EFFECT OF RESTITUTION TO LEGAL SECURITY OF THE ACQUISITIONS IN S ERBIA V IENNA ECONOMIC FORUM N OVEMBER 6 2007 WORKSHOP 3 I NDUSTRIAL AND LEGAL SECURITY.

EFFECT OF RESTITUTION EFFECT OF RESTITUTION TO LEGAL SECURITY OF TO LEGAL SECURITY OF

THE ACQUISITIONS IN SERBIATHE ACQUISITIONS IN SERBIA

VIENNA ECONOMIC FORUM VIENNA ECONOMIC FORUM NOVEMBER 6 2007 NOVEMBER 6 2007

WORKSHOP № 3WORKSHOP № 3““INDUSTRIAL AND LEGAL SECURITY CHALLENGES AND RISKSINDUSTRIAL AND LEGAL SECURITY CHALLENGES AND RISKS””

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 financial institutions, 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.

CORPORATE / M&ACORPORATE / 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.ContactsNenad Popovic, Partner [email protected] Jevtic, Partner [email protected] Hadic, Junior Partner [email protected]�

BANKING & FINANCEBANKING & 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, investmentsfunds and other financial organizationsContactsJulijana Jevtic, Partner [email protected] Teodosijevic, Junior Partner [email protected]

PRACTICE AREASPRACTICE AREAS

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.ContactsMiloš Mitic, Partner [email protected] Grbic, Senior Lawyer [email protected]

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.ContactMiloš Mitic, Partner [email protected]

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.ContactZorica Alavantic [email protected]

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.

ContactsJelena Gazivoda, Senior Lawyer [email protected] Cveticanin, Senior Lawyer [email protected]

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).

CLIENT TRANSACTION

CLIENT CONFIDENTIAL ADVISING ON CARVE OUT AS A PART OF GLOBAL CARVE OUT

KBC GROUP N.V., BELGIUMACTING AS LEGAL ADVISOR OF KBC IN ACQUISITION OF MAJORITY STAKE IN A BANKA A.D. BEOGRAD

KBC SECURITIES

ACTED AS LEGAL ADVISOR FOR KBC SECURITIES FOR ACQUISITION OF 100% EQUITY OF THE SERBIAN BROKERS SENZAL AND HIPOBROKER AND 60% OF THE SERBIAN CORPORATE FINANCE BOUTIQUE BASTION.

BANCA INTESA, ITALYACTING AS LEGAL ADVISOR ON BEHALF OF BANCA INTESA ITALY IN ACQUISITION OF MINORITY INTEREST IN BANCA INTESA A.D. BELGRADE

.A.S.A. INTERNATIONAL ENVIRONMENTAL SERVICES GMBH, AUSTRIA

ACTING AS LEGAL ADVISOR OF .A.S.A. IN DEVELOPMENT PROJECT REGARDING WASTE MANAGEMENT WITH SIX SERBIAN MUNICIPALITIES

KBC GROUP N.V., BELGIUMACTING AS LEGAL ADVISOR OF KBC IN PRIVATIZATION OF DDOR NOVI SAD, BIGGEST INSURANCE COMPANY IN SERBIA

ALPINE MAYREDER, AUSTRIAACTING AS LEGAL ADVISOR OF ALPINE MAYREDER IN THE PROCESS OF OBTAINING A CONCESSION FOR DEVELOPMENT OF HIGHWAY FROM HORGOS TO POZEGA

CASINOS AUSTRIA AG, AUSTRIAACTING AS LEGAL ADVISOR OF CASINOS AUSTRIA IN THE PROCESS OF OBTAINING FIRST GAMBLING LICENSE AND ESTABLISHMENT OF JOINT-VENTURE COMPANY WITH NATIONAL LOTTERY OF SERBIA

MITTAL STEEL A.G., SWITZERLAND ACTING AS LEGAL ADVISOR OF MITTAL STEEL ON ANTIMONOPOLY ISSUES AND CONCENTRATION APPROVAL IN SERBIA RELATED TO THE ACQUISITION OF ARCELOR

USA EMBASSY IN SERBIAACTING AS LEGAL ADVISOR OF THE AMERICAN GOVERNMENT IN DEVELOPMENT PROJECT REGARDING NEW EMBASSY BUILDING IN BELGRADE

FKP SOJUZPLOD IMPORT

REPRESENTING RUSSIAN STATE OWNED SPIRITS PRODUCER IN WORLDWIDE ADMINISTRATIVE AND COURT PROCEEDING RELATED TO THE PROPERTY UPON 10 VODKA TRADEMARKS (STOLICHNAYA, MOSKOVSKAYA).

