REPUBLIC OF LITHUANIA                                     
                                                                                
                                                                                
                               LAW                                              
                      ON STATE ENTERPRISES                                      
                                                                                
                            Chapter 1                                           
                       GENERAL PROVISIONS                                       
                                                                                
     Article 1. Objectives.                                                     
                                                                                
     1.  This   Law   law   shall   define   the   establishment,               
reorganisation  and   liquidation,  management,   the  basis   of               
financial  and  other  commercial-economic  activities  of  state               
enterprise  (SE)   and  state   stock  enterprise  (SSE)  set  up               
(acquired)  from   the  funds   provided  by   the  state  (local               
government). This  Law shall  not apply  to those  special  state               
enterprises which  operate exclusively according to their own by-               
laws, i.e.  the bylaws  of the  individual state  enterprise. The               
list of  such  enterprise,  also  their  model  bylaws  shall  be               
approved by  the Supreme  Council of the Republic of Lithuania on               
the recommendation of the Government.                                           
     2. When  the text  of this  Law  applies  both  to  a  state               
enterprise and  a state  stock enterprise,  the word "enterprise"               
shall be used.                                                                  
                                                                                
     Article 2. State Enterprises (SE) and State Stock                          
               Enterprises (SSE).                                               
                                                                                
     1. A  state enterprise  shall be  an enterprise  established               
from the funds provided by the state (local government) which has               
not issued  shares (has  not received subscriptions) or which has               
issued shares  (has received  subscriptions) with  their  nominal               
value not exceeding 1\5 of the enterprise's authorised capital. A               
state enterprise  which has  issued shares with the nominal value               
exceeding 1\5  of the  enterprise's authorised capital shall be a               
state stock  enterprise. The  shares of  a state stock enterprise               
shall be  circulated publicly  or may  have a  limited sphere  of               
circulation. The  shares of  a state  enterprise shall be neither               
bought nor  sold  on  the  stock  exchange;  nor  shall  they  be               
registered with the appropriate state bodies.                                   
     2. The share of a state (local government) enterprise in the               
SE or  SSE may  not be  included into  the amount  of the nominal               
stock capital  based on  which enterprises  shall be divided into               
SE, SSE  and joint  stock companies,  and shareholders  shall  be               
granted rights  to form  managing bodies  of the  enterprises. An               
enterprise formed  through a merger of the capital of several SEs               
or SSEs shall function as a SSE.                                                
     3. The  bodies of  State governance and administration shall               
not be allowed to own shares of SSEs or SEs.                                    
                                                                                
     Article 3. The Enterprise as a Legal Person.                               
                                                                                
     1. From  the day  of registration, the enterprise shall have               
the rights of a legal person. The basis of economic activities of               
an enterprise  shall be  the capital  owned by  the  state  which               
through investment  into an  enterprise the  state (local  govern               
government)  entrusts  to  the  enterprise.  The  rights  of  the               
enterprise to  manage, use  and handle the assets entrusted to it               
by the  state (local government) shall be established by this Law               
and the  bylaws of  the enterprise.  The share  capital and state               
(local government)  capital shall  belong under the joint-partial               
ownership  plan   to  the   shareholders  and  the  state  (local               
government).                                                                    
     2. The  enterprise shall be of a limited liability. It shall               
be liable  for its  obligations only  by way of its property from               
which sums shall be claimed and recovered in accordance with laws               
of  the   Republic  of   Lithuania.  Neither   the  State  (local               
government),  nor  the  shareholders  or  the  employees  of  the               
enterprise shall be liable by way of their other property for the               
obligations of the enterprise. The enterprise shall not be liable               
for  the   obligations  of  the  State  (local  government),  its               
shareholders or employees.                                                      
     3. The  enterprise shall  have its  own name  (name  of  the               
firm), which  shall include the words "state" or "state stock" or               
their abbreviations.  The enterprise  shall not have a name (name               
of the  firm) similar  to or identical with one of the registered               
enterprises which could interfere with normal economic activities               
of the enterprises.                                                             
     4. The enterprise shall have its own seal, which shall carry               
its name  (name of  the firm)  and the  words  "the  Republic  of               
Lithuania".                                                                     
                                                                                
     Article 4. Composition of Assets of the Enterprise.                        
                                                                                
     1. Assets of the enterprise shall consist of:                              
          1. state capital;                                                     
          2. share capital; and                                                 
          3. loan capital.                                                      
     2. The authorised capital of the enterprise shall consist of               
the nominal  state capital  and the  nominal share  capital.  The               
amount of  the authorised  capital shall  be established  by  the               
bylaws of  the enterprise.  The managing bodies of the enterprise               
shall guarantee  that the  owned assets  of the  enterprise  (the               
difference in  the balance  sheet between  the net value of total               
assets and  the loan  capital) be  not smaller than the amount of               
the state  capital and  the nominal  share capital.  If the owned               
assets of  the enterprise  become smaller  than the amount of the               
state capital  and nominal  stock capital, the payment of bonuses               
and  dividends  from  the  profit  of  the  enterprise  shall  be               
prohibited.                                                                     
     To restore  the balance  between the  amount  of  the  state               
capital and  the nominal share capital, and the owned assets, the               
state enterprise  shall use,  accordingly, the  state capital and               
the share  capital, and  the state  stock enterprise -- the share               
capital.                                                                        
     3. The  loan capital  of the  SSE cannot  exceed  the  share               
capital 0, excluding the share of other enterprises (SE and SSE).               
     4. The  share capital  of the  enterprise cannot  exceed the               
state capital. The enterprise which has accumulated share capital               
exceeding the  state capital  owned by  it, shall  be reorganised               
into a  joint stock  company or  a private  joint  stock  company               
within six  months in  the procedure  prescribed by  law. If  the               
amount of  the nominal share capital of the SSE becomes less than               
1\5 of the enterprise's authorised capital, the minimum amount of               
the share capital of the SSE shall have to be restored within six               
months or  the SSE  shall have  to be reorganised within the same               
period into  a SE.  A SE  which has accumulated the nominal share               
capital exceeding 1\5 of the authorised capital of the enterprise               
must be reorganised within six months into a SSE.                               
     5. An  enterprise shall  be prohibited from acquiring shares               
of the  enterprise, joint  stock company  or private  joint stock               
company which  is its  shareholder and  the nominal  value of the               
shares of  which exceeds  1\10 of  the authorised capital, if the               
nominal value  of the  shares it is acquiring exceeds 1\10 of the               
authorised capital of said enterprise.                                          
     6. The  state capital  accumulated (held)  at the enterprise               
shall not be divided into shares. It shall be appropriated as the               
investment of  the state  (local government)  into the enterprise               
and shall  be entered  in a separate state capital account of the               
enterprise.                                                                     
                                                                                
     Article 5. The Rights of the Enterprise.                                   
                                                                                
     1. The  enterprise, in  conformity  with  the  laws  of  the               
Republic  of  Lithuania,  and  in  pursuance  of  the  objectives               
specified in its bylaws, may:                                                   
     1) have  its own  accounts  with  the  banking  institutions               
registered in the Republic of Lithuania or in foreign countries s               
and use funds deposited therein;                                                
     2) define the directions and ways of using all the state and               
share capital it owns;                                                          
     3) make contracts on giving or obtaining loans and fix their               
interest rates;                                                                 
     4) issue securities ( with the exception of bonds);                        
     5) buy  out (return)  part or  whole of  the  state  capital               
granted to  the enterprise, using for this purpose the net assets               
of its  employees, shareholders  and its net assets received from               
commercial-economic    activities    (after    discharging    its               
liabilities);                                                                   
     6) purchase  or  acquire  in  any  other  way,  own  as  its               
property, sell  or exchange  its securities or dispose of them in               
any other way;                                                                  
     7) pay out dividends on the shares or give premium shares;                 
     8) define  classes and  kinds  of  shares,  including  those               
belonging to  the employees,  and the procedure for their selling               
and distribution;                                                               
     9) establish  economic and trade relations with domestic and               
foreign partners, promote commercial activities;                                
     10) make  payments for  the delivered  goods, performed work               
and services in any agreed form;                                                
     11) establish the organisational and production structure in               
the enterprise,  set up  subsidiaries, define the legal status of               
its departments;                                                                
     12) set  up a  SSE, be  a shareholder of such an enterprise,               
establish associations  with enterprises  of another  type, under               
the agreements  with other SE and SSE establish non-manufacturing               
companies (associations), also leave them;                                      
     13) improve  the conditions of work, life and leisure of the               
employees  of  the  enterprise,  offer  aid  to  their  families,               
participate  in   charities,  allocate  funds  for  health  care,               
culture, education,  science, also  physical education and sports               
of the citizens of the Republic of Lithuania;                                   
     14) conclude production, sales, scientific research, design,               
experimental and other commercial contracts; and                                
     15) fix  the prices,  costs and  tariffs for  its  products,               
services  and  other  resources,  its  wages  systems,  with  the               
exception  of  those  cases  when  prices  and  other  norms  are               
regulated by  the State (local government) in accordance with the               
laws of the Republic of Lithuania.                                              
     The  enterprise   may  also  have  other  civil  rights  and               
obligations which are not specified by this Law, provided they do               
not contradict  the laws  of the  Republic of  Lithuania and  the               
bylaws of the enterprise.                                                       
     2. The  State shall  regulate commercial-economic activities               
of the  enterprise only  through economic means: subsidies, rates               
of interest  for the  use of the state capital by the enterprise,               
orders (contracts)  financed by  the  State  and  other  economic               
measures. The  founder of the SE in transport and communications,               
energy resources,  and public  utilities, shall have the right to               
define  obligatory  kinds  of  work,  also  standards  for  their               
quality. The  same shall  apply to  the SSE if a contract with it               
has been  concluded and  if it  has been  issued  an  appropriate               
licence for its economic activities.                                            
     3. The  enterprise shall  have the right to receive from the               
state centrally  allocated (sold) supplies of financial, material               
and other  assets at  a fixed  state price or a contractual price               
                                                                                
and for  the corresponding  contractual obligations  to the state               
(local government) assumed by the enterprise.                                   
     4.  The  enterprise  shall  have  the  right  through  civil               
proceedings to demand compensation for the damage caused to it by               
unlawful actions  of state  bodies  and  organisations,  also  by               
administrative actions  of officials  in the performance of their               
duties.                                                                         
                                                                                
