PRAC August 2002 e-Bulletin

AUGUST 2002 e-BULLETIN

MEMBER NEWS Page• Clayton Utz Boosts Project, Privatisation & Infrastructure Expertise 2• Davis Wright Tremaine LLP - Host Firm Invitation - PRAC Seattle 2002 Conference 3• Hogan & Hartson Expands Practice in Asia - Beijing Office Opens 4• Kochhar & Co. Opens Chennai Office 6• Rodyk & Davidson Merger Announcement 7• Werksmans Opens London Office - Werksmans UK Limited 8

DEALS MAKING NEWS• Hale and Dorr LLP Software M&A Retains Strength in First Half of Year 9• Tozzini Advises SPC on Floating Rate Series Notes 10

COUNTRY ROUNDUPS• AUSTRALIA - Clayton Utz -High Court Native Judgment - Lack of Certainty to Force Negotiated Outcomes 11• BRAZIL - Tozzini Freire Teixeira e Silva - Enforcement of Foreign Arbitral Awards 12• UNITED STATES - Brobeck Phleger & Harrison - NASDAQ/NYSE Proposed Changes to Corporate Governance Issues 13• UNITED STATES - Hogan & Hartson - Sarbanes-Oxley Act 2002 - SEC Update - Major 22

Securities Reform Legislation Enacted

PRESENTING• MALASYIA/UNITED STATES - Hale and Dorr/Skrine Joint Presentation in New York

" International Transaction Issues" - (online e-Bulletin only)

MEMBERSHIP• Conference - Seattle, Washington October 5-9 2002 Hosted by Davis Wright Tremaine LLP

REGISTRATION and conference information now online at PRAC web site. Deadline 31 August.

CALENDAR WATCH • 2002 October 5-9 PRAC Seattle Conference hosted by Davis Wright Tremaine LLP October 10 Latin American Members - Oil & Gas Seminar hosted by Fraser Milner Casgrain - Calgary October 18-21 Werksmans reception for PRAC members attending IBA, Durban South Africa • 2003 April 5-11 PRAC New Zealand Conference hosted by Simpson Grierson (details coming soon) May 4 NautaDutilh reception for PRAC members attending INTA 2003 - Amsterdam September 20-24 Vancouver 2003 Conference hosted by Richards Buell Sutton

Tools to Use• PRAC Contacts Matrix - August Update 40• PDF Directory 2002-2003 Member Firms now available at PRAC web site• Expert System 2002 now available at PRAC web site Private Libraries

PRAC e-Bulletin published monthly and emailed to member firm Primary, Practice Group & Marketing contactsMembers are encouraged to distribute the e-Bulletin within your firm as appropriate.

Members wishing to contribute articles for future editionsemail to susan.iannetta@fmc-law.com on or before the 15th of each month

Visit the PRAC web site www.prac.org to view this edition and other information on line

8

Print Post Approved PP255003/00084. Clayton Utz ISSUES is produced by Clayton Utz, Lawyers. It is intended to provide general information in summaryform on legal topics, current at the time of printing. The contents do not constitute legal advice and should not be relied upon as such. Formal legal adviceshould be sought in particular matters. Persons listed may not be admitted in all states. In respect of legal services provided in NSW, liability is limited bythe Solicitors’ Limitation of Liability Scheme approved under the Professional Standards Act 1994 (NSW).

Sydney Melbourne Brisbane Perth Canberra Darwin InternetDavid Landy Penny Grau Darryl McDonough Mark Paganin Paul Armarego Neil Philip www.claytonutz.comGreg James Charles Rosedale Levels 18-27 Will Moncrieff Wal Jurkiewicz 17-19 Lindsay StLevels 22-35 Levels 17-19 215 Adelaide St Levels 35-39 Level 8 Darwin NT 0800No.1 O'Connell St 333 Collins St Brisbane Qld 4000 BankWest Tower Canberra House (08) 8943 2555Sydney NSW 2000 Melbourne Vic 3000 (07) 3292 7000 108 St George's Tce 40 Marcus Clarke St(02) 9353 4000 (03) 9286 6000 Perth WA 6000 Canberra ACT 2601

(08) 9426 8000 (02) 6279 4000

For further information please contact one of the following Partners.

he recent addition of two newCorporate Partners - AdamHandley and Michael

Harrison - has boosted our expertisein a wide range of project, privatisationand infrastructure work

Adam Handley previously headed theAndersen Legal Government ServicesIndustry Group. He was also secondedto Freight Rail Corporation (nowPacific National) for a three yearperiod to act as General Counsel.

Adam’s areas of expertise include:• Government sector (including

Government business enterprises/State-owned corporations)

• Transport (particularly rail, road,airports and ports)

• Privatisation & corporatisation(rail, airports, airlines)

• Joint ventures and alliances.

The matters that Adam has handledinclude:• Acting as General Counsel and

Project Manager – Privatisation forFreight Rail Corporation(FreightCorp) in relation to allaspects of its privatisation

• Overseeing FreightCorp’stendering and procurementprogramme, including develop-ment of best practice tenderingprocedures, oversight of all probityissues, tenderer liaison andcontract negotiation

• Acting for the Federal AirportsCorporation (FAC) (while onsecondment) during the privati-sation of the Phase 1 and Phase 2Federal Airports (18 airports)

• Project Leader to the Governmentof the Republic of Armenia on

New PartnersT

Adam Handley Michael Harrison

the outsourcing of the ArmenianAirport Authorities’ new US$30-35m air cargo terminal to theprivate sector, and the design,construct, operate and transferproposal for a new internationalpassenger terminal; and

• Acting for FreightCorp on thenegotiation and implementationof its alliance with AWB Limited inrelation to the construction andoperation of grain consolidationfacilities in New South Wales.

Michael Harrison was previously anAndersen Worldwide Partner. Beforemoving to Australia, he worked atDenton Hall (now Denton WildeSapte), one of the UK’s leading energyand resources practices.

Michael acts for clients in a range ofindustries, principally electricity, oiland gas, rail, ports, resources(including renewable resources),water, waste and waste processing.

He acts on projects (mining, oil andgas, electricity, ports, rail and wasteprocess), and provides competition,regulated markets, corporate(including mergers and acquisitions,joint ventures, debt and equityraisings) and commercial advice toclients. Michael has also acted onprivatizations (airports, electricity,gas, ports and rail).

A small sample of Michael’s clientsand matters includes:• SG Australia – the development

of a diesel generation powerstation in South Australia

• Financiers to AES Transpower –acquisition of the two Ecogen gas-fired power stations in Victoria

• Mission Energy – acquisition andnon-recourse financing of twopumped storage electricitygenerating facilities

• British Gas – the development ofthe Network Code for access to itsUK gas transmission and distributionnetwork

• TOTAL (now TOTALFinaElf) – LPGjoint ventures in the Middle East

• TOTAL – oil refinery reclamationprojects in Russia, Bulgaria andRomania

• Toll Ports & Resources –infrastructure developments

• FreightCorp (now Pacific National)– aspects of its privatisation

• Anaconda Nickel – the MurrinMurrin project, including agree-ments for gas supply, gastransportation, power unit supply,rail transportation, port berthingand industrial gases supply, andsubsequently on sale and lease backof infrastructure assets, includingpower plant, calcrete facility, andheavy machinery

• Three train operating companiesand one rollingstock company – partof the privatisation of the UK railindustry, including negotiatingcontracts for the provision of goodsand services.

Dear PRAC Members:

Davis Wright Tremaine LLP, on behalf of the Pacific Rim Advisory Council, is pleased to invite youto Seattle, the beautiful "Emerald City," to join in their 32nd Conference. The conference will beheld October 5 – 9, 2002, at The Elliott Grand Hyatt hotel in Seattle, Washington.

A jewel of the Pacific Northwest, Seattle is home to world-renowned Microsoft, Starbucks CoffeeCompany, the Space Needle and The Seattle Mariners. The landscape offers lush greenery and watereverywhere – the Puget Sound, several large lakes, rivers, and canals. And, when the mountainemerges from the clouds (Mt. Rainier, all 14,410 feet/4,392 meters of her), there is no more awe-inspiring sight. Despite the rumors, Seattle receives less rainfall annually than New York, but shouldthe rain make an appearance during your stay, our city offers great shopping, dining, theater produc-tions and art galleries, which makes the weather unimportant.

In order for you to plan your trip we are enclosing our Conference Registration Package whichincludes a draft Conference Agenda, Registration forms and Optional Tour information. You willnote that we have added a Public Seminar to the business agenda and additional information on thisevent will be forthcoming. Registration deadline is 31 August and as some events are limited capacity, your early attention is needed. Complete registration materials including on-line registration are available at the PRAC website Seattle Conference link (www.prac.org).

We are excited about this conference and eager to welcome you to our wonderful "Emerald City."

Best regards,

Davis Wright Tremaine LLP

A. Peter Parsons Joseph D. Weinstein Bruce E. H. Johnson

PRAC CONFERENCES E A T T L E , W A S H I N G T O N

O c t o b e r 5 – 9 , 2 0 0 2

For Immediate Release:July 23, 2002

Contact:Hogan & Hartson L.L.P.Maura Connell Brandt(202) 637-8662

Hogan & Hartson L.L.P. Expands Practice in AsiaFirm to Open Office in China

Washington, DC, July 23, 2002 - Hogan & Hartson L.L.P., an international law firm headquartered in Washington,D.C. with more than 900 lawyers worldwide, announced today that the firm will open an office in Beijing, China inearly August. The firm's new office will have experience in areas critical to multi-national and Chinese clients engagedin in-bound and out-bound transactions, with particular emphasis on business and finance, international trade andintellectual property. The office will have strong capabilities to advise U.S., European and Asian clients on structuringinvestments and operations in China, including in Beijing, Shanghai and other provinces, and in dealings with theChinese regulatory bodies.

The office will open with seven lawyers and legal professionals, including two resident partners: Jun Wei, who hasbeen practicing in Beijing since 1993 and will serve as the office's chief representative and co-managing partner, andSteven Robinson, a Hogan & Hartson international business transactions partner who has significant experience inemerging markets in Asia and Europe and will serve as the other co-managing partner. In addition, Stephen Curley,who has worked closely with Jun Wei since 1993 on advising multi-national companies on transactional mattersinvolving China and has substantial international corporate and tax experience, will join Hogan & Hartson in its NewYork office. To provide clients with assistance in developing and financing infrastructure and other projects, JamesGlucksman, a Hogan & Hartson international business advisor with experience in China and East Asia, also will havea significant presence in the Beijing office.

"The continued opening of China’s economy to foreign investment offers significant opportunities for multi-nationaland Chinese companies looking to expand their business operations," said Warren Gorrell, Chairman. "Our lawyers’experience in advising companies and investment banks in sophisticated business and capital markets transactionsand government regulatory matters in China and other markets around the world puts us in a strong position toadvise clients pursuing trade and investment opportunities in China given its highly regulated economy. In addition,our deep experience in many important industry sectors, arising in part from our regulatory strength in areas,including energy, health, life sciences, communications, and transportation, gives Hogan & Hartson a uniquecompetitive advantage.”

In making the announcement, Gorrell stated that Stonebridge International LLC also intends to have a presence inBeijing as part of its strategic alliance with Hogan & Hartson. Stonebridge is the global strategy firm founded byformer National Security Advisor Samuel (Sandy) Berger and former U.S. Ambassador to Brazil Anthony Harrington,both of whom are former Hogan partners. Among Stonebridge's experts on China policy are Ambassador JeffreyBader, former Assistant U.S. Trade Representative for China, who led the United States delegation in completingnegotiations on the accession of China into the WTO, and Professor Kenneth Lieberthal, who formerly served asSpecial Assistant to the President for Asia and Senior Director for Asian Affairs at the National Security Council.Gorrell commented that "the strategic alliance between Hogan & Hartson and Stonebridge will enable us to offer ourrespective clients the type of market knowledge and business and legal advice that will give them a real advantage asthey pursue strategies for expansion or entry into China. We will be similarly well placed to offer such advice toChinese firms on in-bound transactions and where they are looking to expand into other markets.”

The Beijing office of Hogan & Hartson will include both U.S. and native Chinese lawyers and legal professionals whohave extensive experience in handling cross-border mergers and acquisitions, joint ventures and other investments,financings, infrastructure development, company restructurings, government regulatory issues, and intellectualproperty matters. In addition, they regularly counsel Chinese companies and Chinese government ministries on abroad range of matters. Ms. Wei, the resident Chinese partner, is admitted to the New York Bar and has an LL.M.from Harvard University, as well as an LL.M. and LL.B. from Beijing University. She served in the Chinese NationalPeople's Congress as the Deputy Division Director of the Legislative Affairs Commission and has been significantlyinvolved in the drafting and interpretation of many important Chinese business and investment laws.

