Exhibit 1.


                        ARTICLES OF ASSOCIATION (Stanovy)
                                  OF CEZ, a. s.


                                       I.
                                BASIC PROVISIONS

                                    Article 1
                   Foundation and Incorporation of the Company

1.   The joint stock company CEZ, a. s. (hereinafter referred to only as the
     "company") was founded without notice for subscription of shares by virtue
     of a deed of foundation upon the decision of the National Property Fund of
     the Czech Republic, Identification No.: 41 69 29 18, with its registered
     seat at the address Praha 2, Rasinovo nabr. 42, dated April 30, 1992.

2.   The company was incorporated by virtue of its entry in the Commercial
     Register on May 6, 1992.


                                    Article 2
               Corporate Name and Registered Office of the Company

1.   The corporate name of the company is CEZ, a. s.
2.   The company's registered office is Duhova 2/1444, Prague 4, 140 53.
3.   The company's Business Identification No. is 45 27 46 49.
4.   The company's Tax Identification No. is 001 - 45 27 46 49.


                                    Article 3
                             Duration of the Company

The company was founded for an indefinite period of time.


                                    Article 4
         Entries of the Data of the Company into the Commercial Register

1.   The company is recorded in the Commercial Register administered by the
     Municipal Court in Prague, under Section B, File No. 1581.


                                    Article 5
                                Scope of Business

1.   The scope of the company's business is as follows:

     a)   power production,
     b)   power distribution,
     c)   power trading,
     d)   thermal energy production,
     e)   thermal energy distribution,
     f)   power equipment designing,
     g)   electronic equipment installation and repairs,
     h)   electrical equipment and devices installation and repairs,
     i)   automated data processing,
     j)   reserved electrical equipment installation, repairs, reviews, and
          testing,
     k)   testing, measuring, and analyses,
     l)   reprographic services,

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     m)   demineralized water production,
     n)   oil, water, and coal analyzing,
     o)   leasing and renting of movables,
     p)   purchase of goods for the purpose of their resale, and sale of goods
          (retail or wholesale),
     q)   reserved pressure equipment, boilers, and pressure vessels
          installation, repairs, reconstruction, reviews, and testing,
          periodical testing of gas vessels,
     r)   metal working,
     s)   technical activities in transport,
     t)   business, financial, organizational, and economic advisory services,
     u)   hazardous waste handling business,
     v)   water fitting trade,
     w)   insulation installations,
     x)   software provision,
     y)   accommodation services,
     z)   catering,
     a1)  water and sewage systems operation,
     b1)  production and imports of chemicals and chemical agents classified as
          explosive, oxidizing, extremely combustible, highly combustible,
          highly toxic, toxic, carcinogenic, mutagenic, toxic for reproduction,
          environmentally hazardous, and sale of chemicals and agents classified
          as highly toxic and toxic,
     c1)  power industry advisory services,
     d1)  ground water sample analyzing,
     e1)  decontamination works,
     f1)  production of construction materials,
     g1)  representation within the framework of customs proceedings,
     h1)  operation of petrol stations with lubricants and fuels,
     i1)  production and imports of chemicals and chemical agents classified as
          combustible, harmful to health, caustic, irritating, and allergenic,
     j1)  organization of expert courses, training, and other educational
          events, including lecturing,
     k1)  psychological advisory services and diagnostics,
     l1)  operation of cultural and culturally-educational facilities,
     m1)  provision of services in the area of safety and health protection at
          work,
     n1)  technically-organizational activities in the area of fire protection,
     o1)  engineering activities in investment construction,
     p1)  waste management (not including hazardous waste)
     q1)  copying work.


                                    Article 6
   Registered Capital of the Company and Method of Share Issue Price Repayment

1.   The company's registered capital shall amount to CZK 59,208,846,100 (to
     wit: fifty-nine billion two hundred and eight million eight hundred and
     forty-six thousand one hundred Czech crowns).

2.   In subscribing for new shares, monetary as well as in-kind contributions
     are permissible. In-kind contributions shall be assessed by an expert
     pursuant to the provisions of legal rules and regulations.


                                    Article 7
                                 Company Shares

1.   The company's registered capital shall be divided into 592,088,461 shares,
     each having a nominal value of CZK 100 (to wit: one hundred Czech crowns).
     All shares are book-entered.

2.   All company shares shall be bearer shares. All company shares shall be
     registered.

3.   Rights related to book-entered bearer shares shall be exercised by the
     person recorded as of the relevant record date in the lawfully stipulated
     securities register administered by the Securities Center in Prague, unless
     provided otherwise by law.

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                                    Article 8
                                Issuance of Bonds

1.   Based on the general meeting's decision, the company may issue bonds with
     the attached right to exchange the same for the company's stocks
     (convertible bonds) or with the attached preferable right to the
     subscription of shares (priority bonds), provided that the general meeting
     simultaneously decides on a conditional increase in the registered capital.

2.   The method of issuance of bonds shall be governed by law and shall be
     subject to approval by the relevant state authority pursuant to the
     provisions of such legal rules and regulations.


                                       II.
                      SHAREHOLDERS' RIGHTS AND OBLIGATIONS

                                    Article 9
                              Shareholders' Rights

1.   Each shareholder shall be authorized, under the terms and conditions set
     forth in Section 178 of the Commercial Code, to receive a share in the
     company's profits (dividend), which the general meeting has approved for
     distribution with a view to the economic result. Such share shall be
     determined using the ratio of nominal value of the shareholder's shares to
     the nominal value of shares held by all shareholders. The right to dividend
     shall pertain to each shareholder registered as the owner of a share/shares
     in the Securities Center as of the date of the general meeting that shall
     decide on dividend payment. Such date shall be the record date for dividend
     payment. No shareholder shall be obliged to return to the company any
     dividend received in good faith.

2.   During the term of existence of the company or upon its winding up, no
     shareholder shall be authorized to request remittance of its contributions.
     Payments provided for by law shall not be deemed remittance of
     contributions. Upon the company's winding up with liquidation, each
     shareholder shall be authorized to receive a share in the company's
     liquidation balance.

3.   Each shareholder shall be authorized to participate in the company's
     management, i.e., to attend its general meetings and vote therein, to
     request and receive explanations related to company-related matters,
     provided that such explanation is required for assessment of the general
     meeting's agenda, and to submit proposals and counterproposals.
     Shareholders shall usually submit such proposals and counterproposals at
     the general meeting. In the event of a shareholder's counterproposals
     related to proposals specified in the notice of the general meeting or in
     the event a notarial deed must be drawn up in respect of the general
     meeting's decision, such shareholder shall be obliged to deliver a written
     content of its proposal or counterproposal at least five business days
     prior to the date of the general meeting. This shall not apply if proposals
     are concerned for election of specific persons into the company's bodies.
     The same right of shareholders to receive explanations shall exist in
     respect of the matters related to persons in controlled companies, provided
     that such explanations are required for assessment of the general meeting's
     agenda.

4.   Each shareholder shall have the priority right to subscribe for a part of
     the new company's shares subscribed in order to increase the registered
     capital to the extent of its share in the company's registered capital,
     provided that such shares are being subscribed through monetary
     contributions. This right may only be restricted or excluded by virtue of
     the general meeting's decision made if significant interest of the company
     exists in this respect.

5.   Each shareholder may require that the board of directors issue a copy of
     the minutes from the general meeting or a part thereof for the entire term
     of the company's existence. Such copies shall be made at the shareholder's
     expense.

6.   Each shareholder may approach a court with a request to declare invalid any
     resolution of the general meeting in the event such resolution is in
     dispute with the laws or with the company's Articles of Association. Unless
     such right is exercised within three months following the date of the
     general meeting or unless the general meeting has been duly convened, such
     right shall become extinct as of the date when such shareholder could have
     been informed of its convening, but definitely within one year. Should the
     justification of an action be that the general meeting failed to adopt an
     alleged resolution due to its failure to vote thereon or that the content
     of the alleged resolution does not correspond to the resolution adopted by
     the general meeting, such action may be submitted within three months
     following the date on which the petitioner has been informed of such
     alleged resolution, but no longer than one year following the date or
     alleged date of the general meeting.

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7.   The company's shareholder or shareholders owning shares the nominal value
     of which exceeds 3 % of the registered capital may require that the board
     of directors convene an extraordinary general meeting for discussion of
     proposed matters. The method of convening of such general meeting and
     coverage of costs thereof shall be governed by the legal rules and
     regulations.

8.   Upon the request of shareholders specified under Section 7 above:

     a)   the board of directors shall include the matter identified thereby in
          the general meeting's agenda, provided that such agenda may be amended
          in a lawful manner,

     b)   the supervisory board shall review the exercise of board of directors'
          powers in matters specified in the shareholders' request,

     c)   the supervisory board shall exercise the right to indemnification
          which the company has in respect of a member of the board of
          directors,

     d)   the board of directors shall file an action for repayment of the share
          issue price against shareholders being in default with the repayment
          of the same or shall apply the procedure pursuant to the provisions of
          Section 177 of the Commercial Code.

9.   Shareholders specified in Section 7 shall be authorized to request that a
     court appointed expert review a report on relations between a controlled
     entity and related persons, provided that gross reasons exists for such
     action.

10.  Should the board of directors fail to convene an extraordinary general
     meeting pursuant to the provisions of Section 7 above so that it takes
     place within 40 days following the delivery of the request therefor, the
     court shall decide upon the request of shareholders specified in Section 7
     above on such shareholders' power to convene such extraordinary general
     meeting. Method of convening of such general meeting and coverage of costs
     thereon shall be governed by legal rules and regulations.

11.  Should the supervisory board or the board of directors fail to satisfy the
     request of shareholders specified in Section 7 above pursuant to the
     provisions of Section 8 (c) or (d) without undue delay, such shareholders
     may themselves exercise the right to indemnification or to repayment of
     share issue price on behalf of the company. In such event, the relevant
     costs shall be borne by the company.


                                   Article 10
                            Shareholders' Obligations

1.   Subscribers shall be obliged to pay up the subscribed company shares in a
     timely manner on or before dates stipulated by the general meeting's
     decision on the increase in the registered capital. Consequences of any
     breach of such obligation shall be set forth by the law and these Articles
     of Association.

