effect of restitution to legal security of the acquisitions in Serbia

1. effect of restitution to legal security of the acquisitions in Serbia Vienna economic forum November 6 2007 workshop № 3 “Industrial and legal security challenges and risks”

2. Jankovic, Popovic & Mitic, is one of the largest and leading law firms on Serbian legal market, especially in M&A, banking and privatization, with excellent reputation domestically and abroad. Since 1991 JPM remains to be a fast growing, young, dynamic and committed law firm. The Partners, together with over 50 senior and junior lawyers, and other supporting staff and their extensive local and international education and experience have proven their capacity to provide solutions overcoming all the difficulties and to obtain clients’ trust to render the best possible legal services at all times. In the past year firm has advised on range of various cross border M&A transactions, takeover of listed and private companies, privatizations, real estate and development projects and on various other legal matters. Jankovic, Popovic & Mitic represents major international clients from financial, industrial and services sectors including banking, insurance, intellectual property and anti piracy, project finance, energy, real estate, construction and development. Our client portfolio ranges from multinational and national companies engaged in business activities in this region, banks and other financialinstitutions, institutional strategic and financial investors, to public and private institutions. We are “The Lawyers of Confidence” for the Austrian Embassy and Austrian Trade Delegation in Serbia and listed lawyers for the embassies of USA, Germany, Great Britain, Norway, as well as American Chamber of Commerce and German Chamber for Industry and Trade.

3. OUR EXPERTISE: Our lawyers are organized in practice area groups. Appropriate teams lead by one of the partners or senior attorneys are highly specialized but also at all times interdisciplinary orientated and working closely with other JPM groups. PRACTICE AREAS: • Commercial and Corporate • Mergers and Acquisitions • Privatization • Banking • International Investments • Law of Contracts • Commercial Litigation • Industrial and Intellectual Property • Real Estate • Environmental Law • International Trade • International Arbitration •Civil Law • Telecommunications • Broadcasting and Advertising • Banking Law • Tax Law • Establishment of Enterprises and Representative Offices • Privatization • Insurance Law • Labor Law WE CORRESPOND IN: • Serbian • English • German • French • Russian •Greek

4. PRACTICE AREAS CORPORATE / M&A This practicing field constitutes the firm’s main area of activity with the longest history. Our lawyers have experience in handling widest range of transactions from start-ups to large scale and complex corporate deals. Three partners and six senior lawyers have extensive experience enabling them to cover different stages of existence of enterprises and they advice on transactions and all other matters related to the acquisition of shares or stakes in companies. Starting from the capability of finding most suitable legal form, drafting of necessary foundation documents, registration with competent authorities, advising on capital increases or decreases, restructuring through the change in legal form such as mergers and splits including different modifications of these procedures to a fully support of the companies in their corporate governance, our mostly international clients are at all times assured that their local entities are at all times fully in compliance with applicable legislation. Our “Competition & Antitrust Department” within JPM Corporate / M&A team has been very active since recent adoption of the merger control rules in Serbia. Our experience and close cooperation with competent authorities guarantees adequate preparation and submission of all (rather complex) documentation necessary for the merger approval. Serbia has become very popular as investment country for a number of private equity and investment funds. We are fortunate to represent and support some of these investors in their activities in the region. Contacts Nenad Popovic, Partner nenad.popovic@jpm.co.yu Julijana Jevtic, Partner julijana.jevtic@jpm.co.yu Aleksandar Hadžic, Junior Partner aleksandar.hadzic@jpm.co.yu BANKING & FINANCE Jankovic, Popovic & Mitic is very proud on its Banking & Finance group lead by two partners, Ms. Julijana Jevtic and Mr. Zoran Teodosijevic. Our clients are major European and Serbian banks, insurance companies and other financial institutions, but also mostly local borrowers and customers. Close cooperation with other practice area groups, particularly Corporate/M&A, Real Estate and Tax enables us to provide comprehensive legal advice such as: • Acquisition financing • Asset financing • Bank loans and other financing facilities • Collateralization of financing and development of appropriate security structures • Foundation and statutory regulation of banks, insurance companies, brokerage firms, investments funds and other financial organizations Contacts Julijana Jevtic, Partner julijana.jevtic@jpm.co.yu Zoran Teodosijevic, Junior Partner zoran.teodosijevic@jpm.co.yu