"Companies in the U.S., Europe and elsewhere in Asia, particularly in industries such as pharmaceuticals, healthcare, energy, transportation, and communications, are expanding their operations into China and taking advantage ofthe more favorable investment climate," said Jun Wei. "In addition, the increased focus on infrastructure developmentand privatization is attracting companies with experience in these areas, as well as firms that are interested infinancing these projects. Hogan & Hartson's presence on three continents, as well as its long history of representingclients in all of these sectors, will be of great benefit to the China practice."

On matters involving international trade, energy, life sciences, communications, transportation, and other cross-border regulatory issues, the Beijing office will work closely with Hogan & Hartson lawyers resident in Washington,DC, Brussels, Berlin, Moscow, and Tokyo. In the international trade area, Hogan & Hartson's practice features formerU.S. and European trade negotiators and ambassadors, including Clayton Yeutter, Hugo Paemen, Jeanne Archibald,and Warren Maruyama. These attorneys and trade specialists have negotiated and implemented WTO agreements,have extensive dispute settlement experience, and have handled trade matters involving a broad range of productsand services and intellectual property.

"We are very excited about the opportunity to join Hogan & Hartson," said Stephen Curley. "There are suchsignificant synergies between our practices, and our combined experience will provide clients with the full scope ofcorporate, regulatory and intellectual property capabilities that they need to take full advantage of the opportunitiespresented by a more open economy in China."

Hogan & Hartson L.L.P. is an international law firm headquartered in Washington, D.C., with more than 900 attorneyspracticing in 19 offices worldwide. The firm has a broad-based national and international practice that cuts acrossvirtually all legal disciplines and industries. Hogan & Hartson has European offices in Berlin, Brussels, London, Paris,Budapest, Prague, Warsaw, and Moscow; Asian offices in Beijing and Tokyo; and U.S. offices in New York,Baltimore, Northern Virginia, Miami, Los Angeles, Denver, Boulder, Colorado Springs, and Washington, D.C. Furtherinformation about Hogan & Hartson is available at www.hhlaw.com.

Hogan & Hartson L.L.P.China Merchants TowerFloor 29, Suite C118 Jianguo LuBeijing, China 100022Tel: 8610-6566-9088Fax: 8610-6566-9096Contact: Jun Wei or Steven Robinson

KOCHHAR & CO. ESTABLISHES CHENNAI OFFICE

We have great pleasure in informing you that Kochhar & Co. has recently established its office in Chennai(in the State of Tamil Nadu), the gateway to Southern India. This development makes the Firm one of theonly two law firms in the country with offices in Delhi, Mumbai, Bangalore and Chennai and with residentpartners in each of the said offices.

Tamil Nadu is now considered to be one of the most attractive destinations for foreign investments and isfast emerging as the ‘Blue Chip” state for various investments. Currently, Tamil Nadu ranks second amongthe States of India in terms of the number of projects in the pipeline. Chennai, the capital city of Tamil Nadu,has become the most favoured venue for international back office operations given the abundant availabilityof well trained manpower at very competitive costs, sound infrastructure and a well established industrialculture.

Chennai has also acquired the reputation of being the Detroit of South Asia, with the setting up of majorautomobile projects in the city including Hyundai Motors, Mitsubishi, Mahindra Ford, Hindustan Motors andexpansion plans of Ashok Leyland and Tractors and Farm Equipment Limited (TAFE).

The Chennai office of Kochhar & Co. is a full service practice and represents some of the largestcorporations in the world on a wide range of corporate, commercial and contentious issues. Amongst others ,the important practice areas of the Chennai office include foreign investments, joint ventures, mergers andacquisitions, transfer of technology, labor/employment laws, taxation and real estate.

The Chennai office is headed by its’ Resident Partners, Ms. Dorothy Thomas and Mr. Devakumar. Both Ms.Thomas and Mr. Devakumar have sustained experience in representing numerous global corporations onIndian law matters.

The contact details of the office are as follows:

Kochhar & Co.Advocate & Legal ConsultantsSuite 503, Fifth FloorRaheja Towers# 177, Anna SalaiChennai 600 002Tamil Nadu

Tel: (91-44) 852 3775 , (91-44) 851 7591Fax: (91-44) 851 7588Email: chennai@kochhar.com

RODYK & DAVDISON ANNOUNCES MERGER

NOTICE OF MERGER

We are pleased to inform you of our merger with HelenYeo & Partners, which will take effect on 1st November 2002under the name of ‘Rodyk & Davidson’.

The merger, which is unprecedented in Singapore’s legal industry, makes history, and will vault the merged firm intothe group of 6 largest law firms in Singapore.

A merger of equals, the merged firm will comprise more than 90 lawyers and 180 support staff.

We are confident that you, our clients, will benefit significantly from the combination of a wider range of services.

The two firms enjoy a synergy that combines the strengths of both firms across diverse practice groups, and willenable us to develop greater specialisation. This translates to a significant value-add for our clients.

The merged firm will be led by Mrs Helen Yeo as Managing Partner and Mrs Lee Ai Ming as Deputy ManagingPartner, both of whom are accountable to an Executive Committee comprising equal representation from both firms.

We aim for a seamless transition to the commencement of operations as the new merged firm, and we are confidentthat you will not experience any delays in your matters as a result of the merger.

Meanwhile we hope you will celebrate this merger with us, which we embrace with vision, confidence andenthusiasm, and a continued commitment to deliver excellence in legal services.

Yours sincerely

The Executive CommitteeRodyk & Davidson

ABOUT HELEN YEO & PARTNERS

Helen Yeo and Partners is the youngest firm in the top ranking law firms, having only turned 10 in July 2002.

HY&P has a diverse clientele of banks, local listed corporations, government-linked companies, large propertydevelopers, insurers and healthcare providers. HY&P’s core practices are banking and finance, corporate, regionaltransactions, commercial litigation, international arbitration, construction litigation, insolvency and debt restructuring,medical defence, insurance and real estate transactions for developers.

In pursuit of HY&P’s ambition in 1992 to be a regional law firm, HY&P embarked on developing its regional and Chinapractices. In March 1997, HY&P was the first Singaporean firm to open a licensed branch office in Shanghai. HY&Precently relocated its China office to the prestigious Ocean Towers in Shanghai.

WERKSMANS UK LIMITED Opens London Office

Werksmans UK Limited opened a London office earlier this year which will focus advising primarily on SouthAfrican legal issues for clients and foreign law firms with businesses into and out of South Africa and Africa.

Werksmans is the management firm for the Lex Africa network which comprises law firms with proven trackrecords in approximately 18 African countries including Botswana, Burkina Faso, Cote D'Ivoire, Ghana,Kenya, Lesotho, Malawi, Mauritius, Morocco, Mozambique, Nigeria, Senegal, South Africa, Swaziland,Tanzania, Zambia and Zimbabwe. This network offers the expertise and intimate knowledge of localcustom, practice and language in the representative African countries.

Werksmans UK Limited has immediate access to Werksmans, Inc. its counterpart in South Africa.Werksmans, Inc., was established in 1917 in South Africa and is today one of the largest commercial lawfirms in Africa with a client base consisting of many major multinational, leading corporations listed on theJohannesburg Stock Exchange and any of the top South African companies.

Werksmans UK Limited15 Stratton Street, MayfairLondon, United Kingdom W1J 8LQTel +44 (0) 20 7659 0625Fax +44 (0) 20 7659 6266

Vaughn Harrison email: vharrison@werksmans.co.ukJohan vanWykjvanwyk@werksman.co.uk

Contact Werksmans UK Limited and Werksmans, Inc.Mrs. Vicky BunyanWerksmans Inc.vbunyan@werksmans.co.za

HALE AND DORR LLP - Software M&A Retains Strength in First Half of Year

July 2, 2002

Mergers and acquisition activity in the software industry remained at a relatively high level through the firstsix months of the year, bucking a slowdown in M& A transactions generally. According to Mergerstat, thecategory of “computer software, supplies and services” was the largest industry segment for M& Atransactions in the first half of 2002.

Driven by competitive pressures, technological convergence and market demand for integrated, enterprise-wide solutions, many software companies are seeking merger partners, while current valuations have madeacquisitions more attractive. Successful completion of these transactions demands careful management ofthe risks inherent in M&A, as well as a comprehensive understanding of the specialized nature of thesoftware business, including the importance of key personnel and intellectual property.

According to Global Securities, in the first half of 2002 six M&A transactions for software companies (SICCode 7372) valued in excess of $150 million were announced. As one of the nation’s premier counsel tosoftware companies, Hale and Dorr is proud to have advised clients in four of these six transactions:

On June 10, SilverStream Software (Nasdaq: SSSW), a leader in web services-oriented applicationdevelopment, announced that it had agreed to be acquired for $221 million in cash by Novell (Nasdaq:NOVL), the leading provider of Net business solutions. The transaction, structured as a cash tender offer, issubject to regulatory and other customary conditions and is expected to be completed in July.

On June 10, SkillSoft (Nasdaq: SKIL) and SmartForce (Nasdaq: SMTF), both leading providers of e-learning solutions to the Global 5000, announced they had agreed to merge in a stock-for-stock transactionvalued at $413 million. Subject to regulatory and shareholder approvals and customary closing conditions,the transaction is expected to close in the third quarter of 2002.On May 29, Mentor Graphics (Nasdaq: MENT), a world leader in electronic hardware and software designsolutions, completed its $156 million cash tender offer for Innoveda (Nasdaq: INOV), a worldwide leader inelectronic design automation technology, software and services.

On May 14, OTG Software (Nasdaq: OTGS), a leading provider of data storage, data access and emailmanagement solutions, was acquired by Legato Systems (Nasdaq: LGTO), a worldwide leader in enterprisestorage management software, in a stock and cash merger valued at $455 million.

For more information about our software practice our M&A practice please visit www.haledorr.com/practices.

TOZZINI FREIRE TEIXEIRA E SILVA ADVISES SPC ON FLOATING RATE SERIES NOTES

The Brazilian Diversified Payment Rights Finance Company, a special purpose company (SPC) incorporated byBanco Itaú SA, has issued US$150 million Floating Rates Series 2002-2 Notes, due March 2006. Banco Itaú actedas the originator of the diversified payment rights and the servicer to the deal. The SPC is an exempted limitedliability company created under the laws of the Cayman Islands.

The issuance will be secured by the assets of Banco Itaú. These consist primarily of the bank’s rights and interests inthe diversified payment rights existing on or generated after the date of this issue (July 19) and purchased on thatdate by Banco Itaú, duly organised and existing under Brazilian law.

The diversified payment rights are, here, dollar-denominated payment orders received or to be received by BancoItaú.

Bank of America Securities LLC acted as initial purchaser, with Deutsche Bank (Cayman) Limited acting as indenturetrustee. XL Capital Assurance Inc insured the deal.

Tozzini, Freire, Teixeira e Silva Advogados, through Antonio Felix de Araujo Cintra, Juliana de Almeida Galanteand Kátia Ichiba de Oliveira, advised the SPC on Brazilian law.

AUSTRALIA - High Court Native Title Judgment - Lack of Certainly to Force Negotiated Outcomes

Brisbane, 8 August 2002

In a four hundred page document, the High Court today delivered its long awaited decision on the Wardappeal, largely continuing the uncertainty surrounding the resolution of native title claims.

Darren Fooks , Clayton Utz Native Title partner, said that, “given the sheer size and complexity of thejudgment it will take some time to work through the detail, but it is clear that it is not the most desired resultfor the resources sector nor for native title claimants,” Mr Fooks said.

“All parties have been hoping for a decision that would bring simplicity and greater clarity to the process ofresolving native title issues, but that’s not what was delivered,” he said.

“The practical outcome is that negotiated solutions, which take both time and resources, will continue to bethe order of the day. This is the only way to avoid the alternative of drawn out and costly Court proceedingsand subsequent appeals,” he said.

“Significantly, the Court's ruling that there is no native title right to sub-surface minerals or petroleum will givesome comfort to the mining and petroleum industries ” said Mr Fooks.

“The decision does not give any easy solution for the clearing of the backlog of over 11,000 applications formineral titles in Western Australia.” he said.

In a separate judgment also handed down today, the High Court determined that in NSW, Western LandsLeases have completely extinguished native title.

“The judgment indicates that there is very little of NSW, essentially only those areas where there is no titlesuch as on vacant Crown land, that remains available for native title.” Mr Fooks said.

For more information please contact:

Name: Elizabeth Weaver - Corporate Affairs ManagerTel: +61 2 9353 5451Fax: +61 2 8220 6700Email: eweaver@claytonutz.com

BRAZIL - Tozzini Freire Teixeira e Silva Enforcement of Foreign Arbitral Awards

August 7, 2002

Following legislative approval and the issuance of a Presidential Decree on July 23, 2002, Brazil hasofficially adopted the Convention on the Recognition and Enforcement of Foreign Arbitral Awards executedin New York on June 10, 1958 (the "New York Convention").

