Equity Financing Alternatives NIRI Atlanta Chapter

1. December 2007 Equity Financing AlternativesNIRI Atlanta Chapter

3. Equity Financing Needs Many reasons: • Fund acquisitions, projects and subsidiaries • Add working capital for expansion • Debt reduction (at-the-market debt for equity swap) • Adjust leverage ratios to comply with credit facility or regulatory covenants • Manage a Balance Sheet to retain or enhance credit ratings

4. Equity Financing Alternatives • Many alternatives: • Underwritten / “traditional” Secondary Offerings • 144A • QIBs • Private Investment in Public Equity (PIPE) • QIBs • AI’s • Equity Line • ATM / CEO / SAFE • S-3 eligible issuers that offer shares for sale from their existing Shelf Registrations. • Dutch Auction • Direct Equity • S-3 eligible issuers that offer shares for sale from their existing Shelf Registrations via modified DSPP

5. Equity Financing Alternatives 2 3 • Characteristics • Investor Type • Security Type • Confidentiality • Sets Terms / Price • Market Impact • Lead Time • Sizes • Investor Lockup • Inv. Legal Protection • Discount • Fees (% of Cap) • Total Issuance Cost • Direct Equity • Institutional • Registered • High • Issuer • Low • 2 - 6 weeks • > $10MM • None • High • 0 - 2% • 1% • 1-3% • Secondary • Institutional • Registered • Very low • Issuer • High • 3 - 4 Months • > $50MM • None • High • 11% • 5% • 16% • 144a • HNW / HF / PE • Unregistered • Medium • Dealer / Investor • Moderate • 2 - 3 Months • Avg $5MM • 1 year • Low • 5%+ • 6% • 11%+ • PIPE • HF / PE / LBO / VC • Unregistered • Medium • Dealer / Investor • Moderate • 1 month • $1MM – $200MM • 1 month+ • Low • 10%+ • 6% • 16%+ • Dutch Auction • Retail • Registered • Very low • Issuer / Investor • High • 2 - 3 Months • $35MM – Open • None • High • 15% • 4% • 19% • Equity Line • N/A • Registered • High • Issuer • Low • 2 - 4 weeks • > $10MM • None • High • N/A • 1 - 2% • 1-2% 1 4 5 6 • Houlihan Lokey “Private Investment in Public Equity (PIPE) • Financial Management Association, “The Impact of Rule 144a …” Winter 2002 • IT Investors Journal: “Why the pox is on SCOX” August 15, 2004 • Overview: Private Investment in Public Equity Friedland Capital White Paper July 200 • Target price is daily VWAP – not guaranteed • Tied to VWAP

6. Documentation Comparison Grid 1 2 • Secondary • YES • YES • YES • YES • NO • NO • NO • YES • YES • YES • YES • 144a • YES • OPTIONAL • YES • OPTIONAL • YES • YES • YES • NO • YES • NO • YES • PIPE • YES • OPTIONAL • YES • OPTIONAL • YES • YES • YES • YES • YES • NO • YES • Dutch Auction • YES • OPTIONAL • YES • OPTIONAL • NO • NO • NO • YES • NO • YES • YES • Documentation • Offering Circular / Prospectus Supp. • Purchase/Sale Agreement between Issuer & underwriter • Due Diligence • Syndication Group • QIB Questionnaire • Legal Opinion • Reg. Rights Agreement • Reg. Statement • Road Shows (Rule 433) • Credit ratings req. • Press releases • Equity Line • YES • YES • YES • NO • NO • NO • NO • NO • NO • NO • OPTIONAL • Direct Equity • Plan • NO • NO • NO • NO • NO • NO • NO • NO • NO • OPTIONAL 1. File form 8k of Agreement and supplements to prospectus 2. Overview: Private Investment in Public Equity (“PIPES”)

7. Equity Lines and Direct Equity • Can be implemented quickly (typically 2-6 weeks) with no road shows • Clients have access to financing to supplement other forms of funding when needed • Fees and commissions are substantially less than all other avenues of equity financing • High degree of confidentiality • Negligible market impact • Company’s Management controls the selling of shares into the market by setting: • Amount of shares to be sold • Timing of sales • Length of selling period • Minimum sale (floor) prices

