**Exhibit 1.01 Sadia by laws**

 

**SADIA S.A.**

**BYLAWS**

 

**CONSOLIDATEDAT THE EXTRAORDINARY GENERAL MEETING HELD ON 04.29.2005**

 

**CHAPTER I**

**THECOMPANY, ITS HEADQUARTERS AND PURPOSE**

 

**ARTICLE 1**

 

**SADIA S. A.**isa company governed by these Bylaws, by the Joint Stock Company Act and by allother Laws and Regulations applicable to the Company and its business purpose.

 

**ARTICLE 2**

 

The Company’sheadquarters is located at Rua Senador Attílio Fontana no 86, Centro, in theCounty of Concórdia, State of Santa Catarina, with jurisdiction in the samecounty.

 

**ARTICLE 3**

 

The duration of thisCompany is indefinite.

 

**ARTICLE 4**

 

The purpose of thisCompany is to engage in:

 

a)              Agricultural,industrial and commercial activities related to food products, generally;

 

b)             The operation of slaughterhouses,tanneries, meat packing plants, factories producing preserves, whether or notcanned, meats, fats and dairy products, processing of vegetable oils, as wellas the operation of large-scale cold storage depots including meat warehousing,preservation, storage and classification;

 

c)              Meats, generally,byproducts and selected cuts;

 

d)             Processing and saleof wheat, other grains and their by-products;

 

e)              Livestock framing(cattle, swine, sheep, goat and poultry);

 

f)                Lumber mills;

 

g)             Road transportationof own and third party goods and rental of cold stores, silos and warehouses;

 

h)             Allactivities related agriculture and agribusiness and the sale of grains andother primary products and/or processed products on the domestic and foreignmarket;

 

i)                 Processingand sale of substances and products, generally, for human food and animal feed;

 

j)                 Processing andsale of chemical, sanitary and veterinary products for use in agriculture,poultry, cattle and swine raising, i.e. livestock, generally);

 

k)              Forestry andreforestation activities;

 

l)                 Any otheragricultural, industrial and commercial activities correlated to the purposesof the Company;

 

m)           Planning anddevelopment of agricultural and engineering projects, under the responsibilityof professionals duly qualified by the appropriate bodies.

 

**Soleclause** -                                                   Leasingcold storage chambers, silos and depots, as described in letter “g” of thisArticle, does not fall under general warehouse activities as set out inExecutive Order No. 1102, of 21/11/1903.

 

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**CHAPTERII**

**CAPITALSTOCK**

 

**SECTION I**

**SUBSCRIBEDCAPITAL**

 

**ARTICLE 5**

 

Capital Stock is onebillion and five hundred million reais (R$ 1,500,000,000.00, fully paid-in,divided into six hundred and eighty-three million (683,000,000) no par value,of which two hundred and fifty-sevenmillion (257,000,000) are common shares and four hundred and twenty-six million(426,000.000) are preferred shares with no voting rights.

 

**SECTIONII**

**CAPITALINCREASE**

 

**ARTICLE 6**

 

The Company may increasethe capital stock upon a resolution by the General Meeting, proposed by theBoard of Directors, and after hearing the Audit Committee, using:

 

a)              The reserves, retained or suspended earnings, surplus capital orspecial reserves resulting from monetary correction;

 

b)             Annual restatement ofthe monetary expression of the capital stock, observing the provision inArticle 7 of the Bylaws;

 

c)              Issuance andplacement of shares by subscription.

 

**Paragraph 1**-                   The capital increases described initems “a” and “b” will observe the provision in Article 17, clause 4, ofLaw No. 6404/76.

 

**Paragraph 2**-                   Resolutions relating to capitalstock increase shall state indicate the number and type of shares to be issuedand shall be transcribed in the minutes of the Meeting.

 

**Paragraph 3**-                   Within 30 (thirty) days from capitalincrease, the Board of Executive Officers shall submit the correspondingminutes of the General Meeting to the Commercial Registry for annotation andfiling.

 

**ARTICLE 7**

 

Regardless of havingreached the limit contemplated in item I of Article 297 of Law No. 6404/76, theGeneral Meeting shall make a resolution in the year following that of itscalling about the transfer of the capital reserve to the capital stock referredto in Article 167 of the same Law.

