1
EXHIBIT 1.1
DATED , 1999
GOLDEN TELECOM, INC.
4,650,000 SHARES OF PAR VALUE $.01 EACH
COMMON STOCK
---------------------------------
UNDERWRITING AGREEMENT
---------------------------------
2
CONTENTS
CLAUSE PAGE
1. INTERPRETATION..............................................................................................1
2. UNDERWRITING................................................................................................5
3. CLOSING.....................................................................................................6
4. UNDERTAKINGS................................................................................................7
5. COMMISSIONS; TERMS OF THE PUBLIC OFFERING..................................................................10
6. EXPENSES...................................................................................................10
7. REPRESENTATIONS AND WARRANTIES.............................................................................11
8. INDEMNITY..................................................................................................18
9. LISTING....................................................................................................22
10.CONDITIONS PRECEDENT.......................................................................................22
11.TERMINATION................................................................................................35
12.NOTICES....................................................................................................35
13.COUNTERPARTS...............................................................................................36
14.GOVERNING LAW..............................................................................................36
SCHEDULE
1. The Underwriters
3
THIS AGREEMENT is made on , 1999 AMONG:
(1) Golden Telecom, Inc., a Delaware corporation (the "COMPANY");
(2) Global TeleSystems Group, Inc., a Delaware corporation (the "PARENT");
and
(3) The Underwriters named in Schedule 1 hereto (the "UNDERWRITERS"), for
whom Deutsche Bank AG London ("DEUTSCHE BANK"), Bear, Xxxxxxx & Co.
Inc. and ING Barings Limited as agent for ING Bank N.V., London Branch
shall act as representatives (the "REPRESENTATIVES").
WHEREAS:
(A) The Company proposes to issue 4,650,000 shares of its Common Stock, par
value $.01 per share ("SHARES"), in an international offering in
respect of which Deutsche Bank will act as global co-ordinator and
bookrunner. In addition, the Company proposes to grant Deutsche Bank on
behalf of the Underwriters the option to require the Company to issue
up to an additional 697,500 new Shares.
(B) The Offer Shares are to be purchased by the Underwriters and
distributed under an international offering (the "OFFERING") pursuant
to the terms of this agreement.
(C) The Company has filed with the Commission the Registration Statement,
relating to the Offer Shares.
(D) The issued share capital of the Company is currently $106,000
represented by 10,600,000 shares of Common Stock, par value $.01 each.
Under the Certificate of Incorporation of the Company, the board of
directors of the Company has full power and authority to make available
for sale and to issue up to 5,347,500 Shares without the same requiring
first to be offered to shareholders of the Company. At a meeting of the
board of directors held on , 1999 it was resolved that the Firm Shares
and up to the whole of the Additional Shares should be sold for and
issued on the terms of this Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
(1) In this Agreement (including the Recitals and the Schedule):
"ADDITIONAL SHARES" means up to 697,500 additional Shares, the subject
of the option granted by the Company to the Underwriters under clause
2(b);
"AFFILIATE" has the meaning given to it by Rule 501(b) of Regulation D
under the Securities Act;
4
"AGREEMENTS AND INSTRUMENTS" has the meaning given to it in subclause
7(n);
"BLUE SKY" has the meaning given to it in subclause 4(3);
"CLOSING" means the First Closing or the Subsequent Closing as the
context requires;
"CLOSING DATE" means the date of the First Closing or the Subsequent
Closing as the context requires;
"COMMISSION" means the U.S. Securities and Exchange Commission;
"COMMISSIONS" means the commissions referred to in clause 5;
