Exhibit 4.7


 


Execution Copy


 




 





 


 


PUT AND CALL OPTION AGREEMENT


 


BY AND BETWEEN


 


TDC MOBILE INTERNATIONAL A/S


 


AS “SELLER”


 


AND


 


MOBILE TELESYSTEMS OJSC


 


AS “PURCHASER”


 


 


DATED AS OF NOVEMBER 5, 2002




 


 





 

















 


TABLE OF CONTENTS


 


	
  Article I. Definitions

  
	
   

  
	
  Section
  1.1

  	
  Defined Terms

  
	
   

  	
   

  
	
  Article II. Purchaser Call Option

  
	
   

  
	
  Section 2.1

  	
  Call Option

  
	
  Section
  2.2

  	
  Call
  Purchase Price

  
	
  Section
  2.3

  	
  Exercise
  of Call Option

  
	
   

  	
   

  
	
  Article III. Seller Put Option

  
	
   

  
	
  Section 3.1

  	
  Put Option

  
	
  Section
  3.2

  	
  Put
  Purchase Price

  
	
  Section
  3.3

  	
  Exercise
  of Put Option

  
	
   

  	
   

  
	
  Article IV. Consequences of Exercise of an
  Option

  
	
   

  
	
  Section
  4.1

  	
  Priority
  of Exercise

  
	
  Section 4.2

  	
  Sale of Participation
  Interest

  
	
  Section
  4.3

  	
  Beneficial
  Interest

  
	
   

  	
   

  
	
  Article V. Pre-Closing Covenants

  
	
   

  
	
  Section
  5.1

  	
  Transfer
  Restrictions

  
	
  Section
  5.2

  	
  Voting
  Arrangements

  
	
  Section 5.3

  	
  Debt Restructuring
  and Guarantee

  
	
  Section 5.4

  	
  Participants
  Meeting; Amendments to Foundation Documents

  
	
  Section
  5.5

  	
  Notices
  and Consents

  
	
  Section
  5.6

  	
  Notice
  of Developments

  
	
  Section
  5.7

  	
  Exclusivity

  
	
  Section
  5.8

  	
  Governmental
  Approval

  
	
  Section 5.9

  	
  Waiver of Pre-Emptive
  Rights

  
	
  Section
  5.10

  	
  Participants’
  Meeting

  
	
  Section 5.11

  	
  No Acceleration, No
  Payments

  
	
  Section
  5.12

  	
  Escrow
  Agreement

  
	
   

  	
   

  
	
  Article VI. Warranties of the Seller

  
	
   

  
	
  Section
  6.1

  	
  Organization of the Seller

  
	
  Section 6.2

  	
  Authorization of
  Transaction

  
	
  Section
  6.3

  	
  Noncontravention

  
	
  Section
  6.4

  	
  Brokers’ Fees

  
	
  Section 6.5

  	
  Ownership of
  Participation Interest

  
	
  Section
  6.6

  	
  Transfer Taxes

  



 


i

















 


	
  Article VII. Warranties of the Purchaser

  
	
   

  
	
  Section 7.1

  	
  Organization of the
  Purchaser

  
	
  Section 7.2

  	
  Authorization of
  Transaction

  
	
  Section
  7.3

  	
  Noncontravention

  
	
  Section
  7.4

  	
  Brokers’ Fees

  
	
   

  	
   

  
	
  Article VIII. Warranties Concerning the
  Company

  
	
   

  
	
  Section 8.1

  	
  Organization,
  Qualification, and Corporate Power

  
	
  Section
  8.2

  	
  Capitalization

  
	
  Section
  8.3

  	
  Noncontravention

  
	
  Section 8.4

  	
  Licenses,
  Permits, and Authorizations

  
	
  Section
  8.5

  	
  Directors
  and Officers

  
	
  Section
  8.6

  	
  Brokers’ Fees

  
	
  Section
  8.7

  	
  Title to Assets

  
	
  Section
  8.8

  	
  No Subsidiaries

  
	
  Section
  8.9

  	
  Financial
  Statements

  
	
  Section
  8.10

  	
  Recent Events

  
	
  Section
  8.11

  	
  Undisclosed Liabilities

  
	
  Section
  8.12

  	
  Legal
  Compliance

  
	
  Section
  8.13

  	
  Tax Matters

  
	
  Section
  8.14

  	
  Real Property

  
	
  Section
  8.15

  	
  Intellectual
  Property

  
	
  Section
  8.16

  	
  Company
  Licenses

  
	
  Section 8.17

  	
  Networks

  
	
  Section
  8.18

  	
  Contracts

  
	
  Section
  8.19

  	
  Powers
  of Attorney

  
	
  Section
  8.20

  	
  Insurance

  
	
  Section
  8.21

  	
  Litigation

  
	
  Section
  8.22

  	
  Employees

  
	
  Section
  8.23

  	
  Employee
  Benefits

  
	
  Section
  8.24

  	
  Guaranties

  
	
  Section 8.25

  	
  Environment, Health,
  and Safety

  
	
  Section 8.26

  	
  Certain
  Business Relationships with the Company

  
	
  Section
  8.27

  	
  Unlawful
  Contributions

  
	
  Section
  8.28

  	
  Antitrust

  
	
  Section 8.29

  	
  Money
  Laundering and Unlawful Financial Activities

  
	
   

  	
   

  
	
  Article IX. Conditions to Obligations

  
	
   

  
	
  Section 9.1

  	
  Conditions
  to Obligations of the Purchaser

  
	
  Section 9.2

  	
  Conditions to
  Obligations of the Seller

  
	
  Section
  9.3

  	
  Fulfillment of Conditions

  
	
  Section
  9.4

  	
  Postponement
  of Closing

  
	
   

  	
   

  
	
  Article X. Closing

  
	
   

  
	
  Section
  10.1

  	
  Basic
  Transaction

  
	
  Section
  10.2

  	
  Purchase Price

  
	
  Section 10.3

  	
  Purchase Price Adjustment

  



 


ii

















 


	
  Section
  10.4

  	
  The Closing

  
	
  Section 10.5

  	
  Transfer of the
  Participant’s Interest

  
	
  Section
  10.6

  	
  Deliveries at the Closing

  
	
   

  	
   

  
	
  Article XI. Post-Closing Covenants

  
	
   

  
	
  Section 11.1

  	
  General

  
	
  Section
  11.2

  	
  Litigation
  Support

  
	
  Section
  11.3

  	
  Transition

  
	
  Section
  11.4

  	
  Confidentiality

  
	
  Section
  11.5

  	
  Covenant
  Not to Compete

  
	
   

  	
   

  
	
  Article XII. Remedies for Breaches of
  This Agreement

  
	
   

  
	
  Section
  12.1

  	
  Survival
  of Warranties

  
	
  Section 12.2

  	
  Indemnification
  Provisions for Benefit of the Purchaser

  
	
  Section
  12.3

  	
  Indemnification
  Provisions for Benefit of the Seller

  
	
  Section 12.4

  	
  Matters Involving
  Third Parties

  
	
  Section 12.5

  	
  Determination of
  Adverse Consequences

  
	
  Section
  12.6

  	
  Exclusive
  Remedies

  
	
  Section
  12.7

  	
  Miscellaneous

  
	
   

  	
   

  
	
  Article XIII. Miscellaneous

  
	
   

  
	
  Section
  13.1

  	
  Further
  Assurances

  
	
  Section 13.2

  	
  Press Releases
  and Public Announcements

  
	
  Section
  13.3

  	
  Entire
  Agreement

  
	
  Section 13.4

  	
  Succession and Assignment

  
	
  Section
  13.5

  	
  Counterparts

  
	
  Section 13.6

  	
  Headings

  
	
  Section 13.7

  	
  Notices

  
	
  Section
  13.8

  	
  Dispute
  Resolution

  
	
  Section
  13.9

  	
  Governing Law

  
	
  Section
  13.10

  	
  Judgment
  Currency

  
	
  Section 13.11

  	
  Third Party Beneficiaries

  
	
  Section
  13.12

  	
  Amendments
  and Waivers

  
	
  Section
  13.13

  	
  Severability

  
	
  Section
  13.14

  	
  Expenses

  
	
  Section
  13.15

  	
  Construction

  
	
  Section 13.16

  	
  Denomination of
  Monetary References

  
	
  Section
  13.17

  	
  Payment of Taxes

  
	
  Section 13.18

  	
  Incorporation
  of Exhibits, Annexes and Schedules

  
	
  Section
  13.19

  	
  Specific
  Performance

  



 


iii

















 


EXHIBIT INDEX


 


	
  Schedule
  A

  	
  —

  	
  Call Purchase Price

  
	
   

  	
   

  	
   

  
	
  Schedule B

  	
  —

  	
  Put Purchase Price

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  —

  	
  Form of Escrow Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit B-1

  	
  —

  	
  Form of Interim Founding
  Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit B-2

  	
  —

  	
  Form of Interim Charter

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
  —

  	
  Form of Agenda for Closing
  Participants’ Meeting

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
  —

  	
  Historical Financial
  Statements

  
	
   

  	
   

  	
   

  
	
  Exhibit F

  	
  —

  	
  Form of Participants
  Waiver

  
	
   

  	
   

  	
   

  
	
  Exhibit G

  	
  —

  	
  Form of Seller’s
  Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit H

  	
  —

  	
  List of Management

  
	
   

  	
   

  	
   

  
	
  Exhibit K

  	
  —

  	
  Form of Reporting
  Standards

  
	
   

  	
   

  	
   

  
	
  Disclosure Schedule

  	
  —

  	
  Exemptions to Warranties
  Concerning the Company

  



 


iv

















 


PUT AND CALL OPTION AGREEMENT


 


This PUT AND CALL OPTION
AGREEMENT,  dated as of November 5,
2002, (the “Agreement”), is made by and between TDC Mobile International
A/S, a company established and existing under the laws of Denmark with its
registered seat at Larslejsstraede 6, 0900, Copenhagen C, Denmark (the “Seller”),
and Mobile TeleSystems OJSC, an open joint stock company established and
existing under the laws of the Russian Federation with its registered seat at
Marksistskaya Street 4, Moscow 109147, Russian Federation (the “Purchaser”).  The Seller and the Purchaser are referred to
collectively herein as the “Parties.”


