SERVICE OBLIGATION AGREEMENT
dated as of December 1, 1998
TELENOR EAST INVEST AS
OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS"
SERVICE OBLIGATION AGREEMENT dated as of December 1, 1998 between TELENOR
EAST INVEST AS, a corporation organized and existing under the laws of Norway
("Telenor"), and OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS", an open joint
stock company organized and existing under the laws of the Russian Federation
WHEREAS, the Company and Telenor are parties to the Primary Agreement dated
as of December 1, 1998 (the "Primary Agreement") between Telenor and the
WHEREAS, the Company and Telenor are parties to the Service Obligation
Agreement dated as of December 1, 1998, pursuant to which Telenor is willing to
provide personnel to perform certain functions for the Company, to support the
implementation of certain projects by the Company, and to train certain
personnel of the Company, in each case, on and subject to the terms and
conditions set forth therein;
WHEREAS, the Company has personnel who are experienced in the field of
WHEREAS, Telenor wishes to make use of such personnel; and
WHEREAS, the Company is willing to provide such personnel to perform
certain functions for Telenor and to support the implementation of certain
projects by Telenor, in each case, on and subject to the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 Unless otherwise defined herein, terms defined in the Primary Agreement are
used herein as therein defined. In addition, the following terms shall have
the following meanings:
"Agreement" means this Service Obligation Agreement and the Appendices.
"Assignment" means the designation of Personnel to perform services for
Telenor pursuant to this Agreement.
"Company" has the meaning specified in the preamble hereto.
"Event of Force Majeure" has the meaning specified in Section 11.
"Offer" means a confirmation issued by the Company to Telenor
(substantially in the form of Appendix B) in response to a Request.
"Parties" means Telenor and the Company, and "Party" means either of them.
"Personnel" means an individual or individuals assigned by the Company to
provide services to Telenor under this Agreement.
"Primary Agreement" has the meaning specified in the first recital hereto.
"Request" means a request for Personnel issued by Telenor to the Company
(substantially in the form of Appendix A).
"Service" means the provision of Personnel to Telenor by the Company under
this Agreement and for the purposes as described in any Request issued
"Telenor" has the meaning specified in the preamble hereto.
"Termination Date" has the meaning specified in Section 10.2.
1.2 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
(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" or "Appendix" is a reference to a
specific Section of, or Appendix 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, whether or not having the force of law;
(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
(h) a reference to "employees" of the Company shall also include employees
of any of the Company's Affiliates.
2 REQUESTS AND PROVISION OF PERSONNEL
2.1 During the term hereof, Personnel may be requested by Telenor from the
Company in the following manner:
2.1.1 Telenor shall submit a Request to the Company.
2.1.2 The Company shall use its best efforts to supply or procure
Personnel conforming to the terms of such Request, and the Company
shall provide Telenor with an Offer within thirty (30) days of
receipt of such Request.
2.1.3 If such Offer is acceptable to Telenor, such Offer shall be signed
by an authorized representative of Telenor and a copy thereof shall
be returned to the Company. The Company and Telenor shall use
reasonable efforts to resolve any terms of such Offer which are
unacceptable to Telenor.
2.1.4 Notwithstanding any contrary provision in this Agreement, the
Company will be under no obligation to Telenor in respect of the
provision of Personnel unless and until the Company provides Telenor
with an Offer in respect of such Personnel and such Offer is
accepted and signed by Telenor.
2.1.5 An Offer which has been accepted by Telenor shall constitute an
integral part of this Agreement and, except to the extent otherwise
specified therein, be wholly subject to the terms and conditions of
2.1.6 Upon request, the Company shall provide Telenor with information
regarding the experience and skills possessed by all Personnel who
are the subject of an Offer. In addition, the Company shall make
such proposed Personnel reasonably available to Telenor for the
purpose of being interviewed by senior management of Telenor.
2.2 The Company will provide or procure required Personnel in a professional
manner, using those persons most suitably qualified to undertake such work.
2.3 It is envisaged that Personnel will be based at the relevant Telenor unit
referred to in the Offer to which such Personnel are subject.
2.4 Telenor hereby acknowledges that all Assignments will be subject to the
Company's general rules and regulations, if any, for the Company's
employees posted outside the Russian Federation as may be in force from
time to time. Upon request by Telenor from time to time, the Company shall
make available to Telenor the current version of such rules and
3 DURATION OF ASSIGNMENTS
3.1 The period for which any Personnel shall be assigned to Telenor shall
commence on the date specified in the Offer accepted by the Company, and
shall continue for the duration specified therein, unless extended by the
written agreement of the Parties.
3.2 The duration of an Assignment shall include reasonable time to travel to
and from Norway at the commencement and completion of the Assignment.
