Funding for Life Sciences

          On February 24, 2011, the Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury issued final regulations under 31 CFR Part 1010 addressing the reporting of foreign financial accounts and the form used to file these reports (Form TD-F 90-22.1, Report of Foreign Bank and Financial Accounts, which is commonly referred to as the "FBAR" form). While the language in the final regulations is substantially consistent with the proposed FBAR rules that were published one year ago (read our March 10, 2010 summary of the proposed regulations), the FinCEN clarifies and revises certain provisions regarding which persons will be required to report accounts and which accounts will be reportable, as well as any specific exceptions to the filing requirements.

          The final rules are effective March 28, 2011, and apply to FBARs required to be filed by June 30, 2011, for foreign financial accounts maintained in 2010 and for reports required to be filed for all subsequent years. In addition, filers who properly deferred their filing obligations under IRS Notice 2010-23 (which extended the FBAR filing due date from June 30, 2010 to June 30, 2011 for certain groups) may, but are not required to, apply the provisions of the final rule in determining their FBAR filing requirements for reports due June 30, 2011, for foreign financial accounts maintained in years beginning before 2010.

          Note that the regulations under the Bank Secrecy Act (BSA) have been reorganized; therefore, the text of the final FBAR regulations have been renumbered for consistency. The regulations that were originally under 31 CFR 103.24 in their proposed form now appear under 31 CFR 1010.350 as the final regulations.

Applicability to Governmental Pension Plans

          The regulations still exempt governmental pension plans from the FBAR filing requirements. The proposed rules were accompanied by proposed revisions to the FBAR instructions which, among other things, specifically exempted governmental entities from the filing requirements, as follows:

A foreign financial account of any governmental entity is not required to be reported on an FBAR by any person. For purposes of this form, governmental entity includes: (1) a college or university that is an agency or instrumentality of, or owned or operated by, a governmental entity; and (2) an employee retirement or welfare benefit plan of a governmental entity. (Emphasis added.)

          While the FinCEN states in the preamble that the FBAR instructions have been revised to reflect the language adopted in the final regulations, the instructions were not included in the final regulations, and the rules do not explicitly make the above statement. However, when the final FBAR instructions are released, we expect they will include this exemption. In addition, the final rules retain the language from the proposed rules excepting from the filing requirements persons who have a financial interest in or signature or other authority over an account of any State or any political subdivision thereof. 31 CFR 1010.350(c)(4).

          Thus, the rules provide a filing exemption for the accounts of governmental pension plans, both with respect to the plan itself and with respect to the plan's employees with signature authority over foreign investments. The exemption is applicable for accounts held during 2010 and subsequent years. In addition, both pension plan employees with signature authority over accounts but no financial interest in those accounts who took advantage of the extension provided in IRS Notice 2010-23, and pension plans having commingled funds, none of which were mutual funds, which did not file an FBAR for prior years in reliance on Notice 2010-23, may rely on the final regulations to determine whether the delayed filing is now required.

          For more information about FBAR, the final rule, and how the FBAR materials may impact your governmental plan, please contact Mary Beth Braitman, Terry A.M. Mumford, Katrina M. Clingerman,  Lisa Harrison, or your Ice Miller LLP employee benefits attorney.

A proposed rule has been introduced by the U.S. Securities and Exchange Commission to exempt advisers of venture capital funds and other funds with less than $150 million in private fund assets under management from the registration requirements of the Investment Advisers Act of 1940 that were enacted in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Without this exemption in place, as of July 21, 2011, all advisers of private fund assets regardless of size would be required to be registered under and comply with the Investor Advisers Act of 1940.

Read the entire alert on the proposed exemption rule.

For this trade mission, the decision was made to focus on four key sectors in Indiana: vehicles, life sciences, energy and agriculture. The format has been to engage in breakout sessions in each of these sectors and do on-site plant tours and meetings with various leaders from the host country. Today, we had numerous meetings set-up with various leaders in these areas.

