Document:

_

Exhibit 10.2 to 8-K 

dated June 22, 2007

CONSULTING AND RESTRICTIVE COVENANTS AGREEMENT

THIS CONSULTING AND RESTRICTIVE COVENANTS AGREEMENT (this “Agreement”) is made and entered into this 22nd day of June, 2007 by and among Seacoast Banking Corporation of Florida (the “Company”), Seacoast National Bank (the “Bank”) and A. Douglas Gilbert (“Gilbert”), to be effective as of January 1, 2009, or such earlier date as may be agreed upon by Mr. Gilbert and the  Company (the “Effective Date”).

BACKGROUND

Mr. Gilbert currently serves as President and Chief Operating and Credit Officer of the Company, pursuant to an Executive Employment Agreement, dated as of March 22, 1991, between the Company and Mr. Gilbert (the “Employment Agreement”).  In addition, the Company and Mr. Gilbert have entered into a Change of Control Employment Agreement, dated as of December 24, 2003 (the “Change of Control Agreement”), pursuant to which Mr. Gilbert shall have certain rights with respect to his employment following a Change of Control, as defined therein. Effective as of January 31, 2009, or such earlier date of retirement approved by the Company (the “Retirement Date”), Mr. Gilbert will resign from his positions as an officer and employee of the Bank and the Company and will thereafter provide consulting services to the Company upon the terms and conditions set forth herein. 

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.

Employment Agreement, Change in Control Agreement and Resignations.  Mr. Gilbert will tender his resignation as an employee and officer of the Bank and the Company, effective as of his Retirement Date.  Until such Retirement Date, Mr. Gilbert’s employment will be subject to the terms and conditions of the Employment Agreement and, if applicable, the Change of Control Agreement.  In the event that Mr. Gilbert’s employment is terminated prior to the Effective Date for any reason, other than such earlier retirement approved by the Company, this Agreement shall expire and shall have no force or effect.

As provided further in this Agreement, Mr. Gilbert will provide consulting services to the Company after the Effective Date.  Mr. Gilbert and the Company acknowledge that his termination of employment on the Effective Date shall not be deemed a termination subject to Sections 4(d), (e), (f), or (g) of the Employment Agreement or pursuant to the Change of Control Agreement.  Upon and following the Effective Date, Mr. Gilbert shall not be entitled to severance or any other post-termination benefits or payments under the Change of Control Agreement or the Employment Agreement.

2.

Consulting Period.  Unless terminated sooner pursuant to Section 5 below, the term of this Agreement shall be for the five-year period commencing on the Effective Date and ending on the fifth anniversary of the Effective Date.

3.

Consulting Services; Board Service.  

(a)

Consulting Services.  Consultant’s services shall include, but not necessarily be limited to, maintenance of key customer relationships, support of new business development for and on behalf of the Company, the Bank and the Company's other subsidiaries, support of key officer development, continued oversight and management transition of the Seacoast Marine Lending Division of the Bank and such other matters as the Chief Executive Officer of the Company or the Bank or the President and Chief Operating Officer of the Bank, respectively, may request.  During the Consulting Period, Mr. Gilbert shall devote such time and attention to his duties hereunder as is reasonably required to provide consulting services satisfactory to the Company pursuant to this Agreement; provided, however, that Mr. Gilbert will devote no less than 40 hours per month to his duties hereunder.  Notwithstanding the foregoing, the times during which, and the locations at which, Mr. Gilbert shall perform his services hereunder shall be subject to the mutual agreement of Mr. Gilbert and the Company.  

(b)

Service as a Director.  During the Consulting Period, Mr. Gilbert agrees to serve as a member of the Board of Directors (the “Board”) of the Company.

4.

Compensation for Consulting Services.  As compensation for the consulting services to be provided by Mr. Gilbert hereunder, the Company shall pay and provide the following compensation:

(a)

Consulting Fee.  During the Consulting Period, the Company will pay to Mr. Gilbert a consulting fee in an amount equal to $25,000 per month (the “Consulting Fee”).  The Consulting Fee shall be paid in monthly installments.  At Mr. Gilbert's option and upon notice to the Company prior to the Effective Date, Mr. Gilbert may delay any payments hereunder by 6 months.

(b)

Board Service Fees.  As a member of the Board, Mr. Gilbert will receive compensation payable pursuant to the Company’s normal policy for non-employee directors, as changed by the Board from time to time.

(c)

Welfare Benefits. The Company shall purchase for Mr. Gilbert and his spouse a health benefit plan for the Consulting Period.  In addition, the Company shall purchase for Mr. Gilbert a term life insurance policy, with a value equal to one times the amount of the annual Consulting Fee, for the Consulting Period.  Such policy shall expire upon termination of the Consulting Period, or, if earlier, termination of Mr. Gilbert’s consulting services as provided in Section 5 herein.

(d)

Fringe Benefits.  During the Consulting Period, the Company shall provide Mr. Gilbert with the same fringe benefits to which executive officers of the Company and the Bank receive, to the extent legally permissible, in accordance with the plans, practices, programs and policies of the Company, including, but not limited to, reimbursement for expenses, including dues, for clubs of which Mr. Gilbert is a member, and continued use of a Company car.  During the Consulting Period, Mr. Gilbert will be entitled to office, furnishings and equipment of similar type and quality made available to him immediately prior to the Effective Date, and Mr. Gilbert shall be entitled to secretarial and other assistance reasonably necessary for the performance of his duties and responsibilities, as determined by the Company.

(e)

Expenses.  The Company shall reimburse Mr. Gilbert for all reasonable expenses incurred by him in connection with the performance of his duties hereunder, provided that Mr. Gilbert shall furnish the Company with a reasonable accounting for his expenses and hours spent.  The reasonableness of such expenses shall be subject to the determination by the Company, in a manner consistent with the Company’s normal expense reimbursement policies. 

(f)

Equity Awards.  Any equity awards granted to Mr. Gilbert prior to the Effective Date shall become immediately exercisable on the Effective Date and shall thereafter lapse in accordance with the other provisions of the applicable plan and award agreement.  

5.

Termination of Consulting Services.  

(a)

Death or Disability.  Mr. Gilbert’s service as a consultant shall terminate automatically upon his death or disability during the Consulting Period.  

(b)

Termination by the Company.  The Company may terminate Mr. Gilbert’s status as a consultant, with or without cause, at any time prior to a “Change of Control” (as defined in the Change of Control Agreement) or definitive negotiations regarding a Change of Control, or an unsolicited tender offer that, if reasonably likely to be completed, would result in a Change in Control.

(c)

Termination by Mr. Gilbert.  Mr. Gilbert may terminate his status as a consultant at any time, for any reason or no reason.  

(d)

Notice of Termination.  Any termination by the Company or by Mr. Gilbert shall be communicated by notice of termination to the other party hereto given in accordance with Section 10(f) of this Agreement.

(e)

Date of Termination.  “Date of Termination” means (i) if Mr. Gilbert’s status as a consultant is terminated other than by reason of his death or disability, the date of receipt of the notice of termination, or any later date specified therein, or (ii) if Mr. Gilbert’s status as a consultant is terminated by reason of death, the Date of Termination will be the date of death.

6.

Obligations of the Company upon Termination.  Upon termination of the Consulting Period for any reason, including termination by expiration of the Consulting Period, early termination by either party, or termination by reason of Mr. Gilbert’s death or disability, then, in consideration of his services prior to the Date of Termination and his compliance with the Restrictive Covenants set forth in Section 8 of this Agreement, the Company shall, to the extent not theretofore paid, pay to Mr. Gilbert or his estate in a lump sum in cash within 30 days after the Date of Termination the Consulting Fee earned through the Date of Termination and any expenses accrued and reimbursable hereunder through the Date of Termination.

