Document:

Exhibit 4.3

 

Execution Copy

 

 

 

PARTICIPATION INTEREST PURCHASE AGREEMENT

 

BY AND BETWEEN

 

KPN TELECOM B.V.

 

AS “SELLER,”

 

PTT TELECOM KYIV

 

AS “TARGET”

 

AND

 

MOBILE TELESYSTEMS OJSC

 

AS “PURCHASER”

 

 

DATED AS OF NOVEMBER 5, 2002

 

 

 

 

TABLE OF CONTENTS

 

	
  Article I.
  Definitions

  
	
   

  	
   

  
	
  Section 1.1

  	
  Defined Terms

  
	
   

  	
   

  
	
  Article II.
  Purchase and Sale of Target Participation Interest

  
	
   

  	
   

  
	
  Section 2.1

  	
  Basic
  Transaction

  
	
  Section 2.2

  	
  Purchase
  Price

  
	
  Section 2.3

  	
  The Closing

  
	
  Section 2.4

  	
  Transfer of
  the Participation Interest

  
	
  Section 2.5

  	
  Deliveries at
  the Closing

  
	
  Section 2.6

  	
  Escrow
  Agreement

  
	
  Section 2.7

  	
  Return of
  Purchase Price

  
	
   

  	
   

  
	
  Article
  III. Warranties Concerning the Transaction

  
	
   

  	
   

  
	
  Section 3.1

  	
  Warranties of
  the Seller

  
	
  Section 3.2

  	
  Warranties of
  the Purchaser

  
	
   

  	
   

  
	
  Article IV.
  Warranties Concerning the Company

  
	
   

  	
   

  
	
  Section 4.1

  	
  Organization,
  Qualification, and Corporate Power

  
	
  Section 4.2

  	
  Capitalization

  
	
  Section 4.3

  	
  Noncontravention

  
	
  Section 4.4

  	
  Licenses,
  Permits, and Authorizations

  
	
  Section 4.5

  	
  Directors and
  Officers

  
	
  Section 4.6

  	
  Brokers’ Fees

  
	
  Section 4.7

  	
  Title to
  Assets

  
	
  Section 4.8

  	
  No Subsidiaries

  
	
  Section 4.9

  	
  Financial
  Statements

  
	
  Section 4.10

  	
  Recent
  Events

  
	
  Section 4.11

  	
  Undisclosed
  Liabilities

  
	
  Section 4.12

  	
  Legal
  Compliance

  
	
  Section 4.13

  	
  Tax Matters

  
	
  Section 4.14

  	
  Real
  Property

  
	
  Section 4.15

  	
  Intellectual
  Property

  
	
  Section 4.16

  	
  Company
  Licenses

  
	
  Section 4.17

  	
  Networks

  
	
  Section 4.18

  	
  Contracts

  
	
  Section 4.19

  	
  Powers of
  Attorney

  
	
  Section 4.20

  	
  Insurance

  
	
  Section 4.21

  	
  Litigation

  
	
  Section 4.22

  	
  Employees

  

 

i

 

	
  Section 4.23

  	
  Employee
  Benefits

  
	
  Section 4.24

  	
  Guaranties

  
	
  Section 4.25

  	
  Environment,
  Health, and Safety

  
	
  Section 4.26

  	
  Certain
  Business Relationships with the Company

  
	
  Section 4.27

  	
  Unlawful
  Contributions

  
	
  Section 4.28

  	
  Antitrust

  
	
  Section 4.29

  	
  Money
  Laundering and Unlawful Financial Activities

  
	
   

  	
   

  
	
  Article V.
  Pre-Closing Covenants

  
	
   

  	
   

  
	
  Section 5.1

  	
  General

  
	
  Section 5.2

  	
  Notices and
  Consents

  
	
  Section 5.3

  	
  Operation of
  Business

  
	
  Section 5.4

  	
  Participants
  Meeting; Amendments to Foundation Documents

  
	
  Section 5.5

  	
  Preservation
  of Business

  
	
  Section 5.6

  	
  Full Access

  
	
  Section 5.7

  	
  Notice of
  Developments

  
	
  Section 5.8

  	
  Exclusivity

  
	
  Section 5.9

  	
  Governmental
  Approval

  
	
  Section 5.10

  	
  Resignation
  from Corporate Bodies

  
	
  Section 5.11

  	
  Waiver of
  Pre-Emptive Rights

  
	
  Section 5.12

  	
  No
  Acceleration, No Payments

  
	
  Section 5.13

  	
  Retention
  of General Director

  
	
  Section 5.14

  	
  Registration
  of Target Charter

  
	
   

  	
   

  
	
  Article VI.
  Post-Closing Covenants

  
	
   

  	
   

  
	
  Section 6.1

  	
  General

  
	
  Section 6.2

  	
  Litigation
  Support

  
	
  Section 6.3

  	
  Transition

  
	
  Section 6.4

  	
  Confidentiality

  
	
  Section 6.5

  	
  Covenant Not
  to Compete

  
	
   

  	
   

  
	
  Article
  VII. Conditions to Obligations

  
	
   

  	
   

  
	
  Section 7.1

  	
  Conditions to
  Obligation of the Purchaser to Close

  
	
  Section 7.2

  	
  Conditions to
  Obligation of the Seller to Close

  
	
   

  	
   

  
	
  Article
  VIII. Remedies for Breaches of This Agreement

  
	
   

  	
   

  
	
  Section 8.1

  	
  Survival of
  Warranties

  
	
  Section 8.2

  	
  Indemnification
  Provisions for Benefit of the Purchaser

  
	
  Section 8.3

  	
  Indemnification
  Provisions for Benefit of the Seller

  
	
  Section 8.4

  	
  Matters
  Involving Third Parties

  
	
  Section 8.5

  	
  Determination
  of Adverse Consequences

  
	
  Section 8.6

  	
  Exclusive
  Remedies

  
	
  Section 8.7

  	
  Miscellaneous

  
	
   

  	
   

  
	
  Article IX.
  Effectiveness and Termination

  
	
   

  	
   

  
	
  Section 9.1

  	
  Effectiveness
  of Agreement

  

 

ii

 

	
  Section 9.2

  	
  Termination
  of Agreement

  
	
  Section 9.3

  	
  Effect of
  Termination

  
	
   

  	
   

  
	
  Article X.
  Miscellaneous

  
	
   

  	
   

  
	
  Section 10.1

  	
  Press
  Releases and Public Announcements

  
	
  Section 10.2

  	
  Entire Agreement

  
	
  Section 10.3

  	
  Succession
  and Assignment

  
	
  Section 10.4

  	
  Counterparts

  
	
  Section 10.5

  	
  Headings

  
	
  Section 10.6

  	
  Notices

  
	
  Section 10.7

  	
  Dispute
  Resolution

  
	
  Section 10.8

  	
  Governing
  Law

  
	
  Section 10.9

  	
  Judgment
  Currency

  
	
  Section 10.10

  	
  Third Party
  Beneficiaries

  
	
  Section 10.11

  	
  Amendments
  and Waivers

  
	
  Section 10.12

  	
  Remedies
  Cumulative

  
	
  Section 10.13

  	
  Severability

  
	
  Section 10.14

  	
  Expenses

  
	
  Section 10.15

  	
  Construction

  
	
  Section 10.16

  	
  Payment
  of Taxes

  
	
  Section 10.17

  	
  Incorporation
  of Exhibits, Annexes, and Schedules

  
	
  Section 10.18

  	
  Specific
  Performance

  

 

iii

 

EXHIBIT INDEX

 

	
  Exhibit A

  	
   

  	
  Escrow Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit B-1

  	
   

  	
  Form of Founding Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit B-2

  	
   

  	
  Form of Charter

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Company Participants’ Meeting Agenda

  
	
   

  	
   

  	
   

  
	
  Exhibit D-1

  	
   

  	
  Historical Financial Statements of Company

  
	
   

  	
   

  	
   

  
	
  Exhibit D-2

  	
   

  	
  Historical Financial Statements of Target

  
	
   

  	
   

  	
   

  
	
  Exhibit F

  	
   

  	
  Form of Waiver

  
	
   

  	
   

  	
   

  
	
  Exhibit G-1

  	
   

  	
  Form of Seller’s Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit G-2

  	
   

  	
  Form of Purchaser’s Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit H

  	
   

  	
  List of Management

  
	
   

  	
   

  	
   

  
	
  Exhibit I-1

  	
   

  	
  Form of Target Founding Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit I-2

  	
   

  	
  Form of Target Charter

  
	
   

  	
   

  	
   

  
	
  Disclosure Schedule

  	
   

  	
  Exceptions to Warranties Concerning the Company

  

 

iv

 

PARTICIPATION INTEREST PURCHASE AGREEMENT

 

This PARTICIPATION INTEREST
PURCHASE AGREEMENT (the “Agreement”) entered into as of November 5,
2002, by and among Mobile TeleSystems OJSC, an open joint stock company
organized under the laws of the Russian Federation (the “Purchaser”);
KPN Telecom B.V., a company organized under the laws of the Netherlands (the “Seller”),
and PTT Telecom Kyiv, a limited liability company organized under the laws of
Ukraine (the “Target”).  The
Purchaser, the Seller, and the Target are referred to collectively herein as
the “Parties.”

 

RECITALS

 

WHEREAS, the Seller is
currently the direct sole shareholder of the Target, a limited liability
company organized under the laws of Ukraine, with its registered address at
9/2, Chervonoarmiyska (Velyka Vasylkivska Street), Kyiv, Ukraine,
identification code #               
according to the Uniform State Register of Enterprises and Organizations
of Ukraine;

 

WHEREAS, the Target is
currently one of the participants in the Ukrainian-German-Dutch-Danish Joint
Venture “Ukrainian Mobile Communications in Ukraine” (the “Company”), a
company organized under the laws of Ukraine in the form of a limited liability
company, with its registered address at 21, Moskovska Street, Kyiv, Ukraine,
identification code #14333937 according to the Uniform State Register of
Enterprises and Organizations of Ukraine, whose business includes, without
limitation, the establishment and operation of public cellular communications
networks in Ukraine, as well as provision of interregional and international
communications services (the “Business”). The Target holds a
participation interest equivalent to 1.0% of the registered charter capital of
the Company (the “Company Participation Interest”). The other
participants of the Company and their respective participation interests
therein are as follows: the Seller (15.33%), Open Joint Stock Company
Ukrtelecom (51%), TDC Mobile International A/S (16.33%), and Cetel B.V.
(16.33%);

 

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

 

WHEREAS, concurrently with
the entering into of this Agreement, (i) Cetel B.V. will enter into a put and
call option agreement with Open Joint Stock Company Ukrtelecom with regard to a
26% participation interest in the Company (the “Ukrtelecom Option Agreement”),
which Cetel B.V. will subsequently assign to the Purchaser and (ii) the
Purchaser will enter into a put and call option agreement with TDC Mobile
International A/S with regard to a 16.33% participation interest in the Company
(the “TDC Option Agreement”) (collectively, the “Option Agreements”);

 

1

 

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

 

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

 

WHEREAS, concurrent with the
transactions described above, the Seller desires to sell, assign and deliver to
the Purchaser, and the Purchaser desires to purchase and accept from the
Seller, 100% of the participation interests of the Target (the “Participation
Interest”), representing 100% of the charter capital of the Target, on the
terms and subject to the conditions set forth herein (the “Acquisition”).

 

AGREEMENT

 

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

 

ARTICLE I.

DEFINITIONS.

 

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

 

“Acquisition” has the
meaning given in the Recitals.

 

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

 

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

 

2

 

“Agreement” has the
meaning given in the Preamble.

 

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

 

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

 

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

 

“Building” has the
meaning given in Section 4.14.

 

“Business” has the
meaning given in the Recitals.

 

“Business Day” means
any day other than a Saturday or Sunday on which banks in Moscow, Russia, are
open for business and are not required or authorized to close.

 

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

 

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

 

“Closing” has the
meaning given in Section 2.3.

 

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

 

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

 

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

 

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

 

“Company” has the
meaning given in the Recitals.

 

“Company Licenses” means,
collectively, the licenses set forth on Annex III attached hereto.

 

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

 

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

 

“Confidential Information”
means any information concerning the businesses and affairs of the Target and
the Company or any of the transactions contemplated by the Transaction
Documents that is not already generally available to the public.

 

“Control” means the
power to direct the management or policies of an entity, directly or
indirectly, whether through the ownership of securities, by contract or
otherwise (which power shall be deemed to be held by a Person with the direct
or indirect ownership of (i) twenty-five percent (25%) or more of the share
capital of an entity with respect to the definition of Control and/or Affiliate
as used in Article IV hereof, and (ii) fifty percent (50%)

 

3

 

or more of the share capital
of an entity with respect to the definition of Control and/or Affiliate as used
in this Agreement other than in Article IV), and “Controlling” and “Controlled”
have the corresponding meanings.

 

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

 

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

 

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

 

“Environmental, Health,
and Safety Laws” means all Ukrainian Laws concerning pollution or
protection of the environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes.

 

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

 

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

 

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

 

“Escrow Agreement”
has the meaning given in Section 2.6.

 

“Escrow Release” has
the meaning given in Section 2.6.

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

“Licensed IP Rights”
has the meaning given in Section 4.15.

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

“Obligation Currency”
has the meaning given in Section 10.9.

 

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

 

“Owned IP Rights” has
the meaning given in Section 4.15.

 

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

 

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

 

“Parties” has the
meaning given in the Preamble.

 

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

 

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

 

“Purchaser” has the
meaning given in the Preamble.

 

“Rules” has the
meaning given in Section 10.7.

 

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

 

“Seller” has the
meaning given in the Preamble.

 

“Services” has the
meaning given in Section 4.17.

 

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

 

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

 

6

 

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

 

“Target” has the
meaning given in the Preamble.

 

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

 

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

 

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

 

“Third Party Claim”
has the meaning given in Section 8.4.

 

“Transaction Documents”
mean, collectively, this Agreement, the Escrow Agreement, the Concurrent
Purchase Agreements, the Option Agreements, the Debt Restructuring Agreements,
and any agreement entered into to effect to such agreements, and any and all
other documents, agreements, instruments, certificates, consents, waivers
entered into or issued or to be entered into or issued by the Target or the
Company or any of its Participants in relation thereto or in connection with
the consummation of the Acquisition.

 

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

 

“Ukrainian Law” means
any statute, law, ordinance, rule, code, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, ruling, decree or
other requirement of any Ukrainian governmental authority.

 

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

 

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

 

7

 

ARTICLE II.

PURCHASE AND SALE OF TARGET PARTICIPATION
INTEREST.

 

Section 2.1                                   Basic
Transaction.

 

(i)                                     On and subject to the terms and conditions of
this Agreement, the Purchaser agrees to purchase from the Seller, and the
Seller agrees to sell and transfer to the Purchaser, all of the legal and
beneficial ownership in the Participation Interest for the consideration
specified below in this Article II.

 

(ii)                                  If, within
the three (3) month period immediately following the Closing Date, the
Purchaser or any Controlled Affiliate of the Purchaser sells a participation
interest in the Company, or all or subsantially all of the assets of the
Company, for a price based on a valuation higher than the valuation on which
the Purchase Price has been based, then the Purchaser shall pay to the Seller,
on a bank account designated by the Seller, within five (5) Business Days after
the receipt of information regarding such bank account from the Seller, an
amount reflecting the difference between the price that would have been payable
had the higher valuation been applied in determining the Purchase Price and (i)
if the commitment is made within the first month after the Closing Date, the
Purchase Price, (ii) if the commitment is made after the first month, but prior
to the end of the second month after the Closing Date, 105% (one hundred and
five percent) of the Purchase Price, (iii) if the commitment is made after the
second month, but prior to the end of the third month after the Closing Date,
110% (one hundred and ten percent) of the Purchase Price, (iv) if the
commitment is made after the third month, but prior to the end of the fourth
month after the Closing Date, 115% (one hundred and fifteen percent) of the
Purchase Price, (v) if the commitment is made after the fourth month but prior
to the end of the fifth month after the Closing Date, 120% (one hundred and
twenty percent) of the Purchase Price, and (vi) if the commitment is made after
the fifth month but prior to the end of the sixth month after the Closing Date,
125% (one hundred and twenty five percent) of the Purchase Price.

 

(iii)                               Within one
week after the three (3) months referred to under (ii) above, the Purchaser
shall give a notice to the Seller stating either that (a) neither the Purchaser
nor any of its Controlled Affiliates sold a participation interest in the
Company, or all or subsantially all of the assets of the Company, or (b) the
Purchaser or a Controlled Affiliate sold a participation interest in the
Company, or all or subsantially all of the assets of the Company, in which case
such notice shall include the valuation with regard to the price of such sale
and the date of the sale, together with all supporting documentation necessary
to evidence the price valuation and date of the sale (the “Transfer Notice”).

 

8

 

Section 2.2                                   Purchase
Price.  The
purchase price to be paid by the Purchaser to the Seller for the Participation
Interest shall be equal to US$ 3,368,035 (the “Purchase Price”).  The Purchaser agrees, at Closing, to pay the
Purchase Price by delivery of cash in U.S. dollars to the Escrow Agent pursuant
to the Escrow Agreement as provided for in Section 2.6 hereof.  In case Ukrainian Law provides for the payment
in Ukrainian currency, the respective amount of Ukrainian currency shall be
calculated in accordance with the official exchange rate as established by the
Central Bank of the Ukraine on the Business Day such payment is made.  The Purchaser may at its option pay the
Purchase Price to the Escrow Agent prior to Closing.

