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ARTICLES OF ASSOTIATION OF PUBLIC LIMITED LIABILITY COMPANY “VILNIAUS DEGTINĖ”

I. GENERAL PROVISIONS

1. “VILNIAUS DEGTINĖ” (hereinafter referred to as the Corporation) is a private legal person with limited civil liability. It is responsible under its liabilities only to the extent of its property. The shareholders are responsible under Corporation’s liabilities to the extent of the amount to be paid in for the subscribed shares. The Corporation is not responsible for obligations of its shareholders.
2. The Corporation is acting in accordance with laws of the Republic of Lithuania, other legal deeds and the present Articles of Association.
3. Full name of the Corporation is – Akcinė bendrovė “VILNIAUS DEGTINĖ”, abbreviated name - AB “VILNIAUS DEGTINĖ”.
4. Registration address of the Corporation: Panerių Street 47/2, Vilnius, Republic of Lithuania.
5. The Corporation shall have an account with a bank registered in the Republic of Lithuania and a corporate seal.
6. The financial year of the Corporation is calendar year.
7. The Corporation has been established for an indefinite period of time.

II. OBJECTIVES OF THE COMPANY’S ACTIVITIES AND THE NATURE OF ITS ECONOMIC ACTIVITIES

8. The Corporation has been established in order to use the Corporation’s property and other resources rationally, developing economic-commercial activities effectively and efficiently, striving for gaining profits.
9. The Corporation shall be engaged in the following economic-commercial activities (EVRK 2 red.):
11.01 Distilling, rectifying and blending of spirits
11.04 Manufacture of other non-distilled fermented beverages
46.34 Wholesale of beverages

10. The Corporation may be engaged in any activities that do not contradict the laws of the Republic of Lithuania.
11. The Corporation can carry out activities, which are licensed or can be carried out in accordance with the established procedures, only upon obtaining the necessary licenses or permits in accordance with the procedure set forth in legal deeds of the Republic of Lithuania.

III. RIGHTS AND DUTIES OF THE CORPORATION

12. The Corporation may hold and gain any and all civil rights and duties, other than those excepted in accordance with the laws of the Republic of Lithuania.

IV. AUTHORISED CAPITAL

13. The authorised capital of the Corporation amounts to LTL 24,408,431 (twenty four million four hundred eight thousand four hundred thirty one).
14. The authorised capital of the Corporation is divided into 24,408,431 (twenty four million four hundred eight thousand four hundred thirty one) ordinary registered share. Par value of one share is LTL 1.00 (one).

V. THE RIGHTS GRANTED BY SHARES

15. Shareholders of the Corporation have property and non-property rights set forth in the Company Law of the Republic of Lithuania and other laws and legal deeds.
16. Each fully paid-up share grants one vote to its owner at the General Shareholder Meeting.

VI. MANAGEMENT OF THE CORPORATION

17. The Corporation has the General Meeting and a single-person management organ - the manager. A collegial supervisory organ - the Supervisory Board and a collegial management organ - the Board are also formed in the Corporation.
18. In the Corporation's relations with other persons the manager shall act at his own discretion on behalf of the company

VII. THE GENERAL SHAREHOLDERS MEETING

19. The General Shareholders Meeting (hereinafter – the Meeting) is the supreme body of the Corporation. Persons who are shareholders of the Corporation at the end of the record date shall have the right to attend and vote at the General Meeting (or repeat General Meeting). The record date of the public limited-liability company shall be the fifth working day before the General Meeting or the fifth working day before the repeat General Meeting.
20. The Meeting has the competence set forth in the Company Law of the Republic of Lithuania.
21. When adopting a resolution on formation of allocation reserves, the Meeting must determine the purposes of use, the extent and the procedure thereof.

VIII. CONVOCATION OF THE GENERAL SHAREHOLDERS MEETING

22. The procedure of convening the Meeting is set forth in the Company Law of the Republic of Lithuania.
23. The Board of the company, the manager, the persons or authority which adopted the decision to convene the General Meeting shall present to the company information and documents required for drawing up a notice of the General Meeting. The notification on convocation of the Meeting must be announced in the “Lietuvos rytas” daily or deliver the notification to each shareholder of the Corporation in person, under signature, or send by registered mail no later than 30 days before the day of the Meeting. In case of a repeated Meeting, shareholders must be informed thereof in the same manner, no later than 5 days before the day of the Meeting. The meeting may be convened on other terms than the specified above, if all shareholders entitled to vote or proxies thereof consent to that in written.

