Articles of Association

EX-99 12 ex99-10.htm ARTICLES OF ASSOCIATION OF TEPLARNA KROMERIZ Articles of Association

Articles of Association

of

Teplarna Kromeriz, a.s.

a full version of the Articles of Association of Teplarna Kromeriz, a. s.

with its registered office in Kromeriz, Na Sadkach 3572, post code 767 01

as follows from the made changes

based on a decision of the single shareholder acting as the General Meeting
as of June 27, 2001

__________

Lubos Jarolimek

Chairman of the Board of Directors

Teplarna Kromeriz, a.s.

TABLE OF CONTENTS:
I. BASIC PROVISIONS...........................................................................................1
   Article 1..................................................................................................1
   Commercial Name and the Registered Office of the Company ..................................................1
   Article 2..................................................................................................1
   Scope of Business..........................................................................................1
II. REGISTERED CAPITAL OF THE COMPANY AND SHARES..............................................................2
   Article 3..................................................................................................2
   The Company Registered Capital and the Extent to which It Has Been Paid Up and the Method of
   Paying Up the Issue Price of Shares Including the Consequences of Breaching the Duty to Pay Up
   the Subscribed Shares On Time..............................................................................2
   Article 4..................................................................................................2
   Shares.....................................................................................................2
   Article 5..................................................................................................4
   List of Shareholders.......................................................................................4
III. INCREASE AND REDUCTION OF THE REGISTERED CAPITAL OF THE COMPANY .........................................4
   Article 6..................................................................................................4
   Increase of the Registered Capital of the Company .........................................................4
   Article 7..................................................................................................5
   Rules of Procedure of the Company Registered Capital Increase..............................................5
   Article 8..................................................................................................6
   Reduction of the Company Registered capital................................................................6
   Article 9..................................................................................................8
   Rules of Procedure of the Company Registered Capital Reduction.............................................8
IV. SHAREHOLDERS' RIGHTS.....................................................................................10
   Article 10................................................................................................10
   Right to Participate in the General Meeting and to Vote at it, the Method of Voting.......................10
V. COMPANY BODIES............................................................................................10
   Article 11................................................................................................10
   Company Bodies............................................................................................10
A. GENERAL MEETING ..........................................................................................11
   Article 12................................................................................................11
   Status of the General Meeting ............................................................................11
   Article 13................................................................................................11
   Powers of the General Meeting ............................................................................11
   Article 14................................................................................................12
   Convening of the General Meeting .........................................................................12
   Article 15................................................................................................13
   Convening of the Extraordinary General Meeting ...........................................................13
   at Request of Qualified Shareholders' Majority............................................................12
   Article 16................................................................................................14
   Convening of the Extraordinary General Meeting in a Special Case..........................................14
   Article 17................................................................................................13
   Revocation of the General Meeting or Change of Date of its Holding........................................13
   Article 18................................................................................................14
   Participation in the General Meeting .....................................................................13
   Article 19................................................................................................15
   Quorum of the General Meeting and Substitute General Meeting .............................................14
   Article 20................................................................................................16
   General Meeting Decision Making...........................................................................15
   Article 21................................................................................................17
   Organization of the General Meeting, its Control, Rules of Procedure and Voting, Minutes of the
   General Meeting ..........................................................................................16
B. BOARD OF DIRECTORS .......................................................................................18
   Article 22................................................................................................18
   Status of the Board of Directors .........................................................................17
   Article 23................................................................................................18
   Acting on behalf of the Company and Acting for the Board of Directors by its Members......................17
   Article 24................................................................................................18
   Signing on behalf of the Company by the Statutory Body Members............................................17
   Article 25................................................................................................19
   Board of Directors' Powers................................................................................18
   Article 26................................................................................................20
   Convening of the Board of Directors ......................................................................19
   Article 27................................................................................................21
   Board of Directors' Decision Taking.......................................................................20
   Article 28................................................................................................21
   Board of Directors' Decision Taking out of the Meeting....................................................21
C. SUPERVISORY BOARD ........................................................................................21
   Article 29................................................................................................21
   Status and Powers of the Supervisory Board ...............................................................21
   Article 30................................................................................................21
   Composition of the Supervisory Board .....................................................................23
   Article 31................................................................................................22
   Convening of the Supervisory Board .......................................................................23
   Article 32................................................................................................23
   Meeting of the Supervisory Board .........................................................................22
   Article 33................................................................................................22
   Supervisory Board's Decision Taking.......................................................................22
   Article 34................................................................................................24
   Bonuses and Directors' Fees of the Board of Directors' and Supervisory Board's Members....................24
VI. COMPANY ECONOMY..........................................................................................24
   Profit Distribution and Covering of Loss of the Company ..................................................23
   Article 35................................................................................................24
   Reserve Fund..............................................................................................24
VII. FINAL PROVISIONS........................................................................................24
   Article 36................................................................................................24
   Procedure for Amending and Changing the Articles of Association ..........................................24
   Article 37................................................................................................27
   Effect of the Changes of the Articles of Association .....................................................25

I. GENERAL PROVISIONS

Article 1

Commercial Name and the Registered Office of the Company

Commercial Name: Teplarna Kromeriz
Company identification number: 25304925
Registered office: Kromeriz, Na Sadkach 3572, post code: 767 01
Legal form of the legal entity: joint stock company
Tax identification number: 320 - 25304925
The Company has been established for an indefinite period of time.
The Company was formed on July 10, 1996 and is recorded in part B, insert 2060 of the Commercial Register, at the District Court in Brno, as the competent Registration Court.

