Exhibit 4.5


 


Execution copy


 


 




 


 





PARTICIPATION INTEREST
PURCHASE 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. Purchase and Sale of participant
  interest

  
	
   

  	
   

  
	
  Section
  2.1

  	
  Basic
  Transaction

  
	
  Section
  2.2

  	
  Purchase Price

  
	
  Section 2.3

  	
  The Closing

  
	
  Section 2.4

  	
  Transfer of the
  Participation Interest

  
	
  Section
  2.5

  	
  Deliveries at the Closing

  
	
  Section
  2.6

  	
  Escrow
  Agreement

  
	
  Section
  2.7

  	
  Return of Purchase Price

  
	
   

  	
   

  
	
  Article III. Warranties Concerning the
  Transaction

  
	
   

  	
   

  
	
  Section
  3.1

  	
  Warranties of the Seller

  
	
  Section 3.2

  	
  Warranties of the
  Purchaser

  
	
   

  	
   

  
	
  Article IV. Warranties Concerning the
  Company

  
	
   

  	
   

  
	
  Section 4.1

  	
  Organization,
  Qualification, and Corporate Power

  
	
  Section
  4.2

  	
  Capitalization

  
	
  Section
  4.3

  	
  Noncontravention

  
	
  Section 4.4

  	
  Licenses,
  Permits, and Authorizations

  
	
  Section
  4.5

  	
  Directors
  and Officers

  
	
  Section
  4.6

  	
  Brokers’ Fees

  
	
  Section
  4.7

  	
  Title to Assets

  
	
  Section
  4.8

  	
  No Subsidiaries

  
	
  Section
  4.9

  	
  Financial
  Statements

  
	
  Section
  4.10

  	
  Recent Events

  
	
  Section
  4.11

  	
  Undisclosed Liabilities

  
	
  Section
  4.12

  	
  Legal
  Compliance

  
	
  Section
  4.13

  	
  Tax Matters

  
	
  Section
  4.14

  	
  Real Property

  
	
  Section
  4.15

  	
  Intellectual
  Property

  
	
  Section
  4.16

  	
  Company
  Licenses

  
	
  Section 4.17

  	
  Networks

  
	
  Section
  4.18

  	
  Contracts

  
	
  Section
  4.19

  	
  Powers
  of Attorney

  
	
  Section
  4.20

  	
  Insurance

  
	
  Section
  4.21

  	
  Litigation

  
	
  Section
  4.22

  	
  Employees

  
			



 


i

















 


	
  Section
  4.23

  	
  Employee
  Benefits

  
	
  Section
  4.24

  	
  Guaranties

  
	
  Section 4.25

  	
  Environment, Health,
  and Safety

  
	
  Section 4.26

  	
  Certain
  Business Relationships with the Company

  
	
  Section
  4.27

  	
  Unlawful
  Contributions

  
	
  Section
  4.28

  	
  Antitrust

  
	
  Section 4.29

  	
  Money
  Laundering and Unlawful Financial Activities

  
	
   

  	
   

  
	
  Article V. Pre-Closing Covenants

  
	
   

  	
   

  
	
  Section 5.1

  	
  General

  
	
  Section
  5.2

  	
  Notices
  and Consents

  
	
  Section
  5.3

  	
  Operation
  of Business

  
	
  Section 5.4

  	
  Participants
  Meeting; Amendments to Foundation Documents

  
	
  Section
  5.5

  	
  Preservation of Business

  
	
  Section 5.6

  	
  Full Access

  
	
  Section
  5.7

  	
  Notice
  of Developments

  
	
  Section
  5.8

  	
  Exclusivity

  
	
  Section
  5.9

  	
  Governmental
  Approval

  
	
  Section 5.10

  	
  Resignation from
  Corporate Bodies

  
	
  Section 5.11

  	
  Waiver of Pre-Emptive
  Rights

  
	
   

  	
   

  
	 
	
  Article VI. Post-Closing Covenants

  
	 
	
   

  	
   

  
	 
	
  Section 6.1

  	
  General

  
	 
	
  Section
  6.2

  	
  Litigation
  Support

  
	 
	
  Section 6.3

  	
  Transition

  
	 
	
  Section
  6.4

  	
  Confidentiality

  
	 
	
  Section
  6.5

  	
  Covenant
  Not to Compete

  
	 
	
   

  	
   

  
	 
	
  Article VII. Conditions to Obligations

  
	 
	
   

  	
   

  
	 
	
  Section 7.1

  	
  Conditions
  to Obligation of the Purchaser to Close

  
	 
	
  Section 7.2

  	
  Conditions
  to Obligation of the Seller to Close

  
	 
	
   

  	
   

  
	 
	
  Article VIII. Remedies for Breaches of
  This Agreement

  
	 
	
   

  	
   

  
	 