 


RECITALS


 


WHEREAS, the Seller is
currently holding a participation interest of 16.33% of the registered charter
capital of the Ukrainian-German-Dutch-Danish Joint Venture “Ukrainian Mobile
Communications in Ukraine” (the “Company”), a company organized under
the laws of Ukraine in the form of a limited liability company, with its
registered address at 21, Moskovska Street, Kyiv, Ukraine, identification code
#14333937 according to the Uniform State Register of Enterprises and Organizations
of Ukraine, whose business includes, without limitation, the establishment and
operation of public cellular communications networks in Ukraine, as well as
provision of interregional and international communications services (the “Business”);


 


WHEREAS, the other
participants of the Company and their respective participation interests
therein are as follows: Open Joint Stock Company Ukrtelecom (51%), Cetel B.V.
(16.33%), KPN Telecom B.V. (15.33%) and PTT Telecom Kyiv (1.0%);


 


WHEREAS, concurrently with
the entering into of this Agreement, (i) the Purchaser will enter into a
participation interest purchase agreement with KPN Telecom B.V. and PTT Telecom
Kyiv for the purchase of 100% of PTT Telecom Kyiv (the “PTT Purchase
Agreement”); (ii) the Purchaser will enter into a participation interest
purchase agreement with KPN Telecom B.V. for the purchase of a 15.33%
participation interest in the Company (the “KPN Purchase Agreement”);
(iii) Purchaser will enter into a participation interest purchase agreement
with Deutsche Telekom AG and Cetel B.V. for the purchase of a 16.33%
participation interest in the Company (the “Cetel Purchase Agreement”);
and (iv) Cetel B.V. will enter into a participation interest purchase agreement
with Open Joint Stock Company Ukrtelecom for the purchase of a 25%
participation interest in the Company (the “Ukrtelecom Purchase Agreement”),
which agreement Cetel B.V. will subsequently assign to the Purchaser
(collectively, the “Concurrent Purchase Agreements”);


 


WHEREAS, concurrently with the
entering into of this Agreement, Cetel B.V. will enter into a put and call
option agreement with Open Joint Stock Company Ukrtelecom with regard to a 26%
participation interest in the Company (the “Ukrtelecom Option Agreement”),
which agreement Cetel B.V. will subsequently assign to the Purchaser;


 


WHEREAS, concurrently with
the entering into of this Agreement and the Concurrent Purchase Agreements, (i)
the Company and Telki Holding Company B.V. will enter into an amendment to the
Credit Facility Agreement No. CO1-97/UA, dated January 5, 1997; (ii) the
Company and Telki Holding Company B.V. will enter into an amendment to the
Equipment and Service Credit Facility Agreement No. W01-95/UA, dated November
1, 1995; (iii) the Company and Deutsche Telekom AG will enter into an amendment
to the


 


1

















 


Credit Facility Agreement No. C02-97/UA,
dated January 5, 1997; (iv) the Company and Deutsche Telekom AG will enter into
an amendment to the Equipment and Service Credit Facility Agreement No.
W02-95/UA, dated November 1, 1995; (v) the Company and the Seller will enter
into an amendment to the Credit Facility Agreement No. C03-97/UA, dated January
5, 1997; and (vi) the Company and the Seller will enter into an amendment to
the Equipment and Service Credit Facility Agreement No. W03-95/UA, dated
November 1, 1995 (collectively, the “Debt Restructuring Agreements”),
each such agreement to become effective as of the Control Acquisition Date;


 


WHEREAS, upon the completion
of the transactions contemplated by this Agreement and each Concurrent Purchase
Agreement, the Purchaser will, directly or indirectly, hold a 57.67%
participation interest in the Company and a call option with regard to the
remaining 42.33% participation interest (including the call option granted
pursuant to this Agreement); and


 


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


 


AGREEMENT


 


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


 


ARTICLE I.


DEFINITIONS.


 


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


 


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


 


“Adverse Consequences”
means all actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees, rulings,
damages, penalties, fines, costs, amounts paid in settlement, Liabilities,
obligations, Taxes, liens, losses, expenses, and fees, including court costs
and reasonable attorneys’ fees and expenses resulting from, arising out of,
relating to or caused by a breach of any warranty contained in the Concurrent
Purchase Agreements and in the Ukrtelecom Option Agreement.


 


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


 


“Agreement” has the meaning
given in the Preamble.


 


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


 


2

















 


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


 


“Buildings” has the
meaning given in Section 8.14(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 and
Kyiv, Ukraine, are open for business and are neither required nor authorized to
close.


 


“Call Exercise Period”
means the period from the date occurring six (6) months after the date hereof
and extending to the earlier to occur of (i) the date two (2) years and five
(5) days after the date hereof and (ii) the date on which the Seller exercises
the Put Option.


 


“Call Notice” means
an irrevocable notice delivered by the Purchaser to the Seller pursuant to the
provisions of Section 2.3, which shall set forth as a minimum (i) the reference
to this Agreement and request for sale by the Seller to the Purchaser of the
Participation Interest; (ii) an estimate of the amount of the Call Purchase Price
(including details of computation) calculated in accordance with the provisions
of Schedule A; and (iii) the Closing Date, which shall take place no earlier
than thirty (30) days and no later than forty-five (45) days from the service
of a Call Notice.


 


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


 


“Call Option Compound
Factor” has the meaning given in Schedule A.


 


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


 


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


 


 “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 10.4.


 


“Closing Date” means
the date set forth in the Call Notice or the Put Notice, as applicable.


 


“Closing Organizational
Documents” has the meaning given in Section 10.5(iii).


 


“Closing Participants’
Meeting” has the meaning given in Section 10.5(iii).


 


“Company” has the
meaning given in the Recitals.


 


“Company Appointee”
has the meaning given in Section 10.5(iii).


 


“Company Licenses”
has the meaning given in Section 8.16(i).


 


3

















 


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


 


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


 


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


 


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


 


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


 


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


 


“DRA Indemnification
Amount” has the meaning given in Section 10.3(iii).


 


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


 


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


 


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


 


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


 


4

















 


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


 


“Escrow Agreement”
has the meaning given in Section 5.11.


 


“Essential Equipment”
has the meaning given in Section 8.17(i).


 


“Financial Statements”
has the meaning given in Section 8.9.


 


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


 


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


 


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


 


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


 


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


 


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


 


“Indemnification Escrow
Amount” has the meaning given in Section 10.3(i).


 


“Indemnified Party”
has the meaning given in Section 12.4(i).


 


“Indemnifying Party”
has the meaning given in Section 12.4(i).


 


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


 


“Interim Charter” has
the meaning given in Section 5.4(i).


 


5

















 


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


 


“Interim Founding
Agreement” has the meaning given in Section 5.4(i).


 


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


 


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


 


“Leased Real Property”
has the meaning given in Section 8.14(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 8.15(i).


 


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


 


“Loan Guarantees” has
the meaning given in Section 5.3.


 


“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 8.9.


 


“Most Recent Fiscal Month
End” has the meaning given in Section 8.9.


 


“Most Recent Fiscal Year
End” has the meaning given in Section 8.9.


 


“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 13.10.


 


6

















 


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


 


“Owned IP Rights” has
the meaning given in Section 8.15(i).


 


“Owned Real Property”
has the meaning given in Section 8.14(i).


 


“Participation Interest”
means the 16.33% participation interest of the registered charter capital of
the Company held by the Seller together with all rights and obligations
relating thereto.


 


“Participant’s Waiver”
has the meaning given in Section 5.5.


 


“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).


 


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


 


“Purchase Price” has the meaning given in Section 10.2.


 


“Purchaser” has
the meaning given in the Preamble.


 


“Put Exercise Period” means the period from the date occurring nine (9) months after the date
hereof and extending to the earlier to occur of (i) the date two (2) years and
five (5) days after the date hereof and (ii) the date on which the Purchaser
exercises the Call Option.


 


“Put Notice” means an
irrevocable notice delivered by the Seller to the Purchaser pursuant to the
provisions of Section 3.3, which shall set forth as a minimum (i) the reference
to this Agreement and request for purchase by the Purchaser from the Seller of
the Participation Interest; (ii) an estimate of the amount of the Put Purchase
Price (including details of computation) calculated in accordance with Schedule
B; and (iii) the Closing Date, which shall take place no earlier than eighty
(80) days and no later than ninety (90) days from the service of a Put Notice.


 


“Put Option” has the
meaning given in Section 3.1.


 


“Put Option Compound
Factor” has the meaning given in Schedule B.


 


“Put Purchase Price”
has the meaning given in Section 3.2.


 


“Rules” has the
meaning given in Section 13.8.