 

**ARTICLE 8**

 

The following conditionsfor subscription and payment shall be observed in the issuance and placement ofcapital shares:

 

I.              In increases bysubscription, the General Meeting shall indicate:

 

a)              Whether the paymentshall be made in cash or in kind, on demand or by installments;

 

b)             The deadline forplacing or subscribing the issuance;

 

c)              The period of timefor subscribing the shares;

 

d)             The price of issuanceof the shares.

 

II.          Wheneverthe issuance of shares permits a term subscription or subscription byinstallments, the Subscription Bulletin shall specify the down amount, thenumber and amount of the installments and the respective payment dates asfollows:

 

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a)              A minimum payment of10% (ten per cent) of the subscribed amount must be paid at the time ofsubscription; this amount may be received by the Company independent of a bankdeposit;

 

b)             If the shareholderfails to make any payment of the subscription installment on the due date, thisshall imply, regardless of any notice:

 

b.1)                            Acceleratedmaturity of all subsequent installments which shall become due by theshareholder;

 

b.2)                            Thatthe shareholder is in default and consequently, subject to interest on arrearsat the rate of one percent (1%) of the amount of the overdue and unpaidinstallments plus restatement based on the nominal variation of the NationalTreasury Bonds (OTNs) or any other official index, at the discretion of theBoard of Directors;

 

b.3)                            TheCompany shall be entitled to file, against the shareholder and joint debtors,an execution action to collect the amounts due or to sell the shares at theStock Exchange, at the Shareholders’ account and risk, as permitted by Law..

 

III.      Whenevercapital is increased by subscription, the COMPANY shall establish a period noshorter than thirty (30) days for the shareholders to exercise their preemptiverights.

 

**ARTICLE 9**

 

Upon a resolution of theBoard of Directors and observing the provisions of Article 30 of Law 6404/76,the COMPANY may negotiate its own shares.

 

**CHAPTERIII**

**SHARES**

 

**SECTION I**

**PROVISIONSAPPLYING TO ALL SHARES**

 

**ARTICLE 10**

 

The following provisionsapply to all Company shares:

 

I. AllCOMPANY shares shall be book-entry shares and remain in deposit accounts withBANCO BRADESCO S.A., on behalf of their holders, no certificate being issued,pursuant to Articles 34 and 35 of Law No. 6404/76, of 12/15/1976.

 

II.Preferred and common shares are entitled to the compulsory minimum dividend oftwenty-eight percent (28%) of the net income for the year, established inaccordance with Article 202, items I to III, Law No. 6404/76, also observingthe provisions of letter “b” of Article 12 of these Bylaws.

 

III. Ordinary and preferredshares shall participate equally in capital increases derived from net incomeand reserves, revaluation of assets and yearly capital restatement.

 

IV. In capital increases,classes of shares may be created or shares may be issued without observing theprevious proportional relation between classes and kinds of shares.

 

V. Provided that the maximumlimits established by the Brazilian Securities Exchange Committee are observed,the maintenance agreement relating to book-entry share services may authorizethe financial institution to charge the shareholder for the cost oftransferring the title to the shares.

 

**SECTIONII**

**COMMONSHARES**

 

**ARTICLE 11**

 

Only COMMON shares areentitled to vote the resolutions of the General Meeting.

 

**SoleParagraph** – Fifty-one percent (51%) of the capital withvoting rights shall be owned by Brazilian citizens.

 

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**SECTIONIII**

**PREFERREDSHARES**

 

**ARTICLE 12**

 

PREFERRED shares are notentitled to vote and shall enjoy the following advantages:

 

a)         priority in theproportional, noncumulative receipt of twenty-eight percent (28%) of the netincome for the year, as minimum dividend, competing in equal terms with commonshares in any dividend allocated above that percentage;

 

b)        rightto dividends at least ten percent (10%) higher than those allocated to commonshares;

 

c)         priorityin capital reimbursement in case of liquidation of the Company.

 

**Sole Paragraph**–**                       **Nonvotingpreferred shares may acquire this right if the Company fails to pay, for atleast three (3) consecutive years, the minimum dividend to which they areentitled and such right shall continue up to the payment of the first nextdividend.

 

**ARTICLE 13**

 

Shareholders agreement onpurchase and sale or preemptive rights on the acquisition of shares or onexercising voting rights shall be valid, before the Company, only after beingfiled in the Company’s headquarters.