	
  Section
  8.1

  	
  Survival
  of Warranties

  
	 
	
  Section 8.2

  	
  Indemnification
  Provisions for Benefit of the Purchaser

  
	 
	
  Section 8.3

  	
  Indemnification
  Provisions for Benefit of the Seller

  
	 
	
  Section 8.4

  	
  Matters Involving
  Third Parties

  
	 
	
  Section 8.5

  	
  Determination of
  Adverse Consequences

  
	 
	
  Section
  8.6

  	
  Exclusive
  Remedies

  
	 
	
  Section
  8.7

  	
  Miscellaneous

  
	 
	
   

  	
   

  
	 
	
  Article IX. Effectiveness and Termination

  
	 
	
   

  	
   

  
	 
	
  Section 9.1

  	
  Effectiveness of Agreement

  
	 
	
  Section
  9.2

  	
  Termination of Agreement

  
	 
	
  Section
  9.3

  	
  Effect
  of Termination

  
	 
	
   

  	
   

  
						



 


ii

















 


	
  Article X. Miscellaneous

  
	
   

  	
   

  
	
  Section 10.1

  	
  Press Releases
  and Public Announcements

  
	
  Section
  10.2

  	
  Entire Agreement

  
	
  Section
  10.3

  	
  Succession and Assignment

  
	
  Section
  10.4

  	
  Counterparts

  
	
  Section 10.5

  	
  Headings

  
	
  Section 10.6

  	
  Notices

  
	
  Section
  10.7

  	
  Dispute
  Resolution

  
	
  Section
  10.8

  	
  Governing Law

  
	
  Section
  10.9

  	
  Judgment
  Currency

  
	
  Section 10.10

  	
  Third Party Beneficiaries

  
	
  Section
  10.11

  	
  Amendments
  and Waivers

  
	
  Section
  10.12

  	
  Remedies
  Cumulative

  
	
  Section
  10.13

  	
  Severability

  
	
  Section
  10.14

  	
  Expenses

  
	
  Section
  10.15

  	
  Construction

  
	
  Section 10.16

  	
  Denomination of
  Monetary References

  
	
  Section
  10.17

  	
  Payment of Taxes

  
	
  Section 10.18

  	
  Incorporation
  of Exhibits, Annexes, and Schedules

  
	
  Section
  10.19

  	
  Specific
  Performance

  
	
  Section
  10.20

  	
  Waiver
  of Immunity

  



 


iii

















 


EXHIBIT INDEX


 


	
  Exhibit A

  	
  Escrow Agreement

  
	
   

  	
   

  
	
  Exhibit B-1

  	
  Form of Founding Agreement

  
	
   

  	
   

  
	
  Exhibit B-2

  	
  Form of Charter

  
	
   

  	
   

  
	
  Exhibit C 

  	
  Company Participants’
  Meeting Agenda

  
	
   

  	
   

  
	
  Exhibit D

  	
  Historical Financial
  Statements

  
	
   

  	
   

  
	
  Exhibit F

  	
  Form of Waiver

  
	
   

  	
   

  
	
  Exhibit G-1

  	
  Form of Seller’s
  Certificate

  
	
   

  	
   

  
	
  Exhibit G-2

  	
  Form of Purchaser’s
  Certificate

  
	
   

  	
   

  
	
  Exhibit H

  	
  List of Management

  
	
   

  	
   

  
	
  Disclosure Schedule

  	
  Exceptions to Warranties
  Concerning the Company

  



 


iv

















 


PARTICIPATION INTEREST PURCHASE AGREEMENT


 


This
PARTICIPATION INTEREST PURCHASE AGREEMENT (the “Agreement”) entered into
as of November 5, 2002, by and between OAO Ukrtelecom, an open 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 Purchaser and the Seller are referred to collectively herein as the
“Parties.”


 


RECITALS


 


WHEREAS,
the Seller is currently one of the participants in the
Ukrainian-German-Dutch-Danish Joint Venture “Ukrainian Mobile Communications,”
(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”).
The Seller holds a participation interest equivalent to 51.0% of the registered
charter capital of the Company. The other participants of the Company and their
respective participation interests therein are as follows: TDC Mobile
International A/S (16.33%), PTT Telecom Kyiv (1%), KPN Telecom B.V. (15.33%);
and the Purchaser (16.33%);


 


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


 


WHEREAS,
upon the completion of the transactions contemplated by this Agreement, the
Purchaser will hold a 41.33% participation interest in the Company; and


 


WHEREAS,
concurrent with the transactions described above, the Seller desires to sell,
assign and deliver to the Purchaser, and the Purchaser desires to purchase and
accept from the Seller, a 25.0% participation interest in the Company (the “Participation
Interest”) on the terms and subject to the conditions set forth herein.


