Document:

Exhibit
4.1

 

EXECUTION
VERSION

 

 

MOBILE TELESYSTEMS
FINANCE S.A.,

 

as Issuer

 

and

 

MOBILE TELESYSTEMS OJSC,

 

as Guarantor

 

9.75% NOTES DUE 2008

 

 

INDENTURE

Dated as of January 30,
2003

 

 

JPMORGAN CHASE BANK,

 

as Trustee

 

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE I

  
	
   

  
	
  DEFINITIONS
  AND OTHER PROVISIONS OF GENERAL APPLICATION

  
	
   

  
	
  SECTION 1.01.  Definitions

  
	
   

  
	
  SECTION 1.02.  Incorporation by Reference of Trust Indenture Act

  
	
   

  
	
  SECTION 1.03.  Rules of Construction

  
	
   

  
	
  SECTION 1.04.  Form of Documents Delivered to Trustee

  
	
   

  
	
  SECTION 1.05.  Acts of Holders

  
	
   

  
	
  SECTION 1.06.  Satisfaction and Discharge

  
	
   

  
	
  ARTICLE II

  
	
   

  
	
  THE NOTES

  
	
   

  
	
  SECTION 2.01.  Form and Dating

  
	
   

  
	
  SECTION 2.02.  Execution and Authentication

  
	
   

  
	
  SECTION 2.03.  Registrar and Paying Agent

  
	
   

  
	
  SECTION 2.04.  Global Notes

  
	
   

  
	
  SECTION 2.05.  Transfer and Exchange

  
	
   

  
	
  SECTION 2.06.  Replacement Notes

  
	
   

  
	
  SECTION 2.07.  Outstanding Notes

  
	
   

  
	
  SECTION 2.08.  Temporary Notes

  
	
   

  
	
  SECTION 2.09.  Cancellation

  
	
   

  
	
  SECTION 2.10.  Payment of Interest; Interest Rights Preserved

  
	
   

  
	
  SECTION 2.11.  Authorized Denominations

  
	
   

  
	
  SECTION 2.12.  Computation of Interest

  
	
   

  
	
  SECTION 2.13.  Persons Deemed Owners

  
	
   

  
	
  SECTION 2.14.  CUSIP, Common Code and ISIN Numbers

  
	
   

  
	
  SECTION 2.15.  Issuance of Additional Notes

  
	
   

  
	
  SECTION 2.16.  Purchase of Notes by the Guarantor or Subsidiaries of the
  Guarantor

  
	
   

  
	
  ARTICLE III

  
	
   

  
	
  REDEMPTION

  
	
   

  
	
  SECTION 3.01.  Notice of Redemption

  

 

i

 

	
  SECTION 3.02.  Notice to Trustee

  
	
   

  
	
  SECTION 3.03.  Effect of Notice of Redemption

  
	
   

  
	
  SECTION 3.04.  Deposit of Redemption Price

  
	
   

  
	
  ARTICLE IV

  
	
   

  
	
  COVENANTS

  
	
   

  
	
  SECTION 4.01.  Payment of Principal and Interest

  
	
   

  
	
  SECTION 4.02.  Maintenance of Office or Agency

  
	
   

  
	
  SECTION 4.03.  Payments; Money for the Note Payments to be Held in Trust

  
	
   

  
	
  SECTION 4.04.  Corporate Existence

  
	
   

  
	
  SECTION 4.05.  Limitation on Incurrence of Debt

  
	
   

  
	
  SECTION 4.06.  Negative Pledge

  
	
   

  
	
  SECTION 4.07.  Limitation on Sale and Lease-Back Transactions

  
	
   

  
	
  SECTION 4.08.  Change in Control

  
	
   

  
	
  SECTION 4.09.  Reports

  
	
   

  
	
  SECTION 4.10.  Compliance Certificate; Notice of Default or Event of Default

  
	
   

  
	
  SECTION 4.11.  Payment of Additional Amounts

  
	
   

  
	
  SECTION 4.12.  Transactions with Affiliates

  
	
   

  
	
  SECTION 4.14.  Maintenance of Rating

  
	
   

  
	
  SECTION 4.15.  Further Instruments and Acts

  
	
   

  
	
  ARTICLE V

  
	
   

  
	
  SECTION 5.01.  Merger, Consolidation and Disposition of Assets

  
	
   

  
	
  SECTION 5.02.  Successor Person Substituted

  
	
   

  
	
  SECTION 5.03.  Sale of Assets by the Guarantor

  
	
   

  
	
  SECTION 5.04. Sale of Licenses by the
  Guarantor

  
	
   

  
	
  ARTICLE VI

  
	
   

  
	
  DEFAULTS
  AND REMEDIES

  
	
   

  
	
  SECTION 6.01.  Events of Default

  
	
   

  
	
  SECTION 6.02.  Acceleration

  
	
   

  
	
  SECTION 6.03.  Other Remedies

  
	
   

  
	
  SECTION 6.04.  Waiver of Past Defaults

  

 

ii

 

	
  SECTION 6.05.  Control by Majority

  
	
   

  
	
  SECTION 6.06.  Limitation on Suits

  
	
   

  
	
  SECTION 6.07.  Rights of Holders to Receive Payment

  
	
   

  
	
  SECTION 6.08.  Trustee May File Proofs of Claim

  
	
   

  
	
  SECTION 6.09.  Priorities

  
	
   

  
	
  SECTION 6.10.  Undertaking for Costs

  
	
   

  
	
  SECTION 6.11.  Trustee May Enforce Claims Without Possession of Notes

  
	
   

  
	
  SECTION 6.12.  Restoration of Rights and Remedies

  
	
   

  
	
  SECTION 6.13.  Rights and Remedies Cumulative

  
	
   

  
	
  SECTION 6.14.  Delay or Omission Not Waiver

  
	
   

  
	
  ARTICLE VII

  
	
   

  
	
  TRUSTEE

  
	
   

  
	
  SECTION 7.01.  Duties of Trustee

  
	
   

  
	
  SECTION 7.02.  Rights of Trustee

  
	
   

  
	
  SECTION 7.03.  Individual Rights of Trustee

  
	
   

  
	
  SECTION 7.04.  Trustee’s Disclaimer

  
	
   

  
	
  SECTION 7.05.  Notice of Defaults

  
	
   

  
	
  SECTION 7.06.  Preservation of Information; Reports by Trustee to Holders

  
	
   

  
	
  SECTION 7.07.  Compensation and Indemnity

  
	
   

  
	
  SECTION 7.08.  Replacement of Trustee

  
	
   

  
	
  SECTION 7.09.  Successor Trustee by Merger

  
	
   

  
	
  SECTION 7.10.  Eligibility; Disqualification

  
	
   

  
	
  SECTION 7.11.  Preferential Collection of Claims Against Issuer

  
	
   

  
	
  SECTION 7.12.  Other Capacities

  
	
   

  
	
  ARTICLE VIII

  
	
   

  
	
  DEFEASANCE

  
	
   

  
	
  SECTION 8.01.  Issuer’s Option to Effect Legal Defeasance or Covenant
  Defeasance

  
	
   

  
	
  SECTION 8.02.  Legal Defeasance and Discharge

  
	
   

  
	
  SECTION 8.03.  Covenant Defeasance

  

 

iii

 

	
  SECTION 8.04.  Conditions to Legal Defeasance or Covenant Defeasance

  
	
   

  
	
  SECTION 8.05.  Deposited Money and U.S. Government Obligations to be Held in
  Trust; Miscellaneous Provisions

  
	
   

  
	
  SECTION 8.06.  Reinstatement

  
	
   

  
	
  ARTICLE IX

  
	
   

  
	
  AMENDMENTS

  
	
   

  
	
  SECTION 9.01.  Without Consent of Holders

  
	
   

  
	
  SECTION 9.02.  With Consent of Holders

  
	
   

  
	
  SECTION 9.03.  Effect of Supplemental Indentures

  
	
   

  
	
  SECTION 9.04.  Compliance with Trust Indenture Act

  
	
   

  
	
  SECTION 9.05.  Revocation and Effect of Consents and Waivers

  
	
   

  
	
  SECTION 9.06.  Notation on or Exchange of Notes

  
	
   

  
	
  SECTION 9.07.  Trustee to Execute Supplemental Indentures

  
	
   

  
	
  ARTICLE X

  
	
   

  
	
  GUARANTEE

  
	
   

  
	
  SECTION 10.01.  Guarantee

  
	
   

  
	
  SECTION 10.02.  Obligations of the Guarantor Unconditional

  
	
   

  
	
  SECTION 10.03.  Limitation of the Guarantor’s Liability

  
	
   

  
	
  SECTION 10.04.  Application of Certain Terms and Provisions to the Guarantor

  
	
   

  
	
  SECTION 10.05.  Taxes

  
	
   

  
	
  ARTICLE XI

  
	
   

  
	
  MISCELLANEOUS

  
	
   

  
	
  SECTION 11.01.  Trust Indenture Act Controls

  
	
   

  
	
  SECTION 11.02.  Notices

  
	
   

  
	
  SECTION 11.03.  Certificate and Opinion as to Conditions Precedent

  
	
   

  
	
  SECTION 11.04.  Statements Required in Certificate or Opinion

  
	
   

  
	
  SECTION 11.05.  Rules by Trustee, Paying Agent and Registrar

  
	
   

  
	
  SECTION 11.06.  Date of Payments

  
	
   

  
	
  SECTION 11.07.  Governing Law

  
	
   

  
	
  SECTION 11.08.  No Recourse Against Others

  

 

iv

 

	
  SECTION 11.09.  Successors

  
	
   

  
	
  SECTION 11.10.  Counterparts

  
	
   

  
	
  SECTION 11.11.  Table of Contents; Headings

  
	
   

  
	
  SECTION 11.12.  Severability

  
	
   

  
	
  SECTION 11.13.  Further Instruments and Acts

  
	
   

  
	
  SECTION 11.14.  Jurisdiction

  
	
   

  
	
  SECTION 11.15.  Arbitration

  
	
   

  
	
  ARTICLE XII

  
	
   

  
	
  PROVISIONS
  FOR MEETINGS OF HOLDERS OF NOTES

  
	
   

  
	
  SECTION 12.01.  Holders’ Meetings

  

 

v

 

	
  EXHIBIT
  A

  	
   

  	
  FORM OF GLOBAL NOTE

  
	
  EXHIBIT
  B

  	
   

  	
  RULE 144A
  GLOBAL NOTE TRANSFER CERTIFICATE

  
	
  EXHIBIT
  C

  	
   

  	
  REGULATION
  S GLOBAL NOTE TRANSFER CERTIFICATE

  
	
  EXHIBIT
  D

  	
   

  	
  FORM
  OF NOTICE OF REDEMPTION AT THE OPTION OF THE HOLDER

  

 

vi

 

CROSS-REFERENCE TABLE(1)

 

Reconciliation and tie between Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990, and the Indenture, dated as of
January 30, 2003.

 

	
  Trust
  Indenture Act Section

  	
   

  	
  Indenture Section

  
	
  §310

  	
  (a)(1)

  	
  7.10

  
	
   

  	
  (a)(2)

  	
  7.10

  
	
   

  	
  (a)(3)

  	
  Not Applicable

  
	
   

  	
  (a)(4)

  	
  Not Applicable

  
	
   

  	
  (a)(5)

  	
  7.10

  
	
   

  	
  (b)

  	
  7.10

  
	
  §311

  	
   

  	
  7.11

  
	
  §312

  	
  (a)

  	
  7.06(a), 7.06(b)

  
	
   

  	
  (b)

  	
  7.06(c)

  
	
   

  	
  (c)

  	
  7.06(d)

  
	
  §313

  	
  (a)

  	
  7.06(e)

  
	
   

  	
  (b)

  	
  7.06(f)

  
	
   

  	
  (c)

  	
  7.06(a), 7.06(f), 11.02

  
	
   

  	
  (d)

  	
  7.06(g)

  
	
  §314

  	
  (a)(1)

  	
  4.09(a)

  
	
   

  	
  (a)(2), (a)(3)

  	
  4.09(b)

  
	
   

  	
  (a)(4)

  	
  4.10

  
	
   

  	
  (b)

  	
  Not Applicable

  
	
   

  	
  (c)(1)

  	
  11.03

  
	
   

  	
  (c)(2)

  	
  11.03

  
	
   

  	
  (c)(3)

  	
  Not Applicable

  
	
   

  	
  (d)

  	
  Not Applicable

  
	
   

  	
  (e)

  	
  11.04

  
	
  §315

  	
  (a)

  	
  7.01(b)

  
	
   

  	
  (b)

  	
  7.05

  
	
   

  	
  (c)

  	
  7.01(a)

  
	
   

  	
  (d)

  	
  7.01(c)

  
	
   

  	
  (e)

  	
  6.10

  
	
  §316

  	
  (a)(1)(A)

  	
  6.05

  
	
   

  	
  (a)(1)(B)

  	
  6.04

  
	
   

  	
  (a)(2)

  	
  Not Applicable

  
	
   

  	
  (a)(2)(last sentence)

  	
  12.01

  
	
   

  	
  (b)

  	
  6.07

  
	
   

  	
  (c)

  	
  1.05(e)

  
	
  §317

  	
  (a)(1)

  	
  6.11

  
	
   

  	
  (a)(2)

  	
  6.08

  
	
   

  	
  (b)

  	
  4.03

  
	
  §318

  	
  (a)

  	
  9.04

  
				

 

(1)                                  This
Cross-Reference Table does not constitute part of the Indenture and shall not
affect the interpretation of any of its terms or provisions.

 

1

 

INDENTURE, dated as of January 30, 2003, among Mobile
TeleSystems Finance S.A., a société anonyme organized in Luxembourg (the
“Issuer”), Open Joint Stock Company “Mobile TeleSystems”, a company organized
under the laws of the Russian Federation, as guarantor (“MTS” or the
“Guarantor”), and JPMorgan Chase Bank, a New York banking corporation, as
trustee hereunder (the “Trustee”).

 

RECITALS

 

The Issuer has duly authorized the creation and issue
of its 9.75% Notes Due 2008 (the “Notes”) of substantially the tenor and amount
hereinafter set forth, and to provide therefor, the Issuer has duly authorized
the execution and delivery of this Indenture. The Guarantor has duly authorized
a guarantee of the Notes and of the Issuer’s obligations hereunder, and to
provide therefor, the Guarantor has duly authorized the execution and delivery
of this Indenture.

 

All things necessary to make the Notes, when executed
by the Issuer and authenticated and delivered by the Trustee hereunder and duly
issued by the Issuer, the valid obligations of the Issuer, the guarantee the
valid obligation of the Guarantor and this Indenture a valid instrument of the
Issuer and of the Guarantor, in accordance with their respective terms, have
been done.

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, for
and in consideration of the premises and the purchase of the Notes by the
Holders (as hereinafter defined) thereof, it is mutually covenanted and agreed,
for the equal and proportionate benefit of all Holders of the Notes, as
follows:

 

ARTICLE I

 

DEFINITIONS
AND OTHER PROVISIONS OF GENERAL APPLICATION

 

SECTION 1.01. 
Definitions.  For all
purposes of this Indenture, except as otherwise expressly provided or unless
the context otherwise requires:

 

(a)                                  the
terms defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular; and

 

(b)                                 all
accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with U.S. GAAP.

 

“Acquired Debt” means any Debt of an entity
existing at the time such entity is merged into the Guarantor or a Subsidiary
of the Guarantor or becomes one of the Guarantor’s Subsidiaries, and any Debt
secured by a Lien on an asset acquired by the Guarantor or one of the
Guarantor’s Subsidiaries.

 

“Act” when used with respect to any Holder, has
the meaning set forth in Section 1.05 hereof.

 

“Additional Amounts” has the meaning set forth
in Section 4.11 hereof.

 

2

 

“Additional Notes” means,
subject to the Issuer’s compliance with Section 2.15, 9.75% Notes Due 2008 issued from time to time after
the Issue Date under the terms of this Indenture (other than pursuant to
Section 2.01, 2.05, 2.06 or 2.08 of this Indenture).

 

“Affiliate” of any specified Person means (i)
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person or (ii) any other
Person who is a director or executive officer of (a) such specified Person or
(b) any Person described in the preceding clause (i).  For purposes of this definition, “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% 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.

 

“Agent Member” has the meaning set forth in
Section 2.04(a) hereof.

 

“Attributable Debt” means, in respect of a Sale
and Lease-Back Transaction, at the time of determination, the lesser of (x) the
Fair Market Value of the property subject to such arrangement and (y) the
present value (discounted at the weighted average annual interest rate on all
notes then issued and outstanding under the indenture, compounded
semi-annually) of the total obligations of the lessee for rental payments
during the remaining term of the lease included in such arrangement after
excluding all amounts required to be paid on account of maintenance and
repairs, insurance, taxes and similar charges.

 

“Authorized Agent” shall have the meaning set
forth in Section 11.14(a) hereof.

 

“Bankruptcy Law” means any law of any
jurisdiction for the relief of debtors as now or hereafter constituted,
including, without limitation, any such law in the Russian Federation and
Luxembourg and, with respect to the United States, Title 11 of the United
States Code and any similar federal or state law.

 

“beneficial owner” shall have the meaning given
to such term by Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that
in calculating the beneficial ownership of any particular “person” or “group”
(as such terms are used in Section 13(d) of the Exchange Act), such “person” or
“group” shall be deemed to have beneficial ownership of all securities that
they have the right to acquire, whether such right is currently exercisable or
is exercisable only upon the occurrence of a subsequent condition, and
“beneficially owns” and “beneficial ownership” shall have correlative meanings.

 

“Board” means the board of directors of the
Issuer.

 

“Board Resolution” means a duly adopted
resolution of the Board pursuant to the articles of association or other
constituent documents of the Issuer.

 

“business day” has the meaning set forth in
Section 11.06 hereof.

 

“Capital Stock” of any Person means any and all
shares, interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however 

 

3

 

designated) equity of such Person, including any Preferred Stock, but
excluding any debt securities convertible or exchangeable into such equity.

 

“Certificated Notes” means Notes in
certificated form.

 

“Clearstream” means Clearstream Banking,
société anonyme.

 

“Change in Control” means (i) any Person,
including any syndicate or group deemed to be a “person” under Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended, acquires beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of common stock of
the Guarantor entitling that person to exercise 50% or more of the total voting
power of all shares of the Guarantor’s common stock; provided, however,
that (a) any acquisition by Sistema, T-Mobile and/or any of their respective
Subsidiaries that results in the 50% threshold being exceeded will not be
deemed to be a Change in Control or (b) any acquisition by the Guarantor, any
Subsidiary of the Guarantor or any employee benefit plan of the Guarantor will
not be deemed to be a Change in Control; (ii) the Guarantor consolidates with
or merges with or into any other person, another person merges into the
Guarantor, or the Guarantor conveys, transfers, sells, leases or otherwise
disposes of all or substantially all of its assets to another Person; provided,
however, that the transaction will not be deemed to be a Change in Control
if, immediately after the transaction, Sistema and T-Mobile (together with
their Subsidiaries) beneficially own, in the aggregate, more than 50% of the
total voting power of all shares of common stock of the Successor; or (iii) the
Guarantor no longer beneficially owns more than 50% of the Issuer’s share
capital.

 

“clearing agency” has the meaning set forth in
Section 3(a)(23) of the Exchange Act.

 

“Commission” means the United States Securities
and Exchange Commission, as from time to time constituted, created under the
Exchange Act, or, if at any time after the execution of this Indenture such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.

 

“Common Depositary” means the common depositary
for Euroclear or Clearstream.

 

“Consolidated Cash Flows” for any period means
the Guarantor’s consolidated net income for such period, excluding any
cumulative effect of a change in accounting principles since the beginning of
the relevant period, plus the following items (i)-(iv), in each case to the
extent such items were deducted when calculating the Guarantor’s consolidated
net income for such period: (i) any non-recurring loss, including any loss
realized in connection with any asset sale or disposition of securities; (ii)
provision for income taxes; (iii) interest expense; and (iv) depreciation and
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses, including currency exchange and
translation losses (excluding bad debt expense and any such non-cash expense to
the extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a
prior period); minus the following items (v) and (vi), in each case to the
extent such items increased the Guarantor’s consolidated net income for such
period: (v) any non-recurring gain, including 

 

4

 

any gain realized in connection with any asset sale or disposition of
securities; and (vi) any non-cash items, including currency exchange and
translation gains, other than items in the ordinary course of business, all as
determined on a consolidated basis in accordance with U.S. GAAP.

 

“Corporate Trust Office” means the principal
office of the Trustee at which at any particular time its corporate trust
business shall be principally administered, which office is, at the date of
execution of this Indenture, located at 4 New York Plaza, 15th
Floor, New York, New York 10004.

 

“Covenant Defeasance” has the meaning set forth
in Section 8.03 hereof.

 

“Custodian” means any receiver, trustee,
assignee, liquidator, custodian or similar official under any Bankruptcy Law.

 

“Debt” means, with respect to any Person,
without duplication: (i) all obligations of such Person for borrowed money;
(ii) all reimbursement obligations of such Person in respect of letters of
credit, banker’s acceptances or other similar instruments or credit
transactions; (iii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (iv) all obligations of such
Person to the extent that they defer the purchase price of property or services
for more than 180 days, except trade accounts payable arising in the ordinary
course of business; (v) all obligations of such Person as lessee under leases
that would be capitalized on a balance sheet of the lessee prepared in
accordance with U.S. GAAP; (vi) all guarantees and indemnities of such Person
in respect of the Debt of any other Person or Persons, without duplication of
any Debt otherwise included in this definition; and (vii) all Debt of other
Persons secured by a Lien on any property, income and assets of such Person,
whether or not such Debt is assumed by such Person; provided that if such Debt is not assumed by such Person,
the amount of such Debt shall be the lesser of (a) the Fair Market Value of
such property, income or assets at such date of determination and (b) the
amount of such Debt of such other Person.

 

“Default” means any event that is or with the
passage of time or the giving of notice or both would be an Event of Default.

 

“Defaulted Interest” has the meaning set forth
in Section 2.10 hereof.

 

“Depositary” means The Depository Trust
Company, its nominees, and their respective successors.

 

“Euroclear” means Euroclear Bank S.A./N.V., as
operator of the Euroclear System.

 

“Event of Default” has the meaning set forth in
Section 6.01 hereof.

 

“Exchange Act” means the U.S. Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.

 

“Fair Market Value”
means, with respect to any property or assets, the sale price for such property
or asset as could be negotiated in a free market transaction for cash conducted
at arm’s length between a willing seller
and a willing and able buyer, as determined by the board of directors of
the Guarantor in cases of property or assets with a Fair Market Value in excess
of 

 

5

 

U.S.$70,000,000, or by the chief financial officer or chief executive
officer of the Guarantor in cases of property or assets with a Fair Market
Value equal to or less than U.S.$70,000,000.

 

“Global Notes” means the Regulation S Global
Note and the Rule 144A Global Note.

 

“Guarantee” means the obligations of the
Guarantor set forth in Article X hereof.

 

“Guarantor” means the party named as such in
the preamble to this Indenture until a successor replaces it pursuant to the
applicable provisions hereof and, thereafter, means such successor.

 

“Holder” means the person in whose name a Note
is registered in the Security Register.

 

“incorporated provision” has the meaning set
forth in Section 11.01 hereof.

 

“incur,” in relation to incurring debt, has the
meaning set forth in Section 4.05 hereof.

 

“Indenture” means this instrument as originally
executed or as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the Trust Indenture Act that are deemed
to be a part of and govern this instrument, and any such supplemental
indenture, respectively.

 

“Interest Payment Date” means each semi-annual
interest payment date in respect of the Notes on July 30 and January 30 in each
year, commencing July 30, 2003.

 

“Issue Date” means the date on which the Notes
are first authenticated and delivered under this Indenture.

 

“Issuer” means the party named as such in the
preamble to this Indenture until a successor replaces it pursuant to the
applicable provisions hereof and, thereafter, means such successor.

 

“Kuban GSM” means CJSC Kuban GSM, a joint-stock
company organized under the laws of the Russian Federation that is a subsidiary
of the Guarantor.

 

“Legal Defeasance” has the meaning set forth in
Section 8.02 hereof.

 

“Legend” means any restricted securities legend
in the form set forth on the face of the Rule 144A Global Note in Exhibit A
hereto.

 

“Lien” means, any mortgage, lien, pledge,
charge, security interest, right of set off or other encumbrance or preferential
arrangement, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).

 

6

 

“Luxembourg Paying Agent” means the party named
as the Luxembourg Paying Agent in Section 2.03 hereof until a successor
replaces it pursuant to the applicable provisions hereof and, thereafter, means
such successor.

 

“Maturity” means, when used with respect to a
Note, the date on which the principal of such Note becomes due and payable as
provided therein or in this Indenture, whether on the date specified in such
Note as the fixed date on which the principal of such Note is due and payable,
or by declaration of acceleration, call for redemption or otherwise.

 

“Notes” has the meaning set forth in the
Recitals hereto and more particularly means any of the Notes authenticated and
delivered under this Indenture.

 

“Officer’s Certificate” means a certificate
signed, in the case of the Issuer, by a director of the Issuer and, in the case
of the Guarantor, by one or more officers of the Guarantor, at least one of
whom shall be the chief executive officer, a director, a chief financial
officer, chief legal officer or general director of the Guarantor.

 

“Opinion of Counsel” means a written opinion
from legal counsel who is reasonably acceptable to the Trustee, which counsel
may be an employee of or counsel to the Issuer, the Guarantor or the Trustee.

 

“Order” means a written order signed in the
name of the Issuer by any of its managing directors and delivered to the
Trustee.

 

“Paying Agent” means any Person authorized by
the Issuer to make payments of principal or interest with respect to the Notes
on behalf of the Issuer including, where the context so requires, the Luxembourg
Paying Agent.

 

“Permitted Lien” means: (i) any Lien existing
on the date of this Indenture, including any Lien created in respect of an
obligation arising out of the Credit Agreement No. LME/H-96:0824L between
Ericsson Project Finance AB and Rosico CJSC dated December 20, 1996, as
amended; (ii) any Lien on any property or assets of any corporation existing at
the time such corporation is merged or consolidated with or into the Guarantor
or any Subsidiary of the Guarantor or becomes a Subsidiary of the Guarantor and
not created in contemplation of such event, provided that no such Lien shall
extend to any other property or assets; (iii) any Lien existing on any property
or assets prior to the acquisition thereof by the Guarantor or any Subsidiary of
the Guarantor and not created in contemplation of such acquisition, provided
that no such Lien shall extend to any other property or assets; (iv) any Lien
on any property or assets securing Debt of the Guarantor or any Subsidiary of
the Guarantor incurred or assumed for the purpose of financing all or part of
the cost of acquiring, repairing or refurbishing, purchasing or constructing
such property or assets, provided that (a) no such Lien shall extend to
any other property or assets, (b) the aggregate principal amount of all Debt
secured by such Liens on such property or assets shall not exceed the lower of
(x) the purchase price of such property or assets and (y) the Fair Market Value
of such property or assets at the time of acquisition, repair or refurbishing
and (c) such Lien attaches to such property or assets concurrently with the
repair or refurbishing thereof or within 90 days after the acquisition thereof,
as the case may be; (v) any Lien arising by operation of law, including any
Liens (a) arising in the ordinary course of business with respect to amounts
not yet delinquent or being contested by the Guarantor, the Issuer or a
Subsidiary of the Guarantor in good faith in appropriate proceedings or (b) for
taxes, 

 

7

 

assessments, government charges or claims, including without limitation
those in favor of Russian governmental fiscal authorities; (vi) any Lien on the
property or assets of any Subsidiary of the Guarantor securing intercompany
Debt of such Subsidiary owing to the Issuer, the Guarantor or another
Subsidiary of the Guarantor; (vii) 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 Guarantor’s
business or the business of any of the Guarantor’s Subsidiaries, including any
encumbrance or restriction with respect to an equity interest of any joint
venture pursuant to a joint venture agreement; (viii) any extension, renewal or
replacement of any Lien described in clauses (i)-(vii) above, provided
that (a) such extension, renewal or replacement shall be no more restrictive in
any material respect than the original Lien, (b) the amount of Debt secured by
such Lien is not increased and (c) if the property, income or assets securing
the Debt subject to such Lien are changed in connection with such refinancing,
extension or replacement, the Fair Market Value of the property or assets
securing such Debt is not increased; and (ix) any Lien, other than those
described above, provided, that, immediately after giving effect to such Lien,
all of the Guarantor’s secured Debt and Attributable Debt in the aggregate do
not exceed 10% of the book value of the Guarantor’s total assets as determined
by reference to the Guarantor’s most recent quarterly or annual consolidated
balance sheet on a pro forma basis after giving effect to the incurrence of any
Debt and any other changes in the Guarantor’s Debt since the date of such
balance sheet; provided, that no Lien on the property, income or assets
of the Issuer shall be a Permitted Lien, other than a Lien described in clause
(v) above.

 

“Person” means any individual, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

 

“Preferred Stock,” as applied to the Capital
Stock of any corporation, means Capital Stock of any class or classes (however
designated) that is preferred as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other
class of such corporation.

