FOUNDING CONTRACT
executed in accordance with Section 162 and following of the Commercial Code
F o u n d e r s
1. Severoceske teplarny a.s.
address in Most, X. Xxxxxxxx 2179
represented by the Chairman of the Board
Xx. Xxxxx Xxxxxxx,
and the Member of the Board
Mrs. Ing. Xxxxx Xxxxxxxxx, Csc.
ICO 46708065
DIC: 206-46708065
(hereinafter only as "SCT")
2. City Liberec
Liberec, nam. Dr. Ed. Xxxxxx 1
represented by the Mayor
Mr. Ing. Xxxx Xxxx
ICO:
(hereinafter only as the "City")
Preamble
After the company foundation this Contract shall become an agreement of the
shareholders of the company Teplarna Liberec.
Severoceske teplarny a.s., address Most, X. Xxxxxxxx 2179, acting through
the Members of the Board Xx. Xxxxx Xxxxxxx and Mrs. Xxxxx Xxxxxxxxx, CSc., and
City Liberec, acting through the Mayor Mr. Ing. Xxxx Xxxx, in accordance with
their common coincident will, are founding, in a simultaneous way, a joint-stock
company without notice to subscribe shares, on the bellow mentioned day, month,
and year in accordance with this
F o u n d n g C o n t r a c t.
Article 1
The Founders are founding the joint-stock company (hereinafter only as the
"Company") under the terms set by this Founding Contract.
Article 2
The trade name of the Company is : Teplarna Liberec, a.s.
Also the abbreviation "akc. spol." can be used as an amendment specifying
the legal form of the Company.
Article 3
The address of the Company is Liberec, tr. Dr. Xxxxxx Xxxxxxxx 58, 460 01
Liberec 1.
Article 4
The Company has been founded for an indefinite period.
Article 5
The purpose of business of the Company is:
- generation, distribution, purchase, sale of heat and electricity
- lease of tangible fixed assets
- engineering/investor activity within the operational and economical
field of the heating plant industry
- manufacture, repair, and installation of cold water metering devices,
warm service water metering devices, and heat consumption metering
devices
- tests of operated boilers and pressure vessels - thermal technical
measurement
- manufacture, installation, repair, reconstruction, and periodical tests
of specified pressure devices - repair and reconstruction of class 3
steam and hot-water boilers
- trade authorization - purchase of goods for resale and sale of goods
- installation, repair and maintenance of specified electrical devices
- installation, repair and maintenance of specified gas devices
Article 6
The fixed assets of the Company is 500,000,000,- CZK (in words: five
hundred million Czech crowns).
Article 7
The fixed assets of the Company has been divided into 50,000 registered
shares, each share having the nominal value 10,000,- CZK.
Article 8
1. The Founders have agreed to pay by themselves the whole fixed assets of
the Company, mentioned in Article 7 by a non-cash contribution, namely:
a) SCT subscribes a non-cash contribution valued 350,000,000,- CZK
(in words: three hundred and fifty million Czech crowns).
b) The City subscribes a non-cash contribution valued 150,000,000,-
CZK (in words: one hundred and fifty million Czech crowns).
2. The contributions mentioned in Paragraph 1 will be paid by the Founders
as follows:
a) SCT shall pay the amount of 350 million CZK in form of a non-cash
contribution, namely by assets of the existing division Liberec
in a mutually agreed structure, representing a technologically
linked unit with the contributed assets of City Liberec. The
extent of contributed assets is mentioned in Appendix No. 1,
which is an integral part of this Contract.
b) The City shall pay the amount of 150 million CZK in form of a
non-cash contribution, namely:
I) by SCT shares, ISIN - CS 0008458550, in amount 106,158 shares in
nominal value 106,158 thous. CZK, which agreed price is 106
million CZK.
II) The City will make an assignment of its accounts receivable
valued 44,000 thousand CZK for unpaid acquisition price of the
heating plant (account receivable against SCT according to the
contract on future collective agreement - Article VI/1 - executed
between SCT and City Liberec dated September 7, 1994) to its
subsidiary Teplarna Liberec, a.s.
3. SCT is obligated to transfer the assets defined by Appendix No. 1 to
the Company, above the extent of the contribution into assets.
