Attorneys at Law

2007-2008 Annual Review

We’re pleased to share this report on our accomplishments from 2007 and early 2008. We always areproud to contribute to the success of our clients, and are fortunate to have been trusted withimportant and challenging matters.

While we can only describe a small cross-section of the client work we do in any year, we believethese stories help illustrate the outstanding clients we work with and the attributes that make Pepperspecial – teamwork, responsiveness, imagination, integrity and unswerving dedication to our clients.

From an important patent litigation victory to helping the Pittsburgh Penguins stay on home ice in the SteelCity, the matters described on these pages exemplify Pepper’s commitment to exceptional client service.

Pepper has continued to grow. In 2007 alone, we added 22 lateral partners, bringing our total count of lawyers to more than 500. Our officesin Boston, New York, Orange County, Berwyn and Philadelphia grew significantly. Our capability in intellectual property, pharmaceuticaland medical device litigation, commercial litigation, corporate and securities, financial services and tax law also expanded.

Our lawyers also have increased their commitment to pro bono work. As you will read in this report, we formed several new pro bono practicegroups, handling such diverse matters as tangled title cases for low-income homeowners and Supplemental Security Income cases fordisabled children. The number of hours and number of lawyers handling pro bono cases also increased. We also continue to improve the firm’srecruitment, retention and promotion of professionals from diverse backgrounds, and have had promising results from our initiatives in 2007and to date in 2008.

We hope you enjoy this report. We appreciate the trust and confidence our clients continue to show in us.

Sincerely,

Nina M. Gussack Robert E. Heideck Chair, Executive Committee Executive Partner

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Dear Friends:

Saint-Gobain Corporation and its well-known North American subsidiary CertainTeed make a wide range of building materials, high-performancematerials, packaging and glass products. The company’s legal issues also cover a lot of territory, from antitrust to employment issues and more. The Pepperteam that assists Saint-Gobain’s North American general counsel John Mesher (center) includes (from left) partners Barbara T. Sicalides, Jeremy Heep,Jonathan Kane and Robert L. Hickok.

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Partnering with Saint-Gobain Over Time and Distance

“We take great pride in the fact we can serve Saint-Gobain atmany levels. Our multi-faceted team of attorneys has time andagain provided counsel to a corporation that touches much ofthe globe,” said Pepper partner Robert L. Hickok.

Over the years, Pepper has assisted Saint-Gobain in manymatters, including acquiring necessary approvals from antitrustregulatory authorities related to mergers and acquisitions,providing antitrust advice for the distribution of products, andcounseling on intellectual property matters.

“We really appreciate how client-oriented Pepper is even whilewe’re working with the top people there, including BobHeideck, Bob Hickok, Hope Comisky, Jon Kane, M. KellyTillery, Jeremy Heep, Barbara Sicalides, Bill Walsh, CuylerWalker, and Amy McAndrew,” said Mesher. “We know we’regetting our money’s worth. Our parent company holds that sametrust. They know Pepper and its reputation as a solid firm. Theyknow they’re getting good advice.”

Retaining Pepper enables clients to work with a single firm formany business needs in multiple jurisdictions – everything frominternational arbitration to sexual harassment litigation.

This type of relationship has been built over many years withSaint-Gobain Corporation, the North American arm of one ofthe world’s leading industrial companies, which transforms rawmaterials into advanced products for use in our daily lives.

“Our relationship with Pepper predates me, and I’ve been here20 years,” said John Mesher, Saint-Gobain’s North Americangeneral counsel. “The firm is very responsive and works with uson matters including benefits, acquisitions, litigation – bothantitrust and commercial, general compliance and employee andindustrial relations.”

In 2007, a dispute regarding one of Saint-Gobain’s ceramicproducts required Pepper to crisscross the Atlantic Ocean,handling matters in the Miami headquarters of the disputingparty, at Saint-Gobain’s divisional headquarters in Niagara, andat Saint-Gobain’s manufacturing plant in Rodental, Germany.Pepper’s thorough handling of the matter led to a positiveoutcome.

Also in 2007, Pepper defeated a lawsuit by an employee termi-nated for harassment who claimed his dismissal was actually dueto age discrimination.

Following a month-long jury trial in early 2008, Pepper helped Eli Lilly and Company favorably settle litigation brought by the State of Alaska thatsought hundreds of millions of dollars. Cases such as the Alaska lawsuit are just one of multiple litigation and regulatory threats that Pepper helpspharmaceutical companies meet and defeat. Shown conferring during the trial are (from left) Pepper partners John F. Brenner, Nina M. Gussack andGeorge A. Lehner.

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Representing Pharmaceutical Companies

Throughout 2007 and into 2008, Pepper continued to representLilly in other litigation and government investigations involvingZyprexa. In 2007, for example, when an opposing party’s expertwitness and a lawyer violated a federal court order by givingconfidential Lilly documents to The New York Times – resulting in aseries of sensationalized front-page stories – Pepper obtainedinjunctive relief, including a precedent-setting order thatfortified the rights of defendants to protect their confidentialdocuments in the Internet age.

Pepper also obtained a significant victory for Lilly in April 2008when a court dismissed a securities class action case related toZyprexa. The case was dismissed on statute of limitationsgrounds.

