<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS"
------------------------------------------------
(Name of Issuer)
Common Stock, 0.005 rubles nominal value
----------------------------------------
(Title of Class of Securities)
68370R 10 9
-----------
(CUSIP Number)
Kaare Magnus Risung, Esq.
Telenor AS
Keysers Gate 13/15
N-0130 Oslo, Norway
47-23-138-491
-------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 1, 1998
----------------
(Date of Event which Requires Filing
of this Statement)
Copy to:
Peter S. O'Driscoll, Esq.
Coudert Brothers
60 Cannon Street
London EC4N 6JP
England
44-171-248-3000
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (b)(3) or (4), check the following box. [_]
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13D-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page will be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter disclosure
provided in a prior cover page.
The information required on the remainder of this cover page will not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but will be subject to all other provisions of the Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO. 68370R 10 9
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Telenor East Invest AS
000-00-0000
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5 N/A
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Norway
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
8,902,201/1/
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY - 0 -
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
8,902,201/1/
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
-0-
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
8,902,201/1/
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[X]
The aggregate amount reported as beneficially owned in row (11) does not
include shares which the Reporting Person discloses in the report but as
to which beneficial ownership is disclaimed pursuant to Rule 13d-4[17 CFR
240.13d-4] under the Securities Exchange Act of 1934, as amended.
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
31.6% of the issued and outstanding Common Stock (25.7% of the issued and
outstanding voting capital stock)
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ------------------
/1/ The Reporting Person's beneficial ownership of all 8,902,201 shares is
subject to the fulfillment of certain conditions precedent to the Reporting
Person's obligation to purchase such shares, as discussed in Item 4 herein.
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO.68370R109
- -----------------------
- ------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Telenor AS
000-00-000
- ------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
- ------------------------------------------------------------------------------
3. SEC USE ONLY
- ------------------------------------------------------------------------------
4. SOURCE OF FUNDS*
AF
- ------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
N/A
- ------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Norway
- ------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
8,902,201/2/
SHARES -----------------------------------------------------------
8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY - 0 -
-----------------------------------------------------------
EACH 9. SOLE DISPOSITIVE POWER
REPORTING
8,902,201/2/
PERSON -----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
WITH
- 0 -
- ------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,902,201/2/
- ------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[X]
The aggregate amount reported as beneficially owned in row (11) does not
include shares which the Reporting Person discloses in the report but as
to which beneficial ownership is disclaimed pursuant to Rule 13d-4[17 CFR
240.13d-4] under the Securities Exchange Act of 1934, as amended.
- ------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
31.6% of the issued and outstanding Common Stock (25.7% of the issued and
outstanding voting capital stock)
- ------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON*
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ------------------------
/2/ The Reporting Person disclaims beneficial ownership of all shares.
2
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SCHEDULE 13D
Item 1. Security and Issuer
-------------------
This statement on Schedule 13D relates to the common stock, 0.005 rubles
nominal value (the "Common Stock"), of Open Joint Stock Company
"Vimpel-Communications," a Russian open joint stock company ("VimpelCom"). The
principal executive offices of VimpelCom are located at 10-12 Ulitsa 8-Marta,
Moscow, Russian Federation 125083.
Item 2. Identity and Background
-----------------------
This statement is being filed jointly by Telenor East Invest AS (referred
to herein as "Telenor") and Telenor AS, the holder of 100% of the shares of
Telenor, with respect to the acquisition by Telenor of 8,902,201 shares of
VimpelCom's Common Stock. This statement represents an initial filing by Telenor
and Telenor AS with respect to Telenor's acquisition of such Common Stock. The
agreement between the Reporting Persons relating to the joint filing of this
statement is attached as Exhibit A hereto.
TELENOR EAST INVEST AS
(a) Telenor East Invest AS, a corporation formed under the laws of Norway.
(b) Keysers Gate 13/15
N-0130
Oslo Norway
(c) Telenor East Invest AS is engaged principally in the business of
investing in the telecommunications industry outside of Norway.
(d) During the last five years, Telenor East Invest AS has not been
convicted in a criminal proceeding.
(e) During the last five years, Telenor East Invest AS was not a party to a
civil proceeding of a judicial or administrative body as a result of which
Telenor East Invest AS was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
EXECUTIVE OFFICERS AND DIRECTORS OF TELENOR EAST INVEST AS
(a), (b), (c) and (f) The following information sets forth the name,
citizenship, business address and present principal occupation of each of the
directors and executive officers of Telenor East Invest AS. Each of the
directors and executive officers of Telenor East Invest AS is a citizen of
Norway. Except as otherwise indicated, the business address of each of such
persons is Keysers Gate 13/15, N-0130 Oslo, Norway.
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DIRECTORS OF TELENOR EAST INVEST AS
-----------------------------------
<TABLE>
<CAPTION>
Name and Business Address Present Principal Occupation
------------------------- ----------------------------
<S> <C>
Terje Thon Senior Executive Vice President, Telenor
AS
Torstein Moland Executive Vice President and Chief Financial Officer,
Telenor AS
Ole Johan Haga Regional Director, Telenor International AS
EXECUTIVE OFFICERS OF TELENOR EAST INVEST AS
--------------------------------------------
Name and Business Address Present Principal Occupation
------------------------- ----------------------------
Henrik Torgersen President
</TABLE>
(d) During the last five years, none of the above executive officers and
directors of Telenor East Invest AS has been convicted in a criminal proceeding.
(e) During the last five years, none of the above executive officers and
directors of Telenor East Invest AS was a party to a civil proceeding of a
judicial or administrative body as a result of which Telenor East Invest AS was
or is subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
TELENOR AS
(a) Telenor AS, a corporation formed under the laws of Norway.
(b) Universitetsgaten 2 N-0130 Oslo Norway
(c) Telenor AS is engaged principally in the business of production and
supply of services in the fields of telecommunications, data services and media
distribution.
(d) During the last five years, Telenor AS has not been convicted in a
criminal proceeding.
(e) During the last five years, Telenor AS was not a party to a civil
proceeding of a judicial or administrative body as a result of which Telenor AS
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
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EXECUTIVE OFFICERS AND DIRECTORS OF TELENOR AS
(a), (b), (c) and (f) The following information sets forth the name,
citizenship, business address and present principal occupation of each of the
directors and executive officers of Telenor AS. Each of the directors and
executive officers of Telenor AS is a citizen of Norway. Except as otherwise
indicated, the business address of each of such persons is Universitetsgaten 2,
N- 0130 Oslo, Norway.
DIRECTORS OF TELENOR AS
-----------------------
Name And Business Address Present Principal Occupation
------------------------- ----------------------------
Arnfinn Hofstad Director
NKL
Kirkegaten 4
0153 Oslo, Norway
Finn Arild Hvistendahl Consultant
Norske Skog AS
P.O. Box 329
1324 Lysaker
Terje Moe Gustavsen Manager
LO Stat.
Mollergt. 10
0179 Oslo, Norway
Oddbjorn Karhus Nordset Deputy County Governor
Fylkesmannen i Nord-Trondelag
Strandveien 38, Statens hus
7700 Steinkjer, Norway
Ashild Marianne Bendiktsen Chief Financial Officer
Entreprenor Bendiktsen & Aasen A/S
P.O. Box 233
9350 Sjovegan, Norway
Marianne Sofie Damhaug Market Coordinator
Norplan AS
Plogen 1
0679 Oslo
Synnove Lohne-Knudsen Union Leader
Kommunikasjons-og
Teletilsattes Landsforbund
Kongensgate 15
0153 Oslo, Norway
Svein Eivind Solheim Manager of Operations
Telenor Istallasjon AS
Norway
3
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Anne Sorlie Consultant
Tele-og Dataforbundet
P.O. Box 6701, St. Olavs pl.
0130 Oslo, Norway
EXECUTIVE OFFICERS OF TELENOR AS
--------------------------------
<TABLE>
<CAPTION>
Name And Business Address Present Principal Occupation
------------------------- ----------------------------
<S> <C>
Tormod Hermansen President and Chief Executive Officer
Ole Petter Hakonsen Senior Executive
Vice President
Terje Thon Senior Executive
Vice President
Jon Fredrik Baksaas Senior Executive Vice President
Torstein Moland Executive Vice President and Chief Financial
Officer
Peter Pay Executive Vice President
</TABLE>
(d) During the last five years, none of the above executive officers and
directors of Telenor AS has been convicted in a criminal proceeding.
(e) During the last five years, none of the above executive officers and
directors of Telenor AS has been a party to a civil proceeding of a judicial or
administrative body as a result of which such executive officer or director was
or is subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
The amount and source of funds used in connection with the purchase by
Telenor of the Common Stock of VimpelCom is US$161,931,036, plus interest
accruing on such amount from January 29, 1999 until payment thereof at a rate of
4.25% per annum, contributed from Telenor's working capital.
Item 4. Purpose of Transaction
----------------------
Under the Primary Agreement dated as of December 1, 1998 (the "Primary
Agreement") between Telenor and VimpelCom and on the terms and subject to the
conditions specified therein, VimpelCom agreed to issue and Telenor agreed to
subscribe for and purchase 8,902,201 shares of Common Stock of VimpelCom (the
"Purchaser's Shares"), at a price of $18.19 per share of Common Stock (or $13.64
per American Depositary Share
4
<PAGE>
("ADS")), plus interest accruing on such amount from January 29, 1999 until
payment thereof at a rate of 4.25% per annum. The exact purchase price Telenor
will pay for the Purchaser's Shares is $161,931,036, plus interest accruing on
such amount from January 29, 1999 until payment thereof at a rate of 4.25% per
annum. After the issuance of the Purchaser's Shares, the Purchaser's Shares will
constitute approximately 25.7% of VimpelCom's total issued and outstanding
voting capital stock (31.6% of the issued and outstanding shares of Common
Stock). If all 1,000,000 shares of Common Stock reserved for issuance under
VimpelCom's proposed employee stock option plan are issued, Telenor's ownership
interest will be reduced to exactly 25% plus one share of VimpelCom's total
issued and outstanding voting capital stock. If VimpelCom does not issue any of
the 1,000,000 shares contemplated by the proposed employee stock option plan, a
"call option" under the Primary Agreement (described below) will permit
VimpelCom to buy back from Telenor such number of shares as are required to
reduce Telenor's ownership interest to 25% plus one share of VimpelCom's total
issued and outstanding voting capital stock, at a price equal to the price
Telenor paid for such shares, plus interest. The terms of the purchase also
contemplate that Telenor will receive three out of nine seats on the Board of
Directors of VimpelCom.
Telenor is purchasing the Purchaser's Shares for investment purposes.
VimpelCom expects to use the proceeds of Telenor's investment to develop
VimpelCom's licenses to provide GSM services, its fiber optic network and its
Internet services. The Board of Directors of VimpelCom is recommending the terms
of the transaction to VimpelCom's shareholders and expects to hold a special
shareholder meeting in late January 1999 to consider these aspects of the
transaction. Subject to obtaining necessary shareholder and regulatory
approvals, the parties anticipate that the closing of the transaction will occur
on or prior to June 1, 1999 (the "Closing").
In connection with its investment in shares of VimpelCom, in addition to
the Primary Agreement, Telenor entered into the following agreements:
(a) a Registration Rights Agreement dated as of December 1, 1998 (the
"Registration Rights Agreement") among Telenor, VimpelCom, Dr. Dimitri
Borisovich Zimin ("Dr. Zimin"), Glavsotkom LLC ("Glavsotkom") and the
Fund for Non-Commercial Programs "Bee Line" (the "Bee Line Fund");
(b) a Shareholders Agreement dated as of December 1, 1998 (the
"Shareholders Agreement") among Telenor, Dr. Zimin, Glavsotkom, the
Bee Line Fund, Augie K. Fabela, II ("Mr. Fabela"), Geneva Investment
Trust I, L.L.C. ("Geneva") and other holders of capital stock of
VimpelCom from time to time; and
(c) an Escrow Agreement dated December 1, 1998 (the "Escrow Agreement")
among Telenor, VimpelCom and Den norske Bank ASA, as the Escrow Agent
(the "Escrow Agent").
In addition, Telenor AS, the parent corporation of Telenor, has entered into a
Guarantee Agreement dated as of December 1, 1998 (the "Guarantee Agreement")
between Telenor AS and VimpelCom.
5
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Description of Primary Agreement
- --------------------------------
Purchase Terms
The Primary Agreement and the Escrow Agreement contemplate that Telenor
will pay for its purchase of the Purchaser's Shares in as many as seven
installments or as few as one installment. Telenor has deposited the initial
purchase price of US$161,931,036 in an escrow account held by and in the name of
the Escrow Agent, which amount will accrue interest and will, subject to the
terms and conditions of the Primary Agreement and the Escrow Agreement, be paid
over to VimpelCom as the full purchase price or returned to Telenor. Under the
Primary Agreement, Telenor will make its first purchase of the Purchaser's
Shares on or prior to June 1, 1999 (the "Closing Date") and will purchase
additional shares up to the full amount of the Purchaser's Shares on as many as
six subsequent dates, though Telenor has the right to pay for the purchase of
the Purchaser's Shares in a single installment. On the Closing Date, if
VimpelCom has fulfilled the conditions precedent described in Article VIII of
the Primary Agreement (including delivery to Telenor of an extract from
VimpelCom's share register showing Telenor as the owner of such portion of the
Purchaser's Shares as Telenor is purchasing on the Closing Date), Telenor and
VimpelCom will jointly instruct the Escrow Agent to pay to VimpelCom the first
installment of the purchase price (or such other amount in excess thereof as
Telenor has decided to pay). If Telenor does not pay the purchase price for the
Purchaser's Shares in full on the Closing Date, subject to Telenor's right of
acceleration described below, on each subsequent payment date, the installment
of the purchase price payable on such subsequent payment date will be paid in
accordance with the Escrow Agreement without the need for any further
instruction from VimpelCom or Telenor.
Telenor has the right at any time after the Closing Date unilaterally to
accelerate its purchase of the Purchaser's Shares by delivering an instruction
to the Escrow Agent specifying (a) the number of Purchaser's Shares for which
accelerated payment will be made and (b) the subsequent payment date(s) on which
payments have been made but for such acceleration. However, in accelerating a
payment, Telenor must accelerate the entire amount (and not only a portion of
the amount) owing in respect of the Purchaser's Shares on a subsequent payment
date.
Conditions Precedent to Purchase
Under Article VIII of the Primary Agreement, in addition to delivery of the
extract from the share register, and the execution of the Russian Share Purchase
Agreement referred to below, for Telenor to be obligated to cause the Escrow
Agent to pay the first installment of the purchase price to VimpelCom, among
others, the following conditions precedent must have been satisfied by VimpelCom
(or waived by Telenor) on or prior to June 1, 1999: (a) VimpelCom's
representations and warranties under the Primary Agreement must have been true
and correct on December 1, 1998 and on the date of the first Board meeting which
Telenor's representatives elected to the Board of Directors of VimpelCom attend
(the "First Board Date"), (b) certain of VimpelCom's representations and
warranties under the Primary Agreement must be true and correct on the Closing
Date, (c) VimpelCom and certain of its major inside shareholders must have
complied with certain of their respective obligations under the Primary
Agreement and the Shareholders Agreement, (d) VimpelCom must have delivered
officer's certificates confirming (i) that a 3/4 majority of VimpelCom's
shareholders present and eligible to vote at VimpelCom's special meeting of
shareholders has approved the issuance of the Purchaser's Shares to Telenor, the
approval of the amendments to VimpelCom's charter specified in the Primary
Agreement and the election of Telenor's three
6
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representatives to VimpelCom's Board of Directors, (ii) the truth and
correctness of VimpelCom's representations and warranties referred to above and
(iii) the fulfillment of certain conditions precedent, including that certain
corporate and regulatory approvals have been obtained, (e) VimpelCom must have
obtained waivers and consents from certain third parties, including certain of
its secured creditors, (f) VimpelCom must have delivered to Telenor (i) a
certified copy of VimpelCom's charter and (ii) a power of attorney of Dr. Zimin,
the President and Chief Executive Officer of VimpelCom, authorizing Telenor to
vote certain of Dr. Zimin's shares on certain issues at shareholders' meetings
convened after January 30, 1999 but prior to January 29, 2000, until Telenor has
fully paid for all of the Purchaser's Shares (the "Power of Attorney") and (g)
all of the Principal Agreements (as defined in the Primary Agreement), must have
been executed and delivered by the parties, including certain service obligation
agreements between Telenor AS and VimpelCom which have not yet been executed by
the parties. In addition to such conditions precedent, as conditions precedent
to the completion of the issuance and sale of the Purchaser's Shares, Telenor
must have obtained the approval of such purchase from the Ministry for Anti-
Monopoly Policy and Support for Entrepreneurship of the Russian Federation and,
as described below, VimpelCom must have registered the Purchaser's Shares with
the Russian Federation Federal Commission on Securities Markets (the "FCSM").
Current Russian securities regulations prohibit issuers from concluding
agreements to place shares with a specific purchaser prior to the time the
shares have been registered with the FCSM. For this reason, the provisions of
the Primary Agreement relating to VimpelCom's issuance of the Purchaser's Shares
to Telenor are, solely for the purposes of compliance with Russian law,
considered a preliminary agreement. Prior to the Closing Date, after the
Purchaser's Shares have been registered with the FCSM, Telenor and VimpelCom
will enter into a short form share purchase agreement (the "Russian Share
Purchase Agreement") which will incorporate by reference the terms and
conditions of the Primary Agreement. To satisfy the requirements of Russian
securities regulations, VimpelCom will not be obligated to issue any Purchaser's
Shares to Telenor and will not be considered to have offered the Purchaser's
Shares to Telenor, and Telenor will not be obligated to make any payment for
such Purchaser's Shares, until the Russian Share Purchase Agreement has been
signed.
Undertakings of VimpelCom
Under Article V of the Primary Agreement, VimpelCom has undertaken to
Telenor to perform and comply with certain covenants for certain periods of
time.
During the period from December 1, 1998 until the Closing, VimpelCom has
agreed (a) to provide Telenor with certain information concerning VimpelCom's
telecommunications licenses, and upon Telenor's request, roaming and
interconnect applications and filings made by VimpelCom and its subsidiaries
with governmental or regulatory authorities, (b) to with certain exceptions, not
to (and not to permit its principal subsidiary, Open Joint Stock Company KB-
Impuls ("KBI")) to amend its charter, delist the ADSs from the New York Stock
Exchange, reorganize, liquidate or dissolve itself or KBI, declare, set aside or
pay any dividend or redeem, purchase or acquire any shares or options, or engage
in any sale of shares, merger, consolidation or sale of substantially all of its
assets, the value of which exceeds $5,000,000, (c) to effect amendments to its
charter which fix the number of members of the Board of Directors at nine,
provide that a 3/4 majority of the Board of Directors is required to amend the
Board Rules, change the requirements for a quorum of the Board of Directors to
7
<PAGE>
include, in addition to the requirement that two-thirds of the members of the
Board shall constitute a quorum, a requirement that a director nominated by a
holder of 25% plus one share of VimpelCom's voting capital stock must be
present, provide that a 3/4 majority of VimpelCom's shareholders present and
eligible to vote at shareholders meetings is required in connection with the
issuance of any authorized (but unissued) shares, and provide that the names of
non-Russian shareholders of VimpelCom will be deemed to be incorporated by
reference in VimpelCom's charter, and (d) to provide Telenor with VimpelCom's
draft budget for 1999 and cause the First Board Date to occur within five days
of the date of the extraordinary meeting of VimpelCom's shareholders considering
the transactions contemplated by the Primary Agreement.
During the period from December 1, 1998 until the First Board Date, Telenor
has the right to veto the actions of VimpelCom and KBI described below, except
to the extent such actions are contemplated by VimpelCom's 1998 budget, as
amended, or the January 1999 budget adopted by the Board: (a) the issuance of
any new shares of capital stock of VimpelCom (other than the Purchaser's Shares)
or of any of its consolidated subsidiaries, (b) the creation of any new
subsidiary or the making of any investment in any new subsidiary, subject to a
$5,000,000 aggregate basket intended to permit VimpelCom to consolidate a number
of its indirect subsidiaries and investments, (c) the entry into any contract or
series of contracts (other than in respect of indebtedness) having a value per
contract in excess of $5,000,000, (d) certain transactions between VimpelCom,
its subsidiaries and their respective affiliates, (e) subject to certain
exceptions, the incurrence of any indebtedness by VimpelCom, its subsidiaries or
affiliates in excess of $5,000,000, (f) the creation or adoption of any employee
benefit plan (other than VimpelCom's proposed employee stock option plan
referred to above) and (g) subject to certain exceptions, the incurrence of any
lien over the assets and properties of VimpelCom or any of its subsidiaries
securing indebtedness in excess of $5,000,000.
During the period from December 1, 1998 until the first date on which
Telenor, having attained a holding of 10% or more of the issued and outstanding
voting capital stock of VimpelCom, holds less than such percentage, VimpelCom
has agreed (a) to provide Telenor with certain financial information regarding
VimpelCom, (b) not to engage in (or permit any of its subsidiaries to engage in)
certain transactions with its (and their) affiliates and (c) to cause a designee
of Telenor to be elected to the board of directors of KBI.
During the period from December 1, 1998 until the first date on which
Telenor, having attained a holding of 25% plus one share of the issued and
outstanding voting capital stock of VimpelCom, holds less than such percentage,
VimpelCom has agreed (a) to appoint Telenor's designees to VimpelCom's
policy-making bodies responsible for VimpelCom's strategy, marketing,
information technology, financial management and budgeting and (b) not to take
or permit KBI to take any of the following actions without the prior written
consent of Telenor: (i) any amendment of KBI's charter, (ii) any merger,
reorganization, consolidation, dissolution, liquidation or sale of all or
substantially all of the assets of KBI, (iii) subject to certain exceptions, the
incurrence of any indebtedness of KBI in excess of $15,000,000, (iv) subject to
certain exceptions, the incurrence of any lien over the assets and properties of
KBI securing indebtedness in excess of $5,000,000, (v) the creation of any new
subsidiary of KBI, (vi) any transaction having an aggregate value in excess of
$1,000,000 between KBI or any of its subsidiaries and any officer, director or
shareholder of any such subsidiary, (vii) any sale or disposition by VimpelCom
of any interest in KBI or (viii) payment of any dividend or distribution or any
redemption in respect of any of KBI's capital stock.
8
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In addition to the foregoing undertakings of VimpelCom under Article V of
the Primary Agreement, VimpelCom has also agreed, for the period from December
1, 1998 until the earlier of (a) the First Board Date and (b) 180 days from
December 1, 1998, not to take any action, or permit any of its consolidated
subsidiaries to take any action, to initiate, assist, solicit, negotiate,
encourage or accept any offer or inquiry from any entity or individual whose
beneficial owners derive not less than 15% of their annual revenues from
operations in the telecommunications industry (a "Strategic Investor"), with
respect to (i) any issuance of shares to such Strategic Investor, or merger or
consolidation with such Strategic Investor, or sale of all or substantially all
of the assets of VimpelCom or any of its consolidated subsidiaries to such
Strategic Investor, or (ii) furnishing information regarding VimpelCom or
certain of its subsidiaries to any Strategic Investor who VimpelCom or any of
its consolidated subsidiaries knows or has reason to believe is in the process
of considering any of the foregoing transactions.
Liquidated Damages; Call Option; Corporate Opportunity; Appointments to
Policy Working Groups
The Primary Agreement requires VimpelCom to pay liquidated damages to
Telenor under certain circumstances. If the VimpelCom shareholders (a) fail to
approve the amendments to the VimpelCom charter required in the Primary
Agreement (discussed above) on or prior to February 1, 1999 and (b) within
eighteen months after the date on which a meeting of shareholders is held at
which a vote of such shareholders is conducted concerning such amendments,
VimpelCom or KBI issues shares to, merges or consolidates with, or sells all or
substantially all of its assets and properties to, a Strategic Investor other
than a person whose equity interests are at least 51% beneficially owned by
Russian persons and which derives its income principally from the
telecommunications industry in the Russian Federation (except that liquidated
damages will be paid in connection with a sale of VimpelCom shares to such a
person for cash), then on the date of consummation of such issuance, merger,
consolidation or sale (provided such date falls within such eighteen month
period), VimpelCom will pay, as liquidated damages for loss of a bargain and not
as a penalty, to Telenor an amount equal to US$20,000,000.
The Primary Agreement also includes a "call option" in favor of VimpelCom
in respect of certain shares of Common Stock owned by Telenor. If VimpelCom has
not adopted the employee stock option plan described above or issued any shares
of Common Stock in connection with such plan, VimpelCom has the right to
purchase from Telenor a number of shares of Common Stock equal to the difference
between (i) the aggregate number of the Purchaser's Shares and (ii) 25% plus one
share of the then issued and outstanding shares of voting capital stock of
VimpelCom, adjusted for any dilution incurred prior to the date of such
purchase, at a price equal to the price Telenor paid for such shares, plus
interest thereon at the London Inter Bank Offered Rate (LIBOR) for deposits in
US dollars for a period of six months, as published in the Financial Times on
the Closing Date and at each six-month interval thereafter, from (and including)
the Closing Date to (but excluding) the date of purchase of such shares, which
shall be payable in US dollars at the closing of such purchase.
The Primary Agreement includes an expression of intent by Telenor to
conduct all of its new telecommunications business and projects in Russia and
the Commonwealth of Independent States ("CIS") through VimpelCom, and to inform
VimpelCom of any
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opportunities in the telecommunications business in Russia and the CIS of which
Telenor learns. From December 1, 1998 until the earlier of (A) the termination
of the Primary Agreement without the occurrence of the Closing (discussed
below), and (B) following the Closing, the date on which Telenor and its
affiliates have sold or otherwise disposed of shares of VimpelCom Common Stock
or ADSs such that Telenor and its affiliates no longer hold in excess of 25%
plus one share of the issued and outstanding voting capital stock of VimpelCom,
Telenor must use reasonable efforts to coordinate its interest in each of its
projects, operations and other commercial activities in Russia and the CIS in
which it currently holds an interest with the activities of VimpelCom. However,
this obligation will not in any way limit Telenor's right to develop its
existing interests to maximize value.
Finally, the Primary Agreement requires VimpelCom to appoint Telenor
designees to VimpelCom's policy working groups (as designated by VimpelCom)
responsible for (a) strategy, (b) marketing, (c) information technology, (d)
financial management and (e) budgeting. Telenor AS and VimpelCom also intend to
execute reciprocal service obligation agreements under which Telenor AS and
VimpelCom each will second their employees to the other, for the purpose of
providing management training and engineering know-how. This obligation shall
survive until the date on which the Telenor Shareholders (defined below), having
once attained 25% plus one share or more of the issued and outstanding voting
capital stock of VimpelCom, hold less than such amount.
Termination
If VimpelCom's shareholders fail to approve the proposed amendments to
VimpelCom's Charter described above and the issuance of the Purchaser's Shares
to Telenor at the meeting of shareholders held to consider such matters, the
Primary Agreement, the Escrow Agreement, the Registration Rights Agreement and
the Shareholders Agreement will terminate, and on the third business day after
February 15, 1999, the Escrow Agent will pay the balance of the escrow account
to Telenor. If VimpelCom fails to fulfill the conditions precedent to Telenor's
first purchase of the Purchaser's Shares (or such conditions precedent are not
waived by Telenor) on or prior to June 1, 1999, the Escrow Agent will pay the
balance of the escrow account to Telenor, and the Primary Agreement, the Escrow
Agreement, the Registration Rights Agreement and the Shareholders Agreement will
terminate.
The Primary Agreement will terminate, and the transactions contemplated
thereunder will be abandoned, (a) at any time prior to the Closing, by
VimpelCom's and Telenor's written agreement, (b) if the Closing Date has not
occurred on or before June 1, 1999, or (c) if the VimpelCom shareholders fail to
approve the transactions contemplated in the Primary Agreement, the Escrow
Agreement the Registration Rights Agreement and the Shareholders Agreement at
the shareholders meeting at which such decision is considered.
Description of Registration Rights Agreement
- --------------------------------------------
As a condition precedent to Telenor's obligations to purchase the
Purchaser's Shares under the Primary Agreement, Telenor and three of the
significant shareholders of VimpelCom, Dr. Zimin, Glavsotkom and the Bee Line
Fund have entered into the Registration Rights Agreement with VimpelCom, under
which such parties have been granted demand registration rights and piggy-back
registration rights.
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The Registration Rights Agreement defines the "Significant Zimin
Shareholders" as Dr. Zimin, the Bee Line Fund and Glavsotkom. The "Zimin
Shareholders" are defined as (a) during Dr. Zimin's lifetime, Dr. Zimin and any
controlled affiliate of Dr. Zimin which is or becomes a party to the
Registration Rights Agreement in accordance with the Registration Rights
Agreement, and (b) after Dr. Zimin's death or incapacity, any person which was,
at the time of Dr. Zimin's death or incapacity, a controlled affiliate of Dr.
Zimin and a party to the Registration Rights Agreement. The "Telenor
Shareholders" are defined as Telenor and any of its controlled affiliates which
acquires Registrable Securities in accordance with the Registration Rights
Agreement. A "Holder" is defined as the Telenor Shareholders, the Significant
Zimin Shareholders and such of their respective successors, assigns and
transferrees that acquire Registrable Securities, directly or indirectly, from
them, in each case, in accordance with the Registration Rights Agreement.
"Registrable Securities" are defined, generally, as ADSs or shares of Common
Stock (excluding any warrants or other securities convertible into Common Stock)
that any Holder may own (at the time of, or acquired after, the execution of the
Registration Rights Agreement), other than ADSs or shares of Common Stock
acquired by such Holder under circumstances where the resale of such ADSs or
shares by such Holder would not require registration under the Securities Act of
1933, as amended (the "Securities Act").
Demand Registration Rights
At any time beginning one year after the date of execution of the Primary
Agreement, or earlier as may be agreed by the parties, if VimpelCom receives
from a Holder a written request that VimpelCom effect any registration,
qualification or compliance with respect to the Registrable Securities under the
Securities Act, the anticipated aggregate offering price of which exceeds
US$20,000,000, VimpelCom must as soon as practicable use its best efforts to
effect such registration, qualification or compliance covering the Registrable
Securities, as would permit or facilitate the sale and distribution of all or a
portion of the Registrable Securities in an underwritten offering. VimpelCom is
not obligated to effect any such registration, qualification or compliance (a)
within six months after the effective date of a prior registration statement
effected in response to a request from any Holder or within six months after the
effective date of any other registration statement effected by VimpelCom for a
public offering of its ADSs or shares, (b) if at such time such Holder and its
controlled affiliates hold shares representing less than 10% of VimpelCom's
issued and outstanding voting capital stock, or (c) if at such time VimpelCom
has, in response to requests from such Holder, registered Registrable Securities
and has sold such Registrable Securities on at least three prior occasions.
The Registration Rights Agreement prohibits VimpelCom from entering into
any agreement with any holder or prospective purchaser of any securities of
VimpelCom requiring VimpelCom to include shares or securities in any
registration initiated under the demand registration rights described above.
VimpelCom also is prohibited from including in a registration effected in
response to a demand, any shares or securities for its own account, without the
prior written consent of the parties to the Registration Rights Agreement.
VimpelCom and the Holders proposing to distribute Registrable Securities
through an underwriting must, upon request of the lead managing underwriter
selected by VimpelCom (and reasonably acceptable to the Holders of a majority of
the Registrable Securities proposed to be sold in such offering), enter into any
reasonable underwriting agreement. The Holders are permitted to select a
co-managing underwriter for the offering (who must be
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reasonably acceptable to VimpelCom), and in no event is VimpelCom required to
include shares for its own account in such offering. If a Holder disapproves of
the terms of the underwriting, it may elect to withdraw from such offering by
sending written notice to VimpelCom and the lead managing underwriter.
Piggy-Back Registration Rights
So long as they hold ADSs or shares representing at least 10% of the issued
and outstanding voting capital stock of VimpelCom at the time of their
respective exercise of such rights, each of the Significant Zimin Shareholders
and the Telenor Shareholders has the right to participate in (i.e., piggy-back
on) a registration of securities by VimpelCom, as described in more detail
below. If at any time after the fourth anniversary of the date of execution of
the Primary Agreement VimpelCom proposes to register any of its securities in
connection with an underwritten offering and sale of its securities for cash,
either for its own account or the account of another person exercising demand
registration rights (including, without limitation, any other Holder) other than
(a) a registration relating solely to an employee benefit plan, or (b) a
registration relating solely to a Rule 145 transaction, then, if at such time
they are eligible for piggy-back registration rights, as described above,
VimpelCom will (i) promptly give Telenor and/or the Significant Zimin
Shareholders, as the case may be, written notice thereof and (ii) include in
such registration and in any related underwriting, subject to the scale-back
provisions described below, all of the Registrable Securities specified in a
written request made by it or them within 30 days after VimpelCom's delivery of
receipt of such written notice. Any one request must not exceed 50% of the ADSs
or shares that the Telenor Shareholders or the Significant Zimin Shareholders,
as applicable, own at such time.
The Telenor Shareholders' and the Significant Zimin Shareholders' right
to registration will be conditioned upon their participation in the
above-described underwriting and the inclusion of Registrable Securities in the
underwriting. The Holders proposing to sell Registrable Securities must
(together with VimpelCom and any other person distributing securities through
such underwriting) enter into an underwriting agreement with the lead managing
underwriter that VimpelCom selects. If the lead managing underwriter advises
VimpelCom in writing that the number of Registrable Securities exceeds the
number of ADSs which can be sold in such offering, and likely will have an
adverse effect on the price, timing or distribution of the ADSs offered in such
offering, the lead managing underwriter may limit the Registrable Securities to
be included in such registration to the number of Registrable Securities which
can be sold without having such adverse effect. In this event, VimpelCom will
include in such registration (a) first, the securities VimpelCom proposes to
sell for its own account and (b) second, any Registrable Securities and other
VimpelCom securities the Holders and any other person requests to include in
such registration, as nearly as practicable, pro rata to the amounts of
Registrable Securities requested by each Holder and each such other person to be
included in the offering at the time the registration statement is filed. If any
Holder disapproves of the terms of any such underwriting, it may elect to
withdraw from it by written notice to VimpelCom and the lead managing
underwriter. Any securities excluded or withdrawn from such underwriting will be
withdrawn from such registration.
VimpelCom has the right to terminate or withdraw any registration VimpelCom
initiates prior to its effectiveness, whether or not any eligible Holder has
elected to include securities in such registration.
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Expenses
The Registration Rights Agreement provides that all expenses incurred in
connection with a demand registration will be borne by the Holder requesting
such registration. All registration expenses incurred in connection with any
piggy-back registration will be shared equally by VimpelCom and the Holders and
any other person participating in such registration, pro rata to the number of
shares and Registrable Securities they have registered. If a Holder withdraws
from a registration because it has learned of a material adverse change in the
financial condition, business or prospects of VimpelCom which was not known to
such Holder at the time it made its registration request, and VimpelCom
willfully failed to disclose such material adverse change, such Holder will not
be required to pay any registration expenses or to forfeit a right to demand
registration. If a material adverse change in the financial condition, business
or prospects of VimpelCom occurs after a Holder makes a registration request, or
the material adverse change is due to circumstances beyond VimpelCom's and the
Holder's control, is disclosed by VimpelCom to the Holder and results in the
Holder's withdrawal from the registration, then the Holder will bear all
registration expenses incurred in connection with such registration in the
proportion for which it would have been liable.
Transfer of Registration Rights
The right to cause VimpelCom to register the Registrable Securities in
response to a demand registration and, in the case of any Holder other than a
Significant Zimin Shareholder or its successors, assigns or transferees,
piggy-back registration rights, may be assigned by a Holder to a transferee or
assignee in connection with any transfer or assignment of Registrable Securities
by such Holder, provided that (a) such transfer may only be effected in
accordance with applicable securities laws, (b) such Holder and such transferee
will comply with the requirements set forth in the Registration Rights Agreement
concerning transfer restrictions and compliance with the Securities Act and (c)
such transferee or assignee (i) is a controlled affiliate of such Holder or (ii)
acquires from such Holder at least 25% plus one share of the issued and
outstanding voting capital stock of VimpelCom.
Termination
The Registration Rights Agreement will terminate upon the earlier of (a)
the parties' written agreement, (b) with respect to the Telenor Shareholders'
rights and obligations, the date on or after January 29, 2000 on which the
Telenor Shareholders own, in the aggregate, ADSs or shares representing less
than 10% of the issued and outstanding voting capital stock of VimpelCom, (c)
with respect to the Significant Zimin Shareholders' rights and obligations, the
date on which the Zimin Shareholders own, in the aggregate, ADSs or shares
representing less than 10% of the issued and outstanding voting capital stock of
VimpelCom, and (d) the date on which a VimpelCom shareholders' meeting is held
at which a vote of such shareholders is conducted concerning the amendments to
the VimpelCom charter contemplated in the Primary Agreement (discussed above),
and the shareholders fail to approve such amendments.
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Description of Certain Provisions of the Shareholders Agreement
- ---------------------------------------------------------------
As a condition precedent to Telenor's obligations to purchase the
Purchaser's Shares under the Primary Agreement, Dr. Zimin, Glavsotkom, the Bee
Line Fund, Mr. Fabela and Geneva entered into the Shareholders Agreement with
Telenor, under which Telenor and the Significant Zimin Shareholders have granted
certain tag-along registration rights to one another, as described below. For
purposes of the Shareholders Agreement, the definitions of the Significant Zimin
Shareholders, the Zimin Shareholders and the Telenor Shareholders are the same
as those used in the Registration Rights Agreement.
Telenor's Tag-along Registration Rights
Under the terms of the Shareholders Agreement, if any of the Significant
Zimin Shareholders proposes to register any shares of VimpelCom for sale in a
secondary public offering pursuant to the Securities Act (whether through the
exercise of demand registration rights or otherwise), such Significant Zimin
Shareholder must (a) promptly give Telenor written notice thereof, (b) afford
the Telenor Shareholders the opportunity to join in such registration and (c)
cause any underwriter (or any other person that proposes to acquire shares
directly from a Significant Zimin Shareholder) in any offering in connection
with such registration to offer to acquire from the Telenor Shareholders such
number of shares equal to the proportion which the total number of shares the
Telenor Shareholders then hold bears to the total number of shares the
Significant Zimin Shareholders own on such date, at the same price and on the
same terms and conditions that have been offered to the Significant Zimin
Shareholder(s). The foregoing will apply until the Zimin Shareholders own less
than 25% plus one share of the issued and outstanding voting capital stock of
VimpelCom.
If any Significant Zimin Shareholder proposes to register any shares of
VimpelCom for sale in a secondary public offering pursuant to the Securities Act
through the exercise of a demand registration right, and the lead managing
underwriter for such offering advises VimpelCom or any of the Significant Zimin
Shareholders in writing that the number of shares requested to be included in
such registration exceeds the number which can be sold in such offering, and
likely will have an adverse effect on the price, timing or distribution of
shares offered in such offering, the lead managing underwriter may limit the
number of shares which the Telenor Shareholders may include in such registration
to the number of shares which can be sold without having such adverse effect.
The Zimin Shareholders' Tag-along Registration Rights
If any Telenor Shareholder proposes to register any shares of VimpelCom for
sale in a secondary public offering pursuant to the Securities Act (whether
through the exercise of demand registration rights or otherwise) Telenor must
(a) promptly give the Significant Zimin Shareholders written notice thereof, (b)
afford each of the Significant Zimin Shareholders the opportunity to join in
such registration and (c) cause any underwriter (or other person that proposes
to acquire shares directly from a Telenor Shareholder) in any offering in
connection with such registration to offer to acquire from a Zimin Shareholder
such number of shares equal to the proportion which the total number of shares
the Significant Zimin Shareholders hold bears to the total number of shares the
Telenor Shareholders hold on such date, at the same price and on the same terms
and conditions that have been offered to the Telenor Shareholders. The foregoing
will apply until the Telenor Shareholders own less than 25% plus one share of
the issued and outstanding voting capital stock of VimpelCom.
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If any Telenor Shareholder proposes to register any of its shares of
VimpelCom for sale in a secondary public offering pursuant to the Securities Act
through the exercise of a demand registration right, and the lead managing
underwriter for such offering advises VimpelCom or any Telenor Shareholder in
writing that the number of shares requested to be included in such registration
exceeds the number which can be sold in such offering, and likely will have an
adverse effect on the price, timing or distribution of shares offered in such
offering, the lead managing underwriter may limit the number of shares which the
Significant Zimin Shareholders may include in such registration to the number of
shares which can be sold without having such adverse effect.
