V. Governing bodies of the company

B. Supervisory Board

Supervisory Board shall maintain constant supervision over the Company's activities in all branches of its operations.

1. Powers of the Supervisory Board shall be as follows:
   1. Examination of the Management Board reports of the Company standing and profit and loss account for the previous fiscal year, as regards their consistence with the Company's books and documents and with the actual state of affairs, as well as consolidated balance sheet of the whole capital group if such a document is drawn up,
   2. Examination of the Management Board motions as to the distribution of profits and the covering of losses,
   3. Submitting to the General Meeting a written statement containing the results of the examinations as per points 1 amp; 2 above,
   4. Election of auditors to conduct a financial audit,
   5. Establishing the scope and time schedule for submitting substantive-financial annual plans, and long term strategic plans,
   6. Assessment of long term strategic plans,
   7. Assessment of substantive-financial annual plans,
   8. Passing of by-laws describing in detail the manner of conduct for the Supervisory Board,
   9. Adopting uniform wording of the Articles of Association of the Company prepared by the Management Board,
   10. Approval of the Management Board by-laws,
   11. Approval of the Company organizational by-laws
2. It shall be in the powers of the Supervisory Board to consent to the following motions of the Management Board:
   1. Disposal and acquisition of property of value not exceeding €30,000 in zlotys,
   2. Disposal and acquisition of fixed assets of value exceeding €30,000 in zlotys, and not exceeding €50,000 in zlotys, subject to point 1 and § 54, section 3, points 1 through 3,
   3. Incurring conditional liabilities, including issuing warranties and guarantees of value exceeding €30,000 in zlotys,
   4. Drawing bills.
   5. Entering by the Company into agreements exceeding €5,000 in zlotys, which constitute donations, redeeming of a loan or other contract not related to objects of the Company stipulated hereunder. The equivalent in zlotys is calculated in accordance with the exchange rate announced by the National Bank of Poland on the date of entering into such agreement.
3. Moreover, the Supervisory Board shall be specifically competent to:
   1. Appoint and dismiss members of the Management Board,
   2. Move to establish the rules of remuneration and the salary of members of the Management Board,
   3. Suspend for important reasons members of the Management Board,
   4. Delegate members of the Supervisory Board to temporarily perform the functions of members of the Management Board unable to perform their duties,
   5. Conduct a competition to appoint a person for the management of the Company and entering an agreement with such person with the consent of the General Meeting,
   6. Approve establishing foreign branches of the Company,
   7. Consent for members of the Management Board to become a member of one of the governing bodies of other companies.
4. Refusal to consent by the Supervisory Board in matters mentioned in section 2 and 3, points 6 amp; 7 requires substantiation.
5. The Management Board shall be under obligation to submit copies of quarterly reports sent to the Minister of Finance about guarantees and warranties issued, pursuant to art. 34 of the Act on Guarantees and Warranties Issued by the State Treasury and Other Legal Entities of 8 May, 1997 (Dz. U. No. 79, item 484, as amended).

1. The Supervisory Board may for important reasons delegate its members to independently perform the supervisory functions for a limited duration.
2. Delegated member of the Supervisory Board shall be under obligation to submit written reports of performed actions to the Supervisory Board.

1. The Supervisory Board shall be composed of 3 to 12 members appointed by the General Meeting.
2. Members of the Supervisory Board are called upon for a joint term of office, for the duration of three years.
3. Member of the Supervisory Board may be dismissed by the General Meeting at any time.
4. Members of the Supervisory Board should satisfy the requirements outlined in the Cabinet Ordinance of 9 September, 1997 as to the training and examinations for the candidates for members of supervisory boards of companies where the State Treasury is the sole shareholder and remunerations for members of supervisory boards of such companies (Dz. U. No. 110, item 718, as amended).
5. Member of the Supervisory Board submits a written resignation with a copy for the Minister of the State Treasury as long as the State Treasury holds any shares of the Company.

1. Two-fifths of the members of the Supervisory Board are appointed from persons elected by employees of the Company.
2. Election of a candidate for the Supervisory Board is pursuant to § 26 section 4.
3. The Supervisory Board orders elections of a candidate for the Supervisory Board subject to §§ 26 amp; 27.
4. The Supervisory Board adopts By-laws of Elections including the detailed manner of appointing and dismissing members of the Supervisory Board appointed from persons elected by employees of the Company subject to the provisions of the Articles of Association hereunder.
5. As long as the State Treasury is the sole shareholder of the Company, the General Meeting appoints and dismisses members of the Supervisory Board from persons appointed by the governing body exercising the function of a founding body in respect to the state-owned corporation as per § 3 above.