The main purposes of this trade mission is to attract Asian companies to Indiana and to have them start businesses here. One entity on this trade mission, Sherry Labs, wants to introduce their services in China and are potentially considering a location here in China as well.

This is an incredibly engaged delegation. The majority of delegates either have businesses that are currently doing business in China, or are seeking to do business in China. China is an economy that is growing at an exponential pace. They are very interested in doing business with people in the U.S. China is rich with cash and has a tremendous amount of capital ready to be invested, so they do not need capital from the U.S. They plan to spend a few trillion dollars putting in roads and streets over the next couple of years.

China has great interest in our economy and our financial strength here in the state of Indiana. They were very inquisitive about how we fared in the recession, and they were very interested in how well our state has done compared to other states in the last couple of years. They do recognize Indiana as a leading state in the U.S. with regard to the economy, jobs and innovation. The leaders we've met are very impressed with our highly productive workforce and the number of colleges and universities we have. The Chinese leaders are also very impressed with our governor.

Currently, the delegation is in Hangzhou, China, a sister province to Indiana. Hangzhou means Paradise City. We have had an incredibly warm greeting from the various officials here in China as well as the business leaders. Last night, we attended a very impressive banquet with key leaders from Hangzhou where we toasted our continued long-term relationship. They had a group of young girls playing some of our favorite songs, such as Jingle Bells and The Old Swanee River.

Preparing for the Future

Ice Miller is reissuing an updated summary of the provisions under the Patient Protection and Affordable Care Act (PPACA) that impact employers.  Ice Miller originally issued this summary on March 30, 2010.  Since that date, the Departments of Health and Human Services, Labor, and the Treasury have issued several rounds of interim final rules and other guidance regarding the PPACA provisions that apply to Group Health Plans.  As of the date of this reissue, guidance has been published with respect to:

• a tax credit available to small employers that offer health coverage to their employees;
• the extension of dependent coverage mandate and related tax relief;
• the Early Retiree Reinsurance Program;
• rules for maintaining grandfathered plan status;
• application of the PPACA coverage reforms on retiree-only health plans and HIPAA excepted benefits;
• the prohibition on lifetime and annual dollar limits and procedures for a temporary waiver;
• the prohibition on pre-existing condition exclusions;
• the prohibition on rescissions in health plans;
• patient protections afforded under the PPACA;
• coverage for preventive health services with no cost-sharing requirements;
• requirements for internal claims and appeals processes and external reviews; and
• the HIPAA opt-out for self-funded nonfederal governmental health plans.

While there is still more expected, a critical mass of guidance has now been issued that allows employers sponsoring group health plans to move toward finalizing plan design changes for next plan year.  As employers begin preparing for open enrollment season in the coming weeks and months, the PPACA provisions discussed in this summary require a fresh look.  Ice Miller has, therefore, revised its original summary to include discussion of relevant guidance and the obligations such guidance places on employers sponsoring group health plans to timely amend plan materials, make required disclosures to employees, and offer special enrollment opportunities to their employees.

View and print the updated summary.

View and print Ice Miller's list of steps that plan sponsors should be taking now to comply.

Cindy Hoye, Executive Director, Indiana State Fair Commission

Optimism is in the air!  Our group felt truly a sense of pride in the marketable and treasured assets in Indianapolis and the entire state of Indiana.  Coupled with pride in the successful endeavors of the leadership in Indianapolis, all of us were honored to be at the enviable table on June 15.

Thanks to Ice Miller and Gerry Dick, we spent an evening comparing future trends, growth challenges and current findings in the tourism industry. And while obstacles were identified, I think we all prefer to relish in our “glimmers of hope” recently seen and have been forecasted for the immediate future. One such notable sign can be seen in the Fairgrounds’ user groups. From a blockbuster Car Auction this May to signs of our public and consumer show visitors do have confidence, attending events and enjoying themselves.  We are seeing the end-users back to “opening their wallets” with a sense of more security about the economy.  The planning and preparation for this year’s State Fair, the largest, most attended and oldest event in Indiana, speaks to the overall experience, which includes the need for entertainment value and understanding customers are making strategic choices for their time and discretionary funds.

