REPUBLIC OF LITHUANIA                                     
                                                                                
                               LAW                                              
                                                                                
       ON FOREIGN INVESTMENT IN THE REPUBLIC OF LITHUANIA                       
                                                                                
                            Chapter 1                                           
                                                                                
                       General Provisions                                       
                                                                                
                                                                                
     Article 1.  Objective of the Law                                           
                                                                                
     The objective  of this Law is to promote  the investment  of               
foreign capital,  to establish  the procedures for the protection               
thereof, and the legal order by which such investment is  made.                 
     Relations related  to the  investment of  foreign capital in               
the Republic  of Lithuania  shall be  regulated   by this Law and               
other laws,  as well  as by  international agreements whereof the               
Republic of Lithuania is a party to. (Amended 11 February 1992)                 
                                                                                
                                                                                
     Article 2.  Foreign Investment                                             
                                                                                
     Foreign  investment   shall   be   financial   or   material               
implementation of  intellectual or  industrial property rights as               
well as  other property  rights in  the economy of Lithuania by a               
foreign investor. (Amended 11 February 1992)                                    
                                                                                
                                                                                
     Article 3.  Foreign Investor                                               
                                                                                
     The following  legal and natural persons shall be considered               
foreign investors:                                                              
     1) legal persons of other states - corporations (companies),               
partnerships, private firms, associations and other organizations               
that are  formed or  in any  other manner organized in accordance               
with the laws of said state and registered in said state; and                   
     2) citizens  of other  states or  stateless persons  who are               
permanently residing  abroad [outside  Lithuania] and  who invest               
funds in the Republic of Lithuania. (Amended 11 February 1992)                  
                                                                                
     Article 4.  Forms of Foreign Investment                                    
                                                                                
     This  Law   establishes  the   following  forms  of  foreign               
investment:                                                                     
     1) ownership interests in a joint venture; and                             
     2) firms with foreign capital. (Amended 11 February 1992)                  
                                                                                
     Article 5.  Spheres of Foreign Investment                                  
                                                                                
     Foreign investment  shall  be  allowed  in  all  spheres  of               
activity, with  the exception of spheres where foreign investment               
is prohibited by the laws of the Republic of Lithuania.                         
                                                                                
     Article 6.  Foreign Investment Guarantees                                  
                                                                                
     Foreign investments,  investor income,  and the  rights  and               
legal interests  of those  in the  Republic of Lithuania shall be               
protected by the State of Lithuania.                                            
     Discrimination against foreign investment in any form  shall               
be prohibited.                                                                  
                                                                                
     Foreign   investments    may   not    be   nationalized   or               
requisitioned.                                                                  
                                                                                
     Property may  be appropriated by compensating therefor  only               
in cases prescribed by the laws of the Republic of Lithuania, and               
in  accordance   with  the   universally  recognized   norms   of               
international law.                                                              
     Damages sustained  as a  result  of  actions  of  the  State               
government bodies  of the Republic of Lithuania or their officers               
must be  fully compensated  for in  accordance with  the norms of               
international law.                                                              
     Foreign investors shall be guaranteed the right to  transfer               
abroad, in  the currency agreed upon, sums of money   received in               
compensation for  the actions  specified in  paragraphs 3  and  4               
hereof.                                                                         
     Disputes concerning violations of rights and legal interests               
of foreign  investors shall  fall within the jurisdiction  of the               
courts of the Republic of Lithuania, or  foreign or international               
arbitration bodies. (Amended 11 February 1992)                                  
                                                                                
     Article 7.  Application of Laws of the Republic of                         
               Lithuania and Provisions of International                        
               Agreements to Foreign  Investments                               
                                                                                
     Requirements contained  in  the  laws  of  the  Republic  of               
Lithuania regarding  economic  entities  in  Lithuania  shall  be               
applied to  the business  activity of foreign investors, with the               
exception of  cases where  special rules  regulating the activity               
thereof  under   this  Law,   and  provisions  and  international               
agreements whereof Lithuania is a party to, shall apply.                        
     If rules  set forth  in international agreements whereof the               
Republic of  Lithuania is  a party  to contradict the laws of the               
Republic  of  Lithuania,  the  provisions  of  the  international               
agreements shall be applied with provisos made by the Republic of               
Lithuania.                                                                      
                                                                                