 

Section 2.3                                   The
Closing.  Subject to the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the respective
Parties will take at the Closing itself), the closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place at the
offices of ING Barings Kiev, located at 28 Kominterna Street, 5th floor, 252032 Kiev, Ukraine, commencing at 9:00
a.m. local time on the date of the Closing Participants Meeting (the “Closing
Date”).

 

Section 2.4                                   Transfer
of the Participation Interest.

 

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

 

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

 

(iii)                               On the Closing Date, the Seller shall conduct
a participants’ meeting of the Target, at which such meeting the Seller shall
approve the amended founding agreement and the charter of the Target in the
form of Exhibits I-1 and I-2 attached hereto (the “Amended Target
Organizational Documents”) such that the Purchaser becomes the sole
participant in the Target.

 

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

 

9

 

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

 

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

 

Section 2.5                                   Deliveries
at the Closing.  At the Closing, (i) the Seller will deliver
to the Purchaser the various certificates, instruments, and documents referred
to in Section 7.1 hereof, (ii) the Purchaser will deliver to the Seller the
various certificates, instruments, and documents referred to in Section 7.2
hereof, (iii) the Seller will deliver to the Purchaser a notarized copy of a
protocol of the participants’ meeting approving the Amended Target
Organizational Documents, and (iv) the Purchaser will deliver to the Seller the
consideration specified in Section 2.2 hereof in accordance with Section 2.6
hereof.

 

Section 2.6                                   Escrow
Agreement.  The Seller shall enter into an escrow
agreement, substantially in the form of Exhibit A hereto (the “Escrow
Agreement”), with the Purchaser and the Escrow Agent pursuant to which the
Purchase Price shall be held in escrow and, subject to Section 2.7,  released to the Seller in accordance with
the terms thereof in the event of the registration of the Amended Target
Organizational Documents, as necessary under Ukrainian Law.  Such time as the Purchase Price is released
to the Seller in accordance with the terms of the Escrow Agreement shall be
referred to herein as the “Escrow Release.”

 

Section 2.7                                   Return of
Purchase Price.  In the event that the registration of the
Amended Target Organizational Documents, as necessary under Ukrainian Law, has
not occurred within sixty (60) calendar days of the Closing Date, then (i) the
Escrow Agent shall deliver to the Purchaser the balance of the Purchase Price
plus any accrued interest thereon in accordance with the Escrow Agreement, and
the Purchaser’s obligation to pay the Purchase Price shall terminate; (ii) the
Seller’s obligation to transfer the Participation Interest shall terminate.

 

ARTICLE
III.

WARRANTIES CONCERNING THE TRANSACTION.

 

Section 3.1                                   Warranties
of the Seller.  The Seller warrants to the Purchaser that
the statements contained in this Section 3.1 are true, accurate and not
misleading as of the date of this Agreement and will be true, accurate and not
misleading as of the Closing Date (and to that end shall be deemed repeated
again at such date, as though the Closing Date were substituted for the date of
this Agreement throughout this Section 3.1).

 

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

 

10

 

(ii)                                  Authorization
of Transaction.  Each of the Seller and
the Target has full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of each of the Seller and the Target,
enforceable against each of the Seller and the Target in accordance with its
terms and conditions.  Each of the
Seller and the Target has given all notices and received all authorizations,
consents, or approvals of any government or governmental agency necessary in
order to execute this Agreement and will at the Closing have given or received
such notices, authorizations, consents, or approvals necessary to consummate
the transactions contemplated by this Agreement.

 

(iii)                               Noncontravention.  Neither the execution and the delivery of this Agreement, nor the
consummation of the Acquisition contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
either the Seller or the Target is subject or any provision of their respective
foundation, charter or other organizational documents or (B) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller or the Target is a party
or by which either is bound or to which any of its assets is subject to the
extent that any of the foregoing events would affect the Seller’s ownership in
the Target and/or the Company or negatively affect consummation of the
Acquisition.

 

(iv)                              Brokers’ Fees.  Neither the Seller nor the Target has any Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Purchaser, the
Target or the Company could become liable or obligated.

 

(v)                                 Ownership of Participation Interest.  The Seller holds of record and owns
beneficially the Participation Interest, free and clear of any restrictions on
transfer (other than any restrictions under applicable law), Taxes, security
interests, mortgages, pledges, liens, encumbrances, charges, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands. The
Seller is not a party to any option, warrant, purchase right, or other contract
or commitment that could require the Seller to sell, transfer, or otherwise
dispose of any charter capital of the Target (other than this Agreement). The
Seller is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any charter capital of the Target.

 

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

 

11

 

(vii)                           Target. 
Target is a holding company and has no operations and has no assets or
Liabilities other than the lease agreement with the Company as described in
Schedule 3.11(viii) and its participation interest in the Company as set forth
in the Recitals to this Agreement, to which the Target has good and marketable
title to, free and clear of any restrictions on transfer, Taxes, security
interests, mortgages, pledges, liens, encumbrances, charges, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands.  For the avoidance of doubt, the Target has
no Liability, and the Target shall not incur any Liability, arising out of,
relating to or in connection with its failure to properly document and timely
register the increase in its share capital and its acquisition of the Company
Participation Interest.  Neither the
Seller nor the Target is a party to any option, warrant, purchase right, or
other contract or commitment that could require the Seller or the Target, as
the case may be, to sell, transfer, or otherwise dispose of any capital stock
of the Company.  Except for the
Foundation Documents, neither the Seller nor the Target is a party to any
voting trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Company.

 

(viii)                        Target Financial Statements.  Attached hereto as Exhibit D-2 are the following financial statements: audited balance sheets and statements of income, changes in shareholders’ equity,
and cash flow as of and for the fiscal years ended 31 December 2000 and 31 December 2001 for the
Target. Such financial statements (including the notes
thereto) have been prepared in accordance with International Accounting Standards (IAS) applied on a consistent
basis throughout the periods covered thereby, present fairly the financial condition of the
Target as of such dates andthe
results of operations of the Target for such periods, are correct and complete.

 

Section 3.2                                   Warranties
of the Purchaser.  The Purchaser warrants to the Seller that
the statements contained in this Section 3.2 are true, accurate and not
misleading as of the date of this Agreement and will be true, accurate and not
misleading as of the Closing Date (and to that end shall be deemed repeated
again at such date, as though the Closing Date were substituted for the date of
this Agreement throughout this Section 3.2).

 

(i)                                     Organization of the Purchaser.  The Purchaser is an open joint stock company
duly organized and validly existing under the laws of the jurisdiction of its
incorporation.

 

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

 

(iii)                               Noncontravention.  Neither the execution and the delivery of this Agreement, nor the
consummation of the Acquisition

 

12

 

contemplated hereby, will
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Purchaser is subject or any
provision of its foundation document, charter, bylaws or other organizational
document or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Purchaser is a party or by which it is bound or to which any of its assets
is subject to the extent that any of the foregoing events would negatively
affect the consummation of the Acquisition.

 

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

 

ARTICLE IV.

WARRANTIES CONCERNING THE COMPANY.

 

The Seller warrants to the
Purchaser that the statements contained in this Article IV are true and
accurate and not misleading as of the date of this Agreement and will be true
and accurate and not misleading as of the Closing Date (and to that end shall
be deemed repeated again at such date, as though the Closing Date were
substituted for the date of this Agreement throughout this Article IV), except
(i) in case the Closing Date has not occurred until 180 days after the date of
this Agreement, the statements contained in Section 4.4 through Section 4.29
will only be true and accurate and not misleading as of the 180th
day after the date of this Agreement (and to that end shall be deemed repeated
again on the 180th day, as though the such 180th day was
substituted for the date of this Agreement throughout this Article IV), (ii) as
fairly disclosed and set forth in the disclosure schedule delivered by the
Seller to the Purchaser on the date hereof and initialed by the Parties (the “Disclosure
Schedule”), and (iii) to the extent such warranty shall be true as of a
specific date, in which case such warranty shall be true as of such specified
date. Nothing in the Disclosure Schedule relating to this Article IV shall be
deemed adequate to disclose any exception to a warranty made herein unless the
Disclosure Schedule identifies the exception with particularity and describes
the relevant facts in detail. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a warranty made herein (unless
the warranty relates specifically to the existence of the document or other
item itself). The Disclosure Schedule will be arranged in numbered schedules corresponding
to the corresponding sections contained in this Article IV.

 

Section 4.1                                   Organization,
Qualification, and Corporate Power.  The Company is a legal entity
duly organized and validly existing under the Ukrainian Law. The Company is
duly authorized to conduct business under the Ukrainian Law. The Seller has
delivered to the Purchaser correct and complete copies of the Foundation
Documents (as amended to date). The Seller has delivered to the Purchaser
complete and correct copies of the minute books (containing the records of
meetings of the participants (also referred to as the “Board” in the Foundation
Documents) and the board of directors and the management of the Company). The
Company is not in default under or in violation of any provision of its
Foundation

 

13

 

Documents. The Company has
full corporate power and authority necessary to carry on the Businesses and to
own and use the properties and assets owned and used by it.

 

Section 4.2                                   Capitalization.  The
entire registered authorized charter capital of the Company consists of
781,662,169,174 “Units of Ukrainian Currency,” defined in the Foundation
Documents as “one ruble or the equivalent of any future Ukrainian currency”
(currently 7,816,621.69 Ukrainian hryvnia). The Company Participation Interest
has been validly registered, fully paid, and is held of record by the Target,
and neither the Company nor any current or past participant of the Company nor
any third party has the right to demand any further payment or contribution
with respect thereto. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights (other than as
contained in the Debt Restructuring Agreements), exchange rights, or other
contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its charter capital. There are no
outstanding profit participation or similar rights with respect to the Company.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the charter capital of the Company other than provided
for in this Agreement and/or the Foundation Documents.

 

Section 4.3                                   Noncontravention. 
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby (excluding those
transactions contemplated in the agreements, other than this Agreement, listed
in the Recitals hereto and to which the Seller is not a party), will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of its Foundation Documents, or (ii) conflict with, result in a breach of,
constitute a default under, result in the early redemption of, create in any
party the right to redeem early, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Company is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). Except as contemplated in this Agreement, the
Company need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the consummation of the transactions contemplated by this Agreement
(excluding those transactions contemplated in the agreements, other than this
Agreement, listed in the Recitals hereto and to which the Seller is not a
party).

 

Section 4.4                                   Licenses,
Permits, and Authorizations

 

The Company has all material
licenses, permits, and authorizations necessary to carry on the Business and to
own and use the material properties and assets owned and used by it. As used in
this Section 4.4, “material properties and assets” means any property and/or
asset that, either individually or together with a group of related properties
and/or assets, as applicable, is material to the operation of the Business.

 

Section 4.5                                   Directors
and Officers

 

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

 

14

 

Section 4.6                                   Brokers’
Fees.  The Company has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.

 

Section 4.7                                   Title to
Assets.  The Company owns and has the right to
possess, use and alienate the properties and assets used by it, or shown on the
Most Recent Balance Sheet or acquired after the date thereof, free and clear of
all Security Interests, except for (i) properties and assets disposed of in the
Ordinary Course of Business since the date of the Most Recent Balance Sheet and
(ii) properties and assets encumbered with Security Interests in the Ordinary
Course of Business.

 

Section 4.8                                   No
Subsidiaries.  The Company has established branches (in
Russian “Filiatsi”) and territorial divisions (in Russian “Teritorialnie
Upravlenia”) on the territory of Ukraine, and the Company
has no ownership or equity interest whatsoever in any Person, nor any purchase
or other commitments which would result in any such ownership or equity
interest.

 

Section 4.9                                   Financial
Statements.  Attached hereto as Exhibit D-1 are the
following financial statements (collectively the “Financial Statements”):
(i) audited balance sheets and statements of income, changes in shareholders’
equity, and cash flow as of and for the fiscal years ended December 31, 1999,
December 31, 2000, and December 31, 2001 (the “Most Recent Fiscal Year End”)
for the Company; and (ii) unaudited balance sheets and statements of income,
changes in shareholders’ equity, and cash flow (the “Most Recent Financial
Statements”) as of and for the six months ended June 30, 2002 (the “Most
Recent Fiscal Month End”) for the Company. Except as set forth in Schedule
4.9, the Financial Statements (including the notes thereto) have been prepared
in accordance with IFRS applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Company as of
such dates and the results of operations of the Company for such periods are
correct and complete.

 

Section 4.10                            Recent
Events.  Since the Most Recent Fiscal Month End until
the Closing Date, there has not been any material adverse change in the
business, financial condition, operations or results of operations of the
Company. Without limiting the generality of the foregoing, during that period:

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

If, during the period
between the date of this Agreement and the Closing Date, an event occurs or
might occur that would result in a breach of one or more warranties set forth
in this Section 4.10, then the Seller may disclose such event to the Purchaser;
provided, however, that any such disclosure shall
not modify any of the warranties given hereunder except to the extent the
Purchaser has given its prior written approval to the specific actions of the
Company and/or the Seller giving rise to such events and specifically waiving
and/or specifically modifying the Purchaser’s rights hereunder.  To that end, the Seller shall have the right
to submit a written request to the Purchaser, in accordance with Section 10.7,
that the Purchaser give its prior written consent to the specific actions of
the Company and/or the Seller that will or may result in the breach of a
warranty set forth in this Section 4.10 and specifically waive and/or specifically
modify the Purchaser’s rights hereunder. 
In the event and to the extent that the Purchaser shall grant its prior
written consent and/or waive and/or modify its rights hereunder pursuant to the
Seller’s request, then the Seller and/or the Company, as applicable, may
proceed with the specific actions set forth in the written request; provided, however,
that the Purchaser shall be deemed to have given its prior consent to such
actions if the Purchaser fails to consent or object to such actions within ten
(10) Business Days after the Purchaser receives Seller’s written request
therefor.  In the event that the
Purchaser denies the Seller’s request within ten (10) Business Days after its
receipt thereof, then the Seller and/or the Company, as applicable, shall not
proceed with the specific actions set forth in such request.

 

17

 

Section 4.11                            Undisclosed
Liabilities.  Except for Liabilities set forth in
Schedules 4.9 and 4.13, the Company does not have any Liability (and there is
no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Company giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).

 

Section 4.12                            Legal
Compliance.  The Company has complied in all material
respects with applicable Ukrainian Law, and the Company has not received notice
of any action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice that has been filed or commenced against it alleging
any failure to so comply.

 

Section 4.13                            Tax
Matters.

 

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

 

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

 

(iii)                               Except for those Taxes that it is contesting
in good faith and by appropriate proceedings, the Company does not expect any
Ukrainian authority to assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim in Ukraine concerning any
material Tax Liability of the Company claimed or raised by any Ukrainian
authority in writing. Schedule 4.13 of the Disclosure Schedule lists all Tax
Returns filed by the Company for taxable periods ended on or after December 31,
2000, and indicates those Tax Returns that have been audited, and those Tax
Returns that currently are the subject of audit. The Seller has delivered to
the Purchaser correct and complete copies of all income (profit) Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by the Company since December 31, 2000.

 

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

 

18

 

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

 

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

 

Section 4.14                            Real
Property.

 

(i)                                     Schedule 4.l4(i) of the Disclosure Schedule
lists and briefly describes all of the buildings in which the Company has an
ownership interest and in which the book value as per the Most Recent Balance
Sheet exceeded an equivalent of US$500,000. The buildings listed on Schedule
4.14(i) (“Buildings”), along with the buildings housing base stations,
switches or other equipment material to the operation of the Business, taken as
a whole, are referred to herein as “Owned Real Property.” With respect
to the Owned Real Property:

 

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

 

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

 

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

 

(D)                               there are no leases, subleases, or other
agreements, written or oral, granting to any party or parties the right of use
or occupancy of any portion of the Buildings, or the buildings housing base
stations, switches or other equipment material to the operation of the
Business, taken as a whole (or a portion thereof as the case may be), to which
the Company has an ownership interest, except to the extent that the

 

19

 

current use of the building
(or a portions thereof as the case may be) would not be materially impaired
thereby;

 

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

 

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

 

(ii)                                  Schedule 4.l4(ii) of the Disclosure Schedule
lists and briefly describes all of the premises leased or subleased to the
Company and under which the annual lease or sublease payments by the Company
exceed an equivalent of US$50,000. The buildings listed on Schedule 4.14(ii),
along with the buildings housing base stations, switches or other equipment
material to the operation of the Business, taken as a whole, are referred to
herein as “Leased Real Property.” With respect to the Leased Real
Property:

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

Section 4.15                            Intellectual
Property.

 

(i)                                     The Company owns or has the right to use pursuant
to license, sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the Business of the Company as presently
conducted. Each item of Intellectual Property owned or used by the Company
immediately prior to the Closing hereunder will be owned or available for use
by the Company on identical terms and conditions immediately subsequent to the
Closing hereunder. Schedule 4.15(iii) of the Disclosure Schedule lists each
such item of Intellectual Property owned by the Company (the “Owned IP
Rights”), and Schedule 4.15(iv) of the Disclosure Schedule lists each such
item of Intellectual Property leased by the Company (the “Licensed IP Rights”).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

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

 

Section 4.16                            Company
Licenses.

 

(i)                                     Schedule 4.16(i) of the Disclosure Schedule
lists all of the licenses necessary to build, own and operate a mobile cellular
communications network and to provide telecommunications services related
thereto (the “Company Licenses”), and with respect to each such Company
License, such Schedule sets forth the following information, as applicable: the
type of Company License, the name, the issuer and number of the license, the
frequency standard, the date of issue and term of the license, the region
and/or city covered by the license, the frequency or frequencies authorized or
reserved and the bandwidth.

