CATALYST EQUITY RESEARCH REPORT Weekly Research Highlighting Activist Investments

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2 HIGHLIGHTING ACTIVIST INVESTMENTS Week Ending September 23, 2011 SYMBOL COMPANY INVESTOR APFC American Pacific Corp Mill Road Capital CBRL Cracker Barrel Old Country Store Biglari Holdings CHUX O Charley s Inc. Fidelity National Financial CLX Clorox Co. Carl Icahn CPTS Conceptus, Inc. Camber Capital Management GTSI GTSI Corp Alan Silberman HFFC HF Financial Corp PL Capital IRL New Ireland Fund Bulldog Investors NOIZ Micronetics Inc. Vintage Partners NSP Insperity, Inc. Stadium Capital PBSK Poage Bankshares, Inc. Joseph Stilwell RDNT RadNet, inc. Red Mountain Capital RENT RenTrak Corporation Mark Cuban RNE Morgan Stanley Eastern Europe Fund City of London TVOC.PK Texas Vanguard Oil Company VN Capital VSNT Versant Corp Andalusian Capital Partners HEDGE FUND SOLUTIONS (HFS) provides investment research, strategy and stakeholder communications consulting to companies and investors interested in, or involved with, shareholder activist campaigns. Since 2001 HFS has become the trusted advisor to numerous institutional investors, CEOs and board members worldwide. HFS also administers The Official Activist Investing Blog, the definitive source for activist shareholder information. Catalyst Investment Research is a portfolio of activist investing research products that combine company-specific shareholder activism research with deep value investment analysis and access to industry insiders. HEDGE FUND SOLUTIONS PORTFOLIO OF ACTIVIST INVESTING RESEARCH INCLUDES: Daily Alerts Weekly Summary of Activist Investments Quarterly Buying Analysis of Top 50 Activist Investors Company-Specific Shareholder Activism Analysis (combining shareholder activism & deep value company analysis) Special Reports on Activist Investing 400+ Page Shareholder Activism Report & Regularly Updated Shareholder Activism Resource Portal To Learn More: Download a brochure Page 2 of 11

3 American Pacific Corp. (APFC) Activist Investor: Mill Road Capital 553, % On September 19 Mill Road Capital disclosed a 7.3% active ownership stake in APFC Share Price M 50M 131M -81M 12M 52 wk. range EV/ 10.5 Cracker Barrel Old Country Store (CBRL) Activist Investor: Biglari Holdings 2,136, % On September 23 CBRL adopted a Poison Pill with a 10% trigger that will expire at the Company s shareholder meeting unless approved by shareholders. The Company states that the action was in response to Biglari s clearance under the Hart-Scott-Rodino Act to acquire up to 49.99% of the Company s common stock. Share Price B 950M 1.4B -500M 230M 52 wk. range EV/ 6.3 In a press release issued on the same day, Biglari states that the reasoning provided by the board to adopt the pill is misleading since they have told the Company that they are not interested in seeking control. Biglari explains that they were required under FTC regulation to seek clearance to purchase shares above 10% and that they had no intention to accumulate more than 20%. Biglari further pointed out that under Tennessee law (where CBRL is incorporated) each share over an ownership of 20% cannot be voted by that stockholder. We previously covered CBRL in our September 2, August 26 and June 17, 2011 Catalyst Research Reports, highlighting Biglari s 9.7% active ownership stake and August 23 letter expressing concern over the Company s failure to disclose operating segments for both the restaurant and the retail operations of the business. Biglari further demanded that the board address the accounting disclosure requirements for the business so that the restaurant and retail business can be measured and managed properly. On September 1 Biglari formally nominated two individuals to the board of CBRL for election at the next annual meeting. In a letter to the CEO Biglari referenced a proposed settlement from CBRL which indicated the Company s willingness to review nominees submitted by Biglari but unaffiliated with Biglari or any other restaurant company. Biglari s August 23 letter is available here: Biglari s September 1 letter is available here: Cracker Barrel s September 1 letter to Biglari is available here: Proxy Solicitor to Cracker Barrel Legal counsel to Biglari Holdings Page 3 of 11