 

“Purchase Agreement” means the purchase
agreement relating to the notes dated January 29, 2003, among the Issuer, the
Guarantor and the Initial Purchasers named therein.

 

“QIB” means a “qualified institutional buyer”
as defined in Rule 144A.

 

“Record Date” means, for the interest payable
on any Interest Payment Date, the date specified in Section 2.10 hereof.

 

“Redemption Date” means, when used with respect
to any Note to be redeemed hereunder, the date fixed for the redemption of such
Note pursuant to the terms of the Notes and this Indenture.

 

“Redemption Price” means, when used with
respect to any Note to be redeemed hereunder, the price fixed for the
redemption of such Note pursuant to the terms of the Notes and this Indenture,
plus accrued and unpaid interest thereon, if any, to the Redemption Date.

 

“Registrar” has the meaning set forth in
Section 2.03 hereof.

 

8

 

“Regulation S” means Regulation S under the
Securities Act (including any successor regulation thereto), as it may be
amended from time to time.

 

“Regulation S Global Note” has the meaning set
forth in Section 2.01(c) hereof.

 

“Resolution” means a copy of a resolution
certified by the secretary, assistant secretary or equivalent officer of the
Issuer to have been duly adopted by the Board and to be in full force and
effect on the date of such certification, delivered to the Trustee.

 

“Rosico” means Rosico CJSC, a joint-stock
company organized under the laws of the Russian Federation that is a subsidiary
of the Guarantor.

 

“Rule 144” means Rule 144 under the Securities
Act (including any successor regulation thereto), as it may be amended from
time to time.

 

“Rule 144A” means Rule 144A under the
Securities Act (including any successor regulation thereto), as it may be amended
from time to time.

 

“Rule 144A Global Note” has the meaning set
forth in Section 2.01(c) hereof.

 

“Sale and Lease-Back Transaction” means any
arrangement providing for the leasing for a period, including renewals, in
excess of 18 months, of any property or asset that has been owned by the
Guarantor or any Subsidiary of the Guarantor for more than 180 days and has
been or is to be sold or transferred by the Guarantor or such Subsidiary in
such transaction.

 

“Securities Act” means the United States Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Security Register” has the meaning set forth
in Section 2.03 hereof.

 

“Significant Subsidiary” means any Subsidiary
of the Guarantor that satisfies the definition set forth in Article 1, Rule
1-02 of Regulation S-X promulgated under the Securities Act, as such regulation
is in effect on the date of this Indenture.

 

“Sistema” means Sistema JSFC.

 

“Special Record Date” means a date fixed by the
Trustee pursuant to Section 2.10 for the payment of Defaulted Interest.

 

“Stated Maturity” means, with respect to any
security, the date specified in such security as the fixed date on which the
payment of principal of such security is due and payable, including pursuant to
any mandatory redemption provision.

 

“Subsidiary” means, with respect to any Person,
(i) any corporation, association or other business entity of which more than
50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of such Person (or any combination thereof) and (ii) any partnership (a) the
sole general partner or the managing general partner of 

 

9

 

which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or one or more Subsidiaries of such
Person (or any combination thereof).

 

“Successor” means, in the case of a merger,
consolidation or combination of a Person, or the sale, assignment, transfer,
conveyance or other disposal of all or substantially all of a Person’s assets,
the corporation formed by or resulting from such consolidation or merger or
which shall have received such assets.

 

“T-Mobile” means T-Mobile International AG.

 

“Taxes” has the meaning set forth in Section
4.11 hereof.

 

“Taxing Jurisdiction” has the meaning set forth
in Section 4.11 hereof.

 

“Telecom XXI” means Telecom XXI, an open joint
stock company that is a wholly-owned Subsidiary of the Guarantor.

 

“Temporary Notes” has the meaning set forth in
Section 2.08 hereof.

 

“Trust Indenture Act” means the United States
Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on
the date of this Indenture except as required by Section 9.04 hereof; provided
that in the event the Trust Indenture Act of 1939 is amended after such date,
“Trust Indenture Act” means, to the extent required by any such amendment, the
Trust Indenture Act of 1939, as so amended.

 

“Trust Officer” means any officer or assistant
officer of the Trustee (or a successor trustee) assigned by the Trustee (or a
successor trustee) to administer this Indenture.

 

“Trustee” means the party named as such in the
preamble to this Indenture until a successor replaces it in accordance with the
provisions of this Indenture and, thereafter, means such successor.

 

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

 

“Uniform Commercial Code” means the Uniform
Commercial Code as in effect from time to time in the State of New York.

 

“United States Dollars,” “U.S. $” or “$”
means the lawful currency of the United States of America.

 

“U.S. GAAP” means generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect on the
date of this Indenture.

 

“U.S. Government Obligations” means direct
obligations (or certificates representing an ownership interest in such
obligations) of the United States of America 

 

10

 

(including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
that are not callable or redeemable at the issuer’s option.

 

“Wholly-Owned Subsidiary” of any Person means a
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than qualifying shares or shares owned by
foreign nationals mandated by applicable law) shall at the time be owned by
such Person or by one or more Wholly-Owned Subsidiaries of such Person.

 

SECTION 1.02. 
Incorporation by Reference of Trust Indenture Act.  (a) 
This Indenture is expressly made subject to the Trust Indenture Act as
if this Indenture were subject to the Trust Indenture Act under the provisions
of such statute and such provisions are incorporated by reference in this
Indenture.

 

(b)  Whenever
this Indenture refers to a provision of the Trust Indenture Act, the provision
is incorporated by reference in and made a part of this Indenture.  The following Trust Indenture Act terms
incorporated by reference in this Indenture have the following meanings:

 

“indenture securities” means the Notes;

 

“indenture security holder” means a Holder;

 

“indenture to be qualified” means this Indenture;

 

“indenture trustee” or “institutional trustee” means
the Trustee; and

 

“obligor” on the indenture securities means the
Issuer, the Guarantor or any other obligor on the Notes.

 

All other Trust Indenture Act terms used or
incorporated by reference in this Indenture that are defined by the Trust
Indenture Act, defined by the Trust Indenture Act by reference to another
statute or defined by Commission rule have the meanings assigned to them
therein.

 

SECTION 1.03. 
Rules of Construction. 
Unless the context otherwise requires:

 

(a)  the words
“herein,” “hereof” and “hereunder,” and other words of similar import, refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision;

 

(b)  “or” is
not exclusive;

 

(c) 
“including” means including without limitation;

 

(d)  the
principal amount of any non-interest bearing or other discount security at any
date shall be the principal amount thereof that would be shown on a balance
sheet of the Issuer or the Guarantor dated such date prepared in accordance
with U.S. GAAP;

 

(e)  when used
with respect to the Notes, the term “principal amount” shall mean the principal
amount thereof at the Stated Maturity of such principal amount;

 

11

 

(f)  unless
otherwise expressly provided herein, the principal amount of any Preferred
Stock shall be the greater of (i) the maximum liquidation value of such
Preferred Stock or (ii) the maximum mandatory redemption or mandatory
repurchase price with respect to such Preferred Stock; and

 

(g)  unsecured
Debt shall not be deemed to be subordinate or junior to secured Debt merely by
virtue of its nature as unsecured Debt.

 

SECTION 1.04. 
Form of Documents Delivered to Trustee.  In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

 

Any certificate or opinion of an officer of the Issuer
or the Guarantor, including any Officer’s Certificate, may be based, insofar as
it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous.  Any such certificate or
opinion, and any Opinion of Counsel, may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Issuer or the Guarantor, as the case may be, stating
that the information with respect to such factual matters is in the possession
of the Issuer or the Guarantor, as the case may be, unless such officer or counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.

 

Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.

 

SECTION 1.05. 
Acts of Holders.  (a)  Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Issuer or the Guarantor, as the case may be.  Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the “Act” of the Holders signing such instrument or instruments.  Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose
under this Indenture and (subject to Section 7.01) conclusive in favor of the
Trustee, the Issuer and the Guarantor, if made in the manner provided in this
Section.

 

(b)  The fact
and date of the execution by any Person of any such instrument or writing may
be proved by the affidavit of a witness of such execution or by an
acknowledgment of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the 

 

12

 

execution thereof.  Where such
execution is by a signer acting in a capacity other than such signer’s
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of the signer’s authority. 
The fact and date of the execution of any such instrument or writing, or
the authority of the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.

 

(c)  The
ownership of Notes shall be proved by the Security Register, and the ownership
of beneficial interests in the Global Notes shall be proved by the records of
the Depositary and Euroclear or Clearstream, as the case may be.

 

(d)  Any
request, demand, authorization, direction, notice, consent, waiver or other Act
of the Holder of any Note shall bind every future Holder of the same Note and
the Holder of every Note issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done, suffered or
omitted to be done by the Trustee, the Issuer or the Guarantor in reliance
thereon, whether or not notation of such action is made upon such Note.

 

(e)  The Issuer
may, but shall not be obligated to, in or pursuant to a Board Resolution, fix a
record date for the purpose of determining the Holders entitled to give their
consent or take any other action required or permitted to be taken pursuant to
this Indenture.  Notwithstanding
Section 316(c) of the Trust Indenture Act, such record date shall be the
record date specified in or pursuant to such Board Resolution, which shall be a
date not earlier than the date 30 calendar days prior to the first solicitation
of Holders generally in connection therewith and not later than the date of
such first solicitation.  If a record
date is fixed, notwithstanding the provisions of Section 9.05 hereof, those
Persons who were Holders of Notes at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to take any such action or
give such consent or to revoke any consent previously given, whether or not
such Persons continue to be Holders after such record date; provided, however,
that unless such consent is obtained from the Holders (or their duly designated
proxies) of the requisite principal amount of Notes that are outstanding prior
to the date which is the 180th calendar day after such record date, any such
consent previously given shall automatically and without further action by any
Holder be canceled and of no further effect.

 

SECTION 1.06. 
Satisfaction and Discharge. 
This Indenture shall cease to be of further effect (except as to the
rights of Holders under Sections 2.05, 2.06, 2.08, 4.02 and 4.03 hereof) and
the Trustee, on receipt of an Order requesting such action, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
(including the Guarantee contained herein), when (a) either (i) all outstanding
Notes have been delivered to the Trustee for cancellation or (ii) all
outstanding Notes have become due and payable, either at maturity or as a
result of the mailing of a notice of redemption as described in Section 3.01
hereof, and the Issuer, in the case of clause (ii) hereof, has irrevocably
deposited or caused to be deposited with the Trustee, as funds held in trust,
in cash in U.S. dollars, U.S. Government Obligations or a combination thereof,
an amount which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certificate thereof delivered to the
Trustee, is sufficient to pay and discharge the entire indebtedness on such
Notes, for principal and interest to the date of such deposit (in the case of
Notes which have become due and payable) or to the Redemption Date, as the case
may be, together with irrevocable instructions from the Issuer in form and
substance reasonably satisfactory to the Trustee directing the Trustee to apply
such 

 

13

 

funds to the payment thereof; (b) the Issuer has paid or caused to be
paid all other sums payable hereunder by the Issuer; and (c) the Issuer has
delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel,
each stating that all conditions precedent herein provided for or relating to
the satisfaction and discharge of this Indenture have been complied with.  Notwithstanding the satisfaction and
discharge of this Indenture pursuant to this Section 1.06, the obligations of
the Issuer to the Trustee under Section 7.07 hereof, and, if money shall have
been deposited with the Trustee in trust for the Holders pursuant to this
Section 1.06, the obligations of the Trustee under this Section 1.06 and
Section 4.03 hereof, and the provisions hereof relating to the conduct of,
affecting the liability of, or offering protection or immunity to, the Trustee,
shall survive.

 

All money deposited with the Trustee pursuant to this
Section 1.06 shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Paying Agent, to the Persons entitled thereto, of the principal and
interest for the payment of which such money has been deposited with the
Trustee.  If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Section 1.06 by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuer’s obligations under this
Indenture and the Notes (and the obligations of the Guarantor under the
Guarantee) shall be revived and reinstated as though no deposit had occurred
pursuant to this Section 1.06 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with this Section 1.06; provided, that if the Issuer (or the Guarantor)
has made any payment of interest on or principal of any Notes because of the
reinstatement of its obligations, the Issuer (or the Guarantor) shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the cash or U.S. Government Obligations held by the Trustee or Paying
Agent.

 

ARTICLE II

 

THE NOTES

 

SECTION 2.01.  Form and Dating.  (a) 
The Notes and the certificate of authentication of the Trustee thereon
shall be substantially in the form of Exhibit A, which is hereby incorporated
in and expressly made a part of this Indenture.  The Notes will be issued only in fully registered form, without
interest coupons attached, in minimum denominations of U.S. $1,000 and integral
multiples thereof, and initially will be represented by the Global Notes.  Except in the limited circumstances set
forth herein, Certificated Notes will not be issued.

 

(b)  The Notes may have such letters, numbers or
other marks of identification and such legends and endorsements, stamped,
printed, lithographed or engraved thereon, (i) as the Issuer may deem
appropriate and as are not inconsistent with the provisions of this Indenture,
(ii) as may be required to comply with this Indenture, any law, rule or
regulation or any rule of any securities exchange on which the Notes may be
listed and (iii) as may be necessary to conform to customary usage.  Each Note shall be dated the date of its
authentication by the Trustee.

 

(c)  Notes sold in offshore transactions in
reliance on Regulation S, as provided in the Purchase Agreement, will be
represented by a single, permanent global Note (the 

 

14

 

“Regulation S Global Note”) in fully registered form
without interest coupons, substantially in the form of Exhibit A hereto.  The Regulation S Global Note, duly executed
by the Issuer and authenticated by the Trustee as hereinafter provided, on
behalf of the subscribers for the Notes represented thereby, shall be deposited
with, and registered in the name of a nominee of a common depositary for
Clearstream and Euroclear.  The
aggregate principal amount of the Regulation S Global Note may from time to
time be increased or decreased by adjustments made on the records of the common
depositary as hereinafter provided.

 

Notes sold in reliance on
Rule 144A, as provided in the Purchase Agreement, will be represented by a
single, permanent global Note (the “Rule 144A Global Note”) in fully registered
form without interest coupons substantially in the form of Exhibit A hereto,
with such legends as may be applicable thereto as provided in Exhibit A hereto,
which shall be deposited on behalf of the subscribers for the Notes represented
thereby with the Trustee, at its Corporate Trust Office, as custodian for the
Depositary, and registered in the name of Cede & Co. as nominee of the
Depositary, duly executed by the Issuer and authenticated by the Trustee as
hereinafter provided.  The aggregate
principal amount of the Rule 144A Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary, or the Depositary or its nominee, as the case may
be, as hereinafter provided.

 

(d)  Except as provided in Section 2.05(c),
owners of beneficial interests in Global Notes will not be entitled to receive
physical delivery of Certificated Notes.

 

SECTION 2.02. 
Execution and Authentication. 
The Notes shall be issued in a single series.  The Notes will not be limited in aggregate principal amount
outstanding.  The Notes shall be
executed on behalf of the Issuer by a director by manual or facsimile
signature.

 

The Notes shall be authenticated by manual or
facsimile signature of an authorized signatory of the Trustee and shall not be
valid for any purpose unless so authenticated.

 

In case any officer of the Issuer whose signature
shall have been placed upon any of the Notes shall cease to be such officer of
the Issuer before authentication of such Notes by the Trustee and the issuance
and delivery thereof, such Notes may, nevertheless, be authenticated by the
Trustee and issued and delivered with the same force and effect as though such
Person had not ceased to be such officer of the Issuer.

 

Upon receipt by the Trustee of an Officer’s
Certificate and Opinion of Counsel complying with Section 11.04 hereof with
respect to satisfaction of all conditions precedent contained in this Indenture
to authentication and delivery of such Notes, the Trustee shall, upon receipt
of an Order requesting such action, authenticate Notes for original issuance in
an initial aggregate principal amount not to exceed U.S.$400,000,000 except with
respect to Additional Notes issued pursuant to Section 2.15 hereof.  Such Order shall specify the amount of Notes
to be authenticated and the date on which the Notes are to be authenticated and
shall further provide instructions concerning registration, amounts for each
Holder and delivery.

 

Upon the occurrence of any event specified in Section
2.05(c) hereof, the Issuer shall execute and the Trustee, upon receipt of an
Order requesting such action, shall authenticate 

 

15

 

and deliver to each beneficial owner identified by the Depositary, in
exchange for such beneficial owner’s interest in a Global Note, Certificated
Notes representing Notes theretofore represented by such Global Note.

 

A Note shall not be valid or entitled to any benefit
under this Indenture or obligatory for any purpose unless executed by the
Issuer and authenticated by the manual signature of an authorized signatory of
the Trustee as provided herein.  The
signature of an authorized signatory of the Trustee shall be conclusive
evidence, and the only evidence, that such Note has been authenticated and
delivered under this Indenture.

 

The Trustee may appoint an authenticating agent
reasonably acceptable to the Issuer to authenticate the Notes.  Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes whenever the
Trustee may do so.  Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent.

 

The Trustee may at any time terminate the agency of
the authenticating agent by giving written notice thereof to such
authenticating agent and to the Issuer. 
Upon such termination, the Trustee may appoint a successor authenticating
agent reasonably acceptable to the Issuer and shall mail at the Issuer’s
expense a written notice of such appointment by first class mail, postage
prepaid, to all Holders as their names and addresses appear in the Security
Register.  Any successor authenticating
agent upon acceptance of its appointment hereunder shall become vested with all
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent. 
The Issuer agrees to pay each authenticating agent from time to time
reasonable compensation for its services under this Section.

 

SECTION 2.03. 
Registrar and Paying Agent. 
The Issuer shall maintain, pursuant to Section 4.02 hereof, an office or
agency where the Notes may be presented for registration of transfer or for
exchange.  The Issuer shall cause to be
kept at such office a register (the register maintained in such office being
herein sometimes referred to as the “Security Register”) in which, subject to
such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and of transfers of Notes entitled to be registered
or transferred as provided herein.  The
Trustee, at its Corporate Trust Office, is initially appointed “Registrar” for
the purpose of registering Notes and transfers of Notes as herein
provided.  The Issuer may, upon written
notice to the Trustee, change the designation of the Trustee as Registrar and
appoint another Person (other than the Issuer, the Guarantor or any of their
Affiliates) to act as Registrar for purposes of this Indenture.  If any Person other than the Trustee acts as
Registrar, the Trustee shall have the right at any time, upon reasonable
notice, to inspect or examine the Security Register and to make such inquiries
of the Registrar as the Trustee shall in its discretion deem necessary or
desirable in performing its duties hereunder. 
The Trustee is initially appointed Paying Agent.  The Issuer may, upon written notice to the
Trustee, change the designation of the Trustee as Paying Agent, appoint another
Person (other than the Issuer, the Guarantor or any of their Affiliates) to act
as Paying Agent and thereafter change the designation of such Person as Paying
Agent, appoint one or more supplemental Paying Agents (other than the Issuer,
the Guarantor or any of their Affiliates) (whose appointment may be terminated
by the Issuer upon notice to the Trustee), and approve (subject to Section
4.02) any change in the specified office through which any Paying Agent
acts.  Notice of any termination or
appointment of any Paying Agent shall be given to the Holders of the Notes in
accordance with Section 11.02 hereof. 
The 

 

16

 

Registrar and Paying Agent may resign at any time by giving 30 days
prior written notice thereof to the Trustee and the Issuer.

 

The Issuer shall enter into an appropriate agency
agreement with any Person designated by the Issuer as Registrar or Paying Agent
that is not appointed pursuant to this Indenture, which agreement shall
incorporate the provisions of the Trust Indenture Act and shall implement the
provisions of this Indenture that relate to such Registrar or Paying
Agent.  Prior to the designation of any
such Person, the Issuer shall, by written notice (which notice shall include
the name and address of such Person), inform the Trustee of such
designation.  If the Issuer fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such.

 

Notwithstanding any other provision hereof, the Issuer
shall at all times maintain a Paying Agent and an office or agency where the
Notes may be presented for registration of transfer or exchange in the Borough
of Manhattan, The City of New York.

 

In addition to the foregoing, the Issuer hereby
appoints J.P. Morgan Bank Luxembourg S.A., at its office at 5 Rue Plaetis,
L-2338, Luxembourg, as Luxembourg Paying Agent.  The Issuer may, upon written notice to the Luxembourg Paying
Agent and the Trustee, revoke the designation of the Luxembourg Paying Agent,
appoint another Person to act as Luxembourg Paying Agent and thereafter change
the designation of such Person as Luxembourg Paying Agent, and (subject to
Section 4.02) approve any change in the specified office through which the
Luxembourg Paying Agent acts.  Notice of
any termination or appointment of any Luxembourg Paying Agent shall be given to
the Holders of the Notes in accordance with Section 11.02 hereof.  The Luxembourg Paying Agent may resign at
any time by giving 30 days prior written notice thereof to the Trustee and the
Issuer.  Notwithstanding any other
provision hereof, so long as the Notes are listed on the Luxembourg Stock
Exchange and such stock exchange so requires, the Issuer shall maintain a
Luxembourg Paying Agent for the Notes.

 

Subject to compliance with the provisions of Section
2.01 hereof and the transfer restrictions of Section 2.05 hereof, upon
surrender for registration of transfer of any Note at an office or agency of
the Issuer designated for such purpose, the Issuer shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of any authorized denomination
or denominations, of like tenor and aggregate principal amount, all as
requested by the transferor.

 

Every Note presented or surrendered for registration
of transfer or for exchange shall be duly endorsed, or be accompanied by a duly
executed instrument of transfer in form satisfactory to the Issuer, the Trustee
and the Registrar, by the Holder thereof or such Holder’s attorney duly
authorized in writing.

 

SECTION 2.04. 
Global Notes.  (a)  So long as a Global Note is registered in
the name of the Depositary, the Common Depositary or a nominee or successor
thereof, members of, or account holders, or participants in, the Depositary,
the Common Depositary, or any successor or nominee thereof shall have no rights
under this Indenture with respect to the Global Note held on their behalf by
the Depositary, the Common Depositary, a nominee or successor thereof or the
Trustee as custodian therefor, and the Depositary, the Common Depositary or
their nominee or successor may be treated by the Issuer, the Guarantor, the
Trustee or their agents as the sole owner of such Global Note for all purposes
(except with respect to the determination of Additional Amounts owing).  Notwithstanding the foregoing, nothing
herein shall (i) prevent the 

 

17

 

Issuer, the Guarantor, the Trustee or any agent of the Issuer, the
Guarantor or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by the Depositary, the Common Depositary
or (ii) impair, as between the Depositary, the Common Depositary and their
members, account holders or participants, the operation of customary practices
governing the exercise of the rights of holders of beneficial interests in the
Notes.  For purposes of this Indenture,
an “Agent Member” is a member of, or participant in, the Depositary, the Common
Depositary, as the case may be and as the context may require, and includes, in
the case of the Depositary, the Common Depositary.

 

(b)  The Holder
of a Global Note may grant proxies and otherwise authorize any Person,
including Agent Members of the Depositary and Persons that may hold interests
in a Global Note through such Agent Members, to take any action which a Holder
of Notes is entitled to take under this Indenture or the Notes.

 

(c)  Whenever,
as a result of an optional redemption by the Issuer or of an exchange for
Certificated Notes pursuant to the provisions of Section 2.05(c) hereof, a
Global Note is redeemed, repurchased or exchanged in part, such Global Note
shall be surrendered by the Holder thereof to the Trustee who shall cause an
adjustment to be made to Schedule A thereof so that the principal amount of
such Global Note will be equal to the portion of such Global Note not redeemed,
repurchased or exchanged and shall thereafter return such Global Note to such
Holder, provided that each such Global Note shall be in a principal
amount of U.S.$1,000 or integral multiples thereof.

 

SECTION 2.05. 
Transfer and Exchange. (a) 
Notwithstanding any provision to the contrary herein, so long as a
Global Note remains outstanding and is held by or on behalf of the Depositary,
the Common Depositary or a nominee or successor thereof, transfers of a Global
Note, in whole or in part, shall only be made in accordance with this Section
2.05; provided, however, that beneficial interests in a Global
Note may be transferred to persons who take delivery thereof in the form of a beneficial
interest in the same Global Note in accordance with the transfer restrictions
set forth in the restricted securities legend on the Note and the customary
procedures of the Depositary, the Common Depositary, as applicable, and the
Agent Members.

 

(b)  The following provisions shall apply:

 

(i)  Rule 144A Global Note to Regulation S
Global Note.  If a holder of a
beneficial interest in the Rule 144A Global Note deposited with the Depositary
wishes at any time to exchange its interest in such Rule 144A Global Note for
an interest in the Regulation S Global Note, or to transfer its interest in
such Rule 144A Global Note to a Person who wishes to take delivery thereof in
the form of an interest in the Regulation S Global Note, such holder may,
subject to the rules and procedures of the Depositary, exchange or cause the
exchange or transfer or cause the transfer of such interest for an equivalent
beneficial interest in the Regulation S Global Note.  Upon receipt by the Trustee, as Registrar, at its Corporate Trust
Office of (1) instructions given in accordance with the Depositary’s procedures
from the Agent Member directing the Trustee to credit or cause to be credited a
beneficial interest in the Regulation S Global Note in an amount equal to the
beneficial interest in the Rule 144A Global Note to be exchanged or transferred
and (2) a certificate in the form of Exhibit B attached 

 

18

 

hereto given by the holder of such beneficial interest
stating that the exchange or transfer of such interest has been made in
compliance with the transfer restrictions applicable to the Notes and (A)
pursuant to and in accordance with Regulation S or (B) that the Note being
exchanged or transferred is not a “restricted security” as defined in Rule 144,
the Trustee, as Registrar, shall in accordance with the Depositary’s DWAC
procedure reduce the Rule 144A Global Note by the aggregate principal amount of
the beneficial interest in the Rule 144A Global Note to be so exchanged or
transferred and the Trustee, as Registrar, shall instruct the Common Depositary
for Euroclear or Clearstream, concurrently with such reduction, to increase the
principal amount of the Regulation S Global Note by the aggregate principal
amount of the beneficial interest in the Rule 144A Global Note to be so
exchanged or transferred, and to credit or cause to be credited to the account
of the Person specified in such instructions a beneficial interest in the
Regulation S Global Note equal to the reduction in the principal amount of the
Rule 144A Global Note.

 

(ii)  Regulation S Global Note to Rule 144A
Global Note.  If a holder of a
beneficial interest in the Regulation S Global Note wishes at any time to
exchange its interest in such Regulation S Global Note for an interest in the
Rule 144A Global Note, or to transfer its interest in such Regulation S Global
Note to a Person who wishes to take delivery thereof in the form of an interest
in the Rule 144A Global Note, such holder may, subject to the rules and procedures
of Euroclear or Clearstream and the Depositary, exchange or cause the exchange
or transfer or cause the transfer of such interest for an equivalent beneficial
interest in the Rule 144A Global Note. 
Upon receipt by the Trustee, as Registrar, as its Corporate Trust Office
of (1) instructions given in accordance with the Depositary’s procedures
directing the Trustee, as Registrar, to credit or cause to be credited a
beneficial interest in the Rule 144A Global Note equal to the beneficial
interest in the Regulation S Global Note to be exchanged or transferred, such
instructions to contain information regarding the Agent Member’s account with
the Depositary to be credited with such increase, and (2) a certificate in the
form of Exhibit C attached hereto given by the holder of such beneficial
interest and stating that the Person transferring such interest in the
Regulation S Global Note reasonably believes that the person acquiring such
interest in the Rule 144A Global Note is a QIB and is obtaining such beneficial
interest in a transaction otherwise meeting the requirements of Rule 144A any
applicable securities laws of any state of the United States and any other
jurisdiction, the Trustee, as Registrar, shall instruct the Common Depositary
for Euroclear or Clearstream to reduce the Regulation S Global Note by the
aggregate principal amount of the beneficial interest to be exchanged or
transferred, and the Trustee, as Registrar, shall in accordance with the
Depositary’s DWAC procedure, concurrently with such reduction, increase the
principal amount of the Rule 144A Global Note by the aggregate principal amount
of the beneficial interest in the Regulation S Global Note to be so exchanged
or transferred, and to credit or cause to be credited to the account of the
Person specified in such instructions a beneficial interest in the Rule 144A
Global Note equal to the reduction in the principal amount of the Regulation S
Global Note.

 

19

 

(iii)  Other Exchanges.  In the event that a Global Note is exchanged
for Certificated Notes pursuant to Section 2.05(c) hereof, such Notes may be
exchanged or transferred for one another only in accordance with such
procedures as are substantially consistent with the provisions of clauses (i)
and (ii) above (including the certification requirements intended to ensure
that such exchanges or transfers comply with Rule 144, Rule 144A or Regulation
S, as the case may be) and as may be from time to time adopted by the Issuer
and the Trustee.