7.

Independent Contractor.  This Agreement calls for the performance of services by Mr. Gilbert as an independent contractor, and Mr. Gilbert will not be and will not be considered an employee of the Company for any purpose during the Consulting Period.  Accordingly, it is understood and agreed that during the Consulting Period Mr. Gilbert (a) has no authority to act for, or bind the Company by contract or otherwise; (b) is not eligible to participate in any employment benefit plan or program available to employees of the Company; (c) will be treated as an independent contractor for purposes of the Federal Insurance Contributions Act, federal income tax withholding, the Employee Retirement Income Security Act, state unemployment or disability insurance laws, or other similar laws; (d) shall work with, and take general direction from, the Chief Executive Officer of the Company; and (e) will perform the services required under and pursuant to this Agreement in good faith and with a view toward maintaining and enhancing the customer and community relationship, reputation, and goodwill of the Company, the Bank and their subsidiaries.

8.

Restrictions on Mr. Gilbert’s Conduct.

(a)

General.  Mr. Gilbert acknowledges that his rights, the payments for services hereunder, and benefits under this Agreement are contingent upon his compliance with the provisions of this Section 8.  Mr. Gilbert recognizes and agrees that the Company will suffer irreparable harm in the event that Mr. Gilbert violates any of the Restrictive Covenants (as defined below).  Mr. Gilbert and the Company understand and agree that the purpose of the provisions of this Section 8 is to protect the Company's, the Bank's and their subsidiaries' legitimate business interests, as more fully described below, and is not intended to impair or infringe upon Mr. Gilbert’s right to work, earn a living, or acquire and possess property from the fruits of his labor.  Mr. Gilbert and the Company acknowledge and agree that the Restrictive Covenants are not made in connection with Mr. Gilbert’s former services for the Company, but rather are intended to protect the Company’s interests.  Mr. Gilbert hereby acknowledges that the restrictions set forth in this Section 8 are reasonable and that they do not, and will not, unduly impair his ability to earn a living.  Therefore, in consideration of (i) Mr. Gilbert’s rights and benefits under this Agreement; (ii) in consideration of the monetary compensation provided in Section 4; and (iii) in consideration of receiving access to the Confidential Information and Trade Secrets (as defined below), and, subject to the limitations of reasonableness imposed by law, Mr. Gilbert shall be subject to the restrictions set forth in this Section 8.

(b)

Definitions.  The following capitalized terms used in this Section 8 shall have the meanings assigned to them below:

“Competitive Position” means any position with a Competitor as a Principal or Representative in which Mr. Gilbert will use or is likely to use any Confidential Information or Trade Secrets, or in which Mr. Gilbert has duties for, provides services to, or otherwise assists such Competitor where such duties, services or assistance involve Competitive Services.

“Competitive Services” means any activities engaged in by the Company as of the Effective Date that relate directly to soliciting customers or engaging in business development activities in the business of banking, fiduciary services, securities and insurance brokerage, investment management or services, making or administering loans or making credit decisions, or deposit taking.

“Competitor” means any Person engaged, wholly or in material part, in Competitive Services.

“Confidential Information” means all information regarding the Company, its activities, business or clients that is the subject of reasonable efforts by the Company to maintain its confidentiality and that is not generally disclosed by practice or authority to persons not employed by the Company, but that does not rise to the level of a Trade Secret.  “Confidential Information” shall include, but is not limited to financial plans and data concerning the Company; management planning information; business plans; operational methods; market studies; marketing plans or strategies; product development techniques or plans; customer lists; details of customer contracts; credit policies and practices; customer names, data and information; current and anticipated customers; targeted potential customers; business acquisition plans; new personnel acquisition plans; and pricing information.  “Confidential Information” shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right, privilege or obligation of the Company.  This definition shall not limit any definition of “confidential information” or any equivalent term under state or federal law.

“Person” means any individual or any corporation, partnership, joint venture, trust, limited liability company, association or other entity or enterprise, including governmental agencies and authorities.

“Principal or Representative” means a principal, owner, partner, shareholder, joint venturer, investor, member, trustee, director, officer, manager, employee, agent, representative or consultant.

“Protected Customers” means any Person to whom the Company has sold its products or services or to whom the Company has submitted a written proposal to sell its products or services during the Consulting Period or during the twelve (12) months prior to the Effective Date.

“Protected Employees” means employees of the Company who were employed by the Company at any time during the Consulting Period or within six (6) months prior to the Effective Date.

“Restricted Period” means the Consulting Period plus twenty-four (24) months after the termination of the Consulting Period; provided, however that such period shall be extended by any length of time during which Executive is in breach of the Restricted Covenants. 

“Restricted Territory” means the counties in the State of Florida and elsewhere where the Company, the Bank or their subsidiaries have offices at the Termination Date and, with respect to the Bank's Seacoast Marine Lending Division, the markets served by such Division, at the Termination Date.

“Restrictive Covenants” means the restrictive covenants contained in Section 8(d) hereof.

“Trade Secret” means all information, without regard to form, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, distribution lists or a list of actual or potential customers, advertisers or suppliers which is not commonly known by or available to the public and which information:  (A) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (B) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy, and includes any item of confidential information that constitutes a “trade secret(s)” under the common law or federal law or the laws of the State of Florida.

(c)

Protectable Employer Interests.  Mr. Gilbert and the Company acknowledge and agree as follows: (i) that Mr. Gilbert’s services on behalf of the Company have required and will continue to require special expertise and talent in the provision of Competitive Services; (ii) that Mr. Gilbert has been and will continue to be in a position of trust and responsibility and have access to a substantial amount of Confidential Information and Trade Secrets belonging to the Company; (iii) that, during his employment with the Company and the Consulting Period, Mr. Gilbert has developed and will continue to develop substantial relationships with prospective and existing customers of the Company; and (iv) that as a former officer and consultant to the Company, Mr. Gilbert has been and will be the repository of a substantial portion of the customer goodwill of the Company.

(d)

Restrictive Covenants.  

(i)

Restriction on Disclosure and Use of Confidential Information and Trade Secrets.  Mr. Gilbert understands and agrees that the Confidential Information and Trade Secrets constitute valuable assets of the Company and its affiliated entities, and may not be converted to Mr. Gilbert’s own use or for or on behalf of any other Person.  Accordingly, Mr. Gilbert hereby agrees that he shall not, directly or indirectly, at any time during the Restricted Period reveal, divulge, or disclose to any Person not expressly authorized by the Company any Confidential Information, and he shall not, directly or indirectly, at any time during the Restricted Period use or make use of any Confidential Information in connection with any business activity other than business of the Company.  During the Restricted Period, Mr. Gilbert shall not directly or indirectly transmit or disclose any Trade Secret of the Company to any Person, and shall not make use of any such Trade Secret, directly or indirectly, for himself or for others, without the prior written consent of the Company.  Mr. Gilbert and the Company acknowledge and agree that this Section 8 is not intended to, and does not, alter either the Company’s rights or Mr. Gilbert’s obligations under any state or federal statutory or common law regarding trade secrets and unfair trade practices.  

