Agenda and Propositions for Conclusions

1. Electing the Bodies of the Meeting

Proposed resolution:

The Bodies of the General Meeting to be elected.

2. Adoption of the Conclusion on the use of profit, dividend payout and relieving the Management Board and Supervisory Board of their liabilities.

Proposed resolution:

1. The profit stated in the Profit and Loss Statement on 31st December, 2004 in the amount of SIT 3.571.381.824,80 is distributed as follows:

• A part of the profit amounting to SIT 1.020.304.272,00 derived from other reserves from the profit, i.e. the remaining profit from the year 1998 in the sum of SIT 648.174.809,57 and from the remaining profit from the year 1999 in the sum of SIT 372.129.462,43 will be used for the dividend payout in the gross value of SIT 318,00 per ordinary share;
• A part of the profit derived from the total net profit for the year 2004, in the amount of SIT 2.548.437.743,12 and the remainder of the undistributed total net profit for the year 2003 in the amount of SIT 2.639.809,68 will be allocated to other reserves from the profit.

2. Dividends are to be paid out within 30 days after the adoption of the conclusion to all the shareholders registered as shareowners at KDD as per 2nd September, 2005.

3. The General Meeting is relieving the Management Board and Supervisory Board of the company of their liabilities for the business year 2004.

3. Award to the Supervisory Board

Proposed resolution:

To the debit of the business expenses the Supervisory Board will be paid out the award for successful work in the year 2004 in total gross value of SIT 60.500.000,00, of which the Supervisory Board President receives the award in the gross value of SIT 8.750.000,00, and the remaining nine members of the Supervisory Board receive SIT 5.750.000,00 each.

4. Appointment of the Auditor for 2005

Proposed resolution:

Auditing firm Pricewaterhouse Coopers, d.o.o., Ljubljana, is appointed to execute an audit of the company's operations in 2005.

5. Electing the Supervisory Board members

Proposed resolution:

Pursuant to the 2nd paragraph of Art. 31 of the company's Articles of Association the Supervisory Board has 12 members. The following members are elected as the shareholders' representatives:

1. Matjaž Božič
2. Matjaž Gantar
3. Elizabeta Mičović
4. Dušan Mohorko
5. Boštjan Napast
6. Marjan Somrak

The mandate of the elected Supevisory Board members begins on the expiry date of the previous Supervisory Board members mandate, i.e. on 30th October 2005.

6. The use of the International Financial Reporting Standards in preparation of the company's Annual Report

Proposed resolution:

The Annual Report of the company Poslovni sistem Mercator, d.d., will be prepared pursuant to the International Financial Reporting Standards from the 1st January 2006 on.

The resolutions listed under items 1, 2, 3 and 6 are proposed both by Management Board and Supervisory board, whereas the resolutions under items 4 and 5 are proposed solely by the Supervisory Board.

Examination of Material

The material for agenda with the proposed resolutions, inclusive of the adopted Annual Report and Supervisory Board Report is available for shareholders' examination at the company's headquarters in Ljubljana, Dunajska cesta 107 (groundfloor), every working day from the convocation date to the date of the General Meeting session between 9:00 to 12:00 hours.

Convocation time

The Annual Shareholders' Meeting is convened for 14:00 hours. In case the 1st convocation of Annual Shareholders' Meeting is not successful, the 2nd convocation on the same day, will be held in the same premises at 15:00 hours with the quorum established regardless of the percentage of the Company's share capital present.

The conference room where the General Meeting will take place will be opened at least 30 minutes prior to the convocation of the Shareholders' General Meeting.

Conditions for the Attendance

The General Meeting of Shareholders can be attended by the following:

1. Shareholders, their representatives and proxies, who applied to the Shareholders' General Meeting in writing at least 3 days before the date of Annual Shareholders' General Meeting. A written Power of Attorney to representatives and proxies has to be submitted at application and remains deposited with the company.

2. The application from the previous item is considered to be on time if it arrives to company's haeadquarters by 27th August 2005, inclusive.

Management Board President Zoran Janković m.p.
Supervisory Board President Janez Bohorič m.p.

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