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Exhibit 4.1  

 
 

PENN NATIONAL GAMING, INC
  
    NONQUALIFIED STOCK OPTION    
    

        This Nonqualified Stock Option ("Option") is granted as of the 6th day of February, 2003 by Penn National Gaming, Inc., a Pennsylvania corporation (the
"Company") to Peter M. Carlino (the "Optionee"). 

B A C K G R O U N D:  

        The Optionee is an employee of the Company. The Company desires to grant to the Optionee, and the Optionee desires to accept from the Company, a Nonqualified
Stock Option. This Agreement shall serve to memorialize the action taken by the Compensation Committee at its meeting on February 5, 2003. This Option is not granted pursuant to that certain
Amended and Restated 1994 Stock Option Plan of the Company, as amended (the "Plan", a copy of which is attached hereto as Exhibit "A"). Notwithstanding the foregoing sentence, any capitalized terms
used herein shall have the meanings ascribed to them in the Plan, unless the context requires otherwise, and the provisions of this Option shall be interpreted as if the Option were granted under the
plan and in accordance with the terms and conditions of the Plan. 

        NOW
THEREFORE, in consideration of the above premises and of the undertakings set forth herein, the parties hereto, intending to be legally bound, hereby agree as follows: 

        1.    Grant.    The Company hereby grants to the Optionee an Option to purchase on the terms hereinafter set forth all
or any part of an aggregate of FORTY SEVEN THOUSAND AND FIVE HUNDRED (47,500) shares (the "Option Shares") of the Company's $.01 par value Common Stock ("Common Stock") at an exercise price of
$15.9000 per share (the "Option Price") pursuant to the Plan. 

        2.    Term.    The Option granted hereunder shall be exercisable for a period of nine years commencing on the first
anniversary of the date hereof, and in accordance with the following vesting schedule: 

	Date
	 	Number of Vested Shares

	February 6, 2004	 	11,875
	February 6, 2005	 	11,875
	February 6, 2006	 	11,875
	February 6, 2007	 	11,875

        Except
as provided in Article 8 of the Plan (relating to termination of employment after vesting), the Option may be exercised only during the continuance of the Optionee's
employment. Once any Option Shares become vested, the Option's exercisability is intended to be cumulative and is not to be affected by the subsequent vesting of other Option Shares. 

        3.    Method of Exercise and Payment.    The Option shall be exercised by written notice, specifying the number of
Option Shares to be purchased and accompanied by payment in the amount of the Option Price multiplied by the number of shares of Common Stock designated in such election to purchase. The purchase
price shall be paid in full, in cash or by certified or cashier's check payable to the order of the Company, upon the exercise of the Option; provided, however, that in lieu of cash or check, with the
approval of the Committee appointed by the Board of Directors of the Company to administer the Plan at or prior to exercise, the Optionee may exercise the Option in the manner provided in
Article 5.4 of the Plan relating to "Cashless Exercise," or by tendering to the Company shares of the Company's Common Stock owned by the Optionee and having a fair market value equal to the
cash exercise price applicable to the Option (with the fair market value of such stock to be determined in the manner provided in Article 5 of the Plan) or by delivering such combination of
cash 

 

and
such shares as the Committee in its sole discretion may approve. The shares of Common Stock so purchased shall be issued to the Optionee as the record owner of such shares of Common Stock as of
the close of business on the date on which the Option is exercised, in whole or in part, and the Option Price is paid. Certificates representing the shares of Common Stock so purchased shall be
delivered to the Optionee promptly and in no event later than ten days after the Option shall have been so exercised. 

        4.    Transfers.    This Option is not transferable by the Optionee other than by will or pursuant to the laws of
descent and distribution in the event of the Optionee's death, in which event the Option may be exercised by the heirs or legal representatives of the Optionee. Any attempt at assignment, transfer,
pledge or disposition of the Option contrary to the provisions hereof, or the levy of any execution, attachment or similar process on the Option, shall be null and void and without effect. 

        5.    Adjustments on Changes in Common Stock.    The number of Option Shares covered by this Option and the Option
Price shall be appropriately adjusted in the event of a stock dividend, stock split or other increase or decrease in the number of issued shares of Common Stock of the Company resulting from a
subdivision or consolidation of such Common Stock or other capital adjustment (not including the issuance of Common Stock on the conversion of other securities of the Company which are convertible
into Common Stock) effected without receipt of consideration by the Company. 

        6.    Rights of the Company.    Neither the Optionee nor his legal representative, legatees or distributes, as the
case may be, will be or will be deemed to be a holder of any shares subject to this Option unless and until certificates for such shares are issued to him or them upon exercise of this Option. No
dividends shall be payable on any stock subject to this Option prior to the issuance of such shares on exercise of this Option. 

        7.    Legal Requirements.    If the listing, registration or qualification of the Option Shares on any securities
exchange or under any Federal or state law, or the consent or approval of any governmental regulatory body is necessary as a condition of or in connection with the purchase of such Option Shares, the
Company shall not be obligated to issue or deliver the certificates representing the Option Shares as to which the Option has been exercised unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained. This Option does not hereby impose on the Company a duty so to list, register, qualify or effect or obtain consent or approval. If
registration is considered unnecessary by the Company or its counsel, the Company shall cause a legend to be placed on the Option Shares being issued calling attention to the fact that they have been
acquired for investment and have not been registered, and such other legends as maybe considered necessary by the Company or its counsel. 

        8.    Option Shares to Be Purchased for Investment.    Unless the Company has heretofore notified the Optionee that a
registration statement covering the Option Shares has become effective under the Securities Act of 1933, as amended, and the Company has not hereafter notified the Optionee that such registration is
no longer effective or that the prospectus contained therein is no longer current, it shall be a condition to any exercise of the Option that the Option Shares acquired upon such exercise be acquired
for investment and not with a view to distribution, and the person effecting such exercise shall submit to the Company a certificate of such investment intent, together with such other evidence
supporting the same as the Company may request. The Company shall be entitled to restrict the transferability of the Option Shares issued upon any such exercise to the extent necessary to avoid risk
of violation of the Securities Act of 1933, as amended, or any other Federal or state securities laws or any rules or regulations promulgated thereunder. Such restrictions and any such other
restrictions as may be deemed necessary by the Company or its counsel may, at the option of the Company, be noted or set forth in full on the share certificates. 

2

 

        9.    Withholding Taxes.    

        (a)   As
a condition of the exercise of the Option, subject to the provisions of Subsection 9(b), the Company requires that the Optionee pay or reimburse any taxes which the
Company is required to withhold in connection with the exercise of the Option. 

        (b)   The
Optionee may satisfy the withholding obligation described in Subsection 9(a), in whole or in part, by electing to have the Company withhold shares of Common Stock
(otherwise issuable upon the exercise of the Option) having a fair market value equal to the amount required to be withheld. An election by the Optionee to have shares withheld for this purpose shall
be subject to the following restrictions: 

	(i)
	it
must be made prior to the date on which the amount of tax to be withheld is determined;

	(ii)
	it
shall be irrevocable; and

	(iii)
	it
shall be subject to disapproval by the Committee. 

        10.    Notices.    Any notice to be given to the Company shall be addressed to the Treasurer of the Company at its
principal executive office and any notice to be given to the Optionee shall be addressed to the Optionee at the address then appearing on the records of the Company or at such other address as either
party hereafter may designate in writing to the other. Any such notice shall be deemed to have been duly given when deposited in the United States mail addressed as aforesaid, registered or certified
mail and with proper postage and registration or certification fees prepaid. 

        11.    Relationship.    Nothing herein contained shall affect the rights of the Company or any subsidiary to terminate
the Optionee's contractual relationship, services, responsibility, duties or authority to represent the Company or any subsidiary at any time for any reason whatsoever. 

        12.    Non-defined Terms.    Any initially capitalized term not defined herein shall have the meaning
given to it in the Plan. 

        13.    Amendment.    This Option may not be amended except by an agreement in writing executed by the parties hereto,
and approved by the Committee appointed by the Board of Directors of the Company to administer the Plan. 

        14.    Governing Law.    This Option shall be governed by and construed in accordance with the internal laws (without
reference to the law of conflicts) of the Commonwealth of Pennsylvania. 

3

 

        IN
WITNESS WHEREOF, the Company has granted this Option on the day and year first above written. 

	Attest:	 	PENN NATIONAL GAMING, INC.
	

/s/  ROBERT S. IPPOLITO      
	
 	

By:	
 	

/s/  KEVIN DESANCTIS      

	ROBERT S. IPPOLITO, SECRETARY	 	 	 	KEVIN DESANCTIS, PRESIDENT AND CHIEF OPERATING OFFICER
	

(Corporate Seal)	
 	

 	
 	

 
	

Witness:	
 	

ACCEPTED BY:
	

/s/  SUSAN MONTGOMERY      	
 	

/s/  PETER M. CARLINO      
	
	 	
 PETER M. CARLINO

4

Exhibit A  

AMENDED
AND RESTATED

PENN NATIONAL GAMING, INC.

1994 STOCK OPTION PLAN

(AMENDED AND RESTATED AS OF FEBRUARY 19, 1997)

(AMENDMENTS RATIFIED BY THE SHAREHOLDERS OF THE

CORPORATION ON APRIL 30, 1997) 

ARTICLE
1. PURPOSE OF THE PLAN 

        1.1    Purpose—The Penn National Gaming, Inc. 1994 Stock Option Plan (the "Plan") is intended to provide
eligible employees and Directors of Penn National Gaming, Inc. and its subsidiaries an opportunity to acquire Common Stock of the Corporation. The Plan is designed to help the Corporation
attract, retain and motivate employees and Directors to make substantial contributions to the success of the Corporation's business. 

        1.2    Stock Options to Be Granted—Options granted under this Plan are intended to be Incentive Stock Options within
the meaning of Code Section 422(b); however, Nonqualified Stock Options may also be granted within the limitations of the Plan herein described. 

ARTICLE
2. DEFINITIONS 

        2.1    "Agreement"—The written instrument evidencing the grant of an Option. A Participant may be issued one or more
Agreements from time to time, reflecting one or more Options. 

        2.2    "Board"—The Board of Directors of Penn National Gaming, Inc. 

        2.3    "Code"—The Internal Revenue Code of 1986, as amended. 

        2.4    "Committee"—The Committee which the Board appoints to administer the Plan. 

        2.5    "Common Stock"—The common stock of the Penn National Gaming, Inc. ($.01 par value) as described in the
Corporation's Articles of Incorporation, or such other stock as shall be substituted therefor. 

        2.6    "Corporation"—Penn National Gaming, Inc. or any Subsidiary. 

        2.7    "Director"—A member of the Board (or the Board of Directors of any Subsidiary) who is not an Employee. 

        2.8    "Employee"—Any Key Employee, executive officer or non-executive officer employed by the
Corporation. "Key Employee" means any employee of the Corporation determined by the Committee to be in a position to make substantial contributions to the success of the Corporation's business. 

        2.9    "Exchange Act"—The Securities Exchange Act of 1934, as amended. 

        2.10    "Incentive Stock Option"—A stock option intended to satisfy the requirements of Code Section 422(b). 

        2.11    "Nonqualified Stock Option"—A stock option other than an Incentive Stock Option. 

        2.12    "Optionee"—A Participant who is awarded a Stock Option pursuant to the provisions of the Plan. 

        2.13    "Participant"—An Employee or Director who receives a grant of an option under the Plan. 

        2.14    "Plan"—Penn National Gaming, Inc. 1994 Stock Option Plan. 

        2.15    "Retirement"—Separation from service on account of early, normal or late retirement, in accordance with the
retirement policies of the Corporation, or as determined by the Board. 

        2.16    "Securities Act"—The Securities Act of 1933, as amended. 

 

        2.17    "Stock Option" or "Option"—An award of a right to purchase
Common Stock pursuant to the provisions of the Plan. 

        2.18    "Subsidiary"—Any direct or indirect subsidiary of the Corporation or other entity which is controlled by the
Corporation, as determined by the Committee, including a subsidiary corporation as defined in Code Section 424(f) that is a subsidiary of the Corporation. 

ARTICLE
3. ADMINISTRATION OF THE PLAN 

        3.1    The Committee—The Plan shall be administered by a committee of the Board (the "Committee") composed of two or
more members of the Board, all of whom are "non-employee directors," as such term is defined under the rules and regulations adopted from time to time by the Securities and Exchange
Commission pursuant to Section 16(b) of the Exchange Act, including specifically but without limitation, Rule 16b-3 and any successor rule, and are "outside directors," as
such term is defined under the regulations adopted from time to time by the Internal Revenue Service pursuant to Section 162(m) of the Code. The Board may from time to time remove members from,
or add members to, the Committee. Vacancies on the Committee, howsoever caused, shall be filled by the Board. 

        3.2    Power of the Committee— 

	(a)
	The
Committee shall be vested with full authority to make such rules and regulations as it deems necessary or desirable to administer the Plan and to interpret the provisions of the
Plan, unless otherwise determined by the Board. Any determination, decision or action of the Committee in connection with the construction, interpretation, administration or application of the Plan
shall be final, conclusive and binding upon all Optionees and any person claiming under or through an Optionee, unless otherwise determined by the Board.

	(b)
	Subject
to the terms, provisions and conditions of the Plan and subject to review and approval by a majority of the disinterested members of the Board, the Committee shall have
exclusive jurisdiction to:

	(1)
	determine
who are the Corporation's Directors, Key Employees, executive officers and non-executive officers and therefore Participants under the Plan;

	(2)
	select
the Participants to be granted Options (it being understood that more than one Option may be granted to the same person);

	(3)
	determine
the number of shares subject to each Option;

	(4)
	determine
the date or dates when the Options will be granted;

	(5)
	determine
the purchase price of the shares subject to each Option in accordance with Article 5 of the Plan;

	(6)
	determine
the date or dates when each Option may be exercised and the term of the Option pursuant to Article 7 of the Plan,

	(7)
	determine
whether or not an Option constitutes an Incentive Stock Option; and

	(8)
	prescribe
the form, which shall be consistent with the Plan, of the Agreement evidencing any Options granted under the Plan. 

        3.3    Terms—The grant of an Option under the Plan shall be evidenced by an Agreement, which may include any terms
and conditions consistent with this Plan, as the Committee may determine. 

        3.4    Liability—No member of the Board or the Committee shall be liable for any action or determination made in
good faith by the Board or the Committee with respect to this Plan or any Options granted under this Plan. 

A-2

 

ARTICLE
4.    COMMON STOCK SUBJECT TO THE PLAN 

        4.1    Common Stock Authorized—The aggregate number of shares of Common Stock for which Options may be granted under
the Plan shall not exceed 3,000,000 shares. The limitation established by the preceding sentence shall be subject to adjustment as provided in Article 9 of the Plan. 

