1. 20753626 1
Ihr Erfolg im US-Luftfahrtmarkt:
Die juristischen Schlüsselstrategien
Williams Mullen
8300 Greensboro Drive
Suite 1100
Tysons Corner, VA 22102
USA
Direct: 001.804.420.6482
Eliot Norman
enorman@williamsmullen.com
www.williamsmullen.com/practice/international-law

2. The New Southeast Aerospace
Cluster
2

3. • Mobile, AL (Airbus)
• Melbourne, FL (Embr)
• Savannah, GA (Gulfstream-General Dynamics)
• Charleston, SC (Boeing)
• Greensboro, NC (Hondajet)
• Durham, NC (GE Aviation)
• Prince George, VA (Rolls-Royce) 3

4. WHY THE SOUTHEAST?
• Large Number of Graduates from
University Engineering Programs
• NASA (provides a highly qualified
aerospace engineering pool)
– NASA Langley (VA)
– NASA Stennis (AL)
– NASA Melbourne (FL) 4

5. Best-in-class manufacturers & Virginia’s flagship
universities
Delivering “production-ready” manufacturing solutions while combining
the speed & ROI expectations of business with the intellectual rigor and
innovation of universities.
CCAM (Virginia)
5

6. • A global Center of Excellence in
advanced manufacturing research
– Manufacturing Systems
– Surface Engineering
• Focus on translation research
– Accelerate new technologies into
commercialization
– Reduce cost and improve quality
– Complement with workforce training
efforts
• CCAM growth in 5-10 years to:
– 10 year business plan & financial model
complete
– ~60 Employees (49 PhD Researchers)
– 35 graduate research assistants resident
at CCAM
– 35 undergraduate interns resident at
CCAM
– More than 30 Industry Members
– $15-20 Million annual research budget
Aerospace
Energy
Shipbuilding
Transportation
Electronics
Automotive
Defense
Vision
CCAM
6

7. The Opportunities: Fairfax
County (Va) Location
• Washington, D.C. metro
area (8.7 million people)
• 60% of the U.S.
population within one to
two-hour flight of Fairfax
County:
• Immediate Access to
U.S. Government and
Dept. of Defense $55
Billion market
• 24 Hour deliveries to
New Southeast
Aerospace Cluster 7

8. Einführung: Amerika als
Herausforderung
8

9. 5/26/2013 99
Gelten für Sie faire
Bedingungen?

10. For example: Will the BUY
AMERICA ACT Stop your Sales?
•Waivers under Buy America Act( BAA);
•Substantial Transformation after importation; or
•50% test for U.S. content; and
•Use of Trade Agreements Act to overrule the Buy
America Act
– FAR 225.872-1 provides: it is “inconsistent to apply
restrictions of BAA to acquisition of certain qualifying
country end products from the following countries:
Germany, France, Belgium, Sweden, UK, other EU
countries, Canada and Israel
– Products must have value greater than $203,000
10

11. 5/26/2013 111111
Seien Sie zuversichtlich: Das
Frühstück Ihrer amerikanischen
Anwälte

12. Level Playing Field? Yes, but
• To be competitive, German aerospace companies
should:
– Consider assembling or manufacturing in the dollar zone
– Respect and comply with U.S. government regulations:
FAA, Export Controls, Government contracts, FCPA,
antitrust
– Americanize or localize your supply agreements;
– Know how to limit your liability under standard American
supply agreements;
– Take advantage of the international commercial treaties
favoring German trade with and investment in the USA: E-
2 visas; Tax Protocols; Trade Agreements Act, NAFTA;
– Consider using Southeast USA as additional center for
your worldwide exports, taking advantage of U.S.
government subsidies for exports from the USA and local
commercial advantages (Exim Bank; IC DISC)
– Work with an attorney who knows how to make the U.S.
legal system work in favor of German suppliers 12

