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EXHIBIT M
SHAREHOLDERS AGREEMENT
Dated as of May 30, 2001
among
OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS",
ECO TELECOM LIMITED
and
TELENOR EAST INVEST AS,
as the Shareholders
and
CLOSED JOINT STOCK COMPANY "VIMPELCOM-REGION",
as the Company
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INTERPRETATION..................................... 1
1.01 DEFINITIONS......................................................... 1
1.02 INTERPRETATION...................................................... 10
ARTICLE II MANAGEMENT OF THE COMPANY......................................... 10
2.01 BOARD OF DIRECTORS; SHAREHOLDERS...................................... 10
ARTICLE III.................................................................. 14
REPRESENTATIONS AND WARRANTIES............................................... 14
ARTICLE IV TRANSFERS OF SECURITIES........................................... 15
4.01 GENERAL............................................................. 15
4.02 TRANSFERS AND LIENS................................................. 16
4.04 TRANSFERS TO PERSONS OTHER THAN PERMITTED TRANSFEREES............... 20
4.05 RIGHT OF FIRST REFUSAL.............................................. 20
4.06 REQUIRED SALE RIGHTS................................................ 22
4.07 CO-SALE RIGHTS...................................................... 22
4.08 CLOSING............................................................. 23
4.09 EFFECTIVENESS OF TRANSFER........................................... 23
4.10 IMPROPER TRANSFERS INEFFECTIVE...................................... 24
4.11 INFORMATION LETTER.................................................. 24
4.12 OTHER ARRANGEMENTS.................................................. 25
ARTICLE V FUNDING COVENANTS; DEBT ACQUISITION; NEW CAPITAL STOCK............. 25
5.01 LOANS AND FINANCING................................................. 25
5.02 CAPITAL INCREASE.................................................... 25
ARTICLE VI CERTAIN CORPORATE MATTERS......................................... 28
6.01 BUSINESS COMBINATION................................................ 28
6.02 NON-COMPETE......................................................... 29
6.03 CHARTER............................................................. 34
6.04 AMENDMENT OF CHARTER................................................ 34
ARTICLE VII CONFIDENTIALITY.................................................. 35
ARTICLE VIII BOOKS AND RECORDS; REPORTING.................................... 35
8.01 MAINTENANCE OF BOOKS AND RECORDS.................................... 35
8.02 RIGHT TO EXAMINE BOOKS AND RECORDS.................................. 36
8.03 REPORTING........................................................... 36
ARTICLE IX INDEMNIFICATION................................................... 36
ARTICLE X TERM AND TERMINATION............................................... 37
ARTICLE XI DISPUTE RESOLUTION................................................ 38
ARTICLE XII MISCELLANEOUS.................................................... 40
12.01 NOTICES............................................................. 40
12.02 ENTIRE AGREEMENT.................................................... 42
12.03 WAIVER.............................................................. 42
12.05 NO ASSIGNMENT; BINDING EFFECT; NO THIRD PARTY BENEFICIARY.......... 43
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12.06 GOVERNING LAW....................................................... 43
12.07 SEVERABILITY........................................................ 43
12.08 FURTHER ASSURANCES.................................................. 43
12.09 HEADINGS............................................................ 43
12.10 COUNTERPARTS........................................................ 43
12.11 STOP TRANSFER....................................................... 43
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VIP-R SHAREHOLDERS AGREEMENT No. TVER-6, dated May 30, 2001 Page 1 of 48
SHAREHOLDERS AGREEMENT (the "AGREEMENT") dated as of the 30th day of
May, 2001, by and among OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS", an
open joint stock company organized and existing under the laws of the Russian
Federation ("VIP"), Eco Telecom Limited, a company organized and existing under
the laws of Gibraltar ("ECO TELECOM"), TELENOR EAST INVEST AS, a company
organized and existing under the laws of Norway ("TELENOR") and CLOSED JOINT
STOCK COMPANY "VIMPELCOM-REGION", a closed joint stock company organized and
existing under the laws of the Russian Federation (the "COMPANY") and such other
holders of Securities of the Company as shall be party hereto from time to time.
WITNESSETH
WHEREAS, the Company currently is a wholly-owned subsidiary of VIP;
WHEREAS, the Company has agreed to issue and to sell, and Eco Telecom,
VIP and Telenor have agreed, or have the right, to subscribe for and purchase,
shares of Common Stock and/or Preferred Stock on the terms and subject to the
conditions set forth in the Primary Agreement, dated as of the date hereof, by
and between the Company, as issuer, and Eco Telecom, VIP and Telenor, as
purchasers (the "PRIMARY AGREEMENT");
WHEREAS, Eco Telecom, VIP, Telenor and the Company desire to enter into
this Agreement in respect of certain matters of corporate governance, including
the composition of the Board of Directors and the conduct of the affairs of the
Company, and to provide certain rights and set certain restrictions in
connection with the Common Stock and other Securities of the Company.
NOW, THEREFORE, to implement the foregoing and in consideration of the
mutual terms, conditions and covenants contained herein and 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:
"ACTIONS OR PROCEEDINGS" shall mean any action, suit, proceeding or arbitration
commenced, brought, conducted or heard by or before any Governmental or
Regulatory Authority.
"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 including, if such Person is an individual, any
relative or spouse of such Person, or any relative of such spouse of such
Person, any one of whom has the same home as such Person, and also including any
trust or estate for which any such Person or Persons specified herein, directly
or indirectly, serves as a trustee, executor or in a similar capacity
(including, without limitation, any protector or settlor of a trust) or in which
any such Person or Persons specified herein, directly or indirectly, has a
substantial beneficial interest, and any Person who is controlled by any such
trust or estate. As used in this definition, "CONTROL" (including, with its
correlative meanings, "CONTROLLED BY" and
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"UNDER COMMON CONTROL WITH") shall mean, with respect to any Person, the
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 a Person.
"AGREEMENT" has the meaning specified in the preamble.
"APPRAISER" shall mean an independent, internationally recognized investment
bank or accounting firm which (i) shall have substantial experience in Russian
corporate transactions and (ii) shall not be an Affiliate of any Party.
"ARCO" shall mean the Agency for Restructuring of Credit Organizations (Agenstvo
po Restruckturizatzii Kreditnykh Organizaziy).
"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. "BOARD" shall
mean the Board of Directors of the Company.
"BOOKS AND RECORDS" shall mean the documents and information which the Company
is obliged to disclose to its shareholders in accordance with the laws of the
Russian Federation and the Charter.
"BUSINESS" shall mean the cellular mobile telecommunications business
(including, without limitation, GSM, UMTS, 3G and other new standards or
technologies), it being understood that this shall not include fixed wireless
extensions (including, without limitation, Last Mile Digital Subscriber (LMDS),
Bluetooth, wireless local area network (wireless LAN), and any form of Digital
Subscriber Line (xDSL) services), fixed wireless access (including, without
limitation, point to point and point to multipoint), satellite mobile services,
mobile Internet portals and related content services, and similar businesses.
"BUSINESS COMBINATION" shall mean (i) the merger of the Company into VIP
(prisoedinenie), (ii) the purchase by VIP or a wholly owned subsidiary of VIP of
all of the issued and outstanding Common Stock of the Company, or (iii) such
other form of business combination as the Parties may agree (provided, that the
entity which survives the Business Combination shall be listed or quoted on the
New York Stock Exchange or a similar, internationally recognized stock exchange
or market), in each case, with all of the issued and outstanding Common Stock of
the Company to be exchanged for the applicable securities of VIP at the
Combination Ratio determined pursuant to Schedule 3 hereto.
"BUSINESS COMBINATION FEES" has the meaning specified in Section 6.01(e).
"BUSINESS COMBINATION REVIEW" has the meaning specified in Section 6.01(a).
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"BUSINESS DAY" shall mean a day other than a Saturday, a Sunday or any day on
which banks located in Moscow, Russia, Oslo, Norway, London, England or New
York, New York are authorized or obliged to close.
"CEO" shall mean the individual executive body (edinolichniy ispolnitelniy
organ) of the Company, whether the title of such officer is "Chief Executive
Officer", "General Director" or otherwise.
"CHANGE OF CONTROL" shall mean, with respect to any Party or any Controlling
Person of such Party, (a) the sale or other disposition of all or substantially
all of such Party's or such Controlling Person's assets, in one or a series of
related transactions, to any Person or Persons (other than a Controlling Person
of such Party or any Controlled Affiliate or Controlled Affiliates of such
Controlling Person), (b) the sale or other disposition of more than fifty
percent (50%) of the securities having ordinary voting power for the election of
directors or other governing body of such Party or Controlling Person, in one or
a series of related transactions, to any Person or Persons (other than a
Controlling Person of such Party or any Controlled Affiliate or Controlled
Affiliates of such Controlling Person), (c) the merger or consolidation of such
Party or Controlling Person with or into another Person or the merger of another
Person into such Party or Controlling Person with the effect that any Person or
Persons other than the existing shareholders of such Party or Controlling Person
prior to such transaction own or control, directly or indirectly, more than
fifty (50%) of the securities having ordinary voting power for the election of
directors or other governing body of the Person surviving such merger, or the
Person resulting from such consolidation or (d) the liquidation or dissolution
of such Party or Controlling Person; provided, however, that a Change of Control
shall not include (i) a bona fide underwritten public offering of the capital
stock of such Party or any Controlling Person of such Party or (ii) any of (w)
the sale of all or substantially all of the assets of Telenor ASA, Telenor
Communication AS, Telenor Mobile Communications AS or CTF Holdings Limited, (x)
the sale of more than fifty percent (50%) of the securities having ordinary
voting power for the election of directors or other governing body of Telenor
ASA, Telenor Communication AS, Telenor Mobile Communications AS or CTF Holdings
Limited, (y) the liquidation or dissolution of Telenor ASA, Telenor
Communication AS, Telenor Mobile Communication AS or CTF Holdings Limited or (z)
any merger, consolidation, divestiture or de-merger to which Telenor ASA,
Telenor Communication AS, Telenor Mobile Communications AS or CTF Holdings
Limited is a party.
"CHARTER" shall mean the most recent version of the charter (ustav) of the
Company, as registered with the Moscow Registration Chamber (Moskovskaya
registratsionaya palata) on August 31, 1999, as amended on November 24, 2000 and
as it may be amended from time to time.
"COMMON STOCK" shall mean the common stock of the Company, as defined in the
Charter.
"COMBINATION RATIO" shall mean the ratio of the Value of the Company divided by
the Value of VIP, as determined pursuant to Schedule 3 hereto.
"COMPANY" has the meaning specified in the preamble.
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"CONSOLIDATED SUBSIDIARY" shall mean, at any time, a consolidated subsidiary of
a Person, as identified in such Person's financial statements for the prior
fiscal year audited in accordance with GAAP.
"CONTRACT" shall mean any agreement, letter of intent, lease, license, evidence
of Debt Obligations, mortgage, indenture, security agreement or other contract
or understanding (whether written or oral), in each case, to the extent legally
binding.
"CONTROLLED AFFILIATE" shall mean, with respect to any Person, any Affiliate of
such Person in which such Person owns or controls, directly or indirectly, more
than fifty percent (50%) of the securities having ordinary voting power for the
election of directors or other governing body thereof or more than fifty percent
(50%) of the partnership or other ownership interests therein (other than as a
limited partner).
"CONTROLLING INTEREST" shall mean the ownership or control, direct or indirect,
of more than fifty percent (50%) of the securities having ordinary voting power
for the election of directors or other governing body of a Person or more than
fifty percent (50%) of the partnership or other ownership interest therein
(other than as a limited partner of such Person).
"CONTROLLING PERSON" shall mean, with respect to any Person, any other Person
which owns or controls, directly or indirectly, more than fifty percent (50%) of
the securities having ordinary voting power for the election of directors or
other governing body of such first Person or more than fifty percent (50%) of
the partnership or other ownership interests therein (other than as a limited
partner of such first Person).
"CO-SALE NOTICE" has the meaning specified in Section 4.07(a).
"DAMAGES" has the meaning specified in Article IX.
"DEBT OBLIGATIONS" shall mean, with respect to any Person, any obligations of
such Person (i) for borrowed money; (ii) evidenced by notes, bonds, debentures
or similar instruments; (iii) for the deferred purchase price of goods or
services (other than trade payables or accruals incurred in the ordinary course
of business); (iv) arising out of any credit facility or financial
accommodation; (v) in respect of any liabilities and obligations of third
parties (referred to in this definition or otherwise) to the extent that they
are guaranteed by such Person or such Person has otherwise assumed or become
liable for the payment of such liabilities or obligations or to the extent that
they are secured by any Lien upon property owned by such Person, whether or not
such Person has assumed or become liable for the payment of such liabilities or
obligations; (vi) arising under any lease that would be capitalized on the
balance sheet of such Person in accordance with GAAP or Russian Accounting
Standards (RAS) that is otherwise in substance a financing lease; (vii) arising
in respect of any security, any acceptance or documentary credit or any
receivables sold or discounted other than on a non-recourse basis; (viii) for
trade payables incurred in the ordinary course of business; (ix) arising in
connection with damages, fines, penalties, compensatory damages and other
charges of similar kind or nature that may be assessed, charged or appraised
against such Person under any loan agreement, sale-purchase agreement, delivery
of goods (works, services) agreement, lease agreement or any other agreement of
commercial nature; (x) arising in connection with any other transaction that, in
accordance with GAAP or RAS, results in such obligation being treated as
"indebtedness"; (xi)
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any other monetary obligation of a Person to pay an amount of money in excess of
500 minimum monthly wages (as such minimum monthly wage is determined in
accordance with Russian law) to a counter-party either under an agreement or on
another basis, including without limitation on the basis of a normative act of a
state body (including without limitation payments to state bodies such as taxes,
fees or fines) or a judicial decree or Order; and (xii) any other obligations or
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, and whether due or to become due).