(ii)

Nonsolicitation of Protected Employees.  Mr. Gilbert understands and agrees that the relationship between the Company and each of its Protected Employees constitutes a valuable asset of the Company and may not be converted through Mr. Gilbert‘s solicitation to Mr. Gilbert’s own use.  Accordingly, Mr. Gilbert hereby agrees that during the Restricted Period, Mr. Gilbert will not, directly or indirectly, on his own behalf or as a Principal or Representative of any Person or otherwise, solicit or induce any Protected Employee to terminate his employment relationship with the Company or to enter into any relationship of employment, agency or independent contractorship with any other Person.  

(iii)

Restriction on Relationships with Protected Customers.  Mr. Gilbert understands and agrees that the relationship between the Company and each of its Protected Customers constitutes a valuable asset of the Company and may not be converted through Mr. Gilbert’s solicitation to Mr. Gilbert’s own use.  Accordingly, Mr. Gilbert hereby agrees that, during the Restricted Period, Mr. Gilbert will not, without the prior written consent of the Company, directly or indirectly, on his own behalf or as a Principal or Representative of any Person, solicit, divert, or attempt to solicit or divert a Protected Customer for the purpose of providing or selling Competitive Services; provided, however, that the prohibition of this covenant shall apply only to Protected Customers with whom Mr. Gilbert had Material Contact on the Company’s behalf during the Consulting Period or during the twelve (12) months immediately preceding the Effective Date.  For purposes of this Agreement, Mr. Gilbert had “Material Contact” with a Protected Customer if (a) Mr. Gilbert had business dealings with the Protected Customer on the Company’s behalf; (b) Mr. Gilbert was responsible for supervising or coordinating the dealings between the Company and the Protected Customer; or (c) Mr. Gilbert obtained Trade Secrets or Confidential Information about the customer as a result of Mr. Gilbert’s association with the Company.  

(iv)

Noncompetition with the Company.  Mr. Gilbert understands and agrees that he is capable of obtaining gainful, lucrative and desirable employment that does not violate the restrictions contained in this Agreement.  Mr. Gilbert hereby agrees that, during the Restricted Period, Mr. Gilbert will not, without prior written consent of the Company, directly or indirectly seek or obtain a Competitive Position in the Restricted Territory with a Competitor; provided, however, that the provisions of this Agreement shall not be deemed to prohibit the ownership by Mr. Gilbert of any securities of the Company or its affiliated entities or not more than five percent (5%) of any class of securities of any corporation having a class of securities registered pursuant to the Securities Exchange Act of 1934, as amended.  

(e)

Exceptions from Disclosure Restrictions.  Anything herein to the contrary notwithstanding, Mr. Gilbert will not be restricted from disclosing or using Confidential Information that: (a) is or becomes generally available to the public other than as a result of an unauthorized disclosure by Mr. Gilbert or his agent; (b) becomes available to Mr. Gilbert in a manner that is not in contravention of applicable law from a source (other than the Company or its affiliated entities or one of its or their officers, employees, agents or representatives) that is not bound by a confidential relationship with the Company or its affiliated entities or by a confidentiality or other similar agreement; (c) was known to Mr. Gilbert on a non-confidential basis and not in contravention of applicable law or a confidentiality or other similar agreement before its disclosure to Mr. Gilbert by the Company or its affiliated entities or one of its or their officers, employees, agents or representatives; or (d) is required to be disclosed by law, court order or other legal process; provided, however, that in the event disclosure is required by law, Mr. Gilbert will provide the Company with prompt notice of such requirement so that the Company may seek an appropriate protective order prior to any such required disclosure by Mr. Gilbert.

(f)

Reasonableness.  The covenants contained in this Section 8 are considered by the parties hereto to be fair, reasonable and necessary for the protection of the legitimate business interests of the Company.

(g)

Rights and Remedies Upon Breach.  In the event Mr. Gilbert breaches, or threatens to commit a breach of, any of the provisions of the Restrictive Covenants, the Company shall have the following rights and remedies, which shall be independent of any others and severally enforceable, and shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity:

(i)

the right and remedy to enjoin or restrain, preliminarily and permanently, Mr. Gilbert from violating or threatening to violate the Restrictive Covenants and to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction without the need for posting a bond, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company; and

(ii)

the right and remedy to require Mr. Gilbert to account for and pay over to the Company all compensation paid to him pursuant to Section 4 of this Agreement as special consideration for the Restrictive Covenants; and

(iii)

the right and remedy to require Mr. Gilbert to account for and pay over to the Company and the Bank all compensation, profits, monies, accruals, increments or other benefits derived or received by Mr. Gilbert as the result of any transactions constituting a breach of the Restrictive Covenants; and

(iv) 

the right and remedy to recover reasonable attorneys' fees incurred by the Company and/or the Bank to enforce this Agreement and any other damages permitted by law.

(h)

Severability of Covenants.  Mr. Gilbert acknowledges and agrees that the Restrictive Covenants are reasonable and valid in time and scope and in all other respects.  The covenants set forth in this Agreement shall be considered and construed as separate and independent covenants.  If any court determines that any of the Restrictive Covenants, or any part thereof, are invalid or unenforceable, the remainder of the Restrictive Covenants will not thereby be affected and will be given full effect, without regard to the invalid portions.

(i)

Reformation.  Mr. Gilbert and the Company agree that it is their mutual intention that the Restrictive Covenants be enforced in accordance with their terms to the maximum extent possible under applicable law.  Mr. Gilbert and the Company further agree that, in the event any court of competent jurisdiction shall find that any provision hereof is not enforceable in accordance with its terms, the court shall reform the Restrictive Covenants such that they will be enforceable to the maximum extent permissible at law.

9.

Representations and Warranties.  Mr. Gilbert hereby represents and warrants to the Company that (a) he is not a party to, or otherwise subject to, any covenant not to compete with any person or entity which would interfere with his consulting duties hereunder, (b) his performance of all the terms of this Agreement and as a consultant to the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Mr. Gilbert in confidence or in trust prior to his relationship with the Company, and (c) his execution of this Agreement and performance of his obligations hereunder will not violate the terms or conditions of any contract or obligation, written or oral, between Mr. Gilbert and any other person or entity.  

10.

Miscellaneous.

(a)

Assignment and Successors.  This Agreement is personal to Mr. Gilbert and without the prior written consent of the Company shall not be assignable by Mr. Gilbert otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by Mr. Gilbert’s legal representatives.  This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(b)

Waiver.  Failure of either party to insist, in one or more instances, on performance by the other in strict accordance with the terms and conditions of this Agreement shall not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future performance of any such term or condition or of any other term or condition of this Agreement, unless such waiver is contained in a writing signed by the party making the waiver.

(c)

Severability.  If any provision or covenant, or any part thereof, of this Agreement should be held by any court to be invalid, illegal or unenforceable, either in whole or in part, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of the remaining provisions or covenants, or any part thereof, of this Agreement, all of which shall remain in full force and effect.

(d)

Entire Agreement.  Except as provided herein, this Agreement contains the entire agreement and understanding among the Company and Mr. Gilbert with respect to the subject matter hereof and, from and after the Effective Date, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof, including, without limitation, the Employment Agreement and the Change in Control Agreement.

(e)

Choice of Law; Forum Selection.  The validity, interpretation and performance of this Agreement shall be governed by, and construed in accordance with the laws of the State of Florida, excluding said State’s choice of law rules.  The parties hereto voluntarily submit themselves to the jurisdiction of the state or federal district courts in the State of Florida, which shall have exclusive jurisdiction over any case or controversy arising under or in connection with or to remedy any breach of or otherwise to enforce the terms and conditions of this Agreement.