 

**CHAPTERIV**

**THEMANAGEMENT**

 

**ARTICLE 14**

 

The Company shall bemanaged by a Board of Directors and a Board of Executive Officers, formed byBrazilian citizens or a majority of Brazilian citizens domiciled in thecountry, whose shall prevail in decision-making.

 

**Paragraph 1**–                Theterm of office of the members of the Board of Directors and of the ExecutiveOfficers shall be for one year and shall be unified, extending up to the entryupon office of the new administrators, reelection being permitted.

 

**Paragraph 2**-                   The members of the Board ofDirectors and the Executive Officers shall enter upon office by signing thecorresponding installation certificate or by subscribing the minutes of themeeting of election in the corresponding books of minutes of meetings at whichtime a Declaration of Principles shall also be signed.

 

**SECTION I**

**BOARD OFDIRECTORS**

 

**ARTICLE 15**

 

The Board of Directorsshall comprise a minimum of seven (7) to a maximum of eleven (11) members, allof them necessarily being shareholders and shall adopt an Internal Regulationto govern its own activities as well as those of the Committees reporting toit, the rights and duties of other Board of Directors members and itsrelationship with the Executive Board of Executive Officers and other corporatebodies as well as any other matters deemed convenient.

 

**Paragraph1** - The General Meeting shall elect the members of the Boardof Directors and, among them, the Chairperson.

 

**Paragraph2** - The Board of Directors shall elect, among its members,one or more Vice Chairpersons who, following the election order, shallsubstitute for the Chairperson in cases of absence, incapacitation or vacancy.

 

**Paragraph 3**- If a vacancyoccurs whereby the number of members of the Board of Directors is reduced belowthe number fixed in these Bylaws, a General Meeting shall be called withinthirty (30) days to fill the vacant positions. The term of office of thenew members of the Board of Directors elected to fill the vacancies shallcoincide with that of the other members.

 

**ARTICLE 16**

 

The Ordinary Meetings ofthe Board of Directors shall be held at least once a month, on the datesscheduled in advance in the annual calendar prepared by the Chairperson of theBoard of Directors, and the extraordinary meetings whenever necessary, upon acall sent to the members at least twenty-four (24) hours in advance, informingthe place, date and time of the meeting, with a brief explanation about the day’sagenda.

 

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**Paragraph 1**-                   Notices shall be given by theChairperson of the Board of Directors or at the request of three (3) of itsmembers and, should the Chairperson fail to comply with it within five (5)days, those members may call the meeting directly, however, to be held at thesame address of the Company’s Executive Management.

 

**Paragraph 2 -****                  **The quorumfor the meetings of the Board of Directors shall be a minimum of six (6) of itsmembers.

 

**Paragraph 3** –**               **Each member ofthe Board of Directors shall be entitled to one (1) vote in its meetings.

 

**Paragraph 4** -**                  **Except forthe Sole Paragraph to Article 17, the decisions of the Board of Directors shallbe adopted, in any case, by the majority voting of the members present and theChairperson is entitled to the casting vote, without prejudice of his/her ownvote.

 

**Paragraph 5** -                   The meetings of the Board ofDirectors shall be entered in the Book of Minutes of Meetings of the Board ofDirectors and the resolutions destined to be effective before third partiesshall be transcribed as determined by the Board of Directors.

 

**ARTICLE 17**

 

It is incumbent upon theBoard of Directors:

 

I -                         Establishand enforce compliance with the general direction of the Company’s business andof other companies under its control, if any.

 

II –                    Establish and enforce compliancewith all regulations for the operation and administration of the Company,particularly those related to:

 

a)                         Hiringand management of personnel, personnel allocation, careers, levels, salariesand wages as well as fringe benefits of the employees of the Company;

 

b)                        Controls,audit, accounting and statistics;

 

c)                         Acquisition,administration and disposal of permanent assets.

 

III –              Elect and remove Vice Chairpersonsof the Board of Directors and Executive Officers and define their duties andindividual fees, in case an aggregate amount is established by the GeneralMeeting.

