Grindeks                                                16.05.2005.



Terms of Share Capital Increase of AS Grindeks (draft)

(hereinafter the "Terms")



1. PURPOSE OF SHARE CAPITAL INCREASE



1.1. The purpose of issue of new shares is to increase the share 

capital of the joint stock company Grindeks (hereafter the "Company") 

in order to enhance the development and competitiveness of the Company 

from the proceeds received from the said issue of shares. 



2. EXISTING SHARE CAPITAL, CATEGORIES, 

NUMBER AND TYPES OF SHARES, PAR VALUE 



2.1. The existing share capital of the Company on the date of approval 

of the Terms is LVL 7'735'000 (seven million seven hundred thirty five 

thousand lats).



2.2. The share capital of the Company consists of 7'735'000 (seven million 

seven hundred thirty five thousand) dematerialized presenter shares with 

the par value of LVL 1.00 (one lat) per share. All 7'735'000 (seven million 

seven hundred thirty five thousand) shares are of single type and category 

without preferences, and having unrestricted voting rights. 



2.3. The existing share capital of the Company is fully paid up. 



3. INCREASE OF SHARE CAPITAL 



3.1. The share capital shall be increased by the issuance of single 

category 1'850'000 (one million eight hundred fifty thousand) dematerialized 

presenter shares with unrestricted voting rights, having the par value of 

LVL 1.00 (one lat) per share. 



3.2. The share capital of the Company shall be increased up to LVL 9'585'000 

(nine million five hundred eighty-five thousand lats) (declared share capital). 



3.3. The new shares of the Company are envisaged to be listed at the regulated 

securities market through a/s Rīgas Fondu birža. 



3.4. The newly issued shares shall secure to the shareholder all rights of shares 

of a joint stock company, including the right to participate in management of 

the Company, to receive dividend, and in case of liquidation of the Company - 

to receive the termination quota, as well as to have other rights provided for 

by the Charter of the Company and the Commercial Law.  



3.5. Acquirers of the new issue of shares shall be entitled to participate in 

the right to receive dividend as of the date of paying up the respective shares. 



3.6. On the date of approval of these Terms a/s "Latvijas Centrālais depozitārijs" 

prepares the list of all shareholders of the Company (hereafter the "Report Date") 

which are entitled to use preemptive rights to the newly issued shares. For 

determination of the preemptive right of shareholders, only the list of shareholders 

prepared at the Report Date shall be used. 



3.7. The existing shareholders of the Company shall have preemptive right to 

purchase the new issue of shares in proportion to their total par value of 

shareholding as of the Report Date.



3.8. The placement responsibility of the new shares of the Company shall be 

assigned to  companies a/s "Suprema" in Latvia (address: Vaļņu iela 1, Riga), 

and to  a/s "Suprema Securities" (Estonia) - in the international market 

(hereafter the "Managers"). 



4. PAR VALUE OF NEW SHARES 

AND PURCHASE PRICE 



4.1.  The par value of each new share issued shall be LVL 1.00 (one lat). 



4.2. The purchase price of shares shall consist of the par value and the share premium. 



4.3. The share premium is determined to be in the range of LVL [    ] (....) 

to  LVL [    ] (.......). The share premium shall be set by the Management Board

of the Company only within the range stated in these Terms. 



4.4. The purchase price of shares shall be determined by the Management Board 

of the Company during the Third Phase in accordance with the procedure stated 

in Article 4.5 of these Terms. 



4.5. The purchase price of shares shall be calculated by the Managers and 

approved by the Management Board of the Company in accordance with the result 

of demand among professional investors within the Third Phase of subscription by 

using the book-building method. The subscription forms shall be submitted by the 

professional investors to the Managers within the period of the Third Phase. The 

purchase price of shares shall be determined based on the submitted applications 

during the Third Phase, and by taking into account the following information 

gathered in the subscription ledger: 

(a)	the total amount of demand; 

(b)	the total price elasticity of demand; 

(c)	the quality of total demand structure, i.e. by observing the information 

available to the Managers on the demand from short term investors and the long 

term investors. 





5. SUBSCRIPTION TO SHARES 



5.1. Subscription to the shares of new issue shall be organized in three phases 

as stated in these Terms:



5.1.1. in the First Phase  the existing shareholders of the Company determined 

on the Report Date shall pursuant to the preemptive right based on Article 251 

of the Commercial Law have the right to subscribe to all shares of the new issue 

pro rata to their total par value of shareholding on the Report Date. 



5.1.2. in the Second Phase  the existing shareholders of the Company which have

used their preemptive right and subscribed for the new shares of the Company shall 

have the right in proportion to division of shares among the subscribed shareholders, 

to subscribe for the remaining shares not subscribed for by the other shareholders. 

The application expressing willingness to subscribe for the additional new shares 

shall be submitted simultaneously with the subscription form for the First Phase by 

indicating the total purchase price of the shares to be purchased by the respective 

shareholder. 



5.1.3. in the Third Phase all new shares which have not been subscribed by the 

existing shareholders of the Company as determined on the Report Date, shall be 

offered for subscription without limitation to professional investors in accordance 

with the definition set forth by Article 1 Paragraph 4 of the Law On the Market of

Financial Instruments.     



