2 0 0 1 A N N U A L R E P O R T

3

A N N U A L G E N E R A L M I X T ES H A R E H O L D E R S ’ M E E T I N G

M A Y 1 5 , 2 0 0 2

Chairman’s Message 4

Board of directors 6

Simplified organization chart 7

Consolidated highlights 8

Report of the directors 11

• Key developments of 2001 11

• Consolidated financial results 12

• Results by activity 14

• Result of Christian Dior SA 19

• Shareholders 21

• Board of directors 21

• Authorisations of a financial nature 22

Consolidated financial statements 45

Report of the statutory auditors 105

4

CHAIRMAN’S MESSAGE

Following two auspicious years in 1999 and 2000, 2001 will be remembered forits economic downturn and especially the tragic terrorist attacks of September11th. Nevertheless, Christian Dior showed its mettle in tough times as net salesrose for another year.

Over the summer until the attacks, Christian Dior Couture’s retail sales were up50%. The September 11 events had a noticeable, albeit limited impact until theend of October. Then, sales rose an exceptional 40% in November andDecember. This trend continued into 2002, with growth of over 50% throughFebruary, a testament to the Dior brand’s brilliant success.

Christian Dior has assembled some outstanding teams to work with three of theirgeneration’s most talented designers: John Galliano, Hedi Slimane and Victoirede Castellane. Both buyers and the press responded enthusiastically as theircollections were unveiled.

Christian Dior has engineered a remarkable commercial breakthrough based ontop quality, highly creative products that appeal to a youthful, refined clientele.The company is undoubtedly the biggest hit of today’s fashion world. Thecompany opened nearly thirty shops in 2001, reaching the symbolic threshold of100 stores. We will maintain this pace in 2002 and for the following three years.

Despite the austere economic backdrop mentioned above, our LVMH affiliatehas extended its lead. The major brands comprising our core business chalkedup excellent results. Louis Vuitton’s growth and the excitement engendered byits new products accounted for 18% of the year’s net sales. Also noteworthy,were Parfums Christian Dior’s many creative successes. Meanwhile, Hennessycontinued to make inroads in Asia and in the United States as volume sales rose11%.

5

Our recently acquired brands are also forging ahead. The Watches and Jewelrybusiness group devoted 2001 to building its organization and laying thefoundation for future growth. These efforts are paying off, and our timepiecebrands have already boosted their market share in all the countries where theyare sold.

Since DFS’s businesses depend closely on tourism, they were impacted by theslowdown in international travel in the fourth quarter of 2001. The companyimplemented a very strict cost control program in the face of the economic slump,which has had a particular impact on businesses based on tourism. This willenable DFS to stem its losses in 2002 and then return to the black.

Sephora successfully established its format both in Europe and the USA as netsales rose 21%. The company has restructured itself to focus on its best markets,and is forecast to break even this year and turn a profit in 2003.

LVMH plans to pursue the strategic priorities of growing its star brands, a sourceof recurring earnings. Louis Vuitton, Christian Dior, Dom Pérignon, Fendi,Hennessy, Tag Heuer are a few. These icons of the luxury world serve as modelsfor developing such rising stars as Donna Karan, Fresh, Pucci and Zenith. TheGroup recently acquired these companies for their high growth potential.

We can all look forward to 2002 with confidence. After a difficult 2001, we haveemphasized our proven strategy of concentrating on the luxury goods businesseswhile assigning priority to boosting return on equity and generating cash. Thisgoal will be all easier to reach if the economy picks up, as recently publishedindices in the United States seem to indicate.

I thank you for your continued support.

6

B O A R D O F D I R E C T O R S

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Bernard ARNAULT

VICE-CHAIRMAN

Eric GUERLAIN

DIRECTORS

Antoine BERNHEIM

Denis DALIBOT

Pierre GODE

Christian de LABRIFFE

Raymond WIBAUX

STATUTORY AUDITORS

BARBIER FRINAULT & AUTRES

ERNST & YOUNG AUDIT

Alain GROSMANN (Alternate)

Dominique THOUVENIN (Alternate)

7

S I M P L I F I E D O R G A N I Z A T I O N C H A R TA T D E C E M B E R 3 1 , 2 0 0 1

Christian Dior*

FinancièreJean Goujon

Christian Dior Couture

LVMH*

100%

42.5%

100%

* Listed company

8

Christian Dior Couture350

Wines and Spirits2,232

Watches and Jewelry548

Selective Retailing3,475

Other businessesand eliminations

119

Fragrancesand Cosmetics

2,231

Fashionand Leather Goods

3,612

17%

19%

5%

2%

28%25%

1%

27%

26%

20%25%

2%3% 3%

1999 2000

18%

4%

27%

1%

29%

18%

2001

France2,111

Europe (excluding France)2,349

Japan1,872

Asia (excluding Japan)2,059

Other markets906

USA3,270

8%8%

17%

15%

18%

16%

18%

15%

22%26%

7%

16%

15%

19%

17%

26%

17%

20%

1999 2000 2001

12%

4%

4%

16%

29%

22%

1999 2000

3%

5%

17%

29%

35%

12%

4%

5%

16%

31%

2001

32%

24%

Euro3,916

US dollar4,050

British pound478

Hong Kong dollar592

Other currencies1,548

Japanese Yen1,983

Consolidated sales by business group(EUR millions)

Consolidated sales by geographic destination(EUR millions)

Consolidated sales by currency(EUR millions)

C O N S O L I D A T E D H I G H L I G H T S

9

C O N S O L I D A T E D H I G H L I G H T S

1997 1998 1999 2000 2001 EUR millions

Sales by business group

Christian Dior Couture 200 200 220 296 350

Wines and Spirits 1,896 1,919 2,240 2,336 2,232

Fashion and Leather Goods 1,837 1,797 2,295 3,202 3,612

Fragrances and Cosmetics 1,406 1,369 1,703 2,072 2,231

Watches and Jewelry – 32 135 614 548

Selective Retailing 2,170 1,799 2,162 3,287 3,475

Other activities 4 14 3 60 119

Total 7,513 7,130 8,758 11,867 12,567

Percentage earned outside France 87% 81% 80% 85% 83%

Income from operations (1) 1,275 1,181 1,551 1,967 1,548

Net current incomebefore amortization goodwillGroup share 300 184 295 320 75

Net income - Group share 246 47 264 251 (95)

euros

Net current income per sharebefore amortization goodwill (2) 1.78 1.04 1.63 1.77 0.41

Overall dividend per share (2) 0.95 0.95 1.05 1.17 1.17

EUR millions

Balance sheet total 20,091 21,422 26,330 28,435 29,228

Average workforce 33,260 34,098 39,259 48,524 54,463

(1) Adjusted retroactively to reflect reclassifications.

(2) Adjusted to reflect the 4 for 1 stock split in July 2000.

11

M A N A G E M E N T R E P O R T B Y T H E B O A R DO F D I R E C T O R S

Ladies and Gentlemen,

This report first summarizes the significant events affecting the life of Christian Dior groupin 2001. Then we shall review consolidated results, the business picture by segment and yourcompany’s performance.

I. KEY DEVELOPMENTS OF 2001

In 2001, Christian Dior operated in a difficult economy marked by an economic slowdown inthe United States and Europe and ongoing crisis in Japan. Added to this was the shockresulting from the September terrorists attacks in the United States. Despite this unfavorablecontext, net sales rose 6%.

Christian Dior Couture continues its strong performance

After opening 19 shops in 2000, Christian Dior Couture continued its policy to control itsretail network. It opened 24 new points of sale world-wide in 2001 with eight in NorthAmerica, five in Europe and eleven in Asia. Net sales for the retail network were up 21% forthe year, rising 24% in the fourth quarter alone.

LVMH strengthens it position in luxury products

LVMH group took control of Donna Karan, America’s well-known fashion house, and raisedits stake in Fendi to 51%. One of Italy’s most prestigious designer labels, Fendi has rapidlyincreased the number of retail stores it owns from 4 to 83 in eighteen months.

De Beers Group, the world’s leading diamond group, and LVMH, the world’s leading luxuryproducts group, decided to form an independently managed company to develop the potentialof the De Beers brand. De Beers LV intends to create an international chain of jewelrystores under the De Beers banner. The first point of sale will open in London late in 2002.

LVMH settled its dispute with PPR over the control of Gucci. LVMH collected EUR 2.1 billion for its stake in Gucci plus a EUR 90 million extraordinary dividend.

La Samaritaine, a Paris landmark on the right bank, was acquired in 2001. It is undergoinga strategic repositioning, with a new offer focused on a fashion and accessories product line.

In early 2002, LVMH sold its controlling stake in the Phillips, de Pury & Luxembourgauction house to its two principals. The decision was part of LVMH group’s strategy toconcentrate on developing luxury goods products.

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II. CONSOLIDATED FINANCIAL RESULTS

The uncertain economic environment and the consequences of September’s tragic events inthe United States had a significant impact on activity in the second half, particularly in thelast few months of the year, which are traditionally the busiest.

Christian Dior group’s net sales rose 6%. This figure includes the 3% in positive effects fromchanges in consolidation.

Foreign currency fluctuations did not have a major impact as the higher dollar nearly offsetthe weak yen.

The group’s income from operations stood at EUR 1,548 million, down 21% from 2000. Thisdecline primarily reflects the cost of developing Phillips de Pury & Luxembourg’sinternational business and the impact of lower international tourism on DFS.

Consolidated net income before goodwill and unusual items was EUR 361 million comparedwith EUR 983 million in 2000; net income for the group was EUR 75 and EUR 320 millionrespectively. In addition to the decline in operating income, this drop is primarily due to aprovision on treasury stock.

Amortization of goodwill amounted to EUR 70 million (group share), while unusual itemsrepresented a charge of EUR 100 million (group share).

