Exhibit 4.6


 




Execution copy


 


 





 


 


CALL OPTION AGREEMENT


 


BY AND BETWEEN


 


OAO UKRTELECOM


 


AS “SELLER”


 


AND


 


CETEL B.V.


 


AS “PURCHASER”


 


 


DATED AS OF NOVEMBER 5, 2002




 


 





 

















 


TABLE OF CONTENTS


 


	
  Article I. Definitions.

  
	
   

  
	
  Section
  1.1

  	
  Defined Terms

  
	
   

  
	
  Article II. Purchaser Call Option

  
	
   

  
	
  Section 2.1

  	
  Call Option

  
	
  Section
  2.2

  	
  Call
  Purchase Price

  
	
  Section
  2.3

  	
  Exercise
  of Call Option

  
	
   

  	
   

  
	
  Article III. Consequences of Exercise of
  an Option

  
	
   

  
	
  Section 3.1

  	
  Sale of Participation
  Interest

  
	
  Section
  3.2

  	
  Beneficial
  Interest

  
	
   

  	
   

  
	
  Article IV. Pre-Closing Covenants

  
	
   

  
	
  Section
  4.1

  	
  Transfer
  Restrictions

  
	
  Section 4.2

  	
  Participants
  Meeting; Amendments to Foundation Documents

  
	
  Section
  4.3

  	
  Notices
  and Consents

  
	
  Section
  4.4

  	
  Notice
  of Developments

  
	
  Section
  4.5

  	
  Exclusivity

  
	
  Section
  4.6

  	
  Governmental
  Approval

  
	
  Section 4.7

  	
  Waiver of Pre-Emptive
  Rights

  
	
  Section
  4.8

  	
  Participants’
  Meeting

  
	
  Section
  4.9

  	
  Escrow
  Agreement

  
	
   

  
	
  Article V. Warranties of the Seller

  
	
   

  
	
  Section
  5.1

  	
  Organization of the Seller

  
	
  Section 5.2

  	
  Authorization of
  Transaction

  
	
  Section
  5.3

  	
  Noncontravention

  
	
  Section
  5.4

  	
  Brokers’ Fees

  
	
  Section 5.5

  	
  Ownership of
  Participation Interest

  
	
  Section
  5.6

  	
  Transfer Taxes

  
	
  Section
  5.7

  	
  No
  Sovereign Immunity

  
	
   

  
	
  Article VI. Warranties of the Purchaser

  
	
   

  
	
  Section 6.1

  	
  Organization of the
  Purchaser

  
	
  Section 6.2

  	
  Authorization
  of Transaction

  
	
  Section
  6.3

  	
  Noncontravention

  
	
  Section
  6.4

  	
  Brokers’ Fees

  
	
   

  
	
  Article VII. Warranties Concerning the
  Company

  
	
   

  
	
  Section 7.1

  	
  Organization,
  Qualification, and Corporate Power

  
	
  Section
  7.2

  	
  Capitalization

  



 


i

















 


	
  Section
  7.3

  	
  Noncontravention

  	 

	
  Section 7.4

  	
  Licenses,
  Permits, and Authorizations

  	 

	
  Section
  7.5

  	
  Directors
  and Officers

  	 

	
  Section
  7.6

  	
  Brokers’ Fees

  	 

	
  Section
  7.7

  	
  Title to Assets

  	 

	
  Section
  7.8

  	
  No Subsidiaries

  	 

	
  Section
  7.9

  	
  Financial
  Statements

  	 

	
  Section
  7.10

  	
  Recent Events

  	 

	
  Section
  7.11

  	
  Undisclosed Liabilities

  	 

	
  Section
  7.12

  	
  Legal
  Compliance

  	 

	
  Section
  7.13

  	
  Tax Matters

  	 

	
  Section
  7.14

  	
  Real Property

  	 

	
  Section
  7.15

  	
  Intellectual
  Property

  	 

	
  Section
  7.16

  	
  Company
  Licenses

  	 

	
  Section 7.17

  	
  Networks

  	 

	
  Section
  7.18

  	
  Contracts

  	 

	
  Section
  7.19

  	
  Powers
  of Attorney

  	 

	
  Section
  7.20

  	
  Insurance

  	 

	
  Section
  7.21

  	
  Litigation

  	 

	
  Section
  7.22

  	
  Employees

  	 

	
  Section
  7.23

  	
  Employee
  Benefits

  	 

	
  Section
  7.24

  	
  Guaranties

  	 

	
  Section 7.25

  	
  Environment, Health,
  and Safety

  	 

	
  Section 7.26

  	
  Certain
  Business Relationships with the Company

  	 

	
  Section
  7.27

  	
  Unlawful
  Contributions

  	 

	
  Section
  7.28

  	
  Antitrust

  	 

	
  Section 7.29

  	
  Money
  Laundering and Unlawful Financial Activities

  	 

	
   

  	 

	
  Article
  VIII. Conditions to Obligations

  	 

	
   

  	 

	
  Section 8.1

  	
  Conditions
  to Obligations of the Purchaser

  	 

	
  Section 8.2

  	
  Conditions to
  Obligations of the Seller

  	 

	
  Section
  8.3

  	
  Fulfillment of Conditions

  	 

	
  Section
  8.4

  	
  Postponement
  of Closing

  	 

	
  Section
  8.5

  	
  Termination of Agreement

  	 

	
   

  	
   

  	 

	
  Article IX.
  Closing.

  	 

	
   

  	 

	
  Section
  9.1

  	
  Basic
  Transaction

  	 

	
  Section
  9.2

  	
  Purchase Price

  	 

	
  Section 9.3

  	
  The Closing

  	 

	
  Section 9.4

  	
  Transfer of the
  Participant’s Interest

  	 

	
  Section
  9.5

  	
  Deliveries at the Closing

  	 

	
   

  	 

	
  Article X.
  Post-Closing Covenants

  
	
   

  
	
  Section 10.1

  	
  General

  
	
  Section
  10.2

  	
  Litigation
  Support

  
	
  Section
  10.3

  	
  Transition

  
	
  Section
  10.4

  	
  Confidentiality

  
	
  Section
  10.5

  	
  Covenant
  Not to Compete

  



 


ii

















 


	
  Article XI. Remedies for Breaches of This
  Agreement

  
	
   

  
	
  Section
  11.1

  	
  Survival
  of Warranties

  
	
  Section 11.2

  	
  Indemnification
  Provisions for Benefit of the Purchaser

  
	
  Section
  11.3

  	
  Indemnification
  Provisions for Benefit of the Seller

  
	
  Section 11.4

  	
  Matters Involving
  Third Parties

  
	
  Section 11.5

  	
  Determination of
  Adverse Consequences

  
	
  Section
  11.6

  	
  Exclusive
  Remedies

  
	
  Section
  11.7

  	
  Miscellaneous

  
	
   

  	
   

  
	
  Article XII. Miscellaneous

  
	
   

  
	
  Section
  12.1

  	
  Further
  Assurances

  
	
  Section 12.2

  	
  Press Releases
  and Public Announcements

  
	
  Section
  12.3

  	
  Entire
  Agreement

  
	
  Section 12.4

  	
  Succession and Assignment

  
	
  Section
  12.5

  	
  Counterparts

  
	
  Section 12.6

  	
  Headings

  
	
  Section 12.7

  	
  Notices

  
	
  Section
  12.8

  	
  Dispute
  Resolution

  
	
  Section
  12.9

  	
  Governing Law

  
	
  Section
  12.10

  	
  Judgment
  Currency

  
	
  Section 12.11

  	
  Third Party Beneficiaries

  
	
  Section
  12.12

  	
  Amendments
  and Waivers

  
	
  Section
  12.13

  	
  Severability

  
	
  Section
  12.14

  	
  Expenses

  
	
  Section
  12.15

  	
  Construction

  
	
  Section 12.16

  	
  Denomination of
  Monetary References

  
	
  Section
  12.17

  	
  Payment of Taxes

  
	
  Section 12.18

  	
  Incorporation
  of Exhibits, Annexes and Schedules

  
	
  Section
  12.19

  	
  Specific
  Performance

  
	
  Section
  12.20

  	
  Waiver
  of Immunity

  



 


iii

















 


EXHIBIT INDEX


 


	
  Exhibit A

  	
  –

  	
  Form of Escrow Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit B-1

  	
  –

  	
  Form of Interim Founding Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit B-2

  	
  –

  	
  Form of Interim Charter

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
  –

  	
  Form of Agenda for Closing Participants’ Meeting

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
  –

  	
  Financial Statements

  
	
   

  	
   

  	
   

  
	
  Exhibit F

  	
  –

  	
  Form of Participants Waiver

  
	
   

  	
   

  	
   

  
	
  Exhibit G

  	
  –

  	
  Form of Seller’s Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit H

  	
  –

  	
  List of Management

  
	
   

  	
   

  	
   

  
	
  Disclosure Schedule

  	
  –

  	
  Exemptions to Warranties Concerning the Company

  



 


iv

















 


CALL OPTION AGREEMENT


 


This
CALL OPTION AGREEMENT,  dated as of
November 5, 2002, (the “Agreement”), is made by and between OAO
Ukrtelecom, a joint stock company organized under the laws of Ukraine (the “Seller”),
and Cetel B.V., a limited liability company established and acting under the
laws of the Netherlands (the “Purchaser”).  The Seller and the Purchaser are referred to collectively herein
as the “Parties.”


 


RECITALS


 


WHEREAS,
the Seller is currently holding a participation interest of 51.0% of the
registered charter capital of the Ukrainian-German-Dutch-Danish Joint Venture
“Ukrainian Mobile Communications in Ukraine” (the “Company”), a company
organized under the laws of Ukraine in the form of a limited liability company,
with its registered address at 21, Moskovska Street, Kyiv, Ukraine,
identification code #14333937 according to the Uniform State Register of
Enterprises and Organizations of Ukraine, whose business includes, without
limitation, the establishment and operation of public cellular communications
networks in Ukraine, as well as provision of interregional and international
communications services (the “Business”);


 


WHEREAS,
the other participants of the Company and their respective participation
interests therein are as follows: the Seller (51%), the Purchaser (16.33%), TDC
Mobile International A/S (16.33%), KPN Telecom B.V. (15.33%), and PTT Telecom
Kyiv (1.0%);


 


WHEREAS,
concurrently with the entering into of this Agreement, the Purchaser will enter
into a participation interest purchase agreement with the Seller for the
purchase of a 25% participation interest in the Company (the “Ukrtelecom
Purchase Agreement”) (the “Concurrent Purchase Agreement”);


 


WHEREAS,
concurrently with the entering into of this Agreement and the Concurrent
Purchase Agreement, (i) the Company and PTT Telecom Kyiv will enter into an
amendment to the Credit Facility Agreement No. CO1-97/UA, dated January 5,
1997; (ii) the Company and PTT Telecom Kyiv will enter into an amendment to the
Equipment and Service Credit Facility Agreement No. W01-95/UA, dated November
1, 1995; (iii) the Company and Deutsche Telekom AG will enter into an amendment
to the Credit Facility Agreement No. C02-97/UA, dated January 5, 1997; (iv) the
Company and Deutsche Telekom AG will enter into an amendment to the Equipment
and Service Credit Facility Agreement No. W02-95/UA, dated November 1, 1995;
(v) the Company and TDC Mobile International A/S will enter into an amendment
to the Credit Facility Agreement No. C03-97/UA, dated January 5, 1997; and (vi)
the Company and TDC Mobile A/S will enter into an amendment to the Equipment
and Service Credit Facility Agreement No. W03-95/UA, dated November 1, 1995
(collectively, the “Debt Restructuring Agreements”), each such amendment
to become effective as of the Control Acquisition Date; and


 


WHEREAS,
in connection with the transactions set forth above, the Purchaser and the
Seller desire to set forth certain understandings, terms and conditions among
the Parties relating to “call” rights with respect to the Participation
Interest as set forth herein.


 


1

















 


AGREEMENT


 


NOW
THEREFORE, in consideration of the foregoing and the respective agreements and
obligations of the Parties contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties, intending to be legally bound, hereby agree as follows:


 


ARTICLE I.

DEFINITIONS.


 


Section 1.1                               Defined Terms.  As used herein, the terms set forth below
shall have the following meanings.  Any
of such terms, unless the context otherwise requires, may be used in the
singular or plural, depending on the reference.


 


“Acquisition”
means the acquisition by the Purchaser of the Participation Interest from the
Seller as contemplated herein.


 


“Adverse
Consequences” means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, penalties, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys’ fees and expenses.


 


“Affiliate”
means any Person that, directly, or indirectly through one or more
intermediaries, Controls, or is Controlled by or is under common Control with,
the Person specified.


 


“Agreement”
has the meaning given in the Preamble.