Article 2

Scope of business

The scope of business of the Company is as follows:
1. Purchase of goods to be sold and sale;
2. Brokerage;
3. Marketing;
4. Heat generation and distribution;
5. Electricity generation and distribution.
The Company, as an entrepreneur, undertakes business activity:
1. based on Act No. 222/1994 Coll., on Business Conditions and Public Administration in the Energy Sectors and on the State Energy Inspection, as amended (items d) and e) of Paragraph 1 of this Article of the Articles of Association),
2. based on Trade Licensing Act, No. 455/1991 Coll., as amended (items a) through c) of Paragraph 1 of this Article of the Articles of Association).

II. REGISTERED CAPITAL OF THE COMPANY AND SHARES

Article 3

The Company Registered Capital and the Extent to which It Has Been Paid Up and the Method of Paying
Up the Issue Price of Shares Including the Consequences of Breaching the Duty to Pay Up the
Subscribed Shares On Time

The total value of Company's registered capital is CZK 42,036,000 (in words forty-two millions thirty-six thousand Czech crowns).
The extent to which the registered capital has been paid up in the amount mentioned in Paragraph 1 of this Article of the Articles of Association: 100 per cent.
At every increase of the registered capital, the share premium and 50 per cent of the nominal value of shares subscribed by monetary contributions and all nonmonetary (in-kind) investment contribution have to be paid prior to their record into the Commercial Register. The remaining shares subscribed by monetary contributions have to be paid no later than in one year from the record of the increase of the registered capital into the Commercial Register.
If the subscriber does not pay the issue price of subscribed shares or its due part, he is called on by the Board of Directors to pay it in the time limit of 60 days from delivery of the notice.
When the duty to pay the issue price of subscribed shares or its due part is breached, the subscriber shall pay 20 per cent (in words: twenty per cent) of the due amount per year.

Article 4

Shares

The Company's registered capital mentioned in Article 3 (1) is divided into registered shares as follows:
1. 40 pieces (forty pieces) of shares, each having the nominal value of CZK 1,000,000 (one million Czech crowns);
2. 5 pieces (five pieces) of shares, each having the nominal value of CZK 100,000 (one hundred thousand Czech crowns);
3. 152 pieces (one hundred and fifty-two pieces) of shares, each having the value of CZK 10,000 (ten thousand Czech crowns);
4. 158 pieces (one hundred and fifty-eight pieces) of shares, each having the value of CZK 100 (one hundred Czech crowns);
5. 20 pieces (twenty pieces) of shares, each having the value of CZK 10 (ten Czech crowns).
Type of shares: common stock, no special rights are connected with these shares.
Form of shares: registered shares.
The sum of share nominal values corresponds to the amount of the Company registered capital.
Number of votes connected with one share:
1. the right to apply 100,000 votes (in words: one hundred thousand votes) is connected with one share of the nominal value of CZK 1,000,000 (in words: one million Czech crowns);
2. the right to apply 10,000 votes (in words: ten thousand votes) is connected with one share of the nominal value of CZK 100,000 (in words: one hundred thousand Czech crowns);
3. the right to apply 1,000 votes (in words: one thousand votes) is connected with one share of the nominal value of CZK 10,000 (in words: ten thousand Czech crowns);
4. the right to apply 10 votes (in words: ten votes) is connected with one share of the nominal value of CZK 100 (in words: one hundred Czech crowns);
5. the right to apply 1 vote (in words: one vote) is connected with one share of the nominal value of CZK 10 (in words: ten Czech crowns);
Format of shares: certificated shares
A registered certificated share is transferable by an endorsement or by handing-over of a share. In the endorsement, the name and registered office of the legal entity or the name and address of the natural person to whom the share is transferred and the date of the share transfer. The regulations regarding bills of exchange shall apply to the endorsement reasonably otherwise. The change of the shareholder must be recorded in the list of shareholders so that the transfer of a registered share can become effective. The Company shall record such a change of a shareholder without undue delay after such change has been documented to it.

Article 5

List of Shareholders

A person listed in the list of shareholders kept by the Company shall be entitled to exercise rights connected with a registered share with respect to the Company.
The type and form of a share, its nominal value, the commercial name and the registered office of the legal entity or the name and address of the natural person who is a shareholder, and/or a numerical marking of the share and changes of the above listed data must be recorded in the list of shareholders.
The Company is obliged to give a copy of the list of shareholders who are owners of registered shares, or required parts of the list of shareholders to each shareholder at his/its written request and at his/its expense. This shall be effected within seven days after delivery of his/its request.