The Lilly securities case was one of three securities litigationvictories Pepper obtained in a span of 10 days. A court dismisseda securities class action against GlaxoSmithKline when it deter-mined that statements plaintiffs claimed were false andmisleading were “forward-looking statements,” and notactionable. In a ruling that may afford development-stage lifesciences companies future protections, Discovery Laboratorieswon an appeal against plaintiffs’ allegations that the companymisled investors about the prospects for regulatory approval ofits lead product for the prevention of Respiratory DistressSyndrome in premature infants.

In today’s complex regulatory and business environment,pharmaceutical companies face a host of litigation threats –product liability cases, third-party payor claims, shareholderlitigation, consumer protection litigation and more – oftenpreceded or accompanied by federal and state government inves-tigations and enforcement activities. Pepper combines more than50 years of pharmaceutical litigation experience with its skill ingovernment regulation and enforcement in the pharmaceuticaland medical device industry to offer robust litigation andregulatory compliance services to clients.

One example of this work is the firm’s ongoing engagement onbehalf of Eli Lilly and Company. We defended Lilly at trialagainst allegations by the State of Alaska that the companyviolated consumer protection laws. Previously used to attacksuch practices as deceptive advertising and odometer tampering, state attorneys general in recent years have used these laws tochallenge the marketing of prescription drugs. The Alaska casewas one of the first such cases to be tried.

The state sought hundreds of millions of dollars, claiming that Lillymisled the state’s Medicaid program and physicians about sideeffects of Zyprexa®, Lilly’s life-saving medication used to treatmillions of people worldwide for schizophrenia and bipolar disorder.

Before trial, Pepper persuaded the state to abandon much of itscase, and convinced the court to limit the remaining claims.After a month-long jury trial in March 2008, the parties settledthe case on terms favorable to Lilly.

Pepper’s relationship with SKF USA Inc. – the U.S. arm of the world’s premier manufacturer of ball bearings used in everything from trains to windturbines – dates to 1980. Over the ensuing 28 years, Pepper’s team, led by partner Stephen J. Sundheim (right) has worked on a variety of legal matters,ranging from labor matters to a $1 billion outsourcing transaction. SKF General Counsel Timothy D. Gifford (left) attributes the long-lastingrelationship to Pepper’s dedication and depth of services.

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SKF and Pepper – Growing Together

strength. Pepper’s breadth, depth and reach provide SKF withsignificant legal capability.

“From that first meeting between Steve and me, we began toforge a remarkable business relationship. Pepper attorneys havecontinued to build upon that trust. We are very happy with allthe men and women we work with at Pepper. They continuallyprovide great service among myriad specialties,” said Gifford.

Recently, Pepper advised SKF on its acquisition of QPMAerospace’s metallic rods business, which primarily serves theaerospace industry. Pepper also advised SKF on forming a jointventure with General Electric to make ball bearings for GE jetengines. Over the years, Pepper has advised SKF on many acqui-sitions and other transactions, large and small.

The typical Pepper team on an SKF acquisition or divestituretransaction may include attorneys from the corporate and intellectual property groups in Philadelphia and Pittsburgh, realestate and employee benefits advisers in Philadelphia, and theenvironmental team in Detroit and Harrisburg.

“In many ways it’s the best client relationship that an attorneycan ask for. We get to work with a client that comes to us withmany interesting and varied legal issues and who is comfortableworking with Pepper attorneys in different specialty areas,” saidSundheim.

For 28 years, Pepper has been the “go to” outside law firm forSKF USA Inc. It started as a simple relationship between ayoung Pepper attorney, Stephen J. Sundheim, and his SKF in-house counterpart, Timothy D. Gifford. Now a partner andgeneral counsel, respectively, both appreciate the strong alliancethat has formed from that relationship.

No landmark decisions or grandiose trials spotlight the nearlythree-decade history between firm and corporation. Instead, it isa foundation built on trust, hard work and mutual respect.

“Creating this kind of longevity has a simple formula. Weprovide great service by being responsive to the company’s legaland business issues. SKF benefits from our practical advice,” saidSundheim.

The 120-year-old SKF Group is a leading global supplier ofproducts, solutions and services in the area comprising rollingbearings, seals, mechatronics, services and lubrication systems.

Over the years, SKF USA and its Swedish parent company, SKFAB, have used the full spectrum of Pepper talents, fromcorporate and securities to litigation. “Irrespective of location,we provide SKF with thorough counsel, whether it is a particularcourt strategy or defining a game plan for working withgovernment regulators,” said Sundheim.

Though a large corporation, SKF has a small in-house legaldepartment that relies on Pepper to add power and bench

Pepper scored an assist when partner Chuck Greenberg led a group that helped the Pittsburgh Penguins put together an arena deal that keeps the team inthe city and gives it the financial wherewithal to compete with the big-market teams. The deal team included Pepper partners (from left) Lisa R. Jacobs,Charles M. Greenberg, and Kristin I. Wells; Pittsburgh Penguins CEO Ken Sawyer (seated); Pepper partner David J. Lowe; Penguins President DavidMorehouse and Pepper partner Dusty Elias Kirk.

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Keeping the Pittsburgh Penguins on Home Ice

Arduous negotiations culminated in the 2007 unveiling of a newentertainment venue and the issuance of a $325 million bond,which included provisions binding the Penguins to the city ofPittsburgh for the next 30 years.