Notice; Order of Priority
Telenor, on behalf of the Telenor Shareholders, has ten business days in
which to accept a tag-along offer from the Significant Zimin Shareholders, and
the Significant Zimin Shareholders have ten business days in which to accept a
tag-along offer from the Telenor Shareholders. The fees, costs and expenses
incurred in connection with any tag-along sale will be born ratably by the
parties who participate in such sale, provided that each such party will be
responsible for the fees and disbursements of its legal counsel.
If any Significant Zimin Shareholder or any Telenor Shareholder proposes to
register shares for sale in a secondary public offering pursuant to the
Securities Act through the exercise of piggy-back registration rights in
connection with a proposed registered offering pursuant to the Securities Act of
VimpelCom's securities for the account of VimpelCom, and the lead managing
underwriter for such offering advises VimpelCom in writing that the number of
shares requested to be included in such registration exceeds the number which
can be sold in such offering, so as to be likely to have an adverse effect on
the price, timing or distribution of shares offered in such offering, the lead
managing underwriter may limit the shares to be included in such registration to
the number of shares which can be sold without having such adverse effect. The
shareholders will then permit VimpelCom to include in such registration the
amount of the shares which the lead managing underwriter advises VimpelCom can
be sold in such offering in the following priority: first, the shares proposed
by VimpelCom to be sold for its own account; and second, any shares requested to
be included in such registration by the Telenor Shareholders, the Significant
Zimin Shareholders and any such other person, as nearly as practicable, pro rata
to the amounts of shares held by the Telenor Shareholders, the Significant Zimin
Shareholders and such other person at the time of filing of the registration
statement.
Restrictions on Transfer and Increases in Ownership under the Registration
- --------------------------------------------------------------------------
Rights Agreement and the Shareholders Agreement
- -----------------------------------------------
The Shareholders Agreement and Registration Rights Agreement place
restrictions on the parties' ability to transfer their shares in VimpelCom.
Under the terms of the Registration Rights Agreement, Telenor cannot transfer
any shares of VimpelCom for a period of one year after the date of the execution
of the Primary Agreement (other than to another Telenor Shareholder which
becomes a party to the Registration Rights Agreement as the result of a transfer
of shares from Telenor and execution of an endorsement to the Registration
Rights Agreement). Following such one year period, neither Telenor nor any of
the Telenor Shareholders can transfer any shares other than: (a) pursuant to a
registration statement with respect to a public offering by Telenor of ADSs
which has been declared effective under the Securities Act pursuant to the
exercise of demand registration rights or piggy-back
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registration rights provided in the Registration Rights Agreement, or pursuant
to Telenor's exercise of its tag-along registration rights under the
Shareholders Agreement, or (b) in any transaction which is exempt from the
registration requirements of the Securities Act, provided that: (i) if on the
date of any proposed transfer of a number of shares equal to or greater than 25%
of the issued and outstanding voting capital stock of VimpelCom by the Telenor
Shareholders to any third person (1) the Shareholders Agreement is then in
effect and (2) the Zimin Shareholders own, directly or indirectly, at least 25%
plus one share of the issued and outstanding voting capital stock of VimpelCom,
the Telenor Shareholders cannot transfer any shares to such third person, unless
Telenor has given the Zimin Shareholders at least 30 days' prior written notice
of such proposed transfer and obtained the prior written consent of (A) during
the lifetime of Dr. Zimin, Dr. Zimin and (B) after Dr. Zimin's death or
incapacity, the Bee Line Fund, and (ii) the Telenor Shareholders cannot transfer
any shares to any third person (other than the depositary for the ADSs in
connection with the conversion of shares to ADSs) if such third person is on the
date of such transfer, or will be, after giving effect to such transfer, a
holder of 10% or more of the Common Stock, unless Telenor has given VimpelCom at
least 30 days' prior written notice of such proposed transfer and obtained the
prior written consent of VimpelCom thereto, as evidenced by minutes of the Board
of Directors of VimpelCom approving such transfer.
If on the date of any proposed transfer of a number of shares equal to or
greater than 25% plus one share of the issued and outstanding voting capital
stock of VimpelCom by any Zimin Shareholder to any person (other than to another
shareholder or a controlled affiliate of another shareholder party to the
Shareholders Agreement), the Telenor Shareholders own, directly or indirectly,
at least 25% plus one share of the issued and outstanding voting capital stock
of VimpelCom, then such Zimin Shareholder cannot transfer such shares to such
person, unless such Zimin Shareholder has given Telenor 30 business days' prior
written notice of such proposed transfer and obtained the prior written consent
of Telenor thereto.
In addition to the registration rights, piggy-back rights and transfer
restrictions described above, the Registration Rights Agreement includes a
"standstill" provision that prohibits Telenor and its controlled affiliates from
increasing its or their holdings of shares of VimpelCom's issued and outstanding
voting capital stock above 25% plus one share, without the prior written consent
of Dr. Zimin, or, after Dr. Zimin's death, the Bee Line Fund, so long as the
Zimin Shareholders own at least 25% plus one share of VimpelCom's issued and
outstanding voting capital stock. However, the Registration Rights Agreement
also permits Telenor to purchase sufficient additional Common Stock or ADSs to
maintain its ownership interest of 25% plus one share of the issued and
outstanding voting capital stock of VimpelCom, should any third party make a
bona fide and otherwise valid claim (as VimpelCom's Board of Directors
reasonably determines) to any shares of VimpelCom's voting capital stock that
would cause Telenor's ownership interest in VimpelCom to fall below 25% plus one
share of the issued and outstanding voting capital stock of VimpelCom. In any
such case, Telenor has the right to purchase VimpelCom ADSs at the average
market value of the ADSs on the New York Stock Exchange during the 30 trading
days immediately preceding the date on which VimpelCom's Board of Directors
determined that the ownership claim was bona fide and otherwise valid,
calculated on the basis of the closing price per ADS on each such trading day,
sufficient to maintain its ownership of 25% plus one share of the issued and
outstanding voting capital stock of VimpelCom.
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Voting Obligations under the Registration Rights Agreement and the Shareholders
- -------------------------------------------------------------------------------
Agreement
- ---------
Under the Registration Rights Agreement, the Telenor Shareholders must,
subject to certain exceptions, vote in favor of (a) new issuances of shares by
VimpelCom and (b) the issuance of certain preferred shares to Dr. Zimin or the
Bee Line Fund.
The Registration Rights Agreement provides that for the period commencing
on the first anniversary of the date of execution of the Primary Agreement and
ending on the fourth anniversary thereof, (a) so long as the Telenor
Shareholders own any shares and (b) provided that any decision of the Board or
the shareholders of VimpelCom to issue new securities permits Telenor to
purchase such new securities (i) in an amount sufficient to maintain the
ownership by the Telenor Shareholders of 25% plus one share of the issued and
outstanding voting capital stock of VimpelCom, if at such time the Telenor
Shareholders own in the aggregate at least this amount, and (ii) on the same
terms and conditions as other purchasers of such new securities, Telenor must
vote (and must cause the Telenor Shareholders to vote) such shares in favor of
any issuance of new securities which are to be offered to the public (but not to
a Strategic Investor if such Strategic Investor is on the date of such offering
or will be after giving effect to a purchase in such offering a holder of 10% or
more of the voting capital stock of VimpelCom) pursuant to a registration
statement which has been declared effective under the Securities Act.
Further, so long as the Telenor Shareholders own any shares, Telenor must
vote (and must cause the Telenor Shareholders to vote) their shares in favor of
the approval of the issuance of certain Class B cumulative preferred stock of
VimpelCom (the "Class B Preferred Shares"); provided that (i) the Class B
Preferred Shares are issued solely to Dr. Zimin or the Bee Line Fund, have
certain specified terms, and by the terms of the applicable subscription
agreement are non-transferrable, and (ii) Telenor receives at least 30 days
prior the date of a vote by the shareholders of VimpelCom on the issuance of the
Class B Preferred Shares an opinion of counsel to VimpelCom confirming that,
after giving effect to the issuance of the Class B Preferred Shares, there will
be no material adverse effect on the veto rights of a holder of 25% plus one
share of the then issued and outstanding voting capital stock on any decision
requiring a shareholder vote under then applicable Russian law.
The Shareholders Agreement includes a voting agreement intended to increase
the likelihood that VimpelCom's shareholders will approve certain amendments to
the VimpelCom charter, and that Telenor's nominees will be elected to
VimpelCom's Board of Directors. The Shareholders Agreement provides that from
the date of execution of the Primary Agreement until the earlier of (a) the
Closing Date and (b) the termination of the Shareholders Agreement, at any
meeting of the shareholders of VimpelCom or in connection with any written
consent of such shareholders or any such other action taken by VimpelCom, the
parties to the Shareholders Agreement will vote all of their shares in favor of
the transactions contemplated by the Primary Agreement, the Escrow Agreement,
the Registration Rights Agreement, the Shareholders Agreement, and the other
agreements
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related to Telenor's investment, including, without limitation, (i) the adoption
and registration of the amendments to the VimpelCom charter discussed above,
(ii) the issuance and sale to Telenor of the Purchaser's Shares on the terms and
subject to the conditions contained in the Primary Agreement, (iii) the election
to the Board of Directors of VimpelCom of the three candidates designated by
Telenor and nominated by the Zimin Shareholders and (iv) satisfaction of all
other conditions precedent to Closing specified in Article VIII of the Primary
Agreement.
The Shareholders Agreement requires any or all of the Zimin Shareholders to
issue a power of attorney to Telenor, authorizing Telenor to vote at any meeting
of the shareholders of VimpelCom held prior to January 29, 2000 on all issues
requiring the affirmative vote of holders of 75% of voting shares of VimpelCom
present and eligible to vote in order to be approved, as well as in electing
candidates to VimpelCom's Board of Directors, a number of shares, which, in
addition to the voting shares then owned by Telenor are sufficient to carry a
25% plus one vote at a meeting of shareholders of VimpelCom. In addition, the
Zimin Shareholders will ensure that Telenor has the right to vote 25% plus one
share of the voting capital stock of VimpelCom at all times on any such issue
until the earliest of (A) the date on which Telenor is the registered owner of
25% plus one share of the voting capital stock of VimpelCom, has fully paid for
the Purchaser's Shares and has the right to exercise voting rights on all issues
with respect to the Purchaser's Shares, (B) January 29, 2000, (C) the date on
which Telenor or any controlled affiliate of Telenor transfers any share to any
person other than Telenor or a controlled affiliate of Telenor and (D)
termination of the Shareholders Agreement. Russian law does not permit
shareholders to vote their shares until they have paid for them in full.
Therefore, until such time as Telenor has full voting rights in respect of all
of the Purchaser's Shares, such powers of attorney (on the date hereof, embodied
in Dr. Zimin's Power of Attorney executed and delivered as a condition precedent
to the Closing under the Primary Agreement) are necessary to afford Telenor
blocking power over those shareholder matters requiring the approval of 75% of
the shareholders present and eligible to vote at shareholders meetings.
Under the terms of the Shareholders Agreement, on the date of issuance of
the Class B Preferred Stock, or at Telenor's request at any other time, the
Zimin Shareholders to whom the Class B Preferred Stock will be issued must
execute and deliver to Telenor (a) a proxy (or proxies) authorizing Telenor to
vote such shares of the Class B Preferred Stock as may be necessary to ensure
that Telenor will have the right to vote such percentage of the voting capital
stock of VimpelCom as Telenor holds immediately prior to the time the Class B
Preferred Stock will have voting rights in excess of those voting rights
specified in Schedule 1 to the Registration Rights Agreement, (b) a pledge
agreement granting Telenor a first priority security interest in the Class B
Preferred Stock, securing the performance of all of the obligations of such
Zimin Shareholders under the Shareholders Agreement and granting Telenor, as
pledgee, the right to vote such shares of the Class B Preferred Stock as may be
necessary to ensure that Telenor will have the right to vote such percentage of
the voting capital stock of VimpelCom as Telenor holds immediately prior to the
time when the Class B Preferred Stock will have voting rights in excess of those
voting rights specified in Schedule 1 to the Registration Rights Agreement, and
(c) a transfer order in respect of the Class B Preferred Stock, entitling
Telenor to register such security interest in the Class B Preferred Stock in the
shareholder register of VimpelCom at the National Registry Company.
The Shareholders Agreement further provides that so long as the Telenor
Shareholders and the Zimin Shareholders each beneficially own at least 25% plus
one share
18
<PAGE>
of the issued and outstanding voting capital stock of VimpelCom, then (i)
Telenor will nominate no more than three candidates designated by Telenor for
election to the Board of Directors of VimpelCom, at least one of whom will be a
Russian citizen, (ii) Telenor and the Zimin Shareholders will vote a sufficient
number of their respective shares to ensure that Telenor's three designated
nominees are elected to the Board and (iii) should Telenor determine, in its
sole discretion, that it will have votes remaining after the election of its
three designated nominees is ensured, it will allocate on an equal basis any
such votes in favor of nominees for election to the Board which have been
proposed by the Zimin Shareholders. However, if any shareholder (other than a
Telenor Shareholder or a Zimin Shareholder) nominates any person for election to
the Board, Dr. Zimin (or, in the event of his death or incapacity, the Bee Line
Fund) will have the right to approve one of the two non-Russian nominees of
Telenor for election to the Board, provided that such approval will not be
required if at least one of such two non-Russian nominees is a senior executive
vice-president or a member of the board of directors of Telenor AS.
Telenor has also agreed in the Shareholders Agreement that it will cause
the directors nominated by it to vote in favor of Dr. Zimin and Mr. Fabela to
fill any two of the following four positions: (i) President and Chief Executive
Officer, (ii) Chairman of the Board, (iii) Honorary Chairman and (iv) Chairman
Emeritus. However, Telenor will have no obligation to cause its directors to
vote in such manner unless the authority of the Honorary Chairman and Chairman
Emeritus excludes any substantial managerial responsibility and the right to
take any executive action on behalf of VimpelCom.
In addition, under the Shareholders Agreement, subject to compliance with
applicable law, each of Telenor and the Zimin Shareholders has undertaken (a) to
cause directors nominated by it or them to vote in favor of the declaration
and/or full payment of any and all dividends payable on or in respect of certain
class A preferred stock and the Class B Preferred Stock and (b) to vote any
shares owned by them in favor of any resolution of shareholders approving the
payment of the full dividends on or in respect of certain Class A Preferred
Stock and the Class B Preferred Stock.
Termination
The Shareholders Agreement will terminate upon the earlier of (a) the
parties' written agreement, (b) the date on which the Telenor Shareholders and
any party to which the Telenor Shareholders have transferred 25% plus one share
of the issued and outstanding voting capital stock of VimpelCom, having once
attained such percentage, beneficially own, in the aggregate, less than 10% of
the then issued and outstanding voting capital stock of VimpelCom, (c) the date
on which the Zimin Shareholders and any party to which the Zimin Shareholders
have transferred 25% plus one share of the issued and outstanding voting capital
stock of VimpelCom, having once attained such percentage, beneficially own, in
the aggregate, less than 10% of the then issued and outstanding voting capital
stock of VimpelCom, (d) the date on which the meeting of the shareholders of
VimpelCom is held at which a vote of such shareholders is conducted concerning
the amendments to VimpelCom's charter contemplated by the Primary Agreement, and
such shareholders fail to approve such amendments, (e) June 1, 1999 in the event
the Closing shall not have occurred prior to such date, and (f) January 29, 2000
if Telenor has not prior to such date acquired in the aggregate at least 10% of
the then issued and outstanding voting capital stock of VimpelCom pursuant to
the Primary Agreement.
19
<PAGE>
Description of the Guarantee Agreement
- ---------------------------------------
Under the Guarantee Agreement between Telenor AS and VimpelCom, Telenor AS
has guaranteed to VimpelCom the performance of Telenor East Invest AS's
obligations under the Primary Agreement, the Escrow Agreement and the
Registration Rights Agreement. In addition, Telenor AS has, in the Guarantee
Agreement, undertaken not to transfer, sell or otherwise dispose of the shares
of Telenor East Invest AS to anyone other than a controlled affiliate of Telenor
AS without the prior written consent of VimpelCom.
Disclaimer
- ----------
The preceding summary of certain provisions of the Primary Agreement, the
Escrow Agreement, the Guarantee Agreement, the Registration Rights Agreement and
the Shareholders Agreement is not intended to be complete and is qualified in
its entirety by reference to the full text of such agreements, copies of which
are filed as Exhibits B, C, D, E and F hereto, respectively, and which are
incorporated herein by reference.
Item 5. Interest in Securities of the Issuer
------------------------------------
(a) and (b) Immediately after the completion of the transactions described
in Item 4 above, Telenor will be the direct beneficial owner of 8,902,201 shares
of Common Stock of VimpelCom, which constitute 25.7% of the issued and
outstanding voting capital stock (31.6% of the issued and outstanding shares of
Common Stock) of VimpelCom. If all 1,000,000 shares of Common Stock reserved for
issuance under VimpelCom's proposed employee stock option plan are issued,
Telenor's ownership interest will be reduced to exactly 25% plus one share of
VimpelCom's total issued and outstanding voting capital stock. Telenor will have
sole power to vote or direct the vote of, and sole power to dispose or direct
the disposition of, the 8,902,201 shares of Common Stock retained by it.
A total of 22,947,165 shares of voting capital stock of VimpelCom are
subject to the Shareholders Agreement, constituting in the aggregate
approximately 64.4% of VimpelCom's total issued and outstanding voting capital
stock, after giving effect to the issuance of all of the Purchaser's Shares and
assuming issuance of all of the 1,000,000 shares of Common Stock reserved for
issuance under VimpelCom's proposed employee stock option plan. In addition, as
described in Item 4 above, as of January 30, 1999, under the Power of Attorney,
Telenor will have limited voting rights in respect of, and may be deemed the
beneficial owner of, up to 25% plus one share of the voting capital stock of
VimpelCom. However, except with respect to such limited voting rights under the
Power of Attorney, unless and until Telenor acquires any of the Purchaser's
Shares under the Primary Agreement, Telenor will not have any power to vote or
dispose of any shares of voting capital stock of VimpelCom. Neither the filing
of this Schedule 13D nor any of its contents shall be deemed to constitute an
admission that Telenor or Telenor AS is the beneficial owner of any shares of
voting capital stock of VimpelCom (other than, solely in the case of Telenor,
after the completion of the transactions described in Item 4 above, 8,902,201
shares of Common Stock, and, during the time, if any, when the Power of Attorney
is effective, up to 25% plus one share of the voting capital stock of VimpelCom)
for purposes of Section 13(d) of the Securities Exchange Act of 1934, as
amended, or for any other purpose, and such beneficial ownership is expressly
disclaimed.
Telenor is a wholly owned subsidiary of Telenor AS, and, as a result,
Telenor AS may be deemed to be the indirect beneficial owner of the shares of
Common Stock of VimpelCom owned by Telenor. Neither the filing of this Schedule
13-D nor any of its contents shall be deemed to constitute an admission that
Telenor AS is the beneficial owner of the shares of VimpelCom held by Telenor
for the purposes of Section 13(d) of the Securities Exchange Act of 1934, as
amended, or for any other purpose, and such beneficial ownership is expressly
disclaimed.
(c) Neither Telenor nor Telenor AS has effected any transactions in the
Common Stock of VimpelCom other than the transactions described herein.
(d) Neither Telenor nor Telenor AS knows of any other person who has the
right to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the Common Stock of VimpelCom.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
-------------------------------------------------------------
Respect to Securities of the Issuer
-----------------------------------
Except as provided in the Primary Agreement, the Escrow Agreement, the
Guarantee Agreement, the Registration Rights Agreement and the Shareholders
Agreement, or as set
20
<PAGE>
forth herein, neither Telenor nor Telenor AS, nor, to the best of Telenor's and
Telenor AS's knowledge, none of the individuals named in Item 2 hereof has
entered into any contracts, arrangements, understandings or relationships (legal
or otherwise) with any person with respect to any securities of VimpelCom,
including, but not limited to, transfer or voting of any securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or losses, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits
--------------------------------
1. Attached hereto as Exhibit "A" is a conformed copy of the Joint Filing
Agreement dated December 10, 1998 between Telenor and Telenor AS
relating to the filing of a joint statement on Schedule 13D.
2. Attached hereto as Exhibit "B" is a conformed copy of the Primary
Agreement dated as of December 1, 1998 between Telenor, as the
Purchaser, and VimpelCom, as the Issuer, with respect to 8,902,201
shares of Common Stock of VimpelCom.
3. Attached hereto as Exhibit "C" is a conformed copy of the Escrow
Agreement dated as of December 1, 1998 among Telenor, as the
purchaser, VimpelCom, as the Issuer, and Den norske Bank ASA, as the
Escrow Agent.
4. Attached hereto as Exhibit "D" is a conformed copy of the Guarantee
Agreement dated as of December 1, 1998 between Telenor AS and
VimpelCom.
5. Attached hereto as Exhibit "E" is a conformed copy of the Registration
Rights Agreement dated as of December 1, 1998 among Telenor,
VimpelCom, Dr. Zimin, Glavsotkom and the Bee Line Fund.
6. Attached hereto as Exhibit "F" is a conformed copy of the Shareholders
Agreement dated as of December 1, 1998 among Telenor, Dr. Zimin,
Glavsotkom, the Bee Line Fund, Mr. Fabela, Geneva and other holders of
capital stock of VimpelCom from time to time.
7. Attached hereto as Exhibit "G" is a conformed copy of the Power of
Attorney from Dr. Zimin to Telenor, dated December 1, 1998,
authorizing Telenor to vote Dr. Zimin's shares in certain
circumstances.
8. Attached hereto as Exhibit "H" is a conformed copy of the Power of
Attorney from Telenor AS to Henrik Torgersen, authorizing Henrik
Torgersen to execute of behalf of Telenor East Invest AS and Telenor
AS, as applicable, the Primary Agreement and other agreements relating
to Telenor East Invest AS's investment in VimpelCom, and to take other
necessary actions with respect thereto.
21
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 10, 1998 TELENOR EAST INVEST AS
By /s/ Henrik Torgersen
----------------
Henrik Torgersen
Attorney-in-Fact
TELENOR AS
By /s/ Henrik Torgersen
----------------
Henrik Torgersen
Attorney-in-Fact
22
<PAGE>
INDEX TO EXHIBITS
Exhibit "A" a conformed copy of the Joint Filing Agreement dated
December 10, 1998 between Telenor and Telenor AS relating
to the filing of a joint statement on Schedule 13D.
Exhibit "B" a conformed copy of the Primary Agreement dated as of
December 1, 1998 between Telenor, as the purchaser, and
VimpelCom, as the Issuer, with respect to 8,902,201
shares of Common Stock of VimpelCom.
Exhibit "C" a conformed copy of the Escrow Agreement dated as of
December 1, 1998 among Telenor, as the Purchaser,
VimpelCom as the Issuer, and Den norske Bank ASA, as the
Escrow Agent.
Exhibit "D" a conformed copy of the Guarantee Agreement dated as of
December 1, 1998 between Telenor AS and VimpelCom.
Exhibit "E" a conformed copy of the Registration Rights Agreement
dated as of December 1, 1998 among Telenor, VimpelCom,
Dr. Zimin, Glavsotkom and the Bee Line Fund.
Exhibit "F" a conformed copy of the Shareholders Agreement dated as
of December 1, 1998 among Telenor, Dr. Zimin, Glavsotkom,
the Bee Line Fund, Mr. Fabela, Geneva and other holders
of capital stock of VimpelCom from time to time.
Exhibit "G" a conformed copy of the Power of Attorney from Dr. Zimin
to Telenor, dated December 1, 1998, authorizing Telenor
to vote certain of Dr. Zimin's shares in certain
circumstances.
Exhibit "H" a conformed copy of the Power of Attorney from Telenor AS
to Henrik Torgersen, authorizing Henrik Torgersen to
execute on behalf of Telenor East Invest AS and Telenor
AS, as applicable, the Primary Agreement and other
agreements relating to Telenor East Invest AS's
investment in VimpelCom, and to take other necessary
actions with respect thereto.
<PAGE>
Exhibit A
JOINT FILING AGREEMENT Conformed Copy
We, the signatories of the statement on Schedule 13D to which this
Agreement is attached, hereby agree that such statement is, and any amendments
thereto filed by any of us will be, filed on behalf of each of us.
Dated: December 10, 1998 TELENOR EAST INVEST AS
By /s/ Henrik Torgersen
--------------------
Henrik Torgersen
Attorney-in-Fact
TELENOR AS
By /s/ Henrik Torgersen
--------------------
Henrik Torgersen
Attorney-in-Fact
<PAGE>
EXHIBIT B
Conformed Copy
_____________________________________________________________
PRIMARY AGREEMENT
dated as of December 1, 1998
between
TELENOR EAST INVEST AS,
as the Purchaser
and
OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS",
as the Issuer
with respect to 8,902,201 shares of
common stock of
OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS"
_____________________________________________________________
<PAGE>
PRIMARY AGREEMENT dated as of December 1, 1998 between TELENOR EAST INVEST
AS, a corporation organized and existing under the laws of Norway (the
"Purchaser"), and OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS", an open
joint stock company organized and existing under the laws of the Russian
Federation (the "Issuer").
WITNESSETH
WHEREAS, the Issuer desires to issue and to sell, and the Purchaser desires
to subscribe for and purchase, shares of Common Stock equal to twenty-five
percent (25%) plus one (1) share of the issued and outstanding voting capital
stock of the Issuer, calculated on a fully diluted basis (including, without
limitation, treating the Options under the Stock Option Plan as having been
exercised in respect of One Million (1,000,000) shares of Common Stock reserved
for issuance thereunder), on the terms and subject to the conditions set forth
in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I DEFINITIONS AND INTERPRETATION
1.01 Definitions
-----------
As used herein, the following terms shall have the following meanings:
"Act" shall mean the United States Securities Act of 1933, as amended, and
the rules and regulations of the SEC thereunder.
"Actions or Proceedings" shall mean any action, suit, proceeding or
arbitration commenced, brought, conducted or heard by or before any Governmental
or Regulatory Authority.
"ADSs" shall mean the Issuer's American Depositary Shares, each
representing three-quarters (3/4) of one (1) share of the Issuer's Common Stock,
which are currently listed on the NYSE.
"Affiliate" shall mean, with respect to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any relative or
spouse of such individual, or any relative of such spouse, any one of whom has
the same home as such individual, and any trust or estate for which such
individual serves as a trustee or in a similar capacity or in which such
individual has a substantial beneficial interest and any Person who is
controlled by any such member or trust. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise) of any other Person, provided that, in any event, any Person which
owns, directly or indirectly, a majority of the securities having ordinary
voting power for the election of directors or other governing
<PAGE>
2
body of a corporation or a majority of the partnership or other ownership
interests of any other Person (other than as a limited partner of such other
Person) will be deemed to control such corporation or other Person.
"Agreement" shall mean this Primary Agreement and the Exhibits and the
Schedules hereto and the certificates delivered in accordance with Article VIII
and Article IX.
"amendments to the Charter" shall have the meaning specified in Section
5.04.
"Applicable Rate" shall mean the rate of interest from time to time
announced by The Chase Manhattan Bank as its prime commercial lending rate.
"Assets and Properties" shall mean, with respect to any Person, all assets
and properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, used, operated, owned or leased by such Person, including,
without limitation, cash, cash equivalents, Investments, accounts and notes
receivable, chattel paper, documents, instruments, general intangibles, real
estate, equipment, inventory, goods and Intellectual Property.
"Audited Consolidated Financial Statement Date" shall mean December 31,
1997, the last day of the most recent fiscal year of the Issuer for which
Audited Consolidated Financial Statements have been delivered to the Purchaser
pursuant to Section 3.08(a)(i).
"Audited Consolidated Financial Statements" shall mean the financial
statements, prepared in accordance with GAAP, for the fiscal year ended December
31, 1997, the most recent fiscal year of the Issuer, delivered to the Purchaser
pursuant to Section 3.08(a)(i).
"Bee Line Fund" shall mean the Fund for Non-Commercial Programs "Bee Line",
a non- profit organization organized and existing under the laws of the Russian
Federation.
"Bee Line Licensee" shall have the meaning set forth in Section 3.16(a).
"Bee Line Name" shall mean the brand name and trademark "Bee Line" used by
the Issuer.
"Benefit Plan" shall mean any Plan established by the Issuer or the
Significant Subsidiary, existing at the Closing Date or prior thereto, to which
the Issuer or the Significant Subsidiary contributes or has contributed, or
under which any employee, former employee, director, consultant or independent
contractor of the Issuer or the Significant Subsidiary or any beneficiary
thereof is covered, is eligible for coverage or has benefit rights.
"Board" shall mean the Board of Directors of the Issuer.
"Business Combination" shall mean, with respect to any Person, any merger,
consolidation or combination to which such Person is a party, the issuance or
disposition or acquisition of any shares to or from, as applicable, any third
party, any sale, dividend, split or other disposition or acquisition of Equity
Interests of such Person, any sale, dividend or other disposition or acquisition
of all or substantially all of the Assets and Properties of such Person or the
creation of any Subsidiary, the value of which exceeds Five Million US Dollars
(US$5,000,000), provided that the Issuer's proposed consolidation, disposition
or dissolution of certain of its indirect Subsidiaries or acquisition of Equity
Interests of any related Person or the
<PAGE>
3
Assets and Properties of any related Person shall not constitute a Business
Combination for purposes of this Agreement so long as the cost of such
transactions to the Issuer and its Consolidated Subsidiaries, on a consolidated
basis, does not exceed Five Million US Dollars (US$5,000,000).
"Business Day" shall mean a day other than a Saturday, a Sunday or any day
on which banks located in Moscow, Russia, Oslo, Norway or New York, New York are
authorized or obliged to close.
"Business or Condition of the Issuer" shall mean the business, condition
(financial or otherwise), results of operations and Assets and Properties of the
Issuer and its Subsidiaries taken as a whole.
"Call Option" shall have the meaning specified in Section 2.07.
"Call Option Notice" shall have the meaning specified in Section 2.07.
"Call Option Shares" shall have the meaning specified in Section 2.07.
"CBR" shall mean the Central Bank of Russia (Tsentralniy bank Rossii or TsB
Rossii), including any applicable territorial agent thereof, or any successor
thereto.
"CBR License" shall mean the license to be issued by the CBR (or any
amendment to an existing license issued by the CBR) to the Issuer, in each case,
which will allow the Issuer to receive the Purchase Price (or a portion
thereof), denominated in US Dollars, in the Issuer's Account.
"Charter" shall mean the most recent version of the charter (ustav) of the
Issuer, as registered with the MRC on August 23, 1996, and as amended on October
3, 1996 (approved by the Board on September 30, 1996), December 17, 1996
(approved by the GMS on November 20, 1996), December 17, 1996 (approved by the
GMS on November 29, 1996) and September 3, 1998 (approved by the GMS on June 16,
1998).
"Charter Capital" (ustavniy kapital) shall mean the aggregate value of the
ownership interests of a Person as stated in its charter, provided that, with
respect to a joint stock company, the Charter Capital shall mean the aggregate
nominal value of its issued shares.
"Class B Preferred Stock" shall mean the non-voting cumulative class B
preferred stock referred to in the amendments to the Charter.
"Closing" shall mean the first closing of a Purchase, as contemplated by
Section 2.03.
"Closing Date" shall mean the date on which the Closing is to occur, which
date shall be the earlier of (a) at least three (3) Business Days after the
Issuer has furnished written notice to the Purchaser of the Closing Date and (b)
June 1, 1999.
"Common Stock" shall mean the shares of common stock of the Issuer, as
defined in Section 6.1 of the Charter .
"Consolidated Subsidiaries" shall mean, with respect to the Issuer, the
Significant Subsidiary, Impuls-KB and RTI Services Svyaz.
<PAGE>
4
"Contract" shall mean any agreement, letter of intent, lease, license,
evidence of Indebtedness, mortgage, indenture, security agreement or other
contract (whether written or oral), in each case, to the extent legally binding.
"D-AMPs" shall mean Digital Advanced Mobile Phone System, a standard for
digital mobile telephone transmissions at a frequency of 800 MHz.
"Dr. Zimin" shall mean Dr. Dmitri Borisovich Zimin, a Russian citizen.
"Environmental Law" shall mean any Law or Order relating to the regulation
or protection of human health and safety, the environment or hazardous or toxic
substances, wastes, pollutants or contaminants.
"Equity" shall mean the aggregate of the Charter Capital, any surplus
capital (dobavochniy kapital), reserve fund, retained earnings and any other
elements determining the net worth of a Person.
"Equity Interest" in a Person shall mean any share of stock of such Person,
or any partnership share or other ownership interest in such Person.
"Escrow Agent" shall mean Den norske Bank ASA, as escrow agent under the
Escrow Agreement.
"Escrow Agreement" shall mean the Escrow Agreement dated December 1, 1998,
among the Purchaser, the Escrow Agent and the Issuer.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC thereunder.
"Exercise" shall have the meaning specified in Section 2.07.
"Exercise Price" shall have the meaning specified in Section 2.07.
"FCSM" shall mean the Federal Commission for the Securities Market of the
Russian Federation (Federalnaya komissiya po rinku tsenikh bumag Rossisiikoi
Federatsii or "FKTsB"), or any successor thereto, including any applicable
territorial agent thereof.
"Financial Statements" shall mean the financial statements of the Issuer,
delivered to the Purchaser pursuant to Section 3.08, Section 5.02(a)(i) or
Section 5.02(a)(ii).
"First Board Date" shall mean the date of the first board meeting at which
duly elected designates of the Purchaser are sitting on the Board.
"Form 20-F" shall mean the Annual Report of the Issuer on Form 20-F, as
filed with the SEC pursuant to Section 15(d) of the Exchange Act on June 30,
1998, a copy of which is attached hereto as Exhibit D.
"GAAP" shall mean United States generally accepted accounting principles.
"Glavsotkom" shall mean Glavsotkom LLC, a limited liability company
organized and existing under the laws of the Russian Federation.
<PAGE>
5
"GMS" shall mean the general meeting of the shareholders (obschee sobraniye
aktsionerov) of the Issuer, as defined in Article 9 of the Charter.
"GSM" shall mean Global System for Mobile Communications.
"GSM 1800" shall mean GSM in the 1800 MHz frequency range.
"GSM 900" shall mean GSM in the 900 MHz frequency range.
"Governmental or Regulatory Authority" shall mean any court, tribunal,
arbitrator, legislature, government, ministry, committee, inspectorate,
authority, agency, commission, official or other competent authority of the
Russian Federation, any other country or any state, as well as any county, city
or other political subdivision of any of the foregoing.
"Guarantee Agreement" shall mean the Guarantee Agreement dated December 1,
1998, between Telenor AS and the Issuer.
"Indebtedness" shall mean, with respect to any Person, all obligations of
such Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or
similar instruments, (c) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (d) under capital leases or (e) in the nature of a guarantee of any
obligation described in clauses (a) through (d) above of any other Person.
"Indemnified Party" shall have the meaning specified in Section 11.01(c).
"Indemnifying Party" shall have the meaning specified in Section 11.01(c).
"Initial Purchase Price" shall mean the product, expressed in US Dollars,
of (a) US$18.19 (constituting the price on the Closing Date per each Purchaser's
Share) and (b) Eight Million Nine Hundred Two Thousand Two Hundred One
(8,902,201).
"Intellectual Property" shall mean patents and patent rights, licenses,
inventions, copyrights and copyright rights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks and trademark rights, service
marks and service mark rights, trade names and trade name rights, service names
and service name rights, brand names, processes formulae, trade dress, business
and product names, logos, slogans, industrial models, processes, designs,
methodologies, software programs (including all source codes) and related
documentation, technical information, manufacturing, engineering and technical
drawings and all pending applications for and registrations of patents,
trademarks, service marks and copyrights.
"Investments" shall mean all debentures, notes and other evidences of
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures, general and limited partnerships, and other Persons, mortgage loans
and other investment or portfolio assets owned of record or beneficially by a
Person (other than (a) any direct or indirect Subsidiaries of the Issuer or any
ownership interests therein and (b) any short-term trade receivables generated
in the ordinary course of business).
"Issuer" shall have the meaning specified in the preamble to this
Agreement.
"Issuer's Account" shall mean the bank account specified in the CBR License
as the account in which the Issuer is authorized to receive the Initial Purchase
Price.
<PAGE>
6
"JSC Law" shall mean the RF Law No. 208-FZ "On Joint Stock Companies",
dated December 26, 1995 , as amended on June 13, 1996.
"Knowledge of the Issuer" or "Known to the Issuer" shall mean to the best
of the knowledge and belief of the Issuer after having made reasonable
inquiries.
"Knowledge of the Purchaser" or "Known to the Purchaser" shall mean to the
best of the knowledge and belief of the Purchaser after having made reasonable
inquiries.
"Laws" shall mean all laws, decrees, resolutions, instructions, statutes,
rules, regulations, acts, ordinances and other pronouncements having the effect
of law or regulation of the Russian Federation, any other country or any state,
as well as any county, city or other political subdivision of any of the
foregoing.
"Liabilities" shall mean all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"Licenses" shall mean all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority, including,
without limitation, all Telecom Licenses; provided, however, that for purposes
of this Agreement, the licenses for GSM 1800 services issued to the Issuer and
Significant Subsidiary shall not be deemed to include any amendments thereto
relating to GSM 900 service.
"Lien" shall mean any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"Loss" shall mean any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including, without limitation, interest,
court costs, fees of attorneys, accountants and other experts or other expenses
of litigation or other similar proceedings or of any claim, default or
assessment).
"Major Inside Shareholders" shall mean Dr. Zimin, Glavsotkom LLC and the
Bee Line Fund.
"MAMP" shall mean the Ministry for Anti-Monopoly Policy and Support for
Entrepreneurship of the Russian Federation (Ministerstvo po Antimonopolnoy
politike i podderzhke predprinimatelstva Rossiiskoi Federatsii, or "GAK
Rossii"), or any successor thereto, including any applicable territorial agent
thereof.
"Material Adverse Effect" shall mean, with respect to any Person, a
material adverse effect on or with respect to the business, assets, financial
condition or results of operations of such Person and its Subsidiaries taken as
a whole, or upon such Person's ability to perform its obligations under this
Agreement and the other Principal Agreements, if any, to which it is a party.
"MRC" shall mean the Moscow Registration Chamber (Moskovskaya
registratsionaya palata), or any successor thereto.
<PAGE>
7
"New Rubles" shall mean the lawful currency of the Russian Federation, as
redenominated on January 1, 1998, such that One (1) New Ruble is equal to One
Thousand (1,000) Old Rubles.
"NRC" shall mean the Russian closed joint stock company National Registry
Company (Natsionalnaya Registratsionnaya Kompaniya), the duly appointed
shareholder registrar of the Issuer, or any successor thereto.
"NYSE" shall mean The New York Stock Exchange.
"Old Rubles" shall mean the lawful currency of the Russian Federation prior
to the redenomination thereof of January 1, 1998, such that One Thousand (1,000)
Old Rubles equals One (1) New Ruble.
"Option" shall mean, with respect to any Person, any security, right,
subscription, warrant, option, phantom stock right or other Contract that gives
the right to (a) purchase or otherwise receive or be issued any Equity Interest
in such Person or any security of any kind convertible into or exchangeable or
exercisable for any Equity Interest in such Person or (b) receive or exercise
any benefits or rights similar to any rights enjoyed by or accruing to the
holder of any Equity Interest in such Person, including any rights to
participate in the equity or income of such Person or to participate in or
direct the election of any directors or officers of such Person or the manner in
which any Equity Interests in such Person are voted.
"Order" shall mean any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority .
"Permitted Lien" shall mean (a) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (b) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent, and (c) any
mechanic's, materialman's or other similar Lien arising by operation of Law or
any minor imperfection of title or similar Lien, none of which individually or
in the aggregate with other such Liens materially impairs the value of the
property subject to such Lien or the use of such property in the conduct of the
business of the Issuer.
"Person" shall mean any natural person, corporation, general partnership,
simple partnership, limited partnership, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority,
whether incorporated or unincorporated.
"Plan" shall mean any pension, profit sharing, stock purchase, stock
option, stock ownership, stock appreciation rights or phantom stock plan,
practice, policy or other arrangement of any kind, whether written or oral and
whether covering current or former employees, officers, directors, consultants
or independent contractors.
"Power of Attorney" shall mean power of attorney dated the Closing Date, in
substantially the form of Exhibit I, executed and delivered by Dr. Zimin in
favor of the Purchaser.
