INDEX OF DEFINED TERMS - Banca di Legnano

Level: 2 – From: 2 – Wednesday, July 21, 2010 – 11:55 – eprint6 – 4247 Section 02
Risk Factors
GDR/ADR Linked Notes
Exposure to risk that redemption amounts do not reflect direct investment in the shares
underlying the Depositary Receipts. There are important differences between the rights of holders of
ADRs or GDRs (ADRs and GDRs, together, “Depositary Receipts”) and the rights of holders of the stock
of the underlying share issuer represented by such Depositary Receipts. A Depositary Receipt is a security
that represents capital stock of the relevant underlying share issuer. The relevant Deposit Agreement for
the Depositary Receipt sets out the rights and responsibilities of the Depositary (being the issuer of the
Depositary Receipt), the underlying share issuer, and holders of the Depositary Receipt which may be
different from the rights of holders of the underlying shares. For example, the underlying share issuer may
make distributions in respect of its underlying shares that are not passed on to the holders of its Depositary
Receipts. Any such differences between the rights of holders of the Depositary Receipts and holders of the
underlying shares of the underlying share issuer may be significant and may materially and adversely
affect the value of the relevant GDR/ADR Linked Notes.
Exposure to the risk of non-recognition of beneficial ownership of the underlying shares
represented by Depositary Receipts and restrictions on the disposition of such underlying shares. The
legal owner of the underlying shares represented by Depositary Receipts is the custodian bank which at the
same time is the issuing agent of the Depositary Receipts. Depending on the jurisdiction under which the
Depositary Receipts have been issued and the jurisdiction to which the custodian agreement is subject, it is
possible that the corresponding jurisdiction would not recognize the purchaser of the Depositary Receipts
as the actual beneficial owner of the underlying shares. Particularly in the event that the custodian becomes
insolvent or that enforcement measures are taken against the custodian, it is possible that an order
restricting free disposition could be issued with respect to the underlying shares represented by Depositary
Receipts or that such shares are realized within the framework of an enforcement measure against the
custodian. If this is the case, the holder of the Depositary Receipt loses the rights under the underlying
shares and the GDR/ADR Linked Notes would become worthless. See “Investors risk losing all of their
investment in the Notes”.
Potential exposure to risks of emerging markets. Depositary Receipts often represent shares of
underlying shares issuers based in emerging market jurisdictions. In such case, see “Risks relating to Notes
which are linked to emerging market Underlying Asset(s)” above.
Distributions on the underlying shares may not be passed on to the Depositary Receipts. The
issuer of the underlying shares represented by Depositary Receipts may make distributions in respect of
such shares that are not passed on to the purchasers of its Depositary Receipts which may materially and
adversely affect the value of the GDR/ADR Linked Notes.
Adjustment to the terms and conditions or replacement of the Underlying Asset following certain
corporate events in relation to the underlying shares may materially and adversely affect the value of
the Notes. Following certain corporate events specified in the terms and conditions of the relevant
GDR/ADR Linked Notes relating to the underlying shares represented by Depositary Receipts or the
issuer of such underlying shares, such as a merger where the relevant company is not the surviving entity,
the amount Noteholders of GDR/ADR Linked Notes will receive, if any, at maturity of such Notes may be
adjusted by the Calculation Agent or the affected underlying shares and Depositary Receipts may be
replaced by another Underlying Asset. The occurrence of such corporate events and the consequential
amendments may materially and adversely affect the value of the GDR/ADR Linked Notes.
Exposure to changes in the rate of exchange between the currency of the Depositary Receipt and
the underlying share. Where the currency of the Depositary Receipt is different from that of the
underlying share represented by a Depositary Receipt, holders of Notes linked to such Depositary Receipt
may be exposed not only to the performance of the Depositary Receipt but also to the performance of the
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