        4.2    Shares Available—The Common Stock to be issued upon exercise of Options shall be made available at the
discretion of the Board, either from authorized but unissued Common Stock or from Common Stock acquired by the Corporation, including shares purchased in the open market. In the event that any
outstanding Option under the Plan for any reason expires or is terminated, the shares of Common Stock allocable to the unexercised portion of such Option may thereafter be regranted subject to Option
under the Plan. 

        4.3    Individual Optionee Limit—No Optionee shall receive Options for more than 1,000,000 shares in the aggregate.
The limitation established by the preceding sentence shall be subject to adjustment as provided in Article 9 of the Plan. 

ARTICLE
5.    STOCK OPTIONS 

        5.1    Exercise Price—The exercise price per share of Common Stock shall be equal to or greater than
100 percent of the fair market value of one share of Common Stock on the date the Option is granted, except that the purchase price per share shall be 110 percent of such fair market
value in the case of an Incentive Stock Option granted to any individual described in Section 6.2 of the Plan. The exercise price shall be subject to adjustment as provided in Article 9
of the Plan. 

        5.2    Limitation on Incentive Stock Options—The aggregate fair market value (determined as of the date an Option is
granted) of the stock with respect to which Incentive Stock Options are exercisable for the first time by any individual in any calendar year (under the Plan and all other plans maintained by the
Corporation) shall not exceed $100,000. 

        5.3    Determination of Fair Market Value— 

	(a)
	During
such time as Common Stock is not listed on an established stock exchange or exchanges but is listed on the NASDAQ National Market System, the fair market value per share shall
be the closing sale price for the Common Stock on the day the Option is granted, and if no sale of Common Stock is reported on that day, the fair market value shall be the closing price for the Common
Stock for the next preceding day on which a sale is reported.

	(b)
	During
such time as the Common Stock is not listed on an established stock exchange or exchanges or on the NASDAQ National Market System, fair market value per share shall be the mean
between the closing dealer "bid" and "asked" prices for the Common Stock on the day the Option is granted, and if no "bid" and "asked" prices are quoted for the day of the grant, the fair market value
shall be determined by reference to such prices on the next preceding day on which such prices were quoted.

	(c)
	If
the Common Stock is listed on an established stock exchange or exchanges, the fair market value shall be deemed to be the closing price of Common Stock on the principal exchange on
the day the Option is granted or, if no sale of Common Stock has been made on such principal stock exchange on that day, the fair market value shall be determined by reference to such price on any
other stock exchange selected by the Committee where the Common Stock is so listed, and if no sale of Common Stock has been made on such exchange on that day, then by reference to the next preceding
day on which a sale occurred.

	(d)
	In
the event that none of the foregoing clauses (a) through (c) are applicable, then fair market value will be the price established by the Committee in good faith. 

A-3

 

        5.4    Cashless Exercise.    At the request of a Participant, and to the extent permitted by applicable law, the
Corporation may, in its sole discretion, permit the Optionee to exercise the Option by selectively approving arrangements with a brokerage firm under which such brokerage firm, on behalf of the
Participant, shall pay to the Corporation the exercise price of the Stock Options being exercised, and the Corporation, pursuant to an irrevocable notice from the Participant, shall promptly deliver
the shares being purchased to such brokerage firm. 

        5.5    Reload Option.    In the discretion of the Committee, any Option may be accompanied by a reload option. A
reload option gives an Optionee a new Option to acquire the number of shares that the Optionee uses to pay the purchase price upon exercise of any Option. A reload option shall be subject to all the
same terms and conditions as the original Option except that (i) the exercise price of the shares subject to the reload option shall be determined at the time the original Option is exercised,
and (ii) the reload option shall conform to all provisions of the Plan in effect at the time the original Option is exercised. 

ARTICLE
6.    ELIGIBILITY 

        6.1    Participation—Options shall be granted only to persons who are Employees or Directors of the Corporation, as
determined by the Committee, and ratified by a majority of the disinterested members of the Board. 

        6.2    Incentive Stock Option Eligibility. Notwithstanding any provision of the Plan, an individual who owns more than
10 percent of the total combined voting power of all classes of outstanding stock of the Corporation shall not be eligible for the grant of an Incentive Stock Option, unless the special
requirements set forth in Sections 5.1 and 7.2(i) of the Plan are satisfied. For purposes of this Section 6.2, in determining stock ownership, an individual shall be considered as owning
the stock owned, directly or indirectly, by or for such individual's brothers and sisters (whether by the whole or half blood), spouse, ancestors and lineal descendants. Stock owned, directly or
indirectly, by or for a corporation, partnership, estate or trust shall be considered as being owned proportionately by or for its shareholders, partners or beneficiaries. "Outstanding stock" shall
include all stock actually issued and outstanding immediately before the grant of the Option. "Outstanding stock" shall not include shares authorized for issue under outstanding Options held by the
Optionee or by any other person. 

ARTICLE
7.    TERM OF EXERCISE OF OPTIONS 

        7.1    Vesting—An Optionee's interest in the right to exercise an Option granted hereunder, determined only by
reference to continuous employment with the Corporation following the date of grant of the Option, shall vest at such times and in such increments as the Board of Directors shall determine from time
to time. 

        7.2    Termination—Each Option granted under the Plan shall terminate on the date determined by the Committee and
approved by a majority of the disinterested members of the Board, and specified in the Agreement; provided, however, that (i) each Incentive Stock Option granted to an individual described in
Section 6.2 of the Plan shall terminate not later than five years after the date of the grant, (ii) each other Incentive Stock Option shall terminate not later than ten years after the
date of grant, and (iii) each Option granted under the Plan which is intended to be a Nonqualified Stock Option shall terminate not later than ten years and one month after the date of grant.
Each Option granted under the Plan shall become exercisable only after the earlier of the date on which (i) the Optionee has completed continuous employment with the Corporation or provided
services as a Director to the Corporation, immediately following the date of the grant of the Option, in accordance with Section 7.1 above, or (ii) a Change of Control occurs. If a
Change of Control or an event described in Section 8.3 hereof occurs, Stock Options granted to Key Employees and nonexecutive officers shall become immediately exercisable notwithstanding the
application of the determinations made pursuant to 

A-4

 

Section 7.
1 of the Plan. In addition, if a Change of Control or an event described in Section 8.3 hereof occurs, Stock Options granted to executive officers and Directors shall become
exercisable, as follows: 

	Period of

Continuous Employment

Following Grant
	 	Cumulative Vested

Percentage

	Less than one year	 	0
	One year or more	 	50
	Two years or more	 	100

        The
Committee at its discretion may provide further limitations on the exercisability of Options granted under the Plan. An Option may be exercised only during the continuance of the
Optionee's employment, except as provided in Article 8 of the Plan. 

        7.3    Exercise—    

	(a)
	A
person electing to exercise an Option shall give written notice to the Corporation of such election and of the number of shares he has elected to purchase, in such form as the
Committee shall have prescribed or approved, and shall at the time of exercise tender the full purchase price of the shares he has elected to purchase. The purchase price shall be paid in full, in
cash, upon the exercise of the Option, provided, however, that in lieu of cash, with the approval of the Committee at or prior to exercise, an Optionee may exercise an Option by complying with the
method(s) of exercise described in Section 5.4, or by tendering to the Corporation shares of Common Stock owned by the Optionee (or attesting to the ownership of shares of Common Stock) having
a fair market value equal to the cash exercise price applicable to the Option (with the fair market value of such stock to be determined in the manner provided in Article 5 hereof) or by
delivering such combination of cash and such shares as the Committee in its sole discretion may approve. Notwithstanding the foregoing, Common Stock acquired pursuant to the exercise of an Incentive
Stock Option may not be tendered as payment unless the holding period requirements of Code Section 422(a)(1) have been satisfied.

	(b)
	A
person holding more than one Option at any relevant time may, in accordance with the provisions of the Plan, elect to exercise any such Options in any order.

	(c)
	For
purposes of Subsection 7.2 above, a "Change of Control" shall be deemed to have occurred if:

	(1)
	any
"Person" (which for purposes of this Section 7 shall mean as such term is used in Sections 13(d) and 14(d) of the Exchange Act), except for any of the Corporation's
employee benefit plans, or any entity holding the Corporation's voting securities for, or pursuant to, the terms of any such plan (the "Benefit Plan(s)"), is or becomes the beneficial owner, directly
or indirectly, of the Corporation's securities representing 19.9% or more of the combined voting power of the Corporation's then outstanding securities other than pursuant to a transaction described
in (4) below;

	(2)
	there
occurs a contested proxy solicitation of the Corporation's shareholders that results in the contesting party obtaining the ability to vote securities representing 19.9% or more
of the combined voting power of the Corporation's then outstanding securities;

	(3)
	there
occurs a sale, exchange, transfer or other disposition of substantially all of the assets of the Corporation to another entity, except to an entity controlled directly or
indirectly by the Corporation; 

A-5

 

	(4)
	there
occurs a merger, consolidation, or other reorganization of the Corporation, unless:

	(A)
	the
shareholders of the Corporation immediately before such merger, consolidation or reorganization own, directly or indirectly immediately following such merger, consolidation or
reorganization, at least 51% of the combined voting power of the outstanding voting securities of the corporation resulting from such merger, consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their ownership of the voting securities immediately before such merger, consolidation or reorganization;

	(B)
	the
individuals who were members of the Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least 51% of
the members of the board of directors of the Surviving Corporation; and

	(C)
	no
Person (other than the Corporation or any Subsidiary, any Benefit Plan (or any trust forming a part thereof) maintained by the Corporation, the Surviving Corporation or any
Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had beneficial ownership of 20% or more of the then outstanding voting securities) has beneficial
ownership of 20% or more of the combined voting power of the Surviving Corporation's then outstanding voting securities;

	(5)
	a
plan of liquidation or dissolution of the Corporation other than pursuant to bankruptcy or insolvency laws is adopted; or

	(6)
	during
any period of two consecutive years, individuals, who at the beginning of such period constituted the Board cease for any reason to constitute at least a majority of the Board
unless the election, or the nomination for election by the Corporation's shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period; 

        Notwithstanding
the foregoing, a "Change of Control" shall not be deemed to have occurred for purposes of this Plan: 

	(A)
	in
the event of a sale, exchange, transfer or other disposition of substantially all of the assets of the Corporation, or a merger, consolidation or other reorganization involving the
Corporation and a Participant alone or with other Participants, or any entity in which the Participant (alone or with other Participants) has, directly or indirectly, at least a 5% equity or ownership
interest; or

	(B)
	in
a transaction otherwise commonly referred to as a "management leveraged buyout." 

        Notwithstanding
clause (1) of the preceding paragraph, a Change of Control shall not be deemed to have occurred if a Person becomes the beneficial owner, directly or indirectly,
of the Corporation's securities representing 20% or more of the combined voting power of the Corporation's then outstanding securities solely as a result of an acquisition by the Corporation of its
voting securities which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 20% or more of the combined voting power of the
Corporation's then outstanding securities; provided, however, that if a Person becomes a beneficial owner of 20% or more of the combined voting power of the Corporation's then outstanding securities
by reason of share purchases by the Corporation and shall, after such share purchases by the Corporation, become the beneficial owner, directly or indirectly, of any additional voting securities of
the Corporation, then a Change of Control of the Corporation shall be deemed to have occurred with respect to such Person 

A-6

 

under
clause (1) of the preceding paragraph. In no event shall a Change of Control of the Corporation be deemed to occur under such clause (1) above with respect to Benefit Plans. 

ARTICLE
8.    TERMINATION OF EMPLOYMENT AFTER VESTING 

        8.1    Retirement—In the event of Retirement, an Option shall lapse at the earlier of the term of the Option or: 

	(a)
	In
the case of an Incentive Stock Option, three months from the date of Retirement; and

	(b)
	In
the case of Options other than Incentive Stock Options, up to 24 months, at the discretion of the Committee, from the date of Retirement. 

        8.2    Termination Before Retirement—In the event of voluntary termination of employment at the election of the
Optionee or termination at the election of the Corporation, all Options shall lapse as of the earlier of the term of the Option or 30 days from date of termination. 

        8.3    Death or Disability—In the event of termination due to death or "Disability" as defined in Code
Section 72(m)(7), an Option shall lapse at the earlier of the term of the Option or one year after termination due to such cause. 

        8.4    Forfeiture—In the event 

	(a)
	an
Optionee's employment is terminated by the Corporation for cause, or

	(b)
	an
Optionee engages in competition with the Corporation in breach of a written agreement between the Optionee and the Corporation or, in the absence of a written agreement on the
subject, within 12 months after termination of his employment. 

the
Corporation shall have the right to purchase from the Optionee all shares of Common Stock acquired pursuant to the Plan, at a price equal to the lesser of the amount paid for such shares by the
Optionee or the then fair market value of the shares determined under Section 5.3. If the Optionee has previously disposed of Common Stock acquired under the Plan, the Corporation shall have
the right to recover from the Optionee the excess of the amount received by the Optionee upon disposition of such Common Stock over the exercise price of such Common Stock. An Optionee shall be
considered to engage in competition with the Corporation if he engages in any business in which the Corporation has engaged within two years prior to termination of the Optionee's employment with the
Corporation,
within 100 miles of any facility at which the Corporation has engaged in business, whether as employee, officer, director, proprietor, partner or owner of more than 1% of the equity interest in a
business that engages in competition with the Corporation. 

A-7

   
ARTICLE 9.    ADJUSTMENT PROVISIONS 

        9.1    Share Adjustments—    

	(a)
	In
the event that the shares of Common Stock of the Corporation, as presently constituted, shall be changed into or exchanged for a different number or kind of shares of stock or
other securities of the Corporation or of another corporation (whether by reason of merger, consolidation, recapitalization, reclassification, split-up, combination of shares or otherwise)
or if the number of such shares of stock shall be increased through the payment of a stock dividend, then, subject to the provisions of Subsection (c) below, there shall be substituted for or
added to each share of stock of the Corporation which was theretofore appropriated, or which thereafter may become subject to an Option under the Plan, the number and kind of shares of stock or other
securities into which each outstanding share of the stock of the Corporation shall be so changed or for which each such share shall be exchanged or to which each such share shall be entitled, as the
case may be. Outstanding options shall also be appropriately amended as to price and other terms, as may be necessary to reflect the foregoing events.

	(b)
	If
there shall be any other change in the number or kind of the outstanding shares of the stock of the Corporation, or of any stock or other securities into which such stock shall
have been changed, or for which it shall have been exchanged, and if a majority of the disinterested members of the Board shall, in its sole discretion, determine that such change equitably requires
an adjustment in any Option which was theretofore granted or which may thereafter be granted under the Plan, then such adjustment shall be made in accordance with such determination.

	(c)
	The
grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Corporation to make adjustments, reclassifications, reorganizations or changes of its
capital or business structure, to merge, to consolidate, to dissolve, to liquidate or to sell or transfer all or any part of its business or assets. 