III. INCREASE AND REDUCTION OF THE REGISTERED CAPITAL OF THE COMPANY

Article 6

Increase of the registered capital of the Company

The increase of the Company registered capital is governed by Section 202 et seq. of the Commercial Code.
The Company can increase the registered capital as follows:
1. an increase of the registered capital by subscription of new shares,
2. by a conditional increase of the registered capital,
3. by an increase of the registered capital from own Company sources,
4. by a combined increase of the registered capital,
5. by an increase of the registered capital by decision of the Board of Directors.
The General Meeting or the Board of Directors decide on the increase of the registered capital based on delegation by the General Meeting in compliance with the Commercial Code and the Articles of Association.
The effects of the increase of the registered capital start on the day of the record of its amount into the Commercial Register.
The terms and the procedure of the conditional increase of the registered capital is governed by Section 160 and Section 207 of the Commercial Code. If the General Meeting decides to issue convertible or priority bonds, it simultaneously accepts the resolution on the increase of the registered capital in such an extent, in which convertible rights from convertible bonds or priority rights from priority bonds can be applied.
The Board of Directors can be authorized by a resolution of the General Meeting, to decide, under the terms specified by the Commercial Code and the Articles of Association, on the increase of the registered capital by means of a share subscription or from the Company's equity, with exception of retained profit, but by no more than one-third of the existing amount of the registered capital in the time when the Board of Directors decides on the increase of the registered capital ("the authorization to increase the registered capital"). The Board of Directors' authorization to increase the registered capital replaces the decision of the General Meeting to increase the registered capital. The authorization must specify the nominal value, type, form and format of shares that shall be issued to increase the registered capital. The Board of Directors, within the scope of such authorization, may increase the registered capital even more than once, if the total amount of such a registered capital increase does not exceed the fixed limit. If the Board of Directors is authorized to decide on the increase of the registered capital by means of nonmonetary contributions, the authorization to increase the registered capital must also contain the specification, which Company body shall decide on the valuation of a nonmonetary contribution based on an expert opinion, such expert or experts having been appointed pursuant to Section 59(3) of the Commercial Code.
A notarial deed shall be made on the Board of Directors' decision. The Board of Directors' decision to increase the registered capital is recorded into the Commercial Register. An authorization to increase the registered capital shall not be recorded into the Commercial Register. The provisions of Sections 203 through 209 of the Commercial Code shall apply to the procedure to increase the registered capital pursuant to Paragraph 6 of this Article as appropriate.
The authorization to increase the registered capital may be conferred for a period of up to five years after the day when the General Meeting, which resolved to authorize the increase of the registered capital, was held.

Article 7

Rules of the Procedure of the Company Registered Capital Increase

The following rules have to be observed at a registered capital increase:

the General Meeting decides on the increase of the registered capital based on the Board of Director's proposal, or the Board of Directors decides on this matter based on the authorization of the General Meeting;
the invitation to, or notice of, a General Meeting shall also include, in addition to the particulars under section 184(5) of the Commercial Code, at least the information under Section 202(2) to (4) of the Commercial Code;
by 30 days from the resolution of the General Meeting, the Board of Directors shall file an application for its entry in the Commercial Register;
a resolution on the entry shall be published by the Board of Directors without undue delay after its entry into the Commercial Register;
resolution of the General Meeting on increase of the registered capital is performed by the Board of Directors;
in case of a breach of the duty to pay the issue price of subscribed shares, the subscriber pays the due interest in accordance with Article 3 Paragraph 4 of the Articles of Association;
the Board of Directors shall file an application for entry of the new amount of the registered capital into the Commercial Register. The effects of the registered capital increase start on the day of such entry.

Article 8

Reduction of the Company Registered Capital

The reduction of the Company registered capital is possible only based on the decision of the General Meeting. Reduction of the registered capital is governed by the provisions of Sections 211 through 216b of the Commercial Code.
The Company can reduce its registered capital as follows:
1. by decreasing the nominal value of shares and interim certificates,
2. by withdrawal of shares from circulation on the basis of a public proposal,
3. by abandonment of a share issue.
The value of the Company registered capital can not be reduced under its level set by law, i.e. CZK 2,000,000 (in words two million Czech crowns).
With the registered capital reduction the collection of 'creditor's debts must not be made worse.

Article 9

Rules of the Procedure of the Company Registered Capital Reducing

On reducing the registered capital of the Company by a reduction of the nominal value of shares and interim certificates (section 213a of the Commercial Code), the following rules shall be observed:
1. If the nominal value of the Company shares is reduced, the value of all the Company shares must be reduced, except if the purpose of the reduction is to waive the unpaid part of the issue price of the shares.
2. The reduction of the nominal value of certificated shares on unpaid shares to which interim certificates were issued, shall be carried out by replacing the shares or the interim certificates by shares or interim certificates having a lower nominal value, or by marking a lower nominal value on the existing share or the existing interim certificate signed by the members of the Board of Directors authorized to act on behalf of the Company. The Board of Directors shall invite the shareholders having the certificated shares or interim certificates in a way stipulated by law and by the Articles of Association concerning the convening of the General Meeting, to submit their shares or interim certificates for the purpose of a replacement or marking a reduction of their nominal value within a time-limit stipulated by the General Meeting. Unless a shareholder submits his shares or interim certificates in the stipulated time-limit, he/it is not entitled to exercise the related rights until he/it submits them, and the Board of Directors shall proceed pursuant to section 214 of the Commercial Code.
Based on the public proposal (Section 213c of the Commercial Code) the procedure is as follows:
1. Shares may be withdrawn from the market on the basis of a public offer for a contract for the purchase of shares or for the withdrawal of shares from the market without a consideration;
2. the provisions of Section 183a through 183c and 183e through 183g of the Commercial Code shall apply on the public offer of the contract on free share withdrawal from the market;
3. the Board of Directors, based on authorization of the General Meeting, shall issue proposal for the record of the new value of the registered capital into the Commercial Register in such an extent, in which the public offer of contract was accepted by the shareholders.
Based on abandonment of a share issue (Section 213d of the Commercial Code), the procedure shall be as follows:
1. The General Meeting may decide on a reduction of the registered capital by abandonment of a share issue to the extent in which subscribers are in delay with paying-up the nominal value of shares, unless the Company proceeds pursuant to Section 177(4) through (7) of the Commercial Code.
2. The Board of Directors invites the shareholder that is in delay with paying-up the issue price or its part to return his/its interim certificate and the Company will not issue shares replaced by such an interim certificate and it will return the shareholder the so-far paid-up issue price of the shares without undue delay after entry of the reduction of the registered capital in the Commercial Register after setting-off claims of the Company with respect to the subscriber. Unless a shareholder submits his/its interim certificate in the stipulated time limit, he/it is not entitled to exercise the related rights until he/it submits it. Unless he/it submits such an interim certificate in an additional time limit upon call of the Board of Directors, the Board of Directors shall declare it invalid.
The procedure of Company registered capital reducing is as follows:
1. the General Meeting decides about the registered capital reducing based on the Board of Directors' proposal,
2. also the particulars mentioned in Section 211(1) of the Commercial Code are mentioned in the announcement on holding the General Meeting in addition to the particulars mentioned in Section 184(5) of the Commercial Code,
3. The resolution of the General Meeting to reduce the Company's registered capital shall be entered into the Commercial Register. The petition for such entry shall be filed by the Board of Directors within 30 days of the General Meeting's resolution,
4. the resolution on the entry is published by the Board of Directors in the way specified in Article 20 Paragraph 5 of the Articles of Association, without undue delay after its entry into the Commercial Register,
5. the resolution of the General Meeting to reduce the registered capital is exercised by the Board of Directors,
6. The Board of Directors is obligated to notify in writing, within 30 days after the resolution of the General Meeting on reduction of the registered capital became effective with respect to third parties, the extent of the reduction of the registered capital to all known creditors whose claims against the Company arose prior to the day when this resolution became effective with respect to third parties, the aforesaid notification including also an invitation to submit their claims under provision of Section 215(3) of the Commercial Code. The Board of Directors shall secure the publishing of General Meeting's decision on the registered capital reduction after its entry into the Commercial Register, at least twice with a thirty-day interval in the way mentioned in Article 20 Paragraph 5 of the Articles of Association, and with a notice for creditors that they announce their receivables pursuant to provision of Section 215(3) of the Commercial Code.
7. the Board of Directors shall file an application for entry of such a registered capital reduction in the Commercial Register in the deadline mentioned in Section 216 of the Commercial Code.

