CVM INSTRUCTION NO. 223, OF NOVEMBER 10, 1994.

Provides for the issuance of non-standardized options (Warrants).

The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Collegiate Board, in a meeting held on this date, based on Article 8, item I, and Article 18, item II, letter a, of Law No. 6,385, of December 7, 1976, and on Article 3 of Decree-Law No. 2,286, of July 23, 1986,

RESOLVES:

GENERAL PROVISIONS

Art. 1. The issuance of non-standardized call and put options ("Warrants") of the following securities is authorized:

I - shares issued by open companies;

II - theoretical portfolios referenced in shares, traded on a stock exchange or organized over-the-counter market, which have formed and have integrated, for a period not less than the term of the options, a regularly calculated market index of wide dissemination and acceptance;

III - simple or convertible debentures into shares, issued by open companies and resulting from public distributions registered with the Securities and Exchange Commission - CVM; and

IV - promissory notes registered for public distribution.

§1. Non-standardized call options may be issued in covered or uncovered modalities.

§2. The issuance of non-standardized options of other securities depends on prior approval by the CVM of the characteristics of the operation. (NR*)

Art. 2. The issuance of non-standardized options must maintain, throughout the entire period of their validity, at the institution providing securities custody services accredited by the CVM, guarantees constituted by pledge or lien, in favor of the option holders, of free and clear assets, accepted by the depositary institution.

§1. In the case of covered operations, the guarantee, constituted by the total amount of the securities subject to the call options, is not subject to acceptance by the option holders.

§2. In the case of uncovered operations, the depositary institution of the guarantees must maintain an adequate system for calculating guarantees and margins, with the objective of ensuring the correct settlement of the options contract. (NR*)

Art. 3. The options issuance contract may provide for the possibility of financial settlement by difference of the issued options.

Sole Paragraph. Financial settlement by difference is understood as the receipt, in cash, of the amount corresponding to the difference between the reference value of the options, calculated as specified in the issuance contract, and its exercise price.

REGISTRATION WITH THE CVM

Art. 4. The public distribution of options will depend on prior registration with the CVM, which may only be carried out with the intermediation of institutions that are part of the securities distribution system, in accordance with Article 15 of Law No. 6,385/76.

Sole Paragraph. Option issuers are exempt from the registration referred to in Article 21 of Law No. 6,385/76.

INSTRUCTION OF THE REGISTRATION REQUEST

Art. 5. The registration of option distribution will be requested to the CVM by the offeror and by the leading institution of the distribution, if they are distinct institutions, and must be accompanied by the following documents:

I - copy of the public distribution contract of options, from which the clauses listed in Annex I must appear;

II - draft of the sub-contract and list of participants in the launch consortium, as well as those who adhere subsequently, discriminating the quantity of options attributed to each one, if applicable;

III - copy of the options issuance contract, signed with an institution that is part of the distribution system (option agent), if applicable, in which the information contained in Article 8 of this Instruction must appear;

IV - copy of the contract of pledge or lien of the assets for the guarantee of the operation, signed with the depositary institution; (NR*)

V - copy of the contract with the issuing agent of the certificates representing the options or with the depositary institution of book-entry options, if applicable;

VI - prior statement from the Stock Exchange or the entity responsible for the organized over-the-counter market, informing the approval of the request for trading of the options in its premises, conditioned upon obtaining registration with the CVM; or, in the case of trading of options exclusively in the over-the-counter market, a declaration to this effect signed by the issuer;

VII - prior statement from the Stock Exchange where the distribution of the options will take place, if applicable,

VIII - draft of the announcement of the start of distribution (Annex II);

IX - draft of the announcement of the end of distribution (Annex III); and,

X - facsimile of the sales note.

XI - information on the premises used for the calculation of the premium, highlighting volatility and interest rate, as well as the main risks of the underlying asset. (NR*)

ANALYSIS PERIOD

Art. 6. The registration will become automatically effective if the request is not denied within a period of 15 (fifteen) business days after its presentation to the CVM, through protocol, with the required documents and information.

§1. The 15 (fifteen) business day period may be interrupted only once, if the CVM requests the leading institution of the distribution to provide additional documents and information regarding the public offering of options.

§2. To meet any requirements, a period not exceeding 30 (thirty) business days will be granted, counted from the receipt of the respective correspondence.

§3. In the case where the CVM's requirements are met after 10 (ten) business days have elapsed from the registration request, a new period of 15 (fifteen) business days will begin to run, counted from the date of compliance with the requirements.