                            Chapter 2                                           
            FOUNDING, REORGANISATION AND LIQUIDATION                            
                        OF THE ENTERPRISE                                       
                                                                                
     Article 6. The Founding of the Enterprise.                                 
                                                                                
     1. The  legal basis  for the founding of an enterprise shall               
be the  foundation act  which may be adopted by the Government of               
the Republic  of Lithuania (local council) or, on the instruction               
of the  Government, by  the authorised  Ministry. The  body which               
adopts the decision on the founding of an enterprise shall be its               
founder.                                                                        
     2. The founding of enterprises shall be regulated by the Law               
on Enterprises  of the  Republic of Lithuania, this Law and other               
legislative acts.                                                               
                                                                                
     Article 7. The Bylaws of the Enterprise.                                   
                                                                                
     1. The  bylaws shall  be  a  legal  document  by  which  the               
enterprise is guided in its activities.                                         
     2. The  bylaws of a newly founded SE shall be drafted by the               
provisional  administration  of  the  enterprise  formed  by  the               
founder. If  a functioning  enterprise is  being reorganised, the               
bylaws of  the SE  shall be  drafted by  its administration. When               
founding (reorganising)  the SSE,  its bylaws shall be drafted by               
the shareholders-founders.                                                      
     3. The bylaws shall be signed by the members of the board of               
directors (in the event of the absence of the board - by the head               
of the enterprise's administration) or the shareholders-founders.               
If there  is a council of observers at the enterprise, the bylaws               
shall also  be signed by its chairman. The bylaws shall be sealed               
with the  seal of  the enterprise;  if the enterprise has no seal               
with the founder's seal.                                                        
     4. The bylaws of the enterprise shall establish:                           
     1) the  name of  the  enterprise  (name  of  the  firm)  and               
requisites of the seal;                                                         
     2) the address of the enterprise;                                          
     3) the nature of its commercial-economic activities;                       
     4)  the  duration  of  its  operational  activities  if  the               
enterprise is  established for  a specified  term or  a  definite               
activity;                                                                       
     5) the amount of the authorised capital and its composition;               
     6) the composition of the nominal share capital according to               
the classes of the shares;                                                      
     7) the  nominal value of the shares and the rights conferred               
by them;                                                                        
     8) the  administrative organs, their powers, composition and               
formation;                                                                      
     9) the procedure for convening meetings of the employees and               
shareholders;                                                                   
     10) the forms of notifying the employees and shareholders;                 
     11) the procedure for buying out the state capital and share               
capital, payments for the shares and terms of payment; and                      
     12) restrictions  on the  amount of the enterprise's capital               
and the  volume of  its production  as established  by the  local               
government.                                                                     
                                                                                
                                                                                
     5. The  bylaws of  the enterprise  can also  prescribe other               
rules which  do not  contradict  the  laws  of  the  Republic  of               
Lithuania and international agreements.                                         
     6. The bylaws of the enterprise shall be revised and amended               
by the  council of  observers. The  meeting of  shareholders  may               
adopt a  decision that the bylaws of the SSE shall be revised and               
amended only  by the  meeting of its shareholders. If the council               
of observers  has not  been formed, the bylaws of the SE shall be               
revised and amended by its board, and the bylaws of the SSE -- by               
the meeting  of its shareholders. Additions and amendments to the               
bylaws shall enter into force upon their registration.                          
                                                                                
     Article 8. Registration of the Enterprise.                                 
                                                                                
     1. The  procedure of  registration of the enterprise and its               
terms shall  be established by the Law on Enterprises, the Law on               
the Register of Enterprises, and this Law.                                      
     2. The  founder of  a new  enterprise when  registering  the               
enterprise shall  submit to  the registering  body the act on the               
founding of  the  enterprise,  its  bylaws  and  other  documents               
prescribed by  law. In  other cases  the  registration  documents               
shall be submitted by the author of the bylaws.                                 
     3. The  SSE shall  be registered  after all  the shares have               
been  subscribed   for  (distributed)   and  after   the  initial               
investments have been made.                                                     
     4. From  the day  of its  registration,  the  administrative               
bodies of  the enterprise  shall acquire  the right  to discharge               
their functions  established  by  laws  and  the  bylaws  of  the               
enterprise.                                                                     
                                                                                
     Article 9. Liquidation and Reorganisation of the Enterprise                
                                                                                
     1. The basis for the liquidation of the enterprise may be:                 
     1) An  act of  the Government  of the  Republic of Lithuania               
(local council)  to suspend the activities of the SE or to demand               
that the  SSE buys  out (returns) the capital of the state (local               
government);                                                                    
     2) A court order recognising the enterprise as insolvent;                  
     3) A  decision of state bodies exercising industrial control               
to revoke  registration of  the enterprise  for legal  violations               
stipulated by  the legislation  of the Republic of Lithuania. The               
decision of the above bodies can be appealed against in court;                  
     4) A resolution of the meeting of shareholders of the SSE to               
terminate the activities of the enterprise;                                     
     5) A  decision of the founder to liquidate the insolvent SSE               
in whose  authorised capital  the  share  of  the  nominal  share               
capital accumulated  from the  investments  of  natural  persons,               
partnerships, joint-stock  companies, and private stock companies               
accounts for less than 1\10 of the authorised capital of the SSE.               
     2. The  body which  adopts the  decision  to  terminate  the               
activities  of   the  SSE,  shall  appoint  its  liquidator.  The               
liquidator of  the SE shall be appointed by its founder. From the               
day of the liquidator's appointment, the bodies of the enterprise               
shall be  deprived of  their powers to manage the enterprise, and               
their functions  shall be  performed by  the liquidator. He shall               
organise the  liquidation  of  the  enterprise:  re-register  the               
enterprise as  the enterprise in the process of being liquidated,               
fix and  publicate in  the press  the date  of termination of the               
enterprise's functioning,  ascertain the creditors and debtors of               
the enterprise, draw up the balance of liquidation, make payments               
for the  liabilities of  the enterprise,  and transfer the assets               
remaining after  the liquidation to the founder of the enterprise               
or its shareholders.                                                            
     3. Upon acquiring the status of an enterprise in the process               
of being  liquidated, the  enterprise may conclude only contracts               
which concern its liquidation.                                                  
     4. The  employees and  shareholders of  the SE  shall have a               
priority within six months from the day of the appointment of the               
liquidator to  acquire the  state capital of the enterprise which               
is being  liquidated,  with  the  exception  of  cases  when  the               
enterprise is  going bankrupt.  If the shareholders and employees               
of the  enterprise buy  out within  this time more than a half of               
the state  capital of  the enterprise  which is being liquidated,               
the enterprise shall be reorganised into a joint stock company, a               
private joit stock company or a partnership.                                    
     5.  In   the  cases   prescribed  by  this  Law,  after  the               
reorganisation of the SSE into a joint stock company or a private               
joit  stock   company,  the   bodies  of   state  governance  and               
administration, possessing  shares of  the company,  shall not be               
allowed to  have more  than one-third of the votes for five years               
after the reorganisation.                                                       
     6. The  founder shall have the right to reorganise a SE into               
a SSE. The share-holders-founders of the SSE shall be natural and               
legal persons  who have  drawn  up  a  certified  treaty  on  the               
establishment of  the SSE which specifies their rights and duties               
to draft  the  SSE's  bylaws,  and  stipulates  their  individual               
commit- government  to acquire an appropriate number of shares of               
the SSE.  This treaty  may be  unconcluded, and  the  rights  and               
duties of  the shareholders-founders  shall be established in the               
SSE's bylaws drawn up by them.                                                  
     7.  If  the  enterprise  is  liquidated  or  reorganised  in               
compliance with  the request  of  the  shareholders  to  buy  out               
(recover) from  the SSE  or  SE  the  share  capital,  the  rules               
regulating the  reduction of the share capital prescribed by this               
Law shall be applied.                                                           
     8. If  the SE  is liquidated or reorganised by a decision of               
the Government  (local council) of the Republic of Lithuania, the               
state (local  government) must  within six months from the day of               
the liquidation  of the  enterprise refund  to the share-holders,               
employees, as  well as  to other  natural and legal persons their               
share of investment into the enterprise.                                        
                                                                                
                                                                                
                            Chapter 3                                           
                  MANAGEMENT OF THE ENTERPRISE                                  
                                                                                
     Article 10.  Managing Bodies of the Enterprise.                            
                                                                                
     1. Managing  bodies of  the enterprise  shall  comprise  the               
board of  directors, the  council of  observers, and  meetings of               
employees and shareholders.                                                     
     2. During  the period  of construction  of  the  enterprise,               
mounting of  its equipment  and machinery,  preparation  for  its               
operation, also  during the  first year  of  its  operation,  the               
founder shall  appoint the  provisional administration. If the SE               
or SSE  is established  through reorganisation of a solvent state               
enterprise of a different status, permanent managing bodies shall               
be formed immediately.                                                          
     3. During  the period  when the  enterprise is  run  by  the               
provisional administration, the council of observers shall not be               
formed.                                                                         
     4. The council of observers may not be formed if:                          
     1) the  founder of the SE adopts a corresponding decision in               
response  to   the  proposals   made  by  the  employees  of  the               
enterprise; or                                                                  
     2) a corresponding decision is adopted by the meeting of the               
SSE's share-holders.                                                            
     In both  above cases, the meeting of the employees of the SE               
or the  meeting of  the SSE's  shareholders shall  form  a  three               
member auditing  commission for  a period of five years. A member               
of the  auditing commission  shall  not  be  removed  or  have  a               
disciplinary penalty  imposed on  him without the approval of the               
meeting of  the SSE's  shareholders or  the meeting  of the  SE's               
employees.                                                                      
                                                                                