 

(iv)  Beneficial Interests.  Any beneficial interest in one of the Global
Notes that is transferred to a person who takes delivery in the form of an
interest in another Global Note, or exchanged for an interest in another Global
Note, will, upon such transfer or exchange, cease to be an interest in the
original Global Note and become an interest in the other Global Note and,
accordingly, will thereafter be subject to all transfer restrictions and other
procedures applicable to a beneficial interest in such other Global Note for as
long as it remains such a beneficial interest.

 

(c) A Regulation S Global Note shall be exchanged for
Certificated Notes if (a) Clearstream or Euroclear is closed for business for a
continuous period of 14 days (other than by reason of holidays, statutory or
otherwise) or announces an intention permanently to cease business and does in
fact do so and no alternative clearing system satisfactory to the Issuer is
available, or (b) the Issuer elects to exchange such Regulation S Global Note in whole but not
in part for one or more Certificated Notes.  A Rule 144A Global Note shall be
exchanged by the Issuer for one or more Certificated Notes if (a) the
Depositary (i) has notified the Issuer that it is unwilling or unable to
continue as, or ceases to be, a clearing agency registered under Section 17A of
the Exchange Act and (ii) a successor to the Depositary registered as a
clearing agency under Section 17A of the Exchange Act is not able to be
appointed by the Issuer within 90 calendar days, (b) the Depositary is at any
time unwilling or unable to continue as Depositary and a successor to the
Depositary is not able to be appointed by the Issuer within 90 calendar days,
or (c) the Issuer elects to exchange such Rule
144A Global Note in whole but not in part for one or more Certificated
Notes.  In addition, if an Event of
Default occurs and is continuing, the Issuer shall, at the request of the
Holder thereof, exchange all or part of a Global Note for one or more
Certificated Notes; provided that the principal amount of each of such
Certificated Note, and such Global Note, after such exchange, shall be in
minimum denominations of U.S.$1,000 or integral multiples thereof.  Whenever a Global Note is exchanged as a
whole for one or more Certificated Notes, it shall be surrendered by the Holder
thereof to the Trustee for cancellation. 
Whenever a Global Note is exchanged in part for one or more Certificated
Notes, it shall be surrendered by the Holder thereof to the Trustee and the
Trustee shall make the appropriate notations thereon pursuant to Section
2.04(c) hereof.  All Certificated Notes
issued in exchange for a Global Note or any portion thereof shall be in
registered form and registered in such names, and delivered, as the Depositary,
Euroclear or Clearstream, as applicable, shall instruct the Trustee.  Any Certificated Notes issued pursuant to
this Section 2.05(c) shall include the Legend, except as set forth in Section
2.05(i) hereof.  The cost of preparing,
printing, packaging and delivering any Certificated Notes shall be borne by the
Issuer.

 

20

 

(d)  A Holder may transfer a Note only upon the
surrender of such Note for registration of transfer at the specified office of
the Registrar hereunder.  No such
transfer shall be effected until, and the transferee shall succeed to the
rights of a Holder only upon, final acceptance and registration of the transfer
in the Security Register by the Registrar. 
When Notes are presented to the Registrar with a request to register the
transfer of, or to exchange, such Notes, the Registrar shall register the
transfer or make such exchange as requested if its requirements for such
transactions and any applicable requirements hereunder are satisfied.  To permit registrations of transfers and
exchanges of Certificated Notes, the Issuer shall execute and the Trustee shall
authenticate Certificated Notes at the Registrar’s request.

 

(e)  The Issuer shall not be required to make and
the Registrar need not register the transfer or exchange of (i) any Note
previously called for redemption pursuant to Article III of this Indenture or
(ii) any Certificated Note for a period of 15 calendar days preceding the due
date for any payment of principal of or interest on such Certificated Note or
the selection of such Certificated Note for redemption pursuant to Article III
of this Indenture.

 

(f)  No service charge shall be made for any
registration of transfer or exchange of Notes, but the Issuer or the Trustee
may require payment of a sum sufficient to cover any tax, fee or other
governmental charge required by law that may be imposed in connection with any
registration of transfer of Notes.

 

(g)  All Notes issued upon any registration of
transfer or exchange pursuant to the terms of this Indenture will evidence the
same debt and will be entitled to the same benefits under this Indenture as the
Notes surrendered for such registration of transfer or exchange.

 

(h)  Holders of Notes (or holders of beneficial
interests therein) and prospective purchasers designated by such Holders of
Notes (or such holders of beneficial interests therein) shall have the right to
obtain from the Guarantor upon request by such Holders (or such holders of
beneficial interests) or prospective purchasers, during any period in which the
Issuer is not subject to Section 13 or Section 15(d) of the Exchange Act or is
not exempt from such reporting requirements pursuant to and in compliance with
Rule 12g3-2(b) under the Exchange Act, the information required by paragraph
(d)(4)(i) of Rule 144A in connection with any transfer or proposed transfer of
such Notes or beneficial interests.

 

(i)  If Notes are issued upon the transfer,
exchange or replacement of Notes not bearing the Legend, the Notes so issued shall
not bear the Legend.  If Notes are
issued upon the transfer, exchange or replacement of Notes bearing the Legend,
or if a request is made to remove the Legend on a Note, the Notes so issued
shall bear the Legend, or the Legend shall not be removed, as the case may be,
unless there is delivered to the Trustee evidence satisfactory to the Issuer,
which may include an opinion of counsel licensed to practice law in the State
of New York, the United States of America, as may be reasonably required by the
Issuer that neither the Legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the
provisions of Rule 144A, Rule 144 or Regulation S and the securities laws of
each other applicable 

 

21

 

jurisdiction, or that such Notes are not “restricted
securities” within the meaning of Rule 144 and the Issuer and the Guarantor
consent to such removal.  Upon provision
of such satisfactory evidence, the Trustee, at the written direction of the
Issuer, shall authenticate and deliver a Note that does not bear the
Legend.  If the Legend is removed from
the face of a Note and the Note is subsequently held by an Affiliate of the Issuer,
the Issuer shall notify in writing the Registrar and the Legend shall be
reinstated.

 

SECTION 2.06. 
Replacement Notes.  If any
mutilated or defaced Note is surrendered to the Trustee, the Issuer shall
execute and upon its written request the Trustee shall authenticate and
deliver, in exchange and substitution for any such mutilated or defaced Note, a
new Note containing identical provisions (including the same date of issuance)
and of like principal amount, registered in the same manner, dated the date of
its authentication, bearing interest from the date to which interest has been
paid on the mutilated or defaced Note and bearing a number not
contemporaneously outstanding.

 

If there shall be delivered to the Issuer and the
Trustee (i) evidence to their satisfaction of the destruction, loss or theft of
any Note and of the ownership of the applicant of such Note and (ii) such
security or indemnity as may be required by them to save each of them and any
agent of each of them harmless, then, in the absence of notice to the Issuer or
the Trustee that such Note has been acquired by a bona fide purchaser, the
Issuer shall execute and upon its request the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Note, a new Note
containing identical provisions (including the same date of issuance) and of
like principal amount, registered in the same manner, dated the date of its
authentication, bearing interest from the date to which interest has been paid
on the destroyed, lost or stolen note and bearing a number not contemporaneously
outstanding.  Upon the issuance of any
substituted Note, the Issuer may require the payment by the registered Holder
thereof of a sum sufficient to cover fees and expenses connected therewith.

 

In case any such mutilated, destroyed, lost or stolen
Note has become or is about to become due and payable, the Issuer in its
discretion may, instead of issuing a new Note, pay such Note.

 

Upon the issuance of any new Note under this Section
2.06, the Issuer may require the payment by the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and its counsel) connected therewith.

 

Every new Note issued pursuant to this Section 2.06 in
lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.

 

The provisions of this Section 2.06 are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Notes.

 

SECTION 2.07. 
Outstanding Notes.  Notes
outstanding at any time are all Notes authenticated by the Trustee except for
those canceled by it, those delivered to it for cancellation, 

 

22

 

those paid pursuant to Section 2.06 hereof and those described in
this Section 2.07 as not outstanding.  A
Note does not cease to be outstanding because the Issuer or an Affiliate of the
Issuer holds such Note.

 

If a Note is replaced pursuant to Section 2.06 hereof,
it ceases to be outstanding unless the Trustee and the Issuer receive proof
satisfactory to them that such replaced Note is held by a bona fide purchaser.

 

If the Paying Agent segregates and holds in trust or,
in the case of the Luxembourg Paying Agent, on deposit in accordance with this
Indenture, on a Redemption Date or Stated Maturity money sufficient to pay all
principal and interest payable on that date with respect to the Notes to be
redeemed or maturing, as the case may be, then on and after that date such
Notes shall cease to be outstanding and interest on them shall cease to accrue.

 

In determining whether the Holders of the required
principal amount of Notes have concurred in any direction, waiver or consent or
any amendment, modification or other change to this Indenture, Notes held or
beneficially owned by the Issuer, the Guarantor or any of their Affiliates or
by agents of any of the foregoing shall be disregarded, except that for the
purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent or any amendment, modification or other
change to this Indenture, only Notes which a Trust Officer actually knows are
so owned shall be so disregarded.  Notes
so owned which have been pledged in good faith shall not be disregarded if the
pledgee establishes to the satisfaction of the Trustee such pledgee’s right so
to act with respect to the Notes and that the pledgee is not the Issuer, the
Guarantor or an Affiliate of the Issuer or the Guarantor or any of their
agents.

 

SECTION 2.08. 
Temporary Notes.  Pending
the preparation of definitive Notes, the Issuer may execute, and the Trustee
shall authenticate, temporary notes (the “Temporary Notes”) which are printed,
lithographed, or otherwise produced, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officer
executing the Notes may reasonably determine, as conclusively evidenced by such
officer’s execution of such Notes.

 

If Temporary Notes are issued, the Issuer shall cause
definitive Notes to be prepared without unreasonable delay.  After the preparation of definitive Notes,
the Temporary Notes shall be exchangeable for definitive Notes upon surrender
of the Temporary Notes to the Trustee, without charge to the Holder.  Until so exchanged, Temporary Notes will
evidence the same debt and will be entitled to the same benefits under this
Indenture as the definitive Notes in lieu of which they have been issued.

 

SECTION 2.09. 
Cancellation.  The Issuer
at any time may deliver Notes to the Trustee for prompt cancellation.  The Registrar, the Paying Agent and the
Luxembourg Paying Agent shall forward to the Trustee any Notes surrendered to
them for registration of transfer, exchange, purchase or payment.  The Trustee shall cancel all Notes
surrendered for registration of transfer, exchange, purchase, payment or
cancellation and, upon a written order, shall return such canceled Notes to the
Issuer.  The Issuer may not issue new
Notes to replace Notes it has redeemed or paid or that have been delivered to
the Trustee for cancellation.

 

23

 

SECTION 2.10. 
Payment of Interest; Interest Rights Preserved.  Subject to Section 11.06, interest on any
Note which is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name such Note (or any
predecessor Note) is registered at the close of business on the Record Date for
such interest payment, which shall be the fifteenth calendar day immediately
preceding such Interest Payment Date.

 

Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called “Defaulted Interest”) shall forthwith cease to be payable to the
registered Holder on the relevant Record Date, and, except as hereinafter
provided, such Defaulted Interest, and any interest payable on such Defaulted
Interest, shall be paid by the Issuer, at its election, as provided in clause
(a) or (b) below:

 

(a)  The Issuer may elect to make payment of any
Defaulted Interest, and to the extent permitted by law, any interest payable on
such Defaulted Interest, to the Persons in whose names the Notes are registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner.  The Issuer shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on the Notes
and the date of the proposed payment, and at the same time the Issuer shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as provided in this
clause (a).  Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 calendar days and not less than 10 calendar
days prior to the date of the proposed payment and not less than 10 calendar
days after the receipt by the Trustee of the notice of the proposed
payment.  The Trustee shall promptly
notify the Issuer of such Special Record Date and, in the name and at the
expense of the Issuer, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be sent, first-class
mail, postage prepaid, to each Holder at such Holder’s address as it appears in
the Security Register, not less than 10 calendar days prior to such Special
Record Date.  Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor having
been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in
whose names the Notes are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following clause
(b); or

 

(b)  The Issuer may make payment of any Defaulted
Interest, and any interest payable on such Defaulted Interest, on the Notes in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice as
may be required by such exchange, if, after notice given by the Issuer to the
Trustee of the proposed payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.

 

Subject to the foregoing provisions of this Section
2.10, each Note delivered under this Indenture upon registration of transfer
of, or in exchange for, or in lieu of, any other 

 

24

 

Note, shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note.

 

SECTION 2.11. 
Authorized Denominations. 
The Notes shall be issuable in minimum denominations of U.S. $1,000 and
integral multiples thereof.

 

SECTION 2.12. 
Computation of Interest. 
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months.

 

SECTION 2.13. 
Persons Deemed Owners. 
Prior to the due presentation for registration of transfer of any Note,
the Issuer, the Trustee, any Paying Agent, the Registrar, the Luxembourg Paying
Agent or any agent of any of them may deem and treat the Person in whose name
such Note is registered as the absolute owner of such Note for the purpose of
receiving payment of principal of and interest on such Note and for all other
purposes whatsoever, whether or not such Note is overdue, and none of the
Issuer, the Trustee, any Paying Agent, the Registrar, the Luxembourg Paying
Agent or any agent of any of them shall be affected by notice to the
contrary.  All such payments so made to
any such Person, or upon such Person’s order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for money payable upon such Note.

 

SECTION 2.14. 
CUSIP, Common Code and ISIN Numbers.  The Issuer, in issuing the Notes, may use a “CUSIP,” “Common
Code” or “ISIN” number and, if so, the Trustee shall use the relevant CUSIP, Common
Code or ISIN number in any notices to Holders as a convenience to such Holders;
provided that any such notice may state that no representation is made
as to the correctness or accuracy of the number printed in the notice or on the
Notes and that reliance may be placed only on the other identification numbers
printed on the Notes.  The Issuer shall
promptly notify the Trustee of any change in any number used.

 

SECTION 2.15.  Issuance
of Additional Notes.  The Issuer
shall be entitled to issue Additional Notes under this Indenture which shall
have identical terms as the Notes, other than with respect to the date of
issuance, the issue price, the initial interest accrual date, and except as may
be provided in clause (c) of this Section 2.15.  The Additional Notes shall be issued in global registered form
without interest coupons, substantially in the form of Exhibit A hereto.

 

The Notes and any Additional
Notes shall be treated as a single class for all purposes under this Indenture.

 

With respect to any Additional
Notes, the Issuer shall set forth in a Board Resolution and an Officer’s
Certificate, a copy of each which shall be delivered to the Trustee prior to
the authentication thereof, the following information:

 

(a)                                  the aggregate principal amount of such Additional
Notes to be authenticated and delivered pursuant to this Indenture;

 

(b)                                 the issue price, the issue date and the CUSIP,
ISIN and Common Code numbers of such Additional Notes; provided, however, that
no Additional Notes may be issued at a price that would cause such Additional
Notes to have “original issue discount”

 

25

 

within the meaning of Section
1273 of the U.S. Internal Revenue Code of 1986, as amended; and

 

(c)                                 whether such Additional Notes shall be issued in
the form of a Rule 144A Global Note or a Regulation S Global Note.

 

SECTION 2.16.  Purchase
of Notes by the Guarantor or Subsidiaries of the Guarantor.  The Guarantor and each of the
Subsidiaries of the Guarantor shall be
entitled, to the extent permitted by applicable law, at any time, to purchase
Notes in the open market at any price by tender or by any private arrangement
pursuant to the terms and conditions of such tender or private arrangement and,
to the extent permitted by, and pursuant to, the requirements of the Luxembourg
Stock Exchange.  Any Note that the
Guarantor or any of the Subsidiaries of the Guarantor purchases may, at the option of the Guarantor, be surrendered to the
Trustee for cancellation.  None of the
notes that the Guarantor or any of the Subsidiaries of the Guarantor purchases may be reissued or resold, except to
the Guarantor or any of its Subsidiaries.

 

ARTICLE III

 

REDEMPTION

 

SECTION 3.01. 
Notice of Redemption.  If
the Issuer elects to redeem Notes pursuant to Section 7 thereof (relating to a
tax redemption), it shall, at least 30 calendar days but not more than 60
calendar days before a Redemption Date, deliver to the Trustee and send to each
Holder of Notes by first-class mail, postage prepaid, at the address of such
Holder as it appears in the Security Register, a written notice stating:

 

(a)  the Redemption Date;

 

(b)  the Redemption Price (and shall specify the
portion of such Redemption Price that constitutes the amount of accrued and
unpaid interest to be paid, if any);

 

(c)  that the Notes are being called for
redemption pursuant to Section 7 thereof;

 

(d)  that, unless the Issuer defaults in the
payment of the Redemption Price with respect thereto, interest on the Notes
called for redemption shall cease and such Notes shall cease to accrue
interest, from and after the Redemption Date;

 

(e)  that the Notes called for redemption must be
surrendered to any Paying Agent to collect the Redemption Price;

 

(f)  the name and address of the Paying Agent(s);
and

 

(g)  any other information necessary to enable
Holders to comply with the notice of redemption.

 

SECTION 3.02. 
Notice to Trustee.  The
Issuer shall notify the Trustee in writing of the Redemption Date and the
principal amount of Notes to be redeemed. 
The Issuer shall give each such notice to the Trustee at least
60 calendar days prior to the Redemption Date unless the Trustee consents
to a shorter period, and in any event prior to the time notice is delivered to
Holders pursuant to Section 3.01 of this Indenture.  Such notice shall be accompanied by an

 

26

 

Officer’s Certificate stating that the Issuer is entitled to effect
such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of the Issuer to so redeem the Notes have
occurred, and an Opinion of Counsel of recognized international standing to the
effect that such redemption will comply with any conditions to such redemption
set forth herein and in the Notes.

 

SECTION 3.03. 
Effect of Notice of Redemption. 
Once notice of redemption is mailed, Notes called for redemption shall
become due and payable on the Redemption Date and at the Redemption Price
stated in such notice.  Upon surrender
to any Paying Agent such Notes shall be paid at the Redemption Price stated in
such notice.  Failure to give notice or
any defect in the notice to any Holder shall not affect the validity of the
notice to any other Holder.

 

SECTION 3.04. 
Deposit of Redemption Price. 
On or prior to 10:00 a.m., New York City time, on the business day
immediately preceding the Redemption Date, the Issuer shall deposit with the
Paying Agent, U.S. Dollars in immediately available funds, sufficient to pay
the Redemption Price in respect of all Notes to be redeemed other than Notes
called for redemption which have been delivered by the Issuer to the Trustee
for cancellation.  The Paying Agent
shall promptly send by first-class mail, postage prepaid, to each Holder of
Notes to be redeemed, payment in an amount equal to the Redemption Price for
such Notes.

 

So long as the Issuer complies with the preceding
paragraph and the other provisions of this Article III, interest on the Notes
to be redeemed on the Redemption Date shall cease to accrue from and after such
date and such Notes shall be deemed not to be entitled to any benefit under
this Indenture except to receive payment of the Redemption Price on the
Redemption Date (subject to the right of each Holder of record on the relevant
Record Date to receive interest due on the relevant Interest Payment Date
occurring on or before the Redemption Date).  If any Note called for redemption shall not
be so paid upon surrender for redemption, then, from the Redemption Date until
such principal is paid, interest shall be paid on the unpaid principal and, to
the extent permitted by law, on any accrued but unpaid interest thereon, at the
rate prescribed therefor by such Notes.

 

ARTICLE IV

 

COVENANTS

 

SECTION 4.01. 
Payment of Principal and Interest.  The Issuer shall promptly pay the principal of and interest on
the Notes in United States Dollars on the dates and in the manner provided in
the Notes and in Section 4.03 hereof. 
Principal and interest shall be considered paid on the date due if, on
such date, the Trustee or any Paying Agent holds in accordance with this
Indenture money sufficient to pay all principal and interest then due.

 

To the extent lawful, the Issuer shall pay interest on
(i) any overdue principal of the Notes, at the interest rate borne by the Notes
and (ii) Defaulted Interest (without regard to any applicable grace
period), at the same rate.  The Issuer’s
obligation pursuant to the previous sentence shall apply whether such overdue
amount is due at the Stated Maturity of the Notes, as a result of the Issuer’s
obligations pursuant to Section 3.04, or otherwise.

 

Interest on the Notes shall be paid by U.S. dollar
check drawn on a bank in The City of New York or, for Holders of at least
$1,000,000 of Notes, by wire transfer to a U.S. 

 

27

 

dollar account maintained by the payee with a bank in The City of New
York provided that a written request from such Holder to such effect
designating such account is received by the Trustee or a Paying Agent no later
than the Record Date immediately preceding such Interest Payment Date.  Unless such designation is revoked, any such
designation made by such person with respect to such Note will remain in effect
with respect to any future payments with respect to such Note payable to such
person.  The Issuer will pay any
administrative costs imposed by banks in connection with making payments by
wire transfer.

 

Payments in respect of principal on the Notes shall be
made against surrender of such Notes.

 

SECTION 4.02. 
Maintenance of Office or Agency. 
The Issuer and the Guarantor shall maintain in the Borough of Manhattan,
The City of New York, an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Issuer and the
Guarantor in respect of the Notes and this Indenture may be served.  The Issuer or the Guarantor shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency.  If
at any time the Issuer and the Guarantor shall fail to maintain such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and the Issuer and the Guarantor
each hereby appoints the Trustee its agent to receive all such presentations,
surrenders, notices and demands.

 

The Issuer and the Guarantor may also from time to
time designate one or more other offices or agencies (in or outside of The City
of New York) where the Notes may be presented or surrendered for any or all of
such purposes, and may from time to time rescind such designations; provided
that no such designation or rescission shall in any manner relieve the Issuer
of its obligation to maintain an office or agency in The City of New York for
such purposes.  The Issuer shall give
prompt written notice to the Trustee of any such designation and any change in
the location of any such other office or agency.

 

For so long as the Notes shall remain listed on the
Luxembourg Stock Exchange and the Luxembourg Stock Exchange shall so require,
the Issuer shall maintain the appointment of a Luxembourg Paying Agent.

 

SECTION 4.03. 
Payments; Money for the Note Payments to be Held in Trust.

 

(a)                                  The
Issuer shall, no later than the business day immediately preceding each due
date of the principal of, or interest or Additional Amounts on any of the
Notes, deposit, or cause the Guarantor to deposit on its behalf, with the
Paying Agent, at its office in London, as principal paying agent, by wire
transfer in U.S. dollars and in immediately available funds, a sum sufficient
to pay the principal, interest or Additional Amounts so becoming due, such sum
to be held in trust for the benefit of the Persons entitled to such principal,
interest or Additional Amounts.

 

Unless the Paying Agent
is the Trustee, the Paying Agent shall promptly notify the Trustee of the
Issuer’s action or failure so to act according to the preceding paragraph.

 

28

 

(b)                                 The
Issuer shall require each Paying Agent (other than the Trustee) to agree in
writing that such Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all money held by such Paying Agent for the payment of principal
of or interest on the Notes, shall notify the Trustee of any default by the
Issuer in making any such payment and at any time during the continuance of any
such default, upon the written request of the Trustee, shall forthwith pay to
the Trustee all sums held in trust by such Paying Agent.

 

The Issuer at any time
may require a Paying Agent to pay all money held by it to the Trustee and to
account for any funds disbursed by such Paying Agent.  Upon complying with this Section 4.03, the Paying Agent shall
have no further liability for the money delivered to the Trustee.

 

(c)                                  Any
funds paid by the Issuer to the Trustee or any Paying Agent in trust or, in the
case of the Luxembourg Paying Agent, on deposit for the payment of the
principal, interest or Additional Amounts on the Notes that remains unclaimed
for two years after the date upon which such payment shall have become due,
shall be promptly repaid to the Issuer without interest upon receipt by the
Trustee of an Order to that effect; provided, however, that the
Issuer shall cause to be published at least once in a newspaper of general
circulation in The City of New York and in Europe (and Luxembourg, for so long
as any Notes are listed on the Luxembourg Stock Exchange) or mailed to each
Holder entitled to such unclaimed funds, notice that such funds remain
unclaimed and that, after a date specified therein, which shall be a date not
less than 30 days from the date of such publication or mailing, any unclaimed
balance of such money remaining as of such date shall be repaid to the Issuer
without interest.  Holders shall not be
entitled to receive interest on such unclaimed funds under any
circumstances.  After repayment to the
Issuer, Holders entitled to such funds shall look only to the Issuer for
payment without interest thereon, as unsecured general creditors, and the
Issuer shall not be liable to pay any taxes or other duties in connection with
any such payment.  The Trustee and the
Paying Agent shall have no further liability with respect to any such money
repaid to the Issuer, and the Issuer shall not be a trustee in respect of such
funds.  Notwithstanding any other
provision of this Section and unless otherwise provided by applicable law, the
right to receive payment of principal of any Note (whether at maturity,
redemption or otherwise) will become void at the end of 10 years from the
relevant date thereof (or such shorter period as may be prescribed by applicable
law).

 

SECTION 4.04. 
Corporate Existence. 
Except as permitted in Article V hereof, the Issuer and the Guarantor
shall do or cause to be done all things necessary to preserve and keep in full
force and effect the corporate existence, rights (by charter and statutory),
licenses and franchises of the Issuer, the Guarantor and each of the
Subsidiaries of the Guarantor; provided that the Guarantor and any of
its Subsidiaries shall not be required to preserve the corporate existence of
any such Subsidiary (other than the Issuer) or any such right, license or
franchise if the board of directors of the Guarantor shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Guarantor and its Subsidiaries and that the loss thereof is not
disadvantageous in any material respect to the Holders of Notes or owners of
beneficial interests therein.

 

29

 

SECTION 4.05. 
Limitation on Incurrence of Debt.  The Guarantor will not, and will not permit any of its
Subsidiaries to, create, issue, incur,
assume, guarantee or in any manner become directly or indirectly liable with
respect to, or otherwise become responsible for (collectively, “incur”) any
Debt, including any Acquired Debt, unless the ratio of the Guarantor’s total
outstanding Debt to annualized Consolidated Cash Flows (as determined by
multiplying the Guarantor’s Consolidated Cash Flows for the two most recent
fiscal quarters by two) would be no greater than 4.0 to 1.0, determined on a
pro forma basis after giving pro forma effect to such incurrence and the
incurrence of any other Debt and any other changes in the Guarantor’s Debt
since the date of the Guarantor’s most recently available quarterly or annual
consolidated balance sheet and the application of the net proceeds therefrom as
if it had occurred on the first date of such quarterly or annual period.

 

For the purposes of calculating
this ratio, any acquisitions that have been made by the Guarantor or a
Subsidiary of the Guarantor, including through mergers or consolidations and
including any related financing transactions, during or subsequent to the
relevant fiscal quarter or year and on or prior to the date of the calculation
of the ratio shall be deemed to have occurred on the first day of the relevant
fiscal quarter or year, with the pro forma determinations of Consolidated Cash
Flows resulting from any such transactions as determined in good faith by the
Guarantor.

 

The accrual of interest, the
accretion or amortization of original issue discount and the payment of
interest on any Debt in the form of additional Debt with the same terms will
not deemed to be an incurrence of Debt for purposes of this covenant.

 

SECTION 4.06.  Negative
Pledge. The Issuer and the Guarantor will not, and the Guarantor will not
permit any Subsidiary to, create, assume or permit to exist any Debt secured by
Lien (other than a Permitted Lien) upon or in respect of any of its or their
property or assets, now owned or hereafter acquired, without effectively
providing that the Notes and the Guarantee shall be directly secured equally
and ratably with the Debt secured by such Lien.

 

This restriction will not apply
to a Lien created to secure Attributable Debt in connection with a Sale and
Lease-Back Transaction permitted under Section 4.07 hereof.

 

SECTION 4.07.  Limitation
on Sale and Lease-Back Transactions. The Issuer and the Guarantor will not,
and the Guarantor will not permit any Subsidiary to, enter into any Sale and
Lease-Back Transaction with respect to any of its property or assets, now owned
or hereafter acquired, unless after giving effect to the Sale and Lease-Back
Transaction, the aggregate amount of all Attributable Debt relating to all Sale
and Lease-Back Transactions plus all outstanding secured Debt created, incurred
or assumed by the Guarantor and the Subsidiaries of the Guarantor does not
exceed 10% of the book value of the Guarantor’s total assets, as determined by
reference to the Guarantor’s most recent quarterly or annual consolidated
balance sheet on a pro forma basis after giving effect to the incurrence of any
Debt and any other changes in the Guarantor’s Debt since the date of such
balance sheet.  For the purposes of this
determination, the amount of Debt under any secured credit facility will be the
total amount available under the facility, regardless of the amount at any one
time outstanding.

 

This Section 4.07 will not apply
to transactions between the Guarantor and one of the Subsidiaries of the
Guarantor or between such Subsidiaries or to a Sale and Lease-Back Transaction
where the Issuer, the Guarantor or such Subsidiary would be entitled
pursuant to 

 

30

 

Section 4.06 hereof to incur Debt secured by a Lien on the property or
assets subject to the Sale and Lease-Back Transaction without equally and
ratably securing the Notes and the Guarantee.

