Kalev                             ANNOUNCEMENT                          03.11.2004



AS Kalev Won in Supreme Court



On 01.11.2004, the Supreme Court ruled not to  satisfy  the  appeal  in  cassation

submitted by AS Milestone, a shareholder of AS Kalev, against the  judgement  made

by Tallinn Circuit Court on 31.03.2004.



In January 2003, AS Milestone filed a statement of claim to the court in order  to

invalidate  the  resolution  adopted  by  the  general  meeting  of  AS  Kalev  on

08.12.2002 concerning the acquisition of own shares. AS Milestone found  that  the

resolution was in conflict with the requirements of the Commercial Code and  votes

of the shareholders acting in accordance  with  the  director  of  AS  Kalev,  who

allegedly has dominant influence,  were  unlawfully  considered  as  part  of  the

quorum of the general meeting when the resolution was adopted.



Tallinn Circuit Court  found  that  the  resolution  of  the  general  meeting  of

shareholders is not in conflict with the Commercial Code and that the law had  not

been breached when considering the votes of the shareholders who  participated  in

the meeting as part of the quorum.



With its ruling made yesterday, the Supreme Court agreed with the opinion  of  the

Circuit Court that the disputed resolution  of  the  general  meeting  is  not  in

conflict with the provision of the Commercial Code that regulates the  acquisition

of own shares.

Unlike AS Milestone, the Supreme Court agreed with the viewpoints of  the  Circuit

Court and AS Kalev, that an opinion of the resolution of the general  meeting  had

to be given in accordance with the  laws  valid  at  the  time  when  the  general

meeting was held. The Supreme Court agreed with the Circuit Court that  since  the

director of AS Kalev had no dominant influence in the meaning  of  the  Securities

Market Act, then there were no grounds for  exclusion  of  the  shareholder  votes

referred to in the statement of claim submitted by AS Milestone  from  the  quorum

of the general meeting.



Considering the above, the Supreme Court did not amend the  judgement  of  Tallinn

Circuit Court from 31.03.2004 and did not satisfy the appeal in  cassation  of  AS

Milestone and ordered that AS Milestone compensate to AS Kalev all the  litigation

costs incurred in the cassation stage.



Attorney Leon Glikman from Law Office Teder Glikman &  Partners,  who  represented

AS Kalev in the Supreme Court, said that Tallinn City Court is processing  several

other similar claims of AS Milestone,  which  were  postponed  because  courts  of

lower instance wanted to wait for the mandatory judgement of  the  Supreme  Court.

Since the claims of AS Milestone against AS Kalev are based on  the  argumentation

of the Supreme Court that is final and not a subject to  appeal,  then  they  lack

actual perspective. Attorney Leon Glikman does not exclude  the  possibility  that

in such a relatively hopeless process  situation,  AS  Milestone  will  waive  its

other similar claims.





Ruth Roht

PR Manager

6 077 858