27 Mar 2006 08:37
Cesky Telecom A.S.27 March 2006 ARTICLES OF ASSOCIATION Telefonica O2 Czech Republic, a.s. An amended proposed by the Board of Directors to the General Meeting held on April 27, 2006 I. BASIC PROVISIONS The joint-stock Company Telefonica O2 Czech Republic, a.s. (hereinafter referredto as the "Company") was founded by a single action by the National PropertyFund of the Czech Republic, with its registered office at Prague 2, Rasinovonabrezi 42, as the sole founder through the Founder's Deed, which includes thedecision of the founder pursuant to provisions (valid and effective in therelevant time) of Art. 171 (1) and Art. 172 (2) and (3) of Act No. 513/91 Coll.,the Commercial Code, as amended (hereinafter referred to as the "CommercialCode") dated December 16, 1993 in the form of a notarial record. Article 1 Business Name and Registered Office of the Company 1. The business name of the Company shall read: Telefonica O2 Czech Republic, a.s. 2. The registered office of the Company shall be Prague. Article 2 Duration of the Company The Company has been established for an indefinite period of time. Article 3 Subject of Business (Activity) of the Company The subject of business (activity) of the Company shall be: 1. Exercise of communication activities within the territory of theCzech Republic: a) public fixed electronic communications network, b) public network for transmission of radio and television signal, c) public fixed telephone network, d) publicly available telephone service (The service is provided aspublicly available.), e) ensuring of public mobile network, f) other voice services (The service is provided as publiclyavailable.), g) leased lines (The service is provided as publicly available.), h) distribution of radio and television signal (The service isprovided as publicly available.), i) data transfer services (The service is provided as publiclyavailable.), j) Internet access services (The service is provided as publiclyavailable.), k) other voice services (The service is not provided as publiclyavailable.). 2. Assembly, repairs, revisions of the stipulated electricalequipment. 3. Provision of technical services to personal and propertyprotection. 4. Design of electric equipment. 5. Manufacture, installation and repairs of electric machinery andapparatus. 6. Production, repairs and installation of measuring equipment. 7. Manufacture, installation and repairs of electronic equipment. 8. Installation, maintenance and services of telecommunicationsequipment. 9. Manufacture of low voltage distribution boxes, batteries cablingand conductors. 10. Lease and lending of movable things. 11. Warehousing of goods and load handling. 12. Real-estate agency activities. 13. Project preparation activity in construction. 14. Construction of buildings; including their alterations, maintenanceand demolition. 15. Data processing, database services, network administration. 16. Provision of software and consulting in the area of hardware andsoftware. 17. Business, financial, organizational, and economic consultingactivities. 18. Organization of professional courses, training and other educationalevents, including tutoring activities. 19. Passenger road transport. 20. Freight vehicle road transport. 21. Manufacture of machinery and equipment for certain industries. 22. Road vehicle repair. 23. Vehicle body repair. 24. Transportation technical activities. 25. Maintenance of motor vehicles and accessories thereof. 26. Construction preparation activities. 27. Installation, adjustment and maintenance of products, with theexception of activities specified in appendices to Act No. 455/91 Coll. 28. Wholesale. 29. Specialized retail sale. 30. Copying services. 31. Advertising and marketing. 32. Organisation of cultural and entertainment events and operation ofentertainment equipment. 33. Activities of technical consultants in the area oftelecommunications. 34. Acquisition, processing and provision of public information servicesusing telecommunications equipment and services. 35. Publishing activities. 36. Mediation of services. 37. Performance of geodetic activities. 38. Distribution of electricity and production and distribution of heatpursuant to Act No. 222/94 Coll., on conditions of business and on performanceof state administration in the energetics industry and on the State EnergyInspection. 39. Activities of accounting advisors, bookkeeping. 40. Business mediation. 41. Services in the area of administration and services oforganizational and economic nature for legal entities and natural persons. II. REGISTERED CAPITAL, SHARES, SHAREHOLDERS Article 4 Registered Capital, Shares in the Company 1. The registered capital of the Company shall amount to32,208,990,000 CZK (in words: Thirty Two Billion Two Hundred And Eight MillionNine Hundred And Ninety Thousand Czech Crowns). 2. The registered capital of the Company stated in par. (1) shall beallocated to: a) 322,089,890 bearer common shares with a nominal value of 100 CZKper share, and b) 1 registered share with a nominal value of CZK 1,000. 3. The shares of the Company shall be issued in book-entered form. Article 5 Shareholders of the Company 1. The rights and obligations of a shareholder shall be set forth bythe legal regulations and by these Articles of Association. A shareholder of theCompany may be either a Czech or a foreign national, a legal entity or a naturalperson. 2. A shareholder shall be entitled in accordance with the CommercialCode to attend the General Meeting, to vote at it, to ask for and receiveexplanations of matters concerning the Company or, as the case may be, entitiescontrolled by the Company, if such explanation is necessary for assessment ofsubjects of the agenda of the General Meeting and to submit proposals andcounter-proposals. Provision of explanations shall comply above all with theprovisions of Art. 180 (4) of the Commercial Code. 3. A shareholder shall be entitled to a proportion of the Companyprofits (a dividend), assigned for distribution by the General Meeting on thebasis of the Company's financial results. This proportion shall be determined bythe ratio between the nominal value of shareholder's shares and the nominalvalue of shares of all shareholders. A shareholder shall not be bound to refundto the Company any dividend accepted in good faith. 4. A shareholder shall not be authorized to request the return ofhis/her contribution during the term of the Company's existence even in theevent that it has been wound up. Payments by the Company to shareholders shallnot be considered to be return of contribution if they are provided: a) as a result of reduction of registered capital, b) upon purchase of shareholder's shares by the Company, if termsand conditions imposed by law are complied with, c) in returning interim certificates or declaring them invalid, or d) in distribution of shares in the liquidation balance. 5. In the event of liquidation of the Company, a shareholder shallhave the right to a share in the liquidation balance. This proportion shall bedetermined as the share in profits in accordance with par. ( REF _Ref499605159 /n /h /* MERGEFORMAT 3) and it shall further be proceeded in accordance with theprovisions of Art. 220 of the Commercial Code. 6. A shareholder shall exercise his/her rights vis-a-vis the Companyin a responsible manner, in particular in such manner that no unjustifiedinterference is incurred in rights and rightful interests of the Company andother shareholders, which are known or can and shall be known to theshareholders. 7. The Company shall act vis-a-vis all shareholders in an honest andjust manner, and shall handle all shareholders under the same conditions in anequal manner, and shall enable all shareholders equal exercise of their rights.The Company shall act vis-a-vis all shareholders in a responsible manner, inparticular in such manner that no unjustified interference is incurred in rightsand rightful interests of the shareholders, which are known or can and shall beknown to the Company. III. COMPANY BODIES AND THEIR REMUNERATION Article 6 Company Bodies The bodies of the Company shall be: A) the General Meeting, B) the Board of Directors, and C) the Supervisory Board. A) GENERAL MEETING Article 7 The General Meeting and its Status 1. The General Meeting shall be the supreme body of the Company. 2. The proceedings of the General Meeting shall not be public. Article 8 Authority of the General Meeting 1. The General Meeting shall have the exclusive authority to: a) approve the Rules of Procedure of the General Meeting, b) decide on amendments to these Articles of Association, unless anychange which occurred under any other legal circumstances is involved, c) decide on an increase of the registered capital or on theauthorisation of the Board of Directors pursuant to Art. 210 of the CommercialCode (i.e. on the authorisation of the Board of Directors to decide on anincrease of the registered capital) or on the option to offset monetaryreceivable due from the Company against receivable of payment of thesubscription price of shares, d) decide on the reduction of the registered capital, e) decide on issue of bonds, where the decision by the GeneralMeeting is required by the Commercial Code, f) decide to wind up the Company with liquidation, appoint anddismiss the liquidator, including determination of the amount of his/herremuneration, approve proposed distribution of the liquidation balance, g) decide on merger or consolidation of the Company, transfer ofassets to a single participant or on division of the Company or another type oftermination of the Company permitted under law, or, as the case may be, onchange of legal form of the Company, unless the law stipulates that the Board ofDirectors is authorized to make such decision, h) decide on a change in class of shares and any change in therights attached to individual classes of shares, i) decide on changes in type and form of shares, j) elect and dismiss the members of the Supervisory Board, exceptfor the members of the Supervisory Board elected by employees pursuant to theprovisions of Art. 200 of the Commercial Code, k) approve regular and extraordinary financial statements andconsolidated financial statements and, in cases set forth by law, also interimfinancial statements, decide upon the distribution of profits or cover oflosses, determine the total amount and payment date of royalties, and the amountand payment date of dividends, and approve rules for usage of undistributedprofits, l) decide to increase the Reserve Fund in excess of the limit setforth in Article 31 (1) and (2), in compliance with Article 31 (3), m) discuss a Board of Directors' annual report on the Company'sbusiness activity, and on the situation of the Company's assets as part of theannual report according to Act No. 563/1991 Coll. on Accounting as amended(hereinafter referred to as the "Act No. 563/1991 Coll."), n) approve agreements set forth in Art. 67a of the Commercial Code, o) decide on the establishment and the use of other funds createdfrom profits, p) decide on approval of the rules of remuneration to members of theBoard of Directors and the Supervisory Board and stipulation of the total amountand maturity of remuneration to members of the Board of Directors and theSupervisory Board, q) decide on approval of control agreements, profit transferagreements and silent partnership agreements and changes thereto, if the Companyconcludes such agreements, r) decide on approval of agreements on the performance of theoffice of members of the Supervisory Board and the rules for provision ofnon-claim perquisites to members of the Supervisory Board of the Company, s) decide other matters that the General Meeting has the power todecide pursuant to the law or pursuant to these Articles of Association. 2. The General Meeting may not reserve the right to decide onmatters on which the law or these Articles of Association do not provide thatsuch decision comes under the authority of the General Meeting. Article 9 Convening the General Meeting 1. The General Meeting shall be convened at least once a year by theBoard of Directors, so that it is held later than six months from the last dayof the accounting period; the Board of Directors may also convene it when itconsiders this necessary in the Company's interests. 2. The Board of Directors shall convene an extraordinary GeneralMeeting without unreasonable delay after finding out that the total loss of theCompany shown in any financial statements has reached the amount upon coveragewhereof from available resources of the Company the unpaid loss would reach onehalf of the registered capital of the Company or after such situation can beanticipated with respect to all circumstances or after finding out that theCompany has become bankrupt, and shall propose to the General Meeting wind-up ofthe Company or adoption of another measure, unless the law stipulates otherwise. 3. The Supervisory Board or other persons shall convene the GeneralMeeting in cases set forth by law. 4. A shareholder or shareholders who have shares or interimcertificates which nominal value exceeds 3% of the registered capital mayrequest the Board of Directors to convene an extraordinary General Meeting todiscuss proposed matters. The application shall be enclosed with a currentexcerpt from the asset account of book-entered securities and if not, theCompany shall be entitled to get the necessary excerpt from the issue registryof the book-entered securities by itself at the expense of such shareholder orshareholders. 5. The General Meeting shall be convened in the case of ashareholder having bearer shares by a notice published in the manner stated inArticle 37 (1) and in the case of shareholders having registered shares bywritten invitation sent in the manner stated in Article 37 (1), in both cases atleast 30 days prior to the General Meeting, unless the Commercial Codestipulates any shorter period. A notice on the General Meeting and an invitation to the General Meeting shallinclude at least: a) the business name and registered office of the Company, b) the place, date and time of the General Meeting and the decisiveday applicable to a shareholder's participation in the General Meeting, c) indication as to whether a regular or an extraordinary or asubstitute General Meeting is being convened, d) agenda of the General Meeting, e) other requisites stipulated by these Articles of Association,General Meeting's decision, or by legal regulations. 6. The decisive day of participation in the General Meeting is thesecond calendar day before the day the General Meeting is held. 7. The place, date and hour of the General Meeting shall bedetermined in such a manner so as to minimize limitation of shareholder'spossibility to attend the General Meeting. Article 10 Organization of the General Meeting 1. A shareholder shall participate in the General Meeting in personor through a person authorized to act on his/her behalf, or through arepresentative, on the basis of a written power of attorney, unless otherwisestipulated by law; the shareholder participating in such manner is consideredpresent. A member of the Company's Board of Directors or Supervisory Board maynot be the representative of a shareholder. 