"DEBT TRANSACTION" means any transaction by which a Standstill Party directly or
indirectly makes any loan or extends any credit to any Protected Party or
otherwise becomes an obligee or holds or is a beneficiary of any Debt Obligation
of any Protected Party (other than the Telenor Service Obligation Agreement).
"DIRECT COMPETITOR" shall mean, as at any date of determination, any Person, or
any Controlling Person of such Person, or any Controlled Affiliate of any such
Controlling Person (other than the Company or VIP or any of their respective
Controlled Affiliates), which is engaged in, or proposes to engage in, the
Business and which owns or controls a telecommunications license for the
Business in the Moscow License Area or in any ten (10) subjects (subyekti) of
the Russian Federation for which any of the Company, VIP, or any of their
respective Controlled Affiliates holds a telecommunications license for the
Business.
"DIRECTOR" shall mean a member of the Board.
"ECO TELECOM" has the meaning specified in the preamble.
"ECO TELECOM CONTRIBUTION DEFAULT" has the meaning specified in the Primary
Agreement.
"ECO TELECOM GUARANTEE AGREEMENT" shall mean the Guarantee Agreement, dated as
of the date hereof, between and among CTF Holdings Limited, Eco Holdings
Limited, Telenor, VIP and the Company.
"ENDORSEMENT" shall mean an endorsement to this Agreement, in the form of
Exhibit A.
"EXCHANGE ACT" shall mean the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"EXISTING INVESTMENTS" has the meaning set forth in Section 6.02(b)(ii).
"FINAL DATE" shall have the meaning specified in the Primary Agreement.
"FAIR MARKET VALUE" shall mean the fair market value of the item to which such
term is applied as determined in accordance with the methodology set forth on
Schedule 1 attached hereto.
"FIRST CLOSING" has the meaning specified in the Primary Agreement.
"FORECLOSURE ACTIONS" has the meaning specified in Section 4.03(b)(i).
"FORECLOSURE NOTICE" has the meaning specified in Section 4.03(b)(i).
"GAAP" shall mean United States generally accepted accounting principles, as in
effect from time to time.
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"GENERAL MEETING OF THE SHAREHOLDERS" shall mean any general meeting of the
shareholders (obschee sobraniye aktsionerov) of the Company.
"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.
"INDEMNIFIED PERSON" has the meaning specified in Article IX.
"INDEPENDENT DIRECTOR" shall mean any Person who is not an employee, officer,
director or other Affiliate (but who may be a consultant or former employee) of
any Party, any Controlling Person of such Party or any Controlled Affiliate of
such Controlling Person.
"INITIATING SHAREHOLDER" has the meaning specified in Section 6.01(a).
"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 xxxx 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.
"IPO" shall mean the initial underwritten public offering of the Company's
Common Stock which results in the listing of the Company's Common Stock (or
Common Stock-linked Securities) on a national or international exchange or
securities trading facility.
"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
"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 grant
any of the foregoing.
"MANAGEMENT REGULATIONS" shall mean the Management Regulations on the Procedure
for the Company to Conclude Transactions with Interested Parties (Rukovodstvo o
sdelkakh, v sovershenii kotorykh imeetsya zainteresovannost) to be adopted by
the Board in accordance with Section 2.01(e) hereof, pursuant to Sections
11.2.19 and 11.2.22 of the Charter, as a supplement to the provisions set forth
in the Charter which are applicable to the Board.
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"MOSCOW LICENSE AREA" shall mean the city of Moscow and the Moscow region
(Moskovskaya Oblast).
"NEW SECURITIES" has the meaning specified in Section 5.02(a).
"OFFER" has the meaning specified in Section 4.04.
"OFFER NOTICE" has the meaning specified in Section 4.05(a).
"OFFERED SECURITIES" has the meaning specified in Section 4.04.
"OPPORTUNITY" has the meaning set forth in Section 6.02(c).
"OPTION AGREEMENT" shall mean the Option Agreement, as defined in the Primary
Agreement.
"ORDER" shall mean any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority (in each case, whether preliminary or
final).
"OUTSTANDING VOTING SECURITIES" shall mean, collectively, (i) Common Stock,
Preferred Stock and any other Securities now or yet to be authorized that
ordinarily, and in the absence of contingencies, entitle its holder to vote at
any General Meeting of the Shareholders, and that are, at the time specified in
the context in which such term is used, issued and outstanding, and (ii)
Securities that are, at the time specified in the context in which such term is
used, issued and outstanding and convertible into, or exercisable or
exchangeable for, any shares of Securities described in clause (i).
"PARTY" shall mean (i) each of VIP, Eco Telecom and Telenor and (ii) each Person
that acquires Securities in accordance with this Agreement and executes an
Endorsement.
"PERMITTED TRANSFEREE" shall mean, with respect to any Shareholder, any
Controlling Person of such Shareholder, or any Controlled Affiliate of any such
Controlling Person or Shareholder.
"PERSON" shall mean any natural person, corporation, general partnership, simple
partnership, limited partnership, limited liability partnership, limited
liability company, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority, whether incorporated or
unincorporated.
"PLEDGE ARRANGEMENT" has the meaning specified in Section 4.03(d).
"PLEDGE CO-SALE NOTICE" has the meaning specified in Section 4.03(b)(iii).
"PLEDGE NOTICE" has the meaning specified in Section 4.03(a).
"PLEDGED SECURITIES" has the meaning specified in Section 4.03.
"PLEDGEE" has the meaning specified in Section 4.03.
"PLEDGING SHAREHOLDER" has the meaning specified in Section 4.03.
"PREFERRED STOCK" shall mean the shares of preferred stock of the Company, as
defined in the Charter.
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"PREFERRED STOCK PURCHASE AGREEMENT" shall mean the Preferred Stock Purchase
Agreement substantially in the form of Annex A to Schedule 2.07(a) of the
Primary Agreement.
"PREFERRED STOCK CLOSING" has the meaning specified in the Primary Agreement.
"PRIMARY AGREEMENT" has the meaning specified in the second recital.
"PRINCIPAL AGREEMENTS" has the meaning specified in the Primary Agreement.
"PROTECTED PARTY" shall mean any of the Company, VIP or any of their respective
Controlled Affiliates.
"PURCHASING SHAREHOLDER" has the meaning specified in Section 4.05(b).
"REGISTRAR" shall mean the duly appointed shareholder registrar of the Company,
or any successor thereto, as of the date of this Agreement being the Russian
closed joint stock company National Registry Company (Natsionalnaya
Registratsionnaya Kompaniya).
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights Agreement
dated as of the date hereof between the Company, Eco Telecom, VIP and Telenor.
"REJECTION NOTICE" has the meaning specified in Schedule 3 hereto.
"REQUIRED SALE RIGHT" has the meaning specified in Section 4.06.
"REQUIRED SALE SECURITIES" has the meaning specified in Section 4.07.
"REVIEW NOTICE" has the meaning specified in Schedule 3 hereto.
"SEC" shall mean the Securities and Exchange Commission of the United States of
America, or any successor thereto.
"SECOND CLOSING" has the meaning specified in the Primary Agreement.
"SECURITIES" shall mean Common Stock, Preferred Stock or other capital stock of
the Company, whether now authorized or not, or any option, right, subscription,
warrant, phantom stock right or other contract right to receive Common Stock or
such other capital stock, or securities of any kind whatsoever, that are, or may
become, convertible into or exchangeable or exercisable for, Common Stock or
such other capital stock.
"SECURITIES ACT" shall mean the United States Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"SELLING SHAREHOLDER" has the meaning specified in Section 4.04.
"SHAREHOLDER RESPONSE NOTICE" has the meaning specified in Section 4.05(b).
"SHAREHOLDERS" shall mean (i) VIP, for as long as it owns any Securities, (ii)
Eco Telecom, after such date that Eco Telecom has purchased Securities in
accordance with the terms and conditions of the Primary Agreement, and for so
long as Eco Telecom owns any Securities, (iii) Telenor, after such date that
Telenor has purchased Securities in accordance with the terms and conditions
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of the Primary Agreement, and for so long as Telenor owns any Securities and
(iv) each Person that acquires Securities in accordance with this Agreement and
executes an Endorsement, in respect of each such Person for as long as such
Person owns any Securities (and each of the foregoing, individually, a
"SHAREHOLDER").
"SPECIFIED LEGISLATION" has the meaning specified in the Primary Agreement.
"SPECIFIED PERCENTAGE" shall mean (i) with respect to the Company, twenty-five
percent (25%) plus one (1) share of the Voting Securities or (ii), with respect
to VIP, twenty-five percent (25%) plus one (1) share of the issued and
outstanding shares of voting capital stock of VIP.
"STANDSTILL PARTIES" shall mean, with respect to a Party (other than VIP), such
Party, its Controlling Persons, its Controlled Affiliates, any Controlled
Affiliate of any Controlling Person of such Party and any Person acting on
behalf of any of the foregoing, in each case, pursuant to a Contract; provided,
however, that for the purposes of this definition, neither VIP, nor any of its
Controlled Affiliates, nor the Company, nor any of its Controlled Affiliates
shall be deemed Controlled Affiliates of any Party or any Controlling Person of
any Party.
"TELENOR" has the meaning specified in the preamble.
"TELENOR GUARANTEE AGREEMENT" shall mean the Guarantee Agreement, dated as of
the date hereof, between and among Telenor ASA, Eco Telecom, VIP and the
Company.
"TELENOR SERVICE OBLIGATION AGREEMENT" shall mean the Telenor Service Obligation
Agreement dated as of April 1, 1999, between Telenor Russia AS and the Company.
"THIRD CLOSING" has the meaning specified in the Primary Agreement.
"THIRD CLOSING DATE" has the meaning specified in the Primary Agreement.
"THIRD-PARTY PLEDGE AGREEMENT" has the meaning specified in Section 4.03(a).
"TRANSFER" shall mean any direct or indirect sale, exchange, transfer
(including, without limitation, any transfer by gift or operation of law, or any
transfer of an economic interest in any derivative security of any Security),
assignment, distribution or other disposition, or issuance or creation of any
option or any voting proxy, voting trust or other voting agreement in respect of
any Person or instrument (including, without limitation, any of the Securities),
whether in a single transaction or a series of related transactions, including
without limitation, (a) the direct or indirect enforcement or foreclosure of any
Lien or (b) any Change of Control; provided, that nationalization,
expropriation, confiscation, bankruptcy (other than any bankruptcy initiated by
the petition of any Party, or any Affiliate of such Party), arrest or any
similar Action or Proceeding initiated by any Governmental or Regulatory
Authority in respect of any Person or instrument shall not constitute a
Transfer.
"UNCITRAL RULES" has the meaning specified in Section 11.01(a).
"VALUE OF THE COMPANY" has the meaning specified in Schedule 3 hereto.
"VALUE OF VIP" has the meaning specified in Schedule 3 hereto.
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"VIP" has the meaning specified in the preamble.
"VOTING SECURITIES" shall mean, collectively, Common Stock, Preferred Stock and
any other Securities now or yet to be authorized that ordinarily, and in the
absence of contingencies, entitle its holder to vote in any General Meeting of
the Shareholders and that are, at the time specified in the context in which
such term is used, issued and outstanding.
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 "Articles", "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; and
(g) a reference to any Person shall include such Person's
successors and permitted assigns under any agreement, instrument,
contract or other document.
ARTICLE II
MANAGEMENT OF THE COMPANY
2.01 Board of Directors; Shareholders.
(a) General. Except as limited by, or otherwise provided in, this
Agreement or the Charter, the conduct of the overall business,
management and affairs of the Company shall be the responsibility of
the Board and the CEO.
(b) Composition; Election; Voting.
(i) From and after the date hereof, the Board shall
consist of nine (9) Directors. Subject to Section
2.01(b)(ii):
(x) Eco Telecom shall nominate five (5)
Directors, including (a) at least one (1)
nominee who shall be an Independent Director
and
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(b) at least one (1) nominee who shall also
serve on VIP's board of directors; and
(y) VIP shall nominate four (4) Directors,
including (a) two (2) nominees who shall be
members of the senior management of VIP, in
each case whose initial appointment to such
senior management position was approved by
the board of directors of VIP, (b) one (1)
nominee who shall be a designee of Telenor;
provided, however, that if Telenor exercises
its option(s) to purchase Voting Securities
pursuant to the Primary Agreement and, after
such purchase, Telenor owns such number of
Voting Securities which would entitle
Telenor to cumulatively elect two (2)
Directors to the Board (assuming that the
Directors are elected by the cumulative vote
of the shareholders at any General Meeting
of the Shareholders, in accordance with the
Charter), then two (2) of the Directors
nominated by VIP shall be designees of
Telenor for so long as Telenor owns at least
such amount of Voting Securities and (c) if,
at any time after exercising (or declining
to exercise, as the case may be) its
option(s) to purchase Voting Securities
pursuant to the Primary Agreement, Telenor
does not own such number of Voting
Securities which would entitle Telenor to
cumulatively elect two (2) Directors to the
Board, then one (1) of the Directors
nominated by VIP shall be either a member of
the senior management of VIP (whose initial
appointment to such senior management
position was approved by the board of
directors of VIP) or an Independent
Director; provided, further, that in any
event Telenor shall not separately nominate
any additional Directors to the Board.
