Exhibit 4.7


 


	
  CONFORMED
  COPY

  	
  Operation Number 39576

  



 


Dated 
23rd  December 
2008


 


 


EUR 225,000,000


 


FACILITY AGREEMENT


 


 


between


 


 


MOBILE TELESYSTEMS OPEN JOINT STOCK COMPANY


 


as Borrower


 


 


and


 


 


EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT


 


 


as Lender


 

















 


CONTENTS


 


	
  CLAUSE

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION I INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  1

  	
  DEFINITIONS AND INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION II THE FACILITY

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
  2

  	
  THE FACILITY

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  PURPOSE

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  CONDITIONS OF UTILISATION

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION III UTILISATION

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  5

  	
  UTILISATION

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION IV REPAYMENT, PREPAYMENT AND
  CANCELLATION

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  6

  	
  REPAYMENT

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  PREPAYMENT AND CANCELLATION

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION V COSTS OF UTILISATION

  	
   

  	
  19

  
	
   

  	
   

  	
   

  
	
  8

  	
  INTEREST

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  9

  	
  CHANGES TO THE CALCULATION OF INTEREST

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  10

  	
  FEES

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION VI ADDITIONAL PAYMENT
  OBLIGATIONS

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  11

  	
  TAX GROSS-UP AND INDEMNITIES

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  12

  	
  INCREASED COSTS

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  13

  	
  OTHER INDEMNITIES

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  14

  	
  MITIGATION BY THE LENDER

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  15

  	
  COSTS AND EXPENSES

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION VII REPRESENTATIONS,
  UNDERTAKINGS AND EVENTS OF DEFAULT 

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  16

  	
  REPRESENTATIONS

  	
   

  	
  29

  



 


i

















 


	
  17

  	
  INFORMATION UNDERTAKINGS

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  18

  	
  FINANCIAL COVENANTS

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  19

  	
  GENERAL UNDERTAKINGS

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  20

  	
  EVENTS OF DEFAULT

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION VIII CHANGES TO PARTIES

  	
   

  	
  48

  
	
   

  	
   

  	
   

  
	
  21

  	
  CHANGES TO THE LENDER

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  22

  	
  CHANGES TO THE BORROWER

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION IX THE LENDER

  	
   

  	
  50

  
	
   

  	
   

  	
   

  
	
  23

  	
  CONDUCT OF BUSINESS BY THE LENDER

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION X ADMINISTRATION

  	
   

  	
  51

  
	
   

  	
   

  	
   

  
	
  24

  	
  PAYMENT MECHANICS

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  25

  	
  SET-OFF

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  26

  	
  NOTICES

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  27

  	
  CALCULATIONS AND CERTIFICATES

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  28

  	
  PARTIAL INVALIDITY

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  29

  	
  REMEDIES AND WAIVERS

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  30

  	
  AMENDMENTS AND WAIVERS

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  31

  	
  COUNTERPARTS

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION XI GOVERNING LAW AND
  ENFORCEMENT

  	
   

  	
  55

  
	
   

  	
   

  	
   

  
	
  32

  	
  GOVERNING LAW

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  33

  	
  ARBITRATION AND JURISDICTION

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  34

  	
  IMMUNITIES

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 1 Conditions precedent

  	
   

  	
  58

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 2 Utilisation Request

  	
   

  	
  60

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 3 Form of Compliance
  Certificate

  	
   

  	
  61

  



 


ii

















 


	
  SCHEDULE 4 Definitions and Guidelines
  for Private Sector Operations (Fraud and Corruption)

  	
   

  	
  62

  



 


iii

















 


THIS AGREEMENT
is dated 23rd December 2008
and made as a deed between:


 


(1)                              MOBILE TELESYSTEMS
OPEN JOINT STOCK COMPANY, an open joint stock company established and existing under the laws of
the Russian Federation and having its registered address at 4 Marksistskaya
Street, 109147 Moscow, Russian Federation, as borrower (the “Borrower”); and


 


(2)                              EUROPEAN BANK FOR
RECONSTRUCTION AND DEVELOPMENT an international organisation formed by
treaty, with its headquarters at One Exchange Square, London EC2A 2JN, United
Kingdom (the “Lender”).


 


NOW THEREFORE, the Borrower and the Lender intend
this Agreement to be effected as a deed and have agreed as follows:


 


SECTION I

INTERPRETATION


 


1                                      DEFINITIONS AND INTERPRETATION


 


1.1                            Definitions


 


In this Agreement:


 


“Affiliate” means, in relation to any person, a Subsidiary of
that person or a Holding Company of that person or any other Subsidiary of that
Holding Company.


 


“A Loan”
means the maximum principal amount of the loan provided for in Clause 2(i), or,
as the context may require, the principal amount thereof from time to time
outstanding.


 


“A Loan
Commitment” means EUR 115,000,000.


 


“Authorisation” means any consent, registration, filing,
agreement, notarisation, certificate, license, approval, permit, authority or
exemption from, by or with any Governmental Authority, whether given by or
withheld by express action or deemed given or withheld by failure to act within
any specified time period and all corporate, creditors’ and shareholders
approvals and consents.


 


“Availability Period” means the period from and including March 1,
2009 to and including December 31, 2009.


 


“Available Commitment” means, in respect of the proposed
Utilisation Date, the Commitment minus:


 


(a)                                the amount of the Loan outstanding; and


 


(b)                               in relation to any proposed Utilisation, the
amount of the Loan that is due to be made on or before the proposed Utilisation
Date.


 


“B Loan”
means the maximum principal amount of the loan provided for in Clause 2(ii),
or, as the context may require, the principal amount thereof from time to time
outstanding.


 


“B Loan
Commitment” means EUR 110,000,000.


 


“Bitel”
means Bitel LLC, a limited liability company incorporated in the Kyrgyz
Republic.


 


“Bitel
Litigation” means any of the claims, proceedings (present or future)
and causes of action involving the Borrower and/or any of its Affiliates
(including Bitel) relating to or arising out of the 


 


1

















 


acquisition, reorganisation or
ownership of Bitel by the Borrower (whether directly or through any of its
Affiliates).


 


“Break Costs” means any costs of the Lender or a Participant,
payable by the Borrower to the Lender or such Participant (as applicable)
pursuant to Clause 9.3 (Break Costs).


 


“Business Day” means a day (other than a Saturday or Sunday) on
which banks are open for general business in London and which is a TARGET Day.


 


“Commitment” means the aggregate of the
A Loan Commitment and the B Loan Commitment, to the extent either of such
commitment is not cancelled or reduced in accordance with the terms of this
Agreement.


 


“Compliance Certificate” means a certificate substantially in
the form set out in Schedule 3 (Form of
Compliance Certificate).


 


“Confidentiality Undertaking” means a confidentiality
undertaking substantially in a recommended form of the LMA or in any other form
agreed between the Borrower and the Lender.


 


“Coercive
Practice” means the impairing or harming of, or threatening to
impair or harm, directly or indirectly, any party or the property of the party
to influence improperly the actions of a party as that term is interpreted in
accordance with the EBRD Anti-Corruption Guidelines.


 


“Collusive
Practice” means an arrangement between two or more parties designed
to achieve an improper purpose, including influencing the actions of another
party, as this term is defined in accordance with the EBRD Anti-corruption
Guidelines.


 


“Corrupt
Practice” means the offering, giving, receiving or soliciting,
directly or indirectly, of anything of value to influence improperly the
actions of another party, as this term is defined in accordance with the EBRD
Anti-Corruption Guidelines.


 


“Country of
Operation” means each of the Russian Federation, Uzbekistan and
Turkmenistan.


 


“Default” means an Event of Default or any event or
circumstance specified in Clause 20 (Events
of Default) which would (with the expiry of a grace period, the
giving of notice, the making of any determination under the Finance Documents
or any combination of any of the foregoing) be an Event of Default.


 


“Default
Interest Determination Date” means the date two Business Days prior
to the first day of the relevant Default Interest Period (or, at the Lender’s
option, the first day of such Default Interest Period).


 


“Default
Interest Period” means, with respect to any amount overdue under
this Agreement, a period commencing on the day on which such amount becomes
due, or, as the case may be, on the last day of the previous Default Interest
Period with respect to such overdue amount, and ending on a Business Day
selected by the Lender.


 


“Disbursement”
means a disbursement of any portion of the Loan from time to time pursuant to
or, as the context may require, the principal amount thereof from time to time
outstanding.


 


“EBRD
Anti-Corruption Guidelines” means EBRD’s Definitions and Guidelines
for Private Sector Operations (Fraud and Corruption) attached hereto as
Schedule 4.


 


“EIB”
means European Investment Bank an international financial institution, having
its headquarters at 100 boulevard Konrad Adenauer L-2950, Luxembourg.


 


2

















 


“EIB Loan”
means the loan in the maximum principal amount of EUR 115,000,000, to be
provided by EIB to the Borrower pursuant to the EIB Loan Agreement, or, as the
context may require, the principal amount thereof from time to time
outstanding.


 


“EIB Loan Agreement”
means the loan agreement dated of even date herewith entered into between the
Borrower and EIB


 


“Environmental
Matter” means:


 


(a)                              the pollution or protection of the environment;


 


(b)                             harm to or the protection of human health;


 


(c)                              health and safety of the workplace; or


 


(d)                             any emission or substance capable of causing
harm to any living organism or the environment.


 


“EUR”
means the lawful currency of the European Union for the time being.


 


“Event of Default” means any event or circumstance specified as
such in Clause 20 (Events of Default).


 


“Facility Office” means the office of the Lender located at One
Exchange Square, London EC2A 2JN, United Kingdom, or the office or offices
notified by the Lender to the Borrower (by not less than five Business Days’
written notice) as the office or offices through which it will perform its
obligations under this Agreement.


 


“Facility” means the term loan facility made available under
this Agreement as described in  Clause 2
(The Facility).


 


“Fee Letter”
means the letter dated on or about the date of this Agreement between the
Lender and the Borrower setting out the various fees to be paid by the Borrower
to the Lender in respect of the Loan in accordance with Clause 10 (Fees).


 


“Final Maturity Date” means:


 


(a)                              for the A Loan, 20 January 2016; and


 


(b)                             for the B Loan, 20 January 2014.


 


“Finance Document” means:


 


(a)                              this Agreement;


 


(b)                             the NIB Loan Agreement;


 


(c)                              the EIB Loan Agreement;


 


(d)                             the Intercreditor Deed; and


 


(e)                              any other document designated as such by the
Lender and the Borrower.


 


“Financial Indebtedness” means any
indebtedness for or in respect of:


 


(a)                              moneys
borrowed;


 


(b)                             any
amount raised by acceptance under any acceptance credit facility or
dematerialised equivalent;


 


3

















 


(c)                              any
amount raised pursuant to any note purchase facility or the issue of bonds,
notes, debentures, loan stock or any similar instrument;


 


(d)                             the
amount of any liability in respect of any lease or hire purchase contract which
would, in accordance with GAAP, be treated as a finance or capital lease;


 


(e)                              receivables
sold or discounted (other than any receivables to the extent they are sold on a
non-recourse basis);


 


(f)                                any
amount raised under any other transaction (including any forward sale or
purchase agreement) having the commercial effect of a borrowing;


 


(g)                             any
derivative transaction entered into in connection with protection against or
benefit from fluctuation in any rate or price (and, when calculating the value
of any derivative transaction, only the marked to market value shall be taken
into account);


 


(h)                             shares
which are expressed to be redeemable at the option of the holder on or prior to
the Final Maturity Date (but excluding any accrued dividends);


 


(i)                                 any
counter-indemnity obligation in respect of a guarantee, indemnity, bond,
standby or documentary letter of credit or any other instrument issued by a
bank or financial institution; and


 


(j)                                 the amount of any
liability in respect of any guarantee or indemnity for any of the items
referred to in paragraphs (a) to (i) above.


 


“Financial
Statements” means the audited consolidated financial statements
(including balance sheet, income statement, statement of changes in equity,
cash flow statement and notes, comprising a summary of significant accounting
policies and other explanatory notes) of the Borrower and its Subsidiaries
prepared in accordance with GAAP.


 


“First
Utilisation Date” means the date of the first Utilisation for the
Loan.


 


“Fraudulent
Practice” means any act or omission, including a misrepresentation
that knowingly or recklessly misleads, or attempts to mislead, a party to
obtain a financial or other benefit or to avoid an obligation, as this term is
interpreted in accordance with the EBRD Anti-Corruption Guidelines.


 


“GAAP” means generally accepted accounting principles,
standards and practices in the United States of America.


 


“Governmental
Authority” means the government of any country, or of any political
subdivision thereof, whether state, regional or local, and any agency,
authority, branch, department, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government or subdivision
thereof (including any supra-national bodies), and all officials, agents and
representatives of each of the foregoing.


 


“Group” means the Borrower and its Subsidiaries for the time
being.


 


“Holding Company” means, in relation to a person, any other
person in respect of which it is a Subsidiary.


 


“Interbank
Rate” means:


 


(a)                              for
the Interest Period of each Disbursement, the offered rate per annum for
deposits in the Loan Currency which appears on the Reference Page as of
11.00 a.m. Brussels time on the relevant Interest Determination Date for
the period which equals the duration of 


 


4

















 


such Interest Period (or if no such rate appears on
the Reference Page for a period equal to the duration of such Interest
Period but rates (“Reference Rates”) do appear on the Reference Page both
for a period that is shorter than and for a period that is longer than the
duration of such Interest Period, the Interbank Rate shall be the rate (rounded upward, if necessary,
to four decimal places) that would be applicable for a period equal to the
duration of such Interest Period as determined through the use of straight-line
interpolation by reference to the Reference Rate that appears on the Reference Page for
the period that is the next shorter in length than the duration of such
Interest Period and the Reference Rate that appears on the Reference Page for
the period that is the next longer in length than the duration of such Interest
Period); and


 


(b)                             for
each subsequent Interest Period, the offered rate per annum for deposits in the
Loan Currency which appears on the Reference Page as of 11:00 a.m.
Brussels time on the relevant Interest Determination Date for the period which
is closest to the duration of such Interest Period (or, if two periods are
equally close to the duration of such Interest Period, the average of the two
relevant rates);


 


provided that, if, for any reason, the Interbank Rate cannot be
determined at such time by reference to the Reference Page, the Interbank Rate
for such Interest Period shall be the rate per annum which the Lender
determines to be the arithmetic mean (rounded upward, if necessary, to four
decimal places) of the offered rates per annum for deposits in the Loan
Currency in an amount comparable to the portion of the Loan scheduled to be
outstanding during such Interest Period for a period equal to such Interest
Period which are quoted to leading banks in the Euro-zone interbank market as
advised to the Lender by three major banks active in the Euro-zone interbank
market selected by the Lender.


 


“Intercreditor
Deed” means an intercreditor deed in respect of the Loan, the NIB
Loan and the EIB Loan, to be entered into between the Lender, NIB and EIB.


 


“Interest
Determination Date” means, for any Interest Period, the date two
Business Days prior to the first day of such Interest Period.


 


“Interest Expense” has the meaning given to it in Clause 19 (Financial Covenants).


 


“Interest
Payment Date” means any day which is 20 January or 20 July in
any year; provided, however that, if any Interest Payment Date would otherwise
fall on a day which is not a Business Day, such Interest Payment Date shall be
changed to the next succeeding Business Day in the same calendar month or, if
there is no succeeding Business Day in the same calendar month, the immediately
preceding Business Day.


 


“Interest Period” means, for any Disbursement, the period
commencing on the date of such Disbursement and ending on the next Interest
Payment Date and each period of six Months thereafter commencing on an Interest
Payment Date; provided that if such Disbursement is made less than 15 Business
Days prior to the next Interest Payment Date, the first Interest Period for
such Disbursement shall end on the Interest Payment Date following the next
Interest Payment Date.


 


“Investment
Period” means the period commencing on the Relevant Date and ending
on the date falling 12 Months after the first Utilisation Date following the
Relevant Date.


 


“Investments” means the capital expenditure program of the
Borrower through further development of the existing networks in Uzbekistan,
Turkmenistan, construction of the new 3G networks in Uzbekistan, expansion of
3G network coverage of the Borrower in Russia, including a demonstration trial
for scavenger energy power base stations in Russia, network
development, 


 


5

















 


associated local works, purchase of new equipment and/or acquisitions. 
These investments are due to be made in approximately the following
percentages of the Loan:


 


	
   

  	
   

  	
   

  	
  Russia

  	
   

  	
  Uzbekistan

  	
   

  	
  Turkmenistan

  	
   

  	
  Total

  	
   

  
	
   

  	
  3G networks

  	
   

  	
  35

  	
  %

  	
  2

  	
  %

  	
   

  	
   

  	
  37

  	
  %

  
	
   

  	
  Scavenger energy demonstration trial

  	
   

  	
  4

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
  4

  	
  %

  
	
   

  	
  Other Capex

  	
   

  	
   

  	
   

  	
  29

  	
  %

  	
  30

  	
  %

  	
  59

  	
  %

  
	
   

  	
  Total

  	
   

  	
  39

  	
  %

  	
  31

  	
  %

  	
  30

  	
  %

  	
  100

  	
  %

  



 


“LMA” means the Loan Market Association.


 


“Loan” means collectively, the A Loan and the B Loan, or, as
the context may require, the principal thereof from time to time outstanding.


 


“Loan
Currency” means the currency in which the Loan is denominated as set
forth in Clause 2 (The Facility).


 


“Margin” means:


 


(a)                              for the A Loan, the margin for the B Loan plus
0.2 per cent; and


 


(b)                             subject at all times to Clause 8.2, for the B
Loan, 5.9 per cent.


 


“Market
Disruption Event” means:


 


(a)                              on the Interest Determination Date for the
relevant Interest Period or the Default Interest Determination Date for the
relevant Default Interest Period, the Reference Page is not available and
fewer than three major banks active in the Euro-zone interbank market supply a
rate to the Lender to determine the Interbank Rate for the Loan Currency for
the relevant Interest Period or the default interest rate for the Loan Currency
for the relevant Default Interest Period, as the case may be; or


 


(b)                             before close of business in Brussels on the
Interest Determination Date for the relevant Interest Period  or the Default Interest Determination Date
for the relevant Default Interest Period, (1) the Lender determines that
the cost to it or (2) the Lender receives notification from one or more
Participants whose aggregate Participation in the B Loan exceeds 50 per cent.
of the B Loan that the cost to such Participant(s), as the case may be, of
obtaining matching deposits in the Euro-zone interbank market would be in
excess of the Interbank Rate.


