DCA and OneGeorgias Recruitment Incentives for Georgia:

1
DCA and OneGeorgias Recruitment Incentives for
Georgia

• Life Sciences Facilities Fund
• Strategic Industries Loan Fund
• REBA
• EDGE

October 19, 2007
2
Georgias NEW Incentive Programs

• DCAs Life Sciences
• Facilities Fund (LSFF)
• and
• OneGeorgias Strategic Industries Loan Fund (SILF)

3
LSFF SILF Program Purposes

• Grow Georgias life-science and other strategic
  industries
• Serve as an incentive, via low-cost loan
  assistance, for life-science and strategic
  companies seeking to expand or locate in Georgia
• Fill a financing gap that is unmet by the private
  sector (including venture capital, traditional
  commercial financing, developer financing, etc.)
• Creation of higher quality jobs, stimulation of
  private investment in Georgia and creation of
  marketable products

Photo Credit Georgia Dept of Economic Development
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LSFF SILF Who Can Apply?

• Cities, Counties, Development Authorities
• SILF-OGA
• (1) 111 Rural Counties Directly Eligible
• Located outside Metropolitan area
• Population 50,000 or less
• Poverty 10 or Greater
• (2) 35 Counties that share a border with a
  Directly Eligible Rural County and Population is
  500,000 or less (census estimates)
  Conditionally Eligible
• Must submit a Regional Application
• Must demonstrate quantifiable regional public
  benefit to adjacent rural county or counties
• LSFF-DCA No geographic limitation, although
  practically LSFF is used where SILF is not
  available.

5
LSFF SILF Eligible Borrowers

• LIFE SCIENCES FACILITIES FUND (DCA)
• Life-Science companies use biological processes
  to solve problems and make useful products for
  the improvement of health care (human and
  animal), food and agriculture, aquaculture,
  forestry, industrial production, energy
  production, environmental management and national
  defense
• STRATEGIC INDUSTRIES LOAN FUND (OGA)
• Companies in the following industries Aerospace,
  agribusiness, energy and environmental,
  healthcare, eldercare, life sciences, logistics
  and transportation.
• Supporting industry clusters may include, but are
  not limited to, advanced telecommunications,
  business and financial services, homeland
  security, multimedia and software development.

Photo Credit Georgia Dept of Economic Development
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LSFF SILF Eligible Borrowers, continued

• Companies will typically demonstrate one or more
  of the following criteria
• High potential for commercialization
• Creation of skilled jobs that pay above-average
  wages for the subject county and demonstrate full
  benefits including workforce training and
  education
• Successful experience in a Georgia incubator or
  Center of Innovation or
• Existence of a unique partnership with one of the
  States research universities and state colleges.

7
LSFF SILF Available Funding

• Loans will typically be no more than 25 of the
  companys fixed-asset needs in the companys
  Georgia location
• Loans will finance fixed assets only, e.g., lab
  equipment or build-out of lab space leasehold
  improvements
• LSFF available balance 13.4 millionincludes
  repayments from 2.5MM pilot REBA project and
  250,000 REBA loan to a life-science company
• SILF available balance 9.2 million

8
LSFF SILF Application Review

• GDEcD or another state agency or organization
  writes a recommendation letter
• DCA conducts application review and a credit
  risk-analysis of the company
• GRA organizes a panel of experts to conduct a
  scientific vetting of the company
• Applications are scored by a rating system that
  is set forth in the programs regulations

9
LSFF SILF Loan Terms

• Below-market interest rates
• Interest can be deferred
• Amortization dependent upon the assets financed
• Triggering event such as an IPO or FDA approval
  will shorten term
• Clawbacks in the event of relocation or sale of
  company
• Collateralized by assets financed (personal
  property, real estate, leasehold improvements)

10
DCAs First LSFF Award
Altea Therapeutics is focused on developing and
commercializing a broad portfolio of
pharmaceutical products based on a new class of
transdermal patches. Initial products, in
various stages of development, are targeting
unmet medical and market needs in diabetes, pain
management, thrombosis, osteoporosis and
psychoses.
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LSFF Altea Therapeutics

• Alteas products include pharmaceuticals and a
  drug-delivery system that are based on a new
  class of transdermal patches that deliver
  sustained therapeutic levels of proteins and
  water-soluble drugs through the surface of the
  skin.
• Phase-1 trials are underway for transdermal basal
  insulin delivery as well as for fentanyl citrate
  for management of chronic pain.
• Altea has 16 U.S. patents, 20 international
  patents and more than 100 pending patent
  applications in the U.S. and internationally.
• Altea has research agreements with several
  pharmaceutical companies for feasibility studies
  for use of the Companys delivery system for
  other compounds. It also has a licensing
  agreement with Teikoku Seiyaku for product
  development in Japan.