“With the new arena deal came a completely new set of opportu-nities for the Lemieux Group and the Penguins franchise. Formost of its history, the Penguins had primarily been a single-purpose organization centered on hockey. But with theresolution of the arena deal, the enterprise takes on a multi-faceted look,” said Greenberg.

To make full use of the arena opportunities, Pepper continued towork with team management to help restructure the franchise.Greenberg captained a phalanx of attorneys in three deal teamsrelated to the new arena: organization restructuring, devel-opment rights for the land and arena, and a refinancing thatwould allow the partners of the Lemieux Group to finally see areturn on the initial 1999 investments.

“Pepper was invaluable in every aspect of the deals that kept thePenguins on Pittsburgh ice. They were available 24 hours a day,seven days a week,” said David Morehouse, president of thePittsburgh Penguins. “Chuck’s experience in sports and hisnegotiating skills were integral to the decisions to keep the teamunder current management and finalizing favorable deals for thenew arena. We made a great team.”

The picture of a penguin skating in front of a triangular field ofgold is an iconic team logo in the National Hockey League. Butwould it look right in Las Vegas or Kansas City? Thanks to thelong relationship between Pepper’s Chuck Greenberg and MarioLemieux, principal owner of the Penguins, the fans and residentsof Pittsburgh did not have to find out.

Lemieux is no stranger to the savior role in Pittsburgh. As aplayer, he revived the organization in the mid-1980s, leading toa pair of Stanley Cup championships in 1991 and 1992. In 1999,with an assist from Pepper Hamilton, he led a group thatpurchased the team out of bankruptcy before it was forced tofold or move. In 2007, the team’s ownership group – led byLemieux and Ron Burkle – its management team and Pepperagain rescued the franchise.

When the Lemieux Group purchased the team in 1999, one ofits first goals was to solidify the financial foundation of the team.Several factors hindered efforts to fortify the franchise, includingthe attacks of September 11, 2001 and stalled plans for slotsgaming in Pennsylvania. Gaming legislation was integral tofinancing a badly needed new arena without relying on publicfunding.

After an effort to sell the franchise encountered complications inlate 2006, ownership and management resolved to focus exclu-sively on the task of financing a new arena, which wouldstabilize the financial future of the franchise for the long hauland assure its presence in Pittsburgh for generations.

Pepper partners Erik N. Videlock (left) and M. Kelly Tillery (right) helped a jury understand the complex nature of patent infringement claims involvingretail theft prevention technology, leading to a trial victory for Sensormatic Electronics Corporation. At center is Dennis Lynch, vice president and chieflitigation counsel for Tyco International, Inc., Sensormatic’s parent company.

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Making Sense of Complex Issues Leads to Patent Litigation Win

Tillery observed, “Our team approach enabled Pepper to bringgreat value to a client in this patent case. Together, Erik and Iwere able to make the arcane aspects of patent law and theimpenetrable mass of technological information in this caseunderstandable to judge and jury. Days of mind-numbing,incomprehensible technical testimony and charts do not winpatent cases before juries. Rather, it is the ability to presentscience to a jury like Mr. Wizard did on Saturday morning TV.”

In February 2007, the jury returned a verdict in favor of alldefendants on all issues. The jury found that no productmanufactured or sold by any defendant infringed theCheckpoint patent, that the patent was invalid due to incorrectinventorship, obviousness, lack of enablement and lack of opera-tiveness, and that the Checkpoint patent was unenforceable.

“Kelly put together a very strong and understandable trial. Hecreated themes that were much more easily grasped than intypical patent cases, which often become mired in highlytechnical jargon,” said Dennis Lynch, vice president and chieflitigation counsel for Tyco International, Inc. “I credit the Pepperteam’s diligent work with our in-house patent lawyers and theircreative trial sense for securing such a positive outcome.”

Chances are a sales person has at one time or another neglectedto remove or deactivate the security tag on an item you’vepurchased, and you’ve been “buzzed” on your way out of thestore. While you may not have given much thought to thesensor that sets off the alarm, Pepper client SensormaticElectronics Corporation certainly has. It is a major distributor ofthe radio frequency resonant labels that set off the door alarms.

Faced with a patent infringement suit that claimed damages inexcess of $30 million, Sensormatic wanted strong trial counseland called upon Pepper’s M. Kelly Tillery and Erik N. Videlockto develop a defense and trial strategy. Few patent infringementcases are tried to jury verdict each year. The lawyers who trythem are rare, and the lawyers who win them are rarer still.

The case began in 2001, when Checkpoint Systems, Inc. filed apatent infringement case in the U.S. District Court for theEastern District of Pennsylvania against Sensormatic. TycoInternational’s Fire & Security business segment acquiredSensormatic that same year.

The suit claimed that companies that produced and distributedthe radio frequency resonant labels infringed U.S. Patent No.4,876,555, owned by Checkpoint. The patent is for a resonantlabel and its method of fabrication. Checkpoint and Sensormaticare intense competitors in the retail anti-theft technologybusiness.