     Article 11. The Board of Directors.                                        
                                                                                
     1. Commercial-economic activities of the enterprise shall be               
directed by the board of directors (hereinafter -- the board). It               
shall consist of members-directors whose number shall be not less               
than 3  and not  more than  9. The  board shall  be headed by the               
chairman.                                                                       
     2. Members  of the  board shall be appointed for a period of               
not less than five years and their salaries shall be fixed by the               
council of  observers, with the exception of cases established in               
Paragraph 2  of Article  34, and  also upon the expiration of the               
powers of  the provisional  administration of the enterprise when               
one-third of  the members of the board are appointed for a period               
of one  year by  the founder of the enterprise. If the council of               
observers is  not formed,  the  board  shall  be  formed  by  the               
meetings of  shareholders and  employees in  accordance with  the               
regulations for  forming the  council of observers. In such cases               
the board  must  consist  of  not  less  than  6  members.  Their               
salaries, also  their share of dividends in the SE shall be fixed               
by the  founder, in  the SSE -- by the meeting of shareholders. A               
member of  the board, and its chairman may be removed by the body               
which has appointed them.                                                       
     3. An  employee of the enterprise who is 18 years of age and               
over, and has been appointed a member of the board by the founder               
or the  council of  observers of  the enterprise, and who has not               
been deprived of the right to hold this post, as well as a person               
not employed  at the enterprise and who has been appointed by the               
council of  observers may  be a  member of the board. A member of               
the council  of observers  may not be appointed to be a member of               
the board.  The council of observers may appoint its member to be               
a member  of the  board only temporarily, for a period not longer               
than six  months. If  the same member of the council of observers               
is appointed  repeatedly for  temporary work  on the  board,  the               
whole term  of his  office shall not be longer than twelve months               
during five  successive years. The council of observers by a two-               
thirds vote  may remove its member for neglect in the performance               
of his duties, for unsatisfactory work or failure to carry it out               
efficiently. The  decision to  remove a  member of  the board may               
also be  adopted  by  a  two-thirds  vote  of  the  shareholders'               
meeting.                                                                        
     4. If  the provisions  of Paragraph  2 of Article 34 are not               
applicable to the enterprise and no provisional administration is               
formed, the  council of observers (in case it has not been formed               
-- the  shareholders' meeting)  shall appoint the chairman of the               
SSE's board,  while the  chairman of  the SE  board shall  be  ap               
pointed by  the founder  on the  recommendation of the council of               
observers (if  it has  not been  formed, on the recommendation of               
the board).  Disputes between  the council  of observers  and the               
founder concerning  the appointment  of the  chairman of the SE's               
board shall  be settled  by the  Government (local government) of               
the Republic of Lithuania.                                                      
     5. The  chairman of  the board of the SE may be removed by a               
two-thirds vote  of the council of observers or by the Government               
of the  Republic of  Lithuania, if  it has  been established that               
there is  a real  threat of insolvency for the SE or the chairman               
of the board manifestly fails to discharge his duties.                          
     The chairman  of the  SSE's board  can be  removed by a two-               
thirds  vote  of  the  SSE's  council  of  observers  or  of  the               
shareholders' meeting,  also by the Government of the Republic of               
Lithuania if it establishes that there is a real threat of losing               
the state  capital for the SSE. After the removal of the chairman               
of the board, the board shall be dissolved.                                     
                                                                                
     Article 12. Powers of the Board and its Members.                           
                                                                                
     1. The  board shall  be a  collegiate managing  body of  the               
enterprise. It  shall adopt the rules of procedure of the board's               
work and  deal with commercial-economic, organisational and other               
questions within  its powers.  At the  expiration of  its term of               
office, the  board shall  continue to  discharge its duties until               
the formation of a new board.                                                   
     2. Decisions of the board shall be adopted at its meetings.                
     All its members shall have equal voting powers. The rules of               
procedure of  the board's  work shall  be adopted by a two-thirds               
vote of  the entire membership of the board as established by the               
bylaws of  the enterprise.  Other decisions shall be adopted by a               
simple majority vote of the members present at the meeting of the               
board. The  meeting (voting)  shall be regarded as valid if it is               
attended by  no less  than two-thirds  of the board's members. If               
the draft  of the  decision  under  consideration  is  circulated               
before the  meeting, the  member of  the board who is not able to               
attend the  meeting shall  have the  right to  take part  in  the               
voting before the opening of the meeting by expressing in writing               
his will  "yes" or  "no". Meetings of the board shall be convened               
and organised  in accordance  with the  rules of procedure of the               
board.                                                                          
     3. The  chairman of the board, in accordance with the bylaws               
of the  enterprise, the  rules of  procedure of the board and its               
decisions, shall  have the right to conclude all contracts of the               
enterprise.  The  bylaws  of  the  enterprise  or  the  rules  of               
procedure of  the board  may define  the spheres  of activity  in               
which other  embers of  the board  shall have the right to engage               
and conclude  contracts of the enterprise. By the decision of the               
board of  the SSE,  a part  of the  functions of the board may be               
delegated to  the head  of the enterprise's administration. Other               
persons shall  act and conclude contracts only when authorised by               
the enterprise.                                                                 
     4. The  contracts concluded  by the chairman of the board or               
other members  of the  board shall  not be  recognised as invalid               
only because,  in accordance with the bylaws of the enterprise or               
the rules of procedure of the board, said persons had no right to               
conclude  said  contracts  at  their  own  discretion,  with  the               
exception of  cases, when  the contracting  party knew  or should               
have known that he was entering into an unlawful contract.                      
     5. The board shall not:                                                    
     1) restrict the powers of the council of observers (auditing               
commission) or  in any other way obstruct it from supervising the               
commercial-economic activities of the enterprise and auditing its               
financial performance;                                                          
     2) without  the consent  of the council of observers dismiss               
from work or from the post, or impose disciplinary penalties upon               
an employee who is a member of the council of observers; and                    
     3) without  the consent  of the  shareholders' meeting adopt               
decisions  connected   with  the   rights  or  interests  of  the               
shareholders, if such cases are provided by this Law.                           
     6. At the end of the business year, prior to the approval by               
the council  of observers  or the  shareholders' meeting  of  the               
annual balance sheet of the enterprise, the board shall submit to               
the council  of observers (in the SSE - also to the shareholders'               
meeting) a  report with the answers to the questions presented by               
the council  of observers ( the shareholders' meeting of the SSE)               
on:                                                                             
     1) the  results of  the  commercial-economic  and  financial               
activities, and  the balance  sheet of  the  enterprise  for  the               
business year;                                                                  
     2) the  policy and  prospects in  the spheres of production,               
equipment, research,  design and  experiment, as well as in other               
commercial-economic activity;                                                   
                                                                                
     3) the  organisation of  production and  management  at  the               
enterprise, its departments and subsidiaries;                                   
     4) the  projected sources  for the accumulation of financial               
resources and ways of their use; and                                            
     5) new contracts.                                                          
                                                                                
     7. After  the approval  by the  SE's council of observers of               
the  annual   balance  sheet,   the  board   shall  approve   the               
distribution of profit.                                                         
     8. Members  of the  board shall  be jointly  liable for  the               
losses caused to the enterprise by reason of the decisions of the               
board adopted  in violation of the enterprise's bylaws or of this               
Law. A  member of  the board  who voted  against such a decision,               
shall be  exempt from  the liability  if  his  protest  has  been               
entered into  the minutes of the board's meeting. A member of the               
board who  did not  attend the  meeting shall also be exempt from               
the liability if within seven days after being notified of such a               
decision or  after he was supposed to have been notified thereof,               
he submitted  his protest  to the  chairman  of  the  board.  The               
resignation or  removal of  a board  member shall  not exempt him               
from the  liability for  the losses  caused through  his fault. A               
member of  the board  may be excused from making compensation for               
the losses  he  caused  through  the  discharge  of  his  duties,               
provided he  was guided  by the  documents and  other information               
about the  enterprise whose  validity he had no grounds to doubt,               
or acted  within the  limits of  normal operational  or  economic               
risk.                                                                           
                                                                                
     Article 13. Officers of Administration.                                    
                                                                                
     1. The  operational commercial-economic  activities  of  the               
enterprise shall  be managed and run by the administration of the               
enterprise. The  board shall  establish the  departments  of  the               
administration, duties of the officers, shall employ the officers               
under employment  contracts and  fix  their  salaries  (with  the               
exception of salaries of the members of the board).                             
     2. Each  enterprise shall  have head  of the  administration               
(president, general  director, director)  and the chief financier               
(accountant).                                                                   
     3. The  post of  the SE's  head of the administration may be               
held only  by the  chairman of the board. The employment contract               
with head  of the  enterprise's administration shall be concluded               
on behalf  of the  enterprise by  the chairman  of the council of               
observers; if  the council  of observers has not been formed, the               
contract shall  be concluded  by the  founder of  the SE  and the               
board of the SSE.                                                               
     4. It  shall be  prohibited to combine the duties of head of               
the  administration  with  the  duties  of  the  chief  financier               
(accountant). Head of the administration shall be prohibited from               
holding the  post of  chairman of  the board,  and of head of the               
administration  or   representative  of   another  enterprise   (               
partnership, public or private joint stock company).                            
     5.  The   chairman  of   the  SE's   board  (head   of   the               
administration) shall have relations of permanent employment with               
the enterprise  which  shall  be  laid  down  in  the  employment               
contract.                                                                       
                                                                                
