WELLS FARGO FOOTHILL

M&A Discussion for Kuhn CapitalM&A Discussion for Kuhn CapitalChicagoChicago

2/12/042/12/04

Wells Fargo Foothill History

Founded 1970Founded 1970 Rapid Growth in 1970sRapid Growth in 1970s Became NYSE Traded 1987Became NYSE Traded 1987 1990’s: Ability to tap Public Debt Markets which 1990’s: Ability to tap Public Debt Markets which

helped Foothill develop its focus of todayhelped Foothill develop its focus of today

Acquired by Norwest October, 1995Acquired by Norwest October, 1995 ~$775 million of assets at time of sale~$775 million of assets at time of sale

Norwest + Wells Fargo in 1998 Norwest + Wells Fargo in 1998 Today~$9 billion of assets through 4 unitsToday~$9 billion of assets through 4 units

Business Units

Four Business UnitsFour Business Units Business Finance DivisionBusiness Finance Division: Focuses on manufacturing, : Focuses on manufacturing,

distribution, SOFTWARE AND TECHNOLOGY; distribution, SOFTWARE AND TECHNOLOGY; traditional asset based loans (plus underwriting of traditional asset based loans (plus underwriting of enterprise valuation “B” pieces.enterprise valuation “B” pieces.

Wells Fargo Retail FinanceWells Fargo Retail Finance: Focuses on retailers only: Focuses on retailers only Foothill Wholesale FinanceFoothill Wholesale Finance: Focuses on lending to : Focuses on lending to

other lenders, or wholesale lines of credit.other lenders, or wholesale lines of credit. Foothill Specialty FinanceFoothill Specialty Finance: Lending to non traditional : Lending to non traditional

asset based customers, such as hotel/casino, media,and asset based customers, such as hotel/casino, media,and pure cash flow businesses. pure cash flow businesses.

Business Finance Division Los Angeles Headquarters - Offices NationwideLos Angeles Headquarters - Offices Nationwide

New York, Chicago, Boston, Atlanta, Dallas, San New York, Chicago, Boston, Atlanta, Dallas, San FranciscoFrancisco

$500 Million Underwriting capability, $30-$50 Million $500 Million Underwriting capability, $30-$50 Million Typical Hold; good syndication network.Typical Hold; good syndication network.

Over 550 AccountsOver 550 Accounts

Pricing ParametersPricing Parameters Interest Rates: Libor +1.75%…and up…and up...Interest Rates: Libor +1.75%…and up…and up... Closing Fees: 0.50% to 2.00% of the Credit LineClosing Fees: 0.50% to 2.00% of the Credit Line Unused Line Fees and Collateral Service FeesUnused Line Fees and Collateral Service Fees It may look like a lot… but you may get the Wells Fargo It may look like a lot… but you may get the Wells Fargo

Foothill putter and other assorted giftsFoothill putter and other assorted gifts

What we focus on in technology lending…. Collateral Coverage/Exit StrategyCollateral Coverage/Exit Strategy Must Have “Running Room” at ClosingMust Have “Running Room” at Closing Need to Have a Reasonable Plan Need to Have a Reasonable Plan (Aid by third (Aid by third

party consultants is a benefit)party consultants is a benefit)

Competent Management that Competent Management that Communicates effectivelyCommunicates effectively

Recurring Revenue, Install Base of Recurring Revenue, Install Base of CustomersCustomers

Strategic Partnerships

Subordinated Debt Lenders such as Subordinated Debt Lenders such as Cerberus Partners, Highbridge/Zwirn, and Cerberus Partners, Highbridge/Zwirn, and Goldman Sachs Credit PartnersGoldman Sachs Credit Partners

Equity Sponsors such as Windpoint, GTCR Equity Sponsors such as Windpoint, GTCR Platinum/Gores, Cypress Funds, and Platinum/Gores, Cypress Funds, and Deutsche Bank Private EquityDeutsche Bank Private Equity

Wells Fargo Partnerships Wells Fargo Partnerships (banking needs)(banking needs)

How do we lend to software companies? Our financing packages leverage a Borrower’s assets Our financing packages leverage a Borrower’s assets

to provide liquidity based on advances against:to provide liquidity based on advances against: A/R: up to 85%, A/R: up to 85%, Recurring Revenue, install base, and retention Recurring Revenue, install base, and retention

rates.rates. We are typically effective for established operating We are typically effective for established operating

companies facing a re-capitalization, acquisition companies facing a re-capitalization, acquisition financing, new buyout because of the leverage that financing, new buyout because of the leverage that we can provide.we can provide.

Recent Deals

SPSS, Inc. (Database Software company)SPSS, Inc. (Database Software company) $30MM Loan supported by the install base of $30MM Loan supported by the install base of

customers and on-going monthly fees.customers and on-going monthly fees. Norstan, Inc. (IP/telephony installation business)Norstan, Inc. (IP/telephony installation business)

$27.5MM Refinance Revolver supported by $27.5MM Refinance Revolver supported by maintnence contracts-recurring revenue fees.maintnence contracts-recurring revenue fees.

The Learning CompanyThe Learning Company $50MM Leveraged acquisition line of credit partnering $50MM Leveraged acquisition line of credit partnering

with Gores Technology Partners with Gores Technology Partners Palm ComputingPalm Computing

$150MM refinance Line of Credit$150MM refinance Line of Credit

Conclusion

Questions/CommentsQuestions/Comments Party FavoursParty Favours

Golf ballsGolf balls Golf ShirtsGolf Shirts Radio/TVRadio/TV Can you get the A+ gift this holiday season?Can you get the A+ gift this holiday season?

Run a deal by us……Run a deal by us……