Net income totaled EUR 3 million compared with EUR 887 million in 2000, reflecting aEUR 95 million loss in 2001 as opposed to a EUR 251 million profit the year before for thegroup share.

EUR millions 2001 2000

Sales 12,567 11,867

Income from operations 1,548 1,967

Net income before amortization and unusual items 361 983Group share 75 320

Net income 3 887Group share (95) 251

In order to measure the performance of the Christian Dior group under its current structure,pro forma statements were prepared by moving the effective date of all changes to 1 January2000.

The principal results are listed in the table below:2001 2000

EUR millions pro forma pro forma

Sales 12,567 12,241

Net income before amortization and unusual items 360 954Group share 75 292

All of Christian Dior’s business groups recorded higher sales in a slumping economy thataffected income from operations.

Christian Dior Couture’s sales rose 18%, primarily due to the expansion of the boutiquenetwork.

Sales for Wine and Spirits fell 4%, but the Cognac division posted growth of 3%.

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The growth in Fashion and Leather goods was remarkable, both because of the rate of 13%and because it was evenly balanced, with only the Asian region up less than 10%. Perfumesand Cosmetics sales grew 8%, primarily in Europe and the United States. The SelectiveRetailing division recorded a 6% increase, benefiting from Sephora’s growth and the effect ofintegrating la Samaritaine, while sales at DFS fell 10%. The 11% decline in net sales forWatches and Jewelry is due to the shutdown of certain sub-contracting activities and thebusiness group’s marketing repositioning late in 2000.

Net sales Income from operations

EUR millions 2001 2000 2001 2000

Christian Dior Couture 350 296 (5) 14

Wines and Spirits 2,232 2,336 676 716

Fashion and Leather Goods 3,612 3,202 1,274 1,169

Perfumes and Cosmetics 2,231 2,072 149 184

Watches and Jewelry 548 614 27 59

Selective Retailing 3,475 3,287 (194) (2)

Other activities, eliminations and restatements 119 60 (379) (173)

Total 12,567 11,867 1,548 1,967

In the Christian Dior consolidated financial statements, the LVMH accounts are restated toreflect the brand valuation differences recorded before 1990 when consolidating each ofthose companies.

As a result, LVMH’s net income is consolidated at EUR 98 million versus EUR 100 millionbefore restatement and is included in Christian Dior’s net income - group share at EUR 2 million versus EUR 4 million before restatement. It should be noted that, since assetssold by LVMH have a higher consolidation value on the books of Christian Dior than thevalue recorded by LVMH, consolidated results on the sales of assets were reducedaccordingly.

The results by business group presented below are based on LVMH reported data andtherefore are not restated.

Investments

Net investments of EUR 739 million reflect EUR 960 million in operational investmentslinked to recurring business as well as non-recurring investments related to restructuring andacquisitions, notably for the acquisition of the Donna Karan brand, the Samaritaine storesand of Prada’s stake in Fendi (EUR 1,023 million). The group received EUR 2,122 millionfor its disposal of Gucci shares.

Research and Development

Research and development costs recorded as expenses totaled EUR 27 million in 2001 versusEUR 21 million in 2000. These expenses cover scientific research and new productdevelopment.

Research and development costs, expanded to include packaging and design expenses,totaled EUR 37 million in 2001 and EUR 40 million in 2000.

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Employees

The total number of employees in the group rose by 12%. This was due partly to the additionof newly acquired companies and to the organic growth of the most buoyant businesssegments.

The list below shows the average number of employees for fully consolidated companies:

2001 2000

Christian Dior Couture 1,289 1,099Wines and Spirits 5,268 5,347Fashion and Leather Goods 12,758 10,107Perfumes and Cosmetics 12,887 12,354Watches and Jewelry 1,975 1,743Selective Retailing 18,439 16,167Other activities 1,847 1,707

Total 54,463 48,524

III. RESULTS BY ACTIVITY

1. Christian Dior Couture

A - Key Developments

This year the company pursued the strategic objectives initiated in earlier years:

• Net sales continued to grow.The events of 11 September had only a limited effect on activity in the second half, whichremained very buoyant. Sales even rose faster than in the first half, which was affected bylogistical and procurement problems.

• The network of directly operated stores continued to expand: The network had 116 points of sale at 31 December 2001 and 24 stores were opened duringthe year.– The European Community was an essential growth driver with four new stores opened inSpain and Italy. Five major projects were begun with openings planned for early 2002.– The United States was also a focus for expansion with eight new points of sale. Theseincluded a new store in San Francisco, and the expansion of the Los Angeles store in BeverlyHills.– Christian Dior focused on business development in China, opening five points of saleBeijing, Shanghai and Guangzhou.

• Development continued on two priority lines:– Dior Homme: designer Hedi Slimane’s first collection marketed in 2001 was extremelysuccessful in multi-brand retail outlets.– Dior Jewelry: after stores openings on avenue Montaigne in 1999 and in New York in2000, Joaillerie Dior moved into renovated premises with a new format at place Vendôme inParis.

• A new leather goods production shop was opened in the Milan region during the secondhalf, expanding manufacturing capability.

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B - Consolidated results of the Fashion segment

Net sales for Fashion rose 18% to EUR 350 million. At constant exchange rates, sales wouldhave totaled EUR 353 million, representing growth of 19% over the previous year. Thecompany’s continued implementation of its brand strategy for licensing and expanding itsnetwork of directly owned stores brought results. With the supply problems of the first halfsolved with the addition of new production capacity, second half growth was especiallyrobust at 24%.

The company recorded a EUR 5.5 million loss from operations. This was a decline from theEUR 13.8 million profit recorded in 2000. The decrease is due primarily to investmentsmade in the retail network and to develop the Dior Homme line. It was also caused byproduction problems encountered in the first half. These were resolved in the second half, asthe segment posted EUR 6.6 million in income from operations.

Net financial charges were EUR 6.6 million, unchanged from the EUR 6.5 million recordedin 2000. The financial cost of the expenditures required to expand the network were offsetby lower interest rates and equity contributions.

The tax expense totaled EUR 2.6 million. This was up from EUR 1 million in 2000 becauseof improved earnings from subsidiaries located in high tax countries.

All of the above items combined resulted in a EUR 20.4 million net loss compared with netincome of EUR 4.9 million in 2000. The portion allocated to minority interests was EUR 1 million.

C - Breakdown by business sector

EUR millions 2001 2000 %

Licensing royalties 19.7 17.6 12

Wholesale sales 73.3 66.3 11

Retail sales and other 256.6 212.3 21

Total 349.6 296.2 18

LICENSES

Licensing royalties by region break down as follows:

EUR millions 2001 2000 %

Europe 14.6 10.9 34

North America 3.4 3.7 (8)

Asia-Pacific 1.4 2.2 NS

Other 0.3 0.8 NS

Total 19.7 17.6 12

Christian Dior recorded satisfactory growth from licenses, particularly in such specialretailing segments as eye glasses, which grew 69%. Against this backdrop of strong growth,Christian Dior strengthened its partnership with its licensee, Safilo, acquiring a minoritystake in a Safilo subsidiary.

The interruption in the Men’s Ready-to-Wear license and franchise in Latin America, inkeeping with a policy established for several years, was hastened by Argentina’s economicproblems in 2001.

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WHOLESALE SALES

Wholesale sales rose 11% in 2001 with the marketing of Dior Homme’s first collection. Thefirst indications were very satisfactory.

RETAIL SALES

EUR millions 2001 2000 %

Europe 106.9 87.4 22

North America 49.6 42.2 18

Asia-Pacific 97.3 80.1 21

Rest of world 2.8 2.6 8

Total 256.6 212.3 21

Growth remained steady for all geographical areas and all products.

Sales growth for women’s accessories and leather goods was particularly strong, and the newJewelry activity was a great success.

In Europe, the brand expanded its presence by opening brand stores plus corners inprestigious department stores, including a store in Milan, Italy and the Cortes Inglesdepartment stores in Spain. The Monaco store was renovated, resulting in a boost in sales.

In the United States, two new brand-owned stores were opened in San Francisco and LosAngeles. Christian Dior also continued its policy to develop the brand’s presence indepartment stores with the opening of five points of sale in Saks stores and another atNeiman Marcus.

Sales growth was satisfactory in China, where Christian Dior had six stores at year-end2001. In Japan, strong growth was driven by very successful new products in leather goods,ready-to-wear apparel and accessories.

E - Outlook

Sales should continue to grow in 2002 when the company expects to return to profitability.

LICENSES

Sales from licensed products should grow at about the same rate as in 2001.

WHOLESALE SALES

Wholesale sales are expected to continue to grow as the Dior Homme product line ismarketed in multi-brand outlets.

RETAIL SALES

We expect additional strong gains in retail sales. The new Dior Homme line will beintroduced in two new shops with an adapted architectural format, first in Milan and then inParis. Also in Europe, 2002 will see the completion of major projects launched in 2001 inRome, Florence, Madrid and Brussels.

In the United States and Japan, the retail network will continue to expand in the mostexclusive department stores. In 2002, Christian Dior will continue to expand its presence inKorea.

17

The year 2002 should confirm the success of the Dior Homme line and its designer, HediSlimane, as well as that of Victoire de Castellane’s Fine Jewellery line. John Galliano’ssuccessful designs in women’s ready-to-wear apparel and accessories are expected tocontinue to do well.

2. Wines and Spirits

Sales for the Wines and Spirits business group totaled EUR 2,232 million, down 4% from2000. Income from operations fell 6% to EUR 676 million.

The trend masks contrasting situations:• Volume sales of champagne fell 7%, allowing retailers to clear out excess inventory stockedfor Millennium celebrations. Against a backdrop of pricing pressures, the LVMH brandskept to their firm pricing policy, which is essential in maintaining customer confidence andproduct quality. Consumption continued to be strong, rebounding at the end of 2001 despitethe consequences of the events of 11 September.• Cognac volumes rose 6% as Hennessy sales increased in the United States and in severalAsian countries, notably Korea and Vietnam, offsetting declines in Japan. Hennessy wonadditional market share in 2001.• The still wines activity was affected by Argentina’s deteriorating economy while sales of theChandon Estates brands and of the great New World vintages advanced in the other markets.