13. 13
The Top 6
1. Visas: Moving your key personnel to the USA
can be the key to your success
2. What corporate structure for what project?
3. U.S. employment laws: « Right to Work » But
U.Sl laws may not always be that liberal?
4. Export Controls and use of export subsidies
5. Contract administration and negotiation
6. Legal strategies to help accelerate your
growth in the U.S. market

14. Nr. 1 Visa und
praktische
Immigrationslösungen
(Handbook FAQ # 6)
14

15. 5/26/2013 15
Hiermit fängt alles an

16. 16
Attention!
Homeland Security is in charge of
immigration to the USA

17. 5/26/2013 17
Case Illustration: L-1 ou E-2 Intra-
Company New Office Transfers
X&Z Aerosupply , Inc.
Fairfax, Virginia USA
X&Z Aerosupply GmbH
Munich, Germany
Managers, Executives
Software Developers
Electrical Engineers
Project Managers
and
Specialists
Composites
Engineers
X&Z, Ltd.
Bucharest, Romania

18. 18
Visas: Practical Solutions for Visitors
• Reforms in use of « Shengen » type visas
– Visa Waivers (ESTA);
– Can work under B-1 in support of
interntional supply agreement
– B-1 in lieu of H-1B (design engineers)

19. Nr. 2
Welche
Gesellschaftsstruktur
für welches Projekt?
19

20. C
Corporation
Limited
Liability
Company

21. USA Holding Co.
US Factory
US Startup
Business

22. Joint Venture
German US
Subsidiary
US Company

23. 5/26/2013 23
Letzte Frage:
Wo wird die Gesellschaft gegründet?
• Delaware or other states
• Qualifying to do business in other states
• See Handbook FAQ # 6

24. 5/26/2013 24
Last Word? Taxes
Choice of LLC or C Corporation:
100% “Tax Driven”
• Consult your fiscal advisors in the United States and
in Europe before deciding which entity to use

25. IC DISC Structure
Summary of Benefits
1. IC DISC can be paid commissions
• Statutory formula – not required to be Arms Length
• Greater of 40% of gross export sales from the
USA, or 50% of taxable income on those sales
2. Can get Rate Arbitrage
• Commission deduction – up to 40% benefit (Fed &
States)
• Payment from IC DISC to Qualified Foreign Co –
likely zero Withholding Tax.
• Replaces dividends from fully taxed income of ABC
Aerospace, Inc. (USA) with deductible
commissions followed by Dividend from IC-DISC
3. IC DISC may also be used for export finance
• May receive factoring fees of 2-3%
• Additional Commission $3M for $100M export
sales, resulting in additional $1.2M tax savings
Issues
1. Need to structure properly to get rate benefit
ABC Aerospace GmbH
(Munich
ABC Aerospace USA
Inc. (Virginia) )
(deducts Commissions)
IC DISC (ABC Exports, Inc.
Non-taxable
(Virginia )
Commissions
Dividends
Bottom Line: Reduce U.S. Taxes on Exports by 35% to 40%.

26. 5/26/2013 26
Behördenmarkt
Government Classified Market
• Very important market
• Foreign companies can participate by
• Using a SSA or Proxy
• Examples: Fairfax County Companies

27. European Companies
Sources: Fairfax County Economic Development Authority, Dun & Bradstreet
27

28. .. of which are Aerospace Firms
28

29. Nr. 3 Arbeitsrecht:
„Recht auf Arbeit“,
aber vielleicht nicht
so liberal, wie es
sich deutsche
Unternehmen
vorstellen?
29

30. 5/26/2013 30
Human Capital
• Role of federal government
• Role of the states
• Real advantages of Virginia,
for example, as a “right to work”
state?
– Example of Boeing
• With « Right to Work » also
comes « Employment at Will »

31. 31
Must still conform to Federal Laws
• FLSA (overtime rules)
• IRS et DOL: controls on use and abuse of independent
contractors
• FMLA: family medical leave act
• Strict controls with jury damage verdicts for discrimination
(race, sex, age, disability ) (Title VII, ADEA, ADA), above all
sexual harassment and retaliation claims: solution: proper
training of management, employment handbooks.
• Whistleblowers and liability: be careful when entering into
federal government contracts
• Benefits and federal regulation under ERISA
• OHSA safety enforcement
• IRCA (Immigration Reform Control Act) to control illegal
workers, immigration reform will only complicate obligations
of employers (Alabama example)

