©2008, Promega Corporation. All rights reserved.©2007, Promega Corporation. All rights reserved.

Global Financial Crisis -- Practical Implications for addressing legal issues Sara Jensen

Deputy General Counsel, Promega Corporation

March 2009, Madison, Wisconsin

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Promega• Private

biotechnology company

• Biological reagents used for life science research and human identity testing

• Over 2,000 tangible products

• Key assets include intangible intellectual property

Promega Worldwide Headquarters Madison, Wisconsin

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Background• 920 employees worldwide• ISO 13485 certified• Manufacturing in U.S., Korea and Shanghai

• 14 international subsidiaries

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Sales by Region of the World

©2008, Promega Corporation. All rights reserved.©2007, Promega Corporation. All rights reserved.

Implications of reduced cash flow

What does it mean for an in house Legal Department?

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Cash is tight…So what?• Vendors/Suppliers and customers might fail• Your business might fail• Mergers and Acquisitions will decrease• Export compliance issues may increase in importance• Cost cutting pressures• Your Code of Conduct matters

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Vendors and customers may fail…• Litigation is costly • Look for practical solutions

Require or hold safety stock for key supplies Require key suppliers to transfer manufacturing rights in event of

failure. Consider escrow of manufacturing know how Obtain letters of credit or advancement payment from customers Secure your interests

• Put arbitration language in international contracts

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You may fail• Plan for exit strategies• Link price increases to a reasonable index• Force Majeure clauses matter• Limit your damages• Look for indemnities• Insure• Weigh risk

Is it better to ask for forgiveness or permission?

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M&A will decrease• Look for alternatives to acquisitions

Joint Ventures Collaborations Licenses Milestone Payments

• Escrow for unknown liabilities• Consider assignment clauses in all key contracts

What if your partner is sold to your competitor?

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Export compliance may matter more• Looking for new markets• Cuba?• Understand new markets

What your Distributor Agreement says and what local law requires may be totally different

• If U.S. exports decrease, Bureau of Industry and Security may have more time to audit you

• Know the rules, have a policy, enforce the policy Recommended free training at:

www.bis.doc.gov/seminarsandtraining/index.htm

• Beware of the International Trafficking in Arms Regulations

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Cost cutting pressures• Reductions in force – understand local laws• Reduce Outside Counsel Expenses – more pressure to settle, more opportunity to settle

• Beware of bad judgment Desperate times lead to desperate measures…

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Code of Conduct…Need it now more than ever

• FCPA compliance• Antitrust compliance• FAR compliance• Federal Sentencing Guidelines• Look for best practices…

Promote it Train employees globally Provide multiple channels for reporting concerns (including

anonymous hotlines) Have defined investigation processes Audit compliance

©2008, Promega Corporation. All rights reserved.©2007, Promega Corporation. All rights reserved.

Questions Welcome