Source: https://www.scribd.com/doc/86763989/Fraud-fcpa-Biomet
Timestamp: 2017-12-12 03:48:02
Document Index: 99808175

Matched Legal Cases: ['§ 371', '§ 78', '§ 78', '§ 2', '§ 3161', '§ 781', '§ 78', '§ 78', '§ 78', '§ 78', '§ 78', '§ 78', '§ 371', '§ 78', '§ 2', '§ 78']

Fraud.fcpa.Biomet | Corruption | U.S. Securities And Exchange Commission
Uploaded by Michael A. Scarcella
Department of Jnstiee
Fraud Section, Suite 4100, Bond Building 1400 New York Avenue, NW
Laurence Urgenson Kirkland & Ellis LLP 655 Fifteenth Street, NW Washington, DC 20005
Ropes & Gray LLP 111 South Wacker Drive Chicago, IL 60606
Biomet, Inc. ("Biomet"), by its undersigned attorneys, pursuant to authority granted by Directors, and the United States Deparment of Justice, Criminal Division, Fraud Section (the "Departent") enter into this deferred prosecution agreement (the "Agreement"). The terms and conditions of this Agreement are as follows:
waive venue and acknowledges and agrees that the United States wil fie the attached five-count criminal Information in the United States Distrct Cour for the District of Columbia. The Information charges Biomet, Inc. with conspiracy to commit an offense against the United States, in violation of 18 U.S.C. § 371, that is, to violate the Foreign Corrupt Practices Act ("FCP A"), 15 U.S.C. § 78dd-1 (Count One); three counts of violating the FCPA, 15 U.S.C. § 78dd-1 and 18 violating the books and records U.S.C. § 2 (Counts Two through Four); and one count of
charges, as well as all rights to a speedy trial pursuant to the Sixth Amendment to the United Criminal Procedure 4&(b). In States Constitution, 1& U.S.C. § 3161, and Federal Rule of addition, Biomet consents to the filing of the Inormation and the Agreement in the United States District Cour for the District of Columbia.
b. Biomet admits, accepts, and acknowledges that it is responsible for the acts of its offcers, employees and agents, and wholly-owned subsidiaries, as set forth in the Statement of Facts attached hereto as Attachment A, and incorporated by reference into this
Agreement, and that the allegations described in the Information and the facts described in Attchment A are tre and accurate. Should the Department initiate the prosecution that is
2. Term of the Agreement: This Agreement is effective for a period beginning on the date on which the Information is fied in the United States District Court for the District of Columbia and ending thee (3) years from that date (the "Term"). However, Biomet agrees that,
violated any provision oft1iis Agreement, an extension or extensions of
in the event that the Deparent determines, in its sole discretion, that Biomet has knowingly the term of the
Agreement may be imposed by the Department, in its sole discretion, for up to a total additional time period of one year, without prejudice to the Deparment's right to proceed as provided in Paragraph 14 below. Any extension of the Agreement extends all terms of this Agreement, including the obligations of corporate compliance monitorslip and reporting described in Paragraphs 7-12 below, for an equivalcnt pcriod. Convcrscly, in thc cvcnt the Department finds, in its sole discretion, that there exists a change in circumstances sufficient to eliminate the need for reporting and the other provisions of ths Agreement have been satisfied, the Term of the
the individual facts and circumstances presented by ths case and Biomet. Among the facts considered were the following:
Securities and Exchange Commission (the "SEC") the misconduct described in the Information Facts, a portion of which was voluntaily disclosed;
investigation of the conduct of Biomet and its directors, offcers, employees, agents, consultants, subsidiaries, contractors, and subcontractors relating to violations of the FCPA;
and its directors, offcers, employees, agents, consultants, subsidiaries, contractors, and subcontractors relating to corrpt payments;
Deparent in the Deparent's investigations of other companies and individuals in connection with business practices overseas in various markets; and
h. Were the Department to initiate a prosecution of Biomet and obtain a conviction, instead of enterig into ths Agreement to defer prosecution, Biomet would potentially be subject to exclusion from participation in federal health care programs pursuant to
cooperate fully with the Department in any and all matters relating to corrpt payments, related false books and records, and inadequate internal controls. At the request of the Deparent, Biomet shall also cooperate fully Wit11 such other domestic or foreign law enforccmcnt
authorities and agencies, as well as the international fmancial institutions ("IFIs"), in any investigation of Biomet or any of its present and former directors, offieers, employees, agents, consultants, contractors, and subcontractors, or any other par, in any and all matters relating to corrpt payments, related false books and records, and inadequate internal controls, in such
maner as the paries may agree. Biomet agrees that its cooperation shall include, but not be limited to, the following:
valid claim of attorney-client privilege or work product doctrine with respect to its activities and fuose of its present and former subsidiaries and affiiates, and the direetors, officers, employees, agents, subsidiaries, consultants, contractors, and subcontractors thereof, concerrng all matters
about which Biomet has any knowledge or about wlich the Department may inquire. Tlis obligation of truthful disclosure includes the obligation of Biomet to provide to the Department, upon request, any non-privileged document, record, or other tangible evidence relating to such corrupt payments, false books and records, and inadequate internal controls about wlich the Deparent may inquire of Biomet.
the Department, with respect to any issue relevant to its investigation of corrupt payments, related false books and records, and inadequate internal controls in connection with the operations of Biomet, Biomet shall designate knowledgeable employees, agents, or attorneys to provide the Deparment with the information and materials described in Parab'Taph 4(a) above, on behalf of Biomet. It is furher understood that Biomet
with the operations of Biomet or any of its present or former subsidiaries or affiliates, Biomet shall nse its best efforts to make available for interviews or testimony, as requested by the
Deparent, present or former directors, officers, employees, agents, and consultants of Biomet
as well as directors, officers, employees, agents, and consultants of contractors and subcontractors. This includes, but is not limited to, sworn testimony before a federal grand jur or in federal trials, as well as interviews with federal law enforcement authorities. Cooperation under ths Paragraph will include identification of witnesses who, to the knowledge of Biomet, may have material information regarding the matters under investigation.
tangible evidence provided to the Deparent pursuant to this Agreement, Biomet consents to
any and all disclosures, subject to applicable law and regulations, to other governental
authorities, including United States authorities and those of a foreign government, and the IFIs, of such materials as the Deparment, in its sole discretion, shall deem appropriate.
5. Payment of Monetary Penalty: Thc Departmcnt and Biomet agree that application of the United States Sentencing Guidelines ("USSG" or "Sentencing Guidelines") to determine the applicable fine range pelds the following analysis:
a. Base Offense. Based upon USSG 2Ci., the total offense level is 29, calculated as follows:
2C1.1(a)(2)
2CU(b)(1) 2CU(b)(2)
Base than one Level 12 Offense bribe +2 More
benefit received between $2.5-7 millon + is
Substantial assistance in the prosecution of others -1
b. Base Fine. Based upon USSG § SC2.4(a)(l) and (d), the base fine is
$13,500,000 (the fine indicated in the Offense Level Fine Tahle ($11,500,000) is used where such number is greater than the pecunar gain to the organzation from the offense (approximately $4,400,000)).
