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Business Review

S I M P S O N T H A C H E R &

B A R T L E T T

Letter

from the

Chairman

(Continued)1

Building on our core strengths and our diverse practice, Simpson Thacher & Bartlett had another outstanding year in 2001.

In a difficult economic environment, we continued to grow in size and mar-

ket share while participating in some of the most notable transactions of the

year and in some of the most challenging legal contests. At the end of 2001,

we had close to 700 lawyers in our U.S. offices and international offices.

The firm was named one of the top five litigating firms in the country

by the American Lawyer, the only New York firm to be included in that

group. We also continued our strong commitment to pro bono legal services.

Among several accolades, the firm was selected by the National Law Journal

to receive its Pro Bono Award of 2001.

As you take a moment to look at this Business Review, you will see

that we continue to serve some of the world’s most accomplished business

leaders in achieving their goals. We continue to measure our success by

the success of our clients. While there are many individual accomplishments

of which we are proud, we strive for the teamwork that brings all of the

disciplines of the firm together for the benefit of our clients.

Finally, I am sad to report that, as many of you know, Cy Vance,

the leader of the firm from 1979 to 1991, died earlier this year. Cy was an

Contents

Focus on FINANCIAL SERVICES & INSURANCE 4Selected SERVICE PROVIDERS 6Industries POWER & NATURAL RESOURCES 8

TECHNOLOGY & TELECOMMUNICATIONS 10

PHARMACEUTICALS & HEALTHCARE 12

Focus on CORPORATE 16Practice Banking and Credit 16Areas Capital Markets and Securities 20

Mergers and Acquisitions 26Investment Management 30Structured Finance 34Exempt Organizations 37

LITIGATION 38

Antitrust 39International Arbitration 40Insurance 40Product Liability 42Securities and Shareholder Litigation 42Government Investigations and Business Crimes 43Reductions in Force and Other Terminations 43Discrimination and Sexual Harassment 43Intellectual Property and New Media 45

OTHER PRACTICE AREAS 48

Real Estate 48Tax 50Executive Compensation and Employee Benefits 52Personal Planning 53Pro Bono 54

PARTNERS 55

Focus on Selected Industries

2

incomparable force in the firm, a pillar of the bar and a great public servant.

While he spent much of his time serving our country, he always returned to

the firm—the place he called home. He led by example. He set the tone,

he was our moral compass, and he was the soul of integrity. He personified

the concept of role model, both as a professional lawyer and as a public

servant. And he never stopped encouraging all of us to expand our commit-

ment to professionalism, diversity and pro bono service.

We were all, and I as much as anyone, inspired by his actions,

challenged by his intellect and enriched by his friendship. We will miss

him dearly.

Sincerely,

Richard I. Beattie

Chairman, Executive Committee

May 2002

5

JPMORGAN CHASE

Chase Bank and J.P. Morgan

Securities Inc. retained

Simpson Thacher to assist in

the financing of Collins &

Aikman’s bid to acquire the

Trim Division of Textron

Automotive Company. Collins

& Aikman, a leader in the

design, engineering and man-

ufacturing of automotive inte-

rior components, is majority-

owned by Heartland Industrial

Partners, a private equity firm.

In connection with the acquisi-

tion, JP Morgan provided a

bridge financing commitment

to assist in Collins & Aikman’s

successful bid. To finance the

acquisition, we worked on the

refinancing of Collins &

Aikman’s existing credit facili-

ty with a new $575 million

senior credit facility, a $500

million offering of senior

notes and a $250 million

receivables securitization

program. The deal closed

in December 2001.

LEHMAN BROTHERS

We have actively assisted our

client, Lehman Brothers, in

the development of new and

imaginative types of equity-

linked securities. Lehman

Brothers is one of the leading

innovators in these kinds of

products, which include con-

vertible securities, exchange-

able securities, trust securities

and cash-settled instruments.

Lawyers in our capital mar-

kets group and in our tax

group work closely with

Lehman Brothers to solve the

complex legal issues present-

ed by these instruments. Last

year we worked with Lehman

Brothers on offerings of more

than $4.8 billion of these

securities.

KOHLBERG KRAVIS

ROBERTS

The firm regularly represents

long-standing client Kohlberg

Kravis Roberts & Co. Among

other matters, we advised

KKR in 2001 in increasing its

investments in two of its port-

folio companies. In the first

transaction, KKR increased

its stake in PRIMEDIA Inc.,

a specialized media company,

by purchasing $250 million

in convertible preferred

stock and common stock to

partially finance PRIMEDIA’s

acquisition of a competitor,

EMAP, a magazine publisher.

In the second transaction,

KKR invested an additional

$108 million in Alea Group,

a Bermuda-based reinsurance

company.

SWISS RE

Following the tragic

September 11 terror attack,

Swiss Reinsurance Company

(“Swiss Re”), the second

largest reinsurer in the world,

retained the firm to represent

its interests on all aspects of

the World Trade Center disas-

ter. On October 22, 2001, the

firm filed a complaint on Swiss

Re’s behalf in New York feder-

al court against the World

Trade Center’s leaseholders

and others seeking, among

other things, a declaration

that the September 11 attack

constitutes one insurance loss

under the leaseholders’ prop-

erty insurance program. Swiss

Re underwrote a 22% share

of the approximately $3.5 bil-

lion in property damage insur-

ance coverage “per occur-

rence.” Because $3.5 billion

may be insufficient to both

rebuild and cover the debt on

the leasehold, certain lease-

holders controlled by Larry

Silverstein have taken the

position that the September

11 attack constitutes at least

two separate insurance losses

to multiply the insurance

recovery. Billions of dollars are

at stake in this lawsuit. The

firm is also advising Swiss Re

with regard to its involve-

ment in other September11

related matters, including

aviation coverage, reinsur-

ance issues and business

interruption claims.

TRAVELERS

The firm participated in repre-

senting Travelers Property

Casualty Corp. in its $3.8 bil-

lion initial public offering of

shares of Class A Common

Stock and its concurrent

$893 million public offering

of 4.5% Convertible Junior

Subordinated Notes due 2032,

in March 2002. Travelers’ IPO

was the largest ever for a U.S.

insurance company and the

fifth largest U.S. IPO in history.

Travelers is a leading property

and casualty insurance compa-

ny in the United States, with

over $12.2 billion in revenues

in 2001. Prior to the IPO,

Travelers was a wholly owned

subsidiary of Citigroup Inc.

Simpson Thacher & Bartlett Business Review

4

Financial Services& Insurance

7

ACCENTURE

In August 2000, Accenture

(formerly known as Andersen

Consulting), represented by

the firm, won its International

Chamber of Commerce (ICC)

arbitration with Andersen

Worldwide and Arthur

Andersen, allowing for

the formal separation of

Accenture from Andersen

Worldwide and Arthur

Andersen. Accenture is the

world’s leading management

and technology services

organization.

Following the arbitration

and a partner vote in April

2001, Accenture, which has

operations in more than 46

countries, embarked on an

ambitious and complex reor-

ganization, transforming itself

from a series of contractually

related partnerships and

corporations under the

control of its partners into a

two-tiered Bermuda and

Luxembourg corporate hold-

ing company structure. The

firm represented Accenture

in the United States and on a

global basis in coordinating

and implementing the reor-

ganization and the transfor-

mation of Accenture’s corpo-

rate governance model.

In July 2001, Accenture

priced and closed the initial

public offering of its Class A

common shares. The offering,

despite being a sale of less

than 12% of Accenture, is one

of the 25 largest IPOs in histo-

ry and resulted in a market

capitalization for Accenture of

approximately $14.5 billion.

ARAMARK

The firm represented

ARAMARK Corporation in its

initial public offering of shares

of new Class B common stock

and advised ARAMARK in con-

nection with its concurrent

capital reorganization. A sig-

nificant portion of the pro-

ceeds of the IPO were used by

ARAMARK to fund an equity

tender offer for which we

advised ARAMARK. Prior to

the completion of the IPO, the

firm represented ARAMARK in

its $800 million acquisition of

ServiceMaster Management

Services. ARAMARK is a leader

in providing managed services,

including food and support

services, uniform and career

apparel and childcare and

early education programs

with over $7.8 billion in sales

in fiscal 2001.

WEIGHT

WATCHERS

The firm recently represented

Weight Watchers International,

Inc., the leading global pro-

vider of weight-loss services,

and Artal Luxembourg, S.A.,

Weight Watchers’ largest

shareholder, in its initial public

offering in November 2001.

Selling shareholders sold 20

million shares in the offering

with aggregate proceeds

of $480 million. Weight

Watchers did not sell any

shares in the offering and

did not receive any proceeds

from the offering.

DENTSU

The firm represented the

issuer, Dentsu Inc., in a global

offering of 135,000 shares.

The offering, led by Nomura

Securities, Merrill Lynch and

UBS, raised 46.2 billion Yen

($370 million) giving Dentsu

an initial market capitalization

of $4.6 billion. Founded in

1901, Dentsu is the largest

advertising company in Japan

and the largest advertising

agency brand in the world.

The Dentsu Group is also

one of the largest marketing

and communications groups

in the world.

NRI

Nomura Research Institute

offered 13.6 million shares

in a global offering led by

Nomura Securities. The offer-

ing raised 150 billion Yen

($1.2 billion) giving NRI an

initial market capitalization

of $5.3 billion. NRI is a lead-

ing provider in Japan of

systems solutions services and

consulting services. Affiliated

with Nomura Securities,

the company is the leader

in systems solutions services

for the financial services

industry in Japan.