Article 9
After its foundation, the Company will issue its shares. SCT shall receive
35,000 registered shares and the City will receive 15,000 registered shares.
Article 10
The Founders have agreed upon the proposal of the articles of
incorporation, which after the execution of this Founding Contract shall become
its integral part. The articles specify the way of establishment of a reserve
fund at Company founding in compliance with Section 217 Paragraph 1 of the
Commercial Code.
Article 11
The contributions paid by the Founders in compliance with Article 8
Paragraph 2 shall be administered by SCT by the time of the Company foundation.
Article 12
City Liberec is authorized to negotiate in the matter of the Company record
into Commercial Register and at the Real Estate Register in Liberec. SCT is
authorized to act in the other matters.
Article 13
A collective meeting concerning the decision of the Founders will take
place at execution of the Founding Contract in compliance with Section 172 of
the Commercial Code.
Article 14
The collective meeting of the Founders concerning the Company foundation
will be proceeded analogically with the provision of Section 171 of the
Commercial Code.
Article 15
All costs connected with the preparation, formation and foundation of the
Company will be the Company costs.
Article 16
The Founders have agreed the way of election into the Company bodies as
follows:
1. SCT shall propose 3 candidates and the City 2 candidates into the board
of directors.
2. SCT shall propose 1 candidate and the City Liberec 1 candidate into the
supervisory board.
The Founders are obligated to vote for these candidates at the election.
Article 17
This Contract - agreement - is valid for the period, during which each
Founder owns more than 90% of its shares, owned by him at the time of Company
founding.
Article 18
If any of provisions of this Contract is in discrepancy with the generally
obligatory regulations, the generally obligatory regulations are valid, without
this Contract ceases to be valid.
Article 19
This Contract has been prepared in seven counterparts, each Founder shall
receive one counterpart and two counterparts of the Contract will be filed in
the Company archive. Another counterpart will be attached to the proposal of the
record of the Company into Commercial Register and one counterpart shall be
mailed to SCP (Center of Securities).
Article 20
The Founders state that they have mutually discussed the contents of this
Contract and that they arrived at a total coincidence.
In witness whereof the Founders have executed the Contract in front of a
body set for authorization.
SCT: signature
------------------------------
Severoceske teplarny Xxxxx Xxxxxxx
xxxxxxx spolecnost Chairman of the Board
Most
signature
------------------------------
Ing. Xxxxx Xxxxxxxxx, Csc.
Member of the Board
City: signature
------------------------------
Ing. Xxxx Xxxx
Mayor of the City
Most, November 11, 1994
Appendix No. 1
Assets contributed by Severoceske Teplarna a.s., Most
into Teplarna Liberec, a.s.
The total value of SCT, a.s. assets, administered by Division Liberec
pursuant to the expert opinion, prepared by Ing. Xx. Xxxxx, DrSc. in October
1994 based on the documents on assets record dated September 8, 1994, is 723.1
million CZK.
The value of the secondary distribution system is 94.2 million CZK, small
and short term tangible assets represent 1.6 million CZK. Totally 818.9 million
CZK.
Recapitulation
Value of assets administered by Division Liberec 723.1 million CZK
Value of secondary distribution system 94.2 million CZK
Small and short term tangible assets 1.6 million CZK
-------------------------------------------------------------------------------
Total value of administered assets 818.9 million CZK
Based on the agreement dated October 31, 1994 between City Liberec and SCT,
a.s., the following assets shall not be contributed into Teplarna Liberec, a.
s.:
Land valued 37.2 million CZK
Family houses OKAL, house Slikova 137 6.8 million CZK
--------------------------------------------------------------------------------
Totally remains in SCT, a.s., Most's ownership 44.0 million CZK
The total value of assigned SCT assets is 774.9 million CZK
These assets shall be represented by:
Contribution of SCT, a.s., Most into
Teplarna Liberec, a.s. 350.0 million CZK
Payment of SCT, a.s. accounts receivable
to Teplarna Liberec 44.0 million CZK
SCT, a.s. account receivable against Teplarna Liberec 380.9 million CZK
(This account receivable shall be paid within twenty years by the annual amount
19,045 thousand CZK. Within five years the payment will be increased by the
annual inflation coefficient officially issued by state. After five years the
system of payment of the account receivable shall be updated.)
