Irani

Articles Incorporation

Celulose Irani S.A., it is a Limited company that will be governed by the present articles of association and for the applicable legal dispositions.  

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Article 1- CELULOSE IRANI S.A. is a Corporation that is governed by the present Articles of Incorporation and by the applicable legal provisions.

Paragraph 1 – With the admission of the Company to the special listing segment named Level 2 of Corporate Governance, of BM&FBOVESPA S.A. – Sao Paulo Stock Exchange (“BM&FBOVESPA”), the Company, its shareholders, Managers and Members of the Fiscal Council (when existing) are subject to the provisions of the Listing Regulation Level 2 of Corporate Governance of BM&FBOVESPA (“Level 2 Regulations”).

Paragraph 2 – The provisions of the Level 2 Regulations shall prevail over the by-laws provisions, in events of prejudice to the rights of the beneficiaries of the public offers foreseen under this Statute.

Article 2 - The Corporation is headquartered and forum and its place of business in Porto Alegre, State of Rio Grande do Sul at Rua General João Manoel, 157, 9th floor, room 903.

Sole Paragraph - In addition to the industrial and commercial facilities, branches, agencies and depots under its possession, the Corporation may, at the discretion of its Board of Directors, create or discontinue other facilities at any location in the country. 

Article 3 - The Society's purpose is: a) the industrialization and trade of pulp, paper, paper packaging in general and its derivatives, as well as the industrialization and commercialization of wood; b) the administration of forestation, reforestation projects and forestry services provided by third parties, required for the industrialization process of pulp, paper, packaging paper in general and its derivatives, as well as the industrialization and commercialization of wood; c) the manufacture and trade of furniture, sheets and artifacts in general with a predominance of wood; d) import and export of agricultural or industrial products, especially wood, pulp and paper related to the business purpose; e) the industrialization, trade, import and export of resinous products and their derivatives and f)  the manufacture and trade of calcium carbonate.

Sole Paragraph - The Company may, by deliberation of the Board of Directors, take part in other companies as a stockholder or quota holder, if these Companies have, or not, similar objectives to those of the Company. 

Article 4- Duration of the Corporation is indefinite.

Article 5 – The capital totals R$ 161,894,847.81 divided into 166,720,235 registered book-entry shares, without par value, of which 153,909,975 are common shares and 12,810,260 are preferred shares.

Paragraph 1 - Each common share has one voting right in the deliberations at the Shareholders Meeting. 

Paragraph 2 – The preferred shares assure to its holders the following benefits:

(a)    Priority in capital reimbursements, without premium, for its book value, in the event of liquidation of the Company;

(b)   The right to be included in public offering of acquisition of shares due to the Sale of the Company’s Control (as defined under Chapter VIII of these by-laws) for the same price and conditions offered to the Selling Controller Shareholder; and

(c)    Dividends at least equal to those of the common shares.

Paragraph 3 – The preferred shares are not entitled to vote, save regarding the specific matters under paragraph 4 of these by-laws, and will not become entitled to voting even in the event of non payment of dividends.

Paragraph 4 – Each preferred share entitles its holder to restrict voting rights, solely for the following matters:

(a)    Transformation, incorporation, merger or spin-off of the Company;

(b)   Approval of contracts between the Company and its Controlling Shareholder, directly or through third parties, as well as other companies in which the Controlling Shareholder detains interest, whenever due to legal or statutory provision these are decided in General Meetings;

(c)    Assessment of goods aimed at paying up for increases of capital at the Company;

(d)   Choice of specialized institution or company to determine the Company’s Economic Valuation, according to the article 35 of these by-laws; and

(e)    Change or revoking of by-laws provisions that alter or change any of the requirements foreseen under item 4.1 of the Level 2 Regulations, and such voting right shall prevail when the Contract of Level 2 Participation of Corporate Governance is in effect.

Paragraph 5 - The Company may create new classes of preferential shares or promote an increase of the existing preferential shares class regardless of proportion to the remaining preferential shares classes, observing for the preferential share without voting rights or subject to restriction to this right, while observing the limit of two thirds (2/3) of the total shares issued. In the increases of capital, either by subscription or by capitalization of profits and reserves, the existing proportionality among the several types and classes of shares issued by the Company, may not be observed.

Article 6- The shares into which the capital stock is divided shall be of the nominative form. 

Paragraph 1 – The Company is hereby authorized to keep all of its shares or one or more classes of it in trust accounts on behalf of its owners, at the financial institution authorized by the Securities and Exchange Commission, as designated by the Management Council.

Paragraph 2- The trustee institution of the uncertified shares shall always supply on request a statement of their share deposit account at the end of each month if transactions occur and, if no transaction occurs, at least once every year. 

Paragraph 3 - The trustee institution may charge the shareholder a service fee for ownership transfer of uncertified shares, within the official regulatory limits.

Article 7 – The Company, subject to the approval of its Management Council, is authorized to increase its capital, regardless of amending its by-laws, by issuing common or preferred shares without keeping the existing ratio between the different types of shares, up to a limit of 900,000,000 shares, all without nominal value, represented by 300,000,000 common shares and 600,000,000 preferred shares.