c. Culpability Score. Based upon USSG § SC2.5, the culpability score is S, calculated as follows:
(b)(1) Organzation had 5,000 or more employees and an
willfuly ignorant of the offense +5
the organization paricipated in, condoned, or was
individual within high-level personnel of
(g)(2) The organization fully cooperated in fue investigation and clearly demonstrated recognition and affirmative acceptance of responsibility for its criminal conduct; -2
1.6 (miiiimuni)/3.2 (inaxiniurn)
$2 I ,600,000-43,200,000
Biomet agrees to pay a monetar penalty in the amount of $17,280,000, a 20 percent reduction
off the bottom of the fine range. Biomet and the Department agree that ths finc is appropriate
given Biomets extensive internal investigation, the natue and extent of Biomet's cooperation in
tlis matter, Biomet's cooperation in the Department's investigation of other companies pursuant
to 8C4. 1, and Biomet's extraordinar remediation. Biomet and the Deparent agree that Bioniet wil pay tlis $17,280,000 monetary penalty within ten days of the execution of this
agreement. The $17,280,000 penalty is final and shall not be refuded. Furhennore, nofuing in
this Agreement shall be deemed an agreement by the Deparent that the $17,280,000 amount is
the maximum penalty that may be imposed in any future prosecution, and the Deparment is not
precluded from arguing that the Court should impose a higher fine, although the Department agrees that under those circumstances, it will recommend to the Court that the amount paid under this Agreement should be offset against any fine the Court imposes as part of a future judgment. Biomet acknowledges that no tax deduction may be sought in connection with the payment of
any par oftls $17,280,000 penalty.
6. Conditional Release from Crimnal Liabilty: In retu for the full and truthful
cooperation of Biomet, and its compliance with the terms and conditions of this Agreement, the Departuent agrees not to use any information related to the conduct described in the attached Statement of Facts against Biomet or any of its wholly-owned or -controlled subsidiaries in any criminal or civil case, except: (a) in a prosecution for perjur or obstrction of
prosecution for making a false statement; (c) in a prosecution or other proceeding relating to any crime of violence; or (d) in a prosecution or other proceeding relating to a violation of any provision of Title 26 of the United States Code. In addition, the Department agrees, except as provided herein, that it wil not bring any criminal or civil case against Biomet related to the conduct of present and former directors, officers, employees, agents, consultants, contractors, and subcontractors, as described in the attached Statement of Facts, or relating to information Biomet disclosed to the Department prior to the date on which this Agreement was signed.
corrpt payments, false books and records, or inadequate internal controls issues, if any, by Biomet in the future.
issues in the past wlich are not described in the attched Statement of Facts or were not disclosed to the Deparment prior to the date on which this Agreement was signed. In addition, ths Paragraph does not provide any protection against eriminal proseeution of any present or
former director, officer, employee, shareholder, agent, or consultant of
Biomet for any violations
7. Corporate Compliance Program: Biomet represents that it has implemented
and wil continue to implement and maintain a compliance and ethics program designed to
prevent and detect violations of the FCP A and other applicable anticorrption laws throughout its operations, including those of its affliates, joint ventues, contractors, and subcontractors, with responsibilities that include interactions with foreign officials or other ligh-risk activities. Implementation of these policies and procedures shall not be construed in any future enforcement proceeding as providing immunity or amnesty for any crimes not disclosed to the Department as of the date of signing tlis Agreement for wlich Biomet would otherwse be responsible.
8. Corporate :vonitor: Biomet agrees to engage an independent corporate
compliance monitor ("the Monitor") withn ninety (90) calendar days of signing tlis Agreement.
Witli thirty (30) calendar days after the signing of this Agreement, and after consultation with
the Deparent, Biomet will recommend to the Deparment thee qualified Monitor candidates. The Monitor shall have, at a minimum, the following qualifications:
policies, procedures, and internal controls, including FCP A -specific policies, procedures, and internal controls;
c. the ability to access and deploy resources as necessary to discharge
d. sufficient independence from Biomet to ensure effective and
imparial performance of
the Monitor's duties as described in tlis Agreement.
9. The Deparment retains the right, in its sole discretion, to accept or reject any Monitor candidate proposed by Biomet pursuant to the Agreement. In the event the Deparment rejects a proposed Monitor, Biomet shall propose another candidate withn ten (10) ealendar days after receiving notice of the rejection. This process shall continue until a Monitor acceptable to
both parties is chosen. The Deparent may also propose the names of qualified Monitor
candidates for consideration. The term of the monitorship, as set forth in Attchment D, shall commence upon the Department's acceptance of a Monitor candidate proposed by Biomet.
10. The Monitor will be retained by Biomet for a period of not less than eighteen (18) months from the date the Monitor is selected. The term ofthe monitorslip, including tle circumstaces that may support an extension of the term, as well as the Monitor's powers, duties, and responsibilities will be as set forth in Attachment D. Biomet may not employ or be affiliated with the Monitor for a period of not less than one year from the date of the termination of the monitorship.
1 1 . At the end of the monitorship, provided all requirements set forth in Paragraph 8
of Attachment D are met, Biomet wil report on its compliance to the Deparent as set forth in Paragraph 12 below for the remainder ofthe term of this Agreement.
12. Corporate Compliance Reporting: Biomet agrees that, following thc monitorship, it wil report to the Department periodically, at no less than six-month intervals, for the remainder of this Agreement, regarding remediation and implementation of the enhanced compliance measures set forth by the monitor as described in Paragraph 8 of Attchment D. Biomet shall designate a senior company offcer as the person responsible for overseeing Biomet's corporate compliance reporting obligations. Should Biomet discover credible evidence that questionable or corrpt payments or questionable or corrpt transfers of propert or interests may have been offered, promised, paid, or authorized by any Biomet entity or person, or any entity or person working directly for Biomet, or that related false books and records have been maintained, Biomet shall promptly report such conduct to the Department. During this period, Biomet shall conduet and prepare at least three follow-up reviews and reports, as described below:
a. Biomet shall undertake follow-up reviews at six-month intervals, each
incorporating the Deparent's views and comments on Biomets prior reviews andreports, to further monitor and assess whether the policies and procedures of Biomet are reasonahly designed to detect and prevent violations of the FCPA and other applicable anticorrption laws.
Reports shall be transmitted to Deputy Clief (FCP A Unit), Frand Section, Criminal Division, U.S. Deparent ofJustice, 10th and Constitution Ave., N.W., Bond Building, Fourth Floor,
180 calendar days after the approval of the enhanced compliance measures described in Paragraph 8 of Attachment D by the DepartmenL Subsequent follow-up reviews and reports shall be completed by no later than 180 calendar days after the completion of the preceding
c. Biomet may extend the time period for submission of any of the follow-up reports with prior \\Titten approval of the Deparent.
13. Deferred Prosecution: In consideration of: (a) the past and future cooperation of Biomet described in Paragraphs 3 and 4 above; (b) Biomet's payment of a monetar penalty of $ 1 7,280,000; and (e) Biomet's implementation and maintenance of remedial measures, the Deparment agrees that any prosecution of Biomet for the conduct set forth in the attached Statement of Facts, and for the conduct that Biomet disclosed to the Department, prior to the signing of tlis Agreement, be and hereby is deferred for the Term of this Agreement. The its obligations under this Department further agrees that if Biomet fuly complies with all of Agreement, the Department wil not continue the criminal prosecution against Biomet described in Paragraph 1 and, after the Term, tlis Agreement shall expire and the Deparment shall seek move to dismiss, with prejudice, the criminal Intòrmation fied against Biomet.
