the electronic marketplace for receivables finance · tre value proposition 1st centralized...

The Electronic Marketplace for

Receivables Finance

Proprietary and Confidential

Corporate Overview

Who we areThe Receivables Exchange (“TRE”) is an electronic, Internet-based exchange (the “Exchange”)

over which commercial receivables (“Receivables”) are actively traded through auction by and

among buyers (“Liquidity Providers” or “LPs”) and sellers (“Issuers”).

MissionTo provide a global receivables trading platform enabling

efficient and transparent B2B commerce

Founded

New Orleans, LA

April 2007

Investment Partners

Fidelity Ventures

Prism VentureWorks

Square 1 Bank

Office Locations

New Orleans

New York

Dallas


TRE Value Proposition

1st centralized marketplace for commercial buyers and sellers of accounts

receivables electronically

Applying an online exchange to a large, fragmented marketplace

A track record of success: Executive management and Board members have

founded, built and grown successful financial technology companies

A proven technology solution for high volume transactions: Partnered with

the developers of the NYSE fixed-income trading technology platform

Standardized asset class: Trading receivables priced like zero coupon bonds

Comprehensive due diligence package to make informed credit decision

Information agent providing transparency and visibility into each A/R


TRE Product Summary

Primary InstrumentTRE Repurchase Agreement: LP purchase of

Issuer A/R backed by contractual obligation of

Issuer to repurchase A/R in the event of debtor

default

Exchange Administration Process – 7 steps

Registration -> Listing -> Bidding->Awarding->

Funding-> Repayment -> Settlement

Legal Framework

Non-notificationTwo party system (principal to principal via TRE)

Repurchase agreement secured by underlying A/R

True sale

TRE participates out 100% of security interest

NotificationThree party system (Issuer/Debtor/LP)

Recourse to Debtor for underlying A/R in addition

to claim to Issuer for amounts owed

Registration:

Financials, third party

data review, bank

verification & legal

agreements

Listing Options:

Single invoice or

package,

Minimum advance rate,

Maximum discount fee,

Auction duration,

Reservation Price,

Notification to AD

Registration:

Legal agreements and

bank verification

Auction Bidding:

Advance Rate,

Discount Rate,

Maximum amount in a

shared listing

Other:

Issuer and Account

Debtor Research

Insurance Option

Liquidity ProviderTREIssuer

Account Debtor

Notification Option –

Verification of Receivable

Notification of Sale

Payment to TRE


TRE Product Structure

Outright purchase and sale of receivable (i.e. not a loan)

Louisiana law specifically recognizes recourse factoring arrangements to legally result in

“true sales” of factored/sold accounts in the absence of fraud or intentional

misrepresentation by the parties

Option for notification or non-notification

Seller of commercial accounts determines if TRE contacts its customers and collect funds

User agreements from both parties executed with TRE

Agreements by and between TRE and Issuers and LP’s, independent of each other,

outlining agreement to comply with and be bound and obligated under the Rules of the

Exchange.

Repurchase agreement in addition to claim on underlying A/R

LP purchase of Issuer A/R backed by contractual obligation of Issuer to repurchase A/R

in the event of debtor default (i.e. full recourse to Issuer)


Participants on the Exchange

Commercial Banks, Investment Banks, Hedge Funds, Asset Based

Lenders, Factors, Accredited Qualified Investors

Liquidity Providers

Issuers

Addressable market of 22 million private US companies

Targeting small to middle market growth B2B companies

All industry segments, nationwide

Account Debtors

Larger manufacturers with extensive supply chains

Large corporate entities


Increase origination volume

Deploy more capital

Access to high yield asset class

Diversify portfolios

Secondary market trading

Transparent market pricing

Seller transaction history

Aggregated credit information

Comprehensive due diligence package

No fee referral program

Back-office cost savings

Liquidity Provider Benefits

High

Relative Yield

Low

Short Long

Term

Investment Yield vs Term

Accounts Receivable

Asset Backed Securities

Short Term Bonds

Commercial Paper

Certificates of Deposit

Treasury BillsOvernight Deposits

Mid Term Bonds

High Yield Bonds

Equities

Corporate Bonds

Mortgage Backed

Securities

Long Term Bonds

Yield vs. Term


Issuer Benefits TRE Benefits

Broader market access

Lower cost of capital

Competitive bidders

Increased credit worthiness

Faster access to capital

Diversification of funding

Reliable funding sources

Working Capital Benefits

Increase revenues

Invest in new equipment

Hire and train employees

Market to more customers

Buy additional inventory

Invest in new equipment

Issuer Financing Alternatives

TRE


Exchange Administration

• Application

• Financial data

• Credit and lien searches

• Bank verification

• User agreements

• UCC filing

Registration

• Debtor information

• Invoice details

• Invoice images

• Supporting documents

Listing

• Sorted by best bid (preference or implied price)