Paragraph 1 – The issuance of shares, whether public or private, for subscription in cash, assets or by conversion of credits into equity, within the limits of authorized capital, subject to the provisions of article 170, paragraph 3 of Law 6,404/76, shall be performed by decision from the Management Council, which shall decide, if necessary, about the registration of the securities issued by it at the respective bodies and about the execution of a public offer, as well as set the number of shares to be issued for distribution in the Country and/or abroad, in a public or private manner, pricing and other conditions for subscription, observing the legal and statutory norms and the following conditions:

(a)    When relating to issues aimed at private subscription, the Board shall inform the shareholders, by notice published in the media about the decision of the Management Council to increase the capital, offering them a minimum term of 30 (thirty) days counting from the publication of the notice to exercise their respective preference rights.

(b)   upon dealing with the emission for public subscription, the Board of Directors has the option of determining the exclusion or reduction of preferential rights of the legal term for the exercise of this right; and

(c)    in any case, the minimum amount for the initial payment of shares shall be ten per cent (10%) of the issue price for subscribed shares, whereas the balance must be paid according to the requests of the Board of Directors within a term to be set by the Board of Directors, which cannot exceed twelve (12) months.

Paragraph 2 - The Company shall proceed to issue, without preference to old shareholders or with reduction of legal term for the exercise of this right, the shares, debentures convertible into shares or subscription bonus, placement of which is done pursuant to the provisions of Article 172, items I and II in Law # 6.404/76.

Paragraph 3 – The Company, within the limits of authorized capital, and according to the plan approved by the General Meeting, may grant, by an act of the Management Council, call options (“stock option”) to its managers, employees and natural persons who render services to the Company or to enterprises controlled by it, excluding the preference rights of the shareholders in the granting and exercise of call options.

SECTION I – GENERAL PROVISIONS

Article 8- Management of the Company shall be exercised by a Board of Directors with deliberative functions and by a Board of Directors with representative and executive functions. 

Paragraph 1 - The mandate of the Council Members and Directors is unified, having a duration of 2 (two) years, allowing reelection.

Paragraph 2- The term of management of Directors shall be extended until the newly elected administrators and to power. 

Paragraph 3 – The vesting of Council Members and Directors shall be effective by signing the office taking term at the relevant corporate book, exempting warranty for its management.

Paragraph 4 – The vesting of the Management Council Members and of Directors shall be subject to prior subscription of the Agreement Certificate of the Managers, as provided for in the Level 2 Regulations, and to the compliance with the applicable regulatory requirements.

Paragraph 5 – The managers shall receive a compensation that is set for them on global basis by the General Meeting, which may include fixed and variable remuneration (quarterly bonuses and annual or special compensations) and benefits, apart from participation in the profits as set under article 24 and stock option plans. The global amount set by the General Meeting shall be shared among the Council Members and the Directors as defined by the Management Council, observing the provisions under paragraph 7.

Paragraph 6 – The positions of President of the Management Council and President or Chief Executive of the Company may not be occupied by the same person.

Paragraph 7 – The President of the Management Council shall be entitled to an annual compensation paid on the same timelines, corresponding to 10% above that of the Company’s CEO, including fixed compensation, variable compensation and stock options, and the same benefits attributed to the CEO. The vice-president of the Management Council shall be entitled to a global annual compensation equivalent to 15% (fifteen percent) of the compensation attributed to the Council’s President.

SECTION II – THE MANAGEMENT COUNCIL

Article 9 – The Management Council shall be formed by at least 5 (five) and at most 9 (nine) members, all elected and removable from office by the General Meeting, with an unified mandate of 2 years, allowing reelection.

Paragraph 1 – From the Management Council, at least 20% (twenty percent) of the members shall be Independent Council Members, according to the definition set by the Level 2 Regulations, expressly declared as such in the minutes of the General Meeting that elects them, being also considered as independent the council members elected under the conditions foreseen under article 141, paragraphs 4 and 5 of Law 6,404/76.

Paragraph 2 – When, due to the observance of the percentage referred to in the above paragraph, a fraction number of council members is attained, the rounding will be effected according to the terms of the Level 2 Regulations.

Article 10 - The Shareholders' Meeting shall assign, among the elected Directors, those that shall take the position of Chairman and Vice-Chairman of the Board.

Paragraph 1 – In the event of temporary impediment of the President, the Management Council shall be chaired by its vice-president. If the temporary impediment exceeds 60 (sixty) days or if the vacancy of this position is determined, a General Meeting shall be called for election of the new President of the Management Council, within the 30 (thirty) days following the event of any of the above situations.

Paragraph 2 – If the vice-presidency position is vacant, the Management Council shall select one of its members to replace him, with a mandate valid until the following General Meeting.

Paragraph 3 - Without prejudice to the provisions of the previous paragraph, whenever any position of the Board of Directors becomes vacant, the remaining Directors may appoint a substitute, who shall take over until the next Shareholders' Meeting. When most of the positions vacate, a Shareholders' Meeting shall be immediately called to order to proceed with the election of new members, who shall complete the mandates of the replaced positions.