 


“Applicable
Rate” means three (3) months US$ LIBOR.


 


“Basis”
means any past or present fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction that forms or could form the basis for any specified
consequence.


 


“Buildings”
has the meaning given in Section 7.14(i).


 


“Business”
has the meaning given in the Recitals.


 


“Business
Day” means any day other than a Saturday or Sunday on which banks in
Moscow, Russia, London, New York and Kyiv, Ukraine, are open for business and
are neither required nor authorized to close.


 


“Call
Exercise Period” means the period from the date hereof and extending to the
date two (2) years after the date hereof.


 


“Call
Notice” means an irrevocable notice delivered by the Purchaser to the
Seller pursuant to the provisions of Section 2.3, which shall set forth as a
minimum (i) the reference to this Agreement and request for sale by the Seller
to the Purchaser of the Participation Interest; (ii) an estimate of the amount
of the Call Purchase Price (including details of computation) calculated in
accordance with the provisions of Schedule A; and


 


2

















 


(iii)
the Closing Date, which shall take place no earlier than thirty (30) days and
no later than forty-five (45) days from the service of a Call Notice.


 


“Call
Option” has the meaning given in Section 2.1.


 


“Call
Purchase Price” has the meaning given in Section 2.2.


 


“Charter”
means the Charter of the Company, as it may be amended from time to time and
which is incorporated in the Founding Agreement and constitutes an integral
part thereof.


 


“Closing”
has the meaning given in Section 9.3.


 


“Closing
Date” means the date set forth in the Call Notice.


 


“Closing
Organizational Documents” has the meaning given in Section 9.4(iii).


 


“Closing
Participants’ Meeting” has the meaning given in Section 9.4(iii).


 


“Company”
has the meaning given in the Recitals.


 


“Company
Appointee” has the meaning given in Section 9.4(iii).


 


“Company
Licenses” has the meaning given in Section 7.16(i).


 


“Concurrent
Purchase Agreements” has the meaning given in the Recitals.


 


“Confidential
Information” means (i) any information regarding the transactions
contemplated by the Transaction Documents or (ii) with regard to the relevant
Party, any information concerning the business and affairs of the relevant
Party, in each case, that is not already generally available to the public.


 


“Control”
means the power to direct the management or policies of an entity, directly or
indirectly, whether through the ownership of securities, by contract or
otherwise (which power shall be deemed to be held by a Person with the direct
or indirect ownership of twenty-five percent (25%) or more of the share capital
or other ownership interest of an entity), and “Controlling” and “Controlled”
have the corresponding meanings.


 


“Control
Acquisition Date” means such date as the Purchaser, directly or indirectly,
personally or through its Affiliates, shall be the registered legal owner of an
aggregate of at least a 50.01% participation interest in the Company.


 


“Debt
Restructuring Agreements” has the meaning given in the Recitals.


 


“Disclosure
Schedule” has the meaning given in the introductory paragraph of Article
VII.


 


“Employee
Benefit Plan” means any deferred compensation or retirement plan or
arrangement or any employee welfare benefit plan or benefit plan or program.


 


3

















 


“Environmental,
Health, and Safety Laws” means all laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of national, supranational, federal, state, local, and foreign
governments (and all agencies thereof) concerning pollution or protection of
the environment, public health and safety, or employee health and safety, including
laws relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.


 


“Equipment”
means all of the operating fixtures and equipment of the Company, including,
without limitation, any hardware or software component, base stations, base
station controllers, mobile switching centers, radio and fiber optic
transmission equipment,  antennas, prepaid
system, voicemail and short message service, and support equipment for:
activation and network management and network activation, monitoring, security,
performance management and billing equipment.


 


“Escrow
Agent” means the Person jointly selected by the Seller and the Purchaser
who is or will be a party to the Escrow Agreement and will serve such function
and perform such services as provided therein.


 


“Escrow
Account” means the account with the Escrow Agent into which the Purchaser
shall deposit the Purchase Price upon the Closing in accordance with the terms
of this Agreement and the Escrow Agreement.


 


“Escrow
Agreement” has the meaning given in Section 4.9.


 


“Essential
Equipment” has the meaning given in Section 7.17(i).


 


“Financial
Statements” has the meaning given in Section 7.9.


 


“Foundation
Documents” means, collectively, the Founding Agreement and the Charter of
the Company.


 


“Founding
Agreement” means the Founding Agreement of the Company, as it may be
amended from time to time.


 


“Group”
means the Company and any of its subsidiaries from time to time.


 


“Group
Company” means any of the Company and/or any of its subsidiaries.


 


“Handsets”
means the terminals sold or otherwise provided by the Company to subscribers
for using the Services.


 


“IFRS”
means International Financial Reporting Standards and includes and incorporates
the International Accounting Standards where appropriate, consistently applied
throughout the periods indicated.


 


“Indemnified
Party” has the meaning given in Section 11.4(i).


 


“Indemnifying
Party” has the meaning given in Section 11.4(i).


 


4

















 


“Intellectual
Property” means (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names,
and corporate names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith, and
all applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).


 


“Interim
Charter” has the meaning given in Section 4.2(i).


 


“Interim
Organizational Documents” means, collectively, the Interim Charter and the
Interim Founding Agreement.


 


“Interim
Founding Agreement” has the meaning given in Section 4.2(i).


 


“Knowledge”
means actual knowledge after reasonable investigation and due inquiry.  For the purposes of this definition, “due
inquiry” shall mean inquiry of the persons set out in Exhibit H.


 


“Leased
Real Property” has the meaning given in Section 7.14(ii).


 


“Liability”
means any liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), including any
liability for Taxes.


 


“Licensed
IP Rights” has the meaning given in Section 7.15(i).


 


“Licenses”
means each Company License and (a) any concession, license, permit or franchise
for the provision of, or acquisition, construction, ownership, operation or
other use of facilities relating to, (i) public mobile telecommunications
services or (ii) the interconnection of public mobile telecommunications
services facilities with other telecommunications facilities by microwave
frequencies, fiber optic cable or other means and (b) any material consent,
certificate of compliance, approval or authorization with respect to any such
concession, license, permit or franchise that, in the case of either clause (a)
or (b) above, has been granted or issued by the Ministry of Telecommunications
of Ukraine, the State Committee of Ukraine on Telecommunications and
Information or any other governmental entity.


 


“Most
Recent Balance Sheet” means the balance sheet contained within the Most
Recent Financial Statements.


 


5

















 


“Most
Recent Financial Statements” has the meaning given in Section 7.9.


 


“Most
Recent Fiscal Month End” has the meaning given in Section 7.9.


 


“Most
Recent Fiscal Year End” has the meaning given in Section 7.9.


 


“Network”
means the Sites, Equipment and Software and, to the extent used in the
provision of the Services, the Owned Real Property and Leased Real Property
together with all interconnections between such components or any such
components and any other telecommunications system (whether by microwave
frequencies, fiber optic cable or other means, but excluding such as used
solely for the Company’s NMT 450i standard network) and any other
interconnection with other public telecom networks, to the extent such
interconnections have been configured, installed and operated by the Company.


 


“Obligation
Currency” has the meaning given in Section 12.10.


 


“Ordinary
Course of Business” means on arm’s length terms in the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).


 


“Owned
IP Rights” has the meaning given in Section 7.15(i).


 


“Owned
Real Property” has the meaning given in Section 7.14(i).


 


“Participation
Interest” means the 26.0% participation interest of the registered charter
capital of the Company held by the Seller together with all rights and obligations
relating thereto.


 


“Participant’s
Waiver” has the meaning given in Section 4.3.


 


“Parties”
has the meaning given in the Preamble.


 


“Person”
means an individual, a partnership, a joint venture, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).


 


“Purchase
Price” has the meaning given in Section 9.2.


 


“Purchaser”
has the meaning given in the Preamble.


 


“Rules”
has the meaning given in Section 12.8.


 


“Security
Interest” means any mortgage, pledge, lien, encumbrance, claim, charge, or
other security interest, other than (a) mechanic’s, materialmen’s, and similar
liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.


 


“Seller”
has the meaning given in the Preamble.


 


6

















 


“Seller’s
Nominee” has the meaning given in Section 9.4(iii).


 


“Services”
has the meaning given in Section 7.17(i).


 


“Sites”
means the places where the Equipment is located, and related structures owned,
leased or used by the Company at that location including, civil infrastructure,
towers, masts, shelters, electrical power, heating and air conditioning.


 


“Software”
means the computer programs and applications utilized by the Company for the
provision of Services including, without limitation, in connection with the
operation of the Network.


 


“State
Registration” has the meaning given in Section 9.4(iii).


 


“Tax”
means any national, supranational, federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.


 


“Tax
Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.


 


“Third
Party Claim” has the meaning given in Section 11.4(i).


 


“Transaction
Documents” mean, collectively, this Agreement, the Escrow Agreement, the
Concurrent Purchase Agreement and any and all other documents, agreements,
instruments, certificates, consents, waivers entered into or issued or to be
entered into or issued by the Company or any of its participants in relation
thereto.


 


“UAC”
means the Ukrainian Antimonopoly Committee or any successor governmental entity
thereto.


 


“Ukrainian
Law” means any officially issued and publicly disseminated statute, law,
ordinance, rule, code, administrative interpretation, regulation, order, writ,
injunction, directive, judgment, ruling or decree issued by any Ukrainian governmental
authority.


 


“Ukrtelecom
Purchase Agreement” has the meaning given in the Recitals.


 


ARTICLE II.

PURCHASER CALL OPTION.


 


Section 2.1                                   Call Option.  In
consideration of the payment of $1.00 paid by the Purchaser to the Seller, the
receipt of which is hereby acknowledged, the Purchaser shall have the right
(the “Call Option”) during the Call Exercise Period to purchase (or
cause any of its Affiliates to purchase) all (but not less than all) of the
Participation Interest then beneficially owned by the Seller by serving a Call
Notice on the Seller in the manner specified in Section 2.3.


 


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Section 2.2                                   Call Purchase Price.  The
purchase price for the Participation Interest upon exercise of the Call Option
shall be USD 87,568,891.60 (the “Call Purchase Price”).  The Call Purchase Price shall be payable in
the manner and at such time as set forth in Article IX hereof.


 


Section 2.3                                   Exercise of Call Option.  The Purchaser may exercise
the Call Option by serving the Call Notice on the Seller at any time during the
Call Exercise Period at the address and in a manner provided in Section
12.7.  The Call Notice shall constitute
an irrevocable election by the Purchaser to exercise the Call Option.


 


ARTICLE III.

CONSEQUENCES OF EXERCISE OF AN OPTION.


 


Section 3.1                                   Sale of Participation Interest.  Upon
exercise of the Call Option the Parties hereto, subject to prior satisfaction
or waiver of the conditions set forth in Article VIII, shall each be bound to
complete the sale and purchase of the Participation Interest in accordance with
the terms and conditions of this Agreement. 
In such event, the Seller shall be obligated to sell and transfer to the
Purchaser full legal and beneficial title to the Participation Interest free
from all options (except options created by this Agreement), liens, claims,
charges, encumbrances and other third party rights of any nature whatsoever and
together with all accrued benefits and rights attaching thereto under Ukrainian
Law, including, without limitation, the right to receive any undistributed
profits attributable to the Participation Interest after the Closing; and the
Purchaser shall be obligated to (i) purchase and accept the Participation
Interest and (ii) pay to the Seller the Purchase Price.


 


Section 3.2                                   Beneficial Interest. 
Subject to the official recording of the Purchaser’s ownership of the
Participation Interest in accordance with the provisions hereof, all benefits
and rights attached to the Participation Interest shall accrue to the Purchaser
as from the date of the Closing and thereafter the Seller shall account
forthwith to the Purchaser for all dividends paid or other distributions made
in respect of the Participation Interest.


 


ARTICLE IV.

PRE-CLOSING COVENANTS.


 


Section 4.1                                   Transfer Restrictions.  The
Seller hereby agrees that, without the prior written consent of the Purchaser,
the Seller will not, directly or indirectly, during the Call Exercise Period,
(i) offer, sell, agree to offer or sell, solicit offers to purchase, grant any
call option or purchase any put option with respect to, pledge, borrow or
otherwise dispose of, or grant any rights in, the Participation Interest, or
(ii) establish or increase a “put equivalent position” or liquidate or decrease
a “call equivalent position” with respect to the Participation Interest, or
otherwise enter into any swap, derivative or other transaction or arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Participation Interest, whether or not such
transaction is to be settled by delivery of Participation Interest, other
securities, cash or other consideration. 
The Seller hereby authorizes the Company during the Call Exercise Period
to decline to transfer and/or register any change of ownership to the
Participation Interest.