     Article 14. Formation of the Council.                                      
                                                                                
     1. In  the  cases  prescribed  by  this  Law  a  council  of               
observers shall  be formed  for a  term of 5 years of the persons               
selected at  the meeting  of the employees or shareholders of the               
enterprise to  monitor the  activities of  the board  and the  ad               
ministration. The  number of  members of the council of observers               
shall be established by the enterprise's bylaws : it shall be not               
less than  6 and more than 15. A new council of observers must be               
formed before  the  day  of  expiration  of  the  powers  of  the               
functioning council of observers. If an enterprise of a different               
status becomes  a SE  or a  SSE, a  council of  observers must be               
elected not later than within a month of the change in the status               
of the enterprise.                                                              
     2. Members  of the  council of observers shall be elected by               
secret ballot  separately by  : shareholders,  the administration               
officers, the  working personnel  and other  employees who do not               
belong to the administration.                                                   
     3. Administrative  officers who are employees of the central               
management of  the  enterprise,  as  well  as  heads  of  various               
divisions and  their deputies  shall  have  the  right  to  elect               
representatives to  the council  of observers. The final decision               
in resolving the disputes as to what group an employee belongs to               
shall rest with the founder of the enterprise.                                  
     4. A  SE with  the nominal  share capital  accounting for no               
less than 1\20 of the authorised capital, shall reserve one-third               
of the  seats on the council of observers for its shareholders. A               
SE with  the nominal  share capital accounting for less than 1\20               
of the  authorised capital  shall reserve one seat on the council               
of observers for its shareholders.                                              
     5. In  a SSE shareholders shall be given two-thirds of seats               
on the  council of  observers, irrespective  of the amount of the               
share capital.                                                                  
     6. The  number of seats reserved for the shareholders on the               
council of  observers of  a SE or SSE shall not exceed the number               
of shareholders of the enterprise.                                              
     7. The  seats on  the council  of observers reserved for the               
employees shall  be divided  into two equal parts - those for the               
representatives  of   the  administration,   and  those  for  the               
representatives of  the  other  employees.  The  founder  of  the               
enterprise shall  have the right to appoint his representative to               
the council  of observers.  In this  case the number of seats for               
the administrative officers shall be one seat less.                             
     8. The bylaws may specify the qualifications for a member of               
the council  of observers.  The shareholders  may  elect  to  the               
council  of  observers  persons  who  are  not  employed  at  the               
enterprise.                                                                     
     The  employees   of  one   category  may   elect  as   their               
representative  to   the  council  of  observers  a  person,  who               
according to  the order  established  by  this  Law,  belongs  to               
another category of employees.                                                  
                                                                                
     Article 15. Resignation and Removal of a Member of the                     
               Council of Observers.                                            
                                                                                
     1. A  member elected  to the  council of  observers  by  the               
employees shall  be removed  by a two-thirds vote of an electoral               
meeting (voting) of the employees.                                              
     2. A  member of  the council  of observers  elected  by  the               
shareholders may be removed by the meeting of the shareholders.                 
     3. Upon  submitting a  written notice to the chairman of the               
council of observers, its member may resign at any time. A member               
of the  council of  observers shall  forfeit his  right to  be  a               
member of  the  council  and  must  resign,  if  the  council  of               
observers resigns  following the  decision of the majority of its               
members. A  member of  the council  of observers  elected by  the               
employees shall  resign if  he breaks off his employment contract               
with the  enterprise, or  loses his  right to  be elected  to the               
council of observers.                                                           
     4. If the council of observers or its member commits a gross               
violation of  his powers  and duties,  the court may dissolve the               
council or  remove its  member from  the council  acting  on  the               
report of  no less than three employees having the right to elect               
members to  the council  of observers,  or on  the report  of the               
                                                                                
trade union  functioning at  the  enterprise,  or  of  the  board               
(administration) of the enterprise.                                             
                                                                                
     Article 16. Powers of the Council of Observers.                            
                                                                                
     1. The  council of  observers shall  elect  from  among  its               
members the  chairman and  his deputy.  Work on the council of ob               
servers shall  not be  remunerated. The  bylaws of the enterprise               
may provide  for the additional remuneration for the chairman and               
his deputy  for the work on the council of observers payable from               
the net profit. The amount of their remuneration shall make up 60               
and  50   percent  respectively   of  the   average  pay  of  the               
enterprise's employee  (including  various  bonuses)  during  the               
preceding business year.                                                        
     2. The council of observers shall:                                         
     1) put  forward proposals, appoint or remove the chairman of               
the board  and its  other members  (if such  right under this Law               
does not belong to the founder);                                                
     2) taking  into consideration  the proposals of the chairman               
of the  board, fix  salaries for the members of the board working               
at the  enterprise under  employment contracts  for a  period not               
shorter than two years, but not longer than their term of office,               
as well  as approve  the portion  of net  profit (the  normative)               
which is allocated in bonuses to members of the board;                          
     3) at  the request  of the  board, consider  the question of               
dismissing from work (or the post) persons elected to the council               
of observers, or of imposing on them disciplinary penalties;                    
     4) observe  and analyse the activities of the board, the use               
of financial  resources and  distribution of profit, organisation               
of production  and  management,  profitability  of  the  capital,               
remuneration for  work, depreciation  charges and  deductions (in               
percentage) for  the use of the state capital, competitiveness of               
production (services), the prospects of the financial situation;                
     5) audit the balance sheet and the inventory report;                       
     6) approve  the assessment  acts of  non-monetary (property)               
contributions;                                                                  
     7) consider  the report  of the  board on the results of the               
enterprise's performance  during the  business year,  approve its               
annual balance  sheet. The  SSE's bylaws  may prescribe  that the               
annual balance be approved by the shareholders' meeting;                        
     8) on  behalf of  the enterprise institute legal proceedings               
to recover  from members  of the  board compensation  for damages               
caused through their fault; and                                                 
     9) make  amendments and  additions  to  the  bylaws  of  the               
enterprise, with  the exception of cases specified in Paragraph 6               
of Article 7.                                                                   
     3. The  council of  observers shall have no right to: manage               
the enterprise's  affairs which  fall within  the powers  of  the               
other bodies of the enterprise; revoke the decisions of the board               
or of  its authorised  persons; alter the salaries of the members               
of the  board  more  often  than  once  every  two  years;  adopt               
decisions on the rights and interests of the shareholders without               
the consent of the share-holders' meeting.                                      
     4. If the council of observers has not been formed:                        
     1) the  functions established  in subparagraphs  1 and  9 of               
Paragraph 2 hereof shall be performed by the board of the SE;                   
     2) the  auditing commission  of the  SE shall  exercise  the               
functions laid  down in subparagraphs 5, 6, 7, and 8 of Paragraph               
2 hereof;                                                                       
     3) the  auditing commission  of the  SSE shall  perform  the               
functions established  in subparagraphs  5 and  8 of  Paragraph 2               
hereof; and                                                                     
     4) the  shareholders' meeting  of the  SSE shall perform the               
functions established  in subparagraphs  1, 2,  4, 6,  7 and 9 of               
Paragraph 2 hereof.                                                             
                                                                                
     5. The  enterprise's administration,  at the  request of the               
council of observers (the auditing commission), shall present the               
documents concerning  the enterprise's  activities,  as  well  as               
provide conditions  for  auditing  the  enterprise's  securities,               
merchandise, material  supplies and  other assets. Members of the               
council  of   observers  (the   auditing  commission)  must  keep               
commercial secrets  which they learn during the inspection of the               
enterprise's activities.                                                        
                                                                                
     Article 17. Meetings of the Council of Observers.                          
                                                                                
     1. When  a member  of the  council of  observers  cannot  be               
present at  a meeting,  he may  give a written notice about it in               
advance stating  his opinion  on the question under consideration               
which was  announced beforehand.  In such a case, a member of the               
council of  observers shall  be considered as having been present               
and voting at the meeting.                                                      
     2. Members  of the  council of  observers shall  have  equal               
rights. Each  member of  the council  shall have one vote. In the               
event of  a tie,  the vote  of the  council's chairman  shall  be               
decisive.                                                                       
     3. The  council of  observers shall adopt its decisions by a               
simple majority  of the  number of  members  of  the  council  of               
observers established  in the  bylaws, with  the exception of the               
decisions on  the amendments  and additions  to the  enterprise's               
bylaws or on the removal of a member of the board. Said decisions               
shall be adopted by a vote of two thirds of the entire membership               
of the  council of  observers prescribed by the bylaws. The first               
council of  observers of  the SE  shall adopt  decisions  on  the               
amendments and  additions to  the enterprise's bylaws by a simple               
majority.                                                                       
     4. Meetings  of the  council  of  observers  shall  be  held               
according to  the schedule,  not less  frequently than once every               
three months.  In the  event of an exigency, special meetings may               
be held  and each  member of the council shall be given a written               
notice thereof five days in advance. The meetings shall be called               
by the  chairman of the council of observers and, in his absence,               
by deputy  chairman. One  third of  the number  of members of the               
council  of   observers  as  prescribed  by  the  bylaws  of  the               
enterprise, but  no less  than three persons, shall also have the               
right to  demand a  meeting be  called. The agenda of the meeting               
announced beforehand  may be  changed or  supplemented if  such a               
proposal is  approved by  all  the  members  of  the  council  of               
observers present at the meeting.                                               
                                                                                
     Article 18. Electoral Commission.                                          
                                                                                