IX. THE PROCEDURE OF VOTING AT THE GENERAL SHAREHOLDERS MEETING

24. The procedure of voting at the Meeting is set forth in the Company Law of the Republic of Lithuania.
25. Shareholders are entitled to vote in advance. After familiarizing with the agenda and draft resolutions, a shareholder entitled to vote may notify the Meeting of his/her will in advance, in writing (filling in the general ballot paper), voting “for” or “against” each resolution. Advanced bulletin-voting shall be recorded for the purposes of quorum at the Meeting and voting results. General voting bulletins of adjourned meetings are valid at repeated meetings. A shareholder, who has expressed his/her will in written in advance, is not entitled to vote at the Meeting.
26. The general ballot paper shall be deemed valid and may not be recalled if it meets the requirements laid down in laws and was received by the Corporation before the General Meeting.
27. Resolutions may be passed at the Meeting by the ordinary majority of votes of participants of the Meeting, except the following cases:
27.1. Adopt a resolution requiring 2/3 of the votes;
27.1.1. Adopt resolution to alter Articles of Association of the Corporation, except where the Company Law of the Republic of Lithuania provides otherwise;
27.1.2. Adopt resolution to determine the type, class, number and minimum issuing price of the shares to be issued by the Corporation;
27.1.3. Adopt resolution to convert the Corporation’s shares of one class into shares of another class, approve the share conversion procedure;
27.1.4. Adopt resolution on the appropriation of profit/loss
27.1.5. Adopt resolution on building up, drawing on, reduction or liquidation of the reserves;
27.1.6. Adopt resolution to issue convertible debentures;
27.1.7. Adopt resolution to increase the authorised capital;
27.1.8. Adopt resolution to reduce the authorised capital except where laws provide otherwise;
27.1.9. Adopt resolution on approving the conditions of reorganisation or division and reorganisation, or division of the Corporation;
27.1.10. Adopt resolution on the transformation of the company;
27.1.11. Adopt resolution on the restructuring of the company;
27.1.12. Adopt resolution on the liquidation of the company and cancellation of company liquidation except where otherwise provided by Company Law of the Republic of Lithuania;
27.1.13. Adopt resolution regarding transfer, lease or mortgage of fixed assets, the value of which is higher than 1/20 of the Corporation’s authorised capital, as well as resolutions regarding giving bail or guaranteeing execution of obligations of other entities, the extent of which is higher than 1/20 of the Corporation’s authorised capital;
27.2. Adopt a resolution requiring ¾ of the votes, such as to withdraw for all shareholders the pre-emption right in acquiring the company’s newly issued shares or convertible debentures of a specific issue.

X. THE SUPERVISORY BOARD

28. The Supervisory Board is a collegial body supervising the activities of the company, which is managed by its chairman
29. The Supervisory Board consisting of 3 members shall be elected by the Meeting for the period of 4 years. The Chairman and the Deputy Chairman of the Board of Observers shall be elected from the members thereof.
30. In the Supervisory Board election, each shareholder has the number of votes, which is equal to the number of his/her share votes multiplied by the number of the Board members to be elected. Shareholders may distribute those votes at his/her own discretion – for the favour of one or more candidates. The candidates who receive most votes shall be elected. If the number of candidates who receive equal number of votes is higher than the number of vacancies in the Board of Observers, repeated voting shall be organized, and then each shareholder shall vote for only one member of those with equal number of votes.
31. The Meeting may revoke the entire Supervisory Board or individual members thereof before the expiry of the term of office.
32. A member of the Supervisory Board may resign before the expiry of the term of his/her office by at least 14-day prior written notice to the Board of Observers.
33. If a member of the Supervisory Board is revoked, resigns or ceases to act as such, and shareholders owning at least 1/10 of all votes in the Corporation contradict election of individual members of the Supervisory Board, the acting Supervisory Board shall be revoked and a new one shall be elected.
If individual members of the Supervisory Board are elected, they shall act as such till the end of the term of office of the existing Supervisory Board.
34. The Supervisory Board has the competence set forth in the Company Law of the Republic of Lithuania and the present Articles of Association.
35. The Supervisory Board shall analyse and evaluate the material and decision-based draft resolutions on the issues under the competence of the General Shareholder Meeting presented by the Board of the Corporation. In case of approval by the Supervisory Board, the Board shall propose the draft resolution to the General Shareholder Meeting.
36. The following decisions of the Board need to be approved by the Supervisory Board:
36.1. On establishment of subsidiaries and representative offices of the Corporation and termination of operation thereof;
36.2. On acquisition of securities of other enterprises;
36.3. On transfer, lease or mortgage of a part of fixed assets, as well as on giving bail and guaranteeing execution of obligation of other bodies;
36.4. On acquisition of fixed assets, except financial assets, at the price exceeding LTL 700 thousand;
36.5. On reorganization or liquidation of branch companies;
36.6. On taking loans.
37. The Supervisory Board shall at least once a quarter analyse and evaluate transactions of the Corporation that need no approval of the Supervisory Board.
38. Members of the Supervisory Board shall be notified on convocation of a meeting of the Supervisory Board by a letter delivered by fax or e-mail 3 days before the day of the meeting. The notice shall contain information on the date, time and place of the meeting, issues included in the agenda and draft resolutions on the issues included in the agenda.
39. Members of the Supervisory Board, in accordance with the Law, shall be responsible for concealing violations of economic activities of the Corporation, poor control of economic activities, if that results in the conditions for inobservance of the laws of the Republic of Lithuania or the Articles of Association of the Corporation by the Board or the Manager of the Corporation.