Do we all have challenges? Absolutely.  The challenges may remain in the forefront of continued growth. However, given the creativity, passion and dedication in all aspects of the tourism industry…we are destined to be rock solid in Indiana!

Job satisfaction and hiring top managers remain top workforce concerns for Indiana executives.  Finding good management may be a concern, but the ability to find the majority of their workforce isn't causing Indiana leaders restless nights.  Non-skilled, manufacturing and bio-tech/life science workers are abundant.  Engineers and paraprofessional are also easily found.

Although there is a surplus of workers, there may be hope for job hunters.  CEOs of small, medium and large companies are optimistic about hiring in 2010.  We'll see if the hiring in 2010 makes the pool of surplus workers a little shallower.  We'll need to wait for the 2011 report to find out!

CEOs are less optimistic in 2010 than in 2009 about private funding in Indiana.  Interestingly, Indiana leaders believe the availability of public funding increased slightly in 2010.

CEOs are also positive about the state's ability to attract businesses to Indiana.  Which means that the state is doing a good job of "selling" Indiana to out-of-state businesses.  The state can bring in business, but can they keep them?  According to the report, yes.  The bottom line is Indiana is making the Hoosier state fertile ground for companies to plant deep roots that will flourish.

Study highlights from 2010 include the following

•  Corporate reputation is back on top as the highest ranked business issue. In 2009 the highest ranked issue was customer loyalty and retention.
•  Cost of living is still seen as the strongest advantage that Indiana has over neighboring states and has been on the rise as the strongest advantage since 2007.
•  CEOs appear optimistic about 2010. There is a stronger likelihood they will pursue adding jobs, green development, outsourcing, mergers and acquisitions, new alliances, and a variety of other forward looking or growth oriented activities, when compared to 2009.
•  CEOs continue to remain positive about Indiana’s ability to attract business to the state.
•  Perceptions regarding the strength of education programs in the areas of advanced manufacturing and alternative energy have increased since 2009.
•  CEOs report that workers lowest in demand are manufacturing, non-skilled and bio-tech/life science workers.

View the 2010 CEO Survey Full Report.

View the 2010 CEO Survey Excutive Summary.

The Butler University College of Business, Ice Miller and Inside INdiana Business announced today the results of their fourth annual statewide survey of Indiana's chief executive officers, senior executives and business owners. The survey, "The State of Our Business – A Perspective from Indiana Executives," provides insight and understanding on the significant issues facing the state's business leadership.

The project partners identified 2,420 CEOs and other executive officers as potential respondents. Of those contacted, 428 responded to a comprehensive online survey designed by the Butler University College of Business.

The project partners identified 2,420 CEOs and other executive officers as potential respondents. Of those contacted, 428 responded to a comprehensive online survey designed by the Butler University College of Business.

"The survey found some reasons for optimism," stated Gerry Dick, president of Grow INdiana Media Ventures, LLC and host of Inside INdiana Business. "For example, many CEOs report there is now a stronger likelihood they will pursue adding jobs compared to their outlook in 2009." The survey found that central Indiana companies are more likely to add jobs as are companies with less than $5 million in revenue and those between $10 million and $50 million in revenue.

"We're now seeing several trends emerge as we start to analyze the data over a four year period," noted Byron Myers, chief managing partner, Ice Miller. "Many of the priorities of Indiana executives, with the exception of customer loyalty and retention, received importance ratings that are statistically equal to ratings received in 2009 as well as all past years of the survey. This may be an indication that even in times of major economic change CEOs maintain a relatively consistent structure of priorities."

"This year's CEO survey shows that the general business mood is improving but most CEOs are hesitant to implement solid growth strategies until the economy settles down somewhat," said Bill O'Donnell, director of graduate programs, Butler University College of Business. "We are also pleased that now, with four years of data, we can start tracking trends and see the direction CEOs view the state's economy to be moving."

