© 2004 Carter Ledyard & Milburn LLP

2 Wall Street, New York, NY 10005 1401 Eye Street, NW, Washington, DC 20005

2003 Year in ReviewNew York • Washington, DC

The past year saw the beginning of a welcome recoveryin the financial markets and an increase in the corporateactivities of our clients, as they continued to invest,seek growth and focus on core businesses.

AcquisitionsCooperSurgical, Inc., a women’s healthcare companyand subsidiary of The Cooper Companies Inc. (NYSE:COO) that manufactures and markets diagnostic products,medical devices and accessories, purchased Prism Acqui-sition Corp. for approximately $23 million. We also as-sisted CooperSurgical with its purchases, in separate trans-actions, of the CubaClinical™ Bone Sonometer businessof McCue PLC and McCue Corporation Inc., the capitalstock of Avalon Medical Corp., a distributor of productsused for female sterilization, and the assets and associatedworldwide license rights from SURx Inc. for certain prod-ucts using Radio Frequency Bladder Neck Suspensiontechnology to treat female incontinence.

Euronet Worldwide, Inc. (NASDAQ: EEFT), a lead-ing electronic payments provider, acquired U.K.-basede-pay Ltd, the largest electronic payments processor ofprepaid mobile airtime top-up services in the U.K. andAustralia, for $76.2 million.

Incisive Media PLC (London Stock Exchange: INM)closed its purchase of U.K.-based Risk Waters Group Ltdand its U.S. subsidiary for $56 million.  The purchaseprice was financed partially by the Royal Bank of Scot-land and by a secondary offering of Incisive Media in theU.K. Risk Waters’ U.S. subsidiary publishes magazinesand organizes conferences for investment bankers.

Ness Technologies, Inc., a leading Israeli information tech-nology company, purchased Apar Infotech, a Pennsylvaniainformation services company with R&D headquarters inIndia, in a tax free stock swap valued at $78 million. 

CL&M assisted Perimeter Products, Inc., a U.S. subsidiaryof Israeli-based Magal Security Systems Ltd., in the purchaseof assets of Dominion Wireless, Inc., a manufacturer of wire-less communications products. We helped Gilat SatelliteNetworks Ltd. (Nasdaq: GILTF), an Israeli-based companywhich develops and sells products and services that allowhigh-speed Internet connections by satellite, to exchange someof its outstanding debt for new ordinary shares, enabling Gilatto improve its balance sheet dramatically.

SalesBowater Incorporated (NYSE:BOW), a leading paperand newsprint company, sold its ownership interests inapproximately 82,000 acres of timberland in the State ofGeorgia for approximately $122 million. 

www.clm.com

To Our Clients and Other Friends:

The U.S. and world economies showed signs of revivalin 2003, making the year one of opportunity for ourclients. We welcomed the chance to help them grow.

Many of our corporate clients were active in the emerg-ing recovery, investing, for example, in the privateequity markets, acquiring new ventures, and reorganiz-ing and restructuring existing businesses and invest-ments. Carter Ledyard continued to provide theground-breaking estate planning and family businessadvice for which we have long been known. Our pub-lic real estate clients participated in the rebuilding oflower Manhattan in wake of the September 11 attacks.Our litigation practice continued to protect our clients’interests, trying cases and conducting arbitration pro-ceedings. Our corporate investigations practice wasinvolved in almost every high-profile regulatory in-quiry of the year.

This Review describes some of our clients’ many suc-cesses during the past 12 months. We are honored tohave played a part in their accomplishments.

Our firm has now reached 150 years of age. We live inthe present, of course, but are enormously proud tohave reached a milestone that few law firms attain. Thespecial 150th Anniversary section of this Year in Reviewhighlights some of the firm’s achievements in its first150 years.

— Carter Ledyard & Milburn LLP

ContentsBankruptcy and Structured Finance 7

Broker Dealer 7

Corporate Investigations and Defense 5

Corporate Transactions 6

Employee Benefits 2

Employment Law 2

Environment 2

In Court 4

Intellectual Property 3

Maritime 5

Media & Technology 4

Private Equity 1

Real Estate 7

Tax 8

Tax-Exempt Organizations 8

Trusts and Estates 8

Washington Office Developments 3

Corporate TransactionsIn 2003 Pall Corporation (NYSE: PLL), a leader in thegrowing fields of filtration, separations and purification,which provides leading-edge products to customers in thebiotechnology, pharmaceuticals, transfusion medicine,semiconductors, municipal drinking water, aerospace andbroad industrial markets, agreed to sell its investment inOiltools International Limited to Scomi Group Berhad(Kuala Lumpur: SCOI.KL) for about $22 million.  

We represented West End Capital Management, the BermudaFund managed by the prominent arbitrage advisor Mark Byrne,in the proposed sale of Rathgar Capital Management (Bermuda)Limited to WestLB AG, the large German financial servicesgroup. Rathgar is the advisor to the Structured InvestmentVehicle Rathgar Capital Corporation. WestLB AG will acquirea full license to the West End Capital Model, the leading-edgesoftware that underlies the rating for the SIV.

Offerings and RestructuringsSea Containers Ltd. (NYSE: SCR.A) entered into an agree-ment pursuant to which Citigroup Global Markets Inc. sold 2million class A common shares of Sea Containers in a so-called“shelf” offering. As part of its debt-restructuring plan, SeaContainers closed on its offer to exchange certain of its seniornotes for other notes or debentures.  Sea Containers also put inplace a $158 million bridge loan with a syndicate of banks torepay at maturity the notes that were not tendered for exchange.

CL&M assisted Orient-Express Hotels Ltd. with clos-ing the underwritten public offering of 3 million of itsclass A common shares.

We assisted Numatics, Incorporated with a proposed$53 million “Dutch auction” cash tender offer for certainof its outstanding notes and the related financing through aproposed private placement of Numatics’ Series A Pre-ferred Stock and Warrants.

Canadian PracticeOur clients in the Canadian business and financial communi-ties continued to be active during 2003. Last year, we assistedin the formation and initial public offering (by way of a spin-off and rights offering) of Paramount Energy Trust (TSX:PMT.UN), a natural gas royalty trust which had a marketcapitalization immediately following the offering of CDN$600 million. It had a follow-on public offering in Canadawith a portion of the trust units sold in the United States inRule 144A transactions. We provided advice with respect tothe U.S. legal and tax aspects of a successful CDN $144 mil-lion public offering by Pengrowth Energy Trust (NYSE:PGH), one of the largest conventional royalty trusts in NorthAmerica, and assisted numerous other Canadian issuers andinvestment banks with the U.S. aspects of a variety of M&Aand financing transactions.

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The firm’s Environmental Practice Group had anotherexciting year assisting our private and public clients. Anoteworthy development was the addition of partnerMichael Davis in the firm’s Washington office.

Rebuilding Ground ZeroCL&M serves as environmental and land use counsel to theLower Manhattan Development Corporation (LMDC)for LMDC’s World Trade Center Memorial and Redevel-opment Plan, including assistance in preparing LMDC’scomprehensive federal Environmental Impact Statement forthat critically important effort to help New York and thenation recover from the September 11, 2001 terrorist at-tacks. CL&M has also assisted LMDC in its environmentalreviews of other downtown projects, including pedestrianbridges near the WTC Site, security and streetscape im-provements around the New York Stock Exchange andimprovements to Columbus Park in Chinatown.

Toxic CleanupsCL&M represents Pollution Risk Services, LLC (PRS)in assuming financial and management responsibility forthe cleanup of Superfund sites, implementing requiredresponse actions and prosecuting cost-recovery and contri-bution actions against those responsible for the contamina-tion. The firm is assisting PRS in connection with theSheboygan Falls (Wisconsin) Superfund Site, a 14-milestretch of river contaminated with PCBs and other sub-stances. CL&M also continues to represent the City ofNewburgh in its efforts to compel state environmental andhealth regulators to require a complete cleanup of coal tarcontamination left behind from previous manufactured gasoperations that threaten the continued revitalization of theNewburgh waterfront and the health of the Hudson River.