 


“Security Interest”
means any mortgage, pledge, lien, encumbrance, claim, charge, or other security
interest, other than (a) mechanic’s, materialmen’s, and similar liens, (b)
liens for Taxes not yet due and payable or for Taxes that the taxpayer is
contesting in good faith through appropriate proceedings, (c) purchase money
liens and liens securing


 


7

















 


rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.


 


“Seller” has the
meaning given in the Preamble.


 


“Seller Loans” means,
collectively, (i) that certain Credit Facility Agreement (No. C03-97/UA), dated
January 5, 1997, and (ii) that certain Equipment and Service Credit Facility
Agreement (No. W03-95/UA), dated November 1, 1995, in each case by and between
the Seller and the Company.


 


“Seller’s Nominee”
has the meaning given in Section 10.5(iii).


 


“Services” has the
meaning given in Section 8.17(i).


 


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


 


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


 


“State Registration”
has the meaning given in Section 10.5(iii).


 


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


 


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


 


“TDC Debt Restructuring
Agreement” has the meaning given in Section 5.3(i).


 


“Third Party Claim”
has the meaning given in Section 12.4(i).


 


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


 


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


 


“Ukrainian Law” means
any officially issued and publicly disseminated statute, law, ordinance, rule,
code, administrative interpretation, regulation, order, writ,


 


8

















 


injunction, directive, judgment, ruling or
decree issued by any Ukrainian governmental authority.


 


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


 


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


 


ARTICLE II.


PURCHASER CALL OPTION.


 


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


 


Section 2.2                     Call Purchase Price.  The
purchase price for the Participation Interest upon exercise of the Call Option
shall be an amount determined by reference to Schedule A attached hereto (the “Call
Purchase Price”).  The Call Purchase
Price shall be payable in the manner and at such time as set forth in Article X
hereof.


 


Section 2.3                     Exercise of Call Option.  The
Purchaser may exercise the Call Option by serving the Call Notice on the Seller
at any time during the Call Exercise Period at the address and in a manner
provided in Section 13.7.  The Call
Notice shall constitute an irrevocable election by the Purchaser to exercise
the Call Option.


 


ARTICLE
III.


SELLER PUT OPTION.


 


Section 3.1                     Put Option.  In
consideration of the payment of $1.00 paid by the Seller to the Purchaser, the
receipt of which is hereby acknowledged, the Seller shall have the right (the “Put
Option”) during the Put Exercise Period to require Purchaser (or any
Affiliate of Purchaser so designated by Purchaser for such purpose) to purchase
all (but not less than all) of the Participation Interest by serving a Put
Notice on the Purchaser in the manner specified in Section 3.3.


 


Section 3.2                     Put Purchase Price.  The
purchase price for the Participation Interest upon exercise of the Put Option
shall be an amount determined by reference to Schedule B attached hereto (the “Put
Purchase Price”).  The Put Purchase
Price shall be payable in the manner and at such time as set forth in Article X
hereof.


 


Section 3.3                     Exercise of Put Option.  The
Seller may exercise the Put Option by serving the Put Notice on the Purchaser
at any time during the Put Exercise Period at the address and in a manner
provided in Section 13.7.  The Put
Notice shall constitute an irrevocable election by the Seller to exercise its
Put Option.


 


9

















 


ARTICLE IV.


CONSEQUENCES OF EXERCISE OF AN OPTION.


 


Section 4.1                     Priority of Exercise.  If
both the Call Notice and the Put Notice are served on the same day, then the
priority of the Call Notice or the Put Notice shall be determined by the time
that the relevant notice is received in accordance with Section 13.7.


 


Section 4.2                     Sale of Participation Interest.  Upon
exercise of the Put Option or the Call Option the Parties hereto, subject to
prior satisfaction or waiver of the conditions set forth in Article IX, shall
each be bound to complete the sale and purchase of the Participation Interest
in accordance with the terms and conditions of this Agreement.  In such event, the Seller shall be obligated
to sell and transfer to the Purchaser full legal and beneficial title to the
Participation Interest free from all options (except options created by this
Agreement), liens, claims, charges, encumbrances and other third party rights
of any nature whatsoever and together with all accrued benefits and rights
attaching thereto under Ukrainian Law, including, without limitation, the right
to receive any undistributed profits attributable to the Participation Interest
after the Closing; and the Purchaser shall be obligated to (i) purchase and
accept the Participation Interest and (ii) pay to the Seller the Purchase
Price; provided, however, that,
in the event that the State Registration of the Closing Organizational
Documents does not occur within ninety (90) days of the Closing Date, then the
Seller’s obligation to sell and transfer to the Purchaser full legal and
beneficial title to the Participation Interest and the Purchaser’s obligation
to (x) purchase and accept the Participation Interest and (y) pay to the Seller
the Purchase Price, shall terminate.


 


Section 4.3                     Beneficial Interest. 
Subject to the official recording of the Purchaser’s ownership of the
Participation Interest in accordance with the provisions hereof, all benefits
and rights attached to the Participation Interest shall accrue to the Purchaser
as from the date of the Closing and thereafter the Seller shall account
forthwith to the Purchaser for all dividends paid or other distributions made
in respect of the Participation Interest.


 


ARTICLE V.


PRE-CLOSING COVENANTS.


 


Section 5.1                     Transfer Restrictions.  The
Seller hereby agrees that, without the prior written consent of the Purchaser,
the Seller will not, directly or indirectly, during the Call Exercise Period or
the Put Exercise Period, (i) offer, sell, agree to offer or sell, solicit
offers to purchase, grant any call option or purchase any put option with
respect to, pledge, borrow or otherwise dispose of, or grant any rights in, the
Participation Interest, or (ii) establish or increase a “put equivalent
position” or liquidate or decrease a “call equivalent position” with respect to
the Participation Interest, or otherwise enter into any swap, derivative or
other transaction or arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Participation
Interest, whether or not such transaction is to be settled by delivery of
Participation Interest, other securities, cash or other consideration.  The Seller hereby authorizes the Company
during the Call Exercise Period or the Put Exercise Period to decline to transfer
and/or register any change of ownership to the Participation Interest.


 


10

















 


Section 5.2                     Voting Arrangements.


 


(i)                                     After the Control Acquisition Date, and
provided that the Purchaser and its Affiliates own, in aggregate, at least a
50.01% participation interest in the Company, the Seller shall:


 


(A)                              exercise any and all rights arising out
of the Seller’s interest in the Company, including, without limitation, any and
all voting rights at the highest governing bodies of the Company, as directed
by the Purchaser in its sole discretion; and


 


(B)                                procure that its representatives at the
Board of Directors, Supervisory Council, Audit Committee or any other governing
body of the Company exercise their voting rights and other respective corporate
powers as directed by the Purchaser in its sole discretion.


 


(ii)                                  Notwithstanding the provisions of Section
5.2(i) above and after having advised and consulted with the Purchaser, the
Seller and its representatives at the governing bodies of the Company shall not
be obligated to act or abstain from action as directed by the Purchaser if (A)
doing so would not be permitted by Ukrainian Law, (B) the intent of the
Purchaser in directing such action or abstention from action was to prevent the
performance of a condition contained in Section 9.1 or (C) the act or failure
to act would be more likely than not to damage the Seller’s material rights
under the Seller Loans or have a negative effect on the Company’s revenues and
earnings before interest, taxes, depreciation and amortization (EBITDA) which
would result in a material decrease in the Put Purchase Price.


 


(iii)                               The Seller further agrees not to enter
into any other agreement or transaction that is intended, or could be expected,
to impede, interfere with, delay, postpone, discourage or adversely affect the
Seller’s obligations to exercise its rights arising out of the Participation
Interest as provided in this Agreement, and agrees not to enter into any other
voting agreement or voting trust or grant any proxy, consent or approval or
otherwise transfer, directly or indirectly, voting power with respect to the
Participation Interest, in whole or in part.


 


(iv)                              The Seller will procure that on Closing,
its representatives at any and all governing bodies of the Company resign or be
removed from their position and will use its voting rights to procure that the
new members of such body of the Company shall be elected in accordance with the
provisions as set forth in the Closing Organizational Documents.


 


Section 5.3                     Debt Restructuring and Guarantee.


 


(i)                                     On the date hereof, the Seller shall
enter into two debt restructuring agreements with the Company to be effective
upon the Control Acquisition Date (the “TDC Debt Restructuring Agreements”).


 


(ii)                                  On the date hereof, the Purchaser shall
issue, sign and deliver to the Seller two binding and irrevocable guarantees,
to be effective


 


11

















 


upon the effectiveness of the TDC Debt Restructuring
Agreements (the “Loan Guarantees”).


 


Section 5.4                     Participants Meeting; Amendments to
Foundation Documents.  The Seller will use its
reasonable endeavors:


 


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


 


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


 


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


 


Section 5.5                     Notices and Consents.  The
Seller will use reasonable endeavors to cause the Company to give any notices
to third parties, and will use reasonable endeavors to cause the Company to use
reasonable endeavors to obtain any third party consents, that the Purchaser may
reasonably request in relation hereto. Each of the Parties will (and the Seller
will use reasonable endeavors to cause the Company to) give any notices to,
make any filings with, and use reasonable endeavors to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to herein.  Without limiting the generality of this
Section 5.5, the Seller and the Purchaser shall use all reasonable endeavors to
cause the participants of the Company from time to time to provide, as soon as
practicable and to the extent permissible under Ukrainian Law (i) in the
Founding Agreement and/or the Charter of the Company for the unrestricted right
of the Seller to sell and transfer the Participation Interest to the Purchaser
and/or (ii) for the irrevocable and binding waiver by each respective
participant of the Company of all pre-emptive rights, rights of first refusal
or similar rights with respect to the transfer of the Participation Interest by
the Seller to the Purchaser (each such waiver, a “Participant’s Waiver”)
as contemplated herein in the form of the waivers set forth in Exhibit F.