"Preferred Stock" shall mean, collectively, the shares of preferred stock
of the Issuer, as defined in Section 6.1 of the Charter, and, after giving
effect to the issuance thereof, the Class B Preferred Stock.
<PAGE>
8
"Principal Agreements" shall mean this Agreement, the Escrow Agreement, the
Shareholders Agreement, the Registration Rights Agreement, the Guarantee
Agreement and the Service Obligation Agreements.
"Purchase" shall mean the purchase of the Purchaser's Shares on the Closing
Date and each Subsequent Payment Date, if any, in each case, on and subject to
the terms and conditions hereof.
"Purchase Price" shall mean the aggregate of the Purchase Price Amounts.
"Purchase Price Amount" shall mean each portion of the Purchase Price set
forth in Schedule I attached to Schedule 2.01 for any given day.
"Purchaser" shall have the meaning specified in the preamble to this
Agreement.
"Purchaser's Shares" shall mean Eight Million Nine Hundred Two Thousand Two
Hundred One (8,902,201) shares of Common Stock.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated as of December 1, 1998 between the Issuer, the Purchaser and the
Major Inside Shareholders.
"Representatives" shall mean, with respect to any Person, its officers,
directors, shareholders, employees, agents, counsel, accountants, financial
advisors, consultants and other representatives.
"SCCI" shall mean the State Committee of the Russian Federation for
Communications and Information (Gosudarstveniy komitet Rossiiskoi Federatsii po
svyazi i informatizatsii or Goskomsvyaz), including any applicable territorial
agent or any successor thereto.
"SEC" shall mean the Securities and Exchange Commission of the United
States of America, or any successor thereto.
"SEC Documents" shall have the meaning specified in Section 3.27.
"Service Obligation Agreements" shall mean, collectively, the VimpelCom
Service Obligation Agreement and the Telenor Service Obligation Agreement.
"Shareholders Agreement" shall mean the Shareholders Agreement dated as of
December 1, 1998 by and among the Purchaser, the Major Inside Shareholders,
Augie K. Fabela, II and Geneva Investment Trust I, L.L.C.
"Significant Subsidiary" shall mean KB Impuls, an open joint stock company
organized and existing under the laws of the Russian Federation.
"Specified Percentage" shall mean, with the respect to any Person, twenty
five percent (25%) plus one share of the then issued and outstanding shares of
voting capital stock of the Issuer
"SRC" shall mean the State Registration Chamber under the Ministry of
Justice of the Russian Federation (Gosudarstvennaya registratsionnaya palata pri
Ministerstve iustitsii Rossiiskoi Federatsii), or any successor thereto.
<PAGE>
9
"Stock Option Plan" shall mean the employee stock option plan, as approved
by a simple majority of the members of the Board of the Issuer eligible to vote
on such issue (and to be submitted to the shareholders of the Issuer for
approval, if required by applicable law), contemplating the issuance of up to
One Million (1,000,000) shares of Common Stock.
"Strategic Investor" shall mean any Person which derives at least fifteen
percent (15%) of its revenues, on a consolidated basis with its affiliates, from
operations in the telecommunications industry, other than the Purchaser or its
Affiliates.
"Subsequent Payment Date" shall mean, after the Closing Date, each of the
payment dates set forth on Schedule I attached to Schedule 2.01 of this
Agreement, provided that, if any such date is not a Business Day, such
Subsequent Payment Date shall be the next succeeding Business Day.
"Subsidiary" of a Person shall mean any Person at least a majority of the
voting shares or voting Equity Interests of which is, directly or indirectly,
owned or controlled collectively by such Person.
"Tax Document" shall mean any return, declaration, report, claim for
refund, assessment, demand, act, or information return, statement or other
document relating to Taxes, including any Schedule or attachment thereto, and
including any amendment thereof, whether prepared by the taxpayer, a tax
preparer or a Governmental or Regulatory Authority.
"Taxes" shall mean any 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, duty, governmental fee or charge of any kind whatsoever, including any
interest, penalty, or addition thereto.
"Telecom Licenses" shall mean (a) the Issuer's licenses for D-AMPs service
in Moscow and the Moscow Region (Moskovskaya oblast), (b) the Issuer's four (4)
super-region GSM licenses and (c) the license for GSM 1800 services issued to
the Issuer and the Significant Subsidiary (provided, however, that for purposes
of this Agreement, the licenses for GSM 1800 services issued to the Issuer and
the Significant Subsidiary shall not be deemed to include any amendments thereto
relating to GSM 900 service), and (d) frequency permits relating to the licenses
referred to in clauses (a), (b) and (c) of this definition.
"Telenor Service Obligation Agreement" shall mean the Telenor Service
Obligation Agreement dated as of December 1, 1998 between the Issuer and the
Purchaser pursuant to which the Purchaser shall render certain services to the
Issuer.
"Unaudited Consolidated Financial Statement Date" shall mean September 30,
1998, the last day of the most recent fiscal quarter of the Issuer for which
Unaudited Consolidated Financial Statements have been delivered to the Purchaser
pursuant to Section 3.08(a)(ii).
"Unaudited Consolidated Financial Statements" shall mean the unaudited
consolidated financial statements for the fiscal quarter of the Issuer ended
September 30, 1998, the most recent fiscal quarter of the Issuer for which
Unaudited Consolidated Financial Statements have been delivered to the Purchaser
pursuant to Section 3.08(a)(ii).
<PAGE>
10
"US Dollars" and "US$" shall mean the lawful currency of the United States.
"Veto Rights" shall have the meaning specified in Section 5.05.
"VimpelCom Service Obligation Agreement" shall mean the VimpelCom Service
Obligation Agreement dated as of December 1, 1998 between the Issuer and the
Purchaser pursuant to which the Issuer shall render certain services to the
Purchaser.
"Year 2000 Problems" shall mean errors or impaired performance in data
processing, in the output of data or in the operation of any equipment or
software which are connected with or relate to the failure of any system
software or other processing equipment used by the Issuer to give chronological
recognition to calendar dates before, on or after January 1, 2000 when
processing data.
1.02 Interpretations
---------------
Unless the context of this Agreement otherwise requires, the following
rules of interpretation shall apply to this Agreement:
(a) the singular shall include the plural, and the plural shall include
the singular;
(b) words of any gender shall include each other gender;
(c) the words "hereof", "herein", "hereby", "hereto" and similar words
refer to this entire Agreement and not to any particular Section or any other
subdivision of this Agreement;
(d) a reference to any Article, Section, Schedule or Exhibit is a
reference to a specific Article or Section of, or Schedule or Exhibit to, this
Agreement;
(e) a reference to any law, statute, regulation, notification or statutory
provision shall include any amendment, modification or re-enactment thereof, any
regulations promulgated thereunder from time to time, and any interpretations
thereof from time to time by any regulatory or administrative authority;
(f) a reference to any agreement, instrument, contract or other document
shall include any amendment, amendment and restatement, supplement or other
modification thereto;
(g) a reference to any Person shall include such Person's successors and
permitted assigns under any agreement, instrument, contract or other document;
(h) the phrases "ordinary course of business" and "ordinary course of
business consistent with past practice" shall refer to the business and practice
of the Issuer;
(i) the word "pending" shall mean, with respect to a particular matter,
the service of process or delivery of written notice to the Person to whom such
matter relates;
(j) whenever this Agreement refers to a number of days, such number shall
refer to calendar days unless Business Days are specified; and
(k) all accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.
<PAGE>
11
ARTICLE II SALE OF SHARES AND CLOSING
2.01 Purchase and Sale
-----------------
Subject to the terms and conditions contained in this Agreement, in
accordance with the procedures set forth in Schedule 2.01 attached hereto and on
the basis of the representations and warranties contained herein, the Issuer
agrees to issue and sell to the Purchaser, and the Purchaser agrees to subscribe
for and purchase from the Issuer, the Purchaser's Shares at the Closing. The
execution of this Agreement shall not constitute placement (razmescheniye) of
the Purchaser's Shares. The placement shall occur on the date on which the
Purchaser's Shares are disposed of (otchuzhdeny) by the Issuer in favor of the
Purchaser by transferring the title to a portion of the Purchaser's Shares to
the Issuer at the Closing or on a Subsequent Payment Date. In no event shall
the disposition (otchuzhdenie) of the Purchaser's Shares or any part thereof
take place prior to the registration of the issuance of the Purchaser's Shares
with the FCSM.
2.02 Purchase Price
--------------
Subject to the terms and conditions hereof and in consideration of the sale
and transfer to the Purchaser by the Issuer of the Purchaser's Shares, the
Purchaser shall pay to the Issuer the Purchase Price in the manner provided in
Section 2.03, Section 2.04 and Section 2.05, as applicable, and the Purchase
Price shall be allocable entirely to, and deemed to be in consideration of, the
Purchaser's Shares being purchased hereunder.
2.03 Pre-Closing; Closing; Subsequent Payment Dates
----------------------------------------------
(a) On a date which is five (5) Business Days prior to the Closing Date
the Issuer and the Purchaser shall (i) attend a pre-closing meeting at the
offices of the Purchaser's counsel, located at Ulitsa Nikoloyamskaya 54, Moscow
109004, Russia (or at such other place as the Purchaser and the Issuer mutually
agree) at 10:00 am local time, and (ii) review the documents to be delivered at
the Closing to determine whether the conditions precedent specified in Section
8.01 have been, or will on the Closing Date be capable of being, fulfilled by
the Issuer.
(b) The Closing will take place at the offices of the NRC, 22 Balchug
Street, Moscow, or at such other place as the Purchaser and the Issuer mutually
agree, at 10:00 am local time on the Closing Date. At the Closing, if the
conditions precedent specified in Section 8.01 have been fulfilled by the Issuer
(or waived in writing by the Purchaser), then (i) the Purchaser shall, in
accordance with the terms of the Escrow Agreement, execute a joint instruction
to the Escrow Agent from the Purchaser and the Issuer, instructing the Escrow
Agent to pay to the Issuer the Purchase Price Amount for the Closing Date (or
such other amount as shall have been agreed by the parties in accordance with
the terms hereof and of the Escrow Agreement), by wire transfer (or such other
form of payment as shall be mutually agreed upon by the Issuer and the Escrow
Agent) of immediately available funds to the Issuer's Account, and (ii) upon
receipt by the Issuer of written confirmation from the Escrow Agent that it has
irrevocably issued wire transfer instructions for the Purchase Price Amount to
be paid on the Closing Date and the first Subsequent Payment Date, the Issuer
shall deliver to the Purchaser an extract from the share register of the Issuer
issued by the NRC and showing the Purchaser as the owner of the Purchaser's
Shares.
<PAGE>
12
(c) If the Purchase Price has not been paid in full prior to such date,
on each Subsequent Payment Date, the Purchase Price Amount payable on such
Subsequent Payment Date shall be paid in accordance with the Escrow Agreement
without further instruction from the Issuer or the Purchaser.
2.04 Acceleration of Purchase
------------------------
At any time after the Closing, the Purchaser shall have the right
unilaterally to accelerate its purchase of the Purchaser's Shares by delivering
an instruction to the Escrow Agent in accordance with Section 4(e) of the Escrow
Agreement specifying (i) the number of Purchaser's Shares for which accelerated
payment will be made, and (ii) the Subsequent Payment Date(s) on which such
payments would be made but for such acceleration; provided, however, that the
-----------------
Purchaser shall not have the right to accelerate any portion of an amount
payable on a particular Subsequent Payment Date unless the entire amount payable
on such Subsequent Payment Date is accelerated.
2.05 Escrow of Purchase Price
------------------------
Simultaneously with the execution and delivery of this Agreement and the
other Principal Agreements by the parties hereto and thereto, the Purchaser
shall deposit by wire transfer of immediately available funds the Initial
Purchase Price with the Escrow Agent. Thereafter, the Initial Purchase Price
shall be held in escrow, shall accrue interest as set forth in the Escrow
Agreement, and shall be paid over as the Purchase Price, in each case, in
accordance with this Agreement and the Escrow Agreement.
2.06 Liquidated Damages
------------------
If the shareholders of the Issuer fail to approve the transactions
described in Section 5.04(a) on or prior to February 1, 1999 and, within
eighteen (18) months after the date on which a meeting of shareholders is held
at which a vote of such shareholders is conducted concerning such transactions,
the Issuer or the Significant Subsidiary issues Shares to, merges or
consolidates with, or sells all or substantially all of its Assets and
Properties to, a Strategic Investor other than a Person whose Equity Interests
are at least fifty-one (51%) beneficially owned by Russian Persons and which
derives its income principally from the telecommunications industry in the
Russian Federation (except that liquidated damages shall be paid on the terms of
this Section 2.06 in connection with a sale of shares of the Issuer to such a
Person for cash), then on the date of consummation of such issuance, merger,
consolidation or sale (provided such date falls within such eighteen (18) month
period), the Issuer shall pay, as liquidated damages for loss of a bargain and
not as a penalty, to the Purchaser an amount equal to Twenty Million US Dollars
(US$20,000,000), by wire transfer of immediately available funds to an account
of the Purchaser's designation.
2.07 Call Option
-----------
(a) If the Issuer shall not have adopted the Stock Option Plan or issued
any shares of Common Stock in connection therewith, then the Issuer shall have
the right (but not the obligation), exercisable by the Issuer or any Affiliate
thereof designated by the Issuer, to purchase from the Purchaser (and any of the
Purchaser's Affiliates then holding Shares) up to
<PAGE>
13
the number of Shares (the "Call Option Shares") equal to the difference between
(i) aggregate number of the Purchaser's Shares and (ii) twenty-five percent
(25%) plus one share of the then issued and outstanding shares of voting capital
stock of the Issuer (such right to purchase the Call Option Shares hereinafter
referred to as the "Call Option"), adjusted for any dilution incurred prior to
the date of such exercise.
(b) The exercise price (the "Exercise Price") for each of the Call Option
Shares shall be equal to the price per Share reflected in the Initial Purchase
Price plus interest thereon at the London Inter Bank Offered Rate (LIBOR) for
deposits in US Dollars for a period of six months, as published in the Financial
Times on the Closing Date and at each six-month interval thereafter, from (and
including) the Closing Date to (but excluding) the date of purchase of the Call
Option Shares which shall be payable in US Dollars at the closing of such
purchase.
(c) No later than fifteen (15) days prior to any exercise of the Call
Option ("Exercise"), the Issuer shall send written notice (the "Call Option
Notice") to the Purchaser setting forth (i) the Exercise Date, (ii) the number
of Call Option Shares that shall be the subject of such Exercise and (iii) the
aggregate Exercise Price (which aggregate Exercise Price shall reflect the price
per Call Option Share in accordance with paragraph (b) of this Section 2.07).
(d) The closing for purchase and redemption of the Call Option Shares
shall occur at the Issuer's principal office, or such other place as shall be
mutually agreed by the Issuer and the Purchaser, not less than fifteen (15) nor
more than thirty (30) Business Days after receipt by the Purchaser of the Call
Option Notice, unless prior thereto, the Issuer shall have withdrawn the
Exercise in writing.
The provisions of this Section 2.07 shall be enforceable against the
successors of the Purchaser, the Controlled Affiliates of the Purchaser and
their respective successors, if any, which hold Purchaser's Shares. If at the
time of any Exercise any of the Call Option Shares are held by any Controlled
Affiliate of the Purchaser, the Purchaser shall cause such Controlled Affiliate
to take such action and to execute and deliver to a Person designated by the
Issuer any agreements, documents, certificates or other instruments as shall be
reasonably necessary or appropriate to give effect to or otherwise enable the
consummation of the transactions contemplated by this Section 2.07 or to
acknowledge compliance by such Controlled Affiliate of this Section 2.07.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ISSUER
Subject to the information contained the Issuer's Form 20-F and Form 6-Ks
filed with the SEC since the date of such Form 20-F (including the Issuer's Form
6-K filed on the date hereof) and the Schedules hereto, the Issuer hereby
represents and warrants to the Purchaser that, as of the date of this Agreement
and, solely with respect to those representations and warranties specified in
Section 8.01(a), as of the Closing Date:
3.01 Organization of the Issuer
--------------------------
The Issuer is an open joint stock company and has been duly organized, is
validly existing as a legal entity properly organized, registered and existing
under the laws of the Russian Federation, with corporate power and authority to
carry on its business as it is currently being conducted and to own, lease and
operate its Assets and Properties, and is not
<PAGE>
14
required to be qualified as a foreign corporation or other entity authorized to
do business in any other jurisdiction.
3.02 Authority
---------
(a) The Issuer has full power and authority to execute and deliver this
Agreement and the other Principal Agreements to which the Issuer is a party.
(b) This Agreement and the other Principal Agreements to which the Issuer
is a party have been duly and validly authorized, executed and delivered by the
Issuer and constitute the legal, valid and binding obligations of the Issuer,
enforceable against the Issuer in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights and remedies generally
and by general equitable principles (whether applied by a court of law or
equity), except as rights to indemnity and contribution may be limited by
applicable law or public policy and except to the extent any clause hereof
provides for the payment of a penalty.
(c) Subject only to the actions and proceedings identified in Schedules
3.04(c), 3.12, 8.01(e) and 8.01(f), the Issuer has full power and authority to
perform the Issuer's obligations hereunder and under the other Principal
Agreements to which the Issuer is a party, and to consummate the transactions
contemplated hereby and thereby, including, without limitation, to issue and
sell (pursuant to this Agreement) the Purchaser's Shares to the Purchaser.
3.03 Charter Capital of the Issuer
-----------------------------
(a) The Charter Capital of the Issuer consists solely of Nineteen Million
Two Hundred Eighty Thousand (19,280,000) issued shares of Common Stock and Six
Million Four Hundred Twenty-Six Thousand Six Hundred (6,426,600) issued shares
of Preferred Stock. After giving effect to the issuance of all of the
Purchaser's Shares, the Issuer's Charter Capital shall consist of Twenty-Eight
Million One Hundred Eighty Two Thousand Two Hundred and One (28,182,201) issued
shares of Common Stock and Six Million Four Hundred Twenty-Six Thousand Six
Hundred (6,426,600) issued shares of Preferred Stock.
(b) All of the outstanding Equity Interests of the Issuer (excluding the
Purchaser's Shares) (i) have been duly authorized and validly issued, (ii) are
fully paid, and, except as described on page 28 of Form 20-F ("Assessability of
Shares"), non-assessable, (iii) are not subject to any preemptive or similar
rights with respect to the Issuer, and (iv) were properly registered with the
appropriate authorities competent for registration of the issue of such shares.
All of the shares of the Issuer, including the Purchaser's Shares, are
uncertificated.
(c) As of the Closing Date and each Subsequent Payment Date, if any, the
Purchaser's Shares (i) will have been duly authorized, (ii) when issued to the
Purchaser as provided herein and in accordance with the documents to be filed
with the FCSM, and delivered to and paid for by the Purchaser as provided for by
this Agreement and the CBR License, will be validly issued, fully paid and,
except as described on page 28 of Form 20-F ("Assessability of Shares"), non-
assessable, (iii) (upon registration of a report on the issuance thereof with
the FCSM, compliance with the disclosure requirements of the Russian Federation
Federal Law on the Securities Markets and regulations of the FCSM, and approval
of the amendments to the Charter by the Board and their registration with the
MRC and SRC), the issuance of such Purchaser's Shares shall have been properly
registered with the appropriate authorities competent therefor, and (iv) the
Purchaser shall acquire the Purchaser's Shares, free and clear of
<PAGE>
15
all Liens. As of the Closing Date, the Purchaser's Shares will have been
transferred from the Issuer to the Purchaser, and the Purchaser's shareholding
with respect to the Purchaser's Shares will have been entered into the
shareholder register of the Issuer.
(d) After giving effect to the issuance of all of the Purchaser's Shares,
notwithstanding the issuance of an additional One Million (1,000,000) shares
(currently contemplated to be issued under the Stock Option Plan) and regardless
of whether the Issuer exercises the Call Option, the Purchaser's Shares shall
represent not less than twenty-five percent (25%) plus one share of all voting
capital stock of the Issuer, inclusive of all issued shares of Common Stock and
all issued Preferred Stock.
(e) Immediately following the issuance to the Purchaser of all of the
Purchaser's Shares and payment in full therefor, the Purchaser shall have
sufficient voting power to block any decision of the GMS requiring an
affirmative vote of three-quarters (3/4) of the shareholders present and
eligible to vote at the GMS.
(f) Neither the Issuer nor, to the Knowledge of the Issuer, any Person
affiliated (as defined in Rule 405 of the Act) with the Issuer, has taken,
directly or indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of the
Issuer.
(g) No holder of any security of the Issuer, other than the Purchaser and
the Major Inside Shareholders and any Person who has acquired rights to require
registration of the Issuer's Securities in accordance with the Registration
Rights Agreement, has any right to require registration of the shares of Common
Stock or any other security of the Issuer under the Act.
(h) Except as otherwise set forth in Schedule 3.03, there are no
outstanding Options related to or entitling any Person to purchase or otherwise
acquire from the Issuer or the Significant Subsidiary any Equity Interest in the
Issuer or any such Significant Subsidiary, as the case may be.
3.04 Subsidiaries of the Issuer
--------------------------
(a) The direct Subsidiaries of the Issuer and the material indirect
Subsidiaries consist entirely of the entities set forth in Schedule 3.04(a).
(b) The Consolidated Subsidiaries consist entirely of the entities
identified in Schedule 3.04(b) as the "Consolidated Subsidiaries". Each of the
Consolidated Subsidiaries of the Issuer has been duly organized, is validly
existing as a legal entity properly organized, registered and existing under the
laws of the Russian Federation, with corporate power and authority to carry on
its business as it is currently being conducted and to own, lease and operate
its Assets and Properties, and is not required to be qualified as a foreign
corporation or other entity authorized to do business in any other jurisdiction.
(c) Except as set forth on Schedule 3.04(c), all of the outstanding Equity
Interests of each of the Consolidated Subsidiaries of the Issuer have been duly
authorized and validly issued and are fully paid and, except as described on
page 28 of Form 20-F ("Assessability of Shares"), non-assessable, and the
issuance of such Equity Interests was properly registered with the appropriate
authorities competent therefor, and, to the extent owned by the Issuer, are
<PAGE>
16
owned by the Issuer free and clear of any Liens (other than Permitted Liens).
The Issuer owns directly or indirectly such percentage of the Equity Interests
of the Consolidated Subsidiaries of the Issuer as is specified in Schedule
3.04(b) as being owned by the Issuer, and, except as specified in Schedule
3.04(c) hereof, all approvals of Governmental or Regulatory Authorities required
therefor have been obtained.
3.05 No Conflicts
------------
The execution, delivery and performance by the Issuer of this Agreement
and the other Principal Agreements to which it is a party, compliance by the
Issuer with all of the provisions hereof and thereof and the consummation by the
Issuer of the transactions contemplated hereby and thereby:
(a) will not conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the Charter (after giving effect to the
amendments described in Section 5.04 of this Agreement), or the charter of the
Significant Subsidiary,
(b) subject to obtaining the third party consents referred to in Schedule
8.01(f), will not conflict with or constitute a breach of any Contract or
License to which the Issuer or the Significant Subsidiary is a party as of the
date of this Agreement or by which the Issuer or the Significant Subsidiary or
any of their respective Assets and Properties is bound, and
(c) subject to obtaining the consents, approvals and actions, making the
filings and giving the notices disclosed in Schedule 8.01(e) hereto, will not
violate or conflict with any Orders or Laws applicable to the Issuer, the
Significant Subsidiary or any of their respective Assets and Properties,
except, in the case of clauses (b) and (c), any conflict, breach, violation,
failure to obtain consent or approval or make any filing or give any notice,
which would not have a Material Adverse Effect on the Issuer.
3.06 Governmental Approvals and Filings
----------------------------------
Except as set forth in Schedule 8.01(e), the execution, delivery and
performance by the Issuer of this Agreement and the other Principal Agreements
to which it is a party, the compliance by the Issuer with all of the provisions
hereof and thereof and the consummation of the transactions by the Issuer
contemplated hereby and thereby will not require any consent, approval,
authorization or other order of any Governmental or Regulatory Authority.
3.07 Books and Records
-----------------
(a) Schedule 3.07(a) is a true and complete list of all written protocols
of meetings and all written consents in lieu of GMSs and of the Board of the
Issuer and the Significant Subsidiary from November 15, 1996 up to and including
the date of this Agreement. A true and complete copy of each such consent and
the minutes of each such meeting has been made available for review by the
Purchaser.
(b) True and complete copies of the share registers of the Issuer and the
Significant Subsidiary (as provided by the share registrars of the Issuer and
the Significant Subsidiary), and a complete list of shareholders of each other
direct Subsidiary of the Issuer, are attached hereto as Schedule 3.07(b).
<PAGE>
17
(c) Neither the Issuer nor the Significant Subsidiary holds its share
register, Telecoms Licenses or accounting records at any location other than one
of the locations specified in Schedule 3.07(c).
(d) Each of the Issuer and the Significant Subsidiary makes and keeps
accurate books and records and maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of the
Financial Statements in conformity with GAAP and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
3.08 Financial Statements
--------------------
(a) Prior to the execution of this Agreement, the Issuer has delivered to
the Purchaser true and complete copies of the following Financial Statements:
(i) the Audited Consolidated Financial Statements and the Financial
Statements of the Issuer as of December 31, 1995 and December 31, 1996 and for
the fiscal years then ended, together with, in each case, a true and correct
copy of the report on such audited information by Ernst & Young (CIS) Limited;
(ii) the Unaudited Consolidated Financial Statements and the
Financial Statements of the Issuer as of March 31, 1998 and June 30, 1998 and
for the quarters then ended,
(b) Except as disclosed therein, all such Financial Statements:
(i) were prepared in accordance with GAAP, respectively, subject
in the case of unaudited Financial Statements to normal year-end adjustments and
the absence of notes to such Financial Statements;
(ii) present fairly the consolidated financial position, and
results of operations as to the Audited Consolidated Financial Statements and
the other Financial Statements referred to in Section 3.08(a)(i) only, and
changes in financial position of the Issuer and its Consolidated Subsidiaries at
the respective dates for the respective periods to which they apply; and
(iii) comply in all material respects with the requirements of the
Act applicable to annual and quarterly financial statements of foreign issuers.
(c) Ernst & Young (CIS) Limited are independent public accountants with
respect to the Issuer as required by the Act.
<PAGE>
18
3.09 Absence of Changes
------------------
Except as set forth in Schedule 3.09 and except for the execution and
delivery of this Agreement and the other Principal Agreements and the
transactions contemplated hereby and thereby, since the Audited Consolidated
Financial Statement Date:
(a) there has been no material adverse change in the condition (financial
or otherwise) or prospects of the Issuer and the Significant Subsidiary, taken
as a whole, whether or not arising from transactions in the ordinary course of
business;
(b) there has been no transaction entered into by the Issuer or the
Significant Subsidiary material to the Issuer, on a consolidated basis, other
than in the ordinary course of business;
(c) there has been no dividend or distribution of any kind declared, paid
or made, or any direct or indirect redemption, by the Issuer or the Significant
Subsidiary on any class of its capital stock;
(d) there has been no bankruptcy or administrative proceeding (nabludenie)
declared or commenced by a Governmental or Regulatory Authority of competent
jurisdiction with respect to the Issuer or the Significant Subsidiary;
(e) without limiting the generality of the foregoing, except as set forth
in Schedule 3.09(b), there has not occurred between the Audited Consolidated
Financial Statement Date and the date hereof, any of the following with respect
to the Issuer or the Significant Subsidiary:
(i) any authorization, issuance, sale or other disposition of any
Equity Interest or Option other than the Issuer's phantom stock program and
similar arrangements with employees of the Issuer or the Significant Subsidiary,
or any modification or amendment of any right of any holder of any Equity
Interest of or Option of the Issuer on a consolidated basis (except as set forth
in Schedule 3.03);
(ii) any increase in the salary, wages or other compensation of any
director, officer or employee whose annual salary or wages are, or after giving
effect to such change would be, US$500,000 or more;
(iii) any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any movable or immovable
property or equipment (whether owned, leased or used) in an aggregate amount
which would have a Material Adverse Effect on the Issuer;
(iv) except as described on Schedule 3.09(e)(iv), any material
change in any method of calculating bad debt or accounting, financial reporting
or Tax practice or policy or (B) any change in the fiscal year;
(v) any write off or write down of or any determination to write
off or write down any of the Assets and Properties in an aggregate amount
exceeding US$10,000,000 (without taking into account normal year-end audit
adjustments);
<PAGE>
19
(vi) any (A) amendment to its charter, (B) any recapitalization,
reorganization, liquidation or dissolution, in each case, as such terms are
defined under the laws of the Russian Federation; or (C) any Business
Combination in which the Issuer or the Significant Subsidiary has paid or
received more than US$10,000,000;
(vii) any entering into any amendment, modification, termination
(partial or complete) or granting of a waiver under or giving any consent with
respect to any Telecom License;
(viii) any capital expenditures or commitments for additions to
property or equipment constituting capital assets in an aggregate amount
exceeding US$10,000,000;
(ix) any commencement or termination of any material line of
business; or
(x) any transaction with any Affiliate (A) outside the ordinary
course of business consistent with past practice, or (B) other than on an arm's
length basis, or (C) other than pursuant to any Contract disclosed pursuant to
Section 3.17, in each case, which is material to the Issuer and the Significant
Subsidiary, taken as a whole.
3.10 No Undisclosed Indebtedness, Liens and Liabilities
--------------------------------------------------
Except as disclosed in Schedule 3.10, (a) there is no Indebtedness the
value of which exceeds Ten Million US Dollars (US$10,000,000), (b) there are no
Liens (other than Permitted Liens) on any of the Assets and Properties of the
Issuer, and (c) there are no Liabilities against, relating to or affecting the
Issuer or any Consolidated Subsidiary or any of their respective Assets and
Properties, other than Indebtedness, Liens and Liabilities incurred in the
ordinary course of business consistent with past practice which in the aggregate
are not material to their Business or Condition.
3.11 Taxes
-----
Except as set forth in Schedule 3.11, to the Knowledge of the Issuer, each
of the Issuer and the Significant Subsidiary has duly filed with the appropriate
taxing authorities (or has received an extension for filing with respect to) all
Tax Documents required to be filed by it, and each such Tax Document was, when
filed, accurate and complete in all material respects; and, to the Knowledge of
the Issuer, each of the Issuer and the Significant Subsidiary has duly paid, on
time, or has made adequate reserves for, or has contested in good faith, all
Taxes required to be paid or remitted by it or levied against it, and, to the
Knowledge of the Issuer, no material Tax deficiency is currently asserted
against the Issuer or the Significant Subsidiary.
3.12 Legal Proceedings; Liability
----------------------------
Except as set forth in Schedule 3.12 :
(a) there is no Action or Proceeding pending or, to the Knowledge of the
Issuer, threatened which will result in, or would reasonably be expected to
result in, the issuance of an Order which (i) questions the validity of this
Agreement or any of the other Principal Agreements or any action taken or to be
taken pursuant hereto or thereto, or (ii) restrains, enjoins or otherwise
prohibits or makes illegal consummation of any of the transactions contemplated
by this Agreement or any of the other Principal Agreements, or (iii) otherwise
results in a material impairment of the Purchaser's rights under this Agreement
or any of the
<PAGE>
20
other Principal Agreements to which the Purchaser is a party, or (iv) if
determined adversely to the Issuer or a Consolidated Subsidiary of the Issuer,
could reasonably be expected to result in (A) any injunction or other equitable
relief against such Person that would interfere in any material respect with its
business or operations or (B) Losses by such Person, individually or in the
aggregate, in excess of US$10,000,000;
(b) there are no facts or circumstances Known to the Issuer that could
reasonably be expected to give rise to any Action or Proceeding that would be
required to be disclosed pursuant to clause (a) above;
(c) there are no material Orders outstanding against the Issuer or the
Consolidated Subsidiaries of the Issuer; and
(d) neither the Issuer nor any Subsidiary of the Issuer has any material
Liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
any of them giving rise to any Liability) arising out of any injury to
individuals or property as a result of (i) any service rendered by the Issuer or
any Subsidiary or (ii) the ownership, possession or use of any product
manufactured, sold, leased or delivered by the Issuer or any Subsidiary.
3.13 Compliance With Laws and Orders
-------------------------------
(a) Except for any violation or alleged violation of, or default or
alleged default under, any Law or Order applicable to the Issuer or any of its
Assets and Properties which has been settled or otherwise resolved, neither the
Issuer nor the Significant Subsidiary is, or has at any time since November 15,
1996, received any written notice that it is, or has at any time since November
15, 1996 been, in violation of or in default under any Law or Order applicable
to it or any of its Assets and Properties, in each case, which could have a
Material Adverse Effect on that Issuer.
(b) Neither the Issuer nor the Significant Subsidiary, nor any director,
officer, agent, employee or other person associated with or acting on behalf of
the Issuer or the Significant Subsidiary, (i) has used any corporate funds for
any unlawful contributions, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful
payment to any governmental official or employee from corporate funds; (iii)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or (iv) made any bribe, unlawful rebate, payoff, influence payment,
kickback or other unlawful payment in connection with the business of the
Issuer.
3.14 Benefit Plans
-------------
Except as disclosed in the Issuer's Form 20-F and in Schedule 3.03, and
except for the Stock Option Plan, neither the Issuer nor any of its Consolidated
Subsidiaries has any material Benefit Plans.
3.15 Immovable Property
------------------
(a) Schedule 3.15 contains a true and correct list of the three (3)
principal buildings owned or leased by the Issuer or any of its Consolidated
Subsidiaries or used by the Issuer and/or its Consolidated Subsidiaries. Each
of the Issuer and the Consolidated Subsidiaries, as
<PAGE>
21
applicable, has good and valid title, free and clear of all Liens, except
Permitted Liens, to the buildings which Schedule 3.15 indicates are owned by it.
(b) No default has occurred or is continuing in respect of any lease of a
building or portion thereof to which the Issuer or any of its Consolidated
Subsidiaries is a party as lessee and which is listed in Schedule 3.15, and the
Issuer and the Consolidated Subsidiaries enjoy peaceful and undisturbed
possession under all such leases to which any of them is a party as lessee with
such exceptions as do not materially interfere with the use made by the Issuer
or such Consolidated Subsidiary.
3.16 Intellectual Property Rights
----------------------------
Except as set forth in Schedule 3.16(a), the Issuer and the Significant
Subsidiary possess the material Intellectual Property (with the exception of the
software comprising their respective subscriber billing programs), employed by
them in connection with the business as it is currently being conducted and as
it is proposed to be conducted, as described in Form 20-F, and neither the
Issuer nor the Significant Subsidiary has received any notice of infringement of
or conflict with asserted rights of others with respect to the foregoing which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect on the Issuer. Without
limitation to the generality of the foregoing:
(a) The Issuer has the exclusive right to use the Bee Line Name, except to
the extent the Issuer has, directly or indirectly, licensed the Bee Line Name
to, or authorized the use of the Bee Line Name by, a third party (each, a "Bee
Line Licensee").
(b) The Issuer has registered title to the Bee Line Name as a trademark,
free and clear of any Liens except for Permitted Liens and the rights of Bee
Line Licensees under Contracts in respect of the use of the Bee Line Name.
(c) All registrations with and applications to any Governmental or
Regulatory Authorities required to protect the rights of the Issuer and any Bee
Line Licensee to the Bee Line Name are valid and in full force and effect and
are not subject to the payment of any Taxes or maintenance fees or the taking of
any other actions by the Issuer to maintain their validity or effectiveness,
except for (i) such payments which will be made prior to Closing and (ii) any
payments for actions which if they were not made or taken would not result in a
Material Adverse Effect on the Issuer.
(d) The Issuer and, to the Knowledge of the Issuer, each Bee Line
Licensee, have taken reasonable security and enforcement measures to protect the
value of the Bee Line Name and to prevent its use by unauthorized Persons.
(e) Neither the Issuer nor, to the Knowledge of the Issuer, any Bee Line
Licensee is, nor has the Issuer or, to the Knowledge of the Issuer, any Bee Line
Licensee, received any written notice that the Issuer or any Bee Line Licensee
is, in default (or with the giving of notice or lapse of time or both, would be
in default) in any material respect under any Contract to use the Bee Line Name.
(f) To the Knowledge of the Issuer, the Bee Line Name is not being
infringed by any Person.
<PAGE>
22
3.17 Contracts; No Default
---------------------
(a) Schedule 3.17(a) contains a true and complete list of all Contracts
(true and complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto and
all waivers of any terms thereof, have been delivered to the Purchaser prior to
the execution of this Agreement), dated on or after January 1, 1998, to which
the Issuer or the Significant Subsidiary is a party or by which any of their
Assets and Properties is bound which involve an obligation of the Issuer or the
Significant Subsidiary to make payments in any year, other than with respect to
salary or incentive compensation payments in the ordinary course of business, to
any Person exceeding US$5,000,000 in the aggregate (other than Contracts
referred to in Sections 3.10 or 3.15).
(b) Neither the Issuer nor the Significant Subsidiary has received any
notice of default in connection with the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of Indebtedness or in any other agreement, indenture or instrument to
which the Issuer or the Significant Subsidiary is a party or by which the Issuer
or the Significant Subsidiary or their respective Assets and Properties are
bound.
(c) Schedule 3.17(c) contains a true and complete list of the Issuer's
existing commitments and obligations to purchase any goods (including equipment
and handsets) and to retain any services (including leases of interconnect
lines), in each case, exceeding US$15,000,000 in the aggregate in any fiscal
year.
3.18 Year 2000 Warranty
------------------
The letters which the Issuer has received from Alcatel SEL AG and Ericsson
Project Finance AB and AB LM Ericsson Finans are attached hereto as Schedule
3.18.
The Issuer has investigated the possibility of the occurrence of Year 2000
Problems and:
(a) has utilized and intends to continue utilizing internal and external
resources to identify, correct, reprogram and test its computer systems to
address Year 2000 Problems; and
(b) expects to replace some systems and modify others as part of the
process in identifying, correcting, reprogramming and testing its computer
systems for Year 2000 Problems;
provided that the Issuer makes no representation or warranty whatsoever, direct
or indirect, explicit or implicit, with respect to any cost or Loss the Company
may incur as a result of or in connection with Year 2000 Problems affecting any
Person, including, without limitation, Year 2000 Problems affecting the Issuer
or any Person on which the Issuer's operations or the operations of any of its
Subsidiaries directly or indirectly rely.
<PAGE>
23
3.19 Licenses
--------
(a) Except as otherwise set forth in Schedule 3.19(a), the Issuer and each
of the Consolidated Subsidiaries have such Licenses as are used or necessary to
own, lease, and operate its respective Assets and Properties and to conduct its
business, except where the failure to have such Licenses would not have a
Material Adverse Effect on the Issuer;
(b) Except as otherwise set forth in Schedule 3.19(b), the Issuer and each
of the Consolidated Subsidiaries of the Issuer has fulfilled and performed all
of its material obligations with respect to such Licenses and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of the rights
of the holder or any such License, except such as would not have a Material
Adverse Effect on the Issuer;
(c) Except as otherwise set forth in Schedule 3.19(c), no such License
contains any restrictions that have or that the Issuer could reasonably expect
to have a Material Adverse Effect on the Issuer.
(d) Except as set forth on Schedule 3.19(b), no event has occurred which
allows, or after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of the Issuer
or the Significant Subsidiary in respect of any Telecom License.
3.20 Insurance
---------
The Issuer and the Consolidated Subsidiaries have insured their respective
Assets and Properties as set forth on Schedule 3.20.
3.21 Employees; Labor Relations
--------------------------
(a) Neither the Issuer nor the Significant Subsidiary has violated any
applicable Russian or foreign, including in each instance federal, state or
local, Law or regulation relating to discrimination in the hiring, promotion or
pay of employees, which might reasonably be expected to result in any Material
Adverse Effect.
(b) No labor strike, dispute, disturbance, lockout, slowdown or stoppage
of employees of the Issuer or the Significant Subsidiary exists and, to the
Knowledge of the Issuer, no such action is imminent.
3.22 Environmental Matters
---------------------
(a) Neither the Issuer nor the Significant Subsidiary has violated any
Environmental Law, which might reasonably be expected to result in a Material
Adverse Effect on the Issuer.
3.23 Interconnect Providers
----------------------
No gateway operator or other provider of interconnect services to the
Issuer or the Significant Subsidiary has ceased or materially reduced its
provision of services to the Issuer or the Significant Subsidiary since the
Audited Consolidated Financial Statement Date or threatened to cease or
materially reduce such provision of services after the date hereof.