Environmentally Responsible Land UseCL&M is working with the Metropolitan Transporta-tion Authority on a Generic Environmental ImpactStatement under New York law for one of the mostsignificant subway expansions in nearly a century —extension of the No. 7 line to the Hudson Yards area ofmidtown Manhattan. The extension would support Cityrezoning permitting 40 million square feet of new com-

mercial and residential development, a new multi-pur-pose sports and entertainment facility (and possible fu-ture home for the New York Jets), expansion of theJacob Javits Convention Center, major new parks andother public facilities.

CL&M has also assisted the Town of Tuxedo in its envi-ronmental review of a residential project that is expectedto double the Town’s population over the next 12 yearswhile preserving 70 percent of the project site as openspace and creating a revolving loan fund to help revitalizethe Town’s hamlet center.

CL&M continued to assist Ferry Point Partners in con-verting an old landfill into a Jack Nicklaus signature pub-lic golf course at Ferry Point Park in the Bronx. We alsocontinued our work for Roosevelt Island OperatingCorporation in its development plans for both the SouthTown and the Octagon areas of Roosevelt Island.

Clean Energy/Clean WaterCL&M continues to assist the Long Island PowerAuthority (LIPA) and New York Power Authority(NYPA) to meet the growing energy needs of LongIsland and New York City. We assisted LIPA in per-forming environmental reviews, obtaining air qualitypermits and securing agency approvals for two state-of-the-art generating facilities for the summer of 2003, andsuccessfully defended litigation challenging the ap-proval of two generating facilities. CL&M also repre-sents LIPA in additional projects to meet projectedsummer 2004 energy demands, including the upgradeof a transmission line serving the North Fork of LongIsland. We continue to work with NYPA in obtainingoperating permits under Title V of the Clean Air Actfor its New York City natural gas turbines, which anindependent study recently found to be the cleanestsmall power plants in the country.

We continued our work for United Water New Rochelleto bring higher quality drinking water to some 130,000Westchester residents, and in December won two majorvictories in New York’s appellate courts to permit con-struction of UWNR’s new water distribution facility.

Environment

Real EstateOur clients continued to take advantage of conditions inthe real estate market by making new investments,obtaining mortgage financing and repositioning hold-ings to meet operational needs.

Real Estate FinancingCollegiate Church Corporation diversified its endow-ment into real estate financial instruments, making mez-zanine loans to the owners of a Sara Lee warehouse inCalifornia and a corporate office center in Troy, Michi-gan. Collegiate took a security interest in the ownershipentity in each case, giving it the right to step in and takecontrol of the properties in the event of loan defaults, andreceived yields in excess of yields on conventional mort-gage loans. In addition to preparing and negotiating loandocuments and performing due diligence, we workedwith Collegiate in negotiating intercreditor agreementswith senior lenders, structuring the borrowers as bank-ruptcy-remote special purpose entities and obtainingrelated non-consolidation opinions, addressing cashdominion issues, and procuring cost-effective title insur-ance with respect to the interests pledged to the Church.

We represented Beth Abraham Health Services in a tax-exempt bond financing with the New York City IndustrialDevelopment Agency that will permit Beth Abraham toupgrade its main nursing home facilities in the Bronx and todevelop an adult day health care facility in Far Rockaway,Queens. We assisted Comprehensive Care ManagementCorporation in a loan and grant from Primary Care Devel-opment Corporation for leasehold improvements to an adultday health care facility in Coney Island, Brooklyn, and a tax-exempt bond financing with the New York City IndustrialDevelopment Agency for capital improvements to five otherhealth care facilities in Manhattan, Queens and Brooklyn.

We represented National Audubon Society, Inc. insubstituting a nearly $23 million letter of credit to securetax-exempt civic facility revenue bonds issued by theNew York City Industrial Development Agency to de-velop the Society’s national headquarters in New YorkCity. The letter of credit is secured by a mortgage on theSociety’s real property in Manhattan.

Commercial LeasingWe represented Comprehensive Care ManagementCorporation in negotiating two long-term leases cover-ing approximately 21,000 square feet for adult day healthcare facilities in Manhattan. We also assisted CCMC inacquiring a commercial property of approximately12,500 square feet in Queens for conversion to an adultday health care facility.

Our client Sixty continued its expansion in the U.S.market. In Los Angeles, Sixty had its grand opening ofside by side Miss Sixty and Energie stores on MelroseAvenue. Sixty opened a showroom in Hollywood and astore in Miami Beach, and is set to open inGeorgetown, on Third Street Promenade in SantaMonica, and in the prestigious Aventura Mall inFlorida. We assisted Sixty in negotiating leases andconstruction contracts for its stores, and provided ongo-

ing advice on construction matters, lease amendmentsand non-disturbance agreements.

We also represented Trinity Church in negotiating alease renewal and expansion with @radical.media, inc.,a transaction that was announced in Crain’s New Yorkand GlobeStreet.com, and R.M. Smythe & Co. in itssublease of a floor at 2 Rector Street, a transaction thatwas also featured in Crain’s.

Conveyances and CondemnationWe represented two clients in the sales of their officebuildings in Manhattan. We also represented Danisco

USA Inc. in the sale of a 10-acre warehouse property inChester County, Pennsylvania that Danisco acquiredthrough a merger. The transaction involved establishingcompliance with building restrictions in the deed vestingtitle to Danisco’s predecessor-in-interest and obtainingconsent for the assignment of an encroachment agree-ment permitting construction of a parking lot.

Our condemnation lawyers continued to represent theEmpire State Development Corporation in its develop-ment of the new headquarters site for The New YorkTimes in Times Square and in a condemnation actionrelated to the post-9/11 redevelopment of the World TradeCenter site.

3

Washington Office Developments

Our attorneys in Washington continued their activepractices. Mike Davis joined the Washington office,adding additional depth and diversity to the firm’s envi-ronmental and litigation practices.

Media & Technology/TelecommunicationsCL&M was busy assisting domestic and internationalprogrammers with the acquisition and distribution ofprogramming services. During 2003, we representedDMX MUSIC, Fox Cable Networks Group, GameShow Network, Hallmark Channel, InternationalChannel, MBC Network, MGM Networks LatinAmerica, The Outdoor Channel, and Starz Encorepremium networks in negotiating and concluding newdistribution agreements or renewals with virtually everymajor cable operator in the United States, as well asDIRECTV and EchoStar. We also represented severalprogrammer creditors in the Adelphia Cable bankruptcyproceeding.

CL&M represented Starz Encore in civil actions inColorado and Pennsylvania against a major distributorof its premium networks, and was deeply involved inthe successful negotiations resolving that litigation.

We also represented Liberty Media Corporation in acivil action in Delaware seeking a declaratory judgmentregarding certain terms and conditions in QVC’s agree-ments. Our attorneys were integral to the final resolu-tion of that dispute. CL&M also represented LibertyMedia in its acquisition of QVC, in obtaining FederalCommunications Commission approval of the transferof control of QVC’s FCC licenses, and in its due dili-gence reviews and consideration of the potential acqui-sitions of an interest in DIRECTV and Vivendi Univer-sal.

CL&M also advised J.P. Morgan Partners in connec-tion with an investment in another programmer, andobtained FCC approval of the transfer of control ofAstrolink and multiple pro forma applications.