(f)

Notices.  All notices, requests, demands and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or three days after mailing if mailed, first class, certified mail (return receipt requested), postage prepaid:

To the Company or the Bank:

Seacoast Banking Corporation of Florida

815 Colorado Avenue

P.O. Box 9012

Stuart, FL 34995

Attention: Chief Executive Officer

To Mr. Gilbert:

A. Douglas Gilbert

7379 Reserve Creek Drive

Port St. Lucie, Florida 34986

Any party may change the address to which notices, requests, demands and other communications shall be delivered or mailed by giving notice thereof to the other party in the same manner provided herein.

(g)

Amendments and Modifications.  This Agreement may be amended or modified only by a writing signed by both parties hereto, which makes specific reference to this Agreement.

(h)

Construction.  Each party and his or its counsel have reviewed this Agreement and have been provided the opportunity to revise this Agreement and accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.  Instead, the language of all parts of this Agreement shall be construed as a whole, and according to its fair meaning, and not strictly for or against either party.

(i)

Other.  As used herein, the singular shall include the plural and vice versa, and any reference to any gender shall include all other genders, as applicable.  The terms "include", "including" and "included" and derivations thereof shall be deemed to be without limitation, whether by enumeration or otherwise.

- # –

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Consulting Agreement as of the date first above written.

	

/s/ Sharon Mehl

Witness

	SEACOAST NATIONAL BANK

By:  /s/ Dennis S. Hudson, III

Name:  Dennis S. Hudson, III

Title:  Chairman & Chief Executive Officer

	 	 
	 	 
	

/s/ Sharon Mehl

Witness

	SEACOAST BANKING CORPORATION OF FLORIDA

By:  /s/ Dennis S. Hudson, III

Name:  Dennis S. Hudson, III

Title:  Chairman & Chief Executive Officer

	 	 
	 	 
	

/s/ Debra Policino

Witness

	

/s/ A. Douglas Gilbert

A. Douglas Gilbert

- # –Exhibit 4.12

 

	
  CONFORMED COPY

  	
   

  	
  Operation
  Number 36894/35648

  

 

Originally dated 8 December 2004 and

amended and restated with effect from the
Relevant Date

 

 

US$250,000,000

 

FACILITY AGREEMENT

 

between

 

MOBILE TELESYSTEMS OPEN JOINT
STOCK COMPANY

 

as Borrower

 

and

 

EUROPEAN BANK FOR
RECONSTRUCTION AND DEVELOPMENT

 

as Lender

 

 

 

Paveletskaya
sq. 2, bld. 2

Moscow
115054

 

Telephone
(7-495) 797 9797

Facsimile
(7-495) 797 9798

 

Ref
MIYB/TP

 

 

CONTENTS

 

	
  CLAUSE

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1 INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1

  	
  DEFINITIONS AND
  INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2 THE FACILITY

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2

  	
  THE FACILITY

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3

  	
  PURPOSE

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4

  	
  CONDITIONS OF UTILISATION

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3 UTILISATION

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5

  	
  UTILISATION

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4 REPAYMENT,
  PREPAYMENT AND CANCELLATION

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6

  	
  REPAYMENT

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7

  	
  PREPAYMENT AND
  CANCELLATION

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5 COSTS OF
  UTILISATION

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8

  	
  INTEREST

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9

  	
  INTEREST PERIODS

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10

  	
  CHANGES TO THE CALCULATION
  OF INTEREST

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11

  	
  FEES

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6 ADDITIONAL
  PAYMENT OBLIGATIONS

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12

  	
  TAX GROSS-UP AND
  INDEMNITIES

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13

  	
  INCREASED COSTS

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14

  	
  OTHER INDEMNITIES

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15

  	
  MITIGATION BY THE LENDER

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16

  	
  COSTS AND EXPENSES

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7 REPRESENTATIONS,
  UNDERTAKINGS AND EVENTS OF DEFAULT

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17

  	
  REPRESENTATIONS

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18

  	
  INFORMATION UNDERTAKINGS

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19

  	
  FINANCIAL COVENANTS

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20

  	
  GENERAL UNDERTAKINGS

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  21

  	
  EVENTS OF DEFAULT

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8 CHANGES TO PARTIES

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  22

  	
  CHANGES TO THE LENDER

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  23

  	
  CHANGES TO THE BORROWER

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9 THE LENDER

  	
   

  	
  44

  
	
   

  	
   

  	
   

  

 

i

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  24

  	
  CONDUCT OF BUSINESS BY THE
  LENDER

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10 ADMINISTRATION

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  25

  	
  PAYMENT MECHANICS

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  26

  	
  SET-OFF

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  27

  	
  NOTICES

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  28

  	
  CALCULATIONS AND
  CERTIFICATES

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  29

  	
  PARTIAL INVALIDITY

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  30

  	
  REMEDIES AND WAIVERS

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  31

  	
  AMENDMENTS AND WAIVERS

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  32

  	
  COUNTERPARTS

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11 GOVERNING LAW
  AND ENFORCEMENT

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33

  	
  GOVERNING LAW

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  34

  	
  ARBITRATION AND
  JURISDICTION

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  35

  	
  IMMUNITIES

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 1 Conditions
  precedent

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 2 Utilisation
  Request

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 3 Form of
  Compliance Certificate

  	
   

  	
  54

  

 

ii

 

THIS
AGREEMENT is originally dated 8 December 2004 and amended and restated with
effect from the Relevant Date (as defined in the Amendment and Restatement
Agreement referred to below) 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”);
and

 

(2)                              EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT as lender  (the  “Lender” or “EBRD”).

 

IT
IS AGREED as follows:

 

SECTION 1

INTERPRETATION

 

1                                      DEFINITIONS AND INTERPRETATION

 

1.1                            Definitions

 

In this Agreement:

 

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

 

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

 

“Amendment
and Restatement Agreement” means the amendment and restatement
agreement dated May 2006 and made between the Borrower and the Lender.

 

“Availability
Period” means the period from and including the Designated Date to
and including 28 December 2006.

 

“Available
Commitment” means the Commitment minus:

 

(a)                              the amount
of any outstanding Loans; and

 

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

 

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

 

“Bitel
Litigation” means any of the claims, proceedings (present or future)
and causes of action involving the Borrower and/or any of its Affiliates
(including Bitel) relating to or arising out of the acquisition, reorganisation
or ownership of Bitel by the Borrower (whether directly or through any of its
Affiliates).

 

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

 

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

 

1

 

exceeds:

 

(b)                             the amount
which the 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 London, Moscow and New York City.

 

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

 

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

 

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

 

“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.

 

“Designated
Date” means the date of the Amendment and Restatement Agreement.

 

“Due
Diligence Materials” means written information provided in
connection with the due diligence meeting between the Lender and the Borrower
on 31 March 2006, including (without limitation) the terms of the Syndicated
Facility, the Borrower’s business plan as of March 2006 and the Borrower’s financial
projections for the period commencing 1 January 2006 and ending on 31 December
2013, dated 28 March 2006.

 

“Egypt
Licence” means the third licence (not issued as of the date of this
Agreement) to install, provide and operate a public land mobile network in
Egypt.

 

“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.

 

2

 

“Environmental
Licence” means any Authorisation required at any time under
Environmental Law.

 

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

 

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

 

“Facility
Office” means the office of the Lender located at One Exchange
Square, London EC2A 2JN, United Kingdom, or the office or offices notified
by the Lender to the Borrower (by not less than 5 Business Days’ written
notice) as the office or offices through which it will perform its obligations
under this Agreement.