The New York Convention establishes that foreign arbitral awards shall be recognized and enforced withoutany retrial or reexamination of the original decision. For over forty years, it has been largely considered themost important piece of international legislation in the field of arbitration.

It should be noted that the recognition of foreign arbitral awards in Brazil was already assured by FederalLaw 9,307 of September 24, 1996 (known as the "Brazilian Arbitration Law"), which closely tracks theprovisions of the New York Convention.

Notwithstanding the foregoing, the adoption of the full text of the New York Convention provides additionalcomfort to those who conduct business with Brazilian parties. It also reinforces the observance in Brazil ofprinciples of arbitration firmly established by the international community.

For Additional Information Contact:Fernando Eduardo SerecPartnerTelephone (55 11) 3291-1000 - Fax (55 11) 3291-1111TOZZINI, FREIRE, TEIXEIRA E SILVA ADVOGADOS..

NYSE Proposed Changes toCorporate Governance Standards

n June 6, 2002, the New York Stock Exchange (“NYSE”) released its proposed changes tothe NYSE listed company manual to address corporate governance issues. The NYSEBoard of Directors will review the changes and, after the comment period, is expected to

approve the changes on August 1, 2002.

On May 24, 2002, NASDAQ adopted final rules on Corporate Governance. The NYSE proposalis more extensive than the NASDAQ final rule. Both standards include shareholder approval ofequity plans and the independence of directors, but NASDAQ does not address the CEOcertification of disclosure, board governance and ethics policies and board committeerequirements included in the NYSE proposal. NASDAQ did adopt specific rules for review ofrelated party transactions, disclosure of “going concern” audit opinions and disclosure inaccordance with Regulation FD. Please see the “Brobeck Issue Alert” from May 2002summarizing the NASDAQ Corporate Governance rules.

A summary of the proposed NYSE rules follows:

CEO Certification

Proposed Rule: Each year thecompany’s chief executive officer(CEO) must certify to the NYSEthat:

• the company has establishedprocedures for verifying theaccuracy and completeness ofthe information provided toinvestors and that theprocedures were carried out;

• based upon the adequacy of theprocedures and the diligence ofthose enforcing them, the CEObelieves the informationprovided to investors isaccurate and complete in allmaterial respects;

• the CEO has reviewed theprocedures and the company’sobservance of the procedureswith the board; and

• the CEO is not aware of anyviolation by the company ofthe NYSE listing standards.

Current Rule: Current NYSEstandards require that a companyprovide annual certificationregarding insider trading and itscompliance with the NYSE auditcommittee requirements. Thecurrent standards do not requireany certification by the CEO.

Shareholder Voting on Equity Compensation Plans

Proposed Rule: Shareholdersmust have the opportunity to voteon all equity compensation plans.A broker may not vote a customer’sshares on an equity compensation

plan unless the shareholderinstructs the broker to do so.

Current Rule: Current NYSEstandards require shareholder

OT

IA

NYSE proposesmodifications toseveralimportantcorporategovernancestandards

Businessand

echnology

ssuelert

June2002

approval of most equity compensation plans butcompanies may implement broadly based planswithout shareholder approval.

Under the current rule, a broker may vote shares byproxy in favor of an executive compensation plan if

he or she has not received voting instructions fromthe beneficial owner by the date on the proxymaterial and the action to be taken at the meetingdoes not authorize the issuance of more than fivepercent of the issuer’s stock outstanding orsubstantially affect the rights of the stock.

Board Composition

1. Boards Must be Composed of a Majority of Independent Directors

Proposed Rule: The Board of Directors of NYSElisted companies must include a majority ofindependent directors. Companies currently listed onthe NYSE must comply with the new rule within 24months of its enactment; companies joining theNYSE after the rule’s enactment must comply within24 months of the company’s listing date. A company

must publicly disclose when it becomes compliantwith the rule.

Current Rule: Current NYSE standards regulate thecomposition of the audit committee, but there is norequirement for a minimum number of independentdirectors on a board.

2. Definition of “Independent Director”

Proposed Rule: The board of directors must make anaffirmative decision that no material relationship existsbetween a director and the company before a directormay be considered “independent.” The board may useits discretion to determine what constitutes a “materialrelationship”; however, decisions made by the boardwith respect to director independence must bedisclosed to shareholders in the company’s annualproxy statement.

In its independent determination, the board shouldconsider a director’s past employment, commercial,banking, consulting, legal, accounting, charitable, orfamilial relationships.

Current Rule: Current NYSE standards do notrequire the board to make an affirmative decisionabout a director’s independence.

3. Five-year “Cooling Off” Period

Proposed Rule: The new rule increases to five yearsthe “cooling-off” period that must elapse before adirector who previously had a material relationshipwith the company can be considered independent.The rule implies that once the “cooling-off” periodhas elapsed, the board must still make an affirmativedecision regard the director’s independence.Although the NYSE release is unclear, we believethere is no exception to the “cooling-off” period forany director; in contrast to the current rule whichallows boards to make one exception.

Under the new rule, former employees or affiliates ofa past or present auditor of the company areconsidered to have a material relationship with thecompany and are subject to the five-year “coolingoff” period.

Current Rule: Current NYSE standards mandate athree-year “cooling off” period. However, it does notapply to former employees of the company’s auditor.Furthermore, no affirmative independencedetermination is required once the “cooling off”period is terminated.

Under the current rule, the board may make oneexception to the three-year “cooling off” periodpermitting a former employee to serve on the auditcommittee. If it does so, the board must disclose thenature of the director’s relationship with the companyand the reason why it believes that it serves the bestinterests of the company to serve on the committee inthe company’s next proxy statement.

3

4. Non-Management Executive Sessions

Proposed Rule: Non-management directors mustmeet without management at regularly scheduledexecutive sessions. The independent directors mustdesignate and disclose in the annual proxy statementthe name of the director who will preside at theexecutive sessions.

Current Rule: Current NYSE standards do notrequire regularly scheduled sessions of non-management directors.

Nominating/Corporate Governance and Compensation Committees

Proposed Rule: Companies must form both anominating/corporate governance committee and acompensation committee. Each committee must becomposed entirely of independent directors and havea written charter.

Both committee charters must address: • the committee’s purpose;• its responsibilities and duties; • an annual performance evaluation of the

committee;• committee member qualifications, appointment

and removal; • committee structure and operations, including

the authority to delegate to subcommittees; and • committee procedures for reporting to the board.

A company must include the charters of thecompensation and nominating/corporate governancecommittees on its website. In addition it must state inits annual report that the information is available onits website and in print to any shareholder whorequests it.

Nominating/Corporate Governance Committee

The nominating/corporate governance committee’scharter must state that its purpose is to: • select individuals qualified to become board

members;• select, or recommend that the board select, the

director nominees for the next annual meeting ofshareholders; and

• develop and recommend to the board a set ofcorporate governance principles.

The charter must also state that the committee’sduties and responsibilities are to:

• reflect the criteria for selecting new boardmembers; and

• oversee the evaluation of the board andmanagement.

The charter should give sole authority to thecommittee to hire and terminate any search firm usedto identify director candidates and approve the searchfirm’s fees and terms.

Compensation Committee

The compensation committee’s charter must statethat its purpose is to:• execute the board’s responsibilities regarding

compensation of the company’s executives; and • provide an annual report on executive

compensation in the company’s proxy statement.

The charter must also state that the committee’sduties and responsibilities are to:• review and approve corporate goals and

objectives as they relate to CEO compensation;• evaluate the CEO’s performance based on these

goals and objectives; • set the CEO’s compensation based on the

evaluation; and • advise the board on incentive-compensation

plans and equity-based plans.

If a compensation consultant assists in the evaluationof director, CEO or senior executive compensation,the committee charter should give the committee thesole authority to retain and terminate the consultingfirm and to approve the firm’s fees and terms.

Current Rule: Current NYSE standards do notrequire nominating, corporate governance, orcompensation committees.

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Audit Committee

1. Audit Committee Membership

Proposed Rule: If an audit committee membersimultaneously serves on the audit committee ofmore than three companies, the board must make anaffirmative determination that such simultaneousservice does not affect the ability of the director toserve on the committee. The board must disclose thisdetermination in its annual proxy statement.

Current Rule: Current NYSE standards do notrequire companies to make an affirmativedetermination that simultaneous service will notimpair the ability of a director to serve.

2. Director Compensation

Proposed Rule: Audit committee members mayreceive only director compensation from thecompany (which may include additionalcompensation for serving on committees or as acommittee chair).

Current Rule: Current NYSE standards permitindependent directors who are members of the auditcommittee to receive up to $60,000 in non-directorcompensation from the company withoutrelinquishing their independent status.

3. Audit Committee Chair and Voting Rights

Proposed Rule: An audit committee member whothe board has determined is independent but whoholds more than 20% of the company’s stock (or is ageneral partner, controlling shareholder, or officer ofany shareholder who holds more than 20% of the

company’s stock) may not chair the audit committeenor vote in audit committee proceedings.

Current Rule: Current NYSE standards require thatat least three directors be independent; there is nodisqualification for 20% holders.

4. Audit Committee Chair Expertise

Proposed Rule: The audit committee chair musthave accounting or financial management expertise.

Current Rule: Current NYSE standards do notinclude specific requirements for the committee

chair, although all audit committee members must befinancially literate and at least one member musthave accounting or financial management expertise.

5. Audit Committee Authority Over Independent Auditors

Proposed Rule: The audit committee charter shallprovide that the committee is solely responsible forhiring and firing the independent auditors, and forapproving any significant non-audit work by the

independent auditors. This responsibility may not bedelegated to management.

Current Rule: Current NYSE standards give theboard the authority to hire and fire auditors.

6. Audit Committee Charter

Proposed Rule: The audit committee must adopt acharter that addresses the committee’s purpose, dutiesand responsibilities, and the annual performanceevaluation of the committee. The company mustmake the audit committee charter available on its

website and state in its annual report that the charteris available on its website and in print to anyshareholder who requests it.

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The audit committee’s charter must state that itspurpose is to:a) assist the board with the oversight of:

• the integrity of the company’s financialstatements;

• the company’s compliance with legal andregulatory requirements;

• the independent auditor’s qualifications andindependence; and

• the performance of the company’s internalaudit function and independent auditor;

b) prepare the report required by the SEC rules andinclude it in the company’s annual proxystatement.

The charter must state that the committee’s dutiesand responsibilities concerning independent auditorsare to:• review an annual report prepared by the

independent auditor that addresses: • the auditor’s internal quality-control

procedures; • any material issue discovered by the auditor,

within the last five years, that threatens theauditor’s objectivity, independence, orability; and

• the audit committee must present itsconclusion respecting the independentauditor to the full board;

• discuss the quarterly and annual audited financialstatements with management and theindependent auditor;

• meet in separate sessions with management, theinternal auditors, and independent auditors on aquarterly basis;

• review any audit problems or difficulties withthe independent auditor and reviewmanagement’s responses; and

• set hiring policies for employees or formeremployees of the independent auditors.

The charter must state that the committee’s additionalduties and responsibilities are to:• discuss information provided to analysts and

rating agencies regarding press releases andearnings guidance;

• when necessary, seek advice and assistance fromoutside legal, accounting, or other advisors;

• review the guidelines and policies that governrisk assessment and risk management; and

• report regularly to the board of directors.

Current Rule: Current NYSE standards require theBoard of Directors to adopt and approve a formalwritten charter for the audit committee. The chartermust be reviewed annually and the company mustcertify to the NYSE that the committee has reviewedand reassessed the adequacy of the charter. The auditcommittee is required to periodically review therelationship between the outside auditor and thecompany to assess any issues that may impact theobjectivity or independence of the outside auditor.

Adoption of Corporate Governance and Ethics Policies

1. Corporate Governance Guidelines

Proposed Rule: Companies must adopt corporategovernance guidelines. The company shall includethese guidelines on its website and state in the annualreport that the guidelines are available on its websiteand in print to any shareholder who requests them.Although the NYSE does not promulgate a specificset of corporate governance guidelines, it considersthe following areas to be generally applicable:

• director qualification standards that reflect theindependence requirements and other substantiveissues, such as: policies limiting the number ofboards on which a director may serve, directortenure, retirement, and succession;

• director responsibilities, including attendance atboard meetings and advance review of meetingmaterials;

• director access to management and independentadvisors;

• director compensation;• director orientation and continuing education;• management succession policies; and • the annual performance evaluation of the board.

Current Rule: Current NYSE standards do notrequire that a company adopt corporate governanceguidelines.