• Continuous 24/7 market

• Auction support/ policing

• Full depth of market pricing

Bidding

• 4:00pm EST close

• Winner awarded by best bid

• Based on preference or implied price

• Communication to all parties

Awarding

• 10:00am EST next day funding

• Reverse wire from LPs

• Funding trade to Issuer

• Funding confirmation

• Verification & Notification

Funding

• Early pre-payment option

• Account debtor pays invoice

• Reverse wire repayment to TRE

• Issuer repays advance plus discount fee

Repayment

• TRE sends total repurchase amount to LP via ACH or wire

• Transaction completed in full STP fashion

Settlement


How it Works

John gets back $92,000

(less TRE Exchange Fee)

43 days later - 4/2/08

11:07amLisa, an Issuer, needs money to get

volume discount for new parts. Issuer

lists a $100,000 invoice to get at least

$80,000 advanced at no more than a

$3,000 discount fee. She needs

funding by Wednesday

2/18/08

9:30am

2/19/08

4:00 pm

4/3/08

12:00pm

2/20/08

10:00 am

John, an LP, researches listings according to investment strategy,

selects listings, and offers $90,000 advance with a $2,000 discount

fee. His bid is $98,000 ($100,000 less $2,000 discount)

2/18/08

1:30pm

John wins bid at $98,000

$90,000 in funds to be sent

to Issuer

Lisa gets funded amount

of $90,000, (less TRE

Exchange Fee)

Lisa collects on the receivable

and pays TRE back the

Repurchase Price of $92,000,

(i.e. advance plus discount fee)


http://www.belmont.edu/images/massey_new/massey_trading_computer2.jpg



TRE Pricing Model

Listing Date Auction Duration (days) Auction End Date

2/18/2008 3 2/21/2008

Instrument Dates

Invoice Date Invoice Due Date Target Settlement Date

2/17/2008 3/18/2008 4/2/2008

Bidding Requirements

Face Value Min Advance Maximum Discount Fee

$100,000 $80,000 $3,000.00

Bidding History

Bid Date Advance Rate Discount Fee TRE Computed Bid

2/21/2008 13:30 $90,000 $2,000.00 $97,960

2/21/2008 12:30 $89,000 $2,000.00 $97,955

2/20/2008 10:30 $85,000 $2,000.00 $97,935

2/19/2008 9:30 $87,000 $3,000.00 $96,950


Tier I Membership Terms

Seat Ownership: 1,000 share equity ownership in NOE

Seat Acquisition Cost: Currently $10,000 purchase fee

Limited Membership: Seat ownership limited to a maximum 50 Tier I Seat holders

Initial Minimum Bidding Requirements: $50,000/month

Membership Fee: $1,000/month

Increased Access to Research: Preferential access to financial research, historical

bids and market depth

Exclusivity: Exclusive TRE participation in live auction or electronic marketplace for

buying or selling of accounts or other commercial finance collateral for term of agreement

Complementary Referral Program: Companies not meeting TRE registration

requirements referred to Tier One members


Thank You

Nicolas Perkin

Co-founder & President

[email protected]

(504) 208-1938

Paul Ellis

VP, Institutional Sales

[email protected]

(504) 208-1926

220 Camp Street

Fifth Floor

New Orleans, LA 70130


Appendix


Senior ManagementJustin Brownhill – Co-founder & Chief Executive Officer

Mr. Brownhill was a Managing Director at Citigroup’s Corporate and Investment Bank where he was involved with Citigroup’s Market Structure and Exchange Strategy and Investment teams. He was an executive of Lava Trading, a leading global Equities and Foreign Exchange trading technology platform acquired by Citigroup in 2004. He previously worked in Investment Banking at CSFB (formerly “DLJ”), Union Bank of Switzerland (“UBS”) and Salomon Brothers, focused primarily on corporate strategy, M&A and capital raising in the Financial Services arena.

Nicolas Perkin – Co-founder & PresidentMr. Perkin was previously Executive Vice President at EmSense Corporation (a next-generation media measurement company). Prior, Mr. Perkin was Vice President of Global Business Development for Massive Incorporated, which was acquired by Microsoft Corporation in May 2006 for a reported $200m+. Mr. Perkin has held positions as CFO and Executive Vice President of Strategic Business Development at Kestrel Technologies and worked in various capacities at Veronis, Suhler & Company, a premiere media Merchant Bank, Cowles Media Company and Black Book Media.

Jim Quigley– Chief Marketing OfficerMr. Quigley previously founded and led Profability, a privately held marketing consultancy that provided strategic marketing, branding and customer acquisition programs for several technology centric enterprises. Before starting Profability, Jim was the President of Allconnect.com, a VC-backed startup that raised $20 million in private equity. Prior to that, he served as the Regional Marketing Manager at GE Capital IT Solutions. In this position he led the sales and marketing initiatives of the enterprise systems division and grew it into a profitable $30 million business unit. He began his career with Universal Data Consultants as a Major Account Executive where his clients were The Southern Company, Georgia Pacific, W.R. Grace and Boeing.