 

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

 

“Final Maturity
Date” means 15 June 2014.

 

“Finance
Document” means this Agreement and any other document designated as
such by the Lender and the Borrower.

 

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

 

(a)                                moneys borrowed;

 

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

 

(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.

 

3

 

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

 

“Information
Memorandum” means the Original Information Memorandum or the Revised
Information Memorandum.

 

“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).

 

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

 

“Investments”
means:

 

(a)                               expansion by members of the Group into the
regions of the Russian Federation (other than Moscow and St. Petersburg) and
the countries constituting the Commonwealth of Independent States by way of network
development and/or acquisitions; and

 

(b)                             the technological upgrade of its
Subsidiaries,

 

in each case including any fees relating
thereto, and any refinancing or recapitalisation in connection therewith, in
whole or in part.

 

“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 Lender 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 loan made or to be made under the Facility (including, for the
avoidance of doubt, a Loan made under the Original Facility Agreement) or the
principal amount for the time being of that loan.

 

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

 

“Mandate
Letter” means the letter agreement dated 20 March 2006 between the
Lender and the Borrower.

 

“Margin”
means 1.51 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

 

4

 

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

 

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

 

“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.

 

“New
Commitment” means a commitment of $111,538,461.

 

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

 

“Original
Commitment” means a commitment of
$138,461,539 ($150,000,000 less the $11,538,461 repaid by the Borrower on 15 December 2005).

 

“Original
Facility Agreement” has the meaning given to it in the Amendment and
Restatement Agreement.

 

“Original
Financial Statements” means the audited consolidated financial
statements of the Group for the financial year ended 31 December 2005.

 

“Original
Information Memorandum” means the information memorandum prepared in
relation to the facility agreement dated 26 July 2004 between the Borrower, ING
Bank N.V., London Branch as Agent and the lenders named therein, and as
provided to the Lender by the Borrower prior to the Signing Date for the
purpose of this Agreement.

 

“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

 

5

 

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.

 

“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 Lender 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 the principal London offices of
ING Bank N.V., HSBC Bank Plc and Raiffeisen Zentralbank Österreich AG.

 

6

 

“Relevant Contract”
means a contract:

 

(a)                                relating
to an Investment;

 

(b)                               with a
value in excess of EUR1,000,000 (or the equivalent thereof in another currency
at the rate of exchange on the date of that contract); and

 

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

 

“Relevant
Date” has the meaning given to it in the Amendment and Restatement
Agreement.

 

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

 

“Repayment
Date” means 15 June 2007, 15 December 2007, 15 June 2008, 15
December 2008, 15 June 2009, 15 December 2009, 15 June 2010, 15 December 2010,
15 June 2011, 15 December 2011, 15 June 2012, 15 December 2012, 15 June 2013,
15 December 2013 and the Final Maturity 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).

 

“Revised
Information Memorandum” means the information memorandum prepared in
relation to the Syndicated Facility, and as provided to the Lender by the
Borrower prior to the Designated Date for the purpose of this Agreement.

 

“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 Lender
may specify another page or service displaying the appropriate rate after
consultation with the Borrower.

 

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

 

(c)                                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 

 

7

 

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

 

“Signing Date”
means 8 December 2004.

 

“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.

 

“Syndicated
Facility” means the $1,330,000,000 facility agreement dated 21 April
2006 between (amongst others) the Borrower, The Bank of Tokyo-Mitsubishi
UFJ, Ltd, Bayerische Landesbank, HSBC Bank plc, ING Bank N.V., Raiffeisen
Zentralbank Oesterreich AG and Sumitomo Mitsui Banking Corporation Europe
Limited as mandated lead arrangers and ING Bank N.V., London Branch as agent.

 

“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).

 

“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.

 

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

 

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

 

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

 

“UMC”
means Closed Joint Stock Company “Ukrainian Mobile Communications” in Ukraine.

 

 “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,
reorganisation 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 the Facility.

 

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

 

8

 

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

 

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

 

1.2                            Construction

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.3                            Third Party Rights

 

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

 

9

 

SECTION 2

THE FACILITY

 

2                                      THE FACILITY

 

Subject to the terms of this Agreement, the
Lender makes available to the Borrower a term loan facility in Dollars in an
aggregate amount equal to the Commitment.

 

3                                      PURPOSE

 

(a)                               The
Borrower shall apply all amounts borrowed by it under the Facility towards the
Investments, and shall use its best efforts to complete such process by the end
of the Investment Period.

 

(b)                              The
Borrower shall use its best efforts to make Investments in the regions of the
Russian Federation (other than Moscow and St. Petersburg) and in the countries
constituting the Commonwealth of Independent States. However, nothing in this
Agreement shall oblige the Borrower to make any Investment which would not be,
in the opinion of the Borrower, in its best interests.

 

4                                      CONDITIONS OF UTILISATION

 

4.1                            Initial conditions precedent

 

The Lender has received all of the documents
and other evidence listed in Schedule 1 (Conditions
precedent) in form and substance satisfactory to the Lender, and has
notified the Borrower that it is so satisfied.

 

4.2                            Further conditions precedent

 

The Lender will only be obliged to comply with
Clause 5.4 (Availability of Loans)
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.

 

4.3                            Suspension and cancellation

 

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

 

10

 

SECTION 3

UTILISATION

 

5                                      UTILISATION

 

5.1                            Delivery of a Utilisation Request

 

The Borrower may utilise the Facility by
delivery to the Lender of a duly completed Utilisation Request not later than
5:00 p.m. on the day falling 6 London Business Days before the proposed
Utilisation Date.

 

5.2                            Completion of a Utilisation Request

 

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

 

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

 

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

 

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

 

(b)                              Only one
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 $30,000,000 or, if less, the Available Commitment; or

 

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

 

5.4                            Availability of Loans

 

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

 

11

 

SECTION 4

REPAYMENT, PREPAYMENT AND CANCELLATION

 

6                                      REPAYMENT

 

6.1                            Repayment of Loans

 

(a)                               The
Borrower made a repayment of the Loan under the Original Facility Agreement in
the principal amount of US$11,538,461 on 15
December 2005.

 

(b)                              The
Borrower shall repay the Loans in 15 further instalments, by paying on each
Repayment Date an amount equal to one fifteenth of the amount of the Loans
outstanding at the close of business on the last day of the Availability
Period. For the avoidance of doubt, the Loans outstanding shall consist of (i)
the amount of the Loan outstanding under the Original Facility Agreement (being
$138,461,539 immediately prior to the Designated Date) and (ii) Loans made in
respect of the New Commitment, which in each case are outstanding on the last
day of the Availability Period.

 

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

 

7                                      PREPAYMENT AND CANCELLATION

 

7.1                            Illegality

 

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

 

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

 

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

 

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

 

7.2                            Voluntary cancellation

 

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

 

7.3                            Voluntary prepayment of Loans

 

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

 

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

 

(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 or any of its 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 the Lender upon becoming aware of that event;

 

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

 

(iii)                           if the
Lender (in its sole discretion) so requires, it may, within 5 Business Days of
its receipt of the Borrower’s notification under sub-clause (i) above,
direct the Borrower to repay 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 the Lender’s rights and obligations under this Agreement to another
reputable international bank or financial institution nominated by the Borrower
(but which is not an Affiliate of the Borrower) in accordance with Clause 22 (Changes to the Lender). If no such
transfer has been effected on or before the Early Repayment Date, then (x) the
Borrower shall repay the Loans (together with accrued interest) in full on the
Early Repayment Date and (y) the Commitment shall be reduced to zero on that
date.

