REPUBLIC OF LITHUANIA                                     
                               Law                                              
                  On Foreign Capital Investment                                 
                  in the Republic of Lithuania                                  
                                                                                
                            Chapter 1                                           
                       GENERAL PROVISIONS                                       
                                                                                
     Article 1. Objective of this Law                                           
     This Law  establishes the  relations between  the legal  and               
natural persons  of the  Republic of  Lithuania and foreign state               
subjects of  investment which  evolve  when  capital  of  foreign               
origin is  being invested  in the  Republic of  Lithuania in  the               
forms of investment determined by this Law, the relations between               
the State  and foreign  investors,  as  well  as  investments  of               
foreign capital throughout the entire period of their existence.                
     The procedure  for founding  a foreign  commercial bank or a               
commercial bank  with foreign capital and the procedure for their               
operation shall  be established by the Law on Commercial Banks of               
the Republic of Lithuania.                                                      
                                                                                
     Article 2. Definitions                                                     
     As used in this Law:                                                       
     "Foreign    state     enterprises"    means     enterprises,               
amalgamations, associations  and  other  organisations  including               
those which have the rights of legal persons and those which have               
no such  rights, irrespective  of whether they are profit-seeking               
or non-profit  organisations, which have been formed or organised               
and registered  in any other way in accordance with the laws of a               
foreign state,  the principal  office of  which is  in a  foreign               
state and  in which  no capital  of Lithuania's  legal or natural               
persons is employed;                                                            
     "Subjects  of   investment"  means  enterprises  of  foreign               
states, or  persons who  are not  citizens  of  the  Republic  of               
Lithuania, or  stateless persons  permanently residing abroad who               
are investing  capital of  foreign  origin  in  the  Republic  of               
Lithuania and  whose capital  at the  moment of  investment is of               
foreign origin;                                                                 
     "Capital of  foreign origin"  means capital belonging to the               
investor by the right of ownership which was created or otherwise               
lawfully acquired  outside  the  territory  of  the  Republic  of               
Lithuania and  not by  Lithuania's legal  or natural  persons, as               
well as reinvestment. It may be:                                                
     1) monetary  funds in  freely convertible currency or in the               
national currency of Lithuania;                                                 
     2) the  following  property  valued  in  freely  convertible               
currency  or  national  currency  of  Lithuania  for  forming  or               
increasing the authorised capital:                                              
     a) movable and immovable property; and                                     
     b) intellectual and industrial property;                                   
     "Investment of  capital  of  foreign  origin"  means  lawful               
actions of an investing entity, in the process whereof capital of               
foreign origin  is invested  into enterprises  in the Republic of               
Lithuania;                                                                      
     "Spheres of  investment of  capital of foreign origin" means               
all spheres  of economic-commercial activities with the exception               
of spheres  of activities  prohibited and  restricted as  well as               
licensed  under  the  Law  on  Enterprises  of  the  Republic  of               
Lithuania and this Law;                                                         
     "Foreign investor" means the subject of investment which has               
invested or  started to  invest capital  of foreign origin in the               
Republic  of   Lithuania  in   accordance  with   the   procedure               
established by  the laws  of the Republic of Lithuania regulating               
separate types of enterprises.                                                  
                                                                                
                                                                                
     "Investments of  capital of foreign origin" means capital of               
foreign origin  belonging to  foreign investors,  which has  been               
invested in the Republic of Lithuania;                                          
     "Enterprise" means  an economic unit operating under the Law               
on Enterprises of the Republic of Lithuania and under the laws of               
the  Republic   of  Lithuania   regulating  separate   types   of               
enterprises;                                                                    
     "Investment dispute"  means every  legal dispute  between  a               
foreign investor  (investors)  and  the  Republic  of  Lithuania,               
concerning a foreign investment.                                                
                                                                                
                                                                                
                            Chapter 2                                           
             INVESTMENT OF CAPITAL OF FOREIGN ORIGIN                            
                                                                                
     Article 3. The Right to Invest Capital of Foreign                          
               Origin in the Republic of Lithuania                              
     The foreign  state subjects  of investment  shall  have  the               
right to  invest capital  of foreign  origin in  the Republic  of               
Lithuania in the forms established by this Law.                                 
     The procedure and conditions of investing capital of foreign               
origin shall  be established  by this  Law and  other laws of the               
Republic of Lithuania or by international agreements to which the               
Republic of Lithuania is a party.                                               
     Documentations that  would confirm  the  origin  of  foreign               
capital shall  be prescribed by the Government of the Republic of               
Lithuania.                                                                      
     State institutions  or  officers  shall  have  no  right  to               
prohibit or  restrict the investment of capital of foreign origin               
if the  capital of  foreign origin is invested in compliance with               
the laws of the Republic of Lithuania.                                          
     During the  period of  existence of  an  investment  in  the               
Republic of  Lithuania, the foreign investor shall enjoy the same               
rights regulating  economic-commercial activities  and shall have               
the same  obligations as  the legal  and natural  persons of  the               
Republic of Lithuania.                                                          
                                                                                
