otterloo Lee Munder Investments Loomis Sayles MFC Global Investment Mgmt. MFS Investment Mgmt. Putnam Investment Mgmt. Sirios Capital Mgmt. State Street Global Advisors The Boston Company Asset Mgmt. Vinik Asset Mgmt. Wellington Mgmt. Westfield Capital Mgmt. New York Area Preliminary Roadshow Day 1 New York Mgmt Presentations/ 1x1 Mtgs Day 2 Frankfurt/London 1x1 Mtgs Day 3 London 1x1 Mtgs/Group Lunch Day 4 Mid-Atlantic 1x1 Mtgs Day 5 Boston 1x1 Mtgs/Group Lunch Day 6 New York 1x1 Mtgs Day 7 New York 1x1 Mtgs/Group Lunch Day 8 KC/ Denver 1x1 Mtgs Day 9 San Francisco 1x1 Mtgs/Group Lunch Day 10 Portland/L.A. 1x1 Mtgs Day 11 Chicago/Minneapolis 1x1 Mtgs III. IPO EXECUTION (Conference calls will be scheduled as needed) Los Angeles/San Diego AIG Sun America Asset Mgmt. Capital Guardian Capital International Capital World Evolution Capital Mgmt. Jacaranda Partners Nicholas-Applegate Capital Mgmt. PRIMECAP Mgmt. TCW Asset Mgmt. Wall Street Associates Note: Denver/Salt Lake City Arrowpoint Denver Investment Advisors Janus Capital Mgmt. Marsico Capital Mgmt. Platte River Capital Wasatch Advisors Wells Capital Mgmt. Mid-Atlantic Texas/Kansas City AIM Mgmt. Group American Century Investment Mgmt. Brazos Highside Capital Mgmt. Kornitzer Capital Mgmt. Security Investors Van Kampen Waddell & Reed Investment Mgmt. Bold denotes top Cowen recommended accounts. 28 Aberdeen Asset Mgmt. Blackrock Advisors Chartwell Inv. Partners Columbia Partners Delaware Investment Advisers Federated Investment Mgmt. Friess Associates Legg Mason Fund Advisors Redstone Investments Sands Capital Mgmt. T. Rowe Price Associates Turner Investment Partners Alkeon Capital Mgmt. AllianceBernstein Capital Mgmt. Balyasny Asset Mgmt. BlackRock Advisors Castlerock Mgmt. Caxton Chilton Investments ClearBridge Advisors Columbus Circle DE Shaw Deutsche Asset Mgmt. Duquesne Capital Mgmt. Federated Kaufmann Fred Alger Mgmt. FrontPoint Partners George Weiss Associates Gilder, Gagnon, Howe & Co. Goldman Sachs Asset Mgmt. Highbridge Capital Mgmt. ING Investments Intrepid Capital Mgmt. J. & W. Seligman & Co. Jennison Associates JP Morgan Asset Mgmt. Kingdon Capital Mgmt. Lord Abbett Maverick Capital Moon Capital Mgmt. Morgan Stanley Investment Mgmt. Neuberger Berman Northern Trust Och-Ziff Capital Mgmt. OppenheimerFunds Palisade Capital Mgmt. Royce & Associates S.A.C. Capital Schroder Investment Mgmt. Straus Asset Mgmt. TIAA-CREF Tudor Investments UBS Global Asset Mgmt. Visium Asset Mgmt. Weiss Multi-Strategy Advisers York Capital Mgmt. Ziff Asset Mgmt Selected Targeted Institutions in Europe U.K. and Ireland Scandinavia London Sweden Aerion Fund Mgmt. AXA Framlington Barings BAE Systems Blackrock Investment Mgmt. British Airways Pension Inv Mgmt. Cheyne Capital Ecofin Ltd F&C Management First State Investments Gartmore Investment Mgmt. GLG Partners Guinness Atkinson Henderson Insight Investment Mgmt. Kuwait Investment Office Legal and General Neptune Investment Mgmt. Newton Investment Mgmt. Pictet Asset Mgmt. Polar Capital Partners RCM Capital SAC Capital Smith and Williamson Asset Mgmt. Threadneedle Asset Mgmt. Lannebo Fonder Manticore SEB Wealth Mgmt. Swedbank Robur Denmark Bank Invest Asset Mgmt. Carnegie Asset Mgmt. Danske Bank Nordea Investment Mgmt. Norges Bank Investment Mgmt. Norway DnBNOR Asset Mgmt. Germany Allianz Global Investors DWS Investment GmbH DEKA Investment GmbH INVESCO Kapitalanlage GmbH Metzler Investments Union Investment GmbH Scotland Aegon Ballie Gifford Ignis Asset Mgmt. Martin Currie Scottish Widows III. IPO EXECUTION Ireland Bank of Ireland Asset Mgmt. Bloxham Eagle Star Irish Life Pioneer Setanta Benelux Region Switzerland The Netherlands Bank Julius Baer Credit Suisse Asset Mgmt. Lombard Odier Darier Hentsch Cie SAM Sustainable Asset Mgmt. UBS Global Asset Mgmt. APG Investments Delta Lloyd/Cyrte Investments ING Groep Interpolis Robeco Brussels Italy Aureo Gestioni Bipemme SGR BPU — Ubibanca Eurizon Dexia SA ING KBC Asset Mgmt. Note: Bold denotes top Cowen recommended accounts. 