32. Umsetzung am Arbeitsplatz in
den USA

33. 33
Key Considerations
Your legal advisor can help you to:
• Prepare your employment agreements, your handbooks and
manuals and effectively train your managers in compliance with
federal employment statutes
• Non-competition, confidentiality agreements: protect trade
secrets
• Advise on formulating a benefits plan, incorporting the new
regulations under Obama Care (Affordable Health Care Act), as
well as stock options life and medical insurance, to make your
company competitive with other U.S. employers.
• Help you take advantage of “Right to Work” laws to minimize
union activity
• Defend you in case of employee claims under any of the federal
or state laws regulating employment

34. Nr. 4
Ausfuhrkontrollen.
34

35. U.S. Export Laws & Regulations
International Traffic in Arms Regulations (ITAR)
– Requires registration and licenses for the export and
temporary import of defense articles and technical
data, provision of defense services, and brokering of
defense articles. U.S. Dept. of State
Export Administration Regulations (EAR)
– Requires export licenses for exports of commercial
equipment, software and technologies to certain
countries, end-users and end-uses.
– Enforces Anti-Boycott Laws: U.S. Dept. of
Commerce.
– OFAC Sanctions Programs
– In most cases, US corporations are prohibited from
transacting any business with sanctioned countries (e.g.,
Cuba, Iran, Syria) and entities (e.g., narcotics traffickers,
terrorism supporters, WMD proliferators). 35

36. Export Defined: actual and
“deemed”
“Exports” include:
• Sending or taking an item out of the U.S.
• Providing technical data or technologies to
foreign persons, whether in the US or
abroad:
• Emailing technical data to foreign
persons
• Discussing technical data with foreign
persons
• Giving a facility tour to a foreign person
36

37. Regulierte Güter
– Defense Hardware,
Technical Data & Services
controlled for export by State
Department
– Commercial Goods,
Software and Technologies
controlled for export by the
Commerce Department
– Only Public Domain
Information is not controlled
37

38. Unternehmen mit dem höchsten Risiko
Defense Contractors: Almost all items/services are
defense articles subject to strict export control.
• Examples include everything from drones (UAVs) to
navigation systems to military encryption.
• Also includes parts, components, software, etc.
High Tech Companies: More sophisticated products and
technologies are subject to more strict export controls.
• Examples include navigation and avionics, sensors and
lasers, commercial encryption, certain materials, etc.
• Companies may need to collaborate with foreign vendors
to outsource part and component manufacturing
• Many companies have foreign employees
38

39. 39
Reformen der
Ausfuhrkontrollen

40. COMSAT
• On January 3, 2013 President Barack Obama
signed the National Defense Authorization Act for
Fiscal Year 2013 (NDAA) into law, restoring the
President's authority to transfer commercial
communications satellites and related items
(COMSATs) from International Traffic in Arms
Regulations (ITAR) jurisdiction to the less
restrictive dual-use (dual military and commercial
or consumer use) export controls under the
Export Administration Regulations (EAR).
• Recent Announcement: March 8: moving aircraft
and turbine engines to CCL from ITAR list
– Eliminate duplication in licensing
40

41. Impact of Reforms
Impact on German companies in Germany
– Increased ability to purchase certain US
systems, subsystems, parts and components
without being subject to strict ITAR controls
– increases competition in Europe & Germany
from U.S. exporters of components and parts
Impact on German companies in US
– Increased ability to manufacture certain aircraft,
systems, subsystems, parts and components in the
US without being subject to strict ITAR controls

42. Wie können wir Ihnen helfen?
1. Determine export jurisdiction and classification for
the company’s products (ITAR or EAR): “Are my
products on the List”?
2. Strategize with the company to determine which
products are appropriate for production in the
United States
3. Assist with obtaining any necessary export
licenses, including resolving “deemed export”
issues for foreign persons working in the US
4. Advise on export issues related to brokers,
distributors and resellers [B.A.E. issues]
5. Establish an effective Compliance Program