                                                                                
                            Chapter 2                                           
                                                                                
       The Order of Making Investments of Foreign Capital                       
                                                                                
                                                                                
                                                                                
     Article 8.  License to Make a Foreign Investment                           
                                                                                
     Upon receipt  of an  application  concerning  a  prospective               
foreign investment,  the body authorized by the Government of the               
Republic of Lithuania shall make a decision thereon no later than               
30 days  from the  date of receipt thereof.  If the decision is a               
favorable one,  said body shall issue a license to make a foreign               
investment.   A new  firm established  on the  basis of  the said               
license shall be registered at the Ministry of Economy.                         
     If the  Government of  the Republic of Lithuania upholds  an               
unfavorable decision by its authorized body, the applicant  shall               
be notified  thereof and  of the  reasons based  on the laws  and               
other legislative acts of the Republic of Lithuania, pursuant  to               
which  the  decision  was  made.    The  applicant,  taking  into               
consideration whatever  reasons were given to him, shall have the               
right to  repeat his  application.   The newly  filed application               
shall be considered in the general manner.                                      
                                                                                
     Article 9.  Introducing the Investment                                     
                                                                                
     Foreign investment  shall be  made no  later than 12  months               
from the  date of  the receipt  of the  license thereto.  If  the               
investment is  not made  within the  fixed  period,  the  license               
shall be revoked.                                                               
                                                                                
     Article 10.  Change in the Form and Type of Business of                    
               the Foreign Investment                                           
                                                                                
     If the  form of  the foreign  investment is  changed, a  new               
license to make a foreign investment must be obtained, unless the               
previous license  specifically  provides for said form of foreign               
investment.                                                                     
     If a  new business  is  started  that  is  not  specifically               
provided  for   in  the  foundation  documents  of  a  firm,  the               
foundation documents  of the  firm shall be amended in the manner               
established by law. (Amended 11 February 1992)                                  
                                                                                
     Article 11.  The Term of a Joint Venture and of a Firm                     
               with Foreign Capital                                             
                                                                                
     The term  of a  joint venture  and of  a firm  with  foreign               
capital shall not be limited.                                                   
     A joint  venture or  a firm  with  foreign  capital  may  be               
enjoined from  operating in  accordance with  a decision  of  the               
Government of the Republic of Lithuania, if it:                                 
     (1)  contradicts the laws of the Republic of Lithuania;                    
     (2)   is not  in conformity with environmental requirements;               
or                                                                              
     (3)  is not in conformity with the bylaws of the firm.                     
                                                                                
                                                                                
                            Chapter 3                                           
                                                                                
                         Joint Ventures                                         
                                                                                
                                                                                
     Article 12.  Joint Venture, Its Foundation                                 
                                                                                
     An economic  entity of  the Republic  of Lithuania,  with  a               
share of  its  authorized  (ownership)  capital  belonging  to  a               
foreign  investor   (investors),  shall  be  considered  a  joint               
venture.(Amended 11 February 1992)                                              
     A joint  venture  shall  be  founded  on  the  basis  of  an               
agreement.                                                                      
     The agreement  and bylaws  of the  joint  venture  shall  be               
considered  the   instruments  establishing  the  basis  for  the               
functioning of  the firm as an economic entity of the Republic of               
Lithuania.                                                                      
                                                                                
     Article 13.  Contracting Parties in the Joint Venture                      
               Agreement                                                        
                                                                                
     The agreement  on the  founding of a joint venture shall  be               
concluded by  a legal  or natural  person (persons) and a foreign               
investor (investors), hereinafter referred to as founders.                      
                                                                                
     Article 14.  Agreement on the Founding of a Joint Venture                  
                                                                                
     The agreement  on the  founding of  a  joint  venture  shall               
indicate:                                                                       
                                                                                