Article  11 -  It is up to the Chairman or the Vice-Chairman, the latter in the event of absence or impairment of the former, to call and preside the meeting of the Board of Directors, which shall be installed and take place validly with the presence of at least half of its members, necessarily included the President, when not absent or indisposed. The summons must send at least 3 (three) days in advance by registered letter or other written means, with a brief description of the agenda, considering those regularly convened meetings at which all directors are present, regardless of formalities convocation.

Paragraph 1 - The deliberations of the Board of Directors shall be taken by majority votes from the present Directors, whereas the Chairman gives the casting vote and they must always be stated in the minutes recorded in the proper book. The minutes that contain deliberations designed to produce effects toward third parties must be filed with the trade board and be published at a later date.

Paragraph 2 – The council members may take part in the Management Council meetings by conference call or video conferencing.

Article 12 - It is up to the Board of Directors: 

(a)    To set general guidelines for the Company's business;

(b)   To elect and dismiss Company Directors and set their assignments, observing the provisions in these Articles;

(c)    To audit the management of its Directors, examine at any time the Company books and papers, request information on contracts entered into or about to be entered into and any other acts;

(d)   To call yearly a Shareholders' Meeting and Special one, as and when deemed convenient;

(e)    To manifest about the management report and the Board's accou;

(f)    To choose and dismiss independent auditors;

(g)   Decide about the acquisition of shares issued by the Company, for cancellation, entreasuring or subsequent sale, as well as about the sale of entreasured shares or their destination for the stock option plan approved by the General Meeting;

(h)   Decide about the provision of warranties to obligations of third parties;

(i)     Deliberate on the issue of new shares in the terms provided in Article 7;

(j)     Deliberate on the distribution between Company managers, of the global remuneration that has been set for them by the Shareholders' Meeting;

(k)   Deliberate on the emission of subscription bonus, setting their respective conditions;

(l)     Deliberate on the emission of simple debentures, not convertible into shares;

(m) Decide and authorize the issuance, buy-back, amortization and/or settlement of shares, debentures, pledging and mortgage notes, promissory notes and any other securities or instruments of public placement;

(n)   Approve the annual budgetary plans for the Company’s businesses and of its controlled companies;

(o)   Approve the process and procedures for the Company’s internal management and of its controlled companies;

(p)   Approve any transactions, financings and agreements that involve liens of assets and rights of the Company, if these are not foreseen at the annual budgetary business plan;

(q)   Approve the sale, assignment of right of use, rental, leasing or encumbrance of any of the Company’s assets, not foreseen under the annual budgetary business plan, representing, on a single or in sequential transactions during the same financial year, an amount equal or above 1% (one percent) of the fixed assets;

(r)     Approve the signing of contracts or agreements, and the execution of any payment, expenditure or investment not foreseen under the annual budgetary plan of the Company, representing, on a single or sequential transactions during the same financial year, an amount equal or above 1% (one percent) of the fixed assets;

(s)    Decide about the establishment of real charges and provision of warranties to own obligations foreseen under the annual budgetary plan of the Company representing, in a single or sequential transactions during the same financial year, an amount equal or above to 20% (twenty percent) of the fixed assets;

(t)     Approve the execution of any contracts: (a) between the Company and companies in which the Controlling Shareholder detains a significant interest, according to the terms of Law 6,404/76; and (b) between the Company and any of its shareholders detaining 5% (five percent) or more of the capital; and (c) between the Company and its managers or members of the Fiscal Council;

(u)   Prepare and approve the vote to be cast by the Company at the general meetings of companies in which the Company is a stakeholder;

(v)   Set the fixed and variable compensations globally established by the General Meeting to each of the members of the Management Council and Directors;

(w) Establish committees and groups, permanent or temporaries, and elect their members, aiming at supporting the Company’s Management Council;

(x)   Establish the rules for issuance and cancellation of Certificates of Deposit of Shares (“Units”);

(y)   Issue a favorable or contrary opinion about any public offer for acquisition of shares having as object the stocks issued by the Company, through a qualified prior opinion, released within 15 (fifteen) days from the publishing of the public offer for acquisition of shares, which shall entail, at least: (i) the convenience and opportunity of the public offer for acquisition of shares regarding the joint interest of the shareholders and the liquidity of the securities held by them; (ii) the repercussions of the public offer for acquisition of shares in regards to the Company’s interests; (iii) the strategic plans disclosed by the bidders regarding the Company; (iv) other points that the Management Council deems as relevant, and the information required by the applicable rules established by CVM;

(z)    Define a triple list of companies specialized in economic valuation of enterprises to prepare a valuation report of the Company’s shares, in events of OPA for cancellation of registration of public listed company or to exit the Level 2 of Corporate Governance; and

(aa)Perform other attributions foreseen under these by-laws and decide about any issue not foreseen hereunder.