 


Section 4.2                                   Participants Meeting; Amendments to
Foundation Documents.  The Seller will use its
reasonable endeavors:


 


8

















 


(i)                                     as soon as practicable following the date
hereof, to cause a participants meeting of the Company to be convened for the
purpose of approving an amended Founding Agreement of the Company substantially
in the form of Exhibit B-1 attached hereto (the “Interim Founding Agreement”)
and an amended Charter of the Company substantially in the form of Exhibit B-2
attached hereto (the “Interim Charter”); and


 


(ii)                                  following the approval of the Interim
Organizational Documents by a meeting of the participants of the Company, to
cause the registration of the Interim Organizational Documents as may be
necessary or desirable under Ukrainian Law.


 


The
Seller and, as the case may be, the Purchaser (and any Controlled Affiliate of
the Purchaser) shall vote in favor of the approval of each of the Interim
Founding Agreement, the Interim Charter, and the Closing Organizational
Documents.


 


Section 4.3                                   Notices and Consents.  The
Seller will use reasonable endeavors to cause the Company to give any notices
to third parties, and will use reasonable endeavors to cause the Company to use
reasonable endeavors to obtain any third party consents, that the Purchaser may
reasonably request in relation hereto. Each of the Parties will (and the Seller
will use reasonable endeavors to cause the Company to) give any notices to,
make any filings with, and use reasonable endeavors to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to herein.  Without limiting the generality of this
Section 4.3, the Seller and the Purchaser shall use all reasonable endeavors to
cause the participants of the Company from time to time to provide, as soon as
practicable and to the extent permissible under Ukrainian Law (i) in the
Founding Agreement and/or the Charter of the Company for the unrestricted right
of the Seller to sell and transfer the Participation Interest to the Purchaser
and/or (ii) for the irrevocable and binding waiver by each respective
participant of the Company of all pre-emptive rights, rights of first refusal
or similar rights with respect to the transfer of the Participation Interest by
the Seller to the Purchaser (each such waiver, a “Participant’s Waiver”
and, collectively, the “Participants’ Waivers”) as contemplated herein
in the form of the waivers set forth in Exhibit F.


 


Section 4.4                                   Notice of Developments.  From
the date hereof through the Control Acquisition Date, the Seller shall give
prompt written notice to the Purchaser and the Purchaser shall give prompt
written notice to the Seller of (i) the occurrence, or failure to occur, of any
event which occurrence or failure would be likely to cause any warranty
contained in this Agreement or in any exhibit or schedule hereto to be or
become untrue or inaccurate, or the discovery that any warranty contained in
this Agreement or in any exhibit or schedule was untrue at the time it was
made, (ii) any failure by either the Seller or the Purchaser to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement or any exhibit or schedule hereto, (iii) the
occurrence or non-occurrence of any event which will or may result in the
failure of any condition, covenant or agreement to be complied with or
satisfied by it under this Agreement, and (iv) any notice or communication from
any Person alleging that the consent of such Person is or may be required in
connection with the Acquisition contemplated by this Agreement or that such
Acquisition otherwise may violate the rights of, or confer remedies upon, such
Person.


 


9

















 


Section 4.5                                   Exclusivity. 
Without the prior written consent of the Purchaser, neither the Seller
nor its Affiliates will (and the Seller will not cause or permit any of its
representatives to, and will use its reasonable endeavors to not cause or
permit the Company to), directly or indirectly, (i) solicit, initiate, or
encourage the submission of any inquiry, proposal or offer from any Person
relating to the acquisition of any charter capital or other voting securities
of, or any substantial portion of the assets of, the Company (including any
acquisition structured as a merger, consolidation, or share exchange), or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person to do or seek any of the
foregoing.  The Seller will notify the
Purchaser immediately if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing. 
The Seller agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement relating to the
Company to which the Seller is a party.


 


Section 4.6                                   Governmental Approval.


 


(i)                                     Each of the Parties shall, to the extent
required of it under Ukrainian Law, as soon as practicable following the
execution of this Agreement and in a timely manner, make all necessary steps
and comply with all relevant procedures, or shall procure that all such steps
and procedures are timely made and complied with, in order to obtain (and on or
before the Closing Date the Purchaser shall deliver to the Seller certified
copies of) all permits, consents, approvals and authorizations of all relevant
governmental authorities of Ukraine, including without limitation the approval
of the UAC, which may be required under applicable Ukrainian Law for the
Purchaser to acquire the Participation Interest as contemplated herein and the
participation interests under the Concurrent Purchase Agreements.  Any such application for the approval of the
UAC for the acquisition of the Participation Interest under this Agreement and
the participation interests under the Concurrent Purchase Agreements, if
practicable, shall be made at the same time and, to the extent permitted under
Ukrainian Law, in the same application.


 


(ii)                                  To the extent necessary, the Seller will
support the Purchaser in connection with the preparation of the application for
the necessary approval by the UAC or any other relevant governmental authority
of the transactions contemplated by the Transaction Documents and in the course
of the entire clearance procedure.  In
the event that an order prohibiting such transactions is issued by the UAC or
such other relevant governmental authority, the Parties shall jointly use their
commercially reasonable endeavors to remove the reasons for such order.  In case the Purchaser decides to appeal
against such order, the Seller shall support the Purchaser with regard to the
preparation of such appeal and in the course of the respective proceedings.


 


Section 4.7                                   Waiver of Pre-Emptive Rights.  The
Seller shall waive any right of first refusal for the purchase of, or any
pre-emptive rights with respect to (i) the sale and transfer of any
participatory interest in the Company as contemplated by the Transaction
Documents, and (ii) the sale and transfer by any other Company participant of
any portion of such other participant’s participatory interest in the Company,
each substantially in the form of Exhibit F hereto, as deemed necessary by the
Purchaser in its sole and absolute discretion.


 


10

















 


Section 4.8                                   Participants’ Meeting. 
Immediately upon the service of a Call Notice, the Parties shall take
all steps reasonably necessary to convene the Closing Participants’ Meeting as
provided for herein.


 


Section 4.9                                   Escrow Agreement.  The
Seller and the Purchaser shall enter into an escrow agreement, substantially in
the form of Exhibit A attached hereto (the “Escrow Agreement”) within
ten (10) Business Days of the service of a Call Notice.


 


ARTICLE V.

WARRANTIES OF THE SELLER.


 


The
Seller warrants (but does not represent) to the Purchaser that the statements
contained in this Article V are true and accurate and not misleading as of the
date of this Agreement and will be true and accurate and not misleading as of
the date of the exercise of the Call Option (and to that end shall be deemed
repeated again at such date, as though the date of the exercise of the Call
Option, were substituted for the date of this Agreement throughout this Article
V).


 


Section 5.1                                   Organization of the Seller.  The
Seller is a company duly incorporated and validly existing under Ukrainian Law.
It has neither been declared bankrupt nor been granted a moratorium of
payments, nor is the Seller in a state or condition in which it is compelled by
statutory law to apply for compulsory liquidation or for composition
proceedings because of being over-indebted or insolvent. Furthermore, there are
neither any reasons for such measures nor has the Seller initiated any of the
respective procedures.


 


Section 5.2                                   Authorization
of Transaction.  The Seller has the right,
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the legally valid and binding
obligations of the Seller, enforceable in accordance with its terms and
conditions. The Seller need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement other than those notices, filings, authorizations, consents or
approvals which the Seller has already validly made or received and which are
in full force and effect.


 


Section 5.3                                   Noncontravention. 
Neither the execution and the delivery of this Agreement, nor the
consummation of the Acquisition as contemplated hereby, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
the Seller is subject or any provision of its charter, bylaws or any other
organizational or constituent document, or (ii) conflict with, result in a
breach of, or constitute a default under any agreement, contract, lease,
license, instrument, or any other arrangement to which the Seller is a party or
by which it is bound or to which any of its assets is subject that would have a
negative effect on the consummation of the Acquisition.


 


Section 5.4                                   Brokers’ Fees.  The
Seller has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which any of the Purchaser or the Company could become liable or
obligated.


 


11

















 


Section 5.5                                   Ownership of Participation Interest.  The
Seller is the registered legal owner of the Participation Interest beneficially
entitled to effect or procure the sale and transfer of such Participation
Interest, and such Participation Interest will be fully paid in and free from
all options, Taxes, Security Interests, mortgages, pledges, liens,
encumbrances, charges, restrictions on transfer, contracts, commitments,
demands and other third party rights of any nature whatsoever (other than those
expressly provided for in this Agreement, the Charter and the Founding
Agreement and/or that may arise by operation of Ukrainian Law).  The Seller is not a party to any option,
warrant, purchase right, or other contract or commitment that could require the
Seller to sell, transfer, or otherwise dispose of any of the Participation
Interest (other than this Agreement). The Seller is not a party to any voting
trust, proxy, or other agreement or understanding with respect to the voting of
the Participation Interest (other than this Agreement).


 


Section 5.6                                   Transfer Taxes. 
Except as may be applicable to the Purchaser in accordance with the laws
of its jurisdiction of incorporation, no capital, transfer, stamp duty, stamp
duty reserve or documentary, issuance or transfer taxes or duties are payable
by or on behalf of the Purchaser or the Company on (i) the sale, transfer or
delivery by the Seller of the Participation Interest pursuant hereto or the
sale thereof, (ii) the execution and delivery of this Agreement, or (iii) the
consummation of the transactions contemplated by this Agreement to which the
Seller is a party.


 


Section 5.7                                   No Sovereign Immunity.  The
Seller is not and hereafter will not be entitled to claim or acquire, for
itself or any of its assets, any immunity from suit, jurisdiction of any court
or tribunal or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid or execution, or otherwise)
with respect to itself or its property.


 


ARTICLE VI.

WARRANTIES OF THE PURCHASER.


 


The
Purchaser warrants to the Seller that the statements contained in this Article
VI are true and accurate and not misleading as of the date of this Agreement
and will be true and accurate and not misleading as of the date of the exercise
of the Call Option (and to that end shall be deemed repeated again at such date,
as though the date of the exercise of the Call Option were substituted for the
date of this Agreement throughout this Article VI).


 


Section 6.1                                   Organization
of the Purchaser.  The
Purchaser is a limited liability company established and acting under the laws
of the Netherlands.  It has neither been
declared bankrupt nor been granted a moratorium of payments, nor is the
Purchaser in a state or condition in which it is compelled by statutory law to
apply for compulsory liquidation or for composition proceedings because of
being over-indebted or insolvent. Furthermore, there are neither any reasons
for such measures nor has the Purchaser initiated any of the respective
procedures.


 


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Section 6.2                                   Authorization of Transaction. 
Except for any shareholder approvals required in connection herewith,
the Purchaser has the right, power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the legally valid and binding obligations of the Purchaser, enforceable in
accordance with its terms and conditions. As of the Closing Date only, the
Purchaser need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement.


 


Section 6.3                                   Noncontravention. 
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Purchaser is subject or any provision of its charter, bylaws
or other organizational or constituent documents or (ii) conflict with, result
in a breach of, or constitute a default under any agreement, contract, lease,
license, instrument, or any other arrangement to which the Purchaser is a party
or by which it is bound or to which any of its assets is subject that would
have a negative effect on the consummation of the Agreement.


 


Section 6.4                                   Brokers’ Fees.  The
Purchaser has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Seller could become liable or obligated.


 


ARTICLE VII.

WARRANTIES CONCERNING THE COMPANY.


 


The
Seller warrants to the Purchaser that the statements contained in this Article
VII are true and accurate and not misleading as of the date of this Agreement
and will be true and accurate and not misleading as of the Control Acquisition
Date (and to that end shall be deemed repeated again at such date, as though
the Control Acquisition Date were substituted for the date of this Agreement
throughout this Article VII), except (i) in case the Control Acquisition Date
has not occurred until 180 days after the date of this Agreement, the
statements contained in Section 7.4 through Section 7.29 will only be true and
accurate and not misleading as of the 180th day after the date of
this Agreement (and to that end shall be deemed repeated again on the 180th
day, as though the such 180th day was substituted for the date of
this Agreement throughout this Article VII), (ii) as fairly disclosed and set
forth in the disclosure schedule delivered by the Seller to the Purchaser on
the date hereof and initialed by the Parties (the “Disclosure Schedule”),
and (iii) to the extent such warranty shall be true as of a specific date, in
which case such warranty shall be true as of such specified date. Nothing in
the Disclosure Schedule relating to this Article VII shall be deemed adequate
to disclose any exception to a warranty made herein unless the Disclosure Schedule
identifies the exception with particularity and describes the relevant facts in
detail. Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate
to disclose an exception to a warranty made herein (unless the warranty relates
specifically to the existence of the document or other item itself). The
Disclosure Schedule will be arranged in numbered schedules corresponding to the
corresponding sections contained in this Article VII.