 

SECTION 4.08. 
Change in Control.  So
long as any Note remains outstanding, if a Change in Control occurs, each
Holder will have the right to require the Issuer to redeem the Notes of such
Holder at a Redemption Price equal to 101% of the principal amount of such
Notes plus accrued interest.

 

Within 30 days after the occurrence of a Change in
Control, the Issuer will deliver to the Holders, the Trustee and the Luxembourg
Paying Agent notice of the Change in Control and of the resulting redemption
right. Upon receipt by the Trustee or the Luxembourg Paying Agent (for so long
as the Notes are listed on the Luxembourg Stock Exchange) from a Holder, on or
before the 30th day after the date of the Issuer’s notice referred to in the
previous sentence, of (a) a properly completed notice in the form of Exhibit D
hereto, together with (b) the Notes of such Holder, the Issuer will redeem such
Notes no earlier than 30 and no later than 60 days after the date of the
Issuer’s notice of the Change in Control.

 

SECTION 4.09.  Reports.  (a) The Guarantor shall (i) file with the Commission or otherwise
make public and deliver to the Trustee, within 180 days of the end of each
fiscal year, an annual report on Form 20-F (or any successor form) containing
the information required to be contained therein (or in such successor form),
regardless of whether the Guarantor is then required to file a Form 20-F under
the rules promulgated by the Commission; (ii) make public and deliver to the Trustee, within 120 days of the
end of each fiscal year, reports for the fourth quarter of such fiscal year
containing its consolidated balance sheet, statement of operations and
cash flow statement prepared in accordance with U.S. GAAP (but excluding
footnotes) and a discussion by its management highlighting critical financial
developments during the fourth
quarter; and (iii) submit to the Commission or otherwise make public and
furnish to the Trustee, within 60 days of the end of the first three fiscal
quarters of each fiscal year, quarterly reports on Form 6-K (or any successor
form) containing its consolidated balance sheet, statement of operations and
cash flow statement prepared in accordance with U.S. GAAP (but excluding
footnotes) and a discussion by its management highlighting critical financial
developments during the period.  In
addition, the Guarantor has agreed that, during any period in which it is not
subject to and in compliance with Section 13 or 15(d) of the Exchange Act or is
not exempt from such reporting requirements pursuant to and in compliance with
Rule 12g3-2(b) under the Exchange Act, it will provide to each Holder of the
Notes (or holder of a beneficial interest therein) and to each prospective
purchaser of the Notes (as designated by such Holder or holder of a beneficial
interest), upon the request of such Holder, prospective purchaser or holder of
a beneficial interest in the Notes, any information required to be provided by
Rule 144A(d)(4) under the Securities Act.

 

(b)                                       After this
Indenture has been qualified under the Trust Indenture Act, the Issuer and the
Guarantor shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange

 

31

 

Act shall be filed with the Trustee within 15 days
after the same is so required to be filed with the Commission.

 

Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee’s receipt thereof shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Issuer’s or the Guarantor’s compliance with any of their
respective covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officer’s Certificates).

 

SECTION 4.10.  Compliance Certificate; Notice of Default
or Event of Default.

 

(a)  The Issuer and the Guarantor shall each
deliver to the Trustee on the first anniversary of the Issue Date, and on each
anniversary thereafter so long as any Note remains outstanding, an Officer’s
Certificate stating whether or not, to the best knowledge of such officers, the
Issuer or the Guarantor, as the case may be, has complied with all conditions
and covenants under this Indenture, and, if the Issuer or the Guarantor, as the
case may be, shall be in Default, specifying all such Defaults and the nature
thereof of which such officer may have knowledge.

 

For the purposes of this
Section 4.10(a), compliance shall be determined without regard to any period of
grace or requirement of notice under this Indenture.

 

(b)  The Issuer and the Guarantor shall each
deliver written notice to the Trustee promptly after any executive officer of
the Issuer or the Guarantor, as the case may be, becomes aware of the
occurrence of any event which constitutes a Default or Event of Default,
describing such Default or Event of Default, its status and what action the
Issuer or the Guarantor, as the case may be, is taking or proposes to take with
respect thereto.

 

SECTION 4.11. 
Payment of Additional Amounts. 
All payments by the Issuer in respect of the Notes and the Indenture and
by the Guarantor in respect of the Guarantee and the Indenture will be made
free and clear of and without deduction or withholding for or on account of any
present or future taxes, duties, assessments, fees or other governmental
charges (“Taxes”) imposed or levied by or on behalf of Luxembourg, the Russian
Federation, any jurisdiction from or through which a payment is made or any
political subdivision or taxing authority thereof or therein (each, a “Taxing
Jurisdiction”), unless such withholding or deduction is required by law.  If the Issuer is required to make any
withholding or deduction for or on account of any Taxes from any payment made
under or with respect to the Notes, or if the Guarantor is required to make any
withholding or deduction for or on account of any Taxes imposed by a Taxing
Jurisdiction from any payment made under or with respect to the Guarantee, the
Issuer will pay (or, in respect of the Guarantee, the Guarantor will pay) as
additional interest to any Holder of the Notes such additional amounts (the
“Additional Amounts”) as may be necessary in order that every net payment made
by the Issuer on such Note or by the Guarantor on the Guarantee after deduction
or withholding for or on account of any Taxes will not be less than the amount
then due and payable on such Note or the Guarantee.  The foregoing obligation to pay Additional Amounts, however, will
not apply to any (i) Taxes that would not have been imposed but for the
existence of any present or former connection between such Holder of the Notes
and any Taxing Jurisdiction other than the mere receipt of such payment or the
ownership or holding of such 

 

32

 

Note, (ii) Taxes that would not have been imposed but for the presentation
by the Holder of such Note for payment on a date more than 30 days after the
date on which such payment became due and payable or the date on which payment
thereof is duly provided for, whichever occurs later, (iii) Taxes required to
be deducted or withheld by any Paying Agent from a payment on a Note or the
Guarantee, if such payment can be made without deduction or withholding by any
other Paying Agent, (iv) Taxes that would not have been imposed but for the
failure of the Holder to comply with the Issuer’s written request addressed to
the Holder at least 60 days prior to the relevant payment to provide
information with respect to any reasonable certification, documentation,
information or other reporting requirement concerning the nationality, residence,
identity or connection with the Taxing Jurisdiction of the Holder of such Note,
(v) Taxes imposed on a payment to an individual that are required to be made
pursuant to any European Union Directive on the taxation of savings
implementing the conclusion of the ECOFIN Council meeting of 26-27 November
2000 or any law implementing or complying with, or introduced in order to
conform to, such Directive and (vi) estate, inheritance, gift, sale or excise
tax.  The Guarantee also applies to
Additional Amounts payable by the Issuer.

 

The Issuer or the Guarantor, as the case may be, shall
make any such withholding or deduction for or on account of Taxes and shall
remit the full amount deducted or withheld to the relevant authority in
accordance with the applicable law.  The
Issuer or the Guarantor, as the case may be, shall furnish to the Holders of
Notes that are outstanding on the date of the required payment within 30 days
after the date the payment of any Taxes is due pursuant to applicable law,
certified copies of tax receipts evidencing that such payment has been made by
the Issuer or the Guarantor, as the case may be.  The Issuer and the Guarantor shall indemnify and hold harmless
each Holder on the date of the required payment of any Taxes and upon written
request reimburse each such Holder for the amount of (i) any Taxes (other than
net income taxes) so levied or imposed and paid by such Holder as a result of
payments made under or with respect to the outstanding Notes or the Guarantee,
(ii) any liability (other than any liability relating to any net income taxes)
(including penalties, interest and expense) arising therefrom or with respect
thereto, and (iii) any Taxes imposed with respect to any reimbursement under
clause (i) or (ii) above.

 

At least 30 days prior to each date on which any
payment under or with respect to the Notes or the Guarantee is due and payable,
if the Issuer or the Guarantor, as the case may be, becomes obligated to pay
Additional Amounts with respect to such payment, the Issuer or the Guarantor,
as the case may be, shall deliver to the Trustee (and each Paying Agent other
than the Trustee) an Officer’s Certificate certifying that the Issuer will make
a withholding or deduction for or on account of Taxes and remit the same to the
relevant authority, attesting to the fact that such Additional Amounts will be
payable and the amounts so payable, and setting forth such other information as
is necessary to enable the Trustee to pay such Additional Amounts to the
Holders on the payment date.  Whenever
in this Indenture there is mentioned, in any context, the payment of principal,
interest (including Defaulted Interest) or any other amount payable on or with
respect to any of the Notes or the Guarantee, such reference shall be deemed to
include mention of the payment of Additional Amounts provided for in this
Section 4.11 to the extent that, in such context, Additional Amounts are, were
or would be payable in respect thereof pursuant to the provisions of this
Section 4.11, and express mention of the payment of Additional Amounts in
certain provisions hereof shall not be construed as excluding Additional
Amounts in those provisions hereof where such express mention is not made.

 

33

 

The Issuer and the Guarantor, jointly and severally,
hereby covenant to indemnify the Trustee (and each other Paying Agent) (which
shall include their respective directors, officers, employees and agents) for,
and to hold it harmless against any loss, liability or reasonable expenses
incurred without gross negligence, bad faith or willful misconduct on such
Person’s part, arising out of or in connection with actions taken or omitted by
any of them in reliance on any Officer’s Certificate furnished pursuant to this
Section 4.11 or the failure of the Trustee (or other Paying Agent) for any
reason (other than its own gross negligence, bad faith or willful misconduct)
to receive on a timely basis such Officer’s Certificate.  The obligations of the Issuer and the
Guarantor under this Section 4.11 shall survive the resignation or removal of
the Trustee or any Paying Agent, the termination of the Indenture and the
payment of all amounts under or with respect to this Indenture, the Notes and
the Guarantee.

 

SECTION 4.12. 
Transactions with Affiliates. 
None of the Issuer, the Guarantor or any of their Subsidiaries shall,
directly or indirectly, enter into or permit to exist any intercompany loan
with, or for the benefit of, any Affiliate, unless (a) the terms of such
intercompany loan are no less favorable to the Issuer, the Guarantor or such
Subsidiary, as the case may be, than those that could be obtained in a
comparable arm’s-length transaction or series of related transactions with a
person that is not an Affiliate of the Issuer, the Guarantor or such Subsidiary
or (b) such intercompany loan is made pursuant to a contract or contracts
existing on the issue of the Notes (excluding any amendments or modifications
thereto after the date thereof).

 

This Section 4.12 shall not apply to (1) compensation
or employee benefit arrangements with any officer or director of the Issuer,
the Guarantor or such Subsidiary arising out of any employment contract entered
into in the ordinary course of business or (2) transactions between the Issuer,
the Guarantor or any of our Subsidiaries or between any such Subsidiaries.

 

SECTION 4.14.  Maintenance
of Rating.  The Guarantor and the
Issuer will take all commercially reasonable steps necessary to maintain a
rating on the Notes from Moody’s Investors Service, Inc. or Standard &
Poor’s Ratings Services.

 

SECTION 4.15.  Further
Instruments and Acts.  Upon request
of the Trustee, the Issuer and the Guarantor shall execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.

 

ARTICLE V

 

RESTRICTIONS ON MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS

 

SECTION 5.01.  Merger, Consolidation and Disposition of
Assets.  (a)  The Guarantor shall not, in a single
transaction or series of related transactions, merge, consolidate or otherwise
combine with or into (whether or not the Guarantor is the Successor) any other
Person, or directly and/or indirectly through its Subsidiaries sell, transfer,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets, or permit any Person to merge, consolidate or otherwise
combine with or into the Guarantor in one or more related transactions, unless:
(i) the Successor (if other than the 

 

34

 

Guarantor or the Issuer) shall be a corporation
organized and existing under the laws of the Russian Federation or Luxembourg,
respectively, and shall assume, by operation of law or by entering into an indenture
supplemental hereto in form satisfactory to the Trustee, executed and delivered
to the Trustee, the due and punctual payment of all obligations under the
Guarantee and this Indenture and the performance of every covenant of this
Indenture on the part of the Guarantor or the Issuer, as the case may be, to be
performed or observed; (ii) immediately after giving effect to such
transaction, no Event of Default, and no event which, after notice or lapse of
time, or both, would become an Event of Default, shall have occurred and be
continuing; (iii) on the date of that
transaction, after giving pro forma effect to (1) the transaction, (2) any
related financing transactions and (3) the pro forma Consolidated Cash Flows
resulting from such transaction, as determined in good faith by the Guarantor,
in each case as if they had occurred at the beginning of the relevant quarterly
or annual period, the ratio of Debt to Consolidated Cash Flows, calculated as
provided in Section 4.05 hereof, would be no greater than the greater of (x)
such ratio immediately prior to the date of such transaction and (y) 4.0 to
1.0; provided, however, that this clause (iii) shall not apply in
the case of a consolidation, merger or combination by one of the Guarantor’s
Subsidiaries with or into the Guarantor or another of the Guarantor’s
Subsidiaries; and (iv) the Guarantor shall have delivered to the Trustee
(A) an Officer’s Certificate stating that such consolidation, merger,
combination or disposition and such supplemental indenture, if any, comply with
the terms and all conditions precedent provided for in this Section 5.01 and
the Indenture relating to such transaction and (B) an Opinion of Counsel
stating that such consolidation, merger, combination or disposition and such
supplemental indenture comply with the terms and conditions provided for in
clauses (i) and, with respect to the absence of an Event of Default being
caused by such transaction, (ii) of this Section 5.01(a) and elsewhere in the
Indenture relating to such transaction.

 

(b)  So long as any Note remains outstanding, the
Issuer shall not, in a single transaction or series of related transactions,
merge, consolidate or otherwise combine with or into (whether or not the Issuer
is the Successor) any other Person, or directly and/or indirectly sell, assign,
transfer, convey or otherwise dispose of all or substantially all of its
properties or assets, or permit any Person to merge, consolidate or otherwise
combine with or into the Issuer in one or more related transactions, unless:
(i) the Successor (if other than the Issuer) (A) shall be a Wholly Owned
Subsidiary of the Guarantor and (B) shall assume, by operation of law or by
entering into an indenture supplemental hereto, the due and punctual payment of
the principle of and interest on all the Notes and the performance of every
covenant of the Indenture on the part of the Issuer to be performed or
observed; (ii) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred and be continuing; (iii) on the date of that transaction, after giving pro
forma effect to (1) the transaction, (2) any related financing transactions and
(3) the pro forma Consolidated Cash Flows resulting from such transaction, as
determined in good faith by the Guarantor, in each case as if they had occurred
at the beginning of the relevant quarterly or annual period, the ratio of Debt
to Consolidated Cash Flows, calculated as provided in Section 4.05 hereof,
would be no greater than the greater of (x) such ratio immediately prior to the
date of such transaction and (y) 4.0 to 1.0; provided, however,
that this clause (iii) shall not apply in the case of a consolidation, merger
or combination by the Issuer with or into the 

 

35

 

Guarantor or another of the
Guarantor’s Subsidiaries; and (iv) the Issuer shall have delivered to
the Trustee (A) an Officer’s Certificate stating that such consolidation,
merger, combination or disposition and such supplemental indenture comply with
the terms and all conditions precedent provided for in this Section 5.01 and
the Indenture relating to such transaction and (B) an Opinion of Counsel
stating that such consolidation, merger, combination or disposition and such
supplemental indenture comply with the terms and conditions provided for in
clauses (i) and, with respect to the
absence of an Event of Default being caused by such transaction, (ii) of
this Section 5.01(b) and elsewhere in the Indenture relating to such
transaction have been complied with. 
Notwithstanding any other provision hereof, the Issuer and such
transferee or successor Person shall provide written notice of such merger,
consolidation, combination, sale, assignment, transfer, conveyance or disposal
to the Holders of the Notes.

 

SECTION 5.02. 
Successor Person Substituted. 
In the event of any transaction described in and complying with
Section 5.01 hereof in which the Issuer or the Guarantor, as the case may
be, is not the Successor, such Successor shall succeed to, and be substituted
for, and may exercise every right and power of, the Issuer or the Guarantor, as
the case may be, under this Indenture and, except in the case of a lease, the
Issuer or the Guarantor, as the case may be, will be discharged from its
obligations under this Indenture and the Notes or the Guarantee.  Notwithstanding any other provision hereof,
the Issuer or the Guarantor and such Successor shall provide written notice of
such succession or substitution to the Holders of the Notes.

 

SECTION 5.03. 
Sale of Assets by the Guarantor. 
So long as any Note remains outstanding, (a) each conveyance, transfer, sale or lease of assets (other than the
payment of dividends) by the Guarantor or one of its Subsidiaries to an
Affiliate (other then the Guarantor or one of its Subsidiaries) shall be made
for Fair Market Value and (b) if at
any time subsequent to the Issue Date, the Guarantor and its Subsidiaries have
engaged in a transaction or series of related transactions that, in the
aggregate, result in the conveyance, transfer, sale or lease of assets to one
or more Affiliates (other than to the Guarantor or one of its Subsidiaries)
with a Fair Market Value of more than U.S.$70,000,000 (or the equivalent in other currencies), the
Guarantor shall deliver to the Trustee a resolution of the board of directors
of the Guarantor, which shall confirm that
such transaction was made for Fair Market Value.

 

This Section 5.03 shall not apply to any transactions
relating to the acquisition of UMC by the Guarantor.

 

SECTION 5.04. Sale of Licenses by the Guarantor.  So long
as any Note remains outstanding, (a) the Guarantor will not transfer, sell or
lease any of its GSM 900 license for the Moscow license area; (b) Rosico will
not transfer, sell or lease any of its GSM 1800 license for the Moscow license
area; (c) Telecom XXI will not transfer, sell or lease any of its GSM 900 or
1800 license for the St. Petersburg license area; (d) Kuban GSM will not
transfer, sell or lease any of its GSM 900 or 1800 license for the Krasnodar
license area, in each case except in a transaction meeting the requirements set
forth in Section 5.01(a) hereof or which would not have a material adverse
effect on the business, financial condition or results of operations of the
Guarantor and its Subsidiaries as a whole, regardless of whether the Guarantor,
Rosico, Telecom XXI or Kuban GSM would be permitted to do so by law.

 

36

 

ARTICLE VI

 

DEFAULTS AND REMEDIES

 

SECTION 6.01. 
Events of Default.  The
term “Event of Default,” wherever used herein with respect to the Notes, means
any one of the following events (whatever the reason for such event, and
whether it shall be voluntary or involuntary, or be effected by operation of
law, pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):

 

(a)  the Issuer fails to make any payment of
interest or Additional Amounts on any Note when the same becomes due and
payable and such failure continues for a period of 15 calendar days; or

 

(b)  the Issuer fails to make any payment of the
principal of any Note when the same becomes due and payable; or

 

(c)  the Issuer fails to comply with any of its
obligations under Section 4.08 hereof; or

 

(d)  the Issuer or the Guarantor fails to comply
with any of its other agreements or covenants in, or provisions of, the Notes,
the Guarantee or this Indenture for 30 days after written notice by the Trustee
to the Issuer and the Guarantor, or written notice by Holders of at least 25%
in aggregate principal amount of the Notes then outstanding to the Issuer, the
Guarantor and the Trustee; or

 

(e)  a default under any Debt of the Issuer, the
Guarantor or any Subsidiary of the Guarantor (other than the Notes) or under
any indenture or other instrument under which any such Debt has been issued or
by which it is governed and the expiration of the applicable period of grace,
if any, contained in any such Debt, which in the aggregate exceeds U.S.$
5,000,000 (or the equivalent in other currencies), which default (i) results in
the acceleration of the payment of such Debt or (ii) has not been cured or
waived and constitutes the failure to make any payment of principal or interest
on such Debt when due, after the expiration of any applicable grace period; or

 

(f)  a final action resulting in the suspension
for more than 30 days or loss of any of (i) the Guarantor’s GSM 900 licenses
for the Moscow license area; (ii) Rosico’s GSM 1800 licenses for the Moscow
license area; (iii) Telecom XXI’s GSM 900 or 1800 licenses for the St.
Petersburg license area; or (iv) Kuban GSM’s GSM 900 or 1800 licenses for the
Krasnodar license area, in each case other than, in the case of the
Guarantor’s, Rosico’s, Telecom XXI’s or Kuban GSM’s merger or consolidation or
a sale of the Guarantor’s, Rosico’s, Telecom XXI’s or Kuban GSM’s assets and
properties substantially as a whole in a transaction permitted under Section
5.01(a) hereof, a loss where the relevant license is issued within 30 days to
the Guarantor, the Successor of the Guarantor, Rosico, Telecom XXI or Kuban GSM
or any of the Guarantor’s or Successor’s Subsidiaries); or

 

(g)                                 the
reassignment to other users (other than a Subsidiary of the Guarantor),
cancellation or other loss of any of the Guarantor’s, Rosico’s, Telecom XXI’s
or Kuban 

 

37

 

GSM’s assigned spectrum allocations, other than as
would not have a
material adverse effect on the business, financial condition or results of
operations of the Guarantor and its Subsidiaries as a whole; or

 

(h)                                 the express transfer, sale or lease by (i) the
Guarantor of any of its GSM 900 licenses for the Moscow license area (ii)
Rosico of any of its GSM 1800 licenses for the Moscow license area; (iii) Telecom XXI of its GSM 900 or 1800
license for the St. Petersburg license area; or (iv) Kuban GSM of any of its
GSM 900 or 1800 licenses for the Krasnodar license area, regardless of whether
such transfer, sale or lease is permitted by law, other than in a transaction
described in and meeting the requirements of Section 5.01(a) hereof or that
would not have a material adverse effect on the business, financial condition
or results of operations of the Guarantor and its Subsidiaries as a whole; or

 

(i)  the American Depositary Shares representing
the common stock of the Guarantor are no longer listed on the New York Stock
Exchange or such listing is suspended for more than 15 days, where such de-listing or
suspension is due to the Guarantor’s failure to satisfy its obligations under
its listing agreement with the New York Stock Exchange; or

 

(j)  the rendering against the Issuer, the
Guarantor or any Subsidiary of the Guarantor of a judgment, decree or order for
the payment of money in an amount in excess of U.S.$ 10,000,000 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; or

 

(k)  the Guarantee ceases to be (or is claimed in
writing by the Guarantor not to be) in full force and effect; or

 

(l)  the entry by a court having jurisdiction in
the premises of (i) a decree or order for relief in respect of the Issuer, the
Guarantor or any Significant Subsidiary in an involuntary case or proceeding
under any Bankruptcy Law or (ii) a decree or order adjudging the Issuer, the
Guarantor or any Significant Subsidiary bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of, or in respect of, the Issuer, the Guarantor or any Significant
Subsidiary under any Bankruptcy Law or appointing a Custodian of the Issuer,
the Guarantor or any Significant Subsidiary or of any substantial part of the
property of the Issuer, the Guarantor or any Significant Subsidiary, or
ordering the winding-up or liquidation of the affairs of the Issuer, the
Guarantor or any Significant Subsidiary, and the continuance of any such decree
or order for relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive calendar days; or

 

(m)  (i) 
the commencement by the Issuer, the Guarantor or any Significant
Subsidiary of a voluntary case or proceeding under any Bankruptcy Law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent; (ii) the
consent by the Issuer, the Guarantor or any Significant Subsidiary to the entry
of a decree or order for relief in respect of the Issuer, the Guarantor or any
Significant Subsidiary in an involuntary case or proceeding under any
Bankruptcy Law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Issuer, the Guarantor or any 

 

38

 

Significant Subsidiary; (iii) the filing by the
Issuer, the Guarantor or any Significant Subsidiary of a petition or answer or
consent seeking reorganization or relief under any Bankruptcy Law; (iv) the
consent by the Issuer, the Guarantor or any Significant Subsidiary to the
filing of such petition or to the appointment of or taking possession by a
Custodian of the Issuer, the Guarantor or any Significant Subsidiary or of any
substantial part of the property of the Issuer, the Guarantor or any
Significant Subsidiary, or the making by the Issuer, the Guarantor or any
Significant Subsidiary of an assignment for the benefit of creditors; (v) the
admission by the Issuer, the Guarantor or any Significant Subsidiary in writing
of its inability to pay its debts generally as they become due; or (vi) the
taking of corporate action by the Issuer, the Guarantor or any Significant
Subsidiary to authorize or effect any such action.

 

A Default under clause (d) is not an Event of Default
unless the notice provided for in such clause specifies the Default, demands
that it be remedied and states that the notice is a “Notice of Default.”

 

SECTION 6.02. 
Acceleration.  If an Event
of Default (other than an Event of Default specified in Section 6.01(l) or
Section 6.01(m)) occurs and is continuing, then and in every such case the
Trustee by written notice to the Issuer and the Guarantor, or the Holders of at
least 25% in aggregate principal amount of the Notes then outstanding by
written notice to the Issuer, the Guarantor and the Trustee, may declare the
unpaid principal of and any accrued interest on all the Notes then outstanding
to be immediately due and payable.  Upon
such declaration such principal and interest shall be due and payable
immediately.  If an Event of Default
specified in Section 6.01(l) or Section 6.01(m) hereof occurs, such an amount
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.

 

At any time after such a declaration of acceleration has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee or the Holders under this Indenture, the Holders of a
majority in principal amount of the Notes then outstanding, by written notice
to the Issuer, the Guarantor and the Trustee, may rescind and annul such
declaration and its consequences if: (a) the Issuer or the Guarantor has paid
or deposited with the Trustee a sum sufficient to pay (i) all overdue
installments of interest on the Notes, (ii) the principal of any Notes which
have become due otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Notes, (iii) to the extent that payment of
such interest is lawful, interest upon overdue installments of interest at the
rate borne by the Notes, and (iv) all sums paid or advanced by the Trustee
hereunder and reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel; and (b) all Events of Default, other than
the non-payment of the principal of and interest on the Notes which have become
due solely by such acceleration, have been cured or waived as provided in this
Indenture.  No such recission shall
affect any subsequent Default or impair any right consequent thereon.

 

SECTION 6.03. 
Other Remedies.  The
Issuer covenants that if an Event of Default specified in Section 6.01(a) or
Section 6.01(b) occurs the Issuer shall, upon demand of the Trustee, pay to the
Trustee, for the benefit of the Holders, the whole amount then due and payable
on the Notes for principal and interest and, to the extent that payment of such
interest shall be legally enforceable, interest upon the overdue principal and
upon Defaulted Interest at 

 

39

 

the rate or rates prescribed therefor in such Notes; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and all other
amounts due to the Trustee pursuant to Section 7.07 hereof.

 

If the Issuer fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an express trust,
may institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Issuer and the Guarantor or any other obligor upon
such Notes and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property and assets of the Issuer and the
Guarantor or any other obligor upon such Notes, wherever situated.

 

If an Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Holders by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.

 

SECTION 6.04. 
Waiver of Past Defaults. 
The Holders of not less than a majority in principal amount of the Notes
then outstanding may, on behalf of the Holders of all the Notes, waive any past
or existing Default or Event of Default and its consequences under this Article
VI, except a Default or Event of Default (a) in the payment of the principal of
or interest on, any Note, or (b) in respect of a covenant or provision hereof
which under Section 9.02 hereof cannot be modified or amended without the
consent of the Holder of each outstanding Note affected thereby.

 

SECTION 6.05. 
Control by Majority. 
Subject to the provisions of Section 7.02(h) hereof, the Holders of not
less than a majority in principal amount of the Notes then outstanding shall
have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on the Trustee with respect to the Notes; provided
that

 

(a)  such direction shall not be in conflict with
any rule of law or with this Indenture or unduly prejudicial to the rights of
other Holders and would not subject the Trustee to personal liability;

 

(b)  the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction; and

 

(c)  such Holder or Holders have offered to the
Trustee security or indemnity satisfactory to the Trustee in its reasonable
discretion against the costs, expenses and liabilities to be incurred in
compliance with such request.

 

SECTION 6.06.  Limitation
on Suits.  No Holder of Notes
shall have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:

 

40

 

(a)  such Holder has previously given written
notice to the Trustee of a continuing Event of Default;

 

(b)  the Holders of not less than 25% in
principal amount of the Notes then outstanding shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;

 

(c)  such Holder or Holders have offered to the
Trustee security or indemnity satisfactory to the Trustee in its reasonable
discretion against the costs, expenses and liabilities to be incurred in
compliance with such request; and

 

(d)  the Trustee for 60 calendar days after its
receipt of such notice, request and offer of security or indemnity has failed
to institute any such proceeding.

 

in any such event, it being understood and intended that no one or more
Holders of Notes shall have any right in any manner whatever by virtue of, or
by availing of, any provision of this Indenture to affect, disturb or prejudice
the rights of any other Holders of Notes, or to obtain or to seek to obtain
priority or preference over any other of such Holders or to enforce any right
under this Indenture, except in the manner herein provided and for the equal
and ratable benefit of all Holders of Notes.

