Page 1 Recording of this session via any media type is strictly prohibited. Page 1 M&A Insurance: Forever Changing the Way Businesses are Bought and Sold

Page 2 Recording of this session via any media type is strictly prohibited. Ira Weisman, Managing Director, Cerberus Operations and Advisory Company, LLC Responsible for Cerberus’ portfolio companies’ insurance & risk management; utilizes insurance to solve deal issues. Jay Rittberg, Senior Vice President, AIG Leads AIG’s Merger & Acquisition Insurance Group for the Americas; responsible for M&A insurance products, including representations and warranties insurance.

Page 3 Recording of this session via any media type is strictly prohibited. What to Expect After completing this program you should understand how deal makers and their advisors use M&A insurance to (1) protect buyers and sellers of businesses, (2) reduce seller post closing deal obligations, (3) help buyers win competitive auctions and (4) protect relationships. You should also appreciate lessons from actual M&A insurance claims and the rapid evolution of M&A insurance.

Page 4 Recording of this session via any media type is strictly prohibited. Agenda 1)M&A Insurance Basics 2)M&A Insurance at Work 3)Summary and Q&A

Page 5 Recording of this session via any media type is strictly prohibited. M&A Insurance Basics M&A insurance facilitates mergers, acquisitions, divestitures and other business transactions What does an M&A deal look like without M&A insurance? What are Buyers and Sellers fighting about? Provides access to the insurance industry’s capital and allow the transfer of certain transaction-related risks to the insurance markets How does M&A insurance change an M&A deal? Case Study- The Deodorant Auction Key Products: Representations & Warranties Insurance Tax Liability Insurance Contingent Liability Insurance

Page 6 Recording of this session via any media type is strictly prohibited. Key Trends in M&A Insurance Maturing Market; Rapid Growth Rate Current Trends in M&A Insurance: Buyers and sellers remain risk averse in a seller’s market Broad coverage and favorable terms in more jurisdictions Rapid response time and efficient underwriting process Greater awareness, understanding, and recognition of product from the M&A community-private equity, corporations and individuals Proven claims paying ability

Page 7 Recording of this session via any media type is strictly prohibited. Representations and Warranties Insurance Marketplace Representations and Warranties Insurance- Protects a party from financial losses resulting from inaccuracies in the representations and warranties made about the target company or business Key representations typically include compliance with law, no undisclosed liabilities, accuracy of financial statements and tax Not intended to cover known breaches, working capital adjustments Coverage Highlights Two Types of Policies: Buyer-Side Policy (includes fraud protection) and Seller- Side Policy Amount of Coverage: Up to $300+ million for any one transaction available through layered insurance programs Price of Coverage: Generally 2% to 4% of the limit of liability Retention: Generally 1% to 3% of the transaction value Policy Period: Can be extended beyond survival in underlying agreement Coverage Candidates: M&A Deals $20 million to $2 billion in purchase price

Page 8 Recording of this session via any media type is strictly prohibited. Why Buyers and Sellers Use Representations and Warranties Insurance Why Buyers Request Coverage: Enhance Amount/Duration of Indemnity Distinguish Bid in Auction Protect Key Relationships Ameliorate Collection Concerns Protect the Deal Reduce Contingent Liabilities Why Sellers Request Coverage: Distribute Sale Proceeds Increase Purchase Price Supplement Disclosure Process Protect Passive Sellers Insure Certainty of Purchase Price Expedite Sale

Page 9 Recording of this session via any media type is strictly prohibited. Other Practical Considerations for Risk Managers Are there stakeholder requirements that need to be addressed? Does the Company’s Board of Directors or officers require a certain amount of indemnification protection for M&A deals? Who will pay for the insurance? How does Representations and Warranties Insurance change the purchase price and where money flows on a transaction?

Page 10 Recording of this session via any media type is strictly prohibited. How Do I Obtain M&A Insurance? 1. Execute NDA 2.Provide Submission to Insurer Requested information includes acquisition agreement, financial information, offering memo 3.Obtain quote within 1-3 days No cost to obtain quote 4.Pay underwriting fee Typically between $15,000 and $30,000 – used for outside counsel fees 5. Underwriting process: 3-10 days High level review of due diligence process (if buyer-side) or disclosure process (if seller- side) Access to legal, financial, tax DD reports (if buyer-side) Conference call(s) with deal team 6. Policy negotiations Concurrent with underwriting process Work closely with brokers and outside counsel

Page 11 Recording of this session via any media type is strictly prohibited. Claims Claims notices have been received on 23% of the policies issued by AIG in North America since Millions of dollars paid Claims Examples Accounts Receivable- Seller-side policy responds to a claim brought by buyer for breach of the financial statements R&Ws in connection with the target’s issuance of over $1mm of gift certificates which had not been recorded in the financial statements Patent Infringement- Seller-side policy responds to claim brought by buyer for breach of the IP R&Ws resulting from a third party claim of patent infringement Recently paid approximately $10mm for a financial statements related claim

Page 12 Recording of this session via any media type is strictly prohibited. M&A Insurance at Work How do dealmakers use M&A Insurance to avoid roadblocks on transactions? What is the impact of M&A Insurance on negotiations and financial considerations? What is the current M&A landscape for allocation of risk between buyers and sellers?

Page 13 Recording of this session via any media type is strictly prohibited. M&A Insurance Challenges What are the key challenges of using M&A insurance as a buyer? What are the key challenges of using M&A insurance as a seller? Case Study- Buyer with no M&A Insurance experience Case Study- Use of M&A Insurance with a family owned business

Page 14 Recording of this session via any media type is strictly prohibited. M&A Insurance Lessons, Impact and Outlook Key lessons learned from incorporating M&A Insurance into deals Post-deal outcomes for buyers and sellers compared to deals where insurance was not utilized Outlook for M&A Insurance market in 2014 and beyond

Page 15 Recording of this session via any media type is strictly prohibited. Questions, Final Comments and Contact Information Contacts: Ira Weisman Jay Rittberg