 


Section 5.6                     Notice of Developments.  From
the date hereof through the Control Acquisition Date, the Seller shall give prompt
written notice to the Purchaser and the Purchaser shall give prompt written
notice to the Seller of (i) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any warranty contained in
this Agreement or in any exhibit or schedule hereto to be or become untrue or
inaccurate, or the discovery that any warranty contained in this Agreement or
in any exhibit or schedule was untrue at the time it was made, (ii) any failure
by either the Seller or the Purchaser to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or any exhibit or schedule hereto, (iii) the occurrence or
non-occurrence of any event which will or may result in the failure of any
condition, covenant or agreement to be complied with or satisfied by it under
this Agreement, and (iv) any notice or communication from any Person alleging
that the consent of such


 


12

















 


Person is or may be required in connection
with the Acquisition contemplated by this Agreement or that such Acquisition
otherwise may violate the rights of, or confer remedies upon, such Person.


 


Section 5.7                     Exclusivity. 
Without the prior written consent of the Purchaser, neither the Seller
nor its Affiliates will (and the Seller will not cause or permit any of its
representatives to, and will use its reasonable endeavors to not cause or
permit the Company to), directly or indirectly, (i) solicit, initiate, or
encourage the submission of any inquiry, proposal or offer from any Person
relating to the acquisition of any charter capital or other voting securities
of, or any substantial portion of the assets of, the Company (including any
acquisition structured as a merger, consolidation, or share exchange), or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person to do or seek any of the
foregoing.  The Seller will notify the
Purchaser immediately if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing. 
The Seller agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement relating to the
Company to which the Seller is a party.


 


Section 5.8                     Governmental Approval.


 


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


 


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


 


Section 5.9                     Waiver of Pre-Emptive Rights. 
Subject to the grant and issue to and the receipt by the Seller of valid
and binding Participant Waivers from all of the other participants in the
Company, as of the date hereof, to the acquisition by the Purchaser of the
Seller’s Participation Interest substantially in the form of Exhibit F hereto,
the Seller shall


 


13

















 


waive any right of first refusal for the
purchase of, or any pre-emptive right with respect to, the sale and transfer of
any participation interest in the Company as contemplated by the Transaction
Documents, and shall grant, issue and deliver to (A) KPN Telecom B.V., a
Participant’s Waiver in respect of the KPN Purchase Agreement, (B) Deutsche
Telecom AG and Cetel B.V., a Participant’s Waiver in respect of the Cetel
Purchase Agreement, (C) Ukrtelecom, a Participant’s Waiver in respect of the
Ukrtelecom Purchase Agreement, and (D) Ukrtelecom, a Participant’s Waiver in
respect of the Ukrtelecom Option Agreement, in each case, substantially in the
form of Exhibit F hereto which shall be valid and binding.


 


Section 5.10              Participants’ Meeting. 
Immediately upon the service of a Call Notice or a Put Notice, the
Parties shall take all steps reasonably necessary to convene the Closing
Participants’ Meeting as provided for herein.


 


Section 5.11              No Acceleration, No Payments.  From the date hereof through the earlier to occur of (i) the Control
Acquisition Date or (ii) the date 180 days from the date hereof, the Seller
shall not take, exercise, or receive the benefit of any of its rights or
interests in or with regard to each of the Equipment and Service Credit
Facility Agreement No. W03-95/UA and the Credit Facility Agreement No.
C03-97/UA, and, in each case, shall not institute any legal proceedings
(including any proceedings for bankruptcy or insolvency or otherwise) in any
jurisdiction with regard thereto, nor accelerate the principal amounts or any
accrued interest thereunder, nor cause the Company to make any payments
thereunder.


 


Section 5.12              Escrow Agreement.  The
Seller and the Purchaser shall enter into an escrow agreement, substantially in
the form of Exhibit A attached hereto (the “Escrow Agreement”) within
ten (10) Business Days of the service of a Call Notice or a Put Notice.


 


ARTICLE VI.


WARRANTIES OF THE SELLER.


 


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


 


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


 


Section  6.2                  Authorization of Transaction.  The
Seller has the right, power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. This Agreement constitutes the
legally valid and binding obligations of the Seller, enforceable in accordance
with its terms and conditions. The Seller need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions contemplated by
this Agreement.


 


14

















 


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


 


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


 


Section 6.5                     Ownership of Participation Interest.  The
Seller is the registered legal owner of the Participation Interest beneficially
entitled to effect or procure the sale and transfer of such Participation
Interest, and such Participation Interest will be fully paid in and free from
all options, Taxes, Security Interests, mortgages, pledges, liens,
encumbrances, charges, restrictions on transfer, contracts, commitments,
demands and other third party rights of any nature whatsoever (other than those
expressly provided for in this Agreement, the Charter and the Founding Agreement
and/or that may arise by operation of Ukrainian Law).  The Seller is not a party to any option, warrant, purchase right,
or other contract or commitment that could require the Seller to sell,
transfer, or otherwise dispose of any of the Participation Interest (other than
this Agreement). The Seller is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of the Participation
Interest (other than this Agreement).


 


Section 6.6                     Transfer Taxes. 
Except as may be applicable to the Purchaser in accordance with the laws
of the Russian Federation, no capital, transfer, stamp duty, stamp duty reserve
or documentary, issuance or transfer taxes or duties are payable by or on
behalf of the Purchaser or the Company on (i) the sale, transfer or delivery by
the Seller of the Participation Interest pursuant hereto or the sale thereof,
(ii) the execution and delivery of this Agreement, or (iii) the consummation of
the transactions contemplated by this Agreement to which the Seller is a party.


 


ARTICLE
VII.


WARRANTIES OF THE PURCHASER.


 


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


 


Section 7.1                     Organization
of the Purchaser.  The
Purchaser is an open joint stock company duly incorporated and validly existing
under laws of the Russian Federation.  It
has neither been declared bankrupt nor been granted a moratorium of payments,
nor is the Purchaser in a state or condition in which it is compelled by
statutory law to apply for compulsory liquidation or for composition
proceedings because of being over-indebted or


 


15

















 


insolvent. Furthermore, there are neither any
reasons for such measures nor has the Purchaser initiated any of the respective
procedures.


 


Section 7.2                     Authorization of Transaction.  The
Purchaser has the right, power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the legally valid and binding obligations of the Purchaser, enforceable in
accordance with its terms and conditions. As of the Control Acquisition Date
only, the Purchaser need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement.


 


Section 7.3                     Noncontravention. 
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Purchaser is subject or any provision of its charter, bylaws
or other organizational or constituent documents or (ii) conflict with, result
in a breach of, or constitute a default under any agreement, contract, lease,
license, instrument, or any other arrangement to which the Purchaser is a party
or by which it is bound or to which any of its assets is subject that would
have a negative effect on the consummation of the Agreement.


 


Section 7.4                     Brokers’ Fees.  The
Purchaser has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Seller could become liable or obligated.


 


ARTICLE
VIII.


WARRANTIES CONCERNING THE COMPANY.


 


The Seller warrants to the
Purchaser that the statements contained in this Article VIII are true and
accurate and not misleading as of the date of this Agreement and will be true
and accurate and not misleading as of the Control Acquisition Date (and to that
end shall be deemed repeated again at such date, as though the Control
Acquisition Date were substituted for the date of this Agreement throughout
this Article VIII), except (i) in case the Control Acquisition Date has not
occurred until 180 days after the date of this Agreement, the statements
contained in Section 8.4 through Section 8.29 will only be true and accurate
and not misleading as of the 180th day after the date of this
Agreement (and to that end shall be deemed repeated again on the 180th
day, as though the such 180th day was substituted for the date of
this Agreement throughout this Article VIII), (ii) as fairly disclosed and set
forth in the disclosure schedule delivered by the Seller to the Purchaser on
the date hereof and initialed by the Parties (the “Disclosure Schedule”),
and (iii) to the extent such warranty shall be true as of a specific date, in
which case such warranty shall be true as of such specified date. Nothing in
the Disclosure Schedule relating to this Article VIII 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 VIII.


 


16

















 


Section 8.1                     Organization, Qualification, and
Corporate Power.  The
Company is a legal entity duly organized and validly existing under Ukrainian
Law. The Company is duly authorized to conduct business under Ukrainian Law.
The Seller has delivered to the Purchaser correct and complete copies of the
Foundation Documents (as amended to date). The Seller has delivered to the
Purchaser complete and correct copies of the minute books (containing the
records of meetings of the participants (also referred to as the “Board” in the
Foundation Documents) and the executive directors or management of the Company
(referred to as the “Management” in the Foundation Documents)). The Company is
not in default under or in violation of any provision of its Foundation
Documents. The Company has full corporate power and authority necessary to
carry on the Businesses and to own and use the properties and assets owned and
used by it.