 


“Material Adverse Effect” means a material adverse effect on or
material adverse change in:


 


(a)                              the financial condition, operations, assets,
prospects or business of the Borrower or the consolidated financial condition,
operations, assets, prospects or business of the Group;


 


(b)                             the ability of the Borrower to perform and
comply with its obligations under any Finance Document; or


 


(c)                              the validity, legality or enforceability of any
Finance Document, or the rights or remedies of the Lender thereunder,


 


provided that for the purpose
of paragraph (a) above, any losses incurred by any member of the Group
after the date of this Agreement as a consequence of an adverse determination
of any or all of the Bitel litigation, such losses not exceeding $330,000,000
or its equivalent in any other currency (including legal fees and associated
expenses) in aggregate, shall be disregarded.


 


6














 


“Month” means a period starting on one day in a calendar month
and ending on the numerically corresponding day in the next calendar month,
except that:


 


(a)                               if the numerically corresponding day is not a
Business Day, that period shall end on the next Business Day in that calendar
month in which that period is to end if there is one, or if there is not, on
the immediately preceding Business Day; and


 


(b)                              if there is no numerically corresponding day in
the calendar month in which that period is to end, that period shall end on the
last Business Day in that calendar month.


 


The above rules will only
apply to the last Month of any period.


 


“MTS-Ukraine” means Closed Joint Stock Company “Ukrainian
Mobile Communications (MTS-Ukraine)” in Ukraine.


 


“MTS-Ukraine Litigation” means any of
the claims, proceedings (present or future) and causes of action involving the
Borrower and/or any of its Affiliates (including MTS-Ukraine) relating to or
arising out of the sale of MTS-Ukraine to the Borrower or the acquisition, reorganization
or ownership of MTS-Ukraine by the Borrower.


 


“MTS-Uzbekistan” means limited liability company JV
Uzdunrobita in Uzbekistan.


 


“NIB” means Nordic Investment Bank, an
international financial institution having its headquarters at Fabianinkatu 34,
FIN 00171, Helsinki, Finland.


 


“NIB Loan”
means the loan in the maximum principal amount of EUR 80,000,000, to be
provided by NIB to the Borrower pursuant to the NIB Loan Agreement, or, as the
context may require, the principal amount thereof from time to time
outstanding.


 


“NIB Loan
Agreement” means the loan agreement dated of even date herewith
entered into between the Borrower and NIB.


 


“NIB B Loan”
means the B loan provided for under the NIB Loan Agreement.


 


“NIB
Participant” means a person from whom NIB receives a formal
commitment to acquire a NIB Participation through the execution of, or the
accession to, a NIB Participation Agreement with NIB.


 


“NIB
Participation” means a participation in the NIB B Loan, or as the
context may require, in a disbursement of the NIB B Loan.


 


“NIB
Participation Agreement” means an agreement under which a NIB
Participant makes a formal commitment to acquire a NIB Participation.


 


“OIBDA” has the meaning given to it in Clause 19 (Financial Covenants).


 


“Participant”
means a person from whom the Lender receives a formal commitment to acquire a
Participation through the execution of, or the accession to, a Participation
Agreement with the Lender.


 


“Participation”
means a participation in the B Loan, or as the context may require, in a
Disbursement of the B Loan.


 


“Participation
Agreement” means an agreement under which a Participant makes a
formal commitment to acquire a Participation.


 


7

















 


“Participating Member State” means any member state of the
European Communities that adopts or has adopted the euro as its lawful currency
in accordance with legislation of the European Community relating to Economic
and Monetary Union.


 


“Party” means a party to this Agreement.


 


“Permitted Security” means:


 


(a)                               any Security on any assets of any corporation
existing at the time such corporation is merged or consolidated with or into
the Borrower or any Subsidiary of the Borrower or becomes a Subsidiary of the
Borrower and not created in contemplation of such event, provided that no such
Security shall extend to any other assets;


 


(b)                              any Security existing on any assets prior to
the acquisition thereof by the Borrower or any Subsidiary of the Borrower and
not created in contemplation of such acquisition, provided that no such
Security shall extend to any other assets;


 


(c)                               any Security on any assets securing Financial
Indebtedness of the Borrower or Financial Indebtedness of any Subsidiary of the
Borrower incurred or assumed for the purpose of financing all or part of the
cost of acquiring, repairing or refurbishing such assets, provided that (i) no
such Security shall extend to any other assets; (ii) the aggregate
principal amount of all Financial Indebtedness secured by such Security on such
assets shall not exceed the lower of (x) the purchase price of such assets
and (y) the fair market value of such assets at the time of acquisition,
repair or refurbishing; and (iii) such Security attaches to such assets
concurrently with the repair or refurbishing thereof or within 90 days after
the acquisition thereof, as the case may be;


 


(d)                              any Security arising by operation of law,
including any Security (i) arising in the ordinary course of business with
respect to amounts not yet delinquent or being contested by the Borrower or a
Subsidiary of the Borrower in good faith in appropriate proceedings or (ii) for
taxes, assessments, government charges or claims, including without limitation
those in favour of Russian governmental fiscal authorities;


 


(e)                               any Security on the assets of any Subsidiary of
the Borrower securing intercompany Financial Indebtedness of such Subsidiary
owing to the Borrower or another Subsidiary of the Borrower;


 


(f)                                 any netting or set-off arrangement entered into
by a member of the Group with a bank or any other financial institution in the
normal course of its banking arrangements for the purpose of netting or setting
off its debit and credit facilities with that bank or financial institution;


 


(g)                              easements, rights-of-way, restrictions and any
other similar charges or encumbrances incurred in the ordinary course of
business and not interfering in any material respect with the business of the
Borrower or the business of any Subsidiary of the Borrower, including any
encumbrance or restriction with respect to an equity interest of any joint
venture pursuant to a joint venture agreement;


 


(h)                              any extension, renewal or replacement of any
Security described in clauses (a) to (g) above, provided that (i) such
extension, renewal or replacement shall be no more restrictive in any material
respect than the original Security; (ii) the amount of Financial
Indebtedness secured by such Security is not increased; and (iii) if the
assets securing the Financial Indebtedness subject to such Security are changed
in connection with such 


 


8

















 


refinancing,
extension or replacement, the fair market value of the property or assets is
not increased; and


 


(i)                                 any other Security (excluding any Security
described in (a)-(h) above) provided that, immediately after giving effect
to such Security, the aggregate amount of all secured Financial Indebtedness of
the Group does not exceed 10% of the Borrower’s Total Assets.


 


“Prohibited
Practice” means any Corrupt Practice, Fraudulent Practice, Coercive
Practice or Collusive Practice.


 


“Qualifying Lender” has the meaning given to it in Clause 12 (Tax Gross-up and Indemnities).


 


“RAS” means generally accepted accounting principles, standards
and practices in the Russian Federation.


 


“Reference
Page” means the display of Euro-zone interbank offered rates for
deposits in the Loan Currency designated as page EURIBOR01 on Reuters
services (or such other page as may replace page EURIBOR01 on Reuters
services for the purpose of displaying Euro-zone interbank offered rates for
deposits in the Loan Currency).


 


“Relevant
Date” means the date of the notification by the Lender under Clause
4.1 (Initial Conditions Precedent).


 


“Relevant Contract” means a contract:


 


(a)                              relating to an Investment;


 


(b)                             with a value in excess of EUR 1,000,000 (or the
equivalent thereof in another currency at the rate of exchange on the date of
that contract); and


 


(c)                              which is awarded either by the Borrower or by
another member of the Group established under the laws of the Russian
Federation.


 


“Relevant Period” has the meaning given to it in Clause 19 (Financial Covenants).


 


“Repayment Date” means:


 


(a)                              for the A Loan, 20 January 2010,
20 July 2010, 20 January 2011, 20 July 2011, 20 January 2012,
20 July 2012, 20 January 2013, 20 July 2013, 20 January 2014,
20 July 2014, 20 January 2015, 20 July 2015 and the Final
Maturity Date; and


 


(b)                             for the B Loan, 20 January 2010,
20 July 2010, 20 January 2011, 20 July 2011, 20 January 2012,
20 July 2012, 20 January 2013, 20 July 2013 and the Final
Maturity Date.


 


“Repeating Representations” means each of the representations
set out in Clauses 16.1 (Status),
16.3 (Binding obligations), 16.4
(Non-conflict with other obligations),
16.5 (Power and authority), 16.7
(Governing law and enforcement),
16.12 (No default), 16.14 (Pari Passu Ranking), 16.15 (No proceedings pending or threatened),
16.16 (Environmental and social compliance)
and 16.17 (Telecommunications laws and
licences).


 


“Roubles” or “RUB”
means the lawful currency of the Russian Federation for the time being.


 


“Russian Insolvency Law” means the Federal
Law of the Russian Federation No. 127-FZ of 26 October 2002 “On
Insolvency (Bankruptcy)”, as amended from time to time.


 


“Security” means a mortgage, charge, lien, pledge or other
security interest securing any obligations of any person or any other agreement
or arrangement having a similar effect.


 


“Significant Subsidiary” means:


 


9

















 


(a)                               MTS-Ukraine
(unless, pursuant to the MTS-Ukraine Litigation, any or all of the Borrower’s
shares in MTS-Ukraine are transferred to a person that is not a member of the
Group, with the result that MTS-Ukraine ceases to be a member of the Group);


 


(b)                              MTS-Uzbekistan;


 


(c)                               any
Subsidiary of the Borrower to which (i) the Borrower or MTS-Ukraine, or
MTS-Uzbekistan sells, leases or otherwise transfers its GSM 900 or 1800
licences or (ii) any such licence is re-issued; and


 


(d)                              any
Subsidiary of the Borrower (i) whose total assets (or, where such Subsidiary
prepares consolidated accounts, whose total consolidated assets) have a book
value (as determined by reference to the most recent management accounts of
that Subsidiary prepared in accordance with GAAP) equal to or exceeding 10% of
the Borrower’s Total Assets or (ii) whose gross annual revenues (or, where
such Subsidiary prepares consolidated accounts, whose gross annual consolidated
revenues) (as determined by reference to the most recent management accounts of
that Subsidiary prepared in accordance with GAAP) are equal to or exceed 10% of
the Borrower’s gross annual consolidated revenues in the year for which the
Borrower’s most recent consolidated financial statements were prepared.


 


“Signing Date” means the date of this Agreement.


 


“Social
Matters” means:


 


(a)                               labour standards and employment conditions as
regulated by applicable law;


 


(b)                              the impact on persons of resettlement or land
acquisition;


 


(c)                               the impact on indigenous peoples and other
vulnerable groups;


 


(d)                              the impact on objects of cultural heritage
including archaeological artefacts and sites; or


 


(e)                               public consultation and disclosure, including
grievances from members of the public notified to the Borrower.


 


“Subsidiary” means an entity from time to time of
which a person has direct or indirect control or owns directly or indirectly
more than 50% of the share capital or similar right of ownership.


 


“TARGET Day”
means any day on which the Trans-European Automated Real-time Gross Settlement
Payment System (TARGET) is open for the settlement of payments in Euro.


 


“Tax” or “Taxes” means
any tax, levy, impost, duty or other charge or withholding of a similar nature
(including any penalty or interest payable in connection with any failure to
pay or any delay in paying any of the same).


 


“Telecommunications
Authorisation”  means any
Authorisation from any governmental or other regulatory authority necessary in
order for each of the Borrower and its Significant Subsidiaries to maintain,
operate and conduct its business as it is being conducted in accordance with
Telecommunications Laws.


 


“Telecommunications Laws”  means (a) all
laws and regulations which relate to telecommunications and/or the business of
providing mobile telephone services and (b) all rules, guidelines,
policies and regulations made thereunder, that are applicable to each of the
Borrower and its Significant Subsidiaries and/or the business carried on by it.


 


10

















 


“Telecommunications
Licence” means any Authorisation required at any time under
Telecommunications Laws.


 


“Total Assets” means the book value of the consolidated total
assets of the Borrower as determined by reference to the Borrower’s most recent
annual consolidated balance sheet delivered in accordance with paragraph (a) of
Clause 18.1 (Financial statements)
or, prior to the first delivery, to the Financial Statements.


 


“Total Debt” has the meaning given to it in Clause 19 (Financial Covenants).


 


“Unpaid Sum” means any sum due and payable but unpaid by the
Borrower under the Finance Documents.


 


“Utilisation” means a utilisation of the Facility.


 


“Utilisation Date” means the date of a Utilisation, being the
date on which the Loan is to be made.


 


“Utilisation Request” means a notice substantially in the form
set out in Schedule 2 (Utilisation
Request).


 


“VAT” means value added tax and any other tax of a similar
nature.


 


1.2                            Construction


 


(a)                               Unless a contrary indication appears, any
reference in this Agreement to:


 


(i)                                 the “Lender”,
the “Borrower” and any “Party” shall be construed so as to include
its successors in title, permitted assigns and permitted transferees;


 


(ii)                              “assets”
includes present and future properties, revenues and rights of every
description;


 


(iii)                           “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management polices of a person, whether through the
ownership of voting securities, by contract or credit arrangement, as trustee
or executor, or otherwise;


 


(iv)                          a “Finance
Document” or any other agreement
or instrument is a reference to that Finance Document or other agreement or
instrument as amended or novated;


 


(v)                             “indebtedness”
includes any obligation (whether incurred as principal or as surety) for the
payment or repayment of money, whether present or future, actual or contingent;


 


(vi)                          a “person”
includes any person, firm, company, corporation, government, state or agency of
a state or any association, trust or partnership (whether or not having
separate legal personality) or two or more of the foregoing;


 


(vii)                       a “regulation”
includes any regulation, rule, official directive, request or guideline
(whether or not having the force of law) of any governmental, intergovernmental
or supranational body, agency, department or regulatory, self-regulatory or
other authority or organisation;


 


(viii)                    the singular shall include references to the plural and vice versa;


 


(ix)                            a provision of law is a reference to that
provision as amended or re-enacted; and


 


(x)                               a time of day is a reference to London time.


 


(b)                              Section, Clause and Schedule headings are for
ease of reference only.


 


11

















 


(c)                               Unless a contrary indication appears, a term
used in any other Finance Document or in any notice given under or in
connection with any Finance Document has the same meaning in that Finance
Document or notice as in this Agreement.


 


(d)                              A Default (other than an Event of Default) is “continuing” if it has not been remedied or
waived and an Event of Default is “continuing”
if it has not been waived.


 


1.3                            Third Party Rights


 


A person who
is not a Party has no right under the Contracts (Rights of Third Parties) Act
1999 to enforce or to enjoy the benefit of any term of this Agreement.


 


12

















 


SECTION II

THE FACILITY


 


2                                      THE FACILITY


 


Subject to the terms of this Agreement, the Lender makes available to
the Borrower an amount not to exceed EUR 225,000,000 consisting of:


 


(i)                                   the A Loan in an amount not to exceed EUR
115,000,000; and


 


(ii)                                the B Loan in an amount not to exceed EUR
110,000,000.


 


3                                      PURPOSE


 


The Borrower shall apply all
amounts borrowed by it under the Facility in the following manner:


 


(i)                                   towards Investments in Russia, in an amount not
to exceed EUR 87,000,000;


 


(ii)                                towards Investments in Uzbekistan, in an amount
not to exceed EUR 70,000,000; and


 


(iii)                             towards Investments in Turkmenistan, in an
amount not to exceed EUR 68,000,000.


 


4                                      CONDITIONS OF UTILISATION


 


4.1                            Initial conditions precedent


 


The Lender will only be obliged
to comply with Clause 5.4 (Availability of the Loan)
in relation to any Disbursement if, on or before the Utilisation Date for such
Disbursement, it has received all of the documents and other evidence listed in
Schedule 1 (Conditions precedent)
in form and substance satisfactory to the Lender, and the Lender has notified
the Borrower that it is so satisfied.


 


4.2                            Pari Passu Disbursement


 


Notwithstanding anything in this
Agreement to the contrary, the obligation of the Lender to make any
Disbursement shall also be subject to the conditions that:


 


(i)                                 the aggregate amount of the Loan disbursed by
the Lender shall not at any time exceed (i) 285% of the aggregate amounts
theretofore or contemporaneously disbursed under the NIB Loan Agreement; and (ii) 200%
of the aggregate amounts theretofore or contemporaneously disbursed under the
EIB Loan Agreement; and


 


(ii)                              immediately after such Disbursement, the ratio
of the aggregate amount of the A Loan to the aggregate amount of the B Loan
shall be 115:110,


 


provided that the conditions
in this Clause 4.2 may be waived by the Lender at any time, in its sole
discretion.


 


4.3                            Participations


 


Notwithstanding anything in
this Agreement to the contrary, the obligation of the Lender to make any
Disbursement shall also be subject to the conditions that:


 


(i)                                 the Lender shall have entered into, in relation
to the B Loan, a Participation Agreement or Participation Agreements with a
Participant or Participants, for the full amount of the B Loan and NIB shall
have entered into, in relation to the NIB B Loan, a NIB Participation 


 


13

















 


Agreement or NIB
Participation Agreements with a NIB Participant or NIB Participants, for the
full amount of the NIB B Loan; and


 


(ii)                              the Lender shall not in any event be obliged to
make any Disbursement of the B Loan except to the extent that corresponding
funds in an aggregate amount equal to the amount of such Disbursement of the B
Loan are provided to the Lender by Participants pursuant to Participations,


 


provided that the conditions
in this Clause 4.3 may be waived by the Lender at any time, in its sole
discretion.


 


4.4                            Further conditions precedent


 


The Lender will only be obliged
to comply with Clause 5.4 (Availability of
Loan) if on the date of the Utilisation Request and on the proposed
Utilisation Date:


 


(i)                                 no Default is continuing or would result from
the proposed Utilisation; and


 


(ii)                              in relation to the First Utilisation, all
representations and warranties in Clause 16 (Representations),
or, in relation to any other Utilisation, the Repeating Representations, to be
made by the Borrower are true in all material respects.


 


4.5                            Suspension and cancellation


 


(a)                               From time to time, the Lender may, by notice to
the Borrower, suspend or cancel the right of the Borrower to make any
Utilisation of the Loan if the Board of Governors of the Lender has decided in
accordance with Article 8, paragraph 3, of the Agreement Establishing the
European Bank of Reconstruction and Development that access by the Russian
Federation, Uzbekistan or Turkmenistan to EBRD resources should be suspended or
otherwise modified.