     Article 4. Investment Forms of the Capital of Foreign                      
               Origin                                                           
     Subjects of  investment  shall  have  the  right  to  invest               
capital of  foreign origin  in the  Republic of  Lithuania in the               
following forms:                                                                
     1) by establishing an enterprise; or                                       
     2) by  acquiring shares in a going concern or a share in the               
enterprise's authorised (ownership) capital.                                    
     Foreign investors  shall have the right to sell, transfer as               
a gift,  pledge or  otherwise dispose of the fully paid shares in               
accordance with the procedure established by law.                               
                                                                                
     Article 5. Establishment of Enterprises                                    
     Foreign state  enterprises shall  be entitled  to  establish               
their subsidiaries  in the  Republic of Lithuania or become their               
managers, or  open representative  agencies, that  shall  not  be               
legal persons and may not engage in business activities.                        
     The procedure for establishing, operating and liquidating of               
enterprises  and   representative  agencies   of  foreign   state               
enterprises, as  well as  their legal status shall be established               
by  the   Law  on  Enterprises  of  the  Republic  of  Lithuania,               
appropriate laws  on the  types of  enterprises  and  other  laws               
regulating the activities of enterprises.                                       
     Enterprises and  representative agencies shall be registered               
in accordance  with the  procedure established  by the Law on the               
Register of Enterprises of the Republic of Lithuania.                           
                                                                                
     Article 6. Formation of the Enterprise Capital                             
                                                                                
     The authorised  (ownership) capital  of an enterprise may be               
formed   from   monetary   funds   or   non-monetary   (property)               
contributions as  well as  from industrial and other intellectual               
property.                                                                       
     Foreign investors  must pay  their monetary contributions to               
the enterprise's  authorised (ownership)  capital that  is  being               
formed in freely convertible currency or in the national currency               
of Lithuania.                                                                   
     The  contributions   of  foreign  investors  in  movable  or               
immovable property,  industrial and  other intellectual  property               
shall be valued in freely convertible currency or in the national               
currency of  Lithuania according  to the  agreement  between  the               
parties.                                                                        
     The value  of contributions  of foreign investors, expressed               
in freely  convertible currency,  shall be  expressed in terms of               
national currency  of Lithuania  in accordance  with the official               
rate of litas against foreign currency as declared by the Bank of               
Lithuania  on   the  day   of  signing  the  enterprise  founding               
documents.                                                                      
                                                                                
     Article 7. Guarantees to Foreign Investors                                 
     Foreign investments,  the profits, income, dividends, rights               
and lawful  interests of  investors in  the Republic of Lithuania               
shall be protected by the laws of Lithuania.                                    
     Property may be taken for compensation only in the cases and               
according to  the  procedure  established  by  the  laws  of  the               
Republic  of  Lithuania,  only  for  public  needs  and  only  by               
compensating the investor (investors) for the market value of the               
property taken for compensation.                                                
     The amount  of compensation  for  the  taken  property  must               
correspond to the market value thereof right before the taking of               
the property  for compensation or before public announcement with               
respect to  the property,  depending on  which is prior. Interest               
calculated in  accordance with the London Inter Bank Offered Rate               
(LIBOR), accrued  beginning from  the day  the announcement about               
the taking  of property for compensation is made until the day of               
payment of  the compensation,  shall be included in the amount of               
the compensation.                                                               
     The compensation must be paid in freely convertible currency               
or, with  the investor's  consent, in  the national  currency  of               
Lithuania no  later than  within three  months  of  the  day  the               
announcement about the taking of the property for compensation is               
made. At  the request  of the investor (investors), the amount of               
the  compensation   shall  be   transferred  abroad  without  any               
restrictions.                                                                   
     The institutions  of state  power and  government  or  their               
officers shall  have no  right  to  interfere  with  the  foreign               
investors' management,  use or disposal of the property belonging               
to them  by the  right of ownership, except in cases of violation               
of laws of the Republic of Lithuania.                                           
     Disputes concerning  the rights  and lawful interests of the               
foreign investor  (investors) shall be disposed of, following the               
agreement between  the parties,  by the courts of the Republic of               
Lithuania, or international arbitration or other institutions.                  
     In the event of disputes, foreign investor (investors) shall               
have the  right to apply directly to the International Centre for               
the Settlement  of Investment  Disputes in  compliance  with  the               
norms of  the Washington  Convention of  18 March  1965  "On  the               
Settlement of Investment Disputes between States and Nationals of               
other States".                                                                  
                                                                                