14. Breach of the Agreement: If, during the Term of
this Agreement, the
Deparment determines, in its sole discretion, that Biomet has: (a) committed any felony U11der this Agreement; (b) at any time, provided deliberately federal law' subsequent to the signing of
false, incomplete or misleading information; or (c) otherwise breached the Agreement, Biomet shall thereafter be subject to prosecution for any federal criminal violation of which the Department has knowledge, including the charges in the Information, which may be pursued by fue Departent in fue U.S. District Cour for the District of Columbia. Any such prosecutions may be premised on information provided by Biomet. Any such prosecution that is not timebared by the applicable statute of limitations on the date of the signing of tlis Agreement may be
commenced against Biomet notwithstanding the expiration of the statute oflimitations between
the signing oftlis Agreement and the expiration of
the Term plus one year. Thus, by signing this
Agreement, Biomet agrees fuat fue statute of limitations with respect to any prosecution that is this Agreement shall be tolled for the Term plus one year. not time-barred on the date of
15. In the event that the Deparment detemies that Biomet has breached ths
Agreement, the Deparent agrees to provide Biomet with written notice of such breach prior to
instituting any prosecution resulting from such breach. Biomet shall, within thirt (30) days of receipt of such notiee, have the opportnity to respond to the Deparment in writing to explain the nature and cIrcUlstances of such breach, as well as the actions Biomet has undertaken to address and remediate the situation, which explanation the Deparment shall consider in determining whether to institute a prosecution.
16. In the event that the Deparment determines that Biomet has breached this
The filing or unsealing of a qui tam action shall not, by itself, constitute a breach of this Agreement.
a. All statements made by Cour, including the attached Statement of
or on behalf of Biomet to the Deparment or to the
Facts, and any testimony given by Biomet before a jury or any tribunal, at any legislative hearings whether prior or subsequent to this grand Agreement, or any leads derived from such statements or testimony, shall be admissible in evidence in any and all criminal proceedings brought by the Department against Biomet; and
b. Biomet shall not assert any claim under the United States Constitution, the Federal Rules of the Federal Rules of Rule 1 1(t) of Criminal Procedure, Rule 410 of Evidence, or any other federal rule, that statements made by or on behalf of Biomet prior or subsequent to this Agreement, and any leads derived therefrom, should be suppressed. The decision whether conduct or statements of any current director or employee, or any person acting on behalf of, or at the direction of, Biomet, wil be imputed to Biomet for the purpose of determining whether Biomet has violated any provision of tls Agreement shall be in the sole discretion of the Department.
17. Biomet acknowledges that the Department has made no representations, Biomet breaches tbis Agreement and this matter proceeds to judgment. Biomet fuher acknowledges that any such sentence is solely witlin the discretion of the Court and that nothing in this Agreement binds or restricts the Cour in the exercise of such discretion.
assurances, or promises concerrng what sentence may be imposed by the Cour if
18. Sale or Merger: Biomet agrees that in the event it sells, merges, or transfers all or
substantially all of its business operations as they exist as of the date of
this Agreement, whether
such sale is structued as a stock or asset sale, merger, or transfer, it shall include in any contract
for sale, merger, or transfer a provision binding the purchaser, or any successor in interest thereto, to the obligations described in this Agreement.
19. Public Statements by Biomet: Biomet expressly agrees that it shall not, though
present or future attorneys, directors, officers, employees, agents, or any other person authorized to speak for Biomet make any public statement, in litigation or otherwise, contradicting the acceptance of responsibility by Biomet set forth above or the facts described in the attached Statement of Facts. Any such contradictory statement shall, subject to cure rights ofBiomet this Agreement and Biomet thereafer shall be subject to described below, constitute a breach of
prosecution as set fort in Paragraphs 14- 1 6 of this Agreement. The decision whether any public
statement by any such person contradicting a fact contained in the Statement of Facts will be imputed to Biomet for the purpose of determining whether they have breached tlis Agreement the Deparent. If the Deparent determines that a public shall be at the sole discretion of statement by any such person contradicts in whole or in part a statement contained in the Statement of
Facts, ile Deparent shall so notifY Biomet, and Biomet may avoid a breach of
tlis Agreement by publicly repudiating such statement( s) within five business days afer notification. Consistent with the obligations of Biomet as set fort above, Biomet shall be
permtted to raise defenses and to assert affirmative claims in civil and regulatory proceedings
relating to the matters set forth in the Statement of
Facts. Tlis Paragraph does not apply to any
statement made by any present or former employee of Biomet in lle course of any criminal, regulatory, or civil case initiated against such individual, unless such individual is then specifically authorized to speak on behalf of Biomet.
20. Biomet agrees that if it or any of its direct or indirect affiiates or subsidiaries issues a press release or holds any press conference in connection will llis Agreement, Biomet
shall first consult the Deparent to determine: (a) whether the release or proposed statements at
the press conference are tre and accurate with respect to matters between the Department and
Biomet; and (b) whether the Deparment has no objection to the release.
21. The Department agrees to bring to the attention of govenuiiental and other
authorities the facts and circumstances relating to the nature of the conduct underlying this
Agreement, including the natue and quality of Biomet' s cooperation and remediation, if
requested by Biomet to do so. By agreeing to provide this information, the Deparment is not agreeing to advocate on behalf of Biomet, but rather is providing facts to be evaluated indcpcndcntly by the authoritics.
22. Limitations on Binding Effect of Agreement: Tlis Agreement is binding on
Biomet and the Deparment but specifically does not bind any other federal agencies, or any state, local, or foreign law enforcement or regulatory agencies, although the Deparent wil
bring the cooperation of
Biomet and its compliance with its other obligations under ths
Agreement to the attention of such agencies and authorities if requested to do so by Biomet.
23. Complete Agreement: This Agreement sets forth all the terms ofthe Deferred
Prosecution Agreement between Biomet and the Deparent. No amendments, modifications, or additions to this Agreement shall be valid unless they are in writing and signed by the Deparment and a duly authorized representative of Biomet.
24. Notice: Any notice to the Department under this Agreement shall be given by
personal delivery, overrght delivery by a recognized delivery service, or registered or certified mail, in each case, for the Department, addressed to Deputy Chief - FCPA Unit, Fraud Section,
Criminal Division, U.S. Deparment of Justice, Fourh Floor, 1400 New York Avenue, N.W.,
Washington, D.C. 20005. Any notice to Biomet under this agreement shall be given by personal delivery, overrght delivery by a recognized delivery service, or registered or certified mail, addressed to Bradley J. Tandy, Senior Vice President, General Counsel, and Secretar, Biomet,
Inc., 56 East Bell Drive, P.O. Box 587, Warsaw, IN, 46581 -0587. Notice shall be effective upon actual receipt by the Department or Biomet.
FOR BIOMET, INC.:
:L~~ ~.
LAURENCE URGENS Kirkland & Ellis LLP Counsel for Biomet, Inc.
R:&GIaU
HEESHGOEL
Counsel for Biomet, Inc.
KATHLEEN MiAM
JEFFREY KNOX Principal Deputy Clief, Fraud Section
Trial Attomey, Fraud Section Criminal Division United States Department of Justice 1400 New York Avenue, NW Washington, D.C. 20530 (202) 305-7413
Filed at Washington, D.C, on this M day of~, 2012.
I have read this Agreement and carefully reviewed every par of it with counsel for Biomet, Inc. ("Biomet"). I understand the terms of this Agreement and voluntarily agree, on
behalf of Biomet, to each of
its terms. Before signng ths Agreement, I consulted with outside
counsel for Biomet. Counsel fully advised me of the rights ofBiomet, of possible defenses, of the Sentencing Guidelines' provisions, and of the consequences of entering into this Agreement.