The firm represented the

underwriters and acted as sole

U.S. counsel on the NRI IPO.

The December 2001 listings on

the Tokyo Stock Exchange of

Dentsu Inc. and Nomura

Research Institute marked the

largest IPOs of 2001 in Japan.


6

Service Providers

9

DUKE ENERGY

A team of litigators in Los

Angeles and New York helped

win a significant victory for

the firm’s client Duke Energy

in a case against California

Governor Gray Davis arising

out of the California energy

crisis. Duke Energy had

futures contracts with

California’s public utilities to

provide power at fixed prices.

When the utilities defaulted

on their obligation to pay,

Governor Davis purported to

commandeer the futures con-

tracts to prevent their liquida-

tion for the benefit of Duke

Energy and other power gen-

erators. Simpson Thacher filed

suit on behalf of Duke Energy

in federal district court in Los

Angeles to enjoin the seizures.

The United States Court of

Appeals for the Ninth Circuit

reversed the district court’s

decision and held that the

Eleventh Amendment could

not shield the Governor from

a suit seeking to require him to

conform his conduct to the

federal Constitution. The Court

of Appeals adopted Duke

Energy’s argument that the

seizures were barred by the

Supremacy Clause and ordered

the district court to enter the

requested injunction forthwith.

AMERICAN

ELECTRIC POWER

The firm represented American

Electric Power Company in its

study of the appropriate struc-

ture of this large public utility

holding company following

deregulation of portions of

their utility business. In particu-

lar, we considered the tax and

other issues involved in disag-

gregating the regulated utility

business from the deregulated

generation and trading busi-

ness including a restructuring

of the capital structure of all

the subsidiaries of this holding

company. We have, on their

behalf, obtained the requisite

tax ruling and are actively

engaged in the refinancing

project, which will involve both

equity issuances and refinanc-

ing billions of dollars in debt.

AMERICAN WATER

WORKS

RWE AG, the world’s fourth

largest utility, entered into an

agreement to purchase the

firm’s client American Water

Works in a cash transaction

valued at $7.6 billion, including

approximately $3 billion in

assumed debt. American

Water Works is the largest

publicly traded U.S. corpora-

tion devoted exclusively to the

business of water. RWE intends

to combine the operations of

American Water Works with

Thames Water plc, its London-

based water services unit, in

order to expand its presence

in the United States. This

acquisition is expected to close

in the first half of 2003.

GEORGIA-PACIFIC

The firm represented Georgia-

Pacific in the spin-off of

Georgia-Pacific’s timber and

timberlands business and the

subsequent merger of the

spun-off company with Plum

Creek Timber Company. The

overall transaction, which

closed in the fourth quarter

of 2001, was valued at approxi-

mately $3.8 billion. Both the

spin-off and merger transac-

tions were structured to be

tax-free to Georgia-Pacific and

Plum Creek and their respective

shareholders. Georgia-Pacific,

headquartered in Atlanta,

is one of the world’s leading

manufacturers and distributors

of tissue, packaging, paper,

building products, pulp and

related chemicals.

PG&E NATURAL

ENERGY GROUP

The firm represented Lehman

Brothers Inc. and the other

underwriters in an offering by

PG&E National Energy Group,

Inc. of $1 billion of its 10.375%

Senior Notes due 2011, which

closed in May 2001. National

Energy Group, a subsidiary

of PG&E Corporation, is an

integrated energy company

engaged in power generation,

greenfield development,

natural gas transmission and

energy marketing and trading

in North America.

KEYSPAN ENERGY

The firm achieved a substantial

victory for its client KeySpan

Corporation in an arbitration

against the Long Island

Power Authority (“LIPA”).

In December 2001, after a

six-day hearing, an arbitration

panel confirmed KeySpan’s

right to construct a fiber optic

telecommunications network

on LIPA’s utility poles on Long

Island. The dispute had its

origins in the highly publicized

and politicized 1997 breakup

of LIPA, which was one of

the most complex utility trans-

actions ever.


8

Power& Natural Resources

11

AGILENT

TECHNOLOGIES

The firm acted as issuer’s

counsel to Agilent

Technologies Inc. in connec-

tion with its sale of

$1.2 billion aggregate princi-

pal amount of 3% senior

convertible debentures due

2021. We also represented

Agilent in connection with

the $1.7 billion sale of its

medical products business

to Philips Electronics N.V. in

2001. Agilent, which was

spun off by Hewlett-Packard

in 1999, is a global technol-

ogy company providing prod-

ucts for the communications,

electronics and life sciences

industries. Its three primary

businesses are test and

measurement, semiconductor

products and chemical

analysis/life sciences.

MAXIM INTEGRATED

PRODUCTS, INC.

The firm represented Maxim

Integrated Products in its $2.5

billion stock-for-stock acquisi-

tion of Dallas Semiconductor

in April 2001. Maxim is a

leading manufacturer of

analog circuits headquartered

in Silicon Valley. Prior to the

Dallas Semiconductor acquisi-

tion, Maxim had relied exclu-

sively on internal growth to

become a $15 billion market

capitalization company. To

help guide it through its first

acquisition, Maxim turned to

a Simpson Thacher team

consisting of experienced

M&A specialists as well as

attorneys with a deep knowl-

edge of the semiconductor

industry through their repre-

sentation of Intel, NEC and

other leading companies.

Working closely with senior

management of Maxim

and the company’s financial

advisors, the firm helped

structure an innovative

exchange ratio mechanism

that allowed the two parties

to reach agreement on their

relative valuations.

KOREA TELECOM

STB recently represented

Korea Telecom Corp. (“KT”)

in two related transactions: a

Rule 144A/Regulation S offer-

ing of US$1.3 billion of KT’s

0.25% Convertible Notes due

2007 (the “Notes”), under-

written by joint global coordi-

nators and joint bookrunners

Merrill Lynch & Co. and UBS

Warburg, and the entry into

a strategic relationship with

Microsoft Corporation, which

included a private placement

with Microsoft of US$500

million aggregate principal

amount of KT’s 4.30% bonds

due 2005 with warrants to

purchase shares of KT’s

common stock. KT is the

leading telecommunications

service provider in Korea and

one of the largest and most

advanced companies in Asia.

TELEFÓNICA

MÓVILES

The firm acted as United

States counsel to Telefónica

Móviles, S.A. in connection

with its € 3.3 billion initial

public offering. This offering

constituted the largest IPO by

a Spanish issuer in history.

Telefónica Móviles, which

continues to be controlled by

Telefónica, S.A. of Spain, is

one of the ten largest wire-

less companies in the world

and has its principal opera-

tions in Spain and Latin

America. In connection with

the IPO, Telefónica Móviles

listed its ordinary shares

on the Madrid, Bilbao,

Barcelona and Valencia Stock

Exchanges and its ADSs on

the New York Stock Exchange.

UNITED

MICROELECTRONICS

CORPORATION

The firm represented

Taiwan’s United Microelec-

tronics Corporation (“UMC”),

the world’s second-largest

contract manufacturer of

semiconductors, in connec-

tion with the offering of

US$302 million of Zero

Coupon Convertible Bonds in

late 2001, underwritten by

Morgan Stanley. The firm

also represented UMC and

the government of the

Republic of China in the sec-

ondary offering of UMC’s

American depositary shares

in early 2002, underwritten

by Lehman Brothers. The

government of the Republic

of China raised US$440

million in this offering.


10

Technology& Telecommunications

13

WELLPOINT HEALTH

NETWORKS, INC.

The firm represented Well-

point Health Networks, one of

the leading managed health-

care networks in the country,

in the two largest acquisitions

announced in 2001 in the

health care industry. In the first

transaction, we represented

WellPoint in its $1.3 billion

acquisition of RightChoice

Managed Care, the parent of

Blue Cross and Blue Shield

of Missouri, through a stock-

for-stock merger completed in

early 2002. In the second, we

represented the company in

its agreement to acquire

CareFirst, Inc., a not-for-profit

company which owns the Blue

Cross and Blue Shield plans

of Maryland, Delaware and

the District of Columbia, for

$1.3 billion of cash and Well-

point stock. The second trans-

action will close after CareFirst

completes its conversion to

not-for-profit status and the

receipt of regulatory

approvals.

EXPRESS SCRIPTS

In 2001 and 2002, the firm

represented regular client

Express Scripts, Inc., North

America’s third largest phar-

macy benefit manager, in con-

nection with the acquisition

of National Prescription

Administrators, a pharmacy

benefit manager principally

servicing unionized employ-

ees. The transaction was

for $450 million in cash and

Express Scripts stock.

Pharmacy benefit managers or

PBMs coordinate the distribu-

tion of outpatient pharmaceu-

ticals through a combination

of services, including retail

drug card programs, mail

pharmacy services and formu-

lary management programs.

AMERICAN HOME

PRODUCTS

In December 2001, Amgen Inc.

announced plans to acquire

Immunex in a $16 billion cash

and stock transaction. The firm

is representing American

Home Products, a 41% stock-

holder of Immunex. As a result

of the merger, Amgen will

acquire the 41% stake in

Immunex held by American

Home Products, giving AHP an

8% stake in the new company.

The financial contribution to

AHP from the existing licens-

ing and marketing rights to

Enbrel, a breakthrough biolog-

ical treatment for rheumatoid

arthritis, remains unchanged.

