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,
     m)   demineralized water production,

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     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).



                                    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

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     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.

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, and
          approval of agreements  on  incumbency  of members of the  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  10  %  of  the
          company's  registered  capital  per event 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 the
          relevant calendar year exceeds 10 % of company's registered capital,

     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 the issuance of bonds, if stipulated by law,

     w)   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,

                                       8
<PAGE>
     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.

                                       9
<PAGE>
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.

                                       10
<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, written proposals
     and  counterproposals  submitted by  shareholders  shall be voted on in the
     order of their  submission;  and finally,  proposals  and  counterproposals
     submitted  verbally by shareholders shall be voted on in the order of their
     submission  during  the  general  meeting.  Once a  submitted  proposal  is
     approved, no other proposals related to the same matter 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.

                                       11
<PAGE>
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 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  Organizational  Rules of CEZ,  a. s.,  based on
          discussing the same within the framework of the supervisory board, 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 rules for creation and  application of a social fund and other
          funds of the company  pursuant to the  provisions  of the laws and the
          Articles of Association,

     h)   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,

     i)   appoint  and recall the  general  manager  and other  managers  of the
          company pursuant to the provisions of Section 27 of the Labor Code,

     j)   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)   company's  business  plan  within  the  framework  of the  concept  of
          company's business approved by the general meeting,

     d)   price proposals submitted to the regulation authorities,

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

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

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

     h)   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,

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

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

     k)   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,

     l)   annual investment and operational budgets,

     m)   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,

                                       13
<PAGE>
     n)   material changes in the company's organizational structure.

9.   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,  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 the trade  licensing  act,  in
     respect of which no fact exists that would constitute an obstruction to its
     trade operation or incumbency  pursuant to the provisions of Section 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
     vice-chairman from among its members.

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

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 board of directors.  The office
     of such  director  shall be terminated as of the date on which the board of
     directors discussed or was to discuss such notice of resignation. The board
     of directors 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 board of directors, its
     incumbency shall be terminated upon the expiration of two months after such
     notice, unless the board of directors 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.

                                       14
<PAGE>
                                   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  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.

2.   The board of  directors  shall be obliged  to  appoint an audit  committee,
     including a representative of the supervisory board.

                                       15
<PAGE>
                                       VI.
                                SUPERVISORY BOARD

                                   Article 24
                     Supervisory Board's Position and Powers

1.   The   supervisory   board  shall  supervise  the  exercise  of  powers  and
     satisfaction  of obligations  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)   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,
          and submit its opinions to the general meeting,

     c)   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,

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

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

     f)   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,

     g)   be  authorized  to be  informed  by  the  board  of  directors  of its
          intention to convene a general  meeting and to be also informed of the
          proposed agenda of such meeting,  provided that the board of directors
          shall be  obliged  to add an item to the  agenda  as  required  by the
          supervisory board,

     h)   elect and recall members of the board of directors,

     i)   approve agreements on incumbency of directors.

6.   The supervisory  board shall grant its preliminary  consent to the board of
     directors in the following matters:

     a)   disposals and leases of the company's assets,  the book value of which
          in each case exceeds CZK  500,000,000  (to wit:  five hundred  million
          Czech crowns),

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

                                       16
<PAGE>
     c)   company's  holding of a business  interest  in  another  legal  entity
          whenever the amount of the company's  contribution  in each individual
          case  exceeds CZK  500,000,000  (to wit:  five hundred  million  Czech
          crowns),

     d)   company's  holding of a business  interest  in  another  legal  entity
          having its registered office outside the Czech Republic,

     e)   assumption   of  any   guarantees  of  the  company  for  third  party
          obligations  exceeding  in each  individual  case  the  amount  of CZK
          200,000,000 (to wit: two hundred million Czech crowns),

     f)   selection  of  the  annual  financial   statement  auditor  and  draft
          agreement with such auditor,

     g)   in other cases if so provided by law.

7.   The supervisory  board shall be authorized to be kept informed by the board
     of directors in particular of the following:

     a)   all  proposals  submitted  by the board of  directors  to the  general
          meeting for decision or information,

     b)   approvals of or amendments to the Organizational  Rules of CEZ, a. s.,
          the Working Regulations of CEZ, a.s., and the Signing Rules of CEZ, a.
          s.,

     c)   approval of rules for creation and  application of the social fund and
          other company's funds,

     d)   approval of the Electoral  Regulations of CEZ, a. s., dealing with the
          election of members of the supervisory board elected by the employees,

     e)   disbursement of funds from the reserve fund,

     f)   increase  in the  registered  capital  pursuant to the  provisions  of
          Article 34,

     g)   acceptance  of long-term  loans or borrowings  and of other  long-term
          obligations of the company,

     h)   annual investment and operational budgets,

     i)   purchase agreements concluded with large-scale power consumers,

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

     k)   disposals  of real  estate if in each  individual  case its  market or
          appraisal  value exceeds CZK  100,000,000 (to wit: one hundred million
          Czech crowns),

     l)   price proposals submitted to the regulation authority,

     m)   supporting  documentation for materials submitted to the government of
          the Czech Republic,

     n)   appointing and method of remuneration of the general manager and other
          managers exercising direct managing powers,

     o)   the  intention  of the company to  establish a business  company or an
          association  of legal  entities  or to acquire a business  interest in
          another  legal  entity as well as the  intention to wind up a business
          company or an  association  of legal  entities  or to sell a company's
          business interest in another legal entity.

8.   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 the trade  licensing  act, in respect of which no fact exists
     that would  constitute an obstruction to its trade

                                       17
<PAGE>
     operation or  incumbency  pursuant to the  provisions of Section 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.


                                   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.

                                       18
<PAGE>
                                   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 very same supervisory  board. The
     supervisory  board's  rules of  procedure  shall be adopted or amended by a
     two-third majority of votes of all its 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.

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.


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

                                   Article 28
  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.

                                       19
<PAGE>
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  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.


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

                                   Article 29
               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 30
                 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 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:

                                       20
<PAGE>
     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 31
                     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 32
                             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 Sections 161d and 161f of the Commercial Code. The procedure shall
     be applied  that is set forth under  Section 161d (2) through to (4) of the
     Commercial Code.

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

     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,

                                       21
<PAGE>
     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 33
                         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 Sections 202 through to 209a, and
     Section 216c of the Commercial Code.

3.   In its increase in the  registered  capital,  the company shall observe the
     provisions  contained  in Sections  202  through to 209a 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
          Section 14 (5) shall be included as well as  requisites  specified  in
          Section 202 (2) through 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 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,

                                       22
<PAGE>
     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 34
            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.


                                   Article 35
 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
          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

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     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 36
                         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,

     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,

                                       24
<PAGE>
     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 37
          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.

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.

                                       25
<PAGE>
                                       XI.
                                FINAL PROVISIONS

                                   Article 38
                       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 39
                      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 40
       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
     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

                                       26
<PAGE>
     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.

                                       27
<PAGE>
                 CERTIFICATION OF FAIR AND ACCURATE TRANSLATION


The  undersigned  hereby  certifies  that to the best of my knowledge  the above
English  translation  is a fair and accurate  translation  of the original Czech
language document.



Date: June 25, 2003                By:  /s/ Libuse Latalova
                                      ---------------------------------
                                      Name:   Libuse Latalova
                                      Title:  Head of Finance Administration