 


13

















 


Section 7.1                                   Organization,
Qualification, and Corporate Power.  The
Company is a legal entity duly organized and validly existing under Ukrainian
Law. The Company is duly authorized to conduct business under Ukrainian Law.
The Seller has delivered to the Purchaser correct and complete copies of the
Foundation Documents (as amended to date). The Seller has delivered to the
Purchaser complete and correct copies of the minute books (containing the
records of meetings of the participants (also referred to as the “Board” in the
Foundation Documents) and the executive directors or management of the Company
(referred to as the “Management” in the Foundation Documents)). The Company is
not in default under or in violation of any provision of its Foundation
Documents. The Company has full corporate power and authority necessary to
carry on the Businesses and to own and use the properties and assets owned and
used by it.


 


Section 7.2                                   Capitalization.  The entire registered
authorized charter capital of the Company consists of 781,662,169,174 “Units of
Ukrainian Currency,” defined in the Foundation Documents as “one ruble or the
equivalent of any future Ukrainian currency” (currently 7,816,621.69 Ukrainian
hryvnia). The Participation Interest has been validly registered, fully paid,
and is held of record by the Seller, and neither the Company nor any current or
past participant of the Company nor any third party has the right to demand any
further payment or contribution with respect thereto. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights (other than as contained in the Debt Restructuring
Agreements), exchange rights, or other contracts or commitments that could
require the Company to issue, sell, or otherwise cause to become outstanding
any of its charter capital. There are no outstanding profit participation or
similar rights with respect to the Company. There are no voting trusts, proxies,
or other agreements or understandings with respect to the voting of the charter
capital of the Company other than provided for in this Agreement and/or the
Foundation Documents.


 


Section 7.3                                   Noncontravention.  Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Company is
subject or any provision of its Foundation Documents, or (ii) conflict with,
result in a breach of, constitute a default under, result in the early
redemption of, create in any party the right to redeem early, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Company is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets). Except as contemplated in
this Agreement, the Company need not give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the consummation of the transactions
contemplated by this Agreement.


 


Section 7.4                                   Licenses, Permits, and
Authorizations.  The
Company has all material licenses, permits, and authorizations necessary to
carry on the Business and to own and use the material properties and assets
owned and used by it. As used in this Section 7.4, “material properties and
assets” means any property and/or asset that, either individually or together
with a group of related properties and/or assets, as applicable, is material to
the operation of the Business.


 


Section 7.5                                   Directors and Officers.  Schedule 7.5 of the Disclosure
Schedule lists the directors and officers of the Company as of the date of this
Agreement.


 


14

















 


Section 7.6                                   Brokers’ Fees.  The Company has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.


 


Section 7.7                                   Title to Assets.  The Company owns and has the
right to possess, use and alienate the properties and assets used by it, or
shown on the Most Recent Balance Sheet or acquired after the date thereof, free
and clear of all Security Interests, except for (i) properties and assets
disposed of in the Ordinary Course of Business since the date of the Most
Recent Balance Sheet and (ii) properties and assets encumbered with Security
Interests in the Ordinary Course of Business.


 


Section 7.8                                   No Subsidiaries.  The Company has
established branches (in Russian “Filiatsi”) and territorial
divisions (in Russian “Teritorialnie
Upravlenia”)
on the territory of Ukraine, and the Company has no ownership or equity
interest whatsoever in any Person, nor any purchase or other commitments which would result in any
such ownership or equity interest.


 


Section 7.9                                   Financial Statements.  Attached hereto as Exhibit D
are the following financial statements (collectively the “Financial
Statements”): (i) audited balance sheets and statements of income, changes
in shareholders’ equity, and cash flow as of and for the fiscal years ended
December 31, 1999, December 31, 2000, and December 31, 2001 (the “Most
Recent Fiscal Year End”) for the Company; and (ii) unaudited balance sheets
and statements of income, changes in shareholders’ equity, and cash flow (the “Most
Recent Financial Statements”) as of and for the six months ended June 30,
2002 (the “Most Recent Fiscal Month End”) for the Company. Except as set
forth in Schedule 7.9, the Financial Statements (including the notes thereto)
have been prepared in accordance with IFRS applied on a consistent basis
throughout the periods covered thereby, present fairly the financial condition
of the Company as of such dates and the results of operations of the Company
for such periods are correct and complete.


 


Section 7.10                            Recent Events.  Since the Most Recent Fiscal
Month End until the Control Acquisition Date, there has not been any material
adverse change in the business, financial condition, operations or results of
operations of the Company. Without limiting the generality of the foregoing,
during that period:


 


(i)                                     the Company has not sold, leased,
transferred, or assigned any of its assets, tangible or intangible, other than
at arm’s length or in the Ordinary Course of Business;


 


(ii)                                  the Company has not entered into any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either involving more than US$100,000 or
outside the Ordinary Course of Business;


 


(iii)                               no party (including the Company) has redeemed
early, terminated, modified, or cancelled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
involving more than US$100,000 to which the Company is a party or by which it
is bound;


 


15

















 


(iv)                              the Company has not imposed any Security
Interest upon any of its assets, tangible or intangible, other than in the
Ordinary Course of Business;


 


(v)                                 the Company has not made any capital
expenditure (or series of related capital expenditures) either involving more
than US$100,000 or outside the Ordinary Course of Business;


 


(vi)                              the Company has not made any capital
investment in, any loan to, or any acquisition of the securities or assets of,
any other Person (or series of related capital investments, loans, and
acquisitions) either involving more than US$100,000 or outside the Ordinary
Course of Business;


 


(vii)                           the Company has not issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation involving more
than US$100,000 or outside the Ordinary Course of Business;


 


(viii)                        the Company has not delayed or postponed the
payment of accounts payable and other Liabilities with a value greater than
US$100,000 or outside the Ordinary Course of Business;


 


(ix)                                the Company has not cancelled, compromised,
waived, or released any right or claim (or series of related rights and claims)
either involving more than US$100,000 or outside the Ordinary Course of
Business;


 


(x)                                   the Company has not granted any license or
sublicense of any rights under or with respect to any Intellectual Property,
other than at arm’s length or in the Ordinary Course of Business;


 


(xi)                                except as otherwise contemplated by the
Transaction Documents, there has been no change made or authorized in the
Foundation Documents of the Company;


 


(xii)                             the Company has not issued, sold, or
otherwise disposed of any of its charter capital, or granted any options, or
other rights to purchase or obtain (including upon conversion, exchange, or
exercise) any participation interest in respect of its charter capital;


 


(xiii)                          the Company has not declared, set aside, or
paid any dividend or made any distribution with respect to any participation
interests in respect of its charter capital (whether in cash or in kind) or
redeemed, purchased, or otherwise acquired any such participation interest;


 


(xiv)                         except for customary wear and tear, the
Company has not experienced any damage, destruction, or loss (whether or not
covered by insurance) to its property;


 


(xv)                            the Company has not made any loan to, or
entered into any other transaction with, any of its directors, officers, and
employees other than in the Ordinary Course of Business;


 


16

















 


(xvi)                         the Company has not entered into any
employment contract with an annual base salary in excess of US$50,000 or any
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement involving a change of more than US$50,000
or outside the Ordinary Course of Business;


 


(xvii)                      the Company has not granted any increase in
the base compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business;


 


(xviii)                   the Company has not adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan) involving a change of more than US$50,000 or outside the
Ordinary Course of Business;


 


(xix)                           the Company has not made any other material
change in employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business;


 


(xx)                              the Company has not made or pledged to make
any charitable or other capital contribution outside the Ordinary Course of
Business; and


 


(xxi)                           the Company has not committed to any of the
foregoing.


 


If,
during the period between the date of this Agreement and the Control
Acquisition Date , an event occurs or might occur that would result in a breach
of one or more warranties set forth in this Section 7.10, then the Seller may
disclose such event to the Purchaser; provided,
however, that any such disclosure
shall not modify any of the warranties given hereunder except to the extent the
Purchaser has given its prior written approval to the specific actions of the
Company and/or the Seller giving rise to such events and specifically waiving
and/or specifically modifying the Purchaser’s rights hereunder.  To that end, the Seller shall have the right
to submit a written request to the Purchaser, in accordance with Section 12.7,
that the Purchaser give its prior written consent to the specific actions of
the Company and/or the Seller that will or may result in the breach of a
warranty set forth in this Section 7.10 and specifically waive and/or
specifically modify the Purchaser’s rights hereunder.  In the event and to the extent that the Purchaser shall grant its
prior written consent and/or waive and/or modify its rights hereunder pursuant
to the Seller’s request, then the Seller and/or the Company, as applicable, may
proceed with the specific actions set forth in the written request; provided, however,
that the Purchaser shall be deemed to have given its prior consent to such
actions if the Purchaser fails to consent or object to such actions within ten
(10) Business Days after the Purchaser receives Seller’s written request
therefor.  In the event that the
Purchaser denies the Seller’s request within ten (10) Business Days after its
receipt thereof, then the Seller and/or the Company, as applicable, shall not proceed
with the specific actions set forth in such request.


 


17

















 


Section 7.11                            Undisclosed Liabilities.  Except for Liabilities set
forth in Schedules 7.9 and 7.13, the Company does not have any Liability (and
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Company giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business.


 


Section 7.12                            Legal Compliance.  The Company has complied in
all material respects with applicable Ukrainian Law, and the Company has not received
notice of any material action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice that has been filed or commenced
against it alleging any failure to so comply.


 


Section 7.13                            Tax Matters.


 


(i)                                     Since January 1, 1999, the Company has filed
all Tax Returns that it was required to file in Ukraine. All such Tax Returns
were correct and complete in all material respects as required under Ukrainian
Law. Since January 1, 1999, all Taxes due and payable by the Company (whether
or not shown on any Tax Return) have been paid (other than those Taxes that it
is contesting in good faith and by appropriate proceedings). Other than in the
Ordinary Course of Business, the Company currently is not the beneficiary of
any extension of time within which to file any Tax Return in Ukraine. No claim
has ever been made by an authority in a jurisdiction where the Company does not
file Tax Returns that it is or may be subject to taxation by that jurisdiction.
There are no Security Interests on any of the assets of the Company that arose
in connection with any failure (or alleged failure) to pay any Tax.


 


(ii)                                  The Company has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, shareholder, or other
third party.


 


(iii)                               Except for those Taxes that it is contesting
in good faith and by appropriate proceedings, the Company does not expect any
Ukrainian authority to assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim in Ukraine concerning any
material Tax Liability of the Company claimed or raised by any Ukrainian
authority in writing. Schedule 7.13 of the Disclosure Schedule lists all Tax
Returns filed by the Company for taxable periods ended on or after December 31,
2000, and indicates those Tax Returns that have been audited, and those Tax
Returns that currently are the subject of audit. The Seller has delivered to
the Purchaser correct and complete copies of all income (profit) Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by the Company since December 31, 2000.


 


(iv)                              The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.


 


18

















 


(v)                                 The Company is not a party to any Tax
allocation or sharing agreement, nor does it have any Liability for the Taxes
of any Person (other than the Company), as a transferee or successor, by
contract, or otherwise.


 


(vi)                              The unpaid Taxes of the Company in Ukraine
(A) did not, as of the Most Recent Fiscal Month End, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set out in the Most Recent
Balance Sheet and (B) do not exceed that reserve as adjusted for the passage of
time through the Control Acquisition Date in accordance with the past custom
and practice of the Company in filing its Tax Returns.


 


Section 7.14                            Real Property.


 


(i)                                     Schedule 7.l4(i) of the Disclosure Schedule
lists and briefly describes all of the buildings in which the Company has an
ownership interest and in which the book value as per the Most Recent Balance
Sheet exceeded an equivalent of US$500,000. The buildings listed on Schedule
7.14(i) (“Buildings”), along with the buildings housing base stations,
switches or other equipment material to the operation of the Business, taken as
a whole, are referred to herein as “Owned Real Property.” With respect
to the Owned Real Property:


 


(A)                              the Company owns and has the right to
possess, use and alienate the Owned Real Property, and the Owned Real Property
is held free and clear of any Security Interest and other restrictions which
would impair the current use;


 


(B)                                there are no pending or, to the Knowledge of
the Seller, threatened, condemnation proceedings, lawsuits, or administrative
actions relating to any of the Owned Real Property or other matters affecting
materially and adversely the current use thereof;


 


(C)                                each Building, and the buildings housing base
stations, switches or other equipment material to the operation of the
Business, taken as a whole, has received all material approvals of governmental
authorities required in connection with the ownership or operation thereof and
has been operated and maintained in accordance with all material applicable
laws, rules, and regulations. In the context of the foregoing, the term
“material” does not include such approvals, licenses or permits that are of a
routine or minor nature and that are customarily granted in due course after
proper application therefor;


 


(D)                               there are no leases, subleases, or other
agreements, written or oral, granting to any party or parties the right of use
or occupancy of any portion of the Buildings, or the buildings housing base
stations, switches or other equipment material to the operation of the
Business, taken as a whole (or a


 


19

















 


portion thereof as the case may be), to which the Company has an
ownership interest, except to the extent that the current use of the building
(or a portions thereof as the case may be) would not be materially impaired
thereby;


 


(E)                                 there are no outstanding options or rights of
first refusal to purchase any Building, or the buildings housing base stations,
switches or other equipment material to the operation of the Business, taken as
a whole, or any portion thereof or interest therein; and


 


(F)                                 there are no parties (other than the Company)
in possession of any Building, or the buildings housing base stations, switches
or other equipment material to the operation of the Business, taken as a whole,
except to the extent that the current use of such Building or buildings
comprising the Owned Real Property would not be materially impaired thereby.