        9.2    Corporate Changes—A dissolution or liquidation of the Corporation, or a merger or consolidation in which the
Corporation is not the Surviving Corporation, shall cause each outstanding
Option to terminate, except to the extent that another corporation may and does in the transaction assume and continue the Option or substitute its own options. 

        9.3    Fractional Shares—Fractional shares resulting from any adjustment in Options pursuant to this
Article 9 may be settled as the Board or the Committee (as the case may be) shall determine. 

        9.4    Binding Determination—To the extent that the foregoing adjustments relate to stock or securities of the
Corporation, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Notice of any adjustment shall be given by the Corporation to each
holder of an Option which shall have been so adjusted. 

ARTICLE
10.    GRANT OF STOCK OPTIONS TO DIRECTORS 

        10.1    Grant—Stock Options may be granted to Directors under the Plan, subject to any limitations of applicable
law. 

        10.2    Termination—Notwithstanding the provisions of Article 8 hereof, if a Director's service with the
Corporation terminates by reason of Disability or Retirement as a director of the Corporation, any vested Option held by such Director may be exercised for a period of three years from the date of
such termination or until the expiration of the Option, whichever is earlier. If a Director's service with the Corporation terminates by reason of death or under mutually satisfactory conditions, or
if a Director dies within the three-year period following the termination by reason of Disability or Retirement from active service as a Director of the Corporation or within the
one-year period following termination 

A-8

 

under
mutually satisfactory conditions, any vested Option held by such Director may be exercised for a period of one year from the date of such termination or post-termination death, as
the case may be, or until the expiration of the stated term of the Option, whichever is earlier. All applicable provisions of this Plan not inconsistent with this Article 10 shall apply to
Options granted to Directors; provided, however, that the Committee may not exercise discretion under any provisions of this Plan with respect to Options granted under this Article 10 to the
extent that such discretion is inconsistent with Rule 16b-3 of the Exchange Act. 

ARTICLE
11.    GENERAL PROVISIONS 

        11.1    Effective Date—The Plan shall become effective upon its adoption by the Board, provided that any grant of an
Option is subject to the approval of the Plan by the shareholders of the Corporation within 12 months of adoption by the Board. 

        11.2    Termination of the Plan—Unless previously terminated by the Board, the Plan shall terminate on, and no
options shall be granted after, the tenth anniversary of its adoption by the Board. 

        11.3    Limitation on Termination, Amendment or Modification

	(a)
	The
Board may at any time terminate, amend, modify or suspend the Plan, provided that without the approval of the stockholders of the Corporation no amendment or modification shall be
made by the Board which:

	(1)
	increases
the maximum number of shares of Common Stock as to which Options may be granted under the Plan;

	(2)
	changes
the class of eligible Participants; or

	(3)
	otherwise
requires the approval of shareholders in order to maintain the exemption available under Rule 16b-3 (or any similar rule) under the Exchange Act.

	(b)
	No
amendment, modification, suspension or termination of the Plan shall in any manner affect any Option theretofore granted under the Plan without the consent of the Optionee or any
person validly claiming under or through the Optionee. 

        11.4    No Right to Employment—Neither anything contained in the Plan or in any instrument under the Plan nor the
grant of any Option hereunder shall confer upon any Optionee any right to continue in the employ of the Corporation or of any Subsidiary or limit in any respect the right of the Corporation or of any
Subsidiary to terminate the Optionee's employment at any time and for any reason. 

        11.5    Withholding Taxes— 

	(a)
	Subject
to the provisions of Subsection (b), the Corporation will require that an Optionee or any other person or entity receiving Common Stock upon exercise of an Option, as a
condition of the exercise of an Option other than an Incentive Stock Option, pay or reimburse any taxes which the Corporation is required to withhold in connection with the exercise of the Option.

	(b)
	An
Optionee may satisfy the withholding obligation described in Subsection (a), in whole or in part, by electing to have the Corporation withhold shares of Common Stock (otherwise
issuable upon the exercise of an Option) having a fair market value equal to the amount required to be withheld. An election by an Optionee to have shares withheld for this purpose shall be subject to
the following restrictions:

	(1)
	it
must he made prior to the date on which the amount of tax to be withheld is determined (the "Tax Date"); 

A-9

 

	(2)
	it
shall be irrevocable; and

	(3)
	it
shall be subject to disapproval by the Committee. 

        11.6    Listing and Registration of Shares— 

	(a)
	No
Option granted pursuant to the Plan shall he exercisable in whole or in part if at any time the Board shall determine in its discretion that the listing, registration or
qualification of the shares of Common Stock subject to such Option on any securities exchange or under any applicable law, or the consent or approval of any governmental regulatory body, is necessary
or desirable as a condition, of, or in connection with, the granting of such Option or the issue of shares thereunder, unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Board.

	(b)
	If
a registration statement under the Securities Act with respect to the shares issuable upon exercise of any Option granted under the Plan is not in effect at the time of exercise,
as a condition of the issuance of the shares, the person exercising such Option shall give the Committee a written statement, satisfactory in form and substance to the Committee, that such person is
acquiring the shares for such person's own account for investment and not with a view to distribution. The Corporation may place upon any stock certificate for shares issuable upon exercise of such
Option the following legend or such other legend as the Committee may prescribe to prevent disposition of the shares in violation of the Securities Act or other applicable law: 

"THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ("ACT") AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION OF COUNSEL FOR THE CORPORATION THAT REGISTRATION IS NOT REQUIRED." 

A-10

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Exhibit 4.1  

EXECUTION
COPY 

Dated
26 July 2004 

	

  

US$500,000,000  

FACILITY AGREEMENT  

for 

MOBILE TELESYSTEMS OPEN JOINT STOCK COMPANY  

arranged by 

ABN AMRO BANK N.V.

HSBC BANK PLC

ING BANK N.V.

RAIFFEISEN ZENTRALBANK OESTERREICH AG  

as Original Mandated Lead Arrangers 

and 

BANK AUSTRIA CREDITANSTALT AG

COMMERZBANK AKTIENGESELLSCHAFT  

as New Mandated Lead Arrangers 

with

ING BANK N.V., LONDON BRANCH  

acting as Agent 

Linklaters CIS

Paveletskaya sq. 2, bld. 2

Moscow 115054 

Telephone (7-095) 797 9797

Facsimile (7-095) 797 9798 

Ref MIYB 

  

 
 

CONTENTS    
    

	CLAUSE
 
	 	 
	 	 
	 	PAGE

	SECTION 1 INTERPRETATION	 	1
	

 	
 	

1	
 	

DEFINITIONS AND INTERPRETATION	
 	

1
	

SECTION 2 THE FACILITY	
 	

10
	

 	
 	

2	
 	

THE FACILITIES	
 	

10
	

 	
 	

3	
 	

PURPOSE	
 	

10
	

 	
 	

4	
 	

CONDITIONS OF UTILISATION	
 	

10
	

SECTION 3 UTILISATION	
 	

11
	

 	
 	

5	
 	

UTILISATION	
 	

11
	

SECTION 4 REPAYMENT, PREPAYMENT AND CANCELLATION	
 	

12
	

 	
 	

6	
 	

REPAYMENT	
 	

12
	

 	
 	

7	
 	

PREPAYMENT AND CANCELLATION	
 	

12
	

SECTION 5 COSTS OF UTILISATION	
 	

14
	

 	
 	

8	
 	

INTEREST	
 	

14
	

 	
 	

9	
 	

INTEREST PERIODS	
 	

15
	

 	
 	

10	
 	

CHANGES TO THE CALCULATION OF INTEREST	
 	

15
	

 	
 	

11	
 	

FEES	
 	

16
	

SECTION 6 ADDITIONAL PAYMENT OBLIGATIONS	
 	

17
	

 	
 	

12	
 	

TAX GROSS-UP AND INDEMNITIES	
 	

17
	

 	
 	

13	
 	

INCREASED COSTS	
 	

19
	

 	
 	

14	
 	

OTHER INDEMNITIES	
 	

20
	

 	
 	

15	
 	

MITIGATION BY THE LENDERS	
 	

21
	

 	
 	

16	
 	

COSTS AND EXPENSES	
 	

21
	

SECTION 7 REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT	
 	

22
	

 	
 	

17	
 	

REPRESENTATIONS	
 	

22
	

 	
 	

18	
 	

INFORMATION UNDERTAKINGS	
 	

25
	

 	
 	

19	
 	

FINANCIAL COVENANTS	
 	

28
	

 	
 	

20	
 	

GENERAL UNDERTAKINGS	
 	

29
	

 	
 	

21	
 	

EVENTS OF DEFAULT	
 	

33
	

SECTION 8 CHANGES TO PARTIES	
 	

37
	

 	
 	

22	
 	

CHANGES TO THE LENDERS	
 	

37
	

 	
 	

23	
 	

CHANGES TO THE BORROWER	
 	

40
	 	 	 	 	 	 	 

i

 

	

SECTION 9 THE FINANCE PARTIES	
 	

40
	

 	
 	

24	
 	

ROLE OF THE AGENT AND THE MANDATED LEAD ARRANGERS	
 	

40
	

 	
 	

25	
 	

CONDUCT OF BUSINESS BY THE FINANCE PARTIES	
 	

44
	

 	
 	

26	
 	

SHARING AMONG THE FINANCE PARTIES	
 	

44
	

SECTION 10 ADMINISTRATION	
 	

46
	

 	
 	

27	
 	

PAYMENT MECHANICS	
 	

46
	

 	
 	

28	
 	

SET-OFF	
 	

48
	

 	
 	

29	
 	

NOTICES	
 	

48
	

 	
 	

30	
 	

CALCULATIONS AND CERTIFICATES	
 	

49
	

 	
 	

31	
 	

PARTIAL INVALIDITY	
 	

50
	

 	
 	

32	
 	

REMEDIES AND WAIVERS	
 	

50
	

 	
 	

33	
 	

AMENDMENTS AND WAIVERS	
 	

50
	

 	
 	

34	
 	

COUNTERPARTS	
 	

50
	

SECTION 11 GOVERNING LAW AND ENFORCEMENT	
 	

51
	

 	
 	

35	
 	

GOVERNING LAW	
 	

51
	

 	
 	

36	
 	

ARBITRATION	
 	

51
	

 	
 	

37	
 	

JURISDICTION	
 	

51
	

SCHEDULE 1 The Original Lenders	
 	

53
	

SCHEDULE 2 Conditions precedent	
 	

54
	

SCHEDULE 3 Utilisation Request	
 	

56
	

SCHEDULE 4 Mandatory Cost formula	
 	

57
	

SCHEDULE 5 Form of Transfer Certificate	
 	

59
	

SCHEDULE 6 Form of Compliance Certificate	
 	

61

ii

  

THIS AGREEMENT is dated 26 July 2004 and made between: 

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

	(2)
	ABN AMRO BANK N.V., HSBC BANK PLC, ING BANK N.V. and RAIFFEISEN ZENTRALBANK OESTERREICH
AG as original mandated lead arrangers (the "Original Mandated Lead Arrangers") and BANK AUSTRIA
CREDITANSTALT AG and COMMERZBANK AKTIENGESELLSCHAFT as new mandated lead arrangers (the "New Mandated
Lead Arrangers") (together with the Original Mandated Lead Arrangers, the "Mandated Lead Arrangers");

	(3)
	THE FINANCIAL INSTITUTIONS listed in Schedule 1 as lenders (the "Original
Lenders"); and

	(4)
	ING BANK N.V., LONDON BRANCH as agent of the other Finance Parties (the "Agent"). 

IT
IS AGREED as follows: 

 
 

SECTION 1
  INTERPRETATION    
    

1      DEFINITIONS AND INTERPRETATION  

	1.1
	Definitions

In
this Agreement: 

"Additional Cost Rate" has the meaning given to it in Schedule 4 (Mandatory Cost formula). 

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

"Authorisation" means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration. 

"Availability Period" means: 

	(a)
	in
relation to Facility 1, the period from and including the Signing Date to and including the date which is 30 days after the Signing Date; and

	(b)
	in
relation to Facility 2, the period from and including 1 October 2004 to and including the date which is 80 days after 1 October 2004. 

"Available Commitment" means, in relation to a Facility, a Lender's Commitment under that Facility minus: 

	(a)
	the
amount of its participation in any outstanding Loans under that Facility; and

	(b)
	in
relation to any proposed Utilisation, the amount of its participation in any Loans that are due to be made under that Facility on or before the proposed Utilisation Date. 

"Available Facility" means, in relation to a Facility, the aggregate for the time being of each Lender's Available Commitment in relation to that
Facility. 

"Borrowings" has the meaning given to it in Clause 19 (Financial Covenants). 

"Break Costs" means the amount (if any) by which: 

	(a)
	the
interest (excluding the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the
last 

1

 

day
of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period; 

exceeds:

	(b)
	the
amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the London
interbank market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period. 

"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in Amsterdam, London, Moscow and New York
City. 

"Commitment" means a Facility 1 Commitment or a Facility 2 Commitment. 

"Compliance Certificate" means a certificate substantially in the form set out in Schedule 6 (Form of Compliance
Certificate). 

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

"Default" means an Event of Default or any event or circumstance specified in Clause 21 (Events of
Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the
foregoing) be an Event of Default. 

"EBITDA" has the meaning given to it in Clause 19 (Financial Covenants). 

"Environment" means living organisms including the ecological systems of which they form part and the following media: 

	(a)
	air
(including air within natural or man-made structures, whether above or below ground);

	(b)
	water
(including territorial, coastal and inland waters, water under or within land and water in drains and sewers); and

	(c)
	land
(including land under water). 

"Environmental Law" means all laws and regulations of any relevant jurisdiction which: 

	(a)
	have
as a purpose or effect the protection of, and/or prevention of harm or damage to, the Environment;

	(b)
	provide
remedies or compensation for harm or damage to the Environment; or

	(c)
	relate
to any waste, pollutant, contaminant or other substance (including any liquid, solid, gas, ion, living organism or noise) that may be harmful to human health or other life or
the Environment or a nuisance to any person or that may make the use or ownership of any affected land or property more costly or health and safety matters. 

"Environmental Licence" means any Authorisation required at any time under Environmental Law. 

"Event of Default" means any event or circumstance specified as such in Clause 21 (Events of
Default). 

"Facilities" means Facility 1 and Facility 2 and "Facility" means either of them. 

"Facility Office" means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that
date, by not less than five Business Days' 

2

 

written
notice) as the office or offices through which it will perform its obligations under this Agreement. 

"Facility 1" means the term loan facility made available under this Agreement as described in paragraph (a) of Clause 2.1
(The Facilities). 

"Facility 1 Commitment" means: 

	(a)
	in
relation to an Original Lender, the amount set opposite its name under the heading "Facility 1 Commitment" in Schedule 1 (The Original
Lenders) and the amount of any other Facility 1 Commitment transferred to it under this Agreement; and

	(b)
	in
relation to any other Lender, the amount of any Facility 1 Commitment transferred to it under this Agreement, 

to
the extent not cancelled, reduced or transferred by it under this Agreement. 