 

SECTION 6.07. 
Rights of Holders to Receive Payment.  Notwithstanding any other provision of this Indenture, the right
of any Holder to receive payment of principal of, or any premium or interest
on, or the Redemption Price of, the Notes held by such Holder when due, or to
bring suit for the enforcement of any such payment, shall be absolute and
unconditional and shall not be impaired or affected without the consent of such
Holder.

 

SECTION 6.08. 
Trustee May File Proofs of Claim.  In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceedings, or any voluntary or involuntary case under
Bankruptcy Law relative to the Issuer or the Guarantor or any other obligor
upon the Notes or the property and assets of the Issuer or the Guarantor or of
such other obligor or their creditors, the Trustee (irrespective of whether the
principal of such Notes shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Issuer or the Guarantor for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise, (i) to file and prove a claim for the whole
amount of principal and interest owing and unpaid in respect of the Notes, to
file such other papers or documents and to take such other actions, including
participating as a member or otherwise in any official committee of creditors
appointed in the matter, as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and
all other amounts due to the Trustee pursuant to Section 7.07 hereof) and of
the Holders allowed in such judicial proceeding, and (ii) to collect and
receive any moneys or other property and assets payable or deliverable on any
such claims and to distribute the same; and any receiver, assignee, trustee,
custodian, liquidator, sequestrator (or other similar official) in any such
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other 

 

41

 

amounts due the Trustee under Section 7.07 hereof.  Nothing contained herein shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

 

SECTION 6.09. 
Priorities.  Any money
collected by the Trustee pursuant to this Article VI shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or interest upon
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:

 

FIRST:  To the payment of all amounts due the
Trustee under Section 7.07 hereof;

 

SECOND:  To the payment of the amounts then due and
unpaid for principal of and interest and Additional Amounts on the Notes,
ratably, without preference or priority of any kind, according to the amounts
due and payable on such Notes for principal and interest and Additional
Amounts, respectively; and

 

THIRD:  To the Issuer.

 

The Trustee may fix a record date and payment date for
any payment to Holders pursuant to this Section 6.09.  At least 15 calendar days before such record date, the Trustee
shall mail to each Holder and the Issuer a notice that states such record date,
the payment date and amount to be paid.

 

SECTION 6.10. 
Undertaking for Costs. 
All parties to this Indenture agree, and each Holder of any Note by such
Holder’s acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys’ fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Notes then outstanding, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of any Note on or after its Stated
Maturity or interest thereon after the date upon which payment thereof is due.

 

SECTION 6.11. 
Trustee May Enforce Claims Without Possession of Notes.  All rights of action and claims under this
Indenture or the Notes may be prosecuted and enforced by the Trustee without
the possession of any of the Notes or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name, as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Notes in respect of which such
judgment has been recovered.

 

42

 

SECTION 6.12. 
Restoration of Rights and Remedies.  If the Trustee or any Holder of Notes has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Issuer, the Guarantor, the Trustee and the Holders shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.

 

SECTION 6.13. 
Rights and Remedies Cumulative. 
Except as otherwise provided in Section 2.06 hereof, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise.  The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.

 

SECTION 6.14. 
Delay or Omission Not Waiver. 
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein.  Every right
and remedy given by this Article VI or by law to the Trustee or to the Holders
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Holders, as the case may be.

 

ARTICLE VII

 

TRUSTEE

 

SECTION 7.01.  Duties of Trustee.  (a) 
If an Event of Default has occurred and is continuing, the Trustee shall
exercise the rights and powers vested in it by this Indenture and shall use the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own
affairs.

 

(b)  Except during the continuance of an Event of
Default: (i) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and (ii) in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture; provided that in the case of any
such certificates or opinions that by any provision of this Indenture are
specifically required to be furnished to the Trustee, the Trustee shall examine
such certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.

 

(c)  The Trustee may not be relieved from
liability for its own negligent action, its own negligent failure to act or its
own willful misconduct, provided that: (i) this paragraph (c) shall not
limit the effect of paragraph (b) of this Section 7.01; (ii) the Trustee shall
not be liable for any error of judgment made in good faith by a Trust Officer
unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts; (iii) 

 

43

 

the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof; and (iv) none of the provisions
contained in this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers, if there shall
be reasonable ground for believing that the repayment of such funds or adequate
indemnity against such liability is not reasonably assured to it.

 

(d)  The Trustee shall not be liable for interest
on any money received by it except as the Trustee may agree in writing with the
Issuer.

 

(e)  Money held in trust by the Trustee need not
be segregated from other funds except to the extent required by law.

 

(f)  Every provision of this Indenture relating
to the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Article VII and to the
provisions of the Trust Indenture Act.

 

SECTION 7.02.  Rights of Trustee.  (a) 
The Trustee may rely on any document believed by it to be genuine and to
have been signed or presented by the proper Person.  Except as provided in Section 7.01(b) hereof, the Trustee need not
investigate any fact or matter stated in the document.

 

(b)  Before the Trustee acts or refrains from
acting, it may require an Officer’s Certificate and an Opinion of Counsel.  The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on any Officer’s
Certificate or Opinion of Counsel.

 

(c)  The Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any such agent; provided
that such agent was appointed with due care by the Trustee.

 

(d)  The Trustee shall not be liable for any
action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers; provided that the Trustee’s
conduct does not constitute willful misconduct or negligence.

 

(e)  The Trustee shall not be charged with
knowledge of any Default or Event of Default under Section 6.01(c), 6.01(d),
6.01(e), 6.01(f), 6.01(g), 6.01(h), 6.01(i), 6.01(j), 6.01(k), 6.01(l) or
6.01(m) hereof unless either (i) a Trust Officer shall have actual knowledge
thereof or (ii) the Trustee shall have received notice thereof in accordance
with Section 11.02 hereof from the Issuer or any Holder of Notes.

 

(f)  The Trustee may consult with counsel of its
selection and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such
advice of Opinion of Counsel.

 

(g)  The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, 

 

44

 

request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuer and the Guarantor, personally or by agent or attorney.

 

(h)  The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the
request, order, demand or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity satisfactory to the Trustee against the costs, expenses
and liabilities which might be incurred by it in compliance with such request,
order, demand or direction.

 

SECTION 7.03. 
Individual Rights of Trustee. 
The Trustee, any Paying Agent or the Registrar, in its individual or any
other capacity, may become the owner or pledgee of Notes and may otherwise deal
with the Issuer, the Guarantor or their Affiliates with the same rights it
would have if it were not Trustee, Paying Agent or Registrar, as the case may
be, hereunder; provided that the Trustee must in any event comply with
Sections 7.10 and 7.11 hereof.

 

SECTION 7.04. 
Trustee’s Disclaimer.  The
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture, the Guarantee or the Notes, shall not
be accountable for the Issuer’s or the Guarantor’s use of the proceeds from the
Notes, and shall not be responsible for any statement of the Issuer or the
Guarantor in this Indenture, including the recitals contained herein, or in any
document issued in connection with the sale of the Notes or in the Notes other than
the Trustee’s certificate of authentication.

 

SECTION 7.05. 
Notice of Defaults. 
Within 90 calendar days after the occurrence of any Default hereunder
with respect to the Notes, the Trustee shall transmit by mail to all Holders,
as their names and addresses appear in the Security Register, notice of such
Default hereunder known to the Trustee, unless such Default shall have been
cured or waived; provided that, except in the case of a Default in the
payment of the principal of or interest on any Note, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Trust Officers
of the Trustee in good faith determine that the withholding of such notice is
in the interest of the Holders.

 

SECTION 7.06.  Preservation of Information; Reports by
Trustee to Holders.  (a)  the Issuer shall furnish or cause to be
furnished to the Trustee:

 

(i)  semiannually, not less than 10 calendar days
prior to each Interest Payment Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of the Record
Date immediately preceding such Interest Payment Date, and

 

(ii)  at such other times as the Trustee may
request in writing, within 30 calendar days after the receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
15 calendar days prior to the time such list is furnished;

 

45

 

provided,
however, that if and so long as the Trustee shall be the Registrar for
the Notes, no such list need be furnished with respect to the Notes.

 

(b)  The Trustee shall preserve, in as current a
form as is reasonably practicable, the names and addresses of Holders contained
in the most recent list furnished to the Trustee as provided in Section 7.06(a)
hereof and the names and addresses of Holders received by the Trustee in its
capacity as Registrar, if so acting. 
The Trustee may destroy any list furnished to it as provided in Section
7.06(a) hereof upon receipt of a new list so furnished.

 

(c)  Holders may communicate as provided in
Section 312(b) of the Trust Indenture Act with other Holders with respect to
their rights under this Indenture or under the Notes.

 

(d)  Each Holder of Notes, by receiving and
holding the same, agrees with the Issuer and the Guarantor and the Trustee that
none of the Issuer, the Guarantor or the Trustee shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Holders in accordance with this Section 7.06, regardless of the source
from which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
this Section 7.06.

 

(e)  Within 60 calendar days after May 15 of each
year commencing with the year 2003, the Trustee shall transmit by mail to all
Holders of Notes, a brief report dated as of such May 15 if and to the extent
required under Section 313(a) of the Trust Indenture Act.

 

(f)  The Trustee shall comply with Sections
313(b) and 313(c) of the Trust Indenture Act.

 

(g)  A copy of each report described in Section
7.06(e) hereof shall, at the time of its transmission to Holders, be filed by
the Trustee with each stock exchange, if any, upon which the Notes are then
listed, with the Commission and also with the Issuer.  The Issuer or the Guarantor shall promptly notify the Trustee of
any stock exchange upon which the Notes are listed.

 

SECTION 7.07. 
Compensation and Indemnity. 
The Issuer shall pay to the Trustee from time to time such compensation
as the Issuer and the Trustee shall agree in writing for its services.  The Issuer shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by the
Trustee in accordance with any provision of this Indenture, including costs of
collection, in addition to the compensation for its services.  Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee’s agents
and counsel.  The Trustee’s compensation
shall not be limited by any law on compensation of a trustee of an express
trust.

 

The Issuer and the Guarantor, jointly and severally,
shall indemnify each of the Trustee (which shall include, for purposes of this
subsection, its directors, officers, employees and agents) and any predecessor
Trustee for, and hold it harmless against, any and all loss, damage, claim,
liability or expense (including reasonable attorneys’ fees and expenses)
arising 

 

46

 

out of or incurred by it in connection with the acceptance or
administration of the trust created by this Indenture and the performance of
its duties and the exercise of its rights and powers hereunder, except as set
forth in the next paragraph.  The
Trustee shall notify the Issuer and the Guarantor promptly of any claim for
which it may seek indemnity.  Failure by
the Trustee to so notify the Issuer or the Guarantor shall not relieve the
Issuer or the Guarantor, respectively, of its obligations hereunder.  The Issuer and the Guarantor shall defend
any such claim and the Trustee shall cooperate in the defense of such claim and
neither the Issuer, Guarantor nor the Trustee shall enter into any settlement
agreement without the written consent of the other parties, which consents
shall not be unreasonably withheld.  The
Trustee may have separate counsel and the Issuer and the Guarantor, jointly and
severally, shall pay the reasonable fees and expenses of such counsel.  The Issuer and the Guarantor need not pay
for any settlement made without their respective consents, which consents shall
not be unreasonably withheld.

 

The Issuer and the Guarantor need not reimburse any
loss, damage, claim, liability or expense or indemnify against any loss,
damage, claim, liability or expense incurred by the Trustee through the
Trustee’s own willful misconduct, negligence or bad faith.

 

To secure the Issuer’s and the Guarantor’s payment obligations
in this Section 7.07, the Trustee shall have a Lien prior to the Notes on all
money or property held or collected by the Trustee other than money or property
held in trust to pay principal of and interest on particular Notes.

 

The Issuer’s and the Guarantor’s payment obligations
pursuant to this Section 7.07 shall survive the resignation or removal of the
Trustee and discharge of this Indenture. 
Subject to any other rights available to the Trustee under applicable
Bankruptcy Law, when the Trustee incurs expenses after the occurrence of a
Default specified in Section 6.01(l) or Section 6.01(m) hereof, the expenses
are intended to constitute expenses of administration under Bankruptcy Law.

 

The Issuer and the Guarantor
will use their best efforts to pay the acceptance fee and the first annual
administrative fee of the Trustee, as well as the fees and expenses of the
Trustee’s counsel, if any, promptly
upon receipt of an invoice therefor.

 

SECTION 7.08.  Replacement of Trustee.  (a) 
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article VII shall become effective until the
acceptance of appointment by the successor Trustee under this Section 7.08.

 

(b)  The Trustee may resign at any time by giving
written notice thereof to the Issuer. 
If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 calendar days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

 

(c)  The Trustee may be removed at any time by
Act of the Holders of a majority in principal amount of the Notes then
outstanding, delivered to the Trustee, the Issuer and the Guarantor.  If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30
calendar days after the giving of notice of removal, the 

 

47

 

Trustee being removed may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

 

(d)  If at any time:

 

(i)  the Trustee shall fail to comply with
Section 310(b) of the Trust Indenture Act after written request therefor by the
Issuer or by any Holder who has been a bona fide Holder of a Note for at least
six months, unless the Trustee’s duty to resign is stayed in accordance with
the provisions of Section 310(b) of the Trust Indenture Act; or

 

(ii)  the Trustee shall cease to be eligible under
Section 7.10 hereof and shall fail to resign after written request therefor by
the Issuer or by any Holder who has been a bona fide Holder of a Note for at
least six months; or

 

(iii)  the Trustee shall become incapable of acting
or a decree or order for relief by a court having jurisdiction in the premises
shall have been entered in respect of the Trustee in an involuntary case under
any Bankruptcy Law; or a decree or order by a court having jurisdiction in the
premises shall have been entered for the appointment of a Custodian of the
Trustee or of its property and assets or affairs, or any public officer shall
take charge or control of the Trustee or of its property and assets or affairs
for the purpose of rehabilitation, conservation, winding up or liquidation; or

 

(iv)  the Trustee shall commence a voluntary case
under any Bankruptcy Law or shall consent to the appointment of or taking
possession by a Custodian of the Trustee or its property and assets or affairs,
or shall make an assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they become due, or shall
take corporate action in furtherance of any such action,

 

then, in any such case, (i) the Issuer by a Board
Resolution may remove the Trustee, or (ii) subject to Section 6.10 hereof, any
Holder who has been a bona fide Holder of a Note for at least six months may,
on behalf of such Holder and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee for the Notes.  If
an instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 calendar days after the giving of notice of
removal, the Trustee being removed may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

 

(e)  If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Issuer, by or pursuant to a Board Resolution, shall
promptly appoint a successor Trustee. 
If, within one year after such resignation, removal or incapability, or
the occurrence of such vacancy, a successor Trustee shall be appointed by the
Holders of a majority in principal amount of the Notes then outstanding
delivered to the Issuer and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in
accordance with this Section 7.08, become the successor Trustee and to that
extent replace any successor Trustee appointed by the Issuer.  If no successor Trustee shall have been so
appointed by 

 

48

 

the Issuer or the Holders and shall have accepted
appointment in the manner hereinafter provided, any Holder that has been a bona
fide Holder of a Note for at least six months may, subject to Section 6.10
hereof, on behalf of such Holder and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee.

 

(f)  The Issuer shall give notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such resignation, removal and appointment
by first-class mail, postage prepaid, to the Holders as their names and
addresses appear in the Security Register. 
Each notice shall include the name of the successor Trustee with respect
to the Notes and the address of its Corporate Trust Office.

 

(g)  In the event of an appointment hereunder of a
successor Trustee, each such successor Trustee so appointed shall execute,
acknowledge and deliver to the Issuer and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee but, on request of the Issuer
or the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such former Trustee hereunder, subject to its Liens, if any,
provided for in Sections 6.08 and 7.07 hereof.

 

(h)  Upon request of any such successor Trustee,
the Issuer shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts referred to in Section 7.08(g) hereof.

 

(i)  No successor Trustee shall accept its
appointment unless at the time of such acceptance such successor Trustee shall
be qualified and eligible under this Article VII and under the Trust Indenture
Act.

 

SECTION 7.09. 
Successor Trustee by Merger. 
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder; provided
that such corporation shall be otherwise qualified and eligible under this
Article VII and under the Trust Indenture Act, without the execution or filing
of any paper or any further act on the part of any of the parties hereto.  In case any Notes shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as
if such successor Trustee had itself authenticated such Notes.  In the event that any Notes shall not have
been authenticated by such predecessor Trustee, any such successor Trustee may
authenticate and deliver such Notes, in either its own name or that of its
predecessor Trustee, with the full force and effect which this Indenture
provides for the certificate of authentication of the Trustee.

 

49

 

SECTION 7.10. 
Eligibility; Disqualification. 
There shall at all times be a Trustee hereunder which shall be

 

(a)                                  a
corporation organized and doing business under the laws of the United States of
America, any state or territory thereof or the District of Columbia, authorized
under such laws to exercise corporate trust powers, and subject to supervision
or examination by federal, state, territorial or District of Columbia
authority, or

 

(b)                                 a
corporation or other Person organized and doing business under the laws of a
foreign government that is permitted to act as Trustee pursuant to a rule,
regulation or order of the Commission, authorized under such laws to exercise
corporate trust powers, and subject to supervision or examination by authority
of such foreign government or a political subdivision thereof substantially
equivalent to supervision or examination applicable to United States
institutional trustees,

 

in either case having a combined capital and surplus of at least
U.S.$50,000,000.

 

If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 7.10,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.  None of the
Issuer, the Guarantor or any of its or their Affiliates shall serve as Trustee
hereunder.  If at any time the Trustee
shall cease to be eligible to serve as Trustee hereunder pursuant to the
provisions of this Section 7.10, it shall resign immediately in the manner and
with the effect specified in this Article VII.

 

If the Trustee has or shall acquire any “conflicting
interest” within the meaning of Section 310(b) of the Trust Indenture Act, the
Trustee and the Issuer shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act. 
Nothing herein shall prevent the Trustee from filing with the Commission
the application referred to in the penultimate paragraph of Section 310(b) of
the Trust Indenture Act.

 

SECTION 7.11. 
Preferential Collection of Claims Against Issuer.  The Trustee shall comply with Section 311(a)
of the Trust Indenture Act, excluding any creditor relationship listed in
Section 311(b) of the Trust Indenture Act. 
A Trustee who has resigned or been removed shall be subject to Section
311(a) of the Trust Indenture Act to the extent indicated therein.

 

SECTION 7.12. 
Other Capacities.  Except
as otherwise specifically provided herein, (a) all references in this Indenture
to the Trustee shall be deemed to refer to the Trustee in its capacity as
Trustee and in its capacities as Registrar and Paying Agent and (b) every
provision of this Indenture relating to the conduct or affecting the liability
or offering protection, immunity or indemnity to the Trustee shall be deemed to
apply with the same force and effect to the Trustee acting in its capacities as
Paying Agent and Registrar.

 

50

 

ARTICLE VIII

 

DEFEASANCE

 

SECTION 8.01. 
Issuer’s Option to Effect Legal Defeasance or Covenant Defeasance.  The Issuer may elect, at its option, at any
time, to have either Section 8.02 or 8.03 hereof applied to the Notes then
outstanding upon compliance with the conditions set forth below in this Article
VIII.  Such election shall be evidenced
by a Board Resolution delivered to the Trustee and shall specify whether the
Notes are being defeased to Stated Maturity or to the Redemption Date
determined in accordance with the terms of this Indenture and the Notes.

 

SECTION 8.02. 
Legal Defeasance and Discharge. 
Upon the Issuer’s exercise of its option to have this Section 8.02
applied to the outstanding Notes, each of the Issuer and the Guarantor shall be
deemed to have been discharged from its obligations with respect to the Notes
and the Guarantee, respectively, as provided in this Section 8.02 on and after
the date the conditions set forth in Section 8.04 hereof are satisfied
(hereinafter called “Legal Defeasance”). 
For this purpose, such Legal Defeasance means that the Issuer shall be
deemed to have paid and discharged the entire indebtedness represented by such
Notes, and the Guarantor shall be deemed to have paid and discharged the entire
indebtedness represented by the Guarantee, and to have satisfied all their
other obligations under such Notes, the Guarantee and this Indenture insofar as
such Notes or Guarantee, as the case may be, are concerned (and the Trustee, at
the expense of the Issuer, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise terminated
or discharged hereunder:

 

(a)  the rights of Holders of such Notes to
receive, solely from the trust fund described in Section 8.04 hereof and as
more fully set forth in such Section 8.04 payments in respect of the principal
of and interest on such Notes when payments are due;

 

(b)  the Issuer’s obligations with respect to
such Notes under Sections 2.05, 2.06, 2.08, 4.02 and 4.03 hereof;

 

(c)  the rights, powers, trusts, duties and immunities
of the Trustee under this Indenture and the Issuer’s obligations in connection
therewith;

 

(d)  Article III hereof; and

 

(e)  this Article VIII.

 

SECTION 8.03. 
Covenant Defeasance.  Upon
the Issuer’s exercise of its option to have this Section 8.03 apply to the
outstanding Notes, each of the Issuer and the Guarantor shall be deemed to have
been released from their obligations under the covenants contained in Sections
4.04 through 4.10 and 4.12 and the limitations contained in clauses (a)(iii) and
(b)(iii) of Section 5.01 hereof with respect to such Notes on and after the
date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter
called “Covenant Defeasance”), and the Notes thereafter shall be deemed not
outstanding for the purposes of any direction, waiver, consent or declaration
or act of Holders in connection with such covenants, but shall continue to be
deemed outstanding for all other purposes hereunder.  For this purpose, Covenant Defeasance means that the Issuer and
the Guarantor may omit to comply with and shall have no liability in respect of

 

51

 

any term, condition or
limitation set forth in any such covenant and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and the Notes shall
be unaffected thereby.

 

SECTION 8.04. 
Conditions to Legal Defeasance or Covenant Defeasance.  The following shall be the conditions to the
application of either Section 8.02 or 8.03 hereof to the Notes then
outstanding:

 

(a)  The Issuer shall irrevocably have deposited
or caused to be deposited with the Trustee as trust funds in trust for the
purpose of making the following payments, specifically pledged as security for,
and dedicated solely to the benefits of the Holders of such Notes, (i) United
States Dollars in an amount, or (ii) U.S. Government Obligations which through
the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the due
date of any payment, money in an amount, or (iii) a combination thereof, in
each case sufficient, after payment of all Taxes imposed by any jurisdiction or
other charges or assessments in respect thereof payable by the Trustee, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee (or any such other
qualifying trustee) to pay and discharge, the principal of and any installment
of interest coming due on such Notes through the Stated Maturity thereof or the
Redemption Date, as the case may be, in accordance with the terms of this
Indenture and such Notes.

 

(b)  In the event of an election to have Section
8.02 hereof apply to the Notes then outstanding, the Issuer shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee stating that (i) the Issuer has received from, or
there has been published by, the Internal Revenue Service a ruling or (ii)
since the date of this Indenture, there has been a change in the applicable
U.S. federal income tax law, in either case of (i) or (ii) to the effect that,
and based thereon such opinion shall confirm that, the Holders of such Notes
will not recognize income, gain or loss for U.S. federal income tax purposes as
a result of the deposit, Legal Defeasance and discharge to be effected with
respect to such Notes and will be subject to U.S. federal income tax on the
same amounts, in the same manner and at the same times as would be the case if
such deposit, Legal Defeasance and discharge were not to occur.

 

(c)  In the event of an election
to have Section 8.03 hereof apply to the Notes then outstanding, the Issuer
shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that the Holders of such Notes will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of the
Covenant Defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would be the case if such
Covenant Defeasance were not to occur.

 

(d)  No Default or Event of Default with respect
to the outstanding Notes shall have occurred and be continuing at the time of
such deposit (other than a Default or Event or Default resulting from the
borrowing of funds to be applied to such deposit) after giving effect thereto
or, with respect to a Default or Event of Default specified in Section 6.01(l)
or Section 6.01(m), any time on or prior to the 185th calendar day
after the 

 

52

 

date of such deposit (it being understood that this
condition shall not be deemed satisfied until after such 185th
calendar day).

 

(e)  Such Legal Defeasance or Covenant Defeasance
shall not cause the Trustee to have a conflicting interest within the meaning
of the Trust Indenture Act (assuming for the purpose of this clause (e) that
all Notes are in default within the meaning of the Trust Indenture Act).

 

(f)  Such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under,
any material agreement or instrument (other than this Indenture) to which the
Issuer, the Guarantor any Subsidiary of the Guarantor is a party or by which
the Issuer, the Guarantor or any such Subsidiary is bound.

 

(g)  The Issuer shall have delivered to the
Trustee an Officer’s Certificate stating that the deposit was not made by the
Issuer with the intent of preferring the Holders of Notes over any other
creditors of the Issuer or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Issuer or others.

 

(h)  Such Legal Defeasance or Covenant Defeasance
shall not result in the trust arising from such deposit constituting an
investment company within the meaning of the U.S. Investment Company Act of
1940, as amended, unless such trust shall be registered under the U.S.
Investment Company Act of 1940, as amended, or exempt from registration
thereunder.

 

(i)  The Issuer shall have delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
all conditions precedent with respect to such Legal Defeasance or Covenant
Defeasance have been complied with.

 

SECTION 8.05.  Deposited Money and U.S. Government
Obligations to be Held in Trust; Miscellaneous Provisions.  (a) 
All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 8.04(a) hereof in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any such Paying Agent as the Trustee
may determine, to the Holders of such Notes, of all sums due and to become due
thereon in respect of principal and interest, but funds so held in trust need
not be segregated from other funds except to the extent required by law.  The Issuer shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
U.S. Government Obligations deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of outstanding
Notes.

 

(b)  Anything in this Article VIII to the
contrary notwithstanding, the Trustee shall deliver or pay to the Issuer from
time to time upon receipt from the Issuer of an Order any money or U.S.
Government Obligations held by it as provided in Section 8.04 hereof which, in
the opinion of a U.S. nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof that would then be required to be
deposited to effect the Legal Defeasance or Covenant Defeasance with respect to
the outstanding Notes.

 

53

 

Any funds deposited with the Trustee or any Paying
Agent pursuant to this Article VIII in trust for the payment of the principal
of or interest on any Note and remaining unclaimed for two years after the date
upon which such payment shall have become due, shall be repaid to the Issuer
upon receipt of an Order to such effect by the Trustee; provided, however,
that the Issuer shall cause to be published at least once in a newspaper of
general circulation in The City of New York and in Europe or mailed to each
Holder entitled to such unclaimed funds, notice that such funds remain
unclaimed and that, after a date specified therein, which shall be a date not
less than 30 days from the date of such publication or mailing, any unclaimed
balance of such money remaining as of such date shall be repaid to the
Issuer.  After repayment to the Issuer,
Holders entitled to such funds shall look only to the Issuer for payment
without interest thereon, as an unsecured general creditor, and the Trustee and
any Paying Agent, subject to applicable law, shall have no further liability
with respect to such trust money, and the Issuer shall not be a trustee in
respect of such funds.

 

SECTION 8.06. 
Reinstatement.  If the
Trustee or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with this Article VIII with respect to any Notes by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
obligations under this Indenture, the Guarantee and such Notes from which the
Issuer and the Guarantor have been discharged or released pursuant to Section
8.02 or 8.03 hereof shall be revived and reinstated as though no deposit had
occurred pursuant to this Article VIII with respect to such Notes, until such
time as the Trustee or Paying Agent is permitted to apply all money or U.S.
Government Obligations held in trust pursuant to Section 8.05 hereof with respect
to such Notes in accordance with this Article VIII; provided that if the
Issuer or the Guarantor makes any payment of principal of or interest on any
such Note following such reinstatement of its obligations, the Issuer shall be
subrogated to the rights (if any) of the Holders of such Notes to receive such
payment from the money or U.S. Government Obligations so held in trust.

 

ARTICLE IX

 

AMENDMENTS

 

SECTION 9.01. 
Without Consent of Holders. 
The Issuer, the Guarantor and the Trustee may, at any time, and from
time to time, without notice to or consent of any Holder of Notes, enter into
one or more indentures supplemental hereto, in form reasonably satisfactory to
the Trustee, for any of the following purposes:

 

(a)  to evidence the succession of another Person
to the Issuer or the Guarantor and the assumption by such successor of the
covenants of the Issuer or the Guarantor herein and contained in the Notes
(provided that the Issuer or the Guarantor and such successor provide written
notice of such succession and assumption to the Holders of the Notes); or

 

(b)  to add to the covenants of the Issuer or the
Guarantor, for the benefit of the Holders of all of the Notes, or to surrender
any right or power herein conferred upon the Issuer or the Guarantor; or

 

(c)  to add any additional Events of Default; or

 

54

 

(d)  to evidence and provide for the acceptance
of appointment hereunder of a successor Trustee; or

 

(e)  to secure the Notes; or

 

(f)  to comply with the Securities Act, the
Exchange Act, the Investment Company Act of 1940, as amended, or the Trust
Indenture Act; or

 

(g)  to provide for the issuance of Additional
Notes in accordance with this Indenture; or

 

(h)  to cure any ambiguity, omission or defect
herein, or to correct or supplement any provision hereof which may be
inconsistent with any other provision hereof; or

 

(i)  to add any other provisions with respect to
matters or questions arising under this Indenture, or to modify, alter, amend
or supplement this Indenture in any other manner; provided that such
actions shall not adversely affect the legal rights of the Holders of Notes.