Notwithstanding the foregoing, until such
time as Telenor owns or controls 50% or more
of the Voting Securities, then (i) if
Telenor has not invested at least
$58,500,000 in the Company by exercising its
options to purchase Voting Securities at the
Second Closing and/or the Third Closing, no
more than two (2) Director nominees
(including the Directors nominated pursuant
to clause (b) hereof) shall be affiliated
with Telenor and (ii) if Telenor has
invested at least $58,500,000 in the Company
by exercising its options to purchase Voting
Securities at the Second Closing and/or the
Third Closing, no more than three (3)
Director nominees (including the Directors
nominated pursuant to clause (b) hereof)
shall be affiliated with Telenor.
Notwithstanding the foregoing, if the election of
Directors pursuant to this Section 2.01(b)(i) occurs
before Eco Telecom and/or Telenor first become
Shareholders, then VIP shall nominate the Eco Telecom
Director nominees and/or the Telenor Director
nominees, as the case may be, pursuant to the written
instructions received from the respective nominating
Party.
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(ii) Subject to Section 2.01(b)(iii), the provisions of
Section 2.01(b)(i) shall terminate on the date on
which Eco Telecom (having once obtained ownership or
control of at least the Specified Percentage of the
Company) owns or controls less than the Specified
Percentage of the Company, and on and after such date
the Directors shall be elected by the cumulative vote
of the shareholders of the Company. Upon such
termination, Eco Telecom agrees to use its best
efforts to cause the Directors nominated by (or
pursuant to the written instructions of) Eco Telecom
to resign from the Board as expeditiously as
practicable, but in no event later than three (3)
Business Days following such event. Following such
termination the remaining Directors or, in their
failure to do so, the Shareholders, shall take all
actions necessary to convene a General Meeting of the
Shareholders for the purpose of electing a new Board
as promptly as practicable, but in no event shall
such meeting be held later than five (5) Business
Days after the occurrence of any such termination,
and the Shareholders hereby expressly agree to waive
any and all notice requirements required to be
delivered in connection with such meeting, to the
extent permitted by the Laws of the Russian
Federation.
(iii) In the event of an Eco Telecom Contribution Default
in connection with the Second Closing, the provisions
of Section 2.01(b)(i) shall terminate and all five
Directors nominated by (or pursuant to the
instructions of) Eco Telecom shall resign from the
Board as expeditiously as practicable, but in no
event later than three (3) Business Days following
such event. In the event of an Eco Telecom
Contribution Default in connection with the Third
Closing, the provisions of Section 2.01(b)(i) shall
terminate and four (4) of the five (5) Directors
nominated by (or pursuant to the instructions of) Eco
Telecom shall resign from the Board as expeditiously
as practicable, but in no event later than three (3)
Business Days following such event. In either such
event, the Directors shall thereafter be elected by
the cumulative vote of the shareholders of the
Company. Following such Eco Telecom Contribution
Default the remaining Directors or, in their failure
to do so, the Shareholders, shall take all actions
necessary to convene a General Meeting of the
Shareholders for the purpose of electing a new Board
as promptly as practicable, but in no event shall
such meeting be held later than five (5) Business
Days after the occurrence of any such Eco Telecom
Contribution Default, and the Shareholders hereby
expressly agree to waive any and all notice
requirements required to be delivered in connection
with such meeting, to the extent permitted by the
Laws of the Russian Federation.
(c) Chairman. The Board shall elect the Chairman of the Board by a
simple majority vote. Until the earlier to occur of (i) an Eco Telecom
Contribution Default or (ii) the date on which Eco Telecom (having once
obtained ownership or control of at least the Specified Percentage of
the Company) owns or controls less than the Specified Percentage of the
Company, the nominees for the position of Chairman of the Board shall
be chosen from the Directors nominated by (or pursuant to the
instructions of) Eco
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Telecom and may be nominated by any one or more of the Directors. The
Chairman of the Board shall not have any specific powers, other than
the authority to arrange the work of the Board or as otherwise provided
by applicable law and the Charter.
(d) Removal of Directors. VIP has convened a General Meeting of
the Shareholders on the date hereof for the purpose of electing the new
Directors pursuant to the terms of Section 2.01(b)(i). Each Director
nominated by (or pursuant to the instructions of) Eco Telecom and
elected to the Board shall be obligated to execute the conditional
resignation letter in the form of Exhibit B upon such Director's
election to the Board, which letter shall be countersigned by the
Company and held in escrow as the Parties may agree.
(e) Approval of Certain Matters. On the date hereof a meeting of
the Board shall be held for the purpose of affording the Directors an
opportunity to vote on the matters set forth in the form of protocol
annexed hereto as Schedule 2.01(e).
(f) Deadlock Recommendation. Until the earlier to occur of (i) an
Eco Telecom Contribution Default or (ii) the date on which Eco Telecom
(having once obtained ownership or control of at least the Specified
Percentage of the Company) owns or controls less than the Specified
Percentage of the Company, in the event that a deadlock arises with
regard to a single, material Board action at two (2) consecutive
meetings of the Board convened within a twenty (20) Business Days
period, upon the request of any Director, a committee consisting of a
representative of each of Eco Telecom, VIP and Telenor shall convene to
discuss the deadlock and provide the Board with a non-binding
recommendation for how to resolve such deadlock.
(g) Vote of Shareholders. The Shareholders hereby agree that they
will vote, or will cause to be voted, all of their respective Voting
Securities at any meeting of shareholders (in person or by ballot) in
furtherance of the provisions of this Article II. In addition to the
foregoing, until the earlier of (i) the date on which Eco Telecom owns
at least 25% plus one (1) share of the Voting Securities of the Company
or (ii) the date of an Eco Telecom Contribution Default, VIP shall not
take any decisions or actions in its capacity as a shareholder of the
Company without the prior written consent of Eco Telecom, with respect
to the following: (a) requesting the convocation of a meeting of
shareholders of the Company, (b) being considered present for quorum
purposes at any meeting of shareholders of the Company (whether by
being represented personally at a meeting or by submitting a ballot) or
(c) voting (or abstaining from voting) any Voting Securities on issues
requiring super-majority consent or cumulative voting under the Charter
or the Laws of the Russian Federation or with respect to issues under
Section 9.2.9 of the Charter; provided, however, that Eco Telecom will
exercise such rights in furtherance of the provisions of this Article
II; and, provided, further, that if such Eco Telecom Contribution
Default is caused by any Specified Legislation which prevents the
Second Closing or the Third Closing then Eco Telecom shall be given a
veto right (as if it owned the Specified Percentage of the Company),
for a period of one year following the Second Closing Date or the Third
Closing Date, as applicable, with respect to (and only with respect to)
the matters set forth in Sections 9.2.1, 9.2.2, 9.2.3 or 9.2.4 (except
with respect to capital increases contemplated by the Primary
Agreement) of the Charter.
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2.02 CEO.
(a) Following the date hereof, and subject to Section 2.02(c), the
Directors nominated to the Board by (or pursuant to the instructions
of) Eco Telecom shall nominate the CEO. The Chairman of the Board shall
send written notice of such nomination to all Directors. Each nominee
for the position of CEO shall be a person experienced in the Business
who meets the criteria set forth on Schedule 2 hereto and who shall be
chosen from among those candidates recommended by an internationally
recognized executive recruiting firm. Each such CEO nominee shall be
considered by the Board within two (2) weeks of being nominated. On the
first Business Day of such two-week period, the Directors shall be
given the resume of such CEO nominee and a copy of the letter from an
internationally recognized executive recruiting firm recommending the
CEO nominee, and shall have the opportunity to interview such nominee
prior to the vote on such nomination.
(b) The CEO shall be appointed in accordance with the provisions
of the Charter. The CEO shall have the rights and responsibilities
granted to general directors under the Laws of the Russian Federation
and Section 12 of the Charter; provided that such rights and
responsibilities may be expanded or restricted by a decision of the
Board in accordance with the Charter. It is hereby acknowledged by the
Parties that the rights and responsibilities of the CEO under the Laws
of the Russian Federation and Section 12 of the Charter are
substantially the same as those of the general director of VIP under
the Laws of the Russian Federation and Section 11 of the charter of
VIP, as such rights and responsibilities may be expanded or restricted
by the Board or the VIP board of directors, respectively, in accordance
with the Charter or the charter of VIP, respectively, in each case to
the extent permitted by the Laws of the Russian Federation.
(c) In the event of an Eco Telecom Contribution Default, or on the
date that Eco Telecom, (having once obtained ownership or control of
the Specified Percentage of the Company), owns or controls less than
the Specified Percentage of the Company, the Directors nominated by (or
pursuant to the instructions of) Eco Telecom shall lose the right to
nominate the CEO and the CEO will immediately tender to the Board his
or her resignation as the CEO.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Parties.
VIP, Eco Telecom and Telenor each hereby represent and warrant, in each case
severally and not jointly, as of the date of (and after giving effect to) the
consummation of such Party's purchase of Securities pursuant to the Primary
Agreement, that:
(a) On each date that such Party purchases such Securities, such
Party is the record holder and beneficial owner of such Securities;
(b) Other than Securities which may be purchased pursuant to the
terms of the Primary Agreement, the Preferred Stock Purchase Agreement,
the Option Agreement or this Agreement (and, with respect to VIP only,
other than Securities owned by VIP as of
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the date of this Agreement), such Securities are the only shares of
capital stock of the Company owned of record or beneficially by such
Party;
(c) With respect to Telenor and VIP only, such Party has sole
power of disposition and sole voting power with respect to all of such
Securities, 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 terms and
conditions of this Agreement, the Preferred Stock Purchase Agreement,
the Option Agreement and the Registration Rights Agreement;
(d) With respect to Eco Telecom only, no Person other than Eco
Telecom (together with its Controlling Persons) has power of
disposition or voting power with respect to any such Securities, and
Eco Telecom is not subject to any restrictions on such rights, other
than such restrictions on Transfer as arise under applicable United
States federal securities laws, Russian federal securities laws, and
the terms and conditions of this Agreement, the Preferred Stock
Purchase Agreement, the Option Agreement and the Registration Rights
Agreement;
(e) Such Securities are held free and clear of all Liens, proxies,
voting trusts or agreements, understandings or arrangements whatsoever,
except for those arising under this Agreement, the Preferred Stock
Purchase Agreement, the Option Agreement and the Registration Rights
Agreement; and
(f) Since the date of this Agreement, there has not been any
Change of Control with respect to such Party or any Controlling Person
of such Party.
3.02 Representations and Warranties of Subsequent Parties.
Each Person (other than the Parties hereto as of the date hereof) who
subsequently becomes a Shareholder hereunder after the date hereof shall make
the representations and warranties set forth on Annex 1 to the Endorsement,
which representations and warranties shall be incorporated by reference herein,
as though made in this Agreement, upon execution of the Endorsement by such
Person.
ARTICLE IV
TRANSFERS OF SECURITIES
4.01 General.
(a) The provisions of this Article IV shall be applicable to all
Securities owned, directly or indirectly, by a Party or hereafter
Transferred to a Party in any manner whatsoever.
(b) For the purposes of this Article IV, the fees and expenses
incurred in determining the Fair Market Value of any Securities shall
be divided pro rata among the Shareholders who are party to the
relevant transaction, in proportion to the amount of Securities
purchased or sold by such Shareholder, as the case may be.
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4.02 Transfers and Liens.
(a) Except as provided in this Article IV, no Party may Transfer
any or all of its Securities to, or create or permit any Lien on any
Securities in favor of, any Person.
(b) Notwithstanding Section 4.04, a Shareholder may Transfer any
or all of its Securities to a Permitted Transferee at any time without
compliance with Sections 4.05, 4.06 or 4.07; provided, that such
Permitted Transferee executes an Endorsement, in accordance with
Section 4.09 hereof, at the time of such Transfer.
(c) Notwithstanding anything to the contrary contained herein, no
Party may Transfer (or permit the Transfer of) any Securities to, or
create or permit a Lien upon any Securities in favor of, any Person
(including, without limitation, any Permitted Transferee) who is a
Direct Competitor.
(d) Notwithstanding Section 4.04, Eco Telecom (or any Controlled
Affiliate of Eco Telecom) may Transfer any or all of its Securities to
Telenor or a Controlled Affiliate of Telenor ASA in accordance with the
terms of the Option Agreement at any time without compliance with
Sections 4.05, 4.06 or 4.07; provided, that Telenor (or any such
Controlled Affiliate of Telenor ASA) executes an Endorsement in
accordance with Section 4.09 hereof.