"Facility 1 Loan" means a loan made or to be made under Facility 1 or the principal amount outstanding for the time being of that loan. 

"Facility 1 Repayment Date" means the date falling 12 Months after the Signing Date, the date falling 18 Months after the Signing Date, the date falling
24 Months after the Signing Date, the date falling 30 Months after the Signing Date and the Final Maturity Date. 

"Facility 2" means the term loan facility made available under this Agreement as described in paragraph (b) of Clause 2.1
(The Facilities). 

"Facility 2 Commitment" means: 

	(a)
	in
relation to an Original Lender, the amount set opposite its name under the heading "Facility 2 Commitment" in Schedule 1 (The Original
Lenders) and the amount of any other Facility 2 Commitment transferred to it under this Agreement; and

	(b)
	in
relation to any other Lender, the amount of any Facility 2 Commitment transferred to it under this Agreement, 

to
the extent not cancelled, reduced or transferred by it under this Agreement. 

"Facility 2 Loan" means a loan made or to be made under Facility 2 or the principal amount outstanding for the time being of that loan. 

"Facility 2 Repayment Date" means the date falling 15 Months after the Signing Date, the date falling 21 Months after the Signing Date, the date falling
27 Months after the Signing Date and the Final Maturity Date. 

"Fee Letters" means each of the letters dated 2 July 2004 between the Original Mandated Lead Arrangers and the Borrower (or the Agent and the
Borrower) setting out the fees referred to in Clause 11 (Fees). 

"Final Maturity Date" means the date which is three years plus one day after the Signing Date. 

"Finance Document" means this Agreement, any Fee Letter, the Mandate Letter, the Syndication Side Letter and any other document designated as such by
the Agent and the Borrower. 

"Finance Party" means the Agent, the Mandated Lead Arrangers or a Lender. 

"Financial Indebtedness" means any indebtedness for or in respect of: 

	(a)
	moneys
borrowed; 

3

 

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

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

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

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

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

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

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

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

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

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

"Group" means the Borrower and its Subsidiaries for the time being. 

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

"Information Memorandum" means the document in the form approved by the Borrower concerning the Group which, at the Borrower's request and on its
behalf, was prepared in relation to this transaction and distributed by the Mandated Lead Arrangers to selected financial institutions before the Signing Date. 

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

"Interest Period" means, in relation to a Loan, each period determined in accordance with Clause 9 (Interest
Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest). 

"Kuban GSM" means CJSC Kuban GSM, a joint-stock company organized under the laws of the Russian Federation that is a Subsidiary of the Borrower. 

"Lender" means: 

	(a)
	any
Original Lender; and

	(b)
	any
bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 22 (Changes to the
Lenders), 

which
in each case has not ceased to be a Party in accordance with the terms of this Agreement. 

4

 

"LIBOR" means, in relation to any Loan: 

	(a)
	the
applicable Screen Rate; or

	(b)
	(if
no Screen Rate is available for Dollars or the Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at
its request quoted by the Reference Banks to leading banks in the London interbank market, 

as
of 11:00 a.m. on the Quotation Day for the offering of deposits in Dollars for a period comparable to the Interest Period for that Loan. 

"LMA" means the Loan Market Association. 

"Loan" means a Facility 1 Loan or Facility 2 Loan. 

"Majority Lenders" means: 

	(a)
	if
there are no Loans then outstanding, a Lender or Lenders whose Commitments aggregate more than 662/3% of the Total Commitments (or, if the Total Commitments have
been reduced to zero, aggregated more than 662/3% of the Total Commitments immediately prior to the reduction); or

	(b)
	at
any other time, a Lender or Lenders whose participations in the Loans then outstanding aggregate more than 662/3% of all the Loans then outstanding. 

"Mandate Letter" means the letter agreement dated 5 July 2004 between the Original Mandated Lead Arrangers and the Borrower. 

"Mandatory Cost" means the percentage rate per annum calculated by the Agent in accordance with Schedule 4 (Mandatory
Cost formula). 

"Margin" means 2.50 per cent. per annum. 

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

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

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

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

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

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

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

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

"Original Financial Statements" means the audited consolidated financial statements of the Group for the financial year ended 31 December 2003. 

5

 

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

"Party" means a party to this Agreement. 

"Permitted Security" means: 

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

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

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

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

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

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

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

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

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

6

 

"Qualifying Lender" has the meaning given to it in Clause 12 (Tax gross-up and
indemnities). 

"Quotation Day" means, in relation to any period for which an interest rate is to be determined, two Business Days before the first day of that period
unless market practice differs in the London interbank market, in which case the Quotation Day will be determined by the Agent in accordance with market practice in the London interbank market (and if
quotations for that currency and period would normally be given by leading banks in the London interbank market on more than one day, the Quotation Day will be the last of those days). 

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

"Reference Banks" means in relation to LIBOR and Mandatory Cost the principal London offices of the Original Mandated Lead Arrangers or such other banks
as may be appointed by the Agent in consultation with the Borrower. 

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

"Repayment Date" means a Facility 1 Repayment Date or a Facility 2 Repayment Date. 

"Repeating Representations" means each of the representations set out in Clauses 17.1 (Status), 17.2
(Binding obligations), 17.3 (Non-conflict with other obligations), 17.4
(Power and authority), 17.6 (Governing law and enforcement), 17.11 (No
default), 17.14 (Pari Passu Ranking), 17.15 (No proceedings pending or
threatened), 17.16 (Environmental laws and licences) and 17.17 (Telecommunications law and
licences). 

"Roubles" or "RUR" means the lawful currency of the Russian Federation for the time being. 

"Russian Insolvency Law" means the Federal Law of the Russian Federation No. 127-FZ of 26 October 2002 "On Insolvency
(Bankruptcy)". 

"Screen Rate" means the British Bankers Association Interest Settlement Rate for Dollars for the relevant period displayed on the appropriate page of
the Telerate screen. If the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the
Borrower and the Lenders. 

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

"Significant Subsidiary" means: 

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

	(b)
	Telecom
XXI;

	(c)
	Kuban
GSM;

	(d)
	any
Subsidiary of the Borrower to which (i) the Borrower, UMC, Telecom XXI or Kuban GSM sells, leases or otherwise transfers its GSM 900 or 1800 licences or (ii) any
such licence is re-issued; and

	(e)
	any
Subsidiary of the Borrower (i) whose total assets (or, where such Subsidiary prepares consolidated accounts, whose total consolidated assets) have a book value (as
determined by reference to the most recent management accounts of that Subsidiary prepared in accordance with GAAP) equal to or exceeding 10% of the Borrower's Total Assets or (ii) whose gross
annual revenues (or, where such Subsidiary prepares consolidated accounts, whose gross annual consolidated revenues) (as determined by reference to the most recent management 

7

 

accounts
of that Subsidiary prepared in accordance with GAAP) are equal to or exceed 10% of the Borrower's gross annual consolidated revenues in the year for which the Borrower's most recent
consolidated financial statements were prepared. 

"Signing Date" means the date of this Agreement. 

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

"Syndication Date" means (unlesss otherwise agreed by the Borrower and the Original Mandated Lead Arrangers) the day specified by the Original Mandated
Lead Arrangers as the day on which primary syndication of the Facilities is completed. 

"Syndication Side Letter" means the letter agreement dated on or about the Signing Date between the Borrower and the Original Mandated Lead Arrangers in
relation to the syndication of the Facilities. 

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

"Telecom XXI" means Telecom XXI, an open joint stock company that is a wholly-owned Subsidiary of the Borrower. 

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

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

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

"Total Commitments" means the aggregate of the Total Facility 1 Commitments and the Total Facility 2 Commitments, being $500,000,000 at the Signing
Date. 

"Total Facility 1 Commitments" means the aggregate of the Facility 1 Commitments, being $200,000,000 at the Signing Date. 

"Total Facility 2 Commitments" means the aggregate of the Facility 2 Commitments, being $300,000,000 at the Signing Date. 

"Transfer Certificate" means a certificate substantially in the form set out in Schedule 5 (Form of Transfer
Certificate) or any other form agreed between the Agent and the Borrower. 

"Transfer Date" means, in relation to a transfer, the later of: 

	(a)
	the
proposed Transfer Date specified in the Transfer Certificate; and

	(b)
	the
date on which the Agent executes the Transfer Certificate. 

"UMC" means Ukrainian-German-Dutch-Danish Joint Venture "Ukrainian Mobile Communications" in Ukraine. 

8

 

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

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

"US Dollars", "Dollars", "USD" and
"$" denote the lawful currency of the United States of America. 

"Utilisation" means a utilisation of a Facility. 

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

"Utilisation Request" means a notice substantially in the form set out in Schedule 3 (Utilisation
Request). 

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

	1.2
	Construction

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

	(i)
	the
"Agent", any "Mandated Lead Arranger", any "Finance
Party", any "Lender", the "Borrower" and any
"Party" shall be construed so as to include its successors in title, permitted assigns and permitted transferees;

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

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

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

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

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

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

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

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

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

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

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

9

 
	1.3
	Third Party Rights

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

 
 

SECTION 2
  THE FACILITY    
    

2      THE FACILITIES  

	2.1
	The Facilities

Subject
to the terms of this Agreement, the Lenders make available to the Borrower: 

	(a)
	a
term loan facility in Dollars to be designated "Facility 1" in an aggregate amount equal to the Total Facility 1 Commitments; and

	(b)
	a
term loan facility in Dollars to be designated "Facility 2" in an aggregate amount equal to the Total Facility 2 Commitments.  

	2.2
	Finance Parties' rights and obligations

	(a)
	The
obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the
obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

	(b)
	The
rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance
Party from the Borrower shall be a separate and independent debt.

	(c)
	A
Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents. 

3      PURPOSE  

	3.1
	Purpose

The
Borrower shall apply all amounts borrowed by it under the Facilities towards its general corporate purposes, including towards the refinancing of its existing indebtedness. 

	3.2
	Monitoring

No
Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement. 

4      CONDITIONS OF UTILISATION  

	4.1
	Initial conditions precedent

The
Borrower may not deliver the first Utilisation Request unless the Agent has received all of the documents and other evidence listed in Schedule 2 (Conditions
precedent) in form and substance satisfactory to the Agent. The Agent shall notify the Borrower and the Lenders promptly upon being so satisfied. 

	4.2
	Further conditions precedent

The
Lenders will only be obliged to comply with Clause 5.4 (Lenders' participation) if on the date of the Utilisation Request and on the proposed
Utilisation Date: 

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

	(ii)
	the
Repeating Representations to be made by the Borrower are true in all material respects. 

10

  

 
 

SECTION 3
  UTILISATION    
    

5      UTILISATION  

	5.1
	Delivery of a Utilisation Request

The
Borrower may utilise a Facility by delivery to the Agent of a duly completed Utilisation Request not later than 10:00 a.m. on the day falling 3 Business Days before the proposed Utilisation
Date (or, in relation to the first Utilisation Request, not later than 10:00 a.m. on the day falling 2 Business Days before the proposed Utilisation Date). 

	5.2
	Completion of a Utilisation Request

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

	(i)
	it
identifies the Facility to be utilised;

	(ii)
	the
proposed Utilisation Date is a Business Day within the Availability Period applicable to that Facility;

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

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

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

	5.3
	Currency and amount

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

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

	(i)
	a
minimum of $50,000,000 or, if less, the Available Facility; or

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

 

	5.4
	Lenders' participation

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

	(b)
	The
amount of each Lender's participation in each Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the
Loan.

	(c)
	The
Agent shall notify each Lender of the amount of each Loan and the amount of its participation in that Loan not later than 5:00 p.m. on the day falling 3 Business Days
before the relevant Utilisation Date (or, in relation to the first Loan, not later than 11:00 a.m. on the day falling 2 Business Days before the first Utilisation Date). 

11

 
 
 

SECTION 4
  REPAYMENT, PREPAYMENT AND CANCELLATION    
    

6      REPAYMENT  

	6.1
	Repayment of Facility 1 Loans

	(a)
	The
Borrower shall repay the Facility 1 Loans in five equal instalments, by paying on each Facility 1 Repayment Date an amount equal to one fifth of the amount of the Facility 1 Loans
outstanding at the close of business on the last day of the Availability Period for Facility 1.

	(b)
	The
Borrower may not reborrow any part of Facility 1 which is repaid.

	6.2
	Repayment of Facility 2 Loans

	(a)
	The
Borrower shall repay the Facility 2 Loans in four equal instalments, by paying on each Facility 2 Repayment Date an amount equal to one quarter of the amount of the Facility 2
Loans outstanding at the close of business on the last day of the Availability Period for Facility 2.

	(b)
	The
Borrower may not reborrow any part of Facility 2 which is repaid. 

7      PREPAYMENT AND CANCELLATION  

	7.1
	Illegality

If
it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Loan: 

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

	(b)
	upon
the Agent notifying the Borrower, the Commitment of that Lender will be immediately cancelled; and

	(c)
	the
Borrower shall repay that Lender's participation in the Loans on the last day of the Interest Period for each Loan occurring after the Agent has notified the Borrower or, if
earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law).  

	7.2
	Voluntary cancellation

The
Borrower may, if it gives the Agent not less than 10 Business Days' (or such shorter period as the Majority Lenders may agree) prior written notice, cancel the whole or any part (being a minimum
amount of $10,000,000) of an Available Facility. Any cancellation under this Clause 7.3 shall reduce the Commitments of the Lenders rateably under that Facility. 

	7.3
	Voluntary prepayment of Loans

	(a)
	The
Borrower may, if it gives the Agent not less than 10 Business Days' (or such shorter period as the Majority Lenders may agree) prior written notice, prepay the whole or any part
of any Loan (but, if in part, being an amount that reduces the Loan by a minimum amount of $10,000,000).

	(b)
	A
Loan in respect of a Facility may only be prepaid after the last day of the Availability Period for that Facility (or, if earlier, the day on which the relevant Available Facility
is zero).

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

12

 
	7.4
	Mandatory Prepayment—Change of Control

	(a)
	In
this Clause 7.4, "Change of Control" means any of the following events or circumstances: any person or group of persons
acting in concert or under an express or implied agreement or understanding, directly or through one or more intermediaries, shall (x) acquire ultimate beneficial or legal ownership of, or
control over, more than 50% of the issued shares of the Borrower; (y) acquire ownership of or control over more than 50% of the voting interests in the share capital of the Borrower; or
(z) obtain the power (whether or not exercised) to elect not less than half of the directors of the Borrower; (provided, however, that any acquisition by Sistema JSFC, T-Mobile
International AG or any of their respective Subsidiaries that results in the 50% threshold in paragraphs (x) and (y) above being exceeded, or in the power referred to in
paragraph (z) above being obtained, will not be a Change of Control).