 

**IV –        Make aresolution, at any time, about the distribution of interim dividends from interimbalance sheet accounts, or Retained Earnings or Profit Reserve.**

** **

**V.**          Approve:

** **

a)                   Theadministrative structure of the Company and respective positions, duties andsalaries;

 

b)                  The StrategicPlan;

 

c)                   The YearlyOperational Plan and the corresponding capital, investment and financialbudgets as well as divestitures;

 

d)                  Interim balancesheets prepared by the Company;

 

e)                   The balancesheet, statements of income and annual report to be submitted to the GeneralMeeting;

 

f)                     Theacquisition of assets under property, plant and equipment whenever, due totheir nature and/or cost, the amount exceeds that contemplated in a specificproject which is an integral part of the Yearly Operational Plan;

 

g)                  Thedisposal of assets from property, plant and equipment when, due to its natureand/or amount, they have not been contemplated in the Yearly Operational Plan;

 

h)                  Interestin other Companies of any nature, as a shareholder or quota holder;

 

i)                      Nominationof administrators for the controlled, affiliate or associated companies; and

 

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j)                      Anyoperation exceeding the scope of the Board of Executive Officers or which doesnot observe the approved budgets, policies and rules of the Board of Directors.

 

VI –                          Call theGeneral Meetings when required by Law and these Bylaws or whenever deemedconvenient.

 

VII -                         Approveproposals to be submitted to the General Meetings and relating to:

 

a)         Amendmentof the Bylaws;

 

b)        Modificationof Capital Stock;

 

c)         Mergerwith another Company, amalgamation into or of other Company;

 

d)        Creationof other statutory reserves;

 

e)         Distributionof the profits determined in the annual balance sheet.

 

VIII -Authorize the Board of Executive Officers to:

 

a) WaiveCorporate rights, unless those rights are derived from the normal course ofcorporate businesses, and in the case of donations aiming to provide support tosocial, philanthropic and similar projects and programs, provided that in thiscase the limit established in the Yearly Operational Plan, letters “g” and “h”to Article 23 of these Bylaws, is observed;

 

b)             Acquire and disposeof shares or quotas and encumber them, always observing the provisions ofArticle 35 of these Bylaws

 

c) Offercollaterals, except in the case of financial operations contemplated in theAnnual Operating Plan;

 

d)             Assign, by means ofan agreement with a commercial purpose, and for a definite period of time,whether or not renewable, the use of the trademark **“SADIA”**,logos, emblems, symbols and other distinct signs which identify the Company, aswell as other trade marks, know-how, intellectual property works and patentswhich are, or may come to be, its property, except in the case of its use inrelation to products which, even though processed by third parties, are destinedto be exclusively marketed by the Company, provided that observing Article 23,letter “f” of these Bylaws; and

 

e)              Dispose of, on adefinitive basis, trade marks, patents, know-how, characters or any otherintellectual work owned by the Company.

 

IX –               Require, at anytime, the examination of specific corporate matters or business and issuegeneral rules or instructions about them to be observed by the Board ofExecutive Officers.

 

X -                    Follow up themanagement and the performance of the Board of Executive Officers.

 

XI –Create, at any time, on a temporary or permanent basis, committees or workgroups, always presided by a member of the Board of Directors and formed byadministrators, employees or hired professionals, for the specific purpose ofpreparing projects, carrying out analysis and making recommendations on certainmatters or following up activities in any Corporatearea.

 

XII -            Prepare and approvethe Internal Regulation of the Board of Directors and the Code of Conduct ofthe Company.

 

XIII -        Evaluate formally theresults achieved by the Company.

 

**Sole Paragraph -**                         The matters referred to undernumbers I, III, IV, letters “a”, “b”, “c”, “f” and “g” of number V; undernumber VII, letters “a” and “c” of number VIII and under number XII may only beapproved by the vote of at least half plus one of the acting members of theBoard of Directors.

 

XIV –Appoint and remove independent auditors for the Company.

 

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**ARTICLE 18**

 

It is incumbent upon theChairperson of the Board of Directors:

 

I -                         Complywith and enforce compliance with these Bylaws, the Internal Regulation of theBoard of Directors, the Code of Conduct of the Company, the resolutions of theGeneral Meeting and of the Board of Directors and keep abreast of the corporateoperations.

 

II -                   Safeguard, within the scope of itsduties, the effectiveness of the shareholders agreement filed in its mainheadquarters.

 

III -                 Formally convene the General Meetingsand chair them.

 

III -                 Call and chair the meetings of theBoard of Directors.

 

IV –              Provideguidance to the Board of Executive Officers on resolutions approved by theBoard of Directors.