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

Section 4.17                            Networks.

 

(i)                                     The Company operates an analog network of NMT
450i standard and a digital mobile network of GSM 900/1800 standard which are
capable of providing service coverage to areas where approximately 65% of the
population of Ukraine lives, with a dedicated interface signaling, voice and
data backbone network to support hand-off capabilities. The Network provides
the following services to subscribers in covered areas with telephone
interconnect, including basic voice services, mobile terminated short messaging
service, voice mail, call forwarding, call waiting, call forward unconditional,
call forward busy, call forward no answer, call number identity presentation,
call number identity restricted, hot line, do not disturb, three party calling,
direct dial long-distance/international calling, automatic call delivery,
automatic short message delivery with SMPP Interface, and voice-mail deposit
and retrieval. The respective manufacturers of the Equipment have warranted to
the Company that the Equipment has the capability to provide packet data and
asynchronous data. (All of the foregoing, the “Services”.) The Network
includes the essential types of Equipment listed in Schedule 4.17(i) of the
Disclosure Schedule (the “Essential Equipment”) and is located on
appropriate premises.

 

(ii)                                  The Network is in all material respects in
compliance with all material standards imposed by Ukrainian Law to the extent
necessary to provide the services and have passed acceptance tests under the
standards specified in the documents evidencing final acceptance except where
such final acceptance documents indicate otherwise.

 

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

 

(iv)                              The Network is designed, deployed, operated,
managed and maintained to provide and is capable of providing outdoor services
in the

 

23

 

coverage areas described in
the maps set out in Schedule 4.17(iv) of the Disclosure Schedule that permit a
subscriber to maintain communication 90% of the time in 90% of those locations
in Ukraine where coverage is indicated in the map.

 

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

 

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

 

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

 

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

 

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

 

(vi)                              The Network is interconnected, directly or
indirectly, with the public switched fixed and mobile networks set forth in
Schedule 4.17 of the Disclosure Schedule.

 

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

 

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

 

24

 

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

 

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

 

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

 

Section 4.18                            Contracts. 
Schedule 4.18 of the Disclosure Schedule lists the material contracts
and other agreements to which the Company is a party, including:

 

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

 

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

 

(iii)                               agreements concerning a partnership or joint
venture;

 

(iv)                              agreements (or group of related agreements)
under which the Company has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation, in excess
of US$200,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible in excess of US$200,000;

 

(v)                                 agreements concerning confidentiality or
noncompetition;

 

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

 

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

 

(viii)                        collective bargaining agreements;

 

25

 

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

 

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

 

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

 

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

 

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

 

(xiv)                         human resources software and billing software
agreements;

 

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

 

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

 

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

 

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

 

(xix)                           interconnection contracts;

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

With respect to each such
agreement, and unless noted otherwise in Schedule 4.18 of the Disclosure
Schedule: (A) the agreement is legally valid, binding and enforceable against
the Company and in full force and effect; (B) the agreement will continue to be
legally valid, binding and enforceable and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) the Company is not in material breach or default, nor has the
Company received any notice that any third party is in material breach or
default, and no material event has occurred which with notice or lapse of time
would constitute a material breach or default, or permit termination,
modification, or early redemption, under the agreement; and (D) the Company has
not repudiated any provision of the agreement, nor has the Company received any
notice that any third party has repudiated any provision of the agreement.

 

Section 4.19                            Powers of
Attorney.  Except as set forth in Schedule 4.19, there
are no outstanding powers of attorney executed on behalf of the Company and
issued (i) with the ability to generally bind or represent the Company or (ii)
to enter into agreements or a series of related agreements in excess of
US$25,000.

 

Section 4.20                            Insurance. 
Schedule 4.20 of the Disclosure Schedule lists all insurance policies to
which the Company is currently a party and sets out:

 

(i)                                     the policy number (where known);

 

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

 

(iii)                               the type of coverage;

 

(iv)                              the period of coverage; and

 

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

 

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

 

27

 

Section 4.21                            Litigation. 
Schedule 4.21 of the Disclosure Schedule sets forth each instance in
which the Company (i) is subject to any outstanding court and arbitration
injunction, judgment, order, decree or ruling or (ii) is a party or, to the
Knowledge of the Seller, is threatened to be made a party to any action, suit,
proceeding, prosecution, arbitration, hearing, governmental audit, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of Ukraine or before any arbitrator. None of the actions, suits,
proceedings, prosecutions, arbitrations, hearings, governmental audits, and
investigations set forth in Schedule 4.21 of the Disclosure Schedule could
result in any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of the Company. The
Seller has no reason to believe that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against the Company of
over US$25,000. There is no claim, suit, litigation, proceeding, labor dispute,
action, inquiry or investigation pending, or to the Knowledge of the Seller,
threatened, seeking to delay, limit or enjoin the consummation of this
Agreement and the other transactions contemplated by the Transactional
Documents (excluding those transactions contemplated in the agreements, other
than this Agreement, listed in the Recitals hereto and to which the Seller is
not a party).

 

Section 4.22                            Employees.  No
executive, senior key employee, or material group of employees has to date
given notice of termination of their employment with the Company. Except as set
forth in Schedule 4.22, the Company is not a party to or bound by any
collective bargaining agreement, nor has it experienced any material strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. To the Knowledge of the Seller, the Company has not committed any
unfair labor practice. The Seller has no Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with respect
to employees of the Company.

 

Section 4.23                            Employee
Benefits.  Schedule 4.22 of the Disclosure Schedule
describes each Employee Benefit Plan that the Company maintains or to which the
Company contributes, and each complies in form and in operation in all material
respects with all material applicable laws.

 

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

 

Section 4.25                            Environment,
Health, and Safety.

 

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

 

(ii)                                  The Company has no material Liability for
damage to any site, location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual, or for any
reason under

 

28

 

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

 

Section 4.26                            Certain
Business Relationships with the Company.  Except for the Debt
Restructuring Agreements, neither the Seller nor its Affiliates has been
involved in any business arrangement or relationship with the Company within
the past twelve (12) months, and neither the Seller nor its Affiliates own any
asset, tangible or intangible, which is used in the Business of the Company.

 

Section 4.27                            Unlawful
Contributions.  To the Knowledge of the Seller, the Company
has not (i) used any corporate funds for any contribution or other expense
unlawful under Ukrainian Law applicable at the time of such contribution or
other expense and relating to political activity, (ii) made any unlawful
payment under Ukrainian Law to any Ukrainian government official or employee
from corporate funds, or (iii) caused the Company to be in violation of any
Ukrainian Law regulating the payments of bribes to government officials or
employees.

 

Section 4.28                            Antitrust.  The
Company is not currently or has no reason or notice to believe that it will be
in the future a party to, or directly or indirectly concerned in, an agreement,
arrangement, understanding or practice (whether or not legally binding) to
which the Company is a party and which has been, is or may (i) contravene any Ukrainian
Laws concerning competition; (ii) be registrable, unenforceable or void or
rendering the Company or any of its officers, directors or employees liable to
administrative, civil or criminal proceedings under any Ukrainian Laws
concerning competition, or (iii) be the subject of any investigation by any
competent Ukrainian authority in respect of any provision of any Ukrainian Laws
concerning competition. The Company is not currently engaged in any conduct
which amounts to the abuse of a dominant position in a market which may violate
any Ukrainian Laws concerning competition. Schedule 4.28 of the Disclosure
Schedule lists those instances in which the Company has been defined as a
monopolist in Ukraine by a Ukrainian governmental entity.

 

Section 4.29                            Money
Laundering and Unlawful Financial Activities.  The
Company is not in violation of any Ukrainian Laws relating to money-laundering,
unlawful financial activities, or control and prevention of terrorism.

 

ARTICLE V.

PRE-CLOSING COVENANTS.

 

Except as specifically noted
below, the Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.

 

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

 

29

 

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

 

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

 

Section 5.4                                   Participants
Meeting; Amendments to Foundation Documents.

 

(i)                                     The Seller and the Target will each use their
best endeavors, as soon as practicable following date hereof, to cause a
participants’ meeting of the Company to be convened for the purpose of
approving an amended Founding Agreement of the Company substantially in the
form of Exhibit B-1 attached hereto (the “Closing Founding Agreement”)
and an amended Charter of the Company substantially in the form of Exhibit B-2
attached hereto (the “Closing Charter”) and for such other actions as
are set forth in the form of Company Participants Meeting Agenda attached
hereto as Exhibit C.

 

(ii)                                  The Target shall vote in favor of the
approval of each of the Closing Founding Agreement and the Closing Charter.

 

Section 5.5                                   Preservation
of Business.  Subject to Section 5.3, the Seller and the
Target will each use its best endeavors to cause the Company to keep its
business and properties substantially intact, including its present operations,
physical facilities, working conditions, and relationships with lessors,
licensors, suppliers, customers, and employees.

 

30

 

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

 

Section 5.7                                   Notice of
Developments.  From the date hereof through the Closing, the
Seller and the Target, as the case may be, shall give prompt written notice to
the Purchaser and the Purchaser shall give prompt written notice to the Seller
of (i) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty contained in
this Agreement or in any exhibit or schedule hereto to be or become materially
incorrect or incomplete, or the discovery that any representation or warranty
contained in this Agreement or in any exhibit or schedule was materially
incorrect or incomplete at the time it was made, (ii) any failure by a Party to
materially comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or any exhibit or schedule
hereto, (iii) the occurrence or non-occurrence of any event which will or may
result in the material failure of any condition, covenant or agreement to be
complied with or satisfied by it under this Agreement or any other
Transactional Document, and (iv)
any notice or communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions contemplated
by this Agreement or any other Transactional Document or that such transactions
otherwise may violate the rights of, or confer remedies upon, such Person.  No such notice provided pursuant to this
Section 5.7  shall be deemed (i) to have
amended the Disclosure Schedule, (ii) to have qualified the warranties
contained in Article III or Article IV hereof, and (iii) to have cured any
breach of warranty that otherwise might have existed hereunder by reason of
such development.

 

Section 5.8                                   Exclusivity. 
Neither the Seller nor its Affiliates nor the Target will (and the
Seller and the Target will not cause or permit any of its representatives, and
will use its best efforts not to permit the Company to), directly or
indirectly, (i) solicit, initiate, or encourage the submission of any inquiry,
proposal or offer from any Person relating to the acquisition of any charter
capital or other voting securities, or any substantial portion of the assets
of, of the Target or the Company (including any acquisition structured as a
merger, consolidation, or share exchange), or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The Seller will not
vote its interest in the Target in favor of any such acquisition structured as
a merger, consolidation, or share exchange, and will not permit the Target to,
and the Target will not, vote its interest in the Company in favor of any such
acquisition structured as a merger, consolidation, or share exchange. The
Seller and the Target each agree not to release any third party from, or waive
any provision of, any confidentiality or standstill agreement relating to the
Company to which either the Seller or the Target is a party.

 

Section 5.9                                   Governmental
Approval.

 

(i)                                     Each of the Parties will file (and the Seller
and the Target will each use its best endeavors to cause the Company to file)
any notification and report forms and related material that it may be required
to file with the UAC, will use its best endeavors to obtain (and the Seller and
the

 

31

 

Target will each use its
best endeavors to cause the Company to use its best endeavors to obtain)
termination of any applicable waiting period, and will make (and the Seller and
the Target will each use its best endeavors to cause the Company to make) any
further filings pursuant thereto that may be necessary, proper, or advisable in
connection therewith.

 

(ii)                                  Each of the Seller and the Target is obliged
to support the Purchaser in connection with the preparation of the application
for the approval by the UAC or other relevant governmental authority of the
transactions contemplated by this Agreement and in the course of the entire
clearance procedure.  In the event that
an order prohibiting such transactions is issued by the UAC or other relevant
governmental authority, the Parties shall jointly use their commercially
reasonable best endeavors to remove the reasons for such order.  In case the Purchaser decides to appeal
against such order the Seller and the Target are each obliged to support the
Purchaser with regard to the preparation of such appeal and in course of the
respective proceedings.

 

Section 5.10                            Resignation
from Corporate Bodies.  The Parties will use their best endeavors to
cause the removal, not later than Closing, of the then-current members of the
Supervisory Board of the Company and the Target from their position and the
election of new members of this body of the Company and the Target in accordance
with provisions as set out in the Closing Organizational Documents and the
constitutive documents of the Target.

 

Section 5.11                            Waiver of
Pre-Emptive Rights.  Each of the Seller and the Target shall
waive any right of first refusal for the purchase of, or any pre-emptive rights
with respect to, the sale and transfer of the any participation interests in
the Company as contemplated by the Transaction Documents, including, but not
limited to, waivers with regard to the Concurrent Purchase Agreements, and shall
grant waivers with regard to the TDC Option Agreement and the Ukrtelecom Option
Agreement, in each case substantially in the form of Exhibit F hereto.

 

Section 5.12                            No
Acceleration, No Payments.  From the date hereof through Escrow Release
neither the Seller nor any of the Seller’s affiliates shall take, exercise, or
receive the benefit of any of its rights or interests in or with regard to each
of the Equipment and Service Credit Facility Agreement No. W01-95/UA and the
Credit Facility Agreement No. C01-97/UA, and, in each case, shall not institute
any legal proceedings (including any proceedings for bankruptcy or insolvency
or otherwise) in any jurisdiction with regard thereto, nor accelerate the
principal amounts or any accrued interest thereunder, nor cause the Company to
make any payments thereunder.

 

Section 5.13                            Retention
of General Director.  From the date of the Closing until the Amended
Organizational Documents have been registered, as necessary under Ukrainian
Law, the Purchaser shall not cause the removal of the then-acting general
director of the Company; provided, however,
that the Purchaser shall be under no such obligation in the event that the
general director causes damage to the Company or its business through dishonesty
or fraud; engages in conduct of an illegal or criminal nature; or fails to
perform his duties and/or fulfill his responsibilities in relation to the
Company in a professional manner and with the skill generally expected of high
level executive managers.

 

32

 

Section 5.14                            Registration
of Target Charter.  The Seller and the Target shall register, as
soon as practicable following the date hereof and as necessary under Ukrainian
Law, the charter of the Target reflecting the contribution of 1% of the charter
capital of the Company by KPN Telecom B.V.

 

ARTICLE VI.

POST-CLOSING COVENANTS.

 

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

 

Section 6.1                                   General.  In
case at any time after the Closing any further action is necessary to carry out
the purposes of this Agreement, each of the Parties will take such further
action (including the execution and delivery of such further instruments and
documents) as any other Party reasonably may request, all at the sole cost and
expense of the requesting Party (unless the requesting Party is entitled to
indemnification therefor under Article VIII hereof). The Seller acknowledges
and agrees that from and after the Closing the Purchaser will be entitled to
possession of all documents, books, records (including Tax records),
agreements, and financial data of any sort relating to the Target and the
Company in the possession of the Target or in the possession of the Seller in
its capacity as a participant in either the Target or the Company.

 

Section 6.2                                   Litigation
Support.  In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, each of the other Parties will
reasonably cooperate with it and its counsel in the contest or defense,
reasonably make available their personnel, and provide such testimony and
access to their books and records as shall be reasonably necessary in connection
with the contest or defense, all at the sole cost and expense of the contesting
or defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Article VIII hereof).

 

Section 6.3                                   Transition.  For
a period of two (2) years after the Closing Date, the Seller will not take any
action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of the
Company from maintaining the same business relationships with the Company after
the Closing as it maintained with the Company prior to the Closing. The Seller
will refer all customer inquiries relating to the businesses of the Company to
the Purchaser from and after the Closing.

 

Section 6.4                                   Confidentiality.  Each
Party will treat and hold as such all of the Confidential Information of the
other Parties and/or the Company, and refrain from using any of the
Confidential Information of the other Parties and/or the Company except in
connection with this Agreement; provided,
however, such restriction shall not apply if and to the extent that:

 

(i)                                     the Party proposing to make such disclosure
has been requested or is required (by oral question or request for information
or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information of

 

33

 

another Party/Parties and/or
the Company; provided, however,
that such Party will notify the other Party/Parties promptly of the request or
requirement so that the other, nondisclosing Parties may seek an appropriate
protective order or waive compliance with the provisions of this Section
6.4(i). If, in the absence of a protective order or the receipt of a waiver
hereunder, a Party is, on the advice of counsel, compelled to disclose any
Confidential Information of any other Party and/or the Company to any tribunal
or else stand liable for contempt, such Party may disclose such Confidential
Information to the tribunal; provided,
however, that such disclosing Party shall use its best endeavors to
obtain, at the request of the other Party/Parties, an order or other assurance
that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as the other Party/ Parties
shall designate;

 

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

 

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

 

Nothing in this Section 6.4
shall in any way affect the Purchaser’s ability to disclose Confidential
Information relating to the Target or the Company to any third party after the
Closing Date.

