DOING MORE WITH LESS: ADVANCED CONTRACT MANAGEMENT STRATEGIES IN A NEW ECONOMIC ERA

1. DOING MORE WITH LESS:ADVANCED CONTRACT MANAGEMENT STRATEGIES IN A NEW ECONOMIC ERA John Corcoran Senior Director and General Counsel, Cisco-Linksys Susan Myers Senior Corporate Counsel, Kia Motors America Jean Schanberger Axiom Attorney (Current Client: AeroVironment) Moderator – Anne Jacoby Head of Southern California Practice, Axiom HOSTED BY: November 11, 2009

2. Agenda • Introduction (topic and panelists) • Goal: provide specific, practical initiatives on how to increase efficiency through contracts • Contract Management Systems • Contract Tools for Your Business Clients • Avoiding Litigation • Q&A Throughout Program

3. Introductions – Topic

4. Introductions – Panelists • John Corcoran Senior Director and General CounselCisco-Linksys • Susan Myers Senior Corporate CounselKia Motors America • Jean Schanberger Axiom Attorney (Current Client: AeroVironment)

5. Contract Management Systems (“CMS”) • CMS – what is it? • Value Proposition/Identifying Success Factors • Buy vs. Build decision • Vendor selection and due diligence • Things to remember!

6. Contract Evolution CONTRACT FULFILLMENT CONTROL ENABLEMENT CONTROL COMPLIANCE LEGAL CONTROLS RISK MANAGEMENT CONTROL ENABLEMENT CONTROL COMPLIANCE LEGAL CONTROLS RISK MANAGEMENT CONTROL COMPLIANCE LEGAL CONTROLS RISK MANAGEMENT LEGAL CONTROLS RISK MANAGEMENT RISK MANAGEMENT Before Beyond CISCO CONFIDENTIAL

7. ECLM Opportunity The benefits of ECLM will be realized across the organization Cisco Cross-Functional • Single searchable, self-service sell-side contracts repository • Simplified revenue control environment • Simplified field/partner contract engagement & transparency • Accurate identification of entitled customer/partner & affiliates • Secure & simple virtual restatement of contract for ease of integration • Vast majority of contracts with complete & accurate terms required for deal-order-contract linkage • Effective & efficient contract approval process • End-to-end solution for contract engagement with partners/ customers • Improved negotiator experience, productivity, workflow & business controls DMS Transactional (inc. pricing service) Legal CISCO CONFIDENTIAL

8. Enterprise Contract Lifecycle Management Plan Search Create / Draft Negotiate Approve Capture / Store Audit / Comply Transact (QTC, P2R, I2R, M2O) Modify / Terminate Analyze Administration Enterprise Data Hierarchies What is CMS at Cisco? Enterprise Contract Lifecycle Management (ECLM) is the capability to manage multiple legal document types through each stage in the contract lifecycle and transact across Cisco operational processes. • Sales Contracts • Licensing / IP • Non-Disclosure Agreements • Other Prior to ECLM Cisco had the legacy contract management system to perform many of these activities. CISCO CONFIDENTIAL

9. ECLM Value Est. Impact Top Benefit Areas • 1M – 2M annual cost savings • Reduced time to find agreements and associated contract details • Reduced time supporting contract inquiries • Reduced time finding SOW information Search for Contract Details Increase Productivity • 1M – 2M annual cost savings • Reduced time re-entering contract details • Reduced time creating contracts due to integrated templates and T&Cs • Reduced time creating/drafting SOWs Enhance Creation / Drafting • Reduced time for approvals when non-standard terms are integrated into the automated approval workflow • Streamlined parallel and sequential approval hierarchies for SOWs • 400 – 800K annual cost savings Streamline Approval Process • Improved data integrity between contract data and downstream systems • Improved tracking of contract changes • Improved version control and data integrity Improve Contract Data Accuracy Total ECLM Value Opportunities Improve Quality & Controls • Greater use of standard terms • Improved consistency of contract terms • Improved use of standard terms Improve Contract Performance • Improved integration between deal master and contract information • Improved visibility to contract discounts • Better visibility and integration of discount information Enhance Order to Contract Linkage Improve Margin Protection • Reduce FTE support for ongoing enhancements • Packaged software releases provide future enhancements Reduce Cost of Ongoing Enhancements • ~400K annual cost savings Decrease IT Maintenance & Support Costs • Cancellation of current CMS pipeline projects • ~750K one-time cost savings Eliminate CMS Pipeline Project Costs • ~350K annual cost savings • Elimination of annual support and maintenance for CMS Reduce Application Support Costs CISCO CONFIDENTIAL