DRUMMOND

On May, 19, 2000, Drummond

Company, Inc. brought suit in

federal court alleging that Blue

Cross and Blue Shield of

Alabama, Inc. unreasonably

restrained and illegally monop-

olized the market for the

provision and administration of

commercial health benefit

plans in Alabama through its

use of “Most Favored Rate”

provisions in its contracts with

hospitals and physicians, preda-

tory pricing and other exclu-

sionary conduct. In February

of 2001, Drummond defeated

Blue Cross’ motion for judg-

ment on the pleadings and

partial summary judgment.

The Northern District of

Alabama’s denial of these

motions in their entirety

marked one of the first success-

ful challenges in the courts to

“Most Favored Rate” provi-

sions and the seldom seen

survival of a predatory pricing

claim past the pleading stage.

In August 2001, the parties

agreed to a settlement in the

litigation on terms considered

very favorable by Drummond.

UPMC

Simpson Thacher successfully

defended UPMC Health

Systems, Inc., a large health

care provider in the Pittsburgh

area, in a lawsuit brought by

Highmark, Inc., the major

health insurance payor in

the Pittsburgh area, and other

health insurers seeking to

enjoin a merger between

UPMCHS and Children’s

Hospital of Pittsburgh. The law-

suit claimed that the merger

would violate the antitrust

laws on grounds that it would

create concentration in certain

alleged hospital services

markets and that it would per-

mit UPMCHS to “tie and bun-

dle” various services in future

negotiations with payors.

Highmark moved for a prelimi-

nary injunction against the

scheduled October 31, 2001

closing of the transaction.

On the eve of trial, Highmark

withdrew its complaint. This

outcome largely resulted from

the facts developed by

Simpson Thacher lawyers dur-

ing expedited discovery.


12

Pharmaceuticals& Healthcare

Focus on Practice Areas

17


16


Simpson Thacher

is instrumental in the

syndicated loan market

and plays a key role in

the transactions that

shape the syndicated

lending landscape.

Syndicated Lending

he past several yearshave brought manychanges to domestic

and international financingmarkets in general and thesyndicated lending market in particular. Syndicatedlending, nonetheless, remainsa critical focus for financialinstitutions, financial spon-sors and corporations.

Simpson Thacher &Bartlett continues to beinstrumental in advisingleading lender and borrowerclients, such as JPMorgan,CIBC, Lehman Brothers,Kohlberg Kravis Robertsand Blackstone, in the syndicated loan market and plays an important role in transactions that shapethe syndicated lending landscape.

Bank and high-yield debt have come into direct competition for a place in company capital struc-tures as market participants have become more product-neutral and engaged insharper relative value analy-sis. In this environment,syndicated lending has hadto accelerate its market-based orientation. Featuressuch as call premiums andoriginal issue discounts nowappear in bank products,and the pricing of new banktransactions is more closely

tied to the pricing of com-parable instruments tradingin the secondary market.The bank market has alsoseen a wider spread in pricing of syndicated dealsand such pricing features as LIBOR floors. Institu-tional participation frommutual funds, insurancecompanies and CDOs in the syndicated lending market has greatly expanded.

A slowing economic envi-ronment has put a premiumon transaction management,including debt restructur-ings and workouts. Telecomand industrial borrowersalike have had to accommo-date to a different marketenvironment by adjustingthose capital structures that had been established in more prosperous and flexible times. Other “fallenangel” borrowers have alsohad to come back to theirbanks for additional liquid-ity to see them through difficult times. SimpsonThacher has been an activeparticipant in these transac-tions, in many cases assistingin credits migrating frominvestment grade to lever-aged status. The firm hasalso participated in capital-ization-adjusting transac-tions, such as debt for equityrestructurings.

Simpson Thacher contin-ues to see the international-ization of syndicated lend-

ing, including the importinginto the European syndi-cated lending market ofmany of the most successfulfeatures of the U.S. syndi-cated lending market. Thistrend, coupled with theestablishment of CDOs in Europe and the increasinginstitutional participation in the European syndicatedlending market, should facilitate growth in leveragedacquisition activity inEurope. The firm and itsclients stand poised to takeadvantage of such activity.

Regulatory Advice

In addition to serving asthe lead outside regula-tory and corporate coun-sel for JPMorgan, SimpsonThacher advises a numberof prominent U.S. and for-eign financial institutions on regulatory and corporatematters. Recently, the firmobtained the regulatoryapprovals required for themerger of JPMorgan intoChase, advised Wachovia inconnection with its mergerinto First Union (and therelated hostile bid by SunTrust Banks, Inc. forWachovia), advised Wash-

Bank and high-yield debt have come into direct

competition for a place in company capital struc-

tures. As a result, the syndicated lending market

has had to accelerate its market-based orientation.

Banking and Credit

T

18


19


ington Mutual in its acquisi-tion of Dime, assisted sev-eral clients in responding toregulatory investigations,and provided advice regard-ing U.S. bank regulatorymatters to major banks inCanada, Europe and Japan.

The firm has acted as glob-al counsel with respect to themerger and corporate splitsinvolving The Fuji Bank, TheIndustrial Bank of Japan andThe Dai-Ichi-Kangyo Bankto create Mizuho CorporateBank. The firm advisedWestern private investorswith regard to their acquisi-tion of Shinsei Bank in Japanand is counsel to a privateequity fund that invests infinancial institutions in theUnited States and Europe.The firm also advises finan-cial institutions regarding thebank regulatory and bankcapital issues that arise inmerchant banking transac-tions, asset securitizations,and the development of newbank capital instruments.

Bank SyndicateRepresentation inChapter 11 Cases

The heart of thefirm’s bankruptcypractice continuesto be its representation of senior bank syndicates in complex bankruptciesand out-of-court restruc-turings. We have served as counsel to the seniorlenders in many recentChapter 11 cases.

Banking and Credit ContinuedREPRESENTATIVE BANKING AND CREDIT TRANSACTIONS

Firm’s Client Value Transaction

JPMorgan $8.0 billion Syndicated credit facilities for Philip Morris Corporation

JPMorgan $7.0 billion Syndicated credit facilities for Charter Communications Inc.

and certain subsidiaries

JPMorgan and Citigroup $6.5 billion Restructured and increased syndicated credit facilities for

Lucent Technologies Inc. and its partially owned subsidiary,

Agere Systems Inc.

JPMorgan $1.3 billion Syndicated credit facilities to finance Forstmann

Little & Co.’s acquisition of Citadel Broadcasting Company

Barclays Bank PLC $950 million Syndicated credit facilities to Southern Cross Ltd. for its Fiberoptic

Cable System from Australia to the U.S.

Lehman Brothers $875 million Syndicated credit facilities to finance White Mountain Insurance

Group’s acquisition of CGU Corporation

JPMorgan $575 million Syndicated credit facilities to finance Collins & Aikman

Corporation’s acquisition of the automotive interiors

business of Textron Inc.

Bear Stearns $550 million Syndicated credit facilities to finance Affiliated Computer Services

Inc.’s acquisition of Lockheed Martin IMS Corporation

Canadian Imperial Bank $450 million Syndicated U.S. and Canadian dollar facilities to finance

of Commerce International Multifoods Corporation’s acquisition of

certain retail food businesses from Pillsbury and General Mills

Bear Stearns $340 million Syndicated credit facilities to finance an ESOP buyout of

Appleton Papers Inc.

JPMorgan $300 million Structured export loans for Companhia Suzano de

Papel e Celulose and Bahia Sul Celulose S.A.

MedPointe Inc. $225 million Syndicated credit facilities to MedPointe Inc., a company

sponsored by Cypress Partners, Carlyle Partners and

MedPointe Capital Partners to finance its acquisition of the

pharmaceutical business of Carter-Wallace Inc.

We advise prominent

domestic and foreign

financial institutions

on regulatory and

corporate matters.

As Counsel to Lenders

ANC Rental Corp.

Audio Visual Services Corporation

Burlington Industries Inc.

Communications Corporation of America

Federal Mogul Co.

Galey & Lord

Harnischfeger Industries Inc.

Kmart Corp.

Mariner Post-Acute Network Inc.

Sunbeam Corp.

Synthetic Industries Corp.

Teligent Inc.

Velocita Corporation

Williams Communications

RECENT BANKRUPTCY AND

RESTRUCTURING ENGAGEMENTS

Selected recent bankruptcies

and out-of-court restructurings in which

we have appeared are listed below:

21


20


Capital Markets and Securities

We continue tobe a worldleader in capital markets and

securities transactions.

In 2001, the firm ranked

Number 1 in worldwide

equity issuances by

U.S. issuers, Number 1 in

worldwide initial public

offerings by U.S. issuers

and Number 1 in U.S.

equity and equity-

related offerings (based

on proceeds in engage-

ments for issuers and

underwriters). In addi-

tion, we are a leader in

advising on offerings

by foreign issuers, high-

yield offerings and

derivative and complex

instruments.

A World Leader The firm has one ofthe most active andinnovative capital

markets and securities prac-tices in the world. In recentyears, as the SEC continuedto simplify the offeringprocess for domestic invest-ment grade issuers, the firm’ssecurities lawyers have turnedtheir attention to increasinglycomplicated transactions.The results of these effortsare clearly shown by ourleadership positions.