 


AGREEMENT


 


NOW
THEREFORE, in consideration of the foregoing and the respective  warranties, covenants and agreements of the
Parties contained herein, and for other good and


 


1

















 


valuable
consideration, the receipt and adequacy of which is 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
upon 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, dues, 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.


 


“Amended
Organizational Documents” has the meaning given in Section 2.4(iii).


 


“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.


 


“Building”
has the meaning given in Section 4.14(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 Kiev are open for business and are not
required or authorized to close.


 


“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 2.3.


 


“Closing
Date” has the meaning given in Section 2.3.


 


“Closing
Participants Meeting” has the meaning given in Section 2.4(iii).


 


2

















 


“Company”
has the meaning given in the Recitals.


 


“Company
Licenses” has the meaning given in Section 4.16.


 


“Company
Participation Interest” 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
of an entity), and “Controlling” and “Controlled” have the corresponding
meanings.


 


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


 


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


 


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


 


“Environmental,
Health, and Safety Laws” means all Ukrainian Laws 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.


 


“Essential
Equipment” has the meaning given in Section 4.17(i).


 


“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
Agreement” has the meaning given in Section 2.6.


 


“Financial
Statements” has the meaning given in Section 4.9.


 


3

















 


“Foundation
Documents” means 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.


 


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


 


“IFRS”
means International Financial Reporting Standards, consistently applied
throughout the periods indicated.


 


“Indemnified
Party” has the meaning given in Section 8.4.


 


“Indemnifying
Party” has the meaning given in Section 8.4.


 


“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).


 


“Knowledge”
means actual knowledge after reasonable investigation and due inquiry.  For the purposes of this definition, “due
inquiry” shall be inquiry of the officers and employees of the Company set
forth in Exhibit H.


 


“Leased
Real Property” has the meaning given in Section 4.14(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 4.15(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


 


4

















 


(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.


 


“Most
Recent Financial Statements” has the meaning given in Section 4.9.


 


“Most
Recent Fiscal Month End” has the meaning given in Section 4.9.


 


“Most
Recent Fiscal Year End” has the meaning given in Section 4.9.


 


“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 10.9.


 


“Ordinary
Course of Business” means 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 4.15(i).


 


“Owned
Real Property” has the meaning given in Section 4.14(i).


 


“Participation
Interest” has the meaning given in the Recitals.


 


“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 2.2.


 


“Purchaser”
has the meaning given in the Preamble.


 


“Rules”
has the meaning given in Section 10.7.


 


“Security
Interest” means any mortgage, pledge, lien, encumbrance, 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


 


5

















 


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.


 


“Services”
has the meaning given in Section 4.17(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.


 


“Subsidiary”
means any corporation with respect to which a specified Person (or a Subsidiary
thereof) owns a majority of the equity interest or has the power to vote or
direct the voting of sufficient securities to elect a majority of the directors
or otherwise Controls.


 


“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 8.4.


 


“Transaction
Documents” mean, collectively, this Agreement, the Call Option Agreement,
the Escrow Agreement, the Debt Restructuring Agreements, and any agreement
entered into to effect such agreements, 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 statute, law, ordinance, rule, code, administrative
interpretation, regulation, order, writ, injunction, directive, judgment,
ruling, decree or other requirement of any Ukrainian governmental authority.


 


6

















 


ARTICLE II.

PURCHASE AND SALE OF PARTICIPANT INTEREST.


 


Section 2.1                                   Basic Transaction.  On and subject to the terms and conditions of this Agreement, the
Purchaser agrees to purchase from the Seller, and the Seller agrees to sell and
transfer to the Purchaser, full legal and beneficial title to the Participation
Interest for the consideration specified below in this Article II.


 


Section 2.2                                   Purchase Price.  The purchase price to be paid by the Purchaser to the Seller for the
Participation Interest shall be equal to US$84.2 million (the “Purchase
Price”).  At Closing, the Purchaser
agrees to pay 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 2.6
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 to the Escrow Agent prior to Closing.


 


Section 2.3                                   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, commencing at 9:00 a.m. local time on the
date of the Closing Participants Meeting (the “Closing Date”).


 


Section 2.4                                   Transfer of the Participation
Interest.


 


(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 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 all, but not less than all, 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 2.2 of this Agreement.


 


(iii)                               On the Closing Date, the Seller shall convene
and take part in participants’ meeting (the “Closing Participants Meeting”)
of the Company with such agenda as set forth in Exhibit C, at which such
meeting the Seller shall vote in favor of the amended Founding Agreement and
the


 


7

















 


Charter of the Company in
the form of Exhibits B-1 and B-2 attached hereto (the “Amended
Organizational Documents”) such that the Purchaser, taking into
consideration its direct and indirect participation, becomes the majority
participant in the Company.


 


(iv)                              The title to the Participation Interest is
transferred to the Purchaser upon registration of, and shall be confirmed by a
notarized copy of, the Amended Organizational Documents, fully registered as
necessary under Ukrainian Law.