 


(ii)                                  Schedule 7.l4(ii) of the Disclosure Schedule
lists and briefly describes all of the premises leased or subleased to the
Company and under which the annual lease or sublease payments by the Company
exceed an equivalent of US$50,000. The buildings listed on Schedule 7.14(ii),
along with the buildings housing base stations, switches or other equipment
material to the operation of the Business, taken as a whole, are referred to
herein as “Leased Real Property.” With respect to the Leased Real
Property:


 


(A)                              the lease or sublease is legally valid,
binding and enforceable, and in full force and effect;


 


(B)                                the lease or sublease will continue to be
legally valid, binding and enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby;


 


(C)                                the Company is not in breach of, and the
Company has not received any notice that any third party is in breach of, the
lease or sublease, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination, modification,
or acceleration thereunder;


 


(D)                               the Company has not repudiated, nor has the
Company received any notice that any third party has repudiated, any provision
of the lease or sublease;


 


(E)                                 with respect to each sublease, the Company
has not received any notice indicating that any of the warranties set forth in
subsections (A) through (D) above are untrue, inaccurate or misleading with
respect to the underlying lease;


 


20

















 


(F)                                 all of the Leased Real Property has received
all material approvals of governmental authorities required in connection with
the leasing or operation thereof and has been operated and maintained in
accordance with all material applicable laws, rules, and regulations. In the
context of the foregoing, the term “material” does not include such approvals,
licenses or permits that are of a routine or minor nature and that are
customarily granted in due course after proper application therefor.


 


(iii)                               The Company does not directly or indirectly
own any land.


 


Section 7.15                            Intellectual Property.


 


(i)                                     The Company owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the Business of the Company as
presently conducted. Each item of Intellectual Property owned or used by the
Company immediately prior to the Closing hereunder will be owned or available
for use by the Company on identical terms and conditions immediately subsequent
to the Closing hereunder. Schedule 7.15(iii) of the Disclosure Schedule lists
each such item of Intellectual Property owned by the Company (the “Owned IP
Rights”), and Schedule 7.15(iv) of the Disclosure Schedule lists each such
item of Intellectual Property leased by the Company (the “Licensed IP Rights”).


 


(ii)                                  The Company has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and the Company has never
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that the Company must license or refrain from using any Intellectual Property
rights of any third party). To the Knowledge of the Seller, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.


 


(iii)                               With respect to each item of the Owned IP
Rights:


 


(A)                              the Company has taken all necessary action to
maintain and protect each item of the Owned IP Rights;


 


(B)                                the Company possesses all right, title, and
interest in and to the item, free and clear of any Security Interest, license
or other permission to use, or other restriction;


 


(C)                                the item is not subject to any outstanding
injunction, judgment, order, decree, or ruling;


 


(D)                               no action, suit or proceeding is pending or,
to the Knowledge of the Seller is threatened, which challenges the


 


21

















 


legality, validity, enforceability, use, or ownership of the item; and


 


(E)                                 the Company has not agreed to indemnify any
Person for or against any infringement or misappropriation with respect to the
item.


 


(iv)                              With respect to each item of the Licensed IP
Rights:


 


(A)                              the Company possesses all right, title, and
interest in and to the item free and clear of any Security Interest, license,
or other restriction;


 


(B)                                the item is not subject to any outstanding
injunction, judgment, order, decree, or ruling;


 


(C)                                no action, suit or proceeding is pending or,
to the Knowledge of the Seller is threatened, which challenges the legality,
validity, enforceability, use, or ownership of the item; and


 


(D)                               the Company has not agreed to indemnify any
Person for or against any infringement or misappropriation with respect to the
item.


 


Section 7.16                            Company Licenses.


 


(i)                                     Schedule 7.16(i) of the Disclosure Schedule
lists all of the licenses necessary to build, own and operate a mobile cellular
communications network and to provide telecommunications services related
thereto (the “Company Licenses”), and with respect to each such Company
License, such Schedule sets forth the following information, as applicable: the
type of Company License, the name, the issuer and number of the license, the
frequency standard, the date of issue and term of the license, the region
and/or city covered by the license, the frequency or frequencies authorized or
reserved and the bandwidth.


 


(ii)                                  The Company (A) has paid all fees and charges
imposed by any Ukrainian governmental entity which have become due and payable
with respect to the Company Licenses and (B) has made appropriate provision in
the Financial Statements as is required by IFRS, as the case may be, for any
such fees and charges which were accrued and unpaid on the respective dates of
such Financial Statements.


 


(iii)                               The Company has filed or otherwise submitted
all registrations, applications or other filings, reports and other documents
required under applicable Ukrainian Law by the Ministry of Telecommunications
of Ukraine and the State Committee of Ukraine on Telecommunications and
Information and any other governmental entity regulating the operation of
telecommunication services related to the Company Licenses.


 


22

















 


(iv)                              (A) each Company License issued to the
Company is valid and in full force and effect, (B) no event has occurred and is
continuing which could result in the revocation, termination or adverse
modification of any Company License, (C) the Company is not in default under or
in breach of any of the terms and conditions of any Company License, including
without limitation any obligation to exploit any Company License, and (D) the
Seller has no reason to believe that any such breach or default (or any event
which could result in such breach or default) has occurred.


 


(v)                                 The Company has not been subject to any
cancellation of frequencies with respect to any Company License.


 


(vi)                              No material (A) License from, (B) consent of,
(C) filing with, (D) authorization or (E) other action of, the Ministry of
Telecommunications of Ukraine, the State Committee of Ukraine on
Telecommunications and Information or any other governmental entity is required
to be received, made or filed by, or taken on behalf of, the Company with
respect to the Network or the operation of the Business or the Company’s
provision of the Services other than those that have already been received,
made or filed by, or taken on behalf of, the Company, or those that the Company
has timely and duly filed for upon a change in Ukrainian Law since the date
hereof, with respect to the Network or the operation of the Business or the
Company’s provision of the Services.


 


(vii)                           The Seller has provided to the Purchaser
correct and complete copies of all of the Company Licenses.


 


Section 7.17                            Networks.


 


(i)                                     The Company operates an analog network of NMT
450i standard and a digital mobile network of GSM 900/1800 standard which are
capable of providing service coverage to areas where approximately 65% of the
population of Ukraine lives, with a dedicated interface signaling, voice and
data backbone network to support hand-off capabilities. The Network provides
the following services to subscribers in covered areas with telephone
interconnect, including basic voice services, mobile terminated short messaging
service, voice mail, call forwarding, call waiting, call forward unconditional,
call forward busy, call forward no answer, call number identity presentation,
call number identity restricted, hot line, do not disturb, three party calling,
direct dial long-distance/international calling, automatic call delivery,
automatic short message delivery with SMPP Interface, and voice-mail deposit
and retrieval. The respective manufacturers of the Equipment have warranted to
the Company that the Equipment has the capability to provide packet data and
asynchronous data. (All of the foregoing, the “Services”.) The Network
includes the essential types of Equipment listed in Schedule 7.17(i) of the
Disclosure Schedule (the “Essential Equipment”) and is located on appropriate
premises.


 


(ii)                                  The Network is in all material respects in
compliance with all material standards imposed by Ukrainian Law to the extent
necessary to provide the services and have passed acceptance tests under the
standards


 


23

















 


specified
in the documents evidencing final acceptance except where such final acceptance
documents indicate otherwise.


 


(iii)                               The Network has been operated and maintained
in all material respects in accordance with the instructions of the
manufacturers/providers of the Equipment and the Software and meets in all
material respects the functionalities and existing specifications. Each piece
of the Essential Equipment and Software in the Network is materially compatible
with each other piece of Essential Equipment and Software in the Network.


 


(iv)                              The Network is designed, deployed, operated,
managed and maintained to provide and is capable of providing outdoor services
in the coverage areas described in the maps set out in Schedule 7.17(iv) of the
Disclosure Schedule that permit a subscriber to maintain communication 90% of
the time in 90% of those locations in Ukraine where coverage is indicated in
the map.


 


(A)                              In a drive test conducted by the Company on
15 June 2002, 98% of the measurements as reported in the test data showed a
signal power of at least 90 dbm and 94.4% the measurements showed GSM quality
of at least BER3.


 


(B)                                Access failure rate of the Network based upon
data compiled from the switch and processed by management of the Company for
the last week of June 2002, the overall access failure rate of the Network
averaged 6%, measured by one day’s (Wednesday) average of call attempts.


 


(C)                                Interconnection blocking rate
(interconnections from base stations to public networks) based upon data
compiled from the switch and processed by the management of the Company for the
last week of June 2002, the overall interconnection blocking rate averaged 1%,
measured by one day’s (Wednesday) average of call attempts.


 


(D)                               Drop calls rate based upon data compiled from
the drive test and processed by the management of the Company for the last week
of June 2002, the overall drop calls rate averaged 2.5%, measured by the week’s
average of connected calls.


 


(v)                                 The Network, as a whole, is designed to
operate properly under a loading of traffic of approximately 1.2 million
subscribers without material service interruptions.  As of the date of this Agreement, Network congestion is
significant.


 


(vi)                              The Network is interconnected, directly or indirectly,
with the public switched fixed and mobile networks set forth in Schedule 7.17
of the Disclosure Schedule.


 


24

















 


(vii)                           “Network Management Reports” have been
produced by the Company since October 1997. These reports are used by
management in its evaluation of the Network and set forth the Network’s main
operating parameters reported by the operation and management software and
other report generating tools used by the Company in the Ordinary Course of
Business.


 


(viii)                        The Company has the information systems
necessary to support the provision of Services to customers, including, without
limitation, the initial delivery of Services, tarification (correctly
collecting, computing and transcribing operating data in accordance with
applicable tariffs, including, without limitation, correctly applying the
tarification standards established in Ukraine for the interconnection
agreements with the other public networks in Ukraine), billing, and other
customer services.


 


(ix)                                The Network supervisory and management
systems achieve the basic level of functionality required for monitoring, fault
management, configuration, accounting, efficiency and security with respect to
the operation of the Network.


 


(x)                                   The sites for Equipment contain the power,
heating and cooling capabilities and similar improvements necessary for the
proper operation and maintenance of the Network at each such site that is
required for the Network. They are in compliance in all material respects with
the rules and standards generally accepted in the wireless industry in Ukraine.


 


(xi)                                To the Knowledge of the Seller, the Handsets
purchased by the Company and used in the Business are compatible with the
Equipment installed and the Network features. To the Knowledge of the Seller,
the handset stocks are in good working order and proposed to be distributed and
sold under commercial or promotional plans of the Company.