3. Fashion and Leather Goods

Sales for the Fashion and Leather Goods business group totaled EUR 3,612 million, up 13%from 2000. Income from operations rose 9% to EUR 1,274 million. These results areespecially remarkable given the difficult economy and last year’s record sales.• Louis Vuitton’s sales rose 9%, sustained by strong local demand, particularly in Japan,Europe and the United States, and the strong success of the new products designed by MarcJacobs.• The group’s other brands also reported higher sales, despite a slowdown in travel markets.Kenzo, which took over its Japanese business, Christian Lacroix, Marc Jacobs, Berluti andThomas Pink all performed particularly well. • LVMH acquired a controlling interest in Donna Karan in 2001 and increased its stake inFendi. Both brands strengthen the Group’s market positions and growth potential in one ofits key businesses. Donna Karan will be consolidated in LVMH’s financial statements in2002.

Principal developments:• The production constraints that hampered Louis Vuitton’s expansion early in the year arebeing eliminated with the opening of three new workshops in Sainte-Florence, Ducey, andCondé in 2001.• New products accounted for 18% of net sales, a confirmation of Louis Vuitton’sunsurpassed quality and its successful innovation policy. Damier glacé, Mini Monogram, a tiecollection, and the Charm Bracelet were the top new products in 2001.• The business group continued to expand and renovate its retail network in 2001. By year-end, Louis Vuitton had 292 stores, with 8 openings in 2001, including thirty-six “globalstores”. The company entered Uruguay for the first time. Céline renovated two of its Parisstores and its London boutique, which were decorated in its new design concept. ChristianLacroix inaugurated a new and widely acclaimed store concept to mark its return to theJapanese market. Berluti opened its second store in Paris and in Tokyo. Fendi, which wasjust consolidated in the Group, has 80 stores world-wide early in 2002, thereby contributingto geographically well-balanced net sales.

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• Strengthened by its consolidation within LVMH, Emilio Pucci acquired a majority stake inCasor, which was licensed to manufacture its ready-to-wear line.

• Two new designers, Julien Macdonald at Givenchy and José Enrique Ona Selfa at Loewe,joined LVMH last year.

4. Perfumes and Cosmetics

• Net sales for the Perfumes and Cosmetics business group were up nearly 8% to EUR 2,231 million, in contrast to 3% for the world market. Our many creative successes lastyear contributed greatly to this growth, resulting in significant gains in market share.

• Fourth-quarter sales of were hard hit by the plunge in travel retail and a slowdown inconsumer spending in the United States. In this environment, our policy of maintaining theadvertising budget, which is essential in the development of our products and brands,impacted the year’s income from operations, which fell 19% to EUR 149 million. Outsidethis short-term impact, these efforts constitute a major competitive advantage and pave theway for continued strong growth in 2002.

Principal developments:

• Parfums Christian Dior turned in an excellent performance in 2001, with both sales andincome from operations up sharply. The company surpassed the one-billion euro mark in netsales for the first time. These results are the natural culmination of the brand’s creativity,which has received many international awards, and the success of new products. J’Adore isestablishing itself has one of the world’s great classics while Higher, a men’s fragrance unveiledin the second half, and Addict, Christian Dior’s new lipstick, have both exceeded their salesobjectives.

• Net sales for Guerlain and Parfums Givenchy, which were up until 11 September, fellslightly, essentially because their exposure to the North American market. Guerlain’s Issimaskin care line and Givenchy’s Hot Couture performed well.

• Net sales and income for Parfums Kenzo were both up sharply, thanks to the exceptionalglobal success of its Flower perfume, which doubled its original sales targets.

• The business group’s recent US start-ups, although penalized by the year-end recession,maintained their performance, achieving growth of nearly 20%. Bliss and BeneFit began toexpand overseas, notably in Great Britain, where BeneFit was well received and where Blissopened its first European spa.

5. Selective Retailing

• Sales for Selective Retailing rose 6% to EUR 3,475 million, and cover mixed trends.Income also suffered, as the sharp downturn in the yen affected Japanese travelers and travelretail activity slowed following the 11 September terrorist attacks. The business grouprecorded a EUR 194 million loss, whereas it nearly broke even in 2000.

• Sales at DFS were down 10% in 2001 on a full-year basis, falling 21% in the fourth quarteralone when practically all tourist travel declined sharply.

• Sephora’s net sales were up 23% over 2000. Sales were up on both sides of the Atlantic, asign of the new format’s success with customers. Sephora Europe had a good year, markedby increased net sales with the same number of stores, the successful integration of the chainsacquired in 2000, and the implementation of a customer service organization. The UnitedStates recorded a remarkable 14% growth in sales with constant consolidation, anexceptional performance given America’s economic slowdown in 2001.

• Le Bon Marché continued to improve both net sales and income, an affirmation of its goalto be the most exclusive department store in Paris.

19

• La Samaritaine, acquired by LVMH in April 2001, began its repositioning with a newemphasis on fashion and accessories. A new management team was appointed to implementthis strategy.

Principal developments:• After expanding and reopening its Galleria store in Hawaii, DFS opened a Galleria inHollywood and its first store in Kuala Lumpur, Malaysia. DFS also opened three newairport concessions at Inchon, Korea, Kennedy airport in New York, and the New Caledoniainternational airport.• In the current difficult market for travel retail, DFS has implemented an extremely rigorouscost-cutting program, closing several regional administrative offices, and renegotiating lowerconcession costs across the board. • Miami Cruiseline, which specializes in cruise ship retail, assembled a new managementteam and streamlined its organization. It also implemented a strategy to make its boutiquesand product line more upscale.• Following an initial phase of geographic expansion designed to develop a broad customerbase, and instill confidence in its perfume and cosmetics brands, Sephora implemented a newtwo-pronged strategy in 2001-to achieve profitable growth and to open new stores only incountries where the company can gain a significant market share. Based on this newstrategy, Sephora withdrew from Germany and Japan, while continuing to expand in theUnited States and elsewhere in Europe.

6. Watches and Jewelry

In 2001, the Watches and Jewelry group withdrew from certain production and distributionactivities on behalf of third-party brands outside the LVMH group. This strategic decisionwas necessary to ensure future growth and profits, but resulted in an 11% decline in net salesto EUR 548 million. Income from operations fell 54% to EUR 27 million. LVMH brandsreported net sales of EUR 517 million in 2001, unchanged from the previous year. In adifficult business climate, sales grew in all regions, except the United States, and the watchbrands increased their market share in all countries where they are sold.• The creation of the Watchmaking Shop in La-Chaux-de-Fonds will increase production ofChristian Dior watches and give Louis Vuitton its first watch collection in 2002.• TAG Heuer acquired Morellato Spa’s metal bracelets division, naming it Artelink.• The European Commission approved the De Beers LV joint venture in July 2001. Thiscompany intends to create an international chain of jewelry stores under the De Beers name.It is now putting the finishing touches on its strategy, creative management, and initial planfor store openings. The first point of sale will open in London late in 2002.• TAG Heuer opened an exclusive new boutique in London. Fred rolled out three newstores in Paris, London and Tokyo.

IV. RESULTS OF CHRISTIAN DIOR S.A.

Christian Dior SA’s earnings consist primarily of dividend income related to its investment inLVMH less the interest expense incurred to finance the investment.

Net financial income totaled EUR 109 million versus EUR 111 million in 2000. It consistsof EUR 149 million in dividends received from LVMH and Financière Jean Goujon, EUR 36 million in net interest expense and a EUR 4 million provision on treasury stock.

The company took a EUR 38,903,000 net charge on equity investments sold, mainly on thesale of LVMH’s and Lakenbleker’s stocks, which are affiliated companies. Christian DiorSA wrote off EUR 5,570,000 of receivables owed by its subsidiary, Christian Dior Couture.

20

Net income was EUR 105 million compared with EUR 107 million in 2000.

Appropriation of earnings: Euros

• Net income: 105,429,433.39

Less allocation to legal reserve (92,000.00)Less allocation to reserve for long-term capital gains (3,857,708.07)

Plus

• Retained earnings: 214,295,378.22

Total income available for distribution: 315,775,103.54

The following dividend will be proposed to the shareholders:

• Total dividend distribution of 141,742,417.44- EUR 0.78 per share with- EUR 0.39* as a dividend tax credit- EUR 1.17 in gross compensation

• Retained earnings 174,032,686.10

Total 315,775,103.54

* for individuals.

Since an interim dividend of EUR 0.28 per share was paid on December 4, 2001, the balanceof EUR 0.50 with dividend tax credit of EUR 0.25 per share attached will be paid out on June 4, 2002.

Since the shares held by the company at the time this dividend is paid do not pay dividends,the amount corresponding to the unpaid dividend would be posted to retained earnings.

Distribution of dividends

We are reminding you that the dividends paid for the last three years and the correspondingtax credit are as follows*:

(in euros) Net dividend Tax credit Gross dividend

2000 0.78 0.39 1.17

1999 0.70 0.35 1.05

1998 0.64 0.32 0.96

* For reasons of comparability, the figures were adjusted to factor in the four-for-one stock split on July 3,2000.

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V. SHAREHOLDERS

Pursuant to Article L 233-13 of the commercial code and the information received underArticles L 233-7 and L 233-12 of said code, the following table identifies shareholders whohold over 5% of the company’s capital or voting rights to the company’s knowledge:

At December 31, 2001 At December 31,2000

SHAREHOLDERS Number % % Number % %of of of voting of of of voting

shares capital rights shares capital rights

Financière Agache* 123,770,546 68.11 78.23 112,038,659 61.81 61.4711, rue François 1er

75008 PARIS

* Held directly or indirectly.