	(b)
	If
there is a Change of Control:

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

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

	(iii)
	if
any Lender (in its sole discretion) so requires, it may, within 5 Business Days of its receipt of the Borrower's notification under sub-clause (i) above,
direct the Agent to send a notice to the Borrower requiring the Borrower to repay that Lender's participations in the Loans (together with accrued interest) in full on the day (the
"Early Repayment Date") falling 30 days after the date of the Borrower's notification under sub-clause (i) above. Before the
Early Repayment Date, the Lender and the Borrower shall consult with each other for a period of 5 Business Days with respect to the transfer of that Lender's rights and obligations under this
Agreement to another reputable international bank or financial institution nominated by the Borrower (but which is not an Affiliate of the Borrower) in accordance with Clause 22.5
(Procedure for transfer). If no such transfer has been effected on or before the Early Repayment Date, then (x) the Borrower shall repay that
Lender's participations in the Loans (together with accrued interest) in full on the Early Repayment Date and (y) the Commitments of that Lender shall be reduced to zero on that date.

 

	7.5
	Right of repayment and cancellation in relation to a single Lender

If:

	(a)
	any
sum payable to any Lender by the Borrower is required to be increased under paragraph (c) of Clause 12.2 (Tax
gross-up); or

	(b)
	any
Lender claims indemnification from the Borrower under Clause 12.3 (Tax indemnity) or Clause 13
(Increased Costs), 

the
Borrower may, whilst the circumstance giving rise to the requirement or indemnification continues, give the Agent notice of cancellation of the Commitments of that Lender and its intention to
procure the repayment of that Lender's participation in the Loans on the last day of the Interest Period ending after the date of such notice (or, if earlier, on such other date as specified by the
Borrower in that notice) (the "Cancellation Date"). Before the Cancellation Date, the Lender and the Borrower shall consult with each other for a period
of 5 Business Days with respect to the transfer of that Lender's rights and obligations under this Agreement to another reputable international bank or financial institution nominated by the Borrower
(but which is not an Affiliate of the Borrower) in accordance with Clause 22.5 (Procedure for transfer). If no such transfer has been effected on
or before the Cancellation Date, then (x) the Borrower shall repay that Lender's participations in the Loans (together with accrued interest) in full on the Cancellation Date and (y) the
Commitments of that Lender shall be reduced to zero on that date. 

13

 
	7.6
	Restrictions

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

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

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

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

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

	(f)
	If
the Agent receives a notice under this Clause 7 it shall promptly forward a copy of that notice to either the Borrower or the affected Lender, as appropriate. 

 
 

SECTION 5
  COSTS OF UTILISATION    
    

	8
	INTEREST

	8.1
	Calculation of interest

The
rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable: 

	(a)
	Margin;

	(b)
	LIBOR;
and

	(c)
	Mandatory
Cost, if any.  

	8.2
	Payment of interest

The
Borrower shall pay accrued interest on each Loan on the last day of each Interest Period (and, if the Interest Period is longer than 6 Months, on the date falling at six monthly intervals after
the first day of the Interest Period). 

	8.3
	Default interest

	(a)
	If
the Borrower fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual
payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is the sum of 2 per cent. and the rate which would have been payable if the overdue amount had, during
the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any
interest accruing under this Clause 8.3 shall be immediately payable by the Borrower on demand by the Agent.

	(b)
	If
any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:

	(i)
	the
first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and 

14

 

	(ii)
	the
rate of interest applying to the overdue amount during that first Interest Period shall be the sum of 2 per cent. and the rate which would have applied if the overdue amount had
not become due. 

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

	8.4
	Notification of rates of interest

The
Agent shall promptly notify the Lenders and the Borrower of the determination of a rate of interest under this Agreement. 

9      INTEREST PERIODS  

	9.1
	Duration of Interest Periods

	(a)
	Save
as otherwise provided herein, each Interest Period shall have a duration of 6 Months (or such other period as may be agreed between the Borrower and the Lenders) and shall
commence on the day on which the preceding Interest Period expires (provided that the last Interest Period under Facility 1 shall have a duration of 6 Months plus one day and the last Interest Period
under Facility 2 shall have a duration of 9 Months plus one day).

	(b)
	The
first Interest Period for the first Loan made under a Facility shall begin on the Utilisation Date for that Loan and shall have a duration of 6 Months, and the first Interest
Period for each Loan made thereafter under that Facility shall begin on the Utilisation Date for that Loan and end on the last day of the Interest Period applicable to that first Loan. At the end of
the first Interest Period for each Loan under a Facility, such Loan shall be consolidated with all other Loans (if any) then outstanding under that Facility such that all Loans under that Facility
shall then be treated as a single Loan.

	(c)
	No
Interest Period shall extend beyond a Repayment Date for the relevant Facility, and if an Interest Period would otherwise overrun a Repayment Date for the relevant Facility, such
Interest Period shall be shortened so that it ends on that Repayment Date.

	(d)
	An
Interest Period for a Loan shall not extend beyond the Final Maturity Date.

	(e)
	Prior
to the earlier of (i) the Syndication Date and (ii) 31 October 2004, each Interest Period shall have a duration of one Month (or such other duration as is
necessary to ensure that such Interest Period shall end on the Syndication Date).

	9.2
	Non-Business Days

If
an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding
Business Day (if there is not). 

10    CHANGES TO THE CALCULATION OF INTEREST  

	10.1
	Absence of quotations

Subject
to Clause 10.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply
a quotation by 11:00 a.m. on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks. 

15

 
	10.2
	Market disruption

	(a)
	If
a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender's share of that Loan for the Interest Period shall be the
rate per annum which is the sum of:

	(i)
	the
Margin;

	(ii)
	the
rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses
as a percentage rate per annum the cost to that Lender of funding its participation in that Loan from whatever source it may reasonably select; and

	(iii)
	the
Mandatory Cost, if any, applicable to that Lender's participation in the Loan.

	(b)
	In
this Agreement "Market Disruption Event" means:

	(i)
	at
or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Agent to
determine LIBOR for Dollars for the relevant Interest Period; or

	(ii)
	before
close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in a Loan
exceed 35 per cent. of that Loan) that the cost to it of obtaining matching deposits in the London interbank market would be in excess of LIBOR.

 

	10.3
	Alternative basis of interest or funding

	(a)
	If
a Market Disruption Event occurs and the Agent or the Borrower so requires, the Agent and the Borrower shall enter into negotiations (for a period of not more than 30 days)
with a view to agreeing a substitute basis for determining the rate of interest.

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

	10.4
	Break Costs

	(a)
	The
Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being
paid by the Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.

	(b)
	Each
Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they
accrue. 

11    FEES  

	11.1
	Commitment fee

	(a)
	The
Borrower shall pay to the Agent (for the account of each Lender) a commitment fee in respect of Facility 2, calculated on a daily basis, at the rate of:

	(i)
	from
the Signing Date until (and including) 1 October 2004, 0.25 per cent. per annum of the Total Facility 2 Commitments; and

	(ii)
	from
(but excluding) 1 October 2004 until the last day of the Availability Period for Facility 2, 0.50 per cent. per annum of the Available Commitment for Facility 2.

	(b)
	The
commitment fee will accrue from the Signing Date, is payable in arrears on the last day of each successive period of three Months, on the last day of the Availability Period for
Facility 2 

16

 

and,
if cancelled in full, on the cancelled amount of the relevant Lender's Facility 2 Commitment at the time the cancellation is effective. 

	11.2
	Arrangement fee

The
Borrower shall pay to the Mandated Lead Arrangers an arrangement fee in the amount and at the times agreed in a Fee Letter. 

	11.3
	Agency fee  

The
Borrower shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter. 

 
 

SECTION 6
  ADDITIONAL PAYMENT OBLIGATIONS    
    

12    TAX GROSS-UP AND INDEMNITIES  

	12.1
	Definitions

	(a)
	In
this Agreement: 

"Protected Party" means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in
relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document. 

"Qualifying Lender" means a Lender which is situated for tax purposes in the Russian Federation or in a Tax Treaty Jurisdiction. 

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

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

"Tax Payment" means an increased payment made by the Borrower to a Finance Party under Clause 12.2 (Tax
gross-up) or a payment under Clause 12.3 (Tax indemnity). 

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

	(b)
	Unless
a contrary indication appears, in this Clause 12 a reference to "determines" or
"determined" means a determination made in the absolute discretion of the person making the determination.

	12.2
	Tax gross-up

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

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

	(c)
	Subject
to paragraph (d) below, if a Tax Deduction is required by law to be made by the Borrower, the amount of the payment due from the Borrower shall be increased to an
amount which (after 

17

 

making
any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required. 

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

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

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

	12.3
	Tax indemnity

	(a)
	The
Borrower shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines
has been suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

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

	(i)
	with
respect to any Tax assessed on a Finance Party:

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

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

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

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

	(A)
	is
compensated for by an increased payment under Clause 12.2 (Tax gross-up); or

	(B)
	would
have been compensated for by an increased payment under Clause 12.2 (Tax gross-up) but was not so compensated
solely because one of the exclusions in paragraph (d) of Clause 12.2 (Tax gross-up) applied. 

	(c)
	A
Protected Party making, or intending to make, a claim under paragraph (a) above shall promptly notify the Agent of the event which will give, or has given, rise to the claim,
following which the Agent shall notify the Borrower.

	(d)
	A
Protected Party shall, on receiving a payment from the Borrower under this Clause 12.3, notify the Agent.

	12.4
	Tax Credit

If
the Borrower makes a Tax Payment and the relevant Finance Party determines that: 

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

18

 

	(b)
	that
Finance Party has obtained, utilised and retained that Tax Credit, the Finance Party shall pay promptly an amount to the Borrower which that Finance Party determines will leave
the Finance Party (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been made by the Borrower.  

	12.5
	Stamp taxes

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

	12.6
	Value added tax

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

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

	12.7
	Tax forms

	(a)
	At
least 10 Business Days prior to the date of the first scheduled payment of interest under this Agreement, and within 20 Business Days from the beginning of each calendar year
falling after the Signing Date, each Qualifying Lender shall use its reasonable efforts to provide to the Borrower a document issued by the relevant government authority in its jurisdiction of
residence confirming that it is a resident of that jurisdiction.

	(b)
	At
the request of the Borrower (acting reasonably), each Lender shall use its reasonable efforts to provide any other documentation or information to the Borrower that may be
reasonably necessary for the Borrower to establish a complete exemption from Russian withholding tax in relation to payments of interest under this Agreement. 

13 INCREASED COSTS  

	13.1
	Increased costs

	(a)
	Subject
to Clause 13.3 (Exceptions) the Borrower shall, within three Business Days of a demand by the Agent, pay for the account
of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation,
administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the Signing Date.

	(b)
	In
this Agreement "Increased Costs" means:

	(i)
	a
reduction in the rate of return from the Facility or on a Finance Party's (or its Affiliate's) overall capital;

	(ii)
	an
additional or increased cost; or

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

19

 

which
is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its
obligations under any Finance Document. 

	13.2
	Increased cost claims

	(a)
	A
Finance Party intending to make a claim pursuant to Clause 13.1 (Increased costs) shall notify the Agent of the event giving
rise to the claim, following which the Agent shall promptly notify the Borrower.

	(b)
	Each
Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.

	13.3
	Exceptions

	(a)
	Clause 13.1
(Increased costs) does not apply to the extent any Increased Cost is:

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

	(ii)
	compensated
for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3
(Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 12.3
(Tax indemnity) applied);

	(iii)
	compensated
for by the payment of the Mandatory Cost; or

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

	(b)
	In
this Clause 13.3, a reference to a "Tax Deduction" has the same meaning given to the term in Clause 12.1
(Definitions). 

14    OTHER INDEMNITIES  

	14.1
	Currency indemnity

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

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

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

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

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

20

 
	14.2
	Other indemnities

The
Borrower shall, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability incurred by that Finance Party as a result of: 

	(a)
	the
occurrence of any Event of Default;

	(b)
	a
failure by the Borrower to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of
Clause 26 (Sharing among the Finance Parties);

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

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

 

	14.3
	Indemnity to the Agent

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

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

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

15    MITIGATION BY THE LENDERS  

	15.1
	Mitigation

	(a)
	Each
Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable
under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 12 (Tax
gross-up and indemnities) or Clause 13.1 (Increased costs) including (but not limited to) transferring its
rights and obligations under the Finance Documents to another Affiliate or Facility Office.

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

	15.2
	Limitation of liability

	(a)
	The
Borrower shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1
(Mitigation).

	(b)
	A
Finance Party is not obliged to take any steps under Clause 15.1 (Mitigation) if, in the opinion of that Finance Party (acting
reasonably), to do so might be prejudicial to it. 

16    COSTS AND EXPENSES  

	16.1
	Transaction expenses

The
Borrower shall promptly on demand pay the Agent and the Original Mandated Lead Arrangers the amount of all reasonable out-of-pocket costs and legal expenses incurred by any
of them in connection with the negotiation, preparation and execution of: 

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

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

subject
to the terms of the Syndication Side Letter. 

21

  

	16.2
	Amendment costs

If
(a) the Borrower requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 27.9 (Change of
currency), the Borrower shall, within three Business Days of demand, reimburse the Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by
the Agent in responding to, evaluating, negotiating or complying with that request or requirement. 

	16.3
	Enforcement costs

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

 
 

SECTION 7
  REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT    
    

17    REPRESENTATIONS  

The
Borrower makes the representations and warranties set out in this Clause 17 to each Finance Party on the date of this Agreement. 

	17.1
	Status

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

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

	17.2
	Binding obligations

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

	17.3
	Non-conflict with other obligations

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

	(a)
	any
law or regulation applicable to it;

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

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

	17.4
	Power and authority

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

	17.5
	Validity and admissibility in evidence

All
Authorisations required: 

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

22

 

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

	(c)
	to
make the Finance Documents admissible in evidence in the general jurisdiction courts or commercial courts (arbitrazhniye sudi) of
the Russian Federation in an original action or action to enforce a foreign arbitral award, provided that authenticated and notarised Russian texts are made available to such courts at that time and
any other procedures and formalities regarding presentation of documents to a Russian court are complied with, have been obtained or effected and are in full force and effect (except, in relation to
paragraph (b) above, where the failure to obtain such Authorisations (excluding any Telecommunications Authorisations) is not reasonably likely to have a Material Adverse Effect).  

	17.6
	Governing law and enforcement

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

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

	17.7
	No bankruptcy proceedings

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

	17.8
	Deduction of Tax

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

	17.9
	No filing or stamp taxes

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

	17.10
	Payment of Taxes

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

23

 
	17.11
	No default

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

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

	17.12
	No misleading information

	(a)
	Any
factual information provided by or on behalf of any member of the Group for the purposes of the Information Memorandum was true and accurate in all material respects as at the
date it was provided or as at the date (if any) at which it is stated.