 

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

 

If:

 

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

 

(b)                             the 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 Lender
notice of cancellation of the Commitment and its intention to procure the
repayment of 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 the Lender’s rights and obligations under this Agreement to
another reputable international bank or financial institution nominated by the
Borrower (but which is not an Affiliate of the Borrower) in accordance with
Clause 22 (Changes to the Lender).
If no such transfer has been effected on or before the Cancellation Date, then
(x) the Borrower shall repay the Loans (together with accrued interest) in full
on the Cancellation Date and (y) the Commitment 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 the 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 Commitment except at the times and in the manner expressly
provided for in this Agreement.

 

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

 

14

 

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:

 

(a)                                the
Margin; and

 

(b)                               LIBOR.

 

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 Lender (acting
reasonably). Any interest accruing under this Clause 8.3 shall be immediately
payable by the Borrower on demand by the Lender.

 

(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

 

(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 Lender shall promptly notify the Borrower
of the determination of a rate of interest under this Agreement.

 

15

 

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
Lender) and shall commence on the day on which the preceding Interest Period
expires.

 

(b)                              The first
Interest Period for the first Loan 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 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, such Loan shall be
consolidated with all other Loans (if any) then outstanding such that all Loans
under shall then be treated as a single Loan.

 

(c)                               No
Interest Period shall extend beyond a Repayment Date, and if an Interest Period
would otherwise overrun a Repayment Date, 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.

 

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.

 

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 that Loan for the Interest Period shall be the
rate per annum which is the sum of:

 

(i)                                 the
Margin; and

 

(ii)                              the rate
notified to the Borrower by the 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 the Lender of
funding that Loan from whatever source it may reasonably select.

 

(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 Lender to determine LIBOR for Dollars for the relevant Interest
Period; or

 

16

 

(ii)                              before
close of business in London on the Quotation Day for the relevant Interest
Period, the Borrower receives notification from the Lender 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 Lender or the Borrower so requires, the
Lender and the Borrower shall enter into negotiations (for a period of not more
than 30 days) with a view to agreeing a substitute basis for determining the
rate of interest.

 

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

 

10.4                     Break Costs

 

(a)                               The
Borrower shall, within three Business Days of demand by the Lender, pay to the
Lender 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)                              The Lender
shall, as soon as reasonably practicable after a demand by the Borrower,
provide a certificate confirming the amount of its Break Costs for any Interest
Period in which they accrue.

 

11                               FEES

 

The Borrower shall pay to the Lender commitment
fees and front-end commission in accordance with Clause 5 (Fees) of the Amendment and Restatement
Agreement.

 

17

 

SECTION 6

ADDITIONAL PAYMENT OBLIGATIONS

 

12                               TAX GROSS-UP AND INDEMNITIES

 

12.1                     Definitions

 

(a)                               In this
Agreement:

 

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

 

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

 

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

 

“Tax Payment”
means an increased payment made by the Borrower to the Lender under
Clause 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 Lender accordingly. Similarly, the Lender shall notify the Borrower
on becoming so aware in respect of a payment payable to the Lender.

 

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

 

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

 

18

 

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

 

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

 

12.3                     Tax indemnity

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(A)                           is
compensated for by an increased payment under Clause 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)                               If the
Lender makes, or intends to make,  a
claim under paragraph (a) above, it shall promptly notify the Borrower of the
event which will give, or has given, rise to the claim.

 

12.4                     Tax Credit

 

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

 

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

 

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

 

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

 

19

 

12.5                     Stamp taxes

 

The Borrower shall pay and, within three
Business Days of demand, indemnify the Lender against any cost, loss or
liability the Lender 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
the Lender shall be deemed to be exclusive of any VAT. If VAT is chargeable on
such consideration, that Party shall pay to the Lender (or directly to the
appropriate tax authority, if so required by law) (in addition to and at the
same time as paying the consideration) an amount equal to the amount of the
VAT.

 

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

 

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 Lender, pay the
amount of any Increased Costs incurred by the Lender as a result of (i) the
introduction of or any change in (or in the interpretation, administration or
application of) any law or regulation or (ii) compliance with any law or
regulation made after the Signing Date.

 

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

 

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

 

(ii)                                an
additional or increased cost; or

 

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

 

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

 

13.2                     Increased cost claims

 

(a)                               If the
Lender intends to make a claim pursuant to Clause 13.1 (Increased costs), it shall notify the
Borrower of the event giving rise to the claim.

 

(b)                              The Lender
shall, as soon as practicable after a demand by the Borrower, 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;

 

20

 

(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); or

 

(iii)                           attributable
to the wilful breach by the Lender 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 the Lender against
any cost, loss or liability arising out of or as a result of the conversion
including any discrepancy between (A) the rate of exchange used to convert that
Sum from the First Currency into the Second Currency and (B) the rate or rates
of exchange available to that person at the time of its receipt of that Sum.

 

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

 

14.2                     Other indemnities

 

The Borrower shall, within three Business Days
of demand, indemnify the Lender against any cost, loss or liability incurred by
the Lender 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;

 

(c)                              funding,
or making arrangements to fund, 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 the Lender 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 Lender

 

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

 

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

 

21

 

(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 LENDER

 

15.1                     Mitigation

 

(a)                               The Lender
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 the Lender for all costs and expenses reasonably
incurred by the Lender as a result of steps taken by it under Clause 15.1 (Mitigation).

 

(b)                              The Lender
is not obliged to take any steps under Clause 15.1 (Mitigation) if, in the opinion of the Lender (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
Lender 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 Mandate Letter.

 

16.2                     Amendment costs

 

If (a) the Borrower requests an amendment,
waiver or consent or (b) an amendment is required pursuant to Clause 25.6 (Change of currency), the Borrower shall,
within three Business Days of demand, reimburse the Lender for the amount of
all costs and expenses (including legal fees) reasonably incurred by the Lender
in responding to, evaluating, negotiating or complying with that request or
requirement.

 

16.3                     Enforcement costs

 

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

 

22

 

SECTION 7

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

 

17                               REPRESENTATIONS

 

The Borrower makes the representations and
warranties set out in this Clause 17 to the Lender 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;

 

(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,

 

23

 

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).

 

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.

 

24

 

(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)                               The
factual information contained in the Original Information Memorandum was true
and accurate in all material respects as at 26 July 2004, and the factual
information contained in the Revised Information Memorandum was true and
accurate in all material respects as at April 2006.

 

(b)                              The
financial projections contained in the Due Diligence Materials and each
Information Memorandum were prepared on the basis of recent historical
information and on the basis of reasonable assumptions.

 

(c)                               Any
written factual information (other than that contained in each Information
Memorandum) provided by or on behalf of any member of the Group to the Lender
for the purposes of the Due Diligence Materials 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.

 

(d)                              Nothing
has occurred or been omitted from the Due Diligence Materials or the Revised
Information Memorandum and no information has been given or withheld that
results in the information contained in the Due Diligence Materials or the
Revised 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 unaudited consolidated financial statements of the Group for the financial
year ended 31 December 2005.

 

(d)                              There will
be no material difference between the unaudited consolidated financial statements
of the Group for the financial year ended 31 December 2005 and the 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 Lender
before the date hereof, it and each of its Subsidiaries has:

 

25

 

(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.