2.   Each shareholder obtaining, either itself or together with other persons
     through acting in accord, a share in the company's voting rights enabling
     it to control the company shall be obliged to submit a bid of purchase to
     all owners of shares in such company within 60 days following the date on
     which such shareholder acquired or exceeded such share. The same obligation
     shall also pertain to the shareholder and all persons acting in accord
     therewith whose share in a subscriber's securities or voting rights
     obtained as specified in sentence one of this subsection shall reach or
     exceed 2/3 or 3/4 of voting rights. This obligation shall terminate if the
     shareholder decreases within the same period of 60 days its share in voting
     rights under the limit establishing its obligation pursuant to the
     provisions of this subsection or by transferring such shares to another
     person in order not to exercise itself or through others the controlling
     influence in the company. The extinction of such obligation shall in both
     cases be subject to the decision of the Securities Commission based on the
     shareholder's written request. This shall not apply if the shares were
     transferred to a person controlled by or controlling the shareholder or
     acting in accord with the shareholder or having personnel or proprietary
     interrelation with such shareholder, even if the voting right disposal has
     been transferred in such manner. Detailed rules and exceptions for
     satisfaction of this obligation shall be set forth by law. In each specific
     case, the Securities Commission shall decide based on the shareholder's
     request.

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3.   A person or persons acting in accord which shall acquire or dispose of the
     share in voting rights related to company's registered shares to the extent
     of 5 %, 10 %, 15 %, 20 %, 25 %, 30 %, one-third, 40 %, 45 %, 50 %, 55 %, 60
     %, two-thirds, 70 %, 75 %, 80 %, 90 %, and 95 %, shall be obliged to submit
     a written notice to the company, Securities Commission and Securities
     Center within three business days after they have or could have been
     informed of such fact. Such notification obligation shall not relate to any
     holder of book-entered shares, provided that its share in voting rights may
     be determined by reviewing the Securities Center's registers and the holder
     of such shares and the Securities Center had entered into an agreement on
     the Securities Center's satisfaction of such notification obligation in
     respect of the company and the Securities Commission. No shareholder being
     a controlled person shall be obliged to satisfy such notification
     obligation in the event a controlling entity satisfies such notification
     obligation at the time of satisfying its own obligation to notify. The
     lawfully stipulated detailed procedure and consequences of a failure to
     notify shall be observed.

4.   Each shareholder shall without undue delay notify of all changes, if any,
     in its personal data recorded in the lawfully determined register of
     book-entered securities. Under no circumstances shall the company be liable
     for any consequences of any shareholder's failure to satisfy such
     obligation.


                                      III.
                              CORPORATE GOVERNANCE

                                   Article 11
                          Structure of Company's Bodies

1.   The company shall have the following bodies:

     a)   general meeting,

     b)   board of directors,

     c)   supervisory board.


                                       IV.
                                 GENERAL MEETING

                                   Article 12
           Position of General Meeting and Intervals of Its Convening

1.   The general meeting shall be the company's supreme body.

2.   The ordinary general meeting shall be convened at least once a year, always
     within six months following the last day of the accounting period.

3.   Other general meetings convened by the board of directors or the
     supervisory board or shareholders specified in Article 9 (7) shall be
     deemed extraordinary general meetings.


                                   Article 13
                            General Meeting's Powers

1.   The exclusive powers of the general meeting shall include the following:

     a)   decisions on amendments to the Articles of Association, unless such
          change results from the increase in the registered capital by the
          board of directors authorized to do so by the relevant decision of the
          general meeting or unless such change occurred as a consequence of
          other legal facts,

     b)   decisions on increases in the registered capital or on the board of
          directors' authorization to increase the registered capital or on the
          possibility to set-off a monetary receivable existing towards the
          company against a receivable arising from failure to pay the issue
          price of any shares or decisions on the issuance of share warrants
          (poukazky na akcie), or decisions on concurrent reduction of and
          increase in the registered capital or on the commission of the

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     board of directors to publish in a manner stipulated by law and by these
     Articles of Association an amount of reduction of the registered capital
     and the new par value of the existing shares of the company corresponding
     thereto.

     c)   decisions on decreases in the registered capital and decisions on
          issuance of convertible and priority bonds,

     d)   election and removal of members of the supervisory board, except for
          members elected and removed by employees pursuant to the provisions of
          the legal rules and regulations and these Articles of Association,
          approval of agreements on incumbency of members of the supervisory
          board and of rules for the providing of non-entitlement benefits to
          members of the company's supervisory board,

     e)   approvals of the ordinary or extraordinary financial statements and
          consolidated financial statements and, in lawfully determined cases,
          of interim financial statements, the decisions on distribution of
          profits of coverage of losses, determination of royalties and
          dividends and contributions to individual funds from the profits,

     f)   decisions on remuneration for directors and members of the supervisory
          board ,

     g)   decisions on registration of subscriber securities pursuant to the
          provisions of specific legal rules and regulations and decisions on
          deletion of such registrations,

     h)   decisions on company's winding up with liquidation, appointing and
          recalling of a liquidator, including determination of the amount of
          such liquidator's remuneration, and approvals of proposed structure of
          liquidation balance distribution,

     i)   decisions on mergers, transfers of assets to a shareholder, or split
          up the company and/or change of its legal form,

     j)   decisions on execution of an agreement whereby the company or a part
          thereof is transferred or leased, or decisions on execution of such
          agreement by a controlled entity,

     k)   approvals of acts taken on behalf of the company prior to its
          incorporation,

     l)   approvals of controlling/operating agreements, agreements on profit
          transfers, and agreements on tacit partnership, as well as approvals
          of amendments thereto,

     m)   decisions on company's investment plans exceeding, in each case, one
          third of the own capital as stated in the most recent ordinary
          consolidated financial statements and decisions on granting consent to
          the board of directors with disposal of company's assets in the event
          that the book value of such assets in each such case in one accounting
          period exceeds one third of the own capital as stated in the most
          recent ordinary consolidated financial statements

     n)   decisions on funds available to the company for sponsoring activities
          within a stipulated period,

     o)   decisions on change in form or type of shares and on changes in rights
          related to specific share types,

     p)   exclusions or restrictions of priority rights to acquisitions of
          convertible and priority bonds or to subscription of new shares,

     q)   decisions on share consolidation,

     r)   decisions on conductance of due diligence (legal, economic, technical,
          or, as the case may be, environmental audits) and provision of
          information determined thereby,

     s)   decisions on the concept of company's business and changes therein,

     t)   resolution of disputes between company's bodies,

     u)   discussions on board of directors' annual report on company's business
          and its assets,

     v)   decisions on other matters included in the powers of the general
          meeting by law or these Articles of Association.

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                                   Article 14
                          Convening of General Meetings

1.   The general meeting shall be convened by the board of directors, or, as the
     case may be, any member thereof in the event the board of directors has
     failed to decide on such convening of a general meeting without undue delay
     and the law sets forth the obligation to convene such general meeting, or
     provided that the board of directors fails to constitute a quorum for an
     extended period of time.

2.   If requested for the sake of company's interest, the general meeting shall
     be convened by the supervisory board and shall propose thereto all
     necessary measures to be taken. A case when the board of directors or any
     director fails to satisfy its obligation to convene the general meeting
     shall also be deemed such event of interest of the company.

3.   Under the terms and conditions set forth by law, the court may empower
     shareholders specified in Article 9 (7) to convene an extraordinary general
     meeting.

4.   A body convening the general meeting shall be obliged to provide for
     publishing of a notice of such general meeting at least 30 days prior to
     its date in the Hospodarske noviny daily. This period of time shall be
     reduced to 15 days in the event of convening of a substitute general
     meeting or an extraordinary general meeting upon request of shareholders
     specified in Article 9 (7).

5.   Each notice of general meeting shall contain the following:

     a)   company's business firm and registered seat,

     b)   place, date, and time of general meeting,

     c)   information whether an ordinary, extraordinary, or substitute general
          meeting is being convened,

     d)   agenda of the general meeting,

     e)   date decisive for attendance at the general meeting,

     f)   conditions for exercise of shareholders' rights at the general
          meeting,

     g)   if the agenda of the meeting includes approval of the financial
          statement, then the notice shall also contain the material information
          contained in such financial statement and shall specify the place
          where and time when such financial statement shall be available to
          company's shareholders for review,

     h)   should the agenda of the general meeting include amendments to the
          company's Articles of Association, then the notice on the general
          meeting shall also at least characterize the substance of proposed
          amendments and the proposed amendments to the Articles of Association
          shall be made available to the shareholders in the company's offices
          during the period set forth for convening of the general meeting. Each
          shareholder may request sending of a copy of such proposed amended
          Articles of Association at its own expenses and risk. Shareholders
          shall be notified of such right in the relevant notice of the general
          meeting,

     i)   other requisites set forth by law (e.g., in the event of decrease of
          and increase in the registered capital, in the event of company
          transformation) or by a decision of the body convening the general
          meeting.

6.   Each general meeting may be canceled or postponed. Such cancellation or
     postponement must be notified in the same manner as the convening of the
     general meeting no later than the time specified for commencement of the
     general meeting. Unless such notice is issued at least one week prior to
     the date of the general meeting, the shareholders arriving according to the
     original notice of the general meeting shall be entitled to reimbursement
     of purposefully incurred costs. An extraordinary general meeting convened
     upon request of shareholders specified in Article 9 (7) may only be
     canceled or postponed if such shareholders so require.

7.   The agenda of the general meeting may only be extended prior to the general
     meeting and after the publishing of a notice of the general meeting upon
     request of shareholders specified in Article 9 (7) and, in the event of
     extending of the agenda of the general meeting, may be published in the
     manner set forth for convening of general meetings at least 10 days prior
     to such general meeting.

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                                   Article 15
             General Meeting's Quorum and Substitute General Meeting

1.   The general meeting shall constitute a quorum in the event the attending
     shareholders own shares the nominal value of which exceeds 30% of the
     company's registered capital.

2.   In assessing the qualifications of the general meeting to make decisions,
     shares and interim certificates shall not be taken into account, which do
     not authorize their holders to exercise voting rights pursuant to the
     provisions of the law or these Articles of Association.

3.   Unless the general meeting constitutes a quorum within one hour after the
     time of commencement published in the notice of the general meeting, the
     board of directors shall convene a substitute general meeting to take place
     within six weeks following the date of the original general meeting.

4.   Such substitute general meeting shall have the same agenda and shall be
     deemed to constitute a quorum regardless of the provisions of Section 1
     above.


                                   Article 16
                         Attendance at General Meetings

1.   The right to attend a general meeting shall pertain to each person recorded
     as a shareholder or administered in the lawfully determined securities
     register, in the Securities Center, as of the record date. The record date
     shall be the sixth calendar day prior to the date of the general meeting.
     The general meeting shall also be attended by directors and members of the
     supervisory board. The general meeting may also be attended by persons for
     which it is purposeful to express their views on the individual items of
     the agenda of the general meeting such as company's auditors or advisors
     and persons providing for the organization and due course of the general
     meeting. Other persons may only attend general meetings with the consent of
     the board of directors.


                                   Article 17
               Meetings and Decision-Making of the General Meeting

1.   The general meeting shall elect its chairman, minutes clerk, two minutes
     verifying clerks, and scrutineers.

2.   The general meeting shall be presided by its chairman; until the election
     of such chairman of the general meeting, the general meeting shall be
     presided by a chosen member of the body convening such general meeting.
     Should the general meeting be convened based on a court decision upon
     request of shareholders specified in Article 9 (7), the court may also
     appoint the chairman of the general meeting without any proposal.