IV. SHAREHOLDERS' RIGHTS

Article 10

Right to Participate in the General Meeting and to Vote at it, the Method of Voting

The shareholders exercise their rights concerning the Company management at the General Meeting.
The shareholder is entitled to vote in the General Meeting, either personally or by means of a natural person or a legal entity - a proxy - based on the power of attorney with shareholder's authenticated signature under the simultaneous meeting of the condition of shareholder's participation in the General Meeting (Article 18 of the Articles of Association).
At the General Meeting, shareholders vote by acclamation. The details on voting are mentioned in General Meeting rules of procedure and voting, approved by the General Meeting.

V. COMPANY BODIES

Article 11

Company bodies

The Company bodies are as follows:

General Meeting,
Board of Directors,
Supervisory Board.

A. GENERAL MEETING

Article 12

Status of the General Meeting

The supreme Company body is the General Meeting. It consists of all shareholders present.
The General Meeting is competent to decide about all matters, which are entrusted to its competence by the law or the Articles of Association.
The General Meeting decides by means of its resolutions, which are binding for the Company and its bodies.

Article 13

Powers of the General Meeting

It is within the powers of the General Meeting to:
1. decide to modify the Articles of Association unless it is a change as a consequence of registered capital increase by the Board of Directors pursuant to Section 210 of the Commercial Code or a change as a consequence of other legal facts,
2. decide to increase or reduce the registered capital or to authorize the Board of Directors pursuant to Section 210 of the Commercial Code or to set off a receivable from the Company against a receivable relating to the amount of an issue price;
3. decide to reduce the registered capital and to issue bonds pursuant to Section 160 of the Commercial Code;
4. elect and recall of Board of Directors' members;
5. elect and recall Supervisory Board's members;
6. approve the ordinary or extraordinary financial statements and consolidated financial statements and in cases set by law also the interim financial statements, and to decide on the profit distribution, the making good of a loss and determination of directors fee;
7. decide on the financial remuneration of Board of Directors' and Supervisory Board's members;
8. decide to wind up the Company in conjunction with its going into liquidation, to appoint and recall the liquidator, including determining the amount of the liquidator's remuneration, approve the plan for distribution of the liquidation remainder;
9. decide on Company merger, transfer of business assets to a sole shareholder or on division, and/or a change of legal form;
10. decide whether to conclude a contract if its object is the transfer of an enterprise or its part, or lease of an enterprise or its part, or whether to conclude such contract with a controlled person;
11. approve a controlling agreement (Section 190b of the Commercial Code), a profit transfer agreement (Section 190a of the Commercial Code) and a silent partnership agreement and their amendments;
12. decide on other matters, which the Commercial Code or the Articles of Associations entrust to the to the General Meeting's competence.
The General Meeting may not reserve the right to decide on a matter which neither the law nor the Articles of Association entrust to its competence.