 

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

 

(a)                               Neither the Borrower, nor any of its
Significant Subsidiaries, is in material violation of any law presently in
effect that is applicable or relevant to it.

 

(b)                              The Borrower and each of its Significant
Subsidiaries is in compliance with all applicable laws concerning money
laundering (other than where non-compliance is caused by administrative
or technical error and is remedied within a reasonable time from the Borrower
or the relevant Significant Subsidiary becoming aware of such non-compliance).

 

(c)                               Neither the Borrower nor any of its
Significant Subsidiaries, nor (to the best of the Borrower’s knowledge after
due and careful enquiry in accordance with the Borrower’s internal procedures
from time to time) any of the officers, directors or authorised employees,
agents or representatives of the Borrower or any of its Significant
Subsidiaries has:

 

(i)                                paid, promised to pay or offered to pay, or
authorized the payment of, any commission, bribe, pay-off or kickback
related to any Investment (each a “Bribe”),
which Bribe violates any applicable law; or

 

(ii)                             entered into any agreement pursuant to which
any Bribe may or will at any time be paid and which violates any applicable
law; or

 

(iii)                          offered or given any thing of value to
influence the action of a public official, or threatened injury to person,
property or reputation, in connection with any Investment, in order to obtain
or retain business or other improper advantage in the conduct of business.

 

26

 

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.

 

18.1                     Financial statements

 

The Borrower shall supply to the Lender:

 

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

 

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

 

18.2                     Compliance Certificate

 

(a)                               The
Borrower shall supply to the Lender 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. Each Compliance Certificate
shall be signed by an authorised officer of the Borrower

 

(b)                              Where a
Compliance Certificate is required to be delivered with the financial
statements delivered pursuant to paragraph (a) of Clause 18.1 (Financial statements), it shall be
accompanied by a report from the Borrower’s auditors using a form acceptable to
those auditors.

 

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,

 

27

 

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 Lender that
there has been a change in GAAP, the accounting practices or reference periods
and its auditors deliver to the Lender:

 

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

 

(ii)                             sufficient
information, in form and substance as may be reasonably required by the Lender,
to enable the Lender to determine whether Clause 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.

 

18.4                     Implementation report

 

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

 

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

 

18.5                     Environmental health and
safety report

 

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

 

(a)                              information
on compliance by the Borrower with applicable Environmental Law and with
applicable environmental standards, including the status of any Environmental
Licences required for the Borrower’s operations, the results of any inspections
carried out by environmental authorities, any material violations of applicable
Environmental Law by the Borrower and remedial action relating thereto and any
fines imposed for any such violations;

 

(b)                             a summary
of any material notices, reports and other communications on environmental
matters submitted by the Borrower to any environmental authorities;

 

28

 

(c)                              information
on the health and safety record of the Borrower, including the rate of
accidents which are likely to have a material adverse effect on health and
safety (as referred to in Clause 18.6 (Notification
of accident)) and any initiatives in relation to health and safety
matters which have been implemented or planned by the Borrower;

 

(d)                             a summary
of any changes in applicable Environmental Law which may have a material
adverse effect on the Borrower’s operations; and

 

(e)                              copies of
environmental information periodically submitted by the Borrower to its
shareholders or the general public.

 

18.6                     Notification of accident

 

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

 

18.7                     Information: miscellaneous

 

The Borrower shall supply to the Lender:

 

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

 

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

 

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

 

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

 

18.8                     Notification of Default

 

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

 

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

 

18.9                     Know your customer checks

 

If:

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

19.2                     Financial covenant calculations

 

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

 

19.3                     Definitions

 

In this Clause 19.3:

 

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

 

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

 

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

 

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

 

adjusted (but without double counting) by:

 

30

 

(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).

 

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

 

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

 

(i)                                  minority
interests;

 

(ii)                               income
tax;

 

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

 

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

 

(v)                              Interest
Expense;

 

(vi)                           Interest
income; and

 

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

 

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

 

multiplied by two,

 

as determined (except as needed to reflect the
terms of this Clause 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.

 

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

 

For this purpose, any amount outstanding or
repayable in a currency other than 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.

 

31

 

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 Lender of,

 

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

 

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.

 

(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;

 

32

 

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

 

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

 

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

 

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

 

(vi)                         involving
the transfer of any or all of the Borrower’s shares in 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 Lender
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
preceding financial year of the Borrower is not available, the Borrower’s Total
Assets shall be calculated by reference to the draft audit report then
available for that financial year and any other evidence reasonably requested
by, and reasonably satisfactory to, the Lender.

 

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 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 Lender (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.

 

33

 

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.

 

(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

 

34

 

(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, acquire any Telecommunications Licence or invest in any other
entity without the consent of the Lender (such consent not to be unreasonably
withheld), provided that this Clause 20.12 shall not apply to any such
acquisition or investment where such acquisition or investment relates to a
Subsidiary or entity whose principal business is telecommunications or the
provision of data services or related or ancillary businesses; and either:

 

(a)                             the
consideration paid by the Borrower in relation to such acquisition or
investment, when aggregated with the consideration paid by the Borrower in
relation to each other acquisition or investment in the same financial year
permitted under this paragraph (a), does not exceed (i) 20 per cent. of the
Borrower’s Total Assets in the financial year of the Borrower ending 31
December 2006; and (ii) 20 per cent. (or such higher amount not exceeding 25
per cent. as the Lender may agree (acting reasonably)) of the Borrower’s Total
Assets in any other financial year of the Borrower; or

 

(b)                            the
acquisition is of the Egypt Licence or any person holding the Egypt Licence
(but no other asset).

 

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.

 

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

 

35

 

(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).

 

20.16              Environment, health and
safety

 

The
Borrower shall conduct its business with due regard to the environment and
public and occupational health and safety. The Borrower shall conduct its
business in accordance with applicable Environmental Law and with environmental standards existing in the
European Union on the date hereof (or, in the event that such standards do not
exist in the European Union, as set forth in the applicable environmental
guidelines of the World Bank Group).

 

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 Lender 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 Lender giving notice to the Borrower or the Borrower becoming aware of
the same.

 

36

 

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

 

37

 

other authority in respect of the bankruptcy,
winding-up, insolvency, dissolution, administration, reorganisation or
liquidation of the Borrower or a Significant Subsidiary (and such petition has
not been discharged within 14 days);

 

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

 

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

 

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

 

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,  the St. Petersburg licence area or the
Krasnodar licence area; or

 

(ii)                              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 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 Lender, has or is reasonably likely to have a Material Adverse
Effect.

 

(c)                               Any of the
Borrower’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 Lender, has or is
reasonably likely to have a Material Adverse Effect.

 

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

 

38

 

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

 

(f)

 

(i)                                 Any of the
GSM 900 or 1800 licences of 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 Lender 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;

 

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

 

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

 

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

 

(i)                                 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 Lender under Clause 21.18 (UMC
Litigation)); or

 

(ii)                              the transfer of any or all of:

 

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

 

(b)                              the shares in Bitel

 

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

 

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.

 

21.14              Moratorium

 

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

 

39

 

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 Lender, 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 evinces
an intention to repudiate a Finance Document.

 

21.18              UMC Litigation

 

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

 

21.19              Material adverse change

 

The Lender determines 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 Lender may,  by notice to the Borrower:

 

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

 

(b)                             declare
that all or part of the 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 Lender.