Sole Paragraph - The Management Council’s President has the following attributions, without prejudice to others that are attributable to him at law:

(i)    Ensure the integrity and evolution of the vision, mission, values, beliefs, principles, culture, strategies, guidelines – above all regarding sustainability – and monitor its proper and timely operation by the Company’s management;

(ii)   Ensure the efficiency and good performance of the Management Council;

(iii)  Ensure the efficiency of the monitoring and appraisal system by the Company’s management Council, of the Council itself, the Board and, individually, of the members of each of such bodies;

(iv)  Make the activities of the Management Council compatible with the Company’s interests, of its shareholders and other interested parties;

(v)   Coordinate the activities of the other council members;

(vi)  Preside the Management Council and General Meetings, according to this by-laws Articles 11 and 19;

(vii)   Ensure the fulfillment of the Internal Regulations of the Management Council, which shall be prepared by that management body.

SECTION III – BOARD OF DIRECTORS

Article 13 - The Board of Directors shall be comprised of at least two (2) and at most eight (8) members, shareholders or not, residing in the country, elected by the Board of Directors. 

Paragraph 1 – In the event of vacancy or permanent impediment of Directors, resulting in a number lower than the minimum quantity of Directors set herein, a Management Council meeting shall be called according to these by-laws, in order to elect the replacing Directors for the remainder of the vacated mandate.

Paragraph 2 – The Board of Directors shall meet whenever called by the CEO. Board meetings will be installed when attended by the majority of its members, necessarily including the CEO.

Paragraph 3 – The decisions of the Board of Directors are approved by majority voting of its members, with the CEO being entitled to the untying vote; such meetings shall always have minutes recorded in the appropriate corporate book.

Article 14 - It is up to the Board of Directors to practice all the acts necessary to regulate the operations of the Company, which are not under the competence of the Shareholders' Meeting or Board of Directors, which are: 

(a)    Represent the Company at court or elsewhere;

(b)   Execute contracts of any nature, acquire, sell or encumber properties, borrow loans and grant warranties of any nature, observing the provisions of these by-laws and of applicable legislation, as well as the limitations established by the Management Council;

(c)    Appoint “ad judicia” and “ad negotia” attorneys, setting the timeline for their respective mandates; for cases of “ad negotia” powers of attorney, such term may not exceed one year;

(d)   Open and operate bank accounts, issue and endorse checks and promissory notes, issue and endorse bills and drafts, endorse warrants, deposit certificates and bills of lading, observing the provisions of these by-laws and the limitations established by the Management Council;

(e)    Hire and terminate employees, establishing their duties and wages;

(f)    Submit to the General Meeting the financial statements required by law and the proposed destination of the financial year’s results, after obtaining an opinion from the Management Council and from the Fiscal Council (if the latter is active);

(g)   Receive and provide discharge, condescend, renounce to rights, forsake and sign undertaking of liabilities, observing the terms of these by-laws and applicable legislation, as well as the limitations established to the Management Council;

(h)   Perform all management actions required to attain the Company’s objectives;

(i)     Cast the Company’s votes at the general meetings of the companies in which the Company owns capital shares, according to prior guidance from the Management Council;

(j)     Insure and keep properly insured – through renowned insurers – all Company assets that are bound to be insured, against all risks that are generally insured against by companies acting in the same or in similar fields, in order to attain full reimbursement for the cost of replacing such assets;

(k)   Approve the opening and closing of branches, offices, agencies or establishments of the Company;

(l)     Approve the acquisition or granting to third parties of licenses for use or any other of trademark, brand or industrial and intellectual property, including know-how; and

(m) Approve the filing, by the Company, of any legal and/or administrative proceedings, and the compromising regarding any legal or administrative proceeding involving the Company that is not foreseen in the annual budgetary business plan.

Paragraph 1- designation of position titles of Directors and setting of respective assignments shall be established under specific resolution of the Board of Directors.

Paragraph 2 - The Company is represented by:

(a)    extra judicially by two (2) Directors together, by a Director together with an attorney or by two (2) attorneys together; and

(b)   judicially, by the Director to whom this competence is assigned by the Board of Directors in the Resolution under the aforesaid paragraph 1 or by an attorney specially appointed for such a purpose. 

Paragraph 3 – In the matters foreseen under items (c), (f) and (i) of the above article 14, the extrajudicial representation of the Company shall always require the signature of its CEO.

Paragraph 4- Regarding the granting of mandates, the provisions of the sole paragraph of Art 144 must be observed under Law # 6,404/76 and all what is provided in the mentioned resolution of the Board of Directors in such respect.

Article 15 – The Company shall have a Fiscal Council, which will not function permanently, and may be installed by the General Meeting upon request of the shareholders according to the circumstances provided at law.

Sole Paragraph – The General Meeting in which the request to install the Fiscal Council is made shall elect and vest the members of such council in office, setting their respective compensation, according to paragraph 3 of article 162 of the Law of Companies Organized by Shares.

Article 16 – The Fiscal Council will be formed by at least 3 (three) and at most 5 (five) members, with the same number of alternate officers, who may or may not be shareholders, having to be residents in Brazil, elected and replaceable by the General Meeting.

Paragraph 1 - The members of the Audit Committee and its deputies shall exercise their occupations up to the first Shareholders' Meeting, which is held after their election, whereas they can be reelected. 