     14.1   Type of business;                                                   
     14.2    Name, principal place of activity, legal address  of               
the  legal  persons  that  are  founding  the  firm;  full  name,               
citizenship, principal  place of residence of the natural persons               
that are founding the firm;                                                     
     14.3    Sphere  of activity  and character  of  the  founded               
firm;                                                                           
     14.4    The amount of the authorized capital and the  shares               
of the  parties therein;  obligations of  the founders concerning               
the formation of the authorized capital and the term and order of               
investments in the joint venture;                                               
     14.5  The   procedure  for   changing  the   amount  of  the               
authorized capital;                                                             
     14.6   The order of distribution of profit and losses  among               
the founders;                                                                   
     14.7    The  order of  the transfer  to  other  entities  of               
industrial property and rights thereto, and of the commercial use               
and protection of said property;                                                
     14.8   The term of the agreement;                                          
     14.9     The  grounds  and  procedure  for  winding  up  and               
liquidating the firm;                                                           
     14.10  The procedure for arbitrating disputes; and                         
     14.11  Accountability for violating the agreement.                         
                                                                                
                                                                                
     Article 15.  Types of Joint Ventures                                       
                                                                                
     Types of  joint ventures  shall be established in accordance               
with an  agreement between  the  parties,  and  pursuant  to  the               
Enterprise Law of the Republic of Lithuania.                                    
     The foundation  of a  state stock  enterprise, more than  49               
percent of  the shares   at  par value  whereof belong to foreign               
investors, shall  be prohibited.   In  this case,  only  a  stock               
corporation, or a close corporation may be founded.                             
     If foreign  investors acquire  over 49 percent of the shares               
of a state stock enterprise at par value, such enterprise must be               
reorganized into a stock corporation, or a close corporation.                   
     The rules  provided in  the 2nd  section of  paragraph 2  of               
Article 3, and the 2nd section of paragraph 2 of Article 4 of the               
Law on  Stock Corporations of the Republic of Lithuania shall not               
apply to  stock corporations  (close corporations)  founded under               
paragraphs 2 and 3 hereof.                                                      
                                                                                
     Article 16.  Bylaws of a Joint Venture                                     
                                                                                
     The  bylaws  of  a  joint  venture  shall  be  drawn  up  in               
accordance with the Law on the corresponding type of firm.                      
                                                                                
     Article 17.  Transfer of a Share of the Authorized Capital                 
               of a Joint Venture                                               
                                                                                
     The founders  of a  joint venture  shall have  the right  to               
transfer to  third persons  their share  contributed to the joint               
venture, unless  the foundation  agreement of  the joint  venture               
provides otherwise. (Amended 11 February 1992)                                  
                                                                                
                                                                                
                                                                                
                            Chapter 4                                           
                                                                                
                   Firms with Foreign Capital                                   
                                                                                
                                                                                
     Article 18.  Firm with Foreign Capital, its Foundation                     
                                                                                
     A firm with foreign capital shall be considered an  economic               
entity of  the Republic of Lithuania, the authorized  (ownership)               
capital whereof is owned by a foreign investor  (investors).                    
     In cases specified by law, firms with foreign capital in the               
Republic of Lithuania may be legal persons. Subsidiaries of firms               
with foreign  capital founded in the Republic of  Lithuania shall               
have the status of firms with foreign capital  from the moment of               
their registration in the Republic of  Lithuania.                               
     Offices of  representatives of  foreign firms,  institutions               
and organizations  shall not  be considered  firms  with  foreign               
capital, and  shall not  have the  status of a legal person. They               
                                                                                
shall be  founded and  shall  function  in  accordance  with  the               
order established by the Government of the Republic of Lithuania.               
     When  subsidiaries   of  firms   with  foreign   capital  or               
subsidiaries  of  joint  ventures  registered  in  Lithuania  are               
founded  in the Republic of Lithuania, said subsidiaries shall be               
registered in  the same  manner as  firms with  foreign  capital.               
(Amended  11 February 1992)                                                     
                                                                                
     Article 19.  Bylaws of a Firm with Foreign Capital                         
                                                                                
     The bylaws of a firm with foreign capital shall be  drawn up               
in accordance with the Law on the corresponding type of  firm.                  
                                                                                
                                                                                
                            Chapter 5                                           
                                                                                
           The Order of Functioning of Joint Ventures                           
                 and Firms with Foreign Capital                                 
                                                                                