 

40

 

SECTION 8

CHANGES TO PARTIES

 

22                               CHANGES TO THE LENDER

 

22.1                     Assignments and transfers by the Lender

 

(a)                               Subject to
this Clause 22, the Lender (the “Existing
Lender”) may sell, transfer,
assign, novate or otherwise dispose of all or part of its rights or obligations
under this Agreement and the other Finance Documents to another bank or
financial institution or to a trust, fund or other entity which is regularly
engaged in or established for the purpose of making, purchasing or investing in
loans, securities or other financial assets (the “New Lender”).

 

(b)                              Unless an
Event of Default has occurred, any assignment or transfer shall require the
consent of the Borrower, provided that (1) such consent shall not be
unreasonably withheld or delayed; and (2) unless the Borrower has notified the
Lender 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

 

If:

 

(i)                                the 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                     Disclosure of information

 

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

 

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

 

(b)                            with (or
through) whom the 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 the 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.

 

41

 

22.4                     Limitation of responsibility of Existing Lenders

 

(a)                               Unless
expressly agreed to the contrary, the 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

 

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

 

and any representations or warranties implied
by law are excluded.

 

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

 

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

 

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

 

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

 

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

 

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
without the prior written consent of the Lender.

 

42

 

SECTION 9

THE LENDER

 

24                               CONDUCT OF BUSINESS BY THE LENDER

 

No provision of this Agreement will:

 

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

 

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

 

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

 

43

 

SECTION 10

ADMINISTRATION

 

25                               PAYMENT MECHANICS

 

25.1                     Payments to the Lender

 

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

 

(b)                              Payment shall
be made to such account in the principal financial centre 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 Lender specifies.

 

25.2                     Partial payments

 

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

 

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

 

25.3                     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.

 

25.4                     Business Days

 

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

 

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

 

25.5                     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.

 

44

 

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

 

25.6                     Change of currency

 

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

 

(i)                                any reference
in 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 Lender
(after consultation with the Borrower); and

 

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

 

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

 

26                               SET-OFF

 

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

 

27                               NOTICES

 

27.1                     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.

 

27.2                     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 that identified with its name below, or any substitute address,
fax number or department or officer as a Party may notify to the other Party by
not less than five Business Days’ notice.

 

27.3                     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

 

45

 

(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 27.2 (Addresses),
if addressed to that department or officer.

 

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

 

27.4                     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 Lender, accompanied by a certified English
translation and, in this case, the English translation will prevail unless the
document is a constitutional, statutory or other official document.

 

28                               CALCULATIONS AND CERTIFICATES

 

28.1                     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 the Lender are
prima facie evidence of the matters to which they relate.

 

28.2                     Certificates and Determinations

 

Any
certification or determination by the Lender 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.

 

28.3                     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.

 

29                               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.

 

30                               REMEDIES AND WAIVERS

 

No failure
to exercise, nor any delay in exercising, on the part of the Lender, any right
or remedy under the Finance Documents 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

 

46

 

remedy. The rights and remedies
provided in this Agreement are cumulative and not exclusive of any rights or
remedies provided by law.

 

31                               AMENDMENTS AND WAIVERS

 

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

 

32                               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.

 

47

 

SECTION 11

GOVERNING LAW AND ENFORCEMENT

 

33                               GOVERNING LAW

 

This
Agreement is governed by English law.

 

34                               ARBITRATION AND JURISDICTION

 

34.1                     Arbitration

 

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

 

34.2                     Recourse to Courts

 

Notwithstanding
Clause 34.1 above, this Agreement and any other Finance Document, and any
rights of EBRD arising out of or relating to this Agreement or any other
Finance Document, may, at the option of EBRD, be enforced by EBRD in the courts
of England or in any other courts having jurisdiction. For the benefit of EBRD,
the Borrower hereby irrevocably submits to the non-exclusive jurisdiction
of the courts of England with respect to any dispute, controversy or claim
arising out of or relating to this Agreement or any other Finance Document, or
the breach, termination or invalidity hereof or thereof. The Borrower hereby
irrevocably designates, appoints and empowers Law Debenture Corporate Services
Limited at its registered office (being, on the date hereof, at 5th
floor, 100 Wood Street, London EC2V 1EX, England) to act as its authorised
agent to receive service of process and any other legal summons in England for
purposes of any legal action or proceeding brought by EBRD in respect of any
Finance Document. The Borrower hereby irrevocably consents to the service of
process or any other legal summons out of such courts by mailing copies thereof
by registered airmail postage prepaid to its address specified herein. The
Borrower covenants and agrees that, so long as it has any obligations under
this Agreement, it shall maintain a duly appointed agent to receive service of
process and any other legal summons in England for purposes of any legal action
or proceeding brought by EBRD in respect of any Finance Document and shall keep
the Lender advised of the identity and location of such agent. Nothing herein
shall affect the right of EBRD to commence legal actions or proceedings against
the Borrower in any manner authorised by the laws of any relevant jurisdiction.
The commencement by EBRD of legal actions or proceedings in one or more
jurisdictions shall not

 

48

 

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

 

35                               IMMUNITIES

 

35.1                     Privileges and Immunities of EBRD

 

Nothing in
this Agreement shall be construed as a waiver, renunciation or other
modification of any immunities, privileges or exemptions of EBRD accorded under
the Agreement Establishing the European Bank for Reconstruction and
Development, international convention or any applicable law.

 

35.2                     Waiver of immunity

 

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

 

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

 

49

 

SCHEDULE 1

Conditions precedent

 

1                                      Finance Documents

 

An
executed original of this Agreement.

 

2                                      The Borrower

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3                                      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 34 (Recourse
to Courts) has accepted its appointment.

 

(b)                              A copy of any
other Authorisation or other document, opinion or assurance which the Lender
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.

 

(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 by the first Utilisation
Date.

 

50

 

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

 

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

 

51

 

SCHEDULE 2

Utilisation Request

 

	
  From:

  	
   

  	
  Mobile
  TeleSystems Open Joint Stock Company

  
	
   

  	
   

  	
   

  
	
  To:

  	
   

  	
  European
  Bank for Reconstruction and Development

  

 

Dated:

 

Dear Sirs

 

Mobile TeleSystems Open Joint Stock Company – US$250,000,000 Facility
Agreement

originally dated 8 December 2004 and amended and restated on [                   ]
(the “Agreement”)

 

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

 

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

 

	
  Proposed
  Utilisation Date:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Amount:

  	
   

  	
  [                   ]
  or, if less, the Available Commitment

  

 

3                                      We confirm that
each condition specified in Clause 4.2 (Further
conditions precedent) is satisfied on the date of this Utilisation
Request.

 

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

 

5                                      This
Utilisation Request is irrevocable.

 

Mobile
TeleSystems Open Joint Stock Company

 

 

	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Name:

  
	
   

  	
   

  
	
  Title:

  	
  Title:   Chief
  Accountant

  

 

52

 

SCHEDULE 3

Form of Compliance Certificate

 

	
  To:

  	
   

  	
  European
  Bank for Reconstruction and Development

  
	
   

  	
   

  	
   

  
	
  From:

  	
   

  	
  Mobile
  TeleSystems Open Joint Stock Company

  

 

Dated:

 

Dear Sirs

 

Mobile TeleSystems Open Joint Stock Company – US$250,000,000 Facility
Agreement

originally dated 8 December 2004 and amended and restated on [                   ]
(the “Agreement”)

 

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

 

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

 

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

 

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

 

 

	
  Signed:

  	
   

  	
   

  
	
   

  
	
  [Chief Financial Officer] of

  Mobile TeleSystems Open Joint Stock Company

  

 

(*)insert applicable certification language

 

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

 

53

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