 


(b)                              Upon the issuance of such notice by the Lender,
the right of the Borrower to further Disbursements in respect of the Loan shall
be suspended and cancelled as indicated in the notice. The exercise by the
Lender of the right of suspension shall not preclude the Lender from exercising
any other right of cancellation it may have under this Agreement and shall not
limit any other rights of the Lender under the Finance Agreements.


 


14

















 


SECTION III

UTILISATION


 


5                                      UTILISATION


 


5.1                            Delivery of a Utilisation Request


 


The Borrower may utilise the
Facility by delivery to the Lender of a duly completed Utilisation Request not
later than 5:00 p.m. on the day falling ten Business Days before the
proposed Utilisation Date.


 


5.2                            Completion of a Utilisation Request


 


(a)                               Each Utilisation Request is irrevocable and
will not be regarded as having been duly completed unless:


 


(i)                                   the proposed Utilisation Date is a Business Day
within the Availability Period;


 


(ii)                                the currency and amount of the Utilisation
comply with Clause 5.3 (Currency and amount);
and


 


(iii)                             it specifies the account and bank to which the
proceeds of the Utilisation are to be credited.


 


(b)                              Only one Utilisation may be requested in each
Utilisation Request.


 


5.3                            Currency and amount


 


(a)                               The currency specified in a Utilisation Request
must be Euros.


 


(b)                              The amount of the proposed Loan must be:


 


(i)                                   a minimum of EUR 40,000,000 or, if less, the
Available Commitment; or


 


(ii)                                in any event such that it is less than or equal
to the Available Commitment.


 


5.4                            Availability of the Loan


 


If the conditions set out in
this Agreement have been met, the Lender shall make the Loan available by the
Utilisation Date through its Facility Office.


 


15

















 


SECTION IV

REPAYMENT, PREPAYMENT AND CANCELLATION


 


6                                      REPAYMENT


 


6.1                            Repayment of the Loan


 


(a)                               The Borrower shall repay the A Loan in 13 equal
(or as nearly equal as possible) semi-annual instalments on each Repayment
Date, provided that if any Disbursement is made after one or more of such
repayment dates, such Disbursement shall be allocated by the Lender for
repayment on each of the remaining repayment dates described above in amounts
which are pro rata to the amounts of the respective remaining instalments of
the A Loan on each such repayment date (with the Lender adjusting those
allocations as necessary so as to achieve whole numbers in each case).


 


(b)                              The Borrower shall repay the B Loan in 9 equal
(or as nearly equal as possible) semi-annual instalments on each Repayment
Date, provided that if any Disbursement is made after one or more of such
repayment dates, such Disbursement shall be allocated by the Lender for
repayment on each of the remaining repayment dates described above in amounts
which are pro rata to the amounts of the respective remaining instalments of
the B Loan on each such repayment date (with the Lender adjusting those
allocations as necessary so as to achieve whole numbers in each case).


 


(c)                               The Repayment Dates are intended to coincide
with Interest Payment Dates. If any Interest Payment Date is affected by the
proviso to the definition of “Interest Payment Date”, then the corresponding
Repayment Date shall be changed to coincide with such Interest Payment Date.


 


(d)                              Amounts of the Loan repaid may not be
reborrowed.


 


(e)                               No Disbursement shall be made following the
expiry of the Availability Period other than by way of amendment to this
Agreement.


 


7                                      PREPAYMENT AND CANCELLATION


 


7.1                            Illegality


 


If it becomes unlawful in any
applicable jurisdiction for the Lender to make, maintain or fund the Loan or
for any Participant to maintain or fund its Participation:


 


(a)                              the Lender shall promptly notify the Borrower
upon becoming aware of that event;


 


(b)                             upon the Lender notifying the Borrower, the
Commitment of the Lender or Participant (as applicable) will be immediately
cancelled; and


 


(c)                              the Borrower shall repay the Lender’s
participation or that Participant’s Participation (as applicable) in the Loan
made to the Borrower on the later of the last day of the Interest Period for
each Loan occurring, and the date falling 20 days after the Lender has notified
the Borrower (but in any event no longer than any grace period permitted by
law) or, if earlier, the date specified by the Lender in the notice delivered
to the Borrower (being no earlier than the last day of any applicable grace
period permitted by law).


 


16














 


7.2                            Voluntary cancellation


 


The Borrower may, if it gives
the Lender not less than 10 Business Days’ (or such shorter period as the
Lender may agree) prior written notice, cancel the whole or any part (being a
minimum amount of EUR 10,000,000) of the Available Commitment.


 


7.3                            Voluntary prepayment of the Loan


 


(a)                               The Borrower may, if it gives the Lender not
less than 10 Business Days’ (or such shorter period as the Lender may agree)
prior written notice, prepay the whole or any part of the Loan on any Interest
Payment Date (but, if in part, being an amount that reduces the Loan by a
minimum amount of EUR 10,000,000).


 


(b)                              In the case of a partial prepayment, such
prepayment shall be applied pro rata between the A Loan and the B Loan in
proportion to the respective principal amounts thereof then outstanding.


 


(c)                               The Loan may only be prepaid after the last day
of the Availability Period (or, if earlier, the day on which the Available
Commitment is zero).


 


(d)                              Each prepayment shall be applied in
satisfaction of the Borrower’s obligations under Clause 6 (Repayment) in the inverse order of
maturity of the Loan (or, at the option of the Borrower, pro rata to the remaining principal
instalments thereof).


 


7.4                            Mandatory Prepayment — Change of Control


 


(a)                               In this Clause 7.4, “Change of Control” means any of the
following events or circumstances: any person or group of persons acting in
concert or under an express or implied agreement or understanding, directly or
through one or more intermediaries, shall (x) acquire ultimate beneficial
or legal ownership of, or control over, more than 50% of the issued shares of
the Borrower; (y) acquire ownership of or control over more than 50% of
the voting interests in the share capital of the Borrower; or (z) obtain
the power (whether or not exercised) to elect not less than half of the
directors of the Borrower.


 


(b)                              If there is a Change of Control:


 


(i)                                 the Borrower shall promptly notify the Lender
upon becoming aware of that event;


 


(ii)                              the Borrower may not make a Utilisation; and


 


(iii)                           if the Lender (in its sole discretion) so
requires, it may, within five Business Days of its receipt of the Borrower’s
notification under sub-clause (i) above, direct the Borrower to repay the
Loan (together with accrued interest) in full on the day (the “Early Repayment Date”) falling 30 days
after the date of the Borrower’s notification under sub-clause (i) above.
Before the Early Repayment Date, the Lender and the Borrower shall consult with
each other for a period of five Business Days with respect to the transfer of
the Lender’s rights and obligations under this Agreement to another reputable
international bank or financial institution nominated by the Borrower (but
which is not an Affiliate of the Borrower) in accordance with Clause 21 (Changes to the Lender). If no such
transfer has been effected on or before the Early Repayment Date, then (x) the
Borrower shall repay the Loan (together with accrued interest) in full on the
Early Repayment Date and (y) the Commitment shall be reduced to zero on
that date.


 


7.5                            Right of repayment and cancellation in relation to the
Lender or a Participant


 


If:


 


17

















 


(a)                              any sum payable to the Lender by the Borrower
is required to be increased under paragraph (c) of Clause 11.2 (Tax gross-up); or


 


(b)                             the Lender claims indemnification from the
Borrower under Clause 11.3 (Tax indemnity)
or Clause 12 (Increased Costs),


 


the Borrower may, whilst the
circumstance giving rise to the requirement or indemnification continues, give
the Lender notice of cancellation of the Lender’s portion of the Commitment or
that Participant’s Participation (as applicable) and its intention to procure
the repayment of that portion of the principal amount of the Loan affected on
the last day of the Interest Period ending after the date of such notice (or,
if earlier, on such other date as specified by the Borrower in that notice)
(the “Cancellation Date”). Before
the Cancellation Date, the Lender and the Borrower shall consult with each
other for a period of five Business Days with respect to the transfer of the
Lender’s rights and obligations under this Agreement or that Participant’s
Participation to another reputable international bank or financial institution
nominated by the Borrower (but which is not an Affiliate of the Borrower) in
accordance with Clause 21 (Changes to the
Lender). If no such transfer has been effected on or before the
Cancellation Date, then (x) the Borrower shall repay that portion of the
Loan affected (together with accrued interest) in full on the Cancellation Date
and (y) the Commitment shall be reduced to on that date by such amount
cancelled and repaid.


 


7.6                            Restrictions


 


(a)                               Any notice of cancellation or prepayment given
by any Party under this Clause 7 shall be irrevocable and, unless a contrary
indication appears in this Agreement, shall specify the date or dates upon
which the relevant cancellation or prepayment is to be made and the amount of
that cancellation or prepayment.


 


(b)                              Any prepayment under this Agreement shall be
made together with accrued interest on the amount prepaid and, subject to any
Break Costs, without premium or penalty.


 


(c)                               The Borrower may not reborrow any part of the
Facility which is prepaid.


 


(d)                              The Borrower shall not repay or prepay all or
any part of the Loan or cancel all or any part of the Commitment except at the
times and in the manner expressly provided for in this Agreement.


 


(e)                               No amount of the Commitment cancelled under
this Agreement may be subsequently reinstated.


 


18

















 


SECTION V

COSTS OF UTILISATION


 


8                                      INTEREST


 


8.1                            Calculation of interest


 


Except as provided in Clauses
8.3 (Default interest):


 


(a)                               the Borrower shall pay interest on the
principal amount of each Disbursement of the A Loan from time to time
outstanding during each Interest Period for such Disbursement at a rate equal
to the sum of the Margin for the A Loan and, subject to Clause 9.1 (Market disruption), the Interbank Rate for such Interest
Period; and


 


(b)                              the Borrower shall pay interest on the
principal amount of each Disbursement of the B Loan from time to time
outstanding during each Interest Period for such Disbursement at a rate equal
to the sum of the Margin for the B Loan and, subject to Clause 9.1 (Market disruption), the Interbank Rate for such Interest
Period.


 


8.2                            Market Flex


 


(a)                               In relation to the Margin for the B Loan,
during the period from the Signing Date up to and including the date on which
the Lender notifies the Borrower that a successful syndication has been
achieved, the Lender shall be entitled in its sole discretion, to increase the
Margin of the B Loan if the Lender, having regard to the prevailing conditions
in the domestic and/or international money, debt capital or financial markets,  determines that such change is advisable in
order to enhance the prospects of successful syndication, whether or not
successful syndication is thereafter achieved.


 


(b)                              For the purposes of this Clause 8.2, “successful syndication” means in relation to the B Loan, the
Lender shall have received from Participants, upon terms satisfactory to the
Lender, formal commitments by such Participants, evidenced by the execution of
one or more Participation Agreements, for the acquisition of Participations in
the B Loan in the aggregate amount equal to the full amount of the B Loan.


 


(c)                               Any changes made pursuant to this Clause 8.2
will take effect by notice from the Lender to the Borrower.


 


(d)                              The Borrower agrees, at the Lender’s request,
to amend the Finance Documents and do all things as may be required to reflect
and give effect to any changes made under this Clause 8.2.


 


8.3                            Payment of interest


 


(a)                               The Borrower shall pay accrued interest on the
Loan on each Interest Payment Date which is the last day of the relevant
Interest Period.


 


(b)                              Interest shall accrue from and including the
first day of an Interest Period to but excluding the last day of such Interest
Period.


 


(c)                               Interest shall be calculated on the basis of
the actual number of days elapsed and a 360-day year.


 


19

















 


8.4                            Default interest


 


(a)                               If the Borrower fails to pay any amount payable
by it under a Finance Document on its due date, interest shall accrue on the
overdue amount from the due date up to the date of actual payment (both before
and after judgment) at a rate which, subject to paragraph (b) below, is
the sum of:


 


(i)                                 two per cent. per annum;


 


(ii)                              the Margin for the A Loan; and


 


(iii)                           the interest rate per annum offered in the
Euro-zone interbank market on the Default Interest Determination Date for a
deposit in the Loan Currency of an amount comparable to the overdue amount for
a period equal to the relevant Default Interest Period or, if a Market
Disruption Event has occurred, the rate which expresses as a percentage rate
per annum the cost to the Lender of funding its respective portion of the Loan
from whatever source the Lender may reasonably select (or, at the option of the
Lender, the relevant Interbank rate, if available),


 


provided that, in the case of
any amount payable by the Borrower under this Agreement in respect of the B
Loan, the overdue amount shall bear interest at a rate equal to the sum of:


 


(i)                                 two per cent. per annum;


 


(ii)                              the Margin for the B Loan; and


 


(iii)                           the interest rate per annum offered in the
Euro-zone interbank market on the Default Interest Determination Date for a
deposit in the Loan Currency of an amount comparable to the overdue amount for
a period equal to the relevant Default Interest Period or, if a Market Disruption
Event has occurred, the rate which expresses as a percentage rate per annum the
cost to the Lender and each Participant of funding its respective portion of
the Loan from whatever source the Lender or such Participant(s) may
reasonably select (or, at the option of the Lender and such Participant(s), the
relevant Interbank rate, if available).


 


(b)                              Default interest (if unpaid) arising on an
overdue amount will be compounded with the overdue amount at the end of each
Interest Period applicable to that overdue amount but will remain immediately
due and payable.


 


8.5                            Notification of rates of interest


 


Except as otherwise provided in
Clause 9.1(a) (Market disruption),
on each Interest Determination Date, the Lender shall determine the interest
rates applicable during the relevant Interest Period and promptly give notice
thereof to the Borrower. Each determination by the Lender of the interest rate
applicable to any portion of the Loan shall be final, conclusive and binding
upon the Borrower unless shown by the Borrower to the satisfaction of the
Lender that any such determination has involved manifest error.


 


9                                      CHANGES TO THE CALCULATION OF INTEREST


 


9.1                            Market disruption


 


(a)                               If a Market Disruption Event occurs, then the
Lender shall be entitled to notify the Borrower of the occurrence of such
Market Disruption Event. If the Lender notifies the Borrower of the occurrence
of the Market Disruption Event, interest shall accrue on the A Loan at a rate
equal to the sum of:


 


(i)                                 the Margin for the A Loan; and


 


20

















 


(ii)                              the rate which expresses as a percentage rate
per annum the cost to the Lender and each Participant of funding its respective
portion of the A Loan from whatever source the Lender or such Participant(s) may
reasonably select (or at the option of the Lender and such Participant(s), the
relevant Interbank Rate, if available), as notified by the Lender to the
Borrower as soon as practicable and in any event before interest is due to be
paid in respect of that Interest Period,


 


and interest shall accrue on
the B Loan at the rate equal to the sum of:


 


(i)                                 the Margin for the B Loan; and


 


(ii)                              the rate which expresses as a percentage rate
per annum the cost to the Lender and each Participant of funding its respective
portion of the B Loan from whatever source the Lender or such Participant(s) may
reasonably select (or at the option of the Lender and such Participant(s), the
relevant Interbank Rate, if available), as notified by the Lender to the
Borrower as soon as practicable and in any event before interest is due to be
paid in respect of that Interest Period,


 


in each case until the Lender
has given notice to the Borrower that the Market Disruption Event has ceased to
exist.


 


(b)                              If a Market Disruption Event has occurred, the
Lender shall have the right, in its discretion, to change the duration of any
relevant Interest Period by sending the Borrower a written notice thereof. Any
such change to an Interest Period shall take effect on the date specified by
the Lender in such notice.


 


(c)                               If a Market Disruption Event has occurred, the
Lender shall be entitled to determine the interest rate applicable during the
relevant Interest Period and give notice thereof to the Borrower on or before
the end of such Interest Period.


 


9.2                            Alternative basis of interest or funding


 


(a)                               Notwithstanding sub-clause (a) of Clause
9.1 (Market disruption), if a Market
Disruption Event occurs and the Lender or the Borrower so requires, within five
Business Days of the notification by the Lender pursuant to Clause 9.1(a) (Market disruption), the Lender and the Borrower shall enter
into negotiations (for a period of not more than 30 days) with a view to
agreeing a substitute basis for determining the rate of interest.  Any alternative basis so agreed shall take
effect in accordance with its terms and replace the interest rate then in
effect pursuant to Clause 9.1(a) (Market disruption).
If agreement cannot be reached, the Borrower may, if it gives the Lender not
less than 10 Business Days’ (or such shorter notice as the Lender may agree)
prior written notice, prepay the whole or any part of the Loan (but, if in
part, being an amount that reduces the Loan by a minimum amount of EUR
10,000,000).


 


(b)                              For the avoidance of doubt, if any prepayment
of the Loan is made under sub-clause (a) above on a date that is not an
Interest Payment Date, Break Costs, if any, shall be due and payable by the
Borrower.


 


(c)                               If only part of the Loan is prepaid, each
prepayment made under this Clause 9.2 shall be applied in satisfaction of the
Borrower’s obligations under Clause 6 (Repayment) in
the inverse order of maturity of the Loan (or, at the option of the Borrower, pro rata to the remaining principal instalments thereof).


 


(d)                              Any alternative basis agreed pursuant to
paragraph (a) above shall, with the prior consent of the Lender and the
Borrower, be binding on all Parties.


 


21

















 


9.3                            Break Costs


 


(a)                               If, for any reason (including, without
limitation, an acceleration pursuant to Clause 20.21 (Acceleration)),
any portion of the Loan becomes due and payable on a date other than the last
day of an Interest Period, the Borrower shall pay to the Lender on demand, the
amount, if any, by which:


 


(i)                                 the interest which would have accrued on such
portion of the Loan from the date on which such portion of the Loan has become
due and payable to the last day of the then current Interest Period at a rate
equal to the Interbank Rate for such Interest Period;


 


exceeds:


 


(ii)                              the interest which the Lender would be able to
obtain if it were to place an amount equal to such portion of the Loan on
deposit with a leading bank in the Euro-zone interbank market for the period
commencing on the date on which such portion of the Loan has become due and
payable and ending on the last day of the then current Interest Period.


 


(b)                              If any overdue amount is paid on a date other
than the last day of a Default Interest Period, the Borrower shall pay to the
Lender on demand the amount, if any, by which:


 


(i)                                 the interest which would have accrued on such
overdue amount from the date of receipt by the Lender of such overdue amount to
the last day of the then current Default Interest Period at a rate equal to the
rate specified in Clause 8.4 for such Default Interest Period;


 


exceeds:


 


(ii)                              the interest which the Lender would be able to
obtain if it were to place an amount equal to such overdue amount on deposit
with a leading bank in the Euro-zone interbank market for the period commencing
on the Business Day immediately following the date of receipt of such overdue
amount and ending on the last day of the then current Default Interest Period.