 

Section 6.5                                   Covenant
Not to Compete.  For a period of two (2) years from and after
the Closing Date, neither the Seller nor any Affiliate of the Seller will,
except for entry into roaming agreements, engage directly or indirectly in the
provision of GSM cellular network services in Ukraine; provided, however, that no ownership of
less than 3% of the outstanding share capital of any publicly traded
corporation shall be deemed to engage solely by reason thereof in such
services; and further provided that the
ownership of any corporation which after the Closing Date results from a merger
or comparable transaction between (i) the Seller or an Affiliate of the Seller
and (ii) a third party, the annual turnover of which constitutes more than 30%
of the annual turnover of the Seller or of KPN Mobile N.V., and such
transaction results in the ownership by the Seller or an Affiliate of the
Seller of a Person directly or indirectly engaged in the provision of GSM
cellular network services in the Ukraine, shall not be deemed a breach of this
Section 6.5.  The Parties agree that they consider that
the restrictions contained in this Section 6.5 are no greater than is
reasonable and necessary to protect the legitimate business interests of the
Purchaser; however, if the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 6.5 is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.

 

34

 

ARTICLE
VII.

CONDITIONS TO OBLIGATIONS.

 

Section 7.1                                   Conditions
to Obligation of the Purchaser to Close.  The obligation of the
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:

 

(i)                                     the warranties set forth in Section 3.1 and
Article IV hereof shall be true, accurate, and not misleading in all material
respects at, and as of, the Closing Date;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

35

 

(ix)                                each of the Concurrent Purchase Agreements,
the Option Agreements, and the Debt Restructuring Agreements, in each case, in
form and substance satisfactory to the Purchaser, has been executed and
delivered by all parties thereto and, except for the Debt Restructuring
Agreements, are in full force and effect;

 

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

 

(xi)                                the charter of the Target reflecting the
contribution of 1% of the charter capital of the Company by KPN Telecom B.V.
shall have been fully registered as necessary under Ukrainian Law;

 

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

 

(xiii)                          each of the conditions set forth in Section
7.1 of the Cetel Purchase Agreement, Section 7.1 of the KPN Purchase Agreement
and Section 7.1 of the Ukrtelecom Purchase Agreement have, in each case, been
satisfied in accordance with the terms thereof;

 

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

 

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

 

(xvi)                         all actions to be taken by the Seller in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and substance to
the Purchaser as contemplated in this Agreement.

 

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

 

Section 7.2                                   Conditions
to Obligation of the Seller to Close.  The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:

 

36

 

(i)                                     the warranties set forth in Section 3.2(i) -
(iv) hereof shall be true, accurate, and not misleading in all material
respects at and as of the Closing Date;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
VIII.

REMEDIES FOR BREACHES OF THIS AGREEMENT.

 

Section 8.1                                   Survival
of Warranties.  All of the warranties of the Parties
contained in this Agreement shall survive the Closing hereunder (even if the
damaged Party knew or had reason to know of any breach of warranty at the time
of Closing) and continue in full force and effect for a period of two (2) years
from the Closing Date.

 

37

 

Section 8.2                                   Indemnification
Provisions for Benefit of the Purchaser.

 

(i)                                     Subject to Section 8.2(ii), in the event the
Seller breaches any of its warranties contained herein, provided that the
Purchaser makes a written claim for indemnification against the Seller pursuant
to Section 10.7 below within the period set forth in Section 8.1, then the
Seller agrees to indemnify the Purchaser from and against any Adverse
Consequences the Purchaser may suffer through and after the date of the claim
for indemnification (including any Adverse Consequences the Purchaser may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the alleged
breach).

 

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

 

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

 

(B)                                The Seller shall only be obligated to
indemnify, or be liable for breach of warranty to, the Purchaser on any other
basis after and insofar as the Purchaser has suffered Adverse Consequences by
reason of all such breaches in excess of a $1,500,000 aggregate threshold (at
which point the Seller will be obligated to indemnify, or be liable for breach
warranty to, the Purchaser on any other basis from and against all such Adverse
Consequences, including, for the avoidance of doubt, Adverse Consequences
suffered prior to reaching such threshold); provided,
however, that any obligation of the Seller to indemnify or be liable
to the Purchaser with respect to Adverse Consequences that arise as a result of
any breach of warranty after such aggregate threshold has been reached shall
not arise with regard to Adverse Consequences of less than $25,000 per specific
event giving rise to Adverse Consequences; and further
provided that, to the extent that such threshold is reached solely
by reason of claims related to a breach of Section 4.13 (to the extent that
such breach relates to profits tax), the Seller shall not be obligated to
indemnify the Purchaser for Adverse Consequences by reason of any other
breaches of warranties contained in Article IV (but shall be obligated to
indemnify the Purchase for the Adverse Consequences arising as a result of a
breach of Section 4.13) until such other breaches result in Adverse Consequences
in excess of a $1,500,000 aggregate threshold (at which point the Seller will
be obligated to indemnify the Buyer from and against all such Adverse
Consequences, including, for the avoidance of doubt, Adverse Consequences
suffered prior to reaching such threshold);

 

(C)                                To the extent that an Adverse Consequence has
arisen as the result of a breach of a warranty contained in Article IV hereof,
the Seller’s obligation to indemnify or be liable to the Purchaser from and
against such Adverse Consequence shall, in the aggregate, be limited to 1% of
the total amount of such Adverse Consequence irrespective of

 

38

 

whether any third party that
sold a participation interest in the Company to the Purchaser is liable or not
liable for any damages under its respective participation interest purchase
agreement (for the avoidance of doubt, this limitation shall not apply to the
threshold set forth in subparagraph A above);

 

(D)                               Subject to subparagraph (F) below, the
aggregate amount for which the Seller shall have an obligation to indemnify or
be liable to the Purchaser from and against pursuant to this Section 8.2 with
regard to breaches of warranties contained in Article IV shall not exceed 50%
of the Purchase Price;

 

(E)                                 The aggregate amount for which the Seller
shall have an obligation to indemnify or be liable to the Purchaser from and
against pursuant to this Section 8.2 with regard to breaches of warranties in
contained in Sections 4.1, 4.2, 4.3, 4.13 (to the extent that such breach
relates to profits tax or VAT), and 4.16 (to the extent that such breach
results in the revocation, suspension, or a material change in the terms of a
Company License) shall not exceed 100% of the Purchase Price;

 

(F)                                 There shall be no limit to the aggregate
amount for which the Seller shall have an obligation to indemnify or be liable
to the Purchaser from and against pursuant to this Section 8.2 with regard to
breaches of warranties set forth in Article III;

 

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

 

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

 

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

 

39

 

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

 

Section 8.3                                   Indemnification
Provisions for Benefit of the Seller.

 

(i)                                     Subject to Section 8.2(ii)(J)(ii), in the
event the Purchaser breaches (or in the event any third party alleges facts
that, if true, would mean the Purchaser has breached) any of its warranties
contained herein, and, if there is an applicable survival period pursuant to
Section 8.1 hereof, provided that the Seller makes a written claim for
indemnification against the Purchaser pursuant to Section 10.7 below within
such survival period, then the Purchaser agrees to indemnify the Seller from
and against the entirety of any Adverse Consequences the Seller may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Seller may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach).

 

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

 

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

 

Section 8.4                                   Matters
Involving Third Parties.

 

(i)                                     If any third party shall notify any Party
(the “Indemnified Party”) with respect to any matter (a “Third Party
Claim”) which may give rise to a claim for indemnification against any
other Party (the “Indemnifying Party”) under this Article VIII, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.

 

40

 

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

 

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

 

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

 

Section 8.5                                   Determination
of Adverse Consequences.  The Parties shall make appropriate
adjustments for insurance coverage and shall take into account the time cost of
money (using the Applicable Rate as the discount rate) in determining Adverse
Consequences for purposes of this Article VIII. All indemnification payments
under this Article VIII shall be deemed adjustments to the Purchase Price.

 

41

 

Section 8.6                                   Exclusive
Remedies.  The foregoing indemnification provisions
shall be the Parties’ exclusive remedy for or arising out of a breach of
warranty hereunder.  The indemnification
provisions exclude, and are not in addition to but in derogation of, any
statutory, equitable, common law or other remedy any Party may have for or
arising out of a breach of warranty hereunder and the Parties agree that they
shall not seek any other remedy for or arising out of a breach of warranty
hereunder.  The Seller hereby agrees
that it will not make any claim for indemnification against the Company by
reason of the fact that it was an agent of any such entity or was serving at
the request of any such entity as a partner, trustee, director, officer,
employee, or agent of another entity (whether such claim is for judgments,
damages, penalties, fines, costs, amounts paid in settlement, losses, expenses,
or otherwise and whether such claim is pursuant to any statute, charter
document, bylaw, agreement, or otherwise) with respect to any action, suit,
proceeding, complaint, claim, or demand brought by the Purchaser against the
Seller (whether such action, suit, proceeding, complaint, claim, or demand is
pursuant to this Agreement, applicable law, or otherwise).

 

Section 8.7                                   Miscellaneous.

 

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

 

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

 

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

 

ARTICLE IX.

EFFECTIVENESS AND TERMINATION.

 

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

 

Section 9.2                                   Termination
of Agreement.  The Parties may terminate this Agreement as
provided below:

 

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

 

(ii)                                  the Purchaser may terminate this Agreement by
giving written notice to the Seller at any time prior to the Closing (A) in the
event the Seller has breached any material warranty, or covenant contained in
this Agreement in any respect, the Purchaser has notified the Seller of the
breach, and the breach has continued without cure for a period of 30 days after
the notice of breach, if subject to cure, (B) in the event of the failure of
any condition precedent under Section 7.1 that is incapable of being satisfied,
or

 

42

 

(C) if the Closing shall not
have occurred on or before the 180th day after the date hereof by reason of the
failure of any condition precedent under Section 7.1 hereof; and

 

(iii)                               the Seller may terminate this Agreement by
giving written notice to the Purchaser at any time prior to the Closing (A) in
the event the Purchaser has breached any material warranty, or covenant
contained in this Agreement in any material respect, the Seller has notified
the Purchaser of the breach, and the breach, if subject to cure, has continued
without cure for a period of thirty (30) days after the notice of breach (B) in
the event of the failure of any condition precedent under Section 7.2 that is
incapable of being satisfied, or (C) if the Closing shall not have occurred on
or before the 180th day after the date hereof by reason of the failure of any
condition precedent under Section 7.2 hereof.

 

Section 9.3                                   Effect of
Termination.  Subject to Section 6.4, if any Party
terminates this Agreement pursuant to Section 9.2 hereof, all rights and
obligations of the Parties hereunder shall terminate without any Liability of
any Party to any other Party (except for any Liability of any Party then in breach).

 

ARTICLE X.

MISCELLANEOUS.

 

Section 10.1                            Press
Releases and Public Announcements.  No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the
Purchaser and the Seller; provided, however,
that any Party may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
best endeavors to advise the other Parties prior to making the disclosure).

 

Section 10.2                            Entire
Agreement.  This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.

 

Section 10.3                            Succession
and Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Party, such approval not to be unreasonably
withheld.

 

Section 10.4                            Counterparts.  This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.

 

Section 10.5                            Headings.  The
table of contents, exhibit index, and article and section headings contained in
this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.

 

43

 

Section 10.6                            Notices.  All
notices, requests, demands, claims, and other communications hereunder will be
in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given if (and then two (2) Business Days after)
it is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:

 

(i)                                     If to the Seller:

 

KPN Telecom B.V.

Attn: Mr. A.W. Nauta

Maanplein 5

2516 CK Den Haag

The Netherlands

Telecopy:  +31 70 446 0675

 

with a copy to:

 

Loyens & Loeff

Attn: Mr. W.H. Booysen

Weena 690

3012 CN Rotterdam

The Netherlands

Telecopy:  +31 10 404 75 90

 

 

(ii)                                  If to the Target:

 

KPN Telecom B.V.

Attn: Mr. A.W. Nauta

Maanplein 5

2516 CK Den Haag

The Netherlands

Telecopy:  +31 70 446 0675

 

with a copy to:

 

Loyens & Loeff

Attn: Mr. W.H. Booysen

Weena 690

3012 CN Rotterdam

The Netherlands

Telecopy:  +31 10 404 75 90

 

(iii)                               If to the Purchaser:

 

Mobile TeleSystems OJSC

Marksistskaya Street, 4

Moscow 109147 Russian
Federation

Telecopy:  +7-095-915-7425

Attention:  Mikhail A. Smirnov, President

 

44

 

with a copy to:

 

Latham & Watkins

Ulitsa Gasheka, 7

Ducat II, Suite 900

Moscow 123056 Russian Federation

Attention:  Anna Goldin, Esq.

Facsimile:  +7-095-785-1235

 

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

 

Section 10.7                            Dispute
Resolution.  Upon written notice to all Parties to this
Agreement and the Arbitration Institute of the Stockholm Chamber of Commerce,
any dispute, controversy or claim between any Parties hereto arising out of,
relating to or in connection with this Agreement, including its existence,
validity or termination, shall be referred to and resolved by final and binding
arbitration under the Rules of the Arbitration Institute of the Stockholm
Chamber of Commerce in effect on the date any arbitration commences (the “Rules”),
which Rules are deemed to be incorporated by reference into this clause.  The place of the arbitration shall be
Stockholm, Sweden, and the award shall be deemed to have been made there.  The tribunal may hold hearings, meetings,
and deliberations at any place it deems appropriate, having regard to the
circumstances of the arbitration.  The
tribunal shall be comprised of three arbitrators to be appointed by the
Arbitration Institute of the Stockholm Chamber of Commerce in accordance with
the Rules.  The tribunal shall neither
have nor exercise any power to act as amiable
compositeur or ex aequo et bono
or to award special, indirect, consequential, or punitive damages.  The language of the arbitration shall be
English.  Judgment upon any arbitral
award may be entered in any court of competent jurisdiction.  Court jurisdiction under Sections 45 and 69
of the United Kingdom’s Arbitration Act of 1996 shall not apply.  Any Party to this Agreement may intervene in
any arbitral proceeding commenced under this Agreement.

 

Section 10.8                            Governing
Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF ENGLAND AND WALES.  NO EFFECT SHALL BE GIVEN TO ANY CONFLICT OF
LAW PROVISION OR RULE OF ANY JURISDICTION OTHER THAN ENGLAND AND WALES THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN ENGLAND
AND WALES.

 

45

 

Section 10.9                            Judgment
Currency.  The obligation of the Parties to make
payments under this Agreement is in U.S. dollars (the “Obligation Currency”)
and such obligation shall not be discharged or satisfied by any tender or
recovery pursuant to any judgment expressed in any currency other than the
Obligation Currency or any other realization in such other currency, whether as
proceeds of set-off, security, guarantee, distributions, or otherwise, except
to the extent to which such tender, recovery or realization shall result in the
receipt by the Party which is to receive such payment of the full amount of the
Obligation Currency expressed to be payable hereunder.  The Party liable to make such payment agrees
to indemnify the Party which is to receive such payment for the amount (if any)
by which such receipt shall fall short of the full amount of the Obligation
Currency expressed to be payable hereunder and the party which is to receive
such payment agrees to pay to the party liable to make such payment the amount
(if any) by which such receipt, shall exceed the full amount of the Obligation
Currency, and, in each case, such obligation shall not be affected by judgment
being obtained for any other sums due under this Agreement.  The Parties agree that the rate of exchange
which shall be used to determine if such tender, recovery or realization shall
result in the receipt by the party which is to receive such payment of the full
amount of the Obligation Currency expressed to be payable hereunder shall be
the noon buying rate in New York City for cable transfers in foreign currencies
as certified for customs purposes by the Federal Reserve Bank of New York for
the business day preceding that on which the judgment becomes a final judgment.

 

Section 10.10                     Third
Party Beneficiaries.  This Agreement shall not confer any rights
or remedies on any other Person other than the Parties and their respective
successors and permitted assigns.  For
the avoidance of doubt, a person who is not a Party to this Agreement for the
time being has no right under the English Contracts (Rights of Third Parties)
Act 1999 to enforce any term of this Agreement

 

Section 10.11                     Amendments
and Waivers.  No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Seller. No waiver by any Party of any default or breach of warranty
or covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.  No failure to exercise and
no delay in exercising any right, power or remedy under this Agreement will
operate as a waiver; nor will any single or partial exercise of any right,
power or remedy preclude any other or further exercise of that or any other
right, power or remedy.

 

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

 

Section 10.13                     Severability.  Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction.

 

46

 

Section 10.14                     Expenses.  Each
of the Parties and the Company will bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby. The Seller agrees that the Company has not
borne and will not bear any of the Seller’s costs and expenses (including any
of its legal fees and expenses) in connection with this Agreement or any of the
transactions contemplated hereby.

 

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

 

Section 10.16                     Payment of
Taxes.  Each Party shall be responsible for their
respective transfer, documentary, sales, use, stamp, registration and other
such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement.  Any
such taxes shall be paid by such Party responsible for such Taxes when due, and
such Party will, at its own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees, required by applicable law.

 

Section 10.17                     Incorporation
of Exhibits, Annexes, and Schedules.  The Exhibits, Annexes, and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.

 

Section 10.18                     Specific
Performance.  Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court having jurisdiction over the Parties and the matter
(subject to the provisions set forth in Section 10.7 hereof), in addition to
any other remedy to which they may be entitled, at law or in equity.

 

(Signature page follows.)

 

47

 

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

 

 

	
   

  	
  MOBILE TELESYSTEMS OJSC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Mikhail A. Smirnov

  	
   

  
	
   

  	
  By:

  	
  Mikhail A. Smirnov

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Viktor I. Kondratyev

  	
   

  
	
   

  	
  By:

  	
  Viktor I. Kondratyev

  
	
   

  	
  Title:

  	
  Chief Accountant

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KPN TELECOM B.V.