I have carefully reviewed ths Agreement with the Board of Directors of Biomet. I have advised, and caused outside counsel for Biomet to advise, that Board of Directors fully of the rights of Biomet, of possible defenses and of the consequences of entering into the Agreement.
No promises or inducements have been made other than those contained in this Agreement. Furermore, no one has threatened or forced me, or to my knowledge any person
authorizing this Agreement on behalf of Biomet, in any way to enter into this Agreement. I am
also satisfied with the attorney's representation in this matter. I certifY that I am an officer of Biomet and that I have been duly authorized by Biomet to execute tlis Agreement on behalf of Biomet.
3!J:
Bradley J. Tand Senior Vice President,
eral Counsel, and Secretar
I am counsel for Biomet, Inc. ("Biomet") in the matter covered by tlis Agreement. In connection with such representation, I have examined relevant Biomet documents and have discussed this Agreement with the Biomet Board of Directors. Based on my review of the the opinion that: the representative of foregoing materials and discussions, I am of Biomet has been duly authorized to enter into this Agreement on behalf ofBiomet and that this Agreement has been duly and validly authorized, executed, and delivered on behalf of Biomet and is a valid and binding obligation of Biomet. Furer, I have carefully reviewed tlis Agreement with the Board of Directors and General Counsel of Biomet. I have fully advised them of the rights of the consequences Biomet, of possible defenses, ofile Sentencing Guidelines' provisions and of
of entering into this Agreement. To my knowledge, the decision of
Biomet to enter into ths
Agreement is an informed and voluntar one.
Date: ~ ,28 ,2012
Kirkland & Ells, LLP Counsel for Biomet, Inc.
~. orLLP
A eesh Goel
.. -(
Facts is incorporated by tlis reference as part ofthe Deferred Prosecution Agreement (the "Agreement") between the United States Deparment of Justice, Criminal Division, Fraud Section (the "Deparment") and Biomet, Inc. ("Biomet") and the parties hereby agree and stipulate that the following information is tre and accurate. As set forth in
Paragraph 1 of the Agreement, Biomet accepts and acknowledges that it is responsible for the
acts of its officers, employees, and agents that are set fort below.
Should the Department initiate the prosecution that is deferred by tlis Agreement, Biomet Facts in any such proceeding.
agrees that it will neither contest the admissibility of, nor contradict, this Statement of
1. The Foreign Corrpt Practices Act ofl977 ("FCPA"), as amended, Title 15,
United States Code, Sections 78dd- 1, et seq., was enacted by Congress for the purose of, among other things, making it unlawfl for certin classes of persons and entities to act corrptly in furtherance of an offer, promise, authorization, or payment of money or anytng of value to a
foreign governent offcial for the purose of securing any improper advantage, or of obtaiing
or retaining business for, or directing business to, any person. The FCP A also requires that any issuer of securties shall make and keep books, records, and accounts, which, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
2. Defendant Biomet, Inc. ("Biomet") was incorporated in Indiana with its principal
place of business in Warsaw, Indiana and manufactured and sold ortopedic medical devices worldwide. Until September 25, 2007, it issued and maintained a class of publicly-traded securities registered pursuant to Section l2(b) ofthe Securities Exchange Act of 1934 (15 U.S.C. § 781), which traded on the NASDAQ. As such, it was required to fie periodic reports with the
Act (15 U.S.C. § 78m). Accordingly, Biomet was an "issuer" within the meang of
United States Securities and Exchange Connssion under Section 13 of the Securities Exchange the FCPA,
15 U.S.C. § 78dd-l(a). By virtue of its status as an issuer, Biomet was required to make and keep books, records, and accounts which, in reasonable detail, accurately and fairly reflected the transactions and disposition of assets of Biomet and its subsidiaries, including those described below, which were incorporated into the books, records, and accounts of Biomet.
3. Biomet Argentina SA ("Biomet Argentina"), a wholly-owned subsidiar of
ßiomet, was an Argentine corporation through wlich ßiomet conducted business in Argentina.
4. Biomet International Corporation ("Biomet International"), a wholly-owned
subsidiar of
Biomet, was a Delaware corporation through which Biomet sold products into
5. "Brazilian Distributor," a Brazilian company, had exclusive distribution rights for
Biomet reconstructive products in BraziL.
6. Biomet China, a wholly-owned subsidiary of Biomet, was a Chinese corporation
through wlich Biomet sold products into China.
7. "Chinese Distributor," a Clinese company, acted as a distributer of
8. Scandimed AB ("Scandimed"), a wholly owned-subsidiar of Biomet, was a
Swedish corporation through which Biomet sold products into Clina and elsewhere.
9. "Director ofInternal Audit," a U.S. citizen, was the Director of
Internal Audit for Biomet, and was based in Warsaw, Indiana.
10. "Latin America Auditor," a U.S. citizen, was an auditor at Biomet and was based
11. "Vice President," a U.S. citizen, was a senior vice president for Biomet, and was
12. "Operations Manager," a U.S. citizen, was an operations manager for Biomet, and
was based in Warsaw, Indiana.
13. "Associate Regional Manager," a U.S. citizen, was the Associate Regional
Manager for Biomet International in AsialPacifie, and was based in Hong Kong SAR.
14. "PresidentofInternational Operations," a U.S. citizen, was the President of
International Operations for Biomet and was based in Warsaw, Indiana.
15. "Doctor," a citizen of the People's Republic of Clina, was head of orthopedics at a Chinese public hospital in Shanghai.
16. Argentina has a public healthcare system wherein approximately half of hospitals
are publicly owned and operated. Health care providers ("HCPs") who work in the public sector
are governent employees, providing health care services in their official capacities. Therefore,
such HCPs in Argentina are "foreign offcials" as that term is defined in the FCP A, 15 U.S.C. § 78dd-l (f)(l )(A).
17. Beginning prior to 2000, publicly-employed Argentine physicians who implanted
Biomet products sent invoices to Biomet Argentina, which, on their face, were for professional services or consulting, but doctors were actually being paid a commission to induce the purchase Biomet's sales. of the product, wlich ranged from 15-20 percent of
18. Staring in 2000, aftcr thc Argcntinc tax auiloritics forbadc tax-frcc paymcnts to surgeons, Biomet Argentina recorded the payments made on the invoices falsely as "royalties" or "other sales and marketing."
memo was circulated in Biomet's Miami office, 19. On or around Februar 7, 2000, a including to Operations Manager, about opening a direct-sales operation in Argentina, in which he included a budget allocation of"13-20% commission to surgeon."
20. In or around 2001, Biomet purchased a company in Argentina through which it
began making direct sales.
21. On or around Februar 28, 2003, Director of Internal Audit circulated an internal audit report on Argentina to Vice President, Operations Manager, and others in Biomet in
Indiana, in which he states, "(R)oyalties are paid to surgeons if
requested. These are disclosed in
the accounting records as commissions."
Biomet Argentina raised concerns regarding potential payments to customs offcials and requested an internal audit.
22. In or around August 2005, ile managing director of
23. From in or around September 2005 to in or around October 2005, Director of Internal Audit, Latin America Auditor, and others from the Internal Audit, Legal, and Biomet conducted an investigation into the allegations of the Compliance Deparents of managing director of Biomet Argentina.
Biomet Argentina sent an email to Latin America Auditor in Indiana that attached a monthly list of payments to doctors that were a percentage of the cost of products purchased by the doctor during the month.
