The JOBS Act for Portfolio Companies
Part 2 of the Impact of the JOBS Act on Private Equity
Podcast Series

July 10, 2012

JOBS Act Podcast Series§ The Jumpstart Our Business Startups Act (or “JOBSAct”) became law on April 5, 2012
§ Intended to make it easier for businesses to raise
capital, the JOBS Act may have meaningful benefits
for private equity firms and their portfoliocompanies§ This presentation is part of our Impact of the JOBS Act
on Private Equity Podcast Series, focusing on thepractical implications for private equity firms andtheir portfolio companies§ Part 1: Changes to the IPO ProcessØPart 2: The JOBS Act for Portfolio Companies§ Next…

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Presenters
Joshua Ford Bonnie

Contact Information:(212) 455-3986
jbonnie@stblaw.com

Joshua Ford Bonnie is a partner in Simpson Thacher's Corporate Department. Mr. Bonnie has advised
a significant number of companies on their initial public offerings, including: The Carlyle Group L.P.
(2012); Regional Management Corp. (2012); FXCM Inc. (2010); DynaVox Inc. (2010); The BlackstoneGroup L.P. (2007); MasterCard Incorporated (2006); Evercore Partners Inc. (2006); Alpha NaturalResources, Inc. (2005); Cohen & Steers, Inc. (2004); and Accenture Ltd (2001). The initial public offeringsof Blackstone, MasterCard and Accenture were the largest U.S. IPOs of 2007, 2006 and 2001,
respectively. Mr. Bonnie has also advised Blackstone and The Carlyle Group on a number of strategictransactions, including Blackstone’s sale of $3 billion of non-voting common units to a sovereign
wealth fund established by the People’s Republic of China and the 2007 and 2010 investments in The
Carlyle Group by Mubadala Development Company, the Abu Dhabi-based strategic development andinvestment company.

Joseph H. Kaufman

Contact Information:(212) 455-2948
jkaufman@stblaw.com
3Joseph Kaufman is a member of the Simpson Thacher’s Corporate Department. Mr. Kaufman advises
clients on public and private offerings of debt and equity securities, corporate governance, businesscombinations and general corporate and securities law matters. Mr. Kaufman advised HCA Holdings
Inc. in its March 2011 $4.35 billion initial public offering, the largest private-equity backed IPO ever in
the United States. He also advised Nielsen Holdings N.V. in its January 2011 $1.89 billion initial publicoffering, as well as each of Dollar General Corporation, Virgin Mobile USA, Inc., Sealy Corporation
and PanAmSat Holding Corporation in connection with their respective initial public offerings. He
also advised Kohlberg Kravis Roberts & Co. in connection with its business combination with KKR
Private Equity Investors L.P., resulting in KKR being listed publicly on the New York Stock Exchange.

Reduced Disclosure§ Under the JOBS Act, “emerging growthcompanies” benefit from reduced ongoingdisclosure requirements§ While targeted at IPO companies, these
reduced disclosure requirements areavailable to any reporting company meetingthe emerging growth company standard,potentially including:§ Debt-only filers§ Voluntary filers

4Who Can Use Reduced Disclosure?
Emerging Growth Company (“EGC”)§ An issuer that had total annual grossrevenues of less than $1 billion during its
most recently completed fiscal year
§ A company is not an EGC if any of its common
equity securities were first sold in a registeredoffering on or before December 8, 20115

Who Can Use Reduced Disclosure?
Emerging Growth Company (“EGC”)§ EGC status continues until the earliest of:§ the date on which such issuer has, during theprevious three years, issued more than $1billion in non-convertible debt securities§ the date on which such issuer becomes a “largeaccelerated filer” (i.e., a seasoned issuer with$700 million or more of public float)§ last day of fiscal year in which revenues exceed$1 billion§ last day of fiscal year following the fifth
anniversary of the IPO
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Reduced Disclosure:
Financial Information§ Fewer years of historical financial
information required in IPO registration
statement§ Two years of audited financial statements (rather thanthree)§ Two years of associated MD&A (rather than three)§ Two years of selected financial data (rather than five)§ No more than two years of acquired business financial
statements (rather than up to three)§ In other filings, issuer need not disclose
financial information for periods prior to
the periods included in its first registration
statement§ Registration statement filed before IPO?
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Reduced Disclosure:
Auditors and Financials§ EGC auditors not required to attest to its
internal controls under Sarbanes-Oxley 404(b)§ EGCs exempt from selected audit rules that
may be issued by the Public Company
Accounting Oversight Board:§ Audit firm rotation§ Auditor’s discussion and analysis§ Other future audit rules (unless SEC specificallydetermines otherwise)§ For any future new or revised accounting
standards, EGC can rely on any longer
implementation timetables applicable forprivate companies
8Reduced Disclosure:
Executive Compensation§ Generally only required to disclosecompensation of three executive officers(including the principal executive officer) ratherthan five (including the principal executive andfinancial officers)§ Not required to present Compensation
Discussion and Analysis (CD&A)§ Also not required to present Grants of PlanBased Awards Table, Options Exercises andStock Vested Table, Nonqualified Deferred
Compensation Table, Pension Benefits Table

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Reduced Disclosure: Dodd-Frank
Executive Compensation Disclosures§ Exempt from certain recently adopted or
proposed executive compensation disclosure
requirements:§ Comparison of executive compensation tocompany performance§ Ratio of CEO compensation to average
worker pay§ Disclosure of relationship between risk andcompensation§ Not required to hold “say-on-pay” or “say-onwhen” votes

10Choosing Whether to Use Reduced
Disclosure§ A reporting company can choose whether or
not to take advantage of each reduced
disclosure benefit on a case-by-case basis§ Exception: No “cherry picking” among new
or revised accounting standards§ While election to forgo extended period isirrevocable, SEC staff has indicated that an EGC
using the extended implementation periods maylater make an irrevocable election to forgo it§ Reporting companies are required to disclose anyelection to forgo the extended implementation
period available for future new or revised
accounting standards
11Increased Shareholder Cap§ Exchange Act registration and SEC reporting isrequired upon reaching a threshold number ofsecurities holders – cited as a main driver forsome recent high-profile IPOs
§ JOBS Act has increased this threshold from 500
to 2,000 holders§ New sublimit requires registration once there are
500 holders that are not accredited investors§ Also allows an unlimited number of holders
who received securities pursuant to anemployee compensation plan in transactions
exempt from Securities Act registration§ SEC rulemaking
12Easing of General Solicitation Limits§ The JOBS Act directs the SEC to remove theprohibition on general solicitation or generaladvertising with respect to:§ Rule 506 of Regulation D (which allows theprivate placement of securities)§ Rule 144A (which allows private resales,including as part of debt offerings)§ Changes are not yet effective and fullconsequences will not be fully known until
SEC rules are adopted and the market adapts
to them.

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JOBS Act Podcast Series§ This presentation has been part of our Impact of theJOBS Act on Private Equity Podcast Series, focusing on
the practical implications for private equity firms andtheir portfolio companies§ Part 1: Changes to the IPO Process§ Part 2: The JOBS Act for Portfolio CompaniesØNext…

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