4 O Charley s Inc. (CHUX) Activist Investor: Fidelity National Financial 2,079, % Fidelity National (Ticker: FNF) has increased their ownership in CHUX to 9.5% since disclosing an 8.4% 6.65 active ownership in early September. Share Price M 134M 214M -84M 37M 52 wk. range EV/ 5.7 We previously covered CHUX in our September 9, 2011; January 9, 2009; March 21, December 21, December 5, 2007 and November 16, 2007 Catalyst Research Reports, highlighting Crescendo Partner s (Crescendo currently owns 9.2%) intention to nominate four individuals at the 2008 annual meeting. On March 12, 2008 Crescendo entered into a settlement with CHUX. Under the terms of the agreement, CHUX agreed to expand the board by two and add two representatives from Crescendo. In addition, CHUX agreed to submit and solicit support for a shareholder proposal to declassify the board at the 2008 annual meeting. CHUX entered into a second settlement agreement with Crescendo in January Under the terms of the amended agreement CHUX expanded the board from 11 to 12 and appointed a third individual recommended by Crescendo. We reported that on September Fidelity National disclosed an 8.4% active ownership position. Legal counsel to Crescendo Partners Clorox Co. (CLX) Activist Investor: Carl Icahn 12,500, % On September 23 Icahn announced he has withdrawn his slate of directors after concluding that a considerable base of shareholders would not support his campaign at this time because they believe now is not the right time to run a sale process for the business. Share Price B 8.7B 11.5B -2.3B 1.1B 52 wk. range EV/ 10.5 We previously covered CLX in our September 2, August 19, July 22, July 15 and February 11, 2011 Catalyst Research Reports, highlighting Icahn s 9.08% ownership stake (ownership included 11,500,000 call/put options that expire ) and disclosure that he supports the Company s plan to buy back between ten and eleven million shares. Icahn now owns 9.5% in stock and options. On July 14 Icahn sent a letter to the Chairman and CEO of CLX proposing to acquire the Company for $76.50/share net in cash. On July 20 Icahn raised his offer to acquire CLX from $76.50/share to $80.00 per share. On July 18 CLX adopted a poison pill with a 10% trigger. On August 18 Icahn nominated eleven individuals to CLX s board for election at the next annual meeting. On August 30 Icahn issued a press release stating that, if his nominees are elected to the board of CLX, he expects the directors to immediately commence a comprehensive auction process to sell the company. For additional information see our blog post on this investment: Icahn s August 30 press release is available here: Page 4 of 11

5 Conceptus, Inc. (CPTS) Activist Investor: Camber Capital Management 1,951, % On September 22 Camber Capital disclosed a 6.25% active ownership stake in CPTS Share Price M 320M 328M -4M 15M 52 wk. range EV/ 21.2 GTSI Corp. (GTSI) Activist Investor: Alan Silberman 20,000 <1% On August 31 Alan Silberman sent a letter to the CEO of GTSI explaining that the Company is currently trading far below their liquidation value of $8.00 per share. Silberman also questioned the efficacy of the Company s corporate governance oversight since two directors - who received less than 50% of the votes cast in their favor at the last election, are still on the board. Finally, Silberman suggested the Company cease reinvesting capital into high-risk development programs. Share Price M 43M 19M 25M 1M 52 wk. range EV/ 14.3 HF Financial Corp. (HFFC) Activist Investor: PL Capital 688, % On September 16 PL Capital sent a letter to HFFC requesting that they delay the current search for a new CEO and conduct a full scope review of strategic alternatives. Share Price M 60M 182M -121M 52 wk. range EV/ We previously covered HFFC in our August 26, 2011; December 4, 2009 and September Catalyst Research Reports, highlighting a settlement agreement between PL Capital and HFFC. Under the terms of that agreement HFFC adopted a majority voting policy and PL Capital agreed not to attempt to replace board members at the 2009 or 2010 annual meetings. On December 1, 2009 PL Capital sent a letter to HFFC outlining their concerns related to the Company s announced stock offering. In the letter, PL Capital stated that because the offering is so dilutive to existing shareholders, the board must not have understood it completely. PL Capital further requested that the board and management reduce their compensation fees by 30% to be in line with the reduction in shareholder value generated by the dilution. Finally, PL Capital said they regret signing a standstill agreement with the board and look forward to its expiration. On August 17 PL Capital nominated two individuals for election to HFFC s board at the next annual meeting. Page 5 of 11