                                                                                
                            Chapter 3                                           
                SPHERES OF INVESTMENT OF CAPITAL                                
                                                                                
     Article 8. Spheres of Capital Investment wherein                           
               Investment of Foreign Capital is Prohibited                      
     Investment of  capital of  foreign origin shall be permitted               
in  all   spheres  of  economic-commercial  activities  with  the               
exception of the spheres :                                                      
     1) relating to security and defence of the State;                          
     2) manufacture  or sale  of narcotic  substances, and  other               
non-medicinal, poisonous substances that produce strong effect;                 
     3) growing,  processing, and  sale of  cultures that contain               
narcotic and  poisonous substances,  or substances  having strong               
effect; and                                                                     
     4) organising of lotteries.                                                
     Article 9. Licensed Activities                                             
     For carrying  out licensed activities established by the Law               
on Enterprises  of the Republic of Lithuania, a licence or permit               
issued by  the Government  of the  Republic of  Lithuania or  any               
other institution authorised by it, must be obtained.                           
                                                                                
                                                                                
                            Chapter 4                                           
                    ACTIVITIES OF ENTERPRISES                                   
                                                                                
     Article 10. The Right of Enterprises to Use a Land Lot                     
               and another Real Property                                        
      Enterprises shall have the right to possess by the right of               
ownership, lease,  or use  in any  other manner the real property               
necessary for  carrying out its activities, as well as to take on               
lease land  lots in  accordance with  the laws of the Republic of               
Lithuania.                                                                      
     Land lots  owned by  the state  may be leased to enterprises               
for up  to  99  years.  The  conditions  and  procedure  for  the               
extension of  the lease  of the land lot by the right of priority               
shall be  established by  Law on  Land Lease  of the  Republic of               
Lithuania.                                                                      
     Private land lots shall be leased according to the agreement               
between the parties.                                                            
                                                                                
     Article 11. Liability of State Institutions and                            
               Officers Conducting Inspections                                  
     The  institution   that  conducts   inspections  must   keep               
commercial secrets  of inspected  enterprises  confidential.  The               
contents of the commercial secret shall be established by law.                  
     The officers  who have  divulged the commercial secrets that               
they learnt  about in  the course  of inspection  shall be liable               
under laws.                                                                     
     The damage  caused to  enterprises by  unlawful  actions  of               
state institutions  or their officers shall be compensated for in               
full by the institution that caused it.                                         
     The damage  shall be  compensated for in full from the state               
budget, provided  that the institution that conducted inspection,               
shall prove  that it  has insufficient  amount of  funds for  the               
compensation  of   the  damage   caused  to  an  enterprise.  The               
conditions and  procedure for  the compensation for damage out of               
the state budget shall be established by law.                                   
                                                                                
     Article 12. Taxation of Enterprises                                        
     The taxation  conditions applied  to enterprises  may not be               
worse that  those applied  to the  legal and  natural persons  of               
Lithuania.                                                                      
     If an  enterprise was  established (registered)  or  foreign               
capital was  invested before  31 December  1993, the  part of its               
profit (income)  (proportional to the share of foreign investment               
in the  enterprise's authorised  (ownership) capital) due to that               
foreign investment  and not used for labour costs, and reinvested               
in the  enterprise, shall  be taxed for five years by corporation               
(income) tax reduced by 70 percent. Upon the expiration of this 5               
year period  the part  of profit  (income)  due  to  the  foreign               
investment shall  be taxed for another three years by corporation               
(income) tax reduced by 50 percent.                                             
     If an  enterprise was  established (registered)  or  foreign               
capital was invested within the period between 1 January 1994 and               
the coming  into effect  of  this  Law,  the  portion  of  profit               
(income) due  to foreign  investment shall be taxed for six years               
by corporation (income) tax reduced by 50 percent.                              
                                                                                
     Article 13. Tax Incentives Applied to Enterprises                          
     If a  foreign investor  (investors) has acquired at least 30               
percent of  the enterprise's  authorised (ownership)  capital and               
has invested  foreign capital  worth of  at least  USD 2 million,               
such enterprise shall be exempt from corporation (income) tax for               
three  years  from  the  moment  the  income  is  received.  Such               
enterprise shall  pay for  the subsequent three years corporation               
(income) tax reduced by 50 percent.                                             
     An enterprise  willing to  exercise the right to tax reliefs               
provided for in this Article, must file with the Tax Inspectorate               
the documentation prescribed by the Government of the Republic of               
Lithuania,  confirming   the  foreign   origin  of   capital  and               
investment into the capital of an enterprise.                                   
     Other  tax   exemptions  shall  be  applied  in  the  manner               
established by the laws of the Republic of Lithuania.                           
                                                                                