2. The attending shareholders shall be registered in an attendancelist which contains the business name and the registered office of the legalentity or the name and the domicile of the natural person who is a shareholder,or of its representative, the nominal value of the shares which authorize theirholders to vote, or indication that no voting rights are attached to the shares.The Company shall provide for the registration of the shareholders theattendance list. If the Company refuses to enter a certain person in theattendance list, such fact shall be stated in the attendance list, with thereasons for refusal. Powers of attorney of the representatives of shareholdersshall be attached to the attendance list. The accuracy of the attendance listshall be confirmed by the signatures of the chairman of the General Meeting andthe minutes clerk. 3. A shareholder who is a natural person shall produce a proof ofidentity at registration (i.e. at registration in an attendance list). Therepresentative of a shareholder who is a natural person shall also provide powerof attorney signed by the shareholder, unless the law stipulates that the powerof attorney is not required. The signature of the shareholder on power ofattorney must be officially verified. The statutory body of a shareholder - legal entity - shall show proof ofidentity, provide an original or officially verified copy of an extract from theCommercial Register or another document proving the existence of the legalentity and the method of acting of the statutory body on its behalf. Therepresentative of a shareholder - legal entity - shall also provide power ofattorney signed by the statutory body, unless the law stipulates that the powerof attorney is not required. The signature on the power of attorney must beofficially verified. If legal regulations stipulate special prerequisites for the shareholder beingpresent at the General Meeting the relevant shareholders, or theirrepresentatives, shall fulfill these prerequisites. 4. The number of votes of a shareholder shall depend on the nominalvalue of his/her shares. To each share with nominal value of CZK 100 one vote isattached. To each share with nominal value of CZK 1,000 ten votes are attached. 5. Members of the Board of Directors and of the Supervisory Boardshall participate in the General Meeting. If necessary, the Board of Directorsshall arrange that relevant top management members attend the General Meeting sothat shareholders can obtain, in accordance with the Commercial Code, qualifiedexplanations necessary for assessment of subjects on the agenda of the GeneralMeeting. The external auditor shall be authorized to participate in theappropriate part of the General Meeting in order to present his/her findings tothe shareholders of such General Meeting approving the Company's financialstatement. Other persons invited by the Board of Directors shall be entitled toparticipate in the General Meeting, unless the General Meeting decidesotherwise. Article 11 Conduct of the General Meeting 1. The General Meeting shall elect a chairman, a minutes clerk and 2persons to verify the minutes and persons to count the votes; persons who arenot shareholders of the Company may be elected, too. If a counterproposal of anauthorized shareholder is filed prior to the election of the General Meeting'sbodies, Article 12 ( REF _Ref499600608 /n /h /* MERGEFORMAT 1) shall apply.Until the election of the chairman, the General Meeting shall be presided overby an authorized member of the Board of Directors unless the Commercial Codestipulate otherwise; provided that the Board of Directors does not authorise anyof its members to temporarily preside over the General Meeting though ought tohave done so, the General Meeting may elect the chairman directly. 2. If for any serious reasons the Chairman of the General Meetingcannot continue to preside, then the person who presided over the GeneralMeeting until the election of the chairman shall assume conduct of the GeneralMeeting until a new Chairman of the General Meeting is elected. If for anyserious reasons any other elected General Meeting's body cannot continue tocarry out his/her function, the General Meeting shall elect another person inthe given function. 3. The chairman of the General Meeting shall be obliged to ensurethe presentation of all proposals and counterproposals to the shareholders,which have been submitted by the person who convened the General Meeting or theshareholders. The chairman of the General Meeting shall also be obliged, inaccordance with law, to provide answers to the requests of the shareholders inrelation to the Company or, as the case may be, entities controlled by theCompany, which are necessary for assessment of subjects on the agenda of theGeneral Meeting session. 4. Any proposals, counterproposals or questions required to beanswered must be submitted in suitable form. The shareholders may be called uponto submit such proposals, counterproposals or questions in writing; however,this requirement cannot be binding on shareholders. 5. If a shareholder intends to raise counterproposals at the GeneralMeeting in response to proposals, the contents whereof is stated in theinvitation to the General Meeting or in the announcement on the session of theGeneral Meeting, or if a notarial record must be made outlining the decisions ofthe General Meeting, he/she shall deliver the written wording of his/herproposal or counterproposal to the Company at least five business days prior tothe date of the General Meeting. This shall not apply to proposals for electionor dismissal of specific persons to/from the Supervisory Board of the Company.The Board of Directors shall publish his/her counterproposal with its standpointat least three days, if possible, prior to the announced date of the GeneralMeeting. Article 12 Voting and Quorum of the General Meeting 1. The voting shall proceed in accordance with these Articles ofAssociation and Rules of Procedure of the General Meeting approved by theGeneral Meeting, which shall specify the voting rules ensuing from theseArticles of Association; Rules of Procedure of the General Meeting must provideall shareholders with a fair possibility to exercise their rights. The votingshall take place by voting tickets to which present shareholders attach theirsignatures. If a present shareholder cannot write, his ballot shall be signed onhis behalf by the person authorised to count votes. A proposal presented by aperson who convoked the General Meeting shall be voted at first and in case thatthis proposal shall not be approved, the voting of other proposals andcounterproposals relating to the matter in question shall proceed in the orderthey were submitted. Once a submitted proposal is approved, the shareholdersshall no longer vote on other proposals and counterproposals contradictory tothe approved proposal. The General Meeting must be informed about all proposalsand counterproposals being submitted on the relevant point of the agenda of theGeneral Meeting before voting. 2. The General Meeting shall be deemed as having a quorum ifshareholders who have shares or securities substituting shares with an aggregatenominal value exceeding a half of the registered capital of the Company arepresent (as stipulated in Article 10 (1)). When judging whether the GeneralMeeting constitutes a quorum for making decisions and when voting at a GeneralMeeting, the shares without voting rights or securities replacing such sharesshall not be taken into consideration or, if the voting right attached therewithcannot be exercised, then such shares or securities cannot be taken intoconsideration; the same applies to other subscribers' securities indicated inthe Commercial Code. 3. If the General Meeting is not deemed as having a quorum evenafter one hour from the designated beginning of the General Meeting , the Boardof Directors shall reconvene a substitute General Meeting to take place within 6weeks after the date of the originally convened General Meeting. The Board ofDirectors shall convene the substitute General Meeting by a new invitation andnew notice in the manner stated therein for convocation of the General Meeting;the term stated in Article 9 (5) shall be reduced to 15 days. The invitationmust be sent and the notice on the General Meeting must be published within 15days after the date of the originally convened General Meeting. The substituteGeneral Meeting must have the same agenda and constitute a quorum without regardto the number of shareholders present and the aggregate nominal value of sharesheld by them. This fact must be included in the invitation and in the notice onthe General Meeting. 4. Issues not included in the proposed agenda of the General Meetingmay be decided only if all shareholders of the Company are present (orrepresented) and approve the discussion of such issues unanimously. 5. The General Meeting shall adopt decisions by a simple majorityvote of the shareholders present, unless law or these Articles of Associationrequire otherwise. 6. General Meeting decisions regarding the changes in these Articlesof Association, increase in the registered capital, reduction of the registeredcapital, proposal for division of the liquidation balance and the mattersreferred to in Article 8 (1) (n) shall require at least a two-thirds majority ofthe votes of the present shareholders. 7. If the General Meeting decides on an increase in the registeredcapital or on reduction of the registered capital, the consent of at leasttwo-thirds of the votes of shareholders present of each kind of shares issued bythe Company is required, unless stipulated otherwise by law. 8. General Meeting decisions regarding merger, consolidation,transfer of assets to a participant or division of the Company or another formof winding-up of the Company according to law or, as the case may be, change oflegal form of the Company require at least a three-quarters majority of votes ofshareholders present, unless the Commercial Code requires a greater majority.General Meeting decision regarding the wind-up of the Company with liquidationrequire at least a two-thirds majority of the votes of the shareholders present. 9. General Meeting decisions regarding a change in form of sharesand de-listing of shares from the official market shall require at least atwo-thirds majority of the votes of shareholders present and at leastthree-quarters of the votes of shareholders present having these shares shall bealso required. 10. General Meeting decision regarding a change in the kind of shares,on a change in the rights connected with individual kinds of shares shallrequire the affirmative vote of at least two-thirds of the shareholders presentand the affirmative vote of at least three-quarters of the shareholders presenthaving these shares shall be also required. 11. General Meeting decision regarding the elimination or restriction ofthe priority right to convertible and priority bonds, as well as the eliminationor restriction of their priority right to subscribe new shares pursuant to theprovisions of Art. 204a of the Commercial Code, approval of control agreement,profit transfer agreement and an increase of the registered capital throughnon-monetary investments shall require the affirmative vote of at leastthree-quarters of the shareholders present. For such decisions of the GeneralMeeting at least three-quarters of the votes of present shareholders holdingeach kind of shares issued shall also be required. 12. The General Meeting is to decide on joining of shares also by votesof shareholders holding the shares, which are to be joined. 13. Election of members of the Supervisory Board with an obstacle in theperformance of their position pursuant to the provisions of Art. 38l (1) of theCommercial Code, or confirmation of their election shall be decided by theGeneral Meeting, by at least two-thirds of the votes of shareholders present. 14. A notarial record shall be executed with respect to the decisionsunder the preceding par. ( REF _Ref499606360 /n /h /* MERGEFORMAT 6) to (12).If stipulated by law, a notarial record shall be drawn up in other cases, too. Article 13 General Meeting Record 1. The General Meeting record shall be provided by the Board ofDirectors within 30 days from the date of closing of the General Meeting. TheGeneral Meeting record shall contain: a) the business name and registered office of the Company, b) the place and time of the General Meeting, c) the name of the Chairman of the General Meeting, minutes clerk,minute verifiers and persons authorized to count votes, d) a description of discussion on individual items of the agenda ofthe General Meeting, e) the decisions of the General Meeting with results of voting, f) the content of protest of a shareholder, member of the Board ofDirectors or Supervisory Board concerning the decision of the General Meeting,if the protesting person asks for it. 2. Proposals and declarations submitted to the General Meeting fordiscussion and the list of attendance at the General Meeting, including thepowers of attorney of the shareholders' representatives, shall be attached tothe record. 3. The record shall be signed by the Chairman of the GeneralMeeting, minutes clerk and the two elected verifiers. 4. General Meeting records along with the notice, the GeneralMeeting invitation, and the attendance list of the shareholders present shall befiled in the archive of the Company during the term of Company's existence. Theliquidator shall ensure the archiving or storage of such minutes over anadditional term of ten years after the dissolution of the Company. If theCompany is wound up without liquidation the legal successor shall be obliged tokeep the minutes in the archive. 5. Any of the shareholders of the Company may request the Board ofDirectors to release a copy of the record or part thereof for the entire periodof existence of the Company. The copy of the record or any portion thereof andits delivery to the shareholder shall be made at the shareholder's expense. B) THE BOARD OF DIRECTORS Article 14 Status and Authority of the Board of Directors 1. The Board of Directors shall be the statutory body, managing theCompany's activities and acting on the Company's behalf. Nobody is authorised togive instructions to the Board of Directors regarding the commercial managementof the Company, unless law stipulates otherwise. 2. The Board of Directors shall make decisions on all Companybusiness not reserved to the authority of the General Meeting or the SupervisoryBoard of the Company by legal regulations or by these Articles of Association,unless law or these Articles of Association stipulate otherwise. 