1. General Information on Parties SPANISH MED  Spanish Med is a small niche player in medical appliances. It is looking for whatever will be most financially beneficial.. FRANCE MEDOC  France Medoc is a strong player worldwide in the medical industry. It has a very good reputation DEUTSCH DOC  Deutsch Doc is the leader in his Medical appliances sector in Germany but is rather absent internationally. DEUTSCH MEDAID  Deutsch Medaid is a small German player, competitor to Deutsch Doc with a world renowned patented process MEDIGROUP MARKET Back- ground and Context  4 Firms – 1 Spanish, 1 French and 2 Germans, decide to enter into a consortium in order to provide a new league of medical appliances, Eco-friendly X-Rays, which they would not be able to develop, manufacture and distribute alone.  They decide to enter a cooperation agreement to rule their mutual relationships and that with the external world.

2. MEDIGROUP Medical Consortium Spain – France - Germany Ques- tions 1.What is the first question these companies should ask themselves from a legal point of view? Question

3. MEDIGROUP Medical Consortium Spain – France - Germany Ques- tions 1.What is the first question these companies should ask themselves from a legal point of view? Coopera tion Agree- ment PARTIES TO AGREEMENT DEFINITION OF TERMS PURPOSE OF COOPERATION / AGREEMENT DESCRIPTION OF ACTIVITIES PROPERTY RIGHTS FINANCIAL MANAGEMENT INTERNAL/EXTERNAL LIABILITY GOVERNANCE CONFIDENTIALITY DISPUTE RESOLUTION ENTRY INTO FORCE, DURATION, TERMINATION CHOICE OF APPLICABLE LAW  The cooperation agreement shall contain the following provisions. Which will, according to you be subject to most negotiation and why? Classify these items in terms of complexity in reaching an agreement, between “Easy”, “Average” and “Difficult”  How should we organize our cooperation? Through (i) an established company or (ii) solely through a light contractual architecture?  The 4 firms decided to establish a company named “MEDIGROUP S.A” to handle their common program Answer 1

4. MEDIGROUP Medical Consortium Spain – France - Germany Ques- tions Coopera tion Agree- ment PARTIES TO AGREEMENT DEFINITION OF TERMS PURPOSE OF COOPERATION / AGREEMENT DESCRIPTION OF ACTIVITIES PROPERTY RIGHTS FINANCIAL MANAGEMENT INTERNAL/EXTERNAL LIABILITY GOVERNANCE CONFIDENTIALITY DISPUTE RESOLUTION ENTRY INTO FORCE, DURATION, TERMINATION CHOICE OF APPLICABLE LAW  The cooperation agreement shall contain the following provisions. Which will, according to you be subject to most negotiation and why? Classify these items in terms of complexity in reaching an agreement, between “Easy”, “Average” and “Difficult” Question 2

5. MEDIGROUP Medical Consortium Spain – France - Germany Ques- tions 1.What is the first question these companies should ask themselves from a legal point of view? Coopera tion Agree- ment PARTIES TO AGREEMENT DEFINITION OF TERMS PURPOSE OF COOPERATION / AGREEMENT DESCRIPTION OF ACTIVITIES PROPERTY RIGHTS FINANCIAL MANAGEMENT INTERNAL/EXTERNAL LIABILITY GOVERNANCE CONFIDENTIALITY DISPUTE RESOLUTION ENTRY INTO FORCE, DURATION, TERMINATION CHOICE OF APPLICABLE LAW  The cooperation agreement shall contain the following provisions. Which will, according to you be subject to most negotiation and why? Classify these items in terms of complexity in reaching an agreement, between “Easy”, “Average” and “Difficult”  How should we organize our cooperation? Through (i) an established company or (ii) solely through a light contractual architecture?  The 4 firms decided to establish a company named “MEDIGROUP S.A” to handle their common program Answer 2