 


(c)                               The Borrower shall forthwith upon notice from
the Lender reimburse the Lender for any costs, expenses and losses incurred by
the Lender or any Participant, and not otherwise recovered by the Lender under
sub-clauses (a) and (b) of this Clause 9.3, as a result of the
occurrence of an Event of Default, prepayment of any portion of the Loan on a
date other than the last day of an Interest Period, failure by the Borrower to
pay any amount when due hereunder, failure by the Borrower to borrow in
accordance with a Utilisation Request submitted pursuant to Clause 5.1 (Delivery of a Utilisation Request) or failure by the Borrower
to make any prepayment in accordance with a notice of prepayment delivered
pursuant to Clause 7.3 (Voluntary Prepayment of
the Loan).


 


(d)                              The Lender shall, as soon as reasonably
practicable after a demand by the Borrower, provide a certificate confirming
the amount of its or any Participant’s Break Costs for any Interest Period or
Default Interest Period (as applicable) in which they accrue.


 


10                               FEES


 


(a)                               The Borrower shall pay to the Lender certain
fees in accordance with the Fee Letter. Such fees shall be paid at the times
and in the manner specified in the Fee Letter.


 


(b)                              The charges, commissions and fees referred to
in this Clause 10 are exclusive of any Tax which might be chargeable in
connection with such charges, commissions or fees. If any such Tax becomes
chargeable, the Borrower shall pay such Tax to the Lender at the same time that
the relevant charge, commission or fee becomes due and payable.


 


22

















 


SECTION VI

ADDITIONAL PAYMENT OBLIGATIONS


 


11                                TAX GROSS-UP AND INDEMNITIES


 


11.1                      Definitions


 


(a)                               In this Agreement:


 


“Qualifying Lender” means a Lender which is situated for tax
purposes in the Russian Federation or in a Tax Treaty Jurisdiction, or is
otherwise entitled to receive interest free and clear of Russian withholding
tax from a source within the Russian Federation.


 


“Tax Credit” means a credit against, relief or remission for,
or repayment of any Tax.


 


“Tax Deduction” means a deduction or withholding for or on
account of Tax from a payment under a Finance Document.


 


“Tax Payment” means an increased payment made by the Borrower
to the Lender under Clause 11.2 (Tax
gross-up) or a payment under Clause 11.3 (Tax indemnity).


 


“Tax Treaty Jurisdiction” means a jurisdiction which has in
force a double tax treaty with the Russian Federation (or with the Union of
Soviet Socialist Republics to which the Russian Federation has succeeded) which
provides for full exemption from Russian withholding tax on interest derived
from a source within the Russian Federation payable to a resident of such
jurisdiction.


 


(b)                              Unless a contrary indication appears, in this
Clause 11 a reference to “determines”
or “determined” means a
determination made in the absolute discretion of the person making the
determination.


 


11.2                      Tax gross-up


 


(a)                               The Borrower shall make all payments to be made
by it without any Tax Deduction, unless a Tax Deduction is required by law.


 


(b)                              The Borrower shall promptly upon becoming aware
that it must make a Tax Deduction (or that there is any change in the rate or
the basis of a Tax Deduction) notify the Lender accordingly. Similarly, the
Lender shall notify the Borrower on becoming so aware in respect of a payment
payable to the Lender.


 


(c)                               Subject to paragraph (d) below, if a Tax
Deduction is required by law to be made by the Borrower, the amount of the
payment due from the Borrower shall be increased to an amount which (after
making any Tax Deduction) leaves an amount equal to the payment which would
have been due if no Tax Deduction had been required.


 


(d)                              The Borrower is not required to make an
increased payment to the Lender under paragraph (c) above if, on the date
on which the payment falls due, the Borrower could have made such a payment to
the Lender without a Tax Deduction if the Lender was a Qualifying Lender, but
on that date the Lender is not, or has ceased to be, a Qualifying Lender (other
than as a result of any change after the date it became the Lender under this
Agreement in (or in the interpretation, administration, or application of) any
law or treaty, or any published practice or concession of any relevant taxing
authority).


 


23

















 


(e)                               If the Borrower is required to make a Tax
Deduction, it shall make that Tax Deduction and any payment required in
connection with that Tax Deduction within the time allowed and in the minimum
amount required by law.


 


(f)                                 Within 30 days of making either a Tax Deduction
or any payment required in connection with that Tax Deduction, the Borrower
shall deliver to the Lender an original receipt (or certified copy thereof)
demonstrating that the Tax Deduction has been made or (as applicable) any
appropriate payment paid to the relevant taxing authority.


 


11.3                      Tax indemnity


 


(a)                               If the Lender is or will be subject to any
liability, or required to make any payment, for or on account of Tax in
relation to a sum received or receivable (or any sum deemed for the purposes of
Tax to be received or receivable) under a Finance Document, the Borrower shall
(within three Business Days of demand by the Lender) pay to the Lender an
amount equal to the loss, liability or cost which the Lender determines has
been suffered for or on account of Tax by the Lender  in respect of a Finance Document.


 


(b)                              Paragraph (a) above shall not apply:


 


(i)                                 with respect to any Tax assessed on the Lender:


 


(A)                          under the law of the jurisdiction in
which the Lender is incorporated or, if different, the jurisdiction (or
jurisdictions) in which the Lender is treated as resident for tax purposes; or


 


(B)                            under the law of the jurisdiction in
which the Lender’s Facility Office is located in respect of amounts received or
receivable in that jurisdiction,


 


if that Tax is imposed on or
calculated by reference to the net income received or receivable (but not any
sum deemed to be received or receivable) by the Lender; or


 


(ii)                              to the extent a loss, liability or cost:


 


(A)                          is compensated for by an increased
payment under Clause 11.2 (Tax gross-up);
or


 


(B)                            would have been compensated for by
an increased payment under Clause 11.2 (Tax
gross-up) but was not so compensated solely because one of the
exclusions in paragraph (d) of Clause 11.2 (Tax gross-up) applied.


 


(c)                               If the Lender makes, or intends to make, a
claim under paragraph (a) above, it shall promptly notify the Borrower of
the event which will give, or has given, rise to the claim.


 


(d)                              The provisions of Clause 11.2(c) and
sub-clause (a) of this Clause 11.3 shall not apply to Taxes, to the extent
that such Taxes arise as a direct consequence of a Participation having been
acquired a Participant whose principal office is located in a Country of
Operation or by the permanent office of establishment in a Country of Operation
by a Participant.


 


11.4                      Tax Credit


 


If the Borrower makes a Tax
Payment and the Lender determines that:


 


(a)                              a Tax Credit is attributable to that
Tax Payment; and


 


(b)                             that the Lender has obtained,
utilised and retained that Tax Credit,


 


24

















 


the Lender shall pay promptly an
amount to the Borrower which the Lender determines will leave it (after that
payment) in the same after-Tax position as it would have been in had the Tax
Payment not been made by the Borrower.


 


11.5                      Stamp taxes


 


The Borrower shall pay and,
within three Business Days of demand, indemnify the Lender against any cost,
loss or liability that the Lender incurs in relation to all stamp duty,
registration and other similar Taxes payable in respect of any Finance
Document.


 


11.6                      Value added tax


 


(a)                               All consideration expressed to be payable under
a Finance Document by any Party to the Lender shall be deemed to be exclusive
of any VAT. If VAT is chargeable on such consideration, that Party shall pay to
the Lender (or directly to the appropriate tax authority, if so required by law)
(in addition to and at the same time as paying the consideration) an amount
equal to the amount of the VAT.


 


(b)                              Where a Finance Document requires any Party to
reimburse the Lender for any costs or expenses, that Party shall also at the
same time pay and indemnify the Lender against all VAT incurred by the Lender
in respect of the costs or expenses to the extent that the Lender reasonably
determines that neither it nor any other member of the group of which it is a
member for VAT purposes is entitled to credit or repayment from the relevant
tax authority in respect of the VAT.


 


12                               INCREASED COSTS


 


12.1                     Increased Costs


 


(a)                               Subject to Clause 12.3 (Exceptions) the Borrower shall, within
three Business Days of a demand by the Lender, pay to the Lender the amount of
any Increased Costs incurred by the Lender or any Participant as a result of (i) the
introduction of or any change in (or in the interpretation, administration or
application of) any law or regulation or (ii) compliance with any law or
regulation made after the Signing Date.


 


(b)                              In this Agreement “Increased Costs” means:


 


(i)                                   a reduction in the rate of return from the
Facility or on the Lender’s or such Participant’s overall capital;


 


(ii)                                an additional or increased cost; or


 


(iii)                             a reduction of any amount due and payable under
any Finance Document,


 


which is incurred or suffered by
the Lender or such Participant to the extent that it is attributable to the
Lender having entered into the Commitment or funding or performing its
obligations under any Finance Document or such Participant acquiring or
maintaining its Participation (as applicable).


 


12.2                     Increased cost claims


 


(a)                               If the Lender intends to make a claim pursuant
to Clause 12.1 (Increased Costs),
the Lender shall notify the Borrower (on behalf of itself or on behalf of a
Participant) of the event giving rise to the claim.


 


25

















 


(b)                              The Lender shall, as soon as practicable after
a demand by the Borrower, provide a certificate of itself or a Participant
confirming the amount of its or such Participant’s (as applicable) Increased
Costs.


 


12.3                     Exceptions


 


(a)                               Clause 12.1 (Increased
Costs) does not apply to the extent any Increased Cost is:


 


(i)                                 attributable to a Tax Deduction required by law
to be made by the Borrower;


 


(ii)                              a direct consequence of a Participation having
been acquired by a Participant whose principal office is located in a Country
of Operation or by the permanent office of a Participant in a Country of
Operation;


 


(iii)                           compensated for by Clause 11.3 (Tax indemnity) (or would have been
compensated for under Clause 11.3 (Tax
indemnity) but was not so compensated solely because any of the
exclusions in paragraph (b) of Clause 11.3 (Tax indemnity) applied); or


 


(iv)                          attributable to the wilful breach by the Lender
or its Affiliates of any law or regulation.


 


(b)                              In this Clause 12.3, a reference to a “Tax Deduction” has the same meaning given
to the term in Clause 11.1 (Definitions).


 


13                               OTHER INDEMNITIES


 


13.1                     Currency indemnity


 


(a)                               If any sum due from the Borrower under the
Finance Documents (a “Sum”), or
any order, judgment or award given or made in relation to a Sum, has to be
converted from the currency (the “First
Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:


 


(i)                                 making or filing a claim or proof against the
Borrower;


 


(ii)                              obtaining or enforcing an order, judgment or
award in relation to any litigation or arbitration proceedings,


 


the Borrower shall as an
independent obligation, within three Business Days of demand, indemnify the
Lender against any cost, loss or liability arising out of or as a result of the
conversion including any discrepancy between (A) the rate of exchange used
to convert that Sum from the First Currency into the Second Currency and (B) the
rate or rates of exchange available to that person at the time of its receipt
of that Sum.


 


(b)                              The Borrower waives any right it may have in
any jurisdiction to pay any amount under the Finance Documents in a currency or
currency unit other than that in which it is expressed to be payable.


 


13.2                     Other indemnities


 


The Borrower shall, within three
Business Days of demand, indemnify the Lender against any cost, loss or
liability incurred by the Lender or any Participant as a result of:


 


(a)                              the occurrence of any Event of Default;


 


(b)                             a failure by the Borrower to pay any amount due
under a Finance Document on its due date;


 


26














 


(c)                                funding, or making arrangements to fund, the
Utilisation requested by the Borrower in a Utilisation Request but not made by
reason of the operation of any one or more of the provisions of this Agreement
(other than by reason of default or negligence by the Lender alone); or


 


(d)                               the Loan (or part thereof) not being prepaid in
accordance with a notice of prepayment given by the Borrower.


 


13.3                     Indemnity to the Lender


 


The Borrower shall promptly
indemnify the Lender against any cost, loss or liability incurred by the Lender
(acting reasonably) as a result of:


 


(a)                                investigating any event which it reasonably
believes is a Default; or


 


(b)                               acting or relying on any notice, request or
instruction which it reasonably believes to be genuine, correct and appropriately
authorised.


 


14                               MITIGATION BY THE LENDER


 


14.1                     Mitigation


 


(a)                               The Lender shall (and shall request each
Participant to), in consultation with the Borrower, take all reasonable steps
to mitigate any circumstances which arise and which would result in any amount
becoming payable under or pursuant to, or cancelled pursuant to, any of Clause
7.1 (Illegality), Clause 11 (Tax Gross-up and Indemnities) or Clause
12.1 (Increased Costs) including
(but not limited to) transferring its rights and obligations under the Finance
Documents to another Affiliate or Facility Office.


 


(b)                              Paragraph (a) above does not in any way
limit the obligations of the Borrower under the Finance Documents.


 


14.2                     Limitation of liability


 


(a)                               The Borrower shall indemnify the Lender and
each Participant for all costs and expenses reasonably incurred by the Lender
and such Participant as a result of steps taken by it under Clause 14.1 (Mitigation).


 


(b)                              The Lender is not and no Participant is,
obliged to take any steps under Clause 14.1 (Mitigation)
if, in the opinion of the Lender or such Participant (acting reasonably), to do
so might be prejudicial to it.


 


15                               COSTS AND EXPENSES


 


15.1                     Transaction expenses


 


The Borrower shall promptly on
demand pay the Lender the amount of all reasonable out-of-pocket costs and
legal expenses incurred by each of them in connection with the negotiation,
preparation and execution of:


 


(a)                                this Agreement and any other documents referred
to in this Agreement; and


 


(b)                               any other Finance Documents executed after the
date of this Agreement,


 


provided that if the total
costs and expenses referred to in this Clause 15.1 reach the equivalent of two
hundred thousand Euro (EUR 200,000), the Lender will inform the Borrower in
writing that the 


 


27

















 


costs and expenses have
reached such amount and will consult with the Borrower in relation to the
incurrence of costs and expenses in excess of such amount, it being understood
by the Parties, for the avoidance of doubt, that this amount does not in any
way represent a maximum amount in relation to such costs and expenses.


 


15.2                     Amendment costs


 


If (a) the Borrower
requests an amendment, waiver or consent or (b) an amendment is required
pursuant to Clause 24.6 (Change of currency),
the Borrower shall, within three Business Days of demand, reimburse the Lender
for the amount of all costs and expenses (including legal fees) reasonably
incurred by the Lender in responding to, evaluating, negotiating or complying
with that request or requirement.


 


15.3                     Enforcement costs


 


The Borrower shall, within three
Business Days of demand, pay to the Lender the amount of all costs and expenses
(including legal fees) incurred by the Lender in connection with the
enforcement of, or the preservation of any rights under, any Finance Document.


 


28

















 


SECTION VII

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT


 


16                               REPRESENTATIONS


 


The Borrower makes the
representations and warranties set out in this Clause 16 to the Lender on the
date of this Agreement.


 


16.1                     Status


 


(a)                               It is an open joint stock company, duly
established, registered and validly existing under the laws of the Russian
Federation.


 


(b)                              It and each of its Significant Subsidiaries has
the power to own its assets and carry on its business as it is being conducted.


 


16.2                     Directors and Officers


 


As of the date of this
Agreement, the Directors of the Borrower are Vitaliy Savelyev, Anton Abugov,
Alexei Buyanov, Mohanbir Gyani, Daniel Crawford, Sergei Drozdov, Tatiana
Yevtoushenkova, Paul Ostling and Mikhail Shamolin, the President and Chief
Executive Officer is Mikhail Shamolin and the Chief Accountant of the Borrower
is Irina Borisenkova.


 


16.3                     Binding obligations


 


The obligations expressed to be
assumed by it in each Finance Document are legal, valid, binding and
enforceable obligations, subject to insolvency and other laws affecting
creditors’ rights generally and principles of equity.


 


16.4                     Non-conflict with other obligations


 


The entry into and performance
by it of, and the transactions contemplated by, the Finance Documents do not
and will not conflict with:


 


(a)                                any law or regulation applicable to it;


 


(b)                               its or any of its Subsidiaries’ constitutional
documents; or


 


(c)                                any agreement or instrument binding upon it or
any of its Subsidiaries or any of its or any of its Subsidiaries’ assets.


 


16.5                     Power and authority


 


It has the power to enter into,
perform and deliver, and has taken all necessary action to authorise its entry
into, performance and delivery of, the Finance Documents and the transactions
contemplated by those Finance Documents.


 


16.6                     Validity and admissibility in evidence


 


All Authorisations required:


 


(a)                                to enable it lawfully to enter into, exercise
its rights and comply with its obligations in the Finance Documents;


 


(b)                               for it and its Significant Subsidiaries to
carry on its and their business; and


 


29

















 


(c)                                to make the Finance Documents admissible in
evidence in the general jurisdiction courts or commercial courts (arbitrazhniye sudi) of the Russian
Federation in an original action or action to enforce a foreign arbitral award,
provided that authenticated and notarised Russian texts are made available to
such courts at that time and any other procedures and formalities regarding
presentation of documents to a Russian court are complied with,


 


have been obtained or effected
and are in full force and effect (except, in relation to paragraph (b) above,
where the failure to obtain such Authorisations (excluding any
Telecommunications Authorisations) is not reasonably likely to have a Material
Adverse Effect).


 


16.7                     Governing law and enforcement


 


(a)                               The choice of English law as the governing law
of the Finance Documents will be recognised and enforced in the Russian
Federation.


 


(b)                              Any arbitration award obtained in England in
relation to a Finance Document will be recognised and enforced in the Russian
Federation in accordance with the 1958 New York Convention on Recognition and
Enforcement of Foreign Arbitral Awards.


 


16.8                     No bankruptcy proceedings


 


Neither the Borrower nor any of
its Significant Subsidiaries has taken any corporate action nor have any other
steps been taken or legal proceedings been started or, to the best of its knowledge
and belief (after due inquiry), threatened against it or any of its Significant
Subsidiaries for (a) its liquidation or bankruptcy or the appointment of a
liquidation commission (likvidatsionnaya
komissiya) or a similar officer of it or any of its Significant
Subsidiaries; (b) the institution of supervision (nablyudeniye), financial rehabilitation (finansovoe ozdorovlenie), external
management (vneshnee upravlenie) or the appointment of a
bankruptcy manager (konkursniy
upravlayuschiy) or similar officer of it or any of its Significant
Subsidiaries; (c) the convening of a meeting of creditors for the purposes
of considering an amicable settlement (as defined in the Russian Insolvency
Law); or (d) any analogous act in respect of it or any of its Significant
Subsidiaries in any jurisdiction.