(e) Until the earlier to occur of the second anniversary of the
First Closing or an Eco Telecom Contribution Default, VIP shall not
Transfer to any Person other than a Permitted Transferee any Voting
Securities which it now owns or which it hereafter acquires.
(f) Notwithstanding anything to the contrary contained herein, Eco
Telecom shall not Transfer (including any Transfer pursuant to any
co-sale rights under this Article IV), or permit the Transfer of, any
shares of Preferred Stock to, or create or permit a Lien upon any
shares of Preferred Stock in favor of, any Person, except that any
Transfer required by Eco Telecom pursuant to the terms of the Preferred
Stock Purchase Agreement or the Primary Agreement shall be expressly
permitted hereunder and shall be an express obligation of Eco Telecom
hereunder.
4.03 Pledge.
Any Shareholder (a "PLEDGING SHAREHOLDER") may pledge Securities to any Person
(a "PLEDGEE") to secure a bona fide obligation, provided that the following
terms and conditions are satisfied:
(a) Within three (3) Business Days of the pledge of any Securities
to a Pledgee or the execution of any agreement with a Pledgee
concerning such a pledge (a "THIRD-PARTY PLEDGE AGREEMENT"), the
Pledging Shareholder shall give (i) written notice of the pledge (the
"PLEDGE NOTICE") to each of the non-pledging Shareholders (each, a
"NON-PLEDGING SHAREHOLDER" and collectively, the "NON-PLEDGING
SHAREHOLDERS"), which Pledge Notice shall set forth the identity of the
Pledgee, the amount and term of financing being secured by the pledge,
and the number of Securities pledged thereby (the "PLEDGED
SECURITIES"), (ii) copies of the relevant pledge agreement, which
pledge agreement shall
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be delivered subject to the confidentiality provisions set forth in
Article VII hereof and (iii) a written acknowledgement from the Pledgee
(which acknowledgement may be included in the Third-Party Pledge
Agreement) that the Pledgee agrees to the terms and conditions of this
Section 4.03.
(b) The pledge shall be governed by a Third-Party Pledge
Agreement, which shall be binding on the Pledgee and which shall
provide that:
(i) The Pledgee, prior to taking any actions to enforce
its rights in or to the Pledged Securities
(including, but not limited to, any foreclosure upon,
sale of, or acceptance of title to, the Pledged
Securities) (a "FORECLOSURE ACTION"), shall give at
least forty-five (45) days prior written notice of
such intention (a "FORECLOSURE NOTICE") to each of
the Non-Pledging Shareholders;
(ii) Upon receipt of such Foreclosure Notice, each of the
Non-Pledging Shareholders shall have the right, at
the option of such Non-Pledging Shareholders to be
exercised not later than forty-five (45) days after
receipt of such Foreclosure Notice, to purchase from
the Pledgee (pro rata according to the respective
percentage of Voting Securities owned by each
Non-Pledging Shareholder exercising its purchase
rights hereunder (each, a "PURCHASING SHAREHOLDER"
and collectively, the "PURCHASING SHAREHOLDERS")
relative to the total number of Voting Securities
owned by all other Purchasing Shareholders, or in
such other proportion as such Purchasing Shareholders
may agree among themselves) the underlying obligation
(or portion thereof) at a purchase price equal to the
lesser of (a) the Fair Market Value of the Pledged
Securities being purchased by such Purchasing
Shareholder, as determined without taking into
account any decrease in value resulting from the
pledge or (b) the principal amount of the relevant
underlying obligation being purchased by such
Purchasing Shareholder, plus any interest, penalties
and other similar payments (if any) accrued and owing
thereon up to, but excluding, the purchase date
thereof. For the avoidance of doubt, if the
Purchasing Shareholder(s) exercise their right to
purchase the underlying obligation hereunder, the
Purchasing Shareholder(s) shall be obligated to
purchase, and the Pledgee shall be obligated to sell,
the underlying obligation in whole and not in part;
provided, that if there is more than one Purchasing
Shareholder, the purchase of such underlying
obligation shall be apportioned among the Purchasing
Shareholders in accordance with the immediately
preceding sentence. The Purchasing Shareholder(s)'
purchase of the underlying obligation from the
Pledgee shall be effective upon delivery of a
purchase notice by the Purchasing Shareholder(s) to
the Pledgee, and such purchase shall not require the
Pledgee's consent. The Transfer of the relevant
underlying obligation to each Purchasing Shareholder
shall be effective upon payment of the relevant
purchase price to the Pledgee by each such Purchasing
Shareholder, which payment shall be effected not
later than forty-five (45) calendar days after
receipt of the Foreclosure Notice.
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Concurrently with such purchase of the underlying
obligation (or portion thereof), the Third-Party
Pledge Agreement shall be automatically assigned to
the Purchasing Shareholder(s). Thereafter, the
Pledging Shareholder shall Transfer the relevant
Pledged Securities to each such Purchasing
Shareholder, free and clear of all Liens, in exchange
for cancellation of the underlying obligation with
respect to such Pledged Securities, without any
additional purchase price owed or payable with
respect thereto. For the avoidance of doubt, the
Pledged Securities shall be apportioned among each
Purchasing Shareholder based on the pro rata amount
of the underlying obligation purchased by each such
Purchasing Shareholder;
(iii) If a Pledging Shareholder has entered into any Pledge
Arrangement (as defined in Section 4.03(d)) then the
Purchasing Shareholders or, if there are no
Purchasing Shareholders, any other Non-Pledging
Shareholder, shall have the right to purchase from
the Pledging Shareholder such number of Securities
which are the subject of any such Pledge Arrangement,
at a purchase price equal to the Fair Market Value of
such Securities. Any such sale shall be consummated
within 180 days after the date of receipt of the
Foreclosure Notice. For avoidance of doubt, the right
set forth in this Section 4.03(b)(iii) shall exist
regardless of whether or not the Pledgee decides to
exercise its rights under such Pledge Arrangement. If
the Purchasing Shareholders or any Non-Pledging
Shareholders, as applicable, waive in writing (or
fail to exercise within such 180-day period) their
rights to purchase the Securities that are the
subject of the Pledge Arrangement, the Pledging
Shareholder may Transfer such Securities to the
Pledgee free of any right of first refusal of the
Non-Pledging Shareholders pursuant to Section 4.05
hereof, provided that such Transfer occurs within
ninety (90) days of the expiration of such 180-day
period;
(iv) If any Foreclosure Action would result in the
Transfer of Securities such that a Person, together
with any of its Affiliates (other than VIP and any of
its Controlled Affiliates), would acquire a
Controlling Interest in the Company, and the
Non-Pledging Shareholders do not elect to purchase in
the aggregate all of the Pledged Securities pursuant
to Section 4.03(b)(ii), then the Non-Pledging
Shareholders shall each have the right, exercisable
by written notice to the Pledging Shareholder and the
Pledgee (a "PLEDGE CO-SALE NOTICE") within forty-five
(45) days from delivery by the Pledgee of the
Foreclosure Notice, to elect to sell in the proposed
Transfer of Pledged Securities to such Person, all or
any portion of such Non-Pledging Shareholders'
Securities free and clear of any Liens other than
obligations under this Agreement. The Transfer of
Securities by the Non-Pledging Shareholders pursuant
to a Pledge Co-Sale Notice shall be at a price equal
to the Fair Market Value thereof or, at the election
of such Non-Pledging Shareholders, such other price
as may be agreed between the Pledgee and the
Non-Pledging Shareholders electing to Transfer their
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Securities hereunder (which shall not be less than
the Fair Market Value thereof). Failure of any
Non-Pledging Shareholders to provide a Pledge Co-Sale
Notice within such forty-five (45) day period shall
be deemed an election by such Non-Pledging
Shareholder not to participate in the proposed
Transfer pursuant to this Section 4.03(b)(iv);
(v) Each Non-Pledging Shareholder shall be an express
third-party beneficiary of the Third-Party Pledge
Agreement (and the Pledge Arrangement, if any) with
respect to each such Non-Pledging Shareholder's
rights set forth under this Agreement;
(vi) In the event that the Pledged Securities are
Transferred, the transferee which acquires the
Securities agrees to be bound by the terms and
conditions of this Agreement and to execute an
Endorsement; and
(vii) In the event that the Option Agreement is in effect
at the time when a Pledging Shareholder enters into a
pledge, such pledge shall be subject to all rights of
Telenor and its Permitted Transferees set forth in
the Option Agreement with respect to the VIP-R Call
Option (as defined therein) and the Pledgee shall
agree to deliver all Pledged Securities subject to
the VIP-R Call Option (and release all such Pledged
Securities from the pledge) in accordance with the
terms of the VIP-R Call Option upon exercise thereof
in exchange for, and upon payment by Telenor of, the
VIP-R Call Option Exercise Price (as defined in the
Option Agreement).
(c) The Pledgee shall not be an Affiliate of such Pledging
Shareholder and shall be either:
(i) A licensed Russian bank with equity capital of at
least $200,000,000 which is not subject to ARCO
administration and in which ARCO does not possess any
controlling or blocking rights; or
(ii) A foreign (i.e., non-Russian) bank with an investment
grade rating from Xxxxx'x Corporation (i.e., Baa or
higher) or Standard & Poor's (i.e., BBB or higher),
as such ratings are determined at the time of the
pledge; or
(iii) Any other lender or supplier of vendor financing for
the Company that has a long term debt rating of Baa
or higher from Xxxxx'x Corporation or a rating of BBB
or higher from Standard & Poor's, as such ratings are
determined at the time of the pledge.
(d) Any arrangement (a "PLEDGE ARRANGEMENT") which (i) provides
the Pledgee (or any of its Affiliates, designees, successors or
assigns) with the opportunity to obtain such number of Voting
Securities which, together with the Pledged Securities, equals or
exceeds the Specified Percentage of the Company or (ii) requires the
Pledging Shareholder to sell to any Person (whether in connection with
an auction or otherwise), such number of Voting Securities which,
together with the Pledged Securities, equals or exceeds the Specified
Percentage of the Company, shall be disclosed to the Non-Pledging
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Shareholders in the Pledge Notice; provided, however, that in no event
may a Pledging Shareholder enter into any such Pledge Arrangement
unless such Pledge Arrangement is entered into in connection with a
pledge by such Pledging Shareholder of Pledged Securities which
represents at least 24% of the Voting Securities of the Company and
which otherwise complies with this Section 4.03.
(e) Such Pledged Securities shall be pledged to the Pledgee under
one pledge only, and the underlying obligation secured by such pledge
shall not be secured by any collateral other than the Pledged
Securities.
(f) No Shareholder (or group of Shareholders) may pledge
Securities to any one Pledgee which, together with its Affiliates,
owns, controls and/or has pledged to it (or them) Securities which
represent 25% or more of the Voting Securities.
(g) Any breach by the Pledgee of any provision set forth in this
Section 4.03 to be observed by the Pledgee shall be deemed a breach of
this Agreement by the Pledging Shareholder.
4.04 Transfers to Persons Other than Permitted Transferees.
Any Shareholder (a "SELLING SHAREHOLDER") may sell or otherwise effect the
physical disposition of (but in no event may otherwise Transfer) any or all of
such Selling Shareholder's Securities (the "OFFERED SECURITIES") to any Person
from whom the Selling Shareholder receives a bona fide offer (whether or not
such offer is solicited by the Selling Shareholder) that such Selling
Shareholder desires to accept (an "OFFER"); provided, that such Selling
Shareholder complies with Sections 4.05, 4.06 and 4.07 prior to effecting any
such sale or disposition; and provided, further, that Transfers in connection
with Foreclosure Actions shall be governed by Section 4.03 rather than Sections
4.05, 4.06 and 4.07.
4.05 Right of First Refusal.
(a) A Selling Shareholder, before accepting any Offer, shall first
give sixty (60) days prior written notice of such Offer (the "OFFER
NOTICE") to the other Shareholders. The Offer Notice shall set forth
(i) the identity of the third-party offeror (including its Controlling
Persons) (the "THIRD PARTY OFFEROR"), (ii) the number and type of
Offered Securities subject to the Offer, (iii) the purchase price per
share in cash of the Offer (or, if the Offer consists in whole or in
part of non-cash consideration, a description of such non-cash
consideration, the Selling Shareholder's proposed good faith
determination of the fair market value per share thereof and any
valuation by the Third Party Offeror of such non-cash consideration)
and (iv) if applicable, notice of the exercise of its Required Sale
Right pursuant to Section 4.06 hereof.