3.   The chairman of the general meeting shall be obliged to provide for
     submission at the general meeting of all proposals, counterproposals, and
     requests for explanation by shareholders, provided that the same relate to
     the agenda of the meeting and the relevant shareholder insists on the
     submission thereof at the general meeting. The chairman of the general
     meeting shall also be obliged to provide for response at the general
     meeting to shareholders' requests for explanation of matters related to the
     company being the subject of the general meeting.

4.   The general meeting shall decide by an absolute majority of votes of
     attending shareholders, unless provided otherwise by law or company's
     Articles of Association. One vote shall be attached to each company's share
     having a nominal value of CZK 100.

5.   The general meeting shall decide by at least a two-third majority of votes
     of attending shareholders on the following:

     a)   amendments to Articles of Association, unless such amendments result
          from an increase in the company's registered capital by the board of
          directors or unless they result from other legal facts,

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     b)   an increase in or decrease of the registered capital or authorization
          of the board of directors to increase the registered capital or the
          possibility to set-off a monetary receivable existing towards the
          company against a receivable arising from failure to pay the issue
          price, or decisions on the issuance of share warrants or decisions on
          the parallel reduction of and increase in the registered capital or on
          the commission of the board of directors to publish in a manner
          stipulated by law and by these Articles of Association an amount of
          reduction of the registered capital and the new par value of the
          existing shares of the company corresponding thereto.

     c)   a decrease of the registered capital and issuance of convertible and
          priority bonds,

     d)   the company's winding up with liquidation and proposal for
          distribution of the company's liquidation balance.

6.   The general meeting shall decide by at a least three-fourth majority of
     attending shareholders on the following:

     a)   exclusion or restriction of the priority right for acquisition of
          convertible and priority bonds,

     b)   exclusion or restriction of the priority right for subscription of new
          shares pursuant to the provisions of Section 204a of the Commercial
          Code,

     c)   approval of a controlling agreement and amendments thereto,

     d)   approval of an agreement on profit transfer and amendments to the
          same,

     e)   increase in the registered capital through in-kind contributions.

7.   Decisions of the general meeting on the change in a type or form of shares,
     on changes in rights related to certain types of shares, and on
     cancellation of registration of shares shall be subject to the consent of
     at least three-fourth of votes of attending shareholders holding such
     shares.

8.   Decisions of the general meeting on consolidation of shares shall also be
     subject to the consent of all shareholders whose shares are to be so
     consolidated.

9.   In cases not specified in Article 17 (4) through to (8), the general
     meeting shall decide by the lawfully stipulated majority.

10.  In assessing the qualifications of the general meeting to make decisions
     and in voting at the general meeting, shares or interim certificates with
     unattached voting rights shall not be taken into account.

11.  A shareholder may not exercise a voting right:

     a)   attached to an interim certificate if the shareholder is in default
          with the repayment of the issue price of outstanding shares or a part
          thereof,

     b)   if the general meeting is deciding on its in-kind contribution,

     c)   if the general meeting is deciding on whether an agreement exceeding
          common business should be entered into with such shareholder or a
          person acting in accord with the same, unless such agreement refers to
          company transformation, transfer of profits, or is a
          controlling/operating agreement, agreement on sale of company or a
          part thereof, or an agreement on the lease of the company or a part
          thereof, or if the general meeting is deciding on whether an advantage
          should be provided to such shareholder or a person acting in accord
          with the same or whether they shall be relieved from the satisfaction
          of an obligation or whether such shareholder should be recalled from
          the position of a member of a company's body as a result of a breach
          of its obligation in such office,

     d)   if such shareholder had breached the obligation to make an obligatory
          bid for taking over upon its acquisition of the control over the
          target company,

     e)   if such shareholder had breached the obligation to notify,

     f)   in other cases set forth by law.

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12.  Matters not included in the published agenda of the general meeting may
     only be decided in the presence and with the participation of all company's
     shareholders.

13.  Minutes shall be drawn up on the general meeting in the form set forth by
     law.

14.  A notarial deed shall be drawn up on all decisions specified in Article 13
     (1) (a), (b), and (c), and also in all cases of decisions on the following:

     a)   company's winding up with liquidation and plan for distribution of the
          liquidation balance,

     b)   change in the type or form of shares,

     c)   change in rights related to certain share types,

     d)   restriction of transferability of registered shares,

     e)   cancellation of registration of shares,

     f)   exclusion or restriction of the priority right for acquisition of
          convertible and priority bonds,

     g)   exclusion or restriction of a priority right for subscription of new
          shares,

     h)   approval of a controlling agreement,

     i)   approval of an agreement on transfer of profits and amendments
          thereto,

     j)   increase in the registered capital through in-kind contributions,

     k)   consolidation of shares,

     l)   other cases specified by law.

15.  Minutes on the general meeting and the notice of the general meeting and
     the list of attending shareholders, including all submitted powers of
     attorney, shall be kept in the company's archives during the entire term of
     company's existence.


                                   Article 18
                      General Meeting's Rules of Procedure


1.   Shareholders may exercise their rights attached to their shares, share
     warrants, or interim certificates at the general meeting, i.e., they shall
     be authorized in particular to vote, to request and receive explanations of
     matters related to the company being the subject of the general meeting's
     agenda, and to submit proposals and counterproposals, whether in person,
     through their statutory body, through their proxies submitting a written
     power of attorney with an officially certified signature of the principal,
     or through an administrator recorded in the Securities Center's register.

2.   All attending shareholders shall be entered in the attendance list
     specifying also the business firm or registered seat of the legal entity or
     the name and place of residence of an individual person being the
     shareholder, or, as the case may be, a proxy of the same, the number and
     nominal value of shares authorizing such person to vote, or, as the case
     may be, the information that such share does not authorized its holder to
     vote. Should the company reject to record a person in the attendance list,
     such fact shall be stated in such attendance list, including the reason for
     such rejection. The correctness of the attendance list shall be confirmed
     by the signatures of the chairman of the general meeting and the minutes
     clerk, both elected pursuant to the provisions of the Articles of
     Association.

3.   Attendance at the general meeting shall also be registered in enrollment
     sheets. Each such enrollment sheet shall contain the name or firm of the
     shareholder (all legal entities' proxies shall specify their identification
     number), for foreign individual persons also the passport number, and the
     signature of the shareholder or its proxy. Should a shareholder be
     represented, such enrollment sheet shall contain information on its
     representative to the extent specified for the shareholder.

4.   Shareholding individual persons shall prove their identity by submission of
     an identity card. Persons acting on behalf of legal entities shall prove
     their identity, except for through their identity cards, also by submission
     of a document certifying the existence of the relevant legal entity and
     such persons' authorization to act on behalf of such legal entity.
     Shareholders' proxies shall also submit their powers of attorney with an
     officially certified signature of the principal.

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<PAGE>

5.   Should a shareholder be a foreign individual person, he shall submit his
     passport. A foreign shareholder's - individual person's proxy shall submit
     an officially certified power of attorney. Should a shareholder be a
     foreign legal entity, it shall also submit a certified document proving the
     existence of the legal entity, and unless it is also its statutory body, it
     shall also submit an officially certified power of attorney.

6.   Documents by virtue of which a foreign shareholder or its proxy prove their
     identity shall be superlegalized or shall have an apostille (certification)
     attached, unless an agreement on legal assistance exists between the Czech
     Republic and the country where the shareholder has a permanent residence or
     registered seat.

7.   Requests for explanation of matters related to the company, provided that
     such explanations are required for assessment of the subject of the general
     meeting, proposals and counterproposals, except for counterproposals to be
     delivered at least five days prior to the date of the company's general
     meeting, may be submitted by the shareholders for the sake of improvement
     of flexibility of the general meeting in writing to the chairman of the
     general meeting through the general meeting's information center upon the
     commencement of the relevant general meeting until the declaration by the
     chairman of the general meeting of the conclusion of such general meeting.
     The provisions of Section 8 below shall remain unaffected thereby. The
     heading shall show whether a request for explanation, a proposal, or a
     counterproposal is concerned. Requests for explanation, proposals, and
     counterproposals shall also specify under the text the name, birth number
     (or passport number for a foreign individual person), and signature of a
     shareholder-individual person, or the business firm and identification
     number of a shareholder-legal entity registered in the Czech Republic as
     well as the signature authorized to act on behalf of such legal entity.
     Such written filing submitted through the information center shall be
     enclosed with a clause proving the registration of the shareholder's
     attendance at the general meeting. Without such information, no filing may
     be submitted to the general meeting.

8.   Should shareholders require verbal explanations of matters the explanation
     of which is required for the assessment of the subject of the general
     meeting, or should they verbally ask questions and submit proposals and
     counterproposals, they shall be obliged to ask for the floor by lifting
     their hand. As soon as the course of the general meeting permits so, the
     chairman of the general meeting shall give them the floor in the sequence
     they had asked for the same. All shareholders shall be obliged to formulate
     their verbal statement so as to make it brief and understandable.

9.   The chairman of the general meeting shall be obliged to provide for
     provision of explanations required by the shareholders through submissions
     made pursuant to the provisions of these rules or procedure during the
     general meeting, unless in the specific case such explanation may be
     rejected pursuant to the provisions of the Commercial Code.

10.  Voting on the items of the agenda of the general meeting shall be taken
     after the general meeting has been informed of all submitted proposals;
     firstly, the board of directors' proposals shall be voted on; secondly,
     supervisory board's proposals shall be voted on; thirdly, proposals and
     counterproposals submitted by shareholders shall be voted on in the order
     of their submission. Once a submitted proposal is approved, no other
     proposals or counterproposals contradicting the approved proposal shall be
     voted on.

11.  Each ballot paper shall contain the name or firm of the shareholder
     (identification number for legal entities' proxies) and its signature or
     the signature of its proxy. In the ballot, each shareholder shall make its
     choice for a specific proposal number to which the voting refers by
     crossing "FOR", or "AGAINST", or "REFRAINED".

12.  Ballots and the enrollment sheets must be signed. Unsigned enrollment
     sheets and ballot papers shall be invalid. Torn, written on, or otherwise
     degraded ballots and sheets as well as sheets and papers containing
     illegible information shall be deemed invalid as well. Should a mistake
     occur when filling in the ballot papers by crossing the incorrect value, a
     scrutineer must be asked for assistance. Such scrutineer shall transform
     the cross to an asterisk and by a legible signature placed under the
     shareholder's (proxy's) signature, it shall confirm such adjustment. Should
     an enrollment sheet or ballot paper be lost, attendance takers or a
     scrutineer shall be asked for issuance of a duplicate. A record on such
     issuance of a duplicate shall be made.