8. Sample Company

9. Equity Line & Direct Equity • Features & Implementation

10. Typical Equity Line Features* • Efficient and cost effective solution for issuing equity, similar to the operation of a stock repurchase plan or Medium Term Note program. • Transforms the stock issuance process into an execution service, by selling shares directly on the Exchange (or OTC), exploiting market strength and restraining upon market weakness. Sales methodology designed to minimize pressure on the stock price. • Issuer determines 1) amount of issuance, 2) timing of issuance, 3) floor price and 4) duration of selling period. Issuer may stop or start issuance at any time intraday. • No issuance information “leakage”. Discreet selling strategy. • Allows a public company to issue shares, at its discretion, over a period of time (up to 3 years), rather than having to announce a massive sale of shares and be obligated to sell them all at once. • Sale proceeds based on actual sales price (less commission); VWAP target. • Sales are typically executed through electronic trading systems (i.e., B-Trade, ITG Posit, SONIC, Anonymous SuperDot, Direct+, or BNY ConvergEx). • Share issuance amount limited only to Shelf availability. The issuer targets the dollar amount (or share amount) to raise. Entering into a Sales Agency Agreement to sell shares. Shares are sold, with daily reporting, and can be settled T+3 or at the end of a selling period (1-20 days) utilizing securities lending. Funds are wired to the company upon settlement. Regulatory filings are updated when the issuance is deemed to be “material” or at quarter end. *(modeled on BNYCMI SAFE product)

11. Example – Execution Liquidity

12. Equity Line Implementation • Term Sheet • Defines Material Terms • Customizes program to meet client needs • Due Diligence • Management meetings • Business review • Legal review • Follows MTN model review throughout life of program • Agreement • Standardized Agreement • Comfort Letters • Settlement Procedures Timeline: 2-4 Weeks • Execution • Adjustable selling terms • Managed selling of shares • Daily reporting of executions • Settlement at end of selling periods • Regulatory Filings • File Supplements to prospectus (424B5) • File Form 8-K with Sales Agency Agreement

13. Direct Equity Features • An extremely efficient and cost effective solution for issuing equity by leveraging a Direct Stock Purchase Plan vehicle, combined with sophisticated targeting techniques. • Allows the issuer to place shares with targeted investors. • Issuer control mitigates volatility, the impact of the artificial negative money flow caused by arbitrage activity and may result in less dilution. • Allows public companies to offer shares to institutional investors at the companies’ discretion over a period of time, rather than having to announce a massive sale of shares and be obligated to sell them all at once. The issuer targets the dollar amount to raise. Mellon Securities LLC, as agent for the Issuer, notifies qualified investors that the Issuer will be granting Waivers to the monthly cap detailed in the Plan document. Investors perform due diligence, submit a RFW and state a discount from market price.  The plan details the permissible discount level 0% - 3%.  Once Waivers are granted, funds are due to the Plan Administrator on the day prior to the commencement of the pricing window (generally 10 business days).  A threshold price is set for the window period and the Issuer is not obligated to sell stock below the threshold.  At the end of the window period, agent calculates the price of the stock, based on VWAP less the discount granted and shares are issued to the investor.  

14. Program Implementation • Agreement • File Plan • Register Shares via S-3 • Documentation • Agreement • Define plan parameters • Draft / review DSPP • Preparation • Print & distribute • Investor identification Timeline: 2-6 Weeks Prior to Pricing • 2 Days before Pricing • Bids due 10am EST • Bids Presented • Issuer Grants Waivers 1 Day before Pricing Notify bidders Funds wired by 2pm 3 - 6 Days before Pricing Notify of intent to activate Analyzes threshold parameters Determine investor interest Pricing Period Pricing Summary 1pm Funds invested or delivered - 4pm DWAC Shares Agent calculates price Agent calculates share allocation Pricing Period (Standard or Dynamic Duration)

15. Targeting Methodologies - Peer Overlay Significant Weightings Significant Weightings Selected Peers Exclude EAS

16. Potential Investors(Valuation Model Analysis)

17. Compatibility Score: 265 Moderately/High Highland Capital Management L.P., Dallas, Texas Investor Targeting Methodologies Valuation Model Analysis $1,713 Million in Equity Assets Current holdings : $0 Purchase Potential : $32.0 Million Annualized Turnover : 15% Owns 1 in Peer Group Company Compatability Score 150 - 250 moderate attractiveness 250 - 325 moderately high 325 - 450 high 450+ high attractiveness *Source Data Provided by Valuation Technologies

18. Threshold Pricing- Market Neutral Design • Investor selection methodology will help mitigate the impact of the artificial negative money flow caused by arbitrage activity • Generally recommend laddered approach - combination of: • Established pricing periods • Demand driven dynamic duration pricing periods

19. Investor SummarySample Pricing Period

20. Example: • December 2004 – filed a Direct Equity Plan with 5 million shares • January 2006 – initial activation – accepted $10 million from retail and institutional investors through Plan. • Used opportunistically over 3 quarters, raising $10 - $30 million each time. • Investment requests in excess of $500 million. • Client permitted investments totaling in excess of $125 million. • Discount range 1.35% - 1.75%. • During credit crunch in September / October 2007 activated twice, raising $150 million at discount of 2%.