APPROVAL

Art. 7. The approval of the registration will be communicated to the leading institution of the distribution, by official letter and with a copy to the issuer, where the main characteristics of the registered distribution will appear.

Sole Paragraph. The registration request will be denied if the leading institution of the distribution fails to comply with the requirements established by the CVM.

OPTIONS ISSUANCE CONTRACT

Art. 8. The options issuance contract, registered at the Titles and Documents Registry Office, must contain, at a minimum, the following information and conditions:

I - information about the issuer of the options, about the option agent and third party hired, if any, for the calculation of the reference value of the options;

II - information about the securities that will serve as the backing for the issuance of options;

III - procedure to be adopted for the formalization of the exercise of the options by their respective holders;

IV - value of the premium or criterion for its fixation;

V - price and term for the exercise of the options;

VI - the obligations assumed by the option agent, especially with regard to:
a) control of the number of options issued; b) transfer of the securities, in the event of effective exercise of the options by their respective holders; c) cancellation of the options, due to exercise by their respective holder; d) dissemination of information related to the issuance, in a newspaper of wide circulation, in the cases established in the issuance contract; and, e) responsibility, as the case may be, before the stock exchanges where the options are admitted to trading, or before the institution responsible for the organized over-the-counter market where it is traded.

VII - the cases in which adjustments to the exercise price of the options will be admitted; and,

VIII - procedures adopted in the case of substitution of the option agent.

IX - information on the criteria for calculating and charging additional guarantees. (NR*)

ADVERTISING MATERIAL

Art. 9. The dissemination of the preliminary prospectus, as well as the promotion of the offering, may only begin after the registration request with the CVM, except for the use of any announcement or advertising material for the offering, which depend on examination and prior approval by the CVM, and may only be disseminated after the granting of the registration.

§1. Advertising material is considered approved if there is no contrary manifestation by the CVM, within a period of two business days, counted from the date of delivery. (NR*)

§2. The issuer of the options, the option agent, and the leading institution of the distribution are responsible for the truthfulness and consistency of the information provided at the time of registration and provided to the market during the distribution period.

DISSEMINATION AND DISTRIBUTION PERIOD

Art. 10. The leading institution of the distribution must:

I - give wide dissemination of the public offering of options through an announcement of the start of distribution, published for at least one day, in a newspaper of wide circulation.

II - send to the CVM and make available to the public, at its headquarters and at the headquarters of other institutions participating in the distribution, the information contained in Annex IV to this Instruction.

Art. 11. The public distribution of options may only begin after:

I - granting of registration by the CVM; and,

II - publication of the announcement of the start of distribution.

Art. 12. The distribution referred to in this Instruction, including that resulting from guarantee provided by the leading institution or consortium members, will end within a period of 03 (three) months, counted from the approval of the registration.

§1. The CVM may extend this period for an equal period, provided that the publication of the announcement of the start of distribution is duly proven and that not all options have been placed.

§2. In distributions carried out in the over-the-counter market, the leading institution of the distribution must forward to the CVM, within 10 (ten) days after the end of the distribution, the placement report in accordance with Annex VI of CVM Instruction No. 88, of November 3, 1988.

SUSPENSION OF DISTRIBUTION

Art. 13. The CVM may suspend, at any time, the distribution that is being processed under conditions different from those contained in this Instruction and/or the registration, or when the same is illegal or fraudulent, even after the respective registration has been effected.

GRAVE INFRACTION

Art. 14. For the purposes of paragraph 3 of Article 11 of Law No. 6,385/76, without prejudice to the fine referred to in paragraph 1 of the same article, a grave infraction is considered to be the distribution:

I - that is being processed under conditions different from those stated in the registration;

II - carried out without prior registration with the CVM;

III - effected without the intermediation of an institution that is part of the distribution system.

INSPECTION FEE

Art. 15. The CVM will charge an inspection fee for the registration referred to in this Instruction, in accordance with the legal and regulatory provisions in force.

Sole Paragraph. The value of the registration will be the result of the multiplication of the number of options issued by the exercise price.

FINAL PROVISIONS

Art. 16. This Instruction does not apply to standardized options issued on a Stock Exchange, as provided in CVM Instruction No. 14, of October 17, 1980.

Art. 17. Institutions that are part of the distribution system must provide, in writing, to clients, a document alerting about the risks inherent to operations in the options market.

Art. 18. The provisions contained in CVM Instruction No. 42, of February 28, 1985, apply to options transactions carried out in the secondary over-the-counter market.

Art. 19. This Instruction enters into force on the date of its publication in the Official Gazette of the Union.