 

**SECTIONII**

**AUDITCOMMITTEE**

 

**ARTICLE 19**

 

TheAudit Committee is a technical permanent body whose duty is to assist the Boardof Directors. It is formed by three (3) to five (5) members of the Board ofDirectors, elected by the Board of Directors for an annual term of office.Three (3) of them should be compulsorily independent members as defined in itsInternal Regulation. At least one (1) of the independent members shall haveproven experience and knowledge of finance and controls, including someunderstanding of international accounting standards.

 

**Paragraph 1 -**                   The Audit Committee shall have, among itsmembers, a Coordinator appointed by the Board of Directors at the same meetingthat formed it.

 

**Paragraph 2 -**                   The Internal Regulation of the AuditCommittee shall establish how it shall be called, the frequency of meetings andany other formalities regarding the participation of guests and the resolutionsto be made by this body.

 

**Paragraph 3 -****                  **The non-independent members of the AuditCommittee shall not be entitled to vote the collegiate resolutions of thisbody.

 

###### **ARTICLE 20**

###### ** **

It is specificallyincumbent upon the Audit Committee, without prejudice of a better detailing ofits duties in its Internal Regulation:

 

I.                    Monitorthe effectiveness of the procedures relating to the annual and other regularfinancial reports of this Company;

 

II.                Verifythe maintenance of efficient accounting systems and internal controls,overseeing them on an ongoing basis;

 

III.            Monitorthe risk management system relating to the internal control environment of thisCompany;

 

IV.            Analyzein advance the reports to be submitted to the Brazilian and to the U.S.Securities and Exchange Commission (CVM and SEC);

 

V.                Selectand refer external auditors to be engaged, including their respective proposalsand fees, to the Board of Directors, for approval;

 

VI.            Approvein advance the engagement, by the Company, of all other services to be renderedby external auditors, particularly consulting services, ensuring compliancewith the applicable legislation;

 

VII.        Establishprocedures for investigating and taking action in cases of misconduct as wellas in relation to receiving, handling and responding to accusations relating toaccounting practices, internal controls in the issuance of financial reportsand internal audit;

 

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VIII.    Analyze, prior to submitting to the Board ofDirectors, transactions with Related Parties, as referred to in the currentlegislation;

 

IX.           Proposeto the Chairperson of the Board of Directors, when preparing the operationalplan, an amount to be included in the annual budget of the Board of Directorsand required to fund the activities of the Audit Committee; and

 

X.               Supervisethe services and prepare a formal evaluation of the performance of the internalaudit of this Company.

 

**SECTIONIII**

**THE BOARDOF EXECUTIVE OFFICERS**

 

**ARTICLE 21**

 

The Board of ExecutiveOfficers shall comprise a minimum of seven (07) and a maximum of twenty-five(25) members, whether or not shareholders, being one of them appointed ManagingOfficer and the remaining designated Officers, all of them elected by the Boardof Directors. The Board of Directors shall also designate their titles andrespective fees in the election act.

 

**ARTICLE 22**

 

The Board of ExecutiveOfficers shall be convened at least once a month, called by the ManagingOfficer or, in his/her absence, by at least three (3) Officers jointly,whatever their titles, and the minutes of such meetings shall be transcribed inthe pertinent book.

 

**Paragraph1** – The meetings of the Board of Executive Officers shall be presided by the Managing Officer or, in his/her absence, byany Officer, as provided for in Article 23, letter “l”.

 

**Paragraph2** – The quorum for meetings of the Board of ExecutiveOfficers shall be at least seven (7) Officers and resolutions shall be approvedby majority voting.

 

**ARTICLE 23**

 

With the observance ofthe scope of duties of the Board of Directors, it shall be incumbent upon theBoard of Executive Officers:

 

a)              Manage the corporatebusiness seeking to safeguard the interests of the Company, carrying out andenforcing compliance with the laws, these Bylaws and the resolutions approvedby the General Meeting and by the Board of Directors.

 

b)             Submit to the Boardof Directors the matters referred to under Article 17, item IV and V, letters “b”,“c”, “d” and “e” of item VIII and item IX of these Bylaws.