Study highlights from 2010 include the following:

•  Customer reputation is back on top as the highest ranked business issue. In 2009, the highest ranked issue was customer loyalty and retention.
•  K-12 education and innovation continue to be ranked as the strongest disadvantages for Indiana as compared to neighboring states. Cost of living is still seen as the strongest advantage that Indiana has over neighboring states and has been on the rise as the strongest advantage since 2007.
•  CEOs believe the availability of private funding sources is significantly less compared to 2009.
•  A new question was added in 2010 regarding CEOs' plans to hire workers. There is optimism among CEOs that they will hire in 2010, as adding full-time and part-time workers was ranked above the midpoint on the scale.
•  Having enough time is still CEOs most challenging issue, although keeping up with technology has moved up in the ranking.
•  New questions about social media were added to the section relating to information technology. One-third of CEOs said they have a policy concerning social media usage for employees.

The project partners will continue to benchmark the results from the 2010 survey and monitor, discuss and analyze the state's progress. A full summary of the report can be found online at: www.inceosurvey.com.

In the wake of the recent financial crisis, on May 20, 2010, the U.S. Senate voted to adopt sweeping financial reform.  The proposed Restoring American Financial Stability Act of 2010 would:

• create a number of new governmental bodies designed to protect investors;
• severely limit government bail-outs;
• streamline bank regulation;
• regulate trading of derivatives;
• increase regulation of hedge funds and credit rating agencies;
• affect executive compensation;
• undertake some reform of the SEC;
• strengthen the Federal Reserve; and
• increase regulation of securitization and municipal securities transactions. 

But, could it also affect the availability of private equity funds?

The bill aims to end so-called "too big to fail" bail-outs.  The Volcker Rule is part of that effort.  The rule prohibits banks and their affiliates from investing in or sponsoring hedge funds and private equity funds and otherwise requires limited relationships with hedge funds and private equity funds.  Non-bank financial institutions supervised by the Federal Reserve will also have restrictions on their hedge fund and private equity investments. 

Banks and other regulated financial institutions provide a significant portion of the capital for private equity funds.  Without that capital, private equity funds will likely be smaller and less inclined to make investments.  In many instances, private equity dollars are available to companies seeking funding in circumstances under which traditional banks would not lend.  In those cases, the limited availability of private equity dollars could damage companies seeking funding.  Those companies may not be able to obtain funds for operations, strategic acquisitions or expansion if private equity money is not available.

While the financial reform bill has many legitimate purposes, it may have consequences that were not anticipated by the drafters.  Those consequences will affect not only private equity funds themselves but also companies that rely on private equity as a source of funding.

Congratulations!  You're one of few.  The next step is to negotiate the commitment letter.  There was a great article about negotiating loan commitments in the January/February 2010 issue of Business Law Today.  The article was titled "Negotiating the Loan Commitment:  The Borrower's Perspective" and was authored by John N. Oest.  Below are some of the major points made in the article: 

• Negotiate your important points up front before signing the commitment letter.  You will probably not get another opportunity.
   
• Understand that the commitment letter likely contains a number of conditions to the bank's commitment, and few for the borrower.  Some commitment letters contain an express agreement by the borrower to borrow the funds.
• Negotiate basic financial terms in the commitment letter, including amount of loan, interest rate, maturity date, fees, financial covenants and method of calculation of interest.
   
• Understand at the commitment letter stage how much money will actually be available to you.  For example, if your loan is based on "80 percent of Eligible Accounts Receivable" or some similar formulation, you'll need to understand up front what constitutes an Eligible Account Receivable.  If you do not, you could end up with less money available to you than you expect.
   
• Work through the prepayment rights and obligations at the commitment letter stage.  You may want to prepay the loan, but may find it triggers penalties or  yield protection payments .  Also, you need to understand when you will be required to repay the loan.  Often, an equity raise or a sale of substantial properties outside the ordinary course of business will trigger a prepayment requirement.
   