InsuranceWe represented Liberty Mutual Insurance Companybefore the United States Court of Appeals for theFourth Circuit in an appeal of a favorable ruling ob-tained for Liberty Mutual last year. CL&M is repre-senting Liberty Mutual in several other significant cov-erage disputes, including federal actions in the SouthernDistrict of New York and District of Columbia andmultiple actions in Maryland. We also resolved a Natu-ral Resource Damages action brought by the UnitedStates in federal court in the Western District of Vir-ginia.

EnvironmentThe Washington office plays an active role in CL&M’sEnvironmental Practice Group. Attorneys in Washing-ton are representing a firm involved in assuming finan-cial and management responsibility for others’ contami-nated sites, funding and implementing the requiredremediation, and associated monitoring, including theSheboygan Falls, Wisconsin Superfund Site, a 14-milestretch of river contaminated with PCBs and other sub-stances. In addition, we represented landowners inUnited States Department of Justice investigations ofalleged Clean Water Act violations, major manufactur-ers in the sale of contaminated facilities, and clientsseeking conservation easements to preserve and protectnatural and open space on their property.

Food, Drugs & Medical DevicesCL&M continued to advise clients before the Food &Drug Administration on a wide range of issues andapplications, including developmental drugs and bio-logic products, medical devices, dietary supplements,indirect food additives and animal drugs. We assistedclients in pursuing investigational new drug applica-tions for potentially ground-breaking treatments ofcancer and diabetes, and obtaining approvals of addi-tional pre-market application supplements for a deviceused to lower LDL-cholesterol.

Compliance, Regulatory & ImmigrationWe resolved numerous immigration issues for employ-ees of firm clients, their families, and others. CL&Mhas handled a wide variety of visa and employmentapplications and petitions, particularly in the E, H-1Band L nonimmigrant categories and in employment-related immigrant visa categories, and obtained favor-able results in all decided applications during the year.

Our Washington office also assisted clients in address-ing compliance questions, regulatory inquiries, allegedviolations and penalty issues before various other fed-eral agencies, including the Federal Trade Commission(advertising, telemarketing, privacy, Fair Credit Report-ing Act, and Gramm-Leach-Bliley), the Department ofTreasury’s Office of Foreign Assets Control, and theU.S. Customs Service.

IntellectualPropertyOur intellectual property practice continued to grow in 2003,as CL&M clients in a number of fields had notable successesin protecting their valuable assets through integrated copy-right, trademark, and patent strategies. In the entertainmentfield, we represented Marvel Enter-prises in a variety of HULK-relatedcopyright and trademark matters, alsoinitiating patent protection for toysbased on HULK and SPIDER-MANcomic book characters recently fea-tured on film, as well as providingfreedom-to-operate patent and patent-ability analysis for upcoming Marveltoy lines.

We assumed the management of the U.S. and internationalcopyright and trademark portfolios of Playtex Products, Inc.and Sun Pharmaceuticals, Inc., conducting clearance, filing,and prosecution, as well as policing various Playtex-ownedand BANANA BOAT trademarks and trade dress, and stop-ping infringement of our client’s rights on the Internet. Forexample, we stopped a manufacturer from infringing theDROP INS mark, successfully obtained the ontheboat.comdomain name from a third party, and required a previouslyinfringing web site to post a prominent apology for offering aninvalid BANANA BOAT promotion.

We assisted United Business Media (UBM) and subsidiariesMarket Measures/Cozint L.P., Roper ASW LLC, AllisonFisher International LLC (AFI), Health & Beauty AssociationLLC, and CMP Princeton, Inc. in growing and protecting theirtrademark portfolios — registering marks such as SISOURCE INTERNATIONAL and Design — as well asrepresenting AFI in stopping the unauthorized use and regis-tration of its PURCHASE FUNNEL mark, and in amicablyresolving the unauthorized use of its proprietary data, andrepresenting UBM in securing patent protection for businessmethod technologies for prescription drug marketing andoptimizing survey participant selection.

In the pharmaceuticals field, we took on the representa-tion of Teva Pharmaceutical Industries Ltd. and TevaPharmaceuticals USA Inc. in certain trademark mat-ters. In the publishing arena, we assisted The AndyWarhol Foundation in amicably resolving a publica-tion dispute, and assisted Artscroll Printing Corpora-tion and publisher Mesorah Publications, Ltd. inobtaining a trademark from a third party.

We provided patent legal opinions to a major chemicalmanufacturing company concerning the validity of chemi-cal patents held by one of its primary competitors, andundertook an industry-wide patent audit for one of theworld’s largest brokerage firms, analyzing all of the finan-cial-business-method patents held by key competitors.

We also advised the NAACP Legal Defense and Educa-tional Fund, Inc. on intellectual property matters in connec-tion with its campaign commemorating the 50th anniversary ofthe Supreme Court’s Brown v. Board of Education decision.

Michael C. Davis joined the firm

as a partner in May and is based

in our Washington office. He

has over 10 years of experience

in litigating environmental and

corporate matters. He has served

as lead counsel for a Fortune 500

company in litigation concerning

Superfund sites as well as in connection with hazardous

materials transportation incidents requiring multi-day evacua-

tions of communities. Mr. Davis has represented landowners

in litigation against former tenants engaged in industrial

activities. He has also handled general commercial litigation,

including libel and defamation, RICO, breach of contract,

conspiracy, and construction law. Mr. Davis received his

B.A. from Cornell University in 1990 and his J.D. from Uni-

versity of Chicago Law School in 1993, where he received a

Chicago Law Foundation grant.

4

In CourtCL&M’s litigators focus on obtaining successful, cost-effec-tive resolutions for our clients through negotiation, alternativedispute resolution such as arbitration or mediation, or litigat-ing in court. Our litigators obtained successful results for ourclients in a wide variety of legal areas in 2003.

Creditors’ RightsWe won a landmark victory for the Official Committee ofUnsecured Creditors of Cybergenics Corporation in theCourt of Appeals for the Third Circuit. After an extremelyrare rehearing en banc, the Court of Appeals reversed itsprior panel decision by holding that a bankruptcy court mayauthorize an unsecured creditors’ committee to prosecuteavoidance claims where the debtor in possession fails to doso. The Court’s majority reasoned that a bankruptcy courthas the inherent equitable power to authorize a creditors’committee, which plays an essential role in Chapter 11reorganizations, to prosecute avoidance claims even thoughthe Bankruptcy Code does not expressly provide such au-thorization. In a highly publicized case full of statutoryconstruction and policy considerations, CL&M persuadedthe appellate court to preserve creditors’ rights through theequitable power of the bankruptcy court.

Commercial LitigationCL&M successfully defended our client Iotron Indus-tries Canada, Inc., a Canadian company and operatorof electron beam equipment, in a dispute arising out ofthe lease of such equipment to an electron beam opera-tor. CL&M defeated the claims of tortious interferencewith contract and prospective business advantage byobtaining a summary judgment in the U.S. DistrictCourt in New Jersey.

CL&M also successfully defended an action com-menced in New York State Supreme Court against ourclient NAS-Transtech Technology Ltd., a Singaporecompany that manufactures and supplies various con-sumer electronics goods. One of NAS-Transtech’scustomers wrongfully alleged claims against it forbreach of contract, tortious interference with contract,fraud and slander. CL&M removed the case from statecourt to federal court and obtained summary judgmentdismissing all the claims against our client.

Restrictive Covenants & Employment LitigationAs described in the Employment Law section, CL&M’slitigators continued our record of success in the area ofemployment litigation. Last year, we represented aformer Chief Executive Officer of a public companythat supplies high-tech audio and visual conferencingequipment. We defeated the company’s attempt toobtain a preliminary injunction to enforce the non-competition provisions of the executive’s contract.

