ARTICLES OF ASSOCIATION

I  BUSINESS NAME AND SEAT

1.1.  The business name of the public limited company (hereinafter Company) is Arco Vara AS.

1.2.  The seat of the Company is in Tallinn, Republic of Estonia.

II  SHARE CAPITAL AND SHARES

2.1.   The minimum amount of the Company’s share capital is 2,500,000 euros and the maximum amount is 10,000,000 euros.

2.2.   Within the limits of the minimum and maximum amount specified in clause 2.1. hereof, the share capital of the Company may be increased or reduced without amending these articles of association.

2.3.   The Company has registered shares of one class with a nominal value of 70 cents per share, each granting 1 (one) vote to the relevant shareholder of the Company. No share certificates shall be issued for shares. Shares shall give the shareholders the right to take part in the general meeting of shareholders and in the distribution of profits and assets remaining upon the dissolution of the Company and also other rights prescribed by law and the articles of association.

2.4.   The general meeting of shareholders shall decide on increase and reduction of the share capital. A resolution on increase or reduction of the share capital shall be adopted if at least 2/3 of the votes represented at the general meeting are cast in favour of the resolution.

2.5.   Where the share capital is increased, the shareholders shall have a pre-emptive right to subscribe for new shares in proportion to the sum of the nominal values of their shares. The pre-emptive right of the shareholders may be excluded with a resolution of the general meeting which receives at least 3/4 of the votes represented at the general meeting.

2.6.   Contributions to the Company’s share capital may be in both monetary and non-monetary form. Non-monetary contributions shall be valuated by the Company’s management board on the basis of the usual value of things or rights constituting the object of non-monetary contributions. Where generally recognized experts are available for valuation of the object of a non-monetary contribution, valuation by such experts of the object shall be arranged. The valuation of non-monetary contributions shall be audited by an auditor.

2.7.   The shareholders have the right to freely transfer their shares. There is no right of pre-emption when shares are transferred to third parties.

2.8.   The shareholders have the right to pledge their shares. In order to pledge a share, a written disposition transaction of creating a pledge shall be made, and a notation concerning the pledge shall be entered in the Estonian Central Register of Securities.

2.9.   The legal reserve shall constitute 1/10 of the share capital unless otherwise prescribed by law.

2.10.   By a resolution of the general meeting, the Company may issue convertible bonds the holders of which have the right to convert their bonds to shares on the terms specified in the bond.

III  GENERAL MEETING

3.1.  The highest managing body of the Company is the general meeting of shareholders.

3.2.  Annual general meetings of shareholders shall be called at least once a year within six months after the end of the financial year of the Company. The shareholders shall be given at least three weeks’ notice of annual general meetings.

3.3.  Extraordinary general meetings shall be called if the Company’s management board finds it necessary or if it is required by the Company’s supervisory board, the auditor or the shareholders whose shares represent at least 1/20 of the share capital and in other cases prescribed by law. A request to call an extraordinary general meeting shall be submitted to the Company’s management board in writing and shall specify the reason for calling the meeting. The shareholders shall be given at least three weeks’ notice of an extraordinary general meeting.

3.4.  The management board shall send a notice of a general meeting to all the shareholders in accordance with the procedure prescribed by legal enactments. If the Company has over 50 shareholders, there is no need to send notices to the shareholders; however, a notice of a general meeting shall be published in at least one national daily newspaper.

3.5.   A notice of a general meeting shall set out the agenda of the general meeting and other information prescribed by legal enactments.

3.6.   The group of shareholders entitled to take part in a general meeting shall be determined seven days before the general meeting.

3.7.  The general meeting is competent:

3.7.1. to amend the articles of association;

3.7.2. to increase and reduce the share capital;

3.7.3. to issue convertible bonds;

3.7.4. to elect and remove members of the supervisory board and determine the procedure for and amount of their remuneration;

3.7.5. to elect an auditor (auditors) and determine their remuneration;

3.7.6. to order a special audit;

3.7.7. to approve annual reports and distribute profits;

3.7.8. to decide on dissolution, merger, division and transformation of the Company;

3.7.9. to decide on making legal transactions with members of the supervisory board, determine the terms and conditions of such legal transactions, decide on the conduct of legal disputes with the members of the supervisory board and appoint the Company’s representatives in such legal transactions or disputes;

3.7.10. to decide on other matters placed in the competence of the general meeting by legal enactments.

3.8.  The general meeting is quorate if over half of the votes represented by shares are represented thereat.

3.9.  If the number of votes represented at the general meeting is insufficient, the management board shall, within 3 (three) weeks but not earlier than after 7 (seven) days, call a new general meeting with the same agenda. A general meeting called for the second time is competent to adopt resolutions irrespective of the number of votes represented thereat.