 


Section 8.2                     Capitalization.  The entire registered
authorized charter capital of the Company consists of 781,662,169,174 “Units of
Ukrainian Currency,” defined in the Foundation Documents as “one ruble or the
equivalent of any future Ukrainian currency” (currently 7,816,621.69 Ukrainian
hryvnia). The Participation Interest has been validly registered, fully paid,
and is held of record by the Seller, and neither the Company nor any current or
past participant of the Company nor any third party has the right to demand any
further payment or contribution with respect thereto. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights (other than as contained in the Debt Restructuring
Agreements), exchange rights, or other contracts or commitments that could
require the Company to issue, sell, or otherwise cause to become outstanding
any of its charter capital. There are no outstanding profit participation or
similar rights with respect to the Company. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of the
charter capital of the Company other than provided for in this Agreement and/or
the Foundation Documents.


 


Section 8.3                     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 8.4                     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 8.4, “material properties and
assets” means any property and/or asset that, either individually or together


 


17

















 


with a group of related properties and/or
assets, as applicable, is material to the operation of the Business.


 


Section 8.5                     Directors and Officers.  Schedule 8.5 of the Disclosure
Schedule lists the directors and officers of the Company as of the date of this
Agreement.


 


Section 8.6                     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 8.7                     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 8.8                                   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 8.9                     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 8.9, 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 8.10              Recent Events.  Since the Most Recent Fiscal
Month End until the Control Acquisition Date, there has not been any material
adverse change in the business, financial condition, operations or results of
operations of the Company. Without limiting the generality of the foregoing,
during that period:


 


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


 


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


 


18

















 


(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;


 


(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;


 


19

















 


(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;


 


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


 


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


 


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


 


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


 


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


 


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


 


If, during the period
between the date of this Agreement and the Control Acquisition Date , an event
occurs or might occur that would result in a breach of one or more warranties
set forth in this Section 8.10, 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 13.7,
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 8.10 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


 


20

















 


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.


 


Section 8.11              Undisclosed Liabilities.  Except for Liabilities set
forth in Schedules 8.9 and 8.13, 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 (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).


 


Section 8.12              Legal Compliance.  The Company has complied in
all material respects with applicable Ukrainian Law, and the Company has not
received notice of any 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 8.13              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 8.13 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,


 


21

















 


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.


 


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


 


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


 


Section 8.14              Real Property.


 


(i)                                     Schedule 8.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 8.14(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;


 


22

















 


(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 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 8.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
8.14(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;


 


23

















 


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


 


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


 


Section 8.15              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 8.15(iii) of the Disclosure Schedule lists
each such item of Intellectual Property owned by the Company (the “Owned IP
Rights”), and Schedule 8.15(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


 


24

















 


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


 


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


 


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


 


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


 


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


 


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


 


Section 8.16              Company Licenses.


 


(i)                                     Schedule 8.16(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


 


25

















 


has no reason to believe
that any such breach or default (or any event which could result in such breach
or default) has occurred.


 


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


 


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


 


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


 


Section 8.17              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 8.17(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


 


26

















 


material respects the
functionalities and existing specifications. Each piece of the Essential
Equipment and Software in the Network is materially compatible with each other
piece of Essential Equipment and Software in the Network.


 


(iv)                              The Network is designed, deployed,
operated, managed and maintained to provide and is capable of providing outdoor
services in the coverage areas described in the maps set out in Schedule
8.17(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 8.17 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,


 


27

















 


the initial delivery of
Services, tarification (correctly collecting, computing and transcribing
operating data in accordance with applicable tariffs, including, without
limitation, correctly applying the tarification standards established in
Ukraine for the interconnection agreements with the other public networks in
Ukraine), billing, and other customer services.


 


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


 


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


 


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


 


Section 8.18              Contracts. 
Schedule 8.18 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);


 


28

















 


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


 


(viii)                        collective bargaining agreements;


 


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


 


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


 


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


 


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


 


(xiii)                          to the extent not covered by other
warranties in this Section 8.18, agreements that involve amounts in excess of
US$200,000 where (i) the obligations of the Company have not been performed or
(ii) the performance or other obligations of which, are not reflected in the
Financial Statements of the Company;


 


(xiv)                         human resources software and billing
software agreements;


 


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


 


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


 


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


 


(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;


 


29

















 


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


 


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


 


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


 


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


 


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


 


With respect to each such
agreement, and unless noted otherwise in Schedule 8.18 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 8.19              Powers of Attorney.  Except as set forth in
Schedule 8.19, 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 8.20              Insurance. 
Schedule 8.20 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,


 


30

















 


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


 


Section 8.21              Litigation.  Schedule 8.21 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 8.21 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 8.22              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 8.22, 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 8.23              Employee Benefits.  Schedule 8.22 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 8.24              Guaranties.  The Company is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.


 


Section 8.25              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


 


31

















 


conditions of all material
permits, licenses, and other authorizations which are required under the all
Environmental, Health, and Safety Laws of Ukraine.


 


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


 


Section 8.26              Certain Business Relationships with
the Company.  Except for the Debt
Restructuring Agreements, 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 8.27              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 8.28              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 8.28 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 8.29              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 IX.


CONDITIONS TO OBLIGATIONS.


 


Section 9.1                     Conditions to Obligations of the
Purchaser.  The obligation of the
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:


 


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


 


32

















 


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


 


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


 


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


 


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


 


(vi)                              the Seller shall have delivered to the
Purchaser a certificate in the form of Exhibit G to the effect that each of the
conditions specified above in Section 9.1(i), (ii), (iii), and(v) is satisfied
in all respects or waived by the Purchaser;


 


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


 


(viii)                        the Control Acquisition Date shall have
occurred.


 


The Purchaser may waive in whole or in part
any condition specified in this Section 9.1 if in writing and executed by a
duly authorized executive officer of Purchaser at or prior to the Closing.


 


Section 9.2                     Conditions to Obligations of the
Seller.  The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:


 


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


 


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


 


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


 


33

















 


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


 


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


 


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


 


(vii)                           the Purchaser shall have received, if
necessary pursuant to Russian legislation, a license from the Central Bank of
the Russian Federation in connection with its issuance of the Guarantees dated
the date hereof between the Purchaser and the Seller.


 


The Seller may waive in
whole or in part any condition specified in this Section 9.2 if in writing and
executed by a duly authorized executive officer of Seller at or prior to the
Closing.


 


Section 9.3                     Fulfillment of Conditions.  The
Parties shall make all reasonable efforts to achieve and procure the
fulfillment of the conditions set out in Section 9.1 and Section 9.2 on or
before the Closing Date specified in the Call Notice or the Put Notice, as
appropriate, and each of the Purchaser and the Seller shall provide reasonable
cooperation in connection with the fulfillment of the conditions to the
other.  In the event that the Control
Acquisition Date has not been reached within 365 days of the date of this
Agreement, either Party shall have the right to terminate this Agreement by
giving notice to the other Party.


 


Section 9.4                     Postponement of Closing.


 


(i)                                     In the event that the Closing fails to
occur on the Closing Date due to the failure of any condition precedent set
forth in Section 9.1 or Section 9.2 and such condition precedent is not
satisfied or waived by the relevant Party within 90 days after the proposed
Closing Date, then either Party may terminate this Agreement.


 


(ii)                                  If any Party terminates this Agreement
pursuant to Section 9.4(i) or Section 10.3(ii)(A), all rights and obligations
of the Parties hereunder shall terminate without any Liability of any other
Party (except for any Liability of any Party otherwise in breach of this
Agreement).


 


34

















 


ARTICLE X.


CLOSING.


 


Section 10.1              Basic Transaction.  On
and subject to the terms and conditions of this Agreement and upon the exercise
of either the Call Option or the Put Option as provided for herein, the
Purchaser agrees to purchase from the Seller, and the Seller agrees to sell and
transfer to the Purchaser, all of the legal and beneficial ownership in the
Participation Interest for the consideration specified herein.


 


Section 10.2              Purchase Price.  At
Closing, the Purchaser agrees to pay the Call Purchase Price or the Put
Purchase Price, as the case may be (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 5.12 hereof.  In
case Ukrainian Law provides for the payment in Ukrainian currency, the
respective amount of Ukrainian currency shall be calculated in accordance with
the official exchange rate as established by the Central Bank of the Ukraine on
the Business Day such payment is made. 
The Purchaser may at its option pay the Purchase Price prior to Closing.  If the Purchase Price due for payment
pursuant to this Agreement shall not be paid by the Purchaser in full on the
Closing Date in accordance with the terms and conditions hereof, the Purchaser
shall pay to the Seller an amount equal to 0.1% per day on any amount
outstanding for every day following the Closing Date and including such date as
the Purchase Price is fully paid by the Purchaser.