(b) Upon receipt of the Offer Notice, the other Shareholders shall
each have the first right and option to elect to purchase, for cash, in
the aggregate, all (but not less than all) of the Offered Securities
(pro rata according to the respective percentage of Voting Securities
owned by each of the other Shareholders prior to the giving of the
Offer Notice relative to the total number of Voting Securities owned by
such other Shareholders prior to the giving of the Offer Notice, or in
such other proportion as such other Shareholders
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electing to purchase such Offered Securities may agree among
themselves) at the purchase price and on the terms and conditions set
forth in the Offer Notice, such election to be made by the other
Shareholders by written notice delivered to the Selling Shareholder (a
"SHAREHOLDER RESPONSE NOTICE") within forty-five (45) days from the
date of receipt of the Offer Notice. Failure of any other Shareholder
to provide a Shareholder Response Notice within such forty-five (45)
day period shall be deemed an election by such Shareholder not to
purchase any of the Offered Securities. If the purchase price set forth
in the Offer Notice consists in whole or in part of non-cash
consideration, the Shareholder(s) electing to purchase the Offered
Securities (the "PURCHASING SHAREHOLDER(S)") shall pay such portion of
the consideration in cash equal to the Fair Market Value thereof.
(c) In the event of any election by the other Shareholders to
purchase in the aggregate all of the Offered Securities, a single
closing for the purchase of all of the Offered Securities shall be held
at the time and place designated by the Purchasing Shareholder(s), but
in any event no later than one hundred eighty (180) days following
receipt of the Offer. At such closing, the Selling Shareholder shall
deliver to the Purchasing Shareholder(s), against payment of the
purchase price, the Offered Securities, free and clear of all Liens,
and documents required to cause the Registrar to enter the sale in the
Company's share register.
(d) In the event that the other Shareholders do not elect to
purchase in the aggregate all of the Offered Securities in accordance
with Section 4.05(b), the Selling Shareholder (i) shall not be required
to sell any of the Offered Securities to any of the other Shareholders
and (ii) subject to Section 4.07, may, within one hundred eighty (180)
days following receipt of the Offer, Transfer to the Third Party
Offeror identified in the Offer Notice all (but not less than all) of
the Offered Securities for a purchase price payable in cash (or, if the
Offer Notice states that the purchase price consists in whole or in
part of non-cash consideration, such non-cash consideration stated
therein) equal to or greater than the purchase price specified in the
Offer Notice and otherwise on the same terms and conditions specified
in the Offer Notice. Such Transfer shall be made in accordance with and
subject to Section 4.09. If the Selling Shareholder fails to effect the
Transfer of the Offered Securities on such terms and within such time
period, then such proposed Transfer or any other proposed Transfer
shall again become subject to the provisions of this Section 4.05.
(e) Other than as provided in this Article IV, without the prior
written consent of the Selling Shareholder, the other Shareholders
shall not negotiate with, or sell any of their Securities to, the Third
Party Offeror identified in the Offer Notice until the earliest of (i)
one hundred eighty (180) days following receipt of the Offer by the
Selling Shareholder, (ii) the Transfer of the Offered Securities by the
Selling Shareholder or (iii) the termination of the Offer by the
Selling Shareholder.
(f) In the event of an Eco Telecom Contribution Default, neither
Eco Telecom nor its Permitted Transferees which are Affiliates (other
than VIP or any of its Controlled Affiliates) shall have any rights
under this Section 4.05, but shall remain subject to all obligations
hereunder; provided, however, that if such Eco Telecom Contribution
Default
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is caused by any Specified Legislation which prevents the Second
Closing, any rights granted to Eco Telecom pursuant to this Section
4.05 shall not be suspended.
4.06 Required Sale Rights.
If the Offer described in Section 4.04 is delivered after the fifth (5th)
anniversary of the execution of this Agreement and is for a number of Offered
Securities such that, following such Transfer, the Third Party Offeror
identified in the Offer Notice, together with any Affiliate thereof (other than
VIP or any of its Controlled Affiliates), would hold a Controlling Interest in
the Company, and the other Shareholders do not elect to purchase in the
aggregate all of the Offered Securities pursuant to Section 4.05, then such
Selling Shareholder shall have the right (the "REQUIRED SALE RIGHT") to require
all, but not less than all, other Shareholders to sell to such Third Party
Offeror a number of Securities (other than Preferred Stock) owned by each other
Shareholder in an amount equal to (i) the number of Securities (other than
Preferred Stock) owned by such other Shareholder multiplied by (ii) a fraction,
the numerator of which is the number of Securities to be Transferred by the
Selling Shareholder, and the denominator of which is the total number of
Securities owned by the Selling Shareholder immediately prior to such proposed
Transfer, which in any event shall equal an amount not greater than the number
of shares to be sold by the Selling Shareholder; provided, however, that neither
Eco Telecom nor its Permitted Transferees which are Affiliates (other than VIP
or any of its Controlled Affiliates) shall have any rights under this Section
4.06 (but shall remain subject to all obligations hereunder) if there has been
an Eco Telecom Contribution Default; provided, that if such Eco Telecom
Contribution Default is caused by any Specified Legislation which prevents the
Second Closing, any rights granted to Eco Telecom pursuant to this Section 4.06
shall not be suspended. The Selling Shareholder shall exercise its Required Sale
Right by reference thereto in the Offer Notice, which shall state the number of
Securities that the Selling Shareholder is requiring each of the other
Shareholders to sell. Failure by the Selling Shareholder to set forth its
Required Sale Right in the Offer Notice shall be deemed a waiver by the Selling
Shareholder of its Required Sale Right with respect to such Offer. The sale of
Securities by the other Shareholders pursuant to this Section 4.06 shall be on
the same terms and conditions as are set forth in the Offer Notice, except that
(A) the purchase price shall be paid in cash and (B) the purchase price per
share shall be the greater of (x) the purchase price per share stated in the
Offer Notice and (y) the Fair Market Value per share of the Securities as of the
date of delivery of the Offer Notice.
4.07 Co-Sale Rights.
(a) If the Offer described in Section 4.04 is for a number of
Offered Securities such that, as a result of such Transfer, the Third
Party Offeror, together with any of its Affiliates (other than VIP or
any of its Controlled Affiliates), would beneficially hold a
Controlling Interest in the Company, and the other Shareholders do not
elect to purchase in the aggregate all of the Offered Securities
pursuant to Section 4.05, and either (i) the Selling Shareholder does
not exercise its Required Sale Right in respect of such Transfer or
(ii) the number of Securities of each other Shareholder, respectively,
with regard to which such Selling Shareholder exercises its Required
Sale Right ("REQUIRED SALE SECURITIES") is less than all of the
Securities owned, respectively, by each other Shareholder, then each
other Shareholder shall have the right, exercisable by written notice
to the Selling Shareholder (a "CO-SALE NOTICE") within sixty (60) days
from
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delivery by the Selling Shareholder of the Offer Notice, to elect to
sell in the proposed Transfer of Offered Securities to such Third Party
Offeror, all or any portion of such other Shareholder's Securities free
and clear of any Liens other than obligations under this Agreement
(other than any Required Sale Securities); provided, however, that
neither Eco Telecom nor its Permitted Transferees which are Affiliates
(other than VIP or any of its Controlled Affiliates) shall have any
rights under this Section 4.07 (but shall remain subject to all
obligations hereunder) if there has been an Eco Telecom Contribution
Default; provided, that if such Eco Telecom Contribution Default is
caused by any Specified Legislation which prevents the Second Closing,
any rights granted to Eco Telecom pursuant to this Section 4.06 shall
not be suspended. The Transfer of Securities by the other Shareholders
pursuant to a Co-Sale Notice shall be at the purchase price and on the
same terms and conditions set forth in the Offer Notice; provided,
however, that, notwithstanding the foregoing, if the Third Party
Offeror identified in the Offer Notice, together with any of its
Affiliates (other than VIP or any of its Controlled Affiliates),
beneficially holds a Controlling Interest in the Company as a result of
more than one Transfer of Securities by the same Selling Shareholder
and/or its Affiliates, then the purchase price of the Transferred
Securities pursuant to such Co-Sale Notice shall be paid to each other
respective Shareholder in cash in an amount equal to the greatest of
(x) the purchase price per share stated in any applicable Offer Notice,
(y) the highest purchase price per share paid by the Third Party
Offeror in any such Transfer and (z) the Fair Market Value per share of
the Securities as of the date of delivery of any applicable Offer
Notice. Failure of any of the other Shareholders to provide a Co-Sale
Notice within such sixty (60) day period shall be deemed an election by
such Shareholder not to participate in the proposed Transfer pursuant
to this Section 4.07.
(b) In the event any of the other Shareholders gives a Co-Sale
Notice, the Selling Shareholder shall have the option to (i) cause the
Third Party Offeror to purchase both the Offered Securities (including
any Required Sale Securities) and the additional Securities to be
Transferred by such other Shareholders pursuant to the Co-Sale Notice
or (ii) cancel such Transfer to the Third Party Offeror.
4.08 Closing.
The closing of any Transfer of Securities pursuant to Section 4.06 or 4.07 shall
be held at the time and place designated by the purchaser(s). At the closing of
such Transfer, (i) each Shareholder participating in the Transfer shall deliver
to the purchaser(s) its Securities to be Transferred to the purchaser(s) free
and clear of all Liens and documents required to cause the Registrar to amend
the Company's share register to reflect the Transfer and (ii) such purchaser(s)
shall pay the purchase price for such Securities and deliver an Endorsement to
the Company and the Shareholders.
4.09 Effectiveness of Transfer.
(a) Securities Transferred in accordance with the terms and
conditions of this Agreement shall remain subject to the provisions of
this Agreement; provided, that no proposed Transfer of Securities shall
be effective, nor shall the Company authorize any proposed Transfer to
be recorded by the Registrar in the Company's share register, unless
and until the proposed transferee, including, but not limited to, any
Permitted Transferee, agrees in
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writing to assume and be bound by the provisions of this Agreement by
executing and delivering to the Company and each other Shareholder an
Endorsement. Following delivery of such Endorsement, the transferee
shall be deemed to be a Shareholder for purposes of this Agreement, and
shall be entitled to all rights and subject to all obligations of
Shareholders under this Agreement. Notwithstanding the foregoing
provisions of this Section 4.09(a), at any time following an IPO the
provisions of this Article IV shall not apply to any Transfer of
Securities by a Shareholder conducted through the New York Stock
Exchange or any other national or international exchange or securities
trading facility on which the Company's Securities are then listed and
traded and, in each such case the Securities so acquired shall not be
subject to this Agreement, and the transferee shall not be entitled to
any rights or subject to any obligations of the transferor Shareholder
under this Agreement.
(b) A Shareholder which effects a Transfer of all of such
Shareholder's Securities in accordance with the terms of this Agreement
shall, after giving effect to such Transfer, cease to be a Party to, or
be bound by the terms of, this Agreement from and after the date of
such Transfer. Notwithstanding the foregoing, no Transfer shall be
deemed to relieve the transferor Shareholder of any obligations of such
Shareholder pursuant to this Agreement accruing, or resulting from
actions or omissions of such Shareholder occurring prior to the date of
such Transfer.
4.10 Improper Transfers Ineffective.
Any purported Transfer of, or creation or permission of a Lien upon, any
Securities that is in violation of the provisions of this Agreement shall be
void and of no force or effect whatsoever, and, to the extent within the
Company's control, the Company shall not permit the Registrar to record any such
event on the Company's share register or treat any such transferee as the owner
or pledgee of such Securities for any purpose. Without prejudice to any other
rights or remedies of any Party or the Company, if any Party effects a Transfer
of any Securities to any Person in violation of this Article IV, then any
transferee of such Securities shall receive and hold any and all such Securities
so Transferred without any of the rights, but subject to all of the obligations,
set forth in this Agreement.
4.11 Information Letter.
The Company will use its reasonable efforts, to the extent permitted by the laws
of the Russian Federation and regulations applicable to the Registrar, to cause
the Registrar to deliver with each (i) share extract issued in due course in
respect of Common Stock and Preferred Stock of the Shareholders, or (ii) copy of
the register of the Company as permitted by the laws of the Russian Federation,
an original information letter on the Registrar's letterhead executed on behalf
of the Registrar which shall contain (in addition to the addressee's details) a
Russian translation of the following text: "THE STOCK OF THE COMPANY IS SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER (AND PLEDGE) AS SET FORTH IN THE
SHAREHOLDERS AGREEMENT DATED AS OF MAY 30, 2001, COPIES OF WHICH MAY BE
FURNISHED BY THE COMPANY UPON WRITTEN REQUEST AND WITHOUT CHARGE." (the
"INFORMATION LETTER"). The Company shall receive a copy of each such Information
Letter and shall maintain the list of any written requests to provide copies of
the
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Shareholders Agreement. Each Shareholder shall be entitled to receive from the
Company copies of any such written requests or Information Letters.
4.12 Other Arrangements.
(a) Except for the Principal Agreements, no Party shall grant any
proxy or enter into or agree to be bound by any understanding or any
voting trust, voting proxy or other voting agreement with respect to
any Securities, nor shall any Party enter into any shareholders
agreement or arrangement of any kind (whether written or oral) with any
Person with respect to any Securities, including, without limitation,
any agreement, understanding or arrangement with respect to the
acquisition, ownership, transfer or other disposition or voting of
Securities, nor shall any Party act, for any reason, as a member of a
group or in concert with any other Person in connection with the
acquisition, transfer or other disposition or voting of Securities in
any manner which is inconsistent with any obligation of such Party
under this Agreement, provided that each Party shall be permitted to
Transfer its Securities in accordance with the terms of this Agreement.
