Capitalize on ChangeCorporate Access Business Plan

Peter Gallagher, April 2011

Table of Contents

1. Corporate Access Vision: Content Driven, Transaction Oriented

2. Corporate Access Highlights: Capitalize on Change

Conclusion

1. Corporate Access VisionContent Driven, Transaction Oriented

What do Investors Want?

Analysts must be willing to develop highly controversial, non-consensus positions on industries and stocks - and be right

Help portfolio managers Outperform: A couple of great ideas a year will put an Analyst far ahead of peers

Anticipating Change is worth a lot. Analyzing Change is worth much less

Have enthusiasm and communicate that excitement to clients

Being honest and admitting mistakes early increases credibility

Cover exciting smaller cap companies

Source: Morgan Stanley Equity Strategist Byron Wien, 4/26/93

What Research can Offer

Good companies can be bad stocks and bad companies can be good stocks

Analysts are valuable when helping determine the attractiveness of an equity by providing insight about future reality and the market’s likely reaction

Analysts become indispensable because they provide the most insight, not because their stock picks are always right or their estimates are always perfect

Analysts who provide the most insightful and most proactive research to institutional clients are the most valuable to issuers looking to raise Capital

Source: Piper Jaffray Director of Research Tom Schreier, 2000

Research, Sales & Trading

Content is Key: Foster Idea Generation

Drive Themes within and across sectors that can be Expressed across asset classes and product types

Increase the quality and Consistency of high Conviction fundamental Research that is Differentiated

Monetize Actionable Research, minimize maintenance noise

Maximize Information flow between Analysts, Sales, Trading, investors & issuers

Develop Key franchise stocks with Dominant market shares

Think Strategically, Act Tactically = Think Globally, Transact Locally

Monetizing Research

Leverage Research and events into relationships and Revenues

Capitalize on Change: Initiate Corporate Access opportunities around new coverage, upgrades, management Changes

Develop Multi-Industry Thematic Research for Branding purposes ahead of Conferences

Relationships: Highlight specific Research calls and provide forums for dialogue as Themes unfold

Feedback: Timely, Consistent Feedback from NDR’s and Conferences

Transactional: Corporate Access is a Strategic asset to maximize Capital raising for issuers and Performance opportunities for investors

Established Analysts

My greatest Strengths are being a good listener who can tease out high Conviction ideas due to my Analyst training and communicate them effectively. Managing Corporate Access would benefit from my Research background as well as my experience within Sales & Trading

Managing Corporate Access also requires managing relationships by being respectful of established Analysts and gaining their trust by demonstrating value in originating more Actionable NDR’s and Conferences. Mutual interests also mean fostering greater Accountability in providing sufficient Corporate Access focus to the Trading platform in order to profitably scale commission Revenues

I would come in with no prior bias but be objective in reviewing Themes, evaluating Conviction and bringing a Consistent approach to Corporate Access

Integrating New Coverage

Initiating New Coverage: Identify Key Themes; Highlight top high Conviction long, short, and small cap ideas

Articulate where you are Differentiated from current consensus

Don’t be afraid of uncommunicative managements or estimates outside guidance; Understand the global sector value chain to make Anticipatory recommendations

Leverage the stature of established Analysts’ Research and relationships by developing Strategy type products with emerging Analysts that include Multi-Industry analysis and comparisons

Coordinated Research/Trading Call with Multiple Execution paths based on investment conclusion and client objective

Joint Analyst marketing, idea dinners

Client Alignment

“Going to Market Together”

Allocation of resources against share of wallet

Breadth of Research: Is Research penetrating clients in certain sub-sectors but not in related Laterals?

Multiple Touch Points: Is Research penetrating clients in certain sectors/stocks where Trading is not involved, or vice versa?

What are clients thinking, doing? What are clients asking, worried about?

What Corporate Access Strategies can we offer in Terms of Thematic events and Tactically allocate to improve client penetration?

2. Corporate Access HighlightsCapitalize on Change

Relevant Experience

BARCLAYS CAPITAL/LEHMAN BROTHERS, NEW YORKVP & Content Manager, Trading Desk Analyst/Product Manager, Equity Research

• Managed market driven morning Sales Trader meeting, seeking to generate Content Complementary to published Research based on breaking news and position Trader insights Expressed through Cash and non-Cash Equity products

• Previously responsible for development & distribution of Industrials & Materials Research across Lehman’s Equity business and into buy side accounts. Present daily summary of Key Lehman Industrials & Materials calls and breaking news to Sales Traders. Partner with Trading to quickly interpret Information for clients

UBS INVESTMENT BANK, STAMFORDDirector & Global Sector Sales

• Stamford Trading floor based specialized Research Salesperson/Trading Desk Analyst providing high Impact Research calls and Trading opportunities across the capital structure of Industrial companies to 25 of the firm's top institutional clients with sectorized responsibilities