As of December 31, 2001, the company had EUR 363,442,096 in capital stock, divided in181,721,048 shares with a par value of EUR 2 per share. There were 106,847,238 shareswith double voting rights.

Under Articles L 255-208 and L 255-209 of the commercial code, we are also reporting that:• During the past year, the company bought back 461,664 of its own shares at an averageprice of EUR 48.35. These share purchases were made in order to allot them to employeeswho would be exercising the stock options granted by the company.

At December 31, 2001, 2,286,064 shares were held in this manner with a total value of EUR 78,343,757.89, par value EUR 2. These shares represent 1.26% of the total capitalstock.• At year end, the company held 544,220 of its own shares for a net value of EUR 18,642,408.04. These shares were bought back to regularize the stock price. The parvalue is EUR 2. They represent 0.30% of the capital stock. By law, these shares do not carryvoting rights.

VI. BOARD OF DIRECTORS

The Shareholders’ Meeting is being asked to:

• renew Mr. Bernard ARNAULT as director for the statutory three-year term of office;

• ratify the appointment of Mr. Pierre GODE as director for a term ending with theadjournment of this Shareholders’ Meeting, and then to renew his election as director for thestatutory three-year term of office.

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VII. FINANCIAL AUTHORIZATIONS TO BE GIVEN TO THE BOARDOF DIRECTORS BY THE SHAREHOLDERS’ MEETING

Authorization to act on the Stock Market

The Combined Ordinary and Extraordinary Shareholders’ Meeting of May 14, 2001authorized the Board of Directors to acquire the company’s stock up to a maximum of 10%of its capital stock, with a maximum unit purchase price set EUR 120 per share.

During this shareholders’ meeting, you are being asked to renew this authorization. Thepurposes of the stock purchases are to keep, sell, cancel, exchange or give the shares inpayment, regularize stock price fluctuations, or to grant stock options.

The total number of shares the company may acquire would be limited to 10% of the capitalstock as of January 1, 2002 and the maximum purchase price would be EUR 120 per share.

VIII. AMENDMENTS TO THE BYLAWS

Amendment of the bylaws, notably to harmonize them with the New EconomicRegulations Act.

The Law of May 15, 2001 made numerous changes to the French commercial code thatgoverns limited liability companies.

Therefore, we are recommending that the company’s bylaws be amended to harmonize themwith the new provisions. The amendments primarily concern:• the possibility for foreign shareholders to register their securities held in an account with afinancial intermediary who may vote in their name at the Shareholders’ Meeting; in exchange,the company shall have the right to ask said intermediaries to identify these shareholders;• the power given to the Board of Directors to separate the office of the Board Chairmanfrom that of Chief Executive Officer, and the possibility for the Chief Executive Officer tobe assisted by Executive Vice-Presidents. • the definition of the powers of the Board of Directors.• the possibility for boards of directors and shareholders’ meetings to be organized by videoconferencing.• the suppression of the 10-share minimum threshold to attend ordinary shareholders’meetings.

In addition, we are proposing that you amend Article 8 of the bylaws to stipulate that thestatutory requirement to declare any 1% increase in the portion of capital held by ashareholder cease as soon as his stake reaches 60% of the capital stock.

As a large number of the articles under Titles II to IV of the bylaws must be amended, wepropose that the bylaws be completely rewritten.

The proposed amendments to the bylaws are attached to this report.

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IX. INFORMATION ON COMPENSATION AND BENEFITS PAID TO COMPANY OFFICERS

In accordance with Article L 225-102-1 of the commercial code, we are reporting on the totalremuneration and benefits of any kind paid during the fiscal year to each company officer,both by your company and by its controlled companies as this term is defined by Article L233-16 of the commercial code.

The following payments were received during the past financial year:

Mr. Bernard Arnault, Chairman and Chief Executive Officer:• Compensation paid by the company: EUR 18,667

• In-kind benefits: none • Compensation paid by controlled companies: EUR 1,140,014 (1)

• In-kind benefits from controlled companies: none

Mr. Eric Guerlain, Vice Chairman and Director:

• Compensation paid by the company: EUR 9,334• In-kind benefits: none

• Compensation paid by controlled companies: none• In-kind benefits from controlled companies: none

Mr. Antoine Bernheim, Director• Compensation paid by the company: EUR 9,334

• In-kind benefits: none • Compensation paid by controlled companies: EUR 84,300

• In-kind benefits from controlled companies: none

Mr. Denis Dalibot, Director:

• Compensation paid by the company: EUR 5,445• In-kind benefits: none

• Compensation paid by controlled companies: none• In-kind benefits from controlled companies: none

Mr. Pierre Godé, Director:• Compensation paid by the company: EUR 24,578

• In-kind benefits: none • Compensation paid by controlled companies: EUR 1,599,111 (1)

• In-kind benefits from controlled companies: car

Mr. Christian de Labriffe, Director:

• Compensation paid by the company: EUR 9,334• In-kind benefits: none

• Compensation paid by controlled companies: none• In-kind benefits from controlled companies: none

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Mr. Raymond Wibaux, Director:• Compensation paid by the company: EUR 9,334

• In-kind benefits: none • Compensation paid by controlled companies: none• In-kind benefits from controlled companies: none

(1) Amount paid by controlled companies in the sense of Article L. 233-16 of the French Commercial Codeafter deducting employee benefits expenses computed at the 11% marginal rate, of the General SocialContribution (CSG) and the Social Security Repayment Contribution (RDS), and the French personalincome tax at the 52.75% marginal rate.

X. LIST OF POSITIONS OR OFFICES HELD IN ALL COMPANIES BY THE CORPORATE OFFICERS AND DIRECTORS

Pursuant to Article L 225-102-I of the commercial code, below is a report on all positions andoffices held in any company by each of the company’s officers and directors during the pastfinancial year as well as for the directors whose term expires at the close of this shareholders’meeting and the list of offices and positions they have held over the five past years.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Mr. Bernard Arnault - Born on March 5, 1949Date of first appointment: March 20, 1985

Current offices

Chairman and Chief Executive Officer of:• Groupe Arnault, Paris;• LVMH Moët Hennessy Louis Vuitton, Paris;• Montaigne Participations et Gestion SA, Paris.

Chairman of the Société Civile du Cheval Blanc, Saint Emilion.

Director of: • Christian Dior Couture, Paris;• Financière Jean Goujon, Paris;• Vivendi Universal, Paris;• Moët Hennessy Inc., New York; • LVMH Moët Hennessy Louis Vuitton (Japan) KK, Tokyo.

Permanent representative of Montaigne Participations et Gestion, Director of FinancièreAgache, Paris.

Legal representative of:• Montaigne Participations et Gestion, Chairman of Gasa Développement, Paris;• Montaigne Participations et Gestion, Chairman of Société Saint Nivard, Paris.

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VICE CHAIRMAN AND DIRECTOR

Mr. Eric Guerlain - Born May 2, 1940Date of first appointment: June 29, 1994

Chairman of the Board of Directors of Hydroélectrique d’Energie, Oloron Sainte Marie

Director of:• Folio Corporate Finance Ltd., London;• Eurofolio Ltd., London.

Legal representative of LVMH Fashion Group, Director of Guerlain, Paris.

DIRECTOR

Mr. Denis Dalibot - Born November 15, 1945Date of first appointment: May 17, 2000

Chairman of the Board of Directors of:• Montaigne Finance;• Paris Provence Bâtiment.

President of:• Agache Développement SAS;• FA Investissements SAS;• Sifanor SAS.

Director and Executive Vice President of: • Financière Agache;• Financière Truffaut;• Omnium Lyonnais d’Etudes.

Director of: • Christian Dior Couture;• Financière Jean Goujon;• Service Bois Construction.

Permanent representative of: • Financière Agache, Supervisory Board member of Zebank;• Financière Agache, Director of Raspail Investissements;• Financière Agache, Manager of Lamourelle Paris SNC;• Financière Agache, President of Aristide Boucicaut SAS;• Financière Agache, Director of CS Oblig Europe;• Eurofinweb NV, Director of Europatweb;• Ufipar, Director of Le Jardin d’Acclimatation.

Manager of: • Kléber Participations;• Montaigne Investissements.

Director of Sèvres Investissements.

Director of Groupe Arnault Inc.

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DIRECTOR

Mr. Christian de Labriffe - Born March 13, 1947Date of first appointment: May 14, 1986

General Partner of:• Rothschild & Cie;• Rothschild & Cie Banque.

Member of the Supervisory Board of Financière Rabelais.

Director of:• Christian Dior Couture;• Financière Jean Goujon;• Paris Orléans;• Investec.

DIRECTOR

Mr. Raymond Wibaux - Born July 17, 1938Date of first appointment: June 11, 1993

Chairman of the Board of Directors of Financière Joire Pajot Martin.

Director of: • CIPM (Securities Investment Consortium);• CIPM International;• Mosane;• Participex.

DIRECTOR

Mr. Antoine Bernheim - Born on September 4, 1924Date of first appointment: May 14, 2001

Partner of Lazard LLC, Wilmington.

Director of: • Aon France, Levallois-Perret;• Bolloré Investissement, Ergué Gabéric;• Ciments Français, Puteaux;• Financière Agache, Paris;• Generali France Holding, Paris;• LVMH Moët Hennessy Louis Vuitton, Paris;• SA de La Rue Impériale de Lyon, Lyon; • Société Immobilière Marseillaise, Marseille;• AMB, Aachen;• BSI, Lugano;• EA - Generali, Vienna;• Generali, Trieste;• Mediobanca, Milan.

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DIRECTOR

Mr. Pierre Godé - Born December 4, 1944Date of first appointment: May 14, 2001

Current offices

Chairman and Chief Executive Officer of:• Financière Agache, Paris;• Financière Jean Goujon, Paris;• Financière Truffaut, Paris;• Raspail Investissements, Paris.