The depth of our practice and high levels of activityensure that our experiencedsecurities lawyers will transacteach engagement efficiently,whether the task is a new $20 billion shelf registrationstatement for our clientJPMorgan or a convertiblebond offering for a Taiwaneseelectronics company.

Initial PublicOfferings

Advising privatecompanies in theintricacies of goingpublic utilizes almost everydiscipline within the firm, butparticularly the corporate, taxand benefits practice groups.Simpson Thacher is a recog-

nized leader in assisting issuersand underwriters in initialpublic offerings—in 2001,the firm completed moreIPOs for U.S. issuers than anyother law firm, measured bydollar volume. Our IPO prac-tice, like the rest of our capitalmarkets practice, is truly globalas well. For example, in 2001,we were engaged in connec-

tion with the two largest IPOsof the year in Japan.

While many of the IPOsare traditional commonstock offerings for cash, a large number of thesesecurities transactions arepart of a more elaborate corporate program such as a recapitalization, spin-off,or split-off.

RECENT REPRESENTATIVE IPOs

Proceeds Issuer Firm’s Client

$8.7 billion Kraft Foods, Inc. Underwriters led by(the second largest branded food and Credit Suisse First Bostonbeverage company in the world) and Salomon Smith Barney

$3.8 billion Travelers Property Casualty Corp. Issuer(a leading property and casualty insurance company)

€3.3 billion Telefónica Móviles, S.A. Issuer(approx. (leading wireless company in Spain and $2.8 billion) Latin America)

$1.7 billion Accenture Ltd. Issuer(a leading international consulting firm)

¥150 billion Nomura Research Institute Underwriters led by (approx. (a leading provider in Japan of system Nomura Securities$1.2 billion) solutions services and consulting services)

$690 million ARAMARK Corp. Issuer(a leading provider of food and support services, uniform services and childcare)

$483 million Peabody Energy Corp. Issuer(the largest private-sector coal companyin the world)

$395 million Weight Watchers International, Inc. Issuer(a leading international provider of weight loss services)

¥46 billion (approx. Dentsu Inc. Issuer$370 million) (the largest advertising company in Japan)

$309 million Odyssey Re Holdings Corp. Underwriters led by (a leading underwriter of reinsurance) Banc of America Securities

and CIBC World Markets

$270 million Willis Group Holdings Limited Issuer(the third largest insurance broker in the world)

In addition to repre-

senting a significant

number of corporate

issuers, the firm

represents virtually

every major global

investment bank.

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Capital Markets and Securities Continued STB is a Leader in Complex Equity-LinkedInstruments

W e have longbeen engagedin the devel-opment of innovative andcomplex financial instru-ments. Our expertise in this area is one reason whythe firm ranked No. 1 inU.S. equity and equity-related offerings in 2001.

The firm is a recognizedleader in the area of equity-linked securities such asoptionally or mandatorilyconvertible or exchangeablesecurities. Many of thesesecurities, particularly structured mandatory securities, are highly com-plex and draw on the firm’s expertise in tax, aswell as areas such as invest-ment company and pension regulation.

In 2001, SimpsonThacher assisted on nearly30 offerings of convertibleor exchangeable securitiesrepresenting an aggregateprincipal amount at maturi-ty of over $13 billion. Inaddition, the firm complet-ed 20 offerings of cash-set-tled equity-linked securities.

REPRESENTATIVE OFFERINGS OF

CONVERTIBLE/EXCHANGEABLE SECURITIES

Principal ManagingAmount at Underwriter(s)Maturity Name of Security Issuer or Initial Purchaser(s) Firm’s Client

$1.5 billion Contingent Zero- US Bancorp Salomon Smith UnderwritersCoupon Accreting Barney, U.S. Bancorp Redeemable Piper JaffraySecuritiesSM

(CZARSSM) due 2021

$1.2 billion Zero Coupon Cendant Lehman Brothers UnderwritersSenior Convertible CorporationContingent Debt SecuritiesSM

(CODESSM)

$1.1 billion 3% Senior Agilent Credit Suisse IssuerConvertible Technologies, Inc. First Boston, Debentures J.P. Morgan Securities, due 2021 Salomon Smith Barney

$1 billion Trust Preferred Washington Lehman Brothers UnderwritersIncome Equity Mutual Inc.Redeemable SecuritiesSM Units (PIERSSM)

$775 million Equity Units, initially Duke Energy Morgan Stanley Issuerconsisting of CorporationCorporate Equity Units

$650 million Zero Yield Puttable Anadarko Petroleum Lehman Brothers UnderwritersContingent Debt CorporationSecurities (ZYP-CODESSM) due 2021

$500 million 73⁄4% Premium PPL Capital Morgan Stanley IssuerEquity Participating Funding Trust Securities Units (PPL Corporation)(PEPSSM Units)

$467 million 3% Secured HMC Cayman Credit Suisse UnderwritersExchangeable Finance Company First Boston Notes due 2003 (Cayman Islands)

$300 million 61⁄2% Exchangeable Banco Nacional de Morgan Stanley UnderwritersNotes due 2006 Desenvolvimento

Economico e Social—BNDES (Brazil)

$244 million 2.0% Convertible Korea Tobacco & UBS Warburg, UnderwritersBonds due 2006 Ginseng (Korea) Credit Suisse

First Boston,Hyundai Securities

STB AdvisesUnderwriters in Largest IPO of the Year

Simpson Thacheracted for the under-writers in the largestIPO of the year, the KraftFoods initial public offeringcompleted in June 2001.The global IPO raised $8.7 billion in gross pro-ceeds and is one of the twolargest U.S. IPOs to date.Kraft is the largest brandedfood and beverage com-pany headquartered in theU.S. and the second largestin the world. Giving effectto its acquisition of Nabiscoin late 2000, Kraft had revenues and EBITDA of approximately $35 bil-lion and $6.3 billion, res-pectively, with seven brandseach producing over $1 bil-lion in revenue and 61brands each producing over$100 million in revenue.

The firm represented the underwriters, led byCredit Suisse First Bostonand Salomon Smith Barney,as joint book runners on behalf of 13 other co-managers and 54 otherunderwriters.

STB RepresentsAccenture inReorganization and IPO

impson Thacher rep-resented Accenture,the world’s leading

management and technologyconsultancy, in connectionwith Accenture’s worldwidereorganization and initialpublic offering in 2001. Inthe offering, Accenture soldapproximately 14% of itsequity for gross proceeds ofmore than $1.9 billion,

making it one of the 25 largest IPOs in history.

Accenture, which hasoperations in more than 46 countries, completed anambitious and complexreorganization in which ittransformed itself from anetwork of contractually-linked partnerships and corporations into a two-tiered Bermuda and Luxem-bourg corporate holdingcompany structure.

Simpson Thacher repre-sented Accenture in theUnited States and on a global basis in coordinating

and

and implementing the reorganization, the transfor-mation of Accenture’s corporate governance modeland its IPO.

The reorganization andIPO followed Accenture’ssuccessful arbitration againstthe Arthur Andersen firms,permitting Accenture tosever its contractual ties with those entities. SimpsonThacher also representedAccenture in this Interna-tional Chamber of Com-merce arbitration.

In the year’s largest IPO, for Kraft Foods, we were instrumental in designing

novel solutions on behalf of the underwriters. The offering featured the use of

an online“Meet the Management” presentation. This web-based presentation

enabled retail investors, who were not permitted to attend institutional road-

show meetings, to listen to and watch the Kraft co-CEOs discuss their business

by clicking on an embedded hyperlink in an electronic prospectus.

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High-YieldOfferings

Simpson Thacher hasan extensive practicein all areas of publicand private (Rule 144A)high-yield financings,many for first-time issuers.

We participate regularlyin offerings by many com-panies involved in a broadspectrum of businesses,including telecommunica-tions and computer technol-ogy, entertainment, publish-ing, financial services, ener-gy, pharmaceuticals, healthcare, transportation, retail-ing, real estate developmentand manufacturing.

The firm has participatedin most of the major lever-aged acquisition transactionsin the last fifteen years(many of which utilizedhigh-yield financing), eitheras counsel to financial spon-sors, issuers, money centerlenders or major investmentbanks. We have substantialexperience structuring thecomplicated debt instru-ments that have been usedin a wide variety of high-yield financing transactions.This experience is reflectedin a broad knowledge ofdebt structures, a strongbackground in covenantnegotiation and a familiaritywith complex subordinationprovisions and intercreditorarrangements.

24


ore and morenon-U.S. com-panies have

come to the U.S. to raisefunds in the past ten years, motivated by relativelyhigh valuations offered bythe U.S. capital markets.Those companies have beenencouraged also by favorableregulatory attitudes, makingboth U.S. public offerings and U.S. private transactionseasier to accomplish.

As one of the leadingU.S. law firms in the capital markets area, Simpson Thacher has beenin the forefront assisting foreign issuers to accessU.S. capital.

In Europe, the firm’swork ranges from offeringstargeted to the U.S. publicmarkets to European-focused offerings involvingU.S. institutional investorparticipation. In recentyears, much of the firm’swork has been acquisition-related: for example, in2001, the firm representedU.K. specialty chemicalproducer Ineos Group infinancing its acquisitions in Germany and the U.S.;Willis Corroon, the world’sthird largest insurance broker, in refinancing itsleveraged buyout; and theU.S. energy company

WPDH (a joint venture ofMirant Corporation andPPL Corporation) in refi-nancing and restructuringits acquisition of a Britishwater company. The firmfrequently acts on transac-tions for companies that regularly tap the inter-national markets, oftenthrough multi-billion dollar debt programs, fortheir ongoing capital needs,(such as Abbey Nationaland BNP Paribas), as well as on transactions for companies using the U.S. high-yield or equitymarkets for the first time.

While the firm focusesits European-basedresources in London, thegeographic scope of itsactivities is pan-European.The United Kingdom,Italy, France, Germany, the Scandinavian countriesand Spain have generatedthe largest share of workfor the firm, although thefirm’s work has taken its lawyers to virtually everyEuropean country over thepast few years. SimpsonThacher represents mostmajor U.S. investmentbanks and many Europeaninvestment banks, as

well as a wide range of corporate issuers in theirunderwriting activities in Europe.

In Asia, the firm’s localoffices rank among theleading U.S. law firms inproviding advice in financ-ings for major Japanese,Korean, Chinese and Tai-wanese companies. Theoffices have sizable teams ofexperienced capital marketslawyers fluent in Japanese,Korean and Chinese. TheAsian offices also provideadvice on capital marketstransactions originating inHong Kong, Malaysia, The Philippines and otherAsian countries.

In Latin America, Simpson Thacher has sig-nificant experience in assist-ing leading companies,financial institutions andsovereign issuers in access-ing the international capitalmarkets. Among othertransactions in 2001, thefirm represented underwrit-ers in the inaugural bondoffering for the DominicanRepublic, as well as a bondoffering for the Republic of Guatemala. The firm hasa sizeable team of lawyersfluent in Spanish and Portuguese who participate in capital markets transac-tions in the region.

Non-U.S. Issuers

Capital Markets and Securities Continued RECENT REPRESENTATIVE HIGH-YIELD OFFERINGS Managing

Principal Underwriter(s) or Amount Name of Security Issuer Initial Purchaser(s) Firm’s Client

$575 million 9% Notes due 2011 Dana Corporation DeutscheBanc Underwriters€200 million Alex. Brown,

J.P. Morgan Securities

$500 million 87⁄8% Senior Notes PRIMEDIA Inc. Salomon Smith Issuerdue 2011 Barney, J.P. Morgan

Securities, Banc ofAmerica Securities LLC

$500 million 103⁄4% Senior Notes Collins & Aikman J.P. Morgan Securities, Underwritersdue 2011 Products Co. Credit Suisse First

Boston, Deutsche Banc Alex. Brown, Merrill Lynch & Co.

$500 million 9% Senior Notes MeriStar Hospitality Lehman Brothers, Underwritersdue 2008, Operating Partnership, SG Cowen91⁄8% Senior Notes L.P., MeriStar due 2011 Hospitality

Finance Corp.

$275 million 8% Senior Cott Beverages Inc. Lehman Brothers, UnderwritersSubordinated CIBC World Notes due 2011 Markets, BMO

Nesbitt Burns

€250 million 10% Senior Preem Holdings AB Deutsche Bank and UnderwritersSecured Notes (publ) UBS Warburg LLCdue 2011

$250 million 105⁄8% Senior WCI Communities, UBS Warburg LLC, IssuerSubordinated Inc. Bear, Stearns & Co. Notes due 2011 Inc., Fleet

Securities, Inc.

$250 million 10% Senior Notes Pennzoil-Quaker J.P. Morgan Securities, Underwritersdue 2008 State Company Deutsche Banc Alex.

Brown, Salomon Smith Barney, Scotia Capital

$229 million 111⁄4% Senior CB Richard Ellis Credit Suisse IssuerSubordinated Services, Inc. First BostonNotes due 2011

$215 million 9% Senior Tesoro Petroleum Lehman Brothers UnderwritersSubordinated CorporationNotes due 2008

We are in the forefront

assisting the large number

of foreign issuers seeking

to access U.S. capital.

M

impson Thacher &

Bartlett is one of

the world’s preem-

inent law firms in public

and private merger and

acquisition transactions.

For each of the last four

years, the firm has been

ranked first or second,

based on dollar value, in

completed merger and

acquisition transactions

involving United States

targets and ranked in

the top three of law

firms in that period for

announced merger and

acquisition transactions

involving United States

targets. Worldwide,

Simpson Thacher has

been ranked at least in

the top four law firms in

announced and complet-

ed merger and acquisition

transactions for each of

the last four years.

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In 2001, Simpson Thacherranked first in completedmergers and acquisitionsinvolving United Statesfinancial institutions. 2000included the firm’s represen-tation of America Online in its $165 billion mergerwith Time Warner Inc., the largest U.S. corporatemerger to date, and the representation of TheSeagram Company Ltd., in its $55 billion mergerwith Vivendi S.A.

Simpson Thacher is alsoinvolved in many significanttransactions on behalf of private equity firms. We believe that no firm ismore active on behalf of private equity clients than Simpson Thacher, as we represent many of the most active financial sponsors and numerous

money-center lenders andinvestment banks that pro-vide the related bank debtand high-yield financing.Recent representationsinclude Silver Lake Partnersin its $20 billion acquisitionof Seagate Technology;Kohlberg Kravis Roberts &Co., in its acquisition of

Shoppers Drug Mart and Wassall plc; BlumCapital Partners in its acquisition of C.B. RichardEllis; and RipplewoodHoldings LLC in its purchase of Royal DutchShell’s krayton polymerbusiness.

Whether assisting a client

in connection with a multi-billion dollar hostile take-over offer, or representing a client in a more routineasset acquisition, the firm’sattorneys provide sound,pragmatic advice in achiev-ing the clients’ goals asquickly and efficiently as possible. We have morethan 35 corporate partnerswith significant experiencein merger and acquisitiontransactions and a largegroup of dedicated and tal-ented associates who workin this area. In addition,lawyers in our securities,credit, employee benefits,tax, intellectual property,antitrust, real estate, environmental and labor practice groups are routinelyinvolved in merger andacquisition matters.

he firm serves corpo-

rations, private equity funds, finan-

cial advisors and banks incross-border M&A transac-tions around the world.

We represented TheSeagram Company Ltd. in its $55 billion stock merger with Vivendi S.A., a major French entertain-ment company, creating one of the world’s largestmedia and entertainmentcompanies. We then represented Vivendi in its $8.15 billion sale of theassets of the Seagram wine

and liquor business to

British-based Diageo plc and French-based PernodRicard in a complex multijurisdictional transac-tion. The firm has also represented AOL TimeWarner in its $6.5 billionacquisition of Bertelsmann’s50% stake in AOL Europeand in its $750 millionacquisition of Vivendi’s 50% interest in AOLFrance.

Other notable recentinternational transactionsinclude representingHarcourt General in its

sale to Anglo-Dutch

publishing company ReedElsevier plc; representingAmerican Water Works inconnection with its sale toGerman utility RWE AG;representing ACNielsenCorporation in its mergerwith Dutch–based VNUN.V. and assisting TheChase Manhattan Bank inits acquisition of the Englishinvestment bank RobertFleming Holdings Ltd.Recent notable cross-bordertelecom-related transactionsinclude representing theSpanish cellular company

Telefónica Móviles S.A. in

its acquisition of certaininternational cellular phoneoperations of Motorola Inc.; acting as U.S. counselto Telia AB, Telia Overseas and Algar Telecom S.A. in the groups’ acquisition by Telecom Americas Ltd.; representing Canadian company Teleglobe Inc. in its sale to fellowCanadian BCE Inc., andrepresenting Cincinnati-headquartered ConvergysCorp. in its acquisition of British-based GenevaTechnology Limited.

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Simpson Thacher has been ranked either first

or second in completed U.S. M&A transactions

for each of the last four years, and at least in

the top four worldwide for the same period.

Representative Cross–Border M&A

Mergers & Acquisitions



Record High Activity

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ACNielsen/VNU N.V.

A CNielsen, thefirm’s client, wasacquired byVNU, N.V., the Dutchpublishing company. The transaction, valued atapproximately $2.3 billion,and structured as a tenderoffer, was one of the fewacquisitions of a U.S. public company by a Dutchcompany. It reunitedACNielsen with NielsenMedia Research, Inc., a former ACNielsen affiliate,and firm client, previouslyacquired by VNU.

American WaterWorks/RWE AG

RWE AG, a Germanutility holding com-pany, entered into an agreement to purchasefirm client American WaterWorks Company in a cash transaction valued at $7.6 billion, includingapproximately $3 billion inassumed debt. AmericanWater Works is the largestpublicly traded water andwastewater company in theUnited States. RWE intendsto combine the operationsof American Water Workswith Thames Water plc,their London-based waterservices unit, in order to

expand its presence in theUnited States. RWE agreedto pay $46 per share ofAmerican Water Workscommon stock. The acquisi-tion is expected to close bymid-2003.

Harcourt General/ReedElsevier

The firm representedHarcourt General,Inc. in the auction of Harcourt to numerouspotential bidders. The auc-tion culminated in an offerby Reed Elsevier Inc., the

Anglo-Dutch publishingcompany, to purchase all of the outstanding shares ofHarcourt General Inc. for a total of $5.6 billion.

Willamette Industries/Weyerhaeuser Co.

T he firm representedWillamette Indus-tries in one of thelongest hostile takeover bat-tles in recent years, defend-ing Willamette against anunsolicited buyout offer andproxy fight by WeyerhaeuserCo. The 18-month process

between two of the largesttimber and paper productsmanufacturers in the United States was ultimatelyresolved in early 2002 with an agreement forWeyerhaeuser to acquireWillamette for more than$6.2 billion.