5.2. The subscription form attached as Appendix 1 to these Terms shall be used for 

subscription during the First and Second Phases, except if the banks and broker 

companies servicing the accounts of financial instruments of the existing shareholders 

enforce another form of applications in order to submit an order to a/s "Rīgas Fondu 

birža" to subscribe for the new shares. 



5.3. The procedure of subscription by the professional investors from abroad for the 

Third Phase shall be further specified in the offering memorandum approved by the 

Management Board of the Company. 



5.4. Subscription to the new shares shall take place with the members of a/s "Rīgas 

Fondu birža" thought its trading system and within the trading hours in accordance 

with the regulations of a/s "Rīgas Fondu birža". The Managers hereby reserve the 

right to reject any application which is not prepared in accordance with the 

subscription procedure. 



6. TERM OF SUBSCRIPTION 



The subscription to the new shares shall be organized in accordance with the 

following time schedule: 



6.1. First Phase: 



6.1.1. The term of First Phase shall commence on the date when the announcement 

to the existing shareholders of the Company to use the preemptive rights is 

published in the official newspaper  "Latvijas Vēstnesis". 



6.1.2. The term of subscription for the First Phase is 1 (one) month. In the 

event that the last day of the subscription term is an official holiday, the 

submission term shall terminate on the next business day. 



6.2. Second Phase: 



6.2.1. Subscription during the Second Phase shall be based on the submitted 

applications of the existing shareholders, on the next business day after the 

expiry of the subscription term of First Phase. The term of Second Phase is 1 

(one) business day. 



6.2.2. To subscribe during the Second Phase, the existing shareholders are not 

obliged to submit an additional application after the termination of First Phase, 

provided that a preemptive right application has been submitted during the First 

Phase through a member of  a/s "Rīgas Fondu birža" for the total purchase price of 

shares which exceeds the amount of purchase price for shares that would vest to 

such shareholder in proportion to its total par value of shareholding on the Report

Date. 



6.3. Third Phase:  



6.3.1. The Third Phase of subscription shall commence together with the Second 

Phase, and its term is 1 (one) business day. The Management Board of the Company 

shall have the right to process electronic applications for subscription by the 

professional investors. 



6.3.2. The new shares of the Company shall be considered allocated successfully 

as of the moment when the Third Phase of subscription has expired and all of the 

new shares have been subscribed for. 



6.4. The Management Board of the Company shall adopt a decision on the successful 

result of subscription process. If the Management Board of the Company considers 

that insufficient number of applications has been received during the Third Phase,

the Management Board shall have the right to suspend any further issue of shares 

and shall consider advising the General Meeting of shareholders to cancel the 

entire share issue of the Company. 



7. PROCEDURE AND TERM OF PAYMENT 



7.1. All new issue shares of the Company shall be payable in money. During the 

First and Second Phase the existing shareholders of the Company shall block the 

required maximum purchase price of total of shares to be purchased with the cash 

account of a bank or broker company where the securities account of the shareholder 

is opened and maintained in order to effect subscription. 



7.2. The settlement shall be effected in accordance with the regulations of a/s

 "Rīgas Fondu birža" for all of the newly issued shares of the Company. The 

settlement shall be carried out by a/s "Latvijas Centrālais depozitārijs" (LCD) 

settlement system "Delivery-Versus-Payment" (DVP). The shares shall be considered 

paid when the purchase price for the shares is irrevocably blocked on the current 

account of shareholder with the LCD member for performance of DVP transaction.



7.3. The subscription applications of professional investors shall be satisfied 

only after the allocation of shares to the existing shareholders of the Company, 

and only to the extent of any shares remaining following such preferential allocation. 



7.4. In case of default on payment for the shares purchased by the shareholder, the 

number of shares corresponding to the amount of payment in the settlement shall be 

allocated to the shareholder. 



7.5. In the event that during the subscription term not all of the newly issued 

shares are subscribed for, the Management Board of the Company shall after consultation 

with the Managers have the right to adopt a decision that either the share issue is 

completed to the extent of already subscribed shares, or that an extraordinary General 

Meeting of shareholders is to be announced for cancellation of the entire share issue.   



7.6. If the share issue is declared cancelled, the amount of funds required for 

subscription  and blocked with the current account shall be released subject to 

instructions of a/s "Rīgas Fondu birža".



8. ADDITIONAL INFORMATION 



8.1. A/S "Rīgas Fondu birža" shall inform its members on the procedure of submitting 

of subscription forms (orders) and the procedures of exchange of information. 



8.2. All public announcements on the share issue of the Company under these Terms and 

the subscription thereof shall be published via the information system of  a/s "Rīgas 

Fondu birža". 



8.3. Additional information on the application of these Terms may be received with the 

Managers, address: A/S "Suprema", Vaļņu iela 1, Riga. from 9:30 to 16:00 each business 

day.



8.4. If any article of these Terms becomes impossible or against the applicable legal 

norms or the regulations of the Financial and Capital Market Commission, the Management

 Board of the Company shall have the right to correct the Terms insofar as to maintain 

the effect of these Terms to the extent possible.



A/S "Grindeks"

Chairman of the Management Board  

Valdis Jākobsons