Analyst Marketing

US Transport & Aerospace / Defense Analyst Marketing

NY: Andor, Balyasny, Chilton, Citigroup, DeAM, Galleon, GIC, GSAM, Jennison, JPMorgan, Maverick, MSIM, Pequot, SAC, Schroders, TCW, TIAA/CREF, ZBIBoston: AmEx, Babson, Brookside, Columbia, DeAM, Evergreen, Fidelity, John Hancock, MFS, Pioneer, Putnam, State Street, Tudor, Wellington, WestfieldAtlantic: AmEx, Gartmore, Lord Abbett, MLIM, State of New Jersey, Sun America, T Rowe Price, WellingtonLondon: ABN AMRO, DeAM, MLIM, O’Connor, Sarasin

European Transport & Aerospace / Defense Analyst Marketing

NY: Andor, Balyasny, Brown Brothers, GIC, Jennison, Mackay Shields, MSIM, SAC, Sierra Global, TIAA/CREF, Trident, ZBIBoston: Boston Co, Fidelity, PutnamAtlantic: Franklin, MLIM, T Rowe Price, Wellington

Research & Events

I identified ways to leverage Research & events to Capitalize on Change, establish myself, Differentiate our platform and Drive relationships & Revenue

• Originated Branded CEO Dinner Series with JBLU, DAL, NWAC, CAL, LUV; Arranged and/or Executed Corporate Access with AMR, ACAI, EZJ, UPS, CSX, UNP, RTN, LMT, GD, JOYG

• Arranged cross instrument dinner with Airline & Aero Analysts and Equity Derivatives, Converts & Credit Default

• Arranged Trader dinner with Airline Analyst, Block Traders & Equity Derivatives and buyside Analysts & Traders; Executed cross sector dinner with Airline, Rail & Auto Analysts and buyside Analysts

• Supported Aircraft & Transport Conferences, China Transport Supply Chain & NBAA BizJet Field Trips

Events & Clients

DinnersUBS Delta CEO Dinner Series: Andor, CSAM HY, Duquesne HY, Eqinox, GLG, GSPS, Mackay Shields HY, Principaled, T Rowe Price, UBS Prop, Wellington, ZBIAirlines Cross Instrument Ideas Hedge Fund Dinner: Balyasny, Chilton, Derchin, Galleon, GSPS, Hunter Global, O’Connor, Pequot, Satellite, Soros

Non-Deal Roadshows & Field TripsACAI CEO Boston NDR: Boston Co, Fidelity, Highfields, Putnam, WellingtonAMR New CEO Dallas Headquarters Field Trip: AmEx, Carlson, Fidelity, Lazard, Lord Abbett, Primecap, Tudor, Waddell & ReedAMR New CFO West Coast NDR: Brandes, Capital, PrimecapCSX New CFO NY NDR: Jennison, MSIM, PIMCO, Seligman, TIAA/CREFGD CEO & LMT CEO designate Washington Headquarters Field Trip: AmEx, Bernstein, Citigroup, GE, Janus, JPMorgan, Maverick, Neuberger Berman, Principal, SAC, State Street, WellingtonRTN CEO designate & CFO Boston NDR: Fidelity, Putnam

Events Drive Relationships

I launched the Branded UBS CEO Dinner Series on an ad hoc basis. I solicited CEO participation either directly or through Investor Relations. Attendees would be primarily limited to ~10 sectorized Equity clients with large company holdings or large sector investors who could take/increase positions as well as~5 Convert/Fixed Income clients to maximize the Dinner Series’ value internally

A highlight of the UBS CEO Dinner Series was held with DAL where board member Gerald Grinstein was making his first appearance to investors as the company's new CEO. Feedback from the event included the following email from Sales: "Kenn just called to tell me how much he enjoyed the dinner you hosted with DAL this week. He was impressed by your insights and is eager to be kept in the loop on your thinking. He was gushing really”

In addition to building Strong client relationships, my Performance review acknowledged the CEO Dinner Series as being Innovative in sponsoring events and building internal relationships with Converts & Fixed Income

Change Drives Marketing

When Railroad CSX named Oscar Munoz CFO, I impressed upon him the value non-deal roadshows provide to clients, managements and the sponsor firm. Munoz would benefit from exposure to clients who were unfamiliar with him due to his Changing industries. Clients would benefit from learning how Munoz's understanding of the digital Internet would apply to improving network returns from a poorly Performing physical Railroad. UBS would benefit as Corporate Access is one of the top three services clients value in paying firms

Munoz agreed to have UBS conduct his first non-deal roadshow which was successfully Executed by visiting institutional accounts in New York. My relationship with the CFO later allowed me to market Commodity Derivatives as CSX began a fuel hedging program due to rising Crude Oil prices

CSX wento on to report the first of 16 quarters of yr/yr growth in earnings and Revenue combined with improved operational efficiency and safety costs. From $15.46 when named CFO, CSX increased >4x to $70.70

Deals Drive Roadshows

When KSU announced plans to increase its initial minority stake inthe privatization of TFM to majority control, there were significant uncertainties regarding potential leverage/dilution due to the Mexican Government's above FMV Put Option to sell its remaining position to KSU. Separate from the Put, the Government owed a VAT sales tax refund