 

c)              Approve or validateloans, funding and leases;

 

d)             Approve theacquisition, disposal e renting of property, plant and equipment, observing theprovisions of letters “f” and “g” of item V of Article 17 of these Bylaws;

 

e)              Approve the offer ofcollaterals in financial operations contemplated in the Annual Operating Planas well as provide guarantees and/or collaterals to its subsidiaries in loan,funding and lease operations;

 

f)                Approve theassignment for temporary use of trade marks, know-how, patents and intellectualproperty works, owned by the Company, provided that (1) in connection withindustrial processing of products by third parties, to be marketed by theCompany on an exclusive basis; or (ii) authorization be granted for the use oftrademarks and intellectual property works solely for the purposes ofdissemination, not intended for commercial use;

 

g)             Waive Corporate rights, observing the provisions in Article 17,item VIII, letter “a” of these Bylaws;

 

h)             Approve donationsaiming to provide support to social, philanthropic and similar projects andprograms, provided that the limit established in the Yearly Operational Plan isobserved;

 

i)                 import machines, equipment pieces and products for own use,transformation or resale;

 

j)                 Appoint proxiesor attorneys-in-fact, representatives or agents in the Brazilian territory andabroad, observing the provisions in Article 24, item I,letter “e” of these Bylaws;

 

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k)              Approve the settingup and windup of industrial, commercial and service units as well as branchesand deposits;

 

l)                 Designate to anyof its member the duties of a Officer in his/herabsences or incapacitation.

 

**Sole Paragraph** -                     Notwithstanding the provisions inParagraph 1 of Article 22, the meetings of the Board of Executive Officers forresolution on the matters referred to under letter “d” shall necessarily bepresided by the Managing Officer.

 

**ARTICLE 24**

 

Except for the actswithin the exclusive scope of the Board of Executive Officers, as a collectivebody, it shall be incumbent upon the Executive Officers:

 

**I -****          INDIVIDUALLY**

 

**a)**           Carry out and enforce compliancewith these Bylaws and the resolutions approved by the General Meeting and bythe Board of Directors.

** **

b)          Represent the Companybefore Courts or third parties and Governmental, State and MunicipalAuthorities.

 

c)           Hire and dismisstechnicians or employees in any category, in accordance with letter “a” of itemII of Article 17;

 

d)          Receive, release, issue,endorse, discount and accept trade bills, pay and redeem notes, promotecollections, open accounts in banking establishments, endorse checks fordeposits and make interaccount transfers of money on behalf of the Company;

 

e)           Signinstruments relating to the actions authorized by the Board of Directors, asreferred to in item VIII of Article 17, and those approved by the Board, as perletters “c” to “l” of Article 23 of these Bylaws;

 

f)             Practiceall other acts required for the development of corporate businesses which, accordingto law and these Bylaws, are not dependent upon a prior authorization by theGeneral Meeting or a decision by the Board of Executive Officers.

 

**II –          JOINTLY, UPON THE SIGNATURE OF TWO DIRECTORS**

 

 a)        Issue and endorse Promissory Notes and acceptBills of Exchange;

 

 b)       Issue checks or Rural Promissory Notes;

 

**Paragraph 1**-                The powers under item I and letter “b”of item II may be granted through a power-of-attorney.

 

**Paragraph 2**-                  Exceptionally, whenever issuingchecks for payment of raw materials at individual purchasing stations, thesepowers may, at the discretion of the Board of Executive Officers, be exercisedby one Officer or by an attorney-in-fact.

 

**Paragraph 3** –               In the companies in which the Company isa shareholder, the Company may be represented by any of the Officers,previously appointed by the Executive Board of Executive Officers for thispurpose or by an attorney-in-fact with special powers, as provided for inParagraph 1 of article 126 of Law No. 6404/76.

 

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**SECTIONIV**

**ADVISORYCOUNCIL**

 

**ARTICLE 25**

 

The Advisory Councilshall comprise a minimum of seven (7) to a maximum of fifteen (15) members,whether or not shareholders, one of them being appointed Chairperson andanother Vice Chairperson, elected and removed at any time by the Board ofDirectors, for a term of office of one (1) year, reelection being permitted.

 

**Paragraph 1**–                When electing the members of theAdvisory Council, the Board of Directors shall appoint its Chairperson and ViceChairperson.

 

**Paragraph 2** -                   Except for the Chairperson and ViceChairperson of the Board of Directors – who shall be native members of theAdvisory Board – no other Management member is permitted to be a member of thisbody.