"COMPANY" has the meaning given to it in introductory clause (1) of
this Agreement;
"DESIGNATED UNDERWRITER" has the meaning given to it in subclause 2(f);
"DEUTSCHE BANK" has the meaning given to it in introductory clause (3)
of this Agreement;
"DIRECTED SHARE PROGRAM" has the meaning given to it in subclause 2(f);
"DIRECTED SHARES" has the meaning given to it in subclause 2(f);
"ENVIRONMENTAL LAWS" has the meaning given to it in subclause 7(z);
"EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as
amended;
"FIRM SHARES" means 4,650,000 Shares, the subject of the Offering;
"FIRST CLOSING" means the implementation of all the actions described
in subclause 3(1);
"GOVERNMENTAL LICENSES" has the meaning given to it in subclause 7(x);
"GROUP" means the Company and the Ventures, considered as a whole;
"INDEMNIFIED PERSON" means any of the Underwriters, any of their
affiliates or controlling persons (as defined in Section 15 of the
Securities Act or Section 20 of the Exchange Act) or any of their
respective directors, officers, employees or agents;
"INTELLECTUAL PROPERTY RIGHTS" has the meaning given to it in subclause
7(y);
"MATERIAL ADVERSE EFFECT" has the meaning given to it in subclause
7(n);
-2-
5
"NASDAQ NATIONAL MARKET" means the Nasdaq Stock Market's National
Market;
"OFFERING" has the meaning given to it in Recital (B);
"OFFER PRICE" means $[ ] per Offer Share;
"OFFER SHARES" means the Firm Shares and so many of the Additional
Shares as are required to be issued;
"PARENT" has the meaning given to it in introductory clause (2) of this
Agreement;
"PARTICIPANTS" has the meaning given to it in subclause 2(f);
"PERMITS" has the meaning given to it in subclause 10(1)(b)(D)(v);
"PRELIMINARY PROSPECTUS" means the Prospectus in preliminary form;
"PROSPECTUS" means the Prospectus in the form first used to confirm
sales of Offer Shares; the Prospectus is contained in the registration
statement;
"PURCHASE PRICE" means $[ ] per Offer Share;
"REGISTRATION STATEMENT" means the registration statement (File No.
333-82791) with respect to the Offer Shares as amended at the time it
became effective, including the information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to
Rule 430A under the Securities Act. If the Company has filed an
abbreviated registration statement to register additional Shares
pursuant to Rule 462(b) under the Securities Act, then any reference
herein to the term "Registration Statement" shall be deemed to include
such abbreviated registration statement;
"REPAYMENT EVENT" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Company or any Venture;
"REPRESENTATIVES" has the meaning given to it in introductory clause
(3) of this Agreement;
"RULES AND REGULATIONS" means the rules and regulations of the
Commission;
"RUSSIAN COMPANIES" has the meaning given to it in subclause
10(1)(b)(C)(ii);
"RUSSIAN MATERIAL ADVERSE EFFECT" has the meaning given to it in
subclause 10(1)(b)(C)(v);
-3-
6
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended;
"SHARES" has the meaning given to it in Recital (A);
"SUBSEQUENT CLOSING" means the implementation of all the actions
described in subclause 3(2);
"TELECOMMUNICATIONS LICENSES" has the meaning given to it in subclause
10(1)(b)(C)(v);
"TELECOMMUNICATIONS PERMITS" has the meaning given to it in subclause
10(1)(b)(C)(v);
"UKRAINIAN MATERIAL ADVERSE EFFECT" has the meaning given to it in
subclause 10(1)(b)(D)(v);
"UNDERWRITERS" has the meaning given to it in introductory clause (3)
of this Agreement;
"VENTURES" means all entities in which the Company has a direct or
indirect greater than 25% equity interest or voting power.
(2) In this Agreement:
(a) references to a person include a body corporate and an
unincorporated association of persons;
(b) references to a party to this agreement include references to
the successors or assigns (immediate or otherwise) of that
party.
(3) Where any statement is qualified by the expression "to the best of the
Company's knowledge" or any similar expression, that statement shall be
deemed to include an additional statement that it has been made after
due enquiry by the appropriate officers of the Company.
(4) subclauses (1) to (3) above apply unless the contrary intention
appears.
(5) The headings in this Agreement do not affect its interpretation.