Longevity and deep understanding are among the keys to working with an in-house legal department. For AmerisourceBergen Corporation, a majordistributor of pharmaceutical products, Pepper provides a variety of counsel spanning tax, benefits, antitrust and contracts advice. Pepper partners (from left) Sharon R. Klein, Jonathan A. Clark and Annette M. Ahlers are among the team who work with AmerisourceBergen Senior Vice President and General Counsel John G. Chou, Group and Associate General Counsel Sheila Hawes, Counsel Kimberly Radnor Sirni and VP of Tax Daniel Hirst.

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Complementing the In-House Legal Team at AmerisourceBergen

In 2007, Pepper counseled the company on several aspects ofthe divestiture of its institutional pharmacy services business, andthe subsequent merger of that business with the institutionalpharmacy subsidiary of Kindred Healthcare, Inc., to form a newpublic company, PharMerica Corporation.

“The Pepper team worked with the human resource team todetermine how the employee benefit plans and executivecompensation matters were to be handled. Sharon Kleinprovided advice and support about restructuring Amerisource-Bergen’s technology licenses to allow for the transfer of licensesto the new PharMerica and the complex outsourcing aspects ofthe transaction. Annette Ahlers and her team worked with thetax director throughout the structuring and implementationphases of the transaction and represented AmerisourceBergenbefore the IRS in obtaining a private letter ruling, as well aswriting the tax opinion on the spin-off of PharMerica,” said Clark.

“The tax issue related to the PharMerica divestiture led to severalgroundbreaking tax rulings by the IRS,” said Chou. “Pepper’swork on the divestiture is a good example of how Pepper hasbeen able to assist our internal legal department with its ownspecial expertise. Because of our long relationship with Pepperand its ability to stay familiar with our people and the corporateculture here, we feel very comfortable letting Pepper dealdirectly with company employees, without any intervention bymembers of our legal department – which we don’t allow formost of our other law firms.”

“In case of emergency” and “bringing in the big guns” are termsoften associated with outside counsel, but that stereotype doesn’tfit all the services a good law firm can provide.

For AmerisourceBergen Corporation, Pepper Hamilton has notdirectly handled large litigation or transaction matters. Instead,the firm interacts closely with in-house counsel to bring specialknowledge or skills to solve particularly complex issues.

AmerisourceBergen distributes about 23 percent of all pharma-ceuticals sold in the United States. The corporation alsoprovides a variety of related products and services includingpharmacy automation, pharmaceutical packaging and pharma-ceutical consulting services.

“When working with AmerisourceBergen, we’re an extension ofits internal team,” said Pepper partner Jonathan A. Clark, whoalong with Andrew J. Rudolph, counsels on benefit andexecutive compensation issues for AmerisourceBergen.

AmerisourceBergen relies on a variety of Pepper’s talent tosupport the company’s goals. Annette M. Ahlers has advised ontax issues. Sharon R. Klein handled a major IT outsourcingagreement and advises the company on a variety of technologymatters and agreements. Barbara T. Sicalides oversaw the firm’swork related to an antitrust matter. Michael A. Hordell hasfocused on government contracts. “Michael makes the arcanecomprehensible,” said John G. Chou, senior vice president,general counsel and secretary for AmerisourceBergen.

The long relationship between Conair Corporation founder Leandro P. Rizzuto and Pepper partner Joseph V. Del Raso (left) led Conair to rely on Pepperto help smooth the company’s expansion in the Middle East. Pictured with Del Raso are (from left) Mike Lomenzo, Director – Treasury Operations forConair; Talal C. Salaam, a Middle East consultant in Pepper’s New York office; and William J. Esposito, CEO of The Freeh Group International.Pepper has a long-standing relationship with former FBI director Louis Freeh, and brought The Freeh Group on board to advise Conair on security matters.

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Relationships Help Conair Grow in the Middle East

new distribution center will triple sales in the Middle East,” saidMike Lomenzo, Director – Treasury Operations for Conair.

To augment Pepper’s work with Conair in the Middle East, DelRaso enlisted the aid of the Freeh Group International, led byLouis Freeh, the former director of the FBI. The Freeh Groupadvises Conair on international security matters.

“What differentiates Pepper in Middle East matters is longtimepersonal relationships with powerful members of society andgovernment on both sides of the ocean,” said Del Raso. He alsocredits the resourcefulness of Talal Salaam, in Pepper’s New Yorkoffice, with helping to connect Conair to resources in theMiddle East. Salaam is from Dubai.

In addition to helping establish relationships and forge partner-ships, Pepper attorneys also are advising on tax and corporatematters, and working with local counsel and governmentofficials for licensing and other approvals for Conair operations.

“Our work with Conair exemplifies the importance of relation-ships in getting the job done. This project was initiated by arelationship, augmented by a relationship, and it’s our relation-ships with government and business leaders that have openedthe door for Conair to achieve success on this project,” said DelRaso.

While attending a National Italian American Foundationmeeting in Washington, D.C., the founder of Conair, Leandro P.Rizzuto, ran into his longtime friend, Pepper partner Joseph V.Del Raso. As the two friends caught up, Rizzuto mentioned thatConair was looking to expand the company’s footprint in theMiddle East.

Conair, founded in Brooklyn in 1959 to make and sell haircurlers, is now one of the world’s largest producers ofhealth and beauty products and kitchen and electronic appli-ances. The company’s global brands include Conair, Scünci, JheriRedding, BaByliss, RUSK, Cuisinart, Waring and more. Conairhas global sales in excess of $2 billion. Increasingly, internationaloperations and sales are important to the company's success.