 

**Paragraph 3**-                The members of the Advisory Councilshall enter their respective offices by signing the Installation Certificate,to be transcribed on the book of minutes of meetings of this body.

 

**ARTICLE 26**

 

The Advisory Councilshall convene ordinary meetings on a quarterly basis and, extraordinarymeetings whenever requested by the Board of Directors through its Chairperson.

 

**Paragraph 1**–                It is incumbent upon the Chairperson ofthe Advisory Board or, in his/her absence, to the Vice Chairperson, to call,convene and chair the meetings of this body.

 

**Paragraph 2**-                   The quorum for the meetings of theAdvisory Council shall be a minimum of half plus one of its acting members.

 

**ARTICLE 27**

 

It is incumbent upon theAdvisory Council to issue its opinion on matters of relevant interest to theCompany and, irrespective of any request, to keep the Board of Directors,informed about relevant matters which may come to the knowledge of its members.

 

**CHAPTER V**

**GENERALMEETING**

** **

**SECTION I**

**CONVENINGMEETINGS AND MAKING RESOLUTIONS**

 

**ARTICLE 28**

 

A lawfully called andconvened General Meeting is the highest body of the Company, capable ofresolving all matters and making any resolutions, including those relating toamendments to these Bylaws.

 

**ARTICLE 29**

 

General Meetings areheld, on an ordinary basis, within the four (4) months following the closing ofthe fiscal year, for the purposes contemplated in the Law and, on anextraordinary basis, whenever corporate interests so require.

 

**ARTICLE 30**

 

Save for the exceptionscontemplated in the Law, a General Meetings is constituted whenever, on a firstcall, shareholders representing a minimum of twenty-five percent (25%) of theCapital Stock with voting rights are present and, on a second call, any numberof the shareholders present.

 

**ARTICLE 31**

 

Regularly maderesolutions of the General Meetings shall bind all shareholders, in spite ofthose absent or dissenting, as provided for by the Law and these Bylaws.

 

**ARTICLE 32**

 

General Meetings convenedin accordance with Law shall be chaired by the Chairperson of the Board ofDirectors who will appoint one or more secretaries from among the shareholderspresent.

 

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**Sole Paragraph -**                          In the absence of theChairperson, the General Meeting shall be chaired by one of the ViceChairpersons of the Board of Directors, observing the order of election and, inthe absence of both, by a member of the Board of Directors appointed by theshareholders.

 

**ARTICLE 33**

 

In the event that theGeneral Meeting cannot be held on the scheduled date, due to lack of legalquorum, a second call shall be made in the same manner of the first, spaced bya minimum of eight (8) days between the first publication of the advertisementand the date of the General Meeting which, in this case, shall be convened withany number of attendees.

 

**SECTIONII**

**ORDINARYSHAREHOLDERS MEETING**

 

**ARTICLE 34**

 

Ordinary General Meetingsshall be held to:

 

I –                        Receivethe Management accounts and examine, discuss and vote the financial statements;

 

II –                    Make aresolution about the appropriation of net income for the year and thedistribution of dividends.

 

III -                   Electthe members of the Board of Directors and of the Fiscal Council, as the casemay be.

 

IV –                Approvethe restatement of the Capital Stock in the cases contemplated by Law No.6404/76 and these Bylaws.

 

V -                       Fix the compensation of the administratorsand of the members of the Fiscal Council, when called.

 

**SECTIONIII**

**EXTRAORDINARYGENERAL MEETING**

 

**ARTICLE 35**

 

Whenever held on anextraordinary basis, a General Meeting shall make resolutions only about thematters for which it was called.

 

**ARTICLE 36**

 

It is incumbent upon theGeneral Meeting to authorize the disposal or pledge of quotas or shares withvoting rights of a legal entity whose control of the voting capital is directlyor indirectly owned by the Company whenever the disposal or pledge implies therisk of losing that control.

 

**CHAPTERVI**

**AUDITCOMMITTEE**

 

**ARTICLE 37**

 

The Audit Committee shallbe permanent and have the powers established in the Law, being formed by aminimum of three (3) and a maximum of five (5) permanent members and an equalnumber of substitutes, whether or not shareholders, elected by the GeneralMeeting for a one-year mandate.

 

**SoleParagraph**–****The permanentmembers of the Audit Committee shall receive monthly fees, observing theminimum amount established by Law, to be fixed by the General Meeting thatelected them.