29 Illustrative Roadshow Example Summary Statistics 11 # of Cities: 12 # of One-on-Ones/ Two-on-Ones: 56 # of Conference Calls: 13 # of Three-onOnes/Group Meetings: 5 III. IPO EXECUTION # Of Roadshow Days: 30 Marketing: Attack the Market to Create Excitement and Demand The Issuer’s story will be well received by institutional investors, but it will not sell itself Work extensively with management on roadshow presentation Compelling story Effective graphics Comfortable and convincing voice-over Robust Q&A prep Institutional sales memo Pertinent deal information Sales points and positions Anticipate investor questions Management teach-in Educate salesforce Preview of anticipated Q&A Net roadshow Deal captain teach-in Complements analyst teach-in with the “investor hooks” Real-time adjustment to positioning based on feedback • Growth funds Targeting effort • Tech specialists Identify top prospects • Small cap specialists Communicate aggressively • GARP funds III. IPO EXECUTION • Long-term oriented hedge funds Strategic design of roadshow Shape roadshow to tap every pocket of demand Schedule cities to generate early order momentum and buzz Feedback loop to management Leverage proprietary Cowen insight and senior-level relationships to drive anchor order conversion Develop and capitalize on demand tension Strategic messaging to investors during roadshow Find investors who will drive price 31 Pricing and Allocation of Shares The Bookrunner’s Capital Markets team will be the source of pricing and allocation advise as well as a liaison between management and the salesforce Pricing Considerations Registration statement declared “effective” following clearance of SEC comments Shortly before pricing, Underwriters conduct final “bring down due diligence call” with Company management Pricing call occurs shortly after being declared effective by the SEC Changes in offering size or price: Depending on the magnitude of changes, those changes may need to be filed as an amendment with the SEC and approved before proceeding with the offering Execution and delivery of Underwriting Agreement Printing and distribution of Final Prospectus III. IPO EXECUTION Allocation Considerations Allocations made by the bookrunner of the transaction Bookrunner utilizes allocations as a tool to ensure strong aftermarket performance of the stock, acting in both the issuer’s and investors’ best interests Through allocations, bookrunner controls the institutional, retail and geographic distribution of the offering Allocates investors based on the following criteria: Quality of institution History of long-term holding and continued aftermarket interest in both previous IPOs and comparable companies Timing of order Size of order Anticipated aftermarket demand Bookrunner utilizes allocation to ensure strong aftermarket performance of the share Allocations that “seed” investors Reduces supply in aftermarket, stimulates aftermarket buying Investor confidence in aftermarket price and liquidity 32 Aftermarket Support — Key Ingredients Stabilization Sales and Trading Creation of excess demand and a large syndicate short position through overallotment — creates demand in the aftermarket Create a liquid two-way market for shares of the company Capital commitment Provide investors with ready liquidity for their investment (increases or decreases) Repurchasing of shares from the Market III. IPO EXECUTION Strong Aftermarket Support Research Investor Relations Continue regular publication of research reports and meetings/ conference calls with investors, updating them on the company Provide regular flow of information on country, sector and the company to investors Provide company with ongoing feedback from investors Monitor the research effort of syndicate members during offering process and in the aftermarket 33 Sponsor and organize roadshow presentations for the company to update investors on ongoing developments Over-Allotment Option Overview At Pricing Pricing Call: Underwriters Buy 5,000,000 Shares Allocations: Underwriters allocate 5,750,000 shares at deal price (includes 15% overallotment option) Settlement (T+3): Underwriters pay for 5,000,000 shares from company Post Pricing Post pricing of the initial public offering, market conditions and other factors create three options available to the underwriter to support the issuer Leaves underwriters with a 750,000 share short position Stock trades above deal price: underwriters buy 750,000 shares from the issuer at deal price up to 30 days after trade date (i.e. demand greater than supply) Stock trades below deal price: underwriters use the 750,000 share short position to stabilize the stock (i.e. demand less than supply — buy stock in the open market as buyer of last resort) III. IPO EXECUTION Over-allotment option proceeds are delivered to the issuer Over-allotment option proceeds are not delivered to the issuer Stock trades around deal price: underwriters may use a portion of the 750,000 share short position to buy over-allotment shares from the issuer at deal price (i.e. demand equal to supply) Over-allotment proceeds may be delivered to the issuer 34