462

1NEW TERMS OF PAYMENT

HUDSON PARTNERS LTD.

Clayfield, Burney GG10 TQ

New Terms of Payment –

Amendment to Contract DFT/4

Further to our telephone conversation of June 8, we would like to confirm that the new terms of payment, immediately applicable, are as follows:

1. For urgent airfreight orders

Shipping and duties shall be by Airfreight Collect.

The cost of the goods shall be settled by IMO against shipping documents.

2. For container shipments, sea freight:

Payment shall be by bank transfer within 30 days of receipt of the commercial invoice. A discount of 2% shall apply automatically if payment is effected within the stipulated 30 days and a Credit Note will be issued.

We will issue the corresponding amendment to our Contract and will forward it to you for signature.

Yours sincerely,

Lola Brown

Lola Brown

Commercial Manager

463

LEAD-IN 2

BILLS OF EXCHANGE and Promissory Notes

These are particularly suitable as a means of executing and securing payments as well as financing in foreign trade. A drawn bill of exchange is an unconditional order in writing in the form of a document (negotiable instrument) addressed by the drawer of the bill to the drawee, requiring a certain sum of money on a fixed date at a specified place either to the drawer or to a third party.

The bill is drawn by the creditor on the debtor, who is to pay or accept it. A bill of exchange must be met before or on the due date, i.e. honoured at maturity. A dishonoured bill is one that is not paid on the due date. In this case the drawer will protest the bill and prosecute the drawee, i.e. take legal actions to recover the debt.

The deposition of a bill by a drawee with a bank for payment when due is called domiciliation.

Bills can be negotiable if the drawer endorses the bill.

An advantage for the exporter of payment by bill is that the draft can be discounted, i.e. sold to a bank at a percentage less than its value, thus releasing the money for the exporter immediately. The advantage for the importer is that he is given a credit, provided the bill is not a sight draft.

- 2 -

If the documents are to be surrendered only against payment – payment at sight, the documentary bill is known as a D/P bill or a sight bill/draft. If the instructions are to release the documents against acceptance of the bill – payment at some days after sight, the documentary bill is called a D/A bill. A sight bill (or draft) is paid immediately, «after sight» or «after date» bill is paid within the number of days.

A promissory note (IOU – I owe you) is a promise made by the drawer to pay a certain sum of money to or to the order of the payee of the bill on a specified date. The legal difference between the IOU and the bill of exchange (or draft) is that the former does not refer to a drawee, and that it contains an unconditional promise to pay rather than a requirement to pay.

464

465

2.1 BILL OF EXCHANGE

B/E No. 567-002

Moscow, March 15th, 20__

For USD 12,375.00

On June 15th, 20__ pay against this Bill of Exchange to the order of Bank for Foreign Economic Affairs of Russia, Moscow, the sum of US Dollars twelve thousand three hundred and seventy five 00/100 only.

Drawn under L/C No. 03/567 dt. March 11th 20__

2.2 THE SELLER ADVISES THE BUYER OF THE DESPATCH OF A BILL

ZAO MIRANDA

Russia, Moscow, Vavilov st., 29

March 18, 20__

Cyprus Inc.

Mission Hills

Glendale CA 91346

USA

Dear Sirs,

Thank you for your order, which has now been completed and shipped to you.

In accordance with the terms of payment we have drawn on you at 90 days after sight for the amount of the enclosed invoice. The bill is accompanied by the documents and forwarded to your bank. The documents will be released against acceptance.

Yours faithfully,

T.Raspletina

Tatiana Raspletina

Accounting Department

466