Contributed and assigned assets - recapitulation
Assets administered in total 818.9 million CZK
Not assigned assets 44.0 million CZK
-------------------------------------------------------------------------------
Contributed and assigned assets in total 774.9 million CZK
The structure of the contributed and assigned assets is mentioned in the
list of assets dated September 8, 1994.
The subject of the contribution based on the agreement with City Liberec
are not the houses, connected structures, and land of bellow mentioned record
numbers, under which they are filed in SCT, a.s., Most's bookkeeping records
dated September 8, 1994:
- houses OKAL 601 - 610
No. ZO600000455 to ZO600000464
- apartment house Xxxxxxx 000
Xx. ZO6000000209
- structures connected with houses
No. ZO600000465 to ZO600000 and ZO100001794
- land No. ZO100002221 to ZO100002246, ZO100002672 to ZO100002676,
ZO100002721 to ZO100002724,
ZO100002732, ZO600000605, ZO600000606
and ZO600000613.
ARTICLES OF INCORPORATION
"T e p l a r n a L i b e r e c , xxxxxxx spolecnost"
Chapter I.
General statements
Section 1
Incorporation and formation of the company
1. The company was incorporated as limited liability company, founded
without notice to subscribe shares, by executing the founding contract,
by approving of these Articles of Incorporation and by election of the
company bodies.
2. The company is formatted on the day of record into the Commercial
Register, administered by the County court in Usti nad Labem, and is
incorporated for indefinite period.
Section 2
Trade name
1. The trade name of the company is: Teplarna Liberec, a.s.
2. The trade name of the company further is:
a) in German: Heizkraftwerk Liberec, AG
b) in English: District Heating Company Liberec, joint-stock comp.
Section 3
Address of the company
The address of the company is : Liberec, tr. Dr. Xxxxxx Xxxxxxxx 58, 460 01
Liberec 1
Section 4
Purpose of business
1) generation, distribution, purchase, sale of heat and electricity,
2) lease of tangible fixed assets,
3) engineering/investor activity in the field of heating plant operation
and economy,
4) manufacture, repairs and installation of cold water metering devices,
warm service water metering devices and heat consumption metering
devices,
5) tests of operated boilers and pressure vessels - thermal technical
measurement,
6) manufacture, installation, repair, reconstruction and periodical tests
of specified pressure devices - repair and reconstruction of class 3
steam and hot water boilers,
7) trade authorization for purchase of goods for resale and sale of goods,
8) installation, repair and maintenance of specified electrical devices,
9) installation, repair and maintenance of specified gas devices.
Section 5
Acting and signing on behalf of the company
1. The company is acting through its bodies or through its representatives.
2. Either all members of the board of directors together, or the chairman
of the board and two members of the board of directors, are entitled to
act on behalf of the company. Signing on behalf of the company is done
in such a way, that they attach their signature to the company name or
the company seal.
3. The persons mentioned in paragraph 2 certify their authorization to act
on behalf of the company by the certificate stating the legal status of
the company.
4. The company representatives prove their authorization by power of
attorney or by company organization rules.
Chapter II.
Fixed assets, shares and shareholders rights
Part one
Section 6
Fixed assets
Company fixed assets is 500,000,000,- CZK (in words: five hundred
million Czech crowns).
Section 7
Payment of fixed assets
Company fixed assets has been paid and is 500,000,000,- CZK.
Section 8
Increase of fixed assets
1. According to the Articles of Incorporation, only the general assembly,
can decide about the increase of fixed assets, based on the proposal of
the board of directors. The increase of fixed assets always requires to
change the Articles of Incorporation.
2. Fixed assets can be increased only in some of the ways mentioned by
law.
Section 9
Decrease of fixed assets
1. General assembly can also decide to decrease fixed assets.
2. However, company fixed assets can not be decreased under level set by
law, i.e. to less than 1,000,000,- CZK.
Part two
Section 10
Shares
1. Company fixed assets is divided into 50 thousand booked registered
shares for public trading.