5. PRIVATIZATION The year 2007 is according to Serbian Law on Privatization the final year of this process initiated in year 2002. The goal was to privatize more than 7.000 state and socially owned companies. With beginning of this year, some 1.000 companies remained. These are expected to be privatized or restructured and sold during this year. Some of the remaining biggest “bites” are NIS (Serbian Oil Industries), EPS (Electric Power Industry of Serbia), etc. Jankovic, Popovic & Mitic was widely involved in this process from very beginning of it. Being able to participate in a number of privatizations as legal advisor of the Privatization Agency of the Republic of Serbia on one hand, and on the other hand, supporting many potential buyers, mostly foreign strategic investors in their attempts to successfully take over local companies in different industrial branches, allowed us to gain huge experience and capability of understanding of needs of our clients from “both sides of the table”. How to evaluate a company to be privatized, how to calculate potential risks, what are the expectations of employees and their unions, how to structure obligatory investments, how much to offer as a purchase price, what is to be done after a successful acquisition, all these are usual questions on which we provide our clients with reliable answers. Starting with a due diligence procedures, via preparation of the bid or auction participation, negotiating the SPA and executing corporate changes in the privatized company, our services do not find their end with a successful acquisition, but mostly go beyond it and include legal follow up of the day-to-day business of a target company. Contact Nikola Jankovic, Partner nikola.jankovic@jpm.co.yu DISPUTE RESOLUTION / LITIGATION The JPM litigation department is comprised of several dynamic, highly experienced lawyers with extensive knowledge in all domains of business law and commercial litigation as well as a vast of classic civil law matter. With a dispute resolution team and litigation team, we can swiftly make available all the recourses necessary for dealing with the full range of complex and significant disputes that our client could possibly encounter. Our approach to litigation and dispute resolution is that prevention is better than cure. Where litigation is unavailable, we have proven ourselves in working successfully toward your commercial objectives and avoiding reputational risks. We look to bring disputes to an early and successful conclusion through team work, strategic, creative and analytical thinking. The JPM litigation department also recognizes the value of alternative dispute resolutions. Our lawyers have demonstrated high expertise in handling the most sensitive and complex cases including cases in fields of international private and international commercial law. The JPM litigation department has in-depth experience and long standing activities in a wide range of issues, such as: • commercial, • bankruptcy, • labor, • insurance, • classic civil law, • international arbitration • corporate, The advantage for our clients is that they are being provided with timely information concerning resolution of their particular case. If you opt JPM you can be confident that the legal work will be done with the highest level of personal and professional commitment. Our litigation department corresponds in the Serbian, English and German languages. Contact: ŽZarko Borovcanin, Senior Lawyer zarko.borovcanin@jpm.co.yu