                                                                                
     Article 20.  The Principles of the Functioning of Joint                    
               Ventures and  Firms with Foreign Capital                         
                                                                                
     Joint ventures and firms with foreign capital shall  conduct               
their  business   and   administer   their   financial   activity               
independently.                                                                  
                                                                                
     Article 21.  The Right of Foreign Investors to Use                         
               Land Plots and Real Property                                     
                                                                                
     Foreign  investors   shall  have   the  right  to  rent,  in               
accordance with the laws of the Republic of Lithuania,  buildings               
and premises necessary for their commercial-economic activity, as               
well as plots of land for the construction of said buildings.                   
     The term  of a  land lease  for   foreign investors  may  be               
fixed for up to 99 years, with a right of priority for extensions               
of the  term of  the lease. Unless the  lease provides otherwise,               
land rent  for the  plot shall  not be changed during  the entire               
period that  the lease  is in force. The conditions of land lease               
shall  be   regulated  by  the  Government  of  the  Republic  of               
Lithuania. (Amended 11 February 1992)                                           
                                                                                
     Article 22.  Insurance of Joint Ventures and Firms with                    
               Foreign Capital                                                  
                                                                                
     The property  of  joint  ventures  and  firms  with  foreign               
capital must  be insured by insurance agencies of the Republic of               
Lithuania,  regardless  of  whether  same  is  insured  in  other               
localities.                                                                     
                                                                                
     Article 23.  The Order of Conducting Financial Operations                  
               for Joint Ventures and Firms with Foreign Capital                
                                                                                
     Financial  operations  of  joint  ventures  and  firms  with               
foreign capital  shall be  conducted through  banks registered on               
the  territory   of  the  Republic  of  Lithuania  and  in  other               
countries.                                                                      
                                                                                
     Article 24.  Accounts for Joint Ventures and Firms with                    
               Foreign Capital                                                  
                                                                                
     Balance sheet  and statistical accounting prescribed by  the               
Law on  Accounting of  the Republic of Lithuania shall be applied               
to  joint  ventures  and  firms  with  foreign  capital.  Special               
principles on  the application  of balance sheet accounting shall               
be established by the Government of the Republic of Lithuania.                  
                                                                                
     Article 25.  Interrelation between Joint Ventures and                      
               Firms with Foreign Capital, and Financial and                    
               Control Bodies                                                   
                                                                                
     Control over  the conformance  of the business conducted  by               
joint ventures  and firms  with foreign  capital with the laws of               
the Republic  of Lithuania  shall be  exercised by  the bodies of               
State control  and by  the financial  bodies of  the Republic  of               
Lithuania.                                                                      
     Upon the  demand of  the  bodies  of  State  control  or  of               
financial bodies  of the  Republic of Lithuania, said firms must,               
within the  limits established  by the  laws of  the Republic  of               
Lithuania, submit  the necessary  information on their activities               
for review.                                                                     
     The control  bodies must  ensure the  confidentiality of the               
information of the firms reviewed by them, if said information is               
considered to be a commercial secret of the firm.                               
     If no  violations of the laws of the Republic of  Lithuania,               
or of  the bylaws  of joint  ventures and  of firms with  foreign               
capital are  found during  the review  of the activities of  said               
firms, the  control body must compensate the firm for the  losses               
incurred by the suspension of the business.                                     
                                                                                
     Article 26.  Basic Principles Regulating the Internal                      
               Order of Joint Ventures and of Firms with Foreign                
               Capital                                                          
                                                                                
     Working conditions  provided for in collective agreements or               
employment contracts  with joint  ventures and firms with foreign               
capital shall  not be  inferior to  working  conditions  provided               
under the laws of the Republic of Lithuania.                                    
                                                                                
                            Chapter 6                                           
                                                                                
                 Acquisition of Shares of  Firms                                
                  of the Republic of Lithuania                                  
                                                                                
     Article 27.  The Right to the Acquisition of Shares of                     
               Firms of the Republic of Lithuania                               
                                                                                