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2. Code of Business Ethics

Proposed Rule: Companies should adopt a code ofbusiness conduct and ethics for directors, officers,and employees. Any waiver of the code for directorsand executives may be made only by the board andmust be promptly disclosed to shareholders.

The code should address: • preventing conflicts of interest;• restrictions on officers and directors from using

corporate property, information, or position forpersonal gain;

• confidentiality of company and customerinformation;

• the company’s commitment to fair dealing bycompany employees with customers, suppliers,competitors, and employees;

• protection and proper use of company assets;• proactive support of compliance with laws, rules,

and regulations; and• encouraging the reporting of any illegal or

unethical behavior.

Current Rule: Current NYSE standards do notrequire a company to adopt a code of businessconduct and ethics.

3. Director Education

Proposed Rule: Companies should establishorientation programs for new board members. Inaddition, the NYSE will create a Director’s Instituteto offer a continuing education forum for current andnewly-elected members.

Current Rule: Current NYSE standards do notrequire that a company establish an orientationprogram nor does the NYSE offer continuingeducation programs for company directors.

Public Reprimands for Violations of NYSE Listing Standards

Proposed Rule: In addition to the current remedies,the NYSE may issue a public reprimand tocompanies that violate listing standards. This willincrease the risk of market reaction to violations ofNYSE rules.

Current Rule: Current NYSE standards do notprovide for public reprimands. The NYSE maysuspend or delist companies that do not comply withexisting standards.

Non-U.S. Companies

Proposed Rule: Foreign companies must discloseany significant differences between their corporategovernance practices and those required of domesticcorporations.

Current Rule: Current NYSE standards do notrequire such disclosure.

Please do not hesitate to contact us if you have questions or comments regarding the subject of this Issue Alert.

This Business and Technology Issue Alert is prepared by the Business and Technology Group of Brobeck, Phleger & Harrison LLP.

It is provided for information purposes to clients and others interested in the subject and is not intended as legal advice.

Readers should not act upon information in this publication without seeking professional legal counseling.

Clients of the Firm are permitted to make copies for internal distribution.

Brobeck. When your future is at stake.®

ATTORNEYSAT LAW www.brobeck.com

©2002 Brobeck, Phleger & Harrison LLP

Brobeck, Phleger & Harrison LLP

www.brobeck.com

Nasdaq Rule Changes toCorporate Governance Standards

On May 24, 2002, The Nasdaq Stock Market, Inc. announced that its board ofdirectors approved modifications to several important corporate governancestandards, and have submitted the modifications to the Securities and ExchangeCommission for final approval. The rule changes impact the following areas.

1. Stock Option Plans

New rule: The new rule requires stockholder approval for all plans in whichofficers and directors participate.

Prior rule: Before adoption of the new rule, stockholder approval was notrequired for “broadly-based” stock option plans (e.g., stock option plans where amajority of the participants were not officers or directors of the company).

Unchanged: The new rule does not affect the existing exemption allowing listedcompanies to provide inducement grants to new executive officers. However,inducement grants must now be approved by a compensation committeecomposed of independent directors or by a majority of the company’sindependent directors. The new rules also left unchanged the existing exception from stockholderapproval for Employee Stock Purchase (also known as Employee StockOwnership) Plans, rights and warrants that are offered generally to allstockholders.

The new rules also left unchanged the existing exception from stockholderapproval for Employee Stock Purchase Plans (also known as Employee StockOwnership Plans) and for rights and warrants that are offered generally to allstockholders.

2. Definition of Independent Director

New rule: The definition of “director compensation” will be extended to prohibitpayments to independent directors or to their family members in excess of$60,000. This new definition also includes a prohibition on political contributionsto, or on behalf of, a director. In addition, a director will not be consideredindependent if the company makes payments to a charity where the director is anexecutive officer and the payments exceed the greater of $200,000 or five percentof either the company’s or the charity’s gross revenues. Although the Nasdaq

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IssueAlert

May2002

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release is unclear, we believe that the $60,000 limit does not includecompensation for board service, benefits under a tax-qualified retirement plan, ornon-discretionary compensation.

Prior rule: A director was not considered independent if during the previous fiscal year he orshe accepted more than $60,000 in compensation from the company or its affiliates.Compensation for board service, benefits under a tax-qualified retirement plan, or non-discretionary compensation is excluded from the $60,000 threshold for purposes of this rule.

Unchanged: The other four factors to be used in determining a director’s independence (listedbelow) were not altered by the new rule:

• Employment by the company or any of its affiliates in the current year or in past threeyears.

• Membership in the immediate family of an individual who is, or has been in the pastthree years, employed as an executive officer by the corporation or its affiliates.

• Partnership in, or a controlling shareholder or an executive officer of, any for-profitbusiness organization to which, in any of the past three years, the company made, orfrom which the company received, payments (other than those arising solely frominvestments in the company’s securities) that exceed $200,000 or five percent of thecompany’s or business organization’s consolidated gross revenues for that year,whichever is more.

• Employment as an executive of another entity where any of the company’s executivesserve on that entity’s compensation committee.

3. Related-Party Transactions

New rule: All related-party transactions must be reviewed and approved by the company’s auditcommittee or a comparable body of the board of directors (e.g., comprised of at least threeindependent directors).

Prior rule: All related-party transactions must be reviewed by the company’s audit committeeor a comparable body of the board of directors.

4. Dissemination of Material Information in Compliance with Regulation FD

New rule: A company may now disseminate information to the public using all Regulation FD-compliant disclosure methods (e.g., conference calls, press conferences and web-casts) as long asthe public is provided adequate notice of the event (typically by press release) and granted accessto the event.

Prior rule: Except in unusual circumstances, Nasdaq companies are required to promptlydisclose material information to the public through the news media (Bloomberg, Dow Jones,

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Reuters, Business Wire or PR Newswire). “Material Information” is defined as any informationthat would reasonably be expected to affect the value of the company’s securities or influenceinvestors’ decisions.

5. Disclosure of the receipt of an audit opinion with a going concern qualification

New rule: A listed company must promptly inform the public through a press release or otherFD-compliant disclosure method if it receives an auditor’s report concluding that substantialdoubt exists about the company’s ability to continue as a “going concern”.

Prior rule: Other than including the audit opinion in the company’s annual report on Form 10-K, there was no formal disclosure requirement. The new rule makes receipt of a “going concern”qualification uniformly transparent.

6. Prohibition on misrepresenting information to Nasdaq

New rule: The new rules provide explicitly that an issuer that makes an intentionalmisrepresentation to Nasdaq, intentionally omits necessary material information in acommunication with Nasdaq, or otherwise fails to provide requested information, may bedelisted.

Prior rule: Nasdaq maintained the right to exercise “broad discretionary authority” in order tomaintain the quality of, and public confidence in, its market—in other words, Nasdaq could de-list or refuse inclusion of securities even though the securities meet all enumerated criteria forinitial or continued inclusion in Nasdaq. No specific prohibition or penalty for misrepresentationwas stated.

Major Securities Reform Legislation EnactedJuly 31, 2002

On July 25, Congress overwhelmingly enacted the Sarbanes-Oxley Act of 2002, and PresidentBush signed it into law on July 30. This landmark legislation, which is 130 pages long, is themost wide-ranging and far-reaching securities reform legislation enacted since the mid-1930s. The Act will have a dramatic impact not only on the companies affected by it, but alsoon their insiders, auditors and lawyers. It applies to all public companies (domestic orforeign) that have registered or file reports under the Securities Exchange Act of 1934, aswell as companies that have a registration statement pending under the Securities Act of1933 that has not been withdrawn. The Act's provisions become effective at various times,but companies would be well-advised to give immediate attention to those provisions(particularly the officer certification requirements discussed on pages 6-8) that becameeffective upon enactment.

Although the Act is now law, many of its provisions will be affected by subsequentdevelopments. Some provisions dealing with corporate governance matters may eventuallybe overtaken by efforts currently underway by the stock exchanges and Nasdaq to imposemore stringent requirements. Others require SEC rulemaking in order for full implementation.And still others may lead to further legislation or rulemaking because of the many studiesmandated by the Act that could suggest a need for additional changes.

Our report of the Act begins with a list of its major features, continues with a description andanalysis of these features, and concludes with a list of the effective dates of the Act's manyprovisions.

MAJOR FEATURES

The Act is intended to address perceived defects in the securities laws that contributed to aseries of corporate scandals, many of which involved allegations of improper accounting andauditing practices, and wrongdoing by insiders. The provisions of the Act are directedprimarily at public companies and their insiders and auditors, and employ a wide variety ofmeasures to raise the level of compliance by these parties. These measures seek generallyto (i) upgrade company disclosures, (ii) strengthen corporate governance requirements, (iii)expand insider accountability, (iv) heighten auditor independence, (v) increase auditoroversight, and (vi) broaden sanctions for wrongdoing. Key provisions of the Act intended toimplement these purposes are summarized as follows:

Copyright © 2002.Hogan & Hartson L.L.P.All rights reserved.

SEC update

Upgrade Company Disclosures

l Real time disclosure required of material changes in financial condition or operations of company

l Disclosure required of all material off-balance sheet transactions

l Use of pro forma financial information restricted

l Disclosure required of all material correcting adjustments by company's auditor

l Disclosure required of annual assessments of internal controls by management andindependent auditor

l Expanded SEC review required of periodic disclosures by public companies, with eachcompany's disclosures to be reviewed at least once every three years

Strengthen Corporate Governance

l Audit committee required that must be composed solely of independent, outside directors,and must have sole responsibility for hiring and overseeing company's auditor

l Minimum standards of professional conduct required to be issued by SEC for counsel thatpractice before SEC

l Job protection mandated for employee whistleblowers

Expand Insider Accountability

l CEO and CFO certifications required for (i) each annual and quarterly report, and (ii) eachperiodic report containing financial information

l Incentive compensation and trading profits of CEO and CFO required to be forfeited wherecompensation and profits related to financial reports that subsequently were restatedbecause of misconduct

l Deadline for insiders to report transactions involving their company's equity securitiesaccelerated to two business days after occurrence of transaction

l New loans by company to insiders prohibited

l Insider trades restricted during pension fund blackout periods

l Disclosure required of existence or nonexistence of code of ethics for senior financialofficers

Heighten Auditor Independence

l Non-audit services restricted

l Rotation of audit partner (but not entire firm) required at least every five years

l Auditor conflicts of interest limited by requiring one-year cooling-off period beforemember of audit staff can be hired by client for high level executive position

l Improper influence by corporate personnel on the conduct of audit prohibited

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Increase Auditor Oversight

l Independent auditor oversight board created to regulate (with SEC oversight) publiccompany auditors and audits

l Registration with oversight board required of accounting firms that audit publiccompanies

l Adoption by oversight board of auditing, quality control, ethics and independencestandards required

l Authority granted to board to inspect and discipline registered accounting firms

Broaden Sanctions for Wrongdoing

l Criminal sanctions enhanced by (i) increasing penalties for pre-existing crimes, (ii)creating new criminal offenses, (iii) lengthening federal sentencing guidelines, and (iv)expanding SEC enforcement powers

l Civil sanctions enhanced by (i) extending statute of limitations for securities fraud, (ii)vesting SEC with power to bar directors and officers from public company service, and(iii) prohibiting discharge in bankruptcy proceedings of debts relating to securities fraud

Miscellaneous Matters Also Warranting Attention

l Analyst Conflicts of Interest

ll Mandated Studies

ll SEC Resources and Authority

DESCRIPTION AND ANALYSIS

A. Upgrade Company Disclosures

Real Time Disclosure

Section 409 of the Act requires companies reporting under Sections 13 or 15(d) of theExchange Act to disclose publicly "on a rapid and current basis" such additional informationconcerning material changes in their financial condition or operations as may be prescribedby an SEC rule. The SEC already has taken action to implement this requirement byproposing in June 2002 to (i) expand the items reportable on Form 8-K from six to 19, and (ii)accelerate the deadline for reporting on that form to two business days after occurrence ofthe event subject to reporting. Accordingly, all that remains for the SEC to implement thisrequirement is the adoption of final changes to its proposal based on the public comments.

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Disclosure of Off-Balance Sheet Transactions and Pro Forma Figures, and Inclusionof Material Auditor Adjustments in Financial Reports

In an effort to prevent future problems of the type involved in the Enron situation, Section 401of the Act directs the SEC to adopt final rules within 180 days requiring disclosure of allmaterial off-balance sheet transactions, arrangements, obligations and relationships,including those with unconsolidated entities. Similar rulemaking to restrict the use of proforma financial information also is mandated. Specifically, the rules are to require that proforma information included in any SEC report, or in any other public disclosure by thecompany (such as a press release), must not be materially misleading and must bereconciled under GAAP with the company's financial condition and results of operations.