Paragraph 2 – The vesting of the Fiscal Council members is subject to prior execution of a Term of Consent from the Fiscal Council members, according to the provisions of Level 2 Regulations, and to the fulfillment of the applicable legal requirements

Article 17 - The attributions and powers of the Audit Committee are set by law and cannot be delegated to another organ of the Company. 

Paragraph 1 - During the working period of the Audit Committee, at least one of its members must attend the Shareholders' Meetings and respond to inquiries from shareholders.

Paragraph 2 If the Fiscal Council is installed, it shall meet whenever necessary upon calling by one of its members or by the Company’s Board of Directors. Regardless of any formalities, its meetings will be considered as regularly setup when all council members are present.

Paragraph 3 The Fiscal Council decisions are taken by absolute majority of votes, when attended by the majority of its members, and the respective minutes of the meeting shall be recorded at the appropriate corporate book.

Article 18 - The Shareholders' Meeting is to be normally held within the four (4) months following the end of the fiscal year to deliberate on matters that behoove them by law and hold special meetings whenever the corporation's interests so require, without prejudice to the precepts of law in the respective calls.

Article 19 –The General Meeting shall be chaired by the Management Council’s President, who shall appoint a Secretary.

Sole Paragraph – In the event of the Management Council’s President being absent or under impediment, its Vice-President or the Council Member or Director appointed in writing by the President of the Council or his replacement shall preside the General Meeting and appoint the Secretary.

Article 20 - In order to be able to take part in the aforesaid Meeting, the shareholders must submit an identity document and, if required, a voucher from the trustee institution of the shares, dispatched not earlier than four (4) days counting from the Meeting date. 

Sole Paragraph - In order to better organize the work of the Meeting, the proxy instrument for representing the shareholders at general meetings must be deposited at the Company's headquarters, not later than three (3) days before the Meeting. The shareholder who fails to make a prior deposit may attend the General Meeting, provided that he attends the meeting with the necessary documents to take part in it.

Article 21 - Except as otherwise provided in law, the meeting's deliberations, also in the event of modifying the corporation's type, must be taken by the absolute majority of votes, without counting the blank votes, subject to the provisions of Paragraph 1 of Article 36 below.

Article 22 – The financial year shall end on December 31st of each calendar year, when the Board of Directors shall cause the issuance of the financial statements required by law; the issuance of financial statements related to shorter periods of time is allowed, according to decisions of the Management Council.

Article 23 - Before any distribution takes place, accrued losses, if any, must be deducted from the annual income and the income tax provision.

Article 24 - After the deductions have been made that are referred to in Article 23 above, there may be deducted, at the discretion of the Board, the involvement of the employees in the profit and the share of the Company's management, the latter to an amount that does not exceed 10% (ten percent) of the profits, or their annual salary, if this is lower.

Paragraph 1- The management shall be entitled only to the equity in the fiscal year's profit sharing in relation to what the shareholders are assigned the compulsory dividend provided in Article 26 herein under.

Paragraph 2- The equity assigned to management in the terms of this Article shall be shared among its members according to the specific deliberation by the Board of Directors. 

Article 25 The resulting net income after the deductions set forth in Articles 23 and 24 above will be reduced or increased by the following amounts, according to Article 202, part I, of Law No. 6404 of December 15, 1976:

(a)     5% (five percent) allocated to the statutory reserve;

(b)     an amount allocated to the formation of a reserve for contingent liabilities and reversion of the same reserve formed in previous periods;

(c)     an amount allocated to the formation of a reserve for tax incentives.

Paragraph 1 - The Company will maintain in a Statutory Reserve of Biological Assets the unrealized amounts in connection with the initial adoption of the Fair Value of Biological Assets for purposes of International Financial Reporting Standards – IFRS (CPC 29).  No amount will be paid for the formation of this reserve, in this way, there will be no annual portion of the profit to be constituted according to Art. 194, part II, of Law No. 6.404. The reserve will be made up of the amount of the depletion of the fair value of the initial adoption of the biological assets, as ascertained in each period and free of tax effects. The amount realized in each period will be transferred to retained earnings (or losses) for allocation. The Reserve of Biological Assets will not exceed the amount of the capital. 

Paragraph 2 - In addition to the adjustments set forth in the introductory paragraph of this article, the net income will also be adjusted by:

a) the realized amount of the Reappraisal Reserve;

b) the realized amount of the Reserve of Biological Assets;

c) the realized amount of the Equity Appraisal Adjustments account;

Article 26 - In terms of the aforesaid Article 25, an amount not less than twenty-five per cent (25%) shall be distributed from the adjusted net profit to all the shareholders as compulsory dividend.

Sole Paragraph – The Management Council may approve, “ad referendum” from the general meeting, the payment or crediting of interest to the shareholders as remuneration on its own capital, observing the applicable legislation. The amount of interest paid or credited to shareholders as return on the equity, may be imputed by its net withholding income tax to the compulsory dividend value provided in this article.

Article 27 - In the fiscal year where the compulsory dividend amount, calculated in the terms of the preceding article exceeds the realized portion of the fiscal year's net profit, the Shareholder's Meeting may appropriate the surplus to the creation of an unrealized income reserve.