10. ECLM Definition of Success CISCO CONFIDENTIAL

11. Excellent Poor Average ECLM Buy vs. Build Recommendation • The ECLM team recommends the Buy option. • Key Factors: • Nearly all needed base functionality offered out of the box • Faster time to availability • Enhancements and updates are continually released by vendor • Reduced IT maintenance and support costs • Controllable and known functionality release cycle from packaged software vendor Fit and alignment with program objectives and value case: CISCO CONFIDENTIAL

12. ECLM Buy vs. Build Estimates The main differentiators between the Build vs. Buy decision is the speed for implementation and the ability to support future enhancements in parity with industry and technological advancements. CISCO CONFIDENTIAL

13. CISCO CONFIDENTIAL

14. ECLM AssessmentBuy vs. Build Software Evaluation Process The software evaluation process followed a structured process to narrow the field of candidate vendors and reach a Buy recommendation: Initial Packaged Software List* Comparison of Legacy system upgrade options to packaged software Final Vendor Selection Packaged Software Short List Vendor Demo Down-Select List Assessment Phase Recommendation: Buy Packaged SW Software Vendor Short-List Process Request for Information (RFI) and First-Round Vendor Demos Second-Round Vendor Demos, Functional and Technical Assessment, and Reference Calls Next Step: Proof-of-Concept (POC) Activity: *Based on Forrester industry rankings and packaged software vendors incumbent at Cisco CISCO CONFIDENTIAL

15. Excellent Poor Average ECLM AssessmentBuy Decision – Vendor Recommendation Investigate Ariba and Emptoris as solution options in the next phase (ID & Assess) • Ariba • Cisco owns license and currently uses Ariba for buy-side contracts • Ariba has a limited track record with sell-side contract management • Concerns about data architecture fit (ability to capture business variables at contract clause level) • Emptoris • Leading sell-side contract management tool in the industry • Strong sell-side functionality, including capability to handle business variables at the clause level • Higher license costs Vendor Assessment Summary : N/A CISCO CONFIDENTIAL

16. Buy Decision – Subjective Vendor Analysis The subjective analysis enables a weighting for each vendor across a number of assessment areas that are relative to each other. SMEs were called upon to assess the vendors where needed. CISCO CONFIDENTIAL

17. ECLM Lessons Learned • Start simple – don’t over-engineer • Be careful of over enthusiastic marketing claims – it’s all in the detail • Open up to Negotiators early for adoption and feedback • On-going training and support is a must • Focus on the functionality that’s important to you and not the vendor • Don’t be pushed into a rapid implementation CISCO CONFIDENTIAL

18. Know Your Users Revenue Review Specialist Team* Revenue Accounting Operations (RAO)* Account Team Initiates the contractual process Follows established policies to assess contract for potential Rev Rec Implications Contract Negotiators Controller Follow Rev Rec assessment to set up accounting treatment Do the right thing for Cisco, customers and business Responsible for the deal economics and contract approval Channels* ERP* Uses contracts to structure programs Uses contracts to set up discounts, other * Specific to Legal Sales CISCO CONFIDENTIAL

19. Timeout: Questions?

20. Contract Tools For Your Business Clients • Talking about contracts to non-lawyers • Why do I need a contract? • What is a contract anyway? • Key Legal Terms • Indemnification • Confidentiality • Integration clause • Ownership of IP created or disclosed during contract performance