Section 401 contains other requirements as well. Financial statements included in reportsfiled with the SEC must reflect all material correcting adjustments that are identified by thecompany's auditor as being in accordance with GAAP and SEC requirements. And Section401 directs the SEC to complete a study of off-balance sheet transactions and the use ofspecial purpose entities, and to make recommendations regarding the future treatment ofsuch transactions and entities.

Disclosure of Management's Assessment of Internal Controls

Section 404 of the Act requires the SEC to adopt rules requiring a reporting company toinclude in its annual report under the Exchange Act an "internal control report." This report isto (i) state management's responsibility for establishing and maintaining an adequate internalcontrol structure and procedures for financial reporting, and (ii) assess, as of the end of thecompany's most recent fiscal year, the effectiveness of the company's internal controlstructure and its financial reporting procedures. In addition, the company's auditor isrequired to attest to, and report on, management's assessment.

Expanded SEC Review of Disclosure Documents

To improve the quality of disclosures made by reporting companies, Section 408 of the Actrequires that the SEC review "on a regular and systematic basis" the disclosures made bysuch companies. Factors such as market capitalization, volatility, and material financialrestatements are to be taken into account by the SEC in determining the frequency of review,which is to occur at least once every three years.

B. Strengthen Corporate Governance

Audit Committee Requirements

Section 301 of the Act sets forth various requirements for a public company's auditcommittee designed to preserve the committee's independence and provide it with sufficientpower and funding to ensure the integrity of the audit process. To prevent companies fromavoiding these requirements, the Act directs the SEC to adopt rules requiring the nationalsecurities exchanges and Nasdaq to prohibit the listing of any security of a company thatdoes not meet the audit committee requirements. For those companies that do not have anaudit committee, the Act provides in Section 2(3) that the full board of directors should bedeemed to be the committee.

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The requirements for the audit committee cover five areas:

l Responsibilities. The committee is to be "directly responsible for the appointment,compensation, and oversight" of the auditors, and the auditors must report directly to it.

l Independence. Each committee member must be a member of the board of directors whois considered "independent." To be deemed independent, the member must not (i) acceptany compensation from the company other than that for serving as a board member, or (ii)be an affiliate of the company or its subsidiaries. The SEC, in appropriate circumstances,may exempt a particular relationship from the independence requirement.

l Complaints. The committee must establish procedures for processing (i) complaintsregarding accounting, internal control, or auditing matters, and (ii) confidential,anonymous submissions by employees of concerns regarding questionable accounting orauditing matters.

l Engaging Advisors. The committee must have the authority to engage independentcounsel and other advisors, to the extent the committee considers necessary to carry outits duties.

l Funding. The company must provide appropriate funding (as determined by thecommittee, not the board) for the payment of compensation to the auditors and to othersemployed as counsel or advisors to the committee.

In addition to the foregoing, Section 407 of the Act requires the SEC to issue rules requiringthe company to disclose whether the committee contains at least one member who is a"financial expert," and if not, why not. The SEC is required by Section 407 to define the term"financial expert" in its rules, but Congress has directed the Commission to consider in thatregard various criteria that appear weighted in the direction of persons (such as publicaccountants, auditors, CFOs and comptrollers) who can readily be presumed through theireducation and experience to have the requisite expertise.

Section 301 grants audit committees significantly greater authority and responsibility thanhas been customary. Congress clearly intended that the committee's relationship with theoutside auditors be a direct one that is unfiltered by management, and that the committeeestablish mechanisms for the free flow of information from whistleblowers and others withaccounting concerns. To meet these added responsibilities, the committee may find itnecessary in many instances to lean heavily on counsel and other advisors for assistance.

The determination of what procedures the committee should adopt will depend on theparticular circumstances. The committee, however, may wish to consider (i) revisiting itscharter to assure it accurately reflects the committee's duties and responsibilities, (ii)formalizing in writing procedures for dealing with disagreements between management andthe auditors regarding financial reporting, (iii) adopting measures to ensure the continuedindependence of all committee members, and (iv) establishing procedures for processingcomplaints and confidential submissions regarding accounting concerns.

SEC Update | 5

Standards of Professional Conduct for SEC Counsel and Job Protection for Employee Whistleblowers

One of the most controversial provisions of the Act is Section 307, which directs the SEC toissue rules within 180 days after enactment setting forth minimum standards of professionalconduct for attorneys who represent companies before the SEC. The standards are toinclude a rule requiring the attorney to report to the CEO or chief legal counsel of thecompany "evidence of a material violation of securities law or breach of fiduciary duty orsimilar violation by the company or any agent thereof." If the CEO or chief legal counsel doesnot respond appropriately, the attorney is to report the evidence to either the auditcommittee, a committee composed solely of nonemployee directors of the company, or thefull board. SEC lawyers complain that Section 307 imposes a higher duty on them than theModel Rules of Professional Conduct by requiring them to report evidence without the abilityto weigh its probity or credibility. They hope to persuade the SEC to address this concernwhen it adopts the rules in question.

Section 806 of the Act contains another "whistleblower" provision, but this one is not cloudedby the controversy surrounding the one described above. Section 806 simply providesprotection against employment termination or other retaliatory action for any employee,contractor, subcontractor or agent of a public company who (i) provides evidence regardingconduct that the employee reasonably believes violates federal securities or antifraud laws,or (ii) testifies or participates in, or files, a securities or antifraud proceeding. Relief caninclude reinstatement, back pay or special damages.

C. Expand Insider Accountability

CEO and CFO Certification of Company Reports

To assure that the CEO and CFO are actively involved in the process of preparing thecompany's annual and quarterly reports, Section 302 of the Act requires the SEC to adoptrules within 30 days of enactment requiring the CEO and CFO to certify in each such reportfiled with the SEC that:

l The signing officer has reviewed the report;

l Based on the officer's knowledge, the report does not contain any material misstatementsor omit any material facts;

l Based on the officer's knowledge, the financial information in the report fairly presents inall material respects the company's results of operations and financial condition;

l The signing officers (i) are responsible for establishing and maintaining the company'sinternal controls, (ii) have designed the controls to ensure that material informationregarding the company and its subsidiaries is made known to the officers, particularlyduring the period in which the company's periodic report is being prepared, (iii) haveevaluated the effectiveness of the internal controls within the preceding 90 days, and (iv)have presented in the report their conclusions about the effectiveness of the controlsbased on their evaluation;

SEC Update | 6

l The signing officers have disclosed to the auditors and the audit committee all significantdeficiencies and material weaknesses in the company's internal controls, as well as anyfraud, "whether or not material," involving management or other employees who have asignificant role in the company's internal controls; and

l The signing officers have indicated in the report whether or not there were significantchanges in internal controls or in other factors that could significantly affect internalcontrols subsequent to the date of their evaluation, including any corrective actions takenwith regard to significant deficiencies and material weaknesses.

The foregoing certification requirement is distinct from other certification requirements thatmay apply to the CEO and CFO. It is significantly broader in scope than that required by theSEC's one-time order (No. 4-460) issued on June 27 to nearly 1,000 large companies. Thecertification required by that order is not affected by the Act, as it is limited only to thecompanies designated by the SEC, and relates only to the company's annual report for its lastfiscal year and any subsequent quarterly reports filed by the company prior to the filing of thecertification. Of greater concern is the apparent conflict between the certification standardof Section 302 and that of Section 906 of the Act, which is a criminal provision that carrieswith it severe penalties for noncompliance (fine of up to $1 million and imprisonment up to 10years, with willful violations meriting a fine up to $5 million and imprisonment up to 20 years).Section 906 states that each periodic report containing financial statements filed by acompany with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act "shall beaccompanied by a written statement" certifying that the report "fully complies" with therequirements of Section 13(a) or 15(d) and that the information contained in the report "fairlypresents, in all material respects, the financial condition and results of operations" of thecompany. Unlike the Section 302 certification, the Section 906 certification is not by its termsrestricted in scope by the certifying officer's knowledge, nor is it subject to any materialityqualifier. Consequently, anything less than a fully compliant report will, in theory, expose thesigning officer to potential criminal sanctions.

The differences between the Section 302 and Section 906 certifications are so striking as tomake it appear that two separate certifications are necessary under the Act. This is anundesirable result, for which relief or clarification of some sort is promptly needed, due to thefact that Section 906 apparently became effective upon enactment and therefore applies tothe next periodic report filed by every public company. (Note, however, Senator Enzi's belief,expressed in the Congressional Record of July 25, that "it was the intent of the conferees thatthe penalties under section 906 should not become effective until the rulemaking process [forSection 302] is finalized.") The SEC has pending a certification proposal that can be adaptedto meet the requirements of Section 302 and could be used as a vehicle for providingguidance on Section 906. But a high-level member of the SEC staff informally has indicatedthat the staff views the Section 906 certification as being within the province of theDepartment of Justice because Section 906 is a criminal provision. Consequently, the staffhas been reluctant to furnish guidance regarding it, and may decide that it should not do so.

SEC Update | 7

A host of questions are being raised about the Section 906 certification requirement, ranging fromthe wording of the certification, the manner in which it is filed, and the reports it must cover. Forexample, there is a controversy whether Form 8-K reports, including those that contain financialstatements, are "periodic reports" subject to the requirement. A question also exists as towhether the requirement that a Section 906 certification "accompany" the report to which itrelates can be satisfied by simply characterizing the certification as "correspondence" when thereport is filed on EDGAR, rather than formally filing it as an exhibit to the report. Another issue iswhether it is possible to include in the certification a "knowledge" qualifier of the type permittedby a Section 302 certification, on the theory that the criminal penalties for violation of Section 906apply only if an insider certifies a report that the insider knows does not comport with allapplicable requirements. Similarly, there is a question whether a "materiality" qualifier ispermissible.

Until more is known about the Section 906 certification requirement, CEOs and CFOs shouldassume that they will have to provide both a Section 302 certification and a separate Section 906certification. Accordingly, they should begin immediately to take the steps necessary to provide ahigh degree of assurance that providing the more encompassing Section 906 certification will bea relatively low risk act. These steps may include (i) a critical examination of the company'sinternal controls and its processes for preparing periodic reports under the Exchange Act, (ii) theestablishment of procedures for identifying internal control weaknesses and for notifying theauditors of any such weaknesses, (iii) a searching review of the draft of the next periodic reportscheduled to be filed with the SEC, and (iv) an inquiry as to available D&O insurance for CEO andCFO certifications.

Forfeiture of Incentive Compensation and Trading Profits by CEO and CFO After Restatement

To prevent CEOs and CFOs from profiting from financial results that later are restated because ofmisconduct, Section 304 of the Act provides that the CEO and CFO of any company having tomake such a restatement must reimburse the company for any bonuses or other incentivecompensation, as well as any trading profits, derived during the 12-month period following thefirst public issuance or filing of the financial results. It is important to note that the term"misconduct" is not defined, and is not limited to misconduct by the officer who is required tomake reimbursement. Because of the harsh results that could flow from this provision, the SEC isauthorized to grant exemptions from it in appropriate circumstances.

Accelerated Insider Reporting

Section 403 of the Act amended Section 16(a) of the Exchange Act to shorten the deadline bywhich insiders (i.e., officers, directors and 10% stockholders) of public companies must reportchanges in their beneficial ownership of equity securities of the company. Currently, insidersgenerally are required to report changes in beneficial ownership on Form 4, within ten days afterthe end of the month in which the change occurs, but are allowed to report some types ofchanges (e.g., gifts and most option grants) on Form 5, within 45 days after the end of the fiscalyear. Section 403 has dramatically accelerated these reporting deadlines by requiring insiders toreport all changes in beneficial ownership within two business days after the transaction,although it authorizes the Commission to adopt rules permitting later reporting where two-dayreporting is not feasible.

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The new reporting deadlines become effective 30 days after enactment. Although they wouldappear to have rendered unnecessary the SEC's recent proposal to require insider transactionsto be reported on Form 8-K by the insider's company within two business days after occurrence,the SEC staff may not necessarily agree. We think it is possible (perhaps even probable) that,rather than withdraw the proposal, the staff will simply modify it to allow the Section 16(a) reportsto satisfy the 8-K disclosure requirement where the reports are filed as exhibits to the 8-K.

Separately, Section 403 provides that, no later than one year after enactment, insiders will have tofile their Section 16 reports with the SEC electronically. In addition, the Act states that both theSEC and the insider's company will have to publish the electronically filed reports on the Internetby the end of the next business day after filing, although the company will not have to do so if itdoes not have a website.

It is unclear whether Section 403 has the effect of nullifying, without any rulemaking by the SEC,the current deadlines for filing Forms 4 and Forms 5, as well as the exemptions from the reportingrequirements applicable to certain transactions (e.g., routine acquisitions under 401(k) plans). Weanticipate that the SEC will take a position on this issue soon, and believe it is likely that theposition will be that transactions currently reportable on Form 4 will be reportable within twobusiness days, while transactions currently reportable on Form 5 will continue to be reportablewithin 45 days after the end of the company's fiscal year. We also think it is likely that the SECwill allow insiders to continue to rely on all currently available reporting exemptions.