Article 14

Convening of the General Meeting

The General Meeting is held at least once a year, however no later than on June 30 of the current calendar year, and is called by the Board of Directors, possibly its member under conditions of Section 184(3) of the Commercial Code.
The Supervisory Board convenes the General Meeting if it is required by Company interests, and proposes necessary measures at the General Meeting. Provisions of Section 184 through 190 of the Commercial Code are valid for General Meeting convocation as appropriate.
If the General Meeting is convened by the Supervisory Board, the Board of Directors has to cooperate adequately.
The Board of Directors is obligated to publish the announcement on holding the General Meeting at least 30 days prior to holding the General Meeting, namely in an announcement delivered as stipulated in this Article of the Articles of Association.
The announcement on holding the General Meeting contains at least the following data:
1. commercial name and registered office of the Company,
2. venue, date and hour of the General Meeting,
3. whether it is an ordinary, extraordinary or substitute General Meeting that is being convened,
4. the agenda of the General Meeting.
The main data in the financial statements with specifying the time and place, in which the financial statements can be seen by Company shareholders, is part of the announcement on holding the General Meeting, on which the ordinary, extraordinary and consolidated financial statements and/or interim financial statements shall be approved. If a change in the Articles of Association is on General Meeting's agenda, the announcement on holding the General Meeting must at least characterize the principle of proposed changes and the proposal of changes in the Articles of Association must be open to public inspection on the Company registered office within the period set for convening the General Meeting. A shareholder has the right to ask for mailing a copy of the proposal of the Articles of Association at own costs and at own risk. The shareholders must be notified about these rights in the announcement on holding the General Meeting.
After holding one General Meeting, another General Meeting must not be held earlier than in two business days.
The venue, date and time of holding the General Meeting must be determined in such a manner as not in any way to prevent shareholders attending at the General Meeting.
At the request of a shareholder or shareholders having shares whose total nominal value exceeds 5 per cent of the registered capital of the Company, the Board of Directors is obliged to put an issue stipulated by such shareholders on the agenda of the General Meeting. If the request is delivered after the announcements on holding the General Meeting have been sent, the Board of Directors shall announce the changed agenda of the General Meeting to shareholders by registered mail within 10 days before the General Meeting. Unless it is possible to announce the changed agenda in this way, such an issue may be included in the agenda of the General Meeting only if all shareholders are present and agree.

Article 15

Convening of the Extraordinary General Meeting at Request of Qualified Shareholders Minority

The shareholder or shareholders of the Company, whose registered capital is higher than CZK 100,000,000, who have shares, whose total value exceeds 5 per cent of the registered capital, can ask the Board of Directors to call an extraordinary General Meeting to discuss proposed matters (Section 181(1) of the Commercial Code).
The Board of Directors shall convene an Extraordinary General Meeting so that it takes place no later than 40 days from the day, when the Board of Directors received the request for its convening. The deadline mentioned in Section 184(4) of the Commercial Code and Article 14 Paragraph 5 of the Articles of Association is being shortened to 15 days. The Board of Directors is not entitled to change the proposed agenda. The Board of Directors is entitled to amend the agenda only with consent of persons, who requested to convene the Extraordinary General Meeting pursuant to Section 181(1) of the Commercial Code and Paragraph 1 of this Article of the Articles of Association.
Revocation or change of date of holding of an extraordinary General Meeting on a later date, convened according to Section 181, is regulated by Section 184(7) of the Commercial Code and Article 17 Paragraph 2 of the Articles of Association.

Article 16

Convening of the Extraordinary General Meeting in a Special Case

The Board of Directors shall convene a General Meeting, without undue delay, when it ascertains that a settlement of a loss shown in any of the financial statements from the Company's disposable funds would still leave an unsettled amount representing half of the registered capital of the Company, or this result may be expected with respect to all circumstances, or if the Board of Directors establishes that the Company has become insolvent, and propose to the General Meeting that the Company be wound up, or another measure to be adopted, unless a specific legislative regulation provides otherwise.

Article 17

Revocation of the General Meeting or Change of Date of its Holding

The General Meeting can be revoked or the date of its holding can be changed for a later date. The revocation of the General Meeting or the change of the date of its holding have to be announced in the way set by law and the Articles of Association concerning convocation of the General Meeting, one week prior to the announced date of its holding at the latest, otherwise the Company is obligated to pay to the shareholders who came according to the original announcement, the expenses incurred.
The extraordinary General Meeting convened pursuant to Section 181 of the Commercial Code can be revoked or the date of its holding can be changed for a later date only if the mentioned shareholders ask for it. When a new date of holding the General Meeting is set, the deadline pursuant to Section 184(4) of the Commercial Code or pursuant to Section 181(2) of the same act must be fulfilled.

Article 18

Participation in the General Meeting

Every shareholder that is mentioned in the list of shareholders has the right to participate at the General Meeting.
The shareholder (a natural person) is entitled to participate at General Meeting and to perform his/her rights personally at the General Meeting. The shareholder (a legal entity) is entitled to participate at the General Meeting and to perform personally its/his rights by means of an authorized member of its/his statutory body.
When performing his/its rights at the General Meeting, the shareholder is entitled to be represented by a natural person or a legal entity (proxy). For this purpose the shareholder (principal) shall provide a written power of attorney to the proxy, which has to contain the scope of proxy's authorization, otherwise it is void. Members of the Company Board of Directors or Supervisory Board can be a shareholder's proxy.
The Board of Directors and Supervisory Board members can participate in the General Meeting. The notary participates in the General Meeting every time when the Commercial Code sets duty to make a notarial deed. Other persons can participate in the General Meeting or its part only with the approval of the Board of Directors. The General Meeting is not open to public.
The expenses connected with shareholder's participation at the General Meeting are covered by the shareholder unless otherwise set by the Commercial Code.

Article 19

Quorum of the General Meeting and Substitute General Meeting

The General Meeting constitutes a quorum if the shareholders present have shares with nominal value exceeding 50 per cent of the Company registered capital.
If the General Meeting does not constitute a quorum by two hours from the beginning of starting the General Meeting, set in the announcement on holding the General Meeting, then the member of the Board of Directors, who was authorized by the Board of Directors to control the General Meeting till the General Meeting chairman is elected, shall dissolve the General Meeting. In this case the Board of Directors shall convene a substitute General Meeting.
The substitute General Meeting is called by the Board of Directors by a new announcement in the way mentioned in Section 184 Paragraph 4 of the Commercial Code and Article 15 Paragraph 5 of the Articles of Association, with the specification, that the deadline mentioned is shortened for 15 days.
The announcement on holding a substitute General Meeting has to be sent no later than 15 days from the day, for which the original General Meeting was convened.
The substitute General Meeting must be hold no later than six weeks from the day, for which the original General Meeting was convened.
The substitute General Meeting must have an unchanged agenda and constitutes quorum with no regard to Paragraph 1 of this Article of Association.