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Sebastiaan van Loosdrech

  	
   

  
	
   

  	
  By:

  	
  Sebastiaan van Loosdrech

  
	
   

  	
  Title:

  	
  Authorized by Power of Attorney

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PTT TELECOM KYIV

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Sebastiaan van Loosdrech

  	
   

  
	
   

  	
  By:

  	
  Sebastiaan van Loosdrech

  
	
   

  	
  Title:

  	
  Authorized by Power of Attorney

  
				

 

Signature
page to Participation Interest Purchase Agreement.Exhibit 4.4

 

Execution Copy

 

 

 

PARTICIPATION INTEREST PURCHASE AGREEMENT

 

By and Among

 

CETEL B.V.

 

as “Seller”

 

DEUTSCHE TELEKOM AG

 

and

 

MOBILE TELESYSTEMS OJSC

 

as “Purchaser”

 

 

Dated as of November  5, 2002

 

 

 

 

TABLE OF CONTENTS

 

	
  Article I. Definitions

  
	
   

  
	
  Section 1.1

  	
  Defined Terms

  
	
   

  	
   

  
	
  Article II. Purchase and Sale of
  Participant Interest

  
	
   

  
	
  Section 2.1

  	
  Basic Transaction

  
	
  Section 2.2

  	
  Purchase Price

  
	
  Section 2.3

  	
  The Closing

  
	
  Section 2.4

  	
  Transfer of the Participation Interest

  
	
  Section 2.5

  	
  Deliveries at the Closing

  
	
  Section 2.6

  	
  Escrow Agreement

  
	
  Section 2.7

  	
  Second Payment

  
	
  Section 2.8

  	
  Return of Purchase Price

  
	
   

  	
   

  
	
  Article III. Warranties Concerning the
  Transaction

  
	
   

  
	
  Section 3.1

  	
  Warranties of the Seller and DT

  
	
  Section 3.2

  	
  Warranties of the Purchaser

  
	
   

  	
   

  
	
  Article IV. Warranties Concerning the
  Company

  
	
   

  
	
  Section 4.1

  	
  Organization, Qualification, and Corporate
  Power

  
	
  Section 4.2

  	
  Capitalization

  
	
  Section 4.3

  	
  Noncontravention

  
	
  Section 4.4

  	
  Licenses, Permits, and Authorizations

  
	
  Section 4.5

  	
  Directors and Officers

  
	
  Section 4.6

  	
  Brokers’ Fees

  
	
  Section 4.7

  	
  Title to Assets

  
	
  Section 4.8

  	
  No Subsidiaries

  
	
  Section 4.9

  	
  Financial Statements

  
	
  Section
  4.10

  	
  Recent Events

  
	
  Section
  4.11

  	
  Undisclosed Liabilities

  
	
  Section
  4.12

  	
  Legal Compliance

  
	
  Section
  4.13

  	
  Tax Matters

  
	
  Section
  4.14

  	
  Real Property

  
	
  Section
  4.15

  	
  Intellectual Property

  
	
  Section
  4.16

  	
  Company Licenses

  
	
  Section
  4.17

  	
  Networks

  
	
  Section
  4.18

  	
  Contracts

  
	
  Section
  4.19

  	
  Powers of Attorney

  
	
  Section
  4.20

  	
  Insurance

  
	
  Section
  4.21

  	
  Litigation

  

 

i

 

	
  Section
  4.22

  	
  Employees

  
	
  Section
  4.23

  	
  Employee Benefits

  
	
  Section
  4.24

  	
  Guaranties

  
	
  Section
  4.25

  	
  Environment, Health, and Safety

  
	
  Section
  4.26

  	
  Certain Business Relationships with the
  Company

  
	
  Section
  4.27

  	
  Unlawful Contributions

  
	
  Section
  4.28

  	
  Antitrust

  
	
  Section 4.29

  	
  Money Laundering and Unlawful Financial
  Activities

  
	
   

  	
   

  
	
  Article V. Pre-Closing Covenants

  
	
   

  
	
  Section 5.1

  	
  General

  
	
  Section 5.2

  	
  Notices and Consents

  
	
  Section 5.3

  	
  Operation of Business

  
	
  Section 5.4

  	
  Participants Meeting; Amendments to
  Foundation Documents

  
	
  Section 5.5

  	
  Preservation of Business

  
	
  Section 5.6

  	
  Full Access

  
	
  Section 5.7

  	
  Notice of Developments

  
	
  Section 5.8

  	
  Exclusivity

  
	
  Section 5.9

  	
  Governmental Approval

  
	
  Section
  5.10

  	
  Resignation from Corporate Bodies

  
	
  Section
  5.11

  	
  Waiver of Pre-Emptive Rights

  
	
  Section
  5.12

  	
  Retention of Shares

  
	
  Section
  5.13

  	
  No Acceleration, Payments

  
	
   

  	
   

  
	
  Article VI. Post-Closing Covenants

  
	
   

  
	
  Section 6.1

  	
  General

  
	
  Section 6.2

  	
  Litigation Support

  
	
  Section 6.3

  	
  Transition

  
	
  Section 6.4

  	
  Confidentiality

  
	
  Section 6.5

  	
  Covenant Not to Compete

  
	
   

  	
   

  
	
  Article VII. Conditions to Obligations

  
	
   

  
	
  Section 7.1

  	
  Conditions to Obligation of the Purchaser
  to Close

  
	
  Section 7.2

  	
  Conditions to Obligation of the Seller to
  Close

  
	
  Section 7.3

  	
  Condition to Effectiveness of this Agreement

  
	
   

  	
   

  
	
  Article VIII. Remedies for Breaches of
  This Agreement

  
	
   

  
	
  Section 8.1

  	
  Survival of Warranties

  
	
  Section 8.2

  	
  Indemnification Provisions for Benefit of
  the Purchaser

  
	
  Section 8.3

  	
  Indemnification Provisions for Benefit of
  the Seller and DT

  
	
  Section 8.4

  	
  Matters Involving Third Parties

  
	
  Section 8.5

  	
  Determination of Adverse Consequences

  
	
  Section 8.6

  	
  Exclusive Remedies

  
	
  Section 8.7

  	
  Miscellaneous

  
	
   

  	
   

  
	
  Article IX. Effectiveness and Termination

  

 

ii

 

	
  Section 9.1

  	
  Effectiveness of Agreement

  
	
  Section 9.2

  	
  Termination of Agreement

  
	
  Section 9.3

  	
  Effect of Termination

  
	
   

  	
   

  
	
  Article X. Miscellaneous

  
	
   

  
	
  Section
  10.1

  	
  Press Releases and Public Announcements

  
	
  Section
  10.2

  	
  Entire Agreement

  
	
  Section
  10.3

  	
  Succession and Assignment

  
	
  Section
  10.4

  	
  Counterparts

  
	
  Section
  10.5

  	
  Headings

  
	
  Section
  10.6

  	
  Notices

  
	
  Section
  10.7

  	
  Dispute Resolution

  
	
  Section
  10.8

  	
  Governing Law

  
	
  Section
  10.9

  	
  Judgment Currency

  
	
  Section
  10.10

  	
  Third Party Beneficiaries

  
	
  Section
  10.11

  	
  Amendments and Waivers

  
	
  Section
  10.12

  	
  Remedies Cumulative

  
	
  Section
  10.13

  	
  Severability

  
	
  Section
  10.14

  	
  Joint and Several Liability

  
	
  Section
  10.15

  	
  Expenses

  
	
  Section
  10.16

  	
  Construction

  
	
  Section
  10.17

  	
  Payment of Taxes

  
	
  Section
  10.18

  	
  Incorporation of Exhibits, Annexes, and
  Schedules

  
	
  Section
  10.19

  	
  Specific Performance

  

 

iii

 

EXHIBIT INDEX

 

	
  Exhibit A

  	
   

  	
  Escrow Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit B-1

  	
   

  	
  Form of Founding Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit B-2

  	
   

  	
  Form of Charter

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Company Participants’
  Meeting Agenda

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Historical Financial
  Statements

  
	
   

  	
   

  	
   

  
	
  Exhibit F

  	
   

  	
  Form of Waiver

  
	
   

  	
   

  	
   

  
	
  Exhibit G-1

  	
   

  	
  Form of Seller’s
  Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit G-2

  	
   

  	
  Form of Purchaser’s
  Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit H

  	
   

  	
  List of Management

  
	
   

  	
   

  	
   

  
	
  Disclosure Schedule

  	
   

  	
  Exceptions to Warranties
  Concerning the Company

  

 

iv

 

PARTICIPATION INTEREST PURCHASE AGREEMENT

 

This
PARTICIPATION INTEREST PURCHASE AGREEMENT (the “Agreement”) entered into
as of  November 5, 2002, by and between
Mobile TeleSystems OJSC, an open joint stock company organized under the laws
of the Russian Federation (the “Purchaser”); Cetel B.V., a limited
liability company established and acting under the laws of the Netherlands (the
“Seller”); and Deutsche Telekom AG, a company organized under the laws
of Germany (“DT”).  The
Purchaser, DT and the Seller are referred to collectively herein as the “Parties.”

 

RECITALS

 

WHEREAS,
the Seller is currently one of the participants in the
Ukrainian-German-Dutch-Danish Joint Venture “Ukrainian Mobile Communications,”
(the “Company”), a company organized under the laws of Ukraine in the
form of a limited liability company, with its registered address at 21,
Moskovska Street, Kyiv, Ukraine, identification code #14333937 according to the
Uniform State Register of Enterprises and Organizations of Ukraine, whose
business includes, without limitation, the establishment and operation of
public cellular communications networks in Ukraine, as well as provision of
interregional and international communications services (the “Business”).
The Seller holds a participation interest equivalent to 16.33% of the
registered charter capital of the Company. The other participants of the
Company and their respective participation interests therein are as follows:
Open Joint Stock Company Ukrtelecom (51%), TDC Mobile International A/S
(16.33%), KPN Telecom B.V. (15.33%) and PTT Telecom Kyiv (1.0%);

 

WHEREAS, in order to facilitate the acquisition
by the Purchaser of the 16.33% participation interest in the Company previously
held by DT, DT transferred its 16.33% participation interest in the Company to
the Seller pursuant to a purchase agreement (the “DT-Cetel Purchase
Agreement”);

 

WHEREAS,
concurrently with the entering into of this Agreement, (i) the Purchaser will
enter into a participation interest purchase agreement with KPN Telecom B.V.
and PTT Telecom Kyiv for the purchase of a 100% participation interest in PTT
Telecom Kyiv (the “PTT Purchase Agreement”); (ii) the Purchaser will
enter into a participation interest purchase agreement with KPN Telecom B.V.
for the purchase of a 15.33% participation interest in the Company (the “KPN
Purchase Agreement”); (iii) the Seller will enter into a participation
interest purchase agreement with Open Joint Stock Company Ukrtelecom for the
purchase of a 25% participation interest in the Company (the “Ukrtelecom
Purchase Agreement”); and (iv) the Purchaser will enter into a novation
agreement with the Seller and Open Joint Stock Company Ukrtelecom for the
transfer of all rights and obligations of the Seller under the Ukrtelecom
Purchase Agreement to the Purchaser (collectively, the “Concurrent Purchase
Agreements”);

 

WHEREAS,
concurrently with the entering into of this Agreement, (i) the Seller will
enter into a put and call option agreement with Open Joint Stock Company
Ukrtelecom with regard to a 26% participation interest in the Company (the “Ukrtelecom
Option Agreement”); (ii) the Purchaser will enter into a novation agreement
with the Seller and Open Joint Stock Company Ukrtelecom for the transfer of all
rights and obligations of the Seller under the Ukrtelecom Option Agreement to
the Purchaser and (iii) the Purchaser will enter into a put and call option
agreement with TDC Mobile International A/S with regard to a 16.33%
participation interest in the Company (the “TDC Option Agreement”) (the 

 

1

 

Ukrtelecom
Option Agreement and the TDC Option Agreement collectively, the “Option
Agreements”);

 

WHEREAS,
concurrently with the entering into of this Agreement and the Concurrent
Purchase Agreements, (i) the Company and Telki Holding Company B.V. will enter
into an amendment to the Credit Facility Agreement No. CO1-97/UA, dated January
5, 1997; (ii) the Company and Telki Holding Company B.V. will enter into an
amendment to the Equipment and Service Credit Facility Agreement No. W01-95/UA,
dated November 1, 1995; (iii) the Company and DT will enter into an amendment
to the Credit Facility Agreement No. C02-97/UA, dated January 5, 1997; (iv) the
Company and DT will enter into an amendment to the Equipment and Service Credit
Facility Agreement No. W02-95/UA, dated November 1, 1995; (v) the Company and
TDC Mobile International A/S will enter into an amendment to the Credit
Facility Agreement No. C03-97/UA, dated January 5, 1997; and (vi) the Company
and TDC Mobile International A/S will enter into an amendment to the Equipment
and Service Credit Facility Agreement No. W03-95/UA, dated November 1, 1995
(collectively, the “Debt Restructuring Agreements”);

 

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

 

WHEREAS,
concurrent with the transactions described above, the Seller desires to sell,
assign and deliver to the Purchaser, and the Purchaser desires to purchase and
accept from the Seller, its 16.33% participation interest in the Company (the “Participation
Interest”) on the terms and subject to the conditions set forth herein.

 

AGREEMENT

 

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

 

ARTICLE I.

DEFINITIONS.

 

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

 

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

 

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

 

2

 

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

 

“Agreement”
has the meaning given in the Preamble.

 

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

 

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

 

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

 

“Buildings”
has the meaning given in Section 4.14(i).

 

“Business”
has the meaning given in the Recitals.

 

“Business
Day” means any day other than a Saturday or Sunday on which banks in
Moscow, Russia, are open for business and are not required or authorized to
close.

 

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

 

“Closing”
has the meaning given in Section 2.3.

 

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

 

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

 

“Company”
has the meaning given in the Recitals.

 

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

 

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

 

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

 

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

 

“Control”
means the power to direct the management or policies of an entity, directly or
indirectly, whether through the ownership of securities, by contract or
otherwise (which power shall be deemed to be held by a Person with the direct
or indirect ownership of (i) twenty-five percent (25%) or more of the share
capital of an entity with respect to the definition of Control and/or Affiliate
as used in Article IV hereof, and (ii) fifty percent (50%) or more of the share
capital of an entity with respect to the definition of Control and/or 

 

3

 

Affiliate
as used in this Agreement other than in Article IV), and “Controlling” and
“Controlled” have the corresponding meanings.

 

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

 

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

 

“DT”
has the meaning given in the Preamble.

 

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

 

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

 

“Environmental,
Health, and Safety Laws” means all Ukrainian Laws concerning pollution or
protection of the environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes.

 

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

 

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

 

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

 

“Escrow
Agreement” has the meaning given in Section 2.6.

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

“Leased
Real Property” has the meaning given in Section 4.14(ii).

 

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

 

“Licensed
IP Rights” has the meaning given in Section 4.15(i).

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

“Obligation
Currency” has the meaning given in Section 10.9.

 

“Option
Agreements” has the meaning given in the Recitals.

 

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

 

“Owned
IP Rights” has the meaning given in Section 4.15(i).

 

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

 

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

 

“Parties”
has the meaning given in the Preamble.

 

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

 

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

 

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

 

“Purchaser”
has the meaning given in the Preamble.

 

“Rules”
has the meaning given in Section 10.7.

 

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

 

“Seller”
has the meaning given in the Preamble.

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

“Third
Party Claim” has the meaning given in Section 8.4.

 

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

 

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

 

“Ukrainian
Law” means any statute, law, ordinance, rule, code, administrative
interpretation, regulation, order, writ, injunction, directive, judgment,
ruling, decree or other requirement of any Ukrainian governmental authority.

 

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

 

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

 

ARTICLE II.

PURCHASE AND SALE OF PARTICIPANT INTEREST.

 

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

 

7

 

Section 2.2                                   Purchase
Price.  The purchase price to be paid by the
Purchaser to the Seller for the Participation Interest shall be equal to US$
55,000,000 (the “Purchase Price”). 
At Closing, the Purchaser agrees to pay 50% of the  Purchase Price by delivery of cash in U.S.
dollars to the Escrow Agent pursuant to the Escrow Agreement as provided for in
Section 2.6 hereof.  In case Ukrainian
Law provides for the payment in Ukrainian currency, the respective amount of
Ukrainian currency shall be calculated in accordance with the official exchange
rate as established by the Central Bank of the Ukraine on the Business Day such
payment is made.  The Purchaser may at
its option pay the Purchase Price to the Escrow Agent prior to Closing.

 

Section 2.3                                   The
Closing.  Subject to the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself), the closing of the
transactions contemplated by this Agreement (the “Closing”) shall take
place at the offices of ING Barings Kiev, located at 28 Kominterna Street,
5th floor, 252032 Kiev, Ukraine, commencing at 9:00 a.m. local time on the date of the Closing
Participants Meeting (the “Closing Date”).

 

Section 2.4                                   Transfer
of the Participation Interest.

 

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

 

(ii)                                  The Purchaser undertakes (A) to accept the
sale and assignment of all, but not less than all, of the Participation
Interest and of all rights connected with the Participation Interest including
the right to participate in any undistributed profits attributable to the
Participation Interest and all rights and obligations of a participant which
are connected with the ownership in the Participation Interest under Ukrainian
Law and in accordance with the Foundation Documents and (B) to pay the Purchase
Price in accordance with Section 2.2 of this Agreement.