Signed original by

THOMÁS TOSTA DE SÁ
President

ANNEX I

Mandatory Clauses of the Securities Distribution Contract

1 - Qualification of the issuer and the institution that is part of the distribution system;

2 - Type of obligation assumed in the contract;

3 - Total of the options subject to the contract, the form, premium or criterion for its fixation, exercise term, price and conditions to be observed in its exercise must be mentioned;

4 - Characteristics of the subject securities;

5 - Remuneration of the institution that is part of the distribution system, with express mention that no other will be contracted or paid, without prior manifestation of the CVM;

6 - Of the procedure adopted for the distribution of the securities;

7 - In the case of the formation of a consortium, designation of the leading institution and the delegation to the consortium members of obligations attributed to them; and,

8 - Criterion for the allocation of options among the participants of the consortium.

ANNEX II

Announcement of Start of Distribution

1 - Information about the issuer of the options, about the option agent and third party hired, if any, for the calculation of the reference value of the options;

2 - Name of the leading institution of the distribution and of the institutions that are part of the launch consortium;

3 - Main characteristics of the distribution:
3.1 - information about the securities that will serve as the backing for the issuance of options;
3.2 - quantity of options to be offered, form, value of the premium or criterion for its fixation, exercise price, and term and conditions to be observed in its exercise;
3.3 - rights, advantages and other conditions, deemed necessary for evaluation by the investor, regarding the securities resulting from the exercise of the options;
3.4 - clarification that the options now alienated are the property of the controlling shareholder, if applicable;
3.5 - market in which the options and the securities subject to the exercise of the options may be traded secondarily.
3.6 - procedure to be adopted for the formalization of the exercise of the options by their respective holders;

4 - Procedure provided for the distribution;

5 - Date of start of the distribution;

6 - Locations where the options may be acquired;

7 - Name and address of the financial institution depositary of the book-entry options or of the issuing agent of the certificates representing options;

8 - Clarification that more information about the distribution may be obtained from the leading institution, consortium members or at the CVM;

9 - Number and date of registration with the CVM, in a prominent manner; and,

10 - The following statements in a prominent manner:

"THE REGISTRATION OF THIS DISTRIBUTION WITH THE SECURITIES AND EXCHANGE COMMISSION AIMS ONLY TO GUARANTEE ACCESS TO THE INFORMATION PROVIDED, NOT IMPLYING, ON THE PART OF THE CVM, GUARANTEE OF THE TRUTHFULNESS OF THAT INFORMATION, NOR JUDGMENT REGARDING THE QUALITY OF THE ISSUER OR ABOUT THE OPTIONS TO BE DISTRIBUTED."

ANNEX III

Announcement of End of Distribution

1 - Name and address of the issuer of the options;

2 - Name of the leading institution of the distribution and of the institutions that are part of the launch consortium;

3 - Main characteristics of the distribution: quantity of options that were offered, securities that will serve as the backing for the options, form, premium or criterion for its fixation, price and conditions to be observed in its exercise;

4 - Number and date of registration with the CVM, in a prominent manner; and,

5 - The following statements in a prominent manner:

"THIS ANNOUNCEMENT IS OF AN EXCLUSIVELY INFORMATIONAL NATURE, NOT CONSTITUTING AN OFFER FOR THE SALE OF SECURITIES"

ANNEX IV

Information of the issuing company of the subject securities

1 - name and address;

2 - subscribed and paid-in share capital up to the date of the event;

3 - quantity of shares that make up the capital, by species, class and form;

4 - distribution of share capital relating shareholders holding more than 5% (five percent) of ordinary and preferred shares with voting rights;

5 - branch of activity and main products and services offered;

6 - main controlled and affiliated companies;

7 - economic-financial data of the last three years and the last subsequent quarter, if applicable, which discriminate: Net Revenue, Operating Profit, Net Profit, Total Payable, Shareholders' Equity, Share Capital, Net Profit/Net Revenue (Index), Book Value per Share, Earnings per Share, Dividend per Share and Quantity of Shares;

8 - additional information such as:
8.1 - clarify the registration status of the company with the CVM;
8.2 - inform where more information about the company may be obtained, including address and phone number of the Shareholders' Department or the financial institution that provides these services;
8.3 - declaration that the issuance of options does not aim at the alienation of control;
8.4 - declaration that the offerors do not possess any relevant information about the company that is not public knowledge.

(NR)* = new wording with the alterations introduced by CVM Instruction No. 328, of February 18, 2000.

We emphasize that this text does not represent the formal consolidation of the normative in question, having a merely informative character.