3. The Board of Directors shall especially be authorized to: a) secure the business activities and ensure the operationalmanagement of the Company, b) approve the Rules of Procedure of the Board of Directors, c) execute the rights of employer, d) convene the General Meeting, e) ensure the preparation and submit to the General Meeting fordiscussion the matters coming under the authority of the General Meeting, f) implement the General Meeting resolutions in accordance withlaw and these Articles of Association, g) ensure due and proper keeping of accounts and Company documents,in line with legal regulations applicable, h) submit to the Supervisory Board for review the Company's regular,extraordinary or, as the case may be, interim financial statement, always in itsconsolidated as well as unconsolidated form, and the proposal for profitdistribution or for coverage of losses and the report by the Board of Directorspursuant to the provisions of Art. 66a (9) of the Commercial Code, i) decide on the conclusion of agreements establishing businesscompanies and cooperatives, agreements establishing associations or interestgroups, and on capital investment in business companies or cooperatives, onacquisition, cessation, and alienation of participations in other businesscompanies or cooperatives, without limitation to having their registered officein the Czech Republic, j) use the undistributed profits in accordance with the principlesset forth by the General Meeting, k) decide on use of the Funds of the Company in accordance with theprinciples set forth by the General Meeting, l) prepare the report of the Board of Directors on the businessactivity of the Company and on its property in accordance with the provisions ofArt. 192 (2) of the Commercial Code, annual report according to the provisionsof Art. 21 of the Act No. 563/1991 Coll., the provisions of Art. 118 of the ActNo. 256/2004 Coll., on Capital Market Business Activities (hereinafter referredto as the "Act No. 256/2004 Coll."), and Article 32 (7), including the report bythe Board of Directors pursuant to the provisions of Art. 66a (9) of theCommercial Code, semi-annual report pursuant to the provisions of Art. 119 ofthe Act No. 256/2004 Coll., m) determine business policy, n) stipulate principles for the collective agreement, o) decide on use of the Reserve Fund, subject to the conditionsstated in Article 31 (4), p) grant and withdraw procuration, q) organize, in compliance with the Commercial Code, election ordismissal of members of the Supervisory Board by the employees and to approvethe election rules for such election or dismissal, r) stipulate the rules for the creation and use of the Social Fundon the basis of collective bargaining. 4. The Board of Directors shall request the prior consent of theSupervisory Board to the acts whereby, or based on which it shall come to thefollowing matters (provided that the Board of Directors takes any act inconnection with such matters): a) the issue or acquisition of shares in the Company or debtsecurities issued by the Company or debt securities issued by a company wherethe Company has a property participation, b) the issue of global depositary receipts for shares in theCompany, c) application for listing or delisting of the debt securitiesreferred to in letter a) and the global depositary receipts referred to inletter b) on the official list of any stock exchange, d) entry into or termination of a co-operation agreement exceedingone year between the Company an another participant in a controlled entity ofthe Company or entry into or termination of a co-operation agreement exceedingone year between a controlled entity of the Company and another entity if suchagreement concerns core business of such controlled entity, e) acquisition or alienation of a property participation by theCompany or by a controlled entity in another company the value of which is notless than the sum of one-quarter of equity resulting from the last ordinaryfinancial statement or from the consolidated financial statement if aconsolidated financial statement was prepared for preceding accounting period, f) investments by the Company requiring an amount which is notless than the sum of one-quarter of equity resulting from the last ordinaryfinancial statement or from the consolidated financial statement if aconsolidated financial statement was prepared for preceding accounting period, g) termination of the employment agreements at the same time orwithin one calendar year span concerning employees of the Company or of acontrolled entity the number of whom exceeds 10% of such employees as of thelast day of previous year, h) merger, consolidation or division of the Company or a controlledentity, i) the election, appointment or dismissal of members of statutoryand supervisory bodies of subsidiaries and other companies where the Company hasa property participation, j) conclusion of an agreement the subject of which is a sale ofthe business of the Company or any part thereof and lease thereof, or conclusionof such agreement by a controlled entity, k) conclusion of an agreement on alienation or on leasing of theCompany's assets in cases where the book value of such assets in the calendaryear exceeds of one-quarter of equity resulting from the last ordinary financialstatement or from the consolidated financial statement of the Company if aconsolidated financial statement was prepared for preceding accounting period, l) designation of Company Secretary and termination of his/heroffice, m) appointment or dismissal of an external auditor to verify theregular, extraordinary, consolidated or, as the case may be, interim financialstatements of the Company pursuant to the Article 32 ( REF _Ref499601958 /n /h/* MERGEFORMAT 2) or other documents whereof verification is required by law. 5. The Board of Directors is obliged to inform the Supervisory Boardon continuous basis especially about: a) the annual financial and business plans of the Company (includingthe annual investment budget and annual operational budget) and to the conceptof the Company's business activity, b) the establishment and use of the funds of the Company, c) the major changes in the Company's organizational structure, d) the appointment and dismissal CEO and managers of the Companywhose appointment is requested pursuant to labour laws, e) principles and results of the collective bargaining, f) salary development in the Company, g) current situation in the Company in respect to the informationabout the events that have material influence on the operation of the Companyand that occurred after the last Supervisory Board meeting, h) the development of the receivables and the obligations that areoverdue, i) monthly development of Company's performance and riskidentification, j) the course and the results of the meetings of the Board ofDirectors, k) the agenda of the General Meeting, including documents submittedby the Board of Directors to the General Meeting; the Supervisory Board may giveits standpoint to any such documents. 6. Members of the Board of Directors shall be listed in theCommercial Register. 7. The activity of the Board of Directors shall comply with theprinciples and instructions approved by the General Meeting, provided that theyare in accordance with legal regulations and these Articles of Association. TheBoard of Directors shall take heed that the Supervisory Board and SupervisoryBoard Committees may exercise powers coming under their authority pursuant tolaw or these Articles of Association. Article 15 Composition of the Board of Directors 1. The Board of Directors shall consist of 9 members. Members of theBoard of Directors are elected and dismissed by the Supervisory Board. A memberof the Board of Directors may only be a natural person who reached the age of18, is fully competent to carry out legal acts, has a civil integrity in thesense given by Act No. 455/1991 Coll., on commercial activity (Trades LicensingAct) as amended (hereinafter referred to as the "Act No. 455/1991 Coll.") andfor whom no circumstances constituting an obstacle for carrying out a trade inaccordance with Act No. 455/1991 Coll., or an obstacle pursuant to theprovisions of Art. 38l of the Commercial Code occurred (unless the obstacle - inaccordance with Article 23 ( REF _Ref130924599 /n /h /* MERGEFORMAT 1), and theCommercial Code - ceases to exist). The members of the Board of Directors shallbe elected from individual persons who have the required skills and experience.An individual who nominates a new member of the Board of Directors shall procurethat such individual's professional resume is available at the SupervisoryBoard. 2. The term of office of individual members of the Board ofDirectors shall be five years. A member of the Board of Directors may bere-elected. 3. A member of the Board of Directors may resign from his/her officeby means of a written statement delivered to the Board of Directors or to theSupervisory Board. Performance of his/her office shall terminate on the day onwhich the Supervisory Board discussed or should have discussed the resignation.The Supervisory Board shall discuss resignation of the member of the Board ofDirectors on its next meeting. However, if a member of the Board of Directorsannounces his/her resignation at a meeting of the Supervisory Board, his/heroffice shall terminate after two months following such announcement, unless theSupervisory Board approves another office termination date, upon such resigningBoard of Directors member's request. If the Chairman of the Supervisory Board(in his/her absence, the Vice-Chairman in rank order) fails to convene theSupervisory Board meeting, on which the resignation of the member of the Boardof Directors shall be discussed, on the date set forth in advance, otherwisewithout undue delay, any of the members of the Supervisory Board shall convenethe Supervisory Board meeting upon a request of the resigning member of theBoard of Directors. This provision shall also apply to resignation of the Boardof Directors members elected by the General Meeting. 4. If a member of the Board of Directors dies, resigns from his/heroffice, is dismissed or the term of his/her office expires otherwise, theSupervisory Board shall be obliged to elect a new member of the Board ofDirectors within three months. 5. The Chairman and two Vice-Chairmen in rank order shall be electedand dismissed by members of the Board of Directors from amongst the membersthereof. Article 16 Meetings of the Board of Directors 1. The Board of Directors shall usually meet once a calendar month,but no less than 12 times per calendar year. 2. A meeting of the Board of Directors shall be convened by itsChairman, or in his/her absence, a Vice-Chairman in rank order, by a writtennotice indicating the place, the date, the time and the agenda of the meeting.The notice is to be delivered to members of the Board of Directors at least 3days prior to the meeting. Previous sentence shall not apply provided that thedate and the agenda of the following meeting were discussed at any of theprevious meetings of the Board of Directors; even in such case the Chairman ofthe Board of Directors, or in his/her absence, a Vice-Chairman in rank order mayconvene a Board meeting regardless of the previously discussed date and agendaof the meeting. If all members of the Board of Directors agree, the meeting maybe convened also by e-mail or by facsimile. Even in such a case, however, thenotice must include all the above-specified requisites, and the members of theBoard of Directors must confirm delivery of the invitation. If the Chairman orany of the Vice-Chairmen are unable to convene the Board of Directors meeting,any member thereof shall convene the Board of Directors meeting according to therules specified above at a date set forth in advance, or otherwise as necessary;if several members of the Board of Directors convene the Board of Directorsmeeting in such manner at different dates, the Board of Directors shall meet atthe first of such dates. If a decision in a matter that cannot be delayed isinvolved, the Board of Directors meeting may be convened by any member thereofin suitable form, potentially without compliance with the 3-day period. 3. The Chairman or in his/her absence the Vice-Chairman in rankorder shall be obliged to convene a meeting of the Board of Directors whenever amember of the Board of Directors so requests with determination of the reasontherefore. 4. A meeting of the Board of Directors shall take place at theCompany's registered office, unless otherwise decided by the Board of Directors. 5. The function of a member of the Board of Directors constitutes anobligation of personal nature and cannot be performed by a deputy. 6. The Board of Directors may, in compliance with legal regulationsand at its discretion, invite to its meetings members the Supervisory Board ofthe Company, employees of the Company or other persons. 7. The activities of the Board of Directors shall be regulated bythe Rules of Procedure. 8. The meetings of the Board of Directors shall be presided over bythe Chairman and in his/her absence by the Vice-Chairman in rank order. 9. The minutes of the proceedings of the meetings of the Board ofDirectors and decisions approved shall be prepared and shall be signed by theChairman of the Board of Directors and the minutes clerk determined by the Boardof Directors; if the meeting was not presided over by the Chairman of the Boardof Directors the minutes from the meeting shall be signed also by the person whopresided over the meeting. The names of the Board of Directors' members thatvoted against individual decisions of the Board of Directors or abstained fromvoting shall be specified in the minutes from the meeting of the Board ofDirectors. The minutes of meetings of the Board of Directors must be archivedthroughout the term of existence of the Company. A copy of the minutes shall bedelivered to the Supervisory Board. 10. Any expenses in connection with the meetings and with otheractivities of the Board of Directors shall be covered by the Company. Article 17 Board of Directors Decision-Making 1. The Board of Directors shall be deemed to have a quorum if asimple majority of all members of the Board of Directors is present. 2. If a meeting of the Board of Directors cannot be held becausethere are not enough members to constitute a quorum in accordance with par. (REF _Ref499605249 /n /h /* MERGEFORMAT 1), the Chairman or, in his/her absence,the Vice-Chairman in rank order, may schedule a new meeting that shall be heldwithin seven days after the originally scheduled meeting, but no sooner than onthe day following the originally scheduled meeting, and with the originalagenda. 3. For a decision to be passed, the consent of a simple majority ofBoard of Directors members present shall be required. In the event of adeadlock, the vote of the person presiding over the meeting shall be decisive. 