6. Medical Consortium Spain – France – Germany Focus on Financial Management ISSUES?  The 4 participating firms are both shareholders of Medigroup and providers of resources for development and manufacturing of the Medigroup Appliances, which are sold throughout Eastern Europe:  All 4 firms are even shareholders of Medigroup  Contribution in terms of resources is the same…but Cost of resources is different according to the countries; ex: Medigroup products are sold €200,000 but same contributions on the part of the 4 firms cost them, per Medigroup product, €15,000 (Spain), €25,000 (France), €30,000 (Germany) ALTERNATI VES? POSITIONS AND INTERESTS? SITUATION Question 3

7. Medical Consortium Spain – France – Germany Focus on Financial Management ISSUES ALTERNATI VES POSITIONS AND INTERESTS SITUATION 1. What sharing key to use to define the financial repayments to Participating firms? 2. What rules for invoicing and settlement? 1.(i) equal distribution of turnover, on basis of shareholders’ agreement, (ii) proportional distribution on basis of contribution cost…other 2. (i) monthly, (ii) quarterly, (iii) yearly…other 1.Spain which has lowest production costs will favor the alternative 1(i) whereas Germany will favor (ii). France which has average cost can play a pivotal role and bargain its position on other issues 2.This is a financial experts’ issue. All companies would have a preference for early repayment by the company. Nota bene This illustrates the search alliances and trade-offs in multi-lateral negotiations. Where the French party does not find this point critical, it is critical for the other parties. On other issues (see later), other distribution of positions will occur, and issues which are critical to France may not be for other parties. Thus, it is essential to identify what trade-offs and alliances are possible, and this is achievable only if you identify prior to negotiation all parties positions and interests. Answer 3  The 4 participating firms are both shareholders of Medigroup and providers of resources for development and manufacturing of the Medigroup Appliances, which are sold throughout Eastern Europe:  All 4 firms are even shareholders of Medigroup  Contribution in terms of resources is the same…but Cost of resources is different according to the countries; ex: Medigroup products are sold €200,000 but same contributions on the part of the 4 firms cost them, per Medigroup product, €15,000 (Spain), €25,000 (France), €30,000 (Germany)

8. Medical Consortium Spain – France – Germany Focus on Internal / External liability ISSUES?  Medigroup distributes the consortium’s appliances throughout Eastern Europe to hospitals and clinics.  It receives claims on the quality of its products  Lately, an incident with the appliance was associated with the serious injury of a patient in Hungary. A fault on the appliance is mentioned as the cause of the wrong diagnosis made which led to the patient injury. ALTERNATI VES? POSITIONS AND INTERESTS? SITUATION Question 4

9. Medical Consortium Spain – France – Germany Focus on Internal / External liability ISSUES ALTERNATI VES POSITIONS AND INTERESTS SITUATION 1. How are the 4 firms liable one towards the others? (internal liability) 2. Who is liable towards the market, and to what extent? (external liability) Internal: 1.1 (i) liability in all cases, (ii) liability except in some cases (hardship, Force Majeure…), other… 1.2 (i) Unlimited, (ii) Capped to a certain amount External: 2.1 (i) Medigroup liable, (ii) 4 Firms’ joint liability”, (iii) 4Fs “several liability”, (iv) 4Fs “joint and several liability” 2.2.(i) Unlimited, (ii) Capped to a certain amount 1.All companies should agree on the basis of “good faith” on an option, based on their “commitment” 2.France Medoc which has a strong reputation worldwide wishes to be liable towards the market. German Firms, which established Medigroup for it to be “autonomous”, do not wish to be liable in its place. Spain Med does not have a strong position. So it can play a pivotal role for France Med and therefore can be a bargaining tool (see Finance issue). All agree that liability needs to be capped. Nota Bene  Behind a party’s position, it is essential to look for its interest. For the French party, the image protection is the interest driving its position. For the German parties, what is the interest driving their position for an “autonomous Medigroup directly liable towards the market ? Perhaps it is based on legal, tax or financial considerations from a German Law standpoint…? Answer 4  Medigroup distributes the consortium’s appliances throughout Eastern Europe to hospitals and clinics.  It receives claims on the quality of its products  Lately, an incident with the appliance was associated with the serious injury of a patient in Hungary. A fault on the appliance is mentioned as the cause of the wrong diagnosis made which led to the patient injury.