24. On or around January 10, 2006, the managing director of
25. On or around Febru 22,2006, Latin America Auditor circulated an internal rcport on the audit, which stated, "Other allegations being investigated by Biomet's legal team include fraudulent product registration certificates, bribery of customs officials, and other charges as reported to legal via electronic media. It was later determined that certificates were fraudulent
and bribes were made (sic)."
26. Tn or around Novemher 2006, Latin America Auditor sent her report on the audit
of Biomet Argentina to Vice President, Operations Manager, and others in Indiana, wlich stated, "The commission expense recorded on the income statement is actually royalties paid to doctors for using Biomet products. This account should be renamed to royalty's (sicJ expense."
Biomet Argentina emailed Latin America Auditor information regarding cash disbursements, which stated, "Payment for surgeon commissions: the payments for surgeon commissions will be made on the 20th of each month."
27. On or around Februar 26,2007, an employee of
28. On or around December 7, 2007, a sales and marketing manager for Latin
America for Biomet sent a report on a visit to Biomet Argentina to Operations Manager, in which he noted as an issue of concern, "Doctors receive a 'consulting fee' for every surgery."
29. On or around February 19, 2008, a sales and marketing manager for Biomet
Argentina sent a list of payments made to physicians to the managing director of Biomet Argentina.
30. In or around March 2008, the managing director of Biomet Argentia reported the
payments to surgeons to intemal compliance personneL.
31. On or around August 7, 2008, Biomet Argentina sent its financial report, which
included 15-20% commissions to
surgeons, to Operations Manager and others in Indiana
32. In or around August 2008, Biomet distributed new compliance guidelines that
emphasized the FCP A and related issues, and the company's Argentine general manager sought advice from the company's lawyers, causing Biomet to suspend payments to Argentine dùctors.
33. In or around December 2008, Biomet suspended all sales in Argentina.
34. In total, from 2000 to 2008, deIendant Biomet, Biomet Argentina SA, and their
related subsidiaries and employees, authorized the payment, directly or indirectly, of approximately $436,000 in cash incentives to publicly-employed Argentine HCPs to induce fue purchase of Biomet products.
35. Brazl has a socialized public healthcare system that provides universal health care
to all Brazilian citizens, and the majority of hospitals are publicly-controlled. HCPs who work in
the public sector are governent employees, providing health eare services in their official
capacitics. Thcrcforc, such HCPs in Brazil arc "forcign officials" as that tcrm is dcfined in the FCPA, 15 US.C. § 78dd-1(f)(l)(A).
36. On or around August 15, 2001, Brazilian Distributor emailed Vice President in
Indiana, copying Director of Internal Audit and others, noting that Brailian Distributor was paying "commission (sicJ to doctors"
37. On or around February 20, 2002, Director ofInternal Audit sent a memo to Vice President and Operations Manager regarding a limited audit performed of the books and records of Brazilian Distributor, in which he stated, "(Brazilian Distributor J makes payments to surgeons that may be considered as a kickback. These payments are made in cash that allows the surgeon
to receive income tax tree.... The accounting entry is to increase a prepaid expense account. In the consolidated financials sent to Biomet, these payments were reclassified to expense in the
incoDie statement."
38. On or around August 21,2003, Brazilian Distributor emailed Vice President in Indiana, copying Operations Manager, Director ofInterial Audit, and others, stating "Prepaid now was fully reclassified to expenses accounts, commissions to doctors continue to be the major
item... ."
39. On or around February 19, 2004, Biomet Argentina forwarded the 2003 fmancial
Brazilian Distributor, which included the 20% commissions to doctors as "commssions," to Operations Manager in Indiana.
40. On or around Februar 20, 2004, Operations Manager forwarded the financial
Brazilian Distrbutor to Vice President.
41. In or around April 2008, Biomet sent accountants and outside counsel to Brazil to
conduct due diligence, during wlich Brazilian Distributor admitted that they paid doctors for buying Biomet products and described the payments as "scientific incentives."
42. In or around May 2008, Biomet terminated its relationslip the Brazilian Distributor.
43. In total, from 2001 to 2008, defendant Biomet, Biomet International, and their
related subsidiaries and employees, authorized the payment, directly or indirectly, of more than $1.1 milion, some or all of which was used to pay cash incentives to publicly-employed Brazilian HCPs to induce thc purchasc of Biomct products.
44. China has a national healthcare system wherein most Clinese hospitals are
publicly owned and operated. Heps who work at publicly-owned hospitals are government employees, providing health care services in their official capacities. Therefore, such HCPs in China are "foreign officials" as that term is defined in the FCPA, 15 U.S.C. § 78dd- l(f)(l)(A).
45. On or around February 1, 2001, China Distributor sent an email to a Associate
Regional Manager, stating that the distributor was paying a 10-15% "rebate" to surgeons on the
Biomet artificiallips.
46. On or around February 2, 2001, Associate Regional Manager sent an email to Biomet in the United Kingdom, noting that Scandimed "offer( s J higher-than-average 'commssion' to surgeons.. .."
47. On or around Februar 6, 2001, a Scandimed employee emailed President of
International Operations in Indiana and Biomet employees in the United Kingdom, stating, "Re. 'commission' to surgeons, Scandimed has no control over this... as we understand it, giving commission (sic) or gifts of various kinds to surgeons is common in China."
48. On or around February 6, 2001, President ofInternational Operations rcspondcd
to the Scandimed email, copying Operations Manager, stating, "(T)he only problem with a company paying high commissions in a tight market is that the prices must be low enough to the dist(ributor) to allow for these ligh commissions..."
1 0,2001, Chinese Distributor sent an email to President of International Operations, copying Associate Regional Manager, discussing a doctor who was tring to stop commissions being paid to physicians by medical de~ce companies.
49_ On or around April
Regional Manager, stating "(Doctor) wil become the most loyal customer of
50. On or around May 18, 2001, Chinese Distrbutor sent an email copying Associate Biomet if we send
him to Switzerland."
51. On or around May 21, 2001, Chinese Distributor sent an email to Associate
Regional Manager, copying Vice President, President of International Operations, and Operations Manager, stating "(Doctor) is the deparment head of (public hospitalJ. (Doctor) uses about 10 lips and knees a monm and it's on an uptrend, as he told us over dinner a week ago.. .. Many key surgeons in Shanghai are buddies of his. A kind word on Biomet from him goes a long way
for us. Dinner has been set for the evening of
the 24th It will be nice. But dinner aside, I've got
to send him to Switzerland to visit his daughter."
52. On or around January 29,2002, Associate Regional Manager prepared a summary
of distribution in ChiniL noting, "Chinese surgeons tyically receive a commission on sales, which can range from 5% to 25%. Distributors are expected to hold banquets for surgeons, and to sponsor meetings."
53. In or around March 2002, in connection with a field visit to review operations in China, Biomet employees, including Associate Regional Manager, Vice President, and President ofInternational Operations, discussed "commissions" paid to doctors of up to 20 percent for sales and "consulting fees" paid to doctors for conducting clinical trials; the discussion also included a proposal for a two week ~sit for Clinese doctors to me United Kingdom, with the second week being a "holiday" paid for by Chinese Distributor.
54. On or around April 21, 2002, Chinese Distributor sent an email to Associate Regional Manager discussing payments to surgeons, stating, "When we say 'Surgeon Rebate
included', it means the invoice price includes a predeterrined percentage for the surgeon. For
example, a vendor invoices the hospital for a set of plate & screws at RM 3,000.00. The vendor will have to deliver RMB 750.00 (25% in this case) in cash to the surgeon upon
completion of surgery (sic J."
