COMPETENT AUTHORITY AGREEMENT

The Competent Authorities of the United States and the Swiss
Confederation enter into the following Agreement ("Agreement")
concerning the ownership requirements under paragraph 3 of Article 22
(Limitation on Benefits) and paragraph 7 (In reference to paragraph 6 of
Article 22 (Limitation on Benefits)) of the Revised Memorandum of
Understanding ("MOU") of the Convention Between the United States of
America and the Swiss Confederation for the Avoidance of Double Taxation
with Respect to Taxes on Income, signed on October 2, 1996 ("Treaty").
The Agreement is entered into under paragraph 3 of Article 25 (Mutual
Agreement Procedure).

It is understood that for purposes of this Agreement, "Article" refers
to an Article of the Treaty.

[Ownership requirements under Article 22(3) and paragraph 7 of the
MOU]{.underline}

Article 22(3) allows a Swiss company to receive limited derivative
benefits with respect to dividends, royalties, and interest if it meets
an ownership, base reduction, and derivative benefits test. Article 22,
subparagraphs 3(a)(i) and (ii), sets forth a combined ownership test.
One of the ways in which a company can meet the test under subparagraph
3(a)(ii) is if greater than 70 percent of the aggregate vote and value
of its shares are ultimately owned by persons that are residents of a
party to the North American Free Trade Agreement ("NAFTA"), and that are
also described in Article 22(3)(b).

Under Article 22(6), a person who is not entitled to benefits under
Article 22, paragraphs 1 through 5, may nevertheless be granted benefits
if the competent authority of the State in which the income arises so
determines, after consultation with the competent authority of the other
Contracting State. Under paragraph 7 of the MOU, a company that meets an
ownership test and a base-erosion test will be granted treaty benefits
under Article 22(6). A company can meet the ownership test if the
ultimate beneficial owners of 95 percent or more of the aggregate vote
and value of all its shares are seven or fewer persons that are
residents of a party to the European Union, the European Economic Area
or a party to the North American Free Trade Agreement (NAFTA), and that
are also described in Article 22(3)(b).

Under Article 22(3)(b), ultimate beneficial ownership by a resident of a
country that is a party to NAFTA will be taken into account for purposes
of Article 22(3)(a)(ii) and paragraph 7 of the MOU only if the ultimate
beneficial owner meets three conditions, one of which is that the owner
be a resident of a country with which the other Contracting State has a
comprehensive income tax convention. While the United States is a party
to NAFTA, the United States does not have a comprehensive income tax
convention with itself. Thus, there has been doubt as to whether U.S.
residents may be taken into account.

In order to address this concern and provide certainty to taxpayers, the
Competent Authorities of United States and the Swiss Confederation have
agreed that a U.S. resident will qualify as a resident of a party to
NAFTA for purposes of Article 22(3)(b) if the person is a resident of
the United States and is also described in Article 22(1), sub-paragraphs
(a) or (b), or clause (i) of sub-paragraph (e). Accordingly, an
individual who is a resident of the United States (as determined under
Article 4); the United States or a political subdivision of the United
States; an instrumentality of the United States or political subdivision
thereof; and a company incorporated in the United States whose principal
class of shares is primarily and regularly traded on a recognized stock
exchange within the meaning of paragraph 22(1)(e)(i) will be treated as
a resident of a country that is a party to NAFTA for purposes of Article
22(3)(b), and therefore taken into account for purposes of Article
22(3)(a)(ii) and paragraph 7 of the MOU.

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Carol A. Dunahoo

Director, International (LMSB)

U.S. Competent Authority

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Robert Waldburger

Head of the Division for International

Fiscal Law and Double Taxation Matters

Swiss Competent Authority

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