 


(v)                                 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; provided, however, that the Purchaser has
provided to the Seller all such documents which may be obtained only by the
Purchaser.  The Seller shall bear all
costs associated therewith with respect to its actions.


 


(vi)                              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 2.5                                   Deliveries at the Closing.  At the Closing, (i) the Seller will deliver to the Purchaser the
various certificates, instruments, and documents referred to in Section 7.1
hereof, (ii) the Purchaser will deliver to the Seller the various certificates,
instruments, and documents referred to in Section 7.2 hereof, (iii) the Seller
will deliver to the Purchaser a notarized copy of a protocol of the Closing
Participants Meeting approving the Amended Organizational Documents, and (iv)
the Purchaser will deliver to the Seller the consideration specified in Section
2.2 hereof in accordance with Section 2.6 hereof; and (v) the Escrow Agent will
deliver to the Seller, and the Seller will receive, a written confirmation that
the Purchaser has delivered the consideration specified in Section 2.2 hereof
in accordance with Section 2.6 hereof.


 


Section 2.6                                   Escrow Agreement.  The Seller shall enter into an
escrow agreement, substantially in the form of Exhibit A hereto (the “Escrow
Agreement”), with the Purchaser and the Escrow Agent pursuant to which the
Purchase Price shall be held in escrow and released to the Seller in accordance
with the terms thereof after the registration of the Amended Organizational
Documents as necessary under Ukrainian Law.


 


Section 2.7                                   Return of Purchase Price.  In the event that registration
of the Amended Organizational Documents, as necessary under Ukrainian Law, has
not occurred within thirty (30) calendar days of the Closing Date, then (i) the
Escrow Agent shall deliver to the Purchaser the balance of the Purchase Price
plus any accrued interest thereon in accordance with the Escrow Agreement, and
the Purchaser’s obligation to pay the Purchase Price shall terminate; (ii) the
Seller’s obligation to transfer the Participation Interest shall terminate.


 


8

















 


ARTICLE III.

WARRANTIES CONCERNING THE TRANSACTION.


 


Section 3.1                                   Warranties of the Seller.  The Seller warrants to the
Purchaser that the statements contained in this Section 3.1 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 Closing Date (and to that end shall
be deemed repeated again at such date, as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3.1).


 


(i)                                     Organization of the Seller.  The Seller is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.


 


(ii)                                  Authorization of Transaction.  The Seller has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the legally valid and binding obligation
of the Seller, enforceable in accordance with its terms and conditions. The
Seller has given all notices and received all authorizations, consents, or
approvals of any government or governmental agency necessary in order to
consummate the transactions contemplated by this Agreement, including, without
limitation, those notices, authorizations, consents, or approvals listed in
Schedule 3.1(ii).


 


(iii)                               Noncontravention.  Neither the execution and the delivery of this Agreement, nor the
consummation of the Acquisition contemplated hereby, will (A) 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 foundation document,
charter, bylaws or other organizational document or (B) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which the Seller is a party or by which it is bound or
to which any of its assets is subject to the extent that any of the foregoing
events would affect the Seller’s ownership in the Company or negatively affect
the consummation of the Acquisition.


 


(iv)                              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 the Purchaser or the Company could
become liable or obligated.


 


(v)                                 Ownership of Participation Interest.  The Seller holds of record and owns
beneficially the Participation Interest, free and clear of any restrictions on
transfer (other than any restrictions under applicable law and the Foundation
Documents), Taxes, security interests, mortgages, pledges, liens, encumbrances,
charges, options, warrants, purchase rights, contracts, commitments, equities,
claims, and demands. 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 charter capital of the Company (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 any charter
capital of the Company.


 


9

















 


(vi)                              Transfer Taxes.  No capital, transfer, stamp duty, stamp duty reserve or documentary,
issuance or transfer taxes or duties are payable by or on behalf of the Company
on (A) the sale, transfer or delivery by the Seller of the Participation
Interest pursuant hereto or the sale thereof, or (B) the consummation of the
transactions contemplated by this Agreement.


 


(vii)                           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.


 


Section 3.2                                   Warranties of the Purchaser.  The Purchaser warrants to the
Seller that the statements contained in this Section 3.2 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 Closing Date (and to that end shall be
deemed repeated again at such date, as though the Closing Date were substituted
for the date of this Agreement throughout this Section 3.2).


 


(i)                                     Organization of the Purchaser.  The Purchaser is a limited liability company
established and acting under the laws of the Netherlands.


 


(ii)                                  Authorization of Transaction.  Except for any shareholder approvals
required in connection herewith, the Purchaser has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the legally valid and binding obligation 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.