2. Nominal value of each share is 10 thousand CZK.
Section 11
Limitation of share transferability
The board of directors is obligated to keep the list of shareholders.
Transfer of shares is possible only after previous written approval of company
board of directors.
Part three
Section 12
Shareholders to company ratio
1. Every shareholder has the right to participate in company
administration and management, the right for payment of the company
share on profit, and the right to the liquidated balance at company
dissolution.
2. The shareholder does not guarantee company obligations.
3. General rights and obligations of shareholders follow the provisions of
Sections 178 through 183 inclusive, in compliance with the Commercial
Code. Some other principles concerning the rights and duties of
shareholders can be set by the general assembly.
4. When the duty to pay the nominal value of subscribed shares or of its
part is breached, the subscriber shall pay liquidated damage of 25% per
year of the amount overdue.
Section 13
Enforcement of shareholders rights
Rights, belonging to shareholders according to law and these Articles
of Incorporation, are enforced by shareholders on the general assembly.
Chapter III.
Company bodies
Section 14
Company bodies
The company has the following bodies:
1. General assembly
2. Board of directors
3. Supervisory board
4. Director
Part one
Section 15
General assembly
1. The highest body of the company is the general assembly, which consists
of all present shareholders.
2. During the period, when the founders will represent the only company
shareholders, the general assembly can have a quorum when all
shareholders are present.
3. In case the ordinary or extraordinary general assembly can not have a
quorum - the Commercial Code shall be followed.
Section 16
Calling general assembly
1. The body, which calls the general assembly, calls it in accordance with
law.
2. In case the announcement on calling the general assembly is published,
it is published in Business Bulletin.
3. The requisites of the announcement are set by law.
Section 17
Rights of general assembly
Above the extent set by law, the general assembly decides about the
discussion and approval of company business policy, merge of company with
another subject, approval of the company plan, issue of new shares or new type
of shares.
Section 18
The voting right of shareholders and its exercise on general assembly
1. Ownership of one share (Section 10) is connected with the right to
exercise one vote at the general assembly. Every shareholder is
entitled to exercise so many votes on the general assembly, how many
shares he owns.
2. Every shareholder is entitled to personally participate and vote at the
general assembly.
3. The right pursuant to Paragraph 2 can be exercised also by means of a
proxy, who has a written power of attorney.
Section 19
Acting at general assembly
1. The acting of the general assembly is started by a person authorized by
the board of directors. The authorized person controls the election of
the chairman of the general assembly, the election of the recording
official and two verification officials. Further the authorized person
elects the person or persons authorized to count votes.
2. After the activities mentioned in Paragraph 1 are performed, the
procedure of the general assembly is controlled by its chairman.
3. The shareholders present at the general assembly put down their
signatures on the attendance list, which contains the following:
a) name and address (eventually name and domicile) of the
shareholder,
b) at shareholders - legal persons the name and position of the
person, acting on behalf of the shareholders,
c) number of shares of the shareholder,
d) number of votes belonging to individual shareholders.
The validity of the attendance list shall be confirmed by the chairman of
the general assembly and by the recording official. The present shareholders at
the general assembly have to have their access to the attendance list possible.
Section 20
The way of decision making at the general assembly
Plurality of votes of present shareholders shall be sufficient for
acceptance of the general assembly decision. Approval of 75% of present
shareholders at the general assembly is necessary in the matters of discussion
and approval of company business policy, company merge with another subject,
company plan approval, issue of new shares or a new type of shares, increase or
decrease of fixed assets and change of the Articles of Incorporation. Where law
requires two third vote majority of shareholders present at general assembly,
approval of 75% of shareholders present at general assembly is necessary.
Section 21
Minutes of the general assembly
Minutes of the general assembly shall be prepared, which shall be signed by
the chairman of the general assembly and by the recording official, and which
correctness shall be confirmed by the verification official. The requisites of
the minutes are set by law.
Part two
Section 22
Board of directors
1. The statutory body of the company is the five-member board of directors
elected by the general assembly from the ranks of both shareholders and
non-shareholders for four-year term of office.
2. However, the members of the supervisory board can not be the members of
the board of directors.
Section 23
Chairman and deputy chairman of the board of directors
1. The elected members of the board of directors vote their chairman and
deputy chairman from their ranks by public election.