With the stock trading at $11.56, UBS Analyst Rick Paterson upgraded KSU to a Buy with a $14.50 price target based on operational benefits and a probability weighted scenario of the remaining financing issues and resulting Capital Structure. The base case assumed that KSU/TFM and the Mexican Government would offset their obligations, while downside risk of $10 compared to potential upside of $18

Following the upgrade, KSU's CFO committed to doing their first NDR following the transaction's quiet period with UBS. The recommendation played out favorably as the parties later agreed to offset and KSU traded at $18.08 the following year

Controversy Drives Trading

When ACAI announced plans to Change its business model from being a contract carrier feeding legacy Airlines to being an independent low cost carrier, UBS Analyst Robert Ashcroft assumed coverage of ACAI with a Reduce rating due to his opinion that the company's existing assets where ill suited for their proposed Strategy. My relationship with the CFO resulted in the CEO agreeing to a non-deal roadshow visiting institutional accounts in Boston

Upon MESA launching a bid with a 25% premium to acquire ACAI and maintain the contract model, Ashcroft reiterated his Reduce rating and recommended that investors reverse the spread. Cash Trading captured first day volumes following the hostile offer of 50% for the acquirer and 25% for the target. When the CEO reiterated his Strategy on the NDR, holders exited the stock while the firm Dominated market share until the bid was terminated

After ACAI launched its Strategy, the controversial call proved correct when the carrier filed bankruptcy due to high costs the following year

Conviction Drives Deals

When AMR was seeking labor concessions with the stock trading as low as $1.25, UBS Analyst Sam Buttrick made a high Conviction call on the Airlines that they weren't all going bankrupt and to "buy the casket" with AMR as his top pick.

Upon AMR promoting President Gerard Arpey to CEO after negotiations faltered, Buttrick stayed with his call based on his ongoing discussions with Arpey and his view that the CEO's investor focus would lead him to opt for bankruptcy only as the last resort. With a revamped proposal accepted by all unions within days, AMR proceeded to rally to $7.59

Afterwards, Arpey agreed to host a Headquarters Field Trip as the means to reintroduce himself to the investor community in his new role. UBS later acted as Lead Manager of AMR's next Secondary Offering

Cross Product Dinner Ideas

Airlines Cross Instrument Ideas Hedge Fund Dinner

• Geared toward clients with a fundamental Equity role who were: long Airlines at a low cost basis, feared they had missed the move off the bottom looking for alternative ways to get long exposure and/or going back to shorting the group

• Airline Analyst: Equity Fundamentals: Bankruptcies for this cycle are behind us

• Head of Equity Derivatives: Best Idea AMR Stock Replacement: Sell stock and buy 1 x 2 Call Spread - Lock in gains while maintaining long exposure through the Call Spread position

• Head of Credit Derivatives: Best Idea Buy Boeing Capital Protection / Sell Boeing Corp Protection - Capital will Underperform due to leases, more Liquid than Airline credits

Event Commentary

LMT Georgia Field Trip: Aero Facility Tour & F/A-22 Raptor Program Update

Is there a case to shut the line building the F/A-22 Raptor fighter?

• Judging from enthusiasm, threats and aircraft’s progress, there might be upside - Company Overview - Aircraft Operational Requirements - Current Contract - Investor Concerns - Alternatives - R&D Funding - Potential Enemy Threat Requirements - Upcoming Program Milestones/Catalysts - Sense of Growing Support for Production Increases

Conference Break-In’s

Standardized Conference Feedback with Tear Sheets

• Company (Ticker) - Speaker, Title - Location, Time - Recommendation, P/T, Estimates

• What do we Expect to Hear?

• What did we Learn?

• What to do with the Stock?

Performance Reviews

Content Manager Review: “You have taken both the Content captain and idea capture roles to a new and great level... You have owned the ideas, improved Execution and even raised the P&L Impact through better structuring. Your role in organizing, filtering ideas... and combing two organizations (FID and EQ) for ideas has been positively noted by... members of FID management”

Product Manager Review: “Peter has done a very good job at developing several Themes in conjunction with his sector Analysts. His thoughts are well organized and well written... Feedback on the GM Equity/Debt/Convert coordination was very Strong across the organization... Peter does an exceptional job Expressing himself verbally in the 7:05AM Sales Trader meeting

Sector Sales Review: “He has built Strong internal relationships... Peter was proactive in sponsoring cross-product events (Hedge Fund dinners, field trips, etc)... Successfully supported Stamford Trading... challenges the status quo, always looking for new and Innovative ways to do business... unselfish

Conclusion

Corporate Access is a Strategic Asset to drive Transactions

Idea Generation: Conviction, Conviction, Conviction!

Flows have Themes, beget more flows

Monetizing Research, Key franchise names

Innovation, Branding

NDR’s and Conferences, Alignment, Feedback

We don’t trade stocks, we trade Information

Capitalize on Change