	(b)
	The
financial projections contained in the Information Memorandum have been prepared on the basis of recent historical information and on the basis of reasonable assumptions.

	(c)
	Nothing
has occurred or been omitted from the Information Memorandum and no information has been given or withheld that results in the information contained in the Information
Memorandum being untrue or misleading in any material respect.

	17.13
	Financial statements

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

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

	(c)
	There
has been no material adverse change in its business or financial condition (or the business or consolidated financial condition of the Group) since the date of its Original
Financial Statements.

	17.14
	Pari passu ranking

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

	17.15
	No proceedings pending or threatened

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

	17.16
	Environmental laws and licences

Except
as disclosed in writing to the Agent before the date hereof, it and each of its Subsidiaries has: 

	(a)
	complied
with all Environmental Laws to which it may be subject;

	(b)
	obtained
all Environmental Licences required in connection with its business; and

	(c)
	complied
with the terms of those Environmental Licences, 

in
each case where failure to do so would be reasonably likely to have a Material Adverse Effect. 

24

 
	17.17
	Telecommunications laws and licences

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

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

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

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

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

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

	17.18
	Compliance with laws

Each
of the Borrower and its Significant Subsidiaries is conducting its business and operations in compliance with all laws and regulations and all directives of any government agency having legal
force applicable or relevant to it, excluding any such non-compliance which would not reasonably be expected to have a Material Adverse Effect. 

	17.19
	No Immunity

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

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

	17.20
	Repetition

The
Repeating Representations are deemed to be made by the Borrower by reference to the facts and circumstances then existing on the date of each Utilisation Request and the first day of each Interest
Period (provided that whenever the representation in paragraph (c) of Clause 17.3 is deemed to be made on a date other than the Signing Date or a Utilisation Date, the statement "except
where the same would not be reasonably likely to have a Material Adverse Effect" shall qualify the representation in said paragraph (c)). 

18    INFORMATION UNDERTAKINGS  

The
undertakings in this Clause 18 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force. 

25

 
	18.1
	Financial statements

The
Borrower shall supply to the Agent in sufficient copies for all the Lenders: 

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

	(b)
	as
soon as the same become available, but in any event within 45 days after the end of each of its financial quarters, its unaudited consolidated and
non-consolidated financial statements for that financial quarter.  

	18.2
	Compliance Certificate

	(a)
	The
Borrower shall supply to the Agent with each set of financial statements delivered pursuant to Clause 18.1 (Financial
statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 19 (Financial
Covenants) as at the date as at which those financial statements were drawn up.

	(b)
	Each
Compliance Certificate shall be signed by an authorised officer of the Borrower and, if required to be delivered with the financial statements delivered pursuant to
paragraph (a) of Clause 18.1 (Financial statements), shall be reported on by the Borrower's auditors in the form set out in
Schedule 6 (Form of Compliance Certificate).

	18.3
	Requirements as to financial statements

	(a)
	Each
set of financial statements delivered by the Borrower pursuant to Clause 18.1 (Financial statements) shall be certified by
an authorised officer of the Borrower as fairly representing its (or, as the case may be, its consolidated) financial condition and operations as at the end of and for the period in relation to which
those financial statements were drawn up.

	(b)
	The
Borrower shall procure that each set of consolidated financial statements delivered pursuant to Clause 18.1 (Financial
statements) is prepared using GAAP accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements
unless, in relation to any set of financial statements, it notifies the Agent that there has been a change in GAAP, the accounting practices or reference periods and its auditors deliver to the Agent:

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

	(ii)
	sufficient
information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine whether Clause 19
(Financial covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and
that the Original Financial Statements.

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

	(d)
	The
Borrower shall procure that each set of non-consolidated financial statements delivered pursuant to Clause 18.1 (Financial
statements) is prepared using RAS accounting practices and financial reference periods. 

26

 
	18.4
	Information: miscellaneous

The
Borrower shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests): 

	(a)
	all
documents dispatched by the Borrower to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched;

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

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

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

	18.5
	Notification of Default

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

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

	18.6
	Know your customer checks

	(a)
	If:

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

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

	(iii)
	a
proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer, 

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

	(b)
	Each
Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself)
in order for the Agent to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the
transactions contemplated in the Finance Documents. 

27

 

19    FINANCIAL COVENANTS  

The
financial undertakings in this Clause 19 shall remain in force from the Signing Date for so long as any amount is outstanding under the Finance Documents or any Commitment is in force. 

	19.1
	Financial condition

The
Borrower shall ensure that: 

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

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

	19.2
	Financial covenant calculations

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

	19.3
	Definitions

In
this Clause 19.3: 

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

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

"EBITDA" means, in relation to any Relevant Period, the total consolidated operating profit of the Group for that Relevant Period: 

	(a)
	before
taking into account:

	(i)
	Interest
Expense;

	(ii)
	Tax;

	(iii)
	any
share of the profit of any associated company or undertaking, except for dividends received in cash by any member of the Group; and

	(iv)
	extraordinary
and exceptional items; and

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

multiplied by two, 

as
determined (except as needed to reflect the terms of this Clause 19) from the financial statements of the Group and Compliance Certificates delivered under Clause 18.1
(Financial statements) and Clause 18.2 (Compliance Certificate). 

28

 

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

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

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

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

adjusted
(but without double counting) by: 

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

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

multiplied by two, 

as
determined (except as needed to reflect the terms of this Clause 19) from the financial statements of the Group and Compliance Certificates delivered under Clause 18.1
(Financial statements) and Clause 18.2 (Compliance Certificate). 

"Relevant Period" means each period of 6 consecutive Months ending on the last day of each financial year and financial quarter of the Borrower. 

20    GENERAL UNDERTAKINGS  

The
undertakings in this Clause 20 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force. 

	20.1
	Authorisations

The
Borrower shall promptly: 

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

	(ii)
	supply
certified copies to the Agent of, 

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

	20.2
	Compliance with laws

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

	20.3
	Maintenance of existence

The
Borrower shall maintain its corporate existence. 

	20.4
	Negative pledge

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

29

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

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

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

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

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

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

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

	20.5
	Disposals

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

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

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

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

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

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

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

	(vi)
	involving
the transfer of any or all of the Borrower's shares in UMC pursuant to the UMC Litigation to a person that is not a member of the Group (provided that this
sub-clause (vi) shall not in any way prejudice the rights of the Finance Parties under Clause 21.18 (UMC Litigation)). 

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

	20.6
	Merger

	(a)
	The
Borrower shall not enter into or become subject to any consolidation or reorganisation, whether by way of merger (sliyaniye
obschestva), company accession (prisoedinyeniye obschestva), company division (razdelenie
obschestva), company separation (vydelyeniye obschestva), company 

30

 

transformation
(preobrazovaniye obschestva), company liquidation (likvidatisya obschestva) or any other
company reorganisation (reorgnizatsiya obschestva) (as these terms are construed by applicable Russian law) or otherwise, or any analogous transaction
in any jurisdiction, other than a consolidation or merger with one of its Subsidiaries where the Borrower is the surviving entity. 

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

	20.7
	Change of business

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

	20.8
	Conduct of business

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

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

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

	(c)
	the
terms of all relevant Telecommunications Authorisations.  

	20.9
	Asset maintenance

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

	20.10
	Insurance

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

	20.11
	Transactions with Related Parties

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

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

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

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

31

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

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

	(ii)
	transactions
between members of the Group.

	(c)
	For
the purposes of this Clause 20.11 only, a "Related Party" means, with respect to any specified person:

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

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

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

	20.12
	Restriction on acquisitions

The
Borrower shall not establish or acquire any Subsidiary or invest in any other entity without the consent of the Majority Lenders (such consent not to be unreasonably withheld), provided that this
Clause 20.12 shall not apply to any such acquisition or investment where: 

	(a)
	such
acquisition or investment relates to a Subsidiary or entity whose principal business is telecommunications or the provision of data services or related or ancillary businesses;
and

	(b)
	the
consideration paid by the Borrower in relation to such acquisition or investment, when aggregated with the consideration paid by the Borrower in relation to each other acquisition
or investment permitted under this paragraph (b), does not exceed (i) 20 per cent. of the Borrower's Total Assets in the financial year of the Borrower ending 31 December 2004;
and (ii) 15 per cent. (or such higher amount not exceeding 20 per cent. as the Majority Lenders may agree (acting reasonably)) of the Borrower's Total Assets in any other financial year of the
Borrower.

 

	20.13
	Prompt payment of Taxes

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

	20.14
	Pari passu

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

32

 
	20.15
	Loans and guarantees

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

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

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

	(b)
	The
restrictions in paragraph (a) above do not apply to (i) loans, credits, financial accommodation, guarantees, indemnities, bonds and letters of credit expressly
permitted by the Finance Documents or for normal trade credit on arm's length terms and in the ordinary course of business or granted by a member of the Group to another member of the Group, provided
that the aggregate amount of such loans, credits, financial accommodation, guarantees, indemnities, bonds and letters of credit does not at any time exceed 10 per cent. of the Borrower's Total Assets;
(ii) guarantees by the Borrower in relation to the obligations of any other member of the Group; or (iii) the arrangements permitted under Clause 20.11
(Transactions with Related Parties). 

21    EVENTS OF DEFAULT  

Each
of the events or circumstances set out in Clause 21 is an Event of Default. 

	21.1
	Non-payment

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

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

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

	21.2
	Financial covenants

Any
requirement of Clause 19 (Financial Covenants) is not satisfied. 

	21.3
	Other obligations

	(a)
	The
Borrower does not comply with any provision of the Finance Documents (other than those referred to in Clause 21.1
(Non-payment) and Clause 21.2 (Financial Covenants)).

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

	21.4
	Misrepresentation

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

33

 
	21.5
	Cross default

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

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

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

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

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

	21.6
	Insolvency

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

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

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

	21.7
	Insolvency proceedings

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

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

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

	(c)
	the
presentation or filing of a petition (or similar document) in respect of the Borrower or a Significant Subsidiary in any court, state arbitration court
(arbitrazhnyi sud) or before any other authority in respect of the bankruptcy, winding-up, insolvency, dissolution, 

34

 

administration,
reorganisation or liquidation of the Borrower or a Significant Subsidiary (and such petition has not been discharged within 14 days); 

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

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

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

	21.8
	Creditors' process

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

	21.9
	Judgment

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

	21.10
	Loss of Licence

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

	(i)
	the
Borrower's GSM 900 or 1800 licences for the Moscow licence area;

	(ii)
	Telecom
XXI's GSM 900 or 1800 licences for the St. Petersburg licence area;

	(iii)
	Kuban
GSM's GSM 900 or 1800 licences for the Krasnodar licence area; or

	(iv)
	UMC's
GSM 900 or 1800 licences for the Ukraine licence area, 

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

	(b)
	Any
of the Borrower's, Telecom XXI's, Kuban GSM's or UMC's GSM 900 or 1800 licences are amended (or any conditions are imposed with respect to any such licence) in a manner that, in
the reasonable opinion of the Majority Lenders, has or is reasonably likely to have a Material Adverse Effect.

	(c)
	Any
of the Borrower's, Telecom XXI's, Kuban GSM's or UMC's assigned spectrum allocations are reassigned to other users (other than a Significant Subsidiary of the Borrower), cancelled
or otherwise lost, and such event, in the reasonable opinion of the Majority Lenders, has or is reasonably likely to have a Material Adverse Effect.

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

35

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

	(f)
	

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

	(ii)
	Sub-clause (i)
above does not apply to the transfer of the GSM 900 or 1800 licences of UMC pursuant to the UMC Litigation (provided that this
sub-clause (ii) shall not in any way prejudice the rights of the Finance Parties under Clause 21.18 (UMC Litigation)).

 

	21.11
	Cessation of Business

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

	21.12
	Expropriation

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

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

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

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

	(b)
	Paragraph (a)
above does not apply to the transfer of any or all of the Borrower's shares in UMC pursuant to the UMC Litigation to a person that is not a member of the Group
(provided that this paragraph (b) shall not in any way prejudice the rights of the Finance Parties under Clause 21.18 (UMC Litigation)).

	21.13
	Russian Foreign Exchange Restrictions

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

36

  

	21.14
	Moratorium

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

	21.15
	The Russian Federation

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

	21.16
	Unlawfulness

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

	21.17
	Repudiation

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

	21.18
	UMC Litigation

The
UMC Litigation is adversely determined and, in the reasonable opinion of the Majority Lenders, such adverse determination has or is reasonably likely to have a Material Adverse Effect. 

	21.19
	Material adverse change

The
Majority Lenders determine that a Material Adverse Effect exists, has occurred or is reasonably likely to occur. 

	21.20
	Acceleration

On
and at any time after the occurrence of an Event of Default which is continuing the Agent may, and shall if so directed by the Majority Lenders, by notice to the Borrower: 

	(a)
	cancel
the Total Commitments whereupon they shall immediately be cancelled;

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

	(c)
	declare
that all or part of the Loans be payable on demand, whereupon they shall immediately become payable on demand by the Agent on the instructions of the Majority Lenders. 

 
 

SECTION 8
  CHANGES TO PARTIES    
    

22    CHANGES TO THE LENDERS  

	22.1
	Assignments and transfers by the Lenders

	(a)
	Subject
to this Clause 22, a Lender (the "Existing Lender") may:

	(i)
	assign
any of its rights; or

	(ii)
	transfer
by novation any of its rights and obligations, 

37

 

to
another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or
other financial assets (the "New Lender"). 

	(b)
	Unless
(i) the assignment or transfer is to an Affiliate of the Existing Lender or to another Lender or (ii) an Event of Default has occurred, any assignment or transfer
occurring after the Syndication Date shall require the consent of the Borrower, provided that (1) such consent shall not be unreasonably withheld or delayed; and (2) unless the Borrower
has notified the Agent to the contrary within 5 Business Days of receiving notice of the intended assignment or transfer, the Borrower will be deemed to have given its consent to that assignment or
transfer.

	22.2
	Conditions of assignment or transfer

	(a)
	An
assignment will only be effective on:

	(i)
	receipt
by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other
Finance Parties as it would have been under if it was an Original Lender; and

	(ii)
	performance
by the Agent of all "know your customer" or other checks relating to any person that it is required to carry out in relation to such assignment to a New Lender, the
completion of which the Agent shall promptly notify to the Existing Lender and the New Lender.

	(b)
	A
transfer will only be effective if the procedure set out in Clause 22.5 (Procedure for transfer) is complied with.

	(c)
	Any
assignment or transfer by an Existing Lender to a New Lender shall only be effective if it transfers or assigns the Existing Lender's share of each Facility pro rata.

	(d)
	If:

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

	(ii)
	as
a result of circumstances existing at the date the assignment, transfer or change occurs, the Borrower would be obliged to make a payment to the New Lender or Lender acting
through its new Facility Office under Clause 12 (Tax gross-up and indemnities) or Clause 13.1
(Increased Costs), 

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

	22.3
	Assignment or transfer fee

The
New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of $1,000. 