 

(iii)                               On the Closing Date, the Seller shall, and DT
shall cause the Seller to, convene and take part in participants’ meeting (the
“Closing Participants Meeting”) of the Company with such agenda as set
forth in Exhibit C, at which such meeting the Seller shall, and DT shall cause
the Seller to, vote in favor of the amended Founding Agreement and the Charter
of the Company in the form of Exhibits B-1 and B-2 attached hereto (the “Amended
Organizational Documents”) such that the Purchaser, taking into
consideration its direct and indirect participation, becomes the majority
participant in the Company.

 

8

 

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

 

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

 

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

 

Section 2.5                                   Deliveries
at the Closing.  At the Closing, (i) the Seller will, and DT
will cause the Seller to, deliver to the Purchaser the various certificates,
instruments, and documents referred to in Section 7.1 hereof, (ii) the
Purchaser will deliver to the Seller the various certificates, instruments, and
documents referred to in Section 7.2 hereof, (iii) the Seller will, and DT will
cause the Seller to, deliver to the Purchaser a notarized copy of a protocol of
the Closing Participants Meeting approving the Amended Organizational
Documents, and (iv) the Purchaser will deliver to the Seller 50% of the
Purchase Price specified in Section 2.2 hereof in accordance with Section 2.6
hereof; and (v) the Escrow Agent will deliver to the Seller a written
confirmation that the Purchaser has delivered the Purchase Price specified in
Section 2.2 hereof in accordance with Section 2.6 hereof.

 

Section 2.6                                   Escrow
Agreement.  The Seller shall, and DT shall cause the
Seller to, enter into an escrow agreement, substantially in the form of Exhibit
A hereto (the “Escrow Agreement”), with the Purchaser and the Escrow
Agent pursuant to which 50% of the Purchase Price shall be held in escrow and
released to the Seller in accordance with the terms thereof after the
registration of the Amended Organizational Documents as necessary under
Ukrainian Law.

 

Section 2.7                                   Second
Payment.  The Purchaser shall deliver the remaining
50% of the Purchase Price, plus interest accrued in accordance with this
Section 2.7, to the Seller to a bank account specified by the Seller within one
year from the date that 50% of the Purchase Price was released to the Seller in
accordance with the terms of the Escrow Agreement.  Such amount shall accrue interest at a rate of 9% per annum.

 

Section 2.8                                   Return of
Purchase Price.  In the event that the registration of the
Amended Organizational Documents, as necessary under Ukrainian Law, has not
occurred within thirty (30) calendar days of the Closing Date, then (i) the
Escrow Agent shall deliver to the Purchaser the balance of the Purchase Price
plus any accrued interest thereon in accordance with the Escrow Agreement, and
the Purchaser’s obligation to pay the Purchase Price shall terminate; (ii) the
Seller’s obligation to transfer the Participation Interest shall terminate.

 

9

 

ARTICLE
III.

WARRANTIES CONCERNING THE TRANSACTION.

 

Section 3.1                                   Warranties
of the Seller and DT.  The Seller and DT each warrant to the
Purchaser that the statements contained in this Section 3.1 are true and
accurate and not misleading as of the date of this Agreement and will be true
and accurate and not misleading as of the Closing Date (and to that end shall
be deemed repeated again at such date, as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3.1).

 

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

 

(ii)                                  Authorization of Transaction.  Each of the Seller and DT has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the legally valid and binding
obligation of each of the Seller and DT, enforceable against each of the Seller
and DT in accordance with its terms and conditions. Each of the Seller and DT
has given all notices and received all authorizations, consents, or approvals
of any government or governmental agency necessary in order to consummate the
transactions contemplated by this Agreement.

 

(iii)                               Noncontravention.  Neither the execution and the delivery of this Agreement, nor the
consummation of the Acquisition contemplated hereby, will (A) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Seller or DT is subject or any provision of their respective
foundation documents, charters, bylaws or other organizational documents or (B)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Seller or DT is a party
or by which either is bound or to which any of its assets is subject to the
extent that any of the foregoing events would affect DT’s ownership in the
Seller and/or the Seller’s ownership in the Company or negatively affect the
consummation of the Acquisition.

 

(iv)                              Brokers’ Fees.  Neither the Seller nor DT has any Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Purchaser or the
Company could become liable or obligated.

 

(v)                                 Ownership of Participation Interest.  The Seller holds of record and owns
beneficially the Participation Interest, free and clear of any restrictions on
transfer (other than any restrictions under applicable law and the Foundation
Documents), Taxes, security interests, mortgages, pledges, liens, encumbrances,
charges, options, warrants, purchase rights, contracts, commitments, equities,
claims, and demands. The Seller is not a party to any option, warrant, purchase
right, or other contract or commitment that could require the Seller to sell,
transfer, or otherwise dispose of any charter capital of the Company (other than
this Agreement). The Seller is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any charter capital of
the Company.

 

10

 

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

 

(vii)                           No Seller Liabilities.  The Seller is a holding company and, since
the date of its incorporation, has not conducted any operations (except for its
participation in a tender for a license in the Czech Republic, which was not
successful and under which it did not incur any Liabilities).  The Seller has (and has had) no revenues,
assets or Liabilities, other than Liabilities arising pursuant to the
Ukrtelecom Purchase Agreement and the Ukrtelecom Option Agreement.  The Seller is not a party to any option,
warrant, purchase right, or other contract or commitment that could require the
Seller to sell, transfer, or otherwise dispose of the Participation Interest.

 

Section 3.2                                   Warranties
of the Purchaser.  The Purchaser warrants to the Seller that
the statements contained in this Section 3.2 are true and accurate and not
misleading as of the date of this Agreement and will be true and accurate and
not misleading as of the Closing Date (and to that end shall be deemed repeated
again at such date, as though the Closing Date were substituted for the date of
this Agreement throughout this Section 3.2).

 

(i)                                     Organization of the Purchaser.  The Purchaser is an open joint stock company
duly organized and validly existing under the laws of the jurisdiction of its
incorporation.

 

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

 

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

 

11

 

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

 

ARTICLE IV.

WARRANTIES CONCERNING THE COMPANY.

 

The
Seller and DT each warrant to the Purchaser that the statements contained in
this Article IV are true and accurate and not misleading as of the date of this
Agreement and will be true and accurate and not misleading as of the Closing
Date (and to that end shall be deemed repeated again at such date, as though
the Closing Date were substituted for the date of this Agreement throughout
this Article IV), except (i) in case the Closing Date has not occurred until
180 days after the date of this Agreement, the statements contained in Section
4.4 through Section 4.29 will only be true and accurate and not misleading as
of the 180th day after the date of this Agreement (and to that end
shall be deemed repeated again on the 180th day, as though the such
180th day was substituted for the date of this Agreement throughout
this Article IV), (ii) as fairly disclosed and set forth in the disclosure
schedule delivered by the Seller and DT to the Purchaser on the date hereof and
initialed by the Parties (the “Disclosure Schedule”), and (iii) to the
extent such warranty shall be true as of a specific date, in which case such
warranty shall be true as of such specified date. Nothing in the Disclosure
Schedule relating to this Article IV shall be deemed adequate to disclose any
exception to a warranty made herein unless the Disclosure Schedule identifies
the exception with particularity and describes the relevant facts in detail.
Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate
to disclose an exception to a warranty made herein (unless the warranty relates
specifically to the existence of the document or other item itself). The
Disclosure Schedule will be arranged in numbered schedules corresponding to the
corresponding sections contained in this Article IV.

 

Section 4.1                                   Organization,
Qualification, and Corporate Power.  The Company is a legal entity
duly organized and validly existing under the Ukrainian Law. The Company is
duly authorized to conduct business under the Ukrainian Law. The Seller has
delivered to the Purchaser correct and complete copies of the Foundation
Documents (as amended to date). The Seller has delivered to the Purchaser complete
and correct copies of the minute books (containing the records of meetings of
the participants (also referred to as the “Board” in the Foundation Documents)
and the board of directors and the management of the Company). The Company is
not in default under or in violation of any provision of its Foundation
Documents. The Company has full corporate power and authority necessary to
carry on the Businesses and to own and use the properties and assets owned and
used by it.

 

12

 

Section 4.2                                   Capitalization.  The
entire registered authorized charter capital of the Company consists of
781,662,169,174 “Units of Ukrainian Currency,” defined in the Foundation
Documents as “one ruble or the equivalent of any future Ukrainian currency”
(currently 7,816,621.69 Ukrainian hryvnia). The Participation Interest has been
validly registered, fully paid, and is held of record by the Seller, and,
except for the obligations under the DT-Cetel Purchase Agreement, neither the
Company nor any current or past participant of the Company nor any third party
has the right to demand any further payment or contribution with respect
thereto. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights (other than as contained in the
Debt Restructuring Agreements), exchange rights, or other contracts or
commitments that could require the Company to issue, sell, or otherwise cause
to become outstanding any of its charter capital. There are no outstanding
profit participation or similar rights with respect to the Company. There are
no voting trusts, proxies, or other agreements or understandings with respect
to the voting of the charter capital of the Company other than provided for in
this Agreement and/or the Foundation Documents.

 

Section 4.3                                   Noncontravention. 
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby (excluding those
transactions contemplated in the agreements, other than this Agreement, listed
in the Recitals hereto and to which neither the Seller nor DT is a party), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of its Foundation Documents, or (ii) conflict with, result in a breach of,
constitute a default under, result in the early redemption of, create in any
party the right to redeem early, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Company is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). Except as contemplated in this Agreement, the
Company need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the consummation of the transactions contemplated by this Agreement
(excluding those transactions contemplated in the agreements, other than this
Agreement, listed in the Recitals hereto and to which neither the Seller nor DT
is a party).

 

Section 4.4                                   Licenses,
Permits, and Authorizations

 

The
Company has all material licenses, permits, and authorizations necessary to
carry on the Business and to own and use the material properties and assets
owned and used by it. As used in this Section 4.4, “material properties and
assets” means any property and/or asset that, either individually or together
with a group of related properties and/or assets, as applicable, is material to
the operation of the Business.

 

Section 4.5                                   Directors
and Officers

 

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

 

Section 4.6                                   Brokers’
Fees.  The Company has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.

 

13

 

Section 4.7                                   Title to
Assets.  The Company owns and has the right to
possess, use and alienate the properties and assets used by it, or shown on the
Most Recent Balance Sheet or acquired after the date thereof, free and clear of
all Security Interests, except for (i) properties and assets disposed of in the
Ordinary Course of Business since the date of the Most Recent Balance Sheet and
(ii) properties and assets encumbered with Security Interests in the Ordinary
Course of Business.

 

Section 4.8                                   No
Subsidiaries.  The Company has established branches (in
Russian “Filiatsi”) and
territorial divisions (in Russian “Teritorialnie Upravlenia”) on the territory of Ukraine, and the Company
has no ownership or equity interest whatsoever in any Person, nor any purchase
or other commitments which would result in any such ownership or equity
interest.

 

Section 4.9                                   Financial
Statements.  Attached hereto as Exhibit D are the
following financial statements (collectively the “Financial Statements”):
(i) audited balance sheets and statements of income, changes in shareholders’
equity, and cash flow as of and for the fiscal years ended December 31, 1999,
December 31, 2000, and December 31, 2001 (the “Most Recent Fiscal Year End”)
for the Company; and (ii) unaudited balance sheets and statements of income,
changes in shareholders’ equity, and cash flow (the “Most Recent Financial
Statements”) as of and for the six months ended June 30, 2002 (the “Most
Recent Fiscal Month End”) for the Company. Except as set forth in Schedule
4.9, the Financial Statements (including the notes thereto) have been prepared
in accordance with IFRS applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Company as of
such dates and the results of operations of the Company for such periods are
correct and complete.

 

Section 4.10                            Recent
Events.  Since the Most Recent Fiscal Month End until
the Closing Date, there has not been any material adverse change in the
business, financial condition, operations or results of operations of the
Company. Without limiting the generality of the foregoing, during that period:

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(xvi)                         the Company has not entered into any
employment contract with an annual base salary in excess of US$50,000 or any
collective bargaining agreement, written or oral, or modified the terms of any
existing 

 

15

 

such contract or agreement
involving a change of more than US$50,000 or outside the Ordinary Course of
Business;

 

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

 

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

 

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

 

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

 

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

 

If,
during the period between the date of this Agreement and the Closing Date, an
event occurs or might occur that would result in a breach of one or more
warranties set forth in this Section 4.10, then the Seller may disclose such
event to the Purchaser; provided,
however, that any such disclosure
shall not modify any of the warranties given hereunder except to the extent the
Purchaser has given its prior written approval to the specific actions of the
Company, DT and/or the Seller giving rise to such events and specifically
waiving and/or specifically modifying the Purchaser’s rights hereunder.  To that end, the Seller shall have the right
to submit a written request to the Purchaser, in accordance with Section 10.7,
that the Purchaser give its prior written consent to the specific actions of
the Company, DT and/or the Seller that will or may result in the breach of a
warranty set forth in this Section 4.10 and specifically waive and/or
specifically modify the Purchaser’s rights hereunder.  In the event and to the extent that the Purchaser shall grant its
prior written consent and/or waive and/or modify its rights hereunder pursuant
to the Seller’s request, then the Seller, DT and/or the Company, as applicable,
may proceed with the specific actions set forth in the written request; provided, however,
that the Purchaser shall be deemed to have given its prior consent to such
actions if the Purchaser fails to consent or object to such actions within ten
(10) Business Days after the Purchaser receives Seller’s written request
therefor.  In the event that the
Purchaser denies the Seller’s request within ten (10) Business Days after its
receipt thereof, then the Seller and/or the Company, as applicable, shall not
proceed with the specific actions set forth in such request.

 

16

 

Section 4.11                            Undisclosed
Liabilities.  Except for Liabilities set forth in
Schedules 4.9 and 4.13, the Company does not have any Liability (and there is
no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Company giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).

 

Section 4.12                            Legal
Compliance.  The Company has complied in all material
respects with applicable Ukrainian Law, and the Company has not received notice
of any action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice that has been filed or commenced against it alleging
any failure to so comply.

 

Section 4.13                            Tax
Matters.

 

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

 

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

 

(iii)                               Except for those Taxes that it is contesting
in good faith and by appropriate proceedings, the Company does not expect any
Ukrainian authority to assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim in Ukraine concerning any
material Tax Liability of the Company claimed or raised by any Ukrainian
authority in writing. Schedule 4.13 of the Disclosure Schedule lists all Tax
Returns filed by the Company for taxable periods ended on or after December 31,
2000, and indicates those Tax Returns that have been audited, and those Tax Returns
that currently are the subject of audit. The Seller has delivered to the
Purchaser correct and complete copies of all income (profit) Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by the Company since December 31, 2000.

 

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

 

17

 

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

 

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

 

Section 4.14                            Real
Property.

 

(i)                                     Schedule 4.l4(i) of the Disclosure Schedule
lists and briefly describes all of the buildings in which the Company has an
ownership interest and in which the book value as per the Most Recent Balance
Sheet exceeded an equivalent of US$500,000. The buildings listed on Schedule
4.14(i) (“Buildings”), along with the buildings housing base stations,
switches or other equipment material to the operation of the Business, taken as
a whole, are referred to herein as “Owned Real Property.” With respect
to the Owned Real Property:

 

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

 

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

 

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

 

(D)                               there are no leases, subleases, or other
agreements, written or oral, granting to any party or parties the right of use
or occupancy of any portion of the Buildings, or the buildings housing base
stations, switches or other equipment material to the operation of the
Business, taken as a whole (or a portion thereof as the case may be), to which
the Company has an ownership interest, except to the extent that the 

 

18

 

current use of the building
(or a portions thereof as the case may be) would not be materially impaired
thereby;

 

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

 

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

 

(ii)                                  Schedule 4.l4(ii) of the Disclosure Schedule
lists and briefly describes all of the premises leased or subleased to the
Company and under which the annual lease or sublease payments by the Company
exceed an equivalent of US$50,000. The buildings listed on Schedule 4.14(ii), along
with the buildings housing base stations, switches or other equipment material
to the operation of the Business, taken as a whole, are referred to herein as “Leased
Real Property.” With respect to the Leased Real Property:

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

Section 4.15                            Intellectual
Property.

 

(i)                                     The Company owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the Business of the Company as
presently conducted. Each item of Intellectual Property owned or used by the
Company immediately prior to the Closing hereunder will be owned or available
for use by the Company on identical terms and conditions immediately subsequent
to the Closing hereunder. Schedule 4.15(iii) of the Disclosure Schedule lists
each such item of Intellectual Property owned by the Company (the “Owned IP
Rights”), and Schedule 4.15(iv) of the Disclosure Schedule lists each such
item of Intellectual Property leased by the Company (the “Licensed IP Rights”).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

Section 4.16                            Company
Licenses.

 

(i)                                     Schedule 4.16(i) of the Disclosure Schedule
lists all of the licenses necessary to build, own and operate a mobile cellular
communications network and to provide telecommunications services related
thereto (the “Company Licenses”), and with respect to each such Company
License, such Schedule sets forth the following information, as applicable: the
type of Company License, the name, the issuer and number of the license, the
frequency standard, the date of issue and term of the license, the region
and/or city covered by the license, the frequency or frequencies authorized or
reserved and the bandwidth.

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

Section 4.17                            Networks.