In another employment-related dispute, we represented theNorwegian Hull Club, one of the largest marine underwrit-ers in the world, and its American subsidiary in severalactions in the U.S. District Courts of New York and Con-necticut arising out of pension plans for the subsidiary’semployees. These cases concerned the applicability of theEmployee Retirement Income Security Act of 1974 to the

termination of the pension plans and the fiduciary obliga-tions ERISA imposes upon employees who act as trusteesand administrators of the plans. CL&M successfully medi-ated and reached favorable settlements in some of theseactions and continues to litigate the others.

ArbitrationOur alternative dispute resolution practice remainedactive this year as we successfully arbitrated and settleda number of reinsurance arbitrations for our clientGerling Global Reinsurance Corporation arising outof the settlement of large environmental and toxic tortinsurance coverage actions.

We also represented The Shaw Group, Inc., a leadingAmerican pipe manufacturer and engineering and con-struction firm, in an International Chamber of Commercearbitration arising out of the assumption of a contract bythe Shaw Group during its purchase of assets in a compli-cated bankruptcy sale in Delaware. The case, which in-volves the interrelationship between arbitration, bank-ruptcy, federal procedure and state contract law, is cur-rently before the Court of Appeals for the Second Circuit.

We had a series of successes for one of the world’slargest broker-dealers. After filing motions to dismissin a series of four arbitrations against a senior researchanalyst, we successfully obtained stipulations of discon-tinuance as to all charges.

Intellectual Property DisputesCL&M also represented a number of clients in disputesinvolving intellectual property rights and technologywhich are described in detail in the Intellectual Propertysection of this Review.

Real Estate LitigationCL&M has busy commercial real estate litigation andeminent domain practices. We continue to act as litiga-tion counsel for Trinity Church, one of the largestlandlords in Manhattan, in a variety of real estate andlandlord-tenant litigations. We also litigated severalreal estate matters for Collegiate Church Corporation.

Not-for-Profit and Pro Bono LitigationCL&M’s litigators take our pro bono responsibilities seri-ously. For example, CL&M represents Banana Kelly Com-munity Improvement Association, Inc., a not-for-profitcorporation committed to providing affordable housing forlow-income families in the South Bronx. The New YorkState Attorney General’s Office asked CL&M to representBanana Kelly in several litigations after it investigated andremoved the corporation’s former board for alleged misman-agement. Last year, CL&M negotiated several favorablesettlements for Banana Kelly in its joint effort with the Attor-ney General’s Office to ensure that it continues to provideaffordable housing to those who need it.

We also work closely with the Lawyers Committee forHuman Rights. Last year CL&M obtained political asy-lum for a Togolese refugee who suffered political persecu-tion, including physical abuse, because of his active oppo-sition to the controlling political party.

Media & TechnologyOur media and technology clients were buoyed by thepartial recovery in capital markets, the increase in corporatetechnology spending and an upsurge in merger activity.

CL&M client Medidata Solutions, Inc., a leading devel-oper of solutions for the clinical research industry, wasnamed a Rising Star on the 2003 Deloitte Technology Fast500. Advances in software and the Internet enableMedidata to provide next-generation electronic data cap-ture systems to collect and process clinical trial dataonline, speeding regulatory approval for life-saving drugs.We helped Medidata negotiate several multi-year licenseand service agreements with companies conducting DNAand other research. We also helped Medidata negotiate itsnew lease when it outgrew its office and represented thecompany in obtaining its first lending financing facility.

Firm client CorePharma, a generic drug productsmanufacturer, entered into a long-term CollaborationAgreement with a major generic pharmaceutical com-pany for the development, manufacturing and commer-cialization of generic products for medical applications.

We advised Gilat Satellite Networks Ltd. (Nasdaq:GILTF), an Israeli-based company that develops and sellsproducts and services for high-speed Internet connectionsby satellite, on the closing of its offer to exchange certainoutstanding notes for new ordinary shares.

We assisted with the formation and organization of UdefineULLC, a company focused on selling self-improvement prod-ucts and services for women, and the completion of its firstround of equity financing from investors.

Our client Content Directions, Inc. closed its Series Around of angel financing for $3.8 million. CDI marketsand sells the Digital Object Identifier, which provides aunique, permanent link for any type of digital informa-tion so the owner can better manage content online.

We represented a well-known financial institution with itsfourth-round venture capital investment in FlexPlay, Inc., aproducer of non-returnable DVDs for the video rental market.

As described in the Corporate Transactions section of thisReview, we helped many of our media and technologyclients, including Incisive Media PLC, Ness Technolo-gies, Inc., and Euronet Worldwide, Inc., grow in 2003through acquisitions.

5

Corporate Investigations and DefenseOur Corporate Investigations and White Collar Regula-tory and Defense Practice Group focuses on internalinvestigations and on representation of entities andindividuals under investigation by regulatory and crimi-nal authorities. We represented clients embroiled invirtually every significant securities-related investiga-tion of 2003, as well as in numerous non-securitiesinvestigations.

Mutual Fund and Research Analyst InvestigationsCL&M represents a number of broker-dealers, mutualfund employees, hedge funds and registered investmentadvisors in connection with the Securities and Ex-change Commission’s and New York Attorney GeneralEliot Spitzer’s investigations into alleged abuses in themutual fund industry, including allegations of late trad-ing and market timing. We have represented individu-als called before the SEC and the Attorney General, and

have conducted internal investigations at the behest ofentities concerned about potentially improper or illegalconduct.

CL&M continued to represent research analysts in con-nection with investigations by the NYSE and NASD, aswell as in a number of civil actions brought following the$1.4 billion industry-wide settlement with the SEC,NASD and New York Attorney General’s Office.

Corporate Finance and ManagementWe continued to represent a number of clients in con-nection with SEC investigations into alleged manipula-tion of financial statements. We conducted internalinvestigations on behalf of the audit committees offirms listed on the New York Stock Exchange in re-sponse to allegations of financial fraud. We also repre-sent a number of individuals who are under investiga-tion by the U.S. Attorney’s office and the SEC, includ-ing in an investigation for allegedly improperly inflat-ing revenues through “round trip” transactions designedto manipulate earnings, executives of a foreign multina-tional under investigation for accounting and incomestatement fraud, executives of high-technology firmsrelated to income statement and sales revenue fraud,and an executive of a NYSE-listed company underinvestigation for income statement fraud. The firm hasalso been involved in a number of high-profile investi-gations and prosecutions brought by the ManhattanDistrict Attorney’s office concerning allegations ofcorporate fraud.

CL&M also represents clients in connection with theU.S. Attorney’s investigation into an alleged wide-ranging kickback scheme in foreign currency markets.

We have been involved in a number of investigationsand actions arising out of the collapse of Enron. Werepresent a former investment banker who is scheduledto go to trial in 2004 on criminal charges concerning hisinvolvement in certain Enron-related transactions. Wealso are involved in civil actions arising out of Enron.

TrialsWe were scheduled to go to trial in 2003 in one insidertrading case involving allegations that a company in-sider perjured himself when he testified before thegrand jury that he did not tip a relative regarding apending merger. We prevailed on certain key pretrialevidentiary motions, and the U.S. Attorney’s Office hasnow delayed the trial while it appeals those rulings.

CL&M recently concluded the trial of a bond salesmancharged by the SEC with violations concerning hisalleged participation in “parking” and “adjusted trad-ing” involving several $100 million block bond trades.

Other Internal InvestigationsOur internal investigations have not been limited tosecurities matters. We conducted an internal investiga-tion on behalf of a multinational shipping company inconnection with alleged antitrust violations. We alsorepresented several art dealers and purchasers in con-nection with the Manhattan District Attorney’s investi-gation into allegations of tax fraud in the art world.

Finally, we represented a number of substantial localcompanies before the New York State Banking Depart-ment and New York City School Construction Author-ity.

