AGREEMENT
BETWEEN THE GOVERNMENT OF THE RUSSIAN FEDERATION AND
THE GOVERNMENT OF THE UNITED ARAB EMIRATES RELATING
TO THE SETTLEMENT OF THE OUTSTANDING INDEBTEDNESS
OF THE FORMER USSR
(Abu Dhabi, 10.IX.2007)
The Government of the Russian Federation (hereinafter referred to as the "Russian Party") and the Government of the United Arab Emirates (hereinafter referred to as the "Emirates Party") (collectively hereinafter referred to as the "Parties"),
aiming to resolve the outstanding financial issues related to the indebtedness under the Loan Agreement dated September 18, 1991 between the State Bank of the USSR as borrower and the National Bank of Abu Dhabi as lender (hereinafter referred to as the "Original Loan Agreement") for which the Government of the Russian Federation has agreed to be liable in the Declaration of the Government of the Russian Federation dated April 2, 1993,
considering the provisions of the Memorandum of Understanding of March 16, 1994 between the Government of the Russian Federation and the Government of the United Arab Emirates (hereinafter referred to as the "1994 MOU"),
desiring to further develop trade, financial and economic relations between the two countries,
in good and valuable consideration of the foregoing recitals and the mutual promises and covenants stated below,
hereby agree as follows:
Article I
Consolidation
1.1. Subject to clause 4.3. of Article IV, the indebtedness to which the provisions of this Agreement shall be applied is the following:
- the outstanding principal under the Original Loan Agreement as of March 16, 1994 (hereinafter referred to as the "Consolidation date") in the amount of USD 500,000,000.00 (Five hundred million dollars);
- contractual interest accrued under the Original Loan Agreement as of the Consolidation Date, but excluding this date, in the amount of USD 58,975,260.41 (Fifty eight million nine hundred seventy five thousand two hundred sixty dollars and forty one cents).
No penalty interest and/or interest on interest shall be accrued or shall be due and payable on the amounts mentioned above in this clause up to the Consolidation Date.
1.2. Amounts mentioned in clause 1.1. of this Article in the aggregate amount of USD 558,975,260.41 (Five hundred fifty eight million nine hundred seventy five thousand two hundred sixty dollars and forty one cents) (hereinafter referred to as the "Consolidated Amount") shall be consolidated as of the Consolidation Date and repaid in accordance with the provisions of this Agreement.
The Consolidated Amount shall be registered on a special account (hereinafter referred to as the "Consolidation Account") which shall be opened by the authorized agents of the Parties, indicated in Article V of this Agreement.
Article II
Deferral Interest
2.1. Subject to clause 2.2. of this Article, during the period from and including the Consolidation Date until the Settlement Date (as defined below) interest (hereinafter referred to as the "Deferral Interest") shall be accrued on the outstanding Consolidated Amount semi-annually at the rate equal to the offering rate for 6 (six) month US dollars interbank deposits in the London Interbank market (LIBOR) as quoted by the British Bankers" Association at 11 a.m. London time two business days prior to the first day of the relevant interest period plus a margin of 0.5% p.a. using an Actual/360 year basis (hereinafter referred to as the "Deferral Interest Rate"). The Deferral Interest shall be accumulated and shall not be capitalized. No interest shall be accrued on the Deferral Interest thus accumulated.
The Deferral Interest shall be registered on a special account (hereinafter referred to as the "Interest Account"), which shall be opened by the authorized agents of the Parties, indicated in Article V of this Agreement, and shall be repaid in accordance with the provisions of this Agreement.
2.2. Part of the Consolidation Amount in the amount of USD 366,200,000.00 (50% of the original total value of the Purchase Agreement dated May 7, 2000 No. DP/A3/98/71/4/165 between the General Headquarters UAE Armed Forces and KBP Instrument Design Bureau, Tula (the "Purchase Agreement")) shall not accrue Deferral Interest during the period from and including May 7, 2000 up to and including December 31, 2006.
Authorized agents of the Parties, indicated in Article V of this Agreement, shall effect corresponding operations in order to ensure the implementation of the provisions of this clause using a special non-interest bearing account (the "Special Account").
Article III
Repayment of the Consolidated Amount
and Deferral Interest
3.1. Part of the Consolidated Amount and the Deferral Interest shall be repaid at the expense of the deliveries of goods and services which have been effected within the framework of the 1994 MOU on the following terms and conditions:
(a) USD 172,151,025.75 (40% of the total value of the contract dated April 22, 1996 No. DGP/10/95/25) will be assumed to have been paid on April 22, 1996 as a Deferral Interest in the amount of USD 71,160,297.85 accrued from and including March 16, 1994 to and excluding April 22, 1996 and a part of the Consolidated Amount in the amount of USD 100,990,727.90;
(b) USD 43,423,062.50 (50% of the total value of the contract dated December 19, 1996 No. DGP/10/95/9) and USD 9,620,528.75 (50% of the total value of the amendment No. 1 dated February 22, 1998 to the contract dated December 19, 1996 No. DGP/10/95/9) will be assumed to have been paid on November 2, 1998 as a part of the Deferral Interest accrued from and including April 22, 1996 to and excluding November 2, 1998 for the amount of USD 53,043,591.25;
(c) USD 7,969,600.00 (50% of the total value of the contract dated August 20, 2002 No. DP/A3/97/40/4/167) will be assumed to have been paid on August 20, 2002 as a part of the Deferral Interest accumulated as of August 20, 2002 for the amount of USD 7,969,600.00.