WachoviaCorporation/FirstUnion Corporation

In the largest bankingmerger of 2001, the firm representedWachovia Corporation in a $14.7 billion merger ofequals with First UnionCorporation. The firm alsorepresented Wachovia inthe proxy fight and relatedlitigation that ensued when SunTrust Banks, Inc. made an unsolicited offerto break up the merger and acquire Wachovia. The successful defenseagainst SunTrust’s hostileoffer permitted Wachovia’smerger with First Union to be completed in August 2001.

Mergers & Acquisitions Continued LIST OF REPRESENTATIVE MERGER AND ACQUISITION TRANSACTIONSCOMMENCED OR COMPLETED DURING 2001-2002Approximate $ Value of Acquiring Acquired, Type ofTransaction Company Selling or Target Company Transaction Firm’s Client

$165 billion America Online, Inc. America Online, Inc. Merger of Equals America Online, Inc.Time Warner Inc. Time Warner Inc.

$55 billion Vivendi S.A. The Seagram Company Ltd. Stock Merger The Seagram Company Ltd.Canal Plus S.A.

$16 billion Amgen Inc. Immunex Corp. Stock and Cash American Home Products Merger Corp., the controlling

shareholder of Immunex

$14.7 billion First Union Corporation Wachovia Corporation Merger of Equals Wachovia Corporation

$8.15 billion Diageo PLC and Seagram’s wine and liquor businesses Sale of Assets The Seagram CompanyPernod Ricard

$7.6 billion RWE AG American Water Works Cash Merger American Water Works Company, Inc. Company, Inc.

$6.2 billion Weyerhaeuser Company Willamette Industries, Inc. Hostile Offer/Cash Merger Willamette Industries, Inc.

$5.6 billion Reed Elsevier Harcourt General Inc. Cash Merger Harcourt General Inc.

$5 billion Washington Mutual Inc. Dime Bancorp Cash and Stock Merger Washington Mutual Inc.

$4 billion Plum Creek Georgia-Pacific’s Stock Merger Georgia-Pacific CompanyTimber Company timber business

$2.6 billion Telefónica Móviles S.A. Motorola Inc.’s mobile Purchase of Stock Telefónica Móviles S.A.phone service companies

$2.5 billion Maxim Integrated Dallas Semiconductor Corp. Stock Merger Maxim Integrated Products, Inc.Products, Inc.

$2.4 billion BNP Paribas United California Bank, a subsidiary Purchase of Assets BNP Paribasof UFJ Holdings, Inc. (Japan)

$2.3 billion Dominion Resources Inc. Louis Dreyfus Natural Gas Corp. Sale of Stock Affiliates of S.A. Louis Dreyfus et Cie, principal stockholders of Louis Dreyfus Natural Gas Corp.

$2.3 billion VNU N.V. ACNielsen Corporation Cash Merger ACNielsen Corporation

$2.2 billion Potomac Electric Power Conectiv Cash and Stock Merger ConectivCompany

$2.1 billion GE Capital Commercial Franchise Finance Corp. Cash and Stock Merger Franchise Finance Corp. Equipment Financing of America of America

$1.7 billion Kerr-McGee Corp. HS Resources, Inc. Cash and Stock Merger Kerr-McGee Corp.

$1.7 billion Philips Electronics N.V. The medical products business Sale of Assets Agilent Technologies Inc.of Agilent Technologies Inc.

$1.3 billion L-3 Communications Inc. Raytheon Company’s Cash Merger L-3 Communications Inc.aircraft integration business

$1.3 billion WellPoint Health CareFirst, Inc. Cash and Stock Merger WellPoint Health Networks, Inc. Networks, Inc.

$800 million ServiceMaster Co.’s ARAMARK Corporation Purchase of Assets ARAMARK Corporationmanagement services unit

$693 million Convergys Corp. Geneva Technology Ltd. Stock Merger Convergys Corp.

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Investment Management he Investment

Management practiceat Simpson Thacher

combines broad-based capitalmarkets and transactionalexpertise with a thoroughknowledge of the regulatoryenvironment and technicalchallenges inherent in allaspects of the investmentmanagement industry.

We have a significantand long-standing practiceas counsel to U.S. andnon-U.S. investment advi-sory firms and investmentand commercial bankswhich sponsor a wide rangeof collective investmentpools. The firm’s services toits investment advisoryclients include fund forma-tion and ongoing advice as well as counseling inspecialized situations, suchas corporate financings (werepresented the underwrit-ers on the initial publicofferings of several invest-ment advisors) and mergersand acquisitions.

Entities advised by thefirm invest in a wide vari-ety of U.S. and non-U.S.equity and debt securitiesand derivative products,leveraged buyouts and ven-ture capital opportunitiesand are targeted to the fullrange of individual andinstitutional investors.

Registered Mutual Funds

impson Thacher is a

leader in the invest-

ment management

industry, serving as coun-

sel to commercial and

investment banks, invest-

ment advisors, registered

investment companies and

all types of private funds.

Our services include both

fund formation and ongo-

ing advice. We also regu-

larly offer counseling in

specialized situations such

as mergers and acquisi-

tions and corporate

financings, in which we

have represented the

underwriters on the initial

public offerings of several

investment advisors.

Fund Formation and Ongoing Counsel

ur mutual fundpractice has grownsubstantially in

recent years. Over the pastfew years the firm has con-sistently ranked among thenation’s top law firms withrespect to the issuance ofnew mutual fund series. Werepresent a broad base ofopen-end and closed-endfunds with over $160 billionof assets under management,including the JPMorgan andBlackRock complexes, twoof the largest and mostinnovative bank-related fundgroups in the United States.

An increasingly significantpart of the firm’s registeredfund practice involves trans-actional representation. Werepresent both funds andunderwriters in a wide vari-ety of fund capital marketstransactions, including offerings of common andpreferred stock and rightsofferings. In 2001, we repre-sented the underwriters orissuers in over 50 closed-endfund securities offerings. We also represent funds in a variety of merger, acquisi-tion and restructuring trans-actions, including fund con-solidation and conversionsfrom common trust fundsto public mutual funds.

Leveraging of closed-endfunds through fixed and auc-tion rate preferred stock offer-

ings has become an attractiveinvestment option and thefirm has represented issuersand underwriters in a signifi-cant number of these offerings.

As the investment man-agement industry grows andbecomes more complex, onenatural result is an increasein disputes that often lead to litigation. Utilizing itsinvestment managementexpertise, the firm has deliv-ered specialized advice toclients in connection withsuch circumstances.

With mutual fundsincreasingly turning to the Internet as a medium for

marketing and investorcommunications, we haveadvised a number of clientson a wide range of associ-ated regulatory issues.Registered funds is a multi-disciplinary area of our legalpractice, bringing togethersuch other areas as M&A,securities, banking, tax,ERISA and bank regulatory.We bring these areas togeth-er not just by enlisting thehelp of specialists in some of those areas but by havingpartners and associates whohave a familiarity with all of these disciplines as theyrelate to registered funds.

We represent a broad base

of open-end and closed-end

funds with over $160 billion

of assets under management.

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ne of the growingtrends in privateequity funds is sec-

tor and other similar funds.This growth coincides withthe increase in specializationof investment funds as sponsors seek to distinguishthemselves in an increasinglycompetitive arena.

Our practice has contin-ued to develop in these spe-cialty areas. Our wide pres-ence in this area includes:Communications/Tech-nology (Blackstone, SilverLake Partners, Lehman);Real Estate (Blackstone,

Carlyle, J.E. Robert, Soros, Cohen & Steers); Mezzanine (Blackstone, Garmark); IndustrialCompanies (Heartland,

Palladium); FinancialServices (J.C. Flowers); Natural Resources (Sentient); Distressed(Watershed, Lipper);

Healthcare (FFT) andVenture Capital (DraperFisher Jurvetson, Lehman,Rosewood, Carlyle,Genesis).

he firm has repre-sented the purchas-er or seller in some

of the most significant and complex mergers andacquisitions in the invest-ment management indus-try, including the sale ofKemper Corporation toZurich Insurance Group,the sale of BlackRock toPNC Bank, and CreditSuisse’s acquisition ofWarburg Pincus AssetManagement. Moreover,the firm regularly repre-sents both buyers and sellers of investment management businesses in connection with middle-market transactions, suchas American International

Group’s acquisition ofMcStay InvestmentCounsel, and the acquisi-tion of Royce & Associatesby Legg Mason. We alsoare regular outside transac-tion counsel for AffiliatedManagers Group and haverepresented AMG in con-sidering and consummatinga number of acquisitions asan industry consolidator(for example, AMG’sacquisitions of Rorer &Co., Friess Associates andWelch & Forbes).

The firm also has repre-sented principals in some of the most significantinvestment managementminority investments. Forexample, we represented

The Blackstone Group inconnection with a minorityfinancial investment madeby American InternationalGroup, and we representedCredit Suisse in connectionwith a minority investmentit made in Warburg, Pincus& Co. In addition, the firmhas represented principals in a number of significantinvestment management-related joint ventures (forexample, First Quadrant’sJapanese joint venture withNomura Asset Managementand Paine Webber’s Japanesejoint venture with YasudaCapital). Our expertise inthis sector is such that, in a number of transactionswhere both parties were

already represented by theirregular outside transactioncounsel, the firm wasnonetheless asked to serve asspecial investment manage-ment counsel to help negoti-ate the industry-specific elements of the transaction(for example, OppenheimerCapital’s sale to PIMCO).In addition, we are oftenretained by financial advi-sors (for example SalomonSmith Barney, Merrill Lynchand CSFB) in connectionwith their representation oftheir clients in investmentmanagement industry transactions, providing bothlegal and industry expertise.