 


Section 7.18                            Contracts. 
Schedule 7.18 of the Disclosure Schedule lists the material contracts
and other agreements to which the Company is a party, including:


 


(i)                                     agreements (or group of related agreements)
for the lease of personal property to or from any Person providing for lease
payments in excess of US$100,000 per annum;


 


(ii)                                  agreements (or group of related agreements)
for the purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year from the
date of this Agreement, result in a loss to the Company, or involve
consideration in excess of US$150,000;


 


(iii)                               agreements concerning a partnership or joint
venture;


 


(iv)                              agreements (or group of related agreements)
under which the Company has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation, in 


 


25

















 


excess
of US$200,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible in excess of US$200,000;


 


(v)                                 agreements concerning confidentiality or
noncompetition;


 


(vi)                              agreements with the Seller and its Affiliates
(other than the Company);


 


(vii)                           profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plans or
arrangements for the benefit of its current or former directors, officers, and
employees;


 


(viii)                        collective bargaining agreements;


 


(ix)                                agreements for the employment of any individual
on a full-time, part-time, consulting, or other basis providing annual
compensation in excess of US$50,000 or providing severance benefits;


 


(x)                                   agreements under which it has advanced or
loaned any amount to any of its directors, officers, and employees outside the
Ordinary Course of Business;


 


(xi)                                agreements which prohibit or restrict the
Company from engaging in the Business as it is now being conducted, including,
without limitation, any Contract that imposes any exclusivity requirements on
the Company, that is material to the conduct of the Business;


 


(xii)                             agreements pursuant to which the Company may
enforce warranty or similar obligations against manufacturers or other
providers of Equipment or Software which Equipment or Software has a value in excess
of US$200,000;


 


(xiii)                          to the extent not covered by other warranties
in this Section 7.18, agreements that involve amounts in excess of US$200,000
where (i) the obligations of the Company have not been performed or (ii) the
performance or other obligations of which, are not reflected in the Financial
Statements of the Company;


 


(xiv)                         human resources software and billing software
agreements;


 


(xv)                            distribution agreements that involve amounts
in excess of US$200,000 per annum or the performance of which will extend over
a period of more than one year from the date of this Agreement;


 


(xvi)                         handset supplier agreements and other related
contracts that involve amounts in excess of US$100,000;


 


(xvii)                      advertising agreements which involve annual
payments which aggregate more than US$100,000;


 


26

















 


(xviii)                   agreements which guarantee the performance of
obligations of third-parties in excess of US$200,000;


 


(xix)                           interconnection contracts;


 


(xx)                              agreements with governmental entities
regarding frequency clearances involving amounts greater than US$100,000;


 


(xxi)                           engineering agreements related to the
build-out of systems that involve annual payments that aggregate more than
US$200,000;


 


(xxii)                        agreements that require the Company to offer
goods or services with a “most favored nation” provision;


 


(xxiii)                     agreements under which the consequences of a
default or termination could have a material adverse effect on the Business;


 


(xxiv)                    agreements with (a) a director or member of
the management of the Company (other than standard employment agreements), (b)
an immediate family member of a director or member of the management, or (c)
any Person (other than an individual) Controlled by a director or member of the
management; and


 


(xxv)                       other agreements (or group of related
agreements) the performance of which involves consideration in excess of
US$250,000.


 


With
respect to each such agreement, and unless noted otherwise in Schedule 7.18 of
the Disclosure Schedule: (A) the agreement is legally valid, binding and
enforceable against the Company and in full force and effect; (B) the agreement
will continue to be legally valid, binding and enforceable and in full force
and effect on identical terms following the consummation of the transactions
contemplated hereby; (C) the Company is not in material breach or default, nor
has the Company received any notice that any third party is in material breach
or default, and no material event has occurred which with notice or lapse of time
would constitute a material breach or default, or permit termination,
modification, or early redemption, under the agreement; and (D) the Company has
not repudiated any provision of the agreement, nor has the Company received any
notice that any third party has repudiated any provision of the agreement.


 


Section 7.19                            Powers of Attorney.  Except as set forth in
Schedule 7.19, there are no outstanding powers of attorney executed on behalf
of the Company and issued (i) with the ability to generally bind or represent
the Company or (ii) to enter into agreements or a series of related agreements
in excess of US$25,000.


 


Section 7.20                            Insurance. 
Schedule 7.20 of the Disclosure Schedule lists all insurance policies to
which the Company is currently a party and sets out:


 


(i)                                     the policy number (where known);


 


(ii)                                  the name of the insurer, the name of the
policyholder, and the name of each covered insured;


 


(iii)                               the type of coverage;


 


27

















 


(iv)                              the period of coverage; and


 


(v)                                 such other information concerning the scope
and amount of coverage as made available to the Seller by the Company.


 


With
respect to each listed insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will
continue to be legal, valid, binding and enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby; (C) the Company is not in material breach or default
(including with respect to the payment of premiums or the giving of notices),
nor has the Company received any notice that any third party is in material
breach or default; and (D) the Company has not repudiated any provision
thereof, nor has the Company received any notice that any third party has
repudiated any provision thereof.


 


Section 7.21                            Litigation.  Schedule 7.21 of the Disclosure Schedule
sets forth each instance in which the Company (i) is subject to any outstanding
court and arbitration injunction, judgment, order, decree or ruling or (ii) is
a party or, to the Knowledge of the Seller, is threatened to be made a party to
any action, suit, proceeding, prosecution, arbitration, hearing, governmental
audit, or investigation of, in, or before any court or quasi-judicial or
administrative agency of Ukraine or before any arbitrator. None of the actions,
suits, proceedings, prosecutions, arbitrations, hearings, governmental audits,
and investigations set forth in Schedule 7.21 of the Disclosure Schedule could
result in any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of the Company. The
Seller has no reason to believe that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against the Company of
over US$25,000. There is no claim, suit, litigation, proceeding, labor dispute,
action, inquiry or investigation pending, or to the Knowledge of the Seller,
threatened, seeking to delay, limit or enjoin the consummation of this
Agreement and the other transactions contemplated by the Transactional
Documents.


 


Section 7.22                            Employees.  No
executive, senior key employee, or material group of employees has to date
given notice of termination of their employment with the Company. Except as set
forth in Schedule 7.22, the Company is not a party to or bound by any
collective bargaining agreement, nor has it experienced any material strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. To the Knowledge of the Seller, the Company has not committed any
unfair labor practice. The Seller has no Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company.


 


Section 7.23                            Employee Benefits.  Schedule 7.23 of the
Disclosure Schedule describes each Employee Benefit Plan that the Company
maintains or to which the Company contributes, and each complies in form and in
operation in all material respects with all material applicable laws.


 


Section 7.24                            Guaranties.  The Company is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.


 


Section 7.25                            Environment, Health, and Safety.


 


(i)                                     The Company has complied in all material
respects with the material Environmental, Health, and Safety Laws of Ukraine
currently


 


28

















 


applicable to the Company, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against the Company alleging any failure to so comply. Without
limiting the generality of the preceding sentence, the Company has obtained and
has in all material respects been in compliance with all material terms and
conditions of all material permits, licenses, and other authorizations which
are required under the all Environmental, Health, and Safety Laws of Ukraine.


 


(ii)                                  The Company has no material Liability for
damage to any site, location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual, or for any
reason under the Environmental, Health, and Safety Laws of Ukraine applicable
to the Company.


 


Section 7.26                            Certain Business Relationships with
the Company.  Except as set forth in
Schedule 7.26, neither the Seller nor its Affiliates has been involved in any
business arrangement or relationship with the Company within the past twelve
(12) months, and neither the Seller nor its Affiliates own any asset, tangible
or intangible, which is used in the Business of the Company.


 


Section 7.27                            Unlawful Contributions.  To the Knowledge of the
Seller, the Company has not (i) used any corporate funds for any contribution
or other expense unlawful under Ukrainian Law applicable at the time of such
contribution or other expense and relating to political activity, (ii) made any
unlawful payment under Ukrainian Law to any Ukrainian government official or
employee from corporate funds, or (iii) caused the Company to be in violation
of any Ukrainian Law regulating the payments of bribes to government officials
or employees.


 


Section 7.28                            Antitrust.  The
Company is not currently or has no reason or notice to believe that it will be
in the future a party to, or directly or indirectly concerned in, an agreement,
arrangement, understanding or practice (whether or not legally binding) to
which the Company is a party and which has been, is or may (i) contravene any
Ukrainian Laws concerning competition; (ii) be registrable, unenforceable or
void or rendering the Company or any of its officers, directors or employees
liable to administrative, civil or criminal proceedings under any Ukrainian
Laws concerning competition, or (iii) be the subject of any investigation by
any competent Ukrainian authority in respect of any provision of any Ukrainian
Laws concerning competition. The Company is not currently engaged in any
conduct which amounts to the abuse of a dominant position in a market which may
violate any Ukrainian Laws concerning competition. Schedule 7.28 of the
Disclosure Schedule lists those instances in which the Company has been defined
as a monopolist in Ukraine by a Ukrainian governmental entity.


 


Section 7.29                            Money Laundering and Unlawful
Financial Activities.  The
Company is not in violation of any Ukrainian Laws relating to money-laundering,
unlawful financial activities, or control and prevention of terrorism.


 


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ARTICLE VIII.

CONDITIONS TO OBLIGATIONS.


 


Section 8.1                                   Conditions to Obligations of the
Purchaser.  The obligation of the
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:


 


(i)                                     the warranties set forth in Sections 6.1,
6.2, 6.3 and 6.5 hereof shall be true and accurate in all material respects and
not misleading at, and as of, the Closing Date;


 


(ii)                                  the Seller shall have performed and complied
with its covenants set forth in Article IV hereunder in all material respects
through the Closing;


 


(iii)                               no injunction, judgment, order, decree,
ruling, or charge shall have been issued by any court or quasi-judicial or
administrative agency of any national, state, local, or foreign jurisdiction or
by any arbitrator the effect of which would 
prohibit consummation of the Acquisition;


 


(iv)                              the receipt of all approvals, permits,
consents and authorizations, if any, by any relevant governmental authority,
including, without limitation, the UAC, which may be necessary under applicable
law to consummate the Acquisition;


 


(v)                                 each participant of the Company (other than
the Parties and their Controlled Affiliates) shall have delivered a valid and
binding Participant’s Waiver or, in the alternative, the Seller has complied
with and completed all procedures required under Ukrainian Law in order to
validly and effectively offer the Participation Interest to each participant of
the Company (other than the Parties) to give effect to any pre-emptive rights
and/or rights of first refusal such participants may have in relation to the
sale and transfer of the Participation Interest;


 


(vi)                              the Seller shall have delivered to the
Purchaser a certificate in the form of Exhibit G to the effect that each of the
conditions specified above in Section 8.1(i), (ii), (iii), and(v) is satisfied
in all respects or waived by the Purchaser;


 


(vii)                           the Escrow Account shall have been
established prior to the Closing in accordance with the Escrow Agreement;


 


(viii)                        the Purchaser shall have obtained on terms
and conditions satisfactory to it all of the financing it needs in order to
consummate the transactions contemplated hereby and fund the working capital
requirements of the Company after the Closing;


 


(ix)                                the Control Acquisition Date shall have
occurred; and


 


(x)                                   the Seller shall have received a license from
the National Bank of Ukraine to maintain the Purchase Price in the escrow
account pursuant to the Escrow Agreement.


 


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The
Purchaser may waive in whole or in part any condition specified in this Section
8.1 if in writing and executed by a duly authorized executive officer of
Purchaser at or prior to the Closing.


 


Section 8.2                                   Conditions to Obligations of the
Seller.  The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:


 


(i)                                     the warranties set forth in Article VI hereof
shall be true, complete and accurate in all material respects and not
misleading at, and as of, the Closing Date;


 


(ii)                                  the Purchaser shall have performed and
complied with the covenants set forth in Sections 5.2, 5.3, 5.4, 5.5, 5.8, 5.10
and 5.11  hereunder in all material
respects through the Closing;


 


(iii)                               the Escrow Account shall have been
established prior to the Closing in accordance with the Escrow Agreement;


 


(iv)                              no injunction, judgment, order, decree,
ruling, or charge shall have been issued by any court or quasi-judicial or
administrative agency of any national, state, local, or foreign jurisdiction or
by any arbitrator the effect of which would 
prohibit consummation of the Acquisition or of any of the transactions
contemplated by this Agreement to which the Seller is a party;


 


(v)                                 the receipt of all approvals, permits,
consents and authorizations, if any, by any relevant governmental authority,
including, without limitation, the UAC, which may be necessary under applicable
law to consummate the transactions contemplated by this Agreement; and


 


(vi)                              each participant of the Company (other than
the Parties) shall have delivered a valid and binding Participant’s Waiver or,
in the alternative, the Seller has complied with and completed all procedures
required under Ukrainian Law in order to validly and effectively offer the
Participation Interest to each participant of the Company (other than the
Parties) to give effect to any pre-emptive rights and/or rights of first
refusal such participants may have in relation to the sale and transfer of the
Participation Interest.


 


The
Seller may waive in whole or in part any condition specified in this Section
8.2 if in writing and executed by a duly authorized executive officer of Seller
at or prior to the Closing.


 


Section 8.3                                   Fulfillment of Conditions.  The
Parties shall make all reasonable efforts to achieve and procure the
fulfillment of the conditions set out in Section 8.1 and Section 8.2 on or
before the Closing Date specified in the Call Notice, and each of the Purchaser
and the Seller shall provide reasonable cooperation in connection with the
fulfillment of the conditions to the other. 
In the event that the Control Acquisition Date has not been reached
within 365 days of the date of this Agreement, either Party shall have the
right to terminate this Agreement by giving notice to the other Party.


 


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Section 8.4                                   Postponement of Closing.


 


(i)                                     In the event that the Closing fails to occur
on the Closing Date due to the failure of any condition precedent set forth in
Section 8.1 or Section 8.2 and such condition precedent is not satisfied or
waived by the relevant Party within 90 days after the proposed Closing Date,
then either Party may terminate this Agreement.