4. Upon election and dismissal of the Chairman and Vice-Chairmen ofthe Board of Directors the person affected shall not vote. Article 18 Decision-Making by the Board of Directors outside Meetings 1. If all members of a Board of Directors so agree, the Board canadopt a decision "outside" its meeting (per rollam). The consent to per rollamdecision-making must take the same form as the voting referred to in par. (2)and must be granted no later than by the end of voting within the per rollamdecision-making procedure. If a Board member votes within the per rollamdecision-making procedure (or, as the case may be, if he/she explicitly abstainsfrom voting in accordance with par. (2)) it shall hold that he/she consented tothe per rollam decision-making. 2. The voting within the per rollam decision-making procedure maytake either of the following forms: a) in writing, including voting by means that make it possible forthe voting Board members to express their will in writing, includingidentification of the voting person (e.g. fax or e-mail), b) by means transferring the voting Board member's voice or theirvoice and picture (such as telephone, conference calls or videoconference). 3. Per rollam decision-making may be initiated by: a) a call by the Chairman or, if the Chairman is absent, by theVice-Chairman of the Board of Directors in a pre-determined manner, b) a joint call by all members of the Board of Directors present atthe meeting, if the Board of Directors does not constitute a quorum due to ashortage of members present. 4. Per rollam decision-making is subject to the same rules asadoption of decisions at Board meetings provided that all Board members aredeemed to be attending (present) and the Chairman of the Board of Directors (or,in his/her absence, the Vice-Chairman in rank order) shall be deemed to be thepresiding person. 5. The information on the decision-making referred to in par. (1)through (4) must be recorded in the minutes from the next meeting of the Boardof Directors. 6. If the Board of Directors constitutes quorum at a meeting,members who are not present in person at the meeting may vote at the meeting inthe manner referred to in par. (2) hereof; they shall also be deemed as presentfor the purposes of determining the number of votes necessary for adoption of adecision. The expression of will of a Board member who is not present at themeeting in person must unambiguously indicate how he/she votes; it is notpermissible for a Board member who is not present in person to authorize anotherBoard member who is present at the meeting in person to vote instead of him/her.The information on the decision-making under this paragraph must be included inthe minutes from the Board meeting. 7. All organizational work associated with the decision-makingreferred to in par. (1) through ( REF _Ref116690205 /n /h /* MERGEFORMAT 6)shall be ensured by the Company Secretary in accordance with instructions of theChairman of the Board of Directors or in his/her absence of the Vice-Chairman inrank order. 8. The Rules of Procedure for Board meetings can stipulate detailsof the procedure referred to in par. (1) through ( REF _Ref119784050 /r /h /*MERGEFORMAT 7). Article 19 Duties of the Board of Directors Members 1. Members of the Board of Directors shall exercise their authoritywith the due care of a prudent business person and not disclose confidentialinformation and facts to third parties, if such disclosure might be detrimentalto the Company. A member of the Board of Directors shall also be obliged to keepthe duty of confidentiality after his/her office expired. In particular thefollowing duties fall within the obligation to act with the due care of aprudent business person: a) to participate in activities of the Board of Directors actively,independently and with professional knowledge of the issues involved, b) to extend one's knowledge and experience, c) if any potential conflict of interests of the Company withinterests that affect the individual member of the Board of Directors, whetherdirectly or indirectly, is identified during decision-making of the Board ofDirectors, to abstain from voting setting forth the reason therefor or, as thecase may be, not to participate during the relevant part of the Board ofDirectors meeting. 2. The members of the Board of Directors shall be obliged to respectthe restrictions relating to the ban on competitive conduct. No member of theBoard of Directors shall be allowed: a) to carry out business on the field identical or similar to theCompany activities or to enter into commercial relations with the Company, b) to act as an intermediary in or to procure any Company's businessfor another person, c) to participate in the business of another company as a memberwith unlimited liability or as an entity controlling another entity with thesame or similar subject of business, d) to carry out the activities as a statutory body or a member ofthe statutory or another body of another legal entity with the same or similarsubject of business, save that such a legal entity belongs to the same concernas the Company. 3. Breach of duties specified in par. ( REF _Ref499602180 /n /h /*MERGEFORMAT 1) and ( REF _Ref499602184 /n /h /* MERGEFORMAT 2) shall bringabout consequences set forth by legal regulations. 4. Members of the Board of Directors shall be liable to the Company,under the terms and conditions and to the extent set forth by legal regulations,for any damage caused to the Company by breach of duties in the course ofperforming their functions. Should such damage be caused by more than one memberof the Board of Directors, such members shall be liable jointly and severally.Members of the Board of Directors shall be liable for damages caused to theCompany by their performing of an instruction given by the General Meeting onlyif the instruction of the General Meeting is in conflict with legal regulations. C) SUPERVISORY BOARD Article 20 Status and Authority of the Supervisory Board 1. The Supervisory Board is a controlling body of the Company. Itshall supervise the exercise of the powers of the Board of Directors and therealization of the Company's business activities. 2. In line with the decision of the Supervisory Board or its Rulesof Procedure, the Supervisory Board members shall especially be authorized to: a) inspect all documents and reports concerning the Company'sactivities, b) examine whether the accounting records are properly kept andreflect reality, c) examine whether the business activity of the Company is beingperformed in accordance with legal regulations, these Articles of Associationand lawful instructions of the General Meeting. 3. The Supervisory Board shall especially be authorized to: a) review the regular, extraordinary and consolidated or, as thecase may be, interim financial statements and proposals for the distribution ofprofits or coverage of losses, and to submit its standpoint to the GeneralMeeting its standpoint, b) elect and dismiss members of the Board of Directors in the mannergiven in Article 23 ( REF _Ref130924599 /n /h /* MERGEFORMAT 1), c) approve agreements on the performance of the office of members ofthe Board of Directors in compliance with the provisions of Art. 194 (1) of theCommercial Code, d) decide on approval of the rules for provision of non-claimperquisites to members of the Board of Directors of the Company in compliancewith the provisions of Art. 194 (1) of the Commercial Code, e) convene the extraordinary General Meeting, if the interests ofthe Company so require, and propose any necessary measures to the GeneralMeeting, f) submit to the General Meeting and to the Board of Directors itsstandpoints, recommendations, proposals and results of its inspectionactivities, g) review the exercise of the powers of the Board of Directors,based on the request of the shareholders who have shares which nominal valueexceeds 3% of the registered capital, in respect of the matters determined inthe application, h) based on the request of the shareholders who have shares whichnominal value exceeds 3% of the registered capital, claim the right forcompensation of damage incurred by the Company vis-a-vis a member of the Boardof Directors, i) to discuss and give the Board of Directors a prior consent onthe acts stipulated in Article 14 (4), j) to be informed regularly on continuous basis by the Board ofDirectors especially about issues stipulated in Article 14 (5): k) decide on: ka) specific level of remuneration and other benefits for Board of Directorsmembers insofar as stipulated by law, these Articles of Association, individualagreements on the performance of the office of Board of Directors members orrules approved by the General Meeting under Article 8 (1) (p), kb) specific level of remuneration and other benefits for Supervisory Boardmembers insofar as stipulated by law, these Articles of Association, individualagreements on the performance of the office of Supervisory Board member or rulesapproved by the General Meeting under Article 8 (1) ( REF _Ref499602479 /n /h /* MERGEFORMAT p)or Article 8 (1) (r), l) review Board of Directors report under Art. 66a (9) of theCommercial Code; to inform the General Meeting of the review of this report andto submit its standpoint to the General Meeting. 4. The members of the Supervisory Board shall attend the GeneralMeeting of the Company and report the results of their inspection activities tothe General Meeting. 5. The Supervisory Board shall exercise its powers in other matterswhere required by law or by these Articles of Association. 6. The Supervisory Board shall approve the Rules of Procedure of theSupervisory Board, which are to govern the activities of the Supervisory Board. Article 21 Composition of the Supervisory Board 1. The Supervisory Board of the Company shall have 15 members. NoSupervisory Board member shall be simultaneously a member of the Board ofDirectors, CEO, Procurist or any person authorized to act on behalf of theCompany as recorded in the Commercial Register. A member of the SupervisoryBoard may only be a natural person who reached the age of 18, is fully competentto carry out legal acts, has civil integrity in the sense given by Act No. 455/1991 Coll., and for whom no circumstances constituting an obstacle for carryingout a trade in accordance with Act No. 455/1991 Coll. or an obstacle pursuant tothe provisions of Art. 38l of the Commercial Code occurred. (unless the obstacle- in accordance with Article 12 (13) and the Commercial Code - ceases to exist).Furthermore, only a natural person who at the time of election is in employmentrelation to the Company or a representative or a member of a representative ofemployees in accordance with legal regulations may constitute a member of theSupervisory Board elected by employees. Members of the Supervisory Board shallbe assumed to have appropriate professional skills and experience for the properperformance of their duties as members. An individual who nominates a new memberof the Supervisory Board shall procure that such individual's professionalresume be available at the General Meeting. An individual who nominates a newmember of the Supervisory Board shall see, where possible, that at least fourmembers of the Supervisory Board are individuals who have no commercial orsimilar relations with the Company. 2. Two thirds of the Supervisory Board members shall be elected anddismissed by the General Meeting, and one third of the members of theSupervisory Board shall be elected and dismissed by the employees of theCompany. 3. The Supervisory Board members shall be elected for the period offive years. A member of the Supervisory Board may be re-elected. 4. A member of the Supervisory Board may resign from his/her officeby means of a written statement delivered to the Supervisory Board or to theGeneral Meeting; a member of the Supervisory Board elected by employees mayresign from his/her office by means of a written statement delivered to theSupervisory Board. Performance of his/her office shall terminate on the day onwhich the Supervisory Board discussed or should have discussed the statement ofthe resigning member. The Supervisory Board shall discuss resignation of themember of the Supervisory Board on its next meeting. However, if a member of theSupervisory Board announces his/her resignation at a meeting of the SupervisoryBoard, his/her office shall terminate after two months following suchannouncement, unless the Supervisory Board approves another office terminationdate, upon such resigning Supervisory Board member's request. If the Chairman ofthe Supervisory Board (in his/her absence, the Vice-Chairman in rank order)fails to convene the Supervisory Board meeting, on which the resignation of themember of the Supervisory Board shall be discussed, on the date set forth inadvance, otherwise without undue delay, the resigning member of the SupervisoryBoard shall be entitled to convene the Supervisory Board meeting by himself/herself. 5. If a member of the Supervisory Board dies, resigns from his/heroffice, is dismissed or the term of his/her office expires otherwise, a newmember of the Supervisory Board shall be elected within three) months, unless he/she is elected pursuant to par. ( REF _Ref499605340 /n /h /* MERGEFORMAT 6). 6. If the number of Supervisory Board members elected by the GeneralMeeting has not fallen below one half, the Supervisory Board may appoint(co-opt) substitute members to take office until the next General Meetinginstead of its members elected by the General Meeting. 7. The Supervisory Board shall elect and dismiss the Chairman andtwo Vice-Chairmen in rank order from amongst the members thereof. 8. The Supervisory Board shall designate one of its members torepresent the Company in proceedings in courts and other bodies conductedagainst members of the Board of Directors. Article 22 Meetings of the Supervisory Board 1. The Supervisory Board shall meet as it finds it appropriate,usually once in two calendar months, but no less than 6 times per calendar year. 2. The meeting of the Supervisory Board shall be convened by itsChairman or in the case of his/her absence by the Vice-Chairman in rank order,by a written invitation, which shall include the place, date, time and agenda ofthe meeting. The invitation shall be delivered at least seven days prior to themeeting. Previous sentence shall not apply provided that the date and the agendaof the following meeting were discussed at any of the previous meetings of theSupervisory Board; even in such case the Chairman of the Supervisory Board, orin his/her absence, a Vice-Chairman in rank order may convene a SupervisoryBoard meeting regardless of the previously discussed date and agenda of themeeting. If approved by all members of the Supervisory Board, the SupervisoryBoard meeting may be convened also by e-mail or facsimile. Even in such a case,however, the invitation shall include the above given essentials, andSupervisory Board members must confirm its receipt. If the Chairman or any ofthe Vice-Chairmen are unable to convene the Supervisory Board meeting, anymember thereof shall convene the Supervisory Board meeting according to therules specified above; if several members of the Supervisory Board convene theSupervisory Board meeting in such manner at different dates, the SupervisoryBoard shall meet at the first of such dates. If a decision in a matter thatcannot be delayed is involved, the Supervisory Board meeting may be convened byany member thereof in suitable form, potentially without compliance with the7-day period. 