4.1 The Company shall use reasonable efforts to provide the Personnel named in
an Offer, or in the absence of any named Personnel, such professionals as
it considers most suitably qualified to perform the Assignment. The Company
shall endeavor to maintain the continuity of Personnel throughout an
Assignment but reserves the right at any time to vary Personnel upon
4.2 The Personnel assigned by the Company to Telenor under this Agreement shall
at all times remain the employees of the Company and be treated as
secondees to Telenor.
4.3 Any Personnel assigned by the Company to Telenor shall offer Telenor their
full time and services and shall be under the direction, control and
supervision of Telenor for the agreed period of such Assignment. The
Company shall make reasonable efforts to ensure that Personnel will comply
with all reasonable instructions and directions issued by Telenor. The
Personnel shall also be subject to, and shall comply with, all rules and
regulations applicable to employees of Telenor in the corresponding class
generally, including, without limitation, rules and regulations applicable
to security clearance. Telenor shall be responsible for the costs of all
business related trips initiated by Telenor for any Personnel in accordance
with Telenor's policies in effect with respect to employees of Telenor in
the corresponding class of employees generally.
4.4 Nothing in this Agreement shall prevent the Company from providing similar
services to third parties with Personnel other than those assigned to
Telenor or to restrict the Company's use of such Personnel in any way after
the conclusion of such Personnel's Assignment to Telenor. The Company shall
also cause all Personnel to comply with the confidentiality provisions set
forth in Section 9.
4.5 Telenor shall have the right to terminate any Assignment at any time by
giving written notice thereof to the Company. If such rejection is
exercised within ninety (90) days of the commencement date of such
Personnel's Assignment, the Company undertakes to replace any rejected
Personnel as soon as practicable at no additional cost to Telenor. Telenor
shall pay for the rejected Personnel until the effective date of the
If a rejection notice is received by the Company after the initial period
of ninety (90) days, all costs and relevant expenses associated with such
rejected Personnel incurred up to thirty (30) days after the date of the
rejection notice shall be for Telenor's account.
4.6 Within a reasonable period prior to the end of any period of an Assignment,
Telenor shall cooperate with the Company and the Personnel as to the
repatriation of such Personnel to the Company.
5 INTELLECTUAL PROPERTY RIGHTS
5.1 The Company shall have an irrevocable, royalty-free, non-exclusive, non-
transferable license to use any reports, information, drawings, software,
or other material produced
by Personnel under this Agreement for its own internal purposes, although
copyright and any other intellectual property rights in such material shall
be vested in and remain the absolute property of Telenor or its licensor.
Nothing in this Agreement shall prevent the Company from making use of
know-how acquired, principles learned or developed or experience gained
during the performance of this Agreement, provided such use is not
detrimental to Telenor.
5.2 Subject to Section 5.1, nothing in this Agreement shall be deemed to or
require the Company to transfer, assign or license any intellectual
property rights to Telenor.
5.3 Subject to Section 5.1, neither Party may make use of the other Party's
name, trade name, copyright or other intellectual property rights without
the prior written consent of the other Party.
6.1 The Company shall indemnify Telenor for any loss, damage, claim or cost to
Telenor and/or any of its Affiliates to the extent such loss, damage, claim
or cost arises as a result of gross negligence or willful misconduct by the
Company or any Personnel in relation to the performance of the Agreement.
6.2 The Company shall indemnify, defend and hold Telenor harmless against all
claims, actions or proceedings (and all damages and costs in connection
therewith) brought or instituted or threatened against Telenor and/or the
Company by or on behalf of any Personnel as a result of (a) injury, disease
or death of such Personnel (except where caused by the willful misconduct
of Telenor) and/or (b) a violation or an alleged violation by Telenor of
such Personnel's rights under Russian Federation labor or employment laws.
6.3 The Company's liability for errors or omissions in any part of the Service,
which may arise from any failure by the Company to exercise the reasonable
skill and care expected of a provider of competent telecommunications staff
will be limited to re-provision of Personnel in order to correct such
errors or omissions.
6.4 Neither party shall be liable for loss (whether direct or indirect) of
profits, business, anticipated savings or for any indirect or consequential
6.5 Each provision of this Section 6 limiting or excluding liability operates
separately in itself and shall survive independently of the others.
7.1 The Company will invoice Telenor at the end of each quarter for all sums
accrued and in arrears at such time under the Agreement and each Offer
which has been accepted by Telenor. Each invoice rendered by the Company
shall be accompanied by an act of acceptance executed by the Company which
Telenor shall counter-sign and return to the Company, evidencing Telenor's
acceptance of the services rendered and, in accordance with such act of
acceptance, which shall not be unreasonably withheld, Telenor shall effect
payment to the Company under the related invoice.