 


Section 10.3              Purchase Price Adjustment.  The
Parties acknowledge and agree that:


 


(i)                                     in the event the Seller serves a Put
Notice after the Purchaser has made a claim for indemnification under any of
the Concurrent Purchase Agreements, and such claim could also be brought
hereunder pursuant to Article VIII against the Seller, an amount equal to
16.33% of the aggregate amount of such indemnification claim (the “Indemnification
Escrow Amount”) shall remain in the Escrow Account in accordance with the
terms of the Escrow Agreement pending the final resolution of such
indemnification claim.  The Parties
further acknowledge and agree that the Indemnification Escrow Amount shall be
disbursed in accordance with the terms of the Escrow Agreement upon the final
resolution of such indemnification claim, and any amount returned to the
Purchaser pursuant to this  Section
10.3(i) shall be deemed an adjustment to the Purchase Price;


 


(ii)                                  in the event the Seller serves a Put
Notice after any relevant filing before any court or quasi-judicial or
administrative agency of any national, state, local, or foreign jurisdiction or
any arbitrator, relating to and/or for the hearing of any injunction, judgment,
order, decree, ruling or charge has been made, the outcome of which could
prohibit consummation of the Acquisition, then the Purchase Price shall remain
in the Escrow Account in accordance with the terms of the Escrow Agreement
pending the resolution of such matter. 
The Parties further acknowledge and agree that upon the final resolution
of such matter, the Purchase Price shall be disbursed to the Seller in
accordance with the terms of the Escrow Agreement; provided, however,
that if the matter is resolved so as to prohibit the Acquisition, then (A) the
Purchaser shall re-transfer the Participation Interest to the Seller, this
Agreement shall terminate and the Purchase Price shall be returned to the
Purchaser, or (B) to the extent there are Adverse Consequences to the


 


35

















 


Purchaser as a result of
such resolution, an amount equal to such Adverse Consequences shall be deducted
from the Purchase Price prior to its disbursement from the Escrow Account to
the Seller and returned to the Purchaser. 
Any amount returned to the Purchaser pursuant to this Section 10.3(ii)
shall be deemed an adjustment to the Purchase Price;


 


(iii)                               the Seller shall be obligated to
indemnify the Purchaser from and against any Adverse Consequences resulting
from, arising out of, relating to, or caused by any of the TDC Debt
Restructuring Agreements not being in full force and effect, provided that the
Purchaser makes a written claim for indemnification against the Seller pursuant
to Section 13.7.  In the event the
Seller exercises the Put Option after the Purchaser has made a claim for
indemnification pursuant to the preceding sentence, an amount equal to the
aggregate amount of such indemnification claim (the “DRA Indemnification
Escrow Amount”) shall remain in the Escrow Account in accordance with the
terms of the Escrow Agreement pending the final resolution of such
indemnification claim.  The Parties
further acknowledge and agree that the DRA Indemnification Escrow Amount shall
be disbursed in accordance with the terms of the Escrow Agreement upon the
final resolution of such indemnification claim, and any amount returned to the
Purchaser pursuant to this Section 10.3(iii) shall be deemed an adjustment to
the Purchase Price.


 


Section 10.4              The Closing. 
Subject to the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself), the closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place at the offices of ING Barings
Kiev, located at 28 Kominterna Street, 5th floor, 252032 Kiev, Ukraine, and
commence at 9:00 a.m. local time on the Closing Date.


 


Section 10.5              Transfer of the Participant’s
Interest.  In
order to effect the sale and transfer of the Participation Interest as provided
for herein upon the exercise of either the Call Option or the Put Option:


 


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


 


(ii)                                  The Purchaser undertakes (A) to accept
the sale and assignment of the Participation Interest and of all rights
connected with the Participation Interest including the right to participate in
any undistributed profits attributable to the Participation Interest and all
rights and obligations of a participant which are connected with the ownership
in the Participation Interest under Ukrainian Law and in accordance with the
Foundation Documents and (B) to pay the Purchase Price in accordance with
Section 10.2  of this Agreement.


 


36

















 


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


 


(iv)                              Immediately after the holding of the
Closing Participants’ Meeting, the Purchaser and its Affiliates will take all
such steps, actions and measures as are reasonably necessary to cause the
Company Appointee to (A) notify the Seller’s Nominee in writing, immediately
upon submission of all documents necessary for the State Registration, that
such documents have been submitted, (B) complete the State Registration of the
Closing Organizational Documents as soon as possible thereafter, and (C)
provide the Seller’s Nominee with a notarized copy of the registered Closing
Organizational Documents immediately upon completion of the State
Registration.  Notwithstanding the
foregoing, if the Seller has not received the written notice specified in
Section 10.5(iv)(A) within two (2) Business Days after the holding of the
Closing Participants’ Meeting, the Seller may, at its option, notify the
Purchaser and the Company Appointee in writing of its intention to proceed with
the State Registration of the Closing Organizational Documents by the Seller’s
Nominee, in which case the Seller shall cause the Seller’s Nominee to provide
the Purchaser with a notarized copy of the registered Closing Organizational
Documents immediately upon completion of the State Registration.


 


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


 


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


 


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


 


37

















 


Section 10.6              Deliveries at the Closing.  At
Closing:


 


(i)                                     The Seller shall deliver to the Purchaser


 


(A)                              the various certificates, instruments,
consents and documents referred to in Section 9.1;


 


(B)                                the Escrow Agreement, duly executed; and


 


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


 


(ii)                                  The Purchaser shall deliver to


 


(A)                              the Seller, the various certificates,
instruments, consents and documents referred to in Section 9.2;


 


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


 


(C)                                the Escrow Agent, the Purchase Price in
accordance with Section 10.2 hereof and the terms of the Escrow Agreement; and


 


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


 


ARTICLE XI.


POST-CLOSING COVENANTS.


 


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


 


Section 11.1              General.  In
case at any time after the Closing any further action is reasonably necessary
or desirable to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party may reasonably request,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Article XII hereof).


 


Section 11.2              Litigation Support.  In
the event and for so long as any Party actively is contesting or defending
against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any transaction contemplated
under this Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to the Closing Date involving the
Company, the other Party will cooperate with it and its counsel in the contest
or defense, make available its personnel, and provide such testimony and access
to its books and records as shall be necessary in connection with the contest
or defense, all at the sole cost and expense of the contesting or defending
Party (unless the contesting or defending Party is entitled to indemnification
therefor under Article XII hereof).


 


38

















 


Section 11.3              Transition.  The
Seller will not take any action that is designed or intended to have the effect
of discouraging any lessor, licensor, customer, supplier, or other business
associate of the Company from maintaining the same business relationships with
the Company after the Closing as it maintained with the Company prior to the
Closing.  The Seller will refer all
customer inquiries relating to the businesses of the Company to the Purchaser
from and after the Closing.


 


Section 11.4              Confidentiality.  Each
Party will treat and hold as strictly confidential all of the Confidential
Information of the other Party and/or the Company, and refrain from using any
of the Confidential Information of the other Party and/or the Company except in
connection with this Agreement; provided,
however, such restriction shall not apply if and to the extent that
the Party proposing to make such disclosure can demonstrate:


 


(i)                                     that it 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 the other Party and/or the
Company; provided, however, that
such Party will notify the other Party promptly of the request or requirement
so that the other, nondisclosing Party, may seek an appropriate protective
order or waive compliance with the provisions of this Section 11.4. 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
the 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, 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 shall designate;


 


(ii)                                  such disclosure 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 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.


 


From and after the Control Acquisition Date, nothing
in this Section 11.4 shall in any way affect the Purchaser’s ability to
disclose Confidential Information relating to the Company to any third party.


 


Section 11.5              Covenant Not to Compete.  For a period of two (2) years
from and after the Closing Date, neither the Seller, any Controlled Affiliate
of the Seller, TDC A/S nor its Controlled Affiliates (the “Covenantors”)
will engage directly or indirectly in the provision of GSM cellular network
services in Ukraine; provided, however,
that the restriction shall not apply to:


 


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


 


39

















 


(ii)                                  the ownership of any business which is
created as a result of a merger or acquisition of or by any of the Covenantors
where the net revenues on a consolidated basis of such company and its
Controlled Affiliates which is merged with or acquired by any of the
Covenantors constitute more than 30% of the total net revenues of the Covenantors
on a consolidated basis, and which results in the ownership by the Covenantors
of a Person directly or indirectly engaged in the provision of GSM cellular
network services.  The Parties agree
that they consider that the restrictions contained in this Section 11.5 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 11.5
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
XII.


REMEDIES FOR BREACHES OF THIS AGREEMENT.


 


Section 12.1              Survival of Warranties.  All of the warranties of the
Parties contained in this Agreement shall survive the Closing hereunder (even
if the damaged Party knew or had reason to know of any breach of warranty at
the time of Closing) and continue in full force and effect for a period of two
(2) years from the Control Acquisition Date.


 


Section 12.2              Indemnification
Provisions for Benefit of the Purchaser.


 


(i)                                     Subject to Section 12.2(ii), in the event
the Seller breaches any of its warranties contained herein, provided that the
Purchaser makes a written claim for indemnification against the Seller pursuant
to Section 13.7 below within the period set forth in Section 12.1, then the
Seller agrees to indemnify the Purchaser from and against any Adverse
Consequences the Purchaser may suffer through and after the date of the claim
for indemnification (including any Adverse Consequences the Purchaser may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the alleged
breach).


 


(ii)                                  The Seller’s obligation to indemnify the
Purchaser from and against any Adverse Consequences resulting from, arising out
of, relating to, in the nature of, or caused by the breach of any warranty of
the Seller given hereunder or any other liability of the Seller arising from or
in any way connected to a breach of warranty given hereunder shall be limited
as follows:


 


(A)                              The Seller shall not be liable to the
Purchaser in respect of any warranties given under any agreement to which the
Seller is not a party.


 


40

















 


(B)                                Subject to paragraph (G) below, the
Seller shall not be liable to the Purchaser, and the Purchaser shall not be
entitled to bring a claim under any of the warranties (other than in respect of
those warranties that, having been breached by the Seller, have prevented the
consummation of the Acquisition) until the Acquisition has been consummated.