Chris Kennedy – Chief Technology OfficerMr. Kennedy is responsible for the architecture and implementation of the technology of The Exchange. Mr. Kennedy comes to the New Orleans Exchange from LNS/Nevasoft, Inc., a specialty engineering group in California where he serves as CTO. As a technology provider to Kestrel Technologies, Inc., LNS/Nevasoft supplied the technology used for the NYSE's web-based bond-trading front end to Arca as well as Kestrel's Katalyst and Konnektproduct families which provide for on-line trading of fixed income securities and connectivity gateways between Bloomberg's TOMS and Kestrel's RAPTr trading systems and various ECNs. Mr. Kennedy brings close to 20 years experience in building fixed-income electronic trading systems and 30 years of experience in building high performance distributed computing systems to the NOE. Mr. Kennedy did his undergraduate and graduate work at the University of California, Berkeley.

David Willenzik – General Counsel

David leads the overall legal function and serves as the legal resource for all areas of company business. David is nationally recognized as an outstanding authority and practitioner in the field of commercial financial services law with particular emphasis on asset based lending, structured and project finance, equipment leasing and motor vehicle wholesale credit. He is nationally recognized as one of the "deans" of the banking and financial services bar with 36 years of experience in that specialty of law. David led the effort to enact UCC Article 9 in Louisiana and is the author of numerous other Louisiana laws applicable to banking and finance generally. He is a past president and founding member of the American College of Commercial Finance Lawyers and is president elect of the American College of Consumer Financial Services Attorneys. David is Senior Counsel of McGlinchey Stafford PLLC, a New Orleans based law firm with offices in Louisiana, Texas, Mississippi, Ohio and New York. He holds a BS in Finance from the University of Illinois and a JD from the Louisiana State University Law School.

John Barton – Head of OperationsMr. Barton brings a deep understanding of financial analysis and operational expertise. Mr. Barton draws from a successful career in equity research and asset management. Previously, Mr. Barton was an Investment Analyst at Partner Fund Management and Andor Capital Management, two leading global hedge funds.

Senior Management


Board of DirectorsRichard Korhammer – Executive Chairman

Mr. Korhammer has spent his entire career building or growing companies within the technology and finance sectors. Mr. Korhammer was CEO, Co-founder and Chairman of Lava Trading Inc, which he successfully guided from its inception in 1999 to its acquisition by Citigroup. Korhammer’s success at Lava Trading was rewarded with the Ernst & Young Entrepreneur of the Year® Award for the Metropolitan New York Area in 2003. Previously, Mr. Korhammer consulted Wall Street firms, providing strategic, technical and advisory services.

Mitch Davis – Board Member

Mr. Davis is former CEO & Founder of Massive Incorporated, a video game industry pioneer for in-game advertising. He sold the company to Microsoft in 2006 for a reported $200m+. Recently, Mitch raised $400M+ to launch Brash Entertainment, a video game publisher focused on branded and franchise IP where he serves as founder, Chairman and CEO.

Justin Brownhill – Co-founder & CEO

Nicolas Perkin – Co-founder & President

Ashton Ryan, Jr. – Board Member

Mr. Ryan has over 35 years of experience in financial institutions. He is currently the President, CEO and Founder of First NBC Bank, and previously was President of FirsTrust Corporation. Mr. Ryan led the acquisition of First Commerce by Bank One, and has held roles at Arthur Andersen and the Federal Home Loan Bank.

Will Kohler, Partner, Prism VentureWorks‹top›

Mr. Kohler currently sits on the board of Expo TV, Conduit Labs, and Sagamore Systems; and is an observer on LogMeln,

Maven Networks, and SiCortex. He was previously an observer on Collation. Mr. Kohler joined Prism in 2003 from Advanced

Technology Ventures. Prior to ATV, he was Co-founder and Operations Manager of Pointe Communications, and also served

as an Analyst at Prospect Street Ventures. Mr. Kohler holds a B.A. in Economics from Harvard University where he graduated

Cum Laude in 1997.

Jim Counihan, Partner, Prism VentureWorks ‹top›

Mr. Counihan is a director for Astoria Software, Ingrian Networks, and Rate Point. He was formerly on the boards of

Softricity, GeoTrust, and Silverback Technologies. Mr. Counihan joined Prism from EPiCON, Inc. in November of 2000 as

Legal Counsel and Director of Business Operations. He has held positions in Corporate Legal Counsel and Director of

Business Operations for Sapient Corporation. Mr. Counihan also served as Legal Counsel for the Outsourcing Division of Bell

Atlantic Network Integration. A member of the Massachusetts Bar Association, Mr. Counihan holds a B.A. Magna Cum Laude

from the University of Massachusetts at Amherst, a J.D. Cum Laude from Suffolk University Law School.


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