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LSFF Altea Therapeutics

• 2MM LSFF loan for leasehold improvements and
  equipment
• Loan is secured with UCC security interests and
  leasehold deed to secure debt
• 10-year term with a trigger that will accelerate
  the term to three years in the event of an IPO
• Deferred interest equal to 60 of the Prime Rate
• Altea is anchor tenant in Technology Enterprise
  Park and will occupy 49,400 square feet on two
  floors
• Approximately half of space will be for labs
• Total build-out and equipment costs of space
  21MM (including base build-out costs)
• Altea will retain 70 employees and add seven to
  ten new jobs by the end of 2007 it will also
  result in over 5.5 million in additional
  leveraged funds.
• The average annual salary for Altea employees is
  85,000

13
EndoSure Wireless AAA Pressure Measurement
System
CardioMEMS is a medical device company that has
developed and is commercializing a proprietary
wireless sensing and communication technology for
the human body that is designed to improve the
management of severe chronic cardiovascular
diseases such as aneurysms, heart failure and
hypertension.
14

• CardioMEMS has two products with FDA approval
• (1) Abdominal Aortic Aneurysm Repair
• (2) Thoracic Aortic Aneurysm Repair
• Ongoing clinical trials Severe hypertension and
  heart failure

Image Credit CardioMEMS, Inc.
15
LSFF CardioMEMS Basics

• 2MM LSFF funds for equipment and a portion of
  the clean-room build out same loan terms as
  Altea.
• New facility in first building in Technology
  Enterprise Park
• Over 40,000 total square feet
• Approximately 2,500 SF for a clean room
• Approximately 2,200 SF for laboratory space
• 50 new jobs in first two years Company will
  retain its 85 current Atlanta-based employees
• Average annual salary is 84,000
• The total facility construction cost, above base
  build-out, is approximately 6.3 million,
  including 1,626,000 for equipment.
• Over 22 million in additional leveraged funds
  including the Companys research and development
  costs directly associated with the new facility
  in the first two full years at TEP.

16
SILF AviGenics, Inc.

• 733,300 SILF Loan
• Washington-Wilkes County PDA
• Specialized Machinery Equipment and Building
  Construction
• Company originated from UGA laboratories and
  leases facilities at UGAs BioBusiness Center
  and in Oglethorpe County
• SILF-funded project in Wilkes County is the
  Companys third location
• 6 to 8 new jobs within two years
• Private investment 3.6MM
• Total cost 5.7MM

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SILF AviGenics
Human Genes
Transgenic Birds
Cytokines
Monoclonal Antibodies
Fusion Proteins

• Products are targeted for the treatment of
  cancer, infectious diseases, organ- dysfunction,
  genetic disorders and autoimmune diseases.
• AviGenics has established fully integrated,
  in-house facilities to produce, purify and
  characterize its bio-therapeutic products for
  pre-clinical and clinical studies.
• Two of the Companys compounds have successfully
  completed Phase I human clinical trialsone for
  infectious disease in 2005 and one for an
  oncology application in 2006.

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Georgias Traditional Incentive Programs

• REBA and EDGE

October 19, 2007
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REBA EDGE Traditional Incentives

• As incentive programs, EDGE and REBA help
  Georgia close the deal when companies consider
  Georgia and another state or country for their
  location or expansion.

Photo Credits Georgia Dept of Economic
Development
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REBA EDGE The Basics

• New business to Georgia or competitive expansion
• Must have interstate or international competition
• Limited Resources First-Come-First-Served Basis
• DCA conducts a risk assessment on companies
  before GDED issues a recommendation letter
• Applications reviewed in order received and
  according to level of completeness

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REBA EDGE Eligible Applicants

• Local Governments (cities and counties)
• Local Government Authorities
• Joint or Multi-county development authorities
• Must be in compliance with Comprehensive
  planning requirements report of registered
  authority finances report of local government
  finances local service delivery strategies
  development authority registration

22
REBA EDGE Eligible Applicants

• EDGE-OGA
• (1) 111 Rural Counties Directly Eligible
• Located outside Metropolitan areas
• Population 50,000 or less
• Poverty 10 or Greater
• (2) 35 Counties that share a border with a
  Directly Eligible Rural County and Population is
  500,000 or less Conditionally Eligible
• Must submit a Regional Application
• Must demonstrate quantifiable regional public
  benefit to adjacent rural county or counties
• REBA-DCA No geographic limitation, although
  practically REBA is used where EDGE is not
  available.

23
REBA EDGE Sub-Recipients

• Legally established Businesses
• Private investment commitment
• Job creation/ retention commitment
• Benefits must exceed costs

Photo Credit Georgia Dept of Economic Development
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REBA EDGE Credit Analysis

• DCAs Preliminary risk analysis helps GDEcD
  determine if prospect company is a viable going
  concern
• For publicly traded companies, most financial
  information is readily available to DCA via the
  web
• For privately held companies, community may need
  to request financial statements, tax returns,
  business plan
• three years of audited financial statements or
  tax returns
• business plan and pro-forma F/S
• Preliminary analysis may spot areas that require
  additional inquiry

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REBA EDGE Eligible Activities

• Publicly owned assets leased to private
  sub-recipient business
• Land
• Buildings
• Machinery / Equipment
• Telecommunication Assets
• Publicly Owned Assets
• Water/Sewer Improvements
• Railroad Spurs Road Improvements
• Land acquisition
• Site Improvements

Photo Credit Georgia Dept of Economic Development
26
REBA EDGE Ineligible Activities

• Privately Owned Assets
• Rolling Stock
• Capital Assets worth less than 5,000
• Grant Administration
• Working Capital
• Refinancing

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REBA EDGE What Gratuity??