2. The chairman calls and controls meetings of the board of directors. He
is submitted to law, Articles of Incorporation, decision of the general
assembly and resolution of the board of directors.
3. If the chairman is absent, the deputy chairman of the board substitutes
him in full extent.
Section 24
Rights of the board of directors
1. The board of directors has all rights in such company matters, which
law or these Articles of Incorporation set neither to the general
assembly, nor to another company body.
2. The board of directors is responsible for company control and for
performance of employer's rights.
3. The operative performance of activities has been delegated to the
company director, who is responsible for performance of these delegated
operative activities to the board of directors.
4. The board of directors especially:
a) proposes conception of long-term company development to the
general assembly;
b) sets company business plan in the scope of decision of the general
assembly;
c) appoints company director and executes management agreement with
him;
d) issues organizational and working rules of the company;
e) decides on drawing of the reserve fund;
f) approves financial and general plans of the company;
g) approves changes of company organizational rules, working rules
and principles of company internal control;
h) secures proper bookkeeping and trade books;
i) in case of increase or decrease of fixed assets makes
corresponding changes in number or nominal value of shares;
j) decides about general company dislocation matters;
k) decides about executing contracts and funds collection;
1) decides about execution of contracts on participation in trade
companies;
m) submits proposals of company main development strategies to
general assembly;
n) submits proposal of changes in Articles of Incorporation to
general assembly;
o) submits proposal of changes in company purpose of business;
p) submits proposal of issue of new shares or a new type of shares,
and/or proposal of change of rights belonging to shares;
q) submits reports on business activity;
r) submits report on status of assets;
s) submits report on financial policy;
t) submits report on business policy.
Section 25
Meeting of the board of directors
1. The board of directors meets at least ones in three months, in the
first year of company existence at least once a month.
2. The board of directors is called for meeting by its chairman by a
written invitation. In case the invitation does not include agenda or
any member of the board proposes to discuss a matter excluded of agenda
on the meeting, the board of directors can have a valid quorum only
when all members are present at the meeting.
3. The board of directors can have a quorum if majority of its members is
present on the meeting.
4. The resolution of the board of directors is accepted, if at least three
members vote for it. That member of the board, who did not approve the
proposal of the resolution, in case the resolution was accepted, is
entitled to require a record of his opinion.
Section 26
Procedural order
1. Details of the record concerning the meeting and acceptance of
resolutions of the board of directors can be modified in the procedural
order.
2. A written protocol shall be prepared about the meeting and resolutions
of the board of directors, which shall be signed by the chairman of the
board of directors and by the recording official.
3. The recording official has not to be a member of the board of
directors, however, he has to be subject to a confidentiality
agreement.
Part three
Section 27
Supervisory board
1. The highest supervisory body of the company is the three-member
supervisory board.
2. In other cases than the case mentioned in Section 200 of the Commercial
Code, the members of the supervisory board are elected by general
assembly for five-year term of office.
Section 28
1. The meeting of the supervisory board is called by its chairman at least
4 times a year based on the following:
a) decision of the general assembly;
b) own decision;
c) proposal of any other member of the supervisory board or
proposal of the chairman of the board of directors or based on
proposal of a shareholder, who owns shares, which nominal
value represents at least 10% of company fixed assets.
2. Similar regulations of Section 24 Paragraphs 1 and 3 and Section 26
Paragraphs 2 through 4 and Section 27 Paragraphs 1 and 2 shall be used
in details for meeting and decision of the supervisory board.
Part four
Section 29
Common regulations about the board of directors and supervisory board
1. Ban on competition within the scope set in Section 196 of the
Commercial Code is valid for the members of the board of directors and
supervisory board, under provision that company general assembly can
provide an approval for the members of the board of directors or
supervisory board to perform activity of the statutory body or a member
of such or other body of another legal person. This approval is also
necessary in the case when it is a legal person, on whose business the
company participates.
2. The members of the board of directors and supervisory board get
director's fee and bonuses for their work in accordance with these
Articles of Incorporation and the decision of the general assembly.
Part five
Section 30
Director
1. The company has the position of the director, who is appointed and
recalled by the company board of directors.