13.  After voting, scrutineers shall collect the ballots of all shareholders and
     shall forthwith commence to count the votes. As soon as it is determined
     that a number of votes has been achieved that is required for

                                       11
<PAGE>

     a decision on the proposed matter, the chairman of the general meeting
     shall be notified by the scrutineers of such preliminary result of voting.

Counting of the remaining votes of shareholders shall continue and the final
results shall be included in the minutes from the general meeting.

Unless the number of votes required for approval of a submitted proposal is
achieved, the chairman of the general meeting shall present to the shareholders
a new proposal that may be voted on using the ancillary ballot paper.

An ancillary ballot paper shall contain all information specified in Section 11
above. Similarly, counting shall continue until the decisive result is achieved.

Shareholders shall submit their ballot papers through inserting the same into
the ballot box after each voting event.


                                       V.
                               BOARD OF DIRECTORS

                                   Article 19
                     Board of Directors' Position and Powers

1.   The board of directors shall be a statutory body managing the company's
     activities, acting on behalf of the company, and binding the company in the
     manner set forth herein. No proxy may be appointed to represent a director
     in its office.

2.   The board of directors shall decide on all company matters, unless such
     matters are reserved for the powers of the general meeting or the
     supervisory board by law or these Articles of Association.

3.   The board of directors shall observe the principles and instructions
     approved by the general meeting, provided that they are in accordance with
     legal rules and regulations and these Articles of Association.

4.   No one shall be authorized to instruct the board of directors in the
     matters related to the company's business management, unless provided so by
     law.

5.   The board of directors shall convene a general meeting without undue delay
     after finding out that the total loss of the company proven by any
     financial statement has achieved such amount that even through coverage
     thereof using the disposable resources of the company, the unpaid loss
     would achieve 50% of the registered capital, provided that it may be
     presumed with a view to all circumstances or provided that it finds out
     that the company has gone bankrupt; thereafter, it shall propose winding up
     of the company or another measure to the general meeting, unless provided
     otherwise by the bankruptcy act.

6.   The board of directors shall be obliged to file with the relevant court
     without undue delay a petition for declaration of bankruptcy in respect of
     the company's assets or a request for permit for composition, provided that
     all terms and conditions set forth by a specific act have been satisfied in
     accordance with the decision of the general meeting convened pursuant to
     the provisions of Article 19 (5).

7.   The board of directors shall:

     a)   provide for business management of the company, including the due
          keeping of the relevant books,

     b)   convene the general meeting and provide for the organization of the
          same,

     c)   submit the following to the general meeting:

          c.1. draft concept of company's business and proposed amendments
               thereto,
          c.2. draft amendments to the Articles of Association,
          c.3. proposals for increase in or decrease of the registered capital
               as well as proposals for issuance of priority and convertible
               bonds pursuant to the provisions of Article 8,
          c.4. ordinary, extraordinary, and consolidated, or, as the case may
               be, interlocutory financial statements,

                                       12
<PAGE>

          c.5. proposal for distribution of profits, including the determination
               of the amount, method of payment, and maturity of dividends,
               amount of royalties and contributions to funds, or proposals for
               coverage of company's losses,
          c.6. annual reports on company's business and on its assets,
          c.7. a proposal for winding up of the company,

     d)   enforce the resolutions of the general meeting,

     e)   grant and recall the procuration (prokura),

     f)   approve and amend the Signing Rules of CEZ, a. s., and - with the
          approval of the relevant trade union body - the Working Regulations of
          CEZ, a. s.,

     g)   approve the Electoral Regulations of CEZ, a.s., referring to the
          election of members of the supervisory board elected by company's
          employees, in cooperation with the labor union or employees' council,
          or in the event of the non-existence in cooperation with the
          employees, and organize such election of the members of the
          supervisory board,

     h)   appoint and recall managers of the company pursuant to the provisions
          of Article 27 of the Labor Code,

     i)   sign incumbency agreements for members of company's bodies.

8.   The board of directors shall decide on the following:

     a)   disbursement of funds from the reserve fund, unless provided otherwise
          by law,

     b)   increase in the company's registered capital pursuant to the
          provisions of Section 210 of the Commercial Code and pursuant to the
          provisions of Article 34, and issuance of company's bearer shares in
          this connection,

     c)   price proposals submitted to the regulation authorities,

     d)   draft power purchase agreements, provided that this arises from the
          Signing Rules of CEZ, a. s.,

     e)   investment projects and performance thereof, provided that this arises
          from the Signing Rules of CEZ, a. s.,

     f)   approval of long-term and medium-term loans or borrowings and of other
          long-term financial operations of the company, provided that this
          arises from the Signing Rules of CEZ, a. s.,

     g)   content of the annual report pursuant to the provisions of the
          accounting act and of the semi-annual and annual reports pursuant to
          the provisions of the securities act,

     h)   distribution of remuneration stipulated by the general meeting between
          the board of directors and the supervisory board, unless done so by
          the general meeting,

     i)   distribution of remuneration stipulated by the general meeting among
          the individual directors, unless done so by the general meeting,

     j)   conclusion of agreements on foundation of a business company or an
          association of legal entities or on acquisition of a business interest
          in another legal entity as well as on winding up of a business company
          or association of legal entities or sale of a business interest in
          another legal entity,

     k)   disposal of real estate without the provisions of Article 13 (1) (m)
          being affected or lease of real estate for a definite period of time,
          provided that term of lease exceeding three years is concerned,

9.   The board of directors shall request the prior consent of the supervisory
     board for the implementation of its decisions listed as follows:

     a)   regarding the acquisition, disposal, pledge or lease of the company's
          property, the book value of which property in each case exceeds CZK
          500,000,000 (in words: five hundred million Czech crowns),

                                       13
<PAGE>

     b)   regarding the company's investment projects, the value of which
          exceeds CZK 500,000,000 (in words: five hundred million Czech crowns),

     c)   regarding the acquisition, disposal, or pledge of the company's stake
          in another legal entity, if the company's stake in such entity
          exceeds, or would as a result of such act exceed, 33% of the
          registered capital of such a legal entity, and the acquisition,
          disposal, or pledge of a stake in another legal entity, if the value
          of such a stake in each case exceeds CZK 500,000,000 (in words: five
          hundred million Czech crowns), including legal entities based outside
          the Czech Republic,

     d)   regarding the issuing of any guarantees by the company for any
          obligations of third parties exceeding in each case CZK 200,000,000
          (in words: two hundred million Czech crowns),

     e)   regarding the transfer and pledge of the company's own shares,

     f)   regarding the persons to be members of the supervisory boards of
          companies in which the company has a stake in the registered capital
          exceeding CZK 500,000,000 (in words: five hundred million Czech
          crowns). The supervisory board can also issue a decision by which it
          shall reserve the right to be asked for such prior consent in the case
          of companies in which the company's stake in the registered capital
          does not exceed CZK 500,000,000 (in words: five hundred million Czech
          crowns),

     g)   regarding choice of auditor for the ordinary, extraordinary and
          consolidated financial statements and regarding the drafts of
          agreements with such auditor,

     h)   regarding disposal of real estate, if in the given case the market
          value or appraisal value exceeds CZK 100,000,000 (in words: one
          hundred million Czech crowns),

     i)   regarding the acceptance of long-term and medium-term loans or other
          borrowings and other long-term financial operations, with the
          exception of hedging operations, exceeding CZK 500,000,000 (in words:
          five hundred million Czech crowns),

     j)   regarding the issuance of bonds with the exception of those the
          issuance of which requires the consent of the general meeting pursuant
          to Article 160 of the Commercial Code,

regarding other cases pursuant to law.

10.  The board of directors shall submit the following issues to the supervisory
     board for discussion and shall request the supervisory board's opinion on
     the following issues:

     a)   approval of and amendments to the Organizational Rules of CEZ, a.s.,

     b)   approval of rules for the creation and use of a company social fund
          and other company funds, in accordance with the law and herewith,

     c)   appointment and compensation of the chief executive director and
          directors that are employees of the company,

     d)   proposals of annual investment and operating budgets,

     e)   proposals of significant changes in the organizational structure of
          the company,

     f)   proposals of the company's business plans within the business plan
          approved by the company's general meeting,

     g)   proposals for the signing of agreements for the acquisition, disposal,
          zastaveni or lease of the company's property, if the book value of
          such an operation exceeds CZK 200,000,000 (in words: two hundred
          million Czech crowns). The supervisory board may also issue a decision
          by which it shall reserve the right to discuss and issue an opinion
          with respect to proposals for the signing of an agreement for the
          acquisition, disposal and pledge or lease of the company's property in
          cases when the book value of such an operation does not exceed CZK
          200,000,000 (in words: two hundred million Czech crowns),

                                       14
<PAGE>

     h)   promoting the drawing up of business plans and financial plans of
          controlled entities with registered capital exceeding CZK 500,000,000
          (in words: five hundred million Czech crowns) (in accordance with the
          law and the foundation documents of the controlled entities),

          all proposals submitted by the board of directors to the general
          meeting for its decision or information. In the case of proposals that
          the board of directors must submit to the general meeting under law,
          it shall suffice for the board of directors to inform the supervisory
          board.

11.  The board of directors shall inform the supervisory board of matters that
     include the following:

     a)   approving the Working Regulations of CEZ, a. s., and the Signing Rules
          of CEZ, a. s.,

     b)   approving the Election Rules of CEZ, a. s., for the election of
          supervisory board members elected by the employees,

     c)   the drawing of funds from the reserve fund,

     d)   increases in the registered capital pursuant to Article 35,

     e)   long-term purchase agreements with electricity distributors, if the
          agreed duration of such agreements is at least one year,

     f)   principles for collective bargaining and the company's wage policy,

     g)   price proposals submitted to the regulation authority,

     h)   documents for materials submitted to the Cabinet of the Czech
          Republic,

     i)   the intention to establish a company or association of legal entities
          or to acquire a stake in another legal entity, as well as the
          intention to dissolve a company or an association of legal entities or
          to sell the company's stake in another legal entity, if the value of
          the company's existing or anticipated stake in each case exceeds CZK
          500,000,000 (in words: five hundred million Czech crowns) or a 33%
          share of the registered capital (in the case of companies),

     j)   investment projects and the realization thereof,

     k)   the development of receivables and debts past maturity,

     l)   the monthly developments in the company's economic situation,

     m)   the course and results of the meetings of the company's board of
          directors.

12.  Always on or before May 15 of each calendar year, the board of directors
     shall submit to the supervisory board for review the proposed ordinary
     financial statement and the proposals for distribution of profits, report
     of the board of directors pursuant to Article 66a(9) of the Commercial
     Code, method of payment, and maturity of dividends, amounts of royalties,
     and proposals for coverage of the company's losses.