 


16.9                     Deduction of Tax


 


It is not required under the law
of the Russian Federation to make any deduction for or on account of Tax from
any payment it may make under any Finance Document to a Qualifying Lender.


 


16.10              No filing or stamp taxes


 


Under the law of the Russian
Federation it is not necessary that the Finance Documents be filed, recorded or
enrolled with any court or other authority in the Russian Federation or that
any stamp, registration or similar Tax be paid on or in relation to the Finance
Documents or the transactions contemplated by the Finance Documents, except for
court registration fees in connection with any enforcement proceedings in such
court.


 


16.11               Payment of Taxes


 


Neither it nor any of its Significant
Subsidiaries has overdue tax liabilities, other than tax liabilities (a) whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which adequate reserves or other appropriate
provision has been made or (b) whose amount, together with all such other
unpaid or undischarged taxes, does not in aggregate exceed EUR 25,000,000 (or
its equivalent in any other currency or currencies).


 


30

















 


16.12              No default


 


(a)                               No Default or Event of Default is continuing or
might reasonably be expected to result from the making of any Utilisation.


 


(b)                              No event or circumstance is outstanding which
constitutes a default under any other agreement or instrument which is binding
on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’)
assets are subject which is reasonably likely to have a Material Adverse
Effect.


 


16.13              Financial statements


 


(a)                               Its Financial Statements were prepared in
accordance with GAAP consistently applied.


 


(b)                              Its Financial Statements fairly represent its,
and its consolidated, financial condition, financial performance, cash flows
and operations as at the end of and for the relevant financial year.


 


(c)                               Since the date of the Financial Statements,
there has been no material adverse change in its business or financial
condition (or the business or consolidated financial condition of the Group)
and the Borrower has not, nor have any of its Subsidiaries, suffered any
Material Adverse Effect, incurred any substantial or unusual loss or liability
or undertaken or agreed to undertake any substantial or unusual obligation
except under the Finance Agreements.


 


(d)                              The Borrower nor any of its Subsidiaries had,
as at the date of the Financial Statements, no material contingent obligations,
liabilities for Taxes or unusual forward or long term commitments not disclosed
by, or reserved against in, such balance sheet or the notes thereto.


 


16.14              Pari passu ranking


 


Its payment obligations under
the Finance Documents rank at least pari
passu with the claims of all its other unsecured and unsubordinated
creditors, except for obligations mandatorily preferred by law applying to
companies generally.


 


16.15              No proceedings pending or threatened


 


Other than the MTS-Ukraine Litigation, no litigation, arbitration or
administrative proceedings of or before any court, arbitral body or agency
(including but not limited to, investigative proceedings) have, to the best of
its knowledge and belief (after due inquiry), been started or threatened
against it or any of its Significant Subsidiaries which, if adversely
determined would be reasonably likely to have a Material Adverse Effect.


 


16.16              Environmental and social compliance


 


In relation to
the Borrower and each of its Subsidiaries, its businesses, operations, assets,
equipment, property, leaseholds and other facilities are in compliance with the
provisions of all applicable laws relating to Environmental Matters and Social
Matters. The Borrower and each of its Subsidiaries has been issued all required
Authorisations relating to, and has received no complaint, order, directive,
claim, citation or notice from any Governmental Authority or other person with
respect to air emissions, discharges to surface water or ground water, noise
emissions, solid or liquid waste disposal, the use, generation, storage,
transportation or disposal of toxic or hazardous substances or wastes, health
and safety, employment conditions, the protection of indigenous peoples,
cultural property, resettlement of persons or any other Environmental Matter or
Social Matter.


 


16.17              Telecommunications laws and licences


 


(a)                               Each of the Borrower and its Significant
Subsidiaries has:


 


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(i)                                   complied in all material respects with all
Telecommunications Laws to which it may be subject;


 


(ii)                                obtained all material Telecommunications
Authorisations necessary to conduct its business; and


 


(iii)                             complied in all material respects with the
terms of those Telecommunication Authorisations,


 


in each case other than where
failure to do so would not reasonably be expected to have a Material Adverse
Effect.


 


(b)                              There has been no act, omission or event which
might reasonably be expected to give rise to the material amendment,
revocation, suspension, cancellation, withdrawal or termination of any
provision of any Telecommunications Authorisation. To the best of its knowledge
and belief (after due inquiry), no Telecommunications Authorisation is the
subject of any pending or threatened proceedings which, if adversely
determined, would reasonably be expected to have a Material Adverse Effect.


 


16.18              Compliance with laws


 


The Borrower is not, and none of its Subsidiaries are, in violation of
any law applicable to it and presently in effect.  To the best of the Borrower’s knowledge, no
law has been proposed or is expected which may have a Material Adverse
Effect.  All tax returns and reports of
the Borrower required by law to be filed have been duly filed and all Taxes
upon the Borrower, its properties and its income, which are due and payable,
have been paid, other than those currently payable without penalty or
interest.  The Borrower is in compliance
with all applicable laws concerning money laundering.  Neither the Borrower nor any of its
Subsidiaries, nor (to the best of the Borrower’s knowledge after due and
careful enquiry in accordance with the Borrower’s internal procedures from time
to time) any officers, directors, authorised employees, Affiliates, agents or
representatives of the Borrower or its Subsidiaries has committed or engaged
in, with respect to the Project, or any transactions contemplated by this
Agreement, any Prohibited Practice.


 


16.19              No Immunity


 


(a)                               The execution by the Borrower of the
Finance Documents constitutes, and its exercise of its rights and performance
of its obligations thereunder will constitute, private and commercial
activities done and performed for private and commercial purposes (rather than
public and governmental purposes).


 


(b)                              In any proceedings taken in the
Russian Federation in relation to the Finance Documents, the Borrower will not
be entitled to claim for itself or any of its assets immunity from suit,
execution, attachment or other legal process.


 


16.20              Repetition


 


The Repeating Representations
are deemed to be made by the Borrower by reference to the facts and
circumstances then existing on the date of each Utilisation Request and the
first day of each Interest Period (provided that whenever the representation in
paragraph (c) of Clause 16.4 (Non-conflict with other
obligations) is deemed to be made on a date other than the Signing
Date or a Utilisation Date, the statement “except where the same would not be
reasonably likely to have a Material Adverse Effect” shall qualify the representation
in said paragraph (c)).


 


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17                               INFORMATION UNDERTAKINGS


 


The undertakings in this Clause
17 remain in force from the date of this Agreement for so long as any amount is
outstanding under the Finance Documents or any Commitment is in force.


 


17.1                     Financial statements


 


The Borrower shall supply to the
Lender:


 


(a)                                as soon as the same become available, but in
any event within 180 days after the end of each of its financial years, its
audited consolidated and non-consolidated financial statements for that
financial year; and


 


(b)                               as soon as the same become available, but in
any event within (i) 60 days after the end of each of its first, second
and third financial quarters and (ii) 90 days after the end of its fourth
financial quarter, its unaudited consolidated and non-consolidated financial
statements for that financial quarter.


 


17.2                     Compliance Certificate


 


(a)                               The Borrower shall supply the Lender with each
set of financial statements delivered pursuant to Clause 17.1 (Financial statements), a Compliance
Certificate setting out (in reasonable detail) computations as to compliance
with Clause 18 (Financial Covenants)
as at the date as at which those financial statements were drawn up.  Each Compliance Certificate shall be signed
by an authorised officer of the Borrower.


 


(b)                              Where a Compliance Certificate is required to
be delivered with the financial statements delivered pursuant to paragraph (a) of
Clause 17.1 (Financial statements),
it shall be accompanied by a report from the Borrower’s auditors using a form
acceptable to those auditors.


 


17.3                     Requirements as to financial statements


 


(a)                               Each set of financial statements delivered by
the Borrower pursuant to Clause 17.1 (Financial
statements) shall be certified by an authorised officer of the
Borrower as fairly representing its (or, as the case may be, its consolidated)
financial condition and operations as at the end of and for the period in
relation to which those financial statements were drawn up.


 


(b)                              The Borrower shall procure that each set of
consolidated financial statements delivered pursuant to Clause 17.1 (Financial statements) is prepared using
GAAP  accounting practices and
financial reference periods consistent with those applied in the preparation of
the Financial Statements unless, in relation to any set of financial
statements, it notifies the Lender that there has been a change in GAAP, the
accounting practices or reference periods and its auditors deliver to the
Lender:


 


(i)                                   a description of any change necessary for those
financial statements to reflect the GAAP, accounting practices and reference
periods upon which the Financial Statements were prepared; and


 


(ii)                                sufficient information, in form and substance
as may be reasonably required by the Lender, to enable the Lender to determine
whether Clause 18 (Financial Covenants)
has been complied with and make an accurate comparison between the financial
position indicated in those financial statements and that the Financial
Statements.


 


(c)                               Any reference in this Agreement to those
financial statements shall be construed as a reference to those financial
statements as adjusted to reflect the basis upon which the Financial Statements
were prepared.


 


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(d)                              The Borrower shall procure that each set of
non-consolidated financial statements delivered pursuant to Clause 17.1 (Financial statements) is prepared using
RAS accounting practices and financial reference periods.


 


17.4                     Implementation Report


 


(a)                               The
Borrower shall, within 60 days after the end of the Investment Period, provide
to the Lender a report, in the form agreed between the Borrower and the Lender
before the date hereof, and in substance satisfactory to the Lender, concerning
the Investments made during the Investment Period.


 


(b)                              Until
such time as the aggregate amount of Investments made is equal to the principal
amount of the Loan outstanding, in relation to each Relevant Contract the
Borrower shall provide to the Lender information as to the identity and
nationality of the contractor and the amount and date of such Relevant
Contract.


 


17.5                     Environmental health and
safety report


 


As soon as available but, in any
event, within 60 days after the end of each financial year, the Borrower shall
furnish to the Lender a report, in form and in substance satisfactory to the
Lender (acting reasonably), on Environmental Matters and Social Matters arising
in relation to the Borrower and the Investments during such financial year,
including:


 


(a)                                information on compliance by the Borrower with
the environmental, health and safety and social standards mentioned in Clause
19.17 (Environmental and social compliance),
including the status of any Authorisation required for the Borrower’s
operations, the results of any inspection carried out by any regulatory
authority, any violation of applicable laws, regulations or standards and any
remedial action or fine relating to such violation;


 


(b)                               a summary of any material notices, reports and
other communications on Environmental Matters or Social Matters submitted by
the Borrower to any regulatory authority;


 


(c)                                information on the health and safety record of
the Borrower, including the rate of accidents which are likely to have a
material adverse effect on health and safety (as referred to in Clause 17.7 (Notification of accident)) and any
initiatives in relation to health and safety matters which have been
implemented or planned by the Borrower;


 


(d)                               a summary of any changes in laws relating to
Environmental Matters or Social Matters 
which may have a material adverse effect on the Borrower’s operations;
and


 


(e)                                copies of information on Environmental Matters
or Social Matters periodically submitted by the Borrower to its shareholders or
the general public.


 


17.6                     Prohibited Practice


 


The Borrower shall promptly
notify the Lender if the Borrower obtains any information regarding a violation
of Clauses 16.18 (Compliance with laws) and 19.18 (Fraud and corruption) or if any international financial
institution has imposed any sanction on the Borrower or any of its Subsidiaries
for any Prohibited Practice. If the Lender notifies the Borrower of its concern
that there has been a violation of such Clause 16.18 (Compliance
with laws) or 19.18 (Fraud and corruption),
the Borrower shall cooperate in good faith with the Lender its representatives
in determining whether such violation has occurred and shall respond promptly
and in reasonable detail to any such notice from the Lender and shall furnish
documentary support for such response upon the Lender’s request.


 


34

















 


17.7                     Notification of accident


 


Promptly following the
occurrence of any incident or accident relating to the Borrower which is likely
to have a material adverse effect on the environment, health or safety, the
Borrower shall give the Lender notice thereof by facsimile transmission or
telex specifying the nature of such incident or accident and any steps the
Borrower is taking to remedy the same. Without limiting the generality of the
foregoing, an incident or accident is deemed to be likely to have a material
adverse effect on the environment, health or safety if any applicable law
requires notification of such incident or accident to any Governmental
Authority, such incident or accident involves fatality or multiple serious
injuries requiring hospitalisation or such incident or accident has become
public knowledge (whether through media coverage or otherwise) and the Borrower
is aware that it has become public knowledge.


 


17.8                     Insurance


 


Prior to the first Disbursement
and thereafter, within 30 days after the effective date of any new or renewed
insurance policy, the Borrower shall furnish to the Lender an original
certificate from the Borrower’s insurer or insurance broker, indicating the
properties insured, amounts and risks covered, names of loss payees,
beneficiaries and assignees, name of the insurer and any special features of
the new or renewed insurance policy, together with a certified copy of such
insurance policy.


 


17.9                     Information: miscellaneous


 


The Borrower shall supply to the
Lender:


 


(a)                                all documents dispatched by the Borrower to its
shareholders (or any class of them) or its creditors generally promptly after
they are dispatched;


 


(b)                               promptly upon becoming aware of them, the
details of any litigation, arbitration or administrative proceedings which are
current, threatened or pending against any member of the Group, and which
would, if adversely determined, be reasonably likely to have a Material Adverse
Effect;


 


(c)                                promptly, such information as may be reasonably
requested by the Lender (including relevant figures from management accounts)
to ascertain whether any Subsidiary of the Borrower falls within paragraph (e) of
the definition of “Significant Subsidiary”; and


 


(d)                               promptly, such further information regarding
the financial condition, business and operations of any member of the Group as
the Lender may reasonably request.


 


17.10              Notification of Default


 


(a)                               The Borrower shall notify the Lender of any Default
(and the steps, if any, being taken to remedy it) promptly upon becoming aware
of its occurrence.


 


(b)                              Promptly upon a request by the Lender, the
Borrower shall supply to the Lender a certificate signed by two of its
directors or senior officers on its behalf certifying that no Default is
continuing (or if a Default is continuing, specifying the Default and the
steps, if any, being taken to remedy it).


 


17.11               Know your customer checks


 


If:


 


(a)                                the introduction of or any change in (or in the
interpretation, administration or application of) any law or regulation made
after the date of this Agreement;


 


35

















 


(b)                               any change in the status of the Borrower after
the date of this Agreement; or


 


(c)                                a proposed assignment or transfer by
the Lender of any of its rights and obligations under this Agreement,


 


obliges the Lender (or, in the case of paragraph (c) above, any
prospective new Lender) or any Participant to comply with “know your customer”
or similar identification procedures in circumstances where the necessary
information is not already available to it, the Borrower shall promptly upon
the request of the Lender supply, or procure the supply of, such documentation
and other evidence as is reasonably requested by the Lender (for itself or any
Participant or, in the case of the event described in paragraph (c) above,
on behalf of any prospective new Lender) in order for the Lender or any
Participant or, in the case of the event described in paragraph (c) above,
any prospective new Lender to carry out and be satisfied it has complied with
all necessary “know your customer” or other similar checks under all applicable
laws and regulations pursuant to the transactions contemplated in the Finance
Documents.


 


18                               FINANCIAL COVENANTS


 


The financial undertakings in
this Clause 18 shall remain in force from the Signing Date for so long as any
amount is outstanding under the Finance Documents or any Commitment is in
force.


 


18.1                     Financial condition


 


The Borrower shall ensure that:


 


(a)                                The ratio of Total Debt as at the end of any
Relevant Period to OIBDA in respect of such Relevant Period will not exceed
3:1; and


 


(b)                               the ratio of OIBDA to Interest Expense in
respect of any Relevant Period will not be less than 5:1.


 


18.2                     Financial covenant calculations


 


Total Debt, OIBDA and Interest
Expense shall be calculated and interpreted on a consolidated basis in
accordance with the GAAP applicable to the Financial Statements of the Borrower
and shall be expressed in Dollars.


 


18.3                     Definitions


 


In this Clause 18.3:


 


“Interest Expense” means, in relation to any Relevant Period,
the aggregate amount of interest and any other finance charges (whether or not
paid, payable or capitalised) accrued by the Group in that Relevant Period in
respect of Total Debt including:


 


(a)                                the interest element of leasing and hire
purchase payments;


 


(b)                               commitment fees, commissions, arrangement fees
and guarantee fees; and


 


(c)                                amounts in the nature of interest payable in
respect of any shares other than equity share capital,


 


adjusted (but without double
counting) by:


 


(i)                                   adding back the net amount payable (or
deducting the net amount receivable) by members of the Group in respect of that
Relevant Period under any interest or (so far as they relate to interest)
currency hedging arrangements; and


 


36














 


(ii)                                deducting interest income of the Group in
respect of that Relevant Period to the extent freely payable in cash,


 


multiplied by
two,


 


as determined (except as needed
to reflect the terms of this Clause 18) from the financial statements of the
Group and Compliance Certificates delivered under Clause 17.1 (Financial statements) and Clause 17.2 (Compliance Certificate).


 


“OIBDA” means, in relation to any Relevant Period, the total
consolidated net income of the Group for that Relevant Period:


 


(a)                                before taking into account the charge or credit
to the profit and loss account in respect of:


 


(i)                                  minority interests;


 


(ii)                               income tax;


 


(iii)                            non-operating income less non-operating
expenses;


 


(iv)                           the Group’s share in the net income (or loss)
of any associated companies or undertakings;


 


(v)                              Interest Expense;


 


(vi)                           Interest income; and


 


(vii)                        Currency exchange and translation
(gains)/losses


 


(b)                               after adding back all amounts provided for
depreciation and amortisation for that Relevant Period,


 


multiplied by
two,


 


as determined (except as needed
to reflect the terms of this Clause 18) from the financial statements of the
Group and Compliance Certificates delivered under Clause 17.1 (Financial statements) and Clause 17.2 (Compliance Certificate).


 


“Relevant Period” means each period of six consecutive Months
ending on the last day of each financial year and financial quarter of the
Borrower.


 


“Total Debt” means, as at any particular time, the aggregate
outstanding principal, capital or nominal amount (and any fixed or minimum
premium payable on prepayment or redemption) of the Financial Indebtedness of
members of the Group (other than any indebtedness referred to in paragraph (g) of
the definition of Financial Indebtedness and any guarantee or indemnity in
respect of that indebtedness).