(b) Without prejudice to any other rights or remedies of any Party
to this Agreement, if any representation and warranty made by any Party
in Article III hereof is shown to have been false or misleading when
made or confirmed, or if any Party violates the provisions of this
Article IV, the rights of such Party under this Agreement and the
Registration Rights Agreement shall terminate forthwith, but such Party
shall continue to be bound by all of its obligations hereunder and
thereunder.
ARTICLE V
FUNDING COVENANTS; DEBT ACQUISITION; NEW CAPITAL STOCK
5.01 Loans and Financing.
Each of the Parties agrees to use its reasonable best efforts and utilize its
existing banking and vendor relationships to ensure that commercial loans and
vendor financing on commercially favorable terms are made available to the
Company. No Party shall be obligated to guarantee or provide any security in
furtherance of such loans or financing.
5.02 Capital Increase.
(a) From the date hereof through the second (2nd) anniversary of
the First Closing, unless otherwise agreed by all of the Shareholders,
and other than in connection with any issuance of Common Stock and/or
Preferred Stock pursuant to the Primary Agreement or in connection with
the financing of an acquisition of any Opportunity pursuant to Section
6.02(c)(iii) hereof, no Party shall take any action, including, but not
limited to, voting of any Securities, in favor of the sale or issuance
by the Company of any Securities ("NEW SECURITIES"); provided, that New
Securities shall not include (i) Securities purchased or to be
purchased by a Party under the Primary Agreement; (ii) any borrowing or
debt securities that are not, and will not become, convertible into or
exchangeable for Securities; and (iii) Securities issued in connection
with any share split, share consolidation, share dividend or
recapitalization of the Company; provided, further, that the
restriction contained in this Section 5.02 shall no longer apply if
there has been an Eco Telecom Contribution Default.
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(b) The Parties shall exercise (a) their rights and powers as
holders of the Company's Securities, and (b) their rights and powers
granted hereunder to, and the Company shall, ensure that the Company
fulfills all of its obligations under the Primary Agreement and the
Preferred Stock Agreement to (i) issue a sufficient number of
Securities to satisfy the issuance of Securities to Eco Telecom in
connection with the Preferred Stock Closing, the Second Closing and the
Third Closing and any Securities required to be issued to Telenor and
VIP upon exercise of their options in accordance with, and as defined
in, the Primary Agreement, and (ii) to repurchase shares of Preferred
Stock and subsequently dispose of such shares of Preferred Stock as set
forth in the Primary Agreement and the Preferred Stock Agreement.
5.03 Debt Acquisition.
(a) A Party and its other Standstill Parties may enter into any
Debt Transactions if and only if such Party and its Standstill Parties
comply with the provisions of this Section 5.03.
(b) In the event a Party or any of its other Standstill Parties
enters into a Debt Transaction, such Party shall, and shall procure
that its other Standstill Parties shall:
(i) Provide written notice thereof to the Protected Party
(with a copy to the Company) within 10 days of
entering into a Debt Transaction, which notice shall
constitute an offer to such Protected Party (an
"OFFER NOTICE") (which offer shall be legally binding
on the Standstill Party upon acceptance by such
Protected Party or the Company or the Company's
designee on behalf of such Protected Party; provided
such designee is either a recognized financial
institution or telecommunications equipment vendor of
the Company, VIP or the Protected Party) to sell to
such Protected Party, the Company or the Company's
designee, such Debt Obligation (and, if applicable,
the underlying obligation to which such Debt
Obligation relates, such underlying obligation or
Debt Obligation, as applicable, being the "RELEVANT
OBLIGATION") at a purchase price equal to the lesser
of the Fair Market Value thereof, or one hundred
percent (100%) of the aggregate unpaid principal
amount of the Relevant Obligation plus any accrued
interest and other amounts, if any, owing under the
Relevant Obligation up to (but excluding) the
purchase date thereof.
(ii) Within ten (10) Business Days from the date of notice
of an intention to accept such offer by the Protected
Party, the Company or the Company's designee, the
Standstill Party shall provide a copy of the
document(s) evidencing the outstanding amount of the
Relevant Obligation and a calculation of the purchase
price thereof showing the amount of unpaid principal,
any accrued interest thereon and any other amounts
owing thereunder, as well as the basis for
determining the Fair Market Value thereof ("PRICE
NOTICE"). Within five (5) Business Days from the date
of receipt of the Price Notice, the Protected Party,
the Company or the Company's designee shall notify
the Standstill Party whether it accepts the
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offer at such time and, if so, shall purchase such
Relevant Obligation at such time. If the Protected
Party, the Company or the Company's designee, as
applicable, do not accept such offer at such time,
the provisions of this Section 5.03(b) shall remain
in effect with respect to such Relevant Obligation.
(iii) The Standstill Party shall not be restricted from
selling or otherwise disposing of the Relevant
Obligation at any time prior to the acceptance of the
Offer Notice in accordance with the terms hereof;
provided, however, that the Standstill Party shall
provide written notice to the Protected Party (with a
copy to the Company) within ten (10) days of such
sale or disposition.
(c) In the event a Party or any of its other Standstill Parties
enters into a Debt Transaction, such Party shall, and shall procure
that its other Standstill Parties shall, prior to initiating or
participating in any enforcement action or bankruptcy proceeding
against any Protected Party with respect to any Debt Obligation,
provide at least 90 days prior written notice thereof to the Protected
Party (with a copy to the Company) and adhere to the procedures set
forth in Section 5.03(b)(i) and 5.03(b)(ii).
(d) In the event a Party or any of its other Standstill Parties
initiates or participates in the initiation of any enforcement action
or bankruptcy proceeding against any Protected Party with respect to
any Debt Obligation without adhering to the provisions of Section
5.03(c), such Party shall, and shall procure that its other Standstill
Parties shall, immediately file all papers necessary to terminate or
cause the termination of such action or proceeding within five (5)
Business Days of receiving notice from the Protected Party, the Company
or any Party that the entity against whom such bankruptcy proceeding
was initiated is a Protected Party, and shall thereafter use its best
efforts to ensure that such enforcement action or bankruptcy proceeding
is terminated, and immediately thereafter or simultaneously with such
actions, the relevant Standstill Party shall make an offer to sell to
such Protected Party (which offer shall be legally binding on the
Standstill Party upon acceptance by such Protected Party or the Company
or the Company's designee, as the case may be, on behalf of such
Protected Party) and shall sell such Relevant Obligation to the
relevant Protected Party or the Company or the Company's designee, as
the case may be, pursuant to Section 5.03(b), if such offer is
accepted.
(e) Any breach of Section 5.03(b) shall be deemed cured and no
violation of Section 5.03(b) shall be deemed to have occurred or to
exist if: (x) the aggregate principal amount of the Relevant Obligation
is less than US$10,000,000 (calculated without any accrued interest,
penalties or other similar amounts thereon), and (y) the terms of
Section 5.03(b) are complied with immediately upon the Party becoming
aware of it or any of its Standstill Parties have entered into the Debt
Transaction.
(f) Any breach of Section 5.03(c) shall be deemed cured and no
violation of Section 5.03(c) shall be deemed to have occurred or to
exist if: (x) the aggregate principal amount of the Relevant Obligation
is less than US$10,000,000 (calculated without any accrued interest,
penalties or other similar amounts thereon), (y) the Protected Party is
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neither VIP, nor any Consolidated Subsidiary of VIP, nor the Company,
nor any Consolidated Subsidiary of the Company, and (z) the Standstill
Party complies with Section 5.03(d) and such enforcement action or
bankruptcy proceeding is thereafter terminated.
(g) Each of the Company and VIP will, or will cause each Protected
Party to, promptly inform each other Party if it becomes aware of any
violation of the terms of this Section 5.03.
ARTICLE VI
CERTAIN CORPORATE MATTERS
6.01 Business Combination.
(a) From and after the earlier of (i) the Third Closing Date or
(ii) with respect to VIP only, an Eco Telecom Contribution Default,
each of Eco Telecom and VIP shall have the right, for so long as such
party is a Shareholder which owns the Specified Percentage (and, with
respect to Eco Telecom only, so long as there has not occurred an Eco
Telecom Contribution Default), to initiate a review of a Business
Combination, in accordance with the procedures set forth in Schedule 3
hereto (such initiating Shareholder, the "INITIATING SHAREHOLDER" and
such review, a "BUSINESS COMBINATION Review").
(b) In the event of a Business Combination Review, the Appraisers
selected in accordance with the procedures set forth in Schedule 3
hereto shall determine the Combination Ratio. If such Appraisers
determine that the Combination Ratio is at least 90% and if two
Appraisers' respective Combination Ratios do not differ by more than
20% from each other, then each of Eco Telecom, Telenor, VIP and the
Company agree to take the following actions in furtherance of a
Business Combination:
(i) Subject to each party's relevant fiduciary duties and
obtaining shareholder, regulatory and other customary and
necessary approvals, each of VIP and the Company agrees to
negotiate in good faith and use all commercially reasonable
efforts to take all actions necessary to effect the Business
Combination, including but not limited to entering into such
agreements (subject to usual and customary terms and
conditions) as are necessary to effect the Business
Combination;
(ii) Subject to the foregoing, VIP agrees to submit to its
shareholders for approval (a) the Business Combination and (b)
the issuance of capital stock by VIP, or a wholly owned
subsidiary of VIP, or such other entity as the Parties may
determine in accordance with the provisions hereof, in
connection therewith; provided, that nothing hereunder shall
be deemed to require the board of directors of VIP to
recommend the Business Combination or such issuance in any
such submission to its shareholders; and
(iii) Each of Eco Telecom, VIP and Telenor and their
respective Permitted Transferees, if any, agrees to take all
actions within the power of such
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Shareholder (solely in their respective capacity as a
shareholder of the Company) to approve and effect the Business
Combination, including but not limited to voting any
securities of the Company held by such Shareholder, or any of
its Controlled Affiliates, in favor of the Business
Combination.
(c) In the event of a Business Combination effected pursuant to
Section 6.01(b), VIP will acquire all of the issued and outstanding
shares of Common Stock of the Company in exchange for newly issued
shares of capital stock of VIP, or a wholly owned subsidiary of VIP, or
such other entity as the Parties may determine in accordance with the
provisions hereof, at an exchange ratio equal to the final Combination
Ratio determined pursuant to Schedule 3 hereto.
(d) In the event of a Business Combination Review in which any
Appraiser determines, in accordance with the procedures set forth in
Schedule 3 hereto, that the Combination Ratio is less than 90%, or if
no two of three Appraisers have determined Combination Ratios that are
within 20% of each other, then such proposed Business Combination shall
not be effected pursuant to the requirements set forth in this Section
6.01.
(e) In the event that the Initiating Shareholder commences a
Business Combination Review, all fees and expenses of the Initiating
Shareholder, the non-Initiating Shareholder, the Appraisers and the
Company incurred in connection with the Business Combination Review
including, in each case, any legal, banking, accounting, and regulatory
fees and expenses (collectively, the "BUSINESS COMBINATION FEES") shall
be paid in accordance with the provisions of Schedule 3 hereto;
provided, however, that each party shall be responsible for its own
fees and expenses in connection with carrying out the provisions set
forth in Section 6.01(b)(i) hereof.
(f) The Parties acknowledge and agree it is their intent that, if
Eco Telecom and/or Telenor, individually, own at the Specified
Percentage of VIP immediately prior to the consummation of a Business
Combination, Eco Telecom and/or Telenor, as the case may be, should
have the right to individually own at least the Specified Percentage of
VIP following such Business Combination. Accordingly, if Eco Telecom
and/or Telenor, individually, own at least the Specified Percentage of
VIP immediately prior to a Business Combination, the Parties shall use
all commercially reasonable efforts to provide Eco Telecom and/or
Telenor, as the case may be, with the opportunity to own individually
at least the Specified Percentage of VIP following such Business
Combination. If the Parties are unable to provide Eco Telecom and/or
Telenor, as the case may be, with such opportunity, Eco Telecom and/or
Telenor, as the case may be, shall not be required to take any action
in accordance with this Section 6.01 or Schedule 3 hereto, including,
without limitation, the actions specified in Section 6.01(b)(3), in
connection with any such Business Combination.
6.02 Non-Compete.
(a) Subject to Sections 6.02(b) and (c) and the provisos set forth
at the end of this Section 6.02(a) and except for each Party's and its
Affiliates' Existing Investments, each Party or Shareholder, as the
case may be, agrees that such Party or Shareholder, as the
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case may be, will not, without the prior written consent of the
Company, (i) engage in the Business in any region in Russia, (ii) own
or control, directly or indirectly, more than five percent (5%) of the
voting capital stock in any Person (other than the Company, VIP, or any
of their respective Controlled Affiliates) engaged in the Business in
any region in Russia or (iii) permit any of its Controlled Affiliates
(other than the Company, VIP, or any of their respective Controlled
Affiliates) to engage in the Business in any region in Russia or own or
control, directly or indirectly, more than five percent (5%) of the
voting capital stock in any Person (other than the Company, VIP, or any
of their respective Controlled Affiliates) engaged in the Business in
any region in Russia; provided, however, that the restrictions
contained in this Section 6.02(a) shall apply only to Parties which,
together with their Affiliates, own or control, directly or indirectly,
the Specified Percentage of the Company or the Specified Percentage of
VIP; and, provided, further, that from the date hereof until the
earlier of the Third Closing Date or the termination of this Agreement,
Eco Telecom shall be deemed, for the purposes of this Section 6.02, to
own and control the Specified Percentage of the Company and the
Specified Percentage of VIP. Notwithstanding the foregoing, (i) nothing
herein shall prohibit VIP from engaging in the Business in the Moscow
License Area and (ii) nothing herein shall permit the Company to engage
in the Business in the Moscow License Area without the prior written
consent of VIP.