                                   Article 20
                  Number of Directors and Their Terms of Office

1.   The board of directors shall consist of five members. Only an individual
     person of at least 18 years of age, fully qualified to take legal acts,
     impeccable pursuant to the provisions of Act No. 455/1991 Coll., on trade
     licenses (Trade Licensing Act), as amended, in respect of which no fact
     exists that would constitute an obstruction to its trade operation or
     incumbency pursuant to the provisions of Article 31a of the Commercial
     Code, may become a director.

2.   The members of the board of directors shall be elected and removed by the
     supervisory board. Each director may be elected repeatedly.

3.   The board of directors shall elect the board of directors' chairman and two
     vice-chairmen from among its members.

4.   The term of office of each director shall be four years.

                                       15
<PAGE>

5.   Should a director die, resign, be removed, or his term of office be
     otherwise terminated, the supervisory board shall elect a new director
     within three months.

6.   A director may resign from its office at any time by virtue of a written
     statement delivered to the board of directors or supervisory board. Each
     such resignation shall be discussed by the supervisory board. The office of
     such director shall be terminated as of the date on which the supervisory
     board discussed or was to discuss such notice of resignation. The
     supervisory board shall be obliged to discuss such resignation at its
     subsequent meeting held after the delivery of such notice. Should a
     director submit its resignation from the office at a meeting of the
     supervisory board, its incumbency shall be terminated upon the expiration
     of two months after such notice, unless the supervisory board approves
     another date for termination of the office of such director upon such
     director's request.

7.   The office of a director shall be terminated upon the election of a new
     director, but no later than after three months following the termination of
     such director's term of office, except pursuant to the provisions of
     Sections 5 and 6 of this article.


                                   Article 21
                             Directors' Obligations

1.   All directors shall be obliged to exercise their powers and satisfy their
     obligations with the due care of a proper manager and shall keep
     confidential all confidential information and facts the disclosure of which
     to third parties might result in any loss to the company. The obligation of
     confidentiality shall survive the term of each director's office.

2.   Members of the board of directors shall be liable for damage caused to the
     company by performing the instructions of the general meeting only in the
     event such instruction is in dispute with legal rules and regulations.

3.   Members of the board of directors causing a breach of legal obligations
     while exercising the powers of the board of directors shall be jointly and
     severally liable for the resulting damage.

4.   All directors shall be obliged to observe the no-competition provision set
     forth by law.


                                   Article 22
                Board of Directors' Meetings and Decision-Making

1.   The board of directors shall decide by an absolute majority of the votes of
     all its members, unless provided otherwise by these Articles of
     Association. The board of directors shall constitute a quorum when more
     than 50% of its members are present. Each director shall have one vote.

2.   The procedure of the board of directors shall be governed by the board of
     directors' rules of procedure adopted by the very same board of directors.
     The board of directors' rules of procedure shall be adopted or amended by a
     two-third majority of votes of all directors.

3.   The meetings of the board of directors shall be convened by the board of
     directors' chairman by virtue of a notice specifying the place, date, and
     time of such meeting as well as its agenda. Time limits for delivery of
     such notices and other details shall be set forth by the board of
     directors' rules of procedure.

4.   The chairman of the board of directors shall be obliged to convene a
     meeting of the board of directors in the event at least two directors or
     the chairman of the supervisory board based on the decision of the
     supervisory board require so. Such request shall be made in writing and
     shall specify the urgent reason for the convening of such board of
     directors' meeting. The time limit for convening of such extraordinary
     meeting, measures against inactivity, and other details shall be regulated
     by the board of directors' rules of procedure.

5.   The meetings of the board of directors shall be presided by the board of
     directors' chairman. In the event of the chairman's absence, all such
     meetings shall be presided by the vice-chairman.

6.   Minutes shall be taken on the course of a board of directors' meeting and
     on all adopted resolutions; such minutes shall be signed by the chairman of
     the board of directors, another director (always the vice-chairman of the
     board of directors if such vice-chairman presided the meeting of the board
     of

                                       16
<PAGE>

     directors), and the minutes clerk. The minutes of the board of directors'
     meeting shall specify the names of directors voting against each individual
     resolution of the board of directors or refraining from voting. Unless
     provided otherwise, it shall apply that members of the board of directors
     not specified voted for the adoption of such resolution.

7.   In election and voting on recall of a chairman or vice-chairman of the
     board of directors, the person concerned shall not vote.

8.   In urgent matters, the chairman or the vice-chairman in the chairman's
     absence may submit a per rollam resolution by virtue of a written query or
     through a query made through the media towards all directors, and provided
     that all directors consent. Such resolution shall be deemed adopted in the
     event at least two thirds of all directors have voted and an absolute
     majority of all directors have voted for its adoption. A decision made
     outside a meeting shall be recorded in the minutes from the subsequent
     meeting of the board of directors. The board of directors may at its own
     discretion invite to its meetings also members of other company's bodies,
     company's employees, or other persons.

9.   The board of directors shall hold its meetings at least once a month.


                                   Article 23
         Board of Directors' Working Commissions, Teams, and Committees

1.   The board of directors shall establish for its activities working
     commissions, teams, and committees.


                                       VI.
                                SUPERVISORY BOARD


                                   Article 24
                     Supervisory Board's Position and Powers

1.   The supervisory board is the Company's supervisory body. The supervisory
     board shall supervise the exercise of powers of the board of directors and
     conductance of the company's business. No proxy may be appointed to
     represent a member of the supervisory board in its office.

2.   The members of the supervisory board shall be authorized to review all
     documents and records related to company's business and to inspect whether
     accounting entries are kept correctly and whether the company's business is
     conducted pursuant to the provisions of the law, these Articles of
     Association, and the instructions of the general meeting. The supervisory
     board shall inform the general meeting of the results of its supervisory
     activities.

3.   The supervisory board shall convene a general meeting in the event it is
     necessary in the company's best interest; at such general meeting, it shall
     propose all necessary measures.

4.   The supervisory board shall appoint a member thereof to represent the
     company in proceedings before courts and other authorities against a member
     of the board of directors.

5.   The supervisory board shall also:

     a)   supervise the observance of generally binding legal rules and
          regulations, these Articles of Association, and resolutions of the
          general meeting,

     b)   monitor the manner in which the board of directors is exercising
          ownership rights in legal entities in which the company has a stake,

     c)   review the ordinary, extraordinary, consolidated, or, as the case may
          be, interlocutory financial statements, proposals for distribution of
          profits, including the determination of the amount and method of
          dividend and royalty payments, or proposals for coverage of losses,
          report of the board of directors pursuant to Article 66a(9) of the
          Commercial Code, and submit its opinions to the general meeting,

                                       17
<PAGE>

     d)   discuss the quarterly economic results, semi-annual and annual reports
          pursuant to the provisions of the securities act, and the annual
          reports drawn up pursuant to the provisions of the accounting act,

     e)   convene an extraordinary general meeting if necessary in the best
          interest of the company,

     f)   submit to the general meeting and the board of directors its opinions,
          recommendations, and proposals,

     g)   decide on distribution of royalties determined by the general meeting
          between the board of directors and supervisory board, unless done so
          by the general meeting; decide on distribution of remuneration and
          royalties among individual members of the supervisory board and the
          board of directors, unless done so by the general meeting,

     h)   elect and recall members of the board of directors pursuant to Article
          27 hereof,

     i)   approve agreements on incumbency of directors pursuant to Article
          194(1) of the Commercial Code,

     j)   approve rules for the providing of non-entitlement benefits to company
          directors pursuant to Article 194(1) of the Commercial Code.

6.   The supervisory board grants the board of directors prior consent for the
     implementation of the following decisions:

     a)   regarding the acquisition, disposal, pledge or lease of the company's
          property, the book value of which property in each case exceeds CZK
          500,000,000 (in words: five hundred million Czech crowns),

     b)   regarding the company's investment projects, the value of which
          exceeds CZK 500,000,000 (in words: five hundred million Czech crowns),

     c)   regarding the acquisition, disposal, or pledge of the company's stake
          in another legal entity, if the company's stake in such entity
          exceeds, or would as a result of such act exceed, 33% of the
          registered capital of such a legal entity, and the acquisition,
          disposal, or pledge of a stake in another legal entity, if the value
          of such a stake in each case exceeds CZK 500,000,000 (in words: five
          hundred million Czech crowns), including legal entities based outside
          the Czech Republic,

     d)   regarding the issuance of any guarantees by the company for any
          obligations of third parties exceeding in each case CZK 200,000,000
          (in words: two hundred million Czech crowns),

     e)   regarding the transfer and pledge of the company's own shares,

     f)   regarding the persons to be members of the supervisory boards of
          companies in which the company has a stake in the registered capital
          exceeding CZK 500,000,000 (in words: five hundred million Czech
          crowns). The supervisory board may also reserve the right to be asked
          for such prior consent in the case of companies in which the company's
          stake in the registered capital does not exceed CZK 500,000,000 (in
          words: five hundred million Czech crowns),

     g)   regarding choice of auditor for the ordinary, extraordinary and
          consolidated financial statemetns and regarding the drafts of
          agreements with such auditor,

     h)   regarding disposal of real estate, if in the given case the market
          value or appraisal value exceeds CZK 100,000,000 (in words: one
          hundred million Czech crowns),

     i)   regarding the acceptance of long-term and medium-term loans or other
          borrowings and other long-term financial operations, with the
          exception of hedging operations, exceeding CZK 500,000,000 (in words:
          five hundred million Czech crowns),

     j)   regarding the issuance of bonds with the exception of those the
          issuance of which requires the consent of the general meeting pursuant
          to Article 160 of the Commercial Code,

     k)   regarding other cases pursuant to law.