<PAGE>
24
3.24 Investments
-----------
Schedule 3.24 hereto sets forth a list of each equity Investment of the
Issuer (other than in respect of its Subsidiaries). All such equity Investments
are free and clear of all Liens other than Permitted Liens.
3.25 Accounts Receivable
-------------------
The accounts and notes receivable of the Issuer and each Significant
Subsidiary reflected on the balance sheet included in the Unaudited Consolidated
Financial Statements, and all accounts and notes receivable arising subsequent
to the Unaudited Consolidated Financial Statement Date, (a) arose from bona fide
sales transactions in the ordinary course of business and are payable on
ordinary trade terms, (b) to the Knowledge of the Issuer are legal, valid and
binding obligations of the respective debtors generally enforceable in
accordance with their terms, (c) are collectible in the ordinary course of
business consistent with past practice in the aggregate recorded amounts
thereof, net of any applicable reserve reflected in the balance sheet included
in the Unaudited Consolidated Financial Statements, and (d) are not the subject
of any Actions or Proceedings brought by or on behalf of the Issuer or the
Significant Subsidiary.
3.26 Brokers
-------
Except as described on Schedule 3.26, all negotiations relating to this
Agreement and the transactions contemplated hereby have been carried out by the
Issuer directly with the Purchaser without the intervention of any Person on
behalf of the Issuer in such manner as to give rise to any valid claim by any
Person against the Purchaser or the Issuer or any Significant Subsidiary for any
finder's fee, brokerage commission or similar payment.
3.27 SEC Documents
-------------
(a) The Issuer has filed all reports, Schedules, forms, statements and
other documents with the SEC (collectively, and in each case including all
Exhibits and SchedulEs thereto and documents incorporated by reference there,
the "SEC Documents") required to be filed by it prior to giving effect to the
transactions contemplated by this Agreement and the other Principal Agreements.
(b) Each part of the SEC Documents, when such part became effective, (i)
did not contain and each part, as amended or supplemented, if applicable, does
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(ii) complied in all material respects with the Act and, as amended or
supplemented, if applicable, complied in all material respects with the Act;
provided, however, that the representations and warranties set forth in this
Section 3.27(b) do not apply to statements or omissions in the SEC Documents
that are based on information relating to any underwriter or shareholder
furnished to the Issuer in writing by such underwriter or shareholder,
respectively.
3.28 Disclosure
----------
To the Knowledge of the Issuer, the Issuer has disclosed all material
facts relating to the Business or Condition of the Issuer and the Significant
Subsidiary of the Issuer to the Purchaser in or in connection with this
Agreement. No representation or warranty contained in this
<PAGE>
25
Agreement, and no statement contained in the attached Schedules (including,
without limitation, the Financial Statements), or in the Certificate of the
President delivered to the Purchaser in connection with the execution of this
Agreement on the date thereof, contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
herein or therein, in the light of the circumstances under which they were made,
not misleading.
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Issuer as follows:
4.01 Organization; Ability to Consummate Transactions
------------------------------------------------
The Purchaser is a corporation duly organized and validly existing under
the Laws of the Kingdom of Norway. The Purchaser has full power and authority to
execute and deliver this Agreement and the other Principal Agreements to which
it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby, provided that the
Purchaser must obtain the approval of the MAMP to consummate the acquisition of
the Purchaser's Shares.
4.02 Authority
---------
The execution and delivery by the Purchaser of this Agreement and the
other Principal Agreements to which it is a party, and the performance by the
Purchaser of its obligations hereunder and thereunder, have been duly and
validly authorized by the Board of Directors of the Purchaser, no other
corporate action on the part of the Purchaser or its stockholder being
necessary. This Agreement has been duly and validly executed and delivered by
the Purchaser and constitutes, and upon the execution and delivery by the
Purchaser of the other Principal Agreements to which it is a party, such other
Principal Agreements will constitute, the legal, valid and binding obligations
of the Purchaser enforceable against the Purchaser in accordance with their
terms.
4.03 No Conflicts
------------
The execution, delivery and performance by the Purchaser of this Agreement
and the other Principal Agreements to which it is a party and the consummation
of the transactions contemplated hereby and thereby, will not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the charter (vedtekter) of the Purchaser;
(b) subject to obtaining the consents, approvals and actions, making the
filings and giving the notices disclosed in Schedule 4.04 hereto, conflict with
or result in a violation or breach of any term or provision of any Law or Order
applicable to the Purchaser or any of its Assets and Properties; or
(c) conflict with or constitute a breach of any Contract or License to
which the Purchaser is a party or by which any of its Assets and Properties is
bound.
<PAGE>
26
4.04 Governmental Approvals and Filings
----------------------------------
Except as disclosed in Schedule 4.04 hereto, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority on
the part of the Purchaser is required in connection with the execution, delivery
and performance of this Agreement or the other Principal Agreements to which it
is a party or the consummation of the transactions contemplated hereby or
thereby.
4.05 Legal Proceedings
-----------------
There are no Actions or Proceedings pending or, to the knowledge of the
Purchaser, threatened against, the Purchaser or any of its Assets and Properties
which could reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the other Principal Agreements.
4.06 Brokers
-------
All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Purchaser directly with the
Issuer without the intervention of any Person on behalf of the Purchaser in such
manner as to give rise to any valid claim by any Person against the Issuer for
any finder's fee, brokerage commission or similar payment.
4.07 Investment Intent
-----------------
The Purchaser is acquiring the Purchaser's Shares for its own account for
investment purposes only and not with a view to, or for sale or resale in
connection with, any public distribution thereof or with any present intention
of selling, distributing or otherwise disposing of such Shares, except in
compliance with the Act and all other applicable securities laws.
4.08 Knowledgeable Investor
----------------------
The Purchaser (a) possesses such knowledge and experience in financial and
business matters as to enable it to evaluate the merits and risks of its
investment in the Purchaser's Shares, (b) understands that the Purchaser's
Shares that are to be acquired by it under this Agreement are not registered
under the Act, (c) understands and is able to bear the economic risk involved in
acquiring the Purchaser's Shares, including any loss relating to or arising out
of such investment, (d) is not a "U.S. person", as such term is defined under
Rule 902 of Regulations S under the Act, and is not acquiring the Purchaser's
Shares for the account of a U.S. person (as so defined) and (e) is an
"accredited investor" as defined in Rule 501(a) under Regulation D under the
Act, experienced in investing in emerging markets.
4.09 Compliance with Securities Laws
-------------------------------
Neither the Purchaser nor, to the Knowledge of the Purchaser, any Person
affiliated (as defined in Rule 405 of the Act) with the Purchaser, has taken,
directly or indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of the
Issuer. The acquisition of the Purchaser's Shares by the Purchaser pursuant to
this Agreement is, and at all times has been, in compliance with the securities
laws of each
<PAGE>
27
jurisdiction applicable to it, including, without limitation, United States
securities laws and NYSE rules and regulations relating to insider trading.
4.10 No Knowledge of Breach
----------------------
There is no breach by the Issuer known to the Purchaser of any
representation or warranty made by the Issuer in this Agreement.
4.11 Independent Investigation
-------------------------
The Purchaser has (a) conducted its own investigation with respect to the
Purchaser's Shares, the Issuer and its Subsidiaries and Affiliates, and Russia
in connection with its acquisition of the Purchaser's Shares, and has had the
opportunity to ask executive officers of the Issuer such questions as it has
considered necessary, relevant or appropriate with respect to the Purchaser's
Shares, the Issuer and its Subsidiaries and Affiliates, and Russia; (b)
consulted its own legal advisors with respect to its investment in the
Purchaser's Shares and the risks associated with such investment to the extent
the Purchaser deems necessary or appropriate; and (c) received all information
that it believes is necessary, relevant or appropriate in connection with its
acquisition of the Purchaser's Shares.
ARTICLE V COVENANTS OF THE ISSUER
The Issuer covenants and agrees with the Purchaser that, at all times from
and after the date hereof until the Closing (except with respect to Section
5.02(a), Section 5.08 and Section 5.09(a), which shall survive until the date on
which the Purchaser, having once attained ten percent (10%) or more of the
issued and outstanding voting capital stock of the Issuer, holds less than ten
percent (10) of the issued and outstanding voting capital stock of the Issuer,
Section 5.05 which shall survive only until the First Board Date and Section
5.07 and Section 5.09(b), which shall survive until the first date on which the
Purchaser, having once attained the Specified Percentage, holds less than the
Specified Percentage), the Issuer will comply with all covenants and provisions
of this Article V, except to the extent the Purchaser may otherwise consent in
writing.
5.01 No Solicitations
----------------
During the period commencing on the date of the execution of this
Agreement and ending on the earlier of (a) the First Board Date and (b) the date
which is one hundred eighty (180) calendar days from the execution of this
Agreement, the Issuer will not take, nor will it permit any Consolidated
Subsidiary (or authorize or permit any investment banker, financial adviser,
attorney, accountant or other Person retained by or acting for or on behalf of
the Issuer or any Consolidated Subsidiary) to take, directly or indirectly, any
action to initiate, assist, solicit, negotiate, encourage or accept any offer or
inquiry from any Strategic Investor (or any Person known by the Issuer to be
acting on behalf of any Strategic Investor) (i) to engage in, reach any
agreement or understanding (whether or not such agreement or understanding is
absolute, revocable, contingent or conditional) for, or otherwise attempt to
consummate, any issuance of shares to such Strategic Investor or merger or
consolidation with such Strategic Investor, or sale of all or substantially all
of the assets of the Issuer or its assets or the assets of any Consolidated
Subsidiary to such Strategic Investor, or (ii) to furnish or cause to be
furnished any information with respect to the Issuer or any Consolidated
Subsidiary to any
<PAGE>
28
Strategic Investor (or any Person known by the Issuer to be acting on behalf of
any Strategic Investor) (other than as contemplated by Section 5.02) who the
Issuer, or any Consolidated Subsidiary (or any Person acting for or on their
behalf) knows or has reason to believe is in the process of considering any of
the transactions described in clause (i) of this Section 5.01. If the Issuer or
any Consolidated Subsidiary (or any Person acting for or on their behalf)
receives from any Strategic Investor (or any Person known by the Issuer to be
acting on behalf of any Strategic Investor) any offer, inquiry or informational
request referred to in this Section 5.01, the Issuer will (if not the original
recipient thereof) promptly advise such Person, by written notice, of the terms
of this Section 5.01 and, in each case, will promptly in writing advise the
Purchaser of such offer, inquiry or request and deliver a copy of such notice to
the Purchaser, provided that the foregoing shall not apply to normal investor
relations activities of the Issuer.
5.02 Financial Statements and Reports; Filings
-----------------------------------------
(a) Commencing on the date of this Agreement, the Issuer shall deliver to
the Purchaser:
(i) As promptly as practicable and in any event no later than
ninety (90) days after the end of each fiscal quarter ending after the date
hereof and before the Closing, true and complete copies of the unaudited
consolidated balance sheet of the Issuer and the Consolidated Subsidiaries, and
the related unaudited consolidated statement of income of the Issuer and its
Consolidated Subsidiaries, as of and for such period, prepared on a basis
consistent with the Audited Consolidated Financial Statements, subject to normal
year-end audit adjustments, except as otherwise stated therein.
(ii) As promptly as practicable and in any event no later than one
hundred eighty (180) days after the end of each of the Issuer's fiscal years
ending after the date hereof, true and complete copies of a consolidated balance
sheet of the Issuer and its Consolidated Subsidiaries as at the end of such
fiscal year, and consolidated statements of income and cash flows of the Issuer
and its Consolidated Subsidiaries for such fiscal year, prepared in accordance
with GAAP and setting forth in each case in comparative form these figures for
the previous fiscal year, all in reasonable detail and certified by independent
public accountants of recognized international standing, and a comparison to the
Issuer's budget for such years prepared by the Issuer. The Issuer will deliver
the Audited Consolidated Financial Statement for its fiscal year ended December
31, 1998 to the Purchaser not later than June 30, 1999.
(iii) As promptly as practicable, true and complete copies of such
other financial statements and reports as are specified in Schedule 5.02.
(iv) Promptly upon their becoming available, copies of all
registration statements, annual reports on Form 20-F, any reports on Form 6-K
and such proxy statements and other information as shall be filed by the Company
with the SEC or any national or regional securities exchange or otherwise
generally distributed to shareholders of the Company.
(b) During the period from the date of this Agreement up to the Closing,
the Issuer shall deliver to the Purchaser, as promptly as practicable, copies of
all Telecom Licenses received after the execution of this Agreement and, upon
request of the Purchaser, all roaming and interconnect applications and other
material filings made by the Issuer or the Significant Subsidiary after the date
hereof and before the Closing with any Governmental or Regulatory Authority
(other than routine, recurring filings made in the ordinary course of business
consistent with past practice)
<PAGE>
29
5.03 Certain Restrictions
--------------------
Except as contemplated by the Principal Agreements, without the prior
written consent of the Purchaser, the Issuer shall refrain from (and shall
cause, to the extent of its voting power or control, the Significant Subsidiary
to refrain from):
(a) amending its charter, delisting the ADSs from the NYSE or taking any
action with respect to any such amendment or delisting or any recapitalization,
reorganization, liquidation or dissolution of the Issuer or the Significant
Subsidiary;
(b) declaring, setting aside or paying any dividend or other distribution
in respect of the Equity of the Issuer or the Significant Subsidiary, or
directly or indirectly redeeming, purchasing or otherwise acquiring any Equity
Interest in or any Option with respect to the Issuer;
(c) engaging with any Person in any Business Combination;
(d) entering into any Contract to do or engage in any of the foregoing.
5.04 Charter Amendments
------------------
(a) Prior to the Closing, the Issuer shall have effected the amendments
to its Charter, described below (the "amendments to the Charter") and shall have
registered such amendments with the MRC and SRC which shall have the effect of:
(i) fixing the number of members of the Board at nine;
(ii) providing that a three-quarters (3/4) majority of members of
the Board shall be required to amend the Board Rules;
(iii) providing that two-thirds (2/3) of the total number of members
of the Board shall constitute a quorum for any meeting of the Board; provided,
however, that the presence (or, with respect to any meeting by ballot, the vote)
of at least one duly elected member of the Board nominated separately by each
holder (if any) of at least twenty-five percent (25%) plus one share of the
issued and outstanding voting capital stock of the Company shall be required to
constitute any such quorum;
(iv) providing that an affirmative vote of three-quarters (3/4) of
the shareholders of the Issuer present and eligible to vote at shareholder
meetings shall be required in connection with the issuance of any authorized
(but unissued) shares and the corresponding increase in the Charter Capital of
the Issuer, and providing that an affirmative vote of three-quarters (3/4) of
the directors shall be required in connection with the amendments of the Charter
related thereto; and
(v) providing that the names of the non-Russian shareholders of
the Issuer which appear in the register of shareholders of the Issuer from time
to time shall be deemed to be incorporated by reference in the Charter as if
they were set forth in full therein.
(b) Prior to March 30, 1999, the Issuer shall use its best efforts to
cause amendments to be made to its Charter to state the Charter Capital in New
Rubles, unless such amendment is not then required by Russian Law.
<PAGE>
30
(c) As soon as practicable after registration of the report on the issuance
of securities, the Issuer shall:
(i) amend the Charter to show an increase in the Charter Capital
equal to the number of the Purchaser's Shares sold to the Purchaser;
(ii) cause the amendment referred to in clause (i) above to be
registered with the MRC and the SRC;
(iii) deliver to the Purchaser registration certificates evidencing the
registrations referred to in clause (ii) above; and
(iv) deliver to the Purchaser evidence of payment of the securities
Tax.
5.05 Purchaser's Pre-Closing Veto Rights
-----------------------------------
During the period commencing on the date of this Agreement and ending on
the First Board Date, the Purchaser shall have the right to veto the following
actions by the Issuer and the Significant Subsidiary, except to the extent
expenditures related to the following actions are contemplated by the Issuer's
1998 budget, as amended, and the January 1999 budget adopted by the Board (the
"Veto Rights"):
(a) the issuance of any new shares of capital stock of the Issuer (except
as contemplated or referred to herein) or of any of its Consolidated
Subsidiaries;
(b) the creation of any new Subsidiary or any Investment in any new
Subsidiary in an amount exceeding US$5,000,000 in the aggregate during such
period; provided, however, that the Purchaser shall not have the right to veto
(i) any merger, consolidation or combination to which any such Subsidiary is a
party, the issuance or disposition or acquisition of any shares to or from, as
applicable, any third party, any sale, dividend, split or other disposition or
acquisition of Equity Interests of such Subsidiary, any sale, dividend or other
disposition or acquisition of all or substantially all of the Assets and
Properties of such Subsidiary or the creation of any Subsidiary, or (ii) any
consolidation, disposition and dissolution of certain of the Issuer's indirect
Subsidiaries or acquisition of Equity Interests of any related Person or Assets
and Properties of any related Person, so long as the aggregate cost to the
Issuer and its Consolidated Subsidiaries, for any and all such transactions
referred to in this Section 5.05(b) does not exceed US$5,000,000;
(c) the entry into any Contract or series of Contracts (other than
Indebtedness), including in respect of the sale of assets having a value per
Contract greater than US$5,000,000;
(d) (i) any transaction between the Issuer, on the one hand, and any
Subsidiary of the Issuer, other than the Significant Subsidiary, or any direct
or indirect Subsidiaries of any such Subsidiary, on the other hand, having an
aggregate value in excess of US$1,000,000; (ii) any transaction between any
direct or indirect Subsidiary of the Issuer, on the one hand, and any other
direct or indirect Subsidiary of the Issuer, on the other hand, having an
aggregate value in excess of US$1,000,000; and (iii) any transaction between the
Issuer or any direct or indirect Subsidiary of the Issuer, on the one hand, and
any officer, director or shareholder or direct or indirect Subsidiary of any
such officer, director or shareholder (other than the Issuer or any
<PAGE>
31
direct or indirect Subsidiary of the Issuer), on the other hand, having an
aggregate value in excess of US$250,000;
(e) the incurrence of any Indebtedness (including under any guarantee but
excluding Indebtedness consisting of re-financing of existing Indebtedness or
the deferred purchase price of goods and services in the ordinary course of
business) by the Issuer or any of its Subsidiaries or Affiliates, on a
consolidated basis calculated in accordance with GAAP, in an amount exceeding
US$5,000,000; provided, however, this clause (e) shall not apply to (i) any
existing commitments for additional Indebtedness of the Issuer from Ericsson
Project Finance AB, AB LM Ericsson Finans or Alcatel SEL AG or (ii) Indebtedness
of the Issuer from the Savings Bank of the Russian Federation (Sberbank) in an
aggregate principal amount not to exceed US$30,000,000;
(f) the creation or adoption of any Benefit Plan (other than the Stock
Option Plan); and
(g) the incurrence of any Lien over the Assets and Properties of the
Issuer or any Subsidiary of the Issuer (other than a Permitted Lien) securing
Indebtedness of the Issuer or any Subsidiary of the Issuer in an amount
exceeding US$5,000,000; provided, however, this clause (g) shall not apply to
any Lien securing Indebtedness of the Issuer from Ericsson Project Finance AB,
AB LM Ericsson Finans or Alcatel SEL AG or (ii) Indebtedness of the Issuer from
the Savings Bank of the Russian Federation (Sberbank) in an aggregate principal
amount not to exceed US$30,000,000.
The Issuer shall request approval from the Purchaser for any of the foregoing
transactions by sending written notice to the Purchaser in accordance with
Section 13.01 hereof. If the Purchaser does not object in writing to the
Issuer's request within the shorter of (i) seven (7) Business Days and (ii)
fourteen (14) calendar days after receiving such notice, the Purchaser shall be
deemed to have approved such transaction.
5.06 Budget
------
The Issuer will (a) provide the Purchaser's representative on the Budget
Committee of the Issuer with the Issuer's entire draft budget for fiscal year
1999 at least fifteen (15) days prior to the First Board Date and (b) cause the
First Board Date to occur within five (5) days after the date of the GMS in
January 1999.
5.07 Involvement of Purchaser in Issuer's Business
---------------------------------------------
Promptly following the execution of this Agreement, the Issuer shall
appoint a designee of the Purchaser as a secondee (in accordance with the terms
of the Telenor Service Obligation Agreement) (at the deputy or assistant manager
level) to each of the policy organs of the Issuer (as designated by the Issuer),
within divisions or working groups within the Issuer carrying out or responsible
for (a) strategy, (b) marketing, (c) information technology, (d) financial
management and (e) budgeting, provided such secondees must possess sufficient
expertise and knowledge and be resident in Russia for the first six months of
such secondment.
5.08 Transactions with Affiliates
----------------------------
Except as expressly permitted by this Agreement, the Issuer will not, and
will not permit any of its Subsidiaries to, directly or indirectly: (a) make any
Investment in an Affiliate; (b) transfer, sell, lease, assign or otherwise
dispose of any assets to an Affiliate; (c) merge into
<PAGE>
32
or consolidate with or purchase or acquire assets from an Affiliate; or (d)
enter into any other transaction directly or indirectly with or for the benefit
of an Affiliate (including, without limitation, guarantees and assumptions of
obligations of an Affiliate); provided that, notwithstanding the foregoing
provisions of this Section 5.08, (i) any Affiliate who is an individual may
serve as a director, officer or employee of the Issuer or any of its
Subsidiaries and receive reasonable compensation for his or her services in such
capacity and (ii) the Issuer and its Subsidiaries may enter into (x)
transactions (other than extensions of credit by the Issuer or any of its
Subsidiaries to an Affiliate) providing for the leasing of property, the
rendering or receipt of services or the purchase or sale of inventory and other
assets in the ordinary course of business if the monetary or business
consideration arising therefrom would be substantially as advantageous to the
Issuer and its Subsidiaries as the monetary or business consideration which
would obtain in a comparable transaction with a Person who is not an Affiliate
or (y) any other transaction, including any Business Combination between or
among the Issuer and any of its Subsidiaries which is approved by the Board.
5.09 The Significant Subsidiary
--------------------------
The Issuer shall exercise its voting rights in respect of the shares of
capital stock of the Significant Subsidiary owned by it and take such other
steps as are necessary (to the extent of its voting power or control) from time
to time to procure that:
(a) there are five (5) members of the board of directors of the
Significant Subsidiary, one (1) of whom has been designated by the Purchaser,
nominated for election and elected to such board of directors; and
(b) none of the following actions are taken by the Significant Subsidiary,
the members of the Board of Directors of the Significant Subsidiary or the
shareholders of the Significant Subsidiary, as the case may be, without the
prior written consent of the Purchaser:
(i) the adoption or approval of any amendment to the charter of the
Significant Subsidiary;
(ii) any merger, reorganization, consolidation, dissolution,
liquidation, or sale of all or substantially all of the Assets and Properties of
the Significant Subsidiary to or with any Person other than the Issuer;
(iii) the incurrence of any Indebtedness (including under any
guarantee but excluding the re-financing of existing Indebtedness and
Indebtedness in respect of the deferred purchase price of goods and services in
the ordinary course of business) by the Significant Subsidiary in an amount
exceeding US$15,000,000;
(iv) the incurrence of any Lien (other than Permitted Liens) over
the Assets and Properties of the Significant Subsidiary securing Indebtedness of
the Significant Subsidiary in an amount exceeding US$5,000,000; provided,
however, this clause (iv) shall not apply to any Lien in favor of the Issuer or
securing Indebtedness of the Significant Subsidiary to Alcatel SEL AG;
(v) the creation of any new Subsidiary of the Significant
Subsidiary; or
(vi) any transaction between the Significant Subsidiary or any
direct or indirect Subsidiary of the Significant Subsidiary, on the one hand,
and any officer, director or
<PAGE>
33
shareholder or direct or indirect Subsidiary of any such officer, director or
shareholder, on the other hand, having an aggregate value in excess of
US$1,000,000; or
(vii) any authorization, issuance, sale or other disposition of any
Equity Interest or Option of the Significant Subsidiary by the Issuer; provided,
however, that this clause (vii) shall not restrict any issuance, sale or other
disposition by the Significant Subsidiary to the Issuer; or
(viii) any dividend or distribution of any kind, or any direct or
indirect redemption by the Significant Subsidiary on any class of its capital
stock.
5.10 Fulfillment of Conditions
-------------------------
The Issuer will execute and deliver at or prior to the Closing each other
Principal Agreement, will take all commercially reasonable steps necessary and
proceed diligently and in good faith to satisfy each other condition to the
obligations of the Purchaser contained in Article VIII.
ARTICLE VI NOTICE AND CURE
Each party will notify the other party in writing of, and will use all
commercially reasonable efforts to cure, before the Closing, any violation or
breach, as soon as practicable after such party becomes aware of such violation
or breach of any representation, warranty, covenant or agreement made by such
party in this Agreement, whether occurring or arising before, on or after the
date of this Agreement, provided that no notice given pursuant to this Article
VI shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein or shall in any way limit the Purchaser's
right to seek indemnity under Article XI.
ARTICLE VII COVENANTS OF THE PURCHASER
The Purchaser covenants and agrees with the Issuer that, at all times from
and after the date hereof until the Closing (or, in the case of Section 7.02,
until the date on which the Purchaser, having once attained ten percent (10%) or
more of the then issued and outstanding voting capital stock of the Issuer,
holds less than ten percent (10%) of the then issued and outstanding voting
capital stock of the Issuer and, with respect to Section 7.05, for the time
period specified therein), the Purchaser will comply with all covenants and
provisions of this Article VII, except to the extent the Issuer may otherwise
consent in writing.
7.01 Regulatory and Other Approvals
------------------------------
The Purchaser will (a) take all commercially reasonable steps necessary or
desirable, and proceed diligently and in good faith and use all commercially
reasonable efforts, as promptly as practicable to obtain all consents, approvals
or actions of, to make all filings with and to give all notices to Governmental
or Regulatory Authorities or any other Person required of the Purchaser or the
Issuer to consummate the transactions contemplated hereby and by the other
Principal Agreements, including, without limitation, those described in Schedule
4.04 hereto (and shall in any event make all necessary applications to and file
all notices and other filings
<PAGE>
34
with the MAMP as soon as practicable but no later than thirty (30) calendar days
after the date of execution of this Agreement), (b) provide such other
information and communications to the Issuer, such Governmental or Regulatory
Authorities or other Persons as the Issuer or such Governmental or Regulatory
Authorities or other Persons may request in connection therewith and execute all
documents as may be reasonably requested by the Issuer in connection therewith
and (c) cooperate with the Issuer as promptly as practicable in obtaining all
consents, approvals or actions of, making all filings with, and giving all
notices to, Governmental or Regulatory Authorities or other Persons required of
the Issuer to consummate the transactions contemplated hereby and by the other
Principal Agreements. The Purchaser will provide prompt notification to the
Issuer when any such consent, approval, action, filing or notice referred to in
clause (a) above is obtained, taken, made or given, as applicable, and will
advise the Issuer in writing of any communications (and, unless precluded by
Law, provide copies of any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the other Principal
Agreements.
7.02 Compliance with Securities Laws
-------------------------------
From and after the date of this Agreement, the Purchaser will not take,
and will cause all Persons subject to its direct or indirect control not to
take, directly or indirectly, any action (i) designed to or which might
reasonably be expected to cause or result in manipulation of the price of any
security of the Issuer in violation of the Exchange Act or (ii) in violation of
the Issuer's policies, as in effect from time to time, relating to trading in
the Issuer's securities.
7.03 Escrow of Purchase Price
------------------------
From and after the date on which the Initial Purchase Price has been
deposited with the Escrow Agent and until the Initial Purchase Price has been
repaid to the Purchaser or paid to the Issuer, in each case, in accordance with
the terms of the Escrow Agreement, the Purchaser shall ensure and hereby
covenants and agrees that no Liens in respect of Indebtedness of the Purchaser
shall attach to the Initial Purchase Price.
7.04 Fulfillment of Conditions
-------------------------
The Purchaser will execute and deliver at the Closing each Principal
Agreement that the Purchaser is hereby required to execute and deliver as a
condition to the Closing, will take all commercially reasonable steps necessary
or desirable and proceed diligently and in good faith to satisfy each other
condition to the obligations of the Issuer contained in this Agreement.
7.05 Projects and Corporate Opportunities
------------------------------------
Notwithstanding any other provision of this Agreement:
(a) From the date of this Agreement until the earlier of (i) the
termination of this Agreement without the occurrence of the Closing as provided
in Article XII hereof, and (ii) following the Closing, the date on which the
Purchaser and its Affiliates have sold or otherwise disposed of shares of Common
Stock or ADSs such that the Purchaser and its Affiliates no longer hold in
excess of the Specified Percentage of the issued and outstanding voting capital
stock of the Issuer, the Purchaser intends to conduct all of its new
telecommunications business and projects in the Russian Federation and the
Commonwealth of Independent States through the Issuer unless, in each case, the
Issuer declines such opportunity. In addition, the Purchaser
<PAGE>
35
will inform the Issuer of any opportunities in the telecommunications business
in the Russian Federation and the Commonwealth of Independent States that are
brought to the attention of the Purchaser and its Affiliates by any third party.
(b) The Purchaser shall use reasonable efforts to coordinate its interest
in each of the projects, operations and other commercial activities in Russia
and the Commonwealth of Independent States in which it currently holds an
interest with the activities of the Issuer. The Issuer acknowledges that this
Section 7.05(b) shall not in any way limit the Purchaser's right to develop the
Purchaser's existing interests to maximize value.
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
8.01 Conditions Precedent to Closing
-------------------------------
The obligation of the Purchaser to cause the Escrow Agent to deliver the
Purchase Price Amount payable at the Closing to the Issuer is subject to the
fulfillment, on or before the Closing, of each of the following conditions
precedent (all or any of which may be waived in whole or in part by the
Purchaser in writing in its sole discretion), and fulfillment of which by the
Issuer shall, in the case of Section 8.01(a), (b), (d), (e) and (f), be
confirmed by officer's certificate of the Issuer:
(a) Representations and Warranties. The representations and warranties
------------------------------
made by the Issuer in Article III shall have been true and correct on and as of
the date of this Agreement and on and as of the First Board Date. In addition,
the representations and warranties made by the Issuer in Section 3.01, Section
3.02, Section 3.03, Section 3.04(b) (but solely with respect to the Significant
Subsidiary), Section 3.05, Section 3.06, Section 3.09(d), Section 3.12(a)(i)-
(iii) (other than in respect of any Order which is threatened) and the
representation that none of the Telecom Licenses have been terminated or revoked
and no notice of termination or revocation with respect to such Telecom Licenses
has been received, shall, in each case, be true and correct on and as of the
Closing Date as though each such representation or warranty were made on and as
of the Closing Date; provided that if there are any changes to the Schedules
referred to in the Sections of this Agreements referred to in the previous
sentence between the date of execution of this Agreement and the Closing, the
Issuer shall provide updated versions of such Schedules on the day of the
Closing.
(b) Performance. The Issuer shall have performed and complied with each of
-----------
its obligations under Article V and the Major Inside Shareholders shall have
performed and complied with their respective obligations under Article IV of the
Shareholders Agreement.
(c) Certificates. The Issuer shall have delivered to the Purchaser (i) a
------------
certificate, dated the Closing Date and executed by the President of the Issuer,
substantially in the form of Exhibit A and (ii) a certificate dated the Closing
Date and executed by the Head of Legal Department of the Issuer, substantially
in the form of Exhibit B, attached to which are, among other things, true and
correct copies of (A) resolutions of the GMS approved by a three-quarters (3/4)
majority of the shareholders present and eligible to vote, (1) approving the
issuance of the Purchaser's Shares to the Purchaser, (2) approving the
amendments to the Charter as provided in Section 5.04(a) hereof; and (3) by
cumulative voting, electing the Purchaser's three nominees to the Board,
effective as of the date of Closing and in effect until
<PAGE>
36
the next annual GMS, and (B) resolutions of the Board approved by a three-
quarters (3/4) majority of the members, approving the issuance of the
Purchaser's Shares to the Purchaser.
(d) Orders and Laws. There shall not be in effect on the Closing Date any
---------------
Order or Law restraining, enjoining or otherwise prohibiting or making illegal
the consummation of any of the transactions contemplated by this Agreement or
any of the other Principal Agreements or which could reasonably be expected to
otherwise result in a material impairment of the Purchaser's rights under this
Agreement or any of the other Principal Agreements to which the Purchaser is a
party, and there shall not be pending on the Closing Date any Action or
Proceeding or any other action in, before or by any Governmental or Regulatory
Authority which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to the
Purchaser or the Issuer or the transactions contemplated by this Agreement or
any of the other Principal Agreements of any such Law.
(e) Regulatory Consents and Approvals. All consents, approvals and actions
---------------------------------
of, filings with and notices to any Governmental or Regulatory Authority
described in Schedule 8.01(e) which are required to have been obtained, made or
given (as applicable) by the Issuer pursuant to applicable Law (i) shall have
been duly obtained, made or given, (ii) shall not be subject to the satisfaction
of any condition that has not been satisfied or waived (unless any such
condition relates to reporting or other requirements which by the terms of such
consents, approvals, actions, filings or notices can only be effected on or
after the Closing) and (iii) shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority shall be in full force and effect as necessary for the
performance of the obligations of the Issuer under this Agreement and the other
Principal Agreements to be performed on or before the Closing Date.
(f) Third Party Consents. All consents (or in lieu thereof waivers) and
--------------------
agreements described in Schedule 8.01(f)(i) shall have been obtained, (ii) shall
not be subject to the satisfaction of any condition that has not been satisfied
or waived (unless any such condition relates to reporting or other requirements
which by the terms of such consents can only be effected on or after the
Closing) and (iii) shall be in full force and effect.
(g) Current Charter and Shareholder Registry. The Issuer shall have
----------------------------------------
delivered to the Purchaser (i) notary certified copy of the Charter, including
all amendments thereto (including, without limitation, the amendments to the
Charter contemplated by Section 5.04 hereof) and (ii) an extract from the
register of the Issuer's shareholders, as maintained by the NRC, dated the day
of the Closing, showing the Purchaser as the owner of such portion of the
Purchaser's Shares as the Purchaser is purchasing on the Closing Date, free and
clear of all Liens.
(h) Other Principal Agreements. Each of the other Principal Agreements
--------------------------
shall have been executed and delivered by the parties thereto other than the
Purchaser.
(i) Certain Outstanding Indebtedness. The Issuer shall have obtained and
--------------------------------
delivered to the Purchaser (i) an original or certified copy of a waiver by
Ericsson Project Finance AB and AB LM Ericsson Finans, of Section 5.29 of the
Supplementary Agreement (non-dilution) with respect to the shares of Common
Stock pledged to secure the Issuer's obligations thereunder or (ii) documents
evidencing an increase in the number of shares of Common Stock pledged in
connection therewith, sufficient to satisfy the terms of the Supplementary
Agreement relating to the pledge of shares of Common Stock.
<PAGE>
37
(j) Wire Instruction. The Issuer shall have delivered to the Purchaser the
----------------
Issuer's instruction for the wire transfer of the Initial Purchase Price by the
Escrow Agent to the Issuer's bank account identified on the CBR License.
(k) Receipt. The Issuer shall have delivered to the Purchaser a receipt,
-------
signed by the Issuer's Chief Accountant, confirming that upon receipt of the
wire transfer from the Escrow Agent, such portion of the Purchaser's Shares will
have been fully paid.
(l) Power of Attorney. Dr. Zimin shall have delivered to the Purchaser the
-----------------
Power of Attorney.
(m) Legal Opinion. The Purchaser shall have received an opinion of Akin,
-------------
Gump, Strauss, Hauer & Feld, L.L.P., special New York and Russian counsel to the
Issuer, in substantially the form of Exhibit C.
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ISSUER
The obligations of the Issuer hereunder are subject to the fulfillment, at
or before the Closing, of each of the following conditions precedent (all or any
of which may be waived in whole or in part by the Issuer in writing in its sole
discretion):
9.01 Representations and Warranties
------------------------------
Each of the representations and warranties made by the Purchaser in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date as though such representation or warranty were made on and as of
the Closing Date.
9.02 Performance
-----------
The Purchaser shall have performed and complied with, in all material
respects, each agreement, covenant and obligation required by this Agreement to
be so performed or complied with by the Purchaser at or before the Closing,
unless such agreement, covenant or obligation has been waived in writing by the
Issuer.
9.03 Certificates
------------
The Purchaser shall have delivered to the Issuer (a) a certificate, dated
the Closing Date and executed by the President of the Purchaser, substantially
in the form of Exhibit E hereto, and (b) a certificate, dated the Closing Date
and executed by a member of the Board of Directors of the Purchaser,
substantially in the form of Exhibit F hereto.
9.04 Orders and Laws
---------------
There shall not be in effect on the Closing Date any Order or Law
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the other Principal Agreements or which could reasonably be expected to
otherwise result in a material impairment of the Issuer's rights under this
Agreement or any of the other Principal Agreements to which the Issuer is a
party, and
<PAGE>
38
there shall not be pending or threatened on the Closing Date any Action or
Proceeding or any other action in, before or by any Governmental or Regulatory
Authority which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to the
Purchaser or the Issuer or the transactions contemplated by this Agreement or
any of the other Principal Agreements of any such Law.
9.05 Regulatory Consents and Approvals
---------------------------------
All consents, approvals and actions of, filings with and notices to any
Governmental or Regulatory Authority reasonably necessary to permit the Issuer
and the Purchaser to perform their respective obligations under this Agreement
and the other Principal Agreements and to consummate the transactions
contemplated hereby and thereby (a) shall have been duly obtained, made or
given, (b) shall not be subject to the satisfaction of any condition that has
not been satisfied or waived and (c) shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement and the other Principal Agreements shall have
occurred.
9.06 Third Party Consents
--------------------
Certified copies (except as noted) of all confirmations of compliance and
absence of default, consents (or in lieu thereof waivers) and agreements listed
in Schedule 9.06, and all other confirmations of compliance and absence of
default, consents (or in lieu thereof waivers) and agreements to the performance
by the Purchaser of its obligations under this Agreement and the other Principal
Agreements or to the consummation of the transactions contemplated hereby and
thereby as are required under (or are necessary to avoid or prevent conflict
with or breach or default of) any material Contract to which the Purchaser is a
party or by which any of its Assets or Properties are bound (a) shall have been
obtained, (b) shall be in form and substance reasonably satisfactory to the
Issuer, (c) shall not be subject to the satisfaction of any condition that has
not been satisfied or waived and (d) shall be in full force and effect.
9.07 Other Principal Agreements
--------------------------
Each of the other Principal Agreements shall have been executed and
delivered by the parties thereto.
9.08 Legal Opinions
--------------
The Issuer shall have received opinions of Coudert Brothers, special New
York and Russian counsel to the Purchaser, in substantially the form of Exhibit
G and Exhibit H, respectively.
ARTICLE X SURVIVAL OF REPRESENTATIONS,WARRANTIES, COVENANTS AND AGREEMENTS
The Issuer and the Purchaser have the right to rely fully upon the
representations, warranties, covenants and agreements of the other contained in
this Agreement. Unless otherwise noted herein, all representations, warranties,
covenants and agreements of the Issuer and the Purchaser contained in this
Agreement will survive the Closing and remain in effect until three (3) months
from the publication date of the audited, consolidated financial statements for
the Issuer's fiscal year ending December 31, 1999, provided that any such
<PAGE>
39
representation, warranty, covenant or agreement that would otherwise terminate
will continue to survive if a written claim for indemnity shall have been made
under Section 11.01 on or prior to such termination date, until such claim has
been satisfied or otherwise resolved.
ARTICLE XI INDEMNIFICATION
11.01 Indemnification
---------------
(a) (i) Subject to Section 11.03, in the event the Closing occurs, the
Issuer shall indemnify the Purchaser in respect of, and hold the Purchaser
harmless from and against, any and all Losses suffered, incurred or sustained by
the Purchaser resulting from, arising out of or relating to any
misrepresentation, breach of warranty or non-fulfillment of or failure to
perform any covenant or agreement on the part of the Issuer contained in this
Agreement (to the extent not waived in writing by the Purchaser), provided that
the Purchaser shall have made a written claim for indemnification against the
Issuer pursuant to Section 13.01 within the survival period specified in Article
X.