Maritime

Donald A. Corbett was elected

partner in December. He focuses

his litigation practice on securities

and complex commercial disputes.

Don has frequently represented

broker-dealers and registered

representatives in state and federal

courts, arbitration proceedings and SEC, NASD and NYSE

regulatory and enforcement proceedings. He received his

B.A. from State University of New York at Oswego in 1985

and his J.D. from St. John’s University School of Law in

1994, where he was an editor of the Law Review.

CL&M’s maritime group was involved in a number ofsignificant transactions and litigations in 2003.

• We were special maritime counsel to a banking syn-dicate led by ABN AMRO Bank N.V. that provided a$200 million credit facility to finance the acquisitionof CSX’s domestic container lines operation by Hori-zon Line LLC, an investment vehicle formed by theCarlyle Group.

• We obtained the dismissal of a lender liability actionagainst United States Trust Company of New Yorkin connection with the collapse of Adriatic Shipping.

• Our maritime group was very active in the antitrustarena in 2003. We worked with shipping clients informulating antitrust guidelines and related corporatepolicies, represented clients in the shipping businessin federal antitrust investigations, and led an internalcorporate investigation for a major ocean carrier ofpossible collusive activity in the shipping industryand were instrumental in securing conditional immu-nity from prosecution for our client.

• CL&M client MJ Rudolph Corporation and its affiliatedcompanies sold the assets of their East Coast stevedoringoperations to a wholly owned subsidiary of Kinder MorganEnergy Partners L.P., a NYSE-listed Master Limited Part-nership, for $32 million. 

• We represented SeaStreak America Inc., the U.S.ferry subsidiary of Sea Containers Ltd., in the con-tinued expansion of its ferry operations in the NewYork/New Jersey region through the lease financingof two additional fast ferries.

• We represented Polish Steamship Company, one ofthe largest companies in the Great Lakes shippingindustry, in its acquisition from its former partner ofcontrol of two Netherlands Antilles partnerships. Polish Steamship Company also indirectly acquiredownership of several vessels to be managed by thecompany. 

• We advised ship owners about various regulatoryarrangements for registration of vessels in non-U.S.ship registries.

• We negotiated a reduced penalty on behalf of a clientwith the Office of Foreign Asset Control in Washing-ton, D.C. for violations of the Libyan sanctions regu-lations.

• We assisted an owner of a floating crane in negotiat-ing settlement of claims arising out of the groundingof the vessel in the Hudson River.

6

Financial Services & Investment Management2003 was a busy year for the investment management industryand its regulators, with operational changes resulting from theSarbanes-Oxley law and regulations as well as an unprec-edented series of regulatory proceedings involving mutualfund sales practices, late trading and market timing. Ourexperienced fund lawyers have been busy with our advisory,ETF and independent fund director clients, and also assistedour “white collar” defense team in connection with a numberof regulatory investigations.

Our leading-edge practice with exchange-traded funds keepsus busy. We initiated several exemptive applications forclients to enable registered investment companies to purchaseinterests in ETFs beyond statutory limitations. We also as-sisted the American Stock Exchange and State Street Glo-bal Advisors in listing the DIAMONDS on Euronext inAmsterdam, and enabling the sale of the SPDRs and the DIA-MONDS in Japan. We continue to provide advice and coun-seling to funds, investment advisors, index providers, financialintermediaries, broker-dealers and stock exchanges with re-spect to domestic and foreign ETFs.

Unit investment trusts are unmanaged investment vehiclesthat have particular appeal in the current environment.CL&M is one of the few full-service firms representing

unit investment trust sponsors and trustees. Our clientUBS had a banner year, adding novel UIT variations totheir product line. We also conducted numerous closingsfor JPMorgan Chase Bank, a major UIT trustee.

Clients who create and manage offshore investmentfunds were particularly active in 2003:

• FF&P Russia Real Estate Limited, a $60 millionfund established in Guernsey by Fleming Family &Partners, was formed this year and commenced in-vesting in real estate in the Russian Federationthrough two tiers of Cyprus-organized subsidiaries.A principal investor was a General Electric pensiontrust, which involved unique tax and ERISA issues.

• Elystan Advisers LLC created a new internationalfixed-income hedge fund, known as The AilanthusFund LP, and an offshore feeder fund, The Ailan-thus Fund Ltd.

• West End Capital Management restructured its Ber-muda hedge fund to establish a master-feeder structure.

• We advised the Polar Capital European SmallerCompanies Absolute Return Fund Limited, whichwas formed in the Cayman Islands, concerning theU.S. tranche of its offering to sophisticated investors.

We developed a series of “best practice” procedures for ourinvestment advisor clients in anticipation of newly adoptedSEC rules requiring investment advisor compliance programsand proposed anti-money-laundering rules. We assisted ourclients in preparing for and responding to regulatory examina-tions. We authored a member advisory for the Money Man-agement Institute addressing directed brokerage arrangements.

Carol Robinson Schepp joined us in

May as counsel. She was previously

extensively involved with the JP Mor-

gan family of proprietary mutual funds

for fifteen years. During this period,

she was a Vice President at JP Morgan

in New York, responsible for all legal

services and compliance for this family of mutual funds. She

served as President of the Pierpont Group, where she headed the

support team for the independent trustees of these mutual funds,

and served as the funds’ chief legal officer. She moved to this

position after several years at Morgan Stanley where she served as

Senior Vice President of the funds. Ms. Schepp graduated from

Harvard Law School in 1974, cum laude, and received her B.A.,

summa cum laude, from Brown University in 1971.

Private EquityIn 2003, the private equity investment marketplace began tocome back to life, and Carter Ledyard’s expanding PrivateEquity Practice Group assisted clients that took advantage ofthe improved deal environment. With the public equity mar-ket turning upward and debt capital becoming gradually moreavailable, venture capital, mezzanine and buyout investmentfunds began to deploy pools of available equity investmentcapital. Private company owners who had deferred sellingtheir businesses into a depressed marketplace were able toproceed with plans to realize on their value.

Several investment fund clients of the firm completedtransactions in 2003.

• Brown Brothers Harriman & Co. provided acquisitionand working capital financing in connection with a manage-ment buy-out of LOOK, Inc., a visual merchandising com-pany engaged in designing, engineering and manufacturingin-store product display fixtures and signage.

• The 1818 SBIC Fund, L.P. , which is managed byBrown Brothers, completed an investment in SportHelmets Inc., a leading manufacturer of lacrosse helmetssold under the Cascade name. CL&M also assisted The1818 SBIC Fund, L.P. and Spring Capital Partners, L.P.with investments in AIT Acquisition Corp., a new com-pany organized to acquire the assets of Aetea, Inc., anational information technology staffing company.

• Blumberg Capital, a West Coast venture capital fund,closed an equity investment in iCognito, Inc., a West Coast/Israel-based business solutions company that provides filtersfor undesirable information technology content. BlumbergCapital also completed a convertible debt investment, alongwith other prominent Israeli venture capital firms, in GoNetworks, Inc., a mobile date system developer.

• Invest Northern Ireland, the Belfast-based economicdevelopment agency of Northern Ireland, made aventure capital investment in Heartsine Technologies,Inc., a cardiac defibrillation company.

• The Community Development Venture CapitalAssociation, a trade association of community devel-opment venture capital funds, provided venture capi-tal (together with co-investor Mountaineer CapitalLP) to West Virginia Bats LLC, an innovative manu-facturer of baseball and softball bats.