	22.4
	Limitation of responsibility of Existing Lenders

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

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

	(ii)
	the
financial condition of the Borrower;

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

38

 

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

and
any representations or warranties implied by law are excluded. 

	(b)
	Each
New Lender confirms to the Existing Lender and the other Finance Parties that it:

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

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

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

	(i)
	accept
a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 22; or

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

 

	22.5
	Procedure for transfer

	(a)
	Subject
to the conditions set out in Clause 22.2 (Conditions of assignment or transfer) a transfer is effected in accordance
with paragraph (c) below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to
paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and
delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

	(b)
	The
Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary
"know your customer" or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.

	(c)
	On
the Transfer Date:

	(i)
	to
the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents the Borrower and the Existing
Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (being
the "Discharged Rights and Obligations");

	(ii)
	the
Borrower and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only
insofar as the Borrower and the New Lender have assumed and/or acquired the same in place of the Borrower and the Existing Lender;

	(iii)
	the
Agent, the Mandated Lead Arrangers, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired
and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent, 

39

 

the
Mandated Lead Arrangers and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and 

	(iv)
	the
New Lender shall become a Party as a "Lender".  

	22.6
	Disclosure of information

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

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

	(b)
	with
(or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to
be made by reference to, this Agreement or the Borrower; or

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

any
information about the Borrower, the Group and the Finance Documents as that Lender shall consider appropriate if, in relation to paragraphs (a) and (b) above, the person to whom the
information is to be given has entered into a Confidentiality Undertaking. This Clause supersedes any previous agreement relating to the confidentiality of this information. 

23    CHANGES TO THE BORROWER  

The
Borrower may not assign any of its rights or transfer any of its rights or obligations under the Finance Documents. 

 
 

SECTION 9
  THE FINANCE PARTIES    
    

24    ROLE OF THE AGENT AND THE MANDATED LEAD ARRANGERS  

	24.1
	Appointment of the Agent

	(a)
	Each
other Finance Party appoints the Agent to act as its agent under and in connection with the Finance Documents.

	(b)
	Each
other Finance Party authorises the Agent to exercise the rights, powers, authorities and discretions specifically given to it under or in connection with the Finance Documents
together with any other incidental rights, powers, authorities and discretions.

	24.2
	Duties of the Agent

	(a)
	The
Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.

	(b)
	Except
where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to
another Party.

	(c)
	If
the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the
Finance Parties.

	(d)
	If
the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent or the Mandated Lead
Arrangers) under this Agreement it shall promptly notify the other Finance Parties. 

40

 
	(e)
	The
Agent's duties under the Finance Documents are solely mechanical and administrative in nature.

	24.3
	Role of the Mandated Lead Arrangers

Except
as specifically provided in the Finance Documents, the Mandated Lead Arrangers have no obligations of any kind to any other Party under or in connection with any Finance Document. 

	24.4
	No fiduciary duties

	(a)
	Nothing
in this Agreement constitutes the Agent or the Mandated Lead Arrangers as a trustee or fiduciary of any other person.

	(b)
	Neither
the Agent nor any Mandated Lead Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

	24.5
	Business with the Group

The
Agent and the Mandated Lead Arrangers may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group. 

	24.6
	Rights and discretions of the Agent

	(a)
	The
Agent may rely on:

	(i)
	any
representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

	(ii)
	any
statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power
to verify.

	(b)
	The
Agent may assume, unless it has received notice to the contrary in its capacity as agent for the Lenders, that:

	(i)
	no
Default has occurred (unless it has actual knowledge of a Default arising under Clause 21.1 (Non-payment)); and

	(ii)
	any
right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised.

	(c)
	The
Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

	(d)
	The
Agent may act in relation to the Finance Documents through its personnel and agents.

	(e)
	The
Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.

	(f)
	Notwithstanding
any other provision of any Finance Document to the contrary, neither the Agent nor any Mandated Lead Arranger is obliged to do or omit to do anything if it would or
might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

	24.7
	Majority Lenders' instructions

	(a)
	Unless
a contrary indication appears in a Finance Document, the Agent shall (i) exercise any right, power, authority or discretion vested in it as Agent in accordance with any
instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as Agent) and
(ii) not be liable for any act (or 

41

 

omission)
if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders. 

	(b)
	Unless
a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties.

	(c)
	The
Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require
for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.

	(d)
	In
the absence of instructions from the Majority Lenders (or, if appropriate, the Lenders), the Agent may act (or refrain from taking action) as it considers to be in the best
interest of the Lenders.

	(e)
	The
Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender's consent) in any legal or arbitration proceedings relating to any Finance Document.

	24.8
	Responsibility for documentation

Neither
the Agent nor any Mandated Lead Arranger: 

	(a)
	is
responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Mandated Lead Arrangers, the Borrower or any
other person given in or in connection with any Finance Document or the Information Memorandum; or

	(b)
	is
responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or
executed in anticipation of or in connection with any Finance Document.  

	24.9
	Exclusion of liability

	(a)
	Without
limiting paragraph (b) below, the Agent will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its
gross negligence or wilful misconduct.

	(b)
	No
Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of
any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Agent may rely on this Clause.

	(c)
	The
Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by it if it has taken
all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by it for that purpose.

	(d)
	Nothing
in this Agreement shall oblige the Agent or the Mandated Lead Arrangers to carry out any "know your customer" or other checks in relation to any person on behalf of any Lender
and each Lender confirms to the Agent and the Mandated Lead Arrangers that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in
relation to such checks made by the Agent or the Mandated Lead Arrangers.

	24.10
	Lenders' indemnity to the Agent

Each
Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero)
indemnify the Agent, within three Business Days of demand, against any cost, loss or liability incurred by the Agent (otherwise than by reason of the Agent's gross negligence or 

42

 

wilful
misconduct) in acting as Agent under the Finance Documents (unless the Agent has been reimbursed by the Borrower pursuant to a Finance Document). 

	24.11
	Resignation of the Agent

	(a)
	The
Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom as successor by giving notice to the other Finance Parties and the Borrower.

	(b)
	Alternatively
the Agent may resign by giving notice to the other Finance Parties and the Borrower, in which case the Majority Lenders (after consultation with the Borrower) may
appoint a successor Agent.

	(c)
	If
the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above within 30 days after notice of resignation was given, the Agent
(after consultation with the Borrower) may appoint a successor Agent (acting through an office in the United Kingdom).

	(d)
	The
retiring Agent shall, at its own cost, make available to its successor such documents and records and provide such assistance as its successor may reasonably request for the
purposes of performing its functions as Agent under the Finance Documents.

	(e)
	The
Agent's resignation notice shall only take effect upon the appointment of a successor.

	(f)
	Upon
the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of
this Clause 24. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

	(g)
	After
consultation with the Borrower, the Majority Lenders may, by notice to the Agent, require it to resign in accordance with paragraph (b) above. In this event, the Agent
shall resign in accordance with paragraph (b) above.

	24.12
	Confidentiality

	(a)
	In
acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its
divisions or departments.

	(b)
	If
information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have
notice of it.

	24.13
	Relationship with the Lenders

	(a)
	The
Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than five Business Days
prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

	(b)
	Each
Lender shall supply the Agent with any information required by the Agent in order to calculate the Mandatory Cost in accordance with Schedule 4
(Mandatory Cost formula).

	24.14
	Credit appraisal by the Lenders

Without
affecting the responsibility of the Borrower for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Agent and the Mandated Lead
Arrangers that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document
including but not limited to: 

	(a)
	the
financial condition, status and nature of each member of the Group; 

43

 

	(b)
	the
legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document entered into, made or executed in
anticipation of, under or in connection with any Finance Document;

	(c)
	whether
that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the
transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;
and

	(d)
	the
adequacy, accuracy and/or completeness of the Information Memorandum and any other information provided by the Agent, any Party or by any other person under or in connection with
any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection
with any Finance Document.  

	24.15
	Reference Banks

If
a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Agent shall (in consultation with the Borrower) appoint another Lender
or an Affiliate of a Lender to replace that Reference Bank. 

	24.16
	Deduction from amounts payable by the Agent

If
any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which
the Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that
Party shall be regarded as having received any amount so deducted. 

25    CONDUCT OF BUSINESS BY THE FINANCE PARTIES  

No
provision of this Agreement will: 

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

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

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

26    SHARING AMONG THE FINANCE PARTIES  

	26.1
	Payments to Finance Parties

If
a Finance Party (a "Recovering Finance Party") receives or recovers any amount from the Borrower other than in accordance with Clause 27
(Payment Mechanics) and applies that amount to a payment due under the Finance Documents then: 

	(a)
	the
Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery to the Agent;

	(b)
	the
Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or
made by the Agent and distributed in accordance with Clause 27 (Payment Mechanics), 

44

 

without
taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and 

	(c)
	the
Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the "Sharing
Payment") equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made,
in accordance with Clause 27.5 (Partial payments).  

	26.2
	Redistribution of payments

The
Agent shall treat the Sharing Payment as if it had been paid by the Borrower and distribute it between the Finance Parties (other than the Recovering Finance Party) in accordance with
Clause 27.5 (Partial payments). 

	26.3
	Recovering Finance Party's rights

	(a)
	On
a distribution by the Agent under Clause 26.2 (Redistribution of payments), the Recovering Finance Party will be subrogated
to the rights of the Finance Parties which have shared in the redistribution.

	(b)
	If
and to the extent that the Recovering Finance Party is not able to rely on its rights under paragraph (a) above, the Borrower shall be liable to the Recovering Finance Party
for a debt equal to the Sharing Payment which is immediately due and payable.

	26.4
	Reversal of redistribution

If
any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then: 

	(a)
	each
Finance Party which has received a share of the relevant Sharing Payment pursuant to Clause 26.2 (Redistribution of
payments) shall, upon request of the Agent, pay to the Agent for account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing
Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to
pay); and

	(b)
	that
Recovering Finance Party's rights of subrogation in respect of any reimbursement shall be cancelled and the Borrower will be liable to the reimbursing Finance Party for the
amount so reimbursed.  

	26.5
	Exceptions

	(a)
	This
Clause 26 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim
against the Borrower.

	(b)
	A
Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or
arbitration proceedings, if:

	(i)
	it
notified that other Finance Party of the legal or arbitration proceedings; and

	(ii)
	that
other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and
did not take separate legal or arbitration proceedings. 

45

 

 
 

SECTION 10
  ADMINISTRATION    
    

27    PAYMENT MECHANICS  

	27.1
	Payments to the Agent

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

	(b)
	Payment
shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre in a Participating
Member State or London) with such bank as the Agent specifies.

	27.2
	Distributions by the Agent

Each
payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 27.3 (Distributions to the Borrower)
and Clause 27.4 (Clawback), be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in
accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days' notice with
a bank in the principal financial centre of the country of that currency. 

	27.3
	Distributions to the Borrower

The
Agent may (with the Borrower's consent or in accordance with Clause 28 (Set-off)) apply any amount received by it for the
Borrower in or towards payment (on the date and in the currency and funds of receipt) of any amount due from the Borrower under the Finance Documents or in or towards purchase of any amount of any
currency to be so applied. 

	27.4
	Clawback

	(a)
	Where
a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any
related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

	(b)
	If
the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of
any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent,
calculated by the Agent to reflect its cost of funds.

	27.5
	Partial payments

	(a)
	If
the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by the Borrower under the Finance Documents, the Agent shall apply that payment
towards the obligations of the Borrower under the Finance Documents in the following order:

	(i)
	first,
in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent or the Mandated Lead Arrangers under the Finance Documents;

	(ii)
	secondly,
in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement; 

46

 

	(iii)
	thirdly,
in or towards payment pro rata of any principal due but unpaid under this Agreement; and

	(iv)
	fourthly,
in or towards payment pro rata of any other sum due but unpaid under the Finance Documents. 

	(b)
	The
Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.

	(c)
	Paragraphs
(a) and (b) above will override any appropriation made by the Borrower.

	27.6
	No set-off by the Borrower

All
payments to be made by the Borrower under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim. 

	27.7
	Business Days

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

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

	27.8
	Currency of account

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

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

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

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

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

	27.9
	Change of currency

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

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

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

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

47

 

28    SET-OFF  

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

29    NOTICES  

	29.1
	Communications in writing

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

	29.2
	Addresses

The
address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or
in connection with the Finance Documents is: 

	(a)
	in
the case of the Borrower, that identified with its name below;

	(b)
	in
the case of each Lender, that notified in writing to the Agent on or prior to the date on which it becomes a Party; and

	(c)
	in
the case of the Agent, that identified with its name below, 

or
any substitute address, fax number or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than
five Business Days' notice. 

	29.3
	Delivery

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

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

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

and,
if a particular department or officer is specified as part of its address details provided under Clause 29.2 (Addresses), if addressed to
that department or officer. 

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

	(c)
	All
notices from or to the Borrower shall be sent through the Agent.

	29.4
	Notification of address and fax number

Promptly
upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 29.2 (Addresses) or
changing its own address or fax number, the Agent shall notify the other Parties. 

48

 
	29.5
	Electronic communication

	(a)
	Any
communication to be made between the Agent and a Lender under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent
and the relevant Lender:

	(i)
	agree
that, unless and until notified to the contrary, this is to be an accepted form of communication;

	(ii)
	notify
each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

	(iii)
	notify
each other of any change to their address or any other such information supplied by them.

	(b)
	Any
electronic communication made between the Agent and a Lender will be effective only when actually received in readable form and in the case of any electronic communication made by
a Lender to the Agent only if it is addressed in such a manner as the Agent shall specify for this purpose.

	29.6
	English language

	(a)
	Any
notice given under or in connection with any Finance Document must be in English.

	(b)
	All
other documents provided under or in connection with any Finance Document must be:

	(i)
	in
English; or

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

30    CALCULATIONS AND CERTIFICATES  

	30.1
	Accounts

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

	30.2
	Certificates and Determinations

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

	30.3
	Day count convention

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

31    PARTIAL INVALIDITY  

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

49

 

32    REMEDIES AND WAIVERS  

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

33    AMENDMENTS AND WAIVERS  

	33.1
	Required consents

	(a)
	Subject
to Clause 33.2 (Exceptions) any term of the Finance Documents may be amended or waived only with the consent of the
Majority Lenders and the Borrower and any such amendment or waiver will be binding on all Parties.

	(b)
	The
Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause.

	33.2
	Exceptions

	(a)
	An
amendment or waiver that has the effect of changing or which relates to:

	(i)
	the
definition of "Majority Lenders" in Clause 1.1 (Definitions);

	(ii)
	an
extension to the date of payment of any amount under the Finance Documents;

	(iii)
	a
reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable;

	(iv)
	an
increase in or an extension of any Commitment;

	(v)
	a
change to the Borrower;

	(vi)
	any
provision which expressly requires the consent of all the Lenders; or

	(vii)
	Clause 2.2
(Finance Parties' rights and obligations), Clause 22 (Changes to the
Lenders), Clause 26 (Sharing among the Finance Parties) or this Clause 33, 

shall
not be made without the prior consent of all the Lenders. 