Simpson Thacher is a leader in organizing and

bringing to market sophisticated private funds.Recent Investment Management M&A Transactions

Investment Management Continued Sector/Specialty Funds

SELECTED

PRIVATE EQUITY FUND

REPRESENTATIONS

Capital Raised Name of Fund-Client

$4 billion Blackstone Capital Partners IV, L.P. and prior fund

$3.9 billion Carlyle Partners III L.P.

$2.5 billion Cypress Merchant Banking Partnership II L.P. and prior fund

$2.5 billion KKR European Fund, Limited Partnership

$2.2 billion Silver Lake Partners L.P.

$2 billion Lehman Brothers Merchant Banking Partners II, L.P. and prior fund

$1 billion Quadrangle Capital Partners L.P.

Private Funds

istorically, our prin-cipal clients in the area of private

funds have been U.S.-basedLBO funds, including someof the largest sponsors ofprivate equity funds, (KKR,Blackstone, Carlyle andLehman) as well as numer-ous “middle market” fundsponsors (Evercore, Fremont,Harvest, Heartland andPalladium). Our practice

also involves the representa-tion of numerous hedgefunds, venture capital funds,real estate funds, mezzaninefunds and funds in other“alternative asset” categories(including sector/specialtyfunds discussed on the next page).

International funds con-tinue to be a substantial andgrowing part of our practice,covering virtually the entire

globe. Examples of fund sponsorships around theworld include: Asia(Crimson, Ripplewood,Carlyle, H&Q Asia Pacific);Europe (KKR, Soros RealEstate, JER, Carlyle,CIBC/EEF); Latin America(CIBC/Patrimonio, CIBC/EXXEL) and Africa (Brait).

Another continuing trendis in the formation of funds of funds. The firm is

an active participant in that area, working withCSFB, Lehman, CIBC andK2 on private equity fundsof funds.

Among our hedge fundclients are JWM Partners(the successor to Long-TermCapital Management),Endeavor Capital Manage-ment, ESL Investments,Zurich Capital Markets andLipper & Company.

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Structured Finance Continued

Project and InfrastructureFinance

PROJECT AND INFRASTRUCTURE FINANCINGS

Approximate Transaction (and Role) DescriptionValue

$1.8 billion EME Homer City Capital market project financing of 1,882 MW (counsel to underwriters merchant power plant in Pennsylvania and and lenders) subsequent conversion to leverage lease financing

$800 million Dynegy Danskammer and Capital market leverage lease financing of Roseton (counsel to underwriters) 1,700 MW power facilities in New York

$710 million PG&E La Paloma Securitized lease project financing of a (counsel to lenders) 792 MW merchant power plant in California

$600 million Kerr-McGee Corp. Synthetic and leverage lease financings (counsel to lessee) of offshore oil production platforms

$500 million Cogentrix Quachita Construction and term project financing of a (counsel to lenders) 860 MW tolling power plant in Louisiana

$490 million PG&E Lake Road Securitized lease project financing of a (counsel to lenders) 1,048 MW merchant power plant in Connecticut

$400 million Cogentrix Green County Construction and term project financing of a (counsel to lenders) 795 MW tolling power plant in Oklahoma

$270 million MEP Pleasant Hill-Aries Construction and leverage lease financing of a (counsel to financing parties) 600 MW tolling power plant in Missouri

$115 million Trans-Energie Cross-Sound Cable Construction and term lease financing of a 330 MW(counsel to financing parties) underwater transmission system across the Long

Island Sound

The firm has represent-ed parties on all sidesof major project andinfrastructure finance transac-tions around the world. Thesetransactions have includednon-recourse financings ofpower plants, pipelines, fiber-optic cable networks, satelliteand other telecommunica-tions systems, toll roads, watertreatment plants, airports andother facilities. We have beeninvolved in many of the largeindependent power projectfinancings in the UnitedStates, Latin America andAsia, including significantcapital market and bankfinancings of merchant powerplants in the rapidly changingUnited States market.

The breadth of our project and lease financingexpertise permits us to develop innovative financing solutions for our clients. For example, in the domesticpower market, we representedthe underwriters in the firstcapital market debt offering ofa merchant power plant andhave since been involved innumerous merchant powercapital market and bank mar-ket transactions combining project financing with innova-tive lease and structuredfinancing techniques.

he firm represents the consortium ofVancouver Airport

Services, Dragados, the inter-nationally prominent Spanishengineering and constructionfirm, the Chilean sponsors of

the Santiago Airport privati-zation and Ashtrom GroupLtd., a large Israeli construc-tion firm, in the negotiationand project financing of a 30-year concession to refur-bish and operate Sangster

International Airport inMontego Bay, Jamaica. Fundswill be provided by the Inter-national Finance Corpora-tion, the Inter AmericanDevelopment Bank and/orcommercial banks.

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Structured Finance

Simpson Thacherbrings an interdisci-plinary approach tothe area of structured

finance as it does to all

areas. Drawing on the

expertise of lawyers in

virtually every practice

group, the attorneys in

the structured finance

area are able to find cre-

ative solutions to difficult

structural issues. Our

expertise in structured

financing transactions is

wide-ranging and

includes large project

and infrastructure financ-

ings, sophisticated

lease and transportation

financings, complex

securitizations of finan-

cial assets and innovative

derivative products.

Overview

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Exempt Organizations

Foundation, Public Charity and International Work

Public, Educational and HealthOrganizations

Central EuropeanUniversity

Channel 13 (NYC)

Fidelity Charitable Gift Fund

Howard HughesMedical Institute

MetropolitanMuseum of Art

Natural Resources Defense Council

New Visions for Public Schools

New York Presbyterian Hospital

New Yorkers for Children

Princeton University

Robin HoodFoundation

St. Vincent’s CatholicMedical Centers

Private Foundations

American Art Foundation

The Howard Bayne Fund

Center forInternational Political Economy

Dyson Foundation

Sol Goldman Charitable Trust

The William and Mary Greve Foundation

The Hearst Foundation, Inc.

William Randolph Hearst Foundation

LifebridgeFoundation

Catherine B.Reynolds Foundation

International Organizations

American Friends ofThe New EconomicSchool

Concern WorldwideUS

Doctors WithoutBorders

Financial ServicesVolunteer Corps

Friends of China Heritage Fund

Friends of Fondation de France

International Center for Alcohol Policies

Institute of InternationalEducation

LEAD International

Open SocietyInstitute

SELECTED EXEMPT ORGANIZATION CLIENTS

egularly sought outfor our expertise, the firm counsels

many private, family and corporate foundations andprominent public charities.We are deeply involved in all aspects of the 9/11 charitable response.

Last year saw a continuedincrease in our work on inter-national philanthropic mat-ters, including matters forthe Open Society Institute,the Central European Uni-

versity and other projectsfunded by George Soros.

We also advise manyinternational organizationssuch as Concern WorldwideUS, LEAD International,and NetAid on a host ofcross-border operations.

The firm has served since1989 as general counsel tothe Robin Hood FoundationandDoctorsWithout Borders/Médecins Sans Frontières,which was awarded the 1999Nobel Peace Prize.

M&A Expertise

impson Thacher has both the ability to handle thesophisticated challenge of complex M&A work andthe experience of obtaining approvals from the special

regulatory bodies that oversee exempt organizations. Fourprojects illustrate this ability and experience.

In the first, the firm represented The Presbyterian Hospitalin the City of New York and The Society of the New YorkHospital in the largest hospital merger in New York, creatingNew York Presbyterian Hospital.

In a second project, the Ethical Culture Fieldston Schoolswere spun off from and reaffiliated with the Ethical CultureSociety in the City of New York.

In the third project, the firm represented St. Vincent’sHospital, Catholic Medical Centers and Sisters of CharityHealthcare in their merger into the premier Catholic hospitalsystem in the region.

In the fourth, the firm is advising the not-for-profit television station WNET/Channel 13 in its acquisition of the operations of Channel 21.

Investment Counsel for Endowments

Simpson Thacher’s work for major universities andendowed foundations draws on our extensive experi-ence with alternative asset category investments.Organizations such asPrinceton University,the MetropolitanMuseum of Art and theHearst Foundations relyon us to advise themregarding their invest-ment in private equityfunds, structure liabilityand withdrawal rights,and otherwise reviewthe terms of their par-ticipation. We provide

a multi-disciplinary expertise with an in-depth knowledgeof investment funds and unrelated trade or business (UBIT)and excess business holdings tax rules.

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36


T he firm has one of the largest andmost active interna-tional lease and transporta-tion finance practices in theworld and has pioneereddevelopments in the areafor more than 30 years.

We have extensive experience representinglessees, equity investors,lenders and underwriters in lease financings of aircraft, railroad equip-ment, electric generationassets, real estate, satellites,telecommunication andother equipment and facilities around the world.Internationally, we havebeen an innovator in lease financings for more than two decades andadvised clients in the first“double-dip” transactionscompleted in a number of jurisdictions.

The firm has a leading role in complex structuredand securitization financingsof aircraft and other trans-portation equipment as wellas industrial facilities.