Member of the Executive Board and Chief Executive Officer of LVMH Fashion Group.

Director and Executive Vice President of:• Groupe Arnault, Paris;• Le Bon Marché, Maison Aristide Boucicaut, Paris.

Director of:• Christian Dior Couture, Paris;• LVMH Moët Hennessy Louis Vuitton, Paris;• Montaigne Finance, Paris;• Montaigne Participations et Gestion, Paris;• SA du Château d’Yquem, Sauternes;• Cheval Blanc, Saint-Emilion non-trading partnership;• Christian Dior Inc., New York;• LVMH Moët Hennessy Louis Vuitton Inc., New York;• LVMH Moët Hennessy Louis Vuitton (Japan) KK, Tokyo;• LVMH Services Limited, London.

Permanent representative of:• Financière Agache, Director of Parfums Christian Dior, Paris;• Le Bon Marché, Maison Aristide Boucicaut, Director of Franck & Fils, Paris;• Louis Vuitton Malletier, Director of Belle Jardinière, Paris;• LVMH, Director of DI Group, Paris;• LVMH, Director of Sofidiv, Paris.

Chairman of Sèvres Investissements, Paris.

Member of the Board of Directors of LVMH Services GIE, Paris.

Legal representative of:• Financière Agache, Chairman of Aristide Boucicaut, Paris;• Financière Agache, Manager of Lamourelle Paris, Paris.

In accordance with the Board of Directors’ by-laws, each director must hold at least 200registered shares of the company.

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XI. STOCK OPTION PLANS

Stock option plans

• Options granted by the Christian Dior parent company

Two stock option subscription plans and six stock option purchase plans were in effect on December 31, 2001.These plans ranged from five to seven years. Depending on the plan, the options may be exercised three, fouror five years after they are opened. In certain circumstances, notably upon retirement from the company, thistime requirement will be waived.

Each of these plans stipulate that each option entitles the bearer to subscribe to or buy one share.

STOCK OPTION SUBSCRIPTION PLANS:

Number Number of optionsShareholders’ Number Number Exercise of options in force ➂

meeting Plan of options of bene- price exercisedauthorization opened granted ➀ ficiaries (EUR) ➁ ➂ in 2001 ➂ 12/31/2001 01/31/2002

6/11/1993 6/11/1993 150,000 4 7.81 460,000 0 0

6/11/1993 5/30/1996 2,250 2 21.49 – 6,000 6,000

STOCK OPTION PURCHASE PLANS:

Number Number of optionsShareholders’ Number Number Exercise of options in force ➂

meeting Plan of options of bene- price exercisedauthorization opened granted ➀ ficiaries (EUR) ➁ ➂ in 2001 ➂ 12/31/2001 01/31/2002

5/30/1996 10/14/1996 94,600 21 25.95 88,000 284,400 284,400

5/30/1996 5/29/1997 97,900 22 32.01 – 389,600 389,600

5/30/1996 11/3/1998 98,400 23 18.29 – 391,600 391,600

5/30/1996 1/26/1999 89,500 14 25.36 – 358,000 358,000

5/17/2000 2/15/2000 100,200 20 56.70 – 400,800 400,800

5/14/2001 2/21/2001 437,500 17 45.95 – 437,500 437,500

➀ Number of options at opening of plan not restated for adjustments relating to the four-for-one stock split in July 2000.

➁ Exercise prices prior to 1999 convert data originally denominated in francs to the euro.

➂ Adjusted for the transaction stipulated in ➀ .

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• Options granted by its subsidiaries

STOCK OPTION SUBSCRIPTION PLANS GRANTED BY LVMH:

Number Number of optionsShareholders’ Number Number Exercise of options in force ➂

meeting Plan of options of bene- price exercisedauthorization opened granted ➀ ficiaries (EUR) ➁ ➂ in 2001 ➂ 12/31/2001 01/31/2002

6/4/1987 3/20/1991 53,158 1,101 15.85 33,950 – –

6/4/1987 3/18/1992 47,498 861 20.89 8,820 40,855 38,130

STOCK OPTION PURCHASE PLANS GRANTED BY LVMH :

Number Number of optionsShareholders’ Number Number Exercise of options in force ➂

meeting Plan of options of bene- price exercisedauthorization opened granted ➀ ficiaries (EUR) ➁ ➂ in 2001 ➂ 12/31/2001 01/31/2002

5/25/1992 3/17/1993 49,681 548 15.40 6,210 64,135 64,135

5/25/1992 3/16/1994 139,031 364 17.84 10,660 1,598,240 1,597,755

5/25/1992 6/17/1994 1,250 1 17.68 – 7,565 7,565

5/25/1992 3/22/1995 256,903 395 20.89 20,240 449,620 444,960

6/8/1995 5/30/1996 233,199 297 34.15 198,195 797,095 797,095

6/8/1995 5/29/1997 233,040 319 37.50 56,910 1,127,810 1,121,485

6/8/1995 1/29/1998 269,130 346 25.92 99,400 1,315,730 1,310,230

6/8/1995 3/16/1998 15,800 4 31.25 – 86,900 86,900

6/8/1995 1/20/1999 320,059 364 32.10 3,025 1,740,880 1,732,135

6/8/1995 9/16/1999 44,000 9 54.65 – 220,000 220,000

6/8/1995 1/19/2000 376,110 552 80.10 – 1,879,550 1,879,550

5/17/2000 1/23/2001 2,649,075 786 65.12 – 2,649,075 2,649,075

5/17/2000 3/6/2001 40,000 1 63.53 – 40,000 40,000

5/17/2000 5/14/2001 1,105,877 44,669 66.00 – 1,105,877 1,105,877

5/17/2000 5/14/2001 552,500 4 61.77 – 552,500 552,500

5/17/2000 9/19/2001 50,000 1 52.48 – 50,000 50,000

5/17/2000 1/22/2002 3,284,100 993 43.30 – 3,284,100 3,284,100

➀ Number of options at the plan’s opening not restated for adjustments relating to one-for-ten bonus allotments of September1991, July 1994 and June 1999 and the five-for-one stock splits of March 1994 and July 2000.

➁ Exercise prices prior to 1999 convert data originally denominated in francs to the euro.

➂ Adjusted for the transaction stipulated in ➀ .

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The option plans set up in 1999 and 2000 by e.Luxury and Sephora.com expired at year-end2001 following all of the beneficiaries’ forfeiture of their options.

• Options granted to each company officer by Christian Dior and any Group company:

Number Exercise DateGrantor Date of price plan

Beneficiaries company of plan options (EUR) expires

B. Arnault Christian Dior 2/21/2001 220,000 45.95 2/20/2011

LVMH 1/23/2001 600,000 65.12 1/22/2011

D. Dalibot Christian Dior 2/21/2001 15,000 45.95 2/20/2011

P. Godé Christian Dior 2/21/2001 65,000 45.95 2/20/2011

LVMH 1/23/2001 150,000 65.12 1/22/2011

• Options exercised by each company officer/director during the financial year:Exercise price

Beneficiaries Grantor company Number of shares (EUR)

B. Arnault Christian Dior 460,000 7.81

P. Godé Christian Dior 80,000 25.95

LVMH 110,000 34.15

• Options granted by Christian Dior or any Group company to the ten non-officer/directoremployees holding the most options:

Weighted averageGrantor company Date of plan Total number of options exercise price (EUR)

Christian Dior 2/21/2001 129,000 45.95

LVMH 1/23/2001 355,000 65.12

LVMH 3/6/2001 40,000 63.53

LVMH 5/14/2001 100,000 61.77

LVMH 9/12/2001 50,000 52.48

• Options exercised by the ten non-officer/director employees holding the most options:

Weighted averageGrantor company Date of plan Total number of options exercise price (EUR)

Christian Dior 10/14/1996 8,000 25.95

LVMH 3/22/1995 9,700 20.89

LVMH 5/30/1996 56,600 34.15

LVMH 5/29/1997 34,650 37.50

LVMH 1/29/1998 71,900 25.92

LVMH 1/20/1999 3,025 32.10

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A R T I C L E S O F I N C O R P O R A T I O N - D R A F T

SECTION IFORM - LEGAL NAME - PURPOSE - HEADQUARTERS - TERM

Article 1 - FORM

The CHRISTIAN DIOR company was formed as a limited liability company under a privatecontract signed in Paris on October 8, 1946, filed with the Paris Clerk of Courts on October18, 1946 and published in the Journal Spécial des Sociétés Françaises par Actions onOctober 18,1946. It was converted into a French société anonyme, without creating a newlegal entity, under a resolution of the partners’ extraordinary meeting on December 21, 1979.

It is now subject to the legislative and regulatory provisions below and any which may besubsequently created.

Article 2 - PURPOSE

The company’s purpose, both in France and other countries, is:

1) to acquire and manage equity investments in any company or commercial, industrial orfinancial entity whose direct or indirect activity pertains to the manufacture and/ordistribution of prestigious products by the acquisition, in any form whatsoever, of any sharesof stock, partnership shares, bonds, or other securities;

2) to acquire a direct or indirect equity stake in any industrial or commercial operations bycreating new companies, through capital contributions, subscription or purchase of securitiesor corporate rights, mergers, management, joint ventures or otherwise;

3) and, more generally, to perform any commercial, financial, industrial, securities or realestate operations that facilitate, favor or develop the company’s activity.

Article 3 - LEGAL NAME

The legal name is: CHRISTIAN DIOR

In all acts and documents of any kind emanating from the company and sent to third parties,this legal name must always be preceded or followed immediately and legibly by the words,“société anonyme” or the initials “SA” and a mention of the capital stock.

Article 4 - HEADQUARTERS

The company’s headquarters is located at 30, Avenue Montaigne, Paris 75008, France.

It may be transferred to any other location in the same département or an adjoining départementby a decision of the Board of Directors subject to ratification by the next ordinaryshareholders’ meeting, and to any other location by resolution of the extraordinaryshareholders’ meeting.