Because the two-day reporting deadline will become mandatory soon for many types oftransactions, companies that assist their insiders in complying with the reporting requirementsneed to act promptly to develop processes for obtaining information about insider transactions intime to prepare and file Forms 4 for their insiders by the deadline. Because most insiders file theirForms 4 in paper format, the reports generally will need to be completed within one business day,to allow time to overnight them to the SEC for arrival by the deadline. Companies that do notcurrently require insiders to clear all of their transactions with the company in advance shouldconsider revising their insider trading policies to do so.

Prohibition of Loans to Insiders

To limit self-dealing, Section 402 of the Act prohibits public companies (other than investmentcompanies) from making personal loans or extending credit, either directly or through asubsidiary, to executive officers and directors. The prohibition, which became effectiveimmediately upon enactment, is subject to a few exceptions. Loans or credit extensions thatwere in existence at the time of enactment are excluded if they are not materially modified orrenewed. Certain types of consumer loans made by companies engaged in the business ofproviding consumer credit also are excluded if the loans are made in the ordinary course ofbusiness on market terms, and are of a type generally made available by the company to thepublic. Loans that are permitted under this exclusion include home improvement andmanufactured home loans, consumer credit loans, and margin loans by registered broker-dealers.Finally, loans by U. S. banks and thrifts are not subject to the prohibition where the lender isinsured by the FDIC and the loans are subject to the insider lending restrictions of the FederalReserve Act.

SEC Update | 9

Restricting Insider Trades During Pension Fund Blackout Periods

In reaction to the widely-criticized sales of stock by Enron insiders during a period that rank-and-file members of Enron's employee benefit plans were forbidden to trade such stock, Section 306of the Act prohibits directors and executive officers of public companies from acquiring ordisposing of, during a pension fund blackout period, any equity security of the company that wasacquired by the person in connection with his or her service or employment as a director orexecutive officer. Section 306 defines the term "blackout period" to mean a period of more thanthree consecutive business days during which the ability of 50% or more of the participants in thecompany's 401(k) and other ERISA individual account plans to trade company stock is suspended.The prohibition, which will become effective 180 days after enactment, does not extend tosecurities acquired outside the director or officer relationship (such as those acquired in theopen market), nor does it apply during a blackout period incorporated into the plan pursuant to anexpress investment restriction that is disclosed to employees in a timely manner. Generally, atleast 30-days advance notice of a blackout period must be given to plan participants andbeneficiaries. The SEC, after consultation with the Department of Labor, is to adopt rules thatclarify the application of the Section 306 trading prohibition and prevent evasion of it.

The remedy for trading in violation of the prohibition is similar to the remedy provided by Section16(b) of the Exchange Act (i.e., an action by the company or any security holder acting on itsbehalf to recover for the company any profits realized by the director or executive officer as aresult of trading in violation of the prohibition). The problem with the remedy is that it does nottrack Section 16(b) sufficiently to permit a determination of the extent to which profit may havebeen realized by an insider. Under Section 16(b), there must be both a purchase and a salebefore any profit is realized, but Section 306 apparently would apply if there were only a singletransfer, even for no value. It remains to be seen whether this remedy is workable, particularly insituations where there was no opposite-way transaction in close proximity to a transactioneffected during a blackout period.

Mandating Disclosure Regarding Code of Ethics for Senior Financial Officers

Reflecting a concern that the practices of some CFOs and other high ranking financial officers arenot always ethical, Section 406 of the Act requires public companies to disclose in their periodicreports whether they have established a code of ethics for their senior financial officers (i.e., theCFO, and the comptroller or chief accounting officer), and if not, why not. This requirement,which is to be implemented by an SEC rule adopted within 180 days of enactment, also wouldcompel disclosure of any waivers of, or changes in, the code of ethics. The code is to consist ofstandards reasonably necessary to promote (i) honest and ethical conduct, (ii) "full, fair, timelyand understandable" disclosure in the company's periodic reports, and (iii) compliance withapplicable governmental rules and regulations.

D. Heighten Auditor Independence

Restricting Audit Services

To prevent audit firms from appearing to be beholden to the public companies that employ them toconduct audits, Section 201 of the Act will prohibit the firms, beginning 180 days after the date thePublic Company Accounting Oversight Board (discussed later in this Update) commencesoperations, from rendering the following services to a public company client contemporaneouslywith the audit:

l Bookkeeping or other services related to the accounting records or financial statements ofthe audit client;

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l Financial information systems design and implementation;

l Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;

l Actuarial services;

l Internal audit outsourcing services;

l Management functions or human resources;

l Broker or dealer, investment adviser, or investment banking services;

l Legal services and expert services unrelated to the audit; and

l Any other services that the Public Company Accounting Oversight Board determines, byregulation, is impermissible.

An auditing firm may render tax and other non-audit services not included in the above list to anaudit client only if the client's audit committee provides advance approval of the services.Section 202 of the Act indicates that such approval would have to be disclosed in the client'speriodic reports under the Exchange Act.

It is unlikely that the limitation on non-audit services will present a major hardship for auditingfirms. The current SEC rules on auditor independence already prohibit an auditor from renderingessentially the same non-audit services, although the differences between the above limitationand the SEC's rules may have to be reconciled in future SEC rulemaking.

Requiring Audit Partner Rotation at Least Every Five Years

Section 203 of the Act requires the lead audit partner of a public company's auditing firm to rotateout of the audit assignment after five years, in order for the firm to continue to be eligible to auditthe client. The rotation requirement, which will not become effective until auditing firms are ableto register with the Public Company Accounting Oversight Board, is intended to deal with theconcern that an auditor's independence may be compromised over time by extensive contactwith the client and its personnel. Section 207 of the Act directs the Comptroller General toconduct a study of the potential effects of requiring mandatory rotation of auditing firms, and tosubmit a report within one year.

Limiting Auditor Conflicts of Interest

Again reflecting some of the lessons learned in Enron and other situations, Section 206 of the Actseeks to limit potential conflicts of interest by making it unlawful for an accounting firm to performaudit services for a public company if the CEO, CFO, controller, chief accounting officer, or similarofficer of the company was employed by the firm and participated in the audit of the companyduring the prior year. The "cooling off" period mandated by Section 206 may have a limitedimpact, since many companies already had concluded that it would be inadvisable to openthemselves to potential criticism of the type leveled in Enron and other situations by hiring formeraudit personnel for high level executive positions.

Prohibiting Improper Influence on the Conduct of Audits

Section 303 of the Act deals with the problem of management personnel seeking to improperlyinfluence the outcome of an audit by making it unlawful for any officer or director, or any otherperson operating under the direction of an officer or director, "to take any action to fraudulentlyinfluence, coerce, manipulate, or mislead" any auditor of the company "for the purpose ofrendering [the company's] financial statements materially misleading." Section 303 directs theSEC to adopt rules to implement this prohibition within 270 days after enactment.

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E. Increase Auditor Oversight

Creation of Independent Auditor Oversight Board

The centerpiece of the Act, from the standpoint of auditing reform, is Section 101, whichauthorizes the creation of the Public Company Accounting Oversight Board. The Board willoversee the audits of public companies, and will consist of five members appointed by theSEC, two of whom may be members of the accounting profession. Board members will serveon a full-time basis for five-year terms, and may be reappointed only once. Appointment ofthe initial Board members is to occur within 90 days after enactment, and the Board is toorganize itself so that it can begin operations within 270 days after enactment. Instead ofbeing an agency of the federal government, the Board will be a self-regulatory organization,overseen by the SEC in a manner similar to its oversight of the national stock exchanges andthe NASD. Funding for the Board will come primarily from fees collected annually frompublic companies on the basis of their relative market capitalizations.

Board Registration of Public Company Auditing Firms

The principal duty of the board at the outset will be to register public accounting firms thatprepare audit reports for issuers. Section 102 of the Act provides that, beginning 180 daysafter the Board begins operating, only public accounting firms that are registered with it, andagree to Board oversight, will be permitted to participate in the preparation of audit reportsfor public companies. Registration will involve the submission of an initial application andsubsequent annual reports, as well as the payment of fees to cover the costs of processingand reviewing the application and reports. Both domestic and foreign public accountingfirms will be subject to the registration requirement if they perform audit services for publicreporting companies in the United States.

Standard Setting by the Board

Although the Board will not have the power to establish accounting principles, it will have theauthority to establish standards relating to the auditing process. Section 103 of the Actstates that the Board will have the responsibility for establishing standards for auditing,quality control, ethics, and independence for registered public accounting firms. In adoptingthese standards, the Board will be permitted simply to carry over existing standardspublished by organizations such as the AICPA. All standards adopted by the Board will besubject to SEC approval. The auditing standards will be required by Section 103 to includerules compelling work paper retention of at least seven years, second partner review, andthe inclusion in audit reports of a description of the scope of the auditor's testing of acompany's internal controls and the results of such testing.

Board Inspections and Disciplinary Authority

Section 104 of the Act authorizes the Board to conduct annual inspections of the largerregistered public accounting firms (i.e., those which regularly provide audit reports for morethan 100 public companies) and less frequent inspections (but no less than once every threeyears) of smaller firms. The inspections will include a review of selected audit engagements,including engagements that are the subject of litigation. Inspection reports prepared by theBoard will be available to the public, but documents provided to the Board in connection withthe inspection will remain confidential.

SEC Update | 12

The Board also will have responsibility under Section 105 of the Act for investigating possibleviolations by registered public accounting firms and their associated persons of its rules andsecurities law provisions relating to the auditing function. In addition, the Board will be ableto impose disciplinary sanctions, including fines and temporary or permanent bars on futureauditing of public companies.

F. Broaden Sanctions for Wrongdoing

Enhancement of Criminal Sanctions

The Act broadens the criminal sanctions available for securities law and related violations by(i) increasing penalties for pre-existing crimes, (ii) creating new criminal offenses, and (iii)lengthening federal sentencing guidelines. In addition, the Act expands the SEC'senforcement authority in certain respects.

Increased Penalties for Pre-Existing Crimes

Section 903 of the Act increases the maximum imprisonment time for mail and wire fraudfrom five years to 20 years. Section 1106 of the Act raises the maximum penalties forviolations of the Exchange Act in three respects: prison time from 10 years to 20 years,individual fines from $1 million to $5 million, and fines for entities from $2.5 million to $25million. Section 904 of the Act increases the criminal sanctions for violations of the reportingand disclosure provisions of ERISA by upgrading the violations from misdemeanors tofelonies, and by increasing the maximum penalties as follows: prison time from one year to10 years; individual fines from $5,000 to $100,000, and fines for entities from $100,000 to$500,000. Given that maximum penalties rarely are imposed and that prosecutors usuallycharge numerous counts when they bring a prosecution, these changes in the statutorymaximums are principally of symbolic importance. The increased Guidelines sentences(discussed below), however, could have a significant impact on the sentences actuallyimposed for criminal violations of the securities laws.

New Criminal Offenses

The Act creates a number of new criminal offenses:

l Securities fraud. Section 807 of the Act creates a new federal criminal prohibitionagainst fraud in connection with securities registered under Section 12 of the ExchangeAct. It is unclear what impact (apart from the increase in the maximum penaltymentioned above) this new provision will have, given that most or all of the conduct atissue has been able to be prosecuted as a criminal violation of the antifraud provisions ofthe securities laws.

l Obstruction of justice by destroying documents to impede federal investigation. Section802 of the Act defines a new obstruction of justice offense for knowingly destroying oraltering documents with the intent of impeding a federal investigation. The impact of thisprovision is unclear (apart from the increased penalty noted previously), since destructionof documents with the intent to obstruct a federal investigation was already criminalunder existing law. However, the language of the new statute is broad, and likely will begiven an expansive interpretation, whereas existing laws have been construed narrowly.In particular, it is important to note that the new provision makes criminal the destruction,alteration or covering up of any document in contemplation of any federal investigation,whereas existing law requires an ongoing investigation before any criminal charge canbe brought.