The Supervisory Board shall order voting to dismiss a member of the Supervisory Board elected by the employees following a motion by at least 15% of the total number of Company employees. Result of voting shall be binding to the General Meeting under the condition that at least 50% of the total number of Company employees cast their votes and the majority is reached likewise the election procedure. In the event of dismissal, resignation or death of a member of the Supervisory Board appointed from persons elected by the employees, the person who received the second largest amount of votes during the last elections is appointed to the Supervisory Board. In the event where this is not possible, by-elections are ordered subject to § 27, sections 3 amp; 4, and § 36 section 4. From the date when the State Treasury is no longer the sole shareholder of the Company, the stipulations of these Articles of Association shall be subject to amendment, however employees of the Company shall retain the right to elect members of the Supervisory Board in the following quota:

1. Two members - on the Supervisory Board with up to 6 members,
2. Three members - on the Supervisory Board with 7 to 10 members,
3. Four members - on the Supervisory Board with more than 11 members.

1. Members of the Supervisory Board shall elect the President of the Supervisory Board, Deputy President of the Supervisory Board and the Secretary at the first Supervisory Board meeting.
2. The Supervisory Board can dismiss the President, the Vice-Chairman, and the Secretary.
3. The President of the Supervisory Board shall chair the Supervisory Board meetings and in his/her absence - Vice-Chairman.
4. All motions to the Supervisory Board between the meetings shall be addressed to the President of the Supervisory Board, and when it is not possible to the Deputy President or the Secretary.

1. The Supervisory Board shall convene at least once in every two months.
2. The first Supervisory Board meeting in the new term of office shall be convened by the President of the former Supervisory Board within one month of the Ordinary General Meeting, unless the resolution of the General Meeting states otherwise. If the Supervisory Board Meeting is not convened in this manner, the Management Board shall convene the Supervisory Board meeting.
3. The President or the Deputy President of the Supervisory Board shall convene the Supervisory Board meetings, and shall present the agenda of the meeting.
4. The Supervisory Board meeting should be convened on demand by any member of the Supervisory Board or when the Management Board puts forward such a motion.
5. The Supervisory Board meetings shall be put in minute form as per art. 391 § 2 of the Code of Commercial Companies.

1. In order to convene a Supervisory Board meeting, all Members of the Supervisory Board shall be notified in writing, at least seven days before the meeting. The President of the Supervisory Board may for important reasons curtail the notice to two days, and state the form of invitation.
2. The President of the Supervisory Board in the invitation states the date and place of the meeting and its detailed agenda.
3. Agenda may be changed if all Members of the Supervisory Board are present at the meeting, and no-one presents objects to the agenda.

1. The Supervisory Board shall adopt resolutions, if at least half of the composition of the Supervisory Board is present at the meeting, and all members were invited.
2. Voting at the meetings shall be open.
3. A secret ballot shall be used where requested by a member of the Supervisory Board, and in personal matters. If secret ballot is used, the provisions of section 4 below shall not be valid.
4. Resolutions shall be adopted in writing, or using means of remote communication, subject to art. 388 § 4 of the Code of Commercial Companies. Adopting a resolution in this manner requires justification and previous presentation of the draft to all members of the Supervisory Board.
5. Resolutions adopted in the manner pursuant to section 4 above shall be presented at the next meeting with the result of voting.

1. Delegated member of the Supervisory Board or a commercial proxy established by a resolution of the General Meeting shall enter agreements with members of the Management Board.
2. Legal actions other than specified in section 1 above between the Company and members of the Management Board shall be taken in the same manner.

1. Members of the Supervisory Board shall personally exercise their rights and responsibilities.
2. Members of the Supervisory Board shall be under obligation to participate in the Supervisory Board meetings. Members of the Supervisory Board shall justify their absence in writing. In order to justify a Member?s absence a resolution of the Supervisory Board shall be required.
3. Members of the Supervisory Board shall be remunerated monthly in the amount specified by the Minister of State Treasury pursuant to Act on Remuneration of Managers of Certain Legal Entities of 3 March, 2000 (Dz. U. No. 26, item 306, as amended).
4. The Company shall cover the cost incurred due to performance of the function of Member of Supervisory Board, and specifically costs of transportation to the meeting, costs of individual supervision, costs of board and accommodation.