(b) The Parties acknowledge that this Section 6.02 shall not in
any way limit any Party's or any of its Affiliates' right to:
(i) maintain, increase the amount of, or otherwise
develop its Investments in the Company or any of the Company's
Controlled Affiliates, or in VIP or any of VIP's Controlled
Affiliates;
(ii) maintain, increase the amount of, or otherwise
develop any of the Investments made or scheduled to be made by
such Party or Affiliate of such Party on or prior to the date
hereof in Persons engaged in the Business in Russia on the
date hereof, in each case, as listed in Schedule 6.02(b)
("EXISTING INVESTMENTS"), so long as, as a consequence of any
such maintenance, increase or development of an Existing
Investment, such Party or Affiliate does not own or control,
directly or indirectly, a Controlling Interest in any Person
(other than the Company, VIP, any of their respective
Controlled Affiliates or any Existing Investments) which is
engaged in the Business in Russia;
(iii) acquire through a merger, or exchange of shares or
assets of an Existing Investment (which may include cash
and/or other property), or a consolidation or other similar
business combination involving an Existing Investment, or
maintain as a result of the foregoing, directly or indirectly,
an ownership interest in any Person engaged in the Business in
Russia, so long as, as a consequence of any such transaction,
such Party or Affiliate does not own or control, directly or
indirectly, a Controlling Interest in any Person (other than
the Company, VIP or any of their respective Controlled
Affiliates) engaged in the Business in Russia; provided,
however, that such Party or Affiliate shall be permitted to
maintain its ownership interest in such Existing Investment;
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(iv) without limiting in any way any transactions
permitted by clauses (i), (ii), (iii) or (v) of this Section
6.02(b), acquire or maintain, directly or indirectly, any
ownership interest in any Person which, on a consolidated
basis, derives less than 25% of its revenues (calculated on a
consolidated basis for such Person under GAAP) from the
Business in Russia; or
(v) with respect to any Existing Investment, sell to,
merge with or into, consolidate with, or otherwise effect a
change of control with respect to, any Person which is engaged
in the Business in Russia, so long as, as a consequence of
such sale, merger, consolidation or change of control, such
Party or Affiliate does not own or control, directly or
indirectly, a Controlling Interest in any Person (other than
the Company, VIP or any of their respective Controlled
Affiliates) which is engaged in the Business in Russia;
provided, however, that such Party or Affiliate shall be
permitted to maintain its ownership interest in such Existing
Investment.
(c) The Parties acknowledge that this Section 6.02 shall not, in
any way limit the right of Telenor or Eco Telecom, or any of their
respective Permitted Transferees, to identify and pursue on a
preliminary basis an opportunity (the "Opportunity") to obtain a
telecommunications license to engage in the Business or acquire all or
a portion of the shares of a Person holding directly or indirectly a
telecommunications license to engage in the Business, or participate in
a tender for such telecommunications license to engage in the Business,
in any region in the Russian Federation, excluding the Moscow License
Area and excluding those opportunities set forth in Schedule 6.02(c);
provided, that neither Telenor nor Eco Telecom (nor any of their
respective Permitted Transferees) may pursue any such Opportunity more
than twice prior to the second anniversary of the First Closing; and
provided, further, that the following conditions are met:
(i) Upon identifying any such Opportunity, the relevant
Party shall promptly notify the Company thereof in writing,
providing all relevant details to the Company (with a copy to
VIP);
(ii) The Company shall have a right of first refusal to
pursue any such Opportunity, exercisable at no cost to the
Company. The Board of the Company shall determine whether to
exercise such right and pursue such Opportunity in accordance
with the Management Regulations. If the Board of the Company
determines that the Company should pursue such Opportunity,
the Company shall, within fifteen (15) days of receipt of such
notice from such Party, notify such Party that the Company has
elected to exercise its right of first refusal in respect of
such Opportunity. Thereafter, the Company may pursue such
Opportunity as it shall, in its sole discretion, see fit, and
such Party shall desist from pursuing such Opportunity;
(iii) If the Board of the Company determines that the
Company should not pursue such Opportunity, the Company shall,
within fifteen (15) days of receipt of
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such notice from such Party, notify such Party that the
Company has elected not to exercise its right of first refusal
in respect of such Opportunity. If such Party decides to
pursue such Opportunity, it shall do so through a Russian
special purpose vehicle established solely for the purpose of
owning and developing such Opportunity. Such special purpose
vehicle shall have financial statements audited in accordance
with GAAP commencing from the date of its establishment
prepared by an internationally recognized accounting firm. In
such event:
(A) With respect to any Opportunity for which
notice was given pursuant to Section 6.02(c)(i) prior
to the second anniversary of the First Closing, and
with respect to any Opportunity in any subject
(subyekt) of the Russian Federation in which the
Company then holds a license to engage in the
Business for which notice was given pursuant to
Section 6.02(c)(i) on or after the second anniversary
of the First Closing, the Company shall have a call
option in respect of all of such Party's right, title
and interest in and to the Opportunity, exercisable
within three (3) years from the date of such Party's
notice to the Company pursuant to Section 6.02(c)(i)
at an exercise price equal to the greater of the Fair
Market Value of such Opportunity and the cost of
acquiring and developing such Opportunity through the
date of exercise of such call option as evidenced by
documents provided by such Party to the Company; and
(B) With respect to any Opportunity for which
notice was given pursuant to Section 6.02(c)(i) on or
after the second anniversary of the First Closing in
any subject (subyekt) of the Russian Federation in
which the Company does not then hold a license to
engage in the Business, the Company shall have a call
option in respect of all of such Party's right, title
and interest in and to the Opportunity, exercisable
within two (2) years from the date of such Party's
notice to the Company pursuant to Section 6.02(c)(i),
at an exercise price equal to the greater of the Fair
Market Value of such Opportunity and the cost of
acquiring and developing such Opportunity through the
date of exercise of such call option, as evidenced by
documents provided by such Party to the Company;
provided, however, that if such Party decides to sell or
otherwise dispose of such Opportunity prior to the expiration
of the relevant call option period, such Party shall provide
thirty (30) days' prior written notice to the Company and the
Company shall decide, prior to the expiration of such thirty
(30) day period, whether to initiate the due diligence process
set forth in Section 6.02(c)(iv) and thereafter, to exercise
its call option in accordance with and subject to the terms
described in this Section 6.02;
(iv) With respect to each call option described in Section
6.02(c)(iii), the Board of the Company shall determine whether
to exercise such call option in
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accordance with the Management Regulations. If the Board of
the Company determines that the Company should exercise such
call option, the Company shall, at least ninety (90) days
prior to the end of such two (2) year period or three (3) year
period, as the case may be, notify such Party that, subject to
due diligence, obtaining the necessary approvals from all
Governmental and Regulatory Authorities and obtaining the
representations and warranties, and guarantee set forth below,
the Company wishes to exercise such call option. The Company
shall have sixty (60) days to conduct a due diligence
investigation in respect of such Opportunity, commencing on
the date on which the Board of the Company notifies such Party
of the Company's wish to exercise such call option. Such Party
shall cooperate with the Company in connection with such due
diligence investigation and, upon request of the Company, its
counsel, auditors or financial advisors, provide the Company
with all documents and other information concerning such
Opportunity. In addition, such Party agrees that it will not
vote any of its Securities (and, in the case of Eco Telecom,
exercise any other rights provided hereunder) against the sale
or issuance by the Company or VIP of any shares of capital
stock (provided such Party is given the opportunity to
participate on a pro rata basis in order to maintain its
shareholding in the Company and/or VIP, as applicable, and
that such Party may make payment for such portion of the
shares of capital stock of the Company and/or VIP by
contributing the Opportunity (in whole or in part) to the
Company and/or VIP (based on the Fair Market Value of the
Opportunity)), or the borrowing by the Company or VIP of any
public debt securities, in each case, the proceeds of which
will be used to finance, directly or indirectly, the purchase
of such Opportunity. If following such due diligence
investigation the Company still wishes to exercise such call
option, it shall, at least thirty (30) days prior to the end
of such two (2) year period or three (3) year period, as the
case may be, notify such Party thereof and instruct its
counsel to prepare definitive documentation to effect the
exercise of such call option, which definitive documentation
will include the following:
(A) customary representations by the seller of
the Opportunity and such Party substantially
similar to those representations set forth
on Schedule 6.02(c)(iv)(A);
(B) delivery of financial statements of the
relevant Person, audited by an
internationally recognized accounting firm
in accordance with GAAP; and
(C) a guarantee by the General Guarantor under
(and as defined in) the Eco Telecom
Guarantee Agreement or by the Guarantor
under (and as defined in) the Telenor
Guarantee Agreement, as applicable, of the
representations and warranties of the seller
of the Opportunity and Eco Telecom or
Telenor, as applicable, and performance by
the seller of the Opportunity and Eco
Telecom or Telenor, as applicable, of the
covenants and other terms in
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connection with the sale of the Opportunity
substantially in the form of Schedule
6.02(c)(iv)(C); and
(v) If for any reason the Company has not exercised such
call option due to the failure of such Party to meet the
requirements set forth in Section 6.02(c)(iv) within ninety
(90) days from the date the Company notified such Party of its
election to exercise the call option with respect to such
Opportunity, such Party shall promptly sell or otherwise
dispose of such Opportunity to a third party which shall not
be an Affiliate of such Party and shall not be a Direct
Competitor; provided, that in any event, such sale or
disposition shall be consummated within 18 months from the
date of such notice by the Company to such Party.
(d) For the avoidance of doubt, any Shareholder hereunder shall be
deemed a "Party" for the purposes of this Section 6.02.
6.03 Charter.
Within three (3) Business Days following the date hereof, the Company shall file
and, as promptly as practicable thereafter, shall register an amended and
restated charter, substantially in the form of Exhibit C hereto, with the Moscow
Registration Chamber. As soon as practicable after the date that the Company has
completed all necessary corporate and regulatory approvals following the
issuance of Preferred Stock to Eco Telecom in connection with the Preferred
Stock Closing, the Company shall file an amended and restated charter,
substantially in the form of Exhibit D hereto, with the Moscow Registration
Chamber in connection with the reorganization of the Company into an open joint
stock company organized and existing under the laws of the Russian Federation.
The Company and the Shareholders shall promptly undertake all other actions
required to be performed in connection with such reorganization including but
not limited to increasing the charter capital to meet the minimum requirements
under Russian Law of open joint stock companies; provided, however, that the
Shareholders shall not be required to make any additional payments to the
Company in connection with respect to such reorganization.
6.04 Amendment of Charter.
To the extent that pursuant to applicable law the legality, validity or
enforceability of any of the provisions contained in this Agreement now or at
any time hereafter requires that such provisions, or a reference to such
provisions, be contained in the Company's Charter, or requires any amendment to
the Company's Charter, then the Parties shall cause the Company to take such
action as may be necessary to supplement or amend the Charter as so required,
and each of the Parties hereby consents to such amendment to the fullest extent
permitted by law. Without limiting the generality of the foregoing, the Parties
shall take such action as may be necessary to supplement or amend the Charter to
reflect, and not conflict or be inconsistent with, the provisions of this
Agreement. The Parties also agree, to the extent permitted by law, to waive any
rights or privileges granted to them (including but not limited to redemption
rights, rights of first refusal and the like) by applicable law or the Charter
that conflict or are inconsistent with the terms and conditions of this
Agreement.
6.05 Certain Corporate Actions.
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Each Shareholder agrees to take all actions necessary to effect the transactions
set forth in, or contemplated by, the Principal Agreements, including, but not
limited to, voting (or causing to be voted) all of such Shareholder's respective
Voting Securities at any meeting of shareholders (in person or by ballot) in
favor of any action to effect the foregoing, and each Shareholder further agrees
to waive any rights under Articles 30 and 75 of the Federal Law "On Joint Stock
Companies" dated December 26, 1996, as amended, or similar rights under Russian
Laws.
ARTICLE VII
CONFIDENTIALITY
Each Party 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 or a bona fide Pledgee in
connection with any action contemplated by Article IV hereof), unless (a)
compelled to disclose by judicial or administrative process (including, without
limitation, as required to be disclosed under the Act, the Exchange Act or
applicable stock exchange rules) 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 Company or any other Party or any of its or their
Affiliates furnished by the Company or such other Party or their respective
representatives to such Party in such capacity, 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. In the event that this Agreement is
terminated, upon the request of another Party, each Party hereto will, and will
cause its Affiliates and their respective representatives to, unless otherwise
required by law, 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.