43. 5/26/2013 43
U.S. Munitions List (USML)
• Category 1: Firearms, weapons
• Category 2: Guns and armaments
• Category 3: Ammunition, ordinance
• Category 4: Launch vehicles, missiles,
rockets
• Category 5: Explosives, incendiary
agents
• Category 6: Naval vessels
• Category 7: Military vehicles
• Category 8: Aircraft and equipment
• Category 9: Military training services,
equipment
• Category 10: Protective personnel
equipment and shelters
• Category 11: Military electronics
• Category 12: Optical and guidance
control equipment
• Category 13: Auxiliary equipment
(cameras, encryption, camouflage)
• Category 14: Toxicological, chemical,
biological agents, protective
equipment
• Category 15: Space systems and
equipment
• Category 16: Nuclear weapons,
technology
• Category 17: Classified technical
data and services
• Category 18: Directed energy
weapons
• Category 19: Reserved
• Category 20: Oceanographic
equipment
• Category 21: Other items designed
or adapted for military use

44. 5/26/2013 44
Examples of USML Items
• Electronic equipment which is
specifically designed, modified or
configured for military application
• Drone aircraft
• Navigation systems
• Command, control and
communications systems
including radios (transceivers)
and identification equipment
• Military training services and
equipment
• Underwater sound equipment
• Flight control products, software
and technologies
• Satellites, launch vehicles and
ground control equipment,
including parts, technologies and
software
• Classified products, technical
data and software
• Anti-gravity and pressure suits,
atmosphere diving suits
• Body armor
• Naval vessels and related
equipment, parts, technologies
and software
• Protective personnel equipment
and shelters
• Auxiliary military equipment

45. Nr. 5
Vertragsmanagement
und Verhandlung
45

46. 5/26/2013 46
Contracts: the American way

47. Warnhinweis!
• Read the entire contract
• The traps can be found in articles
with such names as :
– « miscellaneous »
– « definitions »
– « flow-through » ou
« incorporation by reference »
• RTBC! RTBC!
47

48. Key Contract Clauses
• Liquidated Damages
• Limitations on consequential damages
• Limitations on Punitive damages
• Maximum liability for damages
• Seller Indemnification of buyer for 3rd party claims
only
• Best efforts,
• Time is of the essence
• Product warranties & representations
• Choice of Law: which state? UCC?
• Dispute resolution
Solution: Use a Model Manufacturing Supply
Agreement as a starting point in the negotiations 48

49. Konventionalstrafen: Die
Vorzüge (Liquidated Damages)
• “ liquidated damages” for late deliveries
• Seller: reduces its uncertainty by capping its liability, even if the cap
turns out to be greater than actual damages to Buyer
• Buyer: reduces its uncertainty by fixing at least acceptable level of
compensation
• Dispute Resolution: Eliminates calculation of damages, streamlines
dispute resolution to proof of delay only, reduces litigation costs
• U.S. Law: Uniform Commercial Code: UCC 2-719:
– Be specific –fix the amount to type of breach
– State difficulty to estimate damages
– Liquidated damages are reasonable estimate of damages
– Liquidated damages are the exclusive remedy for the specified
breach ( , late delivery, defective medical devices etc. )
– Avoid right to elect alternative remedies– creates risk that
liquidated damages will be viewed as penalty and unenforceable
49

50. Liquidated Damages: Model
Clause
Liquidated Damages. If the Seller fails to deliver the
Products by the Delivery Date (the "Seller Breach"), the
Seller shall pay to the Customer an amount equal to $2500
per day for each day a Seller Breach continues (the
"Liquidated Damages"). The parties intend that the
Liquidated Damages constitute compensation, and not a
penalty. The parties acknowledge and agree that the
Customer's harm caused by a Seller Breach would be
impossible or very difficult to accurately estimate at the
time of contract, and that the Liquidated Damages are a
reasonable estimate of the anticipated or actual harm that
might arise from a Seller Breach. The Seller's payment of
the Liquidated Damages is the Seller's sole liability and
entire obligation and the Customer's exclusive remedy for
any Seller Breach. 50