Other clients were recipients of private equity investmentcapital, including Trinity Biotech plc (Nasdaq: TRIB), whichraised substantial capital funding through a private placementof convertible notes to a group of three institutional investors.Trinity has the right to repay the notes in cash or through theissuance of common stock. Trinity also completed a second,larger private equity financing through the sale of ordinaryshares to institutional investors, following the approval inDecember by the FDA of Trinity’s 10-minute HIV test, thefirst rapid test product approved for testing blood serum,plasma and whole blood. Rodman & Renshaw Inc. was theplacement agent for both transactions.

LanOptics Ltd. (Nasdaq:LNOP), a provider of network pro-cessors, completed a private placement of ordinary shares andwarrants to an institutional investor. CDC Securities acted asplacement agent for this transaction, and the proceeds were usedin part for a follow-on private equity investment by LanOpticsin semiconductor technology innovator EZchip Technologies.

Oplus Technologies, Inc., a privately held leading provider ofinnovative systems-on-chip and software solutions for digitaldisplays and flat panel TVs, secured private capital in twoinvestment rounds closed in July and December, 2003. The

bulk of the proceeds will be used for increased R&D, salesand marketing activities and to enable Oplus to open offices inAsia. Venture capital firms Benchmark Capital, Giza VentureCapital and Defta Partners participated in these financings.

ART Advanced Recognition Technologies, Inc., a lead-ing developer of voice and handwriting recognition soft-ware, completed a Series D Preferred equity financingfrom Bessemer Venture Partners, a round which followeda September 2003 Series C Preferred financing subscribedto by ART’s existing shareholders.

Strategic Workforce Solutions, a legal and administra-tive executive search firm, completed a convertible noteoffering to a group of private equity investors.

Investment banking clients also had private equityactivity, including Sunrise Securities Corp., whichclosed a private placement of common stock and war-rants of Diversinet Corp., a provider of secure wirelesscommunications systems headquartered in Toronto.

A well-known multi-billion dollar financial institutionretained CL&M in connection with its investments as alimited partner in five private equity and mezzanineinvestment funds.

Continuing its active involvement with government supportedprivate equity investing, CL&M was a principal sponsor of thethree-day Annual Meeting of the National Association ofSmall Business Investment Companies (NASBIC), held inOctober in Washington, DC. We were also sponsors forNASBIC’s Northeast Regional (NERASBIC) Mid-WinterMeeting, held in January in New York City, and the three-dayNERASBIC Annual Meeting, held in May in Rye Brook,New York.

7

Broker-DealerOur expanding Broker-Dealer Practice Group assistedclients on core issues such as broker dealer registration,regulatory examinations, and emerging issues such as:

• The “new issues” rule (which replaces the “hot is-sues” rule);

• the new restrictions on expense-sharing arrange-ments;

• new interpretations restricting hedge fund marketing;

• the use of instant messaging and other new media;and

• the new record-keeping rules.

We were pleased to welcome Houlihan LokeyHoward & Zukin as a valued client. HLHZ is an inter-national investment bank that has ranked among the top20 M&A advisors in the U.S. for the past 11 years. Ithas one of the largest financial restructuring practicesof any investment bank in the world, and it provides abroad range of other services, including financing,financial opinions, board advisory services and mer-chant banking. CL&M now advises HLHZ on a widevariety of broker-dealer and investment advisor compli-ance issues.

In 2003, we helped our client ICAP plc, the world’sleading interdealer voice broker, integrate its new ac-quisition BrokerTec, one of the world’s leading elec-tronic brokers of fixed income securities.

We represented affiliates of ICAP in buying and profit-ably leasing out five seats on the New York Stock Ex-change based on a form of subordinated loan agreementthat we helped develop and clear with the NYSE staff.

We advised a client on developing a method to brokerOTC foreign exchange forward contracts in the U.S.using an electronic trading system and clearing themthrough the Chicago Mercantile Exchange withoutregistering with the Commodities Futures Trading Com-mission.

We also comprehensively reviewed and updated ourlibrary of written supervisory procedures, to addressrapidly evolving areas such as anti-money launderingrequirements and customer identification programs.

Bankruptcy and Structured FinanceThe bankruptcy practice group was active on behalf of a range of clients in a number of the year’s most prominentbankruptcy cases. The firm’s victory in the Cybergenics case before the Third Circuit Court of Appeals, in a rareen banc hearing, is discussed in the In Court section of this Review. We continued to represent the suppliers toEnron North America in the Enron bankruptcy cases and equipment supplier Cisco Systems in the Global Crossing,MCI/WorldCom and Genuity bankruptcy cases. Representing The Bank of New York, the firm was active in theMetromedia Fiber Network, Navigator Gas, Orion Refining and Atlantic Express Transportation Chapter 11 cases.We represented the FAO Schwarz Foundation, licensor of the FAO Schwarz trademark in the Chapter 11 cases ofFAO, Inc. and its affiliated toy retailers. We continue to represent the board of directors of Loral Orion, Inc. inconnection with Chapter 11 cases for Loral Space & Communications Ltd. and its affiliates that manufacture andoperate geosynchronous satellites.

The firm’s structured finance activity included our continued representation of the trustee for several series of mu-nicipal security derivative and synthetic portfolio transfer transactions, and acting as special counsel for the issuer inthe refinancing of equipment leasing transactions.

Employee BenefitsDuring 2003, clients sought our advice regarding tax andERISA aspects of their qualified pension, profit-sharing and401(k) plans and welfare benefit programs. We counseledclients including Eastern Air Devices, Inc., ScandinavianMarine Claims Office, Lin Communications LLC, SeaContainers America Inc., Orient–Express Hotels Inc. andPall Corporation on establishing, consolidating, spinning offor terminating 401(k) plans or other benefit programs.

We amended clients’ plans to reflect recent changes inIRS and Department of Labor regulations, preparedrequests for IRS determinations for the amendments,and advised as to the tax treatment of plan distributionsto employees and their surviving spouses.

CL&M advised on application of ERISA rules to investmentsby retirement plans in investment funds sponsored by ourclients Polar Capital Funds plc and The Ailanthus Fund,assisted Fleming Family and Partners in structuring theFleming Family & Partners Russia Real Estate Fund Ltdto permit plans subject to ERISA to invest in this unique and

complex investment vehicle, and continued to assist Bank ofAmerica, JPMorgan Chase, Royal Bank of Canada andUBS AG in designing stable value funds, synthetic GICs andother products suitable as investments for ERISA plans.

We also advised our clients on numerous executive compen-sation issues. We advised clients including Pall Corporation,Toffutti Brands, Inc., ICAP plc and United Business Mediaregarding incentive compensation plans. We counseled Pub-lic Service Enterprise Group, Victaulic Company ofAmerica and other clients on deferred compensation plans.We also worked with a number of our clients to address theimpact of recently issued IRS notices and regulations on theirsplit-dollar life insurance arrangements.

We counseled Hosokawa Micron International, Inc.regarding claims of terminated executives for severanceand other benefits under their employment agreementsand for payments under the company’s nonqualifiedSupplemental Executive Retirement Plan. We alsoprepared a Retention Bonus Plan for the company’s keyexecutives in anticipation of a possible acquisition.

Employment LawThe Employment Law Practice Group represents clientsin litigation and transactions as well as through coun-seling. Our clients, who range from large internationalfinancial services corporations to manufacturers ofcutting-edge medical equipment, faced a wide range ofchallenges in 2003.

Litigation: We continued our focus on representing cli-ents in connection with the drafting and enforcement ofrestrictive covenants such as non-compete agreements.GFI Brokers LLC prevailed in a temporary injunctionapplication against a group of brokers who, in violation oftheir restrictive covenants, defected en masse to a competi-tor. We continued our successful representation ofGoldman Sachs in its efforts to enforce non-solicitationagreements, securing favorable settlements.

With our assistance, Banana Kelly Community Improve-ment Association, Inc. achieved a number of favorable settle-ments in litigations with former employees, including a settle-

ment of a claim before the National Labor Relations Boardand a False Claims Act Claim brought by a former employee.