XI. THE BOARD

40. The Board is a collegial management body acting under the leadership of the Chairman The Chairman shall be elected from the members of the Board of Administration.
41. The Board consisting of 5 members shall be elected by the Supervisory Board for the period of 4 years. The number of terms of offices of an individual member is unlimited.
42. The Supervisory Board may revoke the Board of Administration or individual members thereof before expiry of the term of office.
43. A member of the Board may resign before the expiry of the term of his/her office by at least 14-day prior written notice to the Board.
44. The Board has the competence set forth in the Company Law of the Republic of Lithuania and the present Articles of Association
45. The Board also makes decisions on the following:
45.1. On establishment of subsidiaries and representative offices of the Corporation or termination of operation thereof and approves suggested candidates for the position of directors thereof;
45.2. On acquisition of securities of other enterprises;
45.3. On transfer, lease or mortgage of a part of fixed assets, as well as on giving bail and guaranteeing execution of obligation of other bodies;
45.4. On acquisition of fixed assets, except financial assets, at the price exceeding LTL 200 thousand;
45.5. On reorganization or liquidation of branch companies;
45.6. On taking loans.
46. The Board analyses and evaluates the material on transactions of the Company provided by the Manager.
47. The Board also discussed and approves the following:
47.1. the procedure of representation of the Corporation in branch companies and other corporations and companies, in which the Corporation has any shares;
47.2. the number and specific candidates for the position of proxies to represent the Corporation in branch companies and candidates to the positions in management bodies of branch companies of the Corporation;
47.3. the list of commercial secrets of the Corporation;
47.4. the Corporation’s regulations of purchasing goods, works and services.
48. The Board shall also make decisions attributed by the Meeting to the competence of the Board.
49. The Board shall carry out its function for a period set forth in the Articles of Association or till a new Board is elected and qualified.
50. The Chairman and members of the Board of Administration must jointly indemnify the Corporation against any and all losses suffered due to decisions of the Board made through violation of Articles of Association of the Corporation or laws of the Republic of Lithuania. The persons, who have voted against such decision or were absent at the meeting during with the decision was made and have delivered a written remonstrance to the chairman of the meeting within 7 days after becoming or having to become aware of such decision shall be free from the obligation of indemnification of losses. Resignation or revocation of a member of the Board does not dismiss such member from the obligation to indemnify the losses suffered through his/her fault. A member of the Board may be dismissed from the obligation to indemnify the losses caused by him/her while he/she was acting as such, if he/she referred to the Corporation’s documents and other information, provided that there was no reasonable basis to question the truthfulness thereof, or if he/she acted within the limits of normal industrial or economic risk. Disputes related to indemnification of losses shall be settled by the Court.

XII. THE MANAGER

51. The manager of the Corporation is a single-person management organ of the Corporation.
52. The manager of the Corporation shall organise daily activities of the Corporation, hire and dismiss employees, conclude and terminate employment contracts with them, provide incentives and impose penalties.
53. The manager represents the Corporation in its relations with third persons, at the court and arbitrage. The manager is entitled to represent the Corporation since the day defined in his/her employment contract. The manager is entitled to issue letters of authorization for the performance of any and all functions that fall under his/her competence.
54. The manager may have one or more deputies. The deputies are not entitled to act independently on behalf of the Corporation and conclude transactions for and on behalf of the Corporation.
55. The manager shall be elected and revoked by the Board. Salary of the manager shall be discussed and approved by the Board.
56. Persons authorized by the manager in written may conclude transactions on behalf of the Corporation.
57. If the manager or his/her deputy, or any other person has concluded a transaction exceeding his/her competence, normal economic risk or executed other illegal actions, which resulted in damage to the Corporation (including non-gained profit) or in benefits, direct or indirect, to such person on the account of the Corporation or its shareholders, the Corporation and shareholder(s) of the Corporation is/are entitled to claim at the court indemnification of losses suffered due to such transaction or actions (including non-gained profit).