Agencies, branches and warehouses may be created in any location and in any country by adecision of the Board of Directors, which may then transfer them and eliminate them as itsees fit.

Article 5 - TERM

The term of the company is fixed at ninety-nine years beginning on the eighth of October,nineteen hundred and forty-six, the date it was formed.

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SECTION IICAPITAL STOCK - SHARES OF STOCK

Article 6 - CAPITAL STOCK

The capital stock is fixed at EUR 363,442,096, divided into 181,721,048 shares with a parvalue of EUR 2 per share, fully paid up, and all of the same class.

4,351,808 shares were created in exchange for the capital contribution, made by variousshareholders of Djedi Holding S.A., of 5,159,349 full ownership shares and 206,374 bareownership shares of said company valued at FRF 1,958,313,600.

Article 7 - MODIFICATION OF THE CAPITAL STOCK

The capital stock may be increased or reduced by a decision of the extraordinaryshareholders’ meeting, subject to the conditions set by law.

The meeting may delegate the powers needed for this purpose to the Board of Directors.

Article 8 - SHARES

Payment

At least one-fourth of the par value and the share premium, if any, must be paid at the timeof subscription for shares subscribed in cash. The remainder shall be called within amaximum of five years by the Board of Directors.

Shares may be paid up by compensation with payable claims against the company.

The shareholders shall be notified of calls at least fifteen days in advance, either with anannouncement in a legal gazette serving the location in which the headquarters are located,or by registered mail addressed to each shareholder.

Shares allotted to represent a contribution in kind or as the result of the capitalization ofearnings, reserves or share premiums, and shares for which the amount results in part froma capitalization of reserves, earnings or share premiums and, in part, from an investment incash, must be fully paid up as soon as they are issued.

Any late payments on shares shall automatically and without formal notice bear interestpayable to the company, computed at the legal commercial rate plus three points as of thedate due.

Form

Fully paid-up shares shall be in registered or bearer form at the shareholder’s choice.

When the owner of the securities is not domiciled on French territory as defined by Article102 of the French civil code, any intermediary may be registered on behalf of said owner.This registration may be done in the form of a joint account or in several individual accounts,each in the name of one owner.

The registered intermediary is required, at the time the account is opened either with theissuing company or with the authorized financial intermediary holding the account, to declarethat it is an intermediary holding securities on behalf of another person in accordance withthe terms set by decree.

Transfer of shares

The shares shall be freely negotiable, except where otherwise stipulated by law or regulatoryprovisions, particularly with respect to non paid-up shares and contribution shares.

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Registered shares shall be transferred from one account to another on the instructions of theaccount holder or his authorized representative.

Indivisibility

Shares are indivisible with respect to the company. Joint owners of shares are required tobe represented with the company by only one of the owners or by a duly authorized jointagent.

Shares rights

Ownership of a share automatically implies compliance these articles of incorporation andthe decisions of the shareholders’ meeting.

Each share of stock entitles the owner to participate, under the terms set by law and thesearticles of incorporation, in shareholders’ meetings and to vote on resolutions.

Each share entitles the owner to a portion of the corporate assets and distribution of earningsin proportion to the total number of existing shares, taking into account the nominal amountof his shares.

All shares that make up or will make up the capital stock shall be fiscally equivalent.Consequently, each share shall entitle the owner to payment of the same net amount in anyallotment or distribution, during the life of the company or when it is liquidated, so that thereshall be no distinctions between any shares for any tax exemptions or taxation on thisdistribution or allotment.

The shareholders shall bear the company’s losses only to the extent of their capitalcontributions.

The heirs, representatives or creditors of a shareholder may not, under any circumstance,place a lien on or bring action to acquire the company’s assets and holdings, request thedistribution or sale of said assets by auction, nor interfere in any way with the acts of itsadministrative body. They must rely on the corporate inventories and comply with thedecisions of shareholders’ meetings.

Declaration of holdings

Any individual or legal entity who comes to own a number of shares representing more than1% of the company’s capital stock must inform the company within eight days from the datethis threshold was exceeded and each time another 1% threshold is reached. However, thisobligation ceases when the stake owned is equal to or greater than 60% of the capital stock.

Should these reporting requirements not be met, the shares in excess of each of the fractionswhich should have been declared shall be stripped of their voting rights for any shareholders’meeting to be held until the expiration of a three-month period after the date the declarationwas made, provided that one or several shareholders holding at least 5% of the capital stockso request and this request is recorded in the minutes of the shareholders’ meeting.

Identifiable bearer shares

To allow identification of holders of securities, the company has the right to ask the securitiesclearing institution at any time, in exchange for consideration to be paid by the company, thename or, if it is a legal entity, the business name, nationality, year of birth or founding, andthe address of the holders of securities that confer immediately or in the future the right tovote in its own shareholders’ meetings, the number of securities held by each holder, and therestrictions on the securities, if any.

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With respect to the list issued by the aforementioned institution, the company has the rightto ask the persons appearing on this list, either through this institution or directly, whom thecompany believes may be registered on behalf of third parties, for information concerning theowners of the aforementioned securities, under the same conditions and subject to thepenalties stipulated by Article L 228-3-2.

If said persons are intermediaries, they shall be required to reveal the identity of the ownersof the securities. The information shall be provided directly to the authorized financialintermediary holding the account which shall be responsible for forwarding it to the issuingcompany or the aforementioned institution, whichever is appropriate.

SECTION III

Chapter I: COMPANY ADMINISTRATION

Article 9 - COMPOSITION OF THE BOARD

The company shall be administered by a Board of Directors composed of at least threemembers and no more than twelve, appointed for a three-year term by the shareholders’meeting.

A legal entity may be appointed director, but it must, when appointed, designate an individualwho will be its permanent representative on the Board of Directors. The permanentrepresentative shall have the same term of office as the legal entity, and must be confirmedeach time the term of the legal entity is renewed.

When the legal entity removes its representative, it must to provide a new representative atthe same time and notify the company immediately by registered letter of the removal and theidentity of its new permanent representative. The same procedure applies in the event thepermanent representative dies or resigns.

The term of a director shall expire at the end of the ordinary shareholders’ meeting thatapproves the financial statements of the previous fiscal year and is held in the year in whichsaid director’s term expires.

Whatever the term of office, a director’s term shall automatically end at the end of the firstordinary shareholders’ meeting held after the date of his 80th birthday.

One-third of the Board of Directors shall be elected each year. The first outgoing directorsshall be picked by lot during the board meeting called to prepare for or convene the annualshareholders’ meeting.

The directors may be re-elected indefinitely. They may be dismissed at any time by theordinary shareholders’ meeting.

Should one or more seats on the Board fall vacant through death or resignation, the Board ofDirectors may make temporary appointments between two shareholders’ meetings; theseappointments must be ratified by the next ordinary shareholders’ meeting.

When the number of directors falls below the legal minimum, the remaining directors mustimmediately call an ordinary shareholders’ meeting to elect more board members.

A director appointed to replace another shall remain in office only for the remainder of hispredecessor’s term.

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Article 10 - DIRECTORS’ SHARES

Each director must own at least fifty shares of stock for the duration of his term.

If a director does not own the required number of shares on the day he is elected or if, duringhis term, he ceases to own said shares, he must rectify the situation within three months orbe deemed to have resigned from office.

Article 11 - ORGANIZATION OF THE BOARD

The Board of Directors shall elect a Chairman from among its individual members, whoseterm of office shall not exceed his term as a director or the legal age limit.

In the event the Chairman is unable to serve or dies, the Board of Directors may name adirector to serve as Chairman. In the event the Chairman is temporarily unable to serve, thedelegation shall be given for a limited and renewable term. In the event of the death of theChairman, the delegation shall continue until a new Chairman is elected.

The Board may also designate a Secretary chosen from among its members or outside theBoard.

Article 12 - BOARD PROCEEDINGS

1. The Board shall meet as often as the company’s best interests require on notice from itsChairman at his initiative or, if the Chairman is not the Chief Executive Officer, at therequest of the Chief Executive Officer, or from the director delegated to act as Chairman.

If the Board of Directors has not met for more than two months, directors representing atleast one third of the Board members may call a meeting, indicating the agenda.

Meetings shall be held either at the headquarters or any other location indicated in the noticeof meeting. They shall be chaired by the Chairman of the Board or the director delegated toperform these functions or, if the Chairman is not present, by the Vice Chairman or by adirector selected by the Board.

Any director may give any other director, even by letter or telegram, the power to representand vote in his stead and place at a specific meeting of the Board of Directors. However, adirector may represent only one of his colleagues.

An attendance register shall be kept, which shall be signed by all the directors attending themeeting.

2. A quorum of at least one-half of the Board members must be present for the meeting tobe valid.

Directors who participate in the Board meeting by video conferencing methods under theconditions defined by the Board of Directors shall be deemed present for purposes ofestablishing quorum and majority. However, a member must be physically present orrepresented by another director for any Board proceedings relating to the appointment orremoval of a Chairman or Chief Executive Officer, closing the annual accounts andconsolidated financial statements, and drafting the corporate management report and themanagement report for the Group.

Decisions shall be made by a majority vote of the members present or represented. TheChairman shall cast the deciding vote in the event of a tie.

However, when only two directors are present, decisions must be made by unanimous vote.

3. The Board of Directors’ proceedings shall be recorded in the minutes, which are kept in aspecial register maintained at the headquarters. Minutes shall be paginated and initialed, orbe kept on loose-leaf pages which are numbered and initialed without discontinuity.

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These minutes shall be signed by the Chairman of the meeting and one director. If theChairman is unable to sign, the minutes shall be signed by two directors.