55. On or around March 14, 2005, Director oflnternal Audit instructed an auditor to classifY improper payments being made to doctors in connection with certain clinical trials as "entertainment. "
56. On or around December 28, 2005, an employee of
Biomet Clina emailed
Associate Regional Manager, noting that doctors conducting certain clinical trials are paid a 1015% "consulting fee."
57. In or around late 2006, Biomet ended its relationship with the Chinese Distributor.
58. From on or around October 6 through on or around October 13, 2007, Biomet
Clina sponsored the travel of 20 surgeons to Barcelona and Valencia for training, including a substantial portion of the trip being devoted to sightseeing and other entertainment at Biomet's expense.
59. On or around October 11,2007, the product manager for Biomet Clina sent an
email to Associate Regional Manager, discussing ways to evade efforts by the Chinese govemment to halt corrption in health care by requiring all international companies to declare actual cost for import to the govemment, noting, "Obviously, China government (sic J doesn't have ability to forbid the corrption from hospitals & surgeons.. .," proposing four methods for avoiding the regulation, including falsified invoices.
60. From in or around 2000 to in or around 2008, in the District of the District of Columbia and elsewhere, at the end of each ofBiomet's fiscal years, the books and records of Biomet Argentina, Biomet International, and Biomet China contained false characterizations of bribes paid to publicly employed HCPs, as "commissions," "royalties," "consulting fees," "other sales and marketing," "scientific incentives," and "consulting fees," and those books and records
were incorporated into the books and records ofBiomet for puroses of preparng Biomet's yearend financial statements, which were filed with the Securities and Exchange Commssion in
WHEREAS, BIOMET, INC. ("Biomet" or, the "Company") has been engaged in
discussions with the United States Departent of Justice, Criminal Division, Fraud Section (the
"Deparment") in connection with issues arising in relation to certain corrpt payments to foreign officials to obtain and retain business for the Biomet; and
WHEREAS, in order to resolve such discussions, it is proposed that the Company enter into a certain agreement with the Department; and
WHEREAS the Company's General Counsel, together with outside counsel for the the Company's rights, possible defenses, the Directors of Sentencing Guidelines' provisions, and the consequences of entering into such agreement with
Company, have advised the Board of
Therefore, this Board hereby RESOL YES that:
1. The Company (a) consents to the filing in the United States District Court for the District of Columbia of an Information charging Biomet, Inc. will conspiracy to commit an offense against the United States, namely, to violate the Foreign Corrpt Praetices Act ("FCP A") bribes, in violation of (15 U.S.C. § 78dd-l), in violation of 1 8 U.S.C. § 371; and the payment of 15 U.S.C. § 78dd-l and 18 U.S.C. § 2 (Count Two); (b) waives indictment on such charges and enters into a Deferred Prosecution Agreement with the Deparment; and (c) agrees to accept a monetar penalty against Biomet of $17,280,000, and to pay $17,280,000 to the United States Treasury with respect to the conduct described in the Information and the Statement of Facts.
directed, on behalf of the Company, to execute the Deferred Prosecution Agreement substantially in such form as reviewed by this Board of Directors at this meeting with such changes as the General Counsel, or his delegate, may approve;
3. The General Counsel, or lis delegate, is hereby authorized, empowered, and
terms, or provisions of any agreement or other documents as may be necessar or appropriate to the foregoing resolutions; and carr out and effectuate the purpose and intent of
the Ueneral Counsel, wlich actions would have been authorized by ile foregoing resolutions except that such actions were taken prior to the adoption of such resolutions, are herehy severally ratified, confirmed, approved, and adopted as actions on
4. All of the actions of
behalf of the comi pany. \, \~ ti" n
Date: 3:22.,2012 !\ij\) \ l\L/''-',
Biomet, nco
Jeffr~R. Binder'
Chai . ", Board of Directors
In order to address deficiencies in its internal controls, policies, and procedures regarding wmpliance with the Foreign COITipt Praclices Act ("FCPA"), 15 U.S.C. §§ 78dd-1, et seq., and other applicable anti-corruption laws, Biomet, Inc. and its subsidiaries (collectively, "Biomet") agree to continue to conduct, in a maner consistent with all of its obligations under this Agreement, appropriate reviews of its existing internal controls, policies, and procedures.
Where necessar and appropriate, Bi011et agrees to adopt new or to modifY existing
internal controls, policies, and procedures in order to ensure that it maintains: (a) a system of internal accounting controls designed to ensure that Biomet makes and keeps fair and accurate books, records, and accounts; and (b) a rigorous anti-corrnption compliance code, standards, and procedures designed to detect and deter violations of the FCP A and other applicable anticorruption laws. At a minimum, this should include, but not be limited to, the following elements to the extent they are not already par ofthe company's existing internal controls, policies, and procedures::
1. Biomet will develop and promulgate a clearly ariculated and visible corporate
policy against violations ofthe FCP A, including its anti-bribery, books and records, and internal
controls provisions, and other applicable counterparts (collectively, the "anti-corrption laws,"),
including strong, explicit, and visible support and commitment from senior management to the program.
2. Biomet wil develop and promulgate compliance standards and procedures
violations ofthe anti-corrption laws and Biomets compliance eode and will take appropriate measures to encourage and support the observance of etlics and compliance standards and procedures against foreign bribery at all levels ofthe
company. These stadards and procedures shall apply to all directors, officers, and employees and, where necessar and appropriate, outside paries aeting on behalf of Biomet in a foreign
jurisdiction, including but not limited to, agents and intermediaries, consultants, representatives, distributors, teaming partners, contractors and suppliers, consortia, and joint venture parers
(collectively, "agents and business parers"), and shall notifY all employees that compliance
with the standards and procedures is the duty of individuals at all levels of the company. Such standards and procedures shall include policies governing:
3. Biomet will develop these compliance standards and procedures, including
internal controls, ethics, and compliance programs on the basis of a risk assessment addressing the individual circumstances of the company, in paricular the foreign bribery risks facing the company, including, but not limited to, its geographical organization, interaction with
govemments, and industrial sector of operation.
4. Biomet shall review its compliance standards and procedures, including internal controls, ethics, and compliance programs, no less than anually, and updated as appropriate, taking into account relevant developments in the field and evolving international and industry standards, and update and adapt as necessar to ensure the continued effectiveness of the company's internal controls, ethcs, and compliance programs.
5. Biomet will assign responsibility to one or more senior corporate executives of
Biomet for the implementation and oversight of compliance with policies, standards, and
procedures regarding the anti-corrption laws. Such corporate official(s) shall have direct
reporting obligations to independent monitoring bodies, including internal audit, Biomet's Board of Directors, or any appropriate committee ofthe Board of Directors, and shall have an adequate level of autonomy from management as well as suffcient resources and authority to maintain
6. Biomet will ensure that it has a system of financial and accounting procedures,
including a system of intemal controls, reasonably designed to ensure the maintenance of fair and accurte books, records, and accounts to ensure that they cannot be used for the purpose of foreign bribery or concealing such bribery.
7. Biomet will implement mechanisms designed to ensure that the policies,
Biomet regarding the anti-corruption laws are effectively communicated to all directors, officers, employees, and, where appropriate, agents and business
standards, and procedures of
parners. These mechanisms shall include: (a) periodic training for all directors, officers, and
employees, and, where necessar and appropriate, agents and business parners; and (b) anual
certifications by all such directors, officers, and employees, and, where necessar and
appropriate, agents, and business parers, certifying compliance with the trainig requirements.