 

SECTION 9.02. 
With Consent of Holders. 
With the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding, by Act of said Holders delivered to the
Issuer and the Trustee, the Issuer, the Guarantor and the Trustee may amend
this Indenture or the Notes or enter into one or more indentures supplemental
hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying or waiving
in any manner the rights of the Holders; provided that no such
amendment, supplemental indenture or waiver shall, without the consent of the
Holder of each outstanding Note,

 

(a)  change the Stated Maturity or the time for
payment of interest of any Note;

 

(b)  reduce the principal amount or the rate of
interest, including Defaulted Interest, on any Note;

 

(c)  reduce the amount payable upon a redemption
of any Note or alter or waive any provision with respect to the redemption of
any Note (other than provisions relating to the covenants described under
Section 4.08);

 

(d)  amend or modify any payment obligation of
the Guarantor under Article X hereof;

 

(e)  change
the place of payment of any Note (other than changes to or additions or
removals of a Paying Agent made in accordance with the provisions of this
Indenture) or make any Note payable in a currency other than United
States Dollars;

 

(f)  impair
the right of the Holders to institute suit for the enforcement of any payment
on any Note;

 

(g)  reduce the percentage of Holders who must
consent to an amendment or supplement of this Indenture;

 

55

 

(h)  modify any provision of this
Indenture dealing with modification or waiver;

 

(i)  make any change in Section 6.04 or 6.07
hereof or in the foregoing amendment and waiver provisions;

 

(j)  reduce percentage of Holders who must
consent to waive compliance by the Issuer or the Guarantor with any of the
covenants contained in Articles IV or V hereof; or

 

(k)  change the obligation of the Issuer or the
Guarantor to pay Additional Amounts.

 

It shall not be necessary for any Act of Holders under
this Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.

 

After an amendment or supplement under this Section
9.02 becomes effective or a waiver under Section 6.04 becomes effective
the Issuer or the Trustee at the Issuer’s request and expense, shall mail to
Holders of Notes a notice briefly describing such amendment, supplement or
waiver.  The failure to give such notice
to all Holders of Notes, or any defect therein, shall not impair or affect the
validity of an amendment, supplement or waiver.  Notwithstanding any other provision hereof, to the extent that
any amendment to this Indenture involves the transfer of the obligations of the
Issuer or the Guarantor under the Notes or the Guarantee, respectively, to
another Person, or the substitution of another Person for the Issuer or the
Guarantor, the Issuer, the Guarantor and such other Person shall provide
written notice of such transfer or substitution to the Holders of the Notes.

 

SECTION 9.03. 
Effect of Supplemental Indentures.  Upon the execution of any supplemental indenture under this
Article IX, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.

 

SECTION 9.04. 
Compliance with Trust Indenture Act.  Every amendment or supplement to this Indenture or the Notes
shall comply with the Trust Indenture Act as then in effect as though this
Indenture were qualified thereunder.

 

SECTION 9.05. 
Revocation and Effect of Consents and Waivers.  A consent to an amendment, supplement or a
waiver by a Holder of a Note shall bind the Holder and every subsequent Holder
of such Note or portion of such Note that evidences the same debt as the
consenting Holder’s Note, even if notation of the consent or waiver is not made
on such Note; provided that any such Holder or subsequent Holder may
revoke the consent or waiver as to such Holder’s Note or portion of such Note
if the Trustee receives the notice of revocation before the date the amendment,
supplement or waiver becomes effective. 
After an amendment, supplement or waiver becomes effective pursuant to
this Article IX, it shall bind every Holder.

 

SECTION 9.06. 
Notation on or Exchange of Notes.  If a supplemental indenture changes the terms of a Note, the
Trustee may require the Holder thereof to deliver such Note to the
Trustee.  The Trustee may place an
appropriate notation on such Note regarding the changed terms and return it to
the Holder.  Alternatively, if the
Issuer or the Trustee so determines, the 

 

56

 

Issuer in exchange for such Note shall issue and the Trustee shall
authenticate a new Note that reflects the changed terms.  Failure to make the appropriate notation or
to issue a new Note shall not affect the validity of such amendment or
supplement.

 

SECTION 9.07. 
Trustee to Execute Supplemental Indentures.  The Trustee shall execute any supplemental
indenture authorized pursuant to this Article IX if such supplemental indenture
does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  If it does, the Trustee may, but shall not
be required to, execute such supplemental indenture.  In executing any supplemental indenture, the Trustee shall be
entitled to receive indemnity reasonably satisfactory to it and to receive, and
(subject to Section 7.01 hereof) shall be fully protected in relying upon, an
Officer’s Certificate (which need only cover the matters set forth in clause
(a) below) and an Opinion of Counsel reasonable satisfactory to the Trustee
provided by the Issuer and the Guarantor stating in effect that:

 

(a)  such supplemental indenture is authorized or
permitted by this Indenture and that all conditions precedent to the execution,
delivery and performance of such supplemental indenture have been satisfied;

 

(b)  the Issuer or the Guarantor, as the case may
be, has all necessary corporate power and authority to execute and deliver the
supplemental indenture and that the execution, delivery and performance of such
supplemental indenture has been duly authorized by all necessary corporate
action of the Issuer and the Guarantor, as the case may be;

 

(c)  the execution and delivery of the
supplemental indenture do not conflict with, or result in the breach of or
constitute a default under any of the terms, conditions or provisions of the
Indenture;

 

(e)  such supplemental indenture has been duly
and validly executed and delivered by the Issuer or the Guarantor, as the case
may be, and the Indenture together with such supplemental indenture constitutes
a valid and binding obligation of the Issuer or the Guarantor enforceable
against the Issuer or the Guarantor, as the case may be, in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights
generally and general equitable principles; and

 

(f)  the Indenture together with such amendment
or supplement complies with the Trust Indenture Act.

 

Such opinion may be subject to exceptions, limitations and
qualifications, including with respect to the opinion in Section 9.07 (d)
hereof (i) the effect of bankruptcy, insolvency, reorganization, moratorium, or
other similar laws now or hereafter in effect relating to or affecting the
rights or remedies of creditors and the judicial application of foreign laws or
governmental actions affecting creditors’ rights; (ii) the effect of general
principles of equity, whether enforcement is considered in a proceeding in
equity or at law and the discretion of the court before which any proceeding
therefor may be brought; (iii) the unenforceability under certain circumstances
under law or court decisions of provisions providing for the indemnification of
or contribution to a party with respect to a liability where such 

 

57

 

indemnification
or contribution is contrary to public policy; and (iv) the unenforceability of
any provision requiring the payment of attorney’s fees, except to the extent
that  a court determines such fees to be
reasonable.  In addition, such Opinion
of Counsel is not required to express an opinion with respect to
whether acceleration of the Notes may affect the collectibility of that portion
of the stated principal amount thereof which might be determined to constitute
unearned interest thereon or
concerning the enforceability of the waiver of rights or defenses regarding
stay, extension or usury laws.

 

ARTICLE X

 

GUARANTEE

 

SECTION 10.01. 
Guarantee.  Subject to the
provisions of this Article X, the Guarantor hereby irrevocably and
unconditionally guarantees to each Holder and to the Trustee on behalf of the
Holders (i) the due and punctual payment of principal of and interest in full
on each Note when and as the same shall become due and payable whether at
Stated Maturity, by declaration of acceleration, redemption or otherwise and
the due and punctual payment of all other sums stated in this Indenture and the
Notes to be payable pursuant to this Indenture and the Notes, including,
without limitation, any Additional Amounts; (ii) the due and punctual payment
of interest on the overdue principal of and interest in full on the Notes, to
the extent permitted by law; and (iii) the due and punctual performance of all
other duties, agreements, covenants and obligations of the Issuer to the
Holders or the Trustee, including without limitation the payment of fees,
expenses, indemnification or other amounts, all in accordance with the terms of
the Notes and this Indenture.  The
Guarantor hereby further agrees to pay any and all expenses (including
reasonable fees and expenses of counsel) incurred by the Trustee or the Holders
in enforcing any rights under the Guarantee.

 

Each of the Issuer and the Guarantor hereby
unconditionally waives diligence, presentment, demand of payment, filing of claims
with a court in the event of merger, insolvency or bankruptcy of the Issuer,
any right to require a proceeding first against the Issuer or any other Person,
protest or notice with respect to the Notes or the Debt evidenced thereby and
all demands whatsoever, and covenants that the Guarantee will not be discharged
except by complete performance of the obligations contained in the Notes, in
this Indenture and pursuant to the Guarantee.

 

The Guarantor further agrees that, as between the
Guarantor, on the one hand, and Holders and the Trustee, on the other hand, (i)
for purposes of the Guarantee, the maturity of the obligations guaranteed by
such Guarantee may be accelerated as provided in Article VI, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed thereby, and (ii) in the event of any
acceleration of such obligations (whether or not due and payable) such
obligations shall forthwith become due and payable by the Guarantor for purposes
of the Guarantee.

 

The Guarantee shall continue to be effective or shall
be reinstated, as the case may be, if at any time any payment, or any part
thereof, of principal of or interest on any of the Notes is rescinded or must
otherwise be returned by the Holders or the Trustee upon the insolvency,
bankruptcy or reorganization of the Issuer or the Guarantor, all as though such
payment had not been made.

 

58

 

The Guarantor shall be subrogated to all rights of the
Holders against the Issuer in respect of any amounts paid by the Guarantor
pursuant to the provisions of the Guarantee or this Indenture; provided,
however, that the Guarantor shall not be entitled to enforce or to
receive any payments until the principal of and interest on all Notes issued
hereunder shall have been paid in full.

 

Where the context so requires in this Indenture,
payments by the Guarantor under the Guarantee shall be construed to be payments
on or in respect of the Notes.

 

SECTION 10.02. 
Obligations of the Guarantor Unconditional.  The Guarantor hereby agrees that its
obligations hereunder shall be a guarantee of payment and shall be
unconditional, irrespective of and unaffected by the validity, regularity or
enforceability of the Notes or this Indenture, or of any amendment thereto or
hereto, the absence of any action to enforce the same, the waiver or consent by
any Holder or by the Trustee with respect to any provisions thereof or of this
Indenture, the entry of any judgment against the Issuer or any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor.

 

SECTION 10.03. 
Limitation of the Guarantor’s Liability.  The Guarantor, and by its acceptance hereof
each Holder, hereby confirms that it is the intention of all such parties that
the Guarantee not constitute a fraudulent transfer or conveyance for purposes
of any Bankruptcy Law, the U.S. Uniform Fraudulent Conveyance Act, the U.S.
Uniform Fraudulent Transfer Act or any similar law of the United States or any
state thereof or any foreign jurisdiction. 
To effectuate the foregoing intention, the Holders and the Guarantor
hereby irrevocable agree that the obligations of the Guarantor under this Article
X shall be limited to the maximum amount as will, after giving effect to all
other contingent and fixed liabilities of the Guarantor, result in the
obligations of the Guarantor under the Guarantee not constituting a fraudulent
transfer or conveyance.

 

SECTION 10.04.  Application of Certain Terms and
Provisions to the Guarantor. 
(a)  For purposes of any
provision of this Indenture which provides for the delivery by the Guarantor of
an Officer’s Certificate and/or an Opinion of Counsel, the definitions of such
terms in Section 1.01 hereof shall apply to the Guarantor as if references
therein to the Issuer were references to the Guarantor.

 

(b)  Any request, direction, order or demand
which by any provision of this Indenture is to be made by the Guarantor, shall
be sufficient if evidenced by an Order; provided that the definition of
such term in Section 1.01 hereof shall apply to the Guarantor as if references
therein to the Issuer were references to the Guarantor.

 

(c)  Any notice or demand which by any provision
of this Indenture is required or permitted to be given or served by the Trustee
or by the Holders of Notes to or on the Guarantor may be given or served as
described in Section 11.02 as if references therein to the Issuer were
references to the Guarantor.

 

(d)  Upon any demand, request or application by
the Guarantor to the Trustee to take any action under this Indenture, the
Guarantor shall furnish to the Trustee such certificates and opinions as are
required in Sections 11.03 and 11.04 hereof as if all references therein to the
Issuer were references to the Guarantor.

 

59

 

SECTION 10.05. 
Taxes.  The Guarantor
shall pay Additional Amounts as required pursuant to Section 4.11 of this
Indenture.  The Guarantor shall pay and
indemnify the Trustee and the Holders against all documentary, stamp or other
similar taxes payable in connection with the execution, delivery or enforcement
of this Guarantee.  The obligations of
the Guarantor under this Section 10.05 shall survive the termination of this
Indenture and the Guarantee and the payment of all amounts under or with
respect to this Indenture, the Guarantee and the Notes.

 

ARTICLE XI

 

MISCELLANEOUS

 

SECTION 11.01. 
Trust Indenture Act Controls. 
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by, or with another provision
(an “incorporated provision”) included in this Indenture by operation of,
Sections 310 to 318, inclusive, of the Trust Indenture Act, such imposed duties
or incorporated provision shall control. 
If any provision of this Indenture modifies or excludes any provision of
the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.

 

SECTION 11.02. 
Notices.  Any notice or
communication shall be in the English language, in writing and delivered in
person, mailed by first-class mail (postage prepaid) or transmitted via
facsimile (if a facsimile number is given below), addressed as follows:

 

(a)  if to the
Issuer

 

Mobile TeleSystems
Finance, S.A.

3 Avenue Pasteur

L-231 Luxembourg

Facsimile: 352-470-619

 

(b)  if to the
Guarantor

 

Mobile TeleSystems OJSC

4, Marksistskaya Street

109147 Moscow

Russian Federation

Facsimile: +7 095 766 0100

Attention: Vice President—Investments and Securities

 

(c)  if to the
Trustee

 

JPMorgan Chase Bank

4 New York Plaza

15th Floor

New York, New York 10004

Facsimile:  212-623-6216/5

With a copy to facsimile:  +44 1202 34
7438

 

60

 

 

(d)  if to the
Luxembourg Paying Agent

 

J.P. Morgan Bank Luxembourg S.A.

5 Rue Plaetis

L-2338 Luxembourg

Facsimile: +352 4626 85380

 

Any notice to the Issuer, Guarantor, Trustee or
Luxembourg Paying Agent (i) if sent by mail as provided above, shall be deemed
to have been given, made or served upon receipt, or (b) if given by facsimile
transmission, when such facsimile is transmitted to the telephone number
specified above and telephonic or written confirmation of receipt thereof is
received by the sender.

 

The Issuer, the Guarantor, the Trustee or the
Luxembourg Paying Agent, by notice to the others, may designate additional or
different addresses for subsequent notices or communications.  Any notice or communication mailed to a
Holder shall be sent to the Holder by first-class mail, postage prepaid, at the
Holder’s address as it appears in the Security Register and shall be duly given
if so sent within the time prescribed. 
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders.  If a notice or communication is mailed to a
Holder in the manner provided in this paragraph, it is duly given, whether or
not the addressee receives it.  In case
by reason of the suspension of regular mail service or by reason of any other
cause it shall be impracticable to give notice by mail to Holders, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.

 

Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice.  Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.

 

So long as the Notes are listed on the Luxembourg
Stock Exchange and the Luxembourg Stock Exchange shall so require, notice shall
also be given by publication in a leading newspaper of general circulation in
Luxembourg.

 

SECTION 11.03. 
Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the
Issuer to the Trustee to take or refrain from taking any action under this
Indenture, the Issuer shall furnish to the Trustee upon request:  (a) an Officer’s Certificate stating that,
in the opinion of the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel reasonably satisfactory to the Trustee stating that,
in the opinion of such counsel, all such conditions precedent have been
complied with.

 

SECTION 11.04. 
Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to
compliance with a covenant or condition provided for in this Indenture (other
than pursuant to Section 4.10 hereof) shall include: (a) a statement that the
individual making such certificate or opinion has read such covenant or
condition; (b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based; (c) a statement that, in the opinion of 

 

61

 

such individual, such individual has made such examination or
investigation as is necessary to enable such individual to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and (d) a statement as to whether or not, in the opinion of such individual,
such covenant or condition has been complied with.

 

SECTION 11.05. 
Rules by Trustee, Paying Agent and Registrar.  The Trustee may make reasonable additional
rules for action by or a meeting of Holders consistent with provisions of this
Indenture, and any Registrar and Paying Agent may make reasonable rules for
their functions; provided that no such rule shall conflict with terms of
this Indenture or the Trust Indenture Act.

 

SECTION 11.06. 
Date of Payments.  If any
payment on a Note is due on a Saturday, Sunday, legal holiday, or a day that
is, in Moscow, Luxembourg or New York, a day on which banking institutions are
authorized or obligated by law or executive order to close, then, in Moscow,
Luxembourg or New York, such payment need not be made on such day but may be
made on the next succeeding day that is not a Saturday, Sunday, legal holiday,
or a day that is, in Moscow, Luxembourg or New York, a day on which banking
institutions are authorized or obligated by law or executive order to close (a
“business day”), with the same force and effect as if made on the date for such
payment, and no interest will accrue for the period from and after the date for
such payment.

 

If a regular Record Date is a date that is not a
business day, such Record Date shall not be affected.

 

SECTION 11.07. 
Governing Law.  THIS INDENTURE, THE GUARANTEE AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.

 

SECTION 11.08. 
No Recourse Against Others. 
No director, officer, employee, incorporator or stockholder of the
Issuer or the Guarantor, as such, shall have any liability for any obligations
of the Issuer or the Guarantor, as the case may be, under the Notes, the
Guarantee or this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation, solely by reason of its status
as a director, officer, employee, incorporator or stockholder of the Issuer or
the Guarantor, as the case may be.  By accepting
a Note, each Holder waives and releases all such liability (but only such
liability) as part of the consideration for issuance of such Note to such
Holder.

 

SECTION 11.09. 
Successors.  All
agreements of each of the Issuer and the Guarantor in this Indenture and the
Notes shall bind its successors and assigns whether so expressed or not.  All agreements of the Trustee in this
Indenture shall bind its successors and assigns whether so expressed or not.

 

SECTION 11.10. 
Counterparts.  This
Indenture may be executed in any number of counterparts and by the parties
thereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

 

62

 

SECTION 11.11. 
Table of Contents; Headings. 
The table of contents and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.

 

SECTION 11.12. 
Severability.  In case any
provision in this Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

SECTION 11.13. 
Further Instruments and Acts. 
Upon request of the Trustee, the Issuer and the Guarantor will execute
and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purposes of
this Indenture.

 

SECTION 11.14. 
Jurisdiction.  (a)  The Issuer and Guarantor each agrees that
any suit, action or proceeding against the Issuer or the Guarantor brought by
any Holder or the Trustee arising out of or based upon this Indenture, the
Guarantee or the Notes may be instituted in any State or Federal court in the
Borough of Manhattan in The City of New York, New York, and waives any
objection which it may now or hereafter have to the laying of venue of any such
proceeding, and irrevocably submits to the non-exclusive jurisdiction of such
courts in any suit, action or proceeding. 
Each of the Issuer and the Guarantor has appointed Puglisi &
Associates, with offices on the date hereof at 850 Library Avenue, Suite 204,
Newark, Delaware 19715 as its respective authorized agent (the “Authorized
Agent”) upon whom process may be served in any suit, action or proceeding
arising out of or based upon this Indenture, the Guarantee or the Notes which
may be instituted in any State or Federal court in The City of New York, New
York, and expressly accepts the non-exclusive jurisdiction of any such court in
respect of any such suit, action or proceeding.  The Issuer and the Guarantor hereby represent and warrant that
the Authorized Agent has accepted such appointment and has agreed to act as
said agent for service of process, and the Issuer and the Guarantor agree to
take any and all commercially reasonable action, including the filing of any
and all documents that may be reasonably necessary to continue each such
appointment in full force and effect as aforesaid.  Service of process upon the Authorized Agent in any manner
permitted by applicable law shall be deemed, in every respect, effective
service of process upon the Issuer and Guarantor, respectively.

 

(b) 
Notwithstanding paragraph (a) of this Section 11.14, any action
involving the Issuer or the Guarantor arising out of or based upon this
Indenture, the Guarantee or the Notes may be submitted to arbitration, as
provided in Section 11.15 hereof.

 

(c)  To the
extent that either the Issuer or the Guarantor has or hereafter may acquire any
immunity (sovereign or otherwise) from any legal action, suit or proceedings,
from jurisdiction of any court or from set-off or any legal process (whether
service of process or notice, attachment in aid or otherwise) with respect to
itself or any of its property, the Issuer and the Guarantor hereby irrevocably
waive and agree not to plead or claim such immunity in respect of their
obligations under this Indenture.

 

SECTION 11.15. 
Arbitration.  (a)  The Issuer and the Guarantor agree that any
controversy, claim or cause of action brought by any party against any other
party or arising out of or relating to this Indenture, the Guarantee or the
Notes which cannot be settled amicably may be settled by arbitration in
accordance with the Rules of the London Court of International

 

63

 

Arbitration, which rules are deemed to be incorporated by reference
into this Section 11.15.  The place of
the arbitration shall be London, England and the language of the arbitration
shall be English.  The number of
arbitrators shall be three, appointed by the London Court of International
Arbitration in accordance with its Rules. The arbitrators shall have no
authority to award punitive or other damages and may not, in any event, make
any ruling, finding or award that does not conform to the terms and conditions
of this Indenture, the Guarantee or the Notes. 
In no circumstances shall the Trustee be liable for any consequential,
special or punitive damages in connection with its obligations hereunder.

 

(b)  Fees of
the arbitration (excluding each party’s preparation, travel, attorneys’ fees
and similar costs) shall be borne in accordance with the decision of the
arbitrators.  The decision of the
arbitrators shall be final, binding and enforceable upon the parties and
judgment upon any award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.  In the
event that the failure of a party to comply with the decision of the
arbitrators requires any other party to apply to any court for enforcement of
such award, the non-complying party shall be liable to the other for all costs
of such litigation, including reasonable attorneys’ fees.

 

ARTICLE XII

 

PROVISIONS
FOR MEETINGS OF HOLDERS OF NOTES

 

SECTION 12.01. 
Holders’ Meetings. 
(a)  The Trustee may at any time
call a meeting of the Holders by notice to the Holders not less than 30 days
prior to such meeting, for the purpose of approving a modification or amendment
to, or obtaining a waiver of, any provision of this Indenture or the Notes or
to consider any other matter of common interest to the Holders.  In addition, in case at any time the Issuer
or the Guarantor pursuant to a Board Resolution, or the Holders of at least
one-tenth in aggregate principal amount of the Notes then outstanding, shall
have requested the Trustee to call a meeting of the Holders, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have made the first giving of the notice of
such meeting within 20 days after receipt of such request, then the Issuer, the
Guarantor or the Holders of the amount above specified may determine the time
(not less than 30 days after notice is given) and may call such meeting by
giving notice thereof as provided below. 
Any such meeting will be held in London.

 

Meetings of Holders are subject to a first and second notice; the
second to occur upon the failure of the first. 
Both the first and second notice convening a meeting of Holders may be
made simultaneously, in which case the meeting convened by the second notice, upon
the failure of the first, may be held within an hour of such failure.  The quorum for the first notice will be
persons holding or representing at least two-thirds in aggregate principal
amount of Notes then outstanding (other than Notes held by the Issuer, the
Guarantor, any Affiliate of the Issuer or the Guarantor, or the Trustee in its
individual capacity).  No business shall
be transacted, unless a quorum is present when the meeting is called to
order.  In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall
be adjourned for a period of one hour and the quorum for the reconvened meeting
shall be persons holding or representing at least a majority in aggregate
principal amount of Notes then outstanding (other than Notes held by the
Issuer, the Guarantor, any Affiliate of the Issuer or the Guarantor, or the
Trustee in its individual capacity).

 

64

 

If a meeting is being held pursuant to the written request of Holders,
the agenda for the meeting shall be as determined in the request and such
meeting shall be held within 40 days from the date such written request is
received by the Trustee or the Issuer, as the case may be.  Notice of any meeting of Holders, setting
forth the time and place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be given by publication for five
successive business days in leading newspapers having general circulation (i)
in the Borough of Manhattan, City of New York, (ii) in Europe and (iii) in
Luxembourg and as specified in the Notes, not less than 10 or more than 30 days
prior to the date fixed for the meeting. 
To be entitled to vote at any meeting of Holders a person shall be (i) a
Holder of one or more Notes as of the relevant record date determined pursuant
to Section 1.05(e) or (ii) a person or persons appointed by an instrument in
writing as proxy by such a Holder of one or more Notes (other than directors,
officers or any employee of the Issuer, the Guarantor or any of their
Affiliates).  The only persons who shall
be entitled to be present or to speak at any meeting of Holders shall be the
persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee, the Issuer or the Guarantor and their counsel.

 

(b)  Any Holder who has executed
an instrument in writing appointing a person or persons as proxy shall be
deemed to be present for the purposes of determining a quorum and be deemed to
have voted; provided, that such Holder shall be considered as present or
voting only with respect to the matters covered by such instrument in
writing.  Except as otherwise provided
in this Indenture, the Notes or any applicable law, any resolution passed or
decision taken at any meeting of Holders duly held in accordance with this
Section shall be binding on all the Holders whether or not present or
represented at the meeting.

 

(c)  Notwithstanding any other
provision of this Indenture, the Trustee may make such reasonable regulations
as it may deem advisable for any action by or any meeting of Holders, in regard
to the proof of the holding of Notes and of the appointment of proxies, and in
regard to the appointment and duties of inspectors of votes, and submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall think
appropriate.  Such regulations may fix a
record date and time for determining the Holders of record of Notes entitled to
vote at such meeting, in which case those and only those Persons who are
Holders of Notes at the record date and time so fixed, or their proxies, will
be entitled to vote at such meeting whether or not they will be such Holders at
the time of the meeting.

 

(d)  The Trustee shall, by any
instrument in writing, appoint a person to act on its behalf as representative
of the Holders to serve as chairperson of the meeting.  If the Trustee fails to appoint such a
person, then, another representative of the Holders shall be designated to act
as chairperson of the meeting by vote of a majority in aggregate principal
amount of the Notes represented at the meeting.  A secretary of the meeting shall be elected by vote of the
Holders or proxies of a majority in aggregate principal amount of the Notes
represented at the meeting.  At any
meeting each Holder or proxy shall be entitled to one vote for each U.S.$1,000
principal amount of Notes held or represented by him; provided, that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairperson of the meeting to be not
outstanding.  The chairperson of the
meeting shall have no right to vote except as a Holder or proxy.  Any meeting of Holders duly called at which
a quorum is present may, upon motion of the chairperson, be adjourned once and
reconvened within 30 days without further notice.

 

65

 

(e)  Any duly passed resolution
of Holders of Notes, and any instrument given by or on behalf of any Holder of
a Note in connection with any consent to any modification, amendment or waiver
of the Indenture or the terms and conditions of the Notes will be irrevocable
once given and will be conclusive and binding on all subsequent Holders of such
Notes.  Any modifications, amendments or
waivers to the terms and conditions of the Notes duly passed, in accordance
with the requirements provided in paragraph (f) below, at a duly convened
meeting of Holders of Notes will be conclusive and binding on all Holders of
Notes, whether or not they voted in favor of such resolution or were present at
any meeting, and whether or not notation of such modifications, amendments or
waivers is made upon the Notes.

 

(f)  Subject to Section 9.02 of
this Indenture, decisions shall be made by the affirmative vote of Holders of
Notes or their proxies representing at least a majority in aggregate principal
amount of the Notes represented at the meeting.

 

(g)  The vote upon any
resolution submitted to any meeting of Holders shall be by written ballot on
which shall be subscribed the signatures of the Holders or proxies and on which
shall be inscribed the serial number or numbers of the Notes held or
represented by them.

 

66

 

IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed as of the day and year first above written.

 

	
   

  	
  MOBILE TELESYSTEMS FINANCE S.A.,

  
	
   

  	
   

  
	
   

  	
  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Ilya Chuprinko

  	
   

  
	
   

  	
  Name:

  	
  Ilya Chuprinko

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MOBILE TELESYSTEMS OJSC,

  
	
   

  	
   

  
	
   

  	
  as Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Mikhail A. Smirnov

  	
   

  
	
   

  	
  Name:

  	
  Mikhail A. Smirnov

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Viktor A. Kondratyev

  	
   

  
	
   

  	
  Name:

  	
  Viktor A. Kondratyev

  
	
   

  	
  Title:

  	
  Chief Accountant

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK,

  
	
   

  	
   

  
	
   

  	
  as Trustee, Registrar and Paying Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Andrew Dellow

  	
   

  
	
   

  	
  Name:

  	
  Andrew Dellow

  
	
   

  	
  Title:

  	
  Assistant Vice President

  

 

67

 

EXHIBIT A

 

FORM OF GLOBAL NOTE

 

FACE OF GLOBAL NOTE

 

Mobile TeleSystems Finance S.A.

