Taking into account:

The January 14, 1994, Declaration of the Presidents of the United Statesof America and the Russian Federation on "Nonproliferation of Weapons ofMass Destruction and the Means of Their Delivery"'

The Energy Policy Committee report submitted at the 10th session of theU.S.-Russian Commission on Economic and Technological Cooperation, whichwas held in March 1998;

The July 24, 1998, Joint Statement on U.S.-Russian Cooperation toImplement the Nuclear Cities Initiative.

Have agreed as follows:

Article I

The purpose of this Agreement is to create a framework for cooperation infacilitating civilian production that will provide new jobs for workersdisplaced from enterprises of the nuclear complex in the "Nuclear Cities"controlled by the Ministry of the Russian Federation for Atomic Energy.

This cooperation shall be in keeping with the Parties' mutual disarmamentand non-proliferation efforts.

The Nuclear Cities Initiative complements other bilateral and multilateralagreements to which the United States and the Russian Federation areParties, and does not supersede them or otherwise affect their terms andconditions.

Article 2

For purposes of this Agreement:

1. The term "nuclear cities" shall mean administrative territorial units,as defined under the Law of the Russian Federation on ClosedAdministrative Territorial Units, that have bodies of local municipalself-government and within which are located nuclear enterprisescontrolled by the Ministry of the Russian Federation for Atomic Energy,not including the territory of the enterprise itself.

2. Diversification of production shall mean the development, in "nuclearcities," of commercially viable enterprises for civilian production atwhich displaced employees of the nuclear complex can be employed, withemphasis on former nuclear weapon scientists, engineers, technicians, andother specialists.

3. Civilian production shall mean an enterprise of any form of ownership,with an emphasis on private sector ownership development, that is orientedtoward manufacturing or services for civilian use.

Article 3

1. The principal subject areas for the cooperative activities by theParties may include the following types of activities:

a) Sharing experience in diversification of production;

b) Facilitating the selection of promising projects for productiondiversification and creating the conditions that will enable them to beimplemented;

c) Developing entrepreneurial skills in employees displaced fromenterprises of the nuclear complex, training them in how to write abusiness plan, and faci1itating development of such plans;

d) Facilitating creation of the conditions necessary for attractinginvestment in the "nuclear cities" for purposes of implementing theprojects within the framework of this Agreement;

e) Facilitating the search for investors for production diversificationprojects, market analysis, and the marketing of products and servicesproduced as a result of the implementation of those projects;

f) Facilitating access to existing investment mechanisms, includinginvestment funds; and,

g) Identifying mechanisms for the funding of projects under thisAgreement.

Article 4

1. The Parties shall designate Executive Agents to carry out theprovisions of this Agreement. The Executive Agent for the RussianFederation shall be the Ministry of the Russian Federation for AtomicEnergy, and the Executive Agent for the United States of America shall bethe U.S. Department of Energy.

2. The Parties shall establish a U.S.-Russian Joint Steering Committee,which shall coordinate work undertaken under this Agreement. Each Partyshall designate its own members on the Joint Steering Committee. Decisionsof theJoint Steering Committee shall be made on the basis of unanimous consent.

3. The tasks of the Joint Steering Committee shall include:

a) Development of Joint Action Plans to implement this Agreement;

b) Establishment of joint working groups to carry out specific tasks, andcoordination of their activities. These groups may be formed based uponspecific "nuclear cities" or technical subjects depending on the task tobe accomplished;

c) Coordination and review and the making of recommendations forfinancing and implementation of projects under this Agreement;

d) Resolution of disputes and disagreements that may arise in the courseof activities under this Agreement;

e) Review of other masters, as the Executive Agents of the Parties mayagree in writing, that are within the scope of this Agreement.

4. A detailed plan for implementing specific production diversificationprojects within the framework of the Agreement shall be drawn up in theform of specific implementing arrangements.

5. The Parties' Executive Agents may involve other governmentalinstitutions, auditing, marketing, and law firms, research centers,commercial enterprises, universities, institutes, and other organizationsof the Parties in joint activities under this Agreement.

Article 5

1. In the implementation of this Agreement, only unclassified informationshall be exchanged.

2. In order to prevent access by people and organizations notparticipating in the implementation of this Agreement to information thatis provided by the Parties pursuant to, or is obtained or produced as aresult of, implementation of this Agreement and is considered sensitive bythe Parties, such information is to be handled as sensitive information.Such information must be clearly designated and marked. The Partytransmitting the information will designate information as sensitive inaccordance with its laws and regulations. The Partyreceiving this information shall assign it a designation that provides adegree of protection at least equivalent to that required by the Partythat furnished the information.

3. Sensitive information shall be handled in accordance with the laws andregulations of the Party receiving the information, and this informationshall not be disclosed or transmitted to a third party not participatingin implementation of this Agreement without the written consent of theParty transmitting the information. According to the norms and regulationsof the Russian Federation, such information shall be treated as officialinformation with limited distribution and shall be protectedappropriately. According to the norms and regulations of the UnitedStates, such information shall be treated as foreign governmentinformation provided in confidence. That information shall be protectedappropriately.

4. The Parties shall assure effective protection and allocation of rightsto intellectual property transmitted or created under this Agreement, asset forth in this Agreement and in the Annex to this Agreement which formsan integral part of this Agreement.