SEC Update | 13

l Obstruction of justice by destroying corporate audit records. Section 802 of the Actcreates a second new obstruction of justice offense applicable to the destruction ofcorporate audit or review records before five years have elapsed from the end of theperiod in which the audit or review was completed. In addition, Section 802 requiresaccounting firms to retain audit workpapers for five years, and directs the SEC to adoptregulations specifying the other records that accounting firms must maintain. Typically,accounting firms retain their formal workpapers for at least five years, so the auditworkpapers retention requirement is unlikely to have much impact. But SEC regulationsrequiring the retention of other records (coupled with the threat of criminal sanctions)may cause accounting firms to retain many more documents than has been customary.These documents may prove to be a fertile hunting ground for both criminal investigatorsand private plaintiffs seeking discovery as to the audited company's accountingpractices.

l Tampering with a record or otherwise impeding an official proceeding. Section 1102 ofthe Act makes it a crime to alter, destroy or conceal a document or other object in orderto impair the object for use in an official proceeding, or to otherwise obstruct or impedean official proceeding. Mere attempts to engage in the above practices are likewiseconsidered to be crimes. This provision clearly was directed at the type of documentshredding that occurred in the Enron situation.

l Failure of corporate officers to properly certify corporate periodic reports. As previouslydiscussed on pages 7-8, Section 906 subjects the CEO and CFO of public companies topotential criminal penalties if they fail to properly certify the periodic reports filed by themwith the SEC.

l Attempts and conspiracies to commit criminal fraud. Section 902 of the Act states thatany attempt or conspiracy to commit a criminal fraud offense will be subject to the samepenalties that would have applied if the attempt or conspiracy had succeeded.

l Retaliation against informants. Section 1107 expands the federal prohibition againstwitness retaliation by specifically prohibiting interference with the lawful employment orlivelihood of any informant in a federal criminal case.

Lengthened Federal Sentencing Guidelines

Sections 805, 905 and 1104 of the Act require the U. S. Sentencing Commission to review andamend the federal sentencing guidelines within 180 days after enactment to ensure that thepenalties for certain offenses are consistent with the Act and sufficient to deter and punish.Section 805 relates to obstruction of justice (particularly obstruction due to destruction ofdocuments), fraud that endangers the financial security of a large number of victims, andcorporate and organizational criminal misconduct. Section 905 relates to securities fraudand ERISA offenses. And Section 1104 relates to securities and accounting fraud, includingfraud by officers and directors of publicly traded corporations.

It appears likely that the Sentencing Commission will increase the applicable guidelines,which could have a significant impact on the sentences imposed on wrongdoers. It also isimportant to note Congress's directive to the Sentencing Commission to review theguidelines for corporate and organizational offenses. This review could lead to asignificantly increased focus on prosecuting the corporation itself, and increase the penaltiesimposed on the corporation.

SEC Update | 14

Expanded SEC Enforcement Authority

Sections 305 and 1103 of the Act provide the SEC with additional powers to address criminalactivity involving securities. Section 305 allows the Commission to seek equitable relief inany federal proceeding that may be appropriate or necessary for the benefit of investors.And Section 1103 enables the SEC to petition a federal district court for a 45-day temporaryfreeze of the assets of a public company where the Commission believes it is likely that thecompany will make extraordinary payments (including compensation) to any of its directors,officers, partners, controlling persons, agents or employees.

Enhancement of Civil Sanctions

The Act broadens the civil sanctions available for redressing securities law violations by (i)extending the statute of limitations for securities fraud, (ii) vesting the SEC with power to bardirectors and officers from serving in similar public company positions in the future, and (iii)prohibiting the discharge in bankruptcy proceedings of debts relating to securities fraud.

Extended Statute of Limitations

Section 804 of the Act extends the statute of limitations in private actions for securities fraudto two years from discovery of the violation (instead of one year) or five years after theviolation occurred (instead of three years). The extension applies only to suits instituted afterenactment of the Act. This change will significantly increase the exposure of partiesinvolved in securities activities to potential lawsuits.

Ability to Bar Directors and Officers

Section 1105 of the Act grants authority to the SEC in a cease-and-desist proceeding toprohibit any person who has violated the antifraud provisions of Section 10(b) of theExchange Act from serving as an officer or director of a public company. Until this provisionwas enacted, the SEC could obtain a bar of this nature only by petitioning a U. S. DistrictCourt.

Non-Discharge in Bankruptcy of Fraudulently Incurred Debts

Section 803 of the Act amends the federal bankruptcy laws to preclude a debtor fromobtaining a discharge in bankruptcy proceedings of debts incurred in violation of any federalor state securities law or regulation.

G. Miscellaneous Matters Warranting Attention

Analyst Conflicts of Interest

In an effort to improve the objectivity of analyst research and provide investors with moreuseful and reliable information, Section 501 of the Act mandates that the SEC, or a nationalsecurities exchange or Nasdaq (if designated by the SEC), adopt rules within one year ofenactment addressing the conflicts of interest that arise when securities analystsrecommend equity securities in research reports and public appearances.

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Mandated Studies

The Act mandates a multitude of studies with specific deadlines that are set forth in the nextsection Among the studies not already mentioned are those which are to examine

l The consolidation of public accounting firms since 1989

l The role and function of credit rating agencies

l Enforcement actions during the past five years involving violations of the reportingrequirements or restatements of financial statements

l The extent to which investment banks and financial advisors may have assisted publiccompanies in manipulating earnings and hiding their true financial condition

SEC Resources and Authority

Section 601 of the Act increases the SEC's budget for Fiscal 2003 dramatically (i.e., by 77% to$776 million). This will enable the SEC staff to review more filings, perform moreinvestigations, and assume a greater role in the oversight of auditors.

The SEC also gained additional authority as a result of the Act:

l Section 108 allows the SEC to recognize accounting principles as being within GAAPwhere they are established by a "standard setting body." The SEC will make thedetermination whether a particular entity qualifies as a standard setting body.

l Section 602 enables the SEC to censure persons, and preclude them from appearing orpracticing before it, if it finds they lack the qualifications to represent others, haveengaged in unethical or improper professional conduct, or have willfully violated thesecurities laws.

l Section 604 permits the SEC to consider orders of state securities commissions whencontemplating disciplinary action against brokers or dealers.

EFFECTIVE DATES

Provisions that are effective immediately

l CEO and CFO certifications of periodic reports that contain financial statements (§ 906)

l Forfeiture of CEO and CFO bonuses and disgorgement of trading profits after accountingrestatements due to misconduct (§ 304)

l Prohibition of new loans by company to directors and executive officers (§ 402)

l Grant of protections to employees against retaliatory actions for providing informationregarding perceived violations of securities or antifraud laws (§ 806)

l Grant of authority to SEC to prohibit certain individuals from serving as an officer ordirector of a public company (§ 1105)

l Directive that SEC review each public company's filings at least every three years (§ 408)

l Directive that SEC issue rules mandating "rapid and current" disclosure of informationconcerning material changes in company's financial condition or operations (§ 409)

l Non-discharge in bankruptcy of debts arising under securities law claims (§ 803)

l Extension of statute of limitations for private securities fraud actions commenced afterdate of enactment (§ 804)

SEC Update | 16

l Creation of new criminal offenses for destroying, altering or falsifying records in Federalinvestigations and bankruptcy and destroying corporate audit records, as well asdirective to U. S. Sentencing Commission to amend the Federal Sentencing Guidelinesand related policy statements to implement the new offenses and penalties (§§ 801-807,901-906 and 1101-1107)

Provisions with 30-day triggers

l Directive to SEC to issue rules requiring CEO and CFO certifications of certain corporaterecords and information in each annual or quarterly report, and indicating that incorrectcertifications could subject certifying CEO or CFO to civil and criminal liability (§ 302)

l Acceleration of deadline for insiders to file transaction reports under Section 16 to twobusiness days after execution of transaction (§ 403)

Provisions with 90-day triggers

l Directive to SEC to propose rules within 90 days and issue final rules within 180 daysrequiring public companies to disclose whether a "financial expert" serves on their auditcommittees and if not, why not (§ 407)

l Directive to SEC to propose rules within 90 days and issue final rules within 180 daysrequiring public companies to disclose in their periodic reports whether they haveadopted a code of ethics for senior financial officers and if not, why not, and to discloseimmediately (on Form 8-K or otherwise) any change in or waiver of the code of ethics forsenior financial officers (§ 406)

l Directive to SEC to propose rules within 90 days and issue final rules within 270 daysmaking it unlawful for any officer or director of a public company, or persons acting undertheir direction, to exert improper influence on the conduct of an audit for the purpose ofrendering the company's financial statements materially misleading (§ 303)

Provisions with 180-day triggers

l Bar against directors and officers of public companies from purchasing or selling stockduring pension fund blackout periods, subject to certain limited exceptions (§ 306)

l Directive to SEC to issue rules within 180 days requiring attorneys for public companies toreport evidence of material violations of securities laws or breaches of fiduciary duties todesignated parties at the company (§ 307)

l Directive to SEC to issue rules within 180 days prohibiting the disclosure in periodicreports or in any public disclosure (including a press release) of pro forma financialinformation that is not reconciled with GAAP (§ 401)

l Directive to SEC to issue rules within 180 days providing that each periodic reportdisclose all material off-balance sheet transactions, arrangements and obligations andother relationships with unconsolidated entities or other persons (§ 401)

l Directive to U. S. Sentencing Commission to review and amend federal sentencingguidelines within 180 days to ensure that the penalties for certain offenses are consistentwith the Act and sufficient to deter and punish (§§ 805, 905, 1104)

SEC Update | 17

Provisions with 270-day triggers

l Directive to SEC to issue rules within 270 days requiring audit committees composed ofindependent, outside directors to hire and oversee auditors (§ 301)

l Directive to SEC to determine within 270 days whether the Public Company AccountingOversight Board is organized and has the capacity to carry out the requirements of theAct (§§ 101 and 107)

Provisions with one-year triggers

l Requirement that Section 16 transaction reports be filed electronically, and that SEC andreporting person's company (if it has a website) publish the reports on the Internet withinone business day following the filing (§ 403)

l SEC to complete a study on special purpose entities within one year after the adoption ofoff-sheet balance disclosure rules (§ 401)

l SEC, or national securities exchange or Nasdaq (if designated by SEC), to adopt rulesaddressing analyst conflicts of interest (§ 501)

l Comptroller General to complete study of effects of requiring mandatory rotation ofauditing firms (207)

Provisions with triggers beyond one year

l Requirement that firms which audit public companies must be registered with the PublicCompany Accounting Oversight Board within 180 days after SEC determination (which isto occur within 270 days after enactment) that Board is organized and has the capacity tocarry out the requirements of the Act, at which time such audit firms would be precludedfrom contemporaneously providing certain specified non-audit services, with theprovision of other non-audit services to be preapproved by the audit committee (§§ 201,202)

For more information about the matters discussed in this SEC Update, please contact theHogan & Hartson L.L.P. attorney with whom you work, or any of the attorneys below whocontributed to this Update, or who are part of our securities group listed athttp://www.hhlaw.com/secattorneys/.

Peter J. Romeo (Editor) Stephanie D. Markspjromeo@hhlaw.com sdmarks@hhlaw.com

Ira M. Feinberg Jeffrey W. Rubinimfeinberg@hhlaw.com jwrubin@hhlaw.com

Bruce W. Gilchrist Michael J. Silverbwgilchrist@hhlaw.com mjsilver@hhlaw.com

Sandra Folsom Kinsey sfkinsey@hhlaw.com

This SEC Update is for informational purposes only and is not intended as a basis for decisions in specific cases. This information is notintended to create, and receipt of it does not constitute, a lawyer-client relationship. To have your email address removed from the list fordistribution of future issues of this newsletter, please contact Donna Kellermann at 703/610-6105 or via email: drkellermann@hhlaw.com.

SEC Update | 18

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Carlos Umana Margarita Zuleta Carlos Urrutia JrCarlos Fradique-Mendez

Patricia Vergara Carlos UmanaSergio Michelsen

Margarita Zuleta

INDIA - KOCHHAR & CO.New DelhiTel +91 11 646 9606Fax +91 11 646 9656

Rohit KochharManjula Chawla

AJ SethiRajeev Nanda

Dhruv WahiDeepak JacobK V Ramesh

Sumit BasuJanmejay RaiSunita BhambriK V Ramesh

K. ChristopherShubhashish SharmaK V Ramesh

Manjula ChawlaShubhashish SharmaRajarshi ChakrabartiiK V Ramesh

Archana SasanTarun BhallaK V Ramesh

Manishi PathakDeva KumarAmitabh Lal DasRajarshi ChakrabartiK V Ramesh

Rohit Kochhar*K. ChristopherAmitabh Lal DasShubhashish SharmaDeepak JacobK V Ramesh

INDIA MULLA & MULLA & CRAIGIE BLUNT & CAROEMumbaiTel +91 22 204 4960Fax +91 22 204 0246

EAK FaizullabhoyR. Krishnamurthi

E.A.K.Faizullabhoy*

E. FaizullabhoyB.S. BhesaniaR. Krishnamurthi*

E.A.K.Faizullabhoy*

E.A.K. Faizullabhoy* E.A.K.Faizullabhoy*

EAK Faizullabhoy

INDONESIA - ALI BUDIARDJO NUGROHO REKSODIPUTROJakartaTel +62 21 2505 125Fax +62 21 250 5001

MardjonoReksodiputroErnst G. TehuteruMrs. Ricky Nazir

A. KartohadiprodjoNafis Adwani

Ms. WurjatiMartosewojoA. Zen UmarPurba

A. Zen UmarPurba

T.M. Zahirsjah*Emir Nurmansyah

Ernst G.TehuteruMrs. Ricky Nazir

Ferry P. MadianM. Husseyn UmarT. M. Zahirsjah*

Marjono ReksodiputroMrs. Ricky Nazir

*PRAC Primary Contact/Bolded name is Practice Group Co-ChairWhere no name is present please direct inquiry to Primary ContactSee PRAC web site for individual email info (www.prac.org)Rev August 2002 - Page 3 of 5

PRIMARYCONTACT

Tax Litigation IntellectualProperty

&Licensing

Environment&

Native Rights

Banking&

Workouts

Employment&

Labour

BusinessInvestment

& InternationalTrade

Projects/Energy

JAPAN - ASAHI LAW OFFICES www.alo.gr.jpTokyoTel +81 3 3505 0003Fax +81 3 3505 1333

Takemi HiramatsuMasafumi OshinoOsamu Ito

Takashi Ejiri Tetsuro ToriumiSeiichiro UmenoKazuhiko Yamagishi

TakemiHiramatsu*MasafumiOshino*Tetsuro Toriumi

Yuji Onuki Nobuo NakataTakashi Ejiri

Yuji OnukiKeiko TamuraTsutomu Kutibayashi

Osamu Ito*Nobuo NakataSomuku Iimura

Akinobu MiyoshiNagahide Sato

KOREA - KIM CHANG & LEE www.kimchanglee.co.krSeoulTel +82 2 397 9800Fax +82 2 725 8827

Eui Jae Kim Eui Jae Kim*Jae Wook Oh

Kyu Young SuhKwi Youn Moon

Kyung-Joon ChoiHyehjung Soh

Harold Shim Kyung-Joon ChoiSeung Yeop Woo

Harold ShimJin Seak Doh

Jung UnEui Jae Kim*

Eui Jae Kim

MALAYSIA - SKRINEKuala LumpurTel +603 254 8111Fax +603 254 3211

YC ChinTheresa ChongLee Tatt Boon

Kah Leng ChenWong Chong Wah

K. AnanthamN. Pathmananthan

Lee Tatt Boon*Charmayne Ong

Janet Looi Kah Leng ChenY.C. Chin*Theresa Chong*Kok Chee Kheong

N Pathmanathan Y.C. Chin*Kah Leng ChenTheresa Chong*Kok Chee Kheong

Theresa ChongJanet LooiPhilip Chan

MEXICO - SANTAMARINA Y STETA SC www.s-s.com.mxMexico CityTel +525 281 4198Fax +525 281 4198

Alberto SaavedraAlejandro DelgadoJorge Barrero

Jose A. Miranda L Alberto Saavedra* Albert Saavedra

THE NETHERLANDS - NAUTADUTILH www.nautadutilh.comAMSTERDAMTel +31 20 5414 646Fax +31 20 6612 827

Jan WillemSodderland(PRAC Chairman)

Chris Warner Harmen de Mol vanOtterlooFloris Bannier

Ruprecht HermansRichard EbbinkCharles Gielen

Erik Minderhoud Marc BlomKleis Broekhuizen

Warner Roetersvan Lennep

J. Willem Sodderland*Jaap Jan Trommel

Cees Boodt

RotterdamTel +31 10 2240 000Fax +31 10 4148 444

Roderik BouwmanEdgar Brood

Bart van Tongeren Richard van Oerle Norbert deMunnik

Walter Schellekens Simon Tan Freek Jonkhart Chris FonteijnLieuwe de BoerJohan Rijlaarsdam

Other Offices Ewout vanAsbeck (NewYork)

Sierk Bruna (Paris) Rafael Alonso(Madrid)

Joanne Kellermann(London)

Marc Van der Woude(Brussels)

NEW ZEALAND - SIMPSON GRIERSON www.sglaw.co.nzAUCKLANDTel +64 9 358 2222Fax +64 9 307 0331

Andrew LewisDenis McNamara

Stuart Hutchinson William Akel Earl Gray Denis McNamaraRobert Fisher

Peter Ferguson Philipa MuirDon Mackinnon

Denis McNamara* Peter Stubbs

WELLINGTONTel +64 4 499 4599Fax +64 4 472 6986

Stuart Hutchinson Terry Sissons Terry Sissons Duncan Liang Steve Flynn Keith Binnie

*PRAC Primary Contact/Bolded name is Practice Group Co-ChairWhere no name is present please direct inquiry to Primary ContactSee PRAC web site for individual email info (www.prac.org)Rev August 2002 - Page 4 of 5

PRIMARYCONTACT

Tax Litigation IntellectualProperty

&Licensing

Environment&

Native Rights

Banking&

Workouts

Employment&

Labour

BusinessInvestment

& InternationalTrade

Projects/Energy

PERU - MUNIZ FORSYTH RAMIREZ PEREZ-TAIMAN & LUNA-VICTORIA . www.munizlaw.com.peLIMATel +51 1 422 1122Fax +51 1 442 5548

Jorge Perez-Taiman

Fernando CastroKahanRosanna BrignetiBarbis

Nelson RamirezJimenezFernando MelendezFernandez

Jorge MunizZiches Carlos F.-DavilaWinkler

Jorge Perez-Taiman* Armando ArrietaMunoz

Albert ForsythSolariLuis PizarroAranguren

Jorge Perez-Taiman *Isabel HerreraGonzales-Pratto

Albert Forsyth Solari Jorge Perez-Taiman*Albert Forsyth SolariRicardo SilvaRosanna Brigneti

PHILIPPINES - SYCIP SALAZAR HERNANDEZ & GATMAITANMANILATel+63 2 817 9811Fax +63 2 818 7562

Andres GatmaitanAndres B StaMaria

Rolando Medalla JrCirilo T. Tolosa

Roberto San JuanAlfredo B. Caguioa

Vicente AmadorLlewellyn Llanillo

Domingo G.Castillo

Rafael A. MoralesAngelito C. Imperio

Rene Y. Soriano Andres B. Sta. MariaJ.P. M. LotillaEmmanuel C. Paras

Andres B. Sta Maria*Rocky A.L. Reyes

SINGAPORE - RODYK & DAVIDSON www.rodyk.com.sgSingaporeTel +65 225 2626Fax +65 225 1838

Pathma SelvaduraiS. Sivanesan

Gerald SinghamJacqueline Loke

Pathma Selvadurai*Govind AsokanLok Vi Ming

Lee Ai Ming Jacqueline Loke Low Chai ChongNorman HoJulie Woon

Lok Vi MingS. Sivanesan*Govind Asokan

S. Sivanesan*Gerald Singham

S. Sivanesan*Jacqueline Loke

REPUBLIC OF SOUTH AFRICA - WERKSMANS ATTORNEYS www.werksmans.co.zaJohannesburgTel +27 11 488 0000Fax +27 11 484 3200

Carl SteinGareth DriverCharles Butler

Ernest MazanskyPaul Ferreira

Des WilliamsDavid Hertz

GerhardJohannes

Des WilliamsNeil Kirby

Tippy LuttigKevin TrudgeonWildu du Plessis

Carl Stein*Gareth Driver*

Tippy LuttigHulme Scholes

TAIWAN - LEE AND LI www.leeandli.comTAIPEITel+886 2 2715 3300IFax 886 2 2713 3966

Paul S P HsuNigel LiJoyce Fan

James ChenSophie Yeh

Nigel Li* C.V. ChenChristina Chao

Joyce C. Fan* Paul S. P. HsuAlex Liu

T.C. ChiangM.L. Yeh

Kwan Tao-Li Lawrence S. LiuJoyce C. Fan*

THAILAND - MONGKOLNAVIN LAW OFFICEBANGKOKTel +66 2 255 4015Fax +66 2 253 5529

Suwit SuwanPoljun DivariSuneenartThanapantarak

Suwit Suwan*Krisda Tankulrat

Songpol UnnanonWorapot Tanomkul

BunditBoonpasanFabrice Mattei

K. Thongsombat Suwit Suwan* Stephen FrostSuwit Suwan*

Dr. Ajai ChandrasenStephen Frost

*PRAC Primary Contact/Bolded name is Practice Group Co-ChairWhere no name is present please direct inquiry to Primary ContactSee PRAC web site for individual email info (www.prac.org)Rev August 2002 - Page 5 of 5

PRIMARYCONTACTS

Tax Litigation IntellectualProperty

&Licensing

Environment&

Native Rights

Banking&

Workouts

Employment&

Labour

BusinessInvestment

& InternationalTrade

Projects/Energy

UNITED STATES OF AMERICA

BOSTON, MASSACHUSETTS HALE AND DORR LLP www.haledorr.comBostonTel +617 526 6000Fax +617 526 5880

William BenjaminJorge ContrerasKenneth Slade

William Benjamin* Richard A. Johnston Ken Slade*Jorge Contreras*

Robert C. Kirsch Paul P. Daley Christopher Perry Gilbert B. KaplanJohn K.P. StoneThomas Ward

Andy CohnRob Kirsch

HONOLULU, HAWAII - GOODSILL ANDERSON QUINN & STIFEL www.goodsill.comHONOLULUTel +808 547 5600Fax +808 547 5880

Alan FujimotoMiki OkumuraVincent Piekarski

Lant A. Johnson John R. Lacy Gregory R. Kim Vincent A.Piekarski*Lisa W. Munger

Vincent A. Piekarski* Richard Philpott Vincent A. Piekarski*Alan S. Fujimoto*

Vincent A. Piekarski*

LOS ANGELES, CALIFORNIA - BROBECK PHLEGER & HARRISON LLP www.brobeck.comLOS ANGELESTel +213 489 4060Fax +213 745 3345

John Hilson Richard L. Parker Debra Pole Kevin DeBre(Newport Beach)

Kenneth L.Waggoner

John F. Hilson* Jamie L. JohnsonGabriel Wirth

Nigel Howard Mark Mandel

SAN DIEGO, CALIFORNIA - LUCE FORWARD HAMILTON & SCRIPPS LLP www.luce.comSAN DIEGOTel +619 236 1414Fax +619 232 8311

John BrooksPeter HahnJohn McNeece

Phil JelsmaStewart Singer

Christopher HealeyJohn T. Brooks

Peter K. Hahn*Katherine HoffmanMitchell Brook

Steven McDonaldSteve Marsh

Margaret MannMike Isaacs

William EarleyKelly Douglas

John Brooks*Marty Fern

John McNeece*Mark Levinson

SAN FRANCISCO, CALIFORNIA - BROBECK PHLEGER & HARRISON LLP www.brobeck.comSAN FRANCISCOTel +415 442 0900Fax +415 442 1010

Paul Finigan Grady M. BoldingW. Scott Thomas

Paul Finigan Jr.*Rod McLeod

Jim Elacqua (PA)Joe Siino

Tony Garvin G. Larry EngelGeorge A. HisertKevin Fisher

Rebecca D. EisenCecily A.Waterman

Rochelle Alpert Steve Finn

SEATTLE, WASHINGTON - DAVIS WRIGHT TREMAINE LLP www.dwt.comSEATTLETel +206 622 3150Fax +206 628 7699

Bruce JohnsonA. Peter ParsonsJoseph Weinstein

Jim WreggelsworthLaurel BucknerDirk Giseburt

Marvin Gray, Jr.Stuart Dunwoody

Marshal NelsonRich Wyde

Richard ElliottKatherine Laird

Norm PageWard Buringrud

Mary DrobkaBob Blackstone

A. Peter Parsons*Rich Rawson

Joe Weinstein*

WASHINGTON, D.C. - HOGAN & HARTSON LLP www.hhlaw.comWASHINGTONHogan & Hartson LLPTel +202 637 5600Fax +202 637 5910

Ray BatlaClaudette ChristianWarren Gorrell

Prentiss FeaglesNancy O’Neil

David HenslerTy Cobb

Robert Kenney Jr.Ken HautmanPhil Porter

James BanksPatrick Raher

Benton HammondMichael ColglazierCraig Ulman

Robert CavePaul Skelly

Warren Gorrell*James Rosenhauer Jeanne Archibald

Ray Batla *Joseph BellClaudette Christian*

VENEZUELA - HOET PELAEZ CASTILLO & DUQUE www.hpcd-abogados.comCARACASTel +58 2 263 6644Fax +58 2 263 7744

Franklin HoetFernando Pelaez

F. Castillo F. Hoet M. Nebreda R. Clemente B. Cliuffetelli F. HoetFernando Pelaez * F. Castillo

Fernando Pelaez*