 

**CHAPTERVII**

**THEFISCAL YEAR, THE BALANCE SHEET AND THE RESULTS**

 

**SECTION I**

**THEFISCAL YEAR AND THE BALANCE SHEET**

 

**ARTICLE 38**

 

The fiscal year shall endat December 31 of every year, when the Executive Board of Executive Officersshall prepare the Company’s financial statements, based on the commercialaccounting of the Company and expressing clearly its situation and the changesoccurred in the year:

 

I –                        BalanceSheet;

 

II–                       Statementof Year-to-Date net income and losses or changes in shareholders equity;

 

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III -                   Statement ofincome for the year;

 

IV –                Statement ofchanges in financial position.

 

**ARTICLE 39**

 

**The books and records of the Company shall be examined byan independent audit firm selected by the Board of Directors.**

** **

**SECTIONII**

**DISTRIBUTIONOF NET INCOME**

 

**ARTICLE 40**

 

The General Meeting shallmake a resolution about the distribution of net income for the year asdetermined by the balance sheet and proposed by the Board of Directors,accompanied by the opinion of the Fiscal Council, if active, observing thefollowing criteria:

 

I -                Fivepercent (5%) of the net income for the Legal Reserve Fund, up to the amountestablished by the Law on Capital Stock.

 

II –         Anamount equivalent to twenty-eight percent (28%) of Net Income for the year as aportion required for the payment of the minimum dividend of preferred andcommon shares, such net income being reduced or increased by the amountscontemplated in items I, II and III, Article 202 of Law No. 6404/76, alsoobserving the provisions of item “b” of Article 12 of these Bylaws.

 

III -        Up to ten percent (10%), after deducting anyaccumulated losses and the provision for income tax, as the participation ofthe administrators.

 

IV -        Aminimum of fifteen percent (15%) and a maximum of sixty percent (60%) on netincome, as Special Expansion Reserve, destined to fund the expansion plans ofthe Company, up to reaching seventy percent (70%) of the capital.

 

V -            Upto five percent (5%) to set up a Special Fund for Research and Development, upto reaching ten percent (10%) of the capital.

 

VI –     Theremainder shall be destined as proposed by the administration bodies to theGeneral Meeting.

 

**Paragraph 1** -                   The amount corresponding to theparticipation of the administrators shall be distributed solely if the minimumdividend to the shareholders contemplated in these Bylaws has been guaranteed.

 

**Paragraph 2**-                   The distribution of dividends andbonuses shall observe the periods of time defined in the Law.

 

**Paragraph 3** -                   Whenever the subscribed capital isincreased, the dividends corresponding to that period may be distributed on a “prorata tempore” basis from the paid-up capital.

 

**Paragraph 4 -**                   The amounts paid from pre-existingRetained Earnings and/or Profit Reserves accounts are an integral part of theminimum dividend established in item II of this article.

 

**Paragraph 5 -**                   If the minimum dividend is paid fromthe pre-existing Retained Earnings and/or Profit Reserves accounts, a portionof the Net Income for the year, corresponding to the amount of the paiddividend, may be appropriated to reestablish the reserves used.

 

**Paragraph 6**-                   The Company may pay interest on theshareholders’ own capital as dividends.

 

**CHAPTERVIII**

**COMPANYWINDUP**

 

**ARTICLE 41**

 

The Company may beliquidated in the cases contemplated in the Law or upon a resolution of theGeneral Meeting.

 

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**Sole Paragraph -**                          It is incumbent upon theGeneral Meeting to establish the liquidation mode and to elect the liquidatorsand the members of the Fiscal Council who will be active during the liquidationperiod.

 

**CHAPTERIX**

**MISCELLANEOUS**

 

**ARTICLE 42**

 

**In addition to the official gazette *DiárioOficial do Estado de Santa Catarina,* the publications required bythe Law and by these Bylaws shall be made**on the samepress institution where the minutes or the abstract of the minutes of theShareholders approving these Bylaws have been published until any change isadvised to the shareholders for annotation in the minutes of the OrdinaryGeneral Meeting.**

** **

I certify that theseBylaws are a faithful copy of the text approved by the Extraordinary GeneralMeeting held on 04.29.2005, entered in the Book of Minutes of the GeneralMeetings 01 of this Company and duly signed.

 

**LuizGonzaga Murat Junior**

**SECRETARY**

 

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