6. REAL ESTATE & CONSTRUCTION JPM Real Estate & Construction is the fastest growing department within Jankovic, Popovic & Mitic. Headed by Partner Milos Mitic, this practice area group advises on all aspects of real estate, including legal support in connection with significant real estate transactions, particularly acquisitions, project development, project financing, lease and sale of property. The very complex and historically heavily burdened legal situation in Serbia concerning real estate has brought about the necessity for reliable legal advice from experienced lawyers in possession of the detailed information necessary for the understanding of local specificities. JPM Real Estate & Construction is daily expanding its knowledge and expertise and is fully prepared to provide its clients with optimal solutions and reliable legal advice. Our services start with the research of potential development locations including a due diligence procedure based on obtained documents and information. The best possible solutions for developers are prepared in cooperation with relevant public authorities. Obtaining of all necessary permits from the competent authorities is the next step in our involvement. Other services such as Project Finance, including drafting and negotiating of financing agreements and preparation and registration of security documents, drafting and negotiating of contractors and subcontractors agreements and lease agreements and, finally, advising in real estate litigation and environmental issues make up the palette of JPM Real Estate & Construction activities. Although the legislation concerning restitution issues (property confiscated and nationalized after the Word war II) has not yet been completed in Serbia, JPM Real Estate & Construction has been very active in the registration procedure of these claims with the competent authorities and shall commence with restitution procedures as soon as the appropriate legislature framework has been adopted. Contacts Miloš Mitic, Partner milos.mitic@jpm.co.yu Dragan Grbic, Senior Lawyer dragangrbic@jpm.co.yu INTELLECTUAL PROPERTY Jankovic Popovic & Mitic advises a number of international clients on broad range of intellectual property matters. The firm’s copyright practice involves counseling on the availability and registrability of trademarks, prosecuting applications for registration before the Intellectual Property Office and designing and implementing worldwide trademark protection programs. Our attorneys currently manage extensive trademark portfolios for a number of multinational clients. Jankovic Popovic & Mitic possess leading expertise on copyright, trademark infringement, anti-piracy, unfair competition, false advertising, broadcasting, consumer protection and trade secrets theft. Our attorneys understand that intellectual property litigation becomes a way of establishing a client’s future competitive position rather than simply resolving a dispute. Contact Miloš Mitic, Partner milos.mitic@jpm.co.yu

7. EMPLOYMENT / LABOR LAW With the adoption of new labor regulations in Serbia JPM focused its activities on meeting the client’s needs and daily requirements (mostly on the employer’s side) from the perspective of employment relations. Volume and the importance of successful work we have completed for our clients, ranks us as one of the leading labor law practices in Serbia. Our firm provides its clients full range of high-standard legal services and advises on all aspects of: • Individual employment rights and responsibilities • Employment of foreign citizens • Work beyond the scope of employment • Employment termination • Redundancies and social plans • Trade unions and collective bargaining agreements • Social and pension contributions • Strikes • Labor disputes • Bilateral treaties on social insurance The preparation and/or redrafting of the general and individual employment documents (from collective bargaining agreements; rulebooks governing internal labor relations, organization of work and job systematization; through employment contracts and various types of the employers’ decisions) including implementation/localization of the clients’ standard document forms, constitute the essential part of our work. Subject to our clients’ request, our labor team undertakes regular due diligence procedures and reports their findings recommending the most appropriate legal solutions. Our work is also based on active participation during negotiation processes depending on various forms of investments (including privatizations, private deals, etc.), trough representing clients before courts and other Serbian authorities; from the tax perspective, our aim is to find the key solutions from the client’s ideas to implementation. Therefore, our labor team cooperates closely with other JPM experts covering the area of litigation, privatization, banking & finance, corporate/M&A, taxation. We are equally focused on and committed to supporting our clients’ businesses by providing a range of additional services (preparation and submission of applications on mandatory social insurance; close cooperation/communication with the competent authorities; conducting presentations and seminars); We frequently monitor regulations that are in the process of adoption and studying strategies / practice of the competent authorities that correlate to the implementation of the labor legal system. Considering the fact that the field of employment is gradually becoming an important area of our activities, 3 senior lawyers with supporting team of experts, under the supervision of the senior lawyer with an extensive 27 years experience in labor issues within Labor Market Bureau of Serbia, are frequently dedicated to it. Contact Zorica Alavantic zorica.alavantic@jpm.co.yu