     1. The electoral commission shall be formed for the election               
of the  council of  observers (the auditing commission of the SE)               
or members  of  the  board.  Members  and  the  chairman  of  the               
electoral  commission  shall  be  appointed  by  the  council  of               
observers.                                                                      
     In its absence, members of the electoral commission shall be               
appointed by  the board  or the administration of the enterprise,               
taking into consideration the proposals of the employees.                       
     2. No  less than three members of the enterprise's employees               
shall be  on the  electoral commission.  It shall also include at               
least one  member of  the administration  and other employees who               
are not  officers of  the  administration.  A  representative  of               
public organisations  may also  be a  member of the electoral com               
mission.                                                                        
     3.  Upon  its  formation,  the  electoral  commission  shall               
immediately set  the time  and place  of the  electoral  meetings               
(separate votings),  organise the  election, and  sum up, approve               
and announce its results.                                                       
                                                                                
     4. The council of observers or, in its absence, the board or               
the administration of the enterprise shall be responsible for the               
timely formation  of the  electoral commission  and its efficient               
functioning. If the management of the enterprise fails to appoint               
timely the  electoral commission,  it may  be  appointed  by  the               
founder of  the enterprise  at the  request of no less than three               
employees having the right to elect the members of the council of               
observers.                                                                      
                                                                                
     Article 19. Election of the Members of the Council of                      
               Observers from among the Employees.                              
                                                                                
     1. Members  of the  council of  observers shall  be  elected               
(removed) by secret ballot at annual general meetings or separate               
elections of  the employees  which shall be held not earlier than               
one month  before the  expiration of the powers of the council of               
observers.                                                                      
     2. All  employees of the enterprise who are of full age, and               
have been  working at  the enterprise  for at  least six  months,               
shall have  the right to elect (remove) members of the council of               
observers. The requirement of an uninterrupted work record at the               
same enterprise  shall be  not applied if the enterprise has been               
functioning for less than one year.                                             
     3. Members  of the  council  of  observers  from  among  the               
employees of  the enterprise  who under Paragraph 3 of Article 14               
do not  belong to  the administration, shall be elected (removed)               
not at  the meeting  of the  administrative officers.  If all the               
employees cannot  gather at  one and the same time because of the               
specific character of production, separate polls shall be held.                 
     4. Candidates to the members of the council of observers not               
from among  the administrative officers shall be nominated at the               
meeting  of   this  group   of  employees   (conference  of   its               
representatives).  Delegates   of  separate   divisions  of   the               
enterprise, that  differ in  the manner of their organisation and               
are located  at different  territories, shall  be elected  to the               
conference in  proportion to  the number  of employees  of  those               
divisions.  The   norm  of  representation  at  the  enterprise's               
conference shall  be established by the electoral commission, yet               
it must guarantee that no less than one-tenth of the employees is               
delegated to  the conference.  The number of candidates nominated               
to the  council of  observers must  exceed the number of seats on               
the council  of observers  established for  the  given  group  of               
employees by  the electoral  commission. The  maximum  number  of               
candidates shall not be limited. The candidate shall be nominated               
by open  voting if  his candidature is supported by not less than               
one-fifth of  the participants  of the  meeting (conference). The               
employees who  have the  right to  take part  in the election may               
submit to the electoral commission a list of candidates signed by               
not less  than one-tenth  of the  members of  the given  group of               
employees but  by not  less than  ten persons.  In any  event, it               
shall be  enough if  a  list  of  candidates  is  signed  by  100               
employees of  said group  having the  right to  take part  in the               
election.                                                                       
     5. Candidates  from the  administrative  officers  shall  be               
nominated  and  members  shall  be  elected  to  the  council  of               
observers at  a general  meeting of  this personnel in accordance               
with the provisions hereof.                                                     
     6. Public  notice of  the time  of  the  electoral  meetings               
(voting) shall  be given  in each  division of the enterprise ten               
days in  advance, and  in the  event of  a repeat election - five               
days in advance.                                                                
     7.  At   the  beginning   of  the  meeting  a  list  of  the               
participants of  the meeting  (conference) of  employees who have               
the right  to vote must be made. The first and second name of the               
participant shall be given in the list. If members of the council               
of observers  are elected  not at  the meeting (conference) and a               
special voting is held, a list shall be made of the employees who               
have the  right to  vote. The  list shall  be signed  by all  the               
members  of  the  electoral  commission.  The  electoral  meeting               
(conference) of  the employees  shall have  the  right  to  adopt               
resolutions (the  voting shall  be valid) if not less than a half               
of the  employees (representatives)  of a given group (either the               
administration or  non-administration) take  part in  it. If  the               
required number of employees (representatives) fail to turn up at               
the meeting  (conference) or  to take  part in a separate voting,               
another meeting (separate voting) shall be called within 15 days.               
     The  repeated  meeting  (separate  voting)  shall  be  valid               
regardless of  the number  of employees  (representatives) taking               
part in it.                                                                     
     8. The minutes of the meeting (separate poll) must be taken.               
     9. A participant of the meeting (separate voting) shall have               
as many  votes as  the number of members planned to be elected to               
the council  of observers.  The returns  of the election shall be               
established according  to a  larger number  of votes  given for a               
candidate.                                                                      
     10. The  electoral meeting  (separate voting)  held with the               
aim of removing or reelecting members of the council of observers               
shall be  convened not  later than  within two  months after such               
necessity arises.  The election  of a  member of  the council  of               
observers in  the place  of the  member who  has  terminated  his               
activities (has  resigned) shall not be held if the expiry of his               
term of office is less than one year away.                                      
     11. Disputes concerning the election shall be settled by the               
founder of  the enterprise whose decision may be appealed against               
at the  court. No  less than  three employees having the right to               
elect members  of the  council  of  observers,  any  trade  union               
functioning at  the enterprise,  or the board (administration) of               
the enterprise  shall have  the right  to submit an appeal to the               
court protesting the validity of the election.                                  
                                                                                
     Article 20. Annual General Meetings.                                       
                                                                                
     1. Annual  general meetings  (conferences) of  the employees               
shall  be   called  not   less  frequently   than  once  a  year.               
Participating in  them shall  also be  members of  the council of               
observers, auditing commission and the board. At the meetings the               
employees shall  be informed  about the  economic policies of the               
enterprise, economic  and financial performance, social problems;               
proposals and requests shall be considered.                                     
     2. Annual general meetings shall be organised by the council               
of observers  or the  board of  the enterprise in accordance with               
the procedure  for organising  meetings (conferences) established               
by Article 19 of this Law.                                                      
                                                                                
     Article 21. Meetings of Shareholders.                                      
                                                                                
     1.  Meetings  of  shareholders  shall  be  called  not  less               
frequently than once a year. The first meeting of shareholders of               
a newly  founded SSE  shall be, at the same time, the constituent               
meeting and  shall be  convened by  the shareholders-founders not               
later than  within three  months from the day of the subscription               
to the  last share.  The right  to attend  shareholders' meetings               
shall belong to:                                                                
     1) shareholders; and                                                       
     2) members  of the  council  of  observers  and  the  board,               
representatives of the administration.                                          
     To represent his interests at the meeting, a shareholder may               
delegate  his   power  to   vote  to   another  person  under  an               
authorisation certified in the established manner.                              
     2. A shareholders' meeting shall have the right to:                        
                                                                                
                                                                                
     1) elect  and remove members of the council of observers; if               
the council  is not formed, elect or remove members of the board,               
with the exception of the members elected by the employees;                     
     2) at  the request  of the  board, confer on it the right to               
issue preference shares; and                                                    
     3) in  the cases provided by this Law, consider the question               
of liquidation  (reduction) of  share capital  or of  buying  out               
(returning) the state's (local government's) share of capital.                  
     3. A  meeting of  the SSE's shareholders shall also have the               
right to:                                                                       
     1) amend and supplement the bylaws of the enterprise, if the               
meeting has not authorised the council of observers therewith;                  
     2) remove members of the board;                                            
     3) adopt  a resolution on the distribution of profit and, if               
the bylaws  contain a  provision  therefor,  approve  the  annual               
balance sheet;                                                                  
     4) liquidate or reorganise the enterprise; and                             
     5) revoke the decisions of the council of observers.                       
                                                                                
     4. At the meetings members of the council of observers shall               
inform  the   shareholders  about   the  commercial-economic  and               
financial performance of the enterprise, its state and prospects,               
as well  as present a report on the activities of the council and               
its implementation of the instructions of previous meetings.                    
     5. A  shareholders' meeting  shall be  called by  the board.               
Initiative to  call a meeting shall be also vested in the council               
of observers or a group of shareholders with the nominal value of               
shares in their possession no less than 1\20 of the nominal share               
capital.                                                                        
     6. A  public notice  about the  meeting shall be made in the               
manner specified by the bylaws, not later than fifteen days prior               
to the  meeting and not later than seven days prior to a repeated               
meeting. The  notice shall  indicate the  name of  the enterprise               
(name of  the firm)  and its  location, the date and place of the               
meeting, its agenda and the organisers of the meeting.                          
     7.  Prior   to  the  opening  of  the  meeting,  a  list  of               
shareholders (their proxies) attending the meeting shall be made,               
indicating the number of votes held by each participant. The list               
shall be signed by the chairman and the secretary of the meeting.               
     8. At  the meeting  its  chairman  and  secretary  shall  be               
elected from  among the  shareholders. The  meeting may  consider               
issues which  are not  on the  agenda and  adopt decisions if the               
participants of  the meeting represent shareholders with not less               
than three-fourths of all the votes.                                            
     9. A  meeting of shareholders may adopt resolutions if it is               
attended by  share-holders (their  proxies) with more than a half               
of all the votes. If the required number of shareholders fails to               
turn up, another meeting shall be called within fifteen days.                   
This meeting shall have the right to adopt resolutions regardless               
of the number of the shareholders present.                                      
     10. A  meeting of  shareholders shall adopt resolutions by a               
simple majority  vote of  those present  at the meeting, with the               
exception of  resolutions  on  the  removal  of  the  council  of               
observers or  the board elected by the shareholders, and with the               
exception  of   resolutions  concerning   issues  prescribed   by               
subparagraphs 1,  2, 4 of Paragraph 3 hereof, and by subparagraph               
2 of  Paragraph 3  of Article  10 of  this  Law.  In  said  cases               
resolutions shall be adopted by a two-thirds vote.                              
     11. The  proceedings of  the shareholders'  meeting shall be               
recorded in the minute.                                                         
                                                                                