 


(C)                                The Seller shall only be obligated to
indemnify, or be liable for breach of warranty to, the Purchaser on any other
basis after and insofar as the Purchaser has suffered Adverse Consequences by
reason of all such breaches in excess of a $1,500,000 aggregate threshold (at
which point the Seller will be obligated to indemnify, or be liable for breach
warranty to, the Purchaser on any other basis from and against all such Adverse
Consequences, including, for  the
avoidance of doubt, Adverse Consequences suffered prior to reaching such
threshold); provided, however,
that any obligation of the Seller to indemnify or be liable to the Purchaser
with respect to Adverse Consequences that arise as a result of  any breach of warranty after such aggregate
threshold has been reached shall not arise with regard to Adverse Consequences
of less than $25,000;


 


(D)                               To the extent that an Adverse Consequence
has arisen as the result of a breach of a warranty contained in Article VIII
hereof, the Seller’s obligation to indemnify or be liable to the Purchaser from
and against such Adverse Consequence shall be limited to 16.33% 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 (for the avoidance of doubt, this limitation shall not apply to the
threshold set forth in subparagraph C above);


 


(E)                                 Subject to subparagraph (F) below, the
aggregate amount for which the Seller shall have an obligation to indemnify or
be liable to the Purchaser from and against pursuant to this Section 12.2 with
regard to breaches of warranties contained in Article VIII shall not exceed 50%
of the Purchase Price;


 


(F)                                 The aggregate amount for which the Seller
shall have an obligation to indemnify or be liable to the Purchaser from and
against pursuant to this Section 12.2 with regard to breaches of warranties
contained in Section 8.1, Section 8.2, Section 8.3 and Section 8.13 (to the
extent that such breach relates to profits tax or VAT), and Section 8.16 (to
the extent that such breach results in the revocation, suspension, or a
material change in the terms of a Company License) shall not exceed 100% of the
Purchase Price;


 


(G)                                In the event that a breach of any of the
warranties given by the Seller in Article VIII (other than a breach caused by a
direct act or omission of the Seller) prevents consummation of the Acquisition,
the Seller shall only be obliged to indemnify the Purchaser for all


 


41

















 


Transaction Costs. 
For the purpose of this paragraph (G) only, “Transaction Costs” means
any and all costs, fees expenses and liabilities actually incurred by the
Purchaser in negotiating the Transaction Documents to which the Seller and/or
the Seller’s Affiliates is a party.  For
the avoidance of doubt and other than as set forth in this paragraph (G), the
Seller shall not be liable to the Purchaser for any other costs, loss or
liability which the Purchaser may suffer as a result of the Acquisition not
being consummated as a result of a breach of any of the warranties in Article
VIII.


 


(H)                               There shall be no limit to the aggregate
amount for which the Seller shall have an obligation to indemnify or be liable
to the Purchaser from and against pursuant to this Section 12.2 with regard to
breaches of  warranties set forth in Article
VI;


 


(I)                                    For the avoidance of doubt, in no event
shall the aggregate amount for which the Seller shall be liable to the
Purchaser with respect to breaches of any or all warranties contained in
Article VIII exceed 100% of the Purchase Price;


 


(J)                                   The Seller shall not be liable to the
Purchaser in respect of any Adverse Consequences unless the Purchaser has
notified the Seller within two (2) years of the Control Acquisition Date of the
fact, matter or circumstance giving rise to the Adverse Consequences and,
within twelve (12) months after such notification, the relevant claim has
either been settled by the Parties or an arbitration proceeding has been filed
with respect to such claim;


 


(K)                               For the avoidance of doubt, regardless of
the number of warranties breached by any one event, matter, fact or
circumstance giving rise to a claim under this Agreement, the Seller shall not
be required to indemnify, or be liable for breach of warranty to the Purchaser
for an amount greater than the Adverse Consequences arising from such event,
matter, fact or circumstance.


 


Section 12.3              Indemnification
Provisions for Benefit of the Seller.


 


(i)                                     Subject to Section 12.3(ii), 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 12.1
hereof, provided that the Seller makes a written claim for indemnification
against the Purchaser pursuant to 
Section 13.7 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).


 


42

















 


(ii)                                  The Purchaser shall not be obligated to
indemnify the Seller from and against any Adverse Consequences resulting from,
arising out of, relating to, in the nature of, or caused by the breach of
any  warranty of the Purchaser until the
Seller has suffered Adverse Consequences by reason of all such breaches in
excess of a $1,500,000 aggregate threshold (at which point the Purchaser will
be obligated to indemnify the Seller from and against all such Adverse
Consequences; provided, however,
that any obligation of the Purchaser to indemnify the Seller after such
aggregate threshold has been reached shall not arise with regard to Adverse
Consequences of less than $25,000.


 


Section 12.4              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 XII, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.


 


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


 


(iii)                               So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with Section
12.4(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


 


43

















 


to the Third Party Claim
without the prior written consent of the Indemnified Party.


 


(iv)                              In the event any of the conditions in
Section 12.4(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 XII.


 


Section 12.5              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
XII. All indemnification payments under this Article XII shall be deemed
adjustments to the Purchase Price.


 


Section 12.6              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 12.7              Miscellaneous.


 


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


 


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


 


(iii)                               The Seller shall not be liable to the
Purchaser (in equity, contract, tort (including negligence) under the
Misrepresentation Act 1967 or


 


44

















 


in any other way) for a
representation or warranty that is not set out in this Agreement.


 


ARTICLE
XIII.


MISCELLANEOUS.


 


Section 13.1              Further Assurances.  Each
of the Parties hereto agrees to cooperate with one another in executing,
delivering and otherwise providing such additional documents, instruments or
items as shall be reasonably necessary or appropriate in order to consummate
the transactions contemplated by this Agreement.


 


Section 13.2              Press Releases and Public
Announcements.  No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the
Purchaser and the Seller; provided, however,
that any Party may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
best endeavors to advise the other Parties prior to making the disclosure).


 


Section 13.3              Entire Agreement.  This
Agreement (including the documents referred to herein) constitutes the entire
agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof. The Purchaser
acknowledges that it has not entered into this Agreement relying upon any
statement, warranty or representation or assurance whether or not made by the
Seller, other than those incorporated in this Agreement.


 


Section 13.4              Succession and Assignment.  This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. No Party may
assign either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the Purchaser and the Seller; provided, however, that the Purchaser
shall have the right in its sole discretion to (i) assign any or all of its
rights and interests hereunder to one or more of its Affiliates, and (ii)
designate one or more of its Affiliates to perform its obligations hereunder
(in any or all of which cases the Purchaser nonetheless shall remain
responsible for and shall ensure the performance of all of its obligations
hereunder).


 


Section 13.5              Counterparts.  This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.


 


Section 13.6              Headings.  The
headings contained in this Agreement are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.


 


Section 13.7              Notices.  Save
as provided below, and in relation to the service of the Put Notice or the Call
Notice, 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:


 


45

















 


	
   

  	
  (i)

  	
  If to the Seller:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TDC Mobile International
  A/S

  
	
   

  	
   

  	
  Larslejsstrade 6

  
	
   

  	
   

  	
  DK-0900

  
	
   

  	
   

  	
  Copenhagen, Denmark

  
	
   

  	
   

  	
  Telecopy:  +45 3343 7688

  
	
   

  	
   

  	
  Attention:  Torben V. Holm, Executive Vice President

  
	
   

  	
   

  	
   

  	
  Jon Balsby, Attorney at
  law

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Altheimer & Gray

  
	
   

  	
   

  	
  11 Mykhailivska Street

  
	
   

  	
   

  	
  01001, Kyiv, Ukraine

  
	
   

  	
   

  	
  Telecopy:  +380 44 464-0204

  
	
   

  	
   

  	
  Attention:  Volodymyr I. Baibarza

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  If to the Purchaser:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mobile TeleSystems OJSC

  
	
   

  	
   

  	
  Marksistskaya Street, 4

  
	
   

  	
   

  	
  Moscow 109147 Russian
  Federation

  
	
   

  	
   

  	
  Telecopy:  +7-095-915-7425

  
	
   

  	
   

  	
  Attention:  Mikhail A. Smirnov, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Latham & Watkins

  
	
   

  	
   

  	
  Ulitsa Gasheka, 7

  
	
   

  	
   

  	
  Ducat II, Suite 900

  
	
   

  	
   

  	
  Moscow 123056 Russia

  
	
   

  	
   

  	
  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.


 


In the case of the service
of the Put Notice or the Call Notice, such notice shall only be effective if
served by expedited international courier (such as DHL or Federal Express) and
signed for by the Seller or the Purchaser, as the case may be, upon
delivery.  The time of receipt shall be
evidenced by the delivery time and date recording of such courier firm.


 


46

















 


Section 13.8              Dispute Resolution.  Upon
written notice to all Parties to this Agreement and the Arbitration Institute
of the Stockholm Chamber of Commerce, any dispute, controversy or claim between
any Parties hereto arising out of, relating to or in connection with this
Agreement, including its existence, validity or termination, shall be referred
to and resolved by final and binding arbitration under the Rules of the
Arbitration Institute of the Stockholm Chamber of Commerce in effect on the
date any arbitration commences (the “Rules”), which Rules are deemed to
be incorporated by reference into this clause. 
The place of the arbitration shall be 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.


 


Section 13.9              Governing Law.  THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
ENGLAND AND WALES.  NO EFFECT SHALL BE
GIVEN TO ANY  CONFLICT OF LAW PROVISION
OR RULE OF ANY JURISDICTION OTHER THAN ENGLAND AND WALES THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN ENGLAND AND WALES.