(ii) With respect to those Subsidiaries of the Issuer which are not
described in Schedule 3.04(a), in the event the Closing occurs, the Issuer shall
indemnify the Purchaser in respect of, and hold the Purchaser harmless from and
against, any and all losses suffered, incurred or sustained by the Purchaser
resulting from, arising out of, or relating to any such Subsidiary or the
Issuer's non-disclosure of any such Subsidiary
(b) In the event that Closing occurs, the Purchaser shall indemnify the
Issuer in respect of, and hold the Issuer harmless from and against, any and all
Losses suffered, incurred or sustained by the Issuer resulting from, arising out
of or relating to any misrepresentation, breach of warranty or non-fulfillment
of or failure to perform any covenant or agreement on the part of the Purchaser
contained in this Agreement (to the extent not waived in writing by the Issuer),
provided that the Issuer shall have made a written claim for indemnification
against the Purchaser pursuant to Section 13.01 within the survival period
specified in Article X.
(c) In the event that any claim is asserted against any party hereto, or any
party hereto is made a party defendant in any Action or Proceeding, and such
claim, Action or Proceeding involves a matter which is the subject of a claim
for indemnification under Section 11.01(a) or (b), then such party (an
"Indemnified Party") shall (i) promptly give written notice pursuant to Section
13.01 to the Purchaser or the Issuer, as the case may be (the "Indemnifying
Party"), of such claim, Action or Proceeding, and (ii) not make any admission of
liability, agreement or compromise with any Person in relation to such claim
without prior written notice to the Indemnifying Party; and such Indemnifying
Party shall have the right to join in the defense of said claim, Action or
Proceeding at such Indemnifying Party's own cost and expense and, if the
Indemnifying Party agrees in writing to be bound by and to promptly pay the full
amount of any final judgment from which no further appeal may be taken to the
extent such judgement involves an indemnifiable claim under this Section 11.01
and subject to the limitations in Section 11.03, and if the Indemnified Party is
reasonably assured of the Indemnifying Party's ability to satisfy such
agreement, then, at the option of the Indemnifying Party, such Indemnifying
Party may take over the defense of such claim, Action or Proceeding, except
that, in such case, the Indemnified Party shall have the right to join in the
defense of said claim, Action or Proceeding at its own cost and expense.
<PAGE>
40
11.02 Determination of Losses
-----------------------
The parties shall take into account the time value of money (using the
Applicable Rate as the discount rate) in determining Losses for purposes of this
Article XI.
11.03 Limitations on Liability of Issuer
----------------------------------
Notwithstanding any other provision of this Agreement to the contrary:
(a) the aggregate liability of the Issuer in respect of all claims shall be
limited to seventy-five percent (75%) of the Initial Purchase Price;
(b) the Issuer will have no liability in respect of any claim unless such
claim is made in good faith and unless written particulars of such claim (giving
such details of the specific matter in respect of which such claim is made as
are then in the possession of the Purchaser) shall have been given to the Issuer
within the period specified in Article X;
(c) the Issuer will have no liability in respect of any claim:
(i) to the extent that it arose or is increased as a result of an
increase in rates of Tax on or after the date immediately prior to the Closing
Date or the passing of any legislation (or making of any subordinate legislation
or any change in any published practice of any Tax authority) with retrospective
effect, or any provision or reserve in the Unaudited Consolidated Financial
Statements being insufficient solely by reason of any increase in rates of
taxation after the date immediately prior to the Closing Date;
(ii) to the extent that such claim arose due to anything voluntarily
done or omitted to be done after the Closing by the Purchaser or the Issuer or
any of their respective successors or assigns hereunder outside the ordinary
course of business of the Issuer;
(iii) to the extent that such claim relates to any Loss for which the
Purchaser or the Issuer actually recovers under the terms of any insurance
policy in effect at the Closing Date; or
(iv) to the extent such claim:
(A) relates to any matter provided for, or included as a liability
in, the Audited Consolidated Financial Statements; or
(B) relates to any liability for Tax arising out of the ordinary
course of business of the Issuer after the Closing Date; or
(C) arises solely as a result of any change in the accounting
policy, practice or accounting reference date of the Issuer after the Closing
other than a change required by Law or to comply with GAAP, as amended from time
to time;
(v) to the extent the amount of any such claim does not exceed
US$3,000,000; provided, however, that if the amount of any single claim for
indemnification made by the Purchaser hereunder exceeds US$10,000,000, then the
foregoing limitation contained in this Section 11.03(c)(v) shall not apply; and
<PAGE>
41
(d) the Purchaser shall not be entitled to be paid more than once, in
respect of any claim arising out of the same subject matter;
(e) if any potential claim shall arise by reason of a liability of the
Issuer which is contingent only, then the Issuer shall not be under any
obligation to make any payment in respect of such claim until such time as the
contingent liability ceases to be contingent and becomes actual;
(f) the Issuer will have no liability in respect of any claim if, as of the
time such claim is made, the aggregate amount of all claims for indemnification
made by the Purchaser under this Article XI does not exceed US$15,000,000; and
(g) as used in this Article XI, "claim" shall mean any claim which would
(but for this Section 11.03) be capable of being made against the Issuer under
this Article XI.
11.04 Other Indemnification Provisions
--------------------------------
The foregoing indemnification provisions are in addition to, and not in
derogation of, any statutory, equitable, or common law remedy any party may have
for any misrepresentation made in connection with the transactions contemplated
by this Agreement, breach of warranty or non-fulfillment of or failure to
perform any covenant or agreement.
ARTICLE XII TERMINATION
12.01 Termination
-----------
This Agreement shall terminate and the transactions contemplated hereby
shall be abandoned:
(a) at any time prior to the Closing, by mutual written agreement of the
Issuer and the Purchaser;
(b) if the Closing shall not have occurred on or before such date, on June
1, 1999; or
(c) the date on which a meeting of the shareholders of the Issuer is held at
which a vote of such shareholders is conducted concerning the transactions
contemplated by this Agreement and the other Principal Agreements and such
shareholders fail to approve the transactions contemplated by this Agreement and
the other Principal Agreements.
12.02 Effect of Termination
---------------------
(a) If this Agreement is validly terminated pursuant to Section 12.01, this
Agreement will forthwith become null and void, and there will be no liability or
obligation on the part of the Issuer or the Purchaser (or any of their
respective officers, directors, employees, agents or other representatives or
Affiliates), except that the provisions with respect to issuance of Equity
Interests in Section 5.03(b), expenses in Section 13.03 and confidentiality in
Section 13.05 will continue to apply following any such termination.
(b) Notwithstanding any other provision in this Agreement to the contrary,
upon termination of this Agreement pursuant to Section 12.01(b), the Issuer will
remain liable to the
<PAGE>
42
Purchaser for any breach of this Agreement by the Issuer existing at the time of
such termination, and the Purchaser will remain liable to the Issuer for any
breach of this Agreement by the Purchaser existing at the time of such
termination, and the Issuer or the Purchaser may seek such remedies, including
damages and fees of attorneys, against the other with respect to any such breach
as are provided in this Agreement or as are otherwise available at Law or in
equity.
ARTICLE XIII MISCELLANEOUS
13.01 Notices
-------
All notices, requests and other communications hereunder must be in writing
and will be deemed to have been duly given only if delivered personally or by
facsimile transmission or sent by courier to the parties at the following
addresses or facsimile numbers:
If to the Purchaser, to:
Telenor East Invest AS
Keysers Gate 13
0130 Oslo
Norway
Facsimile No.: +47-22-779909
Attn: Henrik Torgersen
with a copy to:
Advokatene i Telenor
Universitetsgaten 2
0130 Oslo
Norway
Facsimile No.: +47-22-114461
Attn: Kaare M. Risung
If to the Issuer, to:
Vimpel-Communications
10-12, Ulitsa 8-Marta
125683, Moscow
Russian Federation
Facsimile No.: +7095 755-3682
Attn: Georgy Silvestrov
General Counsel
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Dukat Place II
7, Ulitsa Gasheka
<PAGE>
43
123056, Moscow
Russian Federation
Facsimile No. +7095-974-2412
Attn: Melissa J. Schwartz
All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 13.01, be deemed given
upon delivery, (b) if delivered by facsimile transmission to the facsimile
number as provided in this Section 13.01, be deemed given upon receipt, and (c)
if delivered by courier in the manner described above to the address as provided
in this Section 13.01, be deemed given upon confirmed receipt (in each case
regardless of whether such notice, request or other communication is received by
any other Person to whom a copy of such notice is to be delivered pursuant to
this Section 13.01). Any party from time to time may change its address,
facsimile number or other information for the purpose of notices to that party
by giving written notice specifying such change to the other parties hereto.
13.02 Entire Agreement
----------------
This Agreement and the other Principal Agreements supersede all prior
discussions and agreements between the parties with respect to the subject
matter hereof and thereof, and contain the sole and entire agreement between the
parties hereto and thereto with respect to the subject matter hereof and
thereof.
13.03 Expenses
--------
Except as otherwise expressly provided in this Agreement (including, without
limitation, as provided in Section 12.02), whether or not the transactions
contemplated hereby are consummated, each of the parties will pay its own costs
and expenses, including, without limitation, legal fees, incurred in connection
with the negotiation, execution and closing of this Agreement and the other
Principal Agreements and the transactions contemplated hereby and thereby;
provided that the Issuer shall pay, without limitation, all costs associated
with the registration of the Purchaser's Shares as required by all applicable
Laws and Russian Federation securities regulations, including the costs
associated with preparing a prospectus, if any, and the Purchaser shall pay the
fee charged by the NRC to register the Purchaser's ownership of the Purchaser's
Shares.
13.04 Public Announcements
--------------------
At all times at or before the Closing, neither the Issuer nor the Purchaser
will issue or make any reports, statements or releases to the public or,
generally, to the employees, customers, suppliers or other Persons to whom the
Issuer sells goods or provides services or with whom the Issuer otherwise has
significant business relationships with respect to this Agreement or the
transactions contemplated hereby without the consent of the other, which consent
shall not be unreasonably withheld. If any party is unable to obtain the
approval of its public report, statement or release from the other parties and
such report, statement or release is, in the opinion of legal counsel to such
party, required by Law or rule of any stock exchange in order to discharge such
party's disclosure obligations, then such party may make or issue the legally
required report, statement or release and promptly furnish the other party with
a copy
<PAGE>
44
thereof. The Issuer and the Purchaser will also obtain each other party's prior
approval of any press release to be issued immediately following the Closing
announcing the consummation of the transactions contemplated by this Agreement.
13.05 Confidentiality
---------------
Each party hereto will hold, and will use its best efforts to cause its
Affiliates, and their respective Representatives to hold, in strict confidence
from any Person (other than any such Affiliate or Representative), unless (a)
compelled to disclose by judicial or administrative process (including, without
limitation, in connection with obtaining the necessary approvals of this
Agreement and the transactions contemplated hereby of Governmental or Regulatory
Authorities) or by other requirements of Law or (b) disclosed in an Action or
Proceeding brought by a party hereto in pursuit of its rights or in the exercise
of its remedies hereunder, all documents and information concerning the other
party hereto or any of its Affiliates furnished to it by such other party or
such other party's Representatives in connection with this Agreement or the
transactions contemplated hereby, except to the extent that such documents or
information can be shown to have been (i) previously known by the party
receiving such documents or information, (ii) in the public domain (either prior
to or after the furnishing of such documents or information hereunder) through
no fault of such receiving party or (iii) later acquired by the receiving party
from another source if the receiving party is not aware that such source is
under an obligation to another party hereto to keep such documents and
information confidential; provided that following the Closing the foregoing
restrictions will not apply to the Purchaser's use of documents and information
solely concerning the Issuer in accordance with the terms of this Agreement
furnished by the Issuer hereunder. In the event the transactions contemplated
hereby are not consummated, upon the request of the other party, each party
hereto will, and will cause its Affiliates and their respective Representatives
to, promptly redeliver or cause to be redelivered all copies of documents and
information furnished by the other parties in connection with this Agreement or
the transactions contemplated hereby and destroy or cause to be destroyed all
notes, memoranda, summaries, analyses, compilations and other writings related
thereto or based thereon prepared by the party furnished such documents and
information or its Representatives.
13.06 Waiver
------
Any term or condition of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof, but no such waiver shall be
effective unless set forth in a written instrument duly executed by or on behalf
of the party waiving such term or condition. No waiver by any party of any term
or condition of this Agreement, in any one or more instances, shall be deemed to
be or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this Agreement or
by Law or otherwise afforded, will be cumulative and not alternative.
13.07 Amendment
---------
This Agreement may be amended, supplemented or modified only by a written
instrument duly executed by or on behalf of each party hereto.
<PAGE>
45
13.08 No Third Party Beneficiary
--------------------------
The terms and provisions of this Agreement are intended solely for the
benefit of each party hereto and their respective successors or permitted
assigns, and it is not the intention of the parties to confer third party
beneficiary rights upon any other Person.
13.09 No Assignment; Binding Effect
-----------------------------
Neither this Agreement nor any right, interest or obligation hereunder may
be assigned by any party hereto without the prior written consent of the other
party hereto and any attempt to do so will be void, except (a) for assignments
and transfers by operation of Law and (b) that the Purchaser may assign any or
all of its rights, interests and obligations hereunder (including, without
limitation, its rights under Article XI) to a wholly owned Subsidiary, provided
that any such Subsidiary agrees in writing to be bound by all of the terms,
conditions and provisions contained herein, but no such assignment referred to
in clause (b)) shall relieve the Purchaser of its obligations hereunder.
Subject to the preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
13.10 Headings
---------
The headings used in this Agreement have been inserted for convenience of
reference only and do not define or limit the provisions hereof.
13.11 Arbitration; Consent to Jurisdiction; Service of Process; Waiver of
-------------------------------------------------------------------
Sovereign Immunity
- ------------------
(a) Any and all disputes and controversies arising under, relating to or in
connection with this Agreement shall be settled by arbitration by a panel of
three (3) arbitrators under the United Nations Commission on International Trade
Law (UNCITRAL) Arbitration Rules in force (the "UNICITRAL Rules") in accordance
with the following terms and conditions:
(i) In the event of any conflict between the UNCITRAL Rules and the
provisions of this Agreement, the provisions of this Agreement shall prevail.
(ii) Either party to this Agreement may refer a matter to arbitration
by written notice to the other party.
(iii) The place of the arbitration shall be Stockholm, Sweden.
(iv) The claimant party shall appoint one (1) arbitrator and the
respondent party shall appoint one (1) arbitrator, and the two (2) arbitrators
so appointed shall appoint the third arbitrator, in accordance with the UNCITRAL
Rules. In the event of an inability to agree on a third arbitrator, the
appointing authority shall be the Arbitration Institute of the Sweden Chamber of
Commerce, Stockholm.
(v) The English language shall be used as the written and spoken
language for the arbitration and all matters connected with all references to
arbitration.
(vi) The decision of the arbitrators shall be made by majority vote
and shall be in writing.
<PAGE>
46
(vii) The decision of the arbitrators shall be final and binding on
the parties to this Agreement, save in the event of fraud, manifest mistake or
failure by any of the arbitrators to disclose any conflict of interest.
(viii) The decision of the arbitrators may be enforced by any court of
competent jurisdiction and may be executed against the person and assets of the
losing party in any jurisdiction.
(b) In the event any dispute is submitted to arbitration pursuant to Section
13.11(a), the panel of arbitrators may, if it deems such award appropriate,
award a party costs and expenses incurred by such party in enforcing its rights.
Except as so awarded, each party shall bear its own costs and expenses of
enforcing its rights to arbitrate under this Section 13.11.
(c) Except for arbitration proceedings pursuant to Section 13.11(a), no
action (other than the enforcement of an arbitration decision or an action to
compel arbitration), lawsuit or other proceeding shall be brought by or between
the parties to this Agreement and/or any of their Affiliates in connection with
any matter arising out of or in connection with this Agreement.
(d) Each party hereto irrevocably appoints CT Corporation System, located on
the date hereof at 1933 Broadway, New York, NY 10019, USA, as its true and
lawful agent and attorney to accept and acknowledge service of any and all
process against it in any action, suit or proceeding permitted by Section
13.11(c) hereof, with the same effect as if such party were a resident of the
State of New York and had been lawfully served with such process in such
jurisdiction, and waives all claims of error by reason of such service, provided
that the party effecting such service shall also deliver a copy thereof to the
other party at its address specified in Section 13.01. Each party to this
Agreement will enter into such agreements with such agent as may be necessary to
constitute and continue the appointment of such agent hereunder. In the event
that any such agent and attorney resigns or otherwise becomes incapable of
acting, the affected party will appoint a successor agent and attorney in New
York reasonably satisfactory to each other party, with like powers. Each party
hereby irrevocably submits to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
state court sitting in New York City, in any such action, suit or proceeding,
and agrees that any such action, suit or proceeding shall be brought only in
such court, provided, however, that such consent to jurisdiction is solely for
the purpose referred to in this Section 13.11(c) and shall not be deemed to be a
general submission to the jurisdiction of said courts of or in the State of New
York other than for such purpose. Each party hereby irrevocably waives, to the
fullest extent permitted by Law, any objection that it may now or hereafter have
to the laying of the venue of any such action, suit or proceeding brought in
such a court and any claim that any such action, suit or proceeding brought in
such a court has been brought in an inconvenient forum. Nothing herein shall
affect the right of any party to serve process in any other manner permitted by
Law or to commence legal proceedings or otherwise proceed against the other in
any other jurisdiction in a manner not inconsistent with Section 13.11(c).
(e) Each of the Purchaser and the Issuer hereby represents and acknowledges
that it is acting solely in its commercial capacity in executing and delivering
this Agreement and each of the other Principal Agreements to which it is a party
and in performing its obligations hereunder and thereunder, and each of the
Purchaser and the Issuer hereby irrevocably waives with respect to all disputes,
claims, controversies and all other matters of any nature
<PAGE>
47
whatsoever that may arise under or in connection with this Agreement or any of
the other Principal Agreements and any other document or instrument contemplated
hereby or thereby, all immunity it may otherwise have as a sovereign, quasi-
sovereign or state-owned entity (or similar entity) from any and all proceedings
(whether legal, equitable, arbitral, administrative or otherwise), attachment of
assets, and enforceability of judicial or arbitral awards.
13.12 Invalid Provisions
------------------
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future Law, and if the rights or obligations
of any party hereto under this Agreement will not be materially and adversely
affected thereby, (a) such provision will be fully severable, (b) this Agreement
will be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, (c) the remaining provisions of
this Agreement will remain in full force and effect and will not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom and
(d) in lieu of such illegal, invalid or unenforceable provision, there will be
added automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
13.13 Governing Law
--------------
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York, United States of America, applicable to contracts
executed and performed in such jurisdiction, without giving effect to the
conflicts of laws principles thereof which would result in the application of a
different law.
13.14 Counterparts
-------------
This Agreement may be executed in any number of counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
<PAGE>
48
IN WITNESS WHEREOF, this Primary Agreement has been duly executed and
delivered by each party hereto as of the day and year first above written.
The Purchaser
-------------
TELENOR EAST INVEST AS
By /s/ Henrik Torgersen
---------------------------------------
Name: Henrik Torgersen
Title: Attorney-in-Fact
The Issuer
----------
OPEN JOINT-STOCK COMPANY
"VIMPEL-COMMUNICATIONS"
By /s/ Dmitri Borisovich Zimin
---------------------------------------
Name: Dmitri Borisovich Zimin
Title: President and Chief Executive Officer
By /s/ Vladimir Mikhailovich Bychenkov
---------------------------------------
Name: Vladimir Mikhailovich Bychenkov
Title: Chief Accountant
<PAGE>
EXHIBIT C
Conformed Copy
- --------------------------------------------------------------------------------
ESCROW AGREEMENT
Dated December 1, 1998
by and among
TELENOR EAST INVEST AS,
as the Purchaser,
OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS",
as the Issuer
and
DEN NORSKE BANK ASA,
as the Escrow Agent
- --------------------------------------------------------------------------------
<PAGE>
ESCROW AGREEMENT ("Agreement") dated December 1, 1998 by and among TELENOR
---------
EAST INVEST AS, a corporation organized and existing under the laws of Norway
(the "Purchaser"), OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS", an open
---------
joint stock company organized and existing under the laws of the Russian
Federation (the "Issuer"), and DEN NORSKE BANK ASA, a bank organized and
------
existing under the laws of Norway, as escrow agent (the "Escrow Agent").
------------
WHEREAS, concurrently with the execution and delivery of this Agreement and
pursuant to the Primary Agreement dated as of December 1, 1998 between the
Purchaser and the Issuer (as amended, supplemented or otherwise modified and in
effect from time to time, the "Primary Agreement"), the Issuer has agreed to
-----------------
issue and the Purchaser has agreed to purchase 8,902,201 shares of the Issuer's
common stock (the "Shares"), in each case, on the terms and subject to the
------
conditions of the Primary Agreement; and
WHEREAS, the Primary Agreement requires that, as a condition to the
consummation of the transactions contemplated by the Primary Agreement, the
Purchaser, the Issuer and the Escrow Agent shall have entered into this
Agreement and the Purchaser shall have deposited the Escrow Amount (as defined
herein) with the Escrow Agent;
NOW, THEREFORE, the Purchaser, the Issuer and the Escrow Agent hereby agree
as follows:
1. APPOINTMENT OF THE ESCROW AGENT; DEPOSIT OF ESCROW AMOUNT
The Purchaser hereby appoints the Escrow Agent as, and the Escrow Agent
hereby agrees to assume and perform the duties of, the escrow agent under and
pursuant to this Agreement, and the Issuer acknowledges and agrees to such
appointment. The Escrow Agent acknowledges receipt of One Hundred Sixty-One
Million Nine Hundred Thirty-One Thousand Thirty-Six U.S. Dollars (US $
161,931,036) (the "Escrow Amount") from the Purchaser and has deposited or shall
-------------
immediately deposit such Escrow Amount in the Escrow Account (as defined in
Section 2 hereof).
2. THE ESCROW FUNDS
The Escrow Amount and all interest thereon (the Escrow Amount and all such
interest being referred to herein, collectively, as the "Escrow Funds") shall be
------------
held by the Escrow Agent in a separate account in the name of "Den norske Bank
ASA, as Escrow Agent under the Escrow Agreement dated December 1, 1998", which
account (the "Escrow Account") shall be maintained for the purpose, and on the
terms and subject to the conditions, of this Agreement. The holder of the Escrow
Account shall be the Escrow Agent, and neither the Purchaser nor the Issuer
shall be the holder, or shall be deemed to be the holder, of the Escrow Account.
Neither the Escrow Funds nor the Escrow Account shall be subject to any Lien or
attachment by any creditor of any party hereto and the Escrow Funds and the
Escrow Account shall be used solely for the purpose set forth in this Agreement.
None of the amounts held in the Escrow Account shall be available to, and none
of such amounts shall be used by, the Escrow Agent to set off any obligations of
the Purchaser or the Issuer owing to the Escrow Agent in any capacity. The
obligation of the Escrow Agent to release from the Escrow Account and pay to the
Issuer in accordance with the terms of this Agreement any amounts constituting
the Escrow Funds constitute an
<PAGE>
independent and separate obligation of the Escrow Agent, and the Escrow Agent
shall under no circumstances whatsoever deduct from or otherwise offset against
such amounts any amounts owed, or alleged to be owed, from the Issuer to the
Purchaser or from the Issuer to the Escrow Agent under or in connection with
this Agreement, the Primary Agreement or any other agreement, or any claim,
obligation or other liability of any nature whatsoever incurred or alleged to
have been incurred by the Issuer under or in connection with any such agreement
or any other matter whatsoever.
3. INTEREST; TAXES
The Escrow Amount shall bear interest at a rate of 4.25 % per annum, which
rate shall be net all of taxes due or withheld with respect thereto (the
Applicable Rate"), for the period from (and including) the date hereof to (but
- ----------------
excluding) the date on which this Agreement terminates in accordance with its
terms. The Applicable Rate shall be calculated on the basis of a 360-day year
consisting of 12 months of 30 days each. All such accrued interest shall be
credited to the Escrow Account.
4. DETERMINATIONS; RELEASE OF ESCROW FUNDS
(a) (i) If the Escrow Agent shall not have received a Certificate and
Instruction in the form of Annex A hereto, signed by the Issuer, by the close of
business on February 15, 1999, then the Escrow Agent, on the third Business Day
thereafter, shall pay to the Purchaser by wire transfer of immediately available
funds to an account of the Purchaser's designation, the balance of the Escrow
Account as at the date of such payment, and this Agreement (other than Sections
6, 7 and 8 hereof) shall terminate.
(ii) If, on or before the close of business on February 15, 1999,
the Escrow Agent shall have received a Certificate and Instruction in the form
of Annex A hereto, signed by the Issuer, then the Escrow Agent, on the third
Business Day thereafter, shall pay to the Purchaser by wire transfer of
immediately available funds to an account designated by Purchaser the amount
specified in such Certificate and Instruction, representing interest accrued on
the Escrow Amount at the Applicable Rate from the date hereof until (but
excluding) January 29, 1999.
(b) If the Escrow Agent shall not have received a Joint Certificate and
Instruction in the form of Annex B hereto, signed by the Purchaser and the
Issuer, by the close of business on June 1, 1999, then the Escrow Agent, on the
third Business Day thereafter, shall pay to the Purchaser by wire transfer of
immediately available funds to an account of the Purchaser's designation, the
balance of the Escrow Account as at the date of such payment, and this Agreement
(other than Sections 6, 7 and 8 hereof) shall terminate.
(c) If, on or before June 1, 1999, the Escrow Agent receives the Joint
Certificate and Instruction described in Section 4(b) hereof, then the Escrow
Agent, on or before the third Business Day thereafter (the "First Payment
-------------
Date"), shall pay to the Issuer from the Escrow Account by wire transfer of
- ----
immediately available funds in accordance with the wire transfer instructions
set forth in Annex E hereto, a portion of the Escrow Funds in an amount equal to
the product of (A) the number of Shares to be paid for on the First Payment Date
(as set forth in Schedule I hereto), multiplied by (B) the purchase price per
Share for the First Payment Date (as set forth in Schedule II hereto), provided
that on the First Payment Date the Escrow Agent shall have confirmed in writing
to the Issuer and the Purchaser by facsimile transmission that it has given
irrevocable wire transfer instructions to effect the payments to
1
<PAGE>
be made from the Escrow Account on the First Payment Date and the Subsequent
Payment Date falling two Business Days after the First Payment Date.
(d) On each Payment Date set forth on Schedule I hereto after the First
Payment Date, (each a "Subsequent Payment Date"), provided the payments on the
-----------------------
First Payment Date have been made and without further instruction from the
Purchaser or the Issuer, the Escrow Agent shall pay to the Issuer from the
Escrow Account by wire transfer of immediately available funds in accordance
with the wire instructions set forth in Annex E hereto, the product of (i) the
number of Shares to be paid for on such Subsequent Payment Date (as set forth in
Schedule I hereto), multiplied by (ii) the purchase price per Share for such
Subsequent Payment Date (as set forth in Schedule II hereto). Without prejudice
to the right of the Purchaser to accelerate the payments for Shares unilaterally
as provided in Section 4(e), the Issuer and the Purchaser may otherwise change
any Subsequent Payment Date or the amount to be paid to the Issuer on any
Subsequent Payment Date by a Joint Certificate in the form of Annex C hereto
amending Schedule I hereto executed by the Issuer and the Purchaser and
delivered to the Escrow Agent at least five Business Days prior to first
Subsequent Payment Date to be changed; provided, however, that no such amendment
-------- -------
will result in there being insufficient funds in the Escrow Account to make all
required payments thereunder.
(e) If at any time on or after the First Payment Date the Escrow Agent
receives a Certificate and Instruction in the form of Annex D hereto signed by
the Purchaser, then on the third Business Day thereafter, the Escrow Agent shall
pay to the Issuer from the Escrow Account by wire transfer of immediately
available funds in accordance with the wire transfer instructions set forth in
Annex E hereto a portion of the Escrow Funds in an amount equal to the amount
set forth in such Certificate and Instruction; provided, however, that no such
--------- --------
Certificate and Instruction shall accelerate any portion of an amount payable on
a particular Subsequent Payment Date unless the entire amount payable on such
Subsequent Payment Date is accelerated.
5. ISSUER'S WIRE TRANSFER INSTRUCTIONS
The wire transfer instructions set forth in Annex E hereto in respect
of payments to the Issuer under this Agreement may be modified from time to time
by written notice to the Escrow Agent signed by the Issuer to an account in the
name of the Issuer.
6. DUTIES AND OBLIGATIONS OF THE ESCROW AGENT
The duties and obligations of the Escrow Agent shall be limited to and
determined solely by the provisions of this Agreement and the certificates
delivered in accordance herewith, and the Escrow Agent is not charged with
knowledge of or any duties or responsibilities in respect of any other agreement
or document. In furtherance and not in limitation of the foregoing:
(a) the Escrow Agent shall be fully protected in relying in good faith
upon any written certification, notice, direction, request, waiver, consent,
receipt or other document that the Escrow Agent reasonably believes to be
genuine and duly authorized, executed and delivered;
(b) the Escrow Agent shall not be liable for any error of judgment, or for
any act done or omitted by it, or for any mistake in fact or law, or for
anything that it may do or
2
<PAGE>
refrain from doing in connection herewith; provided, however, that
notwithstanding any other provision in this Agreement, the Escrow Agent shall be
liable for its recklessness, willful misconduct or breach of this Agreement;
(c) the Escrow Agent may seek the advice of legal counsel selected with
reasonable care to assist it in the event of any dispute or question as to the
construction of any of the provisions of this Agreement or its duties hereunder,
and it shall incur no liability and shall be fully protected in respect of any
action taken, omitted or suffered by it in good faith in accordance with the
opinion of such counsel;
(d) in the event that the Escrow Agent shall in any instance, after
seeking the advice of legal counsel pursuant to the immediately preceding
clause, in good faith be uncertain as to its duties or rights hereunder, it
shall be entitled to refrain from taking any action in that instance and its
sole obligation, in addition to those of its duties hereunder as to which there
is no such uncertainty, shall be to keep safely all property held in the Escrow
Account until it shall be directed otherwise in writing jointly by the parties
hereto or by a final, nonapplicable order of an arbitral tribunal; provided,
however, in the event that the Escrow Agent has not received such written
direction or order within thirty (30) calendar days after requesting the same,
it shall have the right to interplead the Purchaser and the Issuer in any court
of competent jurisdiction and request that such court determine its rights and
duties hereunder; and
(e) the Escrow Agent may execute any of its powers or responsibilities
hereunder and exercise any rights hereunder either directly or by or through
agents or attorneys selected with reasonable care, and nothing in this Agreement
shall be deemed to impose upon the Escrow Agent any duty to qualify to do
business or to act as fiduciary or otherwise in any jurisdiction other than
Norway and the Escrow Agent shall not be responsible for and shall not be under
a duty to examine into or pass upon the validity, binding effect, execution or
sufficiency of this Agreement or of any agreement amendatory or supplemental
hereto.
7. COOPERATION
The Purchaser and the Issuer shall provide to the Escrow Agent all
instruments and documents within their respective powers to provide that are
necessary for the Escrow Agent to perform its duties and responsibilities
hereunder.
8. FEES AND EXPENSES; INDEMNITY
The Purchaser shall pay all of the fees of the Escrow Agent for its
services hereunder as and when billed by the Escrow Agent; provided, however,
that each of the Purchaser and the Issuer shall reimburse and indemnify the
Escrow Agent for, and hold it harmless against, one-half (1/2) of any loss,
liability, cost or expense, including but not limited to reasonable attorneys'
fees, reasonably incurred by the Escrow Agent in connection with the Escrow
Agent's performance of its duties and obligations under this Agreement, as well
as the reasonable costs and expenses of defending against any claim or liability
relating to this Agreement; provided that notwithstanding the foregoing, neither
the Purchaser nor the Issuer shall be required to indemnify the Escrow Agent for
any such loss, liability, cost or expense arising as a result of the Escrow
Agent's recklessness, willful misconduct or breach of this Agreement.
3
<PAGE>
9. RESIGNATION AND REMOVAL OF THE ESCROW AGENT
(a) The Escrow Agent may resign as such thirty (30) calendar days
following the giving of prior written notice thereof to the Issuer and the
Purchaser. In addition, the Escrow Agent may be removed and replaced on a date
designated in a written instrument signed by the Issuer and the Purchaser and
delivered to the Escrow Agent. Notwithstanding the foregoing, no such
resignation or removal shall be effective until a successor escrow agent has
acknowledged its appointment as such as provided in Section 9(c) hereof. In
either event, upon the effective date of such resignation or removal, the Escrow
Agent shall deliver the property comprising the Escrow Funds to such successor
escrow agent, together with such records maintained by the Escrow Agent in
connection with its duties hereunder and other information with respect to the
Escrow Funds as such successor may reasonably request.
(b) If a successor escrow agent shall not have acknowledged its
appointment as such as provided in Section 9(c) hereof, in the case of a
resignation, prior to the expiration of thirty (30) calendar days following the
date of a notice of resignation or, in the case of a removal, on the date
designated for the Escrow Agent's removal, as the case may be, because the
Issuer and the Purchaser are unable to agree on a successor escrow agent, or for
any other reason, the Escrow Agent may select a successor escrow agent and any
such resulting appointment shall be binding upon all of the parties to this
Agreement, provided that any such successor selected by the Escrow Agent shall
be a bank of recognized international standing which is not affiliated with
either the Purchaser or the Issuer.
(c) Upon written acknowledgement by a successor escrow agent appointed in
accordance with the foregoing provisions of this Section 9 of its agreement to
serve as escrow agent hereunder and the receipt of the property then comprising
the Escrow Funds, the Escrow Agent shall be fully released and relieved of all
duties, responsibilities and obligations under this Agreement, subject to the
proviso contained in Section 6(b) hereof, and such successor escrow agent shall
for all purposes hereof be the Escrow Agent.
10. NOTICES
All notices, certificates, instructions and other communications hereunder
must be in writing and will be deemed to have been duly given if delivered
personally or by facsimile transmission or courier to the parties at the
following addresses or facsimile numbers:
If to the Purchaser, to:
Telenor East Invest AS
Keysers Gate 13
N-0130 Oslo
Norway
Facsimile No.: +47-22-779909
Attn: Henrik Torgersen
with a copy to:
4
<PAGE>
Advokatene i Telenor
Universitetsgaten 2
N-0130 Oslo
Norway
Facsimile No.: +47-22-114461
Attn: Kaare M. Risung
If to the Issuer, to:
OJSC "Vimpel-Communications"
10-12 8th of March Street
Moscow 125083, Russia
Facsimile No.: +7095-755-3682
Attn: Dr. D. B. Zimin, President
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
7 Gasheka Street, Ducat Place II
Moscow 123056, Russia
Facsimile No.: +7095-974-2412
Attn: Melissa J. Schwartz
If to the Escrow Agent, to:
Den norske Bank ASA
Stranden 21
0250 Oslo
Norway
Facsimile No.: +4722-48-28-99
Attn: Espen Gjerstrom
All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (b) if delivered by facsimile transmission to the facsimile number as
provided in this Section 10, be deemed given upon printed electronic
confirmation of receipt, and (c) if delivered by courier in the manner described
above to the address provided in this Section 10, be deemed given upon receipt
(in each case regardless of whether such notice, request or other communication
is received by any other Person to whom a copy of such notice is to be delivered
pursuant to
5
<PAGE>
this Section 10). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other parties hereto.
11. AMENDMENTS, ETC.
This Agreement may be amended or modified, and any of the terms hereof may
be waived, only by a written instrument duly executed by or on behalf of the
Purchaser and the Issuer and, except as otherwise expressly set forth herein,
the Escrow Agent. No waiver by any party of any term or condition contained in
this Agreement, in any one or more instances, shall be deemed to be or construed
as a waiver of the same or any other term or condition of this Agreement on any
future occasion.
12. GOVERNING LAW; SUBMISSION TO JURISDICTION; ARBITRATION
(a) This Agreement (and any dispute, controversy or claim arising out of
or relating to this Agreement) shall be governed by, and construed in accordance
with, English law, without giving effect to the principles of private
international law thereof which would result in the application of a different
law.
(b) Except as permitted by Section 6(d) hereof, any dispute, controversy
or claim arising out of or relating to this Agreement (including, without
limitation, any such dispute, controversy or claim relating to any breach,
alleged breach, termination, invalidity or alleged invalidity hereof) shall be
settled by arbitration, to the exclusion of all other proceedings, in accordance
with the UNCITRAL Arbitration Rules as at present in force. There shall be three
(3) arbitrators. The Purchaser shall appoint one arbitrator, the Issuer shall
appoint one arbitrator and the Escrow Agent shall appoint the third arbitrator.
The seat of the arbitration shall be Stockholm Sweden, and the English language
shall be used throughout the arbitral proceeding. Each party shall bear its own
costs of arbitration, including attorneys' fees.
13. Business Day
For all purposes of this Agreement, the term "Business Day" shall mean a
day other than Saturday, Sunday or any day on which banks located in Oslo,
Norway, or New York, New York, United States of America, or Moscow, Russia are
authorized or obligated to close.
14. MISCELLANEOUS
This Agreement is binding upon and will inure to the benefit of the parties
hereto and their respective successors and permitted assigns. The headings used
in this Agreement have been inserted for convenience of reference only and do
not define or limit the provisions hereof. This Agreement may be executed in
any number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
[Signature Page Follows]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
be executed as of the date first above written.
TELENOR EAST INVEST AS
By /s/ Henrik Torgersen
-----------------------------------
Name: Henrik Torgersen
Title: Attorney-in-Fact
OPEN JOINT STOCK COMPANY "VIMPEL-
COMMUNICATIONS"
By /s/ Dr. Dmitri Borisovich Zimin
-----------------------------------
Name: Dr. Dmitri Borisovich Zimin
Title: President and Chief Executive
Officer
By /s/ Vladimir M. Bychenkov
-----------------------------------
Name: Vladimir Bychenkov
Title: Chief Accountant
DEN NORSKE BANK ASA,
as the Escrow Agent
By /s/ Arild Fredriksen
-----------------------------------
Name: Arild Fredriksen
Title: General Manager
7
<PAGE>
EXHIBIT D
Conformed Copy
GUARANTEE AGREEMENT (this "Agreement") dated as of December 1, 1998
between TELENOR AS, a corporation organized and existing under the laws of
Norway (the "Guarantor"), and OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS",
an open joint stock company organized and existing under the laws of the Russian
Federation (the "Issuer").
WITNESSETH
WHEREAS, Telenor East Invest AS, a corporation organized and existing
under the laws of Norway (the "Purchaser") and the Issuer are parties to a
Primary Agreement dated as of December 1, 1998 (as amended, supplemented or
otherwise modified and in effect from time to time, the "Primary Agreement"),
pursuant to which the Issuer has agreed to issue and the Purchaser has agreed to
purchase 8,902,201 shares of the Issuer's common stock, in each case, on the
terms and subject to the conditions of the Primary Agreement; and
WHEREAS, to induce the Issuer to enter into and perform the Primary
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor has agreed (to the
extent hereinafter provided) to procure to secure the performance of the
Purchaser's obligations under the other Principal Agreements to which it is a
party;
NOW, THEREFORE the parties hereto agree as follows:
Section 1 Definitions
-----------
Unless otherwise defined herein, terms defined in the Primary Agreement
are used herein as defined therein.
Section 2 The Guarantee
-------------
2.01 Guarantee
---------
Subject to the limitation set forth in Section 2.02 hereof, the
Guarantor hereby procures to secure to the Issuer the performance of all of the
obligations of the Purchaser under the Primary Agreement and the other Principal
Agreements to which the Purchaser is a Party (other than the obligation of the
Purchaser to pay the Purchase Price pursuant to Article II of the Primary
Agreement), in each case, strictly in accordance with the terms thereof.
2.02 Limitation
----------
Notwithstanding the foregoing provisions of this Section 2, the
aggregate amount for which the Guarantor shall be liable under this Agreement,
if any, shall not exceed an amount equal to the Initial Purchase Price (as
defined in the Primary Agreement).
<PAGE>
2
Section 3 Undertaking of Guarantor
------------------------
3.01 Transfers
---------
The Guarantor hereby covenants and agrees not to transfer (by merger
or otherwise), sell or otherwise dispose of any shares of capital stock of the
Purchaser to any Person other than a Controlled Affiliate of the Guarantor
without the prior written consent of the Issuer.
Section 4 Representations and Warranties
------------------------------
The Guarantor represents and warrants to the Issuer that, as of the date
hereof:
4.01 Organization; Ability to Consummate Transactions
------------------------------------------------
The Guarantor is a corporation duly organized and validly existing under
the Laws of the Kingdom of Norway. The Guarantor has full power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
4.02 Authority
---------
The execution and delivery by the Guarantor of this Agreement, and the
performance by the Guarantor of its obligations hereunder, have been duly and
validly authorized by authorized signatories of the Guarantor, no other
corporate action on the part of the Guarantor or its stockholder being
necessary. This Agreement has been duly and validly executed and delivered by
the Guarantor and constitutes the legal, valid and binding obligations of the
Guarantor, enforceable against the Guarantor in accordance with their terms.
