CATALYST EQUITY RESEARCH REPORT Weekly Research Highlighting Activist Investments

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1 Weekly Research Highlighting Activist Investments Subscribe to receive this FREE Report ed weekly.

2 HIGHLIGHTING ACTIVIST INVESTMENTS Week Ending March 4, 2011 SYMBOL COMPANY INVESTOR CAW CCA Industries, Inc. Biglari Holdings CPEX CPEX Pharmaceuticals, Inc. Mangrove Partners DYN Dynegy, Inc. Carl Icahn EAR HearUSA, Inc. Arcadia Capital GCH The Greater China Fund City of London Investment Group MOC Command Security Corp Norman Pessin MYE Myers Industries GAMCO Investors NOVA NovaMed Inc. HealthInvest Partners SPBC SP Bancorp, Inc. Joseph Stilwell 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 10

3 CCA Industries Inc. (CAW) Activist Investor: Biglari Holdings Shares 381,506 Catalyst: % Outstanding 12.6% Biglari Holdings has increased their ownership in CAW from 6.3% to 12.6% since announcing on January 24 th Cost Basis 5.51 that they have nominated two individuals for election to the board at the 2011 annual meeting. Share Price M 41M Enterprise Value 27M Net Cash 15M 3M 52 wk. range EV/ 9.6 Legal counsel to Bilgari Holdings CPEX Pharmaceuticals, Inc. (CPEX) Activist Investor: Mangrove Partners Shares % Outstanding Cost Basis 149, % Catalyst: On March 2 Mangrove sent a letter to CPEX recommending the Company undergo a dividend recapitalization program they believe could value the Company in the range of $31.42 to $34.01 per share. In addition, Mangrove reiterated their intention to vote against the buyout offer from Footstar Corp for $27.25/share. On March 2 CPEX issued a letter to stockholders asserting many of Mangrove s assumptions were fundamentally flawed. The special meeting to vote on the merger is set for March 24, Share Price M 71M Enterprise Value 52M Net Cash 19M 3M 52 wk. range EV/ 16.5 Comment: We previously covered CPEX in our February 25, February 4, 2011; February 19, January 29 and January Catalyst Research Reports, highlighting Arcadia Capital s (in 2010 Arcadia owned 9.97%) January letter to CPEX expressing concern that the company has not been managed for the benefit of its stockholders. Arcadia subsequently offered to acquire CPEX for $14.00 (which was later increased to $16.00). On February 17 Arcadia nominated one candidate for election to the board but was unsuccessful in gaining representation. On May CPEX announced that it intended to explore strategic alternatives. On January Footstar Corporation offered to purchase CPEX for $27.25/share in cash. On January 28 Mangrove Partners (5.71% shareholder at an avg. $24.41/share) sent a letter to CPEX detailing why they intend to vote against the company s recent buyout proposal. Mangrove has launched a website called CPEX Ripoff to explain why they believe the buyout undervalues CPEX. On February 23 Kingstown Capital (6.1% at an avg. cost of $27.00) announced they will vote against the Company s $27.25 per share buyout offer. Proxy Solicitor to CPEX Pharmaceuticals Legal counsel to Footstar, Inc. Page 3 of 10

4 Dynegy Inc. (DYN) Activist Investor: Icahn Capital Shares % Outstanding Cost Basis 18,042, % Not Avail Catalyst: On March 1 Icahn disclosed he was in discussions with DYN regarding two board seats. Comment: We previously covered DYN in numerous Catalyst Research Reports (most recently on January 28, 2011). Share Price B 685M Enterprise Value 4.8B Net Cash -4.1B 543M 52 wk. range EV/ 8.9 On October 21 Seneca Capital (9.3% voting stock; 12% economic interest) filed preliminary proxy materials to solicit other shareholders to vote against the Company s proposed merger with Blackstone for $4.50/share. On November 2 Seneca disclosed they may nominate two people for election to the board of DYN and on November 15 Seneca filed a consent solicitation seeking stockholder approval to (i) remove two directors (ii) elect two new directors proposed by Seneca, (iii) repeal any new bylaw amendments [implemented to block these proposals], (iv) direct the board to explore strategic alternatives, (v) direct the board to consider strategies to optimize the Company s debt structure, (vi) direct the board to evaluate all cost cutting opportunities, including corporate costs, (vii) direct the board to conduct a review of senior management and their compensation plans, (viii) direct the board to conduct an in-depth review of board and officer compensation, (ix) direct the board to analyze and explore unwinding the recent reverse stock split. On November 12 Icahn s firm (14.92% shareholder) offered to provide a $2 billion credit facility to the Company in the event a deal is not approved by stockholders. Separately, Icahn opposed the buyout and said he may make a bid for the Company. On November 16 - the day before the scheduled shareholder meeting to vote on Blackstone s $4.50 offer, Blackstone raised their buyout offer to $5.00 per share; the meeting was postponed to Nov 23. In a press release issued on the same day, Icahn continued to oppose the deal, referencing a recent research report issued by JP Morgan stating a December 2011 price target of $7. On November 23 DYN announced the Blackstone buyout was not approved by shareholders. On December 23 Icahn formally offered to purchase DYN for $5.50 per share. Seneca Capital disclosed publicly that the deal was worth $6 to $7/share. On January 21 Seneca Capital delivered a letter to the Special Committee of the Board at DYN requesting permission to increase their ownership above the poison pill threshold to: i) work in concert with others for the purpose of acquiring additional Dynegy common stock at a price greater than $5.50 per share (a price above Carl Icahn s December 23 purchase offer), and (ii) acquire additional non-voting stock at a price that is greater than $5.50 per share. Also on January 21 Seneca issued a press release asking shareholders to not tender their stock to Icahn for $5.50 per share, stating that it is the wrong price at the wrong time for the wrong reasons. On February 21, DYN announced (i) Icahn has withdrawn his acquisition offer, (ii) DYN s CEO resigned, (iii) the current board will not stand for reelection, and (iv) the company has increased the threshold on the poison pill trigger from 10% to 20%. Continue to Next Page Page 4 of 10