 


Section 13.10       Judgment Currency.  The
obligation of the Parties to make payments under this Agreement is in U.S.
dollars (the “Obligation Currency”) and such obligation shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in any currency other than the Obligation Currency or any other
realization in such other currency, whether as proceeds of set-off, security,
guarantee, distributions, or otherwise, except to the extent to which such
tender, recovery or realization shall result in the receipt by the Party which
is to receive such payment of the full amount of the Obligation Currency
expressed to be payable hereunder.  The
Party liable to make such payment agrees to indemnify the Party which is to
receive such payment for the amount (if any) by which such receipt shall fall
short of the full amount of the Obligation Currency expressed to be payable
hereunder and the party which is to receive such payment agrees to pay to the
party liable to make such payment the amount (if any) by which such receipt,
shall exceed the full amount of the Obligation Currency, and, in each case,
such obligation shall not be affected by judgment being obtained for any other
sums due under this Agreement.  The
Parties agree that the rate of exchange which shall be used to determine if
such tender, recovery or realization shall result in the receipt by the party
which is to receive such payment of the full amount of the Obligation Currency
expressed to be payable hereunder shall be the noon buying rate in New York
City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York for the business day preceding
that on which the judgment becomes a final judgment.


 


Section 13.11       Third Party Beneficiaries.  This
Agreement shall not confer any rights or remedies on any other Person other
than the Parties and their respective successors and permitted assigns.  For the avoidance of doubt, a person who is
not a Party to this Agreement


 


47

















 


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


 


Section 13.13       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 13.14       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 13.15       Construction.  The
word “including” shall mean including without limitation. The Parties intend
that each warranty and covenant contained herein shall have independent
significance.


 


Section 13.16.    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 13.17       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 13.18.    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 13.19       Specific Performance.  Each
of the Parties acknowledges and agrees that the other Party would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, each of the Parties agrees that the other Party shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action


 


48

















 


instituted in any court having jurisdiction
over the Parties and the matter (subject to the provisions set forth in Section
13.8 hereof), in addition to any other remedy to which they may be entitled, at
law or in equity.


 


(Signature page follows.)


 


49

















 


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


 


 


	
   

  	
  TDC MOBILE INTERNATIONAL
  A/S

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  Torben V. Holm

  	
   

  
	
   

  	
  By:

  	
  Torben V. Holm

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MOBILE TELESYSTEMS OJSC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mikhail A. Smirnov

  	
   

  
	
   

  	
  By:

  	
  Mikhail A. Smirnov

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Viktor I. Kondratyev

  	
   

  
	
   

  	
  By:

  	
  Viktor I. Kondratyev

  
	
   

  	
  Title:

  	
  Chief Accountant

  
				



 

















 


Schedule A


 


Call Purchase Price


 


(A)                              The Call Purchase Price shall be equal
to the product of multiplying Eighty Five Million US Dollars by the Call Option
Compound Factor, and shall be expressed by the following formula:


 


Call Purchase Price =
US$85,000,000 x Call Option Compound Factor


 


(B)                                The Call Option Compound Factor shall
be equal to the result of raising the sum of (a) one (1) and (b) the annual
compound rate of eleven percent (11.0%) (“R”), to the power expressed by the
fraction the numerator of which is the number of days from the signing date of
this Agreement until the date of Closing (“n”) and the denominator of which is
three hundred and sixty-five (365) days, and shall be expressed by the
following formula:


 


Call Option Compound Factor
= (1+R)^n/365


 

















 


Schedule B


 


Put Purchase Price


 


Part I


 


(A)                              The Put Purchase Price shall be equal
to sixteen and thirty-three one-hundredths percent of the amount that is equal
to the difference between: (i) the sum of (a) two and seventy-three
one-hundredths (2.73) multiplied by “EBITDAUMC”
and (b) ninety one-hundredths (0.90) multiplied by “RevenueUMC”, and 
(ii) the “Net DebtUMC”
multiplied by the “Put Option Compound Factor,” where:


 


“Revenue UMC” means the Group’s
revenue (gross revenue less VAT
and allowed discounts) and other operating income, consistent with past accounting principles, policies and
practices of the Company, and as historically applied and as reflected in the
Group’s fiscal year 2001 audited financial statements, as reported in the
quarterly audited financial statements according to the International Financial
Reporting Standards (IFRS) for the last four calendar quarters preceding the
date of the Put Option Notice, to the extent available, and to the extent not
available, on such quarterly unaudited IFRS revenue schedules as prepared by
the Company, in which event the Seller may nonetheless request an audit of such
unaudited IFRS revenue schedules to be conducted at its expense as set forth in
the first paragraph of Part II Schedule B in this Agreement; and


 


“EBITDAUMC” means  the Group’s EBITDA (defined as the sum of
operating income, depreciation and amortisation, and net foreign currency
gains/losses, and exclusive of any restructuring charges or impairment charges), consistent with past accounting
principles, policies and practices of the Company, and as historically applied
and as reflected in the Group’s fiscal year 2001 audited financial statements,
as reported in the quarterly audited financial statements according to the
International Financial Reporting Standards (“IFRS”) for the last four calendar
quarters preceding the date of the Put Option Notice, to the extent available,
and to the extent not available, on such quarterly unaudited IFRS EBITDA
schedules as prepared by the Company, in which event the Seller may nonetheless
request an audit of such unaudited IFRS EBITDA schedules to be conducted at its
expense as set forth in the first paragraph of Part II Schedule B in this
Agreement; and


 


“Net DebtUMC” means the Group’s
net debt as reported at the quarter end nearest to the date of this Agreement,
calculated by subtracting cash and cash equivalents from the total amount of
interest-bearing liabilities of the Group, and is equal to US$56.8 million;


 


and shall be expressed by
the following formula:


 


Put Purchase Price = ((2.73
x EBITDAUMC + 0.90 x RevenueUMC)- (Net DebtUMC
x Put Option Compound Factor)) x 16.33%;


 


provided, however,
that in no event shall the Put Purchase Price be less than the product of Fifty
Five Million U.S. Dollars (US$55,000,000) and the Put Option Compound Factor as
expressed by the following formula:


 

















 


$55,000,000 x Put Option
Compound Factor


 


(B)                                The Put Option Compound Factor shall
be equal to the result of raising the sum of (a) one (1) and (b) the annual
compound rate of nine and five tenths percent (9.5%) (“R”), to the power
expressed by the fraction the numerator of which is the number of days from the
signing date of this Agreement until the date of Closing (“n”) and the
denominator of which is three hundred and sixty-five (365) days, and shall be
expressed by the following formula:


 


Put Option Compound Factor =
(1+R)^n/365


 


Part II


 


From the Control Acquisition Date until the
expiry of the Put Exercise Period, the Company shall provide quarterly
unaudited IFRS schedules of revenue and EBITDA to the Seller and the Purchaser
within 30 days after the end of the respective calendar quarter. The Seller may
request an audit of such unaudited schedules to be conducted on a quarterly
basis by the Company’s auditors at the Seller’s expense (using the reporting
standard in the form of Exhibit K hereto). 
The parties agree that the Schedules of Revenue and EBITDA, as defined
herein, include accompanying footnotes that will include, among other
disclosures, disclosure of material related party transactions or of common
ownership or management control relationships as required by FASB  Statement No. 57.  In addition, the parties agree that any independent audit of the
aforementioned Schedules will include procedures required by U.S. GAAS, which
requires the auditor to consider whether sufficient competent evidential matter
has been obtained during a financial statement audit to understand the relationship
of the parties and, for related party transactions, the effects of the
transaction on the financial statements. 
In addition, under such standards, the auditor should then evaluate all
the information available concerning the related party transaction or control
relationship and determine that the financial statement (Schedule) disclosures
are adequate and appropriate.  The
Schedules prepared by the company and the audit completed thereon should be
conducted in accordance with the aforementioned standards Protection of the Put
Purchase Price.


 


1.1                                 From the Control Acquisition Date until the
expiry of the Put Exercise Period, the Purchaser shall ensure that none of its
Controlled Affiliates nor AFK Sistema or any of its Controlled Affiliates shall
compete with the Group for the Business;


1.2                                 The Purchaser shall ensure that, from the
Control Acquisition Date until the expiry of the Put Exercise Period, the Group
shall:


 


1.2.1                        not dispose of, or agree to dispose of, an
asset, undertaking or business, except if such disposition is done in the
ordinary course of business and the value of such disposition does not exceed
25% of the then current value of the assets of the Group and provided that if
the Purchaser makes a written request for consent to the disposal of an asset,
undertaking or business outside of the ordinary course of business and the
Seller has not responded to such request within ten (10) Business Days of the
request having been made, then the Seller shall be deemed to have consented to
such disposal;


 


1.2.2                        not merge any Group Company or any business
of any Group Company with any other business or other legal entity outside of
the Group;


 

















 


1.2.3                        conduct its business and all its
transactions, taken as a whole, on an arm’s length basis; provided, however, that the Purchaser or
its Affiliates may conduct business with the Company on terms which are no less
advantageous to the Company than if such business had been conducted on an
arm’s length basis;


 


1.2.4                        not enter into any sale and lease back arrangements
in respect of the assets and equipment of the Group representing more than 10%
of the Group’s then assets and equipment from time to time.


 


provided,  however, that any Group
Company may, with the prior written consent of the Seller, which consent shall
not be unreasonably withheld, undertake any action that such Group Company
shall be prohibited from otherwise undertaking as set out in this Section 1.2.


 


1.3                                 The Purchaser shall not dispose of any part
of its interest in the Company if to do so would result in the Purchaser,
either directly or indirectly, personally or through its Affiliates, having an
aggregate of less than 50.01% participation interest in the Company, nor merge
the business or the Company with any other company or business undertaking,
without having previously exercised the Call Option.