LEGAL CHALLENGES DURING AN ECONOMIC DOWNTURN 12 FEBRUARY 2009

2 CRISIS – GLOBALLY Impact decreased liquidity decreased lending higher borrowing costs higher need of regulations disclosure & transparency requirements Causes softened lending standards & regulations low interests rates undervaluation accounting standards credit rating agencies remuneration structure

3 CRISIS – ROMANIAN REALITY Credit market – almost blocked Few new transactions on the market (M&A, real estate, financing) Options Restructurings / Work-outs Foreclosures Insolvency

4 THE REVIEW Scope: radiography of existing status / compliance with obligations Involved parties: contracting parties, consultants (independent third parties) CLIENT Financial advisorsLegal advisorsInsurance brokersReal estate brokersMarketing advisors

5 “TO DO” LIST Serious analysis of existing operations & contracts corporate governance commercial arrangements (customers & suppliers) human resources financing arrangements

6 CORPORATE GOVERNANCE “Back to fundamentals” decision making process – dilution of liability regularity of meetings compliance with internal procedures & applicable laws act in the “best interest” of the company and its creditors avoid conflicts of interest

7 AUDITORS Early and constant communication legal requirements contractual requirements Disclosure & transparency information & documentation personal “support”

8 HUMAN RESOURCES (I) Managing & safeguarding employee’s rights compensation unions collective labor agreements Restructuring employees Labor conflicts

9 HUMAN RESOURCES (II) Focus: talent management key employees ban on recruitment (exception: qualified personnel with competitive background) training and development opportunities (professional reconversion)

10 FINANCING: WORK – OUT - A SOLUTION? Classic solutions – unlikely options Foreclosure (enforcement of security) Insolvency reorganization Insolvency bankruptcy and liquidation Work - out: a “win-win” solution Preventive actions Cooperative Avoid foreclosure threat

11 WORK – OUT: LEGAL FRAMEWORK Work Out governed by the Contracts Laws (i.e. Civil Code and Commercial Code) Specifics: Form contract governed by the general rules (contract nenumit) Mixed contract (aspects of settlement agreement, loan agreement or contract nenumit) Cancellation risk (fraudulent conveyance)

12 DUE DILIGENCE Re-assessment of the case covenants (financial & legal) representations and warranties conditions precedent & subsequent

13 ACTION PLAN Distressed areas Realistic approach Uncertainties – market driven

14 NEW INSTRUMENTS Tighter covenants Higher returns High interest rates Increased monitoring / control rights Prepayment Material adverse change clauses Additional security Additional equity

15 NEW SOURCES Cost cutting ease pressure on cash flow requirements renegotiate terms (temporary & permanent relaxation of payment terms) Equity investment existing shareholders & new investors due diligence comfort tighter management terms clear exit strategy Restructuring existing debt

16 INSOLVENCY - LAST RESORT Observation Period Bankruptcy ProcedureReorganization of Debtor’s activity Repayments of creditors Commencement of insolvency proceedings Closure of procedure

17 SALANS BUCHAREST 12 years of experience in Romania and CEE region Unique loan work-out expertise in CEE region generating from US loan market crack of 1980s and related practice led by best recognized lawyers Constantly selected by independent prestigious directories such as Legal 500, Chambers & Partners and PLC Which Lawyer? as leading and recommended practices and practitioners in Romania Euromoney / Liquid Real Estate Award for the Best Legal Services in Romania in 2007 and 2008 CEE Quality Award as Top Real Estate Legal & Consulting Firm of the Year 2008 by Imagine Events in association with Financial Times and Estates News Elected SUPERBRAND 2007/2008, by the Superbrands, the international independent authority and arbiter on branding present in over 81 countries Eastern Europe Law Firm of the Year 2004 by Chambers & Partners Global Guide for the World’s Leading Lawyers

18 CONTACT Magdalena Raducanu, Managing Counsel Tel: Fax: Str. Gen. C. Budisteanu Nr. 28-C Sector 1, Bucharest