• Look for a due-on-sale clause.  Most mortgages contain these provisions that require repayment of the loan upon sale of the property.  These may be subject to limited enforceability in some states.
   
• Change of control provisions prohibit transfers of shares of a privately-owned company if the transfer would result in specified percentages of change of ownership.  The borrower should ask for some specific exceptions, including permitting transfers among owners and their affiliates, transfers for estate planning purposes and others.
   
• The commitment letter will generally limit other debt and other liens.  You should negotiate to obtain some standard exceptions such as unsecured trade debt, subordinated debt, intercompany debt, purchase money debt and capital leases.  You may also want to try to get a general basket for unsecured debt in a maximum amount.  With respect to liens, you should negotiate to allow existing liens, liens imposed by operation of law, liens security purchase money debt and other liens. Depending on your company's structure, the lender may require guarantees of the loan.  You and the guarantors will need to understand the scope of those guarantees.  

 
The basic point is, don't take the commitment letter lightly.  The early stage is when the key terms of the credit are mutually established, so pay attention to the details of the commitment letter and negotiate the issues most important to you at this stage.

During the financial crisis, private equity, mezzanine and venture capital firms have spent a lot of time "cleaning house."  The financial crisis has made cheap debt less available and thus private equity and other firms are not able to complete deals with the huge leverage ratios that existed prior to the crisis.  So, they have taken a close, hard look at existing investments in order to determine which could be saved and have allocated resources appropriately.  

This sort of review has included, from a legal perspective, review of debt covenants and commercial contracts.  The firms have wanted to determine which of their portfolio companies are in danger of violating a financial covenant or failing to perform under a critical contract. 

Recent reviews have also included analyses of potential exit strategies in a down economy.  The potential strategies include the traditional options of bankruptcy, sale and IPO.  IPO's have been down sharply until very recently, so this option has not been given much consideration.  Sales have continued, but with valuations low, this is often not a favored option.  Bankruptcy is, as always, fraught with difficulties as firms consider the opposition of creditors as well as the value of their secured positions, if any.

Throughout the financial crisis, distressed investing has continued.  With the credit markets tight, private equity and other firms have taken some opportunities to fund companies that have not been able to get credit in the traditional credit markets.  These efforts persist, and the firms continue to focus sharply on the fundamentals of these companies in order to protect their investments. 

If you haven't read the thousands of pages of the current Senate-proposed version of the Patient Protection and Affordable Care Act (that's the formal name of the proposed healthcare reform bill), you might be surprised by the kinds of opportunities that are available for businesses.  This commentary may be a bit premature given that a bill has not been passed, but because the Senate-proposed bill is currently forming the basis for congressional debates, it could become relevant to businesses very soon.

Everyone knows that the bill would require universal health insurance and impose a broad range of new requirements on the healthcare industry.  In addition, the bill has a variety of grants and opportunities it makes available to businesses both within and outside the traditional healthcare field. 

There are numerous grant opportunities for states, and in many cases, the state can allocate funds through a bidding process.  Traditional healthcare organizations such as hospitals are eligible for a large number of grants and funded study and training projects.  Nonprofits have a number of opportunities available, too.  And colleges and universities also can take advantage of a wide range of potential grant and award programs.  Funds are also available for other businesses, such as grants to implement comprehensive workplace wellness programs or contracts to establish Web sites.

It will be an interesting road to see what happens to healthcare reform in the next weeks and months.  We will keep you posted on the funding opportunities that might be available for your business.

Just days before the United Nations Climate Change Conference in Copenhagen, Denmark, the U.S. Patent and Trademark Office (USPTO) initiated the Green Technology Pilot Program on December 8, 2009 to expedite the examination of "green technology" patent applications. By offering the program, the USPTO hopes to accelerate the development and deployment of green technologies, help create green jobs, and promote U.S. competitiveness in the clean technology sector. In the press release announcing the Pilot Program, the Under Secretary of Commerce for Intellectual Property and Director of the USPTO, David Kappos explained "Every day an important green tech innovation is hindered from coming to market is another day we harm our planet and another day lost in creating green businesses and green jobs."