                                                                                
                            Chapter 4                                           
                          STATE CAPITAL                                         
                                                                                
     Article 22. Ownership of the State Capital Entrusted to the                
               Enterprise.                                                      
                                                                                
     1. The  capital of  the Lithuanian  State entrusted  to  the               
enterprise and  comprising the state's investments of capital and               
interest on  the use  of  the  state  capital,  shall  belong  by               
ownership right  to the  Republic  of  Lithuania.  If  the  state               
capital used  by the  enterprise is  created out  of the funds or               
property of  the local government, the right of ownership of this               
capital shall  belong to  the local government. A certain portion               
of depreciation  charges proportionate  to the share of the state               
capital in  the enterprise's  capital, shall  also belong  to the               
state (local government) by ownership right.                                    
     2. The  enterprise shall  have no  right to  use  the  state               
capital for  the payment  of wages,  bonuses, dividends and other               
payments, or for financing non-commercial activities.                           
     3. The  enterprise must ensure the safety and profitable use               
of the  state (local  government) capital  entrusted to  it.  The               
state capital may be reduced only in cases prescribed by law.                   
                                                                                
     Article 23. Interest on the Use of the State Capital.                      
                                                                                
     1. The  enterprise shall  use  the  state  capital  for  the               
interest  which   shall  be  deducted  from  the  profit  of  the               
enterprise less the taxes payable to the budget.                                
     2. The rate of the interest on the use of the state capital,               
uniform for all enterprises, shall be approved by :                             
     1) the  Government of  the Republic  of Lithuania or, at its               
behest, the  Ministry of Finance, if the capital, by the right of               
ownership, belongs to the Republic of Lithuania;                                
     2) the local council or, at its behest, by the board, if the               
capital,  by  the  right  of  ownership,  belongs  to  the  local               
government.                                                                     
     3. The  enterprise which  has failed  to produce interest on               
the use  of the  state capital  at the  prescribed rate  shall be               
considered as  having  violated  its  monetary  obligations,  and               
sanctions  stipulated  by  this  law  shall  be  applied  to  it.               
Investment of  the enterprise's state financial funds into social               
and cultural objects shall not exempt it from payment of interest               
on the state capital used for said purposes.                                    
     4. The  board of the SE shall have the right to leave at the               
enterprise not  less than  2\3 of  the amount  of the interest on               
state (local  government) capital  and to  increase  thereby  the               
state capital  used by  it. The  Government of  the  Republic  of               
Lithuania (local  government) shall  have the  right  to  specify               
separate enterprises  (enjoying special  status) which  shall  be               
financed from  depreciation  charges  and  which  shall  transfer               
deducted sums of interest on state capital to the budget.                       
     5.  Sums  of  interest  on  the  use  of  the  state  (local               
government) capital  shall be  transferred to  the budget  of the               
Lithuanian  State  (local  government).  The  Government  of  the               
Republic of  Lithuania (local  government) may, at the request of               
the enterprise,  leave  (invest)  a  portion  of  the  amount  of               
interest at  the enterprise  and increase  the enterprise's state               
capital thereby.                                                                
     6. The  interest on  the use  of the  state capital shall be               
deduced (paid)  each month in the manner established by the Minis               
try of Finance of the Republic of Lithuania.                                    
                                                                                
     Article 24. Insurance of the State Capital.                                
                                                                                
     1. The  enterprise must  insure the  state  capital  in  its               
possession with  the insurance  agency registered in the Republic               
of Lithuania and recognised as reliable by the Bank of Lithuania,               
or pay  an equivalent  insurance  premium  to  the  state  (local               
government).                                                                    
                                                                                
     2. The  amount of  premium payable  to an  insurance  agency               
shall be  established by  the insurance  contract.  If  insurance               
premiums  on   state  capital   are  paid  to  the  state  (local               
government), their  uniform rates  in each  sphere of  commercial               
activities shall be established by the Ministry of Finance of the               
Republic of  Lithuania (the  local council or, at its behest, the               
board).                                                                         
                                                                                
     Article 25. The Increase of the State Capital.                             
                                                                                
     1. The state capital at an enterprise may be increased by:                 
     1) leaving  at the enterprise the amounts of interest on the               
use of the state capital;                                                       
     2) appropriating investments from the budget;                              
     3) merging the state capital of another enterprise; and                    
     4) taking  over or receiving other monetary and non-monetary               
(property) contributions from the state (local government).                     
     2. With  the increase  of state  capital the enterprise must               
increase the  nominal state  capital and  register all  the state               
capital it  uses  as  the  nominal  state  capital  only  if  the               
enterprise increases  or reduces  the nominal  share capital. The               
increase of  the nominal  state capital  shall become  valid only               
from the moment of its registration.                                            
                                                                                
     Article 26. The Right of the Enterprise to Invest State                    
               Funds.                                                           
                                                                                
     1. If  an enterprise  wishes  to  invest  the  state  (local               
government) capital  on the  territory of another country (on the               
territory of  another local  government) it must obtain a licence               
therefor  from  the  Ministry  of  Finance  of  the  Republic  of               
Lithuania (  the local  government). The  state capital  which is               
being invested  in other countries must be insured with a banking               
institution or  an insurance agency recognised as reliable by the               
Bank of  Lithuania. An  application for  a licence shall be filed               
together with  a certificate  from the Ministry of Finance of the               
Republic of  Lithuania on the economic and financial state of the               
object of investment, and the economic and financial state of the               
investing  enterprise,   as  well  as  a  state  property  (local               
government  property)   insurance   certificate   in   the   from               
established by  the  Ministry  of  Finance  of  the  Republic  of               
Lithuania. The  licence must  be issued or a motivated refusal to               
issue said  licence must  be given  within thirty  days from  the               
filing of  the application.  A refusal  to issue a licence may be               
given if  the established  procedure for  filing the  application               
documents has been violated, or if the enterprise or other object               
of investment  is unprofitable  and is not able to ensure a fixed               
rate of  interest on  the use  of the  state capital,  or if  the               
investment runs  counter to  the interests  of the  state  (local               
government).                                                                    
     2. If  the capital  of the state (local government) is being               
invested in  another country  (on the  territory of another local               
government), the  interest on  the use  of this  capital shall be               
paid at  the established  rate into  the budget of the Lithuanian               
State (local government).                                                       
     3. The  amount of  state capital  which is invested in other               
enterprises  (partner-ships,   public  or   private  joint  stock               
companies), deposited  with banking institutions or given on loan               
in other  forms, must not exceed 1/2 of the state funds possessed               
by the enterprise or its subsidiaries. If the enterprise violates               
said rule, the founder must compel refundment to the state (local               
government)  of  the  appropriate  share  of  the  state  capital               
invested in other enterprises.                                                  
     4. Annual  investments in  long-term (exceeding  12  months)               
construction projects  and the mounting of the equipment shall be               
discounted by  reassessing the  value of  said investments at the               
completion of  the  project  in  accordance  with  the  norms  of               
interest on  the use of the state capital. During the period when               
construction projects  (the mounting  of the equipment) are under               
way, but  not longer  than for  three years, the enterprise shall               
have the  right not to deduce from its profit the interest on the               
invested state  capital, but  this interest shall be deposited in               
the enterprise's state capital account.                                         
                                                                                
     Article 27. Reduction of State Capital.                                    
                                                                                
     1. The  state capital  in the  possession of  the enterprise               
shall not be returned to the budget of the Lithuanian State, with               
the exception of the following cases:                                           
     1) if the activities of the enterprise are terminated or the               
state capital is reduced (liquidated); and                                      
     2) if the enterprise reduces the amount of the state capital               
in its possession                                                               
     2. If  the SE  cannot effectively  use the  state  financial               
funds in  its possession,  it  may  transfer  a  portion  of  the               
interest on  state capital  or of the depreciation charges to the               
budget of  the State  (local government), or, with the consent of               
the Ministry  of Finance  of the  Republic  of  Lithuania  (local               
council or,  at its  behest, the  board), transfer  same  without               
refundment to other state (local government) enterprises.                       
     3. If,  in accordance  with this  Law and  other legislative               
acts of  the Republic  of Lithuania which regulate privatization,               
the Government  of the  Republic of Lithuania (the local council)               
compels liquidation  the SSE's state capital or reorganisation of               
the SE  into the SSE, the shareholders or employees, based on the               
prescribed rates  of depreciation  of fixed  assets, must buy out               
(return) the  state capital  within the period of depreciation of               
the appropriate  volume of  fixed assets. If the enterprise fails               
to comply  with said  requirements, it  may be  liquidated on the               
decision of the Government (the local council).                                 
                                                                                
                                                                                
                            Chapter 5                                           
                          SHARE CAPITAL                                         
                                                                                
     Article 28. Composition and Ownership of Share Capital                     
                                                                                
     1. The  share capital of the enterprise shall be formed from               
monetary and non-monetary (property) contributions of natural and               
legal persons,  as well  as from  the portion  of profit which is               
assigned to  the share  capital in  the manner prescribed by this               
Law.                                                                            
     2. The share capital shall consist of:                                     
     1) the  nominal share capital which equals the nominal value               
of the issued shares;                                                           
     2) the reserve fund of the nominal share capital; and                      
     3) the profit reserve fund.                                                
                                                                                