7.   The supervisory board shall discuss and provide the board of directors with
     its opoinions with respect to:

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<PAGE>

     a)   approval of and amendments to the Organizational Rules of CEZ, a.s.,

     b)   approval of rules for the creation and use of a company social fund
          and other company funds, in accordance with the law and herewith,

     c)   appointment and compensation of the chief executive officer and
          directors that are employees of the company,

     d)   proposals of annual investment and operating budgets,

     e)   proposals of significant changes in the organizational structure of
          the company,

     f)   proposals of the company's business plans within the business plan
          approved by the company's general meeting,

     g)   proposals for the signing of agreements for the acquisition, disposal,
          zastaveni or lease of the company's property, if the book value of
          such an operation exceeds CZK 200,000,000 (in words: two hundred
          million Czech crowns). The supervisory board may also issue a decision
          by which it shall reserve the right to discuss and issue an opinion
          with respect to proposals for the signing of an agreement for the
          acquisition, disposal and pledge or lease of the company's property in
          cases when the book value of such an operation does not exceed CZK
          200,000,000 (in words: two hundred million Czech crowns),

     h)   promoting the drawing up of business plans and financial plans of
          controlled entities with registered capital exceeding CZK 500,000,000
          (in words: five hundred million Czech crowns) (in accordance with the
          law and the foundation documents of the controlled entities),

     i)   all proposals submitted by the board of directors to the general
          meeting for its decision or information. In the case of proposals that
          the board of directors must submit to the general meeting under law,
          it shall suffice for the board of directors to inform the supervisory
          board

8.   The suprvisorsy board shall have the right to be informed by the board of
     directors with regard to issues that shall include:

     a)   approval of the Working Regulations of CEZ, a. s., and the Signing
          Rules of CEZ, a. s.,

     b)   approval of the Election Rules of CEZ, a. s., for the election of
          members of the supervisory board elected by the employees,

     c)   drawing of funds from the reserve fund,

     d)   increases in the registered capital pursuant to Art. 35,

     e)   long-term purchase agreements with electricity distributors, if the
          agreed duration of such agreements is for at least one year,

     f)   principles for collective bargaining and the company's wage policy,

     g)   price proposals submitted to the regulation authority,

     h)   podkladech for materials submitted to the Cabinet of the Czech
          Republic,

     i)   the intention to establish a company or an association of legal
          entities or to acquire a stake in another legal entity, as well as the
          intention to dissolve a company or association of legal entities or to
          sell the company's stake in another legal entity, if the value of the
          company's existing or anticipated stake in each case exceeds CZK
          500,000,000 (in words: five hundred million Czech crowns) or 33% of
          the share of the registered capital (in the case of companies),

     j)   investment projects and the realization of the same,

     k)   the development of receivables and debts past maturity,

     l)   the monthly developments in the company's economic situation,

     m)   the course and results of the meetings of the company's board of
          directors.

                                       19
<PAGE>

9.   The supervisory board shall review the board of directors' report on
     relations among related parties, and shall inform the general meeting
     regarding such review and of its opinion.

10.  The chairman or vice-chairman with another member of the supervisory board
     shall act on behalf of the supervisory board.


                                   Article 25
         Number of Supervisory Board's Members and Their Terms of Office

1.   The supervisory board shall consist of twelve members. The members of the
     supervisory board may not become the members of the board of directors or
     holders of procuration. Only an individual person of at least 18 years of
     age, fully qualified to take legal acts, impeccable pursuant to the
     provisions of Act No. 455/1991 Coll., on trade licenses (Trade Licensing
     Act), as amended, in respect of which no fact exists that would constitute
     an obstruction to its trade operation or incumbency pursuant to the
     provisions of Article 31a of the Commercial Code, may become a member of
     the supervisory board.

2.   Two-thirds of the members of the supervisory board shall be elected and
     removed by the general meeting, one-third of the members of the supervisory
     board shall be elected and removed by the company's employees. Each member
     of the supervisory board may be elected repeatedly.

3.   Persons elected as members of the supervisory board by the company's
     employees must be employed by the company or represent the employees or be
     its member pursuant to the provisions of special legal rules and
     regulations.

4.   The supervisory board shall elect its chairman and two vice-chairmen from
     among its members.

5.   The term of office of each members of the supervisory board shall be four
     years.

6.   Should a member of the supervisory board decease, resign, be recalled, or
     its term of office be otherwise terminated, the general meeting shall elect
     a new member of the supervisory board within three months, unless the
     supervisory board exercises its right set forth under Section 10 below.

7.   A member of the supervisory board elected by the general meeting may resign
     from his office at any time by virtue of a written statement delivered to
     the supervisory board or the general meeting. Each such resignation shall
     be discussed by the supervisory board. The office of such member of the
     supervisory board shall be terminated as of the date on which the
     supervisory board discussed or was to discuss such notice of resignation.
     The supervisory board shall be obliged to discuss such resignation at its
     subsequent meeting held after the delivery of such notice. Should a member
     of the supervisory board submit his resignation from the office at a
     meeting of the supervisory board, his incumbency shall be terminated upon
     the expiration of two months after such notice, unless the supervisory
     board approves another date for termination of the office of such member
     upon such member's request.

8.   A member of the supervisory board elected by the employees may also resign
     from his office by virtue of a written notice delivered to the supervisory
     board. The supervisory board shall be obliged to forthwith notify the board
     of directors of such resignation of its member elected by employees. The
     office of such resigning member of the supervisory board shall be
     terminated as of the date on which the supervisory board discussed such
     notice of resignation. The board of directors shall be obliged to organize
     an election of a new member elected by employees within one month following
     the delivery of the resignation notice of the resigning member to the
     supervisory board.

9.   The office of a member of the supervisory board shall be terminated upon
     the election of a new member of the supervisory board, but no later than
     after three months following the termination of such member's term of
     office, save for pursuant to the provisions of Sections 6, 7, and 8 of this
     article.

10.  Unless the number of members of the supervisory board elected by the
     general meeting drops under 50%, the supervisory board may appoint
     substitute members to take office until the subsequent general meeting.

                                       20
<PAGE>


                                   Article 26
                   Obligations of Supervisory Board's Members

1.   All members of the supervisory board shall be obliged to exercise their
     powers and satisfy their obligations with the due care of a proper manager
     and shall keep confidential all confidential information and facts the
     disclosure of which to third parties might result in any loss to the
     company. The obligation of confidentiality shall survive the term of each
     member's office.

2.   Members of the supervisory board causing a breach of legal obligations
     while exercising the powers of the supervisory board shall be jointly and
     severally liable for the resulting damage.

3.   All members of the supervisory board shall be obliged to observe the
     no-competition provision set forth by law.

4.   All members of the supervisory board shall attend company's general
     meetings and shall be obliged to inform the general meeting of the results
     of the supervisory board's supervisory activities.


                                   Article 27
                Supervisory Board's Meetings and Decision-Making

1.   The supervisory board shall decide by an absolute majority of the votes of
     all its members, unless provided otherwise by these Articles of
     Association. The supervisory board shall constitute a quorum when more than
     50% of its members are present. Each member of the supervisory board shall
     have one vote.

2.   The procedure of the supervisory board shall be governed by the supervisory
     board's rules of procedure adopted by the supervisory board. The
     supervisory board's rules of procedure shall be adopted or amended by a
     majority of votes of all its members. In the case of decisions regarding
     the election as directors of persons in respect of which there exists a
     fact that constitutes an obstruction to its operation of a trade or
     incumbency pursuant to Article 31a(1) of the Commercial Code, or regarding
     the confirmation of the election of such persons, the supervisory board's
     decisions shall require at least a two-thirds majority of the votes of all
     supervisory board members.

3.   The meetings of the supervisory board shall be convened by the supervisory
     board's chairman by virtue of a notice specifying the place, date, and time
     of such meeting as well as its agenda. Time limits for delivery of such
     notices and other details shall be set forth by the supervisory board's
     rules of procedure.

4.   The chairman of the supervisory board shall be obliged to convene a meeting
     of the supervisory board in the event a member of the supervisory board or
     the board of directors or shareholders specified in Article 9 (7) so
     require. Such request shall be made in writing and shall specify the urgent
     reason for the convening of such meeting of the supervisory board. The time
     limit for convening of such extraordinary meeting, measures against
     inactivity, and other details shall be regulated by the supervisory board's
     rules of procedure.

5.   The meetings of the supervisory board shall be presided by the supervisory
     board's chairman. In the event of the chairman's absence, all such meetings
     shall be presided by a vice-chairman of the supervisory board. The sequence
     shall be determined by the supervisory board's rules of procedure.

6.   Minutes shall be taken on the course of each supervisory board's meeting
     and on all adopted resolutions; such minutes shall be signed by the
     chairman of the supervisory board and by the minutes clerk. The minutes
     from the supervisory board's meeting shall also specify the opinions of a
     minority of members if so requested by the same, and the dissenting opinion
     of the members of the supervisory board elected by employees shall be
     recorded under all circumstances.

7.   In election and voting on recall of a chairman or vice-chairman of the
     supervisory board, the person concerned shall not vote.
8.   Absent members of the supervisory board may vote in writing or through
     communication technology outside the meetings of the supervisory board,
     provided that all the members of the supervisory board consent to such
     manner of voting.

                                       21
<PAGE>

9.   The supervisory board may at its own discretion invite to its meetings also
     members of other company's bodies, company's employees, or other persons.
     As far as employees or the members of other company's bodies are concerned,
     those shall be obliged to attend.

10.  The supervisory board shall hold its meetings at least once a month.


                                     Art. 28
                          Supervisory Board Committees

1.   The supervisory board may, within the scope of its powers, set up certain
     committees (the "supervisory board committees"), in particular an audit
     committee. Only members of the supervisory board may be members of a
     committee.

2.   Members of the supervisory board committees shall be elected and removed
     from office by the supervisory board. The term of office of a member of a
     supervisory board committee shall be one year, unless the respective member
     of a supervisory board committee ceases to be a member of the supervisory
     board prior to such time; in such case, the term of office of the
     respective member of the supervisory board committee shall end as of such
     earlier date.

3.   Each of the supervisory board committees shall elect a chairman, as well as
     a vice-chairman to stand in for the chairman during the chairman's absence.

4.   Supervisory board committees shall convene as needed, but at least 1x per
     quarter.

5.   Meetings of supervisory board committees shall be convened by the chairman
     of the committee, or its vice-chairman during the chairman's absence, or
     another authorized member of the supervisory board committee.

6.   For each of the supervisory board committees, a quorum is constituted if
     all of the members of such committee have been invited in due manner to the
     meeting of such committee, and provided that a majority of all of the
     members of such committee is present at the meeting.

7.   The passing of a decision by each of the supervisory board committees
     requires approval by a majority of all of its members.

8.   Minutes shall be taken with respect to the meetings of supervisory board
     committees, such minutes being signed by the chairman, vice-chairman or
     other authorized member of the committee. The minutes shall include the
     opinions of the minority of members, if such members request that such
     opinion be included. The minutes must be kept on file for the entire
     duration of the company's existence.

9.   Details regarding the rules of the meetings of the supervisory board
     committees shall be set out in rules of procedure of each of the
     supervisory board committees, such rules of procedure to be approved by the
     supervisory board.


                                      VII.

                   Joint Provisions on Board of Directors' and
                         Supervisory Board's Activities

                                   Article 29
                 Conditions for Incumbency in Company's Bodies,
            Remuneration and Royalties for Company's Bodies' Members

1.   Costs related to the organization of meetings and to other activities of
     the board of directors and the supervisory board shall be borne by the
     company.

2.   Members of company's bodies shall be reimbursed by the company for costs
     purposefully expended thereby in connection with their incumbency and with
     their attendance at such bodies' meetings.

3.   Members of company's bodies shall be entitled to remuneration for their
     incumbency based on the approval of the same by the general meeting,
     provided that the amount and method of payment of such

                                       22
<PAGE>

     remuneration shall be set forth in agreements entered into by and between
     the company and the members of its bodies.