6 New Ireland Fund (IRL) Activist Investor: Bulldog Investors 832, % Bulldog has increased their ownership in IRL from 10.55% to 12.73% since mid-july. Share Price M We previously covered IRL in our August 19 and July 15 Catalyst Research Reports, highlighting Bulldog s increased ownership from 6.31% since announcing on May 31 that they are concerned about the Fund s persistent discount to Net Asset Value. 47M As of September 23, 2011 IRL was trading at a % discount to NAV. 45M 2M 52 wk. range EV/ IMPORTANT NOTE: On September 26 the Board of IRL announced that they have engaged Thomas J. Herzfeld Advisors, Inc. to prepare an analysis of discount-narrowing measures. Micronetics, Inc. (NOIZ) Activist Investor: Vintage Partners 391, % Vintage Partners has increased their active ownership stake in NOIZ to 8.6% We previously covered NOIZ in our August 12 Catalyst Research Report initially highlighting Vintage Partners 7.4% active ownership stake. Share Price M 28M 37M -7M 4M 52 wk. range EV/ 9.0 Insperity, Inc. (NSP) Activist Investor: Stadium Capital 1,554, % On September 23 Stadium Capital disclosed a 5.9% active ownership stake in NSP Share Price B 534M 233M 303M 68M 52 wk. range EV/ 3.4 Page 6 of 11

7 Poage Bankshares (PBSK) Activist Investor: Joseph Stilwell 240, % On September 23 Joseph Stilwell disclosed a 7.1% active ownership stake in PBSK and stated his belief that the Company s value is not adequately reflected in the share price. Share Price M 52 wk. range EV/ RadNet, Inc. (RDNT) Activist Investor: Red Mountain Capital 3,618, % Red Mountain recently increased their ownership in RDNT from 7.5% to 9.7% since entering into a standstill agreement with the Company in late August. Share Price M 86M 619M -530M 103M 52 wk. range EV/ 6.0 We previously covered RDNT in our September 2 and February 25, 2011 Catalyst Research Reports highlighting Red Mountain s February 22 active 5.8% ownership stake and announcement that [they] have met with the management of RadNet and expect to maintain a dialogue with management regarding, among other things, RadNet s operations, strategic direction, capital structure and corporate governance and Red Mountain s expectation that management will pursue appropriate measures to enhance shareholder value. On August 30 RDNT entered into a Standstill Agreement with Red Mountain Capital. Under the terms of the agreement Red Mountain can purchase up to 9.9% of RDNT s stock but is restricted from running a proxy contest against the company while the agreement is in place. RenTrak Corporation (RENT) Activist Investor: Mark Cuban 972, % 9.53 On September 22 Mark Cuban disclosed an 8.7% active ownership stake in RENT. RENT recently gave an investor presentation which models revenue and operating income for the next 5 years. The Company projects FY 2016 revenue at $245M with a $60M operating income. Share Price M 155M 132M 24M 1M 52 wk. range EV/ RENT s September investor presentation is available here: Page 7 of 11