 


For this purpose, any amount
outstanding or repayable in a currency other than Euros shall on that day be
taken into account in its Euro equivalent at the rate of exchange that would
have been used had an audited consolidated balance sheet of the Group been
prepared as at that day in accordance with the GAAP applicable to the Financial
Statements of the Borrower.


 


19                               GENERAL UNDERTAKINGS


 


The undertakings in this Clause
19 remain in force from the date of this Agreement for so long as any amount is
outstanding under the Finance Documents or any Commitment is in force.


 


37

















 


19.1                     Authorisations


 


The Borrower shall promptly:


 


(i)                                   obtain, comply with and do all that is
necessary to maintain in full force and effect; and


 


(ii)                                supply certified copies to the Lender of,


 


any Authorisation required under
any law or regulation of its jurisdiction of incorporation to enable it to
perform its obligations under the Finance Documents and to ensure the legality,
validity, enforceability or admissibility in evidence in its jurisdiction of
incorporation of any Finance Document.


 


19.2                     Compliance with laws


 


The Borrower shall comply in all respects with all laws to which it may
be subject, if failure so to comply would materially impair its ability to
perform its obligations under the Finance Documents.


 


19.3                     Maintenance of existence


 


The Borrower shall maintain its
corporate existence in compliance with all applicable laws. The Borrower shall
conduct its business with due diligence and efficiency in accordance with sound
engineering, financial and business practices and in compliance with all
applicable laws, including all money laundering laws. The Borrower shall use
procurement methods which ensure a sound selection of goods and services at
fair market value and that the Borrower is making its capital investments in a
cost effective manner.


 


19.4                     Negative pledge


 


(a)                               The
Borrower shall not (and the Borrower shall ensure that no other member of the
Group will) create or permit to subsist any Security over any of its assets.


 


(b)                              The
Borrower shall not (and the Borrower shall ensure that no other member of the
Group will):


 


(i)                                 sell,
transfer or otherwise dispose of any of its assets on terms whereby they are or
may  be leased to or re-acquired by the
Borrower or any other member of the Group;


 


(ii)                              sell,
transfer or otherwise dispose of any of its receivables on recourse terms;


 


(iii)                           enter
into any arrangement under which money or the benefit of a bank or other
account may be applied, set-off or made subject to a combination of accounts;
or


 


(iv)                          enter
into any other preferential arrangement having a similar effect,


 


in circumstances where the arrangement or transaction is entered into
primarily as a method of raising Financial Indebtedness or of financing the
acquisition of an asset.


 


(c)                               Paragraphs
(a) and (b) above do not apply to Permitted Security.


 


19.5                     Disposals


 


(a)                               The Borrower shall not (and shall ensure that
no other member of the Group will) enter into a single transaction or a series
of transactions (whether related or not and whether voluntary or involuntary)
to sell, lease, transfer or otherwise dispose of any asset.


 


(b)                              Paragraph (a) above does not apply to any
sale, lease, transfer or other disposal:


 


(i)                                 made in the ordinary course of trading of the
disposing entity;


 


38

















 


(ii)                              of assets in exchange for other assets
comparable or superior as to type, value and quality;


 


(iii)                           made from one member of the Group (other than
the Borrower) to another member of the Group;


 


(iv)                          of cash or cash equivalents for cash or cash
equivalents;


 


(v)                             where the book value of such asset (when
aggregated with the book value of each other asset disposed of under this
sub-clause (v)) (in each case as calculated in accordance with GAAP) does not
exceed (x) 10% of the Borrower’s Total Assets in any financial year of the
Borrower and (y) 25% of the Borrower’s Total Assets during the period
starting on the Signing Date and ending on the date that all amounts
outstanding under this Agreement have been paid in full. At the request of the
Lender (any such request to be made no more than once per calendar quarter,
unless a Default is continuing), the Borrower shall provide a certificate to
the Lender setting out in reasonable detail the book value of any assets
disposed of under this sub-clause (v) (calculated in accordance with
GAAP); or


 


(vi)                          involving the transfer of any or all of the
Borrower’s shares in MTS-Ukraine pursuant to the MTS-Ukraine Litigation to a
person that is not a member of the Group (provided that this sub-clause (vi) shall
not in any way prejudice the rights of the Lender under Clause 20.19 (MTS-Ukraine Litigation).


 


When calculating the Borrower’s Total Assets under sub-clause (v) above,
if the annual consolidated balance sheet of the Borrower for the immediately
preceding financial year of the Borrower is not available, the Borrower’s Total
Assets shall be calculated by reference to the draft audit report then
available for that financial year and any other evidence reasonably requested
by, and reasonably satisfactory to, the Lender.


 


19.6                     Merger


 


(a)                               The Borrower shall not enter into or become
subject to any consolidation or reorganisation, whether by way of merger (sliyaniye obschestva), company accession (prisoedinyeniye  obschestva), company division (razdeleniye  obschestva),
company separation (vydelyeniye  obschestva), company transformation (preobrazovaniye  obschestva), company liquidation (likvidatisya
obschestva) or any other company reorganisation (reorgnizatsiya  obschestva)
(as these terms are construed by applicable Russian law) or otherwise, or any
analogous transaction in any jurisdiction, other than a consolidation or merger
with one of its Subsidiaries where the Borrower is the surviving entity.


 


(b)                              The Borrower shall ensure that no Significant
Subsidiary will enter into or become subject to any consolidation or
reorganisation, whether by way of merger (sliyaniye
obschestva), company accession (prisoedinyeniye
obschestva), company division (razdeleniye
obschestva), company separation (vydelyeniye
obschestva), company transformation (preobrazovaniye  obschestva),
company liquidation (likvidatsiya obschestva)
or any other company reorganisation (reorganizatsiya
obschestva) (as these terms are construed by applicable Russian law)
or otherwise, or any analogous transaction in any jurisdiction if such
reorganisation or transaction would, in the opinion of the Lender (acting
reasonably), have a Material Adverse Effect.


 


19.7                     Change of business


 


The Borrower shall procure that
no substantial change is made to the general nature of the business of the
Borrower or the Group from that carried on at the Signing Date.


 


39

















 


19.8                     Conduct of business


 


The Borrower shall, and shall
procure that each of its Significant Subsidiaries will, conduct its business in
all material respects in accordance with:


 


(a)                              all Telecommunications Laws to which it is or
may become subject;


 


(b)                             all requirements of the telecommunications
regulators of the Russian Federation, Ukraine and any other jurisdiction where
it conducts its business; and


 


(c)                              the terms of all relevant Telecommunications
Authorisations.


 


19.9                     Asset maintenance


 


The Borrower shall, and shall
procure that each of its Significant Subsidiaries will, have and maintain good
and marketable title to or valid leases or licences of, or rights of use
relating to, all assets necessary to maintain, develop and operate and otherwise
conduct its business as then being conducted by it and in each case where
failure to do so might reasonably be expected to have a Material Adverse
Effect.


 


19.10              Insurance


 


The Borrower shall (and shall
ensure that each other member of the Group will) maintain insurances on and in
relation to its business and assets with reputable underwriters or insurance
companies against those risks, and to the extent, usually insured against by
prudent companies located in the same or a similar location and carrying on a
similar business.


 


19.11               Derivative Transactions


 


(a)                               The Borrower shall not enter into any exchange
traded or over the counter financial derivatives, including any interest rate
or currency swap, interest rate cap or collar, forward rate agreement or other
interest rate, currency or commodity hedge or similar derivative transaction,
except in the ordinary course of business.


 


(b)                              For the purposes of this Clause 19.11, entered
into in the “ordinary course of business” shall
mean where such derivative transactions are entered into by the Borrower for
genuine commercial purposes, being hedging an existing exposure to commodity
prices, interest rates or foreign exchange risk associated with transactions
conducted by the Borrower or otherwise as a result of the Borrower’s usual
business operations and not for speculative purposes.


 


19.12              Transactions with Related Parties


 


(a)                               The Borrower shall not (and the Borrower shall
ensure that no other member of the Group will), directly or indirectly, enter
into or permit to exist any intercompany loan with, or for the benefit of, any
Related Party, unless:


 


(i)                                 the terms of such intercompany loan are no less
favourable to such member of the Group than those that could be obtained in a
comparable arm’s-length transaction or series of related transactions with a
person that is not a Related Party; or


 


(ii)                              such intercompany loan is made pursuant to a
contract or contracts existing on the Signing Date (excluding any amendments or
modifications thereto after the Signing Date),


 


provided that the aggregate
outstanding amount of all such intercompany loans described in sub-clauses (i) and
(ii) above does not, at any time, exceed EUR 100,000,000.


 


(b)                              Paragraph (a) above does not apply to:


 


40

















 


(i)                                 compensation or employee benefit arrangements
with any officer or director of any member of the Group arising out of any
employment contract entered into in the ordinary course of business; or


 


(ii)                              transactions between members of the Group.


 


(c)                               For the purposes of this Clause 19.12 only, a “Related Party” means, with respect to any
specified person:


 


(i)                                 any other person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified person; or


 


(ii)                              any other person who is a director or executive
officer of (a) such specified person or (b) any person described in (i) above.


 


For purposes of the definition
of “Related Party” only, “control” (including, with correlative
meanings, the terms “controlling,”
“controlled by” and “under common control with”), as used with
respect to any person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of
such person, whether through the ownership of voting securities, by agreement
or otherwise; provided that beneficial ownership of 10 per cent. or more of any
class, or any series of any class, of equity securities of a person, whether or
not voting, shall be deemed to be control.


 


19.13              Restriction on
acquisitions


 


The Borrower shall not establish
or acquire any Subsidiary, acquire any Telecommunications Licence or invest in
any other entity without the consent of the Lender (such consent not to be
unreasonably withheld), provided that this Clause 19.13 shall not apply to
any such acquisition or investment where such acquisition or investment relates
to a Subsidiary or entity whose principal business is telecommunications or the
provision of data services or related or ancillary businesses and the
consideration paid by the Borrower in relation to such acquisition or
investment, when aggregated with the consideration paid by the Borrower in
relation to each other acquisition or investment in the same financial year
permitted under this paragraph (a), does not exceed (i) 20 per cent. of
the Borrower’s Total Assets in the financial year of the Borrower ending 31 December 2008;
and (ii) 20 per cent. (or such higher amount not exceeding 25 per cent. as
the Lender may agree (acting reasonably)) of the Borrower’s Total Assets in any
other financial year of the Borrower.


 


19.14              Prompt payment of Taxes


 


The Borrower shall (and shall
ensure that each Significant Subsidiary will) duly pay all Taxes payable by it,
other than (a) those taxes which are being contested in good faith and by
appropriate proceedings and in respect of which adequate reserves or other
appropriate provisions have been made; or (b) whose amount does not exceed
EUR 25,000,000 (or its equivalent in any other currencies).


 


19.15              Pari passu


 


The Borrower shall, and shall
procure that each member of the Group will, procure that its obligations under
the Finance Documents rank at least pari
passu with all its other unsecured, unsubordinated obligations save
where such other obligations are mandatorily preferred by law.


 


19.16              Loans and guarantees


 


(a)                               The Borrower shall not (and the Borrower shall
ensure that no member of the Group will):


 


41

















 


(i)                                 make any loan, or provide any form of credit or
financial accommodation, to any person (including, without limitation, its
employees, shareholders, another member of the Group and any Affiliate); or


 


(ii)                              give or issue any guarantee, indemnity, bond or
letter of credit to or for the benefit of, or in respect of liabilities or
obligations of, any other person or voluntarily assume any liability (whether
actual or contingent) of any other person (including, in each case and without
limitation, its employees, shareholders, another member of the Group and any
Affiliate).


 


(b)                              The restrictions in paragraph (a) above do
not apply to (i) loans, credits, financial accommodation, guarantees,
indemnities, bonds and letters of credit that are: (A) expressly permitted
by the Finance Documents; or (B) for normal trade credit on arm’s length
terms and in the ordinary course of business; or (C) granted to or for the
benefit of, or in respect of liabilities or obligations of, any other person in
connection with any investment in or acquisition of an entity, the principal
business of which is telecommunications, the provision of data services or
business directly related to telecommunications and/or the provision of data
services (the “Investment Loan”) where such
Investment Loan is granted on arm’s length terms and such investment or
acquisition is for fair market value, provided that the aggregate amount of
such loans, credits, financial accommodation, guarantees, indemnities, bonds
and letters of credit referred to in (A) — (C) above, does not at any
time exceed 10 per cent. of the Borrower’s Total Assets; (ii) guarantees
by the Borrower in relation to the obligations of any other member of the
Group; or (iii) the arrangements permitted under Clause 19.12 (Transactions with Related Parties).


 


19.17              Environmental and social compliance


 


(a)                               The
Borrower shall carry out the Investments in accordance with the environmental,
health and safety regulations and standards in effect from time to time in the
jurisdiction in which the Investments are located and the European Union
environmental and health and safety standards existing on the date hereof and
the International Finance Corporation’s Safeguard Policies on Indigenous
Peoples, Involuntary Resettlement and Cultural Property as referred to in EBRD’s
Environmental Policy as of the date hereof.


 


(b)                              The
Borrower shall observe all applicable laws and standards on employment,
including those relating to the employment of children and young people,
discrimination at work, and forced labour. Such applicable laws and standards
shall include (i) the International Labour Organisation’s fundamental
conventions concerning the abolition of child labour, the elimination of
discrimination at the workplace and the elimination of forced and compulsory
labour and (ii) national law.


 


19.18              Fraud and corruption


 


The Borrower shall not and shall procure that each of its Subsidiaries
does not, and shall not authorise or permit any of its officers, directors,
authorised employees, Affiliates, agents or representatives to, engage in with
respect to its operations or any transactions contemplated by this Agreement
any Prohibited Practice.


 


19.19              Further documents


 


The Borrower shall execute all such other documents and instruments and
do all such other acts and things as the Lender may determine are necessary or
desirable to give effect to the provisions of the Finance Agreements and to
cause the Finance Agreements to be duly registered, notarised and stamped in
any applicable jurisdiction.  The
Borrower hereby irrevocably appoints and constitutes the Lender as the Borrower’s
true and lawful attorney with right of substitution (in the 


 


42

















 


name of the Borrower or otherwise) to execute such documents and
instruments and to do such acts and things in the name of and on behalf of the
Borrower in order to carry out the provisions hereof.


 


20                               EVENTS OF DEFAULT


 


Each of the events or
circumstances set out in Clauses 20.1 (Non-payment) to
20.20 (Material adverse change) is an Event of
Default.


 


20.1                     Non-payment


 


The Borrower does not pay on the
due date any amount payable pursuant to a Finance Document at the place at and
in the currency in which it is expressed to be payable unless:


 


(a)                              its failure to pay is caused by administrative
or technical error; and


 


(b)                             payment is made within three Business Days of
its due date.


 


20.2                     Financial covenants


 


Any requirement of Clause 18 (Financial Covenants) is not satisfied.


 


20.3                     Other obligations


 


(a)                               The Borrower does not comply with any provision
of the Finance Documents (other than those referred to in Clause 20.1 (Non-payment) and Clause 20.2 (Financial covenants)).


 


(b)                              No Event of Default under paragraph (a) above
will occur if the failure to comply is capable of remedy and is remedied within
10 Business Days of the Lender giving notice to the Borrower or the Borrower
becoming aware of the failure to comply.


 


20.4                     Misrepresentation


 


Any representation or statement
made or deemed to be made by the Borrower in the Finance Documents or any other
document delivered by or on behalf of the Borrower under or in connection with
any Finance Document is or proves to have been incorrect or misleading in any
material respect when made or deemed to be made, and such representation or
statement shall not have been rendered correct and not misleading within 10
Business Days of the Lender giving notice to the Borrower or the Borrower
becoming aware of the same.


 


20.5                     Cross default


 


(a)                               Any single item of Financial Indebtedness of
any member of the Group in an amount exceeding EUR 10,000,000 (or its
equivalent in any other currency or currencies) is not paid when due nor within
any originally applicable grace period.


 


(b)                              Any single item of Financial Indebtedness of
any member of the Group in an amount exceeding EUR 10,000,000 (or its
equivalent in any other currency or currencies) is declared to be or otherwise
becomes due and payable prior to its specified maturity as a result of an event
of default (however described).


 


(c)                               Any single commitment for any Financial
Indebtedness of any member of the Group in an amount exceeding EUR 10,000,000
(or its equivalent in any other currency or currencies) is cancelled or
suspended by a creditor of any member of the Group as a result of an event of
default (however described).


 


43

















 


(d)                              Any creditor of any member of the Group becomes
entitled to declare any single item of Financial Indebtedness of any member of
the Group in an amount exceeding EUR 10,000,000 (or its equivalent in any other
currency or currencies) due and payable prior to its specified maturity as a
result of an event of default (however described).


 


(e)                               Any of the events
described in paragraphs (a) to (d) above occurs in relation to any
Financial Indebtedness or commitment for Financial Indebtedness of any amount
(including, for the avoidance of doubt, any amount that is less than EUR
10,000,000 (or its equivalent in any other currency or currencies)), and the
aggregate amount of all such Financial Indebtedness and commitments for
Financial Indebtedness is in excess of EUR 35,000,000 (or its equivalent in any
other currency or currencies).


 


20.6                     Insolvency


 


(a)                               The Borrower or a Significant Subsidiary is
unable or admits its inability to pay its debts as they fall due, suspends making
payments on its debts generally or, by reason of actual or anticipated
financial difficulties, commences negotiations with one or more of its
creditors with a view to rescheduling its indebtedness generally.


 


(b)                              The value of the assets of the Borrower or a
Significant Subsidiary is less than its liabilities (taking into account
contingent and prospective liabilities).


 


(c)                               A moratorium is declared in respect of the
indebtedness of the Borrower or a Significant Subsidiary.