Article 20

General Meeting Decision Making

The General Meeting decides with majority of votes of shareholders present unless the Commercial Code requires another majority.
The General Meeting decides about the matters pursuant to Section 187 letter a), b), and c) and about winding up of a Company with its going into liquidation and the plan of liquidation balance distribution by at least two third of votes of shareholders present. If the General Meeting decides to increase or reduce the registered capital, approval of at least two third votes of shareholders present for each type of shares, issued by the Company or issued in form of interim certificates, is also required.
The approval of at least three fourths of votes of shareholders present having these shares is also required for the decision of the General Meeting on the change of type or form of shares, on change of rights connected with a specific type of shares, on restriction of bearer shares transferability and on cancellation of share public transferability.
The General Meeting decides with at least three quarters of votes of shareholders present about the elimination or restriction of the pre-emptive right for obtaining convertible bonds or bonds with attached pre-emptive rights for subscription of new shares pursuant to Section 204a of the Commercial Code, on the approval of a control agreement (Section 190b of the Commercial Code), on the approval of a profit transfer agreement (Section 190a of the Commercial Code), and their changes and on increase of the registered capital with non-monetary contributions. If the Company issues more types of shares, the approval of General Meeting is required plus approval of at least three quarters of votes of shareholders present for each share type.
A General Meeting's resolution on consolidation of shares also requires approval by all shareholders whose shares are to be consolidated.
A notary record must be elaborated on the decisions pursuant to Sections 2 through 5 of this Article of the Articles of Associations. The notary record on the decision on the change of the Articles of Association must contain also an approved text of the change in the Articles of Association.
The General Meeting votes first about the proposal of the resolution submitted for decision by the Board of Directors and in case that the proposal is not approved, voting of other shareholders' counter-proposals is made in such order, in which they were submitted. If some of the proposals are accepted with a necessary majority of votes, there is no voting on other proposals.
The matters that were not included into the proposed General Meeting agenda can be decided only under participation and with approval of all Company shareholders.

Article 21

Organization of the General Meeting, its Control, Rules of Procedure and Voting,
Minutes of the General Meeting

The organization of the General Meeting is secured by the Board of Directors.
Updating of the list of persons present, verification of the right to participate in the General Meeting and authorization to exercise shareholders voting rights is secured by persons authorized by the Board of Directors.
After completing the record of the shareholders into the list of persons present these persons shall submit the determined number of shareholders present and number of their votes to the member of the Board of Directors who was authorized to control the General Meeting by the Board of Directors.
In case the General Meeting is not able to constitute a quorum pursuant to Article 19 Paragraph 1 of the Articles of Association, it shall be governed by other provisions of Article 19 of the Articles of Association.
The General Meeting, after verifying the quorum, is opened by the member of the Board of Directors, who was authorized by the Board of Directors.
The acting and voting of the General Meeting shall be governed by rules of procedure and voting of the General Meeting, which are approved by the General Meeting.
The General Meeting elects its chairman, minutes clerk, two persons verifying the record and persons authorized to count votes (General Meeting bodies).
Until the persons authorized to vote counting are elected, the votes are counted by the persons authorized by the Board of Directors.
Only natural persons present at General Meeting, who agree with this candidature, can be proposed to General Meeting bodies.
Until the chairman of General Meeting and other bodies are elected, the General Meeting is controlled by the member of the Board of Directors who was authorized by the Board of Directors.
The General Meeting is controlled by the chairman of the General Meeting according to General Meeting agenda.
Minutes shall be drawn up from the General Meeting.
Proposals and statements, submitted at the General Meeting, are attached to the Minutes, plus the list of persons present at the General Meeting.
The Board of Directors ensures the preparation of the Minutes from the General Meeting no later than in 30 days from its finishing. The record is signed by the minutes clerk and the chairman of the General Meeting and one elected person to verify the minutes.

B. BOARD OF DIRECTORS

Article 22

Status of the Board of DirectorsM

The Board of Directors is the statutory body of the Company, which manages the Company's activity and acts in its name.
The Board of Directors has three members.
The members thereof are elected and recalled by the General Meeting.
The Board of Directors is elected for a five-year period. The term of office starts on the day of electing the Board members by the General Meeting. Any Board member can be reelected.
The Board of Directors whose number of members elected by the General Meeting is not lower than one half can appoint substitute members until the next General Meeting.
The Board of Directors shall elect its Chairman.
The membership in the Board of Directors is not substitutable. Mutual substitution is inadmissible.

Article 23

Acting on behalf of the Company and Acting for the Board of Directors by its Members

The Board of Directors acts on behalf of the Company. Either the Chairman separately, or separately a Board member within the scope of written authorization delegated by the Board may act in the name of the Company with respect to other parties.

Article 24

Signing on behalf of the Company by the Statutory Body Members

Signing on behalf of the Company is carried out in such a way that all members of the Board of Directors or the Board Chairman separately or one member separately authorized in writing by the Board of Directors append their signatures, mentioning their function in the Board of Directors to the Company's printed, imprinted or written commercial name.
Specimen signatures of all Board members, in which the signatures are authenticated, are filed in the registry of documents at the Commercial Register of the Registration Court. The Company also submits the specimen signatures to the Commercial Court in relation to an entry of changes in the Commercial Register.