A copy or an excerpt from the minutes is sufficient proof of the number of directors in office,their attendance or their representation.Copies or excerpts from the minutes of proceedings shall be duly certified by the Chairmanof the Board, a chief executive officer, the director who is temporarily delegated to performthe Chairman’s duties, or an agent authorized for this purpose.When the company is being liquidated, these copies or excerpts shall be duly certified by asingle liquidator.

Article 13 - POWERS OF THE BOARD OF DIRECTORS

The Board of Directors shall determine the business strategies of the company and ensureimplementation. With the exception of the powers expressly granted to shareholders’meetings and within the limits of the company’s purpose, the Board shall handle any issuerelated to the proper operations of the company and shall govern the business of thecompany.

In its relationships with third parties, the company shall be committed by the decisions of theBoard of Directors that do not fall within the scope of the company’s purpose, unless thecompany proves that the third party knew that the decision was outside the purpose or couldnot be unaware of this fact under the circumstances. The publication of these articles ofincorporation does not constitute sufficient proof.

The Board of Directors shall establish management controls and verifications that it deemsappropriate. Each director shall receive any information necessary to perform his duties andmay obtain any documents he deems useful.

The Board shall distribute attendance fees, the total amount of which shall be voted by theshareholders’ meeting.

The decisions of the Board of Directors shall be carried out either by the Chief ExecutiveOfficer or by any person the Board of Directors shall appoint.

Moreover, the Board may grant special powers to one of its members or third parties, whodo not have to be shareholders, for one or more specific purposes, with or without the optionto sub-delegate said powers, in whole or in part.

It may also decide to form committees responsible for reviewing issues shall submit by theBoard for opinion.

Article 14 - COMPENSATION OF DIRECTORS

The Board of Directors may allocate to directors, as compensation for their duties, an annualfixed amount as directors’ fees, which shall be recorded as an administrative expense for thecompany.

The Board of Directors shall freely distribute these attendance fees among its members. Itmay allocate a greater portion to directors who serve on committees.

It may also allocation exceptional compensation for missions or duties assigned to directors.

This compensation shall be governed by the legal provisions governing agreements that aresubject to prior authorization of the Board of Directors.

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Article 14 a -ADVISORS

From one to three advisors may be appointed, for terms not to exceed three years. They maybe re-elected. The conditions for their appointment and removal shall be governed by thesame rules that govern directors. However, advisors shall not be required to be shareholdersand are not subject, as such, to the rules governing the total number of directorships andsimilar positions that may be held.

Advisors shall be notified and attend Board of Directors’ meetings where they have anadvisory capacity. Their compensation is set each year by the Board of Directors which shallwithhold it from any attendance fees that may be allotted to the Board of Directors by theshareholders’ meeting.

Chapter II: COMPANY MANAGEMENT

Article 15 - CHAIRMANSHIP - MANAGEMENT

I - Chairman of the Board

The Chairman of the Board represents the Board of Directors. He chairs Board meetingsand organizes and directs the work of the Board and reports on this work to the shareholders’meeting. He shall oversee the correct operations of the company’s administrative bodies andshall ensure, in particular, that directors are able to carry out their duties.

The Board of Directors shall determine his compensation.

II - Management

1 - There are two possible Management forms

Management of the company shall be the responsibility of either the Chairman of the Boardor another individual appointed by the Board and holding the title of Chief Executive Officer.The Board of Directors shall decide between the two forms of Management and shall soinform the shareholders in accordance with regulations.

When the Management of the company is assumed by the Chairman of the Board, thefollowing provisions governing the Chief Executive Officer shall apply to the Chairman.

2- Chief Executive Officer

The Chief Executive Officer may be selected from Board members or outside the Board.The Board shall determine the length of his term and his compensation. The Chief ExecutiveOfficer may not be over the age of sixty-five years. Once he has reached this age, he shall bedeemed to have resigned from his position.

The Chief Executive Officer may be removed at any time by the Board of Directors.Dismissal without just cause may result in damages, except where the Chief ExecutiveOfficer assumes the position of Chairman of the Board of Directors.

The Chief Executive Officer shall be vested with the most extensive powers to act in allcircumstances in the name of the company. He shall exercise these powers within the scopeof the company’s purpose and subject to the powers expressly ascribed by law toshareholders’ meetings and the Board of Directors.

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He shall represent the company in its dealings with third parties. The company shall becommitted even by actions of the Chief Executive Officer that do not fall within the scope ofthe company’s purpose, unless the company proves that the third party knew that thedecision was outside the purpose or could not be unaware of this fact under thecircumstances. The publication of these articles of incorporation does not constitutesufficient proof.

The provisions of the articles of incorporation or decisions of the Board of Directors limitingthe powers of Chief Executive Officer may not be enforced against third parties.

3 - Executive Vice Presidents

On the recommendation of the Chief Executive Officer, the Board of Directors may appointone or more individuals charged with assisting the Chief Executive Officer who hold the titleof Executive Vice President, and shall determine their compensation.

There may be no more than five Executive Vice Presidents.

The Executive Vice Presidents may be removed at any time by the Board of Directors on therecommendation of the Chief Executive Officer. Removal without just cause may result indamages.

When the Chief Executive Officer ceases, or is unable to perform his duties, the ExecutiveVice Presidents shall retain their positions and powers, except where otherwise decided bythe Board, until the appointment of a new Chief Executive Officer.

The Board of Directors shall determine, in agreement with the Chief Executive Officer, thescope and duration of the powers conferred on the Executive Vice Presidents. They shallhave the same powers as the Chief Executive Officer with respect to third parties.

The age limit for the Chief Executive Officer shall also apply to Executive Vice Presidents.

Chapter III: FINANCIAL AUDITS

Article 16 - STATUTORY AUDITORS

One or more Statutory Auditors appointed by the ordinary shareholders’ meeting shall beresponsible for financial control.

One or more Alternate Auditors must also be designated.

The Statutory Auditors shall be appointed for six fiscal years; their terms shall expire at theend of the ordinary shareholders’ meeting held to approve the financial statements for thesixth year.

They may be relieved of their duties by the shareholders’ meeting in the case of fault orinability to perform their duties.

They shall be notified of the Board of Directors’ meeting held to close the accounts of theprevious fiscal year and of all shareholders’ meetings.

The Auditors’ compensation shall be set in accordance with regulations in force.

The Statutory Auditor appointed to replace another shall remain in office only until theexpiration of the term of his predecessor.

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SECTION IVSHAREHOLDERS’ MEETINGS

Chapter I: GENERAL PROVISIONS

Article 17Effect of deliberations

The shareholders’ meeting, duly constituted, represents all shareholders. Its resolutionsadopted in accordance with legal requirements and the articles of incorporation, apply to allshareholders, even those absent, unable to vote, or dissenting.

Notices of Meeting

Shareholders shall meet annually within six months from the end of the fiscal year in anordinary shareholders’ meeting.

Shareholders’ meetings, both ordinary ones held on an extraordinary basis, or extraordinarymeetings may be held at any time of the year.

Notices of meeting shall be sent out at least two weeks before the date planned for theshareholders’ meeting. This period shall be reduced to six days for shareholders’ meetingsheld on second notice and for postponed meetings.

Notices of meeting shall be served through an announcement placed in a legal gazette in thedépartement where the headquarters is located and, if the company is making a publicoffering, in the Bulletin d’Announces Légales Obligatoires. Shareholders who have heldregistered shares for at least one month before the notice of meeting is issued shall be notifiedby letter.

If all shares are registered, public notices may be replaced by a simple notification lettermailed to each shareholder at the company’s expense.

All of this shall be done independently of prior notices to shareholders sent in the form andwithin the periods required by law which are related to any request to include proposedresolutions on the agenda.

Attendance

The shareholders’ meeting consists of all shareholders regardless of how many shares theyown.

The right to participate in the meetings shall be subject to registration of the shareholder inthe company’s books.

Shareholders who hold bearer shares must block their shares with their financialintermediary and ensure that a certification to this effect reaches corporate headquarters fivedays before the date of the shareholders’ meeting.

These formalities must be completed five business days before the meeting date. However,the Board of Directors shall always have the power, if it deems appropriate, to reduce thistime period by a general measure.

Holders of shares on which payments due have not been paid within thirty days ofnotification to this effect made by the company may not attend shareholders’ meetings. Theseshares shall be deducted from the total for computing a quorum.

A shareholder may be represented by another shareholder who has not been stripped of hisvoting rights or by his spouse. For this purpose, the agent must provide proof ofauthorization.

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Any shareholder who has not been deprived of his voting rights may receive the powersissued by other shareholders to represent them at shareholders’ meetings.

The financial intermediary that has met the requirements stipulated in paragraphs three andfour of Article L 228-1 of the commercial code may, under a general securities managementauthorization, may transmit for a meeting the vote or power of a shareholder as this is definedin paragraph three of said article.

Before transmitting powers or votes to a shareholders’ meeting, the financial intermediaryregistered in accordance with Article L 228-1 of the commercial code is required, at therequest of the issuing company or its agent, to provide the list of non-resident shareholderswho hold the shares to which the voting rights are attached. This list shall be provided underthe terms of Articles L 228-2 or L 228-3 of the commercial code, as applicable.

The vote or power issued by an intermediary who either has not declared its status asintermediary or has not revealed the identity of the owners of shares may not be counted.

Legal representatives of legally incompetent shareholders and individuals representing legalentity shareholders shall participate in shareholders’ meetings, whether or not theythemselves are shareholders.

Shareholders shall have as many votes as the number of shares they hold. A double votingright is conferred on shares which have been continuously registered in the name of the sameowners for three years.

If there is a Works Council in the company, two of its members appointed by the Councilmay attend shareholders’ meetings. At their request, they must be heard at any proceedingrequiring a unanimous vote of the shareholders.

Article 18 - CONDUCT OF SHAREHOLDERS’ MEETINGS

Shareholders’ meetings shall be called by the Board of Directors at the company’sheadquarters or in any other location indicated in the notice of meeting.

