ABA SECTION OF INTERNATIONAL LAW / AIJA SUCCESSFUL TRANSACTIONS: WHAT IN-HOUSE COUNSEL EXPECT FROM THEIR M&A AND ANTITRUST ATTORNEYS JUNE 6, 2014 | CHICAGO, IL Corporate Counsel’s Role in Merger Control: Negotiating and Structuring the Deal

Corporate Counsel’s Role in Merger Control – Negotiating and Structuring the Deal Agenda  The Hypothetical  Discussion of Key Issues:  Managing expectations  Multi-jurisdictional filings analysis  Information-sharing in negotiations  Antitrust risk-sharing  Co-operation covenants  Remedies / divestiture analysis  Protecting privileged and key deal terms from disclosure  “Soft” factors in deal dynamics  Questions?

Corporate Counsel’s Role in Merger Control – Negotiating and Structuring the Deal The Hypothetical  Purchaser: Vandelay Industries (smartphone OS)  Target: Kramerica Inc.  Waterproof mobile devices and smartphone OS  Operations in USA, Canada, Germany, Brazil  All-cash offer valuing Kramerica at $10BB  Accelerated closing timetable  Potential horizontal and/or vertical competitive overlaps  Antitrust risk scuttled last attempted takeover of Kramerica; potential third-party complaints now

Corporate Counsel’s Role in Merger Control – Negotiating and Structuring the Deal Managing Expectations  Timing  “This deal needs to close asap”  “Can we get all filings in within five days of signing?”  “Do we have to file in China?”  Risk  “There are no substantive problems, right?”  Resources  “Joe really knows these markets, but he’s tied up with due diligence – can he deal with this later?”  “You want me to calculate market shares for waterproof phones and tablets separately for all EU member states?”  Costs  “$5M for a Second Request???”

Corporate Counsel’s Role in Merger Control – Negotiating and Structuring the Deal Multi-jurisdictional Filings Analysis  > 80 jurisdictions with merger control  Suspensory vs non-suspensory regimes  Impact of outlier jurisdictions on global deal timing  To file or not to file  Strategic consideration of filing when below the notification thresholds  Voluntary notification regimes

Corporate Counsel’s Role in Merger Control – Negotiating and Structuring the Deal Information-Sharing in Negotiations  Gun-jumping: thresholds and penalties  Types of information appropriate for data rooms  Treatment of competitively-sensitive information during the negotiations  ECO designations; inclusion of in-house counsel?  External counsel’s management of ECO material pre-closing; what to do if the deal fails?  Use of clean teams

Corporate Counsel’s Role in Merger Control – Negotiating and Structuring the Deal Antitrust Risk Sharing  Assessing the antitrust deal risk  Are there horizontal or vertical issues?  What are customers going to say?  Bad documents?  Who might complain, and why?  Apportioning antitrust risk between buyer and seller  How much risk can we shift to the other side without destroying the deal? How much are we willing to take?  Contractual options (see next slide)  Parties’ transactional histories

Corporate Counsel’s Role in Merger Control – Negotiating and Structuring the Deal Risk Sharing: Contractual Options  Break fees  Buy-side vs. sell-side  Triggers (Temporal? Financial? Others?)  Remedial obligations  Structural vs. behavioral  Types of divestiture caps  “Hell-or-high-water” provisions

Corporate Counsel’s Role in Merger Control – Negotiating and Structuring the Deal Remedies / Divestiture Analysis  Extent of buyer’s obligation to accept agency remedies:  Commercially reasonable efforts; best efforts; sole discretion to reject  Financial triggers on right to reject  Mix-and-match remedies; buyer’s obligation to divest own assets  Scope for behavioral remedies; duration of same  Up-front remedies vs. post-closing

Corporate Counsel’s Role in Merger Control – Negotiating and Structuring the Deal Co-operation Covenants  Time to file  “Promptly” or within specified number of days?  “Best Efforts” clauses  Communications with antitrust agencies  Advance notice rights  Approval of written submissions  Participation in meetings  Timelines around subpoena or 2 nd Request responses

Corporate Counsel’s Role in Merger Control – Negotiating and Structuring the Deal Protecting Privilege And Deal Term Disclosure  Use of JDAs  Scope of filing requirements: side letters, confidential annexes, etc, caught?  Impact of Entire Agreement clauses on same  Scope of privilege protection  Extent of JDA protections  Work product doctrine  Privilege in common law vs. civil law regimes

Corporate Counsel’s Role in Merger Control – Negotiating and Structuring the Deal “Soft” Factors in Deal Dynamics  Co-operation between external M&A counsel and antitrust counsel (same firm or different firms)  Who is the client? Internal complexity, in-house counsel vs. management  Role of external counsel / internal counsel in information-gathering  Influence of risk aversion, risk-embracing management, timing constraints, etc. on antitrust counsel’s role

Questions?  Casey Halladay, Partner, McMillan LLP,  Nikiforos Iatrou, Partner, WeirFoulds LLP,  Michael Kuder, Senior Antitrust Counsel, WESCO Distribution,  Alvaro Ramos, Legal Director (Antitrust), Cisco Systems,  Hartmut Schneider, Partner, Wilmer Hale LLP,  Philipp Werner, Partner, McDermott Will & Emory LLP,  Ed Wynn, VP, General Counsel & Secretary, Stepan Company,