Lease and Transportation Financing

LEASE AND TRANSPORTATION FINANCINGS

Approximate Value Firm Client Transaction

$2.5 billion Export-Import Structured financing of more than 200 Embraer Bank of Brazil (Finance) aircraft

$1.5 billion City of Zurich Cross-border lease of hydro-electric facilities, railroadequipment and buildings in Switzerland

$1.1 billion Airbus Industrie Structured defeasance securitization of aircraft financing portfolios

$929 million Deutsche Messe AG Cross-border lease of trade fair halls in Germany

$835 million Korea Development Bank Cross-border lease of Boeing aircraft of Korea Airlines

$700 million Hypo Vereinsbank AG Cross-border lease of office buildings in Germany

$680 million Berliner Verkehrsbetriebe Cross-border lease of railroad equipment in Germany

$570 million Norske Skog Cross-border lease of a paper mill in Norway

$480 million Austrian Airlines Cross-border lease of Boeing and Airbus aircraft

$265 million VASA Energie Cross-border lease of an independent power plant inGermany

he firm has been atthe forefront ofdeveloping new and

innovative products andstructures in the areas ofasset securitization andderivative products. Forexample, we have partici-

pated in transactions whichwere among the first involv-ing asset-backed commer-cial paper, aircraft leases,airline ticket receivables,bank credit card receivables,future revenue streams, asecuritization by a companyoperating in bankruptcyand a public offering oftrade receivables-backedsecurities.

Recently, the firm repre-sented: JPMorgan ChaseBank in the restructuring ofits offerings of credit card-backed securities and auto-

mobile loan-backed securi-ties in order to conform tothe requirements of State-ment of Financial Account-ing Standards No. 140; J.P. Morgan Securities Inc.in the first public offering of securities secured by

a revolving pool of commer-cial fleet leasing assets of a subsidiary of CendantCorporation; LehmanBrothers Inc. in connectionwith the establishment of the first rental car asset-backed auction rate noteprogram for ANC RentalCorporation; MBIA Insur-ance Corporation in con-nection with the issuance of principal protection guar-antees for a series of INGPrincipal Protection Funds;a financial institution inconnection with the pur-

chase of credit protectionfor a revolving portfolio ofits consumer loans in anotional amount exceeding$5 billion; and, an institu-tional investor participatingin the senior tranche of asynthetic collateralized bond

obligation with a notionalportfolio of €1 billion.

On a variety of tradi-tional engagements, thefirm is also counsel to:JPMorgan Chase Bank, in its offerings of credit card and automobile loan-backed securities; the underwriters, in Navis-tar Financial Corporation’sofferings of truck loan-backed securities; and Northwest Airlines, in its offerings of “enhanced equipment trust certificates.”

Securitization and Derivative Products

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39


Antitrust

On the litigationfront, we work incourts throughoutthe U.S. The firm success-fully defended AppletonPapers against criminalcharges by the Departmentof Justice which alleged thatAppleton conspired to fixthe price of thermal facsim-ile paper notwithstandingguilty pleas by a number of other manufacturers. Formore than seven years wehave defended AmericanHome Products—and haveacted as liaison counsel forall defendants—in a com-plex array of federal andstate court actions broughtagainst the pharmaceuticalindustry by retail pharma-cies and consumers. Thesuits allege a conspiracy tofix prices for prescriptiondrugs in retail pharmacies at prices higher than thosecharged to managed careorganizations. We representViacom and Paramount in actions in Texas and California alleging a con-spiracy in the sale of movieson home video.

We have also prosecutedantitrust actions as plain-tiffs. Currently, we repre-sent a foreign manufacturerof corneal excimer laser systems in a monopoliza-tion case in Californiaagainst its principal com-

petitor; the litigation, likean increasing number ofcases, involves the interplayof antitrust and intellectualproperty principles. Wealso obtained a highlyfavorable settlement for the Drummond Company in its restraint of trade

and monopolization caseagainst Blue Cross andBlue Shield of Alabama.

We have an extensive prac-tice before antitrust enforce-ment agencies both here andabroad. Much of our work is integrated with the firm’sextensive M&A practice.

In 2001, the firm made fiftyU.S. filings under the Hart-Scott-Rodino Act and assistedin a large number of interna-tional filings. Among recenttransactions raising substan-tive issues are the mergers of Joseph E. Seagram, Vivendi and Canal+; VivendiUniversal’s subsequent sale of the Seagram Spirits andWine Business; MTVNetwork’s joint venture withLiberty Media; GeneralInstruments’ acquisition byMotorola; Dillard’s acquisi-tion of Mercantile Stores; andthe acquisition of NielsenMedia Research by VNU.

We have also defendedclients against non-mergercivil and criminal enforce-ment actions. Current representations include cer-tain securities underwriters in connection with theDepartment of Justice’sinvestigation of the grossspread charged on initialpublic offerings, and anentertainment client inconnection with theDepartment of Justice’sinvestigations of film andonline music distributionpractices. Outside the U.S.,we also successfully repre-sented United InternationalPictures (a joint venture ofParamount, Universal andMGM) in defeating theEuropean Commission’schallenge to UIP’s contin-ued operation.

38


Simpson Thacher &Bartlett’s LitigationDepartment is thelargest in New York City

and has what we believe

to be the preeminent

litigation practice in the

country. The Department

serves domestic and

foreign clients from inte-

grated offices in midtown

Manhattan, Palo Alto

and Los Angeles. With

more than 200 attorneys,

including 36 partners,

the Department is a

leader in the resolution

of complex disputes in

both the national and

international arenas. The

Litigation Department

is presently handling

more than 2,000 cases.

A Preeminent Practice

Litigation

The American Lawyer recently completed

an extensive and in-depth analysis to find the

best litigating law firms in the country.

Simpson Thacher & Bartlett was the only

New York firm selected as one of the five finalists.

Additionally, one of our partners was named

by the National Law Journal as one of

America’s Top Fifty Women Litigators.

41


DuPont, Allied-Signal,Pittsburgh Corning, WasteManagement, Witco andmany others. In the mid-1980s, we established thatthese cases could be tried suc-cessfully to jury verdict in theShell Oil case, and in the early1990s, we established thateven the largest of themcould be settled favorably andefficiently. Since then, wehave continued to litigate totrial and resolve major casesin this and other areas forour insurance clients.

The firm currently represents Swiss Re, thelargest participant on the

$3.5 billion property insur-ance program for the WorldTrade Center in the coveragelitigation arising out of thereal estate developer’s claimthat the September 11 attackconstitutes two occurrences,entitling him to double hisinsurance recovery.

We also represent insurersin the myriad asbestos-relatedcoverage, reinsurance, tortand bankruptcy disputes, andprovide counsel in connec-tion with the asbestos-drivenbankruptcies of their policyholders. These cases raisenovel legal issues with enor-mous financial consequences.

Litigators at the firm havetaken critical coverage issuesto the highest courts in anumber of states, includingNew York, Delaware andCalifornia, and have arguedappeals in the federal courtsof appeal throughout thecountry.

We also represent insur-ance clients in reinsurancedisputes arising from toxictort, asbestos, environmentalpollution and other disputes.The firm successfully arguedthe seminal cases of NorthRiver v. Cigna Re, in whichthe Third Circuit clarified thelaw on the “follow the for-

tunes” doctrine, and NorthRiver v. Unigard, in whichthe New York Court ofAppeals held that under NewYork law a reinsurer mustprove prejudice to prevail ona late notice defense.

More recently, the global-ization of the industry has ledthe firm to new focal pointsof complex litigation. Severalinsurers have retained thefirm to handle litigation andreinsurance disputes arising out of off-shore reinsurance“spirals,” insurance and rein-surance allocation issues,computers and e-commerce,trademark infringement andother intellectual propertydisputes, Y2K preventioncosts and other novel issues.In addition, the firm hasbeen a leader in litigatinginternational disputes.

The firm’s litigators are rec-ognized as leading authoritieson insurance coverage issues.Two firm partners have pub-lished Modern ReinsuranceLaw and Practice, the firstmajor published work on thesubject in 75 years. The headof our insurance practice isthe author of the widely citedtext, Handbook on InsuranceCoverage Disputes, which isnow in its 10th edition.

With offices in New York,Los Angeles, Palo Alto andLondon, the firm is situatedto handle any coverage issuein any forum and to advisethe international insurancecommunity in an increas-ingly dynamic environment.

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InternationalArbitration

impson Thacher &Bartlett has one ofthe most dynamic

and successful internationalarbitration practices in the world. Litigators in ourfirm act as counsel andarbitrator in internationalarbitrations under all of the major internationalarbitration rules, includingthe ICC, AAA, LCIA andUNCITRAL arbitrationrules. We currently repre-sent major multinationalcorporations in significantarbitrations—conducted inEnglish, French, Spanish,German and Dutch—inGeneva, Paris, London,Amsterdam, Hong Kong,Buenos Aires, New Yorkand Washington. Our firmis consistently identified as one of the leading inter-national arbitration firmsin the world, and our litigators are repeatedlyprofiled as among the world’sleading international arbi-tration lawyers.

Our recent successesinclude the much-publicizedAndersen arbitration inGeneva, Switzerland,believed to be the largestICC arbitration ever filed,involving 140 member firmparties from 60 countriesworldwide, over $14 billionin claims, and ancillary judi-

cial proceedings in variousnational courts around theworld. In

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