3. The Supervisory Board meeting shall take place at the registeredoffice of the Company, unless otherwise decided by the Supervisory Board. 4. Performance of the office of member of the Supervisory Boardconstitutes an obligation of personal nature and cannot be delegated. 5. The Supervisory Board may, in compliance with legal regulationsand at its own discretion, invite to its meetings members of the Board ofDirectors, employees of the Company or other persons. 6. The meeting of the Supervisory Board shall be presided over byits Chairman and in the case of his/her absence by the Vice-Chairman in rankorder. 7. The minutes of the proceedings of the meeting of the SupervisoryBoard and approved decisions shall be prepared and shall be signed by theChairman of the Supervisory Board and the minutes clerk determined by theSupervisory Board; if the meeting was not presided over by the Chairman of theSupervisory Board the minutes from the meeting shall be signed also by theperson who presided over the meeting. Each member of the Supervisory Board mayrequest that the minutes include his/her opinion on an issue discussed; theminutes shall always set forth any differing opinion of the members of theSupervisory Board elected by employees. The minutes of meetings of theSupervisory Board must be archived throughout the term of existence of theCompany. 8. Any expenses in connection with the meetings and with otheractivities of the Supervisory Board shall be covered by the Company. Article 23 Supervisory Board Decision-Making 1. The Supervisory Board meeting shall be deemed to have a quorum ifa simple majority of all Supervisory Board members is present. For a decision tobe adopted in respect of all matters discussed by the Supervisory Board, theconsent of a simple majority of all Supervisory Board members shall be required.In the event of a deadlock, the vote of the person presiding over the meetingshall be decisive. However for the election of members of the Board of Directorswith an obstacle in the performance of their position pursuant to the provisionsof Art. 38l (1) of the Commercial Code, or confirmation of their election, theconsent of a two-third majority of all Supervisory Board members shall berequired. 2. If a meeting of the Supervisory Board cannot be held becausethere are not enough members to constitute a quorum in accordance with par. (REF _Ref130924599 /n /h /* MERGEFORMAT 1), the Chairman or, in his/her absence,the Vice-Chairman in rank order, may schedule a new meeting that shall be heldwithin seven days after the originally scheduled meeting, but no sooner than onthe day following the originally scheduled meeting, and with the originalagenda. 3. Upon election and dismissal of the Chairman and the Vice-Chairmenof the Supervisory Board the person affected shall not vote. 4. Any different opinion on matters discussed by the SupervisoryBoard of those members of the Supervisory Board who were elected by employees ofthe Company must be reported to the General Meeting along with the conclusionsof the other members of the Supervisory Board. Article 24 Decision-Making by the Supervisory Board outside Meetings 1. If all members of a Supervisory Board so agree, the SupervisoryBoard can adopt a decision "outside" its meeting (per rollam). The consent toper rollam decision-making must take the same form as the voting referred to inpar. (2) and must be granted no later than by the end of voting within the perrollam decision-making procedure. If a Supervisory Board member votes within theper rollam decision-making procedure (or, as the case may be, if he/sheexplicitly abstains from voting in accordance with par. (2)) it shall hold thathe/she consented to the per rollam decision-making. 2. The voting within the per rollam decision-making procedure maytake either of the following forms: a) in writing, including voting by means that make it possible forthe voting Supervisory Board members to express their will in writing, includingidentification of the voting person (e.g. fax or e-mail), b) by means transferring the voting Supervisory Board member's voiceor their voice and picture (such as telephone, conference calls orvideoconference). 3. Per rollam decision-making may be initiated by: a) a call by the Chairman or, if the Chairman is absent, by theVice-Chairman of the Supervisory Board in rank order, b) a joint call by all members of the Supervisory Board present atthe meeting, if the Supervisory Board does not constitute a quorum due to ashortage of members present. 4. Per rollam decision-making is subject to the same rules asadoption of decisions at Supervisory Board meetings provided that allSupervisory Board members are deemed to be attending (present) and the Chairmanof the Supervisory Board (or, in his/her absence, the Vice-Chairman in rankorder) shall be deemed to be the presiding person. 5. The information on the decision-making referred to in par. (1)through (4) must be recorded in the minutes from the next meeting of theSupervisory Board. 6. If the Supervisory Board constitutes quorum at a meeting, memberswho are not present in person at the meeting may vote at the meeting in themanner referred to in par. (2) hereof; they shall be also deemed as present forthe purposes of determining the number of votes necessary for adoption of adecision. The expression of will of a Supervisory Board member who is notpresent at the meeting in person must unambiguously indicate how he/she votes;it is not permissible for a Supervisory Board member who is not present inperson to authorize another Supervisory Board member who is present at themeeting in person to vote instead of him/her. The information on thedecision-making under this paragraph must be included in the minutes from theSupervisory Board meeting. 7. All organizational work associated with the decision-makingreferred to in par. (1) through (6) shall be ensured by the Company Secretary inaccordance with instructions of the Chairman of the Supervisory Board or in his/her absence of the Vice-Chairman in rank order. 8. The Rules of Procedure for Supervisory Board meetings canstipulate details of the procedure referred to in par. (1) through ( REF_Ref130928057 /n /h /* MERGEFORMAT 7). Article 25 Duties of the Supervisory Board Members 1. The Supervisory Board Members shall exercise their office withthe due care of a prudent business person and keep secret all confidentialinformation and facts which, if disclosed to third parties, might cause damageto the Company. This shall not, however, affect the rights of the SupervisoryBoard Members ensuing from the inspection authority of this Company body. Amember of the Supervisory Board shall be obliged to keep the duty ofconfidentiality also after his/her office has expired. The duty to act with thedue care of a prudent business person is subject to the same provisions as setforth in Article 19 (1). 2. The Supervisory Board members shall also be obliged like membersof the Board of Directors to respect the restrictions relating to the ban oncompetitive conduct ensuing from Article 19 (2). 3. Any breach of par. ( REF _Ref499602317 /n /h /* MERGEFORMAT 1)and ( REF _Ref499602318 /n /h /* MERGEFORMAT 2) shall bear the consequences setforth in legal regulations. 4. The Supervisory Board members shall be liable to the Company,under the terms and conditions and to the extent set forth by legal regulations,for any damage caused to the Company by the breach of their duties in theexercise of their offices. Should such damage be caused by more than one memberof the Supervisory Board, such members shall be liable jointly and severally.Members of the Supervisory Board shall be liable for damage caused to theCompany by their performance of an instruction given by the General Meeting onlyif the instruction of the General Meeting is in conflict with legal regulations. Article 26 Supervisory Board Committees 1. The Supervisory Board has the right to establish within itscompetence committees (hereinafter referred to as the "Supervisory BoardCommittees") as its advisory and initiative bodies. The Supervisory Board shallalways establish the following Supervisory Board Committees: a) the Nomination and Remuneration Committee, b) the Audit and Control Committee. 2. Each of the Nomination and Remuneration Committee and the Auditand Control Committee consists of 5 members. 3. Members of Supervisory Board Committees are appointed anddismissed by the Supervisory Board. The term of the office of a member of theSupervisory Board Committee is two and half years, unless the office of suchmember of the Supervisory Board Committee in the Supervisory Board terminatesearlier; in this case the term of the office of the relevant member of theSupervisory Board Committee terminates at this earlier date. Supervisory BoardCommittees may consist only of members of the Supervisory Board and the membersmay be re-elected. 4. The Nomination and Remuneration Committee: a) Constantly monitors and evaluates the performance of the membersof the Board of Directors, Supervisory Board as well as Supervisory BoardCommittees, in particular, with respect to qualified exercise of their functionsand to the benefit of the Company, b) Presents recommendations to the Supervisory Board in relation tothe election and dismissal of the members of the Board of Directors, c) Presents recommendations to the Supervisory Board in relation tothe appointment and dismissal of the members of the Supervisory BoardCommittees, d) Presents opinions to the Supervisory Board in relation to thequestions relating to the appointment or dismissal of the members of thestatutory and supervisory bodies of subsidiaries and other companies in whichthe Company has an equity participation, provided that the Supervisory Boarddecides on these issues, e) Proposes to the Supervisory Board the basic remuneration schemeand incentive plans for members of the Board of Directors in accordance with theprinciples approved by the General Meeting, provided that the Supervisory Boarddecides on these issues, f) Monitors that the remuneration principles applied to themembers of the Board of Directors (including remuneration in connection withtheir labour-law relationship with the Company) and the Supervisory Boardcorrespond with the generally applicable international standards of remunerationof members of bodies and managers, so that they comply with the requirements ofthe generally binding legislation, and that they motivate the members of theBoard of Directors, or, as the case may be, recommends to the Supervisory Boardto change these principles, provided that the Supervisory Board decides on theseissues, g) Gives recommendations to the Supervisory Board on the matter ofremuneration of Supervisory Board members and royalties, provided that theSupervisory Board decides on these issues, h) Through its chairman, shall report to the General Meeting on anymatters within the competence of the Nomination and Remuneration Committeeraised by shareholders at the General Meeting. 5. The Audit and Control Committee a) Monitors the integrity of the financial information provided bythe Company, in particular by reviewing the relevance and consistency of theaccounting methods used by the Company and its group, b) Reviews at least annually the internal control and riskmanagement systems, with a view to ensuring that the main risks of the Companyare properly identified and managed, c) Cooperates with the external auditor, receives and evaluatesinformation on any matters which could jeopardize the external auditor'sindependence, and any matters in connection with the process of carrying out theauditing of accounts, and receives and exchanges with the external auditorinformation and notifications referred to in laws on the auditing of accountsand in technical auditing rules, d) Recommends to the Supervisory Board for issues relating to theselection, appointment, reappointment and dismissal of the external auditor ofthe Company and to the terms and conditions of his engagement, provided that theSupervisory Board decides on these issues, and cooperates on the communicationbetween the external auditor and the management of the Company, e) Monitors the external auditor's independence and objectivity, f) Keeps the nature and extent of non-audit services provided tothe Company by its external auditor under review and reviews the effectivenessof the external audit process, and the responsiveness of the management of theCompany to the recommendations made in the external auditor's management letter, g) Recommends to the Supervisory Board for issues relating tointernal audit of the Company, and supports the effectiveness of the internalaudit function, in particular by: ga) making recommendations on the selection, appointment, reappointment anddismissal of the head of the internal audit department, on the department'sbudget and other issues related to the internal audit as specified in thestatute of the internal audit department gb) monitoring the responsiveness of management of the Company to findings andrecommendations of the internal audit department; h) Through its chairman, shall report to the General Meeting on anymatters within the competence of the Audit and Control Committee raised byshareholders at the General Meeting. 6. Each of the Supervisory Board Committees shall elect its chairmanand a vice-chairman, who shall represent the chairman in his/her absence. 7. The Supervisory Board Committees shall meet as they find itappropriate, and, simultaneously: a) the Audit and Control Committee shall usually meet once in twomonths, but no less than 4 times a year, b) the Nomination and Remuneration Committee shall meet no less thantwice a year, c) other Supervisory Board Committees, if the Supervisory Boardestablishes them, shall meet no less than twice a year, unless otherwisestipulated by the Supervisory Board or rules of procedure of the relevantSupervisory Board Committee. 8. The meeting of a Supervisory Board Committee shall be convened bythe chairman of the relevant Supervisory Board Committee, or the vice-chairmanin his/her absence, or other appointed member of the relevant Supervisory BoardCommittee. 9. Each of the Supervisory Board Committees shall be deemed to havea quorum if at least a simple majority of the members of the relevantSupervisory Board Committee is present and all members of the relevantSupervisory Board Committee were duly invited to the meeting. 10. To pass a decision of each of the Supervisory Board Committees, theconsent of the majority of all of its members is required. In the event of adeadlock, the vote of the person presiding over the meeting shall be decisive. 