From that simple discussion, Del Raso began putting piecestogether to smooth the company’s expansion of its operations inthe Persian Gulf region in 2007 and beyond. The new venturewill improve the company’s distribution and logistics in theMiddle East and North Africa, and supplement Conair’s currentsales and marketing efforts.

“There is tremendous potential in the Middle East. In the regionaround Dubai, the level of local disposable income and tourismcreates great opportunity for high-end product sales. Conair’sCuisinart and Waring brands show tremendous potential in bothresidences and hotels. Moreover, there is a strong market forConair’s personal care and grooming products. We expect our

Advent International has enjoyed remarkable success as a leading global private equity fund. For more than 15 years, Pepper has assisted Adventwith a wide variety of corporate transactions and related advice. More than 40 Pepper lawyers have worked on Advent matters. Pictured with Adventmanaging director Steven J. Collins (second from right) are (from left) partners Cary S. Levinson and James D. Epstein, associate P. Thao Le andpartners Julia D. Corelli and Joan C. Arnold.

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Helping Investments Pay Off for Advent International

In addition to counseling on structuring investments and othertransactions, Pepper has advised Advent as it exits its invest-ments. For example, Pepper advised Advent on the $1.6 billionsale to Macquarie Bank of its majority stake in Boart Longyear,the world’s largest provider of drilling products and services tothe mining industry. Advent acquired Boart in 2005 and, in 14months, transformed it from a loose collection of regionalbusinesses into an integrated company – a feat that earnedAdvent “2007 Exit of the Year” honors from Buyouts magazine.

In another quickly completed transaction, Pepper, in concertwith financial advisor UBS, assisted Advent’s auction sale ofAmerican Radiology Services, Inc. (ARS). The Baltimore-baseddiagnostic medical imaging services provider was sold to CMLHealthCare Income Fund for approximately $150.4 million. Thetransaction was signed before year end, just 90 days after thestart of the process. ARS is a provider of fully integrateddiagnostic medical imaging services and performs approximately2.2 million medical imaging interpretations per year inconjunction with The Johns Hopkins University and The JohnsHopkins Health System Corporation.

“One of the advantages of a long-term relationship like the onewe have with Advent is that we can get up to speed very quicklyon any matter,” Levinson said. “We anticipate the critical issuesand move very quickly to get the job done.”

In 2007, Pepper marked more than 15 years of advising AdventInternational Corporation, a leading global private equity firmwith 15 offices worldwide. Over the years, Pepper has provideda broad range of advice to Advent on mergers and acquisitions,joint ventures, securities offerings, financing transactions, taxmatters, portfolio company advice and a host of other matters.Advent has grown significantly since the relationship began. Inits 24-year history, Advent has raised $12 billion in privateequity capital and completed more than 200 buyout and privateequity transactions valued at over $35 billion in 35 countries. In the past three years alone, Advent earned nine awards for itsleadership in global transactions.

“It’s been an exciting and rewarding relationship,” said Pepperpartner Cary S. Levinson. “Advent stresses adding value in eachof its investment transactions. We try to do that as well, andwe’ve enjoyed being challenged to help Advent find the bestways to achieve its business objectives.”

“The difference a team like Pepper can make cannot be empha-sized enough,” said David Mussafer, a managing director ofAdvent International. “The success of many of our transactionscan be attributed to the great creativity that Pepper has shownin working on very complex matters.”

With more than 500 lawyers in 11 offices, Pepper has the breadth and depth to assist clients with complex matters any time and anywhere.

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Other Notable Matters

• successfully defended a group of fire safety nonprofit organi-zations that were the subject of a complaint from thePennsylvania Department of State alleging violations ofcharitable solicitation laws

• successfully navigated a general contractor through a credit-crunch-fueled building debacle brought on by thebankruptcy filing of its mortgage lender customer. Thegeneral contractor avoided its own bankruptcy filing andpreserved its business relationships with its subcontractorsand a building owner for future construction projects.

• after 27 days of arbitration hearings, 24 witnesses and almost10,000 pages of testimony, secured an interim arbitrationaward of $11.5 million for a joint venture includingFischbach & Moore Electric, Inc. and a minority partner,arising out of an electrical construction contract at LincolnFinancial Field, the stadium for the Philadelphia Eagles

Pepper handles thousands of client matters each year. The following are a few examples in 2007 and early 2008.Pepper lawyers:

• assisted Conestoga Wood Specialties, the cabinet industry’sleading supplier of wood doors and components, withfinancing the construction of a new plant in Tooele, Utah,and the restructuring of its debt from a secured, mortgage-based facility to an unsecured facility

• counseled HAAS TCM, with the assistance of representa-tives from Valente & Associates, to secure the award of afive-year base contract (with an additional five-year option)for the privatization of compressed gases and cylinder supplyand maintenance logistics from the Defense LogisticsAgency’s Defense Supply Center Richmond

• successfully held off a proxy contest by a rogue shareholderwhile representing Yardville National Bancorp in its acqui-sition by The PNC Financial Services Group, Inc.

Pepper added 105 lawyers in 2007, increasing the firm’s capabilities in corporate and securities law, intellectual property, commercial litigation, media andcommunications, financial services, pharmaceutical and medical device litigation and tax.