 


(iii)                               Noncontravention.  Neither the execution and the delivery of this Agreement, nor the
consummation of the Acquisition contemplated hereby, will (A) 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 foundation
document, charter, bylaws or other organizational document or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Purchaser is a party or
by which it is bound or to which any of its assets is subject to the extent
that any of the foregoing events would negatively affect the consummation of
the Acquisition.


 


(iv)                              Brokers’ Fees.  The Purchaser has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with


 


10

















 


respect to the transactions
contemplated by this Agreement for which the Seller could become liable or
obligated.


 


ARTICLE IV.

WARRANTIES CONCERNING THE COMPANY.


 


The
Seller warrants to the Purchaser that the statements contained in this Article
IV 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 Closing Date (and to
that end shall be deemed repeated again at such date, as though the Closing
Date were substituted for the date of this Agreement throughout this Article
IV), except (i) 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 (ii) 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 IV 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 IV.


 


Section 4.1                                   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 board of directors and the management of the
Company). 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.


 


11

















 


Section 4.2                                   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, 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 4.3                                   Noncontravention.  Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (excluding those transactions contemplated in the
agreements, other than this Agreement, listed in the Recitals hereto and to
which the Seller is not a party), 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 (excluding those transactions
contemplated in the agreements, other than this Agreement, listed in the
Recitals hereto and to which the Seller is not a party).


 


Section 4.4                                   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 4.4, “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 4.5                                   Directors and Officers


 


Schedule 4.5 of the
Disclosure Schedule lists the directors and officers of the Company as of the
date of this Agreement.


 


12

















 


Section 4.6                                   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 4.7                                   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 4.8                                   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 4.9                                   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 4.9, 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 4.10                            Recent Events.  Since the Most Recent Fiscal
Month End until the Closing 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;


 


13

















 


(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;


 


14

















 


(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 Closing Date, an
event occurs or might occur that would result in a breach of one or more
warranties set forth in this Section 4.10, 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 10.7,
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 4.10 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.


 


15

















 


Section 4.11                            Undisclosed Liabilities.  Except for Liabilities set
forth in Schedules 4.9 and 4.13, 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 4.12                            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 4.13                            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 4.13 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.


 


16

















 


(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 Closing Date in accordance with the past custom and practice
of the Company in filing its Tax Returns.


 


Section 4.14                            Real Property.


 


(i)                                     Schedule 4.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
4.14(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 portion thereof as the case may be), to which
the Company has an ownership interest, except to the extent that the


 


17

















 


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 4.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 4.14(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;


 


(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


 


18

















 


that are customarily granted
in due course after proper application therefor.


 


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


 


Section 4.15                            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 4.15(iii) of the Disclosure Schedule lists
each such item of Intellectual Property owned by the Company (the “Owned IP
Rights”), and Schedule 4.15(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 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:


 


19

















 


(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 4.16                            Company Licenses.


 


(i)                                     Schedule 4.16(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.


 


(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.


 


20

















 


(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 4.17                            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 4.17(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 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


 


21

















 


coverage areas described in
the maps set out in Schedule 4.17(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 4.17 of the Disclosure Schedule.


 


(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.


 


22

















 


(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 4.18                            Contracts. 
Schedule 4.18 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 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;


 


23

















 


(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)                          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;


 


(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;


 


24

















 


(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 4.18 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 4.19                            Powers of Attorney.  Except as set forth in
Schedule 4.19, 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 4.20                            Insurance. 
Schedule 4.20 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;


 


(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.


 


25

















 


Section 4.21                            Litigation.  Schedule 4.21 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 4.21 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 (excluding those transactions contemplated in the agreements, other
than this Agreement, listed in the Recitals hereto and to which the Seller is
not a party).


 


Section 4.22                            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 4.22, 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 4.23                            Employee Benefits.  Schedule 4.23 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 4.24                            Guaranties.  The Company is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.


 


Section 4.25                            Environment, Health, and Safety.


 


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


 


26

















 


the Environmental, Health,
and Safety Laws of Ukraine applicable to the Company.


 


Section 4.26                            Certain Business Relationships with
the Company.  Except as set forth in
Schedule 4.26, 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 4.27                            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 4.28                            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 4.28 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 4.29                            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.


 


ARTICLE V.

PRE-CLOSING COVENANTS.


 


The
Parties agree as follows with respect to the period between the execution of
this Agreement and the Closing.


 


Section 5.1                                   General.  Each
of the Parties will use its best endeavors to take all action and to do all
things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Article
VII hereof).


 


27

















 


Section 5.2                                   Notices and Consents.  The Seller will use its best endeavors
to cause the Company to give any notices to third parties, and to use its best
endeavors to obtain any third party consents, that the Purchaser may request in
connection with the matters referred to in Section 4.3 hereof. Each of the
Parties will (and the Seller will cause the Company to) give any notices to,
make any filings with, and use its best endeavors to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in Section 3.1(ii), Section 3.2(ii), and Section
4.3  hereof.