8. Biomet will establish an effective system for:
a. Providing guidance and advice to directors, officers, employees, and,
where appropriate, agents and business parers, on complying with Biomets compliance policies, standards, and procedures, including when they need advice on an urgent basis on difficult situations in foreign jurisdictions;
b. Internal and, where possible, confidential reporting by, and protection of,
directors, offcers, employees, and, where appropriate, agents and business
parers, not willing to violate professional standards or ethics under
instructions or pressure from hierarchical superiors, as well as for directors, offcers, employee, and, where appropriate, agents and business
parners, willing to report breaches of fue law or professional standards or
ethies concerning anti-corrption occurring within the cornpany, suspected
criminal conduct, and/or violations of the compliance policies, standards, and procedures regarding the anti-corrption laws for directors, officers, employees, and, where necessar and appropriate, agents and business
parners; and
c. Responding to such requests and undertakng appropriate action in
9. Biomet will institute appropriate disciplinar procedures to address, among other
things, violations of the anti-corrption laws and Biomets compliance and ethics program by Biomets directors, offcers, and employees. Biomet shall implement procedures to ensure that where misconduct is discovered, reasonable steps are taken to remedy the harm resulting from
such misconduct, and to ensure that appropriate steps are taen to prevent fuer similar
misconduct, including assessing fue internal controls, ethics, and compliance program and making modifications necessar to ensure the program is effective.
10. Biomet wil institute appropriate due diligence and compliance requirements pertainng to the retention and oversight of all agents and business parners, including:
b. Informing agents and business parners of
Biomets commitment to
abiding by laws on the prohibitions against foreign bribery, and of Biomet s ethics and compliance standards and procedures or other measures for preventing and detecting such bribery; and
c. Seeking a reciprocal commitment from agents and business parters.
1 I. Where appropriate, Biomet will include standard provisions in agreements,
contracts, and renewals thereof with all agents and business parers that are reasonably
the anti-corrption laws, wlich may, depending upon the circumstances, include: (a) anti-corruption representations and undertkings relating to compliance with the anti -corruption laws; (b) rights to eonduct audits of the books and records of the agent or business parner to ensure compliance with the foregoing; and (c) rights to tenninate an agent or business parner as a result of any breach of anti-corrption laws, and regulations or representations and undertakings related to such matters.
calculated to prevent violations of
12. Biomet will conduct periodic review and testing of the compliance code,
stadards, and procedures designed to evaluate and improve their effectiveness in preventing and
detecting violations of anti -corrption laws and Biomet s compliance and ethics programs, taing into account relevant developments in the field and evolving international and industry standards.
Tbe duties and authority of the Corporate Compliance Monitor (the "~onitor"), and the
obligations of Biomet, Inc. ("Biomet") with respect to the Monitor and the Deparent, are as described below:
1 . Biomet shall retain the Monitor for a period of not less than eighteen (18) months. Subject to certain conditions specified below that would, in the sole discretion of the Deparment, allow for a reduction or extension of the term (the "Term of the Moniturship"), lle Monitor shall be retained until the criteria in Paragraph 8 are satisfied or the Agreement expires, wlichever oecurs first.
2. The Monitor's primary responsibility is to assess and monitor Biomets
cornpliancc will the terms of tlis Agrccmcnt so as to spccifically addrcss and reduce the risk of any recurrence of Biomet s misconduct. During the Term of the Monitorslip, the Monitor will
evaluate, in the maner set fort in Paragraphs 3 through 10 below, the effectiveness and
the corporate compliance program, internal controls and fmancial reporting policies and procedures of Biomet as they relate to Biomet s curent and ongoing compliance with the anti-bribery provisions oflle FCPA and other anti-corrption laws applicable to Biomet (collectively, the "anti-corruption laws"), and take such reasonable steps as, in his or her view, may be necessar to fufill the foregoing mandate (the "Mandate").
3. Biomet shall cooperate fuly with the Monitor, and the Monitor shall have the authority to tae such reasonable steps as, in his or her view, may be necessar to be fully informed about Biomets compliance program within the scope of the Mandate in aecordance with the principles set forth herein and applicable law, including data protection, blocking statutes, and labor laws and regulations applicable to l3iomet. To that end, l3iomet shall: provide the Monitor access to Biomets documents and resources; not limit such access, except as provided in this Paragraph; and provide guidance on applicable laws (such as relevant data proteetion, blocking statutes, and labor laws). Biomet shall provide the Monitor with access to all information, documents, records, facilities and/or employees, as requested by the Monitor, that fall within the scope ofthe Mandate of the Monitor under tlis Agreement. Any disclosure by Biomet to the Monitor concerning corrpt payments shall not relieve Biomet of any otherwise applieable obligation to truthfully disclose such matters to the Deparent.
a. The parties agree that no attorney-client relationslip shall be formed
between Biomet and the Monitor.
b. In the event that Biomet seeks to withhold from the Monitor access to
Biomet that may be subject to a claim of attorney-client privilege or to the attorney work-product doctrine, or where Biomet
information, documents, records, facilities and/or employees of
reasonably believes production would otherwise be inconsistent wifu applicable law, Biomet shall work cooperatively with the Monitor to resolve the matter to the satisfaction of the Monitor. If the matter cannot be resolved, at the request of the Monitor, Biomet shall promptly provide written notice to the Monitor and the Deparent. Such notice shall include a general description of the natue of the information, documents, records, facilities and/or employees that are being witlùield, as well as the basis for the claim. To the extent Biomethas provided information to the Deparment in the course of the investigation leading to this action pursuant to a non-waiver of privilege agreement, Biomet and the Monitor may agree to production of such information to the Monitor pursuant to a similar non-waiver agreement.
4. To carr out the Mandate during the Term offue Monitorship, the Monitor shall
conduct an initial review and prepare an initial report, followed by at least one (1) follow-up review and report as described in Paragraph 7 below, and one (1) frnal report as deseribed in Paragraph 8 below. With respect to the initial report and the follow-up review, afer consultation
with Biomet and the Deparent, the Monitor sball prepare a written work plan, which shall be
submitted no fewer tban sixty (60) calendar days prior to commencing each review to Biomet and the Deparment for comment, which comment shall be provided no more than thirt (30)
calendar days afer receipt of
the written work plan. The Monitor's work plan for the initial
review shall include such steps as are reasonably necessar to conduct an effective initial review in accordance with the Mandate, including developing an understanding, to the extent the Monitor deems appropriate, of the facts and circumstances surounding any violations that may have occured before the date of this Agreement is filed with the Court. In developing such understanding, the Monitor is to rely to the extent possible on available inormation and documents provided by Biomet, and it is not intended that the Monitor wil conduct his or her
own inquiry into those historical events. In developing each work plan and in caring out the
reviews pursuant to such plans, the Monitor is encouraged to coordinate with Biomet personnel, including auditors and compliance personnel, and, to the extent the Monitor deems appropriate, he or she may rely on Biomet processes, on the results of studies, reviews, audits and analyses conducted by or on behalf of Biomet and on sampling and testing methodologies. Any disputes between Biomet and the Monitor with respect to the work plan shall be decided by the Deparent in its sole discretion.
the Monitor (unless otherwise agreed by Biomet, the Monitor and
the Deparment), and the Monitor shall issue a written report within ninety (90) calendar days of
initiating the initial review, setting fort the Monitor's assessment and making recommendations reasonably designed to improve the effectiveness of Biomets program for ensuring compliance with the anti-corrption laws. The Monitor is encouraged to consult with Biomet concerng his or her other findings and reconunendations on an ongoing basis, and to consider and relIect Biomets comments and input to the extent the Monitor deems appropriate. The Monitor need not in his or her initial or subsequent reports recite or describe comprehensively Biomets lùstory or compliance policies, procedures and practices, but rather may focus on those areas with respect to which the Monitor wishes to make recommendations for improvement or which the
Monitor otherwise concludes merit paricular attention. The Monitor shall provide the report to the Board of Directors of Biomet and contemporaneously transmit copies to Deputy Clief FCPA Unit, Fraud Section, Criminal Division, U.S. Departent of Justice, 10th and Constitution Ave., N.W., Bond Building, Fourh Floor, Waslington, D.C. 20530. After consultation with
Biomet, the .\onitor may extend the time period for issuance of
the report for up to tlirt (30)
calendar days with prior written approval of the Deparment.
6. Withi ninety (90) calendar days after receiving the Monitor's report, Biomet
shall adopt all recommendations in the report; provided, however, that withn thirt (30) calendar days after receiving the report, Biomet shall notify the Monitor and the Department in writing of any recommenùalIons that Biornel consiùers unduly burdensome, inconsistent will local or other applicable law or regulation, impractical, unduly costly or otherwise inadvisable. With respect to any recommendation that Biomet considers unduly burdensome, inconsistent with local or other applicable law or regulation, impractical, unduly costly or otherwise inadvisable, Biomet need not adopt that recommendation within that time but shall propose in writing an alternative policy, procedure or system designed to aclieve the same objectivc or purose. As to any recommendation on which Biomet and the Monitor do not agree, such paries shall attempt in
good faith to reach an agreement witlin thirt (30) calendar days after Biomet serves the written
notice. In the event Biomet and the Monitor are unable to agree on an acceptable alternative proposal, Biomet shall promptly consult with the Deparment. Any disputes between Biomet, on the one hand, and the Monitor, on the other hand, mth respect to the recommendations shall be decided by the Department in its sole discretion. The Deparment may consider the Monitor's recommendation and Biomet s reasons for not adopting the recommendation in determining whether Biomet has fully complied with its obligations under this Agreement. Pending such determnation, Biomet shall not be required to implement any contested recommendation(s).
With respect to any recommendation that the Monitor determines carot reasonably be
implemented within ninety (90) calendar days after receiving the report, the Monitor may extend the time period for implementation with prior wrtten approval of the Departent.
7. The Monitor shall undertake at least one follow-up review to carr out the
Mandate. Within one hundred and twenty (120) calendar days of initiating the follow-up review, the compliance program of the Monitor shall: (a) complete the review; (b) certify whether Biomet, including its policies and procedures, is reasonably designed and implemented to detect and prevent violations within Biomet of the anti-corruption laws and is functioning effectively; and (c) report on the Monitor's findings in the same fashion as set forth in Paragraph 5 with respect to the initial review. The first follow-up review shall commence one year after the initial
review commenced. If, reasonably promptly after completing the follow-up review, the Monitor and the Deparent mutually agree that Biomet has not by that time successfully satisfied its
obligations under the Agreement with respect to the Monitor's Mandate, the Term of the Monitorslip shall be extended for one additional year, and the Monitor shall undertake a second follow-up review in accordance with the procedures for such follow-up reviews set out in the Agreement. If, after completing a second follow-up review, the Monitor and the Department again mutually agree that the Biomet has not successfully satisfied its obligations under the
Agreement with respect to the Monitor's Mandate, tle Term of the Monitorship shall be extended until expiration of the Agreement, and the Monitor shall undertake a third follow-up review in accordance with the procedures for such follow-np reviews set out in the Agreement. Additional follow-up reviews, shonld any be required, shall commence one year afer the frrst follow-up review commenced. After consultation witl Biomet, the Monitor may extend the time period for these follow-up reviews for up to sixty (60) calendar days with prior written approval
of the Deparment.
8. If, reasonably promptly after completing a follow-up review, the Monitor, the
Department, and the Biomet mutually agree that Biomets compliance program is reasonably
designed and implemented to detect and prevent violations of the a11ti-conuption laws a1ld is
fuctioning effectively, the Monitor and the Biomet shall submit to the Deparent a written report within sixty (60) calendar days of the submission of the follow up review settng forth a complete description of its remediation efforts to date, its proposals reasonably designed to improve the internal controls, policies, and procedures of Biomet for ensurng compliance with the FCP A and other applicable anticorrption laws, and tle proposed scope for thc Biomct s selfreporting. This report shall include a schedule of enhanced compliance obligations already underten by the Biomet for the Deparents approval, and the Biomets self-reporting shall include measures taken to implement the enhanced compliance obligations. The Biomet may extend the time period for issuance of the report with prior written approval of the Deparent.
At such time as the Deparment approves tle schedule of enhanced compliance obligations, the
Monitorship shall be terminated and the Biomet wil self-report to the Deparment on its enhanced compliance obligations for the remainder of the term of the Agreement, as described in
Paragraph i 2 of the Agreement.
9. In iindertakng the assessments and reviews described in Paragraphs 4 through 8
oftlis Agreement, the Monitor shall formulate conclusions based on, among other things: (a) inspection of relevant documents, including Biomets curent anti-corruption policies and procedures; (b) on-site observation of selected systems and procedures of Biomet at sample sites, including internal controls and record-keeping and internal audit procedures; (c) meetings with, and interviews of, relevant employees, officers, directors and other persons at mutually
convenient times and places; and (d) analyses, studies and testing of
Biomets compliance
program with respect to the anticorrption laws.
his or her engagement, discover that questionable or corrpt payments or questionable or corrupt transfers of propert or interests may have been offered, promised, paid or authorized by any entity or person witlin Biomet, or any entity or person working directly or indirectly for Biomet, either (a) after the date on wlich this Agreement is accepted by the Court or (b) that have not been adequately dealt with by Biomet (collectively, "improper activities"), the Monitor shall promptly report such improper activities to Biomets General Counsel for furher action. If the Monitor believes that any improper activity or activities may constitute a significant violation oflaw, the Monitor shall also report snch improper activity to the Department. The Monitor shall disclose improper activities in his or her
10. Should the Monitor, during the course of
discretion directly to the Deparent, and not to the General Counsel, only if the Monitor
believes that disclosure to Biomet s General Counsel would be inappropriate under the circumstances, and in such case should disclose the improper activities to Biomets General Counsel as promptly and completely as the Monitor deems appropriate under the circumstances. The Monitor shall address in his or her reports the appropriateness of Biomets response to all improper activities, whether previously disclosed to the Depaiiment or not. Further, in the event that Biomet, or any entity or person working directly or indirectly within Biomet, refuses to provide information necessar for the performance of the Monitor's responsibilities, if the Monitor believes that such refusal is without just cause, the Monitor shall disclose that fact to the Departent. Biomet shall not take any action to retaliate against the Monitor for any such
disclosurcs or for any othcr rcason. Thc Monitor may report any criminal or regulatory violations
by Biomet or any other entity discovered in the course of performing his or her duties in the same maner as described above.
11. At least anualy, and more frequently if appropriate, representatives from Biomet
and the Department will meet together to discuss the monitorslip and any suggestions, comments or improvements Biomet may wish to discuss with or propose to the Department.
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