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Other Notable Matters

• closed new structured finance special-purpose vehiclestotaling almost $1.55 billion for Princeton Advisory Group,Inc. – Silver Elms CDO II Ltd. for $1.24 billion and RosedaleCLO I, Ltd. for $309.3 million

• settled on behalf of PKF-Mark III, Inc. a breach of contractand wrongful termination claim that resulted in a substantialaward to the company while defeating a $70 million counter-claim

• represented an affiliate of private equity firm Versa CapitalManagement, Inc. in its acquisition of substantially all of theassets of The Holliston Mills, Inc., a manufacturer of coatedcloth material products. Holliston Mills sought bankruptcyprotection in late May 2007 in the U.S. Bankruptcy Courtfor the District of Delaware. Versa’s affiliate was a securedlender to Holliston Mills and, with Pepper’s assistance,completed the distressed acquisition within three months ofthe bankruptcy filing.

• obtained summary judgment and dismissal of an ERISA classaction against Pepco Holdings, Inc. (PHI), challenging theadoption and design of a cash balance plan by Conectiv, aPHI company

• represented Bear, Sterns & Co, Inc. in the sale by RAITFinancial Trust of $425 million of 6.875 percent ConvertibleSenior Notes

• represented Brandywine Operating Partnership, L.P. in thepublic sale of $300 million of 5.7 percent Guaranteed Notesthrough an underwriting group led by JP Morgan, Banc ofAmerica and Wachovia

Pepper’s pro bono program is devoted to representing people who cannot afford or who are denied access to the justice system. The firm’s pro bono clientsincluded profoundly disabled children and their families, immigrants who are victims of domestic abuse, injured and ill veterans, and prisoners. The firmhas received numerous awards and other recognition for its pro bono program.

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Pro Bono: Making a Difference

Against Women Act (VAWA) provides an avenue toindependent legal status in the United States, lifting thethreat of deportation faced by many, but language andeducation barriers and lack of familiarity with the U.S. legalsystem prevent many women from filing petitions. Workingwith the Nationalities Service Center, a multi-service centerfor immigrants in Philadelphia, Pepper is helping to meet theneeds of hundreds of victims seeking VAWA status.

• The Children’s SSI Practice Group helps extremely disabledchildren and their parents obtain Supplemental SecurityIncome (SSI) benefits. For these children and their families,the usual health care coverage is not enough to cover theirextraordinary health care and living expenses. In 2007, a newPepper group in the Princeton office formed a partnershipwith South Jersey Legal Services (SJLS), a public interest lawcenter, to help these families obtain these much-neededbenefits.

• The Homeownership/Tangled Title Practice Group hashelped more than 40 low-income homeowners obtain cleartitle to their homes, which enables them to obtain grants andloans to repair their homes and stay in their neighborhoods,and in some case to avoid homelessness. In 2007, Pepperexpanded its partnership with client Exelon Corporation inrepresenting low-income homeowners in tangled title cases.

Each year, Pepper devotes thousands of hours to pro bono matters.Overall, the firm’s commitment to pro bono work increased signif-icantly in 2007, with 81 percent of all Pepper associates and 37percent of partners and counsel performing at least five hours ofpro bono work, with the majority of those performing more than20 hours of service. Our pro bono commitment continues toexpand in 2008.

Statistics, however, do not measure the difference this workmakes in the lives of the people we represent or our contributionto the law on important – and often controversial – legalprinciples. Below are a few examples of where Pepper made adifference.

Practice Groups Help the Needy and the AbusedPepper’s pro bono practice groups – groups of lawyers andparalegals dedicated to particular issues for the indigent andother pro bono clients – made important differences in manycommunities. For example:

• The new Immigrant Domestic Violence Practice Group aidsvictims of domestic abuse by their U.S. citizen or permanentresident spouses and has helped many file “self-petitions” forindependent legal status. Many victims are fearful ofreporting abuse to police because of their spouses’ threats tosend them home to their native countries. The Violence

After the Veterans Administration denied benefits to a veteran of the Iraq and Afghanistan conflicts, Pepper stepped in. A pro bono team documented theveteran’s history of symptoms and persuaded the VA to retroactively award the client 100 percent disability benefits, which have helped him maintain anindependent, stable life.

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Pro Bono: Making a Difference

A third detainee client, a Saudi national, has been released.Pepper obtained an important ruling on behalf of Yemeninational Hani Abdullah. Judge Richard W. Roberts of the U.S.Court of Appeals for the District of Columbia Circuit issued aruling declaring that CIA interrogation videotapes destroyed inlate 2005 may be relevant to Abdullah’s case. The videotapesshowed the interrogation of two Al Qaeda suspects in 2002. Atthe time the tapes were destroyed, the government was undervarious court orders, including a July 2005 order by JudgeRoberts, to retain evidence relevant to terrorism and the U.S.detention center at Guantanamo Bay. The Justice Departmentand Congress are investigating the destruction of the tapes.Judge Roberts ruled that Pepper lawyers had made a preliminaryshowing that information obtained from one of the videotapeddetainees was relevant to Abdullah's case, and ordered thegovernment to submit a written report, detailing whether itdestroyed evidence relating to the case and to Abdullah’scontinued detention.

