© 2009 CONSOR

The Economic Tsunami:Key Issues in IP Due Diligence

and Monetization

The Value Perspective

Presented by:Presented by:Weston AnsonWeston Anson

CONSOR Intellectual CONSOR Intellectual Asset ManagementAsset Management

858.454.9091 858.454.9091 www.consor.comwww.consor.com

wanson@consor.comwanson@consor.com

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Five Critical Elements of Value Maximization

1. Know where maximum strategic and realizable value is

to be found in the asset portfolio

2. Establish a realistic current market value for the assets

3. Understand how to extract maximum value from the

assets

4. Select the best possible intellectual property / intangible

asset strategy for the situation

5. Manage the process

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Who Cares About Maximizing IP Value?

Merger and

Acquisition Interests

Shareholders

Tax Authorities

Auditors

Wall Street Analysts

Other Stakeholders

Internal Asset Managers

Partners

International Affiliates

The Media

Finders of Fact

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When Is Valuation Necessary?

Strategic assessment of whether the IP assets be sold separate from the business

Negotiation of “stalking horse” bids and initial asset bundle pricing structures

Evaluation of bids for global asset portfolio versus individual asset buyers

IP assets to serve as collateral for various forms of financing

Purchase price allocation analysis of IP-related transactions

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Identify IP / IA Bundles for Value

Stratify IP / IA Core v. Periphery

Peripheral portfolios may be monetized Vertical and horizontal Out-licensing / Spin-off

Analyze quality of IP Relevancy to current / future business Relative strength analysis

Potential infringement assessment

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Monetizing IP Assets

Monetization Alternatives Sale / Auction License Creditor Settlement Sale & Leaseback Securitization Litigation

Securitization Alternatives Line of Credit Take-out or DIP Interim Long term

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Intangible Asset Bundles

1. Trademarks6. Corporate Identity

Assets11. Real-Estate Related

Assets

2. Other Brand-Related Assets

7. IP Contracts12. Communications-

Related Assets

3. Patent-Related

Bundles of Value8. IT/Software

13. People-Related Assets

4. Internet-Related

Assets9. Data/Information-

Related Assets14. Other Technology

Assets

5. Product-Related Assets

10. Research-Related Assets

15. Miscellaneous Assets

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IP & Intangible Assets

Intellectual Property

PATENTS

COPYRIGHTS

TRADEMARKS

TRADESECRETS

Intangible Assets

Data &Knowledge

Bases

COPYRIGHTS

Customer& VendorRelations

ProprietarySoftwareProprietary

SoftwareInternetAssets

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Case StudyMulti-Jurisdiction Bankruptcy and Sale

The Americas U.S. Canada Mexico Brazil

Europe Belgium Spain Sweden Czech Republic Netherlands United Kingdom Germany Italy

A leading global supplier of interiors to automotive A leading global supplier of interiors to automotive industry (70% of U.S. instrument panels), with operations industry (70% of U.S. instrument panels), with operations in:in:

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U.S. IP Issues

IP not to be sold outright Need for continued use in North America Reserve right to return to Europe

Non-exclusive use imperative Buyer could be competitor in U.S. and worldwide

Valuation must be comprehensive Intangible assets transferred with operations greater

than strictly intellectual property rights

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IP Assets Identified

Patents (74 total, 12 in current use and to be licensed) Product design features (invisible air bag door) Manufacturing process improvements (heat transfer

and molding techniques)

Trademarks (transitional use only) Collins & Aikman Invisitec, Akro-Edge, AcT

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Other Intangible Assets

Trade Secrets Embedded in shop-level manuals and design centers

Know How Including computerized knowledge bases, and just-in-

time sequential parts delivery technology Goodwill

Reputation for design, materials knowledge, and manufacturing expertise and capabilities

Relationships with engineering divisions of all major auto manufacturers in the world

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U.S. Approach to Appraisal

Know-How and trade secrets valued as being transferred in a bundle with patents and tangible plant assets

Value marketing bundle components by plant / country based on contract activity and transitional licensing structure

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Summary By Country

COLLINS & AIKMAN -- EUROPEValuation Summary by Country

as of June 30, 2005In thousands of U.S. Dollars

CountryPatented

Technology Valuation

Know-How & Trade Secrets

Trademark & Goodwill

Royalty (One Year)

Total IP / IA Value

Belgium- 2,834 429 3,263

Brazil- 781 118 899

Czech Republic1,681 2,026 307 4,014

Germany- 2,819 427 1,324

Italy1,631 3,109 471 5,211

Netherlands9,742 2,075 314 12,131

Spain- 3,535 536 4,070

Sweden290 2,804 425 3,519

U.K.- 3,157 478 3,636

Total 13,344$ 23,139$ 3,506$ 38,067$

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Result: Negotiated Sale

U.S. Appraisal Total IP value in the range $37.7 — $40.8 million*

USD 88% tech bundle, 12% marketing bundle

Liquidation value discounted to $16.7 — $18.2 million* USD 90% tech bundle, 10% marketing bundle

Negotiated Sale of IP license $19.25 million USD

Approved by Court February 2006* Values are changed by a common factor

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Conclusions

Dual venues and agendas created unique challenges and timeframes

Comprehensive IP / IA due diligence identified more than 10x ordinary value extraction

Proof that intangible assets, not just IP like patents and trademarks, can be monetized

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Summary

Identify all IP / IA in the current project Understand the context for historical and potential

use of the assets Triage the assets by quality and priority Bundle the assets for optimal effectiveness Benchmark valuation

Liquidation context End-use dependent

Market the assets / close transactions Licensing Sale or other disposition

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QUESTIONS AND ANSWERS