To The Directors:
SUBJECT: Proposal to be presented to the Annual General Meeting in respect of appropriation of net income for the year ended December 31, 2010.
That the Board of Directors, in exercise of its powers provided under article 33, subsection XI of the Company's Bylaws, submit the following proposal for appropriation of net income for the financial year ended December 31, 2010:
1. Ratification of the amount of R$200,983,492.67, distributed to shareholders as interest on own capital, ascribed as dividends, of which R$34,540,532.55 refers to the 1st and 2nd quarters of 2010, R$21,709,951.32 refers to the 3rd quarter of 2010 and R$144,733,008.80 refers to the 4th quarter of 2010;
2. Transfer of the amount of R$15,328,303.51, in respect of investment subsidies utilized in 2010, to the Investment Subsidy Reserve account;
3. To record a legal reserve of R$28,679,614.90, representing 5% of the net income for 2010, in accordance with the provisions of article 193 of Law 6404/76;
4. Absorption into shareholders' equity of the effects on previous years' financial statements, as a result of having adopted the International Accounting Standards, amounting to R$285,052,995.94, by means of the Reserve for Investments and Working Capital account, in accordance with the Company's Bylaws; and
5. Transfer of the balance of net income for the year, amounting to R$328,600,886.87 to the Reserve for Investments and Working Capital account, in accordance with Annex I of the Company's Bylaws.
São José dos Campos, March 16, 2011.
Frederico Fleury Curado
President and Chief Executive Officer