Authorized agents of the Parties, indicated in Article V of this Agreement, shall effect corresponding operations under the Interest Account and the Consolidation Account in order to ensure a write-off of the respective amounts of the Consolidated Amount and the Deferral Interest in accordance with the provisions set forth above in this clause.
3.2. The balances of the Consolidation Account and Interest Account outstanding as a result of operations indicated in clause 3.1. of this Article as of January 1, 2007 in the total amount of USD 535,956,755.53 consisting of:
USD 457,984,532.51 - outstanding balance of the Consolidation Account;
USD 77,972,223.02 - outstanding balance of the Interest Account;
plus interest accrued on this amount at the Deferral Interest Rate for the period from and including January 1, 2007 up to and excluding the date of the payment mentioned below ("Settlement Date") shall be repaid by the Russian Party to the Emirates Party by a single payment in cash.
Payment mentioned-above in this clause shall be effected immediately (but in no event later than 5 business days after signing of such amendment) upon signing between the General Headquarters UAE Armed Forces and KBP Instrument Design Bureau, Tula of the amendment to the Purchase Agreement providing for settlements in cash of the complete value of the above Purchase Agreement. A business day under this clause means a day on which banks are open for business in London and New York City.
Article IV
Termination of Previous Arrangements
4.1. The Government of the Russian Federation confirms that it agreed in the Declaration of the Government of the Russian Federation dated April 2, 1993 to be liable for the obligations of the State Bank of the USSR under the Original Loan Agreement.
4.2. The Government of the United Arab Emirates acting through the Finance Department of the Emirate of Abu Dhabi confirms that it is authorized to discharge the Original Loan Agreement on behalf of the National Bank of Abu Dhabi under the circumstances set out in clause 4.3. of Article IV of this Agreement.
4.3. The Parties confirm that following receipt by the Emirates Party of the amounts set out in clause 3.2. of Article III above, the obligations under the Original Loan Agreement shall be considered fully discharged and the Original Loan Agreement shall be of no further effect.
If (a) the Emirates Party has not received payment of the amounts set out in clause 3.2. of Article III of this Agreement by the date falling no later than 5 business days after the signing of the amendment to the Purchase Agreement referred to in clause 3.2. of Article III of this Agreement, or (b) the Settlement Date does not occur within 90 days of the date of this Agreement, then this Agreement shall automatically, and without the need for any further action by either Party, be null and void, and the provisions of the Original Loan Agreement shall continue to apply.
4.4. Each Party confirms that it has obtained all necessary consents and authorizations to enable it to enter into this Agreement and to perform the transactions contemplated hereunder.
Article V
Agents/Procedures
The State Corporation "Bank for Development and Foreign Economic Affairs" and the National Bank of Abu Dhabi shall be the authorized agents of the Russian Party and the Emirates Party, respectively for the purposes of technical implementation of this Agreement (hereinafter referred to as the "Authorized Agents").
Technical procedures of accounting and repayment of the indebtedness settled under this Agreement shall be determined by the Interbank Agreement to be concluded, based on the principles agreed hereunder, between the Authorized Agents within 20 calendar days from the date of signing of this Agreement.
Article VI
Other Conditions
6.1. The Parties shall undertake all necessary measures to provide for the successful implementation of this Agreement.
6.2. This Agreement is binding upon the Parties and their permitted assigns. Neither Party may assign any of its rights or obligations under this Agreement without the prior written consent of the other Party.
6.3. Any dispute on the implementation of the provisions of this Agreement will be considered and settled in the spirit of goodwill and through bilateral negotiations and consultations or by any other means as may be agreed by the Parties.
6.4. Any amendment to the provisions of this Agreement may be effected by mutual consent of the Parties in writing.
6.5. All notices or other communication to be made under and in connection with this Agreement shall be in the English language. Any document to be delivered under and in connection with this Agreement that is not in English shall be accompanied by a certified English translation. If any conflict between the original of the document and its English translation occurs, the English version shall prevail.
6.6. This Agreement contains the entire agreement between the Parties relating to the subject matter hereof and supersedes all oral statements and prior writings with respect thereto.
6.7. This Agreement shall come into force on the date of its signature.
Made in Abu Dhabi on September 10, 2007 in two originals in English both texts being equally authentic.