11. If all members of a Supervisory Board Committee agree, theSupervisory Board Committee can adopt a decision "outside" its meeting (perrollam). The consent to per rollam decision-making must take the same form asthe voting referred to in par. (12) and must be granted no later than by the endof voting within the per rollam decision-making procedure. If a SupervisoryBoard Committee member votes within the per rollam decision-making procedure(or, as the case may be, if he/she explicitly abstains from voting in accordancewith par. (12)) it shall hold that he/she consented to the per rollamdecision-making. 12. The voting within the per rollam decision-making procedure may takeeither of the following forms: a) in writing, including voting by means that make it possible forthe voting Supervisory Board Committee members to express their will in writing,including identification of the voting person (e.g. fax or e-mail), b) by means transferring the voting Supervisory Board Committeemember's voice or their voice and picture (such as telephone, conference callsor videoconference). 13. Per rollam decision-making may be initiated by: a) a call by the Chairman or, if the Chairman is absent, by theVice-Chairman of the Supervisory Board Committee in a pre-determined manner, b) a joint call by all members of the Supervisory Board Committeepresent at the meeting, if the Supervisory Board Committee does not constitute aquorum due to a shortage of members present. 14. Per rollam decision-making is subject to the same rules as adoptionof decisions at Supervisory Board Committee meetings provided that allSupervisory Board Committee members are deemed to be attending (present) and theChairman of the Supervisory Board Committee (or, in his/her absence, theVice-Chairman in rank order) shall be deemed to be the presiding person. 15. The information on the decision-making referred to in par. (11)through (14) must be recorded in the minutes from the next meeting of theSupervisory Board Committee. 16. If the Supervisory Board Committee constitutes quorum at a meeting,members who are not present in person at the meeting may vote at the meeting inthe manner referred to in par. (12) hereof; they shall be deemed as present forthe purposes of determining the number of votes necessary for adoption of adecision. The expression of will of a Supervisory Board Committee member who isnot present at the meeting in person must unambiguously indicate how he/shevotes; it is not permissible for a Supervisory Board Committee member who is notpresent in person to authorize another Supervisory Board Committee member who ispresent at the meeting in person to vote instead of him/her. The information onthe decision-making under this paragraph must be included in the minutes fromthe Supervisory Board Committee meeting. 17. All organizational work associated with the decision-making referredto in par. (11) through (16) shall be ensured by the Company Secretary inaccordance with instructions of the Chairman of the Supervisory Board Committeeor in his/her absence of the Vice-Chairman in rank order. 18. The Rules of Procedure for Supervisory Board Committee meetings canstipulate details of the procedure referred to in par. (11) through (17). 19. There shall be minutes from each meeting of each of the SupervisoryBoard Committees, which shall be signed by the chairman and the minutes clerkdetermined by the Supervisory Board Committee; if the meeting was not presidedover by the chairman of the Supervisory Board Committee the minutes from themeeting shall be signed also by the person who presided over the meeting. Eachmember of the Supervisory Board Committee may request that the minutes includehis/her opinion on an issue discussed. The minutes must be archived throughoutthe term of the existence of the Company. 20. The details on the form of the meeting of each of the SupervisoryBoard Committees and their powers shall be set out in the rules of procedure ofeach of the Supervisory Board Committees, which shall be approved by theSupervisory Board. Article 27 Remuneration of Members of the Board of Directors and the Supervisory Board andRules for Determining Royalties 1. The royalties shall belong to the members of the Board ofDirectors and the Supervisory Board on condition that a profit has beengenerated by the Company and that the royalties have been approved by theGeneral Meeting and that further conditions stipulated by law and these Articlesof Association are met. 2. The General Meeting shall decide on remuneration of the membersof the Board of Directors and the Supervisory Board in accordance with Article 8(1) (p). Every member of the Board of Directors and the Supervisory Board isentitled to remuneration in accordance with law for the exercise of his/heroffice. The amount of remuneration shall be determined by the General Meeting orunder these Articles of Association and rules for the remuneration of themembers of the Board of Directors and the Supervisory Board members approved bythe General Meeting from the total amount determined by the General Meeting.This shall be without prejudice to the right to remuneration of the members ofthe Board of Directors and the Supervisory Board paid out in connection withtheir labour-law relationship with the Company. 3. The royalties shall belong to the persons who were members of theBoard of Directors or the Supervisory Board in the previous accounting period.The members of the Board of Directors and of the Supervisory Board shall beentitled to a proportional part of the remuneration and royalties in the case ofexercising of office in the Company's bodies for a period shorter than one year.No proportional part shall be granted if the member of the Board of Directors orSupervisory Board member exercised his/her office for a period shorter than twomonths during the period that the royalties shall be granted for. 4. The Company may, in accordance with law, provide members of theBoard of Directors and Supervisory Board with perquisites other thanremuneration and royalties, if no provision of goods or services by the Companywithin standard commercial relationships is involved, on the basis of the rulesfor provision of non-claim perqusites to Members of the Supervisory Boardapproved by the General Meeting in accordance with Article 8 (1) (r) and on thebasis of the rules for provision of non-mandatory performance to Members of theBoard of Directors approved by the Supervisory Board in accordance with Article20 (3) ( REF _Ref42078750 /n /h /* MERGEFORMAT d). IV. COMPANY SECRETARY Article 28 Company Secretary 1. The office of the Company Secretary (hereinafter referred to asthe "Company Secretary") is established in the Company. 2. The Company Secretary shall be in charge of, in particular a) ensuring efficient processes of corporate governance of theCompany and entities controlled by the Company including regular documentationof the processes in accordance with law, b) providing support to the Board of Directors, the SupervisoryBoard and Supervisory Board Committees in their activities and performance oftheir authorities and the Board of Directors members and members of theSupervisory Board in the performance of their office, c) ensuring administration of Company bodies meetings and themeetings of the Supervisory Board Committees, d) exercise of the function of a minutes clerk during meetings ofthe Board of Directors, the Supervisory Board or the Supervisory BoardCommittees unless they determine another minutes clerk, e) in compliance with authorization by the Board of Directors, theSupervisory Board or the Supervisory Board Committees, confirmation or, as thecase may be, communication to third parties of the contents of the decisionsadopted by them or minutes from their meetings. 3. During performance of his/her office, the Company Secretary shallfollow law, these Articles of Association, rules of procedure of Company bodiesor, as the case may be, statuses and rules of procedure of Supervisory BoardCommittees as well as other internal rules of the Company. The Company Secretaryshall, during performance of his/her office, keep confidential all confidentialinformation and facts disclosure of which to third parties could result in harmto the Company. The confidentiality obligation shall continue after terminationof the office. 4. During his/her activities, the Company Secretary is liable to theBoard of Directors. 5. The Board of Directors shall decide on designation of the CompanySecretary and on termination of his/her office; prior consent from theSupervisory Board is required to such designation or termination of the office. 6. The Company Secretary is not a Company body. V. ACTING ON BEHALF OF THE COMPANY Article 29 Acting on Behalf of the Company 1. The Board of Directors shall act on behalf of the Company in oneof the following ways: a) all members of the Board of Directors jointly, or b) at least two members of the Board of Directors jointly, one ofwhom must be the Chairman or Vice-Chairman of the Board of Directors, or c) autonomously a single member of the Board of Directors fulfillingpre-requisites of the Act No. 412/2005 Coll., on the Protection of ClassifiedInformation and on Security Capacity; such member shall act autonomously only inthe matters regulated by the above-mentioned act. 2. Signing shall be carried out as follows: individuals authorizedto act on behalf of the Company shall affix their signature to the business nameof the Company. VI. FINANCIAL MANAGEMENT OF THE COMPANY Article 30 Distribution of Profit and Coverage of Losses 1. The accounting profit shall be obligatorily distributed asfollows: a) for creation of the Reserve Fund pursuant to Article 31 (1) or,as the case may be, (2), b) for other purposes insofar as stipulated by law. 2. Following the obligatory contribution according to par. ( REF_Ref499605379 /n /h /* MERGEFORMAT 1) the accounting profit and undistributedprofit from previous years as well as other funds created from profit may beused in order to: a) cover losses, b) pay a share in the Company profits (dividends) or other own fundsof the Company to shareholders in accordance with law, c) pay royalties to the members of the Board of Directors andSupervisory Board in accordance with law and these Articles of Association, d) determine the employees' share in profits in accordance with law, e) increase the registered capital of the Company in accordance withthe provisions of Art. 208 of the Commercial Code, f) allocate to other funds created from profit. The above-mentioned order of manners of distribution of profits is not bindingon the General Meeting. The General Meeting may also decide that the profit (or,as the case may be, a part thereof) shall not be distributed and shall beassigned to the account of accumulated profits of previous years. 3. The Company is not allowed to pay advances for interests inprofits. 4. Unless set forth otherwise by a General Meeting resolution,dividends and royalties shall be due within three months following the date onwhich a resolution of the General Meeting regarding distribution of profits wasadopted. 5. Unless determined otherwise by a General Meeting resolution or anagreement with a shareholder, the Company shall pay the dividend at its owncosts and risk at the address of a shareholder listed in the list ofshareholders as of the due date of the dividend, if registered shares areinvolved, and to address listed in the records of book-entered securities in thesection determined for the issuer as of the decisive date being the date of theGeneral Meeting that decided on payment of the dividends, unless the GeneralMeeting determines another date that must neither precede the date of theGeneral Meeting that decided on payment of the dividends nor take place afterthe dividend due date, if bearer shares are involved. 6. The Board of Directors shall announce the date of payment of thedividend, the place and manner of payment of the dividend in the manner setforth in Article 37 (1) if listed shares and book-entered bearer shares areinvolved. 7. The losses of the Company shall be covered in particular from theReserve Funds except for the part of the Reserve Funds which cannot be usedpursuant to the provisions of Art. 120 (3), Art. 161d and Art. 161f of theCommercial Code. The General Meeting may also decide on the covering of lossesby the use of other funds of the Company (including undistributed profits fromprevious years), unless such funds are predicated for specific use by theapplicable law, or on the covering of losses by reduction of the registeredcapital, or may decide to assign the losses to the account of accumulated lossesof previous years. Article 31 Creation and Use of the Reserve Fund and Other Funds from Profit 1. The Company shall create a Reserve Fund from profit. The ReserveFund is to be supplied by the amount of 5% of the net profit annually until theReserve Fund created from profit equals 20% of the registered capital. Thecontribution from the first net profit of the Company must equal 20% of theaccounting profit, but such contribution shall not be higher than 10% of theregistered capital. The Company is not obliged to create the reserve fund in themanner described above, if the Company has already created the reserve fund bysurcharges to the subscription price for the shares. 2. The Company shall also be obliged to create a Reserve Fund incases stipulated in the provisions of Art. 120 (3), Art. 161d and Art. 161f ofthe Commercial Code, either from undistributed profits or from other funds thatmay be used at the Company's own discretion. In such cases the provisions of theprovisions of Art. 161d (2) up to (4) of the Commercial Code must be followed. 3. Should a General Meeting's resolution on increase of theregistered capital by subscription of shares so stipulate, a Reserve Fund may becreated by additional payments exceeding the subscription price of shares duringincrease of the registered capital or by using the amount (or any portionthereof), in which the value of the non-monetary investment exceeds the nominalvalue of shares to be released to the subscriber as a counter-performance. AReserve Fund equaling 100% of the registered capital may be created in themanner described in the previous sentence. The additional payment exceeding theamount of the subscription price must be paid up within the same term as thesubscription price. The Company shall also have the right to create a ReserveFund either by reduction of the registered capital pursuant to the provisions ofArt. 216a of the Commercial Code or by transfer from other funds of the Company,unless such funds are predicated for specific use. A Reserve Fund may be createdby the transfer from other funds up to the amount equal to twice the registeredcapital. The Board of Directors shall decide on such transfer, unless suchdecision comes under the authority of the General Meeting. 4. The Board of Directors shall decide on use of the Reserve Fund,unless the law or these Articles of Association provide that such decision onspecific use comes under the authority of the General Meeting. The Reserve Fundcreated pursuant to par. (1), may only be used to cover losses. The Reserve Fundestablished pursuant to par. (2) may not be used as long as the legalpresumptions persist. 