 


Section 5.3                                   Operation of Business.  The Seller will use its best
endeavors not to cause or permit the Company to engage in any practice, take
any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, the Seller will not
cause or permit the Company to (i) declare, set aside, or pay any dividend or
make any distribution with respect to its equity securities or redeem, purchase,
or otherwise acquire any of its equity securities to the extent permitted by
Ukrainian Law, (ii) merge, amalgamate, consolidate with, or acquire any equity
securities or assets of, any other Person, or (iii) otherwise engage in any
practice, take any action, or enter into any transaction of the sort described
in Section 5.8 hereof. The Seller hereby obligates itself from the date of
entry into force of the present Agreement until the earlier of (i) the
completion of the registration of the Amended Organizational Documents and (ii)
the termination of this Agreement to exercise any rights arising from the
Participation Interest, especially voting rights which it has or will have at
the highest governing bodies of the Company as a participant, as necessary or desirable
to consummate the transactions contemplated by this Agreement


 


Section 5.4                                   Participants Meeting; Amendments to
Foundation Documents.


 


(i)                                     The Seller will use its best endeavors, as
soon as practicable following the date hereof, to cause a participants meeting
of the Company to be convened for the purpose of approving the Amended
Organizational Documents and for such other actions as are set forth in the
form of Company Participants Meeting Agenda attached hereto as Exhibit C.


 


(ii)                                  The Seller shall vote in favor of the
approval of each of the Amended Organizational Documents.


 


Section 5.5                                   Preservation of Business.  The Seller will use its best
endeavors to cause the Company to keep its business and properties
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with lessors, licensors, suppliers,
customers, and employees.


 


Section 5.6                                   Full Access.  The Seller will permit, and the Seller will
use its best endeavors to cause the Company to permit, representatives of the
Purchaser to have reasonable access to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to the Company.


 


28

















 


Section 5.7                                   Notice of Developments.  From the date hereof through
the Closing, 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 or any other Transactional
Document, 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
transactions contemplated by this Agreement or any other Transactional Document
or that such transactions otherwise may violate the rights of, or confer
remedies upon, such Person.  No such
notice provided pursuant to this Section 5.7 shall be deemed (i) to have
amended the Disclosure Schedule, (ii) to have qualified the warranties
contained in Article III or Article IV hereof, and (iii) to have cured any
breach of warranty that otherwise might have existed hereunder by reason of
such development.


 


Section 5.8                                   Exclusivity.  Neither the Seller nor its Affiliates will
(a7nd the Seller will not cause or permit any of its representatives or 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 not vote its interest in the Company in favor of any such acquisition
structured as a merger, consolidation, or share exchange. 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 5.9                                   Governmental Approval.


 


(i)                                     Each of the Parties will file (and the Seller
will use its best endeavors to cause the Company to file) any notification and
report forms and related material that it may be required to file with the UAC,
will use its best endeavors to obtain (and the Seller will use its best
endeavors to cause the Company to use its best endeavors to obtain) termination
of any applicable waiting period, and will make (and the Seller will use its
best endeavors to cause the Company to make) any further filings pursuant
thereto that may be necessary, proper, or advisable in connection therewith.


 


(ii)                                  The Seller is obliged to support the
Purchaser in connection with the preparation of the application for the
approval by the UAC or other relevant governmental authority of the
transactions contemplated by this Agreement and in course of the entire
clearance procedure.  In the event that
an order prohibiting such transactions is issued by


 


29

















 


the UAC or such relevant
governmental authority, the Parties shall jointly use their commercially
reasonable best endeavors to remove the reasons for such order.  In case the Purchaser decides to appeal
against such order the Seller is obliged to support the Purchaser with regard
to the preparation of such appeal and in course of the respective proceedings.


 


Section 5.10                            Resignation from Corporate Bodies.  The
Parties will use their best endeavors to cause the removal, on or before the
Closing, of the then-current members of the Management Board of the Company
from their position and the new members of this body of the Company shall be
elected in accordance with provisions as set out in the Closing Organizational
Documents.


 


Section 5.11                            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,
in each case substantially in the form of Exhibit F hereto.


 


ARTICLE VI.

POST-CLOSING COVENANTS.


 


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


 


Section 6.1                                   General.  In
case at any time after the Closing any further action is 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 reasonably may request, all at
the sole cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under Article VIII hereof). The Seller
acknowledges and agrees that from and after the Closing the Purchaser will be
entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the Company.


 


Section 6.2                                   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, each of the other Parties will
cooperate with it and its counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their 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 VIII hereof).


 


30

















 


Section 6.3                                   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 Business to the Purchaser from and after the
Closing.


 


Section 6.4                                   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
6.4(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 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 6.4 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.