In the case of a Palestinian detainee, Maher El Falesteny, thePepper team filed an appeal seeking production of the classifiedgovernment file of evidence against Falesteny. The governmentside-stepped the appeal by designating Falesteny for release.Falesteny still was in Guantanamo as this report was produced.Pepper is working to obtain asylum for Falesteny in a foreigncountry and to clear his name through a petition under theDetainee Treatment Act.

Army Veteran Obtains Needed BenefitsIn the spring of 2007, the Homeless Advocacy Project askedPepper to assist a 35-year-old veteran of the conflicts in Iraq andAfghanistan in appealing the denial of his claim for service-related disability benefits. While serving in the Army, the clientbegan to suffer hallucinations and other symptoms of paranoidschizophrenia. His deteriorating mental health left him homelessand jobless soon after his discharge from the military.

The Veterans Administration denied the client’s original appli-cation because it concluded that his disabling conditions werenot connected to his military service. Pepper obtained evidenceshowing that while the veteran’s condition was not diagnosedbefore his discharge, he showed clear signs of the disease whilein the service. The VA issued a decision in December 2007granting him 100 percent disability benefits, retroactively. The benefits have gone a long way helping the client to liveindependently, maintain his mental health treatment andstabilize other aspects of his life.

Key Rulings for Guantanamo Bay DetaineesSince 2004, a team of Pepper lawyers has worked to ensure thatdetainees held at the U.S. Naval Station in Guantanamo Bay,Cuba, get the access to the federal courts guaranteed by the U.S.Supreme Court’s decision in Rasul v. Bush and subsequent courtrulings. Pepper obtained important rulings in 2007 for two detainees.

Pepper’s pro bono work has earned many awards and honors, but the real reward is the difference the firm’s pro bono and community service work makes inthe lives of clients. Pepper lawyers and paralegals devote thousands of hours each year to pro bono matters, and the firm’s lawyers and staff supporthundreds of charitable and community projects and programs.

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Pro Bono: Making a Difference

• The Philadelphia Court of Common Pleas pro bono awardscommittee awarded the members of the court’s LandlordTenant Liaison Committee one of the 2007 First JudicialDistrict Pro Bono Publico Awards. Joseph A. Sullivan, Pepper’sDirector of Pro Bono Programs, is a member of thecommittee, which recommends how to amend andstreamline procedural rules governing landlord-tenanthearings and to simplify forms and instructions.

• Thomas B. Schmidt III, of counsel in the Harrisburg office,and James P. Thomas, partner in the Pittsburgh office, wereawarded Pepper’s 2007 William R. Klaus Pro Bono Award andthe 2007 William R. Klaus Community Service Award,respectively. The awards are Pepper’s signature honors fordistinguished service to the community.

Awards and RecognitionPepper and our attorneys received an array of pro bono and publicservice honors in 2007:

• The Philadelphia Volunteers for the Indigent Program (VIP)presented Pepper Hamilton with the 2007 William J.Brennan Award for distinguished pro bono service. PartnerThomas E. Zemaitis received a VIPeople’s Choice Award forhis longtime support of VIP as a board member, formerboard president, and as a pro bono volunteer.

• Pepper Hamilton, along with attorneys Christopher J. Huberand Jason Karasik, received the Clifford Scott Green Bill ofRights Award from the Federal Bar Association, Criminal LawCommittee, Philadelphia Chapter for their dedication repre-senting Guantanamo Bay detainees.

Mentoring helps Pepper’s associates in their professional growth and in realizing their career goals. A. Michael Pratt (seated), a Pepperpartner and the Chancellor of the Philadelphia Bar Association in 2008, is a longtime champion of mentoring programs. Among the associates hementors is Andrea M. de Vries (right), an associate in the Philadelphia office.

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Diversity: Expanding Opportunities

two Villanova Law School minority students: initially as first-year summer associates, and then as part-time law clerks duringtheir second or third academic years.

We sponsor Villanova’s annual Martin Luther King, Jr., lecture,featuring a well-known scholar or practitioner as the speaker.Finally, we have funded the Pepper Hamilton National SummerProgram for Minority Undergraduates, a six-week, credit-bearingsummer program at Villanova designed to introduce participantsto the possibilities of law school and legal careers, and provide afirst introduction to legal reasoning and writing.

At Drexel, Pepper is a charter sponsor of The MinorityFellowship Program. We provide a Drexel law student withfinancial assistance for living expenses and guarantee thatstudent an unpaid co-op position at the firm during the student’ssecond or third year of law school.

Pepper started the Law School Ambassador’s Program with theminority student organizations at the law schools associated withTemple University, the University of Pennsylvania, RutgersUniversity – Camden and Villanova University. Through theambassador program, Pepper attorneys reach out to these organ-izations with mentoring and networking opportunities forstudent organization members.

Pepper understands the importance of enhancing diversity in thelegal profession and is working to expand opportunities for all ofits attorneys. Our Diversity Committee recommends initiativesto recruit, support and retain attorneys from diverse backgroundsincluding race, gender, national origin, religion, socio-economicstatus and sexual orientation.