5. The Company shall create a Social Fund. The General Meeting shalldecide on contribution of profit to the Social Fund. This shall be withoutprejudice to provisions of Article 14 (3) (r). Article 32 Financial Statements, Social-Economic Information and Records 1. The Company shall, in the prescribed manner and in compliancewith legal regulations, keep accounts and records; the Board of Directors shallarrange for preparation of financial statements and submit them to the requisitebodies of the Company. 2. The Board of Directors shall be responsible for properaccounting. The Board of Directors shall submit the financial statement,compiled in accordance with legal regulations applicable regarding the keepingof accounting records, to the external auditor approved by the SupervisoryBoard, together with an application for the review of the financial results ofthe Company for the appropriate year. Upon receiving the auditor's report on thereview of the financial statements and the yearly financial results of theCompany, the Board of Directors shall submit the financial statements togetherwith the external auditor's report and the proposal for profit distribution orfor coverage of losses for review to the Supervisory Board without undue delay. 3. The financial statements must include complete informationregarding the property and financial situation of the Company and the amount ofprofit gained or losses incurred in the preceding accounting period. This shallbe without prejudice to the particulars as to the contents of the financialstatements under law. 4. The Supervisory Board shall review the financial statements andthe proposal for profit distribution or coverage of losses and shall report itsconclusion to the General Meeting. 5. The Company shall be obliged, through its external auditor, toprovide for: a) review of the Company's financial statements, b) review of the Company's financial results for the appropriateyear, c) making of a report on the review of the financial statements andfinancial results of the Company, d) review of other documents required under law and preparation ofappropriate reports. 6. The Company shall be obliged to publish data from the financialstatements in the manner stipulated by applicable legal regulations. 7. In addition to the financial statements the Board of Directorsshall also ensure semi annual report under Art. 119 of Act No. 256/2004 Coll.and the annual report according to the provisions of Art. 21 of Act No. 563/1991Coll. and the provisions of Art. 118 of Act No. 256/2004 Coll. The annual reports shall contain: a) names of Board of Directors members with their brief professionalresume, b) names of Supervisory Board members with their brief professionalresume and information on their potential relations with the Company, c) information on remuneration of members of the Board of Directorsand the Supervisory Board and on the manner and methods of determinationthereof, d) names of members of Supervisory Board Committees with their briefprofessional resume. This shall be without prejudice to the particulars as to the contents of annualreports under law. VII. RULES FOR INCREASE AND REDUCTION OF THE REGISTERED CAPITAL Article 33 Increase of the Registered Capital 1. In accordance with the provision of Art. 202 to 210 of theCommercial Code, the following rules for increases of the registered capitalshall apply: a) any increase in the registered capital or, as the case may be, onthe authorisation of the Board of Directors to decide on an increase of theregistered capital shall be decided by the General Meeting upon a proposal by asubmitter, b) notice on the General Meeting and an invitation to the GeneralMeeting must, in addition to the information required by Article 9 (5), comprisethe information required under the provisions of Art. 202 (2) to (4) of theCommercial Code, c) within 30 days from the resolution of the General Meeting, theBoard of Directors shall be obliged to file an application to enter theresolution in the Commercial Register, d) the subscription price for shares being subscribed may be paid bymonetary investment; shares can be subscribed by a non-monetary investment onlyif an important interest of the Company is involved, which shall besubstantiated by the Board of Directors in a report submitted to the GeneralMeeting, e) subscription for shares cannot commence before the resolution ofthe General Meeting is registered in the Commercial Register, unless anapplication for registration of such resolution in the Commercial Register hasbeen filed and the share subscription is subject to a condition subsequent,constituted by the legal force of the decision on refusal of the application forregistration of the relevant resolution in the Commercial Register, f) the priority right of shareholders to subscription for newshares may be prohibited or restricted by the resolution of the General Meetingonly in an important interest of the Company, g) the General Meeting resolution announcing the increase of theregistered capital shall be implemented either by the Board of Directors orthrough another person by contract, h) if the conditions stated by the Commercial Code, these Articlesof Association or the decision of the General Meeting are complied with, theBoard of Directors shall file an application for the entry of the increase ofthe registered capital in the Commercial Register. The increase of theregistered capital shall become effective as of the date of the registrationthereof. 2. The General Meeting of the Company may decide on conditionalincrease of the registered capital; such decision shall be subject to a decisionby the General Meeting regarding issue of bonds to which, in addition to theright to revenue, also the right to convert such bonds to Company shares("convertible bonds") or the priority right to subscribe for Company shares("priority bonds") are attached. The decision regarding the issue of convertibleor priority bonds must also contain: a) the nominal value of the bonds and determined revenue from thebond, b) number of bonds, c) the place and period for exercise of the rights attached to theconvertible bonds or the rights attached to the priority bonds setting forth howthe commencement of such period is to be announced; the period for exercise ofthe right to convert the bonds into shares or the priority right to subscribefor shares shall not be less than two weeks, d) the class, form, type, nominal value and number of shares, intowhich a single bond can be converted or which can be subscribed for under asingle bond; the nominal value of shares, to which a single bond can beconverted, cannot be higher than the aggregate of nominal value of bonds to beconverted into such shares, e) the subscription price of shares being subscribed for by exerciseof the priority right attached to the priority bonds or the manner in which suchsubscription price is to be determined, or authority for the Board of Directorsto determine the amount thereof, unless such priority right of shareholders toacquire such bonds is prohibited or restricted. The procedure of conditional increase of the registered capital of the Companyshall further follow in particular par. (1) and the provisions of Art. 160 and207 of the Commercial Code. 3. Subject to conditions stipulated by provisions of law, thedecision on increase of Company's registered capital from own funds shown in thefinancial statements within the equity of the Company can be taken. Shareholdersparticipate in the increase of the registered capital in proportion to thenominal value of their shares. The increase of the registered capital shall beeffected either by the issue of new shares, and their distribution amongshareholders, or by raising the nominal value of the existing shares. 4. If the price of the shares at a regulated market does not reachthe nominal value thereof at the time the General Meeting decides on increase ofthe registered capital, the General Meeting may decide that a portion of thesubscription price is to be covered from Company's own funds shown in thefinancial statements within the equity of the Company. The procedure of combinedincrease of the registered capital shall further follow in particular par. (1)and the provisions of Art. 209a of the Commercial Code. 5. The Board of Directors may be authorized by the resolution of theGeneral Meeting to decide on the increase of the registered capital under theconditions stipulated by the Commercial Code and these Articles of Association.Thereby, the following rules shall apply: a) the increase of the registered capital may be effected bysubscription for shares or from the Company's own funds (with the exception ofretained profit), b) the Board of Directors may be also authorized to increase theregistered capital by subscription for shares by employees of the Company. Itmay also be decided that employees' portion of the Company's profit may only beused for payment of such shares, c) the registered capital may be increased by no more than one thirdof the amount of the registered capital at the time when the General Meetingmakes such authorization, unless the General Meeting sets forth a lower limit;the Board of Directors may increase the registered capital several times withinthe given limit, d) the General Meeting may grant the authorization for a period ofup to five years from the day when the relevant General Meeting was held. Article 34 Payment of and Consequences of Delay in Paying up the Shares 1. Upon the decision of the General Meeting the subscription priceof shares may be paid up both through monetary investments and non-monetaryinvestments. 2. Monetary investments, unless any agreement on offset thereof isconcluded, must be paid up to a special bank account to be opened for suchpurpose by the Company; the bank shall not make the account available to theCompany prior to registration of increase of the registered capital in theCommercial Register. The subscriber shall pay-up at least 30% of nominal valueof the shares within a period set forth by the General Meeting, unless theGeneral Meeting stipulates any higher amount and potential share premium if theshares are subscribed for by monetary investments; the subscriber shall pay-upthe other part of the subscription price within 1 year from registration ofincrease of the registered capital in the Commercial Register, unless theGeneral Meeting stipulates any shorter time limit. If the combined increase ofthe registered capital is involved, the subscriber shall pay at least 50% of thesubscription price for the shares allocated to him. 3. If the subject of non-monetary investments is a) movable property, the subscriber shall be obliged to hand overthe subject of the investment to the Company and ensure the transfer of theownership rights of the paid up investments to the Company before filing theapplication for registration of increase of the registered capital in theCommercial Register, b) immovable property, the subscriber shall be obliged to releasethe subject of the investment to the Company filing the application forregistration of increase of the registered capital in the Commercial Register;this shall be without prejudice to other obligations pursuant to provisions oflaw. 4. For other non-monetary investments, the investment shall bedeemed to have been paid up upon conclusion of a written agreement on theinvestment. If know-how constitutes such non-monetary investment, hand-over ofdocumentation describing such know-how is required for the payment thereof. Ifan enterprise or any part thereof constitutes the non-monetary investment,hand-over of the enterprise or any part thereof is required for the payment. TheCompany and the investor shall prepare a protocol on release of thedocumentation as well as on release of the enterprise or any part thereof. 5. If a property right to the subject of the non-monetary investmentdoes not pass over to the Company, although the monetary investment is deemed tohave been paid up, the person that undertook to provide such investment shall beobliged to pay the value of the non-monetary investment in cash and the Companyis obliged to return to such person the non-monetary investment that the Companytook over, unless the Company is obliged to return the non-monetary investmentto an entitled person. If any shareholder transfers shares or interimcertificates to another shareholder, the acquirer thereof shall be liable forperformance of the obligation to pay the value of the non-monetary investment incash, unless acquisition at a regulated market or a free market is involved. 6. If a subscriber fails to pay the subscription price or anyportion thereof within the period set forth by the General Meeting, thesubscriber shall also pay default interest from the amount due in the amount offour times the discount rate of the Czech National Bank p.a. applicable as ofthe first date of default. 7. Should the subscriber be in delay with payment of thesubscription price of the shares, he/she shall be obliged to pay defaultinterest as stipulated in par. (6) within the period stated by the Board ofDirectors, but no later than 1 month after the day, on which he/she fully paidup the subscription price or on which he/she was expelled from the Company andthe Board of Directors shall expel the subscriber from the Company and, further,proceed pursuant to the provisions of Art. 177 of the Commercial Code, unlesswithin the same term it either files an action for the payment of thesubscription price of shares or it convenes a General Meeting with the purposeof reducing the registered capital by refraining from issuing shares pursuant tothe provisions of Art. 213d of the Commercial Code. Article 35 Reduction of the Registered Capital 1. Reduction of the registered capital shall be subject to theprovisions of Art. 211 to 216c of the Commercial Code, except for the provisionsof Art. 213b of the Commercial Code, with the option of reducing the registeredcapital by withdrawing shares from circulation on the basis of a proposal toshareholders (pursuant to provisions of Art. 213c of the Commercial Code). Whenshares are withdrawn from circulation on the basis of a proposal toshareholders, the Company shall proceed in accordance with the following rules: a) if the registered capital of the Company is reduced by withdrawalof shares from circulation on the basis of a public offer of an agreement, theGeneral Meeting may decide that the registered capital be reduced to the extentof the nominal values of shares to be withdrawn from circulation in such manner,or that the registered capital be reduced by a fixed amount, b) a draft agreement on the purchase of shares for the purpose ofwithdrawing them from circulation shall be published by the Board of Directorsin the manner stipulated in Article 37 (1), c) if this draft is passed, the Board of Directors shall oblige theperson registering the book-entered securities, to suspend the right to disposeof the relevant shares, d) the Board of Directors under the authorization of the GeneralMeeting shall file an application to enter the new amount of the registeredcapital in the Commercial Register in the extent, in which the public offer ofan agreement was accepted by the shareholders, e) after the registration of the amount of registered capital in theCommercial Register, the Board of Directors shall submit to the personregistering the book-entered securities without undue delay an order to cancelthe shares bought by the Company on the basis of a public offer of an agreement. 