     Article 14. Customs Duty Exemptions                                        
     Contributions   of   foreign   investors   made   into   the               
enterprise's authorised  (ownership) capital that is being formed               
or increased  , and  used as  long-term assets,  shall be brought               
into the country free of customs duties.                                        
     If an  enterprise is  being liquidated  by its  founder, the               
assets or  a portion  thereof which  corresponds to the amount of               
the  foreign  investment  and  which,  on  the  decision  of  the               
shareholders, is  due to foreign investors, shall be taken out of               
the country free of customs duties.                                             
                                                                                
     Article 15. Acquisition of Ownership Rights to Profit,                     
               Income or Dividends, Received in accordance                      
               with Law                                                         
     Profit, income, or dividends received in accordance with law               
shall belong to foreign investors by the right of ownership.                    
     Foreign investors  shall have  the right,  after having paid               
the taxes,  to transfer the profit, income or dividends belonging               
to them  by the  right of  ownership to a foreign country without               
any restrictions.                                                               
     The transfer  shall be  performed according  to the official               
rate of  litas against foreign currencies declared by the Bank of               
Lithuania on the day of transfer.                                               
     Taxes may  not be  levied on  the share dividends of foreign               
investors unless  the same  is applied  with respect to legal and               
natural persons of the Republic of Lithuania.                                   
     Foreign investors  may also  export their profit, income, or               
dividends in  the form  of goods  and services  purchased on  the               
domestic market,  or reinvest  the same  into the  economy of the               
Republic of Lithuania.                                                          
                                                                                
                            Chapter 5                                           
                    INTERNATIONAL AGREEMENTS                                    
                                                                                
     Article 16. This Law and International Agreements                          
     If  an   international  agreement   provides  for  different               
conditions of  foreign capital  investment or  the  existence  of               
investment  than  this  Law  ,  the  norms  of  an  international               
agreement shall be applied.                                                     
                                                                                
                                                                                
                            Chapter 6                                           
                        FINAL PROVISIONS                                        
                                                                                
     Article 17. Conditions of Investment of Capital of                         
               Foreign Origin and Existence of Investments                      
               under Effective Laws                                             
     Subsidiaries of  foreign enterprises, founded and registered               
before the date of the entry into effect of this Law must, by the               
decision of  the founder,  reorganise  its  activities  within  9               
months  from  the  date  of  the  enforcement  of  this  Law,  in               
accordance with the Company Law of the Republic of Lithuania, and               
register  it   in  the  manner  prescribed  by  the  Register  of               
Enterprises of the Republic of Lithuania.                                       
     Stock companies  or close  stock companies  in which foreign               
investors have  acquired at  least one  share prior to the coming               
into effect  of this  Law, must, within 6 months from the date of               
the enforcement  of this Law, replace the Registrar in the manner               
prescribed by the Chief Registrar of the Republic of Lithuania.                 
     If the  subsidiaries of  enterprises of  foreign states, and               
stock  companies  or  close  stock  companies  in  which  foreign               
investors have  acquired at least one share, shall not reorganise               
their activities  or shall not replace their Registrar within the               
time limit specified in parts 1 and 2 of this Article, they shall               
be liquidated in accordance with the procedure established by the               
Government of the Republic of Lithuania.                                        
                                                                                
     Article 18. The Repeal of Existing Legislation                             
               Regulating Foreign Capital Investments                           
     To repeal the following laws:                                              
     The Law  on Foreign Investment of the Republic of Lithuania,               
No. I-905,  29 December 1990, the Law on the Amendment of the Law               
on Foreign  Investment, No.I- 2302, 11 February 1992, and the Law               
on the  Spheres of Business Activities wherein Foreign Investment               
is Prohibited or Restricted, No.I-1276, 2 May 1991.                             
                                                                                
     Article 19. Coming into Effect of this Law                                 
     This Law shall come into effect as of 1 August 1995.                       
                                                                                
     I promulgate  this Law, passed by the Seimas of the Republic               
of Lithuania.                                                                   
                                                                                
                                                                                
                                                                                
Algirdas Brazauskas                                                             
President of the Republic                                                       
                                                                                
Vilnius                                                                         
13 June 1995                                                                    
No. I-938