 


20.7                     Insolvency proceedings


 


Any corporate action or legal
proceedings are taken in relation to:


 


(a)                              the bankruptcy, winding-up, insolvency,
dissolution, administration, reorganisation or liquidation of the Borrower or a
Significant Subsidiary, including, but not limited to, institution of
supervision (nablyudenie),
financial rehabilitation (finansovoe
ozdorovlenie), external management (vneshneye
upravlenie) or bankruptcy management (konkursnoye
proizvodstvo)
(and such legal proceedings continue for at least 14 days);


 


(b)                             the suspension of payments or a moratorium of
any indebtedness of the Borrower or a Significant Subsidiary (and such
suspension continues for at least 14 days);


 


(c)                              the presentation or filing of a petition (or
similar document) in respect of the Borrower or a Significant Subsidiary in any
court, state arbitration court (arbitrazhnyi
sud) or before any other authority in respect of the bankruptcy,
winding-up, insolvency, dissolution, administration, reorganisation or
liquidation of the Borrower or a Significant Subsidiary (and such petition has
not been discharged within 14 days);


 


(d)                             the appointment of a liquidator (likvidator) or a liquidation commission (likvidatsionnaya komissiya), temporary
manager (vremenniy upravlaushiy),
administrative manager (administrativniy
upravlaushiy), external manager (vneshniy
upravlaushiy), bankruptcy manager (konkursniy
upravlaushiy), receiver, administrator, administrative receiver,
compulsory manager or other similar officer in respect of the Borrower or a
Significant Subsidiary or any of its assets (and such appointment continues for
at least 14 days); or


 


(e)                              the enforcement of any Security over any asset
or assets of the Borrower or a Significant Subsidiary (unless such enforcement
is stayed within 14 days),


 


or any analogous procedure or
step is taken in any jurisdiction.


 


44

















 


20.8                     Creditors’ process


 


Any expropriation, attachment,
sequestration, distress or execution affects any asset or assets of the
Borrower or a Significant Subsidiary with a value in excess of
EUR 10,000,000 (or its equivalent in any other currency or currencies) and is not discharged or stayed
within 30 days.


 


20.9                     Judgment


 


The rendering against the
Borrower or any Subsidiary of the Borrower of a judgment, decree or order for
the payment of money in an amount in excess of EUR 10,000,000 (or
its equivalent in any other currency or currencies) and the continuance of any such judgment,
decree or order unsatisfied and in effect for any period of 60 consecutive days
without a stay of execution.


 


20.10              Loss of Licence


 


(a)                               Any action results in the suspension for more
than 30 days or the loss, revocation or termination of any of:


 


(i)                                 the Borrower’s GSM 900 or 1800 licences for the
Moscow licence area, the St. Petersburg licence area or the Krasnodar licence
area; or


 


(ii)                              MTS-Ukraine’s GSM 900 or 1800 licences for the
Ukraine licence area; or


 


(iii)                           MTS-Uzbekistan’s GSM 900 or 1800 licences for
the Uzbekistan licence area.


 


except where, within 30 days of
any such event, the relevant licence is re-issued on
substantially the same terms to any member of the Group and during the period
falling before such re-issuance there is no material interruption to, or other
material adverse effect on, the operations permitted by such licence as a
direct result of such prior loss, revocation or termination.


 


(b)                              Any of the Borrower’s, MTS-Ukraine’s or
MTS-Uzbekistan’s GSM 900 or 1800 licences are amended (or any conditions are
imposed with respect to any such licence) in a manner that, in the reasonable
opinion of the Lender, has or is reasonably likely to have a Material Adverse
Effect.


 


(c)                               Any of the Borrower’s, MTS-Ukraine’s or
MTS-Uzbekistan’s assigned spectrum allocations are reassigned to other users
(other than a Significant Subsidiary of the Borrower), cancelled or otherwise
lost, and such event, in the reasonable opinion of the Lender, has or is
reasonably likely to have a Material Adverse Effect.


 


(d)                              The Borrower sells, leases or otherwise
transfers any of its GSM 900 or 1800 licences for the Moscow, St. Petersburg or
Krasnodar licence areas.


 


(e)                               Any of the Borrower’s GSM 900 or 1800 licences
(other than its GSM 900 and 1800 licences for the Moscow, St. Petersburg or
Krasnodar licence areas) is sold, leased or transferred to any person that is
not (directly or indirectly) a wholly-owned Subsidiary of the Borrower.


 


(f)


 


(i)                                 Any of the GSM 900 or 1800 licences of
MTS-Ukraine is sold, leased or transferred to any person that is not (directly
or indirectly) a wholly-owned Subsidiary of the Borrower.


 


(ii)                              Sub-clause (i) above does not apply to the
transfer of the GSM 900 or 1800 licences of MTS-Ukraine pursuant to the
MTS-Ukraine Litigation (provided that this sub-clause (ii) shall not in
any way prejudice the rights of the Lender under Clause 20.19 (MTS-Ukraine Litigation).


 


(g)                              Any of the GSM 900 or 1800 licences of
MTS-Uzbekistan is sold, leased or transferred to any person that is not
(directly or indirectly) a wholly-owned Subsidiary of the Borrower.


 


45

















 


20.11               Cessation of Business


 


The Borrower or any Significant
Subsidiary suspends, ceases or threatens to suspend or cease to carry on all or
a substantial part of its business.


 


20.12              Expropriation


 


(a)                               By
or under the authority of any government:


 


(i)                                 any
seizure, compulsory acquisition, expropriation, nationalisation or
renationalisation is made after the Signing Date of all or any material part of
the assets or shares of (or other ownership interest in) any member of the Group;


 


(a)                              the
management of any member of the Group is wholly or partially displaced or the
authority of any member of the Group in the conduct of its business is wholly
or partially curtailed; or


 


(b)                             any
member of the Group is otherwise deprived of, or prevented from exercising
ownership or control of, its material business or assets.


 


(b)                              Paragraph
(a) above does not apply to:


 


(ii)                              the
transfer of any or all of the Borrower’s shares in MTS-Ukraine pursuant to the
MTS-Ukraine Litigation to a person that is not a member of the Group (provided
that this paragraph (b) shall not in any way prejudice the rights of the
Lender under Clause 20.19 (MTS-Ukraine
Litigation)); or


 


(iii)                           the
transfer of any or all of:


 


(a)                               the
assets (including licences) held by Bitel; and/or


 


(b)                              the
shares in Bitel


 


pursuant to the Bitel Litigation, to a person that is not a member of
the Group.


 


20.13              Russian Foreign Exchange Restrictions


 


Any foreign exchange law is
enacted or introduced in the Russian Federation which has the effect of
prohibiting, restricting or delaying any payment by the Borrower or any member
of the Group under the Finance Documents.


 


20.14              Moratorium


 


Any moratorium is declared on
the payment of any external indebtedness of the Russian Federation or of
Russian residents generally.


 


20.15              The Russian Federation


 


The political or economic
situation in the Russian Federation deteriorates or an act of war or
hostilities, invasion, armed conflict or act of a foreign enemy, revolution,
insurrection or insurgency occurs in, or involves, the Russian Federation and
such event, in the reasonable opinion of the Lender, has or is reasonably
likely to have a Material Adverse Effect.


 


20.16              Unlawfulness


 


It is or becomes unlawful for
the Borrower to perform any of its obligations under the Finance Documents.


 


46














 


20.17              Ineligibility for EBRD Financing


 


The Lender
shall have determined that the Borrower has engaged in a Prohibited Practice in
competing for, or in executing, an EBRD-financed contract and the Lender shall
have declared the Borrower ineligible, either indefinitely or for a state
period of time, to be awarded an EBRD-financed contract.


 


20.18              Repudiation


 


The Borrower repudiates a
Finance Document or evidences an intention to repudiate a Finance Document.


 


20.19              MTS-Ukraine Litigation


 


The
MTS-Ukraine Litigation is adversely determined and, in the reasonable opinion
of the Lender, such adverse determination has or is reasonably likely to have a
Material Adverse Effect.


 


20.20              Material adverse change


 


The Lender determines that a
Material Adverse Effect exists, has occurred or is reasonably likely to occur.


 


20.21              Acceleration


 


On and at any time after the
occurrence of an Event of Default which is continuing the Lender may, by notice
to the Borrower:


 


(a)           cancel the Commitment whereupon it
shall immediately be cancelled;


 


(b)          declare
that all or part of the Loan, together with accrued interest, and all other
amounts accrued or outstanding under this Agreement be immediately due and payable, whereupon they
shall become immediately due and payable; and


 


(c)           declare that all or part of the Loan
be payable on demand, whereupon they shall immediately become payable on demand
by the Lender.


 


47

















 


SECTION VIII

CHANGES TO PARTIES


 


21                               CHANGES TO THE LENDER


 


21.1                     Assignments and transfers by the Lender


 


(a)                               Subject to this Clause 21, the Lender (the “Existing  Lender”)
may sell, transfer, assign, novate or otherwise dispose of all or part of its
rights or obligations under this Agreement and any other Finance Documents to
which it is a party (including, by granting of Participations or otherwise) to
another bank or financial institution or to a trust, fund or other entity which
is regularly engaged in or established for the purpose of making, purchasing or
investing in loans, securities or other financial assets (the “New Lender”).


 


(b)                              Unless an Event of Default has occurred, any
assignment or transfer shall require the consent of the Borrower, provided that
(1) such consent shall not be unreasonably withheld or delayed; (2) unless
the Borrower has notified the Lender to the contrary within five Business Days
of receiving notice of the intended assignment or transfer, the Borrower will
be deemed to have given its consent to that assignment or transfer; and (3) no
such consent shall be required for granting Participations or the sale of any
interest in the Loan whereby the Lender would continue to be the lender of
record under this Agreement.


 


21.2                     Conditions of assignment or transfer


 


If:


 


(i)            the Lender assigns or transfers any
of its rights or obligations under the Finance Documents to which it is a party
or changes its Facility Office; and


 


(ii)           as a result of circumstances
existing at the date the assignment, transfer or change occurs, the Borrower
would be obliged to make a payment to the New Lender or Lender acting through
its new Facility Office under Clause 11 (Tax
Gross-up and Indemnities) or Clause 12.1 (Increased Costs),


 


then the New Lender or Lender
acting through its new Facility Office is only entitled to receive payment
under those Clauses to the same extent as the Existing Lender or Lender acting
through its previous Facility Office would have been if the assignment,
transfer or change had not occurred.


 


21.3                     Disclosure of information


 


The Lender may disclose to any
of its Affiliates and any other person:


 


(a)           to (or through) whom the Lender
assigns or transfers (or may potentially assign or transfer) all or any of its
rights and obligations under this Agreement;


 


(b)          in connection with any Participation
or proposed Participation or any other transaction under which payments are to
be made by reference to, this Agreement or the Borrower; or


 


(c)           to whom, and to the extent that,
information is required to be disclosed by any applicable law or regulation,


 


any information about the
Borrower, the Group and the Finance Documents as the Lender shall consider
appropriate if, in relation to paragraphs (a) and (b) above, the
person to whom the


 


48

















 


information is to be given has
entered into a Confidentiality Undertaking. This Clause supersedes any previous
agreement relating to the confidentiality of this information.


 


21.4                     Limitation of responsibility of Existing Lender


 


(a)                               Unless expressly agreed to the contrary, the Existing
Lender make no representation or warranty and assumes no responsibility to a
New Lender for:


 


(i)           the legality, validity,
effectiveness, adequacy or enforceability of the Finance Documents or any other
documents;


 


(ii)          the financial condition of the
Borrower;


 


(iii)         the performance and observance by
the Borrower of its obligations under the Finance Documents or any other
documents; or


 


(iv)         the accuracy of any statements
(whether written or oral) made in or in connection with any Finance Document or
any other document,


 


and any representations or
warranties implied by law are excluded.


 


(b)                              Each New Lender confirms to the Existing Lender
that it:


 


(i)            has made (and shall continue to
make) its own independent investigation and assessment of the financial
condition and affairs of the Borrower and its related entities in connection
with its participation in this Agreement and has not relied exclusively on any
information provided to it by the Existing Lender in connection with any
Finance Document to which it is a party; and


 


(ii)          will continue to make its own
independent appraisal of the creditworthiness of the Borrower and its related
entities whilst any amount is or may be outstanding under the Finance Documents
or the Commitment is in force.


 


(c)                               Nothing in any Finance Document obliges the
Existing Lender to:


 


(i)            accept a re-transfer from a New
Lender of any of the rights and obligations assigned or transferred under this
Clause 21; or


 


(ii)           support any losses directly or
indirectly incurred by the New Lender by reason of the non-performance by the
Borrower of its obligations under the Finance Documents or otherwise.


 


22                               CHANGES TO THE BORROWER


 


The Borrower may not assign any
of its rights or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Lender.


 


49

















 


SECTION IX

THE LENDER


 


23                               CONDUCT OF BUSINESS BY THE LENDER


 


No provision of this Agreement
will:


 


(a)           interfere with the right of the
Lender to arrange its affairs (tax or otherwise) in whatever manner it thinks
fit;


 


(b)          oblige the Lender to investigate or
claim any credit, relief, remission or repayment available to it or the extent,
order and manner of any claim; or


 


(c)           oblige the Lender to disclose any
information relating to its affairs (tax or otherwise) or any computations in
respect of Tax.


 


50

















 


SECTION X

ADMINISTRATION


 


24                               PAYMENT MECHANICS


 


24.1                     Payments to the Lender


 


(a)                               On each date on which the Borrower is required
to make a payment under a Finance Document, the Borrower shall make the same
available to the Lender (unless a contrary indication appears in a Finance
Document) for value on the due date at the time and in such funds specified by the
Lender as being customary at the time for settlement of transactions in the
relevant currency in the place of payment.


 


(b)                              Payment shall be made to such account in the
principal financial centre in a Participating Member State or London with such
bank as the Lender specifies.


 


24.2                     Partial payments


 


(a)                               If the Lender receives a payment that is
insufficient to discharge all the amounts then due and payable by the Borrower
under this Agreement and the other Finance Documents to which the Lender is a
party, the Lender shall apply that payment towards the obligations of the
Borrower under this Agreement and such Finance Documents in any order selected
by the Lender.


 


(b)                              Paragraph (a) above will override any
appropriation made by the Borrower.


 


24.3                     No set-off by the Borrower


 


All payments to be made by the
Borrower under this Agreement and any other Finance Documents to which the
Lender is a party shall be calculated and be made without (and free and clear
of any deduction for) set-off or counterclaim.


 


24.4                     Business Days


 


(a)                               Any payment which is due to be made on a day
that is not a Business Day shall be made on the next Business Day in the same
calendar month (if there is one) or the preceding Business Day (if there is
not).


 


(b)                              During any extension of the due date for
payment of any principal or Unpaid Sum under this Agreement interest is payable
on the principal or Unpaid Sum at the rate payable on the original due date.


 


24.5                     Currency of account


 


(a)                               Subject to paragraphs (b) to (e) below,
Euros is the currency of account and payment for any sum due from the Borrower
under this Agreement.


 


(b)                              A repayment of the Loan or Unpaid Sum or a part
of the Loan or Unpaid Sum shall be made in the currency in which the Loan or
Unpaid Sum is denominated on its due date.


 


(c)                               Each payment of interest shall be made in the
currency in which the sum in respect of which the interest is payable was
denominated when that interest accrued.


 


(d)                              Each payment in respect of costs, expenses or
Taxes shall be made in the currency in which the costs, expenses or Taxes are
incurred.


 


51

















 


(e)                               Any amount expressed to be payable in a
currency other than Euros shall be paid in that other currency.


 


24.6                     Change of currency


 


(a)                               Unless otherwise prohibited by law, if more
than one currency or currency unit are at the same time recognised by the
central bank of any country as the lawful currency of that country, then:


 


(i)            any reference in any Finance
Document to which the Lender is a party to, and any obligations arising under
any Finance Document to which the Lender is a party in, the currency of that
country shall be translated into, or paid in, the currency or currency unit of
that country designated by the Lender (after consultation with the Borrower);
and


 


(ii)           any translation from one currency or
currency unit to another shall be at the official rate of exchange recognised
by the central bank for the conversion of that currency or currency unit into
the other, rounded up or down by the Lender (acting reasonably).


 


(b)                              If a change in any currency of a country
occurs, this Agreement will, to the extent the Lender (acting reasonably and
after consultation with the Borrower) specifies to be necessary, be amended to
comply with any generally accepted conventions and market practice in the
Euro-zone interbank market and otherwise to reflect the change in currency.


 


25                               SET-OFF


 


The Lender may set off any
matured obligation due from the Borrower under the Finance Documents to which
the Lender is a party (to the extent beneficially owned by the Lender) against
any matured obligation owed by the Lender to the Borrower, regardless of the
place of payment, booking branch or currency of either obligation. If the
obligations are in different currencies, the Lender may convert either
obligation at a market rate of exchange in its usual course of business for the
purpose of the set-off.


 


26                               NOTICES


 


26.1                     Communications in writing


 


Any communication to be made
under or in connection with this Agreement shall be made in writing and, unless
otherwise stated, may be made by fax or letter.


 


26.2                     Addresses


 


The address and fax number (and
the department or officer, if any, for whose attention the communication is to
be made) of each Party for any communication or document to be made or
delivered under or in connection with this Agreement is that identified with
its name below, or any substitute address, fax number or department or officer
as a Party may notify to the other Party by not less than five Business Days’
notice.


 


The
Borrower


 


Mobile
TeleSystems Open Joint Stock Company


 


	
  Address:

  	
  Ul. Vorontsovskaya 5, Bld.
  2

  
	
   

  	
  109147 Moscow

  



 










22           Borrower
to confirm details.


 


52





















 


	
   

  	
  Russian Federation

  
	
  Fax No:

  	
  +7 495 911 6531

  
	
  Attention:

  	
  Alexey Kaurov

  
	
   

  	
  Head of Corporate Finance
  Department

  
	
   

  	
   

  
	
  The
  Lender

  	
   

  
	
   

  	
   

  
	
  European
  Bank for Reconstruction and Development

  
	
   

  
	
  Address:

  	
  One Exchange Square

  
	
   

  	
  London ECA 2A 2 JN

  
	
   

  	
  United Kingdom

  
	
  Fax No:

  	
  + 44 20 7338 6100

  
	
  Attention:

  	
  Operation Administration
  Unit, Operation 29576

  



 


26.3                     Delivery


 


(a)                               Any communication or document made or delivered
by one person to another under or in connection with this Agreement will only
be effective:


 


(i)            if by way of fax, when received in
legible form; or


 


(ii)           if by way of letter, when it has
been left at the relevant address or five Business Days after being deposited
in the post postage prepaid in an envelope addressed to it at that address,


 


and, if a particular department
or officer is specified as part of its address details provided under Clause
26.2 (Addresses), if addressed to
that department or officer.


 


(b)                              Any communication or document to be made or
delivered to the Lender will be effective only when actually received by the
Lender and then only if it is expressly marked for the attention of the
department or officer identified with its signature below (or any substitute
department or officer as it shall specify for this purpose).


 


26.4                     English language


 


(a)                               Any notice given under or in connection with
this Agreement must be in English.