     3. The  reserve fund  of the  nominal share capital shall be               
formed from  the income  which is  not attributed to profit; said               
income  shall   be  received  from  selling  new  shares  of  the               
enterprise at a higher price than their nominal value. The income               
channeled to said fund shall be exempt from taxation.                           
     4. The  profit reserve fund shall be formed from the portion               
of profit  which has  not been  paid in dividends and bonuses, or               
has not  been used  in any  other way, and is invested in this or               
other enterprises.                                                              
     5. The  reserve fund  of the  nominal share  capital and the               
profit reserve  fund may  not exceed  1\10  of  the  enterprise's               
authorised capital.  If this  provision is  violated, the surplus               
amounts  of  the  reserve  funds  shall  be  apportioned  to  the               
authorised capital  within three months after the approval of the               
annual balance  sheet and,  in accordance  with the provisions of               
Article 31  of this  Law, the  nominal  share  capital  shall  be               
increased. If  these  regulations  are  not  complied  with,  the               
founder of  the enterprise  may direct the surplus amounts of the               
reserve funds  to the  authorised capital  upon a written request               
therefor from any of the share-holders or employees of the SE. If               
the founder  of the  enterprise does  not adopt  such a decision,               
said persons shall have the right to appeal to the court.                       
                                                                                
     Article 29. Shares and the Rights Incident to Them.                        
                                                                                
     1. The  issuance and circulation of the enterprise's shares,               
share  certificates,  and  temporary  shareholder's  certificates               
shall be  regulated by  the Law  of the  Republic of Lithuania on               
Stock Companies and other laws on the issuance and circulation of               
securities.                                                                     
     2. The  property and  personal non-property  rights  of  the               
shareholders of the enterprise shall be defined by the Law of the               
Republic of  Lithuania on  Stock Companies,  if this Law does not               
provide otherwise.                                                              
     3. The  enterprise shall  have no  right to  issue nonvoting               
shares.                                                                         
                                                                                
     Article 30. Increase of the Share Capital.                                 
                                                                                
     1. The  enterprise may increase the nominal share capital by               
issuing new  shares or increasing the nominal value of the issued               
shares.  The  increase  of  the  nominal  share  capital  through               
additional investments  shall be  allowed  only  by  issuing  new               
shares.                                                                         
     2.  The   enterprise  may   issue  new  shares  for  capital               
investments if  the nominal share capital has been fully paid. In               
other cases  the nominal  share capital  may be increased through               
non-monetary (property) contributions.                                          
     3. The  SSE which  has been  found insolvent  in the  manner               
established by  law, shall  have no  right to  increase the share               
capital by issuing and offering new shares to persons who are not               
its shareholders  or employees.  If the SE is insolvent, it shall               
have no right to issue shares.                                                  
     4. The  nominal share  capital  of  the  enterprise  may  be               
increased on  the decision  of the board when, based on this Law,               
the council  of observers or the meeting of shareholders approves               
the appropriate  amendments to  the bylaws. In the instances when               
it is planned to issue new preference shares, the approval of the               
share-holders' meeting shall be necessary.                                      
     5. The amendments to the bylaws shall be registered together               
with the registration of the increase of the capital.                           
     6. An  appropriate state  body shall register, in the manner               
prescribed by  law, the amendments to the bylaws and the increase               
of the nominal share capital if:                                                
     1) all the shares have been subscribed to in the established               
manner, and the initial investments have been made;                             
     2) in  the instances  established by  law  a  permission  to               
expand  production  has  been  received  from  the  state  (local               
government); and                                                                
     3) other requirements under laws have been met.                            
     If a  state body  refuses to  register the  increase of  the               
nominal share  capital and the amendments to the bylaws, it shall               
notify  the   applicant  of   the  reasons  therefor  within  the               
established period. The nominal share capital shall be considered               
as increased only after its registration.                                       
     7. If,  through the fault of the enterprise, the increase of               
the nominal  share capital was not registered within three months               
from the  termination of  subscription for  shares, the paid sums               
must be  returned to  the  subscribers  for  shares  without  any               
deductions. The  enterprise that  causes a delay in the refunding               
of the  paid sums  must pay the shareholders a fine in the amount               
of 10  percent of  the unreturned  sum, unless  the bylaws of the               
enterprise prescribe other fines.                                               
     8.   The    shares   (share   certificates   and   temporary               
shareholder's  certificates)   may  be   issued  only  after  the               
registration of  the increase of the share capital. Prior to that               
it shall be prohibited to transfer to other persons the rights to               
subscribed shares.                                                              
                                                                                
     Article 31. The Increase of the Nominal Share Capital from                 
               the Income of the Enterprise.                                    
                                                                                
     1. The  enterprise shall  have the right to issue new shares               
and transfer them to shareholders free of charge, or increase the               
nominal value  of shares by transferring the reserve funds of the               
share  capital   and  profit   (its  portion)  belonging  to  the               
shareholders and employees of the enterprise to the nominal share               
capital. Such  a transfer  of the  reserve funds  to the  nominal               
share capital  shall be  prohibited  before  the  losses  of  the               
enterprise assessed  in the  balance sheet  have been compensated               
for.                                                                            
     2. The  share of  the profit  reserve fund  belonging to the               
employees of  the SE,  as  well  as  to  the  employees  who  are               
shareholders shall  be equal  to the  share of  the nominal state               
capital  in   the  authorised   capital  of  the  enterprise.  An               
employee's portion  of the income in this fund accumulated during               
the accounting  year shall  be proportionate  to his  actual  pay               
(including bonuses)  during said period. A shareholder's right to               
the surplus of the profit reserve fund and to the reserve fund of               
the nominal  share capital  shall be established in proportion to               
the nominal value of the shares held by him.                                    
     3. In  the manner  established by the bylaws, the enterprise               
shall notify  each shareholder  and employee  having the right to               
obtain the  shares issued  by the enterprise from its own income,               
of the  bonus shares  or partly  paid shares  issued in the above               
manner, and  inform him  about the  procedure for  obtaining  the               
shares. If  a shareholder  or an  employee does  not acquire  the               
shares  belonging   to  him  within  one  year  after  the  above               
notification, the  enterprise shall have the right to realize the               
shares at its own discretion.                                                   
                                                                                
     Article 32. Reduction of the Share Capital.                                
                                                                                
     1. The enterprise shall have the right to reduce the nominal               
share capital  in the cases and manner prescribed by this Law and               
the bylaws of the enterprise. Within 10 days from the adoption of               
said decision  the board  must notify  the founder, creditors and               
shareholders thereof in the manner prescribed by the bylaws.                    
     2. If  the SE  is reducing  its nominal  share capital,  its               
creditors shall have the right to request guarantees.                           
     3. The  amendments to  the bylaws  and the  reduction of the               
nominal share  capital may  be registered  not later than 30 days               
after the  notification of  the decision concerning the reduction               
of the  capital in  the manner  prescribed by  the bylaws  of the               
enterprise.                                                                     
     4. Until  the reduction  of the  share capital  has not been               
registered, the  enter-prise shall have no right to pay out money               
or  transfer  material  assets  to  the  shareholders.  Upon  the               
reduction of the share capital the shareholders may be not exempt               
from the payment for the shares in their possession.                            
     5. The  SE may  not reduce  the nominal share capital on its               
initiative, if  it has  been declared  insolvent according to the               
procedure established  by  this  Law.  The  enterprise  shall  be               
prohibited from  reducing the  nominal share  capital if this may               
result in its insolvency.                                                       
                                                                                
     6. If  the nominal share capital is reduced not according to               
the procedure  established by the bylaws of the enterprise, or if               
same is  done under  different conditions for separate classes of               
shares, the  consent of  the shareholders'  meeting must  be  had               
therefor. If  the nominal  share  capital  of  the  SE  is  being               
reduced, a  permission from  the founder  must be  received.  The               
founder's permission  to reduce  the nominal share capital of the               
SSE shall  also be  required if  after the  planned reduction the               
nominal share  capital would  amount to  less  than  1\5  of  the               
authorised capital.                                                             
     7. The  enterprise may  effect the  reduction of its nominal               
share capital by:                                                               
     1) purchasing  or acquiring  in any other way its own shares               
which are retired thereafter; or                                                
     2) reducing the nominal value of its shares.                               
                                                                                
     8. If  after the  notice about  the retirement of the shares               
the shareholders  do not  return them  by  the  fixed  time,  the               
enterprise may declare said shares invalid.                                     
     9. When reducing the nominal share capital, the shares owned               
by the enterprise shall be retired in the first place.                          
     10. When the enterprise reduces its nominal share capital in               
a way  different from  the provisions  of this Law, its creditors               
shall have the right to bring an action against the enterprise.                 
The court  may  issue  an  order  charging  the  enterprise  with               
compensation for  the losses  sustained by  a creditor,  but  the               
amount of  the compensation  shall not exceed the sum paid to the               
shareholders.                                                                   
     11. The enterprise shall not be bound to purchase the shares               
submitted  by  the  shareholders  with  the  exception  of  cases               
prescribed by law.                                                              
                                                                                
                            Chapter 6                                           
         FINANCES OF THE ENTERPRISE AND THE DISTRIBUTION                        
                            OF PROFIT                                           
                                                                                
     Article 33. Finances.                                                      
                                                                                