 

(i)                                     The Company operates an analog network of NMT
450i standard and a digital mobile network of GSM 900/1800 standard which are capable
of providing service coverage to areas where approximately 65% of the
population of Ukraine lives, with a dedicated interface signaling, voice and
data backbone network to support hand-off capabilities. The Network provides
the following services to subscribers in covered areas with telephone
interconnect, including basic voice services, mobile terminated short messaging
service, voice mail, call forwarding, call waiting, call forward unconditional,
call forward busy, call forward no answer, call number identity presentation,
call number identity restricted, hot line, do not disturb, three party calling,
direct dial long-distance/international calling, automatic call delivery,
automatic short message delivery with SMPP Interface, and voice-mail deposit
and retrieval. The respective manufacturers of the Equipment have warranted to
the Company that the Equipment has the capability to provide packet data and
asynchronous data. (All of the foregoing, the “Services”.) The Network
includes the essential types of Equipment listed in Schedule 4.17(i) of the
Disclosure Schedule (the “Essential Equipment”) and is located on
appropriate premises.

 

(ii)                                  The Network is in all material respects in
compliance with all material standards imposed by Ukrainian Law to the extent
necessary to provide the services and have passed acceptance tests under the
standards specified in the documents evidencing final acceptance except where
such final acceptance documents indicate otherwise.

 

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

 

(iv)                              The Network is designed, deployed, operated,
managed and maintained to provide and is capable of providing outdoor services
in the 

 

22

 

coverage areas described in
the maps set out in Schedule 4.17(iv) of the Disclosure Schedule that permit a
subscriber to maintain communication 90% of the time in 90% of those locations
in Ukraine where coverage is indicated in the map.

 

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

 

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

 

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

 

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

 

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

 

(vi)                              The Network is interconnected, directly or
indirectly, with the public switched fixed and mobile networks set forth in
Schedule 4.17 of the Disclosure Schedule.

 

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

 

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

 

23

 

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

 

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

 

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

 

Section 4.18                            Contracts. 
Schedule 4.18 of the Disclosure Schedule lists the material contracts
and other agreements to which the Company is a party, including:

 

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

 

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

 

(iii)                               agreements concerning a partnership or joint
venture;

 

(iv)                              agreements (or group of related agreements)
under which the Company has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation, in excess
of US$200,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible in excess of US$200,000;

 

(v)                                 agreements concerning confidentiality or
noncompetition;

 

(vi)                              agreements with the Seller, DT and their Affiliates
(other than the Company);

 

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

 

(viii)                        collective bargaining agreements;

 

24

 

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

 

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

 

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

 

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

 

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

 

(xiv)                         human resources software and billing software
agreements;

 

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

 

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

 

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

 

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

 

(xix)                           interconnection contracts;

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

With
respect to each such agreement, and unless noted otherwise in Schedule 4.18 of
the Disclosure Schedule: (A) the agreement is legally valid, binding and
enforceable against the Company and in full force and effect; (B) the agreement
will continue to be legally valid, binding and enforceable and in full force
and effect on identical terms following the consummation of the transactions
contemplated hereby; (C) the Company is not in material breach or default, nor
has the Company received any notice that any third party is in material breach
or default, and no material event has occurred which with notice or lapse of
time would constitute a material breach or default, or permit termination,
modification, or early redemption, under the agreement; and (D) the Company has
not repudiated any provision of the agreement, nor has the Company received any
notice that any third party has repudiated any provision of the agreement.

 

Section 4.19                            Powers of
Attorney.  Except as set forth in Schedule 4.19, there
are no outstanding powers of attorney executed on behalf of the Company and
issued (i) with the ability to generally bind or represent the Company or (ii)
to enter into agreements or a series of related agreements in excess of
US$25,000.

 

Section 4.20                            Insurance. 
Schedule 4.20 of the Disclosure Schedule lists all insurance policies to
which the Company is currently a party and sets out:

 

(i)                                     the policy number (where known);

 

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

 

(iii)                               the type of coverage;

 

(iv)                              the period of coverage; and

 

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

 

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

 

26

 

Section 4.21                            Litigation. 
Schedule 4.21 of the Disclosure Schedule sets forth each instance in
which the Company (i) is subject to any outstanding court and arbitration
injunction, judgment, order, decree or ruling or (ii) is a party or, to the
Knowledge of the Seller or DT, is threatened to be made a party to any action,
suit, proceeding, prosecution, arbitration, hearing, governmental audit, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of Ukraine or before any arbitrator. None of the actions, suits,
proceedings, prosecutions, arbitrations, hearings, governmental audits, and investigations
set forth in Schedule 4.21 of the Disclosure Schedule could result in any
material adverse change in the business, financial condition, operations,
results of operations, or future prospects of the Company. The Seller has no
reason to believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against the Company of over
US$25,000. There is no claim, suit, litigation, proceeding, labor dispute,
action, inquiry or investigation pending, or to the Knowledge of the Seller or
DT, threatened, seeking to delay, limit or enjoin the consummation of this
Agreement and the other transactions contemplated by the Transaction Documents
(excluding those transactions contemplated in the agreements, other than this Agreement,
listed in the Recitals hereto and to which neither the Seller nor DT is a
party).

 

Section 4.22                            Employees.  No
executive, senior key employee, or material group of employees has to date
given notice of termination of their employment with the Company. Except as set
forth in Schedule 4.22, the Company is not a party to or bound by any
collective bargaining agreement, nor has it experienced any material strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. To the Knowledge of the Seller and DT, the Company has not committed
any unfair labor practice. The Seller and DT have no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company.

 

Section 4.23                            Employee
Benefits.  Schedule 4.22 of the Disclosure Schedule
describes each Employee Benefit Plan that the Company maintains or to which the
Company contributes, and each complies in form and in operation in all material
respects with all material applicable laws.

 

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

 

Section 4.25                            Environment,
Health, and Safety.

 

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

 

(ii)                                  The Company has no material Liability for
damage to any site, location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual, or for any
reason under 

 

27

 

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

 

Section 4.26                            Certain Business
Relationships with the Company.  Except for the Debt
Restructuring Agreements, neither the Seller, DT, nor any of their Affiliates
has been involved in any business arrangement or relationship with the Company
within the past twelve (12) months, and neither the Seller, DT, nor any of
their Affiliates owns any asset, tangible or intangible, which is used in the
Business of the Company.

 

Section 4.27                            Unlawful
Contributions.  To the Knowledge of the Seller and DT, the
Company has not (i) used any corporate funds for any contribution or other
expense unlawful under Ukrainian Law applicable at the time of such
contribution or other expense and relating to political activity, (ii) made any
unlawful payment under Ukrainian Law to any Ukrainian government official or
employee from corporate funds, or (iii) caused the Company to be in violation
of any Ukrainian Law regulating the payments of bribes to government officials
or employees.

 

Section 4.28                            Antitrust.  The
Company is not currently or has no reason or notice to believe that it will be
in the future a party to, or directly or indirectly concerned in, an agreement,
arrangement, understanding or practice (whether or not legally binding) to
which the Company is a party and which has been, is or may (i) contravene any
Ukrainian Laws concerning competition; (ii) be registrable, unenforceable or
void or rendering the Company or any of its officers, directors or employees
liable to administrative, civil or criminal proceedings under any Ukrainian
Laws concerning competition, or (iii) be the subject of any investigation by
any competent Ukrainian authority in respect of any provision of any Ukrainian
Laws concerning competition. The Company is not currently engaged in any
conduct which amounts to the abuse of a dominant position in a market which may
violate any Ukrainian Laws concerning competition. Schedule 4.28 of the
Disclosure Schedule lists those instances in which the Company has been defined
as a monopolist in Ukraine by a Ukrainian governmental entity.

 

Section 4.29                            Money
Laundering and Unlawful Financial Activities.  The
Company is not in violation of any Ukrainian Laws relating to money-laundering,
unlawful financial activities, or control and prevention of terrorism.

 

ARTICLE V.

PRE-CLOSING COVENANTS.

 

Except
as specifically noted below, the Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.

 

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

 

28

 

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

 

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

 

Section 5.4                                   Participants
Meeting; Amendments to Foundation Documents.  The
Seller will, and DT will cause the Seller to, use its best endeavors, as soon
as practicable following the date hereof, to cause a participants meeting of
the Company to be called for the purpose of approving the Amended
Organizational Documents and for such other actions as are set forth in the
form of the Company Participants Meeting Agenda attached hereto as Exhibit
C.  The Seller shall, and DT shall cause
the Seller to, vote in favor of the approval of each of the Amended Founding
Agreement and the Amended Charter.

 

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

 

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

 

29

 

Section 5.7                                   Notice of
Developments.  From the date hereof through the Closing,
the Seller shall, and DT shall cause the Seller to, give prompt written notice
to the Purchaser and the Purchaser shall give prompt written notice to the
Seller of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any warranty contained in this
Agreement or in any exhibit or schedule hereto to be or become untrue or
inaccurate, or the discovery that any warranty contained in this Agreement or
in any exhibit or schedule was untrue at the time it was made, (ii) any failure
by either the Seller, DT or the Purchaser to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement or any exhibit or schedule hereto, (iii) the occurrence or
non-occurrence of any event which will or may result in the failure of any
condition, covenant or agreement to be complied with or satisfied by it under
this Agreement or any other Transaction Document, and (iv) any notice or
communication from any Person alleging that the consent of such Person is or
may be required in connection with the transactions contemplated by this
Agreement or any other Transaction Document or that such transactions otherwise
may violate the rights of, or confer remedies upon, such Person.  No such notice provided pursuant to this
Section 5.7 shall be deemed (i) to have amended the Disclosure Schedule, (ii)
to have qualified the warranties contained in Article III or Article IV hereof,
and (iii) to have cured any breach of warranty that otherwise might have
existed hereunder by reason of such development.

 

Section 5.8                                   Exclusivity. 
Neither the Seller, DT, nor any of their Affiliates will (and neither
the Seller nor DT will cause or permit any of its representatives or the
Company to), directly or indirectly, (i) solicit, initiate, or encourage the
submission of any inquiry, proposal or offer from any Person relating to the
acquisition of any charter capital or other voting securities of, or any substantial
portion of the assets of, the Company (including any acquisition structured as
a merger, consolidation, or share exchange), or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The Seller will not,
and DT will not permit the Seller to, vote its interest in the Company in favor
of any such acquisition structured as a merger, consolidation, or share
exchange. The Seller will, and DT will cause the Seller to, notify the
Purchaser immediately if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing. 
DT and the Seller agree, and DT agrees to cause the Seller, not to
release any third party from, or waive any provision of, any confidentiality or
standstill agreement relating to the Company to which the Seller and/or DT is a
party.

 

Section 5.9                                   Governmental
Approval.

 

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

 

(ii)                                  The Seller is obliged, and DT is obligated to
cause the Seller, to support the Purchaser in connection with the preparation
of the application for the approval by the UAC or other relevant governmental 

 

30

 

authority of the
transactions contemplated by this Agreement and in course of the entire
clearance procedure.  In the event that
an order prohibiting such transactions is issued by the UAC or such relevant
governmental authority, the Parties shall jointly use their commercially
reasonable best endeavors to remove the reasons for such order.  In case the Purchaser decides to appeal
against such order the Seller is obliged, and DT is obligated to cause the
Seller, to support the Purchaser with regard to the preparation of such appeal
and in course of the respective proceedings.

 

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

 

Section 5.11                            Waiver of
Pre-Emptive Rights.  As applicable, DT and the Seller shall, and
DT shall cause the Seller to, waive any right of first refusal for the purchase
of, or any pre-emptive rights with respect to, the sale and transfer of any
participatory interest in the Company as contemplated by the Transaction
Documents, including, but not limited to, waivers with regard to the Concurrent
Purchase Agreements, and shall grant waivers with regard to the TDC Option
Agreement and the Ukrtelecom Option Agreement, in each case substantially in
the form of Exhibit F hereto.

 

Section 5.12                            Retention
of Shares.  Until such time as all obligations of the
Seller and DT hereunder are completed or all such obligations have terminated,
DT shall not dispose of, charge, encumber or grant any option or other right
over any shares of the Seller and shall not in any way dispose of or fetter or
permit to be fettered any of the voting rights attaching to its interest in the
Seller.

 

Section 5.13                            No
Acceleration, Payments.  From the date hereof through the date upon
which the Debt Restructuring Agreements become effective, the Seller shall not
take, exercise, or receive the benefit of any of its rights or interests in or
with regard to each of the Equipment and Service Credit Facility Agreement No.
W02-95/UA and the Credit Facility Agreement No. C02-97/UA, and, in each case,
shall not institute any legal proceedings (including any proceedings for
bankruptcy or insolvency or otherwise) in any jurisdiction with regard thereto,
nor accelerate the principal amounts or any accrued interest thereunder, nor
cause the Company to make any payments thereunder.

 

ARTICLE VI.

POST-CLOSING COVENANTS.

 

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

 

Section 6.1                                   General.  In
case at any time after the Closing any further action is necessary or desirable
to carry out the purposes of this Agreement, each of the Parties will take such
further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, all at
the sole cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under Article VIII hereof). The Seller
and DT acknowledge and agree that from and after the Closing the Purchaser will
be entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the Company.

 

31

 

Section 6.2                                   Litigation
Support.  In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, each of the other Parties will
cooperate with it and its counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their books and
records as shall be necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Article VIII hereof).

 

Section 6.3                                   Transition.  For
a period of two (2) years after the Closing Date, neither the Seller nor DT
will take any action that is designed or intended to have the effect of
discouraging any lessor, licensor, customer, supplier, or other business associate
of the Company from maintaining the same business relationships with the
Company after the Closing as it maintained with the Company prior to the
Closing. The Seller and DT will refer all customer inquiries relating to the
Business to the Purchaser from and after the Closing.

 

Section 6.4                                   Confidentiality.  Each
Party will treat and hold as such all of the Confidential Information of the
other Parties and/or the Company, and refrain from using any of the
Confidential Information of the other Parties and/or the Company except in
connection with this Agreement; provided,
however, such restriction shall not apply if and to the extent that:

 

(i)                                     the Party proposing to make such disclosure
has been requested or is required (by oral question or request for information
or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information of another Party/Parties and/or the Company; provided, however, that such Party will
notify the other Party/Parties promptly of the request or requirement so that
the other, nondisclosing Parties may seek an appropriate protective order or
waive compliance with the provisions of this Section 6.4(i). If, in the absence
of a protective order or the receipt of a waiver hereunder, a Party is, on the
advice of counsel, compelled to disclose any Confidential Information of any
other Party and/or the Company to any tribunal or else stand liable for
contempt, such Party may disclose such Confidential Information to the
tribunal; provided, however, that
such disclosing Party shall use its best endeavors to obtain, at the request of
the other Party/Parties, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information
required to be disclosed as the other Party/ Parties shall designate;

 

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

 

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

 

32

 

Nothing
in this Section 6.4 shall in any way affect the Purchaser’s ability to disclose
Confidential Information relating to the Company to any third party after the
Closing Date.

 

Section 6.5                                   Covenant
Not to Compete.  For a period of two (2) years from and after
the Closing Date, neither the Seller, DT nor any of their Affiliates will,
except for the entry into roaming agreements or through their participation in
the Purchaser, engage directly or indirectly in the provision of GSM cellular
network services in Ukraine; provided,
however, that no ownership of less than 1% of the outstanding share
capital of any publicly traded corporation shall be deemed to engage solely by
reason thereof in such services; and further
provided that the ownership of any corporation which occurs
following the Closing Date as the result of a merger between (i) DT or (ii) a
Person (x) under common Control with, or Controlling, DT , and (y) the net
revenues of which constitute more than 30% of the total net revenues of DT and
its Affiliates on a consolidated basis, and a third party which results in the
ownership by DT or an Affiliate of DT of a Person directly or indirectly
engaged in the provision of GSM cellular network services in the Ukraine shall
not be deemed a breach of this Section 6.5. The Parties agree that they
consider that the restrictions contained in this Section 6.5 are no greater
than is reasonable and necessary to protect the legitimate business interests
of the Purchaser; however, if the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 6.5 is invalid
or unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.

 

ARTICLE
VII.

CONDITIONS TO OBLIGATIONS.

 

Section 7.1                                   Conditions
to Obligation of the Purchaser to Close.  The obligation of the
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:

 

(i)                                     the warranties set forth in Section 3.1 and
Article IV hereof shall be true, complete and accurate in all material respects
at, and as of, the Closing Date;

 

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

 

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

 

(iv)                              no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any national, supranational, federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, 

 

33

 

ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, (C) affect adversely the right of the
Purchaser to own the Participation Interest and to control the Company, or (D)
affect adversely the right of the Company to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);

 

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

 

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

 

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

 

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

 

(ix)                                each of the DT-Cetel Purchase Agreement, the
Concurrent Purchase Agreements, the TDC Option Agreement and the Debt
Restructuring Agreements has been executed and delivered by all parties thereto
and, except for the Debt Restructuring Agreements, is in full force and effect;

 

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

 

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

 

(xii)                             each of the conditions set forth in Section 7.1
of the PTT Purchase Agreement, Section 7.1 of the KPN Purchase Agreement and
Section 7.1 of the Ukrtelecom Purchase Agreement  have, in each case, been satisfied in accordance with the terms
thereof; and

 

34

 

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

 

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

 

Section 7.2                                   Conditions
to Obligation of the Seller to Close.  The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:

 

(i)                                     the warranties set forth in Section 3.2 (i) -
(iv) hereof shall be true, complete and accurate in all material respects and
the warranties set forth in Section 3.2(ii) shall be true, complete and
accurate without the qualification contained therein at and as of the Closing
Date;

 

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

 

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

 

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

 

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

 

(vi)                              the Parties and the Company shall have
received all authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3.1(ii), Section 3.2(ii), and
Section 4.3 hereof (including any necessary approvals of the transactions
contemplated herein by the UAC);

 

(vii)                           the novation agreements referred to in
Section 5.13 has been fully executed by all parties thereto substantially in
the form attached hereto as Exhibit G; and

 

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

 

35

 

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

 

Section 7.3                                   Condition
to Effectiveness of this Agreement.  The Purchaser shall not have
any obligations whatsoever hereunder until such time as the terms of this
Agreement have been approved in accordance with Russian law by a shareholders’
meeting of the Purchaser.