5 HearUSA, Inc. (EAR) Activist Investor: Arcadia Capital Shares 2,320,086 Catalyst: % Outstanding 5.1% On March 4 Arcadia disclosed a 5.1% active ownership stake in EAR Cost Basis 0.84 Share Price M 24M Enterprise Value 57M Net Cash -33M 0.5M 52 wk. range EV/ Greater China Fund (GCH) Activist Investor: City of London Investment Group Shares 9,105,730 Catalyst: % Outstanding 29.9% On February 28 City of London Investment Group recommended the board of GCH take the steps necessary to Cost Basis provide shareholders the opportunity to realize net asset value. Share Price M 380M Enterprise Value 376M Net Cash 2M N/A 52 wk. range EV/ N/A Comment: GCH is a closed end fund trading at a % discount to its Net Asset Value (as of 3/4/2011). Command Security Corp. (MOC) Activist Investor: Norman Pessin Shares 1,043,956 Catalyst: % Outstanding 9.6% On March 1 Norman Pessin disclosed a 9.6% active ownership stake in MOC Cost Basis 1.77 Share Price M 22M Enterprise Value 34M Net Cash -12M 5M 52 wk. range EV/ 7.4 Legal counsel to Norman Pessin Page 5 of 10

6 Myers Industries, Inc. (MYE) Activist Investor: GAMCO Investors Shares % Outstanding Cost Basis 5,271, % Not Avail Catalyst: On February 28 GAMCO sent a letter to MYE recommending two individuals for election to the board. Share Price M Comment: We previously covered MYE in our May 7, 2010; November 13, October 30, April ; November ; and July Catalyst Research Reports, highlighting Gamco s opposition to a previously announced merger agreement and Gamco s unsuccessful attempt to nominate four individuals to the company s nine member board at the 2009 annual meeting and three individuals at the 2010 annual meeting. 349M Enterprise Value 436M Net Cash -87M 57M 52 wk. range EV/ 7.6 On May Gamco issued a press release announcing that although their three nominees did not get elected, they received a significant percentage of the votes cast. According to the Company s SEC filing after the election, Gamco s nominees received between 7M and 7.6M votes whereas the company s nominees received between 22.9M and 23M votes. NovaMed Inc. (NOVA) Activist Investor: HealthInvest Partners Shares 405,875 Catalyst: % Outstanding 5.1% On March 2 HealthInvest sent a letter to the board of NOVA stating their intention to vote against the $13.25 Cost Basis per share buyout offer from Surgery Center Holdings Share Price M 105M Enterprise Value 201M Net Cash -100M 42M 52 wk. range EV/ 4.8 SP Bancorp, Inc. (SPBC) Activist Investor: Joseph Stilwell Shares 161,600 Catalyst: % Outstanding 9.4% On February 28 Stilwell disclosed a 9.4% active ownership stake in SPBC and stated their belief that the Cost Basis 7.65 shares are undervalued. Share Price M 23M Enterprise Value 28M Net Cash -4M N/A 52 wk. range EV/ N/A Page 6 of 10

7 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 7 of 10

8 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 8 of 10

9 PLATINUM SPONSORS Proxy Advisors The Altman Group is a full service proxy solicitation firm whose senior professionals have over 250 years of industry experience. We have developed one of the most experienced proxy fight teams in the industry, having been retained in 46 contested solicitations over the past 3 years alone and our 80% win record is unequaled. We were presented with the 2008 TOPS Award recognizing the firm with the highest rated proxy solicitation practice (the third consecutive win for us). We provide strategic consulting, shareholder identification, institutional and proxy advisory firm insight and advanced proxy solicitation services. Paul Schulman, Executive Managing Director pschulman@altmangroup.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 9 of 10

10 GOLD SPONSORS Laurel Hill Advisory Group is a full service, cross-border proxy solicitation firm whose partners and associates are highly recognized in the areas of corporate governance, shareholder activism, and mergers & acquisitions. Laurel Hill was founded in late 2007 by a team of experienced professionals who have worked on over a hundred proxy fights and deals in the U.S. and Canada in the past two years. We are the fastest growing proxy firm in North America providing expertise in corporate governance consulting, shareholder identification, corporate actions (tender offers, consent solicitations), strategic proxy solicitation advisory services, and shareholder asset recovery programs. John O Grady, Vice President jogrady@lhsecurities.com Tel: SSG Capital Advisors, LLC ( SSG ) is a nationally recognized independent investment bank that assists public companies, as well as their stakeholders in providing strategic alternatives analysis including sales and acquisitions, optimizing capital structures, evaluating dividends and share buyback programs, business unit divestitures, monetization of intellectual property, preservation of NOL s, PIPEs, and strategic investments such as joint ventures. As a specialist in maximizing shareholder value we offer the expertise our clients need in today's complex and ever changing financial markets. Since 2001, SSG has successfully completed over 160 investment banking assignments on behalf of clients throughout North America and Europe. Mark Chesen, Managing Director mchesen@ssgca.com Tel: Page 10 of 10