 


(ii)                                  If any Party terminates this Agreement
pursuant to Section 8.4(i), all rights and obligations of the Parties hereunder
shall terminate without any Liability of any other Party (except for any
Liability of any Party otherwise in breach of this Agreement).


 


Section 8.5                                   Termination of Agreement.  The Parties may terminate this
Agreement as provided below:


 


(i)                                     the Purchaser and the Seller may terminate
this Agreement by mutual written consent at any time prior to the Closing;


 


(ii)                                  the Purchaser may terminate this Agreement in
its sole and absolute discretion by giving written notice to the Seller at any
time prior to the Closing; and


 


(iii)                               the Seller may terminate this Agreement by
giving written notice to the Purchaser at any time prior to the Closing in the
event the Purchaser has breached any material warranty, or covenant contained
in this Agreement in any material respect, the Seller has notified the
Purchaser of the breach, and the breach, if subject to cure, has continued
without cure for a period of thirty (30) days after the notice of breach.


 


ARTICLE IX.

CLOSING.


 


Section 9.1                                   Basic Transaction.  On
and subject to the terms and conditions of this Agreement and upon the exercise
of the Call Option as provided for herein, the Purchaser agrees to purchase
from the Seller, and the Seller agrees to sell and transfer to the Purchaser,
all of the legal and beneficial ownership in the Participation Interest for the
consideration specified herein.


 


Section 9.2                                   Purchase Price.  At
Closing, the Purchaser agrees to pay the Call Purchase Price (the “Purchase
Price”) by delivery of cash in U.S. dollars to the Escrow Agent pursuant to
the Escrow Agreement as provided for in Section 4.9 hereof.  In case Ukrainian Law provides for the
payment in Ukrainian currency, the respective amount of Ukrainian currency
shall be calculated in accordance with the official exchange rate as
established by the Central Bank of the Ukraine on the Business Day such payment
is made.  The Purchaser may at its
option pay the Purchase Price prior to Closing.


 


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Section 9.3                                   The Closing. 
Subject to the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself), the closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place at the offices of ING Barings
Kiev, located at 28 Kominterna Street, 5th floor, 252032 Kiev, Ukraine and commence at
9:00 a.m. local time on the Closing Date.


 


Section 9.4                                   Transfer of the Participant’s
Interest.  In
order to effect the sale and transfer of the Participation Interest as provided
for herein upon the exercise of the Call Option:


 


(i)                                     The Seller hereby undertakes to sell,
transfer and assign to the Purchaser in accordance with the provisions of this
Agreement the legal and beneficial ownership of all, but not less than all, of
the Participation Interest, together with all rights connected with the
Participation Interest including the right to participate in any undistributed
profits attributable to the Participation Interest and not attributed before
signing this Agreement and all rights and obligations of a shareholder or
participant which are connected with the ownership in the Participation
Interest under Ukrainian Law and in accordance with the Foundation Documents.


 


(ii)                                  The Purchaser undertakes (A) to accept the
sale and assignment of the Participation Interest and of all rights connected
with the Participation Interest including the right to participate in any
undistributed profits attributable to the Participation Interest and all rights
and obligations of a participant which are connected with the ownership in the
Participation Interest under Ukrainian Law and in accordance with the
Foundation Documents and (B) to pay the Purchase Price in accordance with
Section 9.2  of this Agreement.


 


(iii)                               On the Closing Date, the Seller, the
Purchaser and its Affiliates shall convene a participants’ meeting (the “Closing
Participants’ Meeting”) of the Company with such agenda as set forth in
Exhibit C, at which such meeting the participants of the Company shall approve
the amended Founding Agreement and the amended Charter of the Company (such
amended documents, the “Closing Organizational Documents”) such that the
Purchaser becomes the legal owner of the Participation Interest.  At the Closing Participants’ Meeting, the
Purchaser and its Affiliates will cause a resolution to be passed and
documented in the protocol of the Closing Participant’s Meeting appointing and
authorizing one or more Persons from the Company (the “Company Appointee”),
as well as a Person nominated by the Seller (“Seller’s Nominee”), to
take all steps necessary to complete the state registration of the Closing
Organizational Documents with the Ukrainian local state administrative body (or
such other Ukrainian governmental body that may, at the time of the Closing,
have the authority to carry out such registrations under Ukrainian Law) (the “State
Registration”).


 


(iv)                              Immediately after the holding of the Closing
Participants’ Meeting, the Purchaser and its Affiliates will take all such
steps, actions and measures as are reasonably necessary to cause the Company
Appointee to (A) notify the Seller’s Nominee in writing, immediately upon


 


33

















 


submission
of all documents necessary for the State Registration, that such documents have
been submitted, (B) complete the State Registration of the Closing
Organizational Documents as soon as possible thereafter, and (C) provide the
Seller’s Nominee with a notarized copy of the registered Closing Organizational
Documents immediately upon completion of the State Registration.


 


(v)                                 The title to the Participation Interest will
be transferred to the Purchaser upon the State Registration of, and shall be
confirmed by a notarized copy of, the Closing Organizational Documents, fully
registered as may be necessary under Ukrainian Law.


 


(vi)                              The Seller shall execute all de facto and
legally required actions and shall submit to the Purchaser all documents
necessary for the transfer of the Participation Interest and the official
recording of the Purchaser’s ownership of the Participant Interest in
accordance with Ukrainian Law.  The
Company shall bear all costs associated therewith.


 


(vii)                           The Parties shall cooperate for the
completion of all formalities related to the transfer of the Participation
Interest and agree, that from time to time each Party shall consider and sign
any document necessary in order to support the due and effective execution of
this Agreement.


 


Section 9.5                                   Deliveries at the Closing.  At
Closing:


 


(i)                                     The Seller shall deliver to the Purchaser


 


(A)                              the various certificates, instruments,
consents and documents referred to in Section 8.1;


 


(B)                                the Escrow Agreement, duly executed; and


 


(C)                                the resignations, effective as of Closing, of
each director and officer of the Company or member of the Company’s Board which
was elected or appointed by the Seller, other than those whom the Purchaser
shall have specified in writing at least five (5) business Days prior to
Closing.


 


(ii)                                  The Purchaser shall deliver to


 


(A)                              the Seller, the various certificates,
instruments, consents and documents referred to in Section 8.2;


 


(B)                                the Seller, a notarized copy of the protocol
of the Closing Participants’ Meeting as specified in Section 9.4(iii);


 


(C)                                the Escrow Agent, the Purchase Price in
accordance with Section 9.2 hereof and the terms of the Escrow Agreement; and


 


(D)                               the Seller, the Escrow Agreement duly
executed.


 


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ARTICLE X.

POST-CLOSING COVENANTS.


 


The
Parties agree as follows with respect to the period following the Closing.


 


Section 10.1                            General.  In
case at any time after the Closing any further action is reasonably necessary
or desirable to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party may reasonably request,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Article XI hereof).


 


Section 10.2                            Litigation Support.  In
the event and for so long as any Party actively is contesting or defending
against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any transaction contemplated
under this Agreement or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving the Company, the other
Party will cooperate with it and its counsel in the contest or defense, make
available its personnel, and provide such testimony and access to its books and
records as shall be necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Article XI hereof).


 


Section 10.3                            Transition.  The
Seller will not take any action that is designed or intended to have the effect
of discouraging any lessor, licensor, customer, supplier, or other business
associate of the Company from maintaining the same business relationships with
the Company after the Closing as it maintained with the Company prior to the
Closing.  The Seller will refer all
customer inquiries relating to the businesses of the Company to the Purchaser
from and after the Closing.


 


Section 10.4                            Confidentiality.  Each
Party will treat and hold as such all of the Confidential Information of the
other Parties and/or the Company, and refrain from using any of the
Confidential Information of the other Parties and/or the Company except in
connection with this Agreement; provided,
however, such restriction shall not apply if and to the extent that:


 


(i)                                     the Party proposing to make such disclosure
has been requested or is required (by oral question or request for information
or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information of another Party/Parties and/or the Company; provided, however, that such Party will notify
the other Party/Parties promptly of the request or requirement so that the
other, nondisclosing Parties may seek an appropriate protective order or waive
compliance with the provisions of this Section 10.4(i). If, in the absence of a
protective order or the receipt of a waiver hereunder, a Party is, on the
advice of counsel, compelled to disclose any Confidential Information of any
other Party and/or the Company to any tribunal or else stand liable for
contempt, such Party may disclose such Confidential Information to the
tribunal; provided, however, that
such disclosing Party shall use its best endeavors to obtain, at the request of
the other Party/Parties, an order or other assurance that confidential
treatment will be accorded to such portion of the


 


35

















 


Confidential Information required to be disclosed as the other Party/
Parties shall designate;


 


(ii)                                  such disclosure by a Party is required by law
or by any securities exchange or regulatory or governmental body having
jurisdiction over it and whether or not the requirement has the force of law;
or


 


(iii)                               the Confidential Information of the other
Party/ Parties and/or the Company has come into the public domain other than
through its fault or the fault of any person to whom such Confidential
Information has been disclosed by that Party.


 


Nothing
in this Section 10.4 shall in any way affect the Purchaser’s ability to
disclose Confidential Information relating to the Company to any third party
after the Closing Date.


 


Section 10.5                            Covenant Not to Compete.  Commencing  from and after the Closing Date, for so long
as the Seller and/or any Controlled Affiliate of the Seller are participants in
the Company, (a) neither the Seller nor any Controlled Affiliate of the Seller,
without prior written consent of the Purchaser, will engage directly or through
contractual or other arrangements in the provision of cellular communications
services in Ukraine as an operator in the GSM 900/1800 standard, and (b)
neither the Seller nor any Controlled Affiliate of the Seller, other than the
Company, nor the Purchaser nor any Controlled Affiliate of the Purchaser, other
than the Company, without the prior written consent of the other Party, will
(1) directly or indirectly apply for, submit bids for, solicit invitations to
apply for or submit bids for, attempt to receive, receive or take any actions
aimed at receiving, any license or licenses for the provision of cellular
communications services in any third generation standard in Ukraine, or (2)
engage as an operator directly or through contractual or other arrangements in
the provision of cellular communications services in Ukraine in any third
generation standard;  provided, however, that the preceding
restrictions shall not apply to:


 


(i)                                     ownership of less than 1% of the outstanding
share capital of any publicly traded corporation; and


 


(ii)                                  the ownership of any business which is
created as a result of a merger or acquisition of or by any Party where the net
revenues on a consolidated basis of such company and its Controlled Affiliates
which is merged with or acquired by such Party constitute more than 30% of the
total net revenues of such Party on a consolidated basis, and which results in
the ownership by such Party of a Person (a) directly or through contractual or
other arrangements engaged in the provision of cellular communications services
in Ukraine in the GSM 900/1800 standard, or that (b) directly or indirectly
applies for, submits bids for, solicits invitations to apply for or submits
bids for, attempts to receive, receives or takes any actions aimed at
receiving, any license or licenses for the provision of cellular communications
services in any third generation standard in Ukraine, or that (c) engages as an
operator directly or through contractual or other arrangements in the provision
of cellular communications services in Ukraine in any third generation
standard.  The Parties agree that they
consider that the restrictions contained in this Section 10.5 are no greater than
is reasonable and necessary to protect the legitimate business interests of the
Purchaser; however, if the final judgment of a court of competent jurisdiction
declares that any term or provision of this


 


36

















 


Section
10.5 is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.


 


ARTICLE XI.

REMEDIES FOR BREACHES OF THIS AGREEMENT.


 


Section 11.1                            Survival of Warranties.  All of the warranties of the
Parties contained in this Agreement shall survive the Closing hereunder (even
if the damaged Party knew or had reason to know of any breach of warranty at
the time of Closing) and continue in full force and effect for a period of two
(2) years from the Control Acquisition Date.


 


Section 11.2                            Indemnification Provisions for
Benefit of the Purchaser.


 


In
the event the Seller breaches any of its warranties contained herein, provided
that the Purchaser makes a written claim for indemnification against the Seller
pursuant to Section 12.7 below within the period set forth in Section 11.1,
then the Seller agrees to indemnify the Purchaser from and against any Adverse
Consequences the Purchaser may suffer through and after the date of the claim
for indemnification (including any Adverse Consequences the Purchaser may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the alleged
breach). The Seller’s obligation to indemnify or be liable to the Purchaser from
and against an Adverse Consequence shall, in the aggregate, be limited to 26%
of the total amount of such Adverse Consequence irrespective of whether any
third party that sold a participation interest in the Company to the Purchaser
is liable or not liable for any damages under its respective participation
interest purchase agreement.


 


Section 11.3                            Indemnification
Provisions for Benefit of the Seller.