According to its own statistics, the USPTO takes on average 30 months to issue an initial office action for green technology patent applications and approximately 40 months to make a final determination on the patentability of such applications. In the normal process, applications are taken up for examination based on their filing date. Recognizing that over a three and half year wait is too long in the green technology sector, the Pilot Program provides a mechanism for green technology patent applications to be advanced, out of turn, to examination without having to pay any additional fees or provide any additional examination support documentation. The USPTO estimates that this Pilot Program will reduce the examination time of these applications on average by one year.

The Pilot Program broadly defines the term "green technologies" as technologies that pertain to environmental quality, energy conservation, development of renewable energy resources, or greenhouse gas emission reduction. Despite this broad definition, the USPTO currently requires that a patent application be classified in one of 79 specific U.S. patent classifications outlined in the Pilot Program to be eligible.

The Pilot Program only applies to non-provisional utility applications filed prior to December 8, 2009 that have yet to be examined. Applications that are either filed after December 8, 2009 or already being examined are not eligible for the Pilot Program. The Pilot Program is set to expire on December 8, 2010 and the USPTO only guarantees that it will accept the first 3,000 petitions to make an application special under the Pilot Program. Thereafter, the USPTO will evaluate whether the Pilot Program should be extended based on the USPTO's workload and available resources. Thus, time is of the essence for those wanting to take advantage of the Pilot Program.

While there are limitations on the number and type of claims that can be included in the application and a requirement that an applicant waive its right to object to a restriction requirement, the Pilot Program does provide an inexpensive mechanism to expedite the examination of a green tech patent application. Such an expedited examination can prove beneficial to those looking to enforce their patent rights as quickly as possible and/or those looking for funding options.

The Official Notice of the Pilot Program can be found at 74 Fed. Reg. 64666 (Dec. 8, 2009) (See http://www.uspto.gov/patents/law/notices/74fr64666.pdf ) and the USPTO Press Release for the Pilot program can be found at www.uspto.gov/news/pr/2009/09_33.jsp.

If you have questions about the Green Technology Pilot Program, you can contact Alex Forman or Bill Lyon, members of Ice Miller's Intellectual Property Group.

Some studies suggest that the answer is  yes!  In a recent study, the Preqin Research Report Private Equity Investor Survey August 2009, many limited partners (LPs) investing in private equity funds reported that the balance of power in negotiations between the funds general partners (GPs) and the LP's had shifted in favor of the LPs.  In fact, according to the Preqin report, in April 2009, 27 percent of investors thought they had greater negotiating power.  Three months later, in July 2009, 55 percent of investors interviewed by Preqin believed they had greater negotiating power.

Why would that be?  Certainly, one of the reasons is that levels of LP investment have fallen significantly from previous years.  According to the Preqin report, private equity funds raised $194.5 billion in the first quarter of 2008, while they raised only $64 billion in the first quarter of 2009.  The GPs have to compete for the limited LP funds that are actually being invested now.  One of the ways to do that is to offer LPs more favorable terms.

So, cash-rich LPs appear to be returning to the market.  Private equity fundraising has already begun to improve in 2009.  According to the Preqin report, $79.7 billion was raised by private equity funds in the second quarter of 2009 as compared to $64 billion in the first quarter of 2009.

Today, we visited Zhejiang University and met with the president of the university, Yang Wei.  Zhejiang University has over 40,000 full time students at its five campuses.  In comparison, Indiana University (IU) has about 101,700 students on all 8 campuses; including 42,500 on the Bloomington campus.  There really isn't a school in China that's the size of our large universities, which is surprising considering their population.  We were at the largest campus and all of the campuses have names related to water.