Transactions and Contracts: CL&M assisted numerouscompanies, such as Oddo Securities Corporation andKamoon, Inc., and senior executives in negotiating anddrafting employment contracts, incentive plans, separationagreements and other employment-related documents.

Employment Counseling: We provided employment lawcounseling, to many employers, both multi-national, such asUnited Business Media, and local, such as i-Advize in areasranging from collectiv e bargaining agreements to wage andhour policies to reorganization issues. In addition to providingemployment law guidance to established companies, CL&Malso assisted start-ups like QRStv in crafting employmentpolicies and agreements tailored to their early-stage needs andin successfully recruiting and retaining employees and con-sultants for start-up clients.

© 2004 Carter Ledyard & Milburn LLP

2 Wall Street, New York, NY 10005 212-732-3200 Fax: 212-732-3232 Email: info@clm.com1401 Eye Street, NW, Suite 300, Washington, DC 20005 202-898-1515 Fax: 202-898-1521570 Lexington Avenue, 41st Floor, New York, NY 10022 212-371-2720 Fax: 212-371-4234

www.clm.com

Questions or Comments

If you have any questions or comments about any article,

kindly contact Jeff Boxer at 212-238-8626 or

boxer@clm.com, John Kaufmann at 212-238-8844 or

kaufmann@clm.com, Cully Irving at 212-238-8714 or

irving@clm.com, or Maria D. Velazquez at 212-238-8670 or

velazquez@clm.com.

Trusts and EstatesTrue story: A professor at a leading law school recently pre-sented the class with the case of an estate beset with problemsresulting from a defect in the will. Then a hand went up: “Doyou think we’ll really have to deal with this kind of thing – Imean, wouldn’t the consequences have been clear to thelawyer writing the will?” The professor needed to conveyhow naïve he thought this was. “What do you think,” hereplied, “that everybody has their wills done at Carter, Led-yard?”

More than 130 of our clients did have their wills or revocabletrusts done at CL&M in 2003. For us, estate planning devicesare not forms into which the client’s name is put, but strategiesadapted to the client’s particular needs and circumstances.With yearly changes in federal gift, estate and generation-skipping transfer taxes and the decisions of states to decoupletheir tax laws from the Internal Revenue Code (or not), thecomplexity of estate planning and the need for individuallytailored strategies has increased.

We advised clients on the complex new regulations on“split-dollar insurance,” a useful estate planning tool inwhich the costs and benefits of life insurance are shared byan employer and employee. It became increasingly clearin 2003 that the effectiveness of another estate planningtool, family limited partnerships, depends on how theparticular partnership is structured and operated, lendingfurther support to our no-size-fits-all approach.

We believe that our clients are well-served only byarrangements that will ultimately survive regulatoryand judicial scrutiny. Our use of “zeroed-out” GRATsand victory in the Tax Court in Walton v. Commissioneris a case in point. Although the IRS initially resistedthe notion that such trusts could be created with no gifttax cost, the Tax Court in 2000 ruled in our client’sfavor. In 2003, the IRS “acquiesced” in the Tax Courtdecision, agreeing with our long-standing position.

We also had significant achievements in estate and trustadministration. One of our clients is a family with a valu-able holding company, many shares of which were held intrust. We restructured the arrangement, converting theentity from a C to an S corporation and assisting the fam-ily in bringing in new trustees and investment advisors. Inanother situation, we acted as special tax counsel to theexecutors of a will that left substantial funds to charitiesbut that failed to produce any charitable deduction. Weconvinced a court to reform the will by dividing one trustinto three, potentially saving the clients over $800,000 intax. In another case, where the different branches of afamily came to have differing objectives, we secured courtapproval for the division of a trust and obtained a rulingfrom the IRS that the new trusts would remain exemptfrom the generation-skipping tax.

Last year, we hosted a conference on “The Business of ArtCollecting.” Over 100 clients and their guests heard pre-sentations by a remarkable group of art luminaries, as wellas partners Peter Gates, Michael Frankel, and TheodoreWagner, and counsel Ronald Spencer. Major topics in-cluded Buying and Selling Art, Forgery, Fraud and Own-ership Issues, and Art as and Estate Planning Tool.

Tax-Exempt OrganizationsOur Tax Exempt Organizations Practice continued togrow last year, with the creation of new tax-exempt orga-nizations, dissolution of some older organizations andongoing representation of numerous other organizationswith increasingly complex activities.

Our long-time representation of The Vincent Astor Founda-tion, from its formation in 1948, culminated with its finaldissolution in 2003. Our efforts on behalf of The Astor Foun-dation this past year marked the completion of a five-year planto spend down to zero its $26 million portfolio through aseries of grants. We successfully guided the Foundationthrough the IRS’s regulations for the termination of its exist-ence and its status as a private foundation, and its final federaland state filings. CL&M is proud to have been a part of AstorFoundation history, providing assistance in the making ofroughly $200 million in grants to over 1,000 charities.

We also concluded our representation of the Twin Tow-ers Fund, which was created after the events of Septem-ber 11, 2001. We advised the Fund on matters includ-ing distribution policies, commercial co-venture arrange-ments, and the final distributions of its assets in accor-dance with IRS rules and New York law.

At the request of New York Attorney General Eliot Spitzer, weprovided assistance to the new directors of Banana KellyCommunity Improvement Association, Inc. in connectionwith the rehabilitation of the organization after what the Attor-ney General has alleged were years of mismanagement. Ba-nana Kelly, a community-based public charity which provideslow income housing in the South Bronx, was on the brink of

collapse when the Attorney General stepped in, replaced theboard of directors with one now headed by former BronxBorough President Fernando Ferrer, and sought our help inreviving the organization. We have represented Banana Kellyin several bankruptcy matters, foreclosure actions, numerousother litigations and complex negotiations relating to financing.

2003 saw a growth in our representation of arts organizations.We advised arts organizations on authenticity, intellectual prop-erty and catalogue raisonné issues, as well as on a variety of taxissues relating to their tax-exempt status. We also advised andassisted numerous artists and their estates in the creation ofprivate foundations for their works of art.

Our representation of tax-exempt organizations extends wellbeyond tax-exempt status. In 2003 we represented BethAbraham Health Services and its affiliate ComprehensiveCare Management Corporation in real estate matters, in-cluding negotiating long-term leases and assisting in the acqui-sition of commercial property, and in financing matters, assist-ing in tax-exempt bond financing and negotiating the terms ofa major loan and grant. We are also advising the NAACPLegal Defense and Educational Fund, Inc. on intellectualproperty matters in connection with its campaign commemo-rating the 50th anniversary of the Supreme Court’s Brown v.Board of Education school desegregation decision. The Na-tional Audubon Society, Inc., which we have represented formany years in connection with the acquisition, renovation andfinancing of its headquarters , sought our advice and assistancein obtaining a replacement letter of credit for the New YorkCity Industrial Development Agency bonds financing itsbuilding, and in amending the indenture for those bonds.

TaxTransactions: We counseled Sea Containers Ltd. on taxissues relating to its 2003 debt restructurings and advised Para-mount Resources Ltd. on its spin-off of units of ParamountEnergy Trust and the novel U.S. tax issues for Paramount’sU.S. investors. We advised clients regarding the tax aspects oftransactions described elsewhere in this Review.

We advised Public Service Enterprise Group and its affiliateson issues relating to consolidated returns and tax allocation agree-ments, a proposed restructuring of their leveraged leasing opera-tions and the proposed formation of a captive insurance company.We also advised FirstEnergy Corp. on electric generation plantsales by its subsidiaries Pennsylvania Electric Company, Met-ropolitan Edison Company and Jersey Central Power &Light Company pursuant to the companies’ plant divestitureprogram, adopted in response to the deregulation of the electricgeneration business in Pennsylvania and New Jersey.