 


(b)                              All other documents provided under or in
connection with this Agreement must be:


 


(i)            in English; or


 


(ii)           if not in English, and if so
required by the Lender, accompanied by a certified English translation and, in
this case, the English translation will prevail unless the document is a
constitutional, statutory or other official document.


 


27                               CALCULATIONS AND CERTIFICATES


 


27.1                     Accounts


 


In any litigation or arbitration
proceedings arising out of or in connection with a Finance Document to which
the Lender is a party, the entries made in the accounts maintained by the
Lender are prima facie evidence of the matters to which they relate.


 


53

















 


27.2                     Certificates and Determinations


 


Any certification or
determination by the Lender or a Participant of a rate or amount under any
Finance Document is, in the absence of manifest error, conclusive evidence of
the matters to which it relates.


 


27.3                     Day count convention


 


Any interest, commission or fee
accruing under a Finance Document to which the Lender is a party will accrue
from day to day and is calculated on the basis of the actual number of days
elapsed and a year of 360 days or, in any case where the practice in the Euro-zone
interbank market differs, in accordance with that market practice.


 


28                               PARTIAL INVALIDITY


 


If, at any time, any provision
of this Agreement is or becomes illegal, invalid or unenforceable in any
respect under any law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction will
in any way be affected or impaired.


 


29                               REMEDIES AND WAIVERS


 


No failure to exercise, nor any
delay in exercising, on the part of the Lender, any right or remedy under the
Finance Documents to which it is a Party shall operate as a waiver, nor shall
any single or partial exercise of any right or remedy prevent any further or
other exercise or the exercise of any other right or remedy. The rights and
remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.


 


30                               AMENDMENTS AND WAIVERS


 


No term of
this Agreement may be amended or waived without the consent of the Lender and
the Borrower and any such amendment or waiver will be binding on all Parties.


 


31                               COUNTERPARTS


 


This Agreement may be executed
in any number of counterparts, and this has the same effect as if the
signatures on the counterparts were on a single copy of this Agreement.


 


54

















 


SECTION XI

GOVERNING LAW AND ENFORCEMENT


 


32                               GOVERNING LAW


 


This Agreement is governed by
English law.


 


33                               ARBITRATION AND JURISDICTION


 


33.1                     Arbitration


 


Any dispute,
controversy or claim arising out of or relating to this Agreement, or the
breach, termination or invalidity hereof, shall be settled by arbitration in
accordance with the UNCITRAL Arbitration Rules as in force on the Signing
Date. There shall be one arbitrator and the appointing authority shall be the
London Court of International Arbitration. The seat and place of arbitration
shall be London, England and the English language shall be used throughout the
arbitral proceedings.  The parties hereby
waive any rights under the Arbitration Act 1996 or otherwise to appeal any
arbitration award to, or to seek determination of a preliminary point of law
by, the courts of England. The arbitral tribunal shall not be authorised to
take or provide, and the Borrower agrees that it shall not seek from any
judicial authority, any interim measures of protection or pre-award relief
against the Lender, any provisions of the UNCITRAL Arbitration Rules notwithstanding.
The arbitral tribunal shall have authority to consider and include in any
proceeding, decision or award any further dispute properly brought before it by
the Lender (but no other party) insofar as such dispute arises out of any
Finance Document, but, subject to the foregoing, no other parties or other disputes
shall be included in, or consolidated with, the arbitral proceedings. In any
arbitral proceeding, the certificate of the Lender as to any amount due to it
under any Finance Document shall, in the absence of manifest error, be prima
facie evidence of such amount.


 


33.2                     Recourse to courts


 


Notwithstanding Clause 33.1 (Arbitration) above, this Agreement and any other Finance
Document, and any rights of the Lender arising out of or relating to this
Agreement or any other Finance Document, may, at the option of the Lender, be
enforced by the Lender in the courts of England or in any other courts having
jurisdiction. For the benefit of the Lender, the Borrower hereby irrevocably
submits to the non-exclusive jurisdiction of the courts of England with respect
to any dispute, controversy or claim arising out of or relating to this
Agreement or any other Finance Document, or the breach, termination or
invalidity hereof or thereof. The Borrower hereby irrevocably designates,
appoints and empowers Law Debenture Corporate Services Limited at its
registered office (being, on the date hereof, at 5th floor, 100 Wood Street, London EC2V 7EX,
England) to act as its authorised agent to receive service of process and any
other legal summons in England for purposes of any legal action or proceeding
brought by the Lender in respect of any Finance Document. The Borrower hereby
irrevocably consents to the service of process or any other legal summons out
of such courts by mailing copies thereof by registered airmail postage prepaid
to its address specified herein. The Borrower covenants and agrees that, so
long as it has any obligations under this Agreement, it shall maintain a duly
appointed agent to receive service of process and any other legal summons in
England for purposes of any legal action or proceeding brought by the Lender in
respect of any Finance Document and shall keep the Lender advised of the
identity and location of such agent. 
Nothing herein shall affect the right of the Lender to commence legal
actions or proceedings against the Borrower in any manner authorised by the


 


55

















 


laws of any relevant
jurisdiction. The commencement by the Lender of legal actions or proceedings in
one or more jurisdictions shall not preclude the Lender from commencing legal
actions or proceedings in any other jurisdiction, whether concurrently or not.
The Borrower irrevocably waives any objection it may now or hereafter have on
any grounds whatsoever to the laying of venue of any legal action or proceeding
and any claim it may now or hereafter have that any such legal action or
proceeding has been brought in an inconvenient forum.


 


34                               IMMUNITIES


 


 


34.1                     Privileges and Immunities of the Lender


 


Nothing in
this Agreement shall be construed as a waiver, renunciation or other
modification of any immunities, privileges or exemptions of the Lender accorded
under the Agreement Establishing the European Bank for Reconstruction and
Development, international convention or any applicable law. Notwithstanding
the foregoing, the Lender has made an express submission to arbitration under
Clause 33.1 (Arbitration) and accordingly and
without prejudice to its other privileges and immunities (including without
limitation, the inviolability of its archives), it acknowledges that it does
not have immunity from suit and legal process under Article 5(2) of
Statutory Instrument 1991, No. 757 (The European Bank for
Reconstruction and Development (Immunities and Privileges) Order 1991) or any similar provision under English
law, in respect of the enforcement of an arbitration award duly made against it
as a result of its express submission to arbitration pursuant to Clause 33.1 (Arbitration).


 


34.2                     Waiver of immunity


 


The Borrower irrevocably agrees
that, should any party take any proceedings anywhere (whether for an
injunction, specific performance, damages or otherwise), no immunity (to the
extent that it may at any time exist, whether on the grounds of sovereignty or
otherwise) from those proceedings, from attachment (whether in aid of
execution, before judgment or otherwise) of its assets or from execution of
judgment shall be claimed by it or on behalf of it or with respect to its
assets, any such immunity being irrevocably waived. The Borrower irrevocably
agrees that it and its assets are, and shall be, subject to such proceedings,
attachment or execution in respect of its obligations under the Finance
Documents.


 


56














 


This Agreement
has been executed and delivered as a deed on the date stated at the beginning
of this Agreement.


 


Executed as a deed by:


 


MOBILE TELEPHONE SYSTEMS OPEN JOINT STOCK
COMPANY


 


	
  By

  	
  /s/  Mikhail V.
  Shamolin

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Mikhail V. Shamolin

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  President and CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Irina Borisenkova

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Irina Borisenkova

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Accountant

  	
   

  



 


 


Executed as a deed by:


 


EUROPEAN BANK


 


FOR RECONSTRUCTION AND DEVELOPMENT


 


	
  By

  	
  /s/ Aziz Muminov

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Aziz Muminov

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior
  Banker

  	
   

  



 


57

















 


SCHEDULE 1

Conditions precedent


 


1                                      Finance Documents


 


An executed original of this
Agreement and each other Finance Document.


 


2                                      The Borrower


 


(a)                               Certified copies of the Borrower’s duly
registered constitutional documents and certificates of registration.


 


(b)                              Certified copies of all corporate resolutions
necessary to authorise the Borrower to execute and perform the Finance
Documents and any documents referred to therein and the transactions
contemplated thereunder (including but not limited to any major transaction
approvals or interested party transaction approvals, if applicable).


 


(c)                               Evidence of the authority of the relevant
signatories of the Borrower (including, but not limited to, its Chief
Accountant) to execute each Finance Document to which it is a party and any
documents referred to therein and the transactions contemplated thereunder.


 


(d)                              A certified copy of the most recent balance
sheet of the Borrower by reference to the date of each Finance Document.


 


(e)                               A certificate executed on behalf of the
Borrower:


 


(i)           certifying the sample signature and
office of each person that signed the relevant Finance Document and any
documents referred to therein and the transactions contemplated thereunder on
behalf of the Borrower and certifying that such signatories hold the positions
in which capacity they executed such documents; and


 


(ii)          certifying that each copy document
relating to it specified in this Schedule 1 is correct, complete and in full
force and effect as at a date no earlier than the date of this Agreement.


 


3                                      Participations


 


The Lender shall have received from Participants, upon terms
satisfactory to the Lender, formal commitments by such Participants, evidenced
by the execution of one or more Participation Agreements, for the acquisition
of Participations in the B Loan in an aggregate amount equal to the full amount
of the B Loan.


 


4                                      Legal opinions


 


(a)                               A legal opinion of White & Case LLP as
to matters of English law.


 


(b)                              A legal opinion of White & Case LLC as
to matters of Russian law.


 


(c)                               An in-house legal opinion of the Borrower.


 


5                                      NIB Loan and EIB
Loan


 


The Lender shall be satisfied that a disbursement of the full amount of
the NIB Loan and EIB Loan is to be made available under the NIB Loan Agreement
and the EIB Loan Agreement on the date of the proposed Disbursement; as
evidence for such availability, the Borrower will provide a certified copy of
the notice from NIB and EIB confirming that all conditions precedent to the 


 


58

















 


availability of the NIB Loan and EIB have been fulfilled by the
Borrower; provided that if such notice is not issued by NIB and EIB, the
Borrower will not be obligated to procure any other evidence and the Lender
will consult with NIB and EIB to satisfy itself whether the condition set forth
in this paragraph 5 has been fulfilled.


 


6                                      Insurance


 


EBRD shall have received an
original insurance certificate from the Borrower’s insurer or insurance broker
showing that all insurance policies and endorsements required pursuant to
Clause 17.8 (Insurance) are in full force and
effect and certified copies of such insurance policies and endorsements.


 


7                                      Other documents and
evidence


 


(a)                               Evidence that the process agent referred to in
Clause 33.2 (Recourse to courts)
has accepted its appointment.


 


(b)                              A copy of any other Authorisation or other
document, opinion or assurance which the Lender consider to be necessary or
desirable (if it has notified the Borrower accordingly) in connection with the
entry into and performance of the transactions contemplated by any Finance
Document or for the validity and enforceability of any Finance Document.


 


(c)                               The Financial Statements.


 


(d)                              Evidence that the fees, costs and expenses then
due from the Borrower pursuant to Clause 10 (Fees)
and 15 (Costs and Expenses) have
been paid by the first Utilisation Date.


 


(e)                               A copy of the deal
passport of the Borrower (in the form established by Instruction No. 117-I
of the Central Bank of the Russian Federation dated 15 June 2004) accepted
and duly certified by a Russian authorised bank and copies of all other
documents submitted by the Borrower to the Russian authorised bank in
accordance with applicable Russian currency control regulations, as the Lender
may reasonably require (or written confirmation from ING Bank (Eurasia) ZAO
that all documents required to obtain such deal
passport have been duly submitted to it by or on behalf of the
Borrower).


 


(f)                                 Such other documents or evidence which the
Lender may reasonably require.


 


59

















 


SCHEDULE 2

Utilisation Request


 


 


From:     Mobile TeleSystems Open Joint Stock Company


 


To:                            European Bank for Reconstruction and
Development


 


Dated:


 


Dear Sirs


 


Mobile
TeleSystems Open Joint Stock Company — EUR 225,000,000 Facility Agreement

dated [*] December 2008 (the “Agreement”)


 


1                                      We refer to the Agreement. This is a
Utilisation Request. Terms defined in the Agreement have the same meaning in
this Utilisation Request unless given a different meaning in this Utilisation
Request.


 


2                                      We wish to borrow a Loan on the
following terms:


 


	
  Proposed Utilisation Date:

  	
   

  	
  [                   ]
  or, if that is not a Business Day, the next Business Day

  
	
   

  	
   

  	
   

  
	
  Amount:

  	
   

  	
  [                   ]
  or, if less, the Available Commitment

  



 


3                                      We confirm that each condition
specified in Clause 4.4 (Further conditions
precedent) is satisfied on the date of this Utilisation Request.


 


4                                      The proceeds of this Loan should be
credited to [specify bank account of the Borrower].


 


5                                      This Utilisation Request is
irrevocable.


 


 


Mobile TeleSystems Open Joint
Stock Company


 


 


	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Title: Chief
  Accountant

  



 


60

















 


SCHEDULE 3

Form of Compliance Certificate


 


To:                        European Bank for Reconstruction and
Development


 


From:                    Mobile TeleSystems Open Joint Stock Company


 


Dated:


 


Dear Sirs


 


Mobile
TeleSystems Open Joint Stock Company — EUR 225,000,000 Facility Agreement

dated [*] December 2008 (the “Agreement”)


 


We refer to the Agreement. This
is a Compliance Certificate. Terms defined in the Agreement have the same
meaning in this Compliance Certificate unless given a different meaning in this
Compliance Certificate.


 


1                                      [We confirm that no Default is
continuing.]*


 


2                                      We confirm that the ratio of Total
Debt as at the end of the Relevant Period ending on [•] to OIBDA in
respect of such Relevant Period, was [•].


 


3                                      We confirm that the ratio of OIBDA
to Interest Expense for  the Relevant
Period ending on [•], was [•].


 


 


	
  Signed:

  	
   

  	
   

  
	
   

  	
   

  
	
  [Chief Financial Officer] of 

  	
   

  
	
  Mobile TeleSystems Open Joint
  Stock Company

  	
   

  



 


[*    insert applicable
certification language


 






*                 If this statement cannot be made, the
certificate should identify any Default that is continuing and the steps, if
any, being taken to remedy it.


 


61

















 


SCHEDULE 4

Definitions and Guidelines for Private Sector
Operations (Fraud and Corruption)


 


The purpose of these Guidelines is to clarify the meaning of the terms “Corrupt
Practices”, “Fraudulent Practices”, “Coercive Practices,” and “Collusive
Practices” in the context of the EBRD’s non-sovereign operations in favour of
private sector projects.


 


1.            CORRUPT PRACTICES


 


“Corrupt Practice” means the offering, giving, receiving or soliciting,
directly or indirectly, of anything of value to influence improperly the actions
of another party.  In implementing this
definition, the EBRD will be guided by the following principles:


 


(a)          The conduct in
question must involve the use of improper means (such as bribery or kickbacks)
by someone to induce another person to act or to refrain from acting in the
exercise of his duties, in order to obtain or retain business, or to obtain an
undue advantage.  Antitrust, securities
and other violations of law that are not of this nature fall outside of the
definition of Corrupt Practices but may still be scrutinised under alternative
procedures.


 


(b)          It is acknowledged
that foreign investment agreements, concessions and other types of contracts
commonly require investors to make contributions for bona fide social
development purposes or to provide funding for infrastructure unrelated to the
project. Similarly, investors are often required or expected to make
contributions to bona fide local charities. 
These practices are not viewed as Corrupt Practices for purposes of
these definitions, so long as they are permitted under local law and fully
disclosed in the payer’s books and records. Similarly, an investor will not be
held liable for corrupt or fraudulent practices committed by entities that
administer bona fide social development funds or charitable contributions.


 


(c)          In the context of
conduct between private parties, the offering, giving, receiving or soliciting
of corporate hospitality and gifts that are customary by
internationally-accepted industry standards shall not constitute Corrupt
Practices unless the action violates applicable law.


 


(d)          Payment by private
sector persons of the reasonable travel and entertainment expenses of public
officials that are consistent with existing practice under relevant law and
international conventions will not be viewed as Corrupt Practices.


 


(e)          The EBRD does not
condone facilitation payments whether they are criminalised or not.   Such payments, which are illegal in most
countries, are dealt with in accordance with relevant local laws and international
conventions.


 


2.            FRAUDULENT
PRACTICES


 


“Fraudulent Practice” means any action or
omission, including misrepresentation, that knowingly or recklessly misleads,
or attempts to mislead, a party to obtain a financial benefit or to avoid an
obligation.  In
implementing this definition, the EBRD will be guided by the following
principles:


 


(a)          An action, omission, or misrepresentation will be
regarded as made recklessly if it is made with reckless indifference as to
whether it is true or false. Mere inaccuracy
in such information, committed through simple negligence, is not enough to
constitute a “Fraudulent Practice”.


 


(b)          Fraudulent
Practices are intended to cover actions or omissions that are directed to or
against the EBRD.  The expression also
covers Fraudulent Practices directed to or against an EBRD member country in
connection with the award or implementation of a government contract or
concession in a project financed by the EBRD.    Frauds on, or other illegal behaviour
directed against, other third parties are not condoned.   Such behaviour may represent an impediment
to doing business with EBRD.


 


62

















 


3.            COERCIVE
PRACTICES


 


“Coercive Practice” means impairing or
harming, or threatening to impair or harm directly or indirectly, any party or
the property of the party to influence improperly the actions of a party.  In implementing this
definition, the EBRD will be guided by the following principles:


 


(a)          Coercive Practices are actions undertaken for the
purpose of bid rigging or in connection with public procurement or
government contracting or in furtherance of a
Corrupt Practice or a Fraudulent Practice.


 


(b)          Coercive Practices are threatened or actual
illegal actions such as personal injury or abduction, damage to property, or
injury to legally recognizable interests, in order to obtain an undue advantage
or to avoid an obligation. It is not intended to cover hard bargaining, the
exercise of legal or contractual remedies or litigation in such implementation.


 


4.            COLLUSIVE
PRACTICES


 


“Collusive Practice” means an arrangement
between two or more parties designed to achieve an improper purpose, including
influencing improperly the actions of another party.  In implementing this
definition, the EBRD will be guided by the principle that Collusive Practices are actions undertaken for the
purpose of bid rigging or in connection with public procurement or
government contracting or in furtherance of a
Corrupt Practice or a Fraudulent Practice.


 


5.            GENERAL


 


In implementing the foregoing definitions, the EBRD will be guided by
the principle that a person should not be liable for actions taken by unrelated
third parties unless that person has participated in the prohibited act in
question.


 


63