 


31

















 


Section 6.5                                   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 the prior written consent of the
Purchaser, will engage as an operator directly or through contractual or other
arrangements in the provision of cellular communications services in Ukraine 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 no ownership of less than 1% of the outstanding share capital of
any publicly traded corporation shall be deemed to engage solely by reason
thereof in such services; and further provided that the ownership of any
corporation which occurs following the Closing Date as the result of a merger
between (i) a Party or (ii) a Person (x) under common Control with, or Controlling,
such Party, and (y) the net revenues of which constitute more than 30% of the
total net revenues of such Party and its Affiliates on a consolidated basis,
and a third party which results in the ownership by such Party or an Affiliate
of such Party of a Person directly or through contractual or other arrangements
engaged as an in the provision of cellular communications services in Ukraine
in any of the GSM 900/1800 standard, or that (1) 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 (2) 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,
shall not be deemed a breach of this Section 6.5. The Parties agree that they
consider that the restrictions contained in this Section 6.5 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 Section 6.5 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 VII.

CONDITIONS TO OBLIGATIONS.


 


Section 7.1                                   Conditions to Obligation of the
Purchaser to Close.  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 Section 3.1 and
Article IV hereof shall be true, complete and accurate in all material respects
at, and as of, the Closing Date;


 


32

















 


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


 


(iii)                               the Company shall have procured all of the
third party consents specified in Section 5.2 hereof, all of the corporate
action specified in Section 5.4 hereof, and all of the resignations specified
in Section 5.10 hereof;


 


(iv)                              the Purchaser shall have been satisfied and
shall have determined in its sole and absolute discretion that the execution
and the delivery of any Transaction Document (including this Agreement), and
the consummation of the transactions contemplated hereby or thereby, will not
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, law or other restriction of any government,
governmental agency, or court to which the Company or the Participation
Interest are subject or any provision of the charter or any other organizational
or foundation document of the Company. 
No prior review of any of the foregoing by the Purchaser shall affect in
any manner whatsoever the Purchaser’s right to determine whether the execution
and delivery of the Transaction Documents (including this Agreement), or the
consummation of the transactions contemplated hereby or thereby, would result
in any such violation;


 


(v)                                 no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any national, supranational, federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of
any of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Purchaser to own the
Participation Interest and to control the Company, or (D) affect adversely the
right of the Company to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling, or charge shall be in
effect);


 


(vi)                              the Closing Participants Meeting has been
duly convened in accordance with Ukrainian Law;


 


(vii)                           the Parties and the Company shall have
received all authorizations, consents, and approvals of governments and
governmental agencies necessary for the transactions contemplated by the
Transaction Documents, including, without limitation, such authorizations,
consents, and approvals referred to in Section 3.1(ii), Section 3.2(ii), and
Section 4.3 hereof (including any necessary approvals contemplated herein by
the UAC);


 


(viii)                        the approval by the UAC of the purchase of
the Participation Interest under the present Agreement as well as approvals of
the UAC in respect of the acquisition of participatory interests in the Company
as contemplated by this Agreement;


 


(ix)                                the Escrow Account shall have been opened in
accordance with the Escrow Agreement;


 


33

















 


(x)                                   each of the Debt Restructuring Agreements has
been executed and delivered by all parties thereto and is in full force and
effect;


 


(xi)                                all waivers of any right of first refusal for
the purchase of, or any pre-emptive rights with respect to, the sale and
transfer of any participatory interest in the Company as contemplated by this
Agreement, in each case substantially in the form of Exhibit F hereto, have
been granted by the relevant parties;


 


(xii)                             the Seller shall have delivered to the
Purchaser a certificate in the form of Exhibit G-1 to the effect that each of
the conditions specified above in Section 7.1(i)-(xi) is satisfied in all
respects;


 


(xiii)                          all actions to be taken by the Seller in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and substance to
the Purchaser, and all other actions relating to the consummation of the
Acquisition have been completed to the satisfaction of the Purchaser;


 


(xiv)                         the conditions precedent to all other
transactions relating to the Company as may be contemplated by the Purchaser
have been met to the satisfaction of the Purchaser;


 


(xv)                            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;


 


(xvi)                         the Purchaser shall have received the
resignations, effective as of the Closing, of each director and officer of the
Company elected or appointed upon the Seller’s proposal other than those whom
the Purchaser shall have specified in writing at least ten (10) Business Days
prior to the Closing;


 


(xvii)                      the Call Option Agreement shall have been
executed; and


 


(xviii)                   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.


 


The
Purchaser may waive any condition specified in this Section 7.1 if in writing
and executed by a duly authorized executive officer of the Purchaser at or
prior to the Closing.