Otherwise, meetings may be also convened by:• the statutory auditors,• a court-appointed agent, at the request of any interested party during an emergencysituation or of one or more shareholders holding at least one-fifth of the capital stock,• the liquidator(s), in the event the company is dissolved, during the liquidation period.

Each participant attending the shareholders’ meeting shall have as many votes as he holds orrepresents.

Subject to the conditions stipulated by the legislation or regulations in force, the Board ofDirectors may decide that shareholders’ meetings may be held through video conferencing orby the use of any telecommunications resources that allow shareholders to be identified.

Shareholders’ meetings shall be chaired by the Chairman of the Board or, in his absence, bythe Vice Chairman or, in their absence, by a director specially delegated for this purpose bythe Board of Directors; if not, the shareholders’ meeting shall elect its own Chairman.

In principle, the agenda for the meeting shall be prepared by the author of the notice ofmeeting.

The duties of tellers shall be performed by the two members of the meeting, who are presentand willing, with the largest number of votes.

The executive committee shall appoint a secretary who may does not have to be ashareholder.

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An attendance sheet shall be kept, duly signed by the participants and certified as accurateby the officers of the shareholders’ meeting.

The proceedings shall be recorded in minutes kept in a special register, the pages of whichare numbered and initialed, maintained at headquarters, or on loose-leaf pages that arenumbered and initialed without discontinuity.

These minutes shall be signed by the officers. Copies or excerpts shall be duly certified bythe Chairman of the Board, or by a director performing the duties of Chief Executive Officer,or by the Secretary of the meeting.

Chapter II: ORDINARY SHAREHOLDERS’ MEETINGS

Article 19 - POWERS

The ordinary shareholders’ meeting shall hear the reports of the Board of Directors and theStatutory Auditors. It shall also review the annual financial statements.

The shareholders’ meeting shall discuss, approve, modify or refuse the financial statementssubmitted to it. It shall rule on the allocation and appropriation of earnings.

The meeting shall approve all reserve funds. It shall set withdrawals from those funds anddetermine distribution.

It shall determine the directors’ fees.

It shall appoint, replace, re-elect or remove the directors.

It shall ratify the appointments of directors made on a temporary basis by the Board ofDirectors.

It shall appoint the Statutory Auditors and review their special report, if any.

It shall authorize all borrowings through non-convertible or non-redeemable bonds and theconstitution of specific sureties.

It shall deliberate on all proposals that do not fall under the exclusively jurisdiction of theextraordinary shareholders’ meeting.

Article 20 - QUORUM AND MAJORITY

The ordinary shareholders’ meeting held on the first notice of meeting shall validly deliberateonly if the number of shareholders attending or represented hold at least one-fourth of theshares with voting rights.

On the second notice of meeting, the proceedings shall be valid no matter how many sharesare represented.

Resolutions shall be adopted by a simple majority vote of the shareholders present orrepresented.

Chapter III: EXTRAORDINARY SHAREHOLDERS’ MEETING

Article 21 - POWERS

The extraordinary shareholders’ meeting may amend any provisions of the articles ofincorporation. Likewise, it may convert the company into any other form of company.

Under no circumstances may the meeting, without an unanimous vote, increase shareholders’commitments or violate the equality of their rights, with the exception of operations resultingfrom a legal executed consolidation of shares.

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Article 22 - QUORUM AND MAJORITY

1 - The extraordinary shareholders’ meeting may validly deliberate only if the shareholderspresent or represented on the first notice of meeting hold at least one-third of the votingshares or, on the second notice and in the event the second meeting is extended, one-fourthof said shares.

Resolutions shall be passed with a two-thirds majority of the votes of the shareholdersattending or represented.

2 - If the shareholders’ meeting must vote to authorize the Board of Directors to execute acapital increase by incorporating reserves, earnings or share premiums, the quorum requiredshall be one-fourth on the first notice of meeting. No quorum shall be required on the secondnotice of meeting, no matter how many shares are represented.

Resolutions shall be adopted by a majority of the votes of the shareholders attending orrepresented.

3 - A capital increase executed by raising the par value of shares to be paid in cash, or bycompensation, may be approved only by a unanimous vote of the shareholders representingall shares of the capital stock.

Chapter IV: SHAREHOLDERS’ MEETINGS HELD TO CREATE RIGHTS

Article 23 - QUORUM AND MAJORITY

Shareholders’ meetings held to create rights and approve a contribution in kind or thegranting of a special right shall meet the requirements for quorum and majority stipulated forextraordinary shareholders’ meetings in the previous article.

The investor or the beneficiary of the special benefit shall neither have the right to participatein the discussion nor to vote, either on his own behalf or as an agent. His shares shall not becounted in computing quorum and majority.

SECTION VCORPORATE FINANCIAL STATEMENTS

Article 24 - FISCAL YEAR

Every fiscal year is twelve months and begins on January 1 and ends on December 31 ofeach year.

Article 25 - ACCOUNTING DOCUMENTS

Regular accounts must be kept of the company’s operations as required by law and generalbusiness practices.

At the close of each fiscal year, the Board of Directors shall prepare an inventory of thevarious assets and liabilities existing at that date as well as the annual financial statements.The amount of any commitments made as securities, endorsements or guarantees shall bedisclosed on the balance sheet.

A management report shall also be prepared.

All of these documents shall be made available to the Statutory Auditors as required by lawand regulations.

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Article 26 - EARNINGS

1 - The net income of each fiscal year minus general and administrative expenses and othercompany expenses, including depreciation and provisions, shall form the net income or lossfor the year.

2 - At least one-twentieth of the net income for each fiscal year minus prior losses, if any,shall be withheld and allocated to form a reserve fund called the “Legal Reserve”. Thiswithholding shall cease to be required when said reserve equals one-tenth of the capital stock.The withholding shall resume when, for any reason whatsoever, the “Legal Reserve” fallsbelow this fraction.

3 - The balance, plus retained earnings, if any, forms the distributable earnings.

From the distributable earnings:

The shareholders’ meeting is empowered to withdraw the sums necessary to be allocated tothe special reserve for long-term capital gains as required by current tax law if other legal oroptional reserves do not allow for this allocation, when said allocation is required to defertaxation at the full corporate tax rate on the long-term capital gains realized during the year.

The shareholders’ meeting may also withhold from the balance the amount it deemsappropriate either to be carried over as retained earnings to the following year or to be setaside in one or more general or special reserve funds, for which it shall freely determine theallocation or use.

The remainder of the balance, if any, shall be distributed among all shareholders as a dividendin proportion to the capital stock represented by each share.

The shareholders’ meeting called to approve the year’s financial statements shall have thediscretion, on the recommendation of the Board of Directors, to grant each shareholder theoption of payment in cash or in shares for all or part of the dividend to be paid. The Boardof Directors shall have the same discretion for the distribution of interim dividends.

4 - Except in cases of capital reductions, no distribution may be made to the shareholderswhen the shareholders’ equity is, or would become as a result of the distribution, less than theamount of the capital.

TITLE VI

CONVERSION - DISSOLUTION - EXTENSION

LIQUIDATION - DISPUTES

Article 27 - CONVERSION

The company may convert itself into another form if, at the time of its conversion, it has beenin existence for at least two years and has established and the shareholders have approvedthe balance sheet for its first two years in business.

The decision to convert shall be made based on the Statutory Auditors’ report. This reportmust certify that the net assets are at least equal to the capital stock.

The company’s conversion shall be decided subject to the conditions stipulated for amendingthe articles of incorporation. The decision to convert shall be announced as required by law.

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Article 28 - SHAREHOLDERS’ EQUITY LESS THAN ONE-HALF OF THE CAPITAL STOCK

If, as a result of losses recorded on the company’s financial statements, shareholders’ equityfalls below one-half of the capital stock, the Board of Directors must, within four monthsfollowing the approval of the financial statements showing said loss, call an extraordinaryshareholders’ meeting to decide whether or not the company should be dissolved early.

If dissolution is not approved, the company is required, no later than the end of the secondfiscal year following the year in which the losses were recorded, to reduce its capital by anamount at least equal to the amount of the losses which could not be charged to reserves if,during this time, the shareholders’ equity has not been restored to a value at least equal tothat of the capital stock.

In both cases, the resolution approved by the shareholders’ meeting shall be published asrequired by law.

Article 29 - EARLY DISSOLUTION - EXTENSION

The extraordinary shareholders’ meeting may, at any time, dissolve the company early orextend the term of the company.

One year before the expiration of the term of the company, the Board of Directors shall callan extraordinary shareholders’ meeting to decide whether the company should be continued.

Article 30 - LIQUIDATION

When the company’s term expires, or in the event of early dissolution, the shareholders’meeting shall determine the liquidation procedure and appoint one or more liquidators whosepowers it shall define.

The appointment of liquidators shall end the duties of the directors and statutory auditors.

For the period of liquidation, the shareholders’ meeting shall retain the same powers.

The net proceeds from liquidation, after payment of all liabilities, shall be used first toreimburse the paid and unamortized amount of the shares. The remainder shall be allocatedamong all shares.

No annual financial statements or shareholders’ meetings are required during the liquidationsince the liquidation period is considered one fiscal year, whatever the actual time.

A shareholders’ meeting shall be called at the end of liquidation to approve the final financialstatements, discharge the liquidators for their management, and note the close of theliquidation. This shall be published as required by law.

Article 31 - DISPUTES - ELECTION OF DOMICILE

Any dispute concerning corporate affairs that may arise during the life of the company orduring liquidation, either between the company and its shareholders or among theshareholders themselves, shall be subject to the jurisdiction of the competent courts in thelocation of corporate headquarters.

For this purpose, any shareholder must elect domicile within the jurisdiction of corporateheadquarters and all summonses and notices shall be made to this domicile.

If domicile is not elected, all summonses and notices shall be legally served at the office of theFrench Prosecutor for Tribunal de Grande Instance with jurisdiction for the company’sheadquarters.