• Article 3, Section 6, Paragraph VI of the
  Constitution of the State of Georgia of 1983
• (a) Except as otherwise provided in the
  Constitution, (1) the General Assembly shall not
  have the power to grant any donation or gratuity
  or to forgive any debt or obligation owing to the
  public . . . .

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REBA and EDGE The BIG Change

• Performance and Accountability Agreement

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REBA and EDGE PA Agreement

• Georgia saw the need for clawbacks with incentive
  funds
• Performance standards are companys job-creation
  and private-investment commitments
• PA gives company 24 months from date of
  occupancy or installation of equipment
• Exception for force majeure or extraordinary
  events
• Reporting and documentation requirements
• DCA or OGA receives repayments

30
REBA and EDGE PA Agreement

• No repayment is required upon proof of an
  average of at least 70 of job-creation and
  private-investment commitments met

31
REBA and EDGE PA Agreement

• Repayment required when average of job-creation
  and private-investment met is less than 70
• E.g., 400 actual jobs/600 committed jobs 66
  and 3.5MM actual PI/5.0MM committed PI 70
• 66 70 136/2 68 Average Actual
  Performance
• With a 500,000 grant, adjusted grant amount at
  68 340,000
• 160,000 (32) repayment is required to DCA or
  OGA

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Tallapoosa D.A./Honda Precision Parts of Georgia
-- 3,000,000 EDGE Grant

• Land acquisition - 459.5 acres
• 250,000 SF plant
• High Tech Facility
• Mfg Automatic Transmissions
• Total Cost 124.3 Million
• 115.6M Private Investment
• Create 400 new jobs
• Regional Employer
• Competition AL

33
Tallapoosa D.A./Honda Precision Parts of Georgia
-- Update

• HPPG employs 410 associates as of 10-1-07.
• Also relocated 35 from other plants in North
  America and 16 from Japan.
• Currently operating 2 shifts in Transmission
  Assembly producing 1300 transmissions per day.
• Continuing to ramp up production in Aluminum
  Casting and Machining areas.
• Revised capital investment is in excess of 150M

34
Douglas-Coffee County IA/American Insulated Wire
-- 1,000,000 Grant

• Building Acquisition
• 342,475 SF facility 53 acre site
• Customer Service Center
• National supplier of wire and cable
• 250 new jobs in two years
• Competition TN, NC, SC
• Total cost 26.5 million
• Date of award 5/16/06

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Douglas-Coffee County IA/American Insulated Wire
-- Update

• AIW - manufacturer of electrical wire and cable
  products that include control and medium voltage
  power cable, building wire, and portable and
  flexible cords, as well as telecommunication
  cables, electronic wire and cable and cord set
  products used to help provide electricity to
  appliances, electrical tools and sporting
  complexes.
• Production began October 2006.
• Producing 400,000 lbs of wire
• Capital investment is 10M plus

36
REBA Turano Baking-Douglas County

• 300,000 REBA for ME
• 33MM total project cost
• 107,000 SF baking distribution facility in
  Villa Rica competed with FLA TX
• At least 100 jobs (Cost per job 3,000)
• Salaried positions from 20,000 to 60,000
• Benefits Medical, dental, vision and life
  insurance 401(k)
• QuickStart to provide training
• Privately held company, established 1961
  nationwide market
• PA Agreement
• 100 jobs
• 29MM private investment

37
REBA JMS Metal Services-Dade County

• 175,000 REBA for ME 3.3MM tpc
• 8.1-acre site with existing 48,000 SF building
  in Dade County Industrial Park in Trenton
• Metal services and distribution center carbon
  and stainless steel and aluminum
• Competed with Tennessee
• At least 35 jobs (Cost per job 5,000)
• Hourly rates from 11 to 11.50 for mfg
  drivers 19-39/hour for mgt and admin
• Benefits Medical, dental, vision and life
  insurance 401(k) with company match paid
  vacation
• QuickStart for training
• Privately held companies in southern states
• PA Agreement
• 35 jobs
• 3MM private investment

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Contact Us

• REBA
• Dawn Sturbaum
• DCA, Office of Economic Development
• 60 Executive Park South, NE
• Atlanta, GA 30329
• phone [phone]
• email dsturbau_at_dca.state.ga.us

• Life Sciences Facilities Fund (LSFF)
• Susan Brown
• DCA, Office of Economic Development
• 60 Executive Park South, NE
• Atlanta, GA 30329
• phone [phone]
• email sarringt_at_dca.state.ga.us
• Strategic Industries Loan Fund (SILF) and EDGE
• Nancy Cobb and Tonya Mole
• OneGeorgia Authority
• 1202-B Hillcrest Parkway Dublin,
  GA 31021 Phone[phone] e
  mail ncobb_at_onegeorgia.org tmole_at_onegeorgia.org

October 19, 2007