8 Morgan Stanley Eastern Europe Fund, Inc. (RNE) Activist Investor: City of London Investments 1,432, % On September 23 City of London changed their filing status for RNE from passive to active investor and announced plans to propose the termination of the Fund s existing Investment Advisory Agreement via a stockholder's proposal to be included in the Fund's proxy statement at the 2012 annual meeting. Share Price M 55M 60M 52 wk. range EV/ RNE is a closed-end fund currently trading at an 11.34% discount to its Net Asset Value of $15.08 per share. Texas Vanguard Oil Company (TVOC.PK) Activist Investor: VN Capital 75, % On September 20 VN Capital disclosed a 5.3% active ownership stake in TVOC and stated that the stock 7.98 price is undervalued and that they may seek to meet with the Company's management, Board of Directors, Share Price 9.15 other current or prospective shareholders, strategic partners or competitors to discuss measures to maximize stockholder value, including, but not limited to ensuring that the Company either use its nearly $8.5 million of cash to invest in high returning oil and natural gas plays or pay the money out to shareholders in the form of dividends. 7M 13M 5M 8M 2M 52 wk. range EV/ 2.7 Versant Corp. (VSNT) Activist Investor: Andalusian Capital 158, % On September 22 Andalusian Capital sent a letter to VSNT suggesting that the Company implement a $5M share buyback program along with a dividend equal to $0.60 per year. Furthermore, Andalusian suggested that the Company should be worth more than $8.50 per share ex-cash as opposed to $3.55 per share ex-cash at which the Company is currently trading. Finally, Andalusian suggested that the Company s former CEO not stand for re-election at the next annual meeting. Share Price M 32M 10M 23M 2M 52 wk. range EV/ 5.1 We previously covered VSNT in our May 27, 2011; April 24, 2009, March 20, 2009 and March 6, 2009 Catalyst Research Reports, highlighting Discovery Capital s aggressive increase in ownership in early January At the time, Discovery accumulated a 9.8% ownership position at an average cost of $14.49/share. According to SEC filings, Discovery no longer holds VSNT in their portfolio. We also reported that on May Andalusian disclosed a 5.1% active ownership position and disclosed their belief that there are unexploited opportunities to increase the value of the Company. Andalusian s September 22 letter to VSNT is available here: Page 8 of 11

9 CONTACT INFORMATION: Hedge Fund Solutions, LLC Damien J. Park Tel FREE Subscription to the weekly report: or The Catalyst Equity Research Report is a general circulation weekly. Hedge Fund Solutions and/or its affiliates (the Firm ) may have a consulting relationship with the companies featured in this report (the Companies ). The Firm may also actively trade in the securities of the Companies for its own account. At any time, the Firm, funds it manages and/or its employees or their family members may have a long or short position in registered or non-registered securities or in options on any such security of any company mentioned in this report. The information contained in this report is not a complete analysis of every material fact with respect to the company, industry, or security and is not an offer or solicitation to buy or sell any security. Although opinions and estimates expressed in this report reflect the current judgment of the Firm, the information upon which such opinions and estimates are based is not necessarily updated on a regular basis. In addition, opinions are subject to change without notice. The Firm from time to time may perform consulting services for companies mentioned in this report and may occasionally possess material, nonpublic information regarding such companies. This information is not used in the preparation of this report. Facts and other information contained in this report have been obtained from the public sources considered reliable but are not guaranteed in any way. Hedge Fund Solutions Portfolio of Activist Investing Products Catalyst Investment Research Daily: Alerts Weekly: Catalyst Equity Research Report Quarterly Buying Analysis Top 50 Activist Investors Specific Activist Target Catalyst Investment Research Special Reports Shareholder Activism Report & Resource Portal Download a Brochure Page 9 of 11