 


Section 7.2                                   Conditions to Obligation of the
Seller to Close.  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:


 


34

















 


(i)                                     the warranties set forth in Section 3.2
hereof shall be true, complete and accurate in all material respects at and as
of the Closing Date;


 


(ii)                                  the Purchaser shall have performed and
complied with all of its covenants hereunder in all material respects through
the Closing;


 


(iii)                               no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall be in
effect);


 


(iv)                              the Escrow Account shall have been opened in
accordance with the Escrow Agreement;


 


(v)                                 the Purchaser shall have delivered to the
Seller a certificate in the form of Exhibit G-2 to the effect that each of the
conditions specified above in Section 7.2(i)-(iv) is satisfied in all respects;


 


(vi)                              the Parties and the Company shall have
received all authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3.1(ii), Section 3.2(ii), and
Section 4.3 hereof (including any necessary approvals of the transactions
contemplated herein by the UAC, and, if necessary, receipt by the Seller of a
license from the National Bank of Ukraine to maintain the Purchase Price in the
escrow account pursuant to the Escrow Agreement for six months); and


 


(vii)                           the Call Option Agreement shall have been
executed.


 


The
Seller may waive any condition specified in this Section 7.2 if in writing and
executed by a duly authorized executive officer of the Seller at or prior to
the Closing.


 


ARTICLE
VIII.

REMEDIES FOR BREACHES OF THIS AGREEMENT.


 


Section 8.1                                   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 Closing Date.


 


Section 8.2                                   Indemnification Provisions for
Benefit of the Purchaser.  In
the event the Seller breaches (or in the event any third party alleges facts
that, if true, would mean the Seller has breached) any of its warranties
contained herein, provided that the Purchaser makes a written claim for indemnification
against the Seller pursuant to Section 10.7 below within the period set forth
in Section 8.1, 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


 


35

















 


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 25% 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 8.3                                   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 8.1 hereof, provided that the Seller makes a written claim for
indemnification against the Purchaser pursuant to  Section 10.7 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 8.4                                   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 “Indemnifying Party”) under this Article VIII, 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.


 


36

















 


(iii)                               So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with Section
8.4(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
8.4(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 VIII.


 


Section 8.5                                   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
VIII. All indemnification payments under this Article VIII shall be deemed
adjustments to the Purchase Price.


 


Section 8.6                                   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 8.7                                   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.


 


37

















 


(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 IX.

EFFECTIVENESS AND TERMINATION.


 


Section 9.1                                   Effectiveness of Agreement.  This Agreement shall be
binding upon its signing and shall become effective upon the date hereof
(subject to termination pursuant to Section 9.2 below).  This Agreement shall remain in full force
and effect until completion of all obligations of the Parties or until
terminated pursuant to Section 9.2 below.


 


Section 9.2                                   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.


 


Section 9.3                                   Effect of Termination.  If any Party terminates this
Agreement pursuant to Section 9.2 hereof, all rights and obligations of the
Parties hereunder shall terminate without any Liability of any Party to any
other Party (except for any Liability of any Party then in breach).


 


ARTICLE X.

MISCELLANEOUS.


 


Section 10.1                            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 shall advise the
other Party prior to making the disclosure).


 


38

















 


Section 10.2                            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 10.3                            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 assign either this
Agreement or any of its rights, interests, or obligations hereunder with the
prior written approval of the Purchaser, such approval not to be unreasonably
withheld.  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 10.3, 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 10.4                            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 10.5                            Headings.  The
table of contents, exhibit index and article and section 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 10.6                            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

Attention:

Facsimile: +380 44
234-3957


 


(ii)                                  If to the Purchaser:


 


Cetel
B.V.

Strawinskylaan 1243

1077 XX Amsterdam


 


39

















 


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 actually 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.


 


Section 10.7                            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 Stockholm, Sweden, 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.


 


40

















 


Section 10.8                            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 10.9                            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.


 


Section 10.10                     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 10.11                     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 or
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 10.12                     Remedies Cumulative.  Subject to Section 8.6, the
rights, powers and remedies provided to a Party in this Agreement are in
addition to, and do not exclude or limit, any right, power or remedy provided
by law or equity or any other agreement.


 


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Section 10.13                     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 10.14                     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 10.15                     Construction.  The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. 
Any reference to any national, supranational, federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word “including” shall mean including without limitation. The Parties intend
that each  warranty and covenant
contained herein shall have independent significance. If any Party has breached
any  warranty or covenant contained
herein in any respect, the fact that there exists another warranty or covenant
relating to the same subject matter (regardless of the relative levels of
specificity) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first warranty or
covenant.


 


Section 10.16                     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 10.17                     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 10.18                     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.


 


Section 10.19                     Specific Performance.  Each of the Parties
acknowledges and agrees that the other Parties 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 Parties 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
10.7 hereof), in addition to any other remedy to which they may be entitled, at
law or in equity.


 


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Section 10.20                     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 10.20 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.)


 


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


 


 


	
   

  	
  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 Participation Interest Purchase
Agreement