2. The director is entitled to control the performance of general company
activities, especially:
a) to perform commercial management and to secure company operational
matters
b) to enforce employees' rights
c) to enforce resolution of company bodies
d) to take care of common matters of company management
e) to enforce activities, by which he was appointed by the board of
directors
f) to act on behalf of the company within the scope of written
authorization of the board of directors
g) to act as the statutory body of the company in employees'
relation, namely within the scope authorized by the board of
directors
3. The director is in working relation with the company. The membership in
the supervisory board is incompatible with the position of director.
Chapter IV.
Company economy
Section 31
Financial year
1. The financial year of the company is the calendar year.
2. The first financial year of the company starts on the day of its
formation and ends on December 31 of the corresponding year.
Section 32
Company funds
1. At its formation, the company establishes the following funds in
compliance with the corresponding legal rules:
a) reserve fund;
b) social fund.
2. The general assembly can decide about establishment of other company
funds.
Section 33
Reserve fund
At its formation the company shall establish a reserve fund in the amount
of 10% of fixed assets. Annually it shall be completed minimally by 5% of net
profit, up to 20% of fixed assets.
Section 34
Company bookkeeping and financial statement
1. The board of directors is responsible to the general assembly for
securing of proper company bookkeeping.
2. Financial statements of the company are subject to control in
accordance with law. The auditors for verification of the annual or
extraordinary financial statement are chosen by the board of directors.
3. The board of directors submits to the general assembly the annual or
extraordinary financial statement for approval together with the
proposal for profit distribution, at least 30 days prior to the general
assembly. If the case mentioned in Section 15 Paragraph 3 happens, the
main data of the financial statement shall be published in the
Commercial Bulletin in the same deadline.
Section 35
Way of profit distribution
The general assembly decides about the way of profit distribution based on
the proposal submitted by the board of directors to the general assembly.
1. The company profit achieved in the financial year is divided into the
subsidy into reserve fund up to the maximum creation of the reserve
fund according to Section 33 of the Articles of Incorporation and into
other purpose approved by the general assembly.
2. The general assembly sets more specifying terms of the way of dividend
payment.
Chapter V.
Final provisions
Section 36
Dissolution of company
1. The company can be dissolved, except for cases, when the court is
entitled to do so according to law, only by the decision of the general
assembly. Provision of Section 21 is also valid here.
2. If the general assembly decides on dissolution of the company with
liquidation, the general assembly appoints also a liquidator and sets
his remuneration. The general assembly can also recall the liquidator
any time.
3. By appointing the liquidator the activity of the board of directors is
finished.
4. The liquidator has to perform liquidation of the company in compliance
with law. However, he can not alienate real properties in other way
than in public auction. The liquidator shall start with company
liquidation without delay and after the liquidation is finished he
shall report to the general assembly about the status of trades and
their finishing.
5. The provisions on the general assembly and the supervisory board remain
without changes. The general assembly is called by the liquidator in
the way mentioned in Section 16.
6. The liquidator shall report on the status of liquidation to each
general assembly. Every shareholder is entitled to have a look at this
report, provided with appropriate documents, at least ten days prior to
the general assembly.
Section 37
Announcement and notices of the company
1. Announcements and notices of the company are delivered by its board of
directors to the shareholders in form of a registered letter, and they
are also published in Commercial Bulletin if it is set by law or if the
board of directors decides so.
2. The board of directors can also decide that the announcement or the
notice of the company is published in newspapers or by publishing in
the company domicile, which is available for shareholders.
3. Resolutions of the company bodies, where the shareholder of the company
is the addressee, are delivered to the shareholder in form of a
registered letter to his last known address.
4. If law does not sets otherwise, one publishing is sufficient for valid
notice.
Section 38
Approval of Articles of Incorporation, their changes and amendments
1. These Articles of Incorporation are liable to the approval of the
founders in compliance with provision of Section 172 of the Commercial
Code.
2. The Articles of Incorporation can be changed and amended only by the
decision of the general assembly in accordance with Section 186
Paragraph 1 and Section 187 Paragraph 2 of the Commercial Code and
Section 20 of the Articles of Incorporation. The decision must have the
form of a notary record.
Most, November 11, 1994