4.03 No Conflicts
------------
The execution, delivery and performance by the Guarantor of this
Agreement will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the charter (vedtekter) of the Guarantor; or
(b) to the Knowledge of the Guarantor, conflict with or result in a
violation or breach of any term or provision of any Norwegian Law or Order
applicable to the Guarantor or any of its material Assets and Properties.
4.04 Governmental Approvals and Filings
----------------------------------
To the Knowledge of the Guarantor, no consent, approval or action of,
filing with or notice to any Norwegian Governmental or Regulatory Authority on
the part of the Guarantor is required in connection with the execution, delivery
and performance of this Agreement.
4.05 Legal Proceedings
-----------------
There are no Actions or Proceedings pending or, to the knowledge of the
Guarantor, threatened, against the Guarantor or any of its Assets and Properties
which could reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement.
<PAGE>
3
4.06 Ownership of the Purchaser
--------------------------
All of the outstanding Equity Interests of the Purchaser are wholly
owned by the Guarantor, free and clear of any Liens (other than Permitted
Liens).
Section 5 Miscellaneous
-------------
5.01 No Waiver
---------
No failure on the part of the Issuer or any of its agents to exercise,
and no course of dealing with respect to, and no delay in exercising any right,
power or remedy hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise by the Issuer or any of its agents of any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein are cumulative
and are not exclusive of any remedies provided by law.
5.02 Governing Law; Arbitration; Waiver of Sovereign Immunity
----------------------------------------------------------
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of Norway.
(b) Any and all disputes and controversies arising under, relating to
or in connection with this Agreement shall be settled by arbitration by a panel
of three (3) arbitrators under the United Nations Commission on International
Trade Law (UNCITRAL) Arbitration Rules in force (the "UNICITRAL Rules") in
accordance with the following terms and conditions:
(i) In the event of any conflict between the UNCITRAL Rules and
the provisions of this Agreement, the provisions of this Agreement shall
prevail.
(ii) Either party to this Agreement may refer a matter to
arbitration by written notice to the other party.
(iii) The place of the arbitration shall be Stockholm, Sweden.
(iv) The claimant party shall appoint one (1) arbitrator and the
respondent party shall appoint one (1) arbitrator, and the two (2) arbitrators
so appointed shall appoint the third arbitrator, in accordance with the UNCITRAL
Rules. In the event of an inability to agree on a third arbitrator, the
appointing authority shall be the Arbitration Institute of the Sweden Chamber of
Commerce, Stockholm.
(v) The English language shall be used as the written and spoken
language for the arbitration and all matters connected with all references to
arbitration.
(vi) The decision of the arbitrators shall be made by majority
vote and shall be in writing.
(vii) The decision of the arbitrators shall be final and binding
on the parties to this Agreement, save in the event of fraud, manifest mistake
or failure by any of the arbitrators to disclose any conflict of interest.
<PAGE>
4
(viii) The decision of the arbitrators may be enforced by any
court of competent jurisdiction and may be executed against the Person and
assets of the losing party in any jurisdiction.
(c) In the event any dispute is submitted to arbitration pursuant to
Section 5.02(b), the panel of arbitrators may, if it deems such award
appropriate, award a party costs and expenses incurred by such party in
enforcing its rights. Except as so awarded, each party shall bear its own costs
and expenses of enforcing its rights to arbitrate under this Section 5.02.
(d) Except for arbitration proceedings pursuant to Section 5.02(b)
above, no action, lawsuit or other proceeding (other than a proceeding to compel
arbitration or to enforce any arbitration decision) shall be brought by or
between the parties to this Agreement and/or any of their affiliates in
connection with any matter arising out of or in connection with this Agreement.
(e) Telenor hereby represents and warrants that it is acting solely in
its commercial capacity in executing and delivering this Agreement and each of
the other Principal Agreements to which it is a party and in performing its
obligations hereunder and thereunder, and Telenor hereby irrevocably waives with
respect to all disputes, claims, controversies and all other matters of any
nature whatsoever that may arise under or in connection with this Agreement or
any of the other Principal Agreements and any other document or instrument
contemplated hereby or thereby, all immunity it may otherwise have as a
sovereign, quasi-sovereign or state-owned entity (or similar entity) from any
and all proceedings (whether legal, equitable, arbitral, administrative or
otherwise), attachment of assets, or enforceability of judicial or arbitral
awards.
5.03 Notices
-------
All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally
or by facsimile transmission or sent by courier to the parties at the following
addresses or facsimile numbers:
If to the Guarantor, to:
Telenor AS
Universitetsgaten 2
0130 Oslo
Norway
Facsimile No.: +47-22-779908
Attn: Terje Thon
with a copy to:
Advokatene i Telenor
Universitetsgaten 2
0130 Oslo
Norway
Facsimile No.: +47-22-114461
Attn: Kaare M. Risung
<PAGE>
5
If to the Issuer, to:
Vimpel-Communications
10-12, Ulitsa 8-Marta
125683, Moscow
Russian Federation
Facsimile No.: +7095 755-3682
Attn: Georgy Silvestrov
General Counsel
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Dukat Place II
7, Ulitsa Gasheka
123056, Moscow
Russian Federation
Facsimile No. +7095-974-2412
Attn: Melissa J. Schwartz
All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 5.03, be deemed given upon
delivery, (b) if delivered by facsimile transmission to the facsimile number as
provided in this Section 5.03, be deemed given upon receipt, and (c) if
delivered by courier in the manner described above to the address as provided in
this Section 5.03, be deemed given upon confirmed receipt (in each case
regardless of whether such notice, request or other communication is received by
any other Person to whom a copy of such notice is to be delivered pursuant to
this Section 5.03). Any party from time to time may change its address,
facsimile number or other information for the purpose of notices to that party
by giving written notice specifying such change to the other parties hereto.
5.04 Waivers, etc.
-------------
The terms of this Agreement may be waived, altered or amended only by
an instrument in writing duly executed by the Guarantor and Issuer. Any such
amendment or waiver shall be binding upon the Issuer and the Guarantor.
5.05 Term
----
This Agreement shall take effect on the date hereof and remain in
effect until the date which is one (1) year after the date on which each of the
other Principal Agreements to which the Issuer and the Purchaser are parties has
terminated.
5.06 No Assignment; Binding Effect
------------------------------
Neither this Agreement nor any right, interest or obligation hereunder
may be assigned by either party hereto and any attempt to do so will be void,
except for assignments and transfers in accordance with the terms of this
Agreement. Subject to the preceding sentence, this
<PAGE>
Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the Guarantor and the Issuer.
5.07 Counterparts
------------
This Agreement may be executed in any number of counterparts, all of
which together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee
Agreement to be duly executed as of the day and year first above written.
TELENOR AS,
as Guarantor
By /s/ Henrik Torgersen
--------------------------
Name: Henrik Torgersen
Title: Attorney-in-Fact
OPEN JOINT STOCK COMPANY
"VIMPEL-COMMUNICATIONS"
By /s/ D. B. Zimin
--------------------------
Name: D. B. Zimin
Title: President and Chief
Executive Officer
<PAGE>
EXHIBIT E
Conformed Copy
___________________________________________________________________
REGISTRATION RIGHTS AGREEMENT
dated as of December 1, 1998
by and among
TELENOR EAST INVEST AS,
DR. DMITRI BORISOVICH ZIMIN,
GLAVSOTKOM LLC,
THE FUND FOR NON-COMMERCIAL PROGRAMS "BEE LINE"
and
OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS"
___________________________________________________________________
<PAGE>
REGISTRATION RIGHTS AGREEMENT dated as of December 1, 1998 by and among
TELENOR EAST INVEST AS, a company organized and existing under the laws of
Norway ("Telenor"), DR. DMITRI BORISOVICH ZIMIN, a Russian citizen ("Dr.
Zimin"), GLAVSOTKOM LLC, a limited liability company organized and existing
under the laws of the Russian Federation ("Glavsotkom"), THE FUND FOR NON-
COMMERCIAL PROGRAMS "BEE LINE", a non-commercial organization organized and
existing under the laws of the Russian Federation (the "Bee Line Fund"), and
OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS", an open joint stock company
organized and existing under the laws of the Russian Federation (the "Company").
WHEREAS, Telenor has agreed to purchase 8,902,201 shares of common stock of
the Company on and subject to the terms and conditions of the Primary Agreement
dated as of December 1, 1998 between Telenor and the Company (the "Primary
Agreement");
WHEREAS, Dr. Zimin, Glavsotkom and the Bee Line Fund beneficially own
shares of capital stock of the Company; and
WHEREAS, Telenor, Dr. Zimin, Glavsotkom and the Bee Line Fund desire to
enter into this Agreement to provide for, among other things, certain rights and
obligations of the Parties relating to their respective ownership of the Shares
(as hereinafter defined);
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I DEFINITIONS AND INTERPRETATION
1.01 Definitions
-----------
As used herein, the following terms shall have the following meanings:
"Agreement" shall mean this Registration Rights Agreement.
"ADSs" shall mean the Company's American Depositary Shares, each
representing three-quarters (3/4) of one (1) share of Common Stock, which are
currently listed on The New York Stock Exchange. Inc.
"Bee Line Fund" shall have the meaning specified in the preamble hereto.
"Board" shall mean the Board of Directors of the Company.
"Class B Preferred Stock" shall mean Class B cumulative preferred stock
(Priviligirovannye kumulyativnye akstii tipa B) of the Company.
"Common Stock" shall mean common stock of the Company.
<PAGE>
2
"Company" shall have the meaning specified in the preamble hereto.
"Controlled Affiliate" shall mean, with respect to any Person, any other
Person which directly or indirectly controls, or is under common control with,
or is controlled by, such Person and, if such Person is an individual, any
relative or spouse of such individual, or any relative of such spouse, any one
of whom has the same home as such individual, and any trust or estate for which
such individual serves as a trustee or in a similar capacity or in which such
individual has a substantial beneficial interest and any Person who is
controlled by any such member or trust. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise) of any other Person, provided that, in any event, any Person which
owns, directly or indirectly, more than 50% of the securities having ordinary
voting power for the election of directors or other governing body of a
corporation or more than 50% of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person.
"Demand" shall have the meaning specified in Section 3.01(a).
"Depositary" shall mean The Bank of New York, as depositary, under the
Deposit Agreement dated as of November 20, 1996 between and among the Company,
the Depositary and the owners and beneficial owners from time to time of the
Company's American Depositary Receipts.
"Dr. Zimin" shall have the meaning specified in the preamble hereto.
"Endorsement" shall mean an endorsement to this Agreement in the form of
Exhibit A hereto.
"Escrow Agreement" shall mean the Escrow Agreement dated December 1, 1998
between and among the Company, Telenor and Den norske Bank ASA, as Escrow Agent.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"First Board Date" shall mean the date of the first meeting of the Board at
which duly appointed designees of Telenor are sitting on the Board.
"Glavsotkom" shall have the meaning specified in the preamble hereto.
"GMS" shall mean the general meeting of the shareholders (obschee sobraniye
aktsionerov) of the Issuer, as defined in Article 9 of the Company's charter.
<PAGE>
3
"Guarantee Agreement" shall mean the Guarantee Agreement dated as of
December 1, 1998 between Telenor AS and the Company.
"Holder" shall mean the Telenor Shareholders, the Significant Zimin
Shareholders and such of their respective successors, assigns and transferees
that acquire Registrable Securities, directly or indirectly, from them, in each
case, in accordance with Section 3.03(c).
"Indemnified Party" shall have the meaning specified in Section 3.04(c).
"Indemnifying Party" shall have the meaning specified in Section 3.04(c).
"New Securities" shall mean any capital stock of the Company, whether
authorized, and any rights, options or warrants to purchase such capital stock,
and securities of any type whatsoever that are, or may become, convertible into
capital stock.
"Person" shall mean any natural person, corporation, general partnership,
simple partnership, limited partnership, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority,
whether incorporated or unincorporated.
"Primary Agreement" shall have the meaning specified in the first recital
hereto.
"Principal Agreements" shall mean this Agreement, the Primary Agreement,
the Escrow Agreement, the Shareholders Agreement, the Guarantee Agreement and
the Service Obligation Agreements (as defined in the Primary Agreement).
"Purchaser's Shares" shall mean Eight Million Nine Hundred Two Thousand Two
Hundred One (8,902,201) shares of Common Stock, to be purchased by Telenor on
and subject to the terms and conditions of the Primary Agreement.
"Register", "Registered", and "Registration" shall mean a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean ADSs or shares of Common Stock
(excluding any warrants or other securities convertible into Common Stock) that
any Holder may own (whether now owned or acquired after the date hereof), other
than ADSs or shares of Common Stock acquired by such Holder under circumstances
where the resale of such ADSs or shares by such Holder would not require
registration under the Securities Act. As to any ADSs or shares of Common Stock
which are Registrable Securities, such ADSs or shares shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such ADSs or shares, as the case may be, shall have become effective
under the Securities Act , (b) such ADSs or shares shall have been distributed
pursuant to Rule 144, Rule 144A, Rule 145 or any similar provision then in
force, under the Securities Act, and the transferee(s) thereof have not become
party to this Agreement in accordance with Section 3.03, (c) such ADSs or
shares shall have been otherwise transferred, new certificates or other
evidences of ownership for them not bearing
<PAGE>
4
a legend restricting further transfer and not subject to any stop transfer order
or other restrictions on transfer shall have been delivered by the Company and
subsequent disposition of such ADSs or shares shall not require registration or
qualification of such ADSs or shares under the Securities Act or any state
securities laws then in force, (d) the sale of such ADSs or shares by such
Holder shall no longer require registration under the Securities Act or (e) such
ADSs or shares shall cease to be outstanding. So long as the Company maintains
its registration with the SEC of the ADSs, Registrable Securities consisting of
Shares shall be deposited with the Depositary and registration made of ADSs (for
sale thereof in a public offering), and not shares of Common Stock, under this
Agreement.
"Registration Expenses" shall mean all expenses incurred by the Company in
effecting any registration pursuant to this Agreement, including, without
limitation, all registration, qualification and filing fees, depositary fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, the expenses of any regular or special
audits incident to or required by any such registration, but excluding (a)
Selling Expenses , (b) the compensation of regular employees of the Company
(which shall be paid in any event by the Company) and (c) the premiums in
respect of the insurance policy described in Section 3.04 (e).
"Rule 144", "Rule 144A" and "Rule 145" shall mean Rules 144, 144A and 145,
and any successor rules thereto, as promulgated by the SEC under the Securities
Act.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for any Holder (which
shall, in any event, be paid by such Holder).
"Shareholders Agreement" shall mean the Shareholders Agreement dated as of
December 1, 1998 between and among Telenor, the Significant Zimin Shareholders,
Augie Fabela, II and Geneva Investment Trust I, L.L.C.
"Shares" shall mean shares of common stock or preferred stock of the
Company, as the case may be.
"Significant Zimin Shareholders" shall mean Dr. Zimin, the Bee Line Fund
and Glavsotkom.
"Specified Percentage" shall mean, with respect to Telenor or the Zimin
Shareholders, twenty-five percent (25%) plus one (1) share of the voting capital
stock of the Company.
<PAGE>
5
"Strategic Investor" shall mean any Person which derives at least fifteen
per cent (15%) of its revenues, on a consolidated basis with its affiliates,
from operations in the telecommunications industry, other than the Purchaser or
its Controlled Affiliates.
"Telenor" shall have the meaning specified in the preamble hereto.
"Telenor Shareholder" shall mean Telenor and any Controlled Affiliate of
Telenor which acquires Registrable Securities in accordance with this Agreement.
"Third Person" shall mean any person who is not a Telenor Shareholder or a
Zimin Shareholder.
"transfer" shall mean any transfer, sale, assignment, conveyance, pledge or
other disposition, as the case may be.
"UNCITRAL Rules" shall have the meaning specified in Section 6.09.
"Zimin Shareholders" shall mean (a) during Dr. Zimin's lifetime, Dr. Zimin
and any Controlled Affiliate of Dr. Zimin which is or becomes a party to this
Agreement in accordance with Section 3.03(c), and (b) after Dr. Zimin's death or
incapacity, any Person which was, at the time of Dr. Zimin's death or
incapacity, a Controlled Affiliate of Dr. Zimin and a party to this Agreement.
1.2 Interpretation
--------------
Unless the context of this Agreement otherwise requires, the following
rules of interpretation shall apply to this Agreement:
(a) the singular shall include the plural, and the plural shall include the
singular;
(b) words of any gender shall include each other gender;
(c) the words "hereof", "herein", "hereby", "hereto" and similar words
refer to this entire Agreement and not to any particular Section or any other
subdivision of this Agreement;
(d) a reference to any Article, Section, Schedule or Exhibit is a reference
to a specific Article or Section of, or Schedule or Exhibit to, this Agreement;
(e) a reference to any law, statute, regulation, notification or statutory
provision shall include any amendment, amendment and restatement, modification
or re-enactment thereof, any regulations promulgated thereunder from time to
time, and any interpretations thereof from time to time by any regulatory or
administrative authority;
(f) a reference to any agreement, instrument, Contract or other document
shall include any amendment, amendment and restatement, supplement or other
modification thereto; and
<PAGE>
6
(g) a reference to any Person shall include such Person's successors,
permitted assigns and permitted transferees under any agreement, instrument,
Contract or other document.
ARTICLE II
TRANSFER RESTRICTIONS
AND COMPLIANCE WITH THE SECURITIES ACT
2.01 Restrictions on Transfer by the Telenor Shareholders
----------------------------------------------------
(a) Telenor shall not transfer any Shares for a period of one (1) year
after the date of the execution of the Primary Agreement (other than to another
Telenor Shareholder which becomes a Party to this Agreement in accordance with
Section 3.03); and
(b) Following the period specified in Section 2.01(a), neither Telenor nor
any of the Telenor Shareholders shall transfer any Shares other than:
(i) pursuant to a registration statement with respect to a public
offering by Telenor of ADSs (in which case, Telenor shall have the right to
transfer the underlying shares of Common Stock to the Depositary) which has been
declared effective under the Securities Act in accordance with Section 3.01 or
Section 3.02 of this Agreement or under Section 3.04 of the Shareholders
Agreement; or
(ii) in any transaction which is exempt from the registration
requirements of the Securities Act, provided that:
(A) if on the date of any proposed transfer of a number of Shares
equal to or greater than the Specified Percentage of the Shares by the Telenor
Shareholders to any Third Person (1) the Shareholders Agreement is then in
effect and (2) the Zimin Shareholders own, directly or indirectly, at least the
Specified Percentage of Shares, the Telenor Shareholders shall not transfer any
Shares to such Third Person, unless Telenor has given the Zimin Shareholders at
least thirty (30) days' prior written notice of such proposed transfer in
accordance with Section 7.10 of the Shareholders Agreement and Section 2.03 of
this Agreement and obtained the prior written consent of the applicable Zimin
Shareholder thereto in accordance with Section 3.01 of the Shareholders
Agreement; and
(B) Reserved.
(C) the Telenor Shareholders shall not transfer any Shares to any
Third Person (other than the Depositary in connection with the conversion of
Shares to ADSs) if such Third Person is on the date of such transfer, or will
be, after giving effect to such transfer, a holder of ten percent (10%) or more
of the Common Stock, unless Telenor has given the Company at least thirty (30)
days' prior written notice of such proposed transfer in accordance with Section
2.03 of this Agreement and obtained the prior written consent of the Company
thereto, as evidenced by an extract from the Board Protocol.
<PAGE>
7
2.02 Standstill
----------
So long as the Zimin Shareholders own at least the Specified Percentage of
Shares, neither Telenor nor any of its Controlled Affiliates shall, without the
prior written consent of (a) during his lifetime, Dr. Zimin and (b) after Dr.
Zimin's death or incapacity, the Bee Line Fund, increase its or their holding(s)
of shares of Common Stock, either directly or indirectly, above the Specified
Percentage, as determined in the aggregate for all such Holders.
2.03 Notice of Proposed Transfers
----------------------------
At least 30 days prior to any proposed transfer of any Shares pursuant to
Section 2.01(b)(ii), Telenor shall give written notice to the Company of the
intention of any Telenor Shareholder to effect such transfer. Each such notice
shall identify the proposed transferee and the beneficial owner(s) of such
proposed transferee, describe the shares, if any, of capital stock in any
telecommunications company owned by such transferee (and its affiliates) and
such beneficial owner(s) and describe the manner and circumstances of the
proposed transfer in sufficient detail and, if the Company reasonably so
requests, shall be accompanied, at Telenor's expense, by either (a) an
unqualified opinion of counsel reasonably acceptable to the Company, which
opinion shall be addressed to the Company, to the effect that such proposed
transfer may be effected without registration under the Securities Act or (b) a
"no action" letter from the SEC to the effect that such proposed transfer will
not result in a recommendation by the staff of the SEC that action be taken with
respect thereto, whereupon, subject to Section 2.01(b)(ii), such Telenor
Shareholder shall be entitled to transfer such Shares in accordance with the
terms of the notice delivered by Telenor to the Company.
2.04 Effect of Transfers
-------------------
In the event of any transfer by the Telenor Shareholders of the Specified
Percentage of Shares effected in accordance with Section 2.01(b)(ii)(A) or (B),
the transferee shall receive and hold any and all Shares so transferred subject
to the terms and conditions of this Agreement and all of the obligations, if
any, of the transferor hereunder, and shall forthwith execute and deliver to the
Company an Endorsement. In the event that the Telenor Shareholders shall effect
a transfer of all of their Shares in accordance with Section 2.01(b)(ii)(A) or
(B), the Telenor Shareholders shall, after giving effect to such transfer, cease
to be a party to, or bound by the terms of, this Agreement. In the event of any
transfer of Shares or ADSs in an amount less than the Specified Percentage by
Telenor or any of its Controlled Affiliates, or by any of the Zimin Shareholders
or any of their respective Controlled Affiliates, to any Third Person who is not
a Controlled Affiliate of any of the parties to this Agreement, the transferee
shall not be entitled to any rights, nor subject to any obligations, under this
Agreement.
<PAGE>
8
ARTICLE III REGISTRATION RIGHTS
3.01 Demand Registration
-------------------
(a) Exercise of Demand. At any time commencing one (1) year after the date
------------------
of execution of the Primary Agreement, or earlier as may be agreed by the
parties hereto, if the Company shall receive from a Holder a written request
sent and delivered in accordance with Section 6.02 (a "Demand") that the Company
effect any registration with respect to the Registrable Securities under the
Securities Act, the anticipated aggregate offering price of which exceeds
US$20,000,000, the Company will, as soon as practicable after receipt of such
Demand, use its best efforts to effect such registration (including, without
limitation, by filing a registration statement (and executing an undertaking to
file any amendments thereto) covering the Registrable Securities so requested to
be registered, qualifying such Registrable Securities under applicable blue sky
or other securities laws of any state of the United States of America to the
extent set forth herein and complying with applicable regulations issued under
the Securities Act and any other governmental requirements or regulations) as
may be so requested and as would permit or facilitate the sale and distribution
in an underwritten offering of all or such portion of such Registrable
Securities as are specified in such request; provided, however, that the Company
shall not be obligated to take any action to effect any such registration,
qualification or compliance pursuant to this Section 3.01:
(i) within six (6) months after the effective date of a prior
registration statement effected in response to a request from any Holder
pursuant to this Section 3.01(a) or within six (6) months after the effective
date of any other registration statement effected by the Company for a public
offering of ADSs or Shares;
(ii) if at such time such Holder and its Controlled Affiliates hold
Shares representing less than ten percent (10%) of the Company's issued and
outstanding voting capital stock; or
(iii) if at such time the Company has, in response to requests from
such Holder and such Holder's predecessors in interest pursuant to this Section
3.01(a), effected the registration of Registrable Securities and has sold such
Registrable Securities on at least three (3) prior occasions; provided that, (A)
for purposes of determining the number of demand registrations effected by a
Holder and its predecessors in interest, the Telenor Shareholders and Persons
acquiring Registrable Securities directly or indirectly from the Telenor
Shareholders shall count as one Holder and the Zimin Shareholders and Persons
acquiring Registrable Securities directly or indirectly from the Significant
Zimin Shareholders shall count as one Holder, and (B) except as set forth in
Section 3.03(a), if the Company withdraws a registration of Registrable
Securities at the request of any Holder originally demanding registration under
this Section 3.01(a) at any time after the filing of a registration statement in
response to such demand that is a matter of public record at the SEC, then such
withdrawn registration statement shall count as a registration by such Holder.
<PAGE>
9
(b) Limitations on Subsequent Registration Rights. The Company shall not
---------------------------------------------
enter into any agreement with any holder or prospective purchaser of any
securities of the Company that would allow such holder or prospective purchaser
to require the Company to include shares or securities in any registration
initiated under this Section 3.01, nor shall the Company include any shares or
securities for its own account, without the prior written consent of Telenor and
the Zimin Shareholders.
(c) Underwriting. The Company (together with the Holder(s) proposing to
------------
distribute Registrable Securities through such underwriting) shall, upon request
of the lead managing underwriter selected for such underwriting by the Company
(which lead managing underwriter shall be reasonably acceptable to the Holders
of a majority of the Registrable Securities proposed to be sold in such
offering), enter into any reasonable agreement requested by such lead managing
underwriter in connection with the offering, including, but not limited to, an
underwriting agreement in customary form with such lead managing underwriter;
provided, however, that (a) the Holder(s) shall be permitted to select a co-
managing underwriter for such offering which co-managing underwriter shall be
reasonably acceptable to the Company; and (b) in no event shall the Company be
required to include shares for its own account in such offering. If a Holder
disapproves of the terms of the underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the lead managing underwriter.
3.02 Piggy-Back Registration
-----------------------
(a) Exercise. Each of the Telenor Shareholders and the Significant Zimin
--------
Shareholders shall have the piggyback registration rights set forth in this
Section 3.02 provided that (i) as a prerequisite to any Telenor Shareholder
having such rights, the Telenor Shareholders shall, at the time of the exercise
of such rights, hold ADSs or Shares representing not less than ten percent (10%)
of the issued and outstanding voting capital stock of the Company, and (ii) as a
prerequisite to any Significant Zimin Shareholder having such rights, the
Significant Zimin Shareholders shall, at the time of the exercise of such
rights, hold ADSs or Shares representing not less than ten percent (10%) of the
issued and outstanding voting capital stock of the Company. If at any time
after the fourth anniversary of the date of execution of the Primary Agreement
the Company shall propose to register any of its securities in connection with
the underwritten offering and sale thereof for cash, either for its own account
or the account of another Person exercising demand registration rights
(including, without limitation, any other Holder) other than (i) a registration
relating solely to an employee benefit plan, or (ii) a registration relating
solely to a Rule 145 transaction, then, provided that at such time such Holder
is eligible for piggyback registration rights in accordance with the immediately
preceding sentence, the Company shall:
(i) promptly give Telenor and the Significant Zimin Shareholders
written notice thereof; and
(ii) include in such registration (and any related qualification under
blue sky laws or other applicable laws and regulations with which the Company is
required to comply), and in
<PAGE>
10
any underwriting relating thereto, all of the Registrable Securities specified
in a written request (which in any one request, shall not exceed fifty percent
(50%) of the ADSs or Shares owned in the aggregate by the Telenor Shareholders
or the Significant Zimin Shareholders, as applicable, at such time), made within
thirty (30) calendar days after delivery of such written notice by the Company.
(b) Underwriting. The right of the Telenor Shareholders and the Significant
------------
Zimin Shareholders to registration pursuant to this Section 3.02 shall be
conditioned upon their participation in the underwriting described in Section
3.02(a) and the inclusion of Registrable Securities in such underwriting to the
extent provided herein. The Holders proposing to sell Registrable Securities
shall (together with the Company and any other Person distributing securities
through such underwriting) enter into an underwriting agreement in customary
form with the lead managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 3.02, if the lead
managing underwriter advises the Company in writing that, in the opinion of the
lead managing underwriter, the number of Registrable Securities requested to be
included in such registration exceeds the number of ADSs which can be sold in
such offering, so as to be likely to have an adverse effect on the price, timing
or distribution of ADSs offered in such offering, the lead managing underwriter
may limit the Registrable Securities to be included in such registration to the
number of Registrable Securities requested to be included in such registration
which, in the opinion of the lead managing underwriter, can be sold without
having such adverse effect. In the event the lead managing underwriter so
advises the Company, the Company shall so advise the Holders proposing to sell
Registrable Securities (and any other Person distributing securities through
such underwriting), and the Company will include in such registration to the
extent of the amount of the securities which the lead managing underwriter
advises the Company can be sold in such offering in the following priority: (i)
first, the securities proposed by the Company to be sold for its own account;
and (ii) second, any Registrable Securities and other securities of the Company
requested to be included in such registration by the Holders and any such other
Person, as nearly as practicable, pro rata to the amounts of Registrable
Securities requested by each Holder and each such other Person to be included in
the offering at the time of filing of the registration statement. If any Holder
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Company and the lead managing underwriter.
Any securities excluded or withdrawn from such underwriting shall be withdrawn
from such registration.
(c) Right to Terminate Registration. The Company shall have the right to
-------------------------------
terminate or withdraw any registration initiated by the Company under this
Section 3.02 prior to the effectiveness of such registration, whether or not any
eligible Holder has elected to include securities in such registration.
3.03 Expenses of Registration; Transfer
----------------------------------
(a) All Registration Expenses incurred in connection with any registration
pursuant to Section 3.01 shall be borne by the Holder requesting such
registration. All Registration Expenses incurred in connection with any
registration pursuant to Section 3.02 shall be shared
<PAGE>
11
equally by the Company, on the one hand, and by the Holders and any other Person
participating in such registration, on the other. The Holders and any other
Person participating in such registration shall bear all such Registration
Expenses pro rata to the number of Shares and Registrable Securities which have
been registered. Notwithstanding the foregoing, however, if any Holder withdraws
from a registration because such Holder has learned of a material adverse change
in the financial condition, business or prospects of the Company which was not
known to such Holder at the time of its request and the Company willfully failed
to disclose such material adverse change to such Holder, then such Holder shall
not be required to pay any of said Registration Expenses or to forfeit a right
to demand registration, provided, however, that if a material adverse change in
the financial condition, business or prospects of the Company occurs after a
request for registration has been made by such Holder, such material adverse
change is due to circumstances beyond the Company's and such Holder's control,
is disclosed by the Company to such Holder and results in such Holder
withdrawing from such registration, then all Registration Expenses incurred in
connection with such registration shall be borne by such Holder, in the
proportion it would otherwise have been liable for under this Agreement.
(b) Notwithstanding the provisions of Section 3.03(a), if, as a condition
of registration, qualification or compliance of any offering in any state or
jurisdiction in which the Company (by vote of its Board of Directors) or any
underwriter determines in good faith that it wishes to offer securities
registered in an offering to which this Agreement applies, it is required that
offering expenses be allocated in a manner different from that provided in
Section 3.03(a), the offering expenses shall be allocated in whatever permitted
manner is most nearly in compliance with the provisions of this Agreement.
(c) The rights to cause the Company to register the Registrable Securities
pursuant to Section 3.01 and, in the case of any Holder other than a Significant
Zimin Shareholder or its successors, assigns or transferees, Section 3.02, may
be assigned to a transferee or assignee in connection with any transfer or
assignment of Registrable Securities by a Holder, provided that:
(i) such transfer may only be effected in accordance with applicable
securities laws;
(ii) such Holder and such transferee shall comply with the requirements
of Article II of this Agreement, including the obligation of the transferee to
execute and deliver to the parties hereto an Endorsement; and
(iii) such transferee or assignee:
(A) is a Controlled Affiliate of such Holder; or
(B) acquires from such Holder at least the Specified Percentage of
Shares in accordance with the Shareholders Agreement.
3.04 Indemnification
---------------
<PAGE>
12
(a) To the extent permitted by law, the Company will indemnify each Holder,
each of its officers and directors and partners, and each Person controlling
such Holder (within the meaning of Section 15 of the Securities Act), with
respect to which registration, qualification or compliance has been effected
pursuant to this Article III, and each underwriter, if any, and each Person who
controls any underwriter (within the meaning of Section 15 of the Securities
Act), against all expenses, claims, Losses, damages or liabilities (or actions
in respect thereof), including any of the foregoing incurred in settlement of
any litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation (or alleged violation) by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse or pay for the
account of each Holder, each of its officers and directors, each Person
controlling such Holder, each such underwriter and each Person who controls any
such underwriter, for any legal and any other expenses reasonably incurred (as
and when incurred) in connection with investigating, preparing or defending any
such claim, Loss, damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such claim, Loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder, such controlling person or underwriter and stated
to be specifically for use therein.
(b) To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers, each underwriter, if any, of the
Company's securities covered by such a registration statement, each Person who
controls the Company or such underwriter (within the meaning of Section 15 of
the Securities Act), and any other Person participating in such registration,
each of its officers and directors and each Person controlling (within the
meaning of Section 15 of the Securities Act) such Person participating in such
registration, against all claims, Losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
or pay for the account of the Company, such Persons, such directors, officers,
Persons, underwriters or control Persons for any legal or any other expenses
reasonably incurred (as and when incurred) in connection with investigating or
defending any such claim, Loss, damage, liability or action, in each case to the
extent, but only to the extent that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity
<PAGE>
13
with written information furnished to the Company by an instrument duly executed
by such Holder and stated to be specifically for use therein; provided however
that the liability of such Holder for indemnification under this Section 3.04(b)
shall not exceed the gross proceeds from the offering received by such Holder,
unless such liability arises out of or is based on willful misconduct of such
Holder.
(c) Each party entitled to indemnification under this Section 3.04 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (which approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement except to the extent that the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) The obligations of the Company and each Holder under this Section 3.04
shall survive the completion of any offering of Registrable Securities in a
registration statement pursuant to this Agreement.
(e) The Company shall obtain, and each Holder and each other Person
participating in a registration (including, without limitation, if it is
participating in such registration, the Company) shall pay its ratable share of
the cost of, an insurance policy, naming as insureds each of the Indemnified
Parties eligible for indemnification by the Company under Section 3.04(a), which
insurance policy shall provide coverage in an amount of not less than thirty-
five percent (35%) of the aggregate monetary face value of the offering to which
such registration relates, insuring such insureds against any of the expenses,
claims, Losses, damages or liabilities (or actions in respect thereof) for which
the Company is obligated to indemnify any Indemnified Party under Section
3.04(a). Notwithstanding any other provision in this Agreement, the Company
will be obligated to indemnify any Indemnified Party eligible for
indemnification under Section 3.04(a) only to the extent payments under such
insurance policy are insufficient to hold harmless such Indemnified Party in
respect of any such expenses, claims, Losses, damages or liabilities (or actions
in respect thereof).
3.05 Information to be Provided by Holders
-------------------------------------
Each Holder shall furnish to the Company such information regarding such
Holder, the Registrable Securities held by it and the distribution proposed by
such Holder as the Company
<PAGE>
14
may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
3.06 Obligations of the Company
--------------------------
Whenever required under this Agreement to effect the registration of any
Registrable Securities, the Company shall, as soon as practicable:
(a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such registration
statement to become effective.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act until the earlier of (i) the disposition of all securities
covered by such registration statement and (ii) 120 days after the effective
date thereof.
(c) Furnish to each Holder such numbers of copies as it may reasonably
request, in order to facilitate the disposition of Registrable Securities owned
by it, of any prospectus or preliminary prospectus prepared in conformity with
the Securities Act.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by any Holder; provided, however,
that the Company shall not be required to qualify any such securities under the
laws of any jurisdiction where such qualification would require the
qualification of the Company to transact business in such jurisdiction (which
qualification would not otherwise be required).
(e) Notify each Holder at any time when a prospectus relating to a
registration of Registrable Securities is required to be delivered under the
Securities Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.
(f) Furnish, at the request of any Holder, on the date that any Registrable
Securities are delivered to the underwriters for sale in connection with a
registration pursuant to this Agreement, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement, with respect to such
securities, becomes effective, (i) an opinion dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to such Holder and (ii) a
letter dated such date, from independent certified public accountants of the
Company in form and substance as is customarily given to underwriters in an
underwritten
<PAGE>
15
public offering, addressed to the underwriters, if any, and to such Holder. Any
opinion or letter given shall be subject to all of the qualifications,
exceptions and conditions appropriate to the then existing circumstances.
(g) Maintain a depositary for the ADSs and a registrar for the Common
Stock.
(h) Otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC.
(i) Use its best efforts to maintain the listing of the ADSs on a national
securities exchange in the United States of America and on each additional
national securities exchange on which similar securities issued by the Company
are then listed, if the listing of the Registrable Securities is then permitted
under the rules of such exchange.
(j) Make available for inspection and copying by each Holder, by any
underwriter participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent retained
by such Holder or any such underwriter, all pertinent financial and other
records and pertinent corporate documents and properties of the Company, and
cause all of the Company's officers, directors and employees to supply all
information reasonably requested by such Holder, underwriter, attorney,
accountant or agent in connection with such registration statement.
(k) Use every reasonable effort to prevent the issuance of any stop order
suspending the effectiveness of such registration statement or of any order
preventing or suspending the use of any preliminary prospectus and, if any such
order is issued, to obtain the lifting thereof at the earliest reasonable time.
(l) Make such representations and warranties to each Holder and the
underwriters as are customarily made by issuers to underwriters and selling
shareholders, as the case may be, in secondary underwritten public offerings.
(m) Furnish to each Holder, upon request by such Holder, a copy of all
documents filed and all correspondence from or to the SEC in connection with the
registration statement and the offering to which it relates.
(n) Use its best efforts to obtain all necessary approvals from the
National Association of Securities Dealers, Inc. in connection with any such
offering.
3.07 Rule 144 Reporting
------------------
With a view to making available the benefits of certain rules and
regulations of the SEC which may at any time permit the sale of the Shares to
the public without registration, at all times at which the Company has had
securities registered pursuant to Section 12 of the Exchange Act for the
preceding ninety (90) days, the Company agrees to use its best efforts to:
<PAGE>
16
(a) make and keep public information available, as such terms are
understood and defined in Rule 144 under the Securities Act;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) so long as any Holder owns any ADSs or Shares, furnish to such Holder
upon request a written statement by the Company as to its compliance with the
reporting requirements of said Rule 144, a copy of the most recent annual or
quarterly report of the Company and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as such Holder may reasonably request in availing itself of any rule
or regulation of the SEC allowing such Holder to sell any such Shares without
registration.
3.08 Standoff Agreement
------------------
Each Holder agrees in connection with any registration of the Company's
securities, upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed one hundred eighty (180) days) from
the effective date of such registration as may be requested by the Company or
such underwriters, provided that each of the Company's officers and directors
shall have agreed to be bound by the same restrictions in connection with such
public offering.
3.09 Currency of Registration and Public Information
-----------------------------------------------
In case any Registrable Securities are registered pursuant to this
Agreement the Company will maintain the currency of all registration and other
public information required by law until all Registrable Securities have been
sold or as may otherwise be specified in any underwriting agreement applicable
to such offering, provided, however, that if, at any time during the
effectiveness of such registration, the Board of Directors determines in good
faith that the public disclosure of any such information would be seriously
detrimental to the Company, then (a) the Company will so inform each Holder and
will be relieved of its obligation to maintain the currency of the registration
and other public information required in connection with sales of the
Registrable Securities during the period in which the determination of the Board
of Directors continues to apply and (b) the period during which the Company is
obligated to maintain the currency of the registration and other public
information will be extended by one day for each day during which it is relieved
of such obligation.
ARTICLE IV COVENANTS OF THE COMPANY
The Company hereby covenants and agrees that, for so long as this
Agreement remains in effect:
<PAGE>
17
(a) Without prejudice to any rights of Telenor under the Primary
Agreement, so long as Telenor has not sold or otherwise transferred any of the
Purchaser's Shares, if after the Closing Date any Person makes a bona fide and
otherwise valid claim (as determined by the Board in its reasonable discretion)
to an ownership right, which right arose before the First Board Date, to any
shares of voting capital stock of the Company, as a direct result of the
exercise of which right the Purchaser's Shares subscribed for by Telenor under
the Primary Agreement constitute less than twenty-five percent (25%) plus one
share of the then outstanding voting capital stock of the Company, then, upon
the request of Telenor, the Company shall cause Telenor to be offered the
opportunity to purchase Common Stock or ADSs representing a sufficient number of
shares of voting capital stock of the Company (at the then fair market value
thereof (as defined below)) such that, after giving effect to such purchase,
Telenor shall own in the aggregate twenty-five percent (25%) plus one share of
the then outstanding voting capital stock of the Company. For purposes of this
paragraph, the fair market value of such Common Stock or ADSs shall be
calculated based on the weighted average market value of the ADSs on the New
York Stock Exchange during the thirty (30) trading daYs immediately preceding
the date on which the Board determined that such ownership claim was bona fide
and otherwise valid, calculated on the basis of the closing price per ADS on
each such trading day. Any offer made to Telenor pursuant to this Article IV(a)
must be accepted within five Business Days and, if not accepted within such
period, shall thereafter expire, and payment in full in US Dollars for the
offered Common Stock or ADSs shall be made within five Business Days of such
acceptance against delivery of certificates representing such Common Stock or
ADSs.