51. Folgeschäden
Consequential Damages
51

52. Lösung: Ausschließen von
Folgeschäden/indirekten Schäden
11.1. NO LIABILITY FOR CONSEQUENTIAL OR INDIRECT DAMAGES.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR CONSEQUENTIAL,
INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR
ENHANCED DAMAGES[, LOST PROFITS OR REVENUES OR DIMINUTION
IN VALUE], ARISING OUT OF OR RELATING TO ANY BREACH OF THIS
AGREEMENT, REGARDLESS OF (A) WHETHER SUCH DAMAGES WERE
FORESEEABLE, (B) WHETHER OR NOT THE OTHER PARTY WAS
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND (C) THE LEGAL
OR EQUITABLE THEORY (CONTRACT, TORT OR OTHERWISE) UPON
WHICH THE CLAIM IS BASED, AND NOTWITHSTANDING THE FAILURE
OF ANY AGREED OR OTHER REMEDY OF ITS ESSENTIAL PURPOSE.
52

53. Schadloshaltung: Fallen für
Verkäufer
• Clearly Limit Indemnification to 3rd
Party Claims only against the Buyer
• You will need language that says:
– « Seller indemnifies Buyer solely for losses
arising out of a Third Party Claim directly
caused by a breach of the contract by
Seller, subject to certain exceptions, etc. »
• Obtain insurance coverage
53

54. 54
Final Points: Management of Contracts
• « Americanize » your agreements !
• Examine with care your commercial contracts: ask for legal
advice to interpret and apply under the law of the state that will
govern any dispute:
• Pay close attention to liability provisions, including responsbility
for defective products, liquidated and consequential damages,
and the obligation to indemnify against third party claims.
• Government contracts present special problems and all
provisions must be understood and respected;
• Consider dispute resolution solutions:
Mediation
Arbitration
• It is often far less expensive and must faster to resolve
disputes before the Federal U.S. District Courts.

55. Bußgelder für Produkthaftung:
• McDonald’s: customer spilled coffee,
millions in damages ?
• Legal reality is different
• limitations on punitive
damage by Supreme Court
and Courts in Virginia

56. Products Liabiity
• Adopt the same steps and good sense that
you use to sell in Germany and to other
markets
• Matter of insurance coverage
• Advantages of mediation and federal courts
in Virginia: rapid decisions and pro-
business
• American laws protect businesses against
frivolous lawsuits and set a ceiling or limit
on punitive damages.

57. Other Important Contracts
• See Handbook FAQ #7
• Manufacturer Supply Agreements
• Other sales agreements
• Technology license agreements
• Government contracts and subcontracts
• Distribution and agency agreements
• Teaming agreements
• Joint Ventures (JV)
57

58. 5/26/2013 58
Teaming Agreements
• Teaming Agreement: Defined
• Major Elements and Protections
for French Company as Teaming Partner &
subcontractor: exclusivity, scope of work, data
exchange subject to NDA (accords de
confidentialite), pricing within prime contractor’s
target ranges, easy termination.
• Sample Teaming Agreement Checklist: PDF from
enorman@williamsmullen.com
• Substantial advantages over typical prime-sub
relationships

59. Example: Joint Venture
59

60. Joint Venture
Common development of a new landing gear and
landing gear door
Questions to Consider:
– Division of profits;
– Liability: one venture partner binds the other
– Resolution of disputes
– What acts can be undertaken independent of and
outside the JV
– Who owns the improvements? Cross-licensing
– Termination and grounds for withdrawal
– What structure for the JV?
5/26/2013 60

61. Final Thoughts: Joint Venture
• Define well the scope of the joint venture
agreement and use an american contract
• Know how to end it before you sign it
• Plan for the divorce before you get
married
61