7.2 Payment shall be made in US dollars and paid to the Company's bank named in
such invoice and is due within thirty (30) days of the invoice date. The
Company may charge daily interest on late payments at an annual rate equal
to four percent (4%) plus the London Inter Bank Offered Rate for deposits
in US dollars for a period of one month, as published in the Financial
Times on the invoice date.
7.3 Value added tax, if any, in the amount then prescribed by Norwegian
legislation, which is incurred by the Company shall be specified in the
invoice and shall be paid by Telenor.
8 SUPPORT, INFORMATION, DATA, OFFICE FACILITIES AND ACCESS
8.1 Subject to Section 9, Telenor shall provide the Company with all relevant
support, information and data available to it which may be reasonably
required by the Company or the Personnel from time to time in order to
effectively perform their duties under this Agreement.
8.2 Telenor shall, upon the receipt of a request from the Company, provide the
Personnel, free of charge, and as promptly as practicable, with adequate
office accommodation, facilities and other support in Norway, including
national and international telephone access, computing equipment and
software, secretarial services and support and any stationery which such
Personnel may reasonable require for the effective performance of their
obligations under this Agreement.
8.3 Telenor shall provide any Personnel assigned to Telenor at all reasonable
times with full and convenient access to the Telenor premises at which such
Personnel are working under the terms of the relevant Offer and use
reasonable efforts to secure access for the Company and its Personnel to
any third party premises necessary for the purpose of carrying out their
obligations under this Agreement; provided that, upon termination of any
Assignment in accordance with Section 4.5, Telenor may in its sole
discretion terminate any and all such rights of access of the relevant
This Agreement and confidential information developed or compiled by or for
either Party in connection with the purposes of this Agreement shall be treated
by the Parties hereto and all Personnel as confidential, and neither Party
hereto nor any Personnel shall disclose such confidential information to any
third party except with the prior written approval of the other Party (or in the
case of Personnel, without the approval of Telenor); provided, however, that any
such confidential information may be disclosed (a) on a need to know basis only
and subject to prior written notice to the other Party, to an Affiliate or
consultant of a Party, or an arbitrator or a prospective Affiliate of a Party,
purchaser or lender with respect to either Party if such Person commits to be
bound by the terms of this Section 9; (b) if already known to the other Party
without any restriction on disclosure (other than through a breach of this
Section 9); (c) if and when such information becomes public knowledge through no
act or omission of a Party; or (d) in the reasonable judgement of a Party, if
and to the extent disclosure is required by governmental requirements, by a
court of law or by the requirements of applicable securities laws. Upon
request of Telenor, on completion or termination of this
Agreement, the Company shall return to Telenor any confidential information then
in its possession which it received from Telenor in connection with this
10 EFFECTIVENESS, TERMINATION AND SURVIVAL
10.1 Subject to Section 10.6, this Agreement shall become effective on the
Closing Date and shall remain in effect until the Termination Date.
10.2 Either Party may terminate this Agreement at any time by giving the other
at least three (3) months' notice in writing, with a proposed termination
date designated therein (the "Termination Date") which is on or after the
date of expiry or termination of all of the Assignments then in effect
10.3 Either Party may terminate this Agreement or any Assignment, with
immediate effect, by giving notice to the other Party if;
(a) an Event of Force Majeure prevents the performance of the whole or a
substantial part of the other Party's obligations under this
Agreement for a continuous period of three (3) calendar months after
the date on which such obligations or such Assignment, as the case
may be, should have been performed;
(b) the other Party is the subject of a bankruptcy order, or becomes
insolvent, or makes any arrangement or composition with or assignment
for the benefit of its creditors, or if any of the other Party's
assets are the subject of any form of seizure, or goes into
liquidation, either voluntarily (otherwise than from reconstruction
or amalgamation) or compulsory or if a receiver or administrator is
appointed over its assets (or the equivalent of any such event in the
jurisdiction of such other Party);
(c) the other Party commits a material breach of its obligations (where
such breach is capable of remedy) and such Party has also failed to
remedy such breach within a reasonable period of time, not exceeding
thirty (30) days after having received notice of such default;
(d) the other Party fails to pay any amount owing by it hereunder within
ninety (90) days of the due date thereof; or
(e) the other Party has terminated the Telenor Service Obligation
10.4 In addition to its rights under Sections 10.1 and 10.2, the Company shall
be entitled to suspend the provision of the Personnel (and suspend any
rights of access of such Personnel under Section 4.5) for a period of up
to thirty (30) days in circumstances in which the Company would be
entitled to exercise the rights to terminate contained therein. During any
such suspension period, Telenor's payment obligations to the Company shall
also be suspended.
10.5 The termination of this Agreement or of any Personnel subject to it shall
not relieve Telenor of its obligation to pay for all work performed by the
Company and its Personnel in accordance with this Agreement on any Offer
which has been accepted
by Telenor up to the Termination Date. Final invoices rendered by the
Company shall include fees for Personnel until the Termination Date.