5. Information transmitted under this Agreement must be used solely inconformance with the provisions of this Agreement.

6. The number of people having access to sensitive information must belimited to the number necessary to implement a specific program under thisAgreement and shall be determined by the respective Executive Agent.

Article 6

1. In the event that a Party awards contracts for the acquisition ofarticles and services, including construction, to implement thisAgreement, such contracts shall be awarded in accordance with the laws andregulations of that Party. All activities carried out in the RussianFederation under such contracts shall be performed consistent with RussianFederation law.

2. To the extent necessary for effective implementation of thisAgreement, the Executive Agent of the Russian Party shall provideassistance, in accordance with Russian Federation law and the regulatoryand legal acts of the federal authorities of the Russian Federation, fortimely access for those involved in coordinating and implementing thisAgreement to the "Nuclear Cities" and to sites where activities related tothis Agreement are performed.

Article 7

Equipment, supplies, materials, services and activities provided oracquired by the United States of America, its contractors, subcontractors,and their personnel for the implementation of this Agreement are freetechnical assistance and are thus exempt from customs duties and taxes.The Russian Federation shall take all necessary measures to exempt thisequipment shipments, materials, services, and work from all taxes,tariffs, customs duties, and levies of the Russian Federation and itsinstrumentalities. In carrying out these obligations the RussianFederation, its ministries, agencies and instrumentalities shallact in accordance with Russian Federation law.

Article 8

1. With the exception of claims against individuals for premeditateddamage or injury, the Government of the Russian Federation shall bring noclaims or other legal proceedings against the Government of the UnitedStates of America and its personnel or its contractors, sub-contractors,consultants, suppliers, or subsuppliers of equipment or services at anytier and their personnel, in any court or forum, for any carnage,including indirect, direct, or consequential damage, arising fromactivities undertaken pursuant to this Agreement, to property owned by theRussian Federation. This paragraph shall not apply to legal actionsbrought by the Government of the Russian Federation to enforce theprovisions of contracts to which it or a Russian national or other legalentity is a party.

2. With the exception of claims against individuals for premeditateddamage or injury, the Government of the Russian Federation shall providefor the adequate defense of, shall indemnify, and shall bring no claims orother legal proceedings against, the Government of the United States ofAmerica and its personnel or its contractors, sub-contractors,consultants, suppliers, or subsuppliers of equipment or services at anytier and their personnel, in connection with third-party claims, in anycourt or forum, for any injury or damage, including indirect, direct, orconsequential injury or damage, arisingfrom activities undertaken pursuant to this Agreement, occurring within oroutside the territory of the Russian Federation. Nothing in this paragraphshall be construed as acknowledging the jurisdiction of any court or forumover third-party claims to which this paragraph applies, nor shall it beconstrued as waiving the sovereign immunity of either Party with respectto third-party claims that may be brought against it.

3. The Parties may, as necessary, conduct consultations regarding claimsand legal proceedings concerning this Article.

4. The provisions of this Article shall not prevent the Parties fromproviding compensation in accordance with their national laws.

5. Nothing in this Article shall be interpreted to prevent legalproceedings or claims against nationals of the Russian Federation orpermanent residents of the Russian Federation.

Article 9

1. The joint activities under this Agreement may be supported by fundsappropriated for those purposes by the Russian Federation and the UnitedStates of America and by materials, equipment, and manpower provided freeof charge by them. The joint activities may also be supported partially orwholly directly from other sources, including non-government and privatesector funds.

2. In all cases, the activities of, and financial support provided by,the United States of America under this Agreement are subject to theavailability of appropriated funds. In all cases, the activities of, andfinancial support provided by, the Russian Federation under this Agreementare subject to theavailability of appropriated funds.

Article 10

1. Representatives of the United States of America shall have the right,upon giving notice, to perform coordinated inspections of, and to audit,the use of support or assistance provided by the U.S. Government withinthe framework of cooperation under this Agreement during the life of thisAgreement and for three years thereafter. Such inspections may beconducted at sites or locations that are determined by mutual agreement ofthe Parties' Executive Agents and that are subject to this Agreement.

2. The Parties' Executive Agents shall, within the framework of the JointSteering Committee, develop appropriate procedures for conducting theinspections of the use of assistance and support provided within theframework of this Agreement.

Article 11

All questions regarding the interpretation or application of theprovisions of this Agreement shall be resolved by means of consultationbetween the Parties.

Article 12

1. This Agreement shall enter into force on the date of signature andshall remain in force for five years. The Agreement may be extended forsuccessive five-year periods with the written consent of both Partiesafter joint review before the end of each five-year period. The Agreementmay be amended by written agreement of the Parties.

2. This Agreement may be terminated by either Party by sending writtennotice through diplomatic charnels of its intent to terminate theAgreement, in which case the Agreement shall terminate six months from thedate of the notification.

3. If the Agreement is terminated by either Party, the Parties may agreeupon the full implementation of existing contracts and projects and willsettle any outstanding costs by mutual agreement. If this Agreement isterminated or expires, the Parties agree that all sensitive informationand intellectualproperty obtained or created in the course of implementation of theAgreement shall continue to be treated in conformance with Article 5 ofthis Agreement, unless other arrangements are made by written agreement ofthe Parties.

DONE AT VIENNA this 22nd day of September, 1998 in two copies each, in theEnglish and in Russian languages, each text being equally authentic.

FOR THE GOVERNMENT OF THE UNITED STATES:

FOR THE GOVERNMENT OF THE RUSSIAN FEDERATION: