1. 1 Strategies to Mitigate U.S. Market Entry and Operating Risks to the Home Country Parent and its Shareholders Tycho H. E. Stahl, Esq. Arnall Golden Gregory LLP

2. 2 A.Commercial, Corporate and Structural Issues 1.Customer Contracts 2.Supplier Contracts 3.Insurance 4.Veil Piercing Risks 5.Tax Risks / Choice of Legal Entity in U.S. 6.Risk of Patent Infringement Claims 7.Additional Issues  Structure / Financing: Reducing Direct Equity Investment 1.Structure: What Degree of Engagement? 2.Strategy 3.Capital Investment / Equipment Financing 4.Working Capital

3. 3 C.Economic Incentives 1. Site and Building 2. Additional Investment Support and Incentives

4. 4  Customer Contracts  Customer contracts should be with U.S. entity, not foreign parent  Liability Risks: Contractual Liability, Product Liability, Recall Campaigns  Strategies to reduce credit risk and exposure with significant clients  Issues relating to so-called „nomination letters“  Supplier Contracts  Obligations imposed on suppliers must dovetail with obligations to customers  Supplier contracts should also be with U.S. entity, not foreign parent  Insurance  Especially with respect to product liability and D&O issues  Insurance coverage in home country must dovetail with local coverage in U.S., especially as to U.S. risks applicable to non-U.S. entities  Veil Piercing Risks A. Commercial, Corporate and Structural Issues

5. 5 5.Tax Risks / Choice of Legal Entity in U.S.  Avoiding involuntary „permanent establishment“ in U.S. by home country parent  Risk that especially certain European tax authorities will seek to tax „functions“ shifted from home country to the U.S.  Tax optimization and efficiency drive choice of form of U.S. legal entity: corporation, limited partnership, limited liability corporation (LLC)  Transfer Pricing  Succession planning / structures may also be relevant 6.Risk of Patent Infringement Claims 7.Additional Issues  U.S. terms and conditions of sale must be conformed to U.S. law: no „title retention“ in the US and special risks with customers that may seek „Chapter 11“ protection  Important to respect corporate formalities  Trademark rights  Employment law / visas  Consult advisors early, before problems arise (A. Commercial, Corporate and Structural Issues)

6. 6 B. Structure / Financing: Reducing Required Equity  Structure: What Degree of Engagement?  Supply and Service directly into the U.S. by the home country parent  Establishing a sales and/or distribution office  Acquisition of an established player in the U.S. market  Joint Venture  Establishment of U.S. production facilities / site selection  Strategy  „Beauty Contests“ are common in the U.S., especially when seeking financing  often more important to speak with the “right” group within a bank than with the “right” bank  BUT, major changes in U.S. lending markets since 2008

7. 7 (B. Structure / Financing: Reducing Required Equity) 3. Capital Investment and Equipment Financing  To the extent possible, limit collateral to the capital investment / equipment being financed  To avoid unlimited liability by home country parent and/or U.S. subsidiary for U.S. borrowings, seek to supplement collateral with agreed deposit amounts, partial guarantee by an economic development authority, pledge of receivables (if established business), pre-determined reductions in parent guarantee on attainment of milestones, parent “support” letters (as opposed to guarantee)  Goal is to avoid a letter of credit or unlimited guarantee by foreign parent of U.S. subsidiary and its borrowings and obligations  Guarantees or support via economic incentives by community development authorities may on occasion limit or avoid guarantee by foreign parent 4.Working Capital  To the extent possible, limit collateral for a working capital credit facility to inventory and pledge of receivables

8. 8 C. Economic Incentives  Site / Building  incentives range from subsidized acquisition and construction financing through grant of site and lease with purchase option of a „build-to-suit“ facility constructed by community development authority  5 - 10 year lease of a „build-to-suit“ facility financed and constructed by community development authority and/or private developer may be possible 2.Additional Investment Support and Incentives  Cash Grants to finance equipment purchase, site preparation, land acquisition, public infrastructure  Property and Income Tax Abatements at the County, City and State Level  Pledge of Assets or Guarantee of Project-Related Financing  Support of acquisition financing of capital goods and production equipment  Many permutations of the above and other incentives possible  Consider other partners: utilities, railroads, special entities  Free Trade Zones  Substance and strategy in negotiation are crucial  Employee training and hiring assistance  „Fast track“ permitting assistance  Utility rate concessions

9. 9 Tycho H.E. Stahl, Esq. Arnall Golden Gregory LLP 171 17 th Street NW Suite 2100 Atlanta, GA 30363-1031 U.S.A. Tel. +1-404-873-8556 Fax +1-404-873-8557 tycho.stahl@agg.com www.agg.com # 2940729v2 12/20/10