RELEVANT PROJECTS IN LAST 12 MONTHSRELEVANT PROJECTS IN LAST 12 MONTHS

EFFECT OF RESTITUTION EFFECT OF RESTITUTION TO LEGAL SECURITY OF TO LEGAL SECURITY OF

THE ACQUISITIONS IN SERBIATHE ACQUISITIONS IN SERBIA

Restitution of Confiscated and Expropriated Property in SerbiaRestitution of Confiscated and Expropriated Property in Serbia

• Not RegulatedNot Regulated

• Enactment of Law on denationalization and construction land is expectedEnactment of Law on denationalization and construction land is expected

• Law on evidencing of seized property (“Official Gazette of the Republic of Serbia”, no. Law on evidencing of seized property (“Official Gazette of the Republic of Serbia”, no. 45/2005)45/2005)

i.i. Evidencing of seized property (in accordance with regulations rendered after March 9Evidencing of seized property (in accordance with regulations rendered after March 9 thth 1945);1945);

ii.ii. Evidencing completed on June 30Evidencing completed on June 30thth 2006; 2006;

iii.iii. 73.000 applications submitted approximate value in excess of 100 billion EUR; Draft law 73.000 applications submitted approximate value in excess of 100 billion EUR; Draft law limits amount available for compensation to 4 billion EUR.limits amount available for compensation to 4 billion EUR.

Main features of Draft Law on Main features of Draft Law on Denationalization and Construction LandDenationalization and Construction Land

• Definition of property to be denationalized:Definition of property to be denationalized:i.i. Property nationalized in accordance with regulations rendered after January 1Property nationalized in accordance with regulations rendered after January 1 stst 1945; 1945;ii.ii. Property confiscated in accordance with regulations of occupying authorities following Property confiscated in accordance with regulations of occupying authorities following

April 6April 6thth 1941; 1941;iii.iii. Expropriated property if compensation has not been paid or if goal of expropriation Expropriated property if compensation has not been paid or if goal of expropriation

was confiscation;was confiscation;

• Main principles:Main principles:i.i. Principle of priority of natural restitution;Principle of priority of natural restitution;ii.ii. Principle of the autonomy of will (in regulating mutual relations between restitution Principle of the autonomy of will (in regulating mutual relations between restitution

obligor and beneficiary);obligor and beneficiary);iii.iii. Principle of respecting the person and general interest;Principle of respecting the person and general interest;iv.iv. Principle of protection of bona fide purchaser;Principle of protection of bona fide purchaser;v.v. Principle of urgent procedure.Principle of urgent procedure.

Principle of Protection of Bona Fide PurchaserPrinciple of Protection of Bona Fide Purchaser

• Bona fide purchaserBona fide purchaseri.i. Bona fide purchaser is person/entity who/which after nationalization has acquired Bona fide purchaser is person/entity who/which after nationalization has acquired

title in accordance with the law;title in accordance with the law;ii.ii. Bona fide purchaser shall detain title.Bona fide purchaser shall detain title.

• Mala fide disposalMala fide disposali.i. Disposal after October 5Disposal after October 5thth 2000; 2000;ii.ii. Parties have had to know that property is nationalized;Parties have had to know that property is nationalized;iii.iii. Every disposal after June 8Every disposal after June 8thth 2005 (date when Law on evidencing of seized 2005 (date when Law on evidencing of seized

property came into force) is mala fide disposal;property came into force) is mala fide disposal;iv.iv. Both seller and buyer are responsible jointly and severally;Both seller and buyer are responsible jointly and severally;v.v. Does not apply:Does not apply:

a)a) to sale of property in the procedure of privatization in accordance with Law to sale of property in the procedure of privatization in accordance with Law on privatization;on privatization;

b)b) to buyers which acquired the property against the market value to buyers which acquired the property against the market value consideration. consideration.

Denationalization and Provisions of Sale Purchase Agreement Denationalization and Provisions of Sale Purchase Agreement In Sale of Property by Public AuctionIn Sale of Property by Public Auction

• The Buyer has prior to the day of the auction been apprized of the fact 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 that the property of the Subject also includes nationalized property and agrees to treat the nationalized property in accordance with the provisions agrees to treat the nationalized property in accordance with the provisions of the law that shall govern this area;of the law that shall govern this area;

• Nationalized property, in the context of the provisions hereof, shall mean Nationalized property, in the context of the provisions hereof, shall mean property confiscated from natural and legal entities (hereinafter referred property confiscated from natural and legal entities (hereinafter referred to as previous owners) by the application of regulations on the to as previous owners) by the application of regulations on the confiscation of property in the territory of the Republic of Serbia, confiscation of property in the territory of the Republic of Serbia, regulated by a special regulation governing the issues related to the regulated by a special regulation governing the issues related to the restitution of property;restitution of property;

• The scope and nature of the rights of previous owners of nationalized The scope and nature of the rights of previous owners of nationalized property shall be assessed in accordance with the provisions of the law 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 governing this area, based on the factual state on the day of holding the auction.auction.

JANKOVIĆ, POPOVIĆ & MITIĆJANKOVIĆ, POPOVIĆ & MITIĆČČarli arli Č Čaplina 37, aplina 37,

11000 Belgrade, Serbia11000 Belgrade, SerbiaPhone: +381 (0) 11 207 6850, Phone: +381 (0) 11 207 6850, Fax: + 381 (0) 11 207-6899 , Fax: + 381 (0) 11 207-6899 ,

E-mail:E-mail: [email protected] | Online: [email protected] | Online: www.jpm.co.yu