XIII. PROCEDURE OF ANNOUNCING THE NOTICES OF THE CORPORATION

58. The procedure of announcement of notices of the Corporation concerning convocation of the Meeting or repeated Meeting is set forth in Clause 23 of the Articles of Association.
59. Resolution on reduction of the Corporation’s authorised capital must be announced to each creditor of the Corporation under signature or by registered mail. Furthermore, the decision to reduce the Corporation’s authorised capital must be announced in the “Lietuvos rytas” daily or to each shareholder of the Corporation personally under signature or by registered mail.
60. In other cases, that are not stated therein, when information shall be presented to creditors and/or shareholders of the Corporation, the information shall be announced in the “Lietuvos rytas” daily, in accordance with the procedure set forth in the Company Law of the Republic of Lithuania. The information to each creditor and/or shareholder may also be announced personally, under signature or by registered mail.

XIV. PROCEDURE OF PRESENTING CORPORATE INFORMATION AND OTHER DOCUMENTS TO THE SHAREHOLDERS

61. At the shareholder’s written request the company shall within 7 days from the receipt of the request grant him access to information and/or submit to him copies of the following documents: the Articles of Association of the company, annual accounts, annual reports of the company, auditor's opinion and audit reports, minutes of the General Meetings and other documents whereby the decisions of the General Meeting, the Supervisory Board's recommendations and responses to the General Meeting have been executed, the register of shareholders, the lists of Supervisory Board and Board members, also other company documents that must be publicly accessible under law as well as minutes of the Supervisory Board and Board meetings or other documents whereby the decisions of the above-mentioned company organs have been executed, unless the said documents contain a commercial/industrial secret.
62. A shareholder or a group of shareholders who hold or control more than 1/2 of shares shall have the right of access to all company documents upon giving the company a written pledge in the form prescribed by the company not to disclose the commercial/industrial secret.
63. Commercial secret is any and all information (except the public information provided by the Law of the Republic of Lithuania), to which such status is granted upon the decision of the Board. A shareholder or his representative is responsible for disclosure of commercial secret as laid down in legal acts.
64. Documents and other information of the Corporation shall be provided to its shareholders free of charge. Refusal to provide the documents asked for shall be formalized in written, if so requested by the shareholder. Disputes concerning a shareholder’s right to get acquainted with information shall be settled by the Court.
65. At least 10 days before the Meeting the shareholders shall be granted access to the documents available to the Corporation relating to the agenda of the Meeting, including draft decisions and the request filed to the Board or to the manager of the company by the persons who initiated the convening of the General Meeting. If the shareholder requests so in writing, the manager of the company shall within 3 days from the receipt of the written request deliver to him against his signed acknowledgement of receipt all draft decisions of the Meeting or shall send him the above drafts by a registered letter. A notice must be given with the draft decisions indicating on whose initiative they have been submitted. Where the person who initiated the draft decision submitted its explanations, these must be attached to the draft decisions.
66. The Corporation at least 10 days before the General Meeting shall send the general ballot papers by registered post or deliver them against acknowledgement of receipt to the shareholders who so requested.
67. At least 30 days before the Meeting the agenda of which provides for the adoption of the decision to reorganise the Corporation, every shareholder of the Corporation must be given access to all documents relating the reorganisation. At the request of a shareholder, the Corporation must submit copies of those documents free of charge.

XV. SUBSIDIARIES AND REPRESENTATIVE OFFICES OF THE CORPORATION

68. The Corporation is entitled establish subsidiaries and representative offices both in the Republic of Lithuania and in foreign countries. Subsidiary is not a legal person and it uses the name of the Corporation as a legal person. It shall act in accordance with the Articles of Association of the Corporation and the Statute of the subsidiary. The property of the subsidiary of the Corporation shall be accounted in the Corporation’s balance sheet and in the separate balance sheet of the subsidiary.
69. The Corporation shall be responsible for obligations of its subsidiary or representative office by the entire property of the Corporation.
70. Subsidiaries and representative offices of the Corporation shall be established and their operation shall be terminated by the Board, having obtained a consent of the Supervisory Board.

XVI. PROCEDURE OF ALTERATION OF INCORPORATION DOCUMENTS

71. Any and all alterations of the Corporation’s Articles of Association shall be executed by the General Shareholders Meeting’s resolution adopted by 2/3 of the votes. Following the decision by the General Meeting to amend the Articles of Association of the company, the full text of the amended Articles of Association shall be drawn up and signed by the person authorised by the General Meeting.