 


In
the event the Purchaser breaches (or in the event any third party alleges facts
that, if true, would mean the Purchaser has breached) any of its warranties
contained herein, and, if there is an applicable survival period pursuant to
Section 11.1 hereof, provided that the Seller makes a written claim for
indemnification against the Purchaser pursuant to  Section 12.7 below within such survival period, then the
Purchaser agrees to indemnify the Seller from and against the entirety of any
Adverse Consequences the Seller may suffer through and after the date of the
claim for indemnification (including any Adverse Consequences the Seller may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the alleged
breach).


 


Section 11.4                            Matters Involving Third Parties.


 


(i)                                     If any third party shall notify any Party
(the “Indemnified Party”) with respect to any matter (a “Third Party
Claim”) which may give rise to a claim for indemnification against any
other Party (the


 


37

















 


“Indemnifying
Party”) under this Article XI, then the Indemnified Party shall promptly
notify each Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is prejudiced.


 


(ii)                                  Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with counsel of its
choice satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within ten (10) days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence acceptable to the Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder, (C) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief, (D) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice adverse to the continuing
business interests of the Indemnified Party, and (E) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.


 


(iii)                               So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with Section
11.4(ii) hereof, (A) the Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of the Third Party
Claim, (B) the Indemnified Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party, and (C) the Indemnifying Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnified Party.


 


(iv)                              In the event any of the conditions in Section
11.4(ii) hereof is or becomes unsatisfied, however, (A) the Indemnified Party
may defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys’ fees and expenses), and (C) the Indemnifying Parties
will remain responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this Article XI.


 


38

















 


Section 11.5                            Determination of Adverse
Consequences.  The
Parties shall make appropriate adjustments for insurance coverage and shall
take into account the time cost of money (using the Applicable Rate as the
discount rate) in determining Adverse Consequences for purposes of this Article
XI. All indemnification payments under this Article XI shall be deemed
adjustments to the Purchase Price.


 


Section 11.6                            Exclusive Remedies.  The foregoing indemnification
provisions shall be the Parties’ exclusive remedy for or arising out of a
breach of warranty hereunder.  The
indemnification provisions exclude, and are not in addition to but in
derogation of, any statutory, equitable, common law or other remedy any Party
may have for or arising out of a breach of warranty hereunder and the Parties
agree that they shall not seek any other remedy for or arising out of a breach
of warranty hereunder.  The Seller
hereby agrees that it will not make any claim for indemnification against the
Company by reason of the fact that it was an agent of any such entity or was
serving at the request of any such entity as a partner, trustee, director,
officer, employee, or agent of another entity (whether such claim is for
judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such claim is pursuant to any
statute, charter document, bylaw, agreement, or otherwise) with respect to any
action, suit, proceeding, complaint, claim, or demand brought by the Purchaser
against the Seller (whether such action, suit, proceeding, complaint, claim, or
demand is pursuant to this Agreement, applicable law, or otherwise).


 


Section 11.7                            Miscellaneous.


 


(i)                                     Nothing in this Agreement shall have the
effect of limiting or restricting any liability of the Seller in respect of a
claim under this Agreement arising as a result of any fraud.


 


(ii)                                  The Purchaser acknowledges that it has not
relied on or been induced to enter into this Agreement by any representation,
warranty or undertaking that is not expressly set out in this Agreement.


 


(iii)                               The Seller shall not be liable to the
Purchaser (in equity, contract, tort (including negligence) under the
Misrepresentation Act 1967 or in any other way) for a representation or
warranty that is not set out in this Agreement.


 


 


ARTICLE XII.

MISCELLANEOUS.


 


Section 12.1                            Further Assurances.  Each
of the Parties hereto agrees to cooperate with one another in executing,
delivering and otherwise providing such additional documents, instruments or
items as shall be reasonably necessary or appropriate in order to consummate
the transactions contemplated by this Agreement.


 


39

















 


Section 12.2                            Press Releases and Public
Announcements.  No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the
Purchaser and the Seller; provided, however,
that any Party may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
best endeavors to advise the other Parties prior to making the disclosure).


 


Section 12.3                            Entire Agreement.  This
Agreement (including the documents referred to herein) constitutes the entire
agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof.


 


Section 12.4                            Succession and Assignment.  This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. The Seller may
not assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the Purchaser.  The Purchaser may transfer either this Agreement
or any of its rights, interests or obligations hereunder with prior written
notice to the Seller (whether by assignment, novation or otherwise). The Seller
agrees to take all action necessary to implement any transfer reasonably
requested by the Purchaser (including, without limitation, the execution of any
agreement novating this Agreement to any transferee notified to the Seller by
the Purchaser). Following receipt of notification of any transfer of this
Agreement pursuant to this Section 12.4, the Seller shall be deemed to have
released Cetel B.V. from further performance of this Agreement and all
liabilities, claims and demands howsoever arising under this Agreement, whether
in contract, tort or otherwise, and the Seller shall instead accept the
liability of the transferee and shall acknowledge and agree that such
transferee shall have all of the rights and benefits of the Purchaser arising
hereunder as if it had been the Purchaser from the date hereof.


 


Section 12.5                            Counterparts.  This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.  This Agreement may be
translated into the Russian language. 
In the event of discrepancies between the English-language and Russian
language versions of this Agreement, the English language version shall govern.


 


Section 12.6                            Headings.  The
headings contained in this Agreement are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.


 


Section 12.7                            Notices.  All
notices, requests, demands, claims, and other communications hereunder will be
in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given if (and then two (2) Business Days after)
it is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:


 


(i)                                     If to the Seller:


 


OAO
Ukrtelecom

18, T. Shevchenko Blvd.

01030, Kyiv, Ukraine


 


40

















 


Attention:

Facsimile: +380 44 234-3957


 


(ii)                                  If to the Purchaser:


 


Cetel
B.V.

Strawinskylaan 1243

1077 XX Amsterdam

The Netherlands

Telecopy:

Attention:


 


with a copy to:


 


Clifford
Chance Puender

Cecilienallee 6

40474 Duesseldorf

Germany

Attention:  Marc Bartholomy, Esq.

Facsimile: +49 211 4355 5600


 


and


 


Latham
& Watkins

Ulitsa Gasheka, 7

Ducat II, Suite 900

Moscow 123056 Russian Federation


Attention:  Anna Goldin, Esq.

Facsimile:  +7-095-785-1235


 


Any
Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Parties notice in the manner
herein set forth.


 


41

















 


Section 12.8                            Dispute Resolution.  Upon
written notice to all Parties to this Agreement and the Arbitration Institute
of the Stockholm Chamber of Commerce, any dispute, controversy or claim between
any Parties hereto arising out of, relating to or in connection with this
Agreement, including its existence, validity or termination, shall be referred
to and resolved by final and binding arbitration under the Rules of the
Arbitration Institute of the Stockholm Chamber of Commerce in effect on the
date any arbitration commences (the “Rules”), which Rules are deemed to
be incorporated by reference into this clause. 
The place of the arbitration shall be London, England, and the award
shall be deemed to have been made there. 
The tribunal may hold hearings, meetings, and deliberations at any place
it deems appropriate, having regard to the circumstances of the
arbitration.  The tribunal shall be
comprised of three arbitrators to be appointed by the Arbitration Institute of
the Stockholm Chamber of Commerce, in accordance with the Rules.  The tribunal shall neither have nor exercise
any power to act as amiable compositeur
or ex aequo et bono or to award
special, indirect, consequential, or punitive damages.  The language of the arbitration shall be
English.  Judgment upon any arbitral
award may be entered in any court of competent jurisdiction.  Court jurisdiction under Sections 45 and 69
of the United Kingdom’s Arbitration Act of 1996 shall not apply.  Any Party to this Agreement may intervene in
any arbitral proceeding commenced under this Agreement.


 


Section 12.9                            Governing Law.  THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
ENGLAND AND WALES.  NO EFFECT SHALL BE
GIVEN TO ANY  CONFLICT OF LAW PROVISION
OR RULE OF ANY JURISDICTION OTHER THAN ENGLAND AND WALES THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN ENGLAND AND WALES.


 


Section 12.10                     Judgment Currency.  The
obligation of the Parties to make payments under this Agreement is in U.S.
dollars (the “Obligation Currency”) and such obligation shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in any currency other than the Obligation Currency or any other
realization in such other currency, whether as proceeds of set-off, security,
guarantee, distributions, or otherwise, except to the extent to which such
tender, recovery or realization shall result in the receipt by the Party which
is to receive such payment of the full amount of the Obligation Currency
expressed to be payable hereunder.  The
Party liable to make such payment agrees to indemnify the Party which is to
receive such payment for the amount (if any) by which such receipt shall fall
short of the full amount of the Obligation Currency expressed to be payable
hereunder and the party which is to receive such payment agrees to pay to the
party liable to make such payment the amount (if any) by which such receipt,
shall exceed the full amount of the Obligation Currency, and, in each case,
such obligation shall not be affected by judgment being obtained for any other
sums due under this Agreement.  The
Parties agree that the rate of exchange which shall be used to determine if
such tender, recovery or realization shall result in the receipt by the party
which is to receive such payment of the full amount of the Obligation Currency
expressed to be payable hereunder shall be the noon buying rate in New York
City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York for the business day preceding
that on which the judgment becomes a final judgment.


 


42

















 


Section 12.11                     Third Party Beneficiaries.  This
Agreement shall not confer any rights or remedies on any other Person other
than the Parties and their respective successors and permitted assigns.  For the avoidance of doubt, a person who is
not a Party to this Agreement for the time being has no right under the English
Contracts (Rights of Third Parties) Act 1999 to enforce any term of this
Agreement.


 


Section 12.12                     Amendments and Waivers.  No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by the Purchaser and the Seller. No waiver by
any Party of any default, breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, or breach of warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such occurrence.  No failure to exercise and no delay in
exercising any right, power or remedy under this Agreement will operate as a
waiver; nor will any single or partial exercise of any right, power or remedy
preclude any other or further exercise of that or any other right, power or
remedy.


 


Section 12.13                     Severability.  Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction.


 


Section 12.14                     Expenses.  Each
of the Parties and the Company will bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.  The
Seller agrees that the Company has not borne and will not bear any of the
Seller’s costs and expenses (including any of its legal fees and expenses) in
connection with this Agreement or any of the transactions contemplated hereby.


 


Section 12.15                     Construction.  The
word “including” shall mean including without limitation. The Parties intend
that each warranty and covenant contained herein shall have independent
significance.


 


Section 12.16                     Denomination of Monetary References.  All
references in this Agreement to either “dollars” or “$” are references to
United States dollars, the legal currency of the United States.


 


Section 12.17                     Payment of Taxes.  Each
Party shall be responsible for their respective transfer, documentary, sales,
use, stamp, registration and other such Taxes and fees (including any penalties
and interest) incurred in connection with this Agreement.  Any such taxes shall be paid by such Party
responsible for such Taxes when due, and such Party will, at its own expense,
file all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and
fees, required by applicable law.


 


Section 12.18                     Incorporation of Exhibits, Annexes
and Schedules.  The exhibits,
annexes and schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.


 


43

















 


Section 12.19                     Specific Performance.  Each
of the Parties acknowledges and agrees that the other Party would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, each of the Parties agrees that the other Party shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court having jurisdiction
over the Parties and the matter (subject to the provisions set forth in Section
12.8 hereof), in addition to any other remedy to which they may be entitled, at
law or in equity.


 


Section 12.20                     Waiver of Immunity.  To the extent that the Seller
has or hereafter may be entitled to claim or may acquire, for itself or any of
its assets, any immunity from suit, jurisdiction of any court or tribunal or
from any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid or execution, or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of its
obligations hereunder to which it may be a party to the fullest extent
permitted by applicable law and, without limiting the generality of the foregoing,
agrees that the waivers set forth in this Section 12.20 shall be effective to
the fullest extent now or hereafter permitted under any applicable law of any
other jurisdiction and are intended to be irrevocable for such purposes.


 


 


(Signature page follows.)


 


44

















 


IN
WITNESS WHEREOF, each of the Parties hereto has caused this Call Option
Agreement to be duly executed on their respective behalf, by their respective
officers thereunto duly authorized, as of the date first written above.


 


 


	
   

  	
  OAO UKRTELECOM

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ O. Gaiduk

  	
   

  
	
   

  	
  By:

  	
  Oleg V. Gaiduk

  
	
   

  	
  Title:

  	
  Head of the Management
  Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CETEL B.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ S. Fries

  	
   

  
	
   

  	
  By:

  	
  Swen Michael Fries

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ A. Zijlstra

  	
   

  
	
   

  	
  By:

  	
  Antonius Joseph Zijlstra,

  
	
   

  	
  Title:

  	
  Director

  
				



 


 


Signature page to Call Option Agreement.