Paragraph 1- The portion of the fiscal year's net profit that exceeds the sum of the following amounts is considered as realized:

(a)    positive net income by the equity method; and

(b)   profit, gain or income in operations where the financial realization term occurs after the next fiscal year's end.

Paragraph 2 - Upon realization, profits entered under unrealized income reserve that have not been absorbed by the losses of subsequent fiscal years, must be added to the first dividend declared after its realization.

Article 28 - The portion of profit that remains after the deductions provided in articles 23 to 27 must be transferred to an Investment Reserve, assigned to investments that may be incorporated into the Company's Current or Permanent Assets.

Sole Paragraph - The balance of this reserve, together with the remaining profit reserves, cannot exceed the paid-in stock. Once this ceiling is reached, the aforesaid meeting shall deliberate on the appropriation of the surplus stock payment or increase or distribution of supplementary dividends to all the shareholders.

Article 29 – The Management Council may declare, “ad referendum” from the general meeting, dividends on the account of the profits recorded in quarterly or semi-annual balance sheets or in reports related to shorter periods of time. When the declared dividends represent a percentage not less than the compulsory level, the Board of Directors may authorize by ad referendum of the aforesaid Meeting, a pro-rata equity to the administrators, while observing the legal limits.  

Sole Paragraph - The Board of Directors may at any time declare intermediate dividends to the retained earnings account or the existing profit reserves in the last annual or half-yearly balance sheet.

Article 30 – The Company shall be liquidated upon the occurrence of the events foreseen at law, and the general meeting shall determine the method of liquidation and elect the liquidator and the Fiscal Council that will act during the liquidation period.

Article 31 – The Sale of the Company’s Control, both by means of a single transaction and by successive deals shall be contracted under suspended or resolution condition stating that the Buyer commits to perform a public offering for acquisition of the shares from other Company shareholders, observing the conditions and terms provided by applicable laws and by the Level 2 Regulations, so as to assure them equality of treatment in regards to the Selling Controller Shareholder.

Sole Paragraph – The public offer referred to in this article will also be required:

 (i)   In the event of chargeable assignment of subscription rights of shares and other securities or rights related to securities convertible into shares that result in the Sale of the Company’s Control; or

 (ii) In the event of sale of control of a company that holds the Power of Control in the Company, case in which the Selling Controller Shareholder is obliged to declare to BM&FBOVESPA the value attributed to the Company in such transaction, attaching the relevant documentation attesting such valuation.

Article 32 –The entity acquiring the Power of Control through a private agreement of purchase of shares signed with the Controlling Shareholder, involving any quantity of shares, is obliged to:

 (i)   Perform the public offer referred to under the above article 31; and

 (ii) Pay, according to the following terms, an amount equivalent to the difference between the public offer price and the value paid per share eventually bought from the market during the 6 (six) months prior to the acquisition of the Power of Control, duly updated until the payment date. Such amount shall be distributed among all persons who sold shares of the Company in the trading sessions when the Buyer performed the purchases, proportionally to the net daily oversold balance of each of them, being BM&FBOVESPA responsible for executing the distribution according to the terms of its own regulations.

Article 33 –The Company shall not record any transfer of shares to the Buyer or to those who may come to detain the Power of Control while they do not execute the Term of Consent from the Controllers, referred to under the Level 2 Regulations.

Article 34 – No shareholders agreement regarding the exercise of the Power of Control will be registered at the Company’s headquarters while its respective signatories have not executed the Term of Consent from the Controllers referred to under the Level 2 Regulations.

Article 35 – At the public offer for acquisition of shares that shall be made by the Controller Shareholder or by the Company, for cancellation of the public listed registration, the minimum price to be offered shall correspond to the Economic Valuation appraised at the valuation report prepared according to the provisions of Article 36 and respective paragraphs, observing the legal and regulatory norms applicable.

Article 36 – The aforementioned valuation report shall be prepared by a specialized institution or company, with attested experience and independence regarding the decision making powers of the Company, its Managers and/or its Controlling Shareholders, and satisfy the requirements of paragraph 1 of article 8 under Law 6,404/76, including the responsibility set under paragraph 6 of that same article.

Paragraph 1 – The choice of the specialized institution or company in charge of determining the Company’s Economic Valuation is a private responsibility of the general meeting, based on the presentation – by the management council – of a triple list of options. Such decision shall disregard blank votes and each share – regardless of class or type – is entitled to one vote, prevailing the majority of votes of the shareholders representing the Outstanding Shares attending such meeting. When installed on the first call, the meeting must be attended by shareholders representing at least 20% (twenty percent) of all Outstanding Shares; when installed on the second call, the meeting may be attended by any number of shareholders representing the Outstanding Shares.

Paragraph 2 – The offering party shall bear the costs related to the preparation of the valuation report.

Article 37 – If the exit of the Company from the Level 2 of Corporate Governance is decided so that securities issued by it be traded outside Level 2 of Corporate Governance segment, or due to a transaction of corporate reorganization where the resulting company’s securities are not admitted for trading at such Level 2 of Corporate Governance within 120 (one hundred and twenty) days counted from the general meeting approving such transaction, the Company’s Controlling Shareholder shall perform a public offer to the other shareholders of the Company, priced at least at the Economic Valuation amount, which shall be appraised through a valuation report prepared according to the provisions of Paragraphs 1 and 2 of article 36, observing the legal and regulatory norms applicable.

Paragraph 1 – The Controlling Shareholder is exempted from performing the public offer for acquisition of shares referred to under the caption of this Article if the Company leaves the Level 2 of Corporate Governance due to the execution of a contract for the participation of the Company in the special BM&FBOVESPA segment named New Market, or if the resulting company from the corporate reorganization is authorized to have its securities traded in the New Market segment within 120 (one hundred and twenty) days counted from the general meeting approving such transaction.

Paragraph 2 – If there is no Controlling Shareholder, if the exit of the Company from the Level 2 of Corporate Governance is decided so that securities issued by it be traded outside Level 2 of Corporate Governance segment, or due to a corporate reorganization transaction in which the resulting company’s securities are not allowed for trading at Level 2 of Corporate Governance or at the New Market segments within 120 (one hundred and twenty) days counted from the date of the general meeting approving such transaction, the exit is subject to performing a public offer for acquisition of shares with the same conditions foreseen at the above Article.

Paragraph 3 – Said General Meeting shall determine the responsible for performing the public offer for acquisition of shares, who – attending the Meeting – shall expressly undertake the obligation of performing such public offer.

Paragraph 4 – In the absence of definition of those responsible for performing the public offer for acquisition of shares, in the event of corporate reorganization transactions where the resulting company’s securities are not allowed for trading at the Level 2 of Corporate Governance, it will be up to the shareholders who voted in favor of the corporate reorganization to perform such offer.

Article 38 – The exit of the Company from the Level 2 of Corporate Governance due to non-fulfillment of obligations contained in the Level 2 Regulations is subject to performing a public offer for acquisition of shares, at least for the Economic Valuation of the shares, which shall be appraised on the valuation report referred to under article 36 of these by-laws, observing the applicable legal and regulatory norms.

Paragraph 1 – The Controlling Shareholder shall perform the public offer for acquisition of shares as foreseen under the caption of this article.

Paragraph 2 – In the absence of a Controlling Shareholder, and if the exit from the Level 2 of Corporate Governance as described in the caption of this article results from a decision of the General Meeting, the shareholders who voted in favor of the decision that caused the respective regulatory breach shall perform the public offer of acquisition of shares as foreseen at the caption.

Paragraph 3 – If there is no Controlling Shareholder, and the exit from the Level 2 of Corporate Governance as described in the caption of this article is caused by act or fact of management, the Company’s managers shall call a General Shareholders Meeting having as agenda to decide how to solve the lack of fulfillment of the obligations provided by the Level 2 Regulations or, as the case may be, opt for the exit of the Company from the Level 2 of Corporate Governance.

Paragraph 4 – If the General Meeting referred to in Paragraph 3 above decides for the exit of the Company from the Level 2 of Corporate Governance, such General Meeting shall define who will be responsible for performing the public offer for acquisition of shares foreseen at the caption. Such responsible parties, attending the meeting, shall expressly undertake the obligation of performing such offer.

Article 39 – The Company may hire a financial institution to issue certificates of deposits of shares (“Units”).

Paragraph 1 – The issuance of Units, within the limit of capital, shall be approved by the Management Council, which will determine the terms and conditions for such issuance.

Paragraph 2 – Each Unit will represent 1 (one) common share and 4 (four) preferred shares issued by the Company, related to shares kept in deposit, and will only be issued upon request from interested shareholders, observing the rules that will be set by the Management Council, according to the terms of these by-laws.

Paragraph 3 – From the issuance of the Units, deposited shares shall be recorded into a deposit account linked to the Units, opened on behalf of the beneficiary owner of the shares before the depositary financial institution.

Paragraph 4 – Subject to paragraph 5, shareholders may convert common shares into preferred shares and preferred shares into common shares, exclusively for the formation of Units, at the ratio of one common share in a preferred share and vice versa, subject to the following:

(i)       the shareholder who holds a lot (s) of 5 (five) shares issued by the Company, of a single type of share or in any proportion between preferred and common shares, but which does not fall within the multiple of one common share and four (4) preferred shares, may request the conversion of shares necessary for such lot (s) to constitute the multiple required for the formation of the Unit; 

(ii)     the shares subject to the conversion must be paid in; and 

(iii)   the limit established in Article 5, Paragraph 5, of these Bylaws and the chronological order of the requests. 

Paragraph 5 – It shall be incumbent upon the Board of Directors to establish the terms, terms and conditions for the exercise of the conversion right provided for in the previous paragraph. Conversion requests whose acquisition amounts to a violation of the legal proportion between common and preferred shares will be subject to apportionment or lottery to be structured by the Board of Directors. 

Article 40 – The Units shall be issued in book entry form and, save for cases of cancellation of Units, the property of the shares represented by them may only be transferred by transferring the respective Units.