4.   Should a member of the board of directors also provide for the supreme
     executive management of the company, it shall conduct such activities as
     company's employee and shall be paid the salary therefor pursuant to the
     provisions of the managerial salary rules of the company.

5.   In addition to the remuneration, members of the board of directors and of
     the supervisory board shall be entitled to royalties, the amount of which
     shall be decided by the general meeting in connection with its decision on
     profit distribution.

6.   The company may, in accordance with the law, provide directors and members
     of the supervisory board with other benefits besides remuneration and
     royalties, in accordance with the rules for the providing of
     non-entitlement benefits to members of the supervisory board approved by
     the general meeting pursuant to Art. 13(1)(d) hereof, and pursuant to the
     rules for the providing of non-entitlement benefits to directors approved
     by the supervisory board pursuant to Art. 24(5)(j) hereof.


                                      VIII.
               ACTING AND SIGNING FOR AND ON BEHALF OF THE COMPANY

                                   Article 30
               Acting and Signing for and on Behalf of the Company

1.   The board of directors shall act and sign on behalf of the company, either
     through all its directors jointly or through two directors jointly. They
     shall sign by appending their signatures to the printed or typed business
     name of the company.

2.   The holder or holders of procuration shall also act and sign on behalf of
     the company to the extent of the procuration granted. They shall sign by
     appending their signature(s) with the addendum designating their
     procuration to the printed or typed business name of the company.

3.   Persons authorized by virtue of a written power of attorney granted by the
     board of directors shall also act and sign on behalf of the company. They
     shall sign by appending their signatures to the printed or typed business
     firm.

4.   The company's employees shall also act and sign on behalf of the company to
     the extent arising from organizational and signing rules and regulations of
     the company. They shall sign by appending their signatures to the printed
     or typed business name of the ccompany, and also by printing legibly their
     names, last names and office.


                                       IX.
                         COMPANY'S FINANCIAL MANAGEMENT

                                   Article 31
                 Method of Profit Distribution and Loss Coverage

1.   The net profits shall be distributed in particular for the following
     purposes:

     a)   5 % to the reserve fund up to 20 % of the company's registered
          capital,

     b)   to the company's funds,

     c)   for dividend payment,

     d)   for royalty payments to members of the board of directors and of the
          supervisory board,

     e)   the remaining part of profits shall remain undistributed.

The above-specified order of priority is not binding for the company, except as
far as the contribution to the reserve fund is concerned. A part of the net
profits may based on the approval by the general meeting also be applied for the
increase in the registered capital. A part of the net profits may based on the
approval of the

                                       23
<PAGE>

     general meeting also be applied for payment of shares pertaining to bonds
     pursuant to the provisions of the issuer's prospectus.

2.   The company's own resources shall be applied to cover losses in the
     following sequence of priority:

     a)   undistributed profits from previous years,

     b)   other funds,

     c)   reserve fund,

     d)   registered capital.

3.   The company shall not be authorized to distribute its profits or other
     resources among its shareholders in the event its equity determined through
     an ordinary or extraordinary financial statement is lower than the
     company's registered capital or in the event distribution of profits would
     result in the equity being lower than the company's registered capital
     increased by the subscribed nominal value of shares, provided that
     company's shares are subscribed for such increase in the registered
     capital, and in the event the increased registered capital has not yet been
     entered in the Commercial Register as of the date of the ordinary or
     extraordinary financial statement. The provisions of Section 65a of the
     Commercial Code shall remain unaffected by the provisions of this section.
     The company shall not be authorized to distribute that part of the reserve
     fund or such reserve funds which it may not utilize for payments to
     shareholders pursuant to the provisions of the laws and these Articles of
     Association.

4.   The amount determined for payment as a share in the company's profits shall
     not exceed the economic result of the relevant accounting period reported
     in the financial statement and decreased by the obligatory contribution to
     the reserve fund and by the deferred unpaid loss and increased by the
     undistributed profits from previous years and by created profit funds that
     the company may use at its own discretion.

5.   The board of directors shall be obliged to announce a decision of the
     general meeting on the date of dividend maturity, place, and method of
     payment thereof, in the manner set forth by law and these Articles of
     Association for convening of general meetings.


                                   Article 32
                     Quarterly Financial Management Results

1.   Besides the annual financial statement, the board of directors shall be
     obliged to provide for drawing up of quarterly economic results providing
     the basic information on the current proprietary and financial situation of
     the company, efficiency of its financial management in the previous
     calendar quarter, and on the amounts of profits generated or loss incurred
     during such period of time.


                                   Article 33
                             Reserve Fund and Others


1.       The company shall create a reserve fund.

2.   At the time of the company's foundation, a reserve fund of CZK
     4,918,125,000 (to wit: four billion nine hundred and eighteen million one
     hundred and twenty-five thousand Czech crowns) was created. Such reserve
     fund shall be supplemented with the annual contribution from profits
     totaling at least 5 % of net profits each year, until its amount achieves
     20 % of the registered capital.

3.   The company shall also be obliged to create a reserve fund in cases set
     forth in Articles 161d and 161f of the Commercial Code. The procedure shall
     be applied that is set forth under Article 161d (2) to (4) of the
     Commercial Code.

4.   The reserve fund may also be created as follows:

                                       24
<PAGE>

     a)   by the general meeting's decision on increasing the registered capital
          together with the resolution on the increase in the registered capital
          through subscription of treasury stock as follows:

          -    by an extra charge added to the issue price of new shares, or
          -    by application of the difference (or part thereof) by which the
               value of the in-kind contribution exceeds the nominal value of
               shares to be issued to subscribers as consideration,

     b)   by the general meeting's decision on further voluntary creation of a
          reserve fund from the profits, provided that the reserve fund may be
          so created up to the double of the company's registered capital,

     c)   by the board of directors' decision on the transfer of funds from
          other company's funds, unless they are purposefully bound, provided
          that the reserve fund may be so created up to the double of the
          company's registered capital,

     d)   by the general meeting's decision on the decrease of the registered
          capital for the purpose of transfer to the reserve fund for coverage
          of future losses under the terms and conditions set forth in Section
          216a of the Commercial Code, provided that the amount transferred to
          the reserve fund shall not exceed 10 % of the company's registered
          capital. Such reserve fund created may only be applied pursuant to the
          provisions of Section 216a of the Commercial Code.

5.   The board of directors shall decide on the application of the reserve fund,
     unless the general meeting has such decisions reserved for itself.

6.   The company shall create a social fund. The principles for the use thereof
     shall be stipulated by the board of directors. The general meeting shall
     decide on the establishment of other funds.

7.   The company may also establish other funds. Should such funds be created or
     supplemented using the profits, the contributions to such funds shall be
     approved by the general meeting. The board of directors shall decide on the
     manner of use of such funds according to the approved rules and
     regulations. Rules for creation and use of such funds shall be approved by
     the board of directors based on the discussion of the same at a meeting of
     the supervisory board.


                                       X.
                          CHANGE IN REGISTERED CAPITAL

                                   Article 34
                         Increase in Registered Capital

1.   The general meeting shall decide on any increase in or decrease of the
     company's registered capital, or the board of directors shall decide the
     same pursuant to the provisions of the laws and these Articles of
     Association.

2.   The company's registered capital may be increased in all manners
     permissible pursuant to the provisions of Articles 202 through to 210, and
     Article 216c of the Commercial Code.

3.   In its increase in the registered capital, the company shall observe the
     provisions contained in Articles 202 to 210 of the Commercial Code, while
     also observing the following rules:

     a)   for the general meeting's decisions on the increase in the registered
          capital, at least two-third majority of votes of all attending
          shareholders shall be required, unless the legal rules and regulations
          require more for certain decisions,

     b)   in the notice of the general meeting, the requisites specified in
          Article 14 (5) shall be included as well as requisites specified in
          Article 202 (2) to (4) of the Commercial Code,

     c)   the issue price of subscribed shares may be paid up through a monetary
          contribution; shares may only be subscribed for through in-kind
          contributions if this is in the best interest of the company,

     d)   subscription of shares may not be commenced before the entry of the
          relevant resolution of the general meeting into the Commercial
          Register, unless an application for the entry of such resolution into
          the Commercial Register has been filed and the subscription of shares
          is subject

                                       25
<PAGE>

          to a condition subsequent, i.e., the legal effects of the decision on
          the rejection of such application for entry of the relevant resolution
          into the Commercial Register,

     e)   shareholders' priority right to subscription of new shares may only be
          excluded or restricted by virtue of a resolution of the general
          meeting due to company's significant interests,

     f)   within 30 days following the general meeting's resolution on the
          increase in the registered capital, the board of directors shall file
          an application for the entry of such resolution into the Commercial
          Register,

     g)   after the satisfaction of all conditions set forth by law, these
          Articles of Association, or a decision of the general meeting, the
          board of directors shall propose the entry of the new amount of the
          registered capital into the Commercial Register; the effects of such
          increase in the registered capital shall occur as of the date of such
          entry.

4.   New shares issued based on the decision of a general meeting's or board of
     directors' decision on subscription of shares shall also have a share in
     the economic results of previous years.

5.   If in the increase of the registered capital through the subscription of
     new shares, the transferability of which is not limited, the subscriber has
     paid up the issue price of shares, the company may issue share warrants
     prior to the entry of increase in the registered capital in the Commercial
     Register, if so decided by the general meeting.


                                   Article 35
            Increase in Registered Capital by the Board of Directors

1.   By virtue of a general meeting's resolution, the board of directors may be
     authorized under the terms and conditions set forth by law and these
     Articles of Association to decide on an increase in the registered capital
     through subscription of shares or using company's own resources, save for
     undistributed profits, but always by the maximum of one-third of the amount
     of the registered capital existing at the time when the general meeting
     charged the board of directors with such increase in the registered
     capital.

2.   The authorization to increase the registered capital may be granted for a
     maximum period of five years from the date of the general meeting at which
     the decision was made to grant the authorization for the increase in the
     registered capital.

3.   The authorization must state the nominal value, form, type of shares that
     are to be issued for the increase in registered capital. The board of
     directors may, within the scope of the authorization, increase the
     registered capital one or more times, provided the aggregate amount of the
     increase in the registered capital does not exceed the limit set under
     section 1 of this Article.


                                   Article 36
             Method of Share Issue Price Repayment and Consequences
           of Breach of Obligation to Timely Pay Up Subscribed Shares

1.   The issue price of the shares may be paid up - based on the general
     meeting's decision - both through monetary and in-kind contributions. If
     such in-kind contribution is:

     a)   a movable item, the subscriber shall be obliged to submit the object
          of the contribution to the company and to provide for the acquisition
          of the company's title to the paid up object of contribution prior to
          the filing of an application for entry of increase in the registered
          capital into the Commercial Register,

     b)   an immovable, prior to the filing of an application for the entry of
          the increase in the registered capital into the Commercial Register,
          the subscriber shall be obliged to submit to the company the object of
          its contribution and a written statement with officially certified
          signature and to provide for the company's acquisition of the title to
          such paid up object of contribution, provided that any potential
          application for entry into the real estate register shall be filed

                                       26
<PAGE>

          within 15 days following the entry of the increase in the registered
          capital into the Commercial Register.