	(b)
	An
amendment or waiver which relates to the rights or obligations of the Agent or the Mandated Lead Arrangers may not be effected without the consent of the Agent or the Mandated Lead
Arrangers. 

34    COUNTERPARTS  

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

 
 

SECTION 11
  GOVERNING LAW AND ENFORCEMENT    
    

35    GOVERNING LAW  

This
Agreement is governed by English law. 

50

 

36    ARBITRATION  

	36.1
	Arbitration

Subject
to Clause 36.4 (Agent's option), any dispute arising out of or in connection with this Agreement (including a dispute regarding the
existence, validity or termination of this Agreement) (a "Dispute") shall be referred to and finally resolved by arbitration under the Arbitration Rules
(the "Rules") of the London Court of International Arbitration (the "LCIA Court"). 

	36.2
	Procedure for arbitration

	(a)
	The
arbitral tribunal shall consist of three arbitrators. The claimant(s), irrespective of number, shall nominate jointly one arbitrator; the respondent(s), irrespective of number,
shall nominate jointly the second arbitrator; and a third arbitrator, who shall serve as Chairman (who shall be a lawyer currently qualified in England and Wales and be admitted to the Bar of England
and Wales), shall be appointed by the LCIA Court within 15 days of the appointment of the second arbitrator.

	(b)
	In
the event the claimant(s) or the respondent(s) shall fail to nominate an arbitrator within the time limits specified in the Rules, such arbitrator shall be appointed by the LCIA
Court within 15 days of such failure. In the event that both the claimant(s) and the respondent(s) fail to nominate an arbitrator within the time limits specified in the Rules, all three
arbitrators shall be appointed by the LCIA Court within 15 days of such failure who shall designate one of them as chairman.

	(c)
	If
all the parties to an arbitration so agree, there shall be a sole arbitrator appointed by the LCIA Court within 15 days of such agreement.

	(d)
	The
seat of arbitration shall be London, England and the language of the arbitration shall be English.

	36.3
	Recourse to courts

Save
as provided in Clause 36.4 (Agent's option), the parties exclude the jurisdiction of the courts under Sections 45 and 69 of the Arbitration
Act 1996. 

	36.4
	Agent's option

Before
an arbitrator has been appointed by a Finance Party to determine a Dispute, the Agent may (and, if so instructed by the Majority Lenders, shall) by notice in writing to the Borrower require
that all Disputes or a specific Dispute be heard by a court of law. If the Agent gives such notice, the Dispute to which such notice refers shall be determined in accordance with Clause 37
(Jurisdiction). 

37    JURISDICTION  

	37.1
	Jurisdiction of English courts

	(a)
	The
courts of England have exclusive jurisdiction to settle all Disputes.

	(b)
	The
Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

	(c)
	This
Clause 37.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other
courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions. 

51

 
	37.2
	Service of process

Without
prejudice to any other mode of service allowed under any relevant law, the Borrower: 

	(a)
	irrevocably
appoints Law Debenture Corporation, located at the date hereof at 5th Floor, 100 Wood Street, London EC2V 7EX, England, as its agent for service of process
in relation to any proceedings commenced in accordance with this Agreement; and

	(b)
	agrees
that failure by a process agent to notify the Borrower of the process will not invalidate the proceedings concerned.  

	37.3
	Waiver of immunity

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

This Agreement has been entered into on the date stated at the beginning of this Agreement.

52

  

 
 

SCHEDULE 1
  The Original Lenders    
    

	Name of Original Lender
 
	 	Facility 1

Commitment
	 	Facility 2

Commitment

	 
	 	(US$)
 
	 	(US$)
 

	ABN AMRO Bank N.V.	 	$	35,000,000	 	$	52,500,000
	

Bank Austria Creditanstalt AG	
 	
$	

30,000,000	
 	
$	

45,000,000
	

Commerzbank (Eurasija) SAO	
 	
$	

30,000,000	
 	
$	

45,000,000
	

HSBC Bank plc	
 	
$	

35,000,000	
 	
$	

52,500,000
	

ING Bank N.V.	
 	
$	

35,000,000	
 	
$	

52,500,000
	

Raiffeisen Zentralbank Oesterreich AG	
 	
$	

19,000,000	
 	
$	

28,500,000
	

ZAO Raiffeisenbank Austria	
 	
$	

16,000,000	
 	
$	

24,000,000
	
TOTAL:	
 	
$	

200,000,000	
 	
$	

300,000,000

53

 
 
 

SCHEDULE 2
  Conditions precedent    
    

1      Finance Documents  

        Executed originals of: 

	(a)
	this
Agreement;

	(b)
	each
Fee Letter;

	(c)
	the
Mandate Letter; and

	(d)
	the
Syndication Side Letter. 

2      The Borrower  

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

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

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

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

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

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

	(ii)
	certifying
that each copy document relating to it specified in this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this
Agreement. 

3      Legal opinions  

	(a)
	A
legal opinion of Linklaters as to matters of English law.

	(b)
	A
legal opinion of Linklaters CIS as to matters of Russian law.

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

4      Other documents and evidence  

	(a)
	Evidence
that the process agent referred to in Clause 37.2 (Service of process) has accepted its appointment.

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

54

 
	(c)
	The
Original Financial Statements.

	(d)
	Evidence
that the fees, costs and expenses then due from the Borrower pursuant to Clause 11 (Fees) and 16
(Costs and expenses) have been paid or will be paid by the first Utilisation Date.

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

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

55

 
 
 

SCHEDULE 3
  Utilisation Request    
    

	From:	 	Mobile TeleSystems Open Joint Stock Company
	

To:	
 	

ING Bank N.V., London Branch as Agent
	

Dated:	
 	

 

Dear
Sirs 

Mobile TeleSystems Open Joint Stock Company—US$500,000,000 Facility Agreement

dated [_______] (the "Agreement")

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

2	
 	

We wish to borrow a Loan on the following terms:
	

 	
 	

Proposed Utilisation Date:	
 	

[	
 	

 	
 	

]	
 	

or, if that is not a Business Day,
	 	 	 	 	 	 	
	 	 	 	 
	 	 	 	 	the next Business Day)
	

 	
 	

Facility to be utilised	
 	

[Facility 1]/[Facility 2]1
	

 	
 	

Amount:	
 	

[	
 	

 	
 	

]	
 	

or, if less, the Available Facility
	 	 	 	 	 	 	
	 	 	 	 
	

3	
 	

We confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Utilisation Request.
	

4	
 	

The proceeds of this Loan should be credited to [specify R-1-type special bank account of the Borrower, which must be an account with an authorised bank of the Russian Federation].
	

5	
 	

This Utilisation Request is irrevocable.

Mobile
TeleSystems Open Joint Stock Company 

	By:	 	 	 	By:	 	 
	 	 	
	 	 	 	

	

Name:	
 	

Name:
	

Title:	
 	

Title: Chief Accountant
	

    	

 	

 	

 	

 	

 	

 
	

    	

 	

 	

 	

 	

 	

 

	(1)
	Delete
as appropriate 

56

 
 
 

SCHEDULE 4
  Mandatory Cost formula    
    

	1
	The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England
and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.   

 
	2
	On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the
"Additional Cost Rate") for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a
weighted average of the Lenders' Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per
annum.  

 
	3
	The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by
that Lender to the
Agent. This percentage will be certified by that Lender in its notice to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender's participation in all Loans
made from that Facility Office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that Facility Office.  

 
	4
	The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Agent as follows: 

	E x 0.01
 300	 	per cent. per annum.

Where:

	E
	is
designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Agent as being the average of the most recent rates of charge supplied by the
Reference Banks to the Agent pursuant to paragraph 7 below and expressed in pounds per £1,000,000.  

	5
	For the purposes of this Schedule:

	(a)
	"Fees Rules" means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in
force from time to time in respect of the payment of fees for the acceptance of deposits;

	(b)
	"Fee Tariffs" means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum
fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and

	(c)
	"Tariff Base" has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.  

 

	6
	The resulting figure shall be rounded to four decimal places.  

 
	7
	If requested by the Agent,
each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Agent, the rate
of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for
this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff
Base of that Reference Bank. 

57

 
	8
	Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation,
each Lender shall supply the following information on or prior to the date on which it becomes a Lender:

	(a)
	the
jurisdiction of its Facility Office; and

	(b)
	any
other information that the Agent may reasonably require for such purpose. 

Each
Lender shall promptly notify the Agent of any change to the information provided by it pursuant to this paragraph. 

	9
	The rates of charge of each Reference Bank for the purpose of E above shall be determined by the Agent based upon the information supplied to it pursuant to
paragraphs 7 and 8 above.  

 
	10
	The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or
under compensates any Lender and shall be
entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.  

 
	11
	The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each
Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7 and 8 above.  

 
	12
	Any determination by the
Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender
shall, in the absence of manifest error, be conclusive and binding on all Parties.  

 
	13
	The Agent may from time to time, after consultation with the
Borrower and the Lenders, determine and notify to all Parties any amendments which are required to
be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European
Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all
Parties. 

58

 
 
 

SCHEDULE 5
  Form of Transfer Certificate    
    

	To:	 	ING Bank N.V., London Branch as Agent
	

From:	
 	

[_______] (the "Existing Lender") and [_______] (the "New Lender")
	

Dated:	
 	

 

Mobile TeleSystems Open Joint Stock Company—US$500,000,000 Facility Agreement

dated [_______] (the "Agreement")

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

 
	2
	We refer to Clause 22.5 (Procedure for transfer):

	(a)
	The
Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all or part of the Existing Lender's Commitment, rights and obligations
referred to in the Schedule in accordance with Clause 22.5 (Procedure for transfer).

	(b)
	The
proposed Transfer Date is [_______].

	(c)
	The
Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 29.2
(Addresses) are set out in the Schedule.  

 

	3
	The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of Clause 22.4
(Limitation of responsibility of Existing Lenders).  

 
	4
	This Transfer Certificate may be executed in any
number of counterparts and this has the same effect as if the signatures on the counterparts were on a single
copy of this Transfer Certificate.  

 
	5
	This Transfer Certificate is governed by English law. 

59

 
 
 

THE SCHEDULE
  Commitment/rights and obligations to be transferred    
    

[insert
relevant details] 

[Facility
Office address, fax number and attention details for notices and account details for payments.] 

	[Existing Lender]	 	[New Lender]
	

By:	
 	

 	
 	

By:	
 	

 

This
Transfer Certificate is accepted by the Agent and the Transfer Date is confirmed as [_______]. 

ING
Bank N.V., London Branch 

By:

60

 
 
 

SCHEDULE 6
  Form of Compliance Certificate    
    

	To:	 	ING Bank N.V., London Branch as Agent
	

From:	
 	

Mobile TeleSystems Open Joint Stock Company
	

Dated:	
 	

 

Dear
Sirs 

Mobile TeleSystems Open Joint Stock Company—US$500,000,000 Facility Agreement

dated [_______] (the "Agreement")

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

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

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

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

	Signed:	 	 	 	 
	 	 	
	 	 
	

[Chief Financial Officer] of

Mobile TeleSystems Open Joint Stock Company	
 	

 

	*
	insert applicable certification language

We
have reviewed the Facility Agreement and audited consolidated financial statements of the Mobile TeleSystems Open Joint Stock Company for the year ended [_______]. 

On
the basis of that review and audit, nothing has come to our attention which would require any modification to the confirmations in paragraphs 2 or 3 of the above Compliance Certificate. 

	

	
 	

 
	

for and on behalf of	
 	

 
	
name of auditors of Mobile TeleSystems Open Joint Stock Company
	

    	

 	

 	

 	

 
	

    	

 	

 	

 	

 

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

61

   The Borrower  

Mobile TeleSystems Open Joint Stock Company  

	Address:	 	4 Marksistskaya Street,

109147 Moscow, Russian Federation	 	 
	

Fax No:	
 	

+7 095 911 6531	
 	

 
	

Attention:	
 	

Tatiana Evtoushenkova

Vice President for Investments and

Corporate Development	
 	

 
	

    	
 	

 	
 	

 

	By:	 	 	 	By:	 	 
	 	 	
	 	 	 	

	

Name: Tatiana Evtoushenkova	
 	

Name: R.Kolomiets
	

Title: Vice President for Investments and Corporate Development	
 	

Title: Chief Accountant
	

    	
 	

 	
 	

 
	
The Original Mandated Lead Arrangers	
 	

 
	

ABN AMRO Bank N.V.	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

HSBC Bank plc	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 

62

 

	 ING Bank N.V.	 	 	 	 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

Raiffeisen Zentralbank Oesterreich AG	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	
The New Mandated Lead Arrangers	
 	

 
	

Bank Austria Creditanstalt AG	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

Commerzbank Aktiengesellschaft	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 
	 	 	 	 	 	 	 

63

 

	
The Original Lenders	
 	

 
	

ABN AMRO Bank N.V.	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

Bank Austria Creditanstalt AG	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

Commerzbank (Eurasija) SAO	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

HSBC Bank plc	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 
	 	 	 	 	 	 	 

64

 

	

ING Bank N.V.	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	Raiffeisen Zentralbank Oesterreich AG	 	 	 	 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

ZAO Raiffeisenbank Austria	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

Name:	
 	

 	
 	

 
	

Title:	
 	

 	
 	

 

65

 

	The Agent
	

ING Bank N.V., London Branch	
 	

 
	

Address:	
 	

60 London Wall

London EC2M 5TQ	
 	

 
	

Fax:	
 	

+44 207 767 7324	
 	

 
	

Attention:	
 	

David Hobbs/Craig Baker

Agency Operations	
 	

 
	

    	
 	

 	
 	

 

	By:	 	 	 	 
	 	 	
	 	 
	

Name:	
 	

 
	

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CONTENTS

SECTION 1 INTERPRETATION

SECTION 2 THE FACILITY

SECTION 3 UTILISATION

SECTION 4 REPAYMENT, PREPAYMENT AND CANCELLATION

SECTION 5 COSTS OF UTILISATION

SECTION 6 ADDITIONAL PAYMENT OBLIGATIONS

SECTION 7 REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

SECTION 8 CHANGES TO PARTIES

SECTION 9 THE FINANCE PARTIES

SECTION 10 ADMINISTRATION

SECTION 11 GOVERNING LAW AND ENFORCEMENT

SCHEDULE 1 The Original Lenders

SCHEDULE 2 Conditions precedent

SCHEDULE 3 Utilisation Request

SCHEDULE 4 Mandatory Cost formula

SCHEDULE 5 Form of Transfer Certificate

THE SCHEDULE Commitment/rights and obligations to be transferred

SCHEDULE 6 Form of Compliance Certificate

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}]]