Twenty-five percent of the people in China attend universities or technical colleges.  The government only spends money to educate the best and the brightest traditionally, although they're moving more toward private money paying for education.  Considering China has 1.3 billion people, the U.S. is behind in the number of students attending college.

Someone asked how students are accepted to these schools and we learned that students take a national entrance exam they must pass.  Students spend their entire last year of high school to prepare for this exam.  Zhejiang University gets a large portion of the top performing students.  The 2,700 students admitted this year to Zhejiang University were from the top 4,500 ranked students who applied to all colleges in China.  Meaning, of the top 4,500 students taking the national entrance exam, 2,700 of them went to Zhejiang University.

There are certain instances in which you can bypass this entrance exam to get into college.   They, for instance, can pick 500 students in specialty areas with special talents, such as students who are really excelling in language.  Also, high schools can recommend some of their very top students.

There were a lot of new buildings at Zhejiang University, including a new school for agriculture and life sciences.  This demonstrates their commitment to renewed energy and agriculture.  They also built a new indoor-outdoor stadium which was pretty fantastic. 

Yang, who has visited IU, spoke about the economics of the country and how its impacting the school.  He stated that Zhejiang University is looking at three main ingredients for economic growth: investment (which is doing well - it grew almost 30 percent in the last year); consumption (which is also doing well – it has increased about 15 percent); and import/export (which unfortunately has decreased about 15-20 percent over the last year).  The university wants to do more "internationalization," and by that they mean more international collaboration and also recruiting more international faculty. 

The research grants have increased dramatically since 1998 to 2008.  And patents have also greatly increased since 1998.  For the last three to fours years Zhejiang University has been the leader in the application of patents.  They have two different types of patents: invention patents and progress patents.  An important component of growing the number of patents is to train faculty on the importance of patents, and also the respect of having patents.

There are major reforms in place at Zhejiang University.   The first is dealing with their undergrad program.  In the past, they had 112 undergrad programs in 24 schools, and now they've put everything into just 6 categories.  They believe this allows students more time to develop their interests.  For the first two years they are exposed to a variety of classes because they take what we would consider "general studies" and in the last two years they focus on a specific area.  Each of the six different categories have different color t-shirts that the students wear so they can be easily identified.  This is obviously more ritualistic than in the U.S.

Another major reform in the university is that they've signed an agreement with the Hangzhou government to bring more investment and to grow the university in other regions.  They've added a national park and another university, and they're working to build campuses about the same size as the existing campus that we visited today in another location within the city. 

The university has a river on the main campus, and they're trying to connect the river to the main river locally, and then to the main river in Zhejiang.  This would allow a continual flow of water from the campus all the way up to Beijing. 

The university has a hospital system and a medical school on the main campus, which consists of seven affiliated hospitals and a staff of over 7,000.  The amount of money generated from the hospital system is significant; about $750 million in U.S. dollars.  This is approximately the same amount of revenue generated by the total university.  The university has joint research centers with other international universities, such as Singapore, Hong Kong, and the University of California. 

Important new initiatives the university is focusing on include sustainable energy, water pollution, e-service (which is a collaboration they have with IBM), social entrepreneurship (which includes a law school supported by a Taiwanese foundation), as well as a digital library which includes over 20 universities. 

Zhejiang University is in close collaboration with both Purdue and IU.  In fact, Zhejiang University has 16 students attending Purdue this year and they also have administrative staff that are going for training.  The Zhejiang University intends to double its student exchange in the next three years.  The majority of overseas students are language students.

In the afternoon, we attended a seminar dealing with investment and cooperation opportunities in Indiana for representatives of Chinese companies seeking to invest in the state.  There were over 84 participants at this seminar.

We also visited a "vineyard" for tea.  Tea is such a traditional drink in China that I'm going to go into more specifics in a later posting.

We ended the day at a banquet hosted by the governor of Zhejiang, Lu Zushan.

Tomorrow we are traveling to Japan and I look forward to learning about these very different Asian business and social cultures.