2.   For other in-kind contributions, each contribution shall be paid up through
     the execution of a written agreement on contribution. Should know-how
     constitute such in-kind contribution, documentation shall also be required
     for such contribution to be effective, wherein such know-how is described.
     Should a company or a part thereof constitute an in-kind contribution,
     submission of such company or a part thereof shall also be required for the
     provision thereof. The company and the contribution shall draw up a record
     on the submission of documentation describing the know-how as well as a
     record on the submission of the company or a part thereof.

3.   Unless the title to the object of an in-kind contribution is transferred to
     the company although the in-kind contribution is deemed paid up, the person
     that had undertaken to provide such contribution shall be obliged to pay
     the value of the in-kind contribution in monies and the company shall be
     obliged to return the in-kind contribution it had accepted to such person,
     unless it is obliged to issue the same to the obligee. Should a shareholder
     transfer shares or interim certificates to another, the transferee of such
     shares or interim certificates shall be liable for the satisfaction of the
     obligation to pay up the value of the in-kind contribution in monies,
     unless acquisition within a public market is concerned.

4.   In subscription of shares for the purpose of increasing the registered
     capital, the subscriber shall be obliged to pay up the entire share premium
     and that part of the nominal value (but at least 30% thereof) that has been
     stipulated by the authority in charge in its decision on the increase in
     the registered capital. The remaining amount shall be paid up on dates
     specified in such decision, but under all circumstances within one year.
     In-kind contributions shall be paid up in full prior to the filing of the
     application for the entry of the increase in the registered capital into
     the Commercial Register.

5.   Should the subscriber fail to pay the issue price of subscribed shares or
     the due and payable part of such price, it shall be called upon by the
     board of directors to pay the same within 30 days. After the expiration in
     vain of such deadline, however, the board of directors shall exclude such
     subscriber from the company and shall apply the procedure set forth in
     Section 177 (4) of the Commercial Code, or the general meeting shall
     decrease the registered capital by deciding on the non-issuance of shares.

6.   In the event of a breach of the obligation to pay up the issue price of
     subscribed shares, the subscriber shall pay default interest at 24 % a
     year. However, the right to file an action for the payment of the issue
     price shall remain unaffected thereby.


                                   Article 37
                         Decrease of Registered Capital

1.   Decrease of the registered capital shall be governed pursuant to the
     provisions of Sections 211 through to 216c of the Commercial Code, while
     decrease of the registered capital through withdrawal of circulating shares
     based on the shareholders' proposal shall be permissible (pursuant to the
     provisions of Section 213c of the Commercial Code). Decrease of the
     registered capital through decrease of the nominal value of shares and
     interim certificates and through the decision not to issue shares shall
     also be permissible.

2.   In decrease of the registered capital through withdrawal of circulating
     shares based on a proposal, the following procedure shall be observed:

     a)   should registered capital be decreased through withdrawal of
          circulating shares based on a public draft agreement, a decision of
          the general meeting may determine that the registered capital shall be
          decreased to the extent of nominal values of circulating shares to be
          so withdrawn, or that it shall be decreased by a specific fixed
          amount,

     b)   the board of directors shall publish in the manner set forth for
          convening of the general meeting the draft agreement pursuant to the
          provisions of Section 213c of the Commercial Code for the purpose of
          withdrawal of circulating shares,

     c)   should such draft agreement be accepted, the board of directors shall
          submit to the Securities Center an order to suspend the right to
          dispose of the shares to which such draft agreement refers and in
          respect of which it has been accepted,

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     d)   the board of directors shall based on the authorization by the general
          meeting submit an application for the entry of the new amount of the
          registered capital into the Commercial Register to the extent to which
          the public draft agreement has been accepted by the shareholders,

     e)   upon the entry of the amount of the registered capital into the
          Commercial Register, the board of directors shall without undue delay
          submit an order to the Securities Center to cancel the shares that the
          company had purchased pursuant to the provisions of the public draft
          agreement.

3.   In the event of a decrease of the registered capital, the following rules
     shall also be observed:

     a)   the general meeting shall decide on the decrease of the registered
          capital, provided that at least two-third majority of the votes of
          shareholders attending the relevant general meeting are required,

     b)   in the notice of the general meeting and in the invitation thereto,
          the requisites specified in Section 14 (5) shall be included as well
          as requisites specified in Section 211 (1) of the Commercial Code

     c)   within 30 days following the resolution of the general meeting, the
          board of directors shall file an application for the entry thereof
          into the Commercial Register,

     d)   the general meeting's resolution on the decrease of the registered
          capital shall be performed by the very same board of directors or by
          the board of directors through another person,

     e)   within 30 days following the legal effects of the general meeting's
          decision on the decrease of the registered capital towards third
          parties, the board of directors shall be obliged to inform in writing
          the creditors having receivables from the company arising prior to the
          effective date of such decision with respect to third parties of the
          amount of decrease of the registered capital and shall also request
          that such creditors apply their receivables; after its entry into the
          Commercial Register, the general meeting's decision on the decrease of
          the registered capital shall be published by the board of directors at
          least twice successively in at least thirty-day intervals and with a
          request for the creditors to apply their receivables,

     f)   the board of directors shall file an application for the entry of the
          decrease of the registered capital within the period of specified in
          Section 216 of the Commercial Code,

     g)   the registered capital may not be decreased under its lawful amount
          set forth in Section 162 (3) of the Commercial Code,

     h)   should the company be obliged to decrease the registered capital, it
          shall use the treasury stock or interim certificate for such purpose,
          provided that it owns any; also in other cases of decrease of the
          registered capital, the company shall use for the decrease of the
          registered capital in particular its treasury stock or interim
          certificate, while any other method may only be applied to decrease
          the registered capital in the event they are not sufficient for the
          decrease of the registered capital to the extent determined by the
          general meeting or should the purpose of the decrease of the
          registered capital not be complied with,

     i)   prior to the entry of the decrease of the registered capital into the
          Commercial Register and prior to the satisfaction or securing of the
          creditors' receivables pursuant to the provisions of Section 215 (2),
          or, as the case may be, Section 215 (4) of the Commercial Code,
          shareholders may not be provided any payments due to such decrease of
          the registered capital or forgiven or reduced any unpaid amounts of
          the nominal values of their shares as a result of such decrease of
          registered capital.


                                   Article 38
          Parallel Reduction of and Increase in the Registered Capital

1.   Subject to terms and conditions stipulated by law, the general meeting may
     concurrently decide on the reduction of and increase in the registered
     capital, if the purpose of the reduction is to conform the par value of the
     existing registered shares to their price on public market in connection
     with increase in the registered capital through the subscription of new
     shares under public offer.

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2.   In a resolution on the parallel reduction of and increase in the registered
     capital, the general meeting may determine the extent of the registered
     capital reduction by determining the method of calculation of the amount of
     reduction according to the issue price of new shares to be set later on.
     Such a determination method must clearly reveal by what amount the
     registered capital is to be reduced. In a resolution on the concurrent
     reduction of and increase in the registered capital, the general meeting
     shall commission the board of directors to promptly publish the amount of
     the registered capital reduction and the new par value of the company's
     shares corresponding thereto, with such publication to be performed in a
     manner stipulated by law and by these Articles of Association with respect
     to the convening of a general meeting.



                                       XI.
                                FINAL PROVISIONS

                                   Article 39
                       Company's Winding Up and Extinction

1.   The company shall be wound up as follows:

     a)   by general meeting's decision on winding up with liquidation,

     b)   by court decision,

     c)   by the general meeting's decision on merger, on transfer of assets to
          shareholders or on company's split, by cancellation of bankruptcy
          proceedings after compliance with the schedule resolution, or by
          cancellation of bankruptcy proceedings due to the bankrupt's assets
          being insufficient for coverage of costs of bankruptcy proceedings, or
          by rejection of petition for declaration of bankruptcy due to
          insufficiency of assets.

2.   The company shall be wound up as of the date of its deletion from the
     Commercial Register.


                                   Article 40
                      Publishing, Notices, and Information

1.   All facts that the company shall be obliged to publish shall be so
     published in Obchodni vestnik.

2.   All facts that the company shall be obliged to publish shall be published
     in Hospodarske noviny and posted in the company's registered office at a
     place designated for such purpose, unless provided otherwise by laws or
     these Articles of Association.

3.   The annual report together with a report on related persons shall be
     published by the company pursuant to the provisions of special legal rules
     and regulations. Should a company issue registered securities, it shall
     also draw up and publish a semi-annual report and shall comply with all
     obligations of the issuer of registered securities set forth by special
     legal rules and regulations. Should the company intend to issue or offer
     securities to the public, it shall be obliged to draw up and publish a
     prospectus pursuant to the provisions of special legal rules and
     regulations.


                                   Article 41
       Procedure for Amending and Modifying These Articles of Association

1.   The general meeting shall decide on amendments to and modifications of
     these Articles of Association as specified in Article 17.

2.   Should amendments to these Articles of Association be included in the
     agenda of a general meeting, a notice of such general meeting shall at
     least characterize the basis of the proposed amendments and the draft
     amended Articles of Association shall be available to the shareholders for
     review in the company's registered office 30 days prior to the date of the
     relevant general meeting. Each shareholder may require sending of a copy of
     the draft amended Articles of Association at its own expense and risk. The

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     shareholders shall be notified of such right in the notice of the general
     meeting or in the invitation thereto.

3.   Should a shareholder intend to submit counterproposals at a general meeting
     to the proposed amendments to these Articles of Association specified in
     the notice of the general meeting, it shall be obliged to deliver the
     written wording of such counterproposal to the company at least five
     business days prior to the date of the relevant general meeting. The board
     of directors shall be obliged to publish such counterproposal together with
     its opinion, if possible, at least three days prior to the notified date of
     the general meeting concerned.

4.   After the approval of such amendments to these Articles of Association by
     the general meeting, the board of directors shall provide for drawing up of
     a complete new wording of the Articles of Association and shall submit the
     same to the relevant registry court. All amendments to the Articles of
     Association consisting of the increase in or decrease of the registered
     capital, split of shares, or consolidation of shares into one share,
     changes in the form of shares or restrictions on transferability of
     registered shares or changes therein shall enter into effect as of the date
     of entry of such facts into the Commercial Register. Other amendments and
     changes shall enter into effect at the time when decided on by the general
     meeting, unless it arises from the decision of the general meeting on
     amendments to the Articles of Association or from the law that such changes
     shall only enter into effect at a later date.

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