3.10.  A resolution of the general meeting shall be adopted if over half of the votes represented at the general meeting are cast in favour of the resolution unless the law or other provisions of these articles of association prescribe a greater majority of votes.

3.11.   The shareholders may take part in the general meeting and exercise their rights using electronic means without being physically present at the general meeting and without appointing a proxy. The procedure for electronic participation and voting shall be determined by the management board in accordance with applicable legal enactments.

IV  MANAGEMENT BOARD

4.1.   The management board shall have 1 (one) to 5 (five) members elected for a term of three years. The members of the management board may be re-elected.

4.2.   The members of the management board shall be elected and removed by the supervisory board. The consent of the members of the management board is required for their election.

4.3.   If the management board consists of more than two (2) members, the chairman of the management board shall be appointed by a resolution of the supervisory board.

4.4.   The remit, official duties and other rights and obligations of the members of the management board may be further detailed in the contract concluded with them.

4.5.   The Company may be represented in all legal acts by the chairman of the management board alone or by any other two members of the management board jointly. The right of the members of the management board to represent the Company may be further restricted by a resolution of the supervisory board.

4.6.   The management board needs the consent of the supervisory board only for making the following transactions and taking the following actions:

(i) acquiring and terminating ownership interests in other companies;

(ii) establishing and dissolving subsidiaries;

(iii) approving and changing the operational strategy of the Company;

(iv) substantially changing the Company’s activities or involving the Company in any business unrelated to the hitherto declared purpose of the Company’s operation.

4.7.   A member of the management board shall not take part in the voting if consent is being decided to a legal transaction between the Company and the member of the management board or between the Company and a legal person in which the member of the management board or a person connected with him or her has a substantial ownership interest.

4.8.   Minutes shall be taken of meetings of the management board.

4.9.   The management board shall approve its detailed work procedure by a resolution.

V SUPERVISORY BOARD

5.1.   The supervisory board shall have 5 (five) to 7 (seven) members.

5.2.   The term of authority of the supervisory board shall be 5 (five) years.

5.3.   The members of the supervisory board shall be elected and removed by the general meeting. The members of the supervisory board shall be elected with their written consent.

5.4.   The members of the supervisory board shall elect from among themselves the chairman, who shall organise the activities of the supervisory board.

5.5.   Meetings of the supervisory board shall be held when necessary but at least once every three month. Meetings of the supervisory board shall be called by the chairman of the supervisory board or by a member of the supervisory board substituting for the chairman. Advance notice of at least three days shall be given of the meeting of the supervisory board and of its agenda.

5.6.   A meeting of the supervisory board is quorate if it is attended by over half of the members of the supervisory board. Minutes shall be taken of meetings of the supervisory board; minutes shall be signed by the chairman of the meeting, the recording secretary and all the attending members of the supervisory board.

5.7.   A resolution of the supervisory board shall be adopted if over half of the attending members of the supervisory board vote in favour of the resolution. The supervisory board has the right to adopt resolutions without calling a meeting if all the members of the supervisory board agree to it. A resolution adopted without calling a meeting is deemed to have been adopted if all the members of the supervisory board agree with the resolution.

5.8.   The supervisory board is competent:

5.8.1. to approve the annual budget and the principles of risk management;

5.8.2. to decide on the matters set out in clause 4.6 hereof and give consent to the management board for making such legal transactions and taking such actions;

5.8.3. to appoint and remove a procurator;

5.8.4. to decide on making legal transactions with members of the management board, determine the terms and conditions of such legal transactions, decide on the conduct of legal disputes with the members of the management board and appoint the Company’s representatives in such legal transactions or disputes.

VI  FINANCIAL STATEMENTS AND DIVIDENDS

6.1.   The financial year of the Company begins on 1 January and ends on 31 December.

6.2.   The management board shall prepare and submit the annual report along with the auditor’s report and the profit distribution proposal to the general meeting of shareholders in accordance with applicable enactments.

6.3.   A profit distribution resolution shall be adopted by the general meeting on the basis of the approved annual financial statements.

6.4.   The general meeting of shareholders may decide on the conduct of a special audit in matters pertaining to the management and financial situation of the Company in accordance with the Commercial Code.

6.5.   The Company’s management board may make advance payments to the shareholders with the consent of the supervisory board after the end of a financial year and before the approval of the annual report out of the presumed profit in the amount of up to one-half of the amount to be distributed among the shareholders.