Article 25

Board of Directors' Powers

The Board of Directors decides on all matters relating to the Company, provided they have not been entrusted by the Commercial Code or the Articles of Association to the powers of the General Meeting or the Supervisory Board.
The Board of Directors in particular:
1. insures business, as well as proper accounting management of the Company;
2. convenes the General Meetings, substitute General Meetings as well as extraordinary General Meetings;
3. decides on proposals that are to be approved and decided on by the General Meeting, in particular:
  - proposals for changes to the Articles of Association, unless it concerns a change caused by an increase in the registered capital by the Board of Directors pursuant to Section 210 of the Commercial Code;
  - ordinary, extraordinary and consolidated, and/or interim financial statements and proposals for distribution of profit or covering a loss and the determination of Board members' director's fees;
  - proposals for the election and recall of members of the Board of Directors and the Supervisory Board;
  - proposals for changes to the registered capital and for an issue of bonds with attached pre-emptive rights and convertible bonds;
  - proposals for changes to the format, form and type of shares;
4. submits to the General Meeting the Company's annual financial statement of the previous accounting period, annual report on the Company's business activities and assets for approval;
5. decides on an increase of the registered capital pursuant to Article 6, Paragraphs 6 through 8 of the Articles of Association, being authorized by the General Meeting;
6. elects and recalls the Chairman of the Board of Directors out of the Board members;
7. without undue delay, ensures the elaboration of the whole wording of the Articles of Association, if a change in the Articles of Association occurs based on any legal fact, after any of the Board of Directors' members is informed about such a change;
The Board of Directors carries out the General Meeting's resolutions and decisions.
The Board of Directors passes provisions concerning a protection of the Company's trade secrets.
The Board of Directors is governed by the principles and instructions adopted by the General Meeting, provided they are in accordance with statutory provisions and these Articles of Association. Their infringement has no influence on the effects of actions by members of the Board of Directors with regard to third parties. Unless otherwise set by the Commercial Code, nobody is authorized to issue orders to the Board of Directors concerning the Company business management.
The Board of Directors submits to the Supervisory Board in particular:
1. ordinary, extraordinary and consolidated financial statements, and/or the interim financial statements and the proposals for the distribution of profit or covering of loss and the setting of Board members' director's fees, for review,
2. a report on the Company's business activities and assets, for an opinion,
The Board of Directors decides on the use of money from the reserve fund pursuant to Article 35 of the Articles of Association.

Article 26

Convening of the Board of Directors

The Board of Directors meets according to need.
The meetings of the Board of Directors are called by its Chairman, if being absent, the Board meetings are convened by an authorized Board member by a written invitation in which the venue, date and hour of holding the Board of Directors meeting and the agenda are specified. The invitation must be delivered to the members of the Board of Directors at least three days before the meeting unless the next meeting date and particulars were discussed at the preceding Board meeting. If approved by all the Board members, the Board meeting may be convened by telephone or by telefax. In such a case, the invitation must also contain the above mentioned particulars and the Board members must confirm its receipt.
The Chairman of the Board of Directors is obliged to convene a Board meeting always when required by any member of the Board of Directors specifying the reason.

Article 27

Board of Directors' Decision Taking

The Board of Directors has a quorum when at least two members are present.
Each member of the Board of Directors has one vote on voting at Board meetings.
Absolute majority of votes of all Board of Directors' members is required to pass a resolution concerning any matter discussed at the meeting of the Board of Directors. If the votes are equal, the Chairman's vote decides.
On election and recall of the Board Chairman, this person shall not vote.

Article 28

Board of Directors' Decision Taking out of the Meeting

Decision taking out of the Board's meeting is possible if agreed by all Board members. The voting persons are considered present. To adopt the decision of the Board of Directors, it is necessary that all members of the Board of Directors vote for the decision in writing and the decision must be adopted unanimously. The voting persons are considered present.
Such an accepted decision must be incorporated in the minutes of the next Board of Directors' meeting.
Any organizational activities connected with the decision taking out of the Board meeting are ensured by the Chairman of the Board of Directors.

C. SUPERVISORY BOARD

Article 29

Status and Powers of the Supervisory Board

The Supervisory Board oversees the exercise of the powers of the Board of Directors and the carrying out of the Company's business activities.
Members of the Supervisory Board are entitled to examine all documents and records relating to the Company's activities, and examine whether accounting statements are properly kept in accordance with the facts and whether the Company's business activities are conducted in accordance with legal regulations, these Articles of Association and instructions of the General Meeting.
The Supervisory Board reviews the financial statements and proposal for the distribution of profit and submits its opinion to the General Meeting.
The Supervisory Board approves the auditor for an audit of the financial statements.
The members of the Supervisory Board take part in the General Meeting and are obliged to present the General Meeting results of their control.
The Supervisory Board convenes a General Meeting where this is required in the interests of the Company, and proposes the required measures at the General Meeting.

Article 30

Composition of the Supervisory Board

The Supervisory Board has three members. A member of the Supervisory Board may not also be a member of the Board of Directors, an agent by proxy or a person authorized according to the record in the Commercial Register to act on behalf of the Company.
Two-thirds of the specified number of members of the Supervisory Board shall be elected and recalled by the General Meeting, and one third by the Company's employees. However, provided the number of the Company's employees, whose working hours exceed one half of the weekly working hours stipulated by a special regulation at the time of holding the General Meeting, does not exceed 50 persons, all the members of the Supervisory Board are elected by the General Meeting.
Members of the Supervisory Board are elected for a period of five years. Their term of office may not, however, end before new members have been elected. New members are however elected not later than by expiry of three months after the former members' end of the term of office. Members of the Supervisory Board may be re-elected.
A member of the Supervisory Board may withdraw from his/her function by his/her written statement delivered to the Supervisory Board. In such a case, his/her function expires on the date when his/her withdrawal has been or should have been discussed by the Supervisory Board. Provided the number of the Supervisory Board members falls below one half, the Supervisory Board is obliged to convene the extraordinary General Meeting without undue delay, which discusses the members' withdrawal and elects new members of the Supervisory Board.
The Supervisory Board shall elect its Chairman out of its members.
The Supervisory Board determines its member who shall represent the Company in court proceedings and in other proceedings held against Board of Directors' members by other bodies.