     Foreign investors shall have the right to acquire  shares of               
firms of  the Republic  of Lithuania in the manner  prescribed by               
the laws of the Republic of Lithuania.                                          
     If a  foreign investor  (investors)  acquires    controlling               
interest (in  excess of  50 percent  of shares)  in an firm, said               
firm must  be re-registered  as a  joint venture.  If  a  foreign               
investor desires  to acquire   controlling interest (in excess of               
50   percent of  shares) in  firms that are entered on a separate               
list   by the  Government (or  by a person authorized by it), the               
foreign  investor must obtain a license to make an investment. In               
this   case, the  license to  make a  foreign investment shall be               
issued in  accordance with the order set forth in Article 8.                    
                                                                                
                                                                                
                            Chapter 7                                           
                                                                                
                      Taxes and Tax Reliefs                                     
                                                                                
                                                                                
     Article 28.  Taxation of Joint Ventures and of Firms                       
               with Foreign Capital                                             
                                                                                
     The manner  of taxation of joint ventures and of firms  with               
foreign capital shall be established by the laws of the  Republic               
of Lithuania.                                                                   
     The  income   and  expenses  of  the  firms  in  convertible               
currency shall be recalculated in rubles (litas) according to the               
commercial exchange  rate,  and  the  profit  received  shall  be               
calculated.                                                                     
     The tax  on the  calculated amount  of the  profit shall  be               
paid in rubles (litas) and in convertible currency, in proportion               
to the firm's income in rubles (litas) and convertible currency.                
                                                                                
     Article 29.  Tax Reliefs and Tax Rates                                     
                                                                                
     If  a  firm  is  established  (registered),  or  if  foreign               
capital is  invested prior  to 31  December 1993, profit (income)               
tax levied  on the share of its profit (income) (proportionate to               
the share of the foreign investment in the authorized [ownership]               
capital) due  to the foreign investment and not used for workpay,               
and also  reinvested in  the enterprise,  shall be  reduced by 70               
percent for  a 5  year period, which period is calculated as from               
the date  of the  receipt of income. On the expiry of the period,               
profit (income)  tax   levied on the share of the profit (income)               
due to  the foreign investment shall be reduced by 50 percent for               
a 3 year period.                                                                
     In the  event that  a firm  is established  (registered)  or               
foreign capital  is invested in the period from 1 January 1994 to               
31 December 1995,  profit (income) tax levied on the share of its               
profit (income) due to the foreign investment shall be reduced by               
50 percent  for a  6 year  period. Other  tax  reliefs  shall  be               
applied in  pursuance of  the laws on taxation of the Republic of               
Lithuania.                                                                      
     Dividends to  foreign investors received in Lithuania  shall               
be exempt from taxes.                                                           
     The Supreme  Council may  adopt other  forms of  tax relief.               
(Amended 11 February 1992)                                                      
                                                                                
     Article 30.  Responsibility for Violating Tax Rules                        
                                                                                
     Joint ventures  and firms with foreign capital shall be held               
accountable for  violations of  tax rules  in accordance with the               
laws of the Republic of Lithuania.                                              
                                                                                
     Article 31.  Repatriation of Income Derived from Foreign                   
               Investment                                                       
                                                                                
     The  income   (profit)  of   foreign  investors   which   is               
repatriated shall be exempt from tax.                                           
     Foreign investors  may also  repatriate all or a portion  of               
their income  in kind,  that is, in products or services acquired               
on the Lithuanian domestic market, or reinvest said income in the               
economy of the Republic of Lithuania. (Amended 11 February  1992)               
                                                                                
                            Chapter 8                                           
                                                                                
                         Customs Relief                                         
                                                                                
                                                                                
     Article 32.  Customs Relief                                                
                                                                                
     Material contributions  by foreign  investors to  authorized               
capital during  the period  of the  formation  thereof  shall  be               
exempt from customs duties.                                                     
     The Government  of the  Republic of  Lithuania  shall  adopt               
decisions relating  to customs  relief for the importation of raw               
materials  and   other  products,  and  for  the  exportation  of               
products.                                                                       
                                                                                
Vytautas Landsbergis                                                            
President                                                                       
Supreme Council                                                                 
Republic of Lithuania                                                           
Vilnius                                                                         
29 December 1990                                                                
No. I-905