10.6 The rights and obligations of the Parties under Sections 5, 6, 7, 9, 10,
13 and 16 shall survive the Termination Date, if any.
11 FORCE MAJEURE
Neither Party shall be liable for any breach of this Agreement which is
caused by an event beyond its reasonable control which effects the
performance of its obligations hereunder (an "Event of Force Majeure"),
including, without limitation, any Acts of God, riots, commotions,
insurrections, wars, strikes, lockouts or any other events beyond their
Unless agreed in writing to the contrary, neither Party shall be the other
Party's agent nor make any contracts on behalf of the other Party, bind
the other Party to any obligation or in any way act as an agent or on
behalf of the other Party.
13 RECRUITMENT QUARANTINE PERIOD
Telenor agrees that, during the term of this Agreement and for a period of
twelve (12) months thereafter, neither it nor any of its Affiliates shall,
without the Company's prior written agreement, (directly nor indirectly)
employ or engage as an independent consultant or offer employment or any
such engagement to any of the Personnel.
Neither the Company nor Telenor shall assign or transfer any of its rights
or obligations under this Agreement, without the written consent of the
15 PERMITS, AUTHORIZATIONS, ASSISTANCE, CUSTOMS CLEARANCE, ETC.
Telenor shall, at no cost to the Company or the Personnel:
(a) use its best efforts to assist the Company in obtaining visas,
working permits and any other approvals necessary to enable the
Personnel to perform their obligations effectively from time to time;
(b) provide all possible assistance in obtaining customs clearance for
all documents, books, equipment or personal effects which the Company
considers to be required;
(c) arrange for any necessary communication and co-operation between the
Company and any other authorities in connection with the performance
(d) provide assistance in the booking of airline flights, hotel
accommodation, rental of more permanent accommodations and car
rental, when this can save considerable time and/or money for the
Personnel and/or the Company, compared to managing without such
(e) provide security during working hours at a level normally provided to
Telenor employees of similar status.
16.1 This Agreement shall be governed by, and construed in accordance with, the
laws of Norway.
16.2 All communications between the Company and Telenor in relation to this
Agreement shall be in the English language, unless otherwise agreed.
16.3 This Agreement (and any Offers accepted in accordance with the terms
hereof) constitutes the entire agreement among the Parties with respect to
the subject matter hereof and shall supersede all previous expectations,
understandings, communications, representations and agreements, whether
verbal or written, among the Parties with respect to the subject matter
hereof. This Agreement shall not be amended, supplemented or otherwise
modified except by written agreement of the Parties.
16.4 Failure of either Party at any time to enforce any of the provisions of
this Agreement shall neither be construed as a waiver of any rights or
remedies hereunder nor in any way affect the validity of this Agreement or
any part of it. No waiver shall be effective unless given in writing and
no waiver of a breach of this Agreement shall constitute a waiver of any
antecedent or subsequent breach.
16.5 Unless otherwise specified herein, any notice required or permitted to be
given hereunder by any Party shall be in writing and shall be deemed to
have been given if mailed by prepaid registered mail, sent by facsimile or
delivered to, the address of the other Parties as hereinafter set forth:
If to Telenor, To: Telenor East Invest AS
X.X. Xxx 0000 Xx. Xxxxx xxxxx
X-0000 Xxxx, Xxxxxx
Attn: Xx. Xxxxxx Xxxxxxxxx
Telefax no.: + 44 22 77 99 09
If to the Company, to: AO Vimpel-Communications
00-00 Xx. 0 Xxxxx
Xxxxxx 000000, Xxxxxx
Attn: Xx. Xxxxxxxx X. Xxxxxxxxxxxxxx
Telefax no.: + 7 095 755-3682
16.6 Any term or provision of this Agreement which is held invalid or
unenforceable by a court of competent jurisdiction, shall be ineffective
to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
rights of the Party intended to benefit from such term or provision of
16.7 Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach, termination or invalidity hereof, shall be
settled by arbitration in accordance with the UNCITRAL Arbitration Rules
as at present in force. There shall be three (3) arbitrators. Telenor
shall appoint one (1) arbitrator, and the Company shall appoint one (1)
arbitrator, and the two (2) arbitrators 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'
16.8 Telenor waives any defense based on sovereign immunity with respect to
this Agreement to the same degree and in accordance with the same terms
and conditions as are set forth in the Primary Agreement.
IN WITNESS WHEREOF, the Parties have entered into this Service Obligation
Agreement as of the day and year first above written.
TELENOR EAST INVEST AS
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: President and CEO
OPEN JOINT STOCK COMPANY
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive
By: /s/ Xxxxxxxx X. Bychenkov
Name: Xxxxxxxx X. Bychenkov
Title: Chief Accountant