Article 31

Convening of the Supervisory Board's Meetings

The Supervisory Board meets at least once in a year.
The meetings of the Supervisory Board are called by its Chairman by a written invitation in which the venue, date and hour of holding the Supervisory Board meeting and the agenda are specified. The invitation must be delivered to the members of the Supervisory Board at least fifteen days before the meeting. If approved by all the Board members, the Board meeting may be convened by telephone or by telefax. In such a case, the invitation must also contain the above mentioned particulars and the Board members must confirm its receipt.
The membership in the Supervisory Board is unsubstitutable.
At its discretion, the Supervisory Board may also invite members of other Company's bodies, employees, shareholders and other persons.

Article 32

Meetings of the Supervisory Board

Meetings of the Supervisory Board are conducted by its Chairman. If being absent, the meeting is conducted by the Deputy Chairman.
Minutes are taken of the proceedings and decisions of the Supervisory Board, signed by the Chairman of the Supervisory Board and the minutes keeper authorized by the Supervisory Board.
Costs related to the meetings and other activities of the Supervisory Board are paid by the Company.

Article 33

Supervisory Board's Decision Taking

The Supervisory Board has a quorum when at least two members of the Supervisory Board are present.
The Supervisory Board decides on the basis of consent of the majority of its members' votes. Each member of the Supervisory Board has one vote on voting at Board meetings.
On election and recall of the Board Chairman, this person shall not vote.

Article 34

Bonuses and Directors' Fees of the Board of Directors' and Supervisory Board's Members

Members of the Board of Directors and the Supervisory Board are entitled to receive remuneration in the amount and under conditions stipulated by the General Meeting and these Articles of Association.

VI. COMPANY ECONOMY

Profit Distribution and Covering a Loss of the Company

The General Meeting decides on the distribution of the Company's profit on the basis of a proposal by the Board of Directors, following a review of such proposal by the Supervisory Board.
Following tax liabilities in accordance with statutory provisions, the allocation to the reserve fund and other funds as the case may be, and following distribution for other purposes approved by the General Meeting, profit achieved by the Company in the accounting period is allocated on the basis of a decision by the General Meeting on the payment of dividends to individual shareholders. This does not exclude the possibility of the General Meeting's deciding that a part of profit not specially committed is used to increase the Company's registered capital or that a part of profit is not allocated.
The proposal for the profit distribution or covering of loss is governed by Section 178(6) of the Commercial Code.
Possible losses arisen in the Company's economy shall be compensated in particular from the Company's reserve fund.
The Company is not entitled to allocate profit among shareholders in cases listed in Section 178 para. 2 of the Commercial Code.

Article 35

Reserve Fund

Following tax liabilities in accordance with statutory provisions, the Company shall use its profit for obligatory and other allocations to the Company's fund, for investments and for other purposes approved by the General Meeting, for payment of dividends to individual shareholders and for directors' fees of members of the Board of Directors and the Supervisory Board.
The reserve fund shall be replenished by at least 5 per cent of the profit in the preceding accounting period after levies and taxes, until the amount being equal to 20 per cent of the Company's registered capital is reached. The Board of Directors decides on a specific use of the reserve fund. The reserve fund may be used by the Company to settle a loss or for measures that are to overcome unfavorable economic position of the Company in the extent in which this fund is created pursuant the Commercial Code in an obligatory way.
The General Meeting shall decide on any other creation of the reserve fund above the level stipulated in the preceding paragraph.
Based on a decision of the General Meeting, the Company may create other funds. The Board of Directors shall decide on their use pursuant to principles stipulated by the General Meeting.

VII. FINAL PROVISIONS

Article 36

Procedure for Amending and Changing the Articles of Association

Proposals for an amendment or another change of the Articles of Association ("changes to the Articles of Association") may be given by the Board of Directors, the Supervisory Board and a shareholder provided the agenda of the General Meeting contains changes to the Articles of Association.
Proposals for changes to the Articles of Association are proceeded in particular by the Board of Directors.
The General Meeting decides on changes to the Articles of Association, unless it is a change as a consequence of an increase in the registered capital by the Board of Directors pursuant to Section 210 of the Commercial Code or a change as a consequence of other legal fact.
At least two-third majority of votes of the shareholders present is needed to pass a decision concerning changes to the Articles of Association. A notarial record must be written about a decision concerning changes to the Articles of Association.
If the General Meeting reaches a decision concerning a change to the Articles of Association, the Board of Directors shall ensure the production of the full wording of the Company's Articles of Association, without undue delay. The full wording of the Company's Articles of Association shall become a part of the registry of documents kept by a registration court. The Articles of Association table of contents must be a part of the full wording of the Articles of Association.

Article 37

Effect of the Changes of the Articles of Association

Should the General Meeting decide on an increase or decrease in the registered capital, splitting of shares or consolidation of shares into one share, change of share form or type, or limitation of transferability of registered shares or a change thereof, the changes to the Articles of Association come into force on the day of their record in the Commercial Register.
Other changes come into effect at the moment when the General Meeting made a decision about them, provided that neither a decision by the General Meeting on a change to the Articles of Association nor the law requires that they come into effect at a later time.
If the change in the Articles of Association is based on any legal fact, the provision of Article 26 Paragraph 2 (g) of the Articles of Association shall apply. The change in the Articles of Association takes effect on the day on which such a legal fact takes effect.