21. Contract Tools For Your Business Clients • Traps • Limitation of liability • Battle of forms • Automatic renewals • Termination for convenience/penalty

22. Timeout: Questions?

23. Current State of Contract Litigation • 28% of companies report increase in contract litigation from last year due to recession • 53% of all companies spend $1M or more on litigation • 13% of small companies • 38% of midsized companies • Highest litigation bills are in health care, insurance, energy and tech/communications industries • 43% of companies expect the number of legal disputes faced to increase in 2010 due to global economic conditions (53% stay the same) • 52% of large companies • 30% of small companies (up dramatically from 5% in 2007, 22% in 2008) Source: Fulbright & Jaworski 6th Annual Litigation Trends Survey Report published October 2009 (survey of 408 General Counsel in U.S. and UK)

24. Current State of Contract Litigation • Main corporate litigation types pending in 2009: • Contracts (45%) • Labor/employment (45%) • Personal injury (13%) • Companies turning away from arbitration in domestic disputes • 55% prefer litigation; 32% prefer arbitration • Reasons to favor LIT: ARB is splitting the baby, not faster or less expensive, no right of appeal/too limiting • Reasons to favor ARB: Typical venues subject to jurisdiction not favorable to judge or jury trials; specialized nature warrants experienced decision makers Source: Fulbright & Jaworski 6th Annual Litigation Trends Survey Report published October 2009 (survey of 408 General Counsel in U.S. and UK)

25. Avoiding Litigation: Minimizing Disputes • The Business Side • Clarity of business terms • Ensure everyone understands deal (business & legal) • MOUs and LOIs • Anticipate/plan for end game at beginning – what can go wrong? • ID most likely issues? Worst Issues? • The Legal Side • Contract milestone admin process • Avoid “Death in the Drawer” • Leverage technology • Gov’t contracts approach • UCC Provisions for sale of goods • Attorneys’ Fees Provisions • Integration clauses • Choice of applicable law • Choice of forum • Acceptance of jurisdiction • Language throughout contracts

26. To Litigate Or Not To Litigate… That Is The Question • Subject matter of potential contract dispute affects dispute resolution approach • Failure to perform • Intellectual Property misuse/NDA Violation/IP Ownership • Collections  • Potentially problematic contract provisions • Limitation of liability provisions (parties; third party) • Insurance coverage/duty to defend/control of defense • Indemnification clauses • Limitation of warranties (tech services or delivery of product)

27. Dispute Resolution Mechanisms: Escalation Mix n’ Match • Between the companies (choose 1 or more levels) • Unspecified participants • Participants who are not directly involved with the contract • Senior management • Process • Mediation • Identify organization – JAMS? AAA? INTA? ICC? WIPO? • Location • Mediation selection process • Good faith participation requirement • Costs • Confidentiality/non-admissibility of proceedings, negotiations

28. Dispute Resolution Mechanisms: Escalation Mix n’ Match • Arbitration • Identify organization • Location • Arbitrator selection process • Enforceability/binding nature of arbitrator’s award • Costs • International Dispute Special Considerations • Governing laws (to each his own?) • Forum selection (when in Rome…) • Mutual inconvenience of location • Language

29. Lessons Learned • Hat sharing • Lawyers need business knowledge and involvement • Clients need some exposure to legal risks and implications • Plan for a rainy day • Potential disputes and resolution process • Litigation scenarios • Exit strategy • The old adages apply… • A stitch in time saves nine… An ounce of prevention is worth a pound of cure • Well worth front end investment in business and legal issues plus dispute resolution process to avoid litigation

30. Timeout: Questions?

31. Thanks for joining us! Axiom is a firm of experienced lawyers liberated from the unnecessary overhead and inefficiency of Big Law. Clients turn to us to reduce their dependence on outside counsel, achieve greater flexibility, and expand their in-house team’s capacity. Attorneys come to us for a challenging, yet more satisfying practice that offers variety and self-determination. We are the first real alternative to the traditional law firm for complex legal work. We call it Law 2.0. Check us out at www.axiomlaw.com.