10 PLATINUM SPONSORS Legal Advisers Olshan Grundman Frome Rosenzweig & Wolosky LLP is a law firm dedicated to providing personal service tailored to the specific requirements and concerns of the firm s clients. Olshan is widely recognized as a preeminent law firm in the activist strategy area, and represents experienced activist investors, funds new to the activist area, as well as other investment and hedge funds. Olshan has extensive experience advising clients in a wide range of activist strategies, from private negotiations with management to public, high profile proxy contests, including expertly and efficiently handling litigation relating to activist matters. We also specialize in mergers and acquisitions and hostile takeovers, with extensive expertise in these matters. Olshan s highly regarded attorneys provide a full range of legal services and are uniquely positioned to provide expert advice regarding the complicated and nuanced legal issues facing activist investors today. Steve Wolosky, Partner swolosky@olshanlaw.com Tel: Schulte Roth and Zabel LLP, one of the leading law firms in the activist investing area, has been involved in some of the highest-profile campaigns facing the business world in recent years. Serving both activist-only and occasional activists, the firm advises on federal securities law, state corporate law, Hart-Scott-Rodino, proxy rules and related matters, as well as handling investigations and litigations arising out of clients' activist activity. The firm, with over 450 lawyers in offices in New York, Washington, D.C., and London, has a long history of serving private equity and hedge fund clients. Marc Weingarten, Partner marc.weingarten@srz.com Tel: Page 10 of 11

11 PLATINUM SPONSORS Proxy Advisors Alliance Advisors LLC is a multi-faceted shareholder communications firm specializing in proxy solicitation, corporate governance consulting, and information agent services. Our in-depth view of the investor communities and governance environment allows us to prepare for successful outcomes. Alliance Advisors fight team has built a distinguished reputation by successfully completing countless contested assignments. The team will complete a comprehensive analysis of the shareholder base and build a calculated battle plan accordingly. We will assist in the crafting and delivery of your message to the target audience, ensuring the message is heard and understood. Alliance Advisors consistently delivers successful outcomes to our clients. Peter Casey, Executive Vice President pcasey@allianceadvisorsllc.com Tel: Georgeson Inc. is the world s leading provider of strategic proxy and corporate governance advisory services to corporations and shareholder groups working to influence corporate strategy. For over half a century, Georgeson has specialized in complex solicitations such as hostile and friendly acquisitions, proxy contests and takeover defenses. For eight consecutive years, Georgeson has been ranked the No. 1 proxy solicitor for M&A transactions in the US. Georgeson s experts include former corporate secretaries who have worked toward successful outcomes with activist investors, former directors of US research at RiskMetrics, M&A attorneys, and the most experienced proxy solicitation team in the industry. Rachel Posner, Senior Managing Director and General Counsel rposner@georgeson.com Tel: Innisfree M&A Incorporated is a full service proxy solicitation/investor relations firm providing clients with sound tactical and strategic advice and results-oriented implementation in proxy and consent solicitations (whether friendly or contested), tender and exchange offers, mergers, rights offerings, strategic restructurings and other domestic and cross-border transactions requiring action by public security-holders. We provide expert consulting services on a wide range of matters, including executive compensation proposals, corporate governance issues and investor relations. Innisfree s reputation derives from our success in complex and/or contested situations. Key to that success is our ability to track, identify and understand the shifting dynamics of a company s security-holder base and provide battle-tested advice based on that information. We are convinced, and our unrivaled record demonstrates, that this refined, analytical based approach enables us to deliver the extraordinary results our clients expect. Arthur Crozier, Co-Chairman acrozier@innisfreema.com Tel: MacKenzie Partners, Inc. is a full-service proxy solicitation, investor relations and corporate governance consulting firm specializing in mergers-and-acquisitions related transactions. The firm has offices in New York City, Los Angeles, Palo Alto and London. MacKenzie's services include corporate governance consulting, security holder solicitations, information agent services for tender and exchange offers, beneficial ownership identification, market surveillance and associated financial, investor and media relations services. We work in close partnership with our client's attorneys, investment bankers and other consultants, providing advice and counsel at each stage of the transaction. Mark Harnett, President mharnett@mackenziepartners.com Tel: Page 11 of 11