8. BANKRUPTCY & INSOLVENCY The field of insolvency and bankruptcy with recent substantial changes of Serbian bankruptcy legislation became one of the of firm’s activities with two senior lawyers who are licensed Bankruptcy administers providing advice to several local and international clients. Our services include negotiating among debtors, creditors, purchasers, and other parties in cases of Bankruptcy. We provide clients with problem loan analysis, analysis of collateral positions, and pre-bankruptcy restructuring and planning. We assist clients in purchasing or selling assets in liquidations. JPM’s restructuring and insolvency attorneys also have experience in dealing with the purchase and sale of assets at bankruptcy sales, mergers and acquisitions of troubled companies and bankruptcy claims trading. Our restructuring and insolvency attorneys cooperate with other practice groups such as finance, labor and employment, tax, real estate, intellectual property, and litigation to meet the full range of client needs. Contacts Jelena Gazivoda, Senior Lawyer jelena.gazivoda@jpm.co.yu Natasa Cveticanin, Senior Lawyer natasa.cveticanin@jpm.co.yu OTHER PRACTICE AREAS Some of other practice areas of Jankovic, Popovic & Mitic include different kinds of administrative proceedings (foreigners residence and work permits etc.), representation in procedures of granting licenses (energy production and trade, broadcasting, games of chance etc), concessions (highways, waste management) and environmental matters (development projects regarding waste management with a number Serbian municipalities, including entrustment of the communal activities to the Strategic Partner, as well as continuation of construction and management of the regional landfills and the selection centers).

9. RELEVANT PROJECTS IN LAST 12 MONTHS

10. REPRESENTATIVE CLIENTS EMBASSIES: AUSTRIAN EMBASSY EMBASSY OF GERMANY EMBASSY OF GREAT BRITAIN EMBASSY OF UNITED STATES OF AMERICA TRADE CHAMBERS: AMERICAN CHAMBER OF COMMERCE (Founders) AUSTRIAN CHAMBER OF COMMERCE GERMAN CHAMBER OF COMMERCE (DIHK) Italian Institute for Foreign Trade (I.C.E) BANKS: AGRICULTURAL BANK OF GREECE BANK AUSTRIA BANCA INTESA BAYERISCHE HYPOVEREINSBANK COMMERZBANK CREDIT AGRICOLE DRESDNER BANK GENERAL ELECTRIC CONSUMER FINANCE (GE) HRVATSKA NARODNA BANKA HYPO ALPE-ADRIA-BANK IKB DEUTSCHE INDUSTRIEBANK MERIDIAN BANK RAIFFEISEN ZENTRALBANK ÖSTERREICH RAIFFEISENBANK UNICREDIT BANK VOLKSBANK ZEPTER Banka COMPANIES AND REPRESENTATIVE OFFICES: ALFA-LAVAL ALLTECH BIOTECHNOLOGY ALPINE MAYREDER AON Holdings .A.S.A. ATEKS AUTOCOMMERCE AUSTROWAREN AVENTIS AVON Cosmetics BANK AUSTRIA CREDITANSTALT LEASING BASF BAUMIT BEIERSDORF BERLIN CHEMIE BILLA BIOMEDICA CASINOS AUSTRIA COLGATE–PALMOLIVE COLLIERS Continental Properties C Market DANFOSS DDSG CARGO DEBIS ECOLAB HYGIENE EFES BEVERAGE GROUP ENIA CARPET GROUP ERNST & YOUNG ERMENEGILDO ZEGNA EUROSPORT FKP SOJUZPROMIMPORT FUJITSU SIEMENS COMPUTERS FPP Balkan Limited GENERALI VERSICHERUNG GORENJE GOVERNMENT OF THE REPUBLIC OF SERBIA HENKEL HiPP u. Co Export HÖDLMAYR Logistics HYPO Leasing HYUNDAI AUTO ILIRIKA ILIRIKA TURIZAM INSTITUT ZA NUKLEARNA ISTRAŽIVANJA VINČA ITM IVAX CR KBC KIKA-LEINER KLACSKA KLÖCKNER MÖLLER KNJAZ MILOŠ AD KNAUF KOTANYI KÖGEL KUNERT LKW WALTER INTERNATIONAL LOUIS VUITTON MALLETIER LURA LUTZ MANN + HUMMEL MAYR-MELNHOF KARTON MERCK SHARP & DOHME MESSER GROUP MICROSOFT CORPORATION MICROSOFT SOFTWARE MITTAL STEEL N.V MK COMMERCE MÖLER GROUP MOL HUNGARIAN oil and gas NECKERMANN H. NEUMMAN INTERNATIONAL HOLDING OBB OLYMPUS ORF OSRAM OTIS PIONEER PUMA RAIFFEISEN INVESTMENT RAUCH REHAU REWE RIGIPS ROBERT BOSCH ROCKWOOL INTERNATIONAL RÖFIX SAVE THE CHILDREN FUND U.K. SALFORD CAPITAL PARTNERS INC. SCHENKER & CO SCHILLER SCHWAN STABILO SIKA SITECO S‘OLIVER STINNES STORA ENSO STRABAG TELEKOM MONTENEGRO TELENOR TYROLIT UNITED CARRIER TEHNOLOGIES VEOLIA VIESSMAN HOLDING INTERNATIONAL VISA INTERNATIONAL VOEST ALPINE WELLA WELZ INTERNATIONAL SPEDITION YTONG HOLDING (XELLA Porenbeton Holding) ZDRAVLJE ACTAVIS ZEPTER OSIGURANJE

11. effect of restitution to legal security of the acquisitions in Serbia

12. Restitution of Confiscated and Expropriated Property in Serbia Not Regulated Enactment of Law on denationalization and construction land is expected Law on evidencing of seized property (“Official Gazette of the Republic of Serbia”, no. 45/2005) Evidencing of seized property (in accordance with regulations rendered after March 9th 1945); Evidencing completed on June 30th 2006; 73.000 applications submitted approximate value in excess of 100 billion EUR; Draft law limits amount available for compensation to 4 billion EUR.

13. Main features of Draft Law on Denationalization and Construction Land • Definition of property to be denationalized: • Property nationalized in accordance with regulations rendered after January 1st 1945; • Property confiscated in accordance with regulations of occupying authorities following April 6th 1941; • Expropriated property if compensation has not been paid or if goal of expropriation was confiscation; • Main principles: • Principle of priority of natural restitution; • Principle of the autonomy of will (in regulating mutual relations between restitution obligor and beneficiary); • Principle of respecting the person and general interest; • Principle of protection of bona fide purchaser; • Principle of urgent procedure.

14. Principle of Protection of Bona Fide Purchaser • Bona fide purchaser • Bona fide purchaser is person/entity who/which after nationalization has acquired title in accordance with the law; • Bona fide purchaser shall detain title. • Mala fide disposal • Disposal after October 5th 2000; • Parties have had to know that property is nationalized; • Every disposal after June 8th 2005 (date when Law on evidencing of seized property came into force) is mala fide disposal; • Both seller and buyer are responsible jointly and severally; • Does not apply: • to sale of property in the procedure of privatization in accordance with Law on privatization; • to buyers which acquired the property against the market value consideration.

15. Denationalization and Provisions of Sale Purchase Agreement In Sale of Property by Public Auction • The Buyer has prior to the day of the auction been apprized of the fact that the property of the Subject also includes nationalized property and agrees to treat the nationalized property in accordance with the provisions of the law that shall govern this area; • Nationalized property, in the context of the provisions hereof, shall mean property confiscated from natural and legal entities (hereinafter referred to as previous owners) by the application of regulations on the confiscation of property in the territory of the Republic of Serbia, regulated by a special regulation governing the issues related to the restitution of property; • The scope and nature of the rights of previous owners of nationalized property shall be assessed in accordance with the provisions of the law governing this area, based on the factual state on the day of holding the auction.

16. JANKOVIĆ, POPOVIĆ & MITIĆ Čarli Čaplina 37, 11000 Belgrade, Serbia Phone: +381 (0) 11 207 6850, Fax: + 381 (0) 11 207-6899 , E-mail:office@jpm.co.yu | Online: www.jpm.co.yu