Paragraph 1 – Save for the hypothesis foreseen under paragraphs 2 and 3 of this article, the owner of the Units is entitled to – at any time – request to the issuing and booking institution to cancel the Units and deliver the respective deposited shares, observing the rules to be set by the Management Council according to the provisions of these by-laws.

Paragraph 2 – The Company’s Management Council may, at any time, suspend – for an undetermined period of time – the possibility to cancel the Units as foreseen under the first paragraph of this article, in the event of a public offer for primary and/or secondary distribution of Units being kicked-off in the local and/or international markets. In such cases, the suspension period may not exceed 30 (thirty) days.

Paragraph 3 – Units backed by shares subject to charges, liens or encumbers may not be cancelled.

Article 41 – Units will entitle their holders to the same rights, benefits and restrictions related to the shares issued by the Company that are represented by them.

Paragraph 1 – The Units holder is entitled to take part in the Company’s General Meetings and exercise there all rights pertaining to the shares represented by the Units, upon proof of ownership.

Paragraph 2 – The Unit holders may be represented, at Company’s General Meetings, by attorneys empowered according to article 126 of Law 6,404/76.

Article 42 – In the event of split, grouping, bonus or issuance of new shares due to capitalization of profits or reserves, the following rules shall be followed in regards to Units:

 (a) If the number of shares issued by the Company is increased, the issuing and trustee financial institution shall record the deposit of the new shares and credit new Units to the account of the respective unit holders, so as to reflect the new number of shares held by the Unit Holders, always keeping the proportion of 1 (one) common and 4 (four) preferred shares issued by the Company for each Unit. Shares that are not sufficient to form a Unit shall be directly credited to shareholders without the issuance of Units; and

 (b) If the number of shares issued by the Company is decreased, the issuing and trustee financial institution shall debit the Units’ deposit accounts of the holders of grouped shares, performing the automatic cancellation of units in a sufficient number to reflect the new quantity of shares owned by the Unit Holders, always keeping the proportion of 1 (one) common and 4 (four) preferred shares to each Unit. Remaining shares that cannot form a Unit shall be directly delivered to the shareholders, without the issuance of Units.

Article 43 –In the event of capital increment by subscription of shares in which the preference right is granted to the Company’s shareholders, the following rules apply to the Units:

I –If the capital increase is done by issuing common and preferred shares of the Company, capable of forming new Units, the Unit Holders may exercise their preference rights applicable to the shares represented by their Units, and:

(a)    If the shareholder subscribes new common and preferred shares issued by the Company, in the proportion of 1 (one) common to each 4 (four) preferred shares issued by the Company, new units will be issued to his benefit, corresponding to the shares subscribed by him, unless when the shareholder instructs otherwise; and

(b)   The shareholder may subscribe common and preferred shares issued by the Company without the respective issuance of Units, or only common or preferred shares issued by the Company, and must inform his intentions through the shares subscription bulletin.

II – If only common or only preferred shares are issued, without allowing the issuance of new Units, the Unit Holders may directly exercise his preference rights related to each share represented by the Units held, but in such case no issuance of new Units may be requested.

Article 44 – The Company, its shareholders, managers and members of the Fiscal Council commit to resolve by means of arbitrage – before the Market Arbitrage Chamber – all and any dispute or controversy that may arise between them, regarding or arising from – particularly – the application, validity, effectiveness, interpretation, violation and respective effects, of the provisions contained in the Law of Companies Organized by Shares, in the Company’s by-laws, in the norms issued by the National Monetary Council, by the Central Bank of Brazil and by the Securities and Exchange Commission (CVM), as el as in the applicable norms related to the functioning of the capital markets in general and those contained in the Level 2 Regulations, in the Arbitrage Regulations, in the Sanctions Regulations and in the Contract of Participation in the Level 2 of Corporate Governance.

Sole Paragraph – The Brazilian law shall be the only one applicable to the merit of all and any controversy, as well as to the execution, interpretation and validity of this commitment clause. The city of Sao Paulo shall be the arbitrage venue, which shall be processed in Portuguese language. Arbitrage shall be managed by the Market Arbitrage Chamber itself, being conducted and judged by a single arbitrator or arbitrage tribunal formed by three arbitrators, according to the relevant provisions of the Arbitrage Regulations.

Article 45 –The terms in capital letters, when not defined in the text of these By-laws, shall have the meaning attributed to them by the Listing Regulations of the Level 2 Corporate Governance of BM&FBOVESPA.

Article 46 – The provisions contained in the articles: 1º, §§1º and 2º; 5º, §4º; 8º, §§1º, 4º and 6º; 9º, §§1º and 2º; 12 (y) and (z); 16, §2º; 31 to 38, 39, paragraphs 4 and 5, 44 and 45 of these Bylaws, which refer to the minimum clauses for the Company's entry into the Level 2 listing segment of Corporate Governance of BM&FBOVESPA will only be effective after disclosure of the fact Relevant information informing the determination of the price per Unit in the scope of the Primary Public Offering of Common and Preferred Shares and Units issued by the Company.