 

GLOBAL NOTE

 

REPRESENTING 9.75% SENIOR NOTES DUE 2008

 

	
   

  	
  CUSIP No.

  	
   

  
	
   

  	
   

  
	
   

  	
  Common Code No.

  	
   

  
	
   

  	
   

  
	
   

  	
  ISIN No.

  	
   

  
					

 

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO.

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF [Reg S
note:  EUROCLEAR BANK
S.A./N.V. (“EUROCLEAR”) OR CLEARSTREAM BANKING, SOCIETE ANONYME (“CLEARSTREAM”)
[Rule
144A note: THE DEPOSITORY TRUST COMPANY] TO MOBILE TELESYSTEMS
FINANCE S.A. OR A SUCCESSOR THEREOF OR THE REGISTRAR FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
[Reg S
note:  [name of common
depositary]] [Rule 144A note: CEDE & CO.] OR SUCH OTHER ENTITY AS HAS
BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF [Reg S note:  EUROCLEAR OR CLEARSTREAM] [Rule 144A
note: THE DEPOSITORY TRUST COMPANY] (AND ANY PAYMENT HEREON IS MADE
TO [Reg S
note: [name of common depositary]] [Rule 144A note: CEDE &
CO.] OR TO SUCH OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF[Reg S note:  EUROCLEAR OR CLEARSTREAM] [Rule 144A note: THE DEPOSITORY TRUST
COMPANY]), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, [Reg S note:
[name of common depositary]] [Rule 144A note: CEDE & CO.], HAS AN
INTEREST HEREIN.

 

TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
AND NOT IN PART, TO [Reg S note:  EUROCLEAR OR CLEARSTREAM OR THE COMMON DEPOSITARY, OR NOMINEES OF
EUROCLEAR OR CLEARSTREAM] [Rule 144A note: THE DEPOSITORY TRUST
COMPANY OR NOMINEES OF THE DEPOSITORY TRUST COMPANY] OR TO A SUCCESSOR 

 

A-1

 

THEREOF OR SUCH SUCCESSOR’S NOMINEE, AND TRANSFERS OF INTERESTS IN THIS
GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.05 OF THE INDENTURE DATED AS OF JANUARY 30,
2003, AS AMENDED OR SUPPLEMENTED, AMONG MOBILE TELESYSTEMS FINANCE S.A., AS
ISSUER, MOBILE TELESYSTEMS OJSC, AS GUARANTOR AND JPMORGAN CHASE BANK, AS
TRUSTEE (THE “INDENTURE”), PURSUANT TO WHICH THIS NOTE WAS ISSUED.

 

[INCLUDE IF THIS GLOBAL NOTE IS A RULE 144A GLOBAL
NOTE UNLESS, PURSUANT TO SECTION 2.05(i) OF THE INDENTURE, THE ISSUER
DETERMINES THAT THE FOLLOWING LEGEND MAY BE REMOVED:  THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE.  THE OFFER, SALE, PLEDGE OR TRANSFER OF THIS
NOTE IS SUBJECT TO CERTAIN CONDITIONS AND RESTRICTIONS, INCLUDING THOSE SET
FORTH IN THE INDENTURE.  THE HOLDER
HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS NOTE, ACKNOWLEDGES THAT THIS
NOTE IS A “RESTRICTED SECURITY” THAT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT AND AGREES FOR THE BENEFIT OF MOBILE TELESYSTEMS FINANCE S.A. (THE
“ISSUER”) AND MOBILE TELESYSTEMS OJSC (THE “GUARANTOR”) THAT THIS NOTE MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OF THE STATES, TERRITORIES AND
POSSESSIONS OF THE UNITED STATES GOVERNING THE OFFER AND SALE OF SECURITIES AND
ONLY (1) TO THE ISSUER, THE GUARANTOR OR AN AFFILIATE THEREOF (UPON REDEMPTION
HEREOF OR OTHERWISE), (2) PURSUANT TO AND IN ACCORDANCE WITH RULE 144A UNDER
THE SECURITIES ACT TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE OFFER,
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER
THE SECURITIES ACT, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903
OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO AND IN
ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (5)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT.

 

A-2

 

BY ACCEPTANCE OF THIS NOTE BEARING THE ABOVE LEGEND,
WHETHER UPON ORIGINAL ISSUANCE OR SUBSEQUENT TRANSFER, EACH HOLDER OF THIS NOTE
ACKNOWLEDGES THE RESTRICTIONS ON THE TRANSFER OF THIS NOTE SET FORTH ABOVE AND
AGREES THAT IT SHALL TRANSFER THIS NOTE ONLY AS PROVIDED HEREIN AND IN THE
INDENTURE.

 

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE ON
SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE.]

 

Mobile TeleSystems Finance S.A., a société anonyme
organized under the laws of Luxembourg, for value received, hereby promises to
pay to [Reg.
S note: [Common
Depository]] [Rule 144A note: CEDE & CO.], or its registered assigns,
the principal sum indicated on Schedule A hereof, on January 30, 2008.

 

Interest Payment Dates:  July 30 and January 30, commencing July 30, 2003.

 

Record Dates: 
July 15 and January 15 of each year.

 

Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has
been duly executed by the Trustee referred to on the reverse hereof by manual
or facsimile signature of one of its authorized signatories, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory
for any purposes.

 

IN WITNESS WHEREOF, Mobile TeleSystems Finance S.A.
has caused this Note to be duly executed.

 

	
   

  	
  Mobile TeleSystems Finance S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  TRUSTEE’S CERTIFICATE OF AUTHENTICATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  JPMorgan Chase Bank

  	
   

  
	
   

  	
  as Trustee, certifies that this is one of 

  the Notes referred to in the Indenture.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  	
   

  

 

A-3

 

REVERSE SIDE OF GLOBAL
NOTE

 

Mobile TeleSystems
Finance S.A.

 

GLOBAL NOTE

 

REPRESENTING 9.75% SENIOR
NOTES DUE 2008

 

1.                                       Indenture.

 

This Note is one of a duly authorized issue of debt
securities of the Issuer (as defined below) designated as its “9.75 % Senior
Notes Due2008” (herein called the “Notes”), issued under an indenture dated as
of January 30, 2003 supplemented from time to time, the “Indenture”) among
Mobile TeleSystems Finance S.A., as issuer (including any successors or assigns
under the Indenture, the “Issuer”), Mobile TeleSystems OJSC, as guarantor
(including any successors or assigns under the Indenture, the “Guarantor”) and
JPMorgan Chase Bank, as trustee (the “Trustee,” which term includes any
successor trustee under the Indenture). 
The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code §§ 77aaa-77bbbb). 
The Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and such Act for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Issuer,
the Guarantor, the Trustee and each Holder of Notes and of the terms upon which
the Notes are, and are to be, authenticated and delivered.  The summary of the terms of this Note
contained herein does not purport to be complete and is qualified by reference
to the Indenture.  To the extent
permitted by applicable law, in the event of any inconsistency between the
terms of this Note and the terms of the Indenture, the terms of the Indenture
shall control.  All capitalized terms
used in this Note which are not defined herein shall have the meanings assigned
to them in the Indenture.

 

The Indenture restricts, among other things, the
Issuer’s and the Guarantor’s ability to incur Debt, to incur Liens to secure
Debt, to engage in Sale and Lease-Back Transactions, to merge or consolidate
with any other Person, and to sell, transfer, lease, convey or otherwise
dispose of substantially all of its or their properties or assets, and the
Guarantor’s ability to sell, transfer, lease, convey or otherwise dispose of
certain assets.

 

2.                                       Principal
and Interest.

 

The Issuer promises to pay the principal amount set
forth on Schedule A of this Note to the Holder hereof on January 30, 2008.

 

The Issuer shall pay interest at a rate of 9.75% per
annum, from the Issue Date or from the most recent Interest Payment Date
thereafter to which interest has been paid or duly provided for, semi-annually
in arrears on July 30 and January 30 in each year (each such date, an “Interest
Payment Date”), commencing on July 30, 2003, in cash, to the Holder hereof
until the principal amount hereof is paid or made available for payment.  The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, subject to certain
exceptions provided in the Indenture, be paid to the Person in whose name this
Note (or the Note in exchange or substitution for which this Note was issued)
is registered at the close of business 

 

A-4

 

on the Record Date for interest payable on such Interest Payment
Date.  The Record Date for any interest
payment is the close of business on the July 15 or January 15, as the case may
be, whether or not a business day, immediately preceding the Interest Payment
Date on which such interest is payable. 
Any such interest not so punctually paid or duly provided for
(“Defaulted Interest”) shall forthwith cease to be payable to the Holder on
such Record Date and shall be paid as provided in Section 2.10 of the
Indenture.  Interest will be computed on
the basis of a 360-day year of twelve 30-day months.

 

Each payment of interest in respect of an Interest
Payment Date will include interest accrued through the day before such Interest
Payment Date.  If any payment on this
Note is due on a day that is, in the City of New York or at any other place of
payment, a day on which banking institutions are authorized or obligated by law
or executive order to close, then, at each place of payment, such payment need
not be made on such day but may be made on the next succeeding day that is not,
in the City of New York or at such other place of payment, a day on which
banking institutions are authorized or obligated by law or executive order to
close, with the same force and effect as if made on the date for such payment,
and no interest will accrue for the period from and after such date.

 

To the extent lawful, the Issuer shall pay interest on
any (i) overdue principal of this Note, at the interest rate borne on this Note
and (ii) Defaulted Interest (without regard to any applicable grace period), at
the same rate. The Issuer’s obligation pursuant to the previous sentence shall
apply whether such overdue amount is due at its Stated Maturity, as a result of
the Issuer’s obligations pursuant to Section 3.04 of the Indenture or
otherwise.

 

3.                                       Method
of Payment.

 

The Issuer, through any Paying Agent, shall pay
interest on this Note to the registered Holder of this Note, as provided
above.  The Holder must surrender this
Note to a Paying Agent to collect principal payments.  The Issuer will pay principal and interest in money of the United
States of America that at the time of payment is legal tender for payment of
all debts public and private.  Interest
on this Note shall be paid to the registered Holder hereof at its registered
address by U.S. dollar check drawn on a bank in The City of New York or, for
Holders of at least $1,000,000 of Notes, by wire transfer to a U.S. dollar
account maintained by the payee with a bank in The City of New York or in
Europe, provided that a written request from the Holder to such effect
designating such account is received by the Trustee or a Paying Agent no later
than the Record Date.  Unless such
designation is revoked, any such designation made by such Person with respect
to this Note will remain in effect with respect to any future payments with
respect to this Note payable to such person. 
The Issuer will pay any administrative costs imposed by banks in
connection with making payments by wire transfer.

 

4.                                       Paying
Agent and Registrar.

 

Initially, the Trustee will act as Paying Agent and
Registrar and J.P. Morgan Bank Luxembourg S.A. will act as the Luxembourg
Paying Agent under the Indenture. The Issuer may, upon written notice to the
Trustee, appoint and change any Paying Agent or Registrar.  Neither the Issuer, the Guarantor nor any
Affiliate of the Issuer or the Guarantor may act as Registrar or a Paying Agent
with respect to this Note or the Notes generally.

 

A-5

 

5.                                       Guarantee.

 

This Note is entitled to the benefits of the Guarantee
made for the benefit of the Holders of the Notes pursuant to Article X of the
Indenture.  The Guarantor has
irrevocably and unconditionally guaranteed to each Holder and to the Trustee on
behalf of the Holders (i) the due and punctual payment of principal of and
interest in full on the Notes when and as the same shall become due and payable
whether at Stated Maturity, by declaration of acceleration, redemption or
otherwise and the due and punctual payment of all other sums stated in the
Indenture and the Notes to be payable pursuant to the Indenture and the Notes,
including, without limitation, any Additional Amounts; (ii) the due and
punctual payment of interest on the overdue principal of and interest in full
on the Notes, to the extent permitted by law; and (iii) the due and punctual
performance of all other duties, agreements, covenants and obligations of the
Issuer to the Holders or the Trustee, including without limitation the payment
of fees, expenses, indemnification or other amounts, all in accordance with the
terms of the Notes and the Indenture. 
The Guarantor has also agreed to pay any and all expenses (including
reasonable fees and expenses of counsel) incurred by the Trustee or the Holders
in enforcing any rights under the Guarantee, and has further agreed to
indemnify Holders and the Trustee against all documentary, stamp or other
similar taxes payable in connection with the execution, delivery or enforcement
of the Guarantee.

 

6.                                       Additional
Amounts.

 

All payments by the Issuer in respect of this Note and
the Indenture and by the Guarantor in respect of the Guarantee and the
Indenture will be made free and clear of and without deduction or withholding
for or on account of any present or future taxes, duties, assessments, fees or
other governmental charges (“Taxes”) imposed or levied by or on behalf of
Luxembourg, the Russian Federation, any jurisdiction from or through which a
payment is made, or any political subdivision or taxing authority thereof or
therein (each, a “Taxing Jurisdiction”), unless such withholding or deduction
is required by law.  If the Issuer is
required to make any withholding or deduction for or on account of any Taxes
from any payment made under or with respect to this Note, or if the Guarantor
is required to make any withholding or deduction for or on account of any Taxes
imposed by a Taxing Jurisdiction from any payment made under or with respect to
the Guarantee, the Issuer (or, in respect of the Guarantee, the Guarantor) will
pay as additional interest to the Holder of this Note such additional amounts
(the “Additional Amounts”) as may be necessary in order that every net payment
made by the Issuer on this Note or by the Guarantor on the Guarantee after
deduction or withholding for or on account of any Taxes will not be less than
the amount then due and payable on this Note or the Guarantee.  The foregoing obligation to pay Additional
Amounts, however, will not apply to any (i) Taxes that would not have been
imposed but for the existence of any present or former connection between the
Holder of this Note and any Taxing Jurisdiction other than the mere receipt of
such payment or the ownership or holding of this Note; (ii) Taxes that would
not have been imposed but for the presentation by the Holder of this Note for
payment on a date more than 30 days after the date on which such payment became
due and payable or the date on which payment thereof is duly provided for,
whichever occurs later; (iii) Taxes required to be deducted or withheld by any
Paying Agent from a payment on this Note or the Guarantee, if such payment can
be made without deduction or withholding by any other Paying Agent; (iv) Taxes
that would not have been imposed but for the failure of the Holder to comply
with the Issuer’s written request 

 

A-6

 

addressed to the Holder at least 60 days prior to the relevant payment to
provide information with respect to any reasonable certification,
documentation, information or other reporting requirement concerning the
nationality, residence, identity or connection with the Taxing Jurisdiction of
the Holder of such Note; (v) Taxes imposed on a payment to an individual that
are required to be made pursuant to any European Union Directive on the
taxation of savings implementing the conclusion of the ECOFIN Council meeting
of 26-27 November 2000 or any law implementing or complying with, or introduced
in order to conform to, such Directive; or (vi) estate, inheritance, gift, sale
or excise tax.

 

7.                                       Redemption
for Tax Reasons.

 

This Note may be redeemed at the option of the Issuer
in whole, but not in part, at any time, on giving not less than 30 nor more
than 60 days’ notice in accordance with Article III of the Indenture at the
principal amount hereof, together with any Additional Amounts and interest
accrued to the date fixed for redemption, if (a) the Issuer or the Guarantor
has or will become obligated to pay Additional Amounts as described in Section
6 of this Note and in Section 4.11 of the Indenture as a result of any change
in, or amendment to, the laws, treaties, rulings or regulations of any Taxing
Jurisdiction, or any change in, or amendment to the application or official
interpretation of such laws, treaties, rulings or regulations, including a holding by a court of competent
jurisdiction, which change or amendment becomes effective on or after
January 30, 2003 (or in the case of Additional Amounts that a successor to the
Guarantor or the Issuer is obligated to pay, the date on which that successor
became such pursuant to the Indenture); provided that in the case of
Additional Amounts payable by the Guarantor arising from an imposition or levy
of Taxes by the Russian Federation or any political subdivision or taxing
authority thereof on amounts paid under the Guarantee, the Taxes are imposed or
levied at a rate in excess of 30% on the gross amount payable under the
Guarantee, and (b) such obligation cannot be avoided by the Issuer or the
Guarantor taking reasonable measures available to it; provided that no
such notice of redemption shall be given earlier than 60 days prior to the
earliest date on which the Issuer or the Guarantor would be obliged to pay such
Additional Amounts were a payment in respect of this Note then due.  Prior to the publication of any notice of
redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee
an Officer’s Certificate stating that the Issuer is entitled to effect such
redemption and setting forth a statement of facts showing that the conditions
precedent to the right of the Issuer so to redeem have occurred, and an Opinion
of Counsel of recognized international standing to the effect that the Issuer
has or will become obligated to pay such Additional Amounts as a result of such
change or amendment.

 

This Note may be redeemed pursuant to this Section
only if all Notes are simultaneously so redeemed.

 

If money in an amount sufficient to pay the Redemption
Price of all Notes to be redeemed on the Redemption Date pursuant to this
Section 7 is deposited with a Paying Agent on or before the applicable
Redemption Date and certain other conditions are satisfied, interest on the
Notes to be redeemed on the applicable Redemption Date will cease to accrue.

 

A-7

 

8.                                       Redemption
upon a Change in Control.

 

If a Change in Control occurs, the Holder of this Note
will have the right to require the Issuer to redeem it at a Redemption Price
equal to 101% of the principal amount hereof plus accrued interest.

 

Within 30 days after the occurrence of a Change in
Control, the Issuer will deliver to the Holders, the Trustee and the Luxembourg
Paying Agent notice of the Change in Control and of the resulting redemption
right.  Upon receipt by the Trustee or
the Luxembourg Paying Agent (for so long as the Notes are listed on the
Luxembourg Stock Exchange) from a Holder, on or before the 30th day after the
date of the Issuer’s notice referred to in the previous sentence, of (a) a
properly completed notice in the form specified by the Indenture and (b) this
Note, the Issuer will redeem this Note no earlier than 30 and no later than 60
days after the date of the Issuer’s notice of the Change in Control.

 

9.                                       The
Global Note.

 

So long as this Global Note is registered in the name
of the [Rule 144A Note:
Depositary] [RegS Note: Common
Depositary] or a nominee or successor thereof, members of, or account holders
or participants in (the “Agent Members”) the [Rule
144A Note: Depositary] [RegS Note:
Common Depositary] shall have no rights under the Indenture with respect to
this Global Note held on their behalf by the [Rule
144A Note: Depositary] [RegS Note:
Common Depositary] or the Trustee as its custodian, and the [Rule 144A Note: Depositary] [RegS Note: Common Depositary] may be
treated by the Issuer, the Guarantor, the Trustee and any agent of the Issuer,
the Guarantor or the Trustee as the absolute owner of this Global Note for all
purposes.  Notwithstanding the
foregoing, nothing herein shall (i) prevent the Issuer, the Guarantor, the
Trustee or any agent of the Issuer, the Guarantor or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the [Rule 144A Note: Depositary] [RegS  Note:
Common Depositary] or (ii) impair, as between the [Rule 144A Note: Depositary] [RegS  Note: Common Depositary] and its
Agent Members, the operation of customary practices governing the exercise of
the rights of a holder of a beneficial interest in the Notes.

 

The Holder of this Global Note may grant proxies and
otherwise authorize any Person, including Agent Members of the [Rule 144A Note: Depositary] [RegS Note: Common Depositary] and Persons
that may hold interests in this Global Note through such Agent Members, to take
any action which a Holder of Notes is entitled to take under the Indenture or
the Notes.

 

Whenever, as a result of an exchange for Certificated
Notes, this Global Note is redeemed, repurchased or exchanged in part, this
Global Note shall be surrendered by the Holder thereof to the Trustee who shall
cause an adjustment to be made to Schedule A hereof so that the principal
amount of this Global Note will be equal to the portion not redeemed,
repurchased or exchanged and the Trustee shall thereafter return this Global
Note to such Holder; provided that this Global Note shall be in a
principal amount of $1,000 or integral multiples thereof.

 

A-8

 

10.                                 Transfer
and Exchange.

 

A Holder may transfer or exchange Notes as provided in
the Indenture and subject to certain limitations therein set forth.  The Registrar may require a Holder, among
other things, to furnish appropriate endorsements or transfer documents and to
pay any taxes, fees and expenses required by law or permitted by the Indenture.

 

11.                                 Denominations.

 

The Notes are issuable only in fully registered form
without coupons in minimum denominations of $1,000 and integral multiples thereof.

 

12.                                 Unclaimed
Money.

 

Any funds paid by the Issuer to the Trustee or any
Paying Agent in trust for the payment of the principal, interest or Additional
Amounts on this Note that remains unclaimed for two years after the date upon
which such payment shall have become due, shall be promptly repaid to the
Issuer without interest upon receipt by the Trustee of an Order to that effect;
provided, however, that the Issuer shall cause to be published at
least once in a newspaper of general circulation in The City of New York and in
Europe or mailed to the Holder of this Note entitled to such unclaimed funds,
notice that such funds remain unclaimed and that, after a date specified
therein, which shall be a date not less than 30 days from the date of such publication
or mailing, any unclaimed balance of such money remaining as of such date shall
be repaid to the Issuer without interest. 
Holders shall not be entitled to receive interest on such unclaimed
funds under any circumstances.  After
repayment to the Issuer, the Holder of this Note entitled to such unclaimed
funds shall look only to the Issuer for payment without interest thereon, as an
unsecured general creditor, and the Issuer shall not be liable to pay any taxes
or other duties in connection with any such payment.  The Trustee and the Paying Agent, subject to applicable law,
shall have no further liability with respect to any such money repaid to the
Issuer, and the Issuer shall not be a trustee in respect of such funds.  Notwithstanding any other provision of this
Section and unless otherwise provided by applicable law, the right to receive
payment of principal of this Note (whether at maturity, redemption or
otherwise) will become void at the end of 10 years from the relevant date
thereof (or such shorter period as may be prescribed by applicable law).

 

13.                                 Amendment,
Waiver.

 

Subject to certain exceptions set forth in the
Indenture, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding, and any existing Default and its consequences may be waived
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding.  Subject to
certain exceptions set forth in the Indenture, without the consent of any
Holder of Notes, the Issuer, the Guarantor and the Trustee may amend the
Indenture or the Notes: (i) to evidence the succession of another Person to the
Issuer or the Guarantor and the assumption by such successor of the covenants
of the Issuer and the Guarantor under the Indenture and contained in the Notes;
(ii) to add additional covenants or to surrender rights and powers conferred on
the Issuer or Guarantor; (iii) to add any additional Events of 

 

A-9

 

Default; (iv) to evidence and provide for the acceptance of appointment
under the Indenture of a successor Trustee; (v) to secure the Notes; (vi) to
comply with the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the Investment Company Act of 1940, as amended, or the
Trust Indenture Act of 1939, as amended; (vii) to issue Additional Notes;
(viii) to cure any ambiguity, omission or defect in the Indenture, or to
correct or supplement any provision in the Indenture which may be inconsistent
with any other provision therein; or (ix) to add any other provisions with
respect to matters or questions arising under the Indenture or to modify,
alter, amend or supplement the Indenture in any other manner, provided
that such actions shall not adversely affect the legal rights of the Holders.

 

14.                                 Defaults
and Remedies.

 

Under the Indenture, Events of Default include: (i) a
default for 15 calendar days in payment of interest or Additional Amounts on
any Note when due and payable; (ii) default in payment of principal of any Note
when due and payable at Maturity; (iii) failure by the Issuer to comply with
its obligations under Section 4.08 of the Indenture; (iv) failure by the Issuer
or the Guarantor to comply with any of its other agreements or covenants in, or
provisions of, the Guarantee, the Indenture or the Notes for 30 days after
written notice by the Trustee to the Issuer and the Guarantor or after written
notice by Holders of at least 25% in aggregate principal amount of the Notes
then outstanding to the Issuer, the Guarantor and the Trustee; (v) a default
under any Debt of the Issuer, the Guarantor or any Subsidiary of the Guarantor
(other than the Notes) or under any indenture or other instrument under which
any such Debt has been issued or by which it is governed and the expiration of
the applicable period of grace, if any, contained in any such Debt, which in
the aggregate exceeds U.S.$5 million (or the equivalent in other currencies),
which default (A) results in the acceleration of the payment of such Debt or
(B) has not been cured or waived and constitutes the failure to make any
payment of principal or interest on such Debt when due, after the expiration of
any applicable grace period; (vi) a final action resulting in the suspension
for more than 30 days or loss of any of (A) the Guarantor’s GSM 900 licenses
for the Moscow license area; (B) Rosico’s GSM 1800 licenses for the Moscow
license area; (C) Telecom XXI’s GSM 900 or 1800 licenses for the St. Petersburg
license area; or (D) Kuban GSM’s GSM 900 or 1800 licenses for the Krasnodar
license area, in each case other than, in the case of the Guarantor’s,
Rosico’s, Telecom XXI’s or Kuban GSM’s merger or consolidation or a sale of the
Guarantor’s, Rosico’s, Telecom XXI’s or Kuban GSM’s assets and properties
substantially as a whole in a transaction permitted under Section 5.01(a)
hereof, a loss where the relevant license is issued within 30 days to the
Guarantor, the Successor of the Guarantor, Rosico, Telecom XXI or Kuban GSM, or
any of the Guarantor’s or Successor’s Subsidiaries); (vii) the reassignment to
other users (other than one of the Guarantor’s Subsidiaries), cancellation or
other loss of any of the Guarantor’s, Rosico’s, Telecom XXI’s or Kuban GSM’s
assigned spectrum allocations, other than as would not have a material adverse
effect on the business, financial condition or results of operations of the
Guarantor and its Subsidiaries as a whole; (viii) the express transfer, sale or
lease by (A) the Guarantor of any of its GSM 900 licenses for the Moscow
license area, (B) Rosico of any of its GSM 1800 licenses for the Moscow license
area, (C) Telecom XXI of any of its GSM 900 or 1800 licenses for the St.
Petersburg license area or (D) Kuban GSM of any of its GSM 900 or 1800 licenses
for the Krasnodar license area, , regardless of whether such transfer, sale or
lease is permitted by law, other than in a merger, consolidation, transfer,
sale or lease described in and meeting the conditions set forth in Section
5.01(a) of the Indenture, or that would not have a material adverse 

 

A-10

 

effect on the business, financial condition or results of operations of
the Guarantor and its Subsidiaries as a whole; (ix) the American Depositary
Shares representing the common stock of the Guarantor are no longer listed on
the New York Stock Exchange or such listing is suspended for more than 15 days,
where such de-listing or suspension is due to the Guarantor’s failure to
satisfy its obligations under its listing agreement with the New York Stock
Exchange; (x) certain events of bankruptcy or insolvency with respect to the
Issuer, the Guarantor or any Significant Subsidiary; (xi) the rendering against
the Issuer, the Guarantor or any Subsidiary of the Guarantor of a judgment,
decree or order for the payment of money in excess of U.S.$10 million, and the
continuance of such judgment, decree or order unsatisfied and in effect for a
period of 60 days without a stay of execution; and (xii) if the Guarantee
ceases to be (or is claimed by the Guarantor in writing not to be) in full
force and effect.

 

If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Notes then
outstanding, subject to certain limitations set forth in the Indenture, may
declare all the Notes to be immediately due and payable.  Certain events of bankruptcy or insolvency
shall result in the Notes being immediately due and payable upon the occurrence
of such Events of Default without any further act of the Trustee or any Holder.

 

Holders of Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. 
The Trustee may refuse to enforce the Indenture or the Notes unless it
receives reasonable indemnity or security. 
Subject to certain limitations, Holders of a majority in principal
amount of the Notes then outstanding may direct the Trustee in its exercise of
any trust or power under the Indenture. 
The Holders of a majority in principal amount of the Notes then
outstanding, by written notice to the Issuer, the Guarantor and the Trustee may
rescind any declaration of acceleration and its consequences if certain
conditions are met, as more fully set forth in the Indenture.  No such recission shall affect any
subsequent Default or impair any right consequent thereto.

 

15.                                 Individual
Rights of Trustee.

 

Subject to certain limitations imposed by the Trust
Indenture Act, the Trustee or any Paying Agent or Registrar, in its individual
or any other capacity, may become the owner or pledgee of Notes and may
otherwise deal with the Issuer, the Guarantor or their Affiliates with the same
rights it would have if it were not Trustee, Paying Agent or Registrar, as the
case may be, under the Indenture.

 

16.                                 No
Recourse Against Certain Others.

 

No director, officer, employee, incorporator or
stockholder of the Issuer or the Guarantor, as such, shall have any liability
for any obligations of the Issuer or the Guarantor under the Notes, the Guarantees
or the Indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation, solely by reason of its status as a
director, officer, employee, incorporator or stockholder of the Issuer or the
Guarantor, as the case may be.  By
accepting a Note, each Holder waives and releases all such liability (but only
such liability) as part of the consideration for issuance of such Note to such
Holder.