Tax Disputes: We represented a NYSE-listed company in itssettlement negotiations and execution of a closing agreement(affecting subsequent tax years) with the IRS. We advised thePSEG companies as to certain issues in their federal incometax audit. We also represented a high-net-worth individualbefore the IRS and were successful in having significant pen-alties and interest abated on her behalf.

Tax Planning: We provided tax planning advice forcorporations, limited liability companies, partnerships,not-for-profit institutions, individuals, and estates. Weadvised high-net-worth individuals on tax-efficient assetdiversification strategies, including various over-the-counter, tax-sensitive financial products. We providedextensive advice to a family holding company regardingtax strategies for diversification and tax efficiency. Weadvised the CEO and founder of a privately held publish-ing company concerning charitable contributions and gifttaxes and the operation of a private charitable foundation.

2 Wall Street, New York, NY 10005 1401 Eye Street, NW, Washington, DC 20005 New York • Washington, DC

Our 150th AnniversaryIn 1854, James Coolidge Carter and Henry J. Scudderjoined together to practice law at 66 Wall Street underthe name Scudder & Carter. We still practice law onWall Street 150 years later, down the block at 2 WallStreet.

How does a law firm endure and thrive for so long?

The requisites are great clients who are working onimportant and interesting projects. From the beginningwe have been blessed with just such clients. Ourfounders handled the estate of Aaron Burr’s wife(which included property belonging at one time toAlexander Hamilton), native American title to thecoastal waters of Long Island, the constitutionality of afederal income tax, and Langdon v. The Mayor, whichdetermined the respective rights of New York City andprivate property owners in the extension of the docklines on the East River and the North (Hudson) River.We also represented the United States before the Tribu-nal of Arbitration in Paris in an 1893 dispute with GreatBritain over the right to regulate the taking and killingof seals born on the Pribilof Islands, a case in whichJames Carter’s opening speech lasted eight days. Allthree of our name founders served as presidents of theAssociation of the Bar of the City of New York.

Right down to the present day, we continue to havegreat clients with important and interesting projects, asthis Year in Review demonstrates.

A few years ago some of our partners put together abook about the Firm’s beginnings (please let us knowif you would like a copy). Rather than condensing ourhistory at the beginning of our anniversary celebration,we thought that it would be more fun to show a fewimages from the family photograph album.

Twenty-five years before he was elected President, FranklinRoosevelt was a clerk (that is, an Associate) at our firm. Itwas natural that Roosevelt would want to work here - ourfirm had passed its 50th anniversary and Partners JamesCoolidge Carter, Lewis Cass Ledyard and John G. Milburnrepresented some of the most prominent corporations of theGolden Age, including AT&T, American Express, and theNew York Central Railroad, and individual captains ofindustry including John D. Rockefeller and Payne Whitney.

Unpaid internships have apparently existed for a long time.This is the letter that Edmund Baylies, a partner, wrote toMr. Roosevelt in 1907 offering him (unpaid) employment.

James Coolidge Carter was a litigator and a leadingmunicipal reformer. Mr. Carter was a member of thelegal team that brought a civil suit for graft andcorruption acting on behalf of New York City againstWilliam Marcy Tweed, the infamous “Boss Tweed”who had dominated New York City politics throughhis Tammany Hall machine. The suit was successful,and resulted in a recovery of over $6 million. Here acartoon by Thomas Nast, one of the greatcommunicators of the day, shows Justice locking upBoss Tweed.

Mr. Carter was a founder and president of theNational Municipal League, an organizer of theCitizens’ Union, and a founder and twice President ofthe Association of the Bar of the City of New York.

In the center, John D. Rockefeller andJohn G. Milburn crossing Wall Street.The Standard Oil Company turned toMr. Milburn and Carter Ledyard todefend it from the U.S. government inthe early days of the U.S. antitrust laws.Congress had drafted the Sherman Actwith Standard Oil in mind, of course.After a litigation that lasted many manyyears, the United States Supreme Courtruled against Standard Oil in 1911.Guides at Kykuit (Mr. Rockefeller’shome in Westchester County) tellvisitors that when Mr. Rockefeller heardthat the Supreme Court had finally ruledand that Standard Oil must be brokenapart, he remarked that his holdingswould now be worth more as separatecompanies than they had been as onecompany!

Courtesy of The Rockefeller Archive Center

W.M.Tweed

© 2004 Carter Ledyard & Milburn LLP

Got art? Andy Warhol died in 1987 leaving the bulk of his estate,valued at over $200 million, to The Andy Warhol Foundation forthe Visual Arts, Inc. During the 14 years in which Carter Ledyardhas been the Foundation’s principal counsel, the Foundation hasbecome one of the major arts funding institutions in the world,establishing extensive and varied programs to support the visualarts and artists. In support of these programs, it has made over1,400 grants totaling more than $50 million. At the same time, ithas worked to preserve Warhol’s extraordinary legacy, for exampleby joining in the creation of the Andy Warhol Museum in Pittsburghand undertaking the definitive catalogue raisonné of his works.

Continuing our high-profile work in the art law field, we presented aconference this year on “The Business of Art Collecting” attendedby collectors, art dealers and other art market professionals. Panelsof experts discussed art as an investment, how to measure artsinvestment returns, buying and selling art, and forgery andownership issues. Lawyers from our Trusts & Estates departmentaddressed art as an estate planning challenge.

As counsel for the New York Mets from the inception of the team in 1961, we drafted the agreement betweenthe Mets and the City of New York covering the construction of Shea Stadium and its use by the team for a40-year term. The agreement gave the Mets the right to receive and retain all revenues from the operationof all concessions in the stadium year round, whether for baseball games, football games, concerts or otherevents. Because the 1950s had been a time of low inflation, and because the team was expected to losemoney, the Mets negotiated for a fixed dollar maximum rent for the entire 40-year term of the agreement.

The rent computed under the percentage formula exceeded the maximum rent in the very first year and everyyear thereafter, saving the Mets many millions of dollars. The Stadium Agreement was an important asset ofthe Club when it was sold by the Payson family to the Doubleday publishing company in 1982. After thesale, we assisted Doubleday in amending the agreement to provide for a new scoreboard, skyboxes, andother additions to the Stadium.

In recognition of our 150th anniversary, we joined three other donors to restore the“necklace” lights to the City’s East River bridges. The re-lighting project was part of a longand ongoing association between Carter Ledyard and the electrification needs of New YorkCity. In 1903, for example, we worked out the plan for electrifying the railway lines into GrandCentral Terminal, eliminating dangerous conditions that had caused a serious accident andmuch loss of life in 1902. More recently, we helped clear the way for our client New YorkPower Authority to build natural gas turbine generators to keep New York City functioning inthe summer of 2001, when the City and State experienced record-breaking electrical demand.

2 Wall Street, New York, NY 10005 212-732-3200 Fax: 212-732-3232 Email: info@clm.com1401 Eye Street, NW, Suite 300, Washington, DC 20005 202-898-1515 Fax: 202-898-1521570 Lexington Avenue, 41st Floor, New York, NY 10022 212-371-2720 Fax: 212-371-4234

www.clm.com

For the past decade, Carter Ledyard has assisted in the ambitious plan to redevelop and revitalize TimesSquare. We have worked to enable our client the Empire State Development Corporation to obtain title toand redevelop numerous properties in the area, including the site of the new headquarters for The NewYork Times. Our dedication to urban development does not stop there — other redevelopment programsinclude representing the Lower Manhattan Development Corporation in the rebuilding of downtownManhattan after the attacks of September 11, 2001.

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