     1. The  enterprise shall  make use  of internal and external               
sources  of   finance.  The   internal  sources   shall   embrace               
depreciation charges, interest on the state capital if it remains               
at the  enterprise, and  the profit.  The external  sources shall               
embrace   shareholders'   investments,   one-time   non-repayable               
contributions of  other natural  and legal  persons, and the loan               
capital. For  large-scale investments  a solvent state enterprise               
may obtain  additional funds  from the  state (local  government)               
budget.                                                                         
     2. The  economic  rates  of  depreciation  charges  for  the               
physical and  functional replacement of the equipment, machinery,               
facilities and  other fixed  assets shall  be established  by the               
enterprise which  assesses real changes in the efficiency of said               
assets during  a fixed  period of  time.  The  amount  of  actual               
depreciation charges  of the enterprise shall not be smaller than               
the established tax rates of depreciation charges which, together               
with the procedure for their application, shall be established by               
the Government of the Republic of Lithuania. Further depreciation               
of the  equipment, facilities  and other  fixed assets completely               
depreciated in  value as  against their  original cost  shall  be               
discontinued. In the event of a premature writing off of the [not               
fully depreciated]  assets, their residual cost shall be included               
into the losses of the enterprise.                                              
     3. For  the failure  to deduct  (pay) by  the fixed time the               
interest on  the use  of the  state capital, the enterprise shall               
pay to  the budget  a 0.5 percent fine per day. If the enterprise               
conceals  or   reduces  the   interest  or  depreciation  charges               
                                                                                
(payments), a  fine equal  to the  amount of the concealed income               
shall be paid into the budget.                                                  
     4. If  the enterprise  violates repeatedly  or  heavily  the               
established procedure for the payment of depreciation charges and               
interest on the use of the state capital, also if it loses in any               
other manner  the state property entrusted to it, the founder may               
dissolve the  board of the enterprise, or apply to the enterprise               
the regime  of a  special supervision, or reduce the share of the               
state capital  in the  possession of the enterprise, or liquidate               
(reorganise) the enterprise.                                                    
     5. The  enterprise shall  form a  reserve (obligatory profit               
reserve) fund.  It shall  be formed  by appropriating thereto not               
less than  5 percent of the amounts of annual deductions from the               
profit remaining  after the payment of required taxes. Every year               
sums shall  be appropriated  to the fund until, together with the               
reserve fund  of the nominal share capital, it amounts to 1/20 of               
the  enterprise's  authorised  capital.  If  the  profit  is  not               
sufficient for  making mandatory  payments (interest on the state               
capital and  insurance, as well as minimal dividends), deductions               
into the profit reserve fund shall be reduced accordingly.                      
     6. The losses and debts sustained in the commercial-economic               
activities of the enterprise shall be covered from:                             
     1) the  share of  profit  belonging  to  the  employees  and               
shareholders of  the enterprise,  also from  the resources of the               
reserve fund  of the nominal share capital and the profit reserve               
fund;                                                                           
     2) the  share of  the profit appropriated for the payment of               
mandatory and minimal dividends;                                                
     3) the  resources of  the nominal  share capital  of the SSE               
(this provision shall not apply to the SE); and                                 
     4) the  subsidies received  by the  SE fom  the state (local               
government) if  the sums under subparagraphs 1, 2, 3 hereof prove               
insufficient.                                                                   
     7. The  losses resulting  from bankruptcy  of the SE or from               
other causes,  shall be  covered proportionately  from the  state               
capital and share capital.                                                      
     8. When  the SSE  goes bankrupt, the losses shall be covered               
from the  share capital.  If this  amount is  not sufficient, the               
losses shall be covered from the funds of the state capital.                    
                                                                                
     Article 34. Insolvency of the Enterprise.                                  
                                                                                
     1. At the request of the founder, insolvency of the SE shall               
be established and recorded in the insolvency act by an agency of               
the Ministry of Finance of the Republic of Lithuania based on the               
analysis of  the results  of the  financial  performance  of  the               
enterprise, established  according to  the documents of financial               
ac counting  and inventory inspection. The enterprise may also be               
declared insolvent  if it  fails to  make the  mandatory payments               
within more  than three months from the deadline fixed for making               
said payments, or if a real (supported by evidence) insolvency is               
being expected.                                                                 
     2. If  the SE  is insolvent, as well as for a year after the               
enterprise became  solvent or  profitable, the founder shall have               
the right to:                                                                   
     1) remove or appoint the chairman of the board;                            
     2)  remove   or  appoint   members  of   the  board  on  the               
recommendation of the council of observers;                                     
     3) set  the size  of salary and bonuses for the chairman and               
other members of the board, also for head of the administration;                
     4) establish  the order  of using the enterprise's financial               
resources; and                                                                  
     5) liquidate or reorganise the SE.                                         
                                                                                
     3. The enterprise may appeal to the court against the act on               
its unprofitability or insolvency.                                              
     4. A  person dismissed  from the post of the chairman of the               
board on  the grounds  of unprofitability  or insolvency  of  the               
enterprise headed  by him, shall not be appointed a member of the               
board of  another  SE  or  SSE,  its  chairman  or  head  of  its               
provisional administration  for five  years since  the day of his               
dismissal.                                                                      
     5. Regulations  provided in  this article  may be applied to               
the SSE when, upon the reduction of its net assets, the remaining               
nominal share capital amounts to less than 1\10 of the authorised               
capital of the enterprise.                                                      
                                                                                
     Article 35. Dividends.                                                     
                                                                                
     1. Dividends  to the owners of ordinary shares shall be paid               
from the profits less taxes and other mandatory payments.                       
Dividends shall  be paid  in view  of the time (during a year) of               
the acquisition  of the share, its nominal value and the received               
profit. Dividends  on preference  shares shall  be paid after the               
payment of  profit taxes,  interest  on  the  state  capital  and               
insurance deductions.  The sum  of dividends  paid to  one person               
shall not be limited.                                                           
     2. The  rate of  dividends shall be planned and paid so that               
the expected profit is sufficient to make the mandatory payments.               
Final payments  to the  shareholders shall  be  permissible  only               
after making  the mandatory  payments and  also after meeting the               
liabilities to the creditors.                                                   
     3. Together  with the  additional dividends  paid  with  the               
shares the rate of the planned and paid dividends shall not be in               
excess of  the rate  of the comparative profitability achieved by               
the enterprise  during the accounting year (the ratio between the               
balance profit  and the enterprise's paid authorised capital less               
the investments in the unfinished capital construction).                        
     4. The  minimal dividends  on ordinary shares of the SE paid               
in cash  or in property shall not be less than the minimal amount               
established by  the Government  of the  Republic of Lithuania and               
equal for  all the  SEs, maximized by the rate of payments out of               
the profit  per one  rouble of  the  authorised  capital  of  the               
enterprise to the employees of the enterprise.                                  
     5. If  the profit of the SE is not sufficient for paying the               
minimal dividends,  the unpaid amount shall be transferred to the               
following (one)  year. No  distribution of profits shall be made,               
with the  exception of taxes and other mandatory payments, if the               
minimal dividends  have not  been paid.  If the  debt is  not met               
within one year, the SE may be declared insolvent. In that event,               
a meeting  of share-holders  may compel  the liquidation  of  the               
nominal share  capital of  the SE  with the enterprise purchasing               
its own shares. If the SE refuses to purchase the shares, it must               
be liquidated  within one  year. The  founder, wishing to prolong               
the functioning  of the  enterprise, may,  within the liquidation               
period, purchase the shares with his own money.                                 
     6. The  share capital of the SE shall be liquidated from the               
depreciation income  of the  share capital, and, with the consent               
of the  founder, from  the deductions  of interest  on the  state               
capital. The  shares of  the share capital under liquidation must               
be  purchased   not  later   than  within  the  average  term  of               
depreciation of  fixed assets  owned by  the  SE.  The  value  of               
capital purchased  annually must  not be  less  than  the  annual               
average nominal value of shares subject to being purchased during               
a fixed  (announced) period, this proportion being computed in an               
increasing (accumulative) order. The shares shall be purchased in               
accordance with  the provisions of this Law and the bylaws of the               
enterprise.                                                                     
                                                                                
     Article 36. Distribution of Profit.                                        
                                                                                
                                                                                
     1. The following mandatory payments shall be made out of the               
enterprise's balance profit:                                                    
     1) taxes to the budget;                                                    
     2) deductions of interest on the state capital;                            
     3) insurance  premiums for  the state capital accumulated at               
the enterprise;                                                                 
     4) mandatory and minimal dividends; and                                    
     5) payments into the profit reserve fund of the enterprise.                
                                                                                
     The residual  profit  shall  be  used  for  the  payment  of               
dividends and  bonuses, formation  of the  reserve fund,  and for               
financing additional social, cultural and other programmes.                     
     2. Prior to the discharge of the enterprise's liabilities to               
its creditors  or to the state (local government), the payment of               
dividends to  shareholders, or  bonuses to  the employees, or any               
distribution of  the profit  to the  employees  and  shareholders               
shall be prohibited.                                                            
     3. At the termination of the business year, dividends may be               
paid in  advance, if  the  preliminary  annual  balance  for  the               
accounting year  envisages a  profit sufficient therefor. The sum               
paid in advance may not exceed 1\2 of the profit of the preceding               
year which remained after making mandatory payments.                            
     4. Bonuses  for the  employees of  the SE  may  be  paid  in               
advance every  three months  if, on  the evidence  of the current               
financial results  of  the  economic  performance,  a  sufficient               
amount of  profit is  expected. Not  more than 2\3 of the bonuses               
which are  planned to be paid for work for a corresponding period               
shall be  paid in advance. The remaining amounts shall be paid at               
the termination of the business year on the basis of the received               
profit. Not more than 2\3 of the amount of bonuses factually paid               
for the preceding year shall be paid in advance.                                
                                                                                
                                                                                
VYTAUTAS LANDSBERGIS                                                            
President                                                                       
Supreme Council                                                                 
Republic of Lithuania                                                           
Vilnius                                                                         
25 September 1990                                                               
No. I-604