Cutting the Red Tape Real-Life China SAFE Filing Stories Keith D. Bilezerian Senior Compensation and Benefits Counsel, Covidien Beth O'Hara Parker Principal Equity Plan Administrator, Genzyme Corporation Jeanne Weinzierl Manager of Treasury Finance, Analog Devices, Inc. Joyce Chen Managing Associate, Orrick, Herrington & Sutcliffe LLP

Background  SAFE approval required prior to offers  Approval allows you to open foreign exchange account  Approval of annual “quota” amount of funds that may be transferred in and out of country  Repatriation requirement and enforcement

Deciding to File  Company culture on equity  Employee demand / retention concerns  Internal support for processes  Basics of filing process

Preparing the Application  Documentation issues  Participating entities / gathering local information  Working with broker / stock plan administrator  Fund flow chart

Sample Fund Flow Chart Company Domestic Special-Purpose Foreign Exchange Account (USD deposit only) Employee Broker sells shares to be issued under employee’s equity awards, either immediately or, if Company permits, at a later date; Broker withholds exercise price and/or broker fees from sale proceeds. Managed by Broker Managed by Company China Managed by Broker Step 1. Options: Employee instructs Broker to exercise Options. Restricted Shares: Upon settlement, shares are issued. No flow of funds out of China. Step 2. Repatriation of USD sale proceeds Step 3. Tax Payments (in RMB) Company Local Affiliate Local Tax Bureau Employee Payroll Deduction and/or Direct Payment Step 4. Alternative 1: USD Sale Proceeds Employee USD Account Managed by Company China Managed by Company China & Employees China US Employee Payroll Step 4. Alternative 2: Upon approval from Shanghai SAFE, convert USD to RMB.

Addressing SAFE Concerns  Questions raised by the SAFE during review process  Additional documents requested  Timing

Practical Implementation  Internal processes  Coordination of US entity, broker, finance team, local payroll, individual participants, etc.  Tax payment and reimbursement  Employee communications  Data collection for update filings

Questions  Keith D. Bilezerian Senior Compensation and Benefits Counsel, Covidien  Beth O'Hara Parker Principal Equity Plan Administrator, Genzyme Corporation  Jeanne Weinzierl Manager of Treasury Finance, Analog Devices, Inc.  Joyce Chen Managing Associate, Orrick, Herrington & Sutcliffe LLP