 

A-11

 

17.                                 Reports.

 

The Guarantor shall (i) file within the Commission and
furnish to the Trustee, within 180 days of the end of each fiscal year, an
annual report on Form 20-F (or any successor form) containing the information
required to be contained therein (or in such successor form, regardless of
whether the Guarantor is then required to file a Form 20-F under the rules
promulgated by the Commission, (ii) make public and furnish to the Trustee, within 120 days of the end
of each fiscal year, reports for the fourth quarter of such fiscal year
containing its consolidated balance sheet, statement of operations and
cash flow statement prepared in accordance with U.S. GAAP (but excluding
footnotes) and a discussion by its management highlighting critical financial
developments during the fourth
quarter; and (iii) submit to the Commission or otherwise make public and furnish to the
Trustee, within 60 days of the end of the first three fiscal quarters of
each fiscal year, quarterly
reports on Form 6-K (or any successor form) containing its consolidated balance
sheet, statement of operations and cash flow statement prepared in accordance
with U.S. GAAP (but excluding footnotes) and a discussion by its management
highlighting critical financial developments during the period.  In addition, the Guarantor has agreed that,
during any period in which the Issuer is not subject to and in compliance with
Section 13 or 15(d) of the Exchange Act or is not exempt from such reporting
requirements pursuant to and in compliance with Rule 12g3-2(b) under the
Exchange Act, it will provide to each Holder of the Notes (or holder of a
beneficial interest therein) and to each prospective purchaser of the Notes (as
designated by such Holder or holder of a beneficial interest), upon the request
of such Holder, prospective purchaser or holder of a beneficial interest, any
information required to be provided by Rule 144A(d)(4) under the Securities
Act.

 

18.                                 Authentication.

 

This Note shall not be valid until an authorized
signatory of the Trustee manually or in facsimile signs the certificate of
authentication on the other side of this Note.

 

19.                                 Abbreviations.

 

Customary abbreviations may be used in the name of a
Holder of Notes or an assignee, such as TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with rights of
survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (=
Uniform Gift to Minors Act).

 

20.                                 CUSIP,
Common Code and ISIN Numbers.

 

Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuer has caused
CUSIP, Common Code or ISIN numbers, as applicable, to be printed on the Notes
and has directed the Trustee to use such numbers in notices of redemption as a
convenience to Holders of Notes.  No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.

 

A-12

 

21.                                 Governing
Law.

 

THE INDENTURE, THE GUARANTEE AND THIS NOTE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.

 

*   *  
*

 

The Issuer will furnish to any Holder of Notes upon written request and
without charge to the Holder a copy of the Indenture which has in it the text
of this Note.  Requests may be made to:

 

Mobile TeleSystems
Finance S.A.

3 Avenue Pasteur

L-2311 Luxembourg

 

A-13

 

SCHEDULE A

 

SCHEDULE OF PRINCIPAL
AMOUNT

 

The initial principal amount at maturity of this Note shall be
$                      .  The following decreases/increases in the
principal amount in denominations of integral multiples of $1,000 at maturity
of this Note have been made:

 

	
  Date of

  Decrease/

  Increase

  	
   

  	
  Decrease in

  Principal

  Amount at

  Maturity

  	
   

  	
  Increase in

  Principal

  Amount at

  Maturity

  	
   

  	
  Total Principal

  Amount at

  Maturity

  Following such

  Decrease/

  Increase

  	
   

  	
  Notation

  Made by

  or on

  Behalf of

  Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-14

 

ASSIGNMENT

 

(To be executed by the
registered Holder

if such Holder desires to transfer this Note)

 

FOR VALUE RECEIVED
                                                             
hereby sells, assigns and transfers unto

 

PLEASE INSERT SOCIAL SECURITY OR OTHER

TAX IDENTIFYING NUMBER OF TRANSFEREE

 

	
   

  
	
   

  
	
   

  
	
  (Please print name and
  address of transferee)

  
	
   

  
	
   

  

this Note, together with all right, title and interest herein, and does
hereby irrevocably constitute and appoint
                                                          
Attorney to transfer this Note on the Security Register, with full power of
substitution.

 

	
  Dated:

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  
	
  Signature of Holder:

  	
  Signature Guaranteed:

  

 

NOTICE:  The signature to the foregoing Assignment
must correspond to the Name as written upon the face of this Note in every particular,
without alteration or any change whatsoever.

 

A-15

 

EXHIBIT B

 

RULE
144A GLOBAL NOTE TRANSFER CERTIFICATE

 

FORM OF TRANSFER CERTIFICATE FOR EXCHANGE OR TRANSFER FROM 

RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE

(Exchanges or transfers pursuant to Section 2.05(b)(i) of the Indenture)

 

 

JPMorgan Chase Bank
   as Registrar
4 New York Plaza

15th Floor

New York, New York 10004

 

Re:                               Mobile
TeleSystems Finance, S.A.

9.75 % Senior Notes Due 2008 (the “Notes”)

 

Reference is hereby made to the Indenture dated as of
January 30,2003 (the “Indenture”) among Mobile TeleSystems Finance, S.A., as
Issuer, MTS, as Guarantor, JPMorgan Chase Bank, as Trustee.  Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

 

This letter relates to
U.S.$                        
principal amount of Notes which are held as a beneficial interest in the Rule
144A Global Note (CUSIP No.
                            
) with the Depositary in the name of [insert name of transferor] (the
“Transferor”).  The Transferor has
requested an exchange or transfer of such beneficial interest for an interest
in the Regulation S Global Note (CUSIP No.                               
).

 

In connection with such request, and in respect of
such Notes, the Transferor does hereby certify that such exchange or transfer
has been effected in accordance with the transfer restrictions set forth in the
Notes and the Indenture and (i) with respect to transfers made in reliance on
Regulation S under the Securities Act, the Transferor does hereby certify that:

 

(1)  the offer
of the Notes was not made to a person in the United States,

 

[(2)  at the time the buy order was originated,
the transferee was outside the United States or the Transferor and any person
acting on its behalf reasonably believed that the transferee was outside the
United States,]*

 

[(2)  the transaction was executed in, on or
through the facilities of a designated offshore securities market and neither
the Transferor nor any person acting on its behalf knows that the transaction
was pre-arranged with a buyer in the United States,]**

 

*                                         Insert
one of these two provisions, which are derived from the definition of “offshore
transaction” in Regulation S.

**                                  Insert
one of these two provisions, which are derived from the definition of “offshore
transaction” in Regulation S.

 

B-1

 

(3)  no directed selling efforts have been made
in contravention of the requirements of Rule 903(b) or 904(b) of Regulation S,
as applicable, and

 

(4)  the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act;

 

or (ii) does hereby certify that the Notes being transferred are not
“restricted securities” as defined in Rule 144 under the Securities Act.

 

This certificate and the statements contained herein
are made for your benefit and the benefit of the Issuer, the Guarantor and the
Initial Purchasers named in the Purchase Agreement.

 

	
   

  	
  [Insert Name of Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
					

 

cc:  Mobile TeleSystems Finance
S.A.

 

B-2

 

EXHIBIT C

 

REGULATION
S GLOBAL NOTE TRANSFER CERTIFICATE

 

FORM OF TRANSFER CERTIFICATE FOR EXCHANGE OR TRANSFER FROM REGULATION S
GLOBAL NOTE TO RULE 144A GLOBAL NOTE

 

 

(Exchanges or transfers pursuant to Section 2.05(b)(ii) of the
Indenture)

 

JPMorgan Chase Bank
   as Registrar
4 New York Plaza

15th Floor

New York, New York 10004

 

Re:                               Mobile
TeleSystems Finance, S.A.

9.75 % Senior Notes Due 2008 (the “Notes”)

 

Reference is hereby made to the Indenture dated as of
January 30, 2003 (the “Indenture”) among Mobile TeleSystems Finance, S.A., as
Issuer, MTS, as Guarantor, JPMorgan Chase Bank, as Trustee.  Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.

 

This letter relates to U.S.
$                        
principal amount of Notes which are held as a beneficial interest in the
Regulation S or Unrestricted (as the case may be) Global Note (CUSIP No.
                        
) with [Euroclear] [Clearstream]* (Common Code                         
) through the Depositary in the name of [insert name of transferor] (the
“Transferor”).  The Transferor has
requested an exchange or transfer of such beneficial interest in the Notes for
an interest in the Rule 144A Global Note.

 

In connection with such request, and in respect of
such Notes, the Transferor does hereby certify that such Notes are being
transferred pursuant to and in accordance with Rule 144A under the Securities
Act to a transferee that the Transferor reasonably believes is purchasing the
Notes for its own account or an account with respect to which the transferee
exercises sole investment discretion and that transferee and any such account
is a “qualified institutional buyer” within the meaning of Rule 144A under the
Securities Act and has been informed by the Transferor that the transfer is
being made in reliance on Rule 144A under the Securities Act, in each case in a
transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States or any other
jurisdiction.

 

This certificate and the statements contained herein
are made for your benefit and the benefit of the Issuer, the Guarantor and the
Initial Purchasers named in the Purchase Agreement.

 

*                                         Select
appropriate depositary.

 

C-1

 

	
   

  	
  [Insert Name of Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
					

 

cc:  Mobile TeleSystems Finance,
S.A.

 

C-2

 

EXHIBIT D

 

Form of Notice of
Redemption at the Option of the Holder

 

ELECTION OF HOLDER TO
REQUIRE REDEMPTION

 

1.                                       Pursuant
to Section 4.08 of the Indenture, the undersigned hereby elects to have this
Note redeemed by the Issuer.

 

2.                                       The
undersigned hereby directs the Trustee or the Issuer to pay it or
                                 
an amount in cash, equal to 101% of the principal amount of this Note, plus
interest accrued to the Redemption Date, as provided in the Indenture.

 

 

	
   

  	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guaranteed

  	
   

  

 

NOTICE:  The signature to the
foregoing election must correspond to the name as written upon the face of this
Note in every particular, without alteration or any change whatsoever.Exhibit 4.2

 

Execution
Copy

 

 

 

 

PARTICIPATION
INTEREST PURCHASE AGREEMENT

 

BY AND BETWEEN

 

KPN TELECOM
B.V.

 

AS “SELLER,”

 

AND

 

MOBILE
TELESYSTEMS OJSC

 

AS “PURCHASER”

 

 

DATED AS OF NOVEMBER 5, 2002

 

 

 

 

TABLE OF CONTENTS

 

	
  Article
  I. Definitions

  
	
   

  
	
  Section 1.1

  	
  Defined
  Terms

  
	
   

  	
   

  
	
  Article
  II. Purchase and Sale of Participation Interest

  
	
   

  
	
  Section 2.1

  	
  Basic
  Transaction

  
	
  Section 2.2

  	
  Purchase
  Price

  
	
  Section 2.3

  	
  The
  Closing

  
	
  Section 2.4

  	
  Transfer
  of the Participation Interest

  
	
  Section 2.5

  	
  Deliveries
  at the Closing

  
	
  Section 2.6

  	
  Escrow
  Agreement

  
	
  Section 2.7

  	
  Return
  of Purchase Price

  
	
   

  	
   

  
	
  Article
  III. Warranties Concerning the Transaction

  
	
   

  
	
  Section 3.1

  	
  Warranties
  of the Seller

  
	
  Section 3.2

  	
  Warranties
  of the Purchaser

  
	
   

  	
   

  
	
  Article
  IV. Warranties Concerning the Company

  
	
   

  
	
  Section 4.1

  	
  Organization,
  Qualification, and Corporate Power

  
	
  Section 4.2

  	
  Capitalization

  
	
  Section 4.3

  	
  Noncontravention

  
	
  Section 4.4

  	
  Licenses,
  Permits, and Authorizations

  
	
  Section 4.5

  	
  Directors
  and Officers

  
	
  Section 4.6

  	
  Brokers’
  Fees

  
	
  Section 4.7

  	
  Title
  to Assets

  
	
  Section 4.8

  	
  No
  Subsidiaries

  
	
  Section 4.9

  	
  Financial
  Statements

  
	
  Section 4.10

  	
  Recent
  Events

  
	
  Section 4.11

  	
  Undisclosed
  Liabilities

  
	
  Section 4.12

  	
  Legal
  Compliance

  
	
  Section 4.13

  	
  Tax
  Matters

  
	
  Section 4.14

  	
  Real
  Property

  
	
  Section 4.15

  	
  Intellectual
  Property

  
	
  Section 4.16

  	
  Company
  Licenses

  
	
  Section 4.17

  	
  Networks

  
	
  Section 4.18

  	
  Contracts

  
	
  Section 4.19

  	
  Powers
  of Attorney

  
	
  Section 4.20

  	
  Insurance

  
	
  Section 4.21

  	
  Litigation

  
	
  Section 4.22

  	
  Employees

  

 

i

 

	
  Section 4.23

  	
  Employee
  Benefits

  
	
  Section 4.24

  	
  Guaranties

  
	
  Section 4.25

  	
  Environment,
  Health, and Safety

  
	
  Section 4.26

  	
  Certain
  Business Relationships with the Company

  
	
  Section 4.27

  	
  Unlawful
  Contributions

  
	
  Section 4.28

  	
  Antitrust

  
	
  Section 4.29

  	
  Money
  Laundering and Unlawful Financial Activities

  
	
   

  	
   

  
	
  Article
  V. Pre-Closing Covenants

  
	
   

  
	
  Section 5.1

  	
  General

  
	
  Section 5.2

  	
  Notices
  and Consents

  
	
  Section 5.3

  	
  Operation
  of Business

  
	
  Section 5.4

  	
  Participants
  Meeting; Amendments to Foundation Documents

  
	
  Section 5.5

  	
  Preservation
  of Business

  
	
  Section 5.6

  	
  Full
  Access

  
	
  Section 5.7

  	
  Notice
  of Developments

  
	
  Section 5.8

  	
  Exclusivity

  
	
  Section 5.9

  	
  Governmental
  Approval

  
	
  Section 5.10

  	
  Resignation
  from Corporate Bodies

  
	
  Section 5.11

  	
  Waiver
  of Pre-Emptive Rights

  
	
  Section 5.12

  	
  No
  Acceleration, No Payments

  
	
  Section 5.13

  	
  Retention
  of General Director

  
	
   

  	
   

  
	
  Article
  VI. Post-Closing Covenants

  
	
   

  
	
  Section 6.1

  	
  General

  
	
  Section 6.2

  	
  Litigation
  Support

  
	
  Section 6.3

  	
  Transition

  
	
  Section 6.4

  	
  Confidentiality

  
	
  Section 6.5

  	
  Covenant
  Not to Compete

  
	
   

  	
   

  
	
  Article
  VII. Conditions to Obligations

  
	
   

  
	
  Section 7.1

  	
  Conditions
  to Obligation of the Purchaser to Close

  
	
  Section 7.2

  	
  Conditions
  to Obligation of the Seller to Close

  
	
   

  	
   

  
	
  Article
  VIII. Remedies for Breaches of This Agreement

  
	
   

  
	
  Section 8.1

  	
  Survival
  of Warranties

  
	
  Section 8.2

  	
  Indemnification
  Provisions for Benefit of the Purchaser

  
	
  Section 8.3

  	
  Indemnification
  Provisions for Benefit of the Seller

  
	
  Section 8.4

  	
  Matters
  Involving Third Parties

  
	
  Section 8.5

  	
  Determination
  of Adverse Consequences

  
	
  Section 8.6

  	
  Exclusive
  Remedies

  
	
  Section 8.7

  	
  Miscellaneous

  
	
   

  	
   

  
	
  Article
  IX. Effectiveness and Termination

  
	
   

  
	
  Section 9.1

  	
  Effectiveness
  of Agreement

  
	
  Section 9.2

  	
  Termination
  of Agreement

  

ii

 

	
  Section 9.3

  	
  Effect
  of Termination

  
	
   

  	
   

  
	
  Article
  X. Miscellaneous

  
	
   

  
	
  Section 10.1

  	
  Press
  Releases and Public Announcements

  
	
  Section 10.2

  	
  Entire
  Agreement

  
	
  Section 10.3

  	
  Succession
  and Assignment

  
	
  Section 10.4

  	
  Counterparts

  
	
  Section 10.5

  	
  Headings

  
	
  Section 10.6

  	
  Notices

  
	
  Section 10.7

  	
  Dispute
  Resolution

  
	
  Section 10.8

  	
  Governing
  Law

  
	
  Section 10.9

  	
  Judgment
  Currency

  
	
  Section 10.10

  	
  Third
  Party Beneficiaries

  
	
  Section 10.11

  	
  Amendments
  and Waivers

  
	
  Section 10.12

  	
  Remedies
  Cumulative

  
	
  Section 10.13

  	
  Severability

  
	
  Section 10.14

  	
  Expenses

  
	
  Section 10.15

  	
  Construction

  
	
  Section 10.16

  	
  Payment
  of Taxes

  
	
  Section 10.17

  	
  Incorporation
  of Exhibits, Annexes, and Schedules

  
	
  Section 10.18

  	
  Specific
  Performance

  

 

iii

 

EXHIBIT INDEX

 

	
  Exhibit A

  	
  Escrow Agreement

  
	
   

  	
   

  
	
  Exhibit B-1

  	
  Form of Founding Agreement

  
	
   

  	
   

  
	
  Exhibit B-2

  	
  Form of Charter

  
	
   

  	
   

  
	
  Exhibit C

  	
  Company Participants’ Meeting Agenda

  
	
   

  	
   

  
	
  Exhibit D

  	
  Historical Financial Statements

  
	
   

  	
   

  
	
  Exhibit F

  	
  Form of Waiver

  
	
   

  	
   

  
	
  Exhibit G-1

  	
  Form of Seller’s Certificate

  
	
   

  	
   

  
	
  Exhibit G-2

  	
  Form of Purchaser’s Certificate

  
	
   

  	
   

  
	
  Exhibit H

  	
  List of Management

  
	
   

  	
   

  
	
  Disclosure Schedule

  	
  Exceptions to Warranties Concerning the Company

  

 

iv

 

PARTICIPATION INTEREST PURCHASE AGREEMENT

 

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

 

RECITALS

 

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

 

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

 

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

 

WHEREAS, concurrently with the entering into of this Agreement and the
Concurrent Purchase Agreements, (i) the Company and the Telki Holding Company
B.V. will enter into an amendment to the Credit Facility Agreement No.
CO1-97/UA, dated January 5, 1997; (ii) the Company and Telki Holding Company
B.V. will enter into an amendment to the Equipment and Service Credit Facility
Agreement No. W01-95/UA, dated November 1, 1995; (iii) the Company and Deutsche
Telekom AG will enter into an amendment to the Credit Facility Agreement No.
C02-97/UA, dated January 5, 1997; (iv) the Company and Deutsche Telekom AG will
enter into an amendment to the Equipment and

 

1

 

Service Credit Facility Agreement No. W02-95/UA, dated November 1,
1995; (v) the Company and TDC Mobile International A/S will enter into an
amendment to the Credit Facility Agreement No. C03-97/UA, dated January 5,
1997; and (vi) the Company and TDC Mobile International A/S will enter into an
amendment to the Equipment and Service Credit Facility Agreement No. W03-95/UA,
dated November 1, 1995 (collectively, the “Debt Restructuring Agreements”),
each such amendment to become effective upon the Escrow Release;

 

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

 

WHEREAS, concurrent with the transactions described above, the Seller
desires to sell, assign and deliver to the Purchaser, and the Purchaser desires
to purchase and accept from the Seller, its 15.33% participation interest in
the Company (the “Participation Interest”) on the terms and subject to
the conditions set forth herein (the “Acquisition”).

 

AGREEMENT

 

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

 

ARTICLE I.

DEFINITIONS.

 

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

 

“Acquisition” has the meaning given in the Recitals.

 

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

 

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

 

“Agreement” has the meaning given in the Preamble.

 

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

 

“Amended Target Organizational Documents” means the founding
agreement and the charter of PTT approved at a participants’ meeting of PTT on
the Closing Date,

 

2

 

amended in accordance with the
PTT Purchase Agreement such that the Purchaser becomes the sole participant in
PTT.

 

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

 

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

 

“Building” has the meaning given in Section 4.14.

 

“Business” has the meaning given in the Recitals.

 

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

 

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

 

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

 

“Closing” has the meaning given in Section 2.3.

 

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

 

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

 

“Company” has the meaning given in the Recitals.

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Intellectual Property” means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all

 

4

 

trademarks, service marks,
trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all mask works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form
or medium).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

and any other interconnection
with other public telecom networks, to the extent such interconnections have
been configured, installed and operated by the Company.

 

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

 

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

 

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

 

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

 

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

 

“Parties” has the meaning given in the Preamble.

 

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

 

“PTT” means PTT Telecom Kyiv, a limited liability company
organized under the laws of Ukraine.

 

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

 

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

 

“Purchaser” has the meaning given in the Preamble.

 

“Rules” has the meaning given in Section 10.7.

 

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

 

“Seller” has the meaning given in the Preamble.

 

“Services” has the meaning given in Section 4.17.

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II.

PURCHASE AND SALE OF PARTICIPATION INTEREST.

 

Section 2.1                                   Basic Transaction.

 

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

 

(ii)                                  If, within the
three (3) month period immediately following the Closing Date, the Purchaser or
any Controlled Affiliate of the Purchaser sells a participation interest in the
Company, or all or subsantially

 

7

 

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

 

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

 

Section 2.2                                   Purchase Price. 
The purchase price to be paid by the Purchaser to the Seller for the
Participation Interest shall be equal to US$ 51,631,965 (the “Purchase Price”).  The Purchaser agrees, at Closing, to pay the
Purchase Price by delivery of cash in U.S. dollars to the Escrow Agent pursuant
to the Escrow Agreement as provided for in Section 2.6 hereof.  In case Ukrainian Law provides for the
payment in Ukrainian currency, the respective amount of Ukrainian currency
shall be calculated in accordance with the official exchange rate as
established by the Central Bank of the Ukraine on the Business Day such payment
is made.  The Purchaser may at its
option pay the Purchase Price to the Escrow Agent prior to Closing.

 

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

 

8

 

Section 2.4                                   Transfer of the Participation
Interest.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

ARTICLE III.

WARRANTIES CONCERNING THE TRANSACTION.

 

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

 

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

 

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

 

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

 

10

 

the
extent that any of the foregoing events would affect the Seller’s ownership in
the Company or negatively affect consummation of the Acquisition.

 

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

 

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

 

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

 

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

 

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

 

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

 

(iii)                               Noncontravention.  Neither the execution and the delivery of
this Agreement, nor the consummation of the Acquisition contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Purchaser is

 

11

 

subject
or any provision of its foundation document, charter, bylaws or other organizational
document or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Purchaser is a party or by which it is bound or to which any of its assets
is subject to the extent that any of the foregoing events would negatively
affect the consummation of the Acquisition.

 

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

 

ARTICLE IV.

WARRANTIES CONCERNING THE COMPANY.

 

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

 

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

 

12

 

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

 

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

 

Section 4.4                                   Licenses, Permits, and
Authorizations

 

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

 

Section 4.5                                   Directors and Officers

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

Section 4.13                            Tax Matters.

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

Section 4.14                            Real Property.

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

Section 4.15                            Intellectual Property.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

Section 4.16                            Company Licenses.

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

Section 4.17                            Networks.

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

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

 

(iii)                               agreements concerning a partnership
or joint venture;

 

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

 

(v)                                  agreements concerning
confidentiality or noncompetition;

 

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

 

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

 

(viii)                        collective
bargaining agreements;

 

24

 

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

 

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

 

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

 

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

 

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

 

(xiv)                         human resources software and billing
software agreements;

 

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

 

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

 

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

 

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

 

(xix)                           interconnection contracts;

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

(i)                                     the policy number (where known);

 

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

 

(iii)                               the type of coverage;

 

(iv)                              the period of coverage; and

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

Section 4.25                            Environment, Health, and Safety.

 

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

 

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

 

27

 

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

 

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

 

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

 

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

 

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

 

ARTICLE V.

PRE-CLOSING COVENANTS.

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

Section 5.9                                   Governmental Approval.

 

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

 

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

 

30

 

order.  In case the Purchaser decides to appeal
against such order, the Seller is obliged to support the Purchaser with regard
to the preparation of such appeal and in course of the respective proceedings.

 

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

 

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

 

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

 

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

 

ARTICLE VI.

POST-CLOSING COVENANTS.

 

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

 

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

 

31

 

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

 

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

 

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

 

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

 

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

 

(iii)                               the Confidential Information of the
other Party and/or the Company has come into the public domain other than
through its fault or

 

32

 

the
fault of any person to whom such Confidential Information has been disclosed by
that Party.

 

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

 

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

 

ARTICLE VII.

CONDITIONS TO OBLIGATIONS.

 

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

 

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

 

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

 

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

 

(iv)                              no action, suit, or proceeding shall
be pending or threatened before any court or quasi-judicial or administrative
agency of any national, supranational, federal, state, local, or foreign
jurisdiction or before 

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(vi)                              the Parties and the Company shall
have received all authorizations, consents, and approvals of governments and
governmental agencies necessary for the transactions contemplated by this
Agreement, including, without limitation, such authorizations, consents, and
approvals

 

35

 

referred
to in Section 3.1(ii), Section 3.2(ii) and Section 4.3 hereof (including any
necessary approvals of the transactions contemplated herein by the UAC); and

 

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

 

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

 

ARTICLE VIII.

REMEDIES FOR BREACHES OF THIS AGREEMENT.

 

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

 

Section 8.2                                   Indemnification Provisions for
Benefit of the Purchaser.

 

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

 

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

 

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

 

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

 

36

 

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

 

(C)                                To the extent that an Adverse
Consequence has arisen as the result of a breach of a warranty contained in
Article IV hereof, the Seller’s obligation to indemnify or be liable to the
Purchaser from and against such Adverse Consequence shall, in the aggregate, be
limited to 15.33% of the total amount of such Adverse Consequence irrespective
of whether any third party that sold a participation interest in the Company to
the Purchaser is liable or not liable for any damages under its respective
participation interest purchase agreement (for the avoidance of doubt, this
limitation shall not apply to the threshold set forth in subparagraph A above);

 

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

 

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

 

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

 

(G)                                In the event that a breach of any of
the warranties given by the Seller in Article IV (other than a breach caused by
a direct act or

 

37

 

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

 

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

 

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

 

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

 

Section 8.3                                   Indemnification Provisions for
Benefit of the Seller.

 

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

 

(ii)                                  The Purchaser shall not be obligated
to indemnify the Seller from and against any Adverse Consequences resulting
from, arising out of, relating to, in the nature of, or caused by the breach of
any warranty of the Purchaser until the Seller has suffered Adverse
Consequences by reason of all

 

38

 

such
breaches in excess of a $1,500,000 aggregate threshold (at which point the
Purchaser will be obligated to indemnify the Seller from and against all such
Adverse Consequences; provided, however,
that any obligation of the Purchaser to indemnify the Seller after such
aggregate threshold has been reached shall not arise with regard to Adverse
Consequences of less than $25,000.

 

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

 

Section 8.4                                   Matters Involving Third Parties.

 

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

 

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

 

(iii)                               So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with Section
8.4(ii) hereof, (A) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party Claim,
(B) the Indemnified Party will not consent to the entry of any judgment or
enter into

 

39

 

any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party, and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnified
Party.

 

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

 

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

 

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

 

Section 8.7                                   Miscellaneous.

 

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

 

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

 

40

 

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

 

ARTICLE IX.

EFFECTIVENESS AND TERMINATION.

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

ARTICLE X.

MISCELLANEOUS.

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     If
to the Seller:

 

KPN Telecom B.V.

Attn: Mr. A.W. Nauta

Maanplein 5

2516 CK Den Haag

The Netherlands

Telecopy:  +31 70 446 0675

 

with a copy to:

 

Loyens & Loeff

Attn: Mr. W.H. Booysen

Weena 690

3012 CN Rotterdam

The Netherlands

Telecopy:  +31 10 404 75 90

 

42

 

(ii)                                  If
to the Purchaser:

 

Mobile TeleSystems OJSC

Marksistskaya Street, 4

Moscow 109147 Russian Federation

Telecopy:  +7-095-915-7425

Attention:  Mikhail A. Smirnov,
President

 

with a copy to:

 

Latham & Watkins

Ulitsa Gasheka, 7

Ducat II, Suite 900

Moscow 123056 Russian Federation

Attention:  Anna Goldin, Esq.

Facsimile:  +7-095-785-1235

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

44

 

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

 

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

 

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

 

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

 

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

 

(Signature page follows.)

 

45

 

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

 

 

	
   

  	
  MOBILE TELESYSTEMS OJSC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mikhail A. Smirnov

  
	
   

  	
  By:

  	
  Mikhail A. Smirnov

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Viktor I. Kondratyev

  
	
   

  	
  By:

  	
  Viktor I. Kondratyev

  
	
   

  	
  Title:

  	
  Chief Accountant

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KPN TELECOM B.V.

  
	
   

  	
   

  
	
   

  	
  /s/ Sebastiaan van Loosdrech

  
	
   

  	
  By:

  	
  Sebastiaan van Loosdrech

  
	
   

  	
  Title:

  	
  Authorized by Power of Attorney

  

 

Signature page to Participation
Interest Purchase Agreement.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}]]