 

ARTICLE
VIII.

REMEDIES FOR BREACHES OF THIS AGREEMENT.

 

Section 8.1                                   Survival
of Warranties.  All of the warranties of the Parties
contained in this Agreement shall survive the Closing hereunder (even if the
damaged Party knew or had reason to know of any breach of warranty at the time
of Closing) and continue in full force and effect for a period of two (2) years
from the Closing Date.

 

Section 8.2                                   Indemnification
Provisions for Benefit of the Purchaser.

 

(i)                                     Subject to Section 8.2(ii), in the event that
any of the Seller or DT breaches any of its respective warranties contained
herein, provided that the Purchaser makes a written claim for indemnification
against the Seller and DT pursuant to Section 10.7 below within the period set
forth in Section 8.1, then each of the Seller and DT agrees to indemnify the
Purchaser from and against any Adverse Consequences the Purchaser may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Purchaser may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach).

 

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

 

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

 

(B)                                The Seller and DT shall only be obligated to
indemnify, or be liable for the breach of the warranties contained in Article
IV to, the Purchaser on any other basis after and insofar as the Purchaser has
suffered Adverse Consequences by reason of all such breaches of any warranty
contained in Article IV in excess of a $1,500,000 aggregate threshold (at which
point the Seller and DT will be obligated to indemnify, or be liable for the
breach of the warranties contained in Article IV to, the Purchaser on any other
basis from and against all such Adverse Consequences, including, for  the avoidance of doubt, Adverse Consequences
suffered prior to reaching such threshold); provided,
however, that any obligation of the Seller and DT to indemnify or be
liable to the Purchaser with respect Adverse Consequences that arise as a
result of  any breach of warranty 

 

36

 

contained in Article IV
after such aggregate threshold has been reached shall not arise with regard to
Adverse Consequences of less than $25,000;

 

(C)                                To the extent that an Adverse Consequence has
arisen as the result of a breach of a warranty contained in Article IV hereof,
the obligation of the Seller and DT to indemnify or be liable to the Purchaser
from and against such Adverse Consequence shall, in the aggregate, be limited
to 16.33% of the total amount of such Adverse Consequence irrespective of
whether any third party that sold a participation interest in the Company to
the Purchaser is liable or not liable for any damages under its respective
participation interest purchase agreement (for the avoidance of doubt, this
limitation shall not apply to the threshold set forth in subparagraph B above);

 

(D)                               Subject to subparagraph (E) and (F) below,
the aggregate amount for which the Seller and DT shall have an obligation to
indemnify or be liable to the Purchaser from and against pursuant to this
Section 8.2 with regard to breaches of warranties contained in Article IV shall
not exceed 50% of the Purchase Price;

 

(E)                                 The aggregate amount for which the Seller and
DT shall have an obligation to indemnify or be liable to the Purchaser from and
against pursuant to this Section 8.2 with regard to breaches of warranties
contained in Sections 4.1, 4.2, 4.3, 4.13 (to the extent that such breach
relates to profits tax or VAT), and 4.16 (to the extent that such breach
results in the revocation, suspension, or a material change in the terms of a
Company License) shall not exceed 100% of the Purchase Price;

 

(F)                                 There shall be no limit to the aggregate
amount for which the Seller and DT shall have an obligation to indemnify or be
liable to the Purchaser from and against pursuant to this Section 8.2 with
regard to breaches of  warranties set
forth in Article III;

 

(G)                                In the event that a breach of any of the
warranties given by the Seller in Article IV (other than a breach caused by a
direct act or omission of the Seller and DT or, for the avoidance of doubt, a
breach of any warranty given by the Seller and DT in Section 3.1) prevents
consummation of the Acquisition, the Seller and DT shall only be obliged to
indemnify the Purchaser for all Transaction Costs.  For the purpose of this paragraph (G) only, “Transaction Costs”
means any and all costs, fees expenses and liabilities actually incurred by the
Purchaser in negotiating the Transaction Documents.  For the avoidance of doubt and other than set forth in this
paragraph (G), the Seller and DT shall not be liable to the Purchaser for any
other costs, loss or liability which the Purchaser may suffer as a result of
the Acquisition not being consummated as a result of a breach of any of the
warranties in Article IV.

 

37

 

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

 

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

 

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

 

Section 8.3                                   Indemnification
Provisions for Benefit of the Seller and DT. 
Subject to Section 8.3(i) and Section 8.3(ii), in the event the
Purchaser breaches (or in the event any third party alleges facts that, if
true, would mean the Purchaser has breached) any of its warranties contained herein,
and, if there is an applicable survival period pursuant to Section 8.1 hereof,
provided that the Seller or DT make a written claim for indemnification against
the Purchaser pursuant to  Section 10.7
below within such survival period, then the Purchaser agrees to indemnify the
Seller and/or DT from and against the entirety of any Adverse Consequences the
Seller and/or DT may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Seller and/or DT may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the alleged
breach).

 

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

 

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

 

38

 

Section 8.4                                   Matters
Involving Third Parties.

 

(i)                                     If any third party shall notify any Party
(the “Indemnified Party”) with respect to any matter (a “Third Party
Claim”) which may give rise to a claim for indemnification against any
other Party (the “Indemnifying Party”) under this Article VIII, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.

 

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

 

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

 

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

 

39

 

Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Article VIII.

 

Section 8.5                                   Determination
of Adverse Consequences.  The Parties shall make appropriate
adjustments for insurance coverage and shall take into account the time cost of
money (using the Applicable Rate as the discount rate) in determining Adverse
Consequences for purposes of this Article VIII. All indemnification payments
under this Article VIII shall be deemed adjustments to the Purchase Price.

 

Section 8.6                                   Exclusive
Remedies.  The foregoing indemnification provisions
shall be the Parties’ exclusive remedy for or arising out of a breach of
warranty hereunder.  The indemnification
provisions exclude, and are not in addition to but in derogation of, any
statutory, equitable, common law or other remedy any Party may have for or
arising out of a breach of warranty hereunder and the Parties agree that they
shall not seek any other remedy for or arising out of a breach of warranty
hereunder.  The Seller hereby agrees
that it will not make any claim for indemnification against the Company by
reason of the fact that it was an agent of any such entity or was serving at
the request of any such entity as a partner, trustee, director, officer,
employee, or agent of another entity (whether such claim is for judgments,
damages, penalties, fines, costs, amounts paid in settlement, losses, expenses,
or otherwise and whether such claim is pursuant to any statute, charter
document, bylaw, agreement, or otherwise) with respect to any action, suit,
proceeding, complaint, claim, or demand brought by the Purchaser against the
Seller (whether such action, suit, proceeding, complaint, claim, or demand is
pursuant to this Agreement, applicable law, or otherwise).

 

Section 8.7                                   Miscellaneous.

 

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

 

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

 

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

 

ARTICLE IX.

EFFECTIVENESS AND TERMINATION.

 

Section 9.1                                   Effectiveness
of Agreement.  Subject to Section 7.3, this Agreement shall
be binding upon its signing and shall become effective upon the date hereof
(subject to termination pursuant to Section 9.2 below).  This Agreement shall remain in full force
and effect until completion of all obligations of the Parties or until
terminated pursuant to Section 9.2 below.

 

Section 9.2                                   Termination
of Agreement.  The Parties may terminate this Agreement as
provided below:

 

40

 

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

 

(ii)                                  the Purchaser may terminate this Agreement by
giving written notice to the Seller and DT at any time prior to the Closing (A)
in the event the Seller and/or DT has breached any material warranty, or
covenant contained in this Agreement in any respect, the Purchaser has notified
the Seller and DT of the breach, and the breach has continued without cure for
a period of 30 days after the notice of breach, if subject to cure, (B) in the
event of the failure of any condition precedent under Section 7.1 that is
incapable of being satisfied, or (C) if the Closing shall not have occurred on
or before the 180th day after the date hereof by reason of the
failure of any condition precedent under Section 7.1 hereof; and

 

(iii)                               the Seller and/or DT may terminate this Agreement
by giving written notice to the Purchaser at any time prior to the Closing (A)
in the event the Purchaser has breached any material warranty, or covenant
contained in this Agreement in any material respect, the Seller and/or DT has
notified the Purchaser of the breach, and the breach, if subject to cure, has
continued without cure for a period of thirty (30) days after the notice of
breach (B) in the event of the failure of any condition precedent under Section
7.2 that is incapable of being satisfied, or (C) if the Closing shall not have
occurred on or before the 180th day after the date hereof by reason
of the failure of any condition precedent under Section 7.2 hereof.

 

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

 

ARTICLE X.

MISCELLANEOUS.

 

Section 10.1                            Press Releases
and Public Announcements.  No Party shall issue any press release or
make any public announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of the Purchaser, the
Seller and DT; provided, however,
that any Party may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party shall advise the
other Parties prior to making the disclosure).

 

Section 10.2                            Entire
Agreement.  This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.

 

Section 10.3                            Succession
and Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Party, such approval not to be unreasonably
withheld.

 

41

 

Section 10.4                            Counterparts.  This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.

 

Section 10.5                            Headings.  The
table of contents, exhibit index and article and section headings contained in
this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.

 

Section 10.6                            Notices.  All
notices, requests, demands, claims, and other communications hereunder will be
in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given if (and then two (2) Business Days after)
it is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:

 

(i)                                     If to the Seller:

 

Cetel
B.V.

Strawinskylaan 1243

1077 XX Amsterdam

The Netherlands

Telecopy:

Attention:

 

with
a copy to:

 

Clifford
Chance Puender

Cecilienallee 6

40474 Duesseldorf

Germany

Attention:  Marc Bartholomy, Esq.

Facsimile: +49 211 4355 5600

 

(ii)                                  If to DT:

 

Deutsche
Telekom AG

Friedrich - Ebert - Allee 140

53113 Bonn

Germany

Telecopy:

Attention:

 

with
a copy to:

 

Clifford
Chance Puender

Cecilienallee 6

40474 Duesseldorf

Germany

Attention:  Marc Bartholomy, Esq.

Facsimile: +49 211 4355 5600

 

(iii)                               If to the Purchaser:

 

42

 

Mobile
TeleSystems OJSC

Marksistskaya
Street, 4

Moscow
109147 Russian Federation

Telecopy:  +7-095-915-7425

Attention:  Mikhail A. Smirnov, President

 

with
a copy to:

 

Latham
& Watkins

Ulitsa Gasheka, 7

Ducat II, Suite 900

Moscow 123056 Russian Federation

Attention:  Anna Goldin, Esq.

Facsimile:  +7-095-785-1235

 

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

 

Section 10.7                            Dispute
Resolution.  Upon written notice to all Parties to this
Agreement and the Arbitration Institute of the Stockholm Chamber of Commerce,
any dispute, controversy or claim between any Parties hereto arising out of,
relating to or in connection with this Agreement, including its existence,
validity or termination, shall be referred to and resolved by final and binding
arbitration under the Rules of the Arbitration Institute of the Stockholm
Chamber of Commerce in effect on the date any arbitration commences (the “Rules”),
which Rules are deemed to be incorporated by reference into this clause.  The place of the arbitration shall be
Stockholm, Sweden, and the award shall be deemed to have been made there.  The tribunal may hold hearings, meetings,
and deliberations at any place it deems appropriate, having regard to the
circumstances of the arbitration.  The
tribunal shall be comprised of three arbitrators to be appointed by the
Arbitration Institute of the Stockholm Chamber of Commerce, in accordance with
the Rules.  The tribunal shall neither
have nor exercise any power to act as amiable
compositeur or ex aequo et bono
or to award special, indirect, consequential, or punitive damages.  The language of the arbitration shall be
English.  Judgment upon any arbitral
award may be entered in any court of competent jurisdiction.  Court jurisdiction under Sections 45 and 69
of the United Kingdom’s Arbitration Act of 1996 shall not apply.  Any Party to this Agreement may intervene in
any arbitral proceeding commenced under this Agreement.  For purposes of this Section 10.7 and any
arbitration in relation to this Agreement only, the Seller and DT shall be
considered one and the same Party, and shall be considered, together, as one
Party.

 

Section 10.8                            Governing
Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF ENGLAND AND WALES.  NO EFFECT SHALL BE GIVEN TO ANY CONFLICT OF
LAW PROVISION OR RULE OF ANY JURISDICTION OTHER THAN ENGLAND AND WALES THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN ENGLAND
AND WALES.

 

43

 

Section 10.9                            Judgment
Currency.  The obligation of the Parties to make
payments under this Agreement is in U.S. dollars (the “Obligation Currency”)
and such obligation shall not be discharged or satisfied by any tender or
recovery pursuant to any judgment expressed in any currency other than the
Obligation Currency or any other realization in such other currency, whether as
proceeds of set-off, security, guarantee, distributions, or otherwise, except
to the extent to which such tender, recovery or realization shall result in the
receipt by the Party which is to receive such payment of the full amount of the
Obligation Currency expressed to be payable hereunder.  The Party liable to make such payment agrees
to indemnify the Party which is to receive such payment for the amount (if any)
by which such receipt shall fall short of the full amount of the Obligation
Currency expressed to be payable hereunder and the party which is to receive
such payment agrees to pay to the party liable to make such payment the amount
(if any) by which such receipt, shall exceed the full amount of the Obligation
Currency, and, in each case, such obligation shall not be affected by judgment
being obtained for any other sums due under this Agreement.  The Parties agree that the rate of exchange
which shall be used to determine if such tender, recovery or realization shall
result in the receipt by the party which is to receive such payment of the full
amount of the Obligation Currency expressed to be payable hereunder shall be
the noon buying rate in New York City for cable transfers in foreign currencies
as certified for customs purposes by the Federal Reserve Bank of New York for
the business day preceding that on which the judgment becomes a final judgment.

 

Section 10.10                     Third
Party Beneficiaries.  This Agreement shall not confer any rights
or remedies on any other Person other than the Parties and their respective
successors and permitted assigns.  For
the avoidance of doubt, a person who is not a Party to this Agreement for the
time being has no right under the English Contracts (Rights of Third Parties)
Act 1999 to enforce any term of this Agreement

 

Section 10.11                     Amendments
and Waivers.  No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Seller. No waiver by any Party of any default or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.  No failure
to exercise and no delay in exercising any right, power or remedy under this
Agreement will operate as a waiver; nor will any single or partial exercise of
any right, power or remedy preclude any other or further exercise of that or
any other right, power or remedy.

 

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

 

Section 10.13                     Severability.  Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction.

 

Section 10.14                     Joint and
Several Liability.  The obligations of the Seller and DT
hereunder shall be joint and several, and shall be binding upon and inure to
the benefit of the Seller and DT and their respective successors and assigns.

 

44

 

Section 10.15                     Expenses.  Each
of the Parties and the Company will bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby. Each of the Seller and DT agrees that the
Company has not borne and will not bear any of the costs and expenses of the
Seller or DT (including any of its legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.

 

Section 10.16                     Construction.  The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this
Agreement.  Any reference to any
national, supranational, federal, state, local, or foreign statute or law shall
be deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word “including” shall mean
including without limitation. The Parties intend that each  warranty and covenant contained herein shall
have independent significance. If any Party has breached any  warranty or covenant contained herein in any
respect, the fact that there exists another warranty or covenant relating to
the same subject matter (regardless of the relative levels of specificity)
which the Party has not breached shall not detract from or mitigate the fact
that the Party is in breach of the first warranty or covenant.

 

Section 10.17                     Payment of
Taxes.  Each Party shall be responsible for their
respective transfer, documentary, sales, use, stamp, registration and other
such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement.  Any
such taxes shall be paid by such Party responsible for such Taxes when due, and
such Party will, at its own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees, required by applicable law.

 

Section 10.18                     Incorporation
of Exhibits, Annexes, and Schedules.  The Exhibits, Annexes, and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.

 

Section 10.19                     Specific
Performance.  Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court having jurisdiction over the Parties and the matter
(subject to the provisions set forth in Section 10.7 hereof), in addition to
any other remedy to which they may be entitled, at law or in equity.

 

(Signature page follows.)

 

45

 

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

 

 

	
   

  	
  CETEL B.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Swen Michael Fries

  	
   

  
	
   

  	
  By:

  	
  Swen Michael Fries

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Antonius Joseph
  Zijlstra

  	
   

  
	
   

  	
  By:

  	
  Antonius Joseph Zijlstra,

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DEUTSCHE TELEKOM AG

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Kevin Copp

  	
   

  
	
   

  	
  By:

  	
  Kevin Copp

  
	
   

  	
  Title:

  	
  Assistant General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Fridbert Gerlach

  	
   

  
	
   

  	
  By:

  	
  Fridbert Gerlach

  
	
   

  	
  Title:

  	
  Senior Executive Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MOBILE TELESYSTEMS OJSC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Mikhail A. Smirnov

  	
   

  
	
   

  	
  By:

  	
  Mikhail A. Smirnov

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Viktor I. Kondratyev

  	
   

  
	
   

  	
  By:

  	
  Viktor
  I. Kondratyev

  
	
   

  	
  Title:

  	
  Chief Accountant

  
				

 

46

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