62. Nr. 6 Rechtsstrategien
zur Förderung Ihres
Wachstums auf dem
US-Markt
62

63. Strategie 1: Ihr Wachstum auf dem US-
Markt mit Fusionen und Übernahmen
beschleunigen
• Benefits of M&A
– localize and americanize your business
– add to your competitivity
– create a level playing field with your american
competitiors
– Less complex, ultimately more profitable than a JV
– Gives your company the ability to raise capital from
private equity and commercial banks in the USA
63

64. 5/26/2013 64
M&A: Practical Considerations
• Legal concept: New York Minute!
• Legal point: Importance of non-binding Letter of Intent (LOI)
to give you exclusivity until signing of Stock Purchase
Agreement
• Legal Point: Great American Bait and Switch in Reverse!
– Bid at $11 million , buy at $9 million
– your weapon: your lawyers and their due diligence.
• Stock Purchase Agreement: Representations and
Warranties
• Post-Acquisition Issues: Deal with Them Pre-Acquisition to
cement the deal: Employment Agreements; Golden
Parachutes, Consulting/Non-compete Agreements:
• Momentum to close the deal
• IP/ employment and immigration issues post-acquisition
• Deposits and Break-Up Fees: Be Prepared

65. Strategie 2: Südöstliche Bundesstaaten
als Zentrum für den Export aus den USA
• Manufacture or assemble in the dollar zone:
avoid Euro/Dollar exchange issues. Your
contracts may be in dollars.
• Benefit from savings of 15% or more on the costs
of production in Europe
• Export from the United States with subsidies from
U.S. government:
– IC DISC : 2 companies, one tax free receives
commissions on the sales
– reduces by 35% to 40% the taxes on profits
from exports
– availability of financing from Ex-Im Bank 65

66. Strategie 3: Kapitalaufnahmen
für Expansion in den USA
• Your expansion to the USA presents an
opportunity for raising private equity capital
• U.S. sources will finance an acquisition (M&A)
• « the dry powder » of Private Equity
• Key point: show a contract to obtain the financing
• Documentation: American-style Term Sheet or
Private Placement Memorandum
• US JOBS ACT: makes capital raises easier
• Commercial bank financing…. yes and no
66

67. Strategy # 4: Negotiation of
Financial Incentives
• Be cautious of “conditions” in offers of financial incentives
• Seek legal advice in negotiations
• Proper analysis of long-term costs and benefits of your
location decision may depend more these factors than
incentives:
• Availability of qualified professional workforce and
education levels
– R&D resources
– multiple markets: commercial and government
– quality of life
– Pro-business environmental regulations
– transportation and infrastructure: ports, airports
– long term cost of doing business in the location
67

68. Zusammenfassung
68

69. 69
Conclusion : Your success for a Soft
Landing in the USA will depend upon:
• Choice of correct visa solutions for key
personnel: “It all starts here”
• Choice of correct corporate structure
• Careful planning of your approach to handling
employment questions while maximizing use of
“Right to Work” laws in states like Virginia
• Recognizing importance of government
regulations, notably Export Controls
• Proper management and negotiation of your
Manufacturing Supply Agreements and other
important contracts to limit your liability and
reduce your risks
• Adopt strategies for M&A, Exporting and Raising
Capital to permit you to accelerate your growth in
the U.S. market and
• Finding legal advisors with the experience and
expertise to help you succeed with your
investment project in the USA.

70. 70
The desired results

71. 71
Thank You
Eliot Norman, Esq.
enorman@williamsmullen.com
www.williamsmullen.com
001/804.420.6000
Fairfax County/Washington, DC USA
www.williamsmullen.com/practice/international-law

72. 72
QUESTIONS ?
Eliot Norman
Williams Mullen
8300 Greensboro Drive
Suite 1100
Tysons Corner (Fairfax County)
Virginia 22102 USA
Direct Line: +1.804.420.6482
enorman@williamsmullen.com
www.williamsmullen.com/practice/international-law