ARTICLE VIII
BOOKS AND RECORDS; REPORTING
8.01 Maintenance of Books and Records.
The Company shall maintain such corporate Books and Records necessary or
appropriate for the conduct of its business. Such Books and Records, and the
minutes of actions and/or meetings of the shareholders and directors of the
Company, shall be kept at the principal office of the Company or at such other
reasonable place as the Board may determine.
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8.02 Right to Examine Books and Records.
Any Shareholder shall have the right, at such Shareholder's expense, to examine,
audit and make copies of the Books and Records of the Company, in person or by
duly authorized agent or attorney, upon reasonable prior notice to the Company
and during normal business hours.
8.03 Reporting.
The Company shall furnish the following reports to each Party:
(a) As soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company,
and in any event within ninety (90) days thereafter, an unaudited
consolidated balance sheet of the Company and its consolidated
subsidiaries as at the end of each such quarterly period, and the
related unaudited consolidated statements of income and cash flows of
the Company and its consolidated subsidiaries for such period and for
the current fiscal year to date, prepared in accordance with GAAP, as
adjusted by the accounting procedures and policies utilized by the
Company for internal management reports consistently applied and
setting forth in comparative form the figures for the corresponding
periods of the previous fiscal year, which statements shall be subject
to changes resulting from audit adjustments. Such statements, upon
delivery thereof, shall have been reviewed by the Company's auditors;
and
(b) As soon as practicable after the end of each fiscal year of
the Company, and in any event within one hundred eighty (180) days
thereafter, an audited consolidated balance sheet of the Company and
its consolidated subsidiaries as at the end of such fiscal year, and
audited consolidated statements of income and cash flows of the Company
and its consolidated subsidiaries for such fiscal year, prepared in
accordance with GAAP consistently applied and setting forth in
comparative form the figures for the previous fiscal year. Such
statements, upon delivery thereof, shall have been audited by the
Company's auditor, which shall be selected by the Board in accordance
with the Charter and this Agreement from among the major international
accounting firms.
ARTICLE IX
INDEMNIFICATION
The Company shall indemnify, defend and hold harmless the Parties' respective
directors, officers and employees who are acting as a Director or officer of the
Company or any of its Controlled Affiliates, and any other directors or officers
of the Company or any of its Controlled Affiliates, in such Person's capacity as
a Director or officer of the Company or any of its Controlled Affiliates (each
and severally, an "INDEMNIFIED PERSON", and collectively, the "INDEMNIFIED
PERSONS"), from and against any and all liabilities, losses, damages, claims,
fines, penalties, costs and expenses, including reasonable fees and expenses of
counsel selected by the Indemnified Person (collectively, "DAMAGES") to which
the Indemnified Person may become subject by reason of, or in connection with,
any action taken or omitted to be taken by such Person arising out of such
Person's status as a director or officer of the Company or any of its Controlled
Affiliates, to the fullest extent permitted by law, except that the Company
shall not indemnify any Indemnified Person for any Damages (i) arising from such
Indemnified Person's
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bad faith or willful misconduct, or (ii) as to which indemnification is barred
under applicable law. Attorneys' fees and expenses shall be paid by the Company
as they are incurred, upon receipt, in each case, of an undertaking by or on
behalf of the Indemnified Person to repay such amounts if it is ultimately
determined that such Indemnified Person is not entitled to indemnification with
respect thereto.
The Company shall procure director and officer liability insurance or similar
insurance policy, at its expense, insuring such Indemnified Persons against any
of the Damages for which the Company is obligated to indemnify any Indemnified
Person pursuant to this Article IX. Notwithstanding any other provision of this
Article IX, the Company shall be obligated to indemnify any Indemnified Person
eligible for indemnification hereunder only to the extent payments under such
insurance policy are insufficient to hold harmless such Indemnified Person in
respect of any such Damages (or actions in respect thereof).
ARTICLE X
TERM AND TERMINATION
This Agreement shall take effect on the date hereof and remain in effect until
the earliest of:
(a) at midnight (Moscow time) on the Final Date, if the First
Closing has not occurred by such time ;
(b) the date on which all of the Parties and the Company agree in
writing to the termination of this Agreement;
(c) the date on which a meeting of the shareholders of VIP 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 such transactions as
are required by Russian Law and the Charter to be approved by such
shareholders;
(d) with respect to any Party, such date that such Party has
effectively Transferred, in accordance with Section 4.09, all of its
Securities; provided, that following an Eco Telecom Contribution
Default, Eco Telecom's obligations (and the obligations of any of Eco
Telecom's Permitted Transferees) under Sections 5.03, 6.02(a) and
6.02(b) shall remain in effect until the Third Closing Date; and
(e) with respect to Telenor only, upon the Third Closing if
Telenor has not purchased the Second Closing Telenor Shares or the
Third Closing Telenor Shares (as such terms are defined in the Primary
Agreement), pursuant to the terms of the Primary Agreement;
provided, that no such termination shall be deemed to relieve any Party of any
obligations of such Party pursuant to this Agreement accruing, or resulting from
actions or omissions of such Party occurring, prior to the date of such
termination; and provided, further, that Section 6.02(c) shall not terminate
with respect to any Party until all call options with respect to any
Opportunities under Section 6.02(c) have lapsed or been exercised.
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ARTICLE XI
DISPUTE RESOLUTION
11.01 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 then in force
(the "UNCITRAL 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) The place of the arbitration shall be Geneva,
Switzerland.
(iii) Where there is only one claimant party and one
respondent party, each shall appoint one arbitrator in
accordance with the UNCITRAL Rules, and the two arbitrators so
appointed shall appoint the third (and presiding) arbitrator
in accordance with the UNCITRAL Rules within thirty (30) days
from the appointment of the second arbitrator. In the event of
an inability to agree on a third arbitrator, the appointing
authority shall be the International Court of Arbitration of
the International Chamber of Commerce, acting in accordance
with such rules as it may adopt for this purpose. Where there
is more than one claimant party, or more than one respondent
party, all claimants and/or all respondents shall attempt to
agree on their respective appointment(s). In the event that
all claimants and all respondents cannot agree upon their
respective appointments(s) within thirty (30) Business Days of
the date of the notice of arbitration, all appointments shall
be made by the International Court of Arbitration of the
International Chamber of Commerce.
(iv) The English language shall be used as the written and
spoken language for the arbitration and all matters connected
to the arbitration.
(v)The arbitrators shall have the power to grant any remedy
or relief that they deem just and equitable and that is
accordance with the terms of this Agreement, including
specific performance, and including, but not limited to
injunctive relief, whether interim or final, and any such
relief and any interim, provisional or conservatory measure
ordered by the arbitrators may be specifically enforced by any
court of competent jurisdiction. Each Party retains the right
to seek interim, provisional or conservatory measures from
judicial authorities and any such request shall not be deemed
incompatible with the agreement to arbitrate or a waiver of
the right to arbitrate.
(vi) The award of the arbitrators shall be final and
binding on the Parties.
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(vii) The award 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 competent
jurisdiction.
(b) Except for arbitration proceedings pursuant to Section
11.01(a), no action, lawsuit or other proceeding (other than the
enforcement of an arbitration decision, an action to compel arbitration
or an application for interim, provisional or conservatory measures in
connection with the arbitration) shall be brought by or between the
Parties in connection with any matter arising out of or in connection
with this Agreement.
(c) Each Party irrevocably appoints CT Corporation System, located
on the date hereof at 000 Xxxxxx Xxxxxx, 13th Floor, New York, New York
10011, USA, as its true and lawful agent and attorney to accept and
acknowledge service of any and all process against it in any judicial
action, suit or proceeding permitted by Section 11.01(b), 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 on the
date of such service to the other Parties by facsimile as specified in
Section 12.01. Each Party 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 connection with any
such action, suit or proceeding, and agrees that any such action, suit
or proceeding may be brought in such court, provided, however, that
such consent to jurisdiction is solely for the purpose referred to in
this Section 11.01 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 any other Party in any
other jurisdiction in a manner not inconsistent with this Section
11.01(c).
(d) Each Party 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 Party 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)
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from any and all proceedings (whether legal, equitable, arbitral,
administrative or otherwise), attachment of assets, and enforceability
of judicial or arbitral awards.
ARTICLE XII
MISCELLANEOUS
12.01 Notices.
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 Party in a notice to
each other Party:
If to VIP, to:
Vimpel-Communications
10 Xxxxxx 0-Xxxxx
Xxxxxxxx 00
000000, Xxxxxx
Xxxxxxx Federation
Facsimile No.: x0 000 000 0000
Attention: Xxxxxx Xxxxxxxxxx
General Counsel
With a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
Xxxxx Place II
7 Ulitsa Gasheka
123056, Moscow
Russian Federation
Facsimile No.: x0 000 000 0000
Attention: Xxxxxxx X. Xxxxxxxx
If to Eco Telecom, to:
Eco Telecom Limited
Xxxxx 0, 0 Xxxxx Xxxxx
Xxxxxxxxx
Xxxxxxxxx No.: + 3 504 1988
Attention: Xxxxx Xxxx
With a copy to:
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OOO Alfa-Eco
21 Novy Arbat
121019 Moscow
Russian Federation
Facsimile No.: + 7 095 202 8364
Attention: Stanislav Shekshnya
And a copy to:
Xxxxxxx Xxxxx CIS Legal Services
00 Xxxxxxxxxxxx Xxxxxxxx
000000 Xxxxxx
Russian Federation
Facsimile No.: x0 000 000 0000
Attention: Xxxxxxxx Xxxxxxx
If to the Company, to:
VimpelCom-Region
10 Ulista 8-Xxxxx
Building 14
125083 Moscow
Russian Federation
Facsimile No.: x0 000 000 0000
Attention: Xxxxxxxx Xxxxxxx
General Counsel
With a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
Xxxxx Place II
7 Ulitsa Gasheka
123056, Moscow
Russian Federation
Facsimile No.: x0 000 000 0000
Attention: Xxxxxxx X. Xxxxxxxx
And a copy to :
Xxxxxxx Xxxxx CIS Legal Services
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24 Korobeinikov Pereulok
119034 Moscow
Russian Federation
Facsimile No.: x0 000 000 0000
Attention: Xxxxxxxx Xxxxxxx
If to Telenor, to:
Telenor East Invest AS
Xxxxxxxxxxxxxxxxx 0
X-0000 Xxxx
Xxxxxx
Facsimile No.: x00 00 00 0000
Attention: Xxxxxx Xxxxxxxxx
With a copy to:
Advokatene i Xxxxxxx
Xxxxxxxxxxxxxxxxx 0
X-0000 Xxxx
Xxxxxx
Facsimile No.: x00 00 00 0000
Attention: Xxxxx Xxxxxxx
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.
12.02 Entire Agreement.
This Agreement, together with the Principal Agreements, supersedes all prior
discussions and agreements among the parties with respect to the subject matter
hereof and thereof, and contains the sole and entire agreement between the
parties hereto and thereto with respect to the subject matter hereof and
thereof.
12.03 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 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.
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12.04 Amendment.
This Agreement may be amended, supplemented or modified only by a written
instrument duly executed by or on behalf of each party hereto.
12.05 No Assignment; Binding Effect; No Third Party Beneficiary.
Except as expressly provided herein, 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. 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
hereto to confer third party beneficiary rights upon any other Person other than
any Person entitled to indemnity under Article IX.
12.06 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, without giving effect to any
conflicts of laws principles thereof which would result in the application of a
different law.
12.07 Severability.
If any provision in this Agreement or any other document executed in connection
herewith is or shall become invalid, illegal or unenforceable in any
jurisdiction, the invalidity, illegality or unenforceability of such provision
in such jurisdiction shall not affect or impair the validity, legality or
enforceability of (i) any other provision of this Agreement or any such other
document in such jurisdiction or (ii) such provision or any other provision of
this Agreement or any such other document in any other jurisdiction.
12.08 Further Assurances.
From time to time, at any Party's reasonable request and without further
consideration, each Party 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.
12.09 Headings.
The headings contained in this Agreement are for convenience of reference only,
and do not form a part hereof and in no way interpret or construe the provisions
hereof.
12.10 Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which shall constitute one and the same
instrument.
12.11 Stop Transfer.
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To the extent permitted by applicable law, each Party agrees with, and covenants
to the other Parties that such Party shall not request that the Company or the
Registrar register the transfer (book-entry or otherwise) of any of such Party's
Securities, unless such transfer is made in compliance with this Agreement.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
duly executed by its duly authorized officer, effective as of the day and year
first above written.
OPEN JOINT STOCK COMPANY "VIMPEL-COMMUNICATIONS"
By: /s/ Xxxxxx Xxxxxxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxxx Xxxxx
Title: President
By: /s/ Xxxxxxxx Bychenkov
-----------------------------------
Name: Xxxxxxxx Bychenkov
Title: Chief Accountant
ECO TELECOM LIMITED
By: /s/ Serge Barychkov
-----------------------------------
Name: Serge Barychkov
Title: Attorney-in-Fact
CLOSED JOINT STOCK COMPANY "VIMPELCOM-REGION"
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Attorney-in-Fact
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Accountant
TELENOR EAST INVEST AS
By: /s/ Tron Xxxxx
-----------------------------------
Name: Tron Xxxxx
Title: Attorney-in-Fact
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