(b) Telenor shall have the right, but not the obligation, to request that
the Company instruct the National Registry Company to indicate in the share
register of the Company that the Shares held by the parties to the Shareholders
Agreement are subject to restrictions on transfer and certain other encumbrances
pursuant to this Agreement and the Shareholders Agreement.
ARTICLE V COVENANTS OF TELENOR
Telenor hereby covenants and agrees that:
5.01 Public Offering
---------------
For the period commencing on the first anniversary of the date of
execution of the Primary Agreement and ending on the fourth anniversary thereof,
(a) so long as the Telenor Shareholders own any Shares and (b) provided that any
decision of the Board or the shareholders of the Company to issue New Securities
permits Telenor to purchase such New Securities (i) in an amount sufficient to
maintain the ownership by the Telenor Shareholders of the Specified Percentage
of Shares if at such time the Telenor Shareholders, in the aggregate, own at
least the specified Percentage of Shares and (ii) on the same terms and
conditions as other purchasers of such New Securities, Telenor shall vote (and
shall cause the Telenor Shareholders to vote) such Shares in favor of any
issuance of New Securities which are to be offered to the public (and not to a
Strategic Investor if such Strategic Investor is on the date of such offering or
will be after giving effect to a purchase in such offering a holder of ten
percent (10%) or more of the voting
<PAGE>
18
capital stock of the Company) pursuant to a registration statement which has
been declared effective under the Securities Act (regardless of whether the
offering of such New Securities is registered with the Russian Federal
Commission on Securities Markets as an open subscription or a closed
subscription under Russian law).
5.02 Preferred Stock
---------------
So long as the Telenor Shareholders own any Shares, provided that (a) the
Class B Preferred Stock is issued solely to Dr. Zimin or the Bee Line Fund, has
substantially the same terms and conditions as are set forth in Schedule 1, and,
by the terms of the applicable subscription agreement, is non-transferable, and
(b) Telenor receives at least thirty (30) days prior to the date of a vote by
the shareholders of the Company on the issuance of the Class B Preferred Stock
an opinion of counsel to the Company, in form and substance reasonably
satisfactory to Telenor, confirming that (i) after giving effect to the issuance
of the Class B Preferred Stock, there will be no material adverse effect on the
veto rights of a holder of the Specified Percentage of Shares on any decision
requiring a shareholder vote under then applicable Russian law and (ii) the
terms and conditions of the Class B Preferred Stock are substantially the same
as those set forth in Schedule 1, Telenor shall vote (and shall cause the
Telenor Shareholders to vote) all Shares owned by the Telenor Shareholders in
favor of the approval of the issuance of the Class B Preferred Stock.
5.03 Compliance with Trading Policy
------------------------------
During the period in which Telenor is an affiliate (as such term is
defined in the Securities Act) of the Company, Telenor shall at all times
comply, and shall cause each of the Telenor Shareholders to comply, with (a) the
Company's policy relating to trading activities involving or affecting the
Company's securities, as in effect from time to time, and (b) applicable law
relating to the holding or transfer of such securities.
ARTICLE VI MISCELLANEOUS
6.01 Term
----
This Agreement shall take effect on the date hereof and remain in effect
until the earliest of:
(a) the date on which parties hereto agree in writing to the termination
of this Agreement;
(b) as to all rights and obligations of the Telenor Shareholders under
this Agreement, the date on or after January 29, 2000 on which the Telenor
Shareholders own, in the aggregate, ADSs or Shares representing less than ten
percent (10%) of the issued and outstanding voting capital stock of the Company;
<PAGE>
19
(c) as to all rights and obligations of the significant Zimin Shareholders
under this Agreement, the date on which the Significant Zimin Shareholders, in
the aggregate, own ADSs or Shares representing less than ten percent (10%) of
the issued and outstanding voting capital stock of the Company; and
(d) the date on which a meeting of the shareholders of the Company is held
at which a vote of such shareholders is conducted concerning the transactions
specified in Section 5.04(a) of the Primary Agreement and such shareholders fail
to approve such transactions;
provided, however, that the obligations set forth in Section 5.03(b) hereof
shall survive any such termination of this Agreement described in this Section
6.01.
6.02 Notices
-------
(a) All notices and other communications provided for herein (including,
without limitation, any modifications of, or waivers or consents under, this
Agreement) shall be given or made by facsimile or by hand in writing and
transmitted by facsimile or courier and delivered to the "Address for Notices"
specified below or at such other address as shall be designated by such
Shareholder in a notice to each other Shareholder party hereto:
If to Telenor, to:
Telenor East Invest AS
Keysers Gate 13
N-0130 Oslo
Norway
Facsimile No.: +47-22-77-99-09
Attn: Henrik Torgersen
with a copy to:
Advokatene i Telenor
Universitatsgaten 2
N-0130 Oslo
Norway
Facsimile No.: +47-22-11-44-61
Attn: Kaare M. Risung
If to Dr. Zimin, Glavsotkom, the Bee Line Fund and/or any other Zimin
Shareholder, to:
10-12, 8th March Street
125683, Moscow, Russian Federation
Facsimile No.: +7 095 755-3682
<PAGE>
20
Attn: Dr. Dmitry B. Zimin
If to the Company, to:
Open Joint Stock Company "Vimpel-Communications"
10-12, Ulitsa 8-Marta
125683, Moscow
Russian Federation
Facsimile No.: +7095-755-3682
Attn: Georgy Silvestrov
General Counsel
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Ducat Place II
7 Ulitsa Gasheka
123056, Moscow
Russian Federation
Facsimile No.: +7095-974-2412
Attn: Melissa J. Schwartz
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given and shall be effective when transmitted by
facsimile, personally delivered or, in the case of any notice delivered by
courier, upon receipt, in each case, given or addressed as aforesaid.
(b) Any Demand made by a Telenor Shareholder or a Zimin Shareholder
pursuant to Section 3.01(a) shall be delivered by courier (i) to the Company and
(ii) to Telenor, if such Demand is made by a Zimin Shareholder, or to Dr. Zimin
(provided that, after Dr. Zimin's death or incapacity, such Demand shall be sent
to the Bee Line Fund), if such Demand is made by a Telenor Shareholder. A Demand
shall be effective for all purposes (including, without limitation, for purposes
of determining when such Demand was exercised) as of the date and time of the
acceptance by such courier of such Demand (as evidenced by an original receipt
indicating such date and time) for delivery to Dr. Zimin or Telenor,
respectively, in accordance with this Section 6.02(b).
6.03 Entire Agreement
----------------
This Agreement supersedes all prior discussions and agreements among the
parties with respect to the subject matter hereof, and contains the sole and
entire agreement among the parties hereto with respect to the subject matter
hereof.
<PAGE>
21
6.04 Waiver
------
Any term or condition of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof, but no such waiver shall be
effective unless set forth in a written instrument duly executed by or on behalf
of the party waiving such term or condition. No waiver by any party of any term
or condition of this Agreement, in any one or more instances, shall be deemed to
be or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this Agreement or
by law or otherwise afforded, will be cumulative and not alternative.
6.05 Amendment
---------
This Agreement may be amended, supplemented or modified only by a written
instrument duly executed by or on behalf of each party hereto.
6.06 No Assignment; Binding Effect; No Third Party Beneficiary
---------------------------------------------------------
Neither this Agreement nor any right, interest or obligation hereunder may
be assigned by any party hereto without the prior written consent of the other
parties hereto and any attempt to do so will be void, except for assignments and
transfers in accordance with the terms of this Agreement. Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and
is enforceable by the parties hereto and their respective successors and
assigns. The terms and provisions of this Agreement are intended solely for the
benefit of each party hereto and their respective successors or permitted
assigns, and it is not the intention of the parties to confer third party
beneficiary rights upon any other Person other than any Person entitled to
indemnity under Section 3.04.
6.07 Headings
--------
The headings used in this Agreement have been inserted for convenience of
reference only and do not define or limit the provisions hereof.
6.08 Invalid Provisions
------------------
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future Law, and if the rights or obligations
of any party hereto under this Agreement will not be materially and adversely
affected thereby, (a) such provision will be fully severable, (b) this Agreement
will be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, (c) the remaining provisions of
this Agreement will remain in full force and effect and will not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom and
(d) in lieu of such illegal, invalid or unenforceable provision, there will be
added automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
<PAGE>
22
6.09 Arbitration; Waiver of Sovereign Immunity
-----------------------------------------
(a) Any and all disputes and controversies arising under, relating to, or
in connection with, this Agreement shall be settled by arbitration by a panel of
three (3) arbitrators under the United Nations Commission on International Trade
Law (UNCITRAL) Arbitration Rules (the "UNICITRAL Rules") in accordance with the
following terms and conditions:
(i) In the event of any conflict between the UNCITRAL Rules and the
provisions of this Agreement, the provisions of this Agreement shall prevail.
(ii) Any party to this Agreement may refer a matter to arbitration
by written notice to the other parties.
(iii) The place of the arbitration shall be Stockholm, Sweden.
(iv) The claimant party shall appoint one (1) arbitrator and the
respondent party shall appoint one (1) arbitrator, and the two (2) arbitrators
so appointed shall appoint the third arbitrator, in accordance with the UNCITRAL
Rules. In the event of an inability to agree on a third arbitrator, the
appointing authority shall be the Arbitration Institute of the Sweden Chamber of
Commerce, Stockholm.
(v) The English language shall be used as the written and spoken
language for the arbitration and all matters connected with all references to
arbitration.
(vi) The decision of the arbitrators shall be made by majority vote
and shall be in writing.
(vii) The decision of the arbitrators shall be final and binding on
the parties to this Agreement, save in the event of fraud, manifest mistake or
failure by any of the arbitrators to disclose any conflict of interest.
(viii) The decision of the arbitrators may be enforced by any court of
competent jurisdiction and may be executed against the Person and assets of the
losing party in any jurisdiction.
(b) In the event any dispute is submitted to arbitration pursuant to
Section 6.09(a), the panel of arbitrators may, if it deems such award
appropriate, award a party costs and expenses incurred by such party in
enforcing its rights. Except as so awarded, each party shall bear its own costs
and expenses of enforcing its rights to arbitrate under this Section 6.09.
(c) Except for arbitration proceedings pursuant to Section 6.09(a) above,
no action, lawsuit or other proceeding (other than a proceeding to compel
arbitration or to enforce any arbitration decision) shall be brought by or
between the parties to this Agreement and/or any of their Controlled Affiliates
in connection with any matter arising out of or in connection with this
Agreement.
<PAGE>
23
(d) Each Shareholder hereby represents and warrants that it is acting
solely in its commercial capacity in executing and delivering this Agreement and
each of the other Principal Agreements to which it is a party and in performing
its obligations hereunder and thereunder, and each Shareholder hereby
irrevocably waives with respect to all disputes, claims, controversies and all
other matters of any nature whatsoever that may arise under or in connection
with this Agreement or any of such other Principal Agreements and any other
document or instrument contemplated hereby or thereby, all immunity it may
otherwise have as a sovereign, quasi-sovereign or state-owned entity (or similar
entity) from any and all proceedings (whether legal, equitable, arbitral,
administrative or otherwise), attachment of assets or enforceability of judicial
or arbitral awards.
6.10 Governing Law
-------------
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York, United States of America, applicable to contracts
executed and performed in such jurisdiction, without giving effect to the
conflicts of laws principles thereof which would result in the application of a
different law.
6.11 Counterparts
------------
This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.
6.12 Consent to Jurisdiction and Service of Process
----------------------------------------------
The Company hereby irrevocably appoints, each Zimin Shareholder hereby
irrevocably appoints, and each Telenor Shareholder hereby irrevocably appoints,
CT Corporation System, located on the date hereof at 1933 Broadway, New York, NY
10019, USA, as its true and lawful agent and attorney to accept and acknowledge
service of any and all process against it in any action, suit or proceeding
arising out of or relating to this Agreement or any of the other Principal
Agreements or any of the transactions contemplated hereby or thereby and upon
whom such process may be served, with the same effect as if such party were a
resident of the State of New York and had been lawfully served with such process
in such jurisdiction, and waives all claims of error by reason of such service,
provided that the party effecting such service shall also deliver a copy thereof
to each other party at the address and in the manner specified in Section 6.02.
The Company, each Zimin Shareholder and each Telenor Shareholder will enter into
such agreements with such agent as may be necessary to constitute and continue
the appointment of such agent hereunder. In the event that any such agent and
attorney resigns or otherwise becomes incapable of acting, the affected party
will appoint a successor agent and attorney in New York reasonably satisfactory
to each other party, with like powers. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York state court sitting in New
York City, in any such action, suit or proceeding arising out of or relating to
this Agreement or any of the other Principal Agreements or any of the
transactions contemplated hereby or thereby, and agrees that any such action,
suit or
<PAGE>
24
proceeding shall be brought only in such court, provided, however, that such
consent to jurisdiction is solely for the purpose referred to in Section 6.09
and shall not be deemed to be a general submission to the jurisdiction of said
courts of or in the State of New York other than for such purpose. Each party
hereby irrevocably waives, to the fullest extent permitted by Law, any objection
that it may now or hereafter have to the laying of the venue of any such action,
suit or proceeding brought in such a court and any claim that any such action,
suit or proceeding brought in such a court has been brought in an inconvenient
forum. Nothing herein shall affect the right of any party to serve process in
any other manner permitted by Law or to commence legal proceedings or otherwise
proceed against the other in any other jurisdiction.
<PAGE>
25
IN WITNESS WHEREOF, this Registration Rights Agreement has been duly
executed and delivered by each party hereto as of the day and year first above
written.
Telenor
-------
TELENOR EAST INVEST AS
By /s/ Henrik Torgersen
--------------------
Name: Henrik Torgersen
Title: Attorney-in-Fact
The Zimin Shareholders
----------------------
/s/ Dr. Dmitri Borisovich Zimin
-------------------------------
DR. DMITRI BORISOVICH ZIMIN
GLAVSOTKOM LLC
By /s/ D. B. Zimin
----------------
Name: D. B. Zimin
Title: General Director
By /s/ V. M. Bychenkov
--------------------
Name: V. M. Bychenkov
Title: Chief Accountant
THE FUND FOR NON-COMMERCIAL PROGRAMS "BEE LINE"
By /s/ Konstantin I. Ashitkov
--------------------------
Name: Konstantin I. Ashitkov
Title: Executive Director
By /s/ V. M. Bychenkov
---------------------------
Name: V. M. Bychenkov
Title: Chief Accountant
<PAGE>
26
The Company
-----------
OPEN JOINT STOCK COMPANY
"VIMPEL-COMMUNICATIONS"
By /s/ D. B. Zimin
---------------
Name: D. B. Zimin
Title: President and Chief Executive Officer
By /s/ V. M. Bychenkov
-------------------
Name: V. M. Bychenkov
Title: Chief Accountant
<PAGE>
EXHIBIT A
Endorsement
The undersigned hereby agrees to the terms and conditions of the
Registration Rights Agreement dated as of December 1, 1998 between Telenor East
Invest AS, Dr. Dmitri Zimin, Glavsotkom LLC, The Fund for Non-Commercial
Programs "Bee Line" and Open Joint Stock Company "Vimpel-Communications", to
which this Endorsement is attached, and agrees to be fully bound by the terms
and conditions of such Registration Rights Agreement as if the undersigned were
an original signatory thereto.
_______________________________
[Name of Transferee]
By_____________________________
Name:
Title:
<PAGE>
SCHEDULE 1
Class B Preferred Stock
1. Class B Preferred Stock shall have a nominal value of 0.1 kopecks.
2. Each holder of the fully paid Class B Preferred Stock shall have the
following rights:
(a) To participate in the GMS with the right to vote on the following
issues: (i) liquidation of the Company; (ii) reorganization of the Company; and
(iii) amendment of the Company's charter restricting the rights of the holders
of Class B Preferred Stock.
(b) To participate in the GMS with the right to vote on all issues, if for
ten consecutive fiscal years, the GMS fails to adopt a decision to pay dividends
on Class B Preferred Stock in full (including the dividends accrued for
preceding fiscal years). The voting rights of the holders of Class B Preferred
Stock described in this clause (b) shall terminate from the moment of payment in
full of all accrued dividends for Class B Preferred Stock.
(c) To receive dividends which shall be determined as the ruble equivalent
of US$ .02 (at the exchange rate of the Central Bank of Russia on the date the
GMS adopts a decision to pay dividends for Class B Preferred Stock) plus 15% per
annum, compounded on a quarterly basis on the amount of dividends for Class B
Preferred Stock which were not paid for the previous fiscal year. A dividend
which has not been paid in full or in part based on the result of any fiscal
year shall be accrued and added to the amount of dividends to be paid for the
following fiscal year. Dividends for Class B Preferred Stock may be paid by the
Company only after it pays in full dividends for Class A Preferred Stock.
(d) In a liquidation of the Company, receive a fixed liquidation value in
the amount of 0.1 (zero point one) kopecks per share of Class B Preferred Stock.
Liquidation value in respect of Class B Preferred Stock shall be payable after
full payment of the liquidation value in respect of Class A Preferred Stock.
3. Decisions with respect to issues referred to in Articles 9.2.2 and 9.2.3.
(liquidation of the Company and reorganization of the Company) of the Charter
shall be taken if a majority of 75% of the voting shares of each class of shares
represented at the GMS and eligible to vote thereon has voted in favor of it.
Votes shall be counted separately for each class of voting shares (Common Stock,
Class A Preferred Stock and Class B Preferred Stock).
<PAGE>
EXHIBIT F
Conformed Copy
________________________________________________________________________
SHAREHOLDERS AGREEMENT
dated as of December 1, 1998
by and among
TELENOR EAST INVEST AS
and
DR. DMITRI BORISOVICH ZIMIN,
GLAVSOTKOM LLC,
THE FUND FOR NON-COMMERCIAL PROGRAMS "BEE LINE"
AUGIE K. FABELA, II
GENEVA INVESTMENT TRUST I, L.L.C.
and
OTHER HOLDERS OF CAPITAL STOCK OF OPEN JOINT STOCK COMPANY "VIMPEL-
COMMUNICATIONS" FROM TIME TO TIME
________________________________________________________________________
<PAGE>
SHAREHOLDERS AGREEMENT dated as of December 1, 1998 by and among TELENOR
EAST INVEST AS, a corporation organized and existing under the laws of Norway
("Telenor"), DR. DMITRI BORISOVICH ZIMIN, a Russian citizen ("Dr. Zimin"),
GLAVSOTKOM LLC, a limited liability company organized and existing under the
laws of the Russian Federation ("Glavsotkom"), THE FUND FOR NON-COMMERCIAL
PROGRAMS "BEE LINE", a non-commercial organization organized and existing under
the laws of the Russian Federation (the "Bee Line Fund"), AUGIE K. FABELA, II, a
citizen of the United States ("Mr. Fabela"), GENEVA INVESTMENT TRUST I, L.L.C.,
a limited liability company organized and existing under the laws of Delaware
("Geneva"), and such other holders of capital stock of the Company as shall be
party hereto from time to time.
WITNESSETH
WHEREAS, Open Joint Stock Company "Vimpel-Communications", a company
organized and existing under the laws of the Russian Federation (the "Company"),
and Telenor are parties to the Primary Agreement dated as of December 1, 1998
(the "Primary Agreement") between Telenor and the Company;
WHEREAS, Dr. Zimin, Glavsotkom, the Bee Line Fund, Mr. Fabela and Geneva
(collectively, the "Existing Shareholders") beneficially own the issued and
outstanding shares of capital stock of the Company described in Schedule 1
hereto opposite their respective names;
WHEREAS, each of Mr. Fabela and Geneva are entering into this Agreement
solely for the purposes of (a) making the representations and warranties set
forth in Article II of this Agreement and (b) subject to the conditions and on
the terms set forth therein, agreeing to be bound by the obligations and
entitled to the rights arising under Article IV, Section 5.02 and Article VI of
this Agreement, and under no circumstances whatsoever shall Mr. Fabela or Geneva
be liable, or incur any liability whatsoever, in connection with any breach (or
alleged breach) of any other provision set forth in this Agreement; and
WHEREAS, Telenor and the Existing Shareholders believe it is in the best
interests of the Company that provision be made for the continuity and stability
of the business and management of the Company;
NOW, THEREFORE, in consideration of the mutual covenants and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
2
ARTICLE I DEFINITIONS AND INTERPRETATION
1.01 Definitions
-----------
As used herein, the following terms shall have the following meanings:
"Actions or Proceedings" shall mean any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"Agreement" shall mean this Shareholders Agreement.
"amendments to the Charter" shall have the meaning specified in Section
5.04 of the Primary Agreement.
"Assets and Properties" shall mean, with respect to any Person, all assets
and properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, used, operated, owned or leased by such Person, including,
without limitation, cash, cash equivalents, investments, accounts and notes
receivable, chattel paper, documents, instruments, general intangibles, real
estate, equipment, inventory, goods and Intellectual Property.
"Bee Line Fund" shall have the meaning specified in the preamble hereto.
"Board" shall mean the Board of Directors of the Company.
"Charter" shall mean the most recent version of the charter (ustav) of the
Issuer, as registered with the MRC on August 23, 1996, and as amended on October
3, 1996 (approved by the Board on September 30, 1996), December 17, 1996
(approved by the GMS on November 20, 1996), December 17, 1996 (approved by the
GMS on November 29, 1996) and September 3, 1998 (approved by the GMS on June 16,
1998).
"Class B Preferred Stock" shall mean Class B cumulative preferred stock
(Priviligirovannye kumulyativnye akstii tipa B) of the Company.
"Closing" shall have the meaning specified in the Primary Agreement.
"Company" shall have the meaning specified in the first recital hereto.
"Contract" shall mean any agreement, preliminary agreement, letter of
intent (to the extent binding or creating liability), lease, license, evidence
of Indebtedness, mortgage, indenture, security agreement or other contract
(whether written or oral).
"Controlled Affiliate" shall mean, with respect to any Person, any other
Person which directly or indirectly controls, or is under common control with,
or is controlled by, such Person and, if such Person is an individual, any
relative or spouse of such individual, or any relative of such spouse, any one
of whom has the same home as such individual, and any trust or estate for which
such individual serves as a trustee or in a similar capacity or in which such
individual has a substantial beneficial interest and any Person who is
controlled by any such member or trust. As used in this definition, "control"
(including,
<PAGE>
3
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise) of any other
Person, provided that, in any event, any Person which owns, directly or
indirectly, more than 50% of the securities having ordinary voting power for the
election of directors or other governing body of a corporation or more than 50%
of the partnership or other ownership interests of any other Person (other than
as a limited partner of such other Person) will be deemed to control such
corporation or other Person.
"Dr. Zimin" shall have the meaning specified in the preamble hereto.
"Endorsement" shall mean an endorsement to this Agreement in the form of
Exhibit A hereto.
"Ericsson Agreements" shall have the meaning specified in Section 2.07(c).
"Escrow Agreement" shall mean the Escrow Agreement dated December 1, 1998 by
and among the Company, Telenor and Den norske Bank ASA, as Escrow Agent.
"Existing Shareholders" shall have the meaning specified in the second
recital hereto.
"Final Payment Date" shall mean the date on which the final installment of
the Purchase Price is paid to the Company under the terms of the Escrow
Agreement.
"First Board Date" shall mean the date of the first meeting of the Board at
which the three duly elected designees of Telenor eligible to sit on the Board
and at least one of them is present at such meeting.
"First Payment Date" shall mean the date on which the payment of the first
installment of the Purchase Price is paid to the Company under the terms of the
Primary Agreement.
"Geneva" shall have the meaning specified in the preamble hereto.
"Glavsotkom" shall have the meaning specified in the preamble hereto.
"Laws" shall mean all laws, decrees, resolutions, instructions, statutes,
rules, regulations, acts, ordinances and other pronouncements having the effect
of law or regulation of the Russian Federation, any other country or any state,
as well as any county, city or other political subdivision of any of the
foregoing.
"Governmental or Regulatory Authority" shall mean any court, tribunal,
arbitrator, legislature, government, ministry, committee, inspectorate,
authority, agency, commission, official or other instrumentality of the Russian
Federation, any other country or any state, as well as any county, city or other
political subdivision of any of the foregoing.
<PAGE>
4
"Guarantee Agreement" shall mean the Guarantee Agreement dated as of
December 1, 1998 between Telenor AS and the Company.
"Indebtedness" shall mean, with respect to any Person, all obligations of
such Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or
similar instruments, (c) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (d) under capital leases or (e) in the nature of a guarantee of any
obligation described in clauses (a) through (d) above of any other Person.
"Intellectual Property" shall mean patents and patent rights, licenses,
inventions, copyrights and copyright rights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks and trademark rights, service
marks and service mark rights, trade names and trade name rights, service names
and service name rights, brand names, processes formulae, trade dress, business
and product names, logos, slogans, industrial models, processes, designs,
methodologies, software programs (including all source codes) and related
documentation, technical information, manufacturing, engineering and technical
drawings, and all pending applications for and registrations of patents,
trademarks, service marks and copyrights.
"Licenses" shall mean all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Lien" shall mean any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"Mr. Fabela" shall have the meaning specified in the preamble hereto.
"Order" shall mean any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each case, whether preliminary
or final).
"Person" shall mean any natural person, corporation, general partnership,
simple partnership, limited partnership, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority,
whether incorporated or unincorporated.
"Primary Agreement" shall have the meaning specified in the first recital
hereto.
"Principal Agreements" shall mean this Agreement, the Primary Agreement, the
Escrow Agreement, the Registration Rights Agreement, the Guarantee Agreement and
the Service Obligation Agreements (as defined in the Primary Agreement).
"Purchase Price" shall mean the purchase price for the Purchaser's Shares
under (and as defined in) the Primary Agreement.
<PAGE>
5
"Purchaser's Shares" shall mean Eight Million Nine Hundred Two Thousand Two
Hundred and One (8,902,201) shares of Common Stock, to be purchased by Telenor
on and subject to the terms and conditions of the Primary Agreement.
"Registration Rights Agreement" shall mean the Registration Rights Agreement
dated as of December 1, 1998 by and among the Company, Telenor, Dr. Zimin,
Glavsotkom and the Bee Line Fund.
"SEC" shall mean the Securities and Exchange Commission of the United States
of America.
"SEC Documents" shall have the meaning specified in Section 2.06(a),
provided that, with respect to Telenor, the SEC Documents shall include only the
SEC Documents filed by Telenor in connection with the transactions contemplated
by this Agreement and the other Principal Agreements.
"Securities Act" shall mean the United States Securities Act of 1933, as
amended, and the rules and regulations of the SEC thereunder.
"Shareholder" shall mean any holder of Shares who is party to this
Agreement.
"Shares" shall mean shares of common stock or preferred stock of the Company
or American Depositary Shares representing interests therein, as the case may
be.
"Significant Zimin Shareholders" shall mean Dr. Zimin, the Bee Line Fund and
Glavsotkom.
"Specified Percentage" shall mean, with respect to Telenor or the Zimin
Shareholders, twenty-five percent (25%) plus one (1) Share of the voting capital
stock of the Company.
"Tag-Along Sale" shall mean a reference to a Telenor Tag-Along Sale or a
Zimin Tag-Along Sale, as the case may be.
"Telenor Shareholders" shall mean, collectively, Telenor and any of its
Controlled Affiliates which become a party to this Agreement in accordance with
Section 3.02, and, individually, any of them, and any Controlled Affiliate of
any of them which acquires Shares subject to this Agreement.
"Telenor Tag-Along Purchase Offer" shall have the meaning specified in
Section 3.04(a)(i)(C).
"Telenor Tag-Along Sale" shall have the meaning specified in Section
3.04(a)(i)(C).
"Telenor" shall have the meaning specified in the preamble hereto.
"Transfer" shall mean any transfer, sale, assignment, conveyance, pledge or
other disposition, as the case may be.
"UNCITRAL Rules" shall have the meaning specified in Section 7.13 hereof.
<PAGE>
6
"Zimin Shareholders" shall mean (a) during Dr. Zimin's lifetime, Dr. Zimin
and any Controlled Affiliate of Dr. Zimin which is or becomes a party to this
Agreement in accordance with Section 3.02(a), and (b) after Dr. Zimin's death or
incapacity, any Person which was, at the time of Dr. Zimin's death or
incapacity, a Controlled Affiliate of Dr. Zimin and a party to this Agreement.
"Zimin Pledge" shall have the meaning specified in Section 2.07(c).
"Zimin Tag-Along Purchase Offer" shall have the meaning specified in
Section 3.04(b)(i)(C).
"Zimin Tag-Along Sale" shall have the meaning specified in Section
3.04(b)(i)(C).
1.02 Interpretation
--------------
Unless the context of this Agreement otherwise requires, the following
rules of interpretation shall apply to this Agreement:
(a) the singular shall include the plural, and the plural shall include
the singular;
(b) words of any gender shall include the other gender;
(c) the words "hereof", "herein", "hereby", "hereto" and similar words
refer to this entire Agreement and not to any particular Section or any other
subdivision of this Agreement;
(d) a reference to any "Section", "Schedule" or "Exhibit" is a reference
to a specific Section of, or Schedule or Exhibit to, this Agreement;
(e) a reference to any law, statute, regulation, notification or statutory
provision shall include any amendment, modification or re-enactment thereof, any
regulations promulgated thereunder from time to time, and any interpretations
thereof from time to time by any regulatory or administrative authority;
(f) a reference to any agreement, instrument, contract or other document
shall include any amendment, amendment and restatement, supplement or other
modification thereto; and
(g) a reference to any Person shall include such Person's successors and
permitted assigns under any agreement, instrument, contract or other document.
<PAGE>
7
ARTICLE II REPRESENTATIONS AND WARRANTIES
Each Shareholder party hereto on the date hereof hereby represents and
warrants as of the date hereof (and each Person who subsequently becomes a party
to this Agreement by executing an Endorsement, represents and warrants as of the
date on which such Person executes such Endorsement) that:
2.01 Organization of the Shareholders
--------------------------------
If not a natural Person, such Shareholder is duly organized and validly
existing under the laws of its jurisdiction of organization, with corporate
power and authority to carry on its business as it is currently being conducted
and to own, lease and operate its Assets and Properties.
2.02 Authority
---------
(a) Such Shareholder has full power and authority to enter into this
Agreement. The execution and delivery of this Agreement by such Shareholder has
been duly and validly authorized and, if such Shareholder is not a natural
person, no other corporate action on the part of such Shareholder, its board of
directors or its shareholders is necessary therefor.
(b) This Agreement has been duly and validly authorized, executed and
delivered by such Shareholder and constitutes the legal, valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights and remedies generally or by general equitable principles
(whether applied by a court of law or equity).
(c) Such Shareholder has full power and authority to perform its
obligations hereunder.
2.03 No Conflicts
------------
The execution, delivery and performance by such Shareholder of this
Agreement, compliance by such Shareholder with all of the provisions hereof and
the consummation of the transactions by such Shareholder contemplated hereby:
(a) if such Shareholder is not a natural person, will not conflict with or
constitute a breach of any of the terms or provisions of, or a default under its
charter, memorandum of association, articles of association, certificate of
incorporation, by-laws or other like constituent documents, as the case may be;
(b) will not conflict with or constitute a breach of any Contract or
License to which such Shareholder is a party or by which it or any of its Assets
and Properties is bound, in each case, as in effect on the date hereof or, with
respect to any Person that subsequently becomes a party to this Agreement, as of
the date such Person becomes a party hereto; and
<PAGE>
8
(c) will not violate or conflict with any Orders or Laws applicable to
such Shareholder, in each case, as in effect on the date hereof or, with respect
to any Person that subsequently becomes a party to this Agreement, as of the
date such Person becomes a party hereto.
2.04 Governmental Approvals and Filings
----------------------------------
The execution, delivery and performance by such Shareholder of this
Agreement, the compliance by such Shareholder with all of the provisions hereof
and the consummation by such Shareholder of the transactions contemplated hereby
will not require any consent, approval, authorization, other order or action of,
filing with or notice to any Governmental or Regulatory Authority, except for
such consents, approvals, authorizations or other orders as have been obtained
and which are in full force and effect on the date of this Agreement or, with
respect to any Person that subsequently becomes a party to this Agreement, as of
the date such Person becomes a party hereto.
2.05 Legal Proceedings; Liability
----------------------------
(a) To the knowledge of such Shareholder, there are no material Actions or
Proceedings pending to which such Shareholder is a party or to which any of the
Shares it owns or controls, beneficially or otherwise, is subject, which would,
or would reasonably be expected to, result in the issuance of an Order which
questions the validity of this Agreement or which would, or would reasonably be
expected to, result in the issuance of an Order which materially adversely
affects the ability of such Shareholder to perform its obligations hereunder
and, to the knowledge of such Shareholder, no such proceedings are threatened.
(b) There are no facts or circumstances known to such Shareholder that
would reasonably be expected to give rise to any material Action or Proceeding
that would be required to be disclosed pursuant to clause (a) above.
2.06 SEC Documents
-------------
(a) Such Shareholder has filed all reports, schedules, forms, statements
and other material documents with the SEC (collectively, and in each case
including all exhibits and schedules thereto and documents incorporated by
reference therein, the "SEC Documents") required to be filed by such Shareholder
prior to giving effect to the execution of this Agreement.
(b) After giving effect to all amendments thereto but prior to giving
effect to the execution of this Agreement and the other Principal Agreements, if
any, to which such Shareholder is a party, no SEC Document filed by such
Shareholder contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
2.07 Shareholding
------------
Each Shareholder (other than Telenor) hereby represents and warrants as of
the date hereof, each Person who subsequently becomes a party to this Agreement
by executing an
<PAGE>
9
Endorsement hereby represents and warrants, as of the date on which such Person
executes such Endorsement, and Telenor hereby represents and warrants as of the
date of (and after giving effect to) the consummation of its purchase of all of
the Purchaser's Shares pursuant to the Primary Agreement, that:
(a) it is the record holder and beneficial owner of the Shares described
opposite its name on Schedule 1 hereto or on its Endorsement, as the case may
be;
(b) the Shares described opposite its name on Schedule 1 hereto, or on its
Endorsement, as the case may be, constitute all of the shares of capital stock
of the Company owned of record or beneficially by such Person;
(c) except for (i) any rights of such Shareholder's spouse, if any, arising
by operation of law and (ii) in the case of the Bee Line Fund, the rights of the
Board of Directors thereof relating to the voting or disposition of Shares held
by the Bee Line Fund, such Shareholder has sole power of disposition and sole
voting power with respect to all of the Shares described opposite its name on
Schedule 1 hereto, or on its Endorsement, as the case may be, with no
restrictions on such rights, other than such restrictions on transfer as arise
under applicable United States federal securities laws, Russian federal
securities laws, the Agreements on Pledge (the "Zimin Pledge") made on January
27, 1998 and August 18, 1998 between Dr. Zimin, Ericsson Project Finance AB and
AB LM Ericsson Finans, the Undertaking and Acknowledgement of Pledge Agreements
dated April 9, 1998 between KB Impuls-TV, the Bee Line Fund, Ericsson Project
Finance AB and AB LM Ericsson Finans (the "Ericsson Agreements"), the
Undertaking and Acknowledgement of Pledge Agreement dated April 9, 1998 between
KB Impuls-TV, Bee Line Fund and Ericsson Project Finance AB and AB LM Ericsson
Finans, the restrictions on the transfer of shares of preferred stock of the
Company which are disclosed in the Company's SEC Documents, and the terms and
conditions of this Agreement and the Registration Rights Agreement; and
(d) its Shares are, unless they are ADSs, uncertificated, and, in any event,
are now held (and in the case of Telenor will, upon issuance, be held), in each
case, free and clear of all Liens, proxies, voting trusts or agreements,
understandings or arrangements whatsoever that would conflict with any of the
obligations of such Person hereunder or under the Registration Rights Agreement,
except for any thereof arising under (i) the charter of the Bee Line Fund, (ii)
the Zimin Pledge, (iii) the Ericsson Agreements and (iv) the restrictions on the
transfer of shares of preferred stock of the Company disclosed in the Company's
SEC Documents, and the terms and conditions of this Agreement and the
Registration Rights Agreement.
<PAGE>
10
ARTICLE III TRANSFER RESTRICTIONS
3.01 Transfers of Specified Percentage
---------------------------------
(a) If on the date of any proposed transfer (pursuant to a transaction or
series of related transactions) of a number of Shares equal to or greater than
the Specified Percentage of Shares by any Telenor Shareholder to any Person
(other than to another Shareholder or a Controlled Affiliate of another
Shareholder), the Zimin Shareholders own, directly or indirectly, at least the
Specified Percentage of Shares, then such Telenor Shareholder shall not transfer
such Shares to such Person, unless Telenor has given the Zimin Shareholders
thirty (30) Business Days' prior written notice of such proposed transfer in
accordance with Section 7.10 of this Agreement and obtained the prior written
consent of:
(i) during the lifetime of Dr. Zimin, Dr. Zimin; and
(ii) after Dr. Zimin's death or incapacity, the Bee Line Fund.
(b) If on the date of any proposed transfer (pursuant to a transaction or
series of related transactions) of a number of Shares equal to or greater than
the Specified Percentage of Shares by any Zimin Shareholder to any Person (other
than to another Shareholder or a Controlled Affiliate of another Shareholder),
the Telenor Shareholders own, directly or indirectly, at least the Specified
Percentage of Shares, then such Zimin Shareholder shall not transfer such Shares
to such Person, unless such Zimin Shareholder has given Telenor thirty (30)
Business Days' prior written notice of such proposed transfer in accordance with
Section 7.10 of this Agreement and obtained the prior written consent of Telenor
thereto.
3.02 Effect of Transfers
-------------------
(a) In the event of any transfer of Shares (whether through a transaction
or a series of related transactions, by operation of law or otherwise) from a
Shareholder to another Shareholder or a Controlled Affiliate of any Shareholder,
the transferee shall receive and hold any and all Shares so transferred subject
to the terms and conditions of this Agreement and the rights and obligations, if
any, of the transferor hereunder, and shall forthwith execute and deliver to the
other Shareholders an Endorsement. Each of Telenor and the Zimin Shareholders
hereby undertakes to cause each of their respective Controlled Affiliates to
which Shares are so transferred to execute and deliver an Endorsement to each of
the other Shareholders. A Shareholder which effects a transfer of all of such
Shareholder's Shares in accordance with this Agreement shall, after giving
effect to such transfer, cease to be a party to, or bound by the terms of, this
Agreement from and after the date of such transfer. In the event of any transfer
of Shares or ADSs in an amount less than the Specified Percentage by Telenor or
any of its Controlled Affiliates, or by any of the Zimin Shareholders, to any
Third Person who is not a Controlled Affiliate of any of the parties to this
Agreement, the transferee shall not be entitled to any rights, nor subject to
any obligations, under this Agreement.
(b) If the Telenor Shareholders, or any of them, transfer, in the
aggregate, a number of Shares equal to or greater than the Specified Percentage
of Shares (whether
<PAGE>
11
through a transaction or a series of related transactions) to any Person, other
than another Shareholder, provided such transfer is made in accordance with
Section 3.01(a) of this Agreement, the transferee shall forthwith execute and
deliver to each of the Shareholders an Endorsement and shall receive and hold
any and all Shares so transferred with the rights and subject to the obligations
set forth in this Agreement and the Registration Rights Agreement, except for
the rights and obligations specified in Sections 4.01, 4.02 and 5.01 of this
Agreement.
(c) If the Zimin Shareholders, or any of them, transfer, in the aggregate,
a number of Shares equal to or greater than the Specified Percentage of Shares
(whether through a transaction or a series of related transactions) to any
Person (other than another Shareholder), provided such transfer is made in
accordance with Section 3.01(b) of this Agreement, the transferee shall
forthwith execute and deliver to each of the Shareholders an Endorsement and
shall receive and hold any and all Shares so transferred with the rights and
subject to the obligations set forth in this Agreement and the Registration
Rights Agreement, except for the rights and obligations specified in sections
4.01, 4.02 and 5.01 of this Agreement.
(d) Notwithstanding, and not in limitation of, any rights or remedies of
any party under this Agreement, if (i) the Telenor Shareholders (or any of them)
transfer, in the aggregate, a number of Shares equal to or greater than the
Specified Percentage of Shares (whether through a transaction or a series of
related transactions) to any Person in violation of Section 3.01(b) or Section
3.02(c), as applicable, or (ii) the Zimin Shareholders (or any of them)
transfer, in the aggregate, a number of Shares equal to or greater than the
Specified Percentage of Shares (whether through a transaction or a series of
related transactions) to any Person in violation of Section 3.01(b) or Section
3.02(c), as applicable, then such transferee shall receive and hold any and all
Shares so transferred without any of the rights, but subject to all of the
obligations, set forth in this Agreement and the Registration Rights Agreement.
3.03 Endorsements by Future Shareholders
-----------------------------------
The term "Shareholders" as used in this Agreement shall include any and
all Persons (i) agreeing to be bound as a "Shareholder" hereunder by signing
this Agreement or an Endorsement, and (ii) required to execute and deliver an
Endorsement pursuant to the terms of this Agreement.
3.04 Tag-Along Rights Relating to Telenor
------------------------------------
(a) If any Significant Zimin Shareholder proposes to register any Shares
for sale in a secondary public offering pursuant to the Securities Act (whether
through the exercise of demand registration rights or otherwise), such
Significant Zimin Shareholder shall, unless and until such time as the Zimin
Shareholders, in the aggregate, own less than the Specified Percentage of
Shares:
(i) promptly give Telenor written notice thereof;
(ii) afford the Telenor Shareholders the opportunity to join in such
registration; and
<PAGE>
12
(iii) cause any underwriter (or any other Person that proposes to
acquire Shares directly from a Significant Zimin Shareholder) in any offering (a
"Telenor Tag-Along Sale") in connection with such registration to offer to
acquire from the Telenor Shareholders (a "Telenor Tag-Along Purchase Offer")
such number of Shares as shall equal the proportion which the total number of
Shares then held by the Telenor Shareholders bears to the total number of Shares
owned by the Significant Zimin Shareholders on such date, at the same price and
on the same terms and conditions that have been offered to the Significant Zimin
Shareholder(s).
(b) Notwithstanding the foregoing, if (A) any Significant Zimin
Shareholder proposes to register any of its Shares for sale in a secondary
public offering pursuant to the Securities Act through the exercise of a demand
registration right, and (B) the lead managing underwriter for such offering
advises the Company or any of the Significant Zimin Shareholders in writing
that, in the opinion of the lead managing underwriter, the number of shares
requested to be included in such registration exceeds the number which can be
sold in such offering, so as to be likely to have an adverse effect on the
price, timing or distribution of shares offered in such offering, the lead
managing underwriter may limit to the extent deemed appropriate by such lead
managing underwriter the number of the Telenor Shareholders' Shares to be
included in such registration to the number of Shares requested to be included
in such registration which, in the opinion of the lead managing underwriter, can
be sold without having such adverse effect (in which case such Significant Zimin
Shareholder shall so advise Telenor and any other Person distributing securities
through such underwriting).
3.05 Tag Along Rights Relating to Significant Zimin Shareholders
-----------------------------------------------------------
(a) If any Telenor Shareholder proposes to register any Shares for sale in
a secondary public offering pursuant to the Securities Act (whether through the
exercise of demand registration rights or otherwise), Telenor shall, unless and
until such time as the Telenor Shareholders own, in the aggregate, less than the
Specified Percentage of Shares:
(i) promptly give the Significant Zimin Shareholders written notice
thereof;
(ii) afford each of the Significant Zimin Shareholders the
opportunity to join in such registration; and
(iii) cause any underwriter (or any other Person that proposes to
acquire Shares directly from a Telenor Shareholder) in any offering (a "Zimin
Tag-Along Sale") in connection with such registration to offer to acquire from a
Significant Zimin Shareholder (a "Zimin Tag-Along Purchase Offer") such number
of Shares as shall equal the proportion which the total number of Shares then
held by the Significant Zimin Shareholders bears to the total number of Shares
owned by the Telenor Shareholder(s) on such date, at the same price and on the
same terms and conditions that have been offered to the Telenor Shareholder(s).
(b) Notwithstanding the foregoing, if (i) any Telenor Shareholder proposes
to register any Shares for sale in a secondary public offering pursuant to the
Securities Act through the exercise of a demand registration right, and (ii) the
lead managing underwriter for such offering advises the Company or any Telenor
Shareholder in writing that, in the
<PAGE>
13
opinion of the lead managing underwriter, the number of shares requested to be
included in such registration exceeds the number which can be sold in such
offering, so as to be likely to have an adverse effect on the price, timing or
distribution of shares offered in such offering, the lead managing underwriter
may limit to the extent deemed appropriate by such lead managing underwriter the
number of Shares of the Significant Zimin Shareholders to be included in such
registration to the number of Shares requested to be included in such
registration which, in the opinion of the lead managing underwriter, can be sold
without having such adverse effect (in which case such Telenor Shareholder shall
so advise the Significant Zimin Shareholders and any other Person distributing
securities through such underwriting).
(c) Telenor on behalf of the Telenor Shareholders shall have ten (10)
Business Days from the date of receipt of a Telenor Tag-Along Purchase Offer in
which to accept such offer, and the Significant Zimin Shareholders shall have
ten (10) Business Days from the date of receipt of a Zimin Tag-Along Purchase
Offer in which to accept such offer. The fees, costs and expenses incurred in
connection with a Telenor Tag-Along Sale in which any of the Significant Zimin
Shareholders participate shall be borne ratably by the Zimin Shareholders
participating in such sale and the Telenor Shareholders, and the fees, costs and
expenses incurred in connection with a Zimin Tag-Along Sale in which any Telenor
Shareholder participates shall be borne ratably by such Telenor Shareholders and
the Zimin Shareholders; provided that each such party shall be responsible for
the fees and disbursements of its legal counsel in connection with any such Tag-
Along Sale.
3.06 Order of Priority
-----------------
Notwithstanding Section 3.04 or 3.05, if (a) any Significant Zimin
Shareholder or any Telenor Shareholder proposes to register Shares for sale in a
secondary public offering pursuant to the Securities Act through the exercise of
so-called "piggy-back" registration rights in connection with a proposed
registered offering pursuant to the Securities Act of the Company's securities
for the account of the Company, and (b) the lead managing underwriter for such
offering advises the Company in writing that, in the opinion of the lead
managing underwriter, the number of Shares requested to be included in such
registration exceeds the number which can be sold in such offering, so as to be
likely to have an adverse effect on the price, timing or distribution of Shares
offered in such offering, the lead managing underwriter may limit the Shares to
be included in such registration to the number of Shares requested to be
included in such registration which, in the opinion of the lead managing
underwriter delivered to Telenor, the relevant Significant Zimin Shareholders
and any other Person distributing Shares through such underwriting, can be sold
without having such adverse effect. The Shareholders shall then permit the
Company to include in such registration the amount of the Shares which the lead
managing underwriter advises the Company can be sold in such offering in the
following priority: first, the Shares proposed by the Company to be sold for its
own account; and second, any Shares requested to be included in such
registration by the Telenor Shareholders, the Significant Zimin Shareholders and
any such other Person, as nearly as practicable, pro rata to the amounts of
Shares held by the Telenor Shareholders, the Significant Zimin Shareholders and
such other Person at the time of filing of the registration statement.
<PAGE>
14
3.07 Notices Relating to Transfer of Shares
--------------------------------------
In addition to, and not in limitation of, any other provision herein or in
any of the other Principal Agreements pursuant to which any Person is required
to deliver notice, the parties hereto agree that:
(a) if, as a result of any transfer of Shares (whether through a
transaction or a series of related transactions) the Zimin Shareholders shall,
in the aggregate, beneficially own less than ten percent (10%) of the then
issued and outstanding voting capital stock of the Company, then the Zimin
Shareholders shall, as soon as practicable after such transfer, deliver written
notice of such occurrence to each of the other Shareholders; and
(b) if, as a result of any transfer of Shares (whether through a
transaction or a series of related transactions) the Telenor Shareholders shall,
in the aggregate, beneficially own less than ten percent (10%) of the then
issued and outstanding voting capital stock of the Company, then Telenor shall,
as soon as practicable after such transfer, deliver written notice of such
occurrence to each of the other Shareholders.
ARTICLE IV PRE-CLOSING OBLIGATIONS
4.01 Pre-Closing Voting Agreement
----------------------------
Each of the Existing Shareholders hereby severally undertakes and agrees
that, during the period from the date of execution of the Primary Agreement
until the earlier of the Closing and the termination of this Agreement pursuant
to Article VI of this Agreement, at any meeting of the shareholders of the
Company, however called, or in connection with any written consent of the
shareholders of the Company or any such other action taken by the shareholders
of the Company, such Existing Shareholder shall vote or cause to be voted all of
the Shares held by such Existing Shareholder in favor of any proposal presented
to the shareholders of the Company for a vote in connection with the
transactions contemplated by the Principal Agreements, and any action presented
to the shareholders of the Company for a vote in furtherance thereof, including,
without limitation:
(a) the adoption and registration of the amendments to the Charter;
(b) the issuance and sale to Telenor of the Purchaser's Shares, on the
terms and subject to the conditions contained in the Primary Agreement;
(c) the election to the Board of three (3) candidates designated by
Telenor and nominated by the Zimin Shareholders; and
(d) satisfaction of all other conditions to the Closing specified in
Article VIII of the Primary Agreement.
<PAGE>
15
4.02 No Mandatory Tender
-------------------
The Existing Shareholders hereby agree to vote in favor of a waiver of, or
to waive, Telenor's obligation to offer to purchase the Shares held by the
Existing Shareholders, to the extent, if any, that Telenor's acquisition of
Shares pursuant to the Primary Agreement gives rise to such obligation under
Article 80 of the Russian Federation Joint Stock Company Law or any other
applicable law.
4.03 Powers of Attorney from the Zimin Shareholders
----------------------------------------------
(a) At the time of the execution of this Agreement, any or all of the
Zimin Shareholders shall execute and deliver to Telenor a power of attorney
which shall be effective as of January 30, 1999 (provided that the shareholders
of the Company approve the issuance of the Purchaser's Shares to Telenor on or
before January 29, 1999) duly authorizing Telenor to vote, at any meeting of the
shareholders of the Company held on or before January 29, 2000 on all issues
requiring the affirmative vote of holders of seventy-five percent (75%) of
voting shares of the Company present and eligible to vote in order to be
approved, as well as in electing candidates to the Board, a number of Shares
sufficient to carry twenty-five percent (25%) plus one (1) vote at a general
meeting of the shareholders of the Company. In addition, the Zimin Shareholders
shall ensure that Telenor has the right to vote twenty-five percent (25%) plus
one (1) share of the voting capital stock of the Company at all times on any
such issue until the earliest of (A) the date on which Telenor is the registered
owner of the Specified Percentage of Shares, has fully paid for the Purchaser's
Shares and has the right to exercise voting rights on all issues with respect to
the Purchaser's Shares, (B) January 29, 2000, (C) the date on which Telenor or
any Controlled Affiliate of Telenor transfers any Share to any Person other than
Telenor or a Controlled Affiliate of Telenor and (D) termination of this
Agreement pursuant to Article VI.
(b) On the date of issuance of the Class B Preferred Stock or at any other
time at Telenor's request, the Zimin Shareholders to whom the Class B Preferred
Stock will be issued shall execute and deliver to Telenor (i) a proxy (or
proxies) satisfactory to Telenor authorizing Telenor to vote such shares of the
Class B Preferred Stock as may be necessary to ensure that Telenor shall have
the right to vote such percentage of the voting capital stock of the Company as
Telenor shall hold immediately prior to the time the Class B Preferred Stock
shall have voting rights in excess of those set forth in Schedule 1 to the
Registration Rights Agreement, whether pursuant to the Charter or applicable
law, (ii) a pledge agreement, satisfactory to Telenor, granting Telenor a first
priority security interest in the Class B Preferred Stock, securing the
performance of all of the obligations of such Zimin Shareholders hereunder and
granting Telenor, as pledgee, the right to vote such shares of the Class B
Preferred Stock as may be necessary to ensure that Telenor shall have the right
to vote such percentage of the voting capital stock of the Company as Telenor
shall hold immediately prior to the time when the Class B Preferred Stock shall
have voting rights in excess of those set forth in Schedule 1 to the
Registration Rights Agreement, such security interest to be enforceable only in
the event of the ineffectiveness, invalidity, revocation, termination or
expiration of such proxy (or proxies), whether by operation of law or otherwise,
only against such number of shares of the Class B Preferred Stock as shall be
necessary to ensure that Telenor shall have the
<PAGE>
16
percentage ownership of voting capital stock of the Company as existed
immediately prior to giving effect to the voting rights in excess of those set
forth in Schedule 1 to the Registration Rights Agreement, and (iii) a transfer
order in respect of the Class B Preferred Stock, entitling Telenor to register
such security interest in the Class B Preferred Stock in the shareholder
register of the Company at the NRC; provided, however, that if Telenor violates
the terms of Section 5.01(c) or Section 5.01(d) hereof, all rights granted to
Telenor pursuant to this Section 4.03(b) and the proxy (or proxies) and the
pledge agreement referred to in this Section 4.03(b) (if then in effect) shall
immediately terminate. Upon the request of Telenor from time to time, the Zimin
Shareholders shall perform all reasonable actions, including, without
limitation, renewing such proxies and/or amending or replacing the documents
described in clauses (i)-(iii) above to comply with the requirements of
applicable law or as may otherwise be necessary to preserve Telenor's rights
under this Section 4.03(b), in each case, to enable Telenor to exercise such
voting rights.
ARTICLE V POST-CLOSING OBLIGATIONS
5.01 Voting
------
(a) So long as the Telenor Shareholders and the Zimin Shareholders each
beneficially own at least the Specified Percentage of Shares, then (i) Telenor
shall nominate no more than three (3) candidates designated by Telenor for
election to the Board, at least one of whom shall be a Russian citizen, (ii)
Telenor and the Zimin Shareholders shall vote a sufficient number of their
respective Shares to ensure that Telenor's three (3) designated nominees are
elected to the Board and (iii) should Telenor determine, in its sole discretion,
that it will have votes remaining after the election of its three (3) designated
nominees is ensured, it shall allocate on an equal basis any such votes in favor
of nominees for election to the Board which have been proposed by the Zimin
Shareholders; provided, however, that if any shareholder of the Company (other
than a Telenor Shareholder or a Zimin Shareholder) nominates any Person to the
Board, Dr. Zimin (or, in the event of his death or incapacity, the Bee Line
Fund) shall have the right to approve one of the two non-Russian nominees of
Telenor to the Board, which approval shall not be unreasonably withheld,
provided that such approval shall not be required if at least one of such two
non-Russian nominees is a senior executive vice-president or a member of the
board of directors of Telenor AS. Telenor shall use its best efforts to ensure
that any director designated by Telenor for nomination to the Board pursuant to
this Section 5.01(a) shall be an individual having such knowledge, technical
expertise or know-how relating to the telecommunications industry and related
sectors as may be reasonably requested by Dr. Zimin (or, in the event of his
death or incapacity, the Bee Line Fund). The parties hereto agree that Ms.
Tatiana Malozemova shall initially be the Russian Board member designated by
Telenor. The Zimin Shareholders shall ensure that at least one (1) other
employee of Telenor (identified in a notice sent by Telenor to Dr. Zimin) shall
receive notices of Board meetings and shall have the right to attend and speak
at all Board meetings.
(b) Telenor shall cause directors nominated by it to vote in favor of Dr.
Zimin and Mr. Fabela to fill any two of the following four positions: (i)
President and Chief
<PAGE>
17
Executive Officer (referred to in the charter of the Company as "General
Director"), (ii) Chairman of the Board, (iii) Honorary Chairman and (iv)
Chairman Emeritus; provided, however, that Telenor shall have no obligation to
cause its directors to vote in accordance with this Section 5.01(b) unless the
authority of the Honorary Chairman and Chairman Emeritus excludes any
substantial managerial responsibility and the right to take any executive action
on behalf of the Company.
(c) Subject to compliance with applicable law, each of Telenor and the
Zimin Shareholders undertakes to cause directors nominated by them (or who
represent their respective shareholdings in the Company) to vote in favor of the
declaration and/or full payment of any and all dividends payable on or in
respect of the Class A Preferred Stock and the Class B Preferred Stock (whether
in the form of a Board recommendation to shareholders for payment of annual
dividends, Board approval of payment of interim dividends, or otherwise).
(d) Subject to compliance with applicable law, each of Telenor and the
Zimin Shareholders undertakes to vote (and to cause their respective Controlled
Affiliates to vote) any Shares owned by them in favor of any resolution of
shareholders approving the payment of the full dividends on or in respect of the
Class A Preferred Stock and the Class B Preferred Stock.
(e) Upon not less than ninety (90) days' prior written notice from Telenor
that it wishes to cause an amendment to the Charter to be adopted that would
include its name (and/or any of the Telenor Shareholders' respective names) in
the Charter in accordance with Article 15 of the Law on Foreign Investments, the
Zimin Shareholders shall (i) cause the directors nominated by them to propose
such an amendment at the next annual general meeting of shareholders and (ii)
vote any Shares owned by them in favor of the adoption of such amendment.
5.02 Shareholder Capacity
--------------------
No Person executing this Agreement who is, or who becomes during the term
hereof, a director of the Company makes any agreement or understanding herein in
his or her capacity as such director, and the agreements set forth herein shall
in no way restrict any director in the exercise of his or her fiduciary duties
as a director of the Company. Each Shareholder executes and delivers this
Agreement solely in his, her or its capacity as the record and beneficial owner
of such Shareholder's Shares.
5.03 Other Arrangements
------------------
No Shareholder shall grant any proxy or enter into or agree to be bound by
any understanding or any voting trust with respect to any Shares (provided that
any Zimin Shareholder may grant a proxy to Dr. Zimin in respect of the Shares
owned by such Zimin Shareholder), nor shall any Shareholder enter into any
shareholders agreement or arrangement of any kind with any Person with respect
to any Shares, in each case, inconsistent with any obligation of such
Shareholder under this Agreement (whether or not such agreement, understanding
or arrangement is with other Shareholders or holders of shares which are not
bound by this Agreement), including, without limitation, any agreement,
understanding or arrangement with respect to the acquisition, disposition or
<PAGE>
18
voting of Shares, nor shall any Shareholder act, for any reason, as a member of
a group or in concert with any other Person in connection with the acquisition,
disposition or voting of Shares in any manner which is inconsistent with any
obligation of such Shareholder under this Agreement, provided that each
Shareholder shall be permitted to transfer its Shares in accordance with this
Agreement and the Registration Rights Agreement.
ARTICLE VI TERM AND TERMINATION
This Agreement shall take effect on the date hereof and remain in effect
until the earliest of:
(a) the date on which all of the Shareholders party hereto agree in writing
to the termination of this Agreement;
(b) the date on which the Telenor Shareholders and any transferee of the
Specified Percentage of Shares pursuant to a transfer by the Telenor
Shareholders made in accordance with Section 3.01(a) hereof, having once
attained such Specified Percentage, thereafter, collectively beneficially own,
in the aggregate, less than ten percent (10%) of the then issued and outstanding
voting capital stock of the Company;
(c) the date on which the Zimin Shareholders and any transferee of the
Specified Percentage of Shares pursuant to a transfer by the Zimin Shareholders
made in accordance with Section 3.01(b) hereof collectively beneficially own, in
the aggregate, less than ten percent (10%) of the then issued and outstanding
voting capital stock of the Company;
(d) the date on which the meeting of the shareholders of the Company is held
at which a vote of such shareholders is conducted concerning the transactions
specified in Section 5.04(a) of the Primary Agreement and such shareholders fail
to approve such transactions;
(e) June 1, 1999, in the event the Closing shall not have occurred on or
prior to such date; and
(f) January 29, 2000, if Telenor has not theretofore acquired in the
aggregate at least ten percent (10%) of the then issued and outstanding voting
capital stock of the Company pursuant to the Primary Agreement;
provided that, notwithstanding the foregoing or any other provision contained
herein or in any of the other Principal Agreements, the rights and obligations
of Mr. Fabela and Geneva hereunder (which, in any event, are limited to Article
II, Article IV, Section 5.02 and Article VI hereof) shall terminate immediately
after the meeting of the shareholders of the Company referred to in paragraph
(d) above (notwithstanding that the Shareholders have approved the transactions
contemplated by the Primary Agreement and the other Principal Agreements), and,
thereafter, Mr. Fabela and Geneva shall cease to be parties to, or bound by the
terms and conditions of, this Agreement, and under no circumstances whatsoever
shall Mr. Fabela or Geneva be liable, or incur any liability whatsoever, in
connection with any breach (or alleged breach) of any other provision set forth
in this Agreement.
<PAGE>
19
ARTICLE VII MISCELLANEOUS
7.01 Specific Performance
--------------------
The Shareholders hereby declare that it is impossible to measure in money
the damages that will accrue to a party hereto by reason of a failure to perform
any of the obligations under this Agreement. Therefore, if any Shareholder
shall institute any arbitral proceeding to enforce specifically the provisions
hereof, any Shareholder against whom such proceeding is brought hereby waives
the claim or defense therein that such Shareholder has an adequate remedy at law
or in damages, and such Shareholder shall not urge in any such proceeding the
claim or defense that such remedy at law or in damages exists.
7.02 Further Assurances
------------------
From time to time, at any Shareholder's reasonable request and without
further consideration, each Shareholder shall execute and deliver such
additional documents and take all such further action as may be reasonably
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
7.03 Certain Events
--------------
Each Shareholder agrees that this Agreement and the obligations hereunder
shall attach to such Shareholder's Shares and shall be binding upon any Person
to which legal or beneficial ownership of such Shares shall pass by operation of
law, including, without limitation, such Shareholder's heirs, guardians,
administrators or successors or spouse, as a result of any divorce.
7.04 Stop Transfer
-------------
Each Shareholder agrees with, and covenants to, the other Shareholders
that such Shareholder shall not request that the Company or the National
Registry Company register the transfer (book-entry or otherwise) of any of such
Shareholder's Shares, unless such transfer is made in compliance with this
Agreement.
7.05 Entire Agreement
----------------
This Agreement supersedes all other prior discussions and agreements among
the parties with respect to the subject matter hereof, and contains the sole and
entire agreement among the parties with respect to the subject matter hereof.
7.06 No Waiver
---------
No failure on the part of any party hereto to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right,
<PAGE>
20
power or privilege under this Agreement preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
7.07 Binding Agreement
-----------------
This Agreement shall, to the extent specifically set forth herein, be
binding upon the successors and permitted assigns and permitted transferees of
each party hereto.
7.08 Assignment
----------
No party hereto may assign any of its rights under this Agreement without
the prior written consent of each of the other parties hereto.
7.09 Expenses
--------
Each party to this Agreement shall pay its own expenses and costs
incidental to its execution and delivery of this Agreement.
7.10 Notice
------
(a) All notices and other communications provided for herein (including,
without limitation, any modifications of, or waivers or consents under, this
Agreement) shall be given or made by facsimile or by hand in writing and
transmitted by facsimile or courier and delivered to the "Address for Notices"
specified below or at such other address as shall be designated by such
Shareholder in a notice to each other Shareholder party hereto:
If to Telenor, to:
Telenor East Invest AS
Keysers Gate 13
N-0130 Oslo
Norway
Facsimile No.: +47-22-77-99-09
Attn: Henrik Torgersen
with a copy to:
Advokatene i Telenor
Universitetsgaten 2
N-0130 Oslo
Norway
Facsimile No.: +47-22-11-44-61
Attn: Kaare M. Risung
If to Dr. Zimin, Glavsotkom, the Bee Line Fund and/or any other Zimin
Shareholder, to:
<PAGE>
21
10-12, 8th March Street
Moscow, Russia
Facsimile No.: 755-3682
Attn: Dr. Dmitry B. Zimin
If to the Company, to:
Open Joint Stock Company "Vimpel-Communications"
10-12, Ulitsa 8-Marta
125683, Moscow
Russian Federation
Facsimile No.: +7095-755-3682
Attn: Georgy Silvestrov
General Counsel
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Ducat Place II
7 Ulitsa Gasheka
123056, Moscow
Russian Federation
Facsimile No.: +7095-974-2412
Attn: Melissa J. Schwartz
If to Augie K. Fabela, II, to:
10-12, 8th March Street
Moscow, Russia
Facsimile No.: 755-3682
Attn: Augie K. Fabela, II
Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given and shall be effective when transmitted
by facsimile, personally delivered or, in the case of any notice delivered by
courier, upon receipt, in each case, given or addressed as aforesaid.
(b) Any notices of proposed transfers pursuant to Section 3.01 of
this Agreement shall identify the proposed transferee and the beneficial
owner(s) of such proposed transferee, describe the shares, if any, of capital
stock in any telecommunications company owned by such transferee (and its
affiliates) and such beneficial owner(s) and describe the manner and
circumstances of the proposed transfer in sufficient detail.
<PAGE>
22
7.11 Counterparts
------------
This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.
7.12 Amendment
---------
This Agreement may be amended, supplemented or modified only by a written
instrument duly executed by or on behalf of each party hereto.
7.13 Arbitration; Waiver of Sovereign Immunity
-----------------------------------------
(a) Any and all disputes and controversies arising under, relating to or
in connection with this Agreement shall be settled by arbitration by a panel of
three (3) arbitrators under the United Nations Commission on International Trade
Law (UNCITRAL) Arbitration Rules in force (the "UNICITRAL Rules") in accordance
with the following terms and conditions:
(i) In the event of any conflict between the UNCITRAL Rules and the
provisions of this Agreement, the provisions of this Agreement shall prevail.
(ii) Either party to this Agreement may refer a matter to
arbitration by written notice to the other party.
(iii) The place of the arbitration shall be Stockholm, Sweden.
(iv) The claimant party shall appoint one (1) arbitrator and the
respondent party shall appoint one (1) arbitrator, and the two (2) arbitrators
so appointed shall appoint the third arbitrator, in accordance with the UNCITRAL
Rules. In the event of an inability to agree on a third arbitrator, the
appointing authority shall be the Arbitration Institute of the Sweden Chamber of
Commerce, Stockholm.
(v) The English language shall be used as the written and spoken
language for the arbitration and all matters connected with all references to
arbitration.
(vi) The decision of the arbitrators shall be made by majority vote
and shall be in writing.
(vii) The decision of the arbitrators shall be final and binding on
the parties to this Agreement, save in the event of fraud, manifest mistake or
failure by any of the arbitrators to disclose any conflict of interest.
(viii) The decision of the arbitrators may be enforced by any court of
competent jurisdiction and may be executed against the Person and assets of the
losing party in any jurisdiction.
(b) In the event any dispute is submitted to arbitration pursuant to
Section 7.13(a), the panel of arbitrators may, if it deems such award
appropriate, award a party costs and expenses incurred by such party in
enforcing its rights. Except as so
<PAGE>
23
awarded, each party shall bear its own costs and expenses of enforcing its
rights to arbitrate under this Section 7.13.
(c) Except for arbitration proceedings pursuant to Section 7.13(a) above,
no action, lawsuit or other proceeding (other than a proceeding to compel
arbitration or to enforce any arbitration decision) shall be brought by or
between the parties to this Agreement and/or any of their affiliates in
connection with any matter arising out of or in connection with this Agreement.
(d) Telenor hereby represents and warrants that it is acting solely in its
commercial capacity in executing and delivering this Agreement and each of the
other Principal Agreements to which it is a party and in performing its
obligations hereunder and thereunder, and Telenor hereby irrevocably waives with
respect to all disputes, claims, controversies and all other matters of any
nature whatsoever that may arise under or in connection with this Agreement or
any of the other Principal Agreements and any other document or instrument
contemplated hereby or thereby, all immunity it may otherwise have as a
sovereign, quasi-sovereign or state-owned entity (or similar entity) from any
and all proceedings (whether legal, equitable, arbitral, administrative or
otherwise), attachment of assets, or enforceability of judicial or arbitral
awards.
7.14 Governing Law
-------------
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York, United States of America, applicable to contracts
executed and performed in such jurisdiction, without giving effect to the
conflicts of laws principles thereof which would result in the application of a
different law.
7.15 Invalid Provisions
------------------
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future Law, and if the rights or obligations
of any party hereto under this Agreement will not be materially and adversely
affected thereby, (a) such provision will be fully severable, (b) this Agreement
will be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, (c) the remaining provisions of
this Agreement will remain in full force and effect and will not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom and
(d) in lieu of such illegal, invalid or unenforceable provision, there will be
added automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
7.16 Consent to Jurisdiction and Service of Process
----------------------------------------------
Each Shareholder hereby irrevocably appoints, and Telenor hereby
irrevocably appoints, CT Corporation System, located on the date hereof at 1933
Broadway, New York, NY 10019, USA, as its true and lawful agent and attorney to
accept and acknowledge service of any and all process against it in any action,
suit or proceeding arising out of or relating to this Agreement or any of the
transactions contemplated hereby and upon whom such process may be served, with
the same effect as if such party were a resident of the State of New York and
had been lawfully served with such process in such
<PAGE>
24
jurisdiction, and waives all claims of error by reason of such service, provided
that the party effecting such service shall also deliver a copy thereof to each
other party at the address specified on the execution pages of this Agreement.
Each Shareholder and Telenor will enter into such agreements with such agent as
may be necessary to constitute and continue the appointment of such agent
hereunder. In the event that any such agent and attorney resigns or otherwise
becomes incapable of acting, the affected party will appoint a successor agent
and attorney in New York reasonably satisfactory to each other party, with like
powers. Each party hereby irrevocably submits to the non-exclusive jurisdiction
of the United States District Court for the Southern District of New York and of
any New York state court sitting in New York City, in any such action, suit or
proceeding arising out of or relating to this Agreement or any of the
transactions contemplated hereby, and agrees that any such action, suit or
proceeding shall be brought only in such court, provided, however, that such
consent to jurisdiction is solely for the purpose referred to in Section 7.13
and shall not be deemed to be a general submission to the jurisdiction of said
courts of or in the State of New York other than for such purpose. Each party
hereby irrevocably waives, to the fullest extent permitted by Law, any objection
that it may now or hereafter have to the laying of the venue of any such action,
suit or proceeding brought in such a court and any claim that any such action,
suit or proceeding brought in such a court has been brought in an inconvenient
forum. Nothing herein shall affect the right of any party to serve process in
any other manner permitted by Law or to commence legal proceedings or otherwise
proceed against the other in any other jurisdiction.
<PAGE>
25
IN WITNESS WHEREOF, the parties hereto have executed this Shareholders
Agreement as of the date first above written.
TELENOR EAST INVEST AS
By /s/ Henrik Torgersen
--------------------
Name: Henrik Torgersen
Title: Attorney-in-Fact
DR. DMITRI BORISOVICH ZIMIN
/s/ Dmitri Borisovich Zimin
---------------------------
GLAVSOTKOM LLC
By /s/ D. B. Zimin
-----------------
Name: D. B. Zimin
Title: General Director
THE FUND FOR NON-COMMERCIAL PROGRAMS "BEE LINE"
By /s/ Konstantin I. Ashitkov
---------------------------
Name: Konstantin I. Ashitkov
Title: Executive Director
<PAGE>
26
AUGIE K. FABELA, II
(for the limited purposes set forth in the
Agreement)
/s/ Augie K. Fabela, II
-----------------------
GENEVA INVESTMENT TRUST I, L.L.C.
(for the limited purposes set forth in the
Agreement)
By /s/ Augie K. Fabela, II
--------------------------
Name: Augie K. Fabela, II
Title: Authorized Signatory
<PAGE>
27
The undersigned hereby consents and agrees to, and accepts, the execution of
the foregoing Shareholders Agreement by her husband, Dr. Dmitri B. Zimin, and
all terms and conditions of said Shareholders Agreement.
MAYA PAVLOVNA ZIMINA
/s/ Maya Pavlovna Zimina
------------------------
<PAGE>
SCHEDULE 1
SHAREHOLDINGS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Name of Shareholder Type of Shares Number
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dr. Dmitri B. Zimin Common Stock 750,000 Shares
- ---------------------------------------------------------------------------------------------------------
Dr. Dmitri B. Zimin Preferred Stock 6,426,600 Shares
- ---------------------------------------------------------------------------------------------------------
Glavsotkom LLC Common Stock 3,051,000 Shares
- ---------------------------------------------------------------------------------------------------------
The Fund for Non- Common Stock 3,606,344 Shares
Commercial "Bee Line"
Programs
- ---------------------------------------------------------------------------------------------------------
Augie Fabela, II Common Stock 50,000 ADSs
- ---------------------------------------------------------------------------------------------------------
Geneva Investment Trust I, Common Stock 173,520 Shares
L.L.C.
- ---------------------------------------------------------------------------------------------------------
Telenor East Invest AS Common Stock 8,902,201 Shares
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
29
EXHIBIT A
ENDORSEMENT
The undersigned shareholder of Open Joint Stock Company "Vimpel-
Communications" (the "Company") hereby agrees to the terms and conditions of the
Shareholders Agreement (the "Shareholders Agreement") dated as of December 1,
1998 by and among Telenor East Invest AS and certain other shareholders of the
Company party thereto from time to time, to which this Endorsement is attached,
and (a) agrees to be fully bound by the terms and conditions of such
Shareholders Agreement as if such shareholder were an original signatory
thereto, (b) hereby makes as of the date hereof, for the benefit of each of the
other parties to the Shareholders Agreement, each of the representations and
warranties set forth in Article II of the Shareholders Agreement, (c) represents
that it owns the beneficial interest in the number of shares of capital stock or
ADSs of the Company specified below and (d) agrees to deliver to each other
party to the Shareholders Agreement, as soon as practicable (and in any event
not later than two Business Days after the date hereof) an original copy of this
Endorsement.
[Name of Shareholder]
By__________________________
Name:
Title:
Type of Shares/ADSs:
______________________
Number of Shares:
______________________
<PAGE>
EXHIBIT G
Conformed Copy
POWER OF ATTORNEY
Moscow, the First of December, Nineteen Ninety-Eight.
I, Dmitry Borisovich Zimin, residing at: 53 Festivalnaya ul., bldg. 3, apt. 269,
Moscow, passport XXIV-MYu, No. 520067, being the owner of Six Million Six
Hundred Forty-Two Thousand Six Hundred Fifty-One (6,642,651) registered voting
shares of Open Joint Stock Company "Vimpel-Communications" (hereinafter, the
"Company") hereby authorize and grant Telenor East Invest AS, a legal entity
registered under the laws of Norway and located at: Keysersgaten 13, N-0130,
Oslo, Norway, the power and right to take any and all of the following actions
at any general meeting of the shareholders of the Company held at any time on or
after January 30, 1999 but prior to January 29, 2000:
(a) to vote at any general meeting of the shareholders of the Company on any
issues requiring the affirmative vote of holders of seventy-five percent (75%)
of the voting shares of the Company present and eligible to vote, as well as in
electing members of the Company Board of Directors, such number of the Company's
voting shares as are held by me which, together with the Company's shares held
by Telenor East Invest AS as of the record date established to determine the
shareholders entitled to participate in such general meeting of the shareholders
of the Company, comprises twenty-five percent (25%) plus one share of the voting
capital stock of the Company; and
(b) as my attorney with respect to the number of the Company's shares held by
me as specified in clause (a) above, to convene an extraordinary general
shareholders meeting of the Company, to nominate candidates to the Company's
Board of Directors and to execute such documents as may be necessary in
connection with any exercise of the above authority.
Authority under this Power of Attorney may only be delegated to Telenor East
Invest AS employees.
This power of attorney shall be effective as of January 30, 1999 until the
earliest of (i) January 29, 2000 and (ii) termination of the Shareholders
Agreement, and (iii) date on which Telenor East Invest AS has fully paid for
Eight Million Nine Hundred Two Thousand Two Hundred One (8,902,201) shares of
the Company's common stock.
/s/ Dr. Dmitri Borisovich Zimin
- -------------------------------
<PAGE>
EXHIBIT H
Conformed Copy
POWER OF ATTORNEY
Oslo, Norway November 27, 1998
Arnfinn Hofstad and Finn Hvistendahl in their capacity as members of the Board
of Directors of Telenor AS, a legal entity duly organized and registered under
the laws of Norway (the "Company"), hereby appoint:
Mr. Henrik Torgersen, holding Passport No. G 0285334-1,
to represent the Company, Telenor International AS ("Telenor International"),
Telenor Invest AS ("Telenor Invest") and Telenor East Invest AS ("Telenor East
Invest") and authorize him:
1. To take all actions contemplated by the resolution adopted by the
Board of Directors on November 23, 1998, including to negotiate, agree
and execute:
(a) on behalf of Telenor East Invest or Telenor Invest or Telenor
International, (i) a Subscription Agreement between Telenor East
Invest or Telenor Invest or Telenor International and Open Joint
Stock Company "Vimpel-Communications" ("VimpelCom"), (ii) a
Registration Rights between Telenor East Invest or Telenor Invest
or Telenor International and VimpelCom, (iii) a Shareholders
Agreement between Telenor East Invest or Telenor Invest or
Telenor International and certain shareholders of VimpelCom, (iv)
a Service Obligation Agreement between Telenor East Invest or
Telenor Invest or Telenor International and VimpelCom (items (i)-
(iv) being referred to herein as the "Agreements"), (v) a
Schedule 13D for filing with the United States Securities and
Exchange Commission (and any amendments thereto) (vi) one or more
applications to the Anti-Monopoly Committee of the Russian
Federation (and any relevant territorial agency thereof) for
approval of the transactions contemplated by the Agreements, and
(vii) a letter appointing CT Corporation System as Telenor East
Invest's and/or Telenor Invest's and/or Telenor International's
agent for service of process in connection with the Agreements;
(b) on behalf of Telenor Invest or Telenor International, if Telenor
East Invest is party to the Agreements referred to in item (a)
above, a guarantee of the obligations of Telenor East Invest
under the Agreements;
(c) in each case, on behalf of the Company and/or Telenor
International and/or Telenor Invest and/or Telenor East Invest,
to coordinate, execute, and sign any and all letters,
certificates, deeds, or other documents and do other acts and
things relating to, or in connection with, any of the Agreements
as such representative may think fit in his sole discretion (as
shall be evidenced by his signature for all purposes), and to
negotiate, enter into, execute and deliver any and all further
agreements, instruments, certificates and other documents, and to
take
<PAGE>
Conformed Copy
all such other actions as he may deem necessary or advisable in
order to implement, effectuate and comply with the terms,
provisions and conditions of the Agreements and any and all
transactions and agreements contemplated thereby;
2. to sign any applications, certifications, letters or other documents
to be provided under the Agreements;
3. to give on behalf of any of the Company, Telenor International or
Telenor Invest or Telenor East Invest any notice, certificate,
confirmation, or communication and do any acts and things as may be
necessary in connection with any letter, document, deed or act
referred to in paragraphs 1, 2, and 3 above;
4. to make any statement, sign, file, and receive any document, and do
any other acts and things as may be necessary and/or appropriate for
the execution and performance of any of the Agreements, including to
request such governmental and other authorizations, registrations or
administrative verifications as may be necessary, and file any
documents with and obtain any authorizations, certificates,
permissions by any of the governmental authorities of the Russian
Federation, including, without limitation, the Anti-Monopoly Committee
of the Russian Federation and its territorial agencies and the United
States Securities and Exchange Commission;
5. to represent the Company, Telenor International or Telenor Invest or
Telenor East Invest before the Government and any governmental
agencies, offices and organizations of the Russian Federation with
respect to execution and performance of the Agreements and other
documents related thereto; and
6. to take any other action required or permitted to be taken by the
Company or Telenor International or Telenor Invest or Telenor East
Invest under the Agreements; and to do all such acts and things as
such representative may deem necessary or appropriate to carry out the
objects set forth above.
(signature page to follow)
<PAGE>
Conformed Copy
This Power of Attorney shall be valid for one (1) year from the date herein.
TELENOR AS
By /s/ Arnfinn Hofstad
-------------------
Name: Arnfinn Hofstad
Title: Chairman of the Board
By /s/ Finn Hvistendahl
--------------------
Name: Finn Hvistendahl
Title: Deputy Chairman of the Board