Pepper recognizes that mentoring is a key component ofassociate retention. To foster professional growth andcamaraderie, Pepper extends to all associates formal and informalmentoring programs. Each associate is offered the opportunity tochoose a partner-mentor at Pepper. This mentor relationship isdesigned to address issues related to the practice of law, workingin a firm environment and career aspirations. Pepper alsoencourages all senior attorneys to provide informal mentoring tojunior attorneys on a regular basis.

In 2007, 30 percent of the firm’s summer associates wereminorities, and 60 percent were women. Externally, Pepper hasfunded programs for minorities at the Villanova UniversitySchool of Law and Drexel University College of Law.

At Villanova, the law school awards two three-year, full-tuitionscholarships in Pepper’s name to racial or ethnic minorities,based on a combination of merit-based factors and financialneed. The firm also is committed, on an ongoing basis, to hiring

Pepper understands that a diverse workforce makes for a stronger firm, better able to relate to and represent a wide range of client interests. Pepper associatesSapna K. Anderson (left), secretary of the board of directors for the South Asian Bar Association of Philadelphia, and Kassem L. Lucas, named to theStakeholder 100 List for 2007, are examples of the strength diversity provides.

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Diversity: Expanding Opportunities

Pepper associate Kassem L. Lucas was named to the Stakeholder100 List for 2007 and participated in the two-day StakeholderAcademy. The Stakeholder 100 List recognizes the topperforming law firm associates of color in the nation.Stakeholder 100 works with industry leaders to identify top-performing associates of color and help them maximize theirvalue to their law firm, clients and the profession.

Partner Kay Kyungsun Yu became president of the AsianAmerican Bar Association of the Delaware Valley; she will leadthe association through 2008.

Associate Sapna K. Anderson holds the position of secretary onthe board of directors for the South Asian Bar Association ofPhiladelphia. Associate Nikhil A. Heble also is a board memberand has been successful bringing many of the association’s eventsto Pepper.

DaQuana L. Carter, an associate, became president-elect of theBarristers’ Association of Philadelphia, which addresses theprofessional needs and development of African-Americanlawyers in Philadelphia and the surrounding counties. She willserve as president in 2008-09. She also was named a“Pennsylvania Lawyer on the Fast Track” by American LawyerMedia.

In 2007, our Diversity Committee hosted its second “CelebrateDiversity” event at the African American Museum inPhiladelphia. Featured speakers at the event includedPhiladelphia mayoral candidate Michael A. Nutter; Nina M.Gussack, the first woman to chair the firm’s executivecommittee; and A. Michael Pratt, an African-American partner,who in 2008 became chancellor of the 13,000-memberPhiladelphia Bar Association.

Many other women and minority lawyers at Pepper holdleadership roles in the firm and in the legal community.

Women head several of the practice groups and offices atPepper, including, Dusty Elias Kirk, co-chair of the Real EstatePractice Group; Joan C. Arnold, chair of the Tax Practice Group;Deborah F. Cohen, chair of the Insurance Practice Group; AmyB. Ginensky, chair of the Commercial Litigation Practice Group;Nina M. Gussack, chair of the Health Effects Litigation PracticeGroup; Barbara W. Mather, co-chair of the Litigation andDispute Resolution Department; Sharon R. Klein, partner-in-charge of the Orange County office; and Barbara Rom, partner-in-charge of the Detroit office.

Kathleen A. Stephenson recently completed a four-year term aschairwoman of the Probate and Trust Law Section of the PhiladelphiaBar Association. Maria A. Feeley is chairwoman of the Sub-committee on the Retention and Promotion of Women, co-chairof the Women in the Profession Committee and a member ofthe Board of Governors of the Philadelphia Bar Association.

Offices

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Berwyn400 Berwyn Park899 Cassatt RoadBerwyn, PA 19312-1183610.640.7800

Boston15th Floor, Oliver Street Tower125 High StreetBoston, MA 02110-2736617.204.5100

DetroitSuite 3600100 Renaissance CenterDetroit, MI 48243-1157313.259.7110

HarrisburgSuite 200 100 Market StreetP.O. Box 1181Harrisburg, PA 17108-1181717.255.1155

New YorkThe New York Times Building37th Floor620 Eighth AvenueNew York, NY 10018-1405212.808.2700

Orange CountySuite 12004 Park PlazaIrvine, CA 92614-5955949.567.3500

Philadelphia3000 Two Logan Square Eighteenth and Arch StreetsPhiladelphia, PA 19103-2799215.981.4000

Pittsburgh50th Floor500 Grant StreetPittsburgh, PA 15219-2502412.454.5000

PrincetonSuite 400301 Carnegie CenterPrinceton, NJ 08543-5276609.452.0808

WashingtonHamilton Square600 Fourteenth Street, N.W.Washington, DC 20005-2004202.220.1200

WilmingtonHercules Plaza, Suite 51001313 Market StreetP.O. Box 1709Wilmington, DE 19899-1709302.777.6500

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Production Credits

Writing/Editing: Jim Austin, Pepper Hamilton, 215.981.4779Michael Walsh, Pepper Hamilton

Graphic Design: Jocelyn Canfield, Communication Results, 215.887.4806 Offset Printing: Linda Rice and the production team at CRW Graphics, 800.820.3000Photography: page 3 – Vince Massa

page 6 inset – Joshua Borough, The New York Times/ReduxAll other Pepper client team photos – Ken Kauffman

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