2. For the reduction of the registered capital the following rulesshall apply: a) any reduction in the registered capital shall be decided upon bythe General Meeting upon the proposal of the submitter, b) the notice on the General Meeting and the invitation to theGeneral Meeting shall include the information pursuant to Article 9 (5), as wellas information required by the provisions of Art. 211 (1) of the CommercialCode, c) within 30 days from the resolution of the General Meeting, theBoard of Directors shall be obliged to file an application to enter theresolution in the Commercial Register, d) the resolution of the General Meeting to reduce the registeredcapital shall be implemented by the Board of Directors itself or contractuallythrough a third party, e) within 30 days of the date on which the decision of the GeneralMeeting became effective vis-a-vis third parties, the Board of Directors shallbe obliged to inform in writing known creditors, who have incurred claimsagainst the Company prior to that date, of the extent of reduction of theregistered capital, together with a call for them to apply for their claims,unless reduction of registered capital pursuant to the provisions of Art. 216a(1) or the Art. 216c of the Commercial Code is concerned, f) the Board of Directors shall ensure the publishing of thedecision of the General Meeting on reduction of the registered capital after theregistration thereof in the Commercial Register at least twice consecutivelywithin an interval of at least 30 days in the manner stipulated in Article 37(1), unless it concerns reduction of registered capital pursuant to theprovisions of Art. 216a (1) or Art. 216c of the Commercial Code, g) the Board of Directors shall file the application for entry ofthe reduction of registered capital in the Commercial Register within the termstipulated in the provisions of Art. 216 of the Commercial Code, h) the registered capital cannot be reduced below the legal amountthereof stipulated in the provisions of Art. 162 (3) of the Commercial Code, i) if the Company is obliged to reduce the registered capital, itshall use for such reduction its own shares or interim certificates if theCompany owns such shares or interim certificates. In other cases as well, theCompany shall use in particular its own shares or interim certificates forreduction of the registered capital; the registered capital may be reduced inanother manner only if the Company's own shares or interim certificates are notsufficient for reduction of the registered capital to the extent stipulated bythe General Meeting or if the purpose of reduction of the registered capitalwould not be complied with, j) prior to registration of reduction of the registered capital inthe Commercial Register and prior to satisfaction or securing creditors'receivables in accordance with the provisions of Art. 215 (2) or, as the casemay be, the provisions of Art. 215 (4) of the Commercial Code, shareholderscannot be provided with performance due to reduction of the registered capitalnor can unpaid portions of nominal values of their shares be waived or reducedfor the same reason. VIII. FINAL PROVISIONS Article 36 Winding up and Dissolution of the Company 1. The Company shall be wound up: a) on the date specified in the decision of the General Meeting asthe day on which the Company shall be wound up, otherwise on the date when sucha decision was adopted, b) on the date set forth in the decision of the General Meeting onmerger, consolidation or division of the Company or on assumption of assetsthereof by a single shareholder, otherwise on the date on which such decisionwas adopted, c) on the date set forth by a judicial decision on Company's windingup, or on the date when such a court decision comes into legal force, d) on the termination of the bankruptcy proceedings after the termsof the order on settlement have been met or on the termination of the bankruptcyproceedings due to the lack of assets of the liquidated Company to cover thecosts of the bankruptcy proceedings or by virtue of a rejection of the proposalto declare bankruptcy proceedings due to the lack of assets. 2. The Company shall become dissolved upon its deletion from theCommercial Register. Article 37 Notification 1. Facts stipulated by the legal regulations, by these Articles ofAssociation and on the basis of a decision by the General Meeting shall beannounced by letter or fax to the owners of registered shares. The othershareholders shall be informed by a notice published in the nationwide dailynewspaper Hospodarske noviny; simultaneously, the notice shall be published onthe internet pages of the Company. Matters that are required to be published(zverejneny) according to law or these Articles of Association shall bepublished in the Commercial Gazette (Obchodni vestnik), unless any other mannerof publishing is stipulated by law. Other facts or information (including noticeon the General Meeting) shall be also published (uverejneny) in the CommercialGazette provided that it is requested by law. 2. Any correspondence to be sent to particular persons shall bedelivered at their addresses given to the Company. 3. The annual report and semi-annual report in accordance with ActNo. 256/2004 Coll., shall be published by the Company in the manner stipulatedlaw. 4. The annual reports, the semi-annual reports, the prospectus ofthe security issuer as well as other documents stipulated by applicable legalregulations shall be publicly available to all interested parties within workinghours at the registered office of the Company. 5. The annual report in the extent stipulated by law must bepublished at least within 4 months after the end of the calendar (or fiscal)year. The semi-annual report must be published within 1 month after the end ofthe first 6 calendar months. 6. The provisions of par. (3) to (5) shall apply accordingly toconsolidated annual and semi-annual reports, should the Company prepare them. Article 38 Legal Status of the Company and Settlement of Disputes 1. The foundation, legal relations and winding-up of the Company, aswell as all legal relations ensuing from these Articles of the Association andlabour-law and other relationships within the Company shall be ruled by thelegal regulations. 2. In the event of disputes between the shareholders and theCompany, if any, disputes between the Company and members of its bodies, as wellas disputes between the shareholders themselves which relate to theirparticipation in the Company, shall be settled amicably. In case such disputesare not settled amicably, the relevant Czech court pertaining to the registeredoffice of the Company shall hear and rule on such disputes, unless such aprocedure is excluded by legal regulations or the parties sign an arbitrationagreement. Article 39 Procedure for Amendments to the Articles of Association 1. The General Meeting shall decide on amendments to these Articlesof Association, unless a change that occurred on the other legal grounds isinvolved. 2. Any proposals for amendments to these Articles of Associationshall be prepared with respect to the mandatory provisions of the legalregulations. 3. If any amendment to these Articles of Association is to be on theagenda of the General Meeting, the notice thereon must at least characterize theessence of the proposed amendment and such proposed amendment must be madeavailable to shareholders in the registered office of the Company within theperiod stipulated for convening the relevant General Meeting. Shareholders shallhave the right to request copies of draft amendments to these Articles ofAssociation at their own cost and risk. Shareholders shall be informed of suchrights in the invitation to the General Meeting or in the notice on the GeneralMeeting. 4. If a shareholder intends to exercise at the General Meetingcounter-proposals to the proposed alterations to these Articles of Association,the procedure pursuant to Article 11 (5) shall apply. 5. The submitter shall submit a proposal for changes of andamendments to these Articles of Association together with his/her/its rationaleto the General Meeting. Upon approval by the General Meeting, the Board ofDirectors shall provide for preparation of the new full version of theseArticles of Association, and shall file the same with the Registration Court.Should the General Meeting decide on amendments to these Articles of Associationpursuant to the provisions of Art. 173 (2) of the Commercial Code, anyamendments to these Articles of Association shall take effect as of the date ofentry of such facts in the Commercial Register. Any other amendments to theseArticles of Association shall take effect upon its passing by the GeneralMeeting, unless a later effective date is stipulated by the decision of theGeneral Meeting amendments to these Articles of Association or by law. 6. If the General Meeting adopts a decision resulting in anamendment to the contents of these Articles of Association, such decision shallreplace a decision on an amendment to these Articles of Association. If thedecision of the General Meeting does not stipulate whether or, as the case maybe, in what manner these Articles of Association shall be amended, the Board ofDirectors shall decide on the amendment to these Articles of Association incompliance with the decision of the General Meeting. Article 40 Company's Incorporation into the Commercial Register 1. The Company is registered in the Commercial Register at theMunicipal Court in Prague in section B, under reference No. 2322. 2. The facts that are required by a legal regulation to be recordedin the Commercial Register and the change and termination of the recorded factsshall be recorded in the Commercial Register. Article 41 Provisions on Interpretation If any provision of these Articles of Association appears invalid,non-effective, or disputable in view of legal regulations in force or changestherein, or if any provision is missing, other provisions of these Articles ofAssociation shall remain unaffected by this fact. Instead of the provisionconcerned either the provision of the particular legal regulation which due toits nature and purpose is the closest to the contemplated purpose of theseArticles of Association shall apply, or, if the legal regulations do not includesuch a provision, the manner of settlement which is common in business relationsshall apply. In Prague, on April 27, 2006 Responsible: ............................... Vladimir Broz Company Secretary CONTENTS TOC /o "1-2" BASIC PROVISIONS.......................................... 2 1. Business Name and Registered Office of the Company................... 2 2. Duration of the Company............................................ 2 3. Subject of Business (Activity) of the Company...................... 2 REGISTERED CAPITAL, SHARES, SHAREHOLDERS............................... 5 4. Registered Capital, Shares in the Company........................ 5 5. Shareholders of the Company...................................... 5 COMPANY BODIES AND THEIR REMUNERATION................................... 6 6. Company Bodies ................................................... 6 A) GENERAL MEETING...................................................... 7 7. The General Meeting and its Status................................. 7 8. Authority of the General Meeting................................... 7 9. Convening the General Meeting......................................... 8 10. Organization of the General Meeting.................................. 9 11. Conduct of the General Meeting....................................... 11 12. Voting and Quorum of the General Meeting............................. 11 13. General Meeting Record............................................... 13 B) THE BOARD OF DIRECTORS................................................. 14 14. Status and Authority of the Board of Directors...................... 14 15. Composition of the Board of Directors............................... 18 16. Meetings of the Board of Directors.................................. 19 17. Board of Directors Decision-Making.................................. 20 18. Decision-Making by the Board of Directors outside Meetings.......... 20 19. Duties of the Board of Directors Members............................ 21 C) SUPERVISORY BOARD.......................................................23 20. Status and Authority of the Supervisory Board....................... 23 21. Composition of the Supervisory Board................................ 24 22. Meetings of the Supervisory Board................................... 26 23. Supervisory Board Decision-Making................................... 27 24. Decision-Making by the Supervisory Board outside Meetings........... 27 25. Duties of the Supervisory Board Members............................. 28 26. Supervisory Board Committees..................................... 29 27. Remuneration of Members of the Board of Directors and theSupervisory Board and Rules for Determining Royalties................... 33 COMPANY SECRETARY................................................ 34 28. Company Secretary.................................................. 34 ACTING ON BEHALF OF THE COMPANY........................................... 35 29. Acting on Behalf of the Company.................................... 35 FINANCIAL MANAGEMENT OF THE COMPANY...................................... 35 30. Distribution of Profit and Coverage of Losses..................... 35 31. Creation and Use of the Reserve Fund and Other Funds from Profit....37 32. Financial Statements, Social-Economic Information and Records....... 38 RULES FOR INCREASE AND REDUCTION OF THE REGISTERED CAPITAL................. 39 33. Increase of the Registered Capital.................................. 39 34. Payment of and Consequences of Delay in Paying up the Shares........ 41 35. Reduction of the Registered Capital................................ 43 FINAL PROVISIONS...................................................... 44 36. Winding up and Dissolution of the Company........................... 44 37. Notification................................................... 45 38. Legal Status of the Company and Settlement of Disputes.............. 46 39. Procedure for Amendments to the Articles of Association............. 46 40. Company's Incorporation into the Commercial Register................ 47 41. Provisions on Interpretation........................................ 47 This information is provided by RNS The company news service from the London Stock Exchange
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