-4-
7
2. UNDERWRITING
Subject to the terms and conditions of this Agreement:
(a) the Company agrees to issue and sell the Firm Shares and, upon
exercise of the option described below, the Additional Shares,
to the several Underwriters;
(b) the Company irrevocably grants to the several Underwriters an
option, exercisable at one time only, to require the Company to
issue and sell up to 697,500 Additional Shares solely to cover
over-allotments in connection with the Offering, such option to
be exercisable upon notice to the Company from Deutsche Bank on
behalf of the Underwriters given not later than 5:00 p.m. (New
York time) on , 1999;
(c) each Underwriter severally and not jointly agrees, upon the
basis of the representation and warranties contained herein, and
subject to the conditions stated in clause 10 hereof, to
purchase the number of Firm Shares set out against its name in
Schedule 1, at the Purchase Price, plus the number of Additional
Shares representing such Underwriter's pro rata share
(calculated by reference to the aggregate number of Firm Shares
purchased by such Underwriter and the aggregate number of Firm
Shares purchased by all of the Underwriters) of the number of
Additional Shares required to be issued by the Company;
(d) subject to the terms hereof, the Underwriters shall make a
public offering of the Firm Shares as soon after the
Registration Statement and this Agreement have become effective;
(e) if, at a Closing, any one or more of the Underwriters shall fail
or refuse to purchase Offer Shares that it has or they have
agreed to purchase hereunder on such date, and the aggregate
number of Offer Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not
more than 10% of the aggregate number of the Offer Shares to be
purchased on such date, each of the non-defaulting Underwriters
shall be obligated severally in the proportion that the number
of Firm Shares set forth opposite its names in Schedule 1 bears
to the aggregate number of Firm Shares set forth opposite the
names of all such non-defaulting Underwriters, or in such other
proportion as Deutsche Bank may specify, to purchase the Offer
Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date. If, at the First
Closing, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares
with respect to which such default occurs is more than 10% of
the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to Deutsche Bank and the Company for
the purchase of such Firm Shares are not made
-5-
8
within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting
Underwriter or the Company. In any such case either Deutsche
Bank or the Company shall have the right to postpone the
Closing, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement
and in the Prospectus or in any other documents or arrangements
may be effected. If, at any Subsequent Closing, any Underwriter
or Underwriters shall fail or refuse to purchase Additional
Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than 10% of the
aggregate number of Additional Shares to be purchased, the
non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional
Shares or (ii) purchase not less than the number of Additional
Shares that such non-defaulting Underwriters would have been
obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
(f) As part of the offering contemplated by this Agreement, [ ] (the
"DESIGNATED UNDERWRITER") has agreed to reserve out of the Offer
Shares purchased by it under this Agreement, up to 150,000
shares, for sale to the Company's directors, officers, employees
and other parties associated with the Company (collectively,
"PARTICIPANTS"), as set forth in the Prospectus (as defined
herein) under the heading "Underwriting" (the "DIRECTED SHARE
PROGRAM"). The Offer Shares to be sold by the Designated
Underwriter pursuant to the Directed Share Program (the
"DIRECTED SHARES") will be sold by the Designated Underwriter
pursuant to this Agreement at the Purchase Price. Any Directed
Shares not orally confirmed for purchase by a Participant by the
end of the business day on which this Agreement is executed will
be offered to the public at the Offer Price by the Designated
Underwriter as set forth in the Prospectus.
3. CLOSING
(1) At 9:00 A.M. (New York time) on , 1999 or at such other time and/or
date as the Company and Deutsche Bank on behalf of the Underwriters may
agree:
(a) the Company shall issue the Firm Shares and shall deliver
certificates, in definitive form and registered in such names
and in such denominations as Deutsche Bank and the
Representatives shall request in writing not later than two full
business days prior to the First Closing, evidencing the Firm
Shares for the respective accounts of the several Underwriters,
with any transfer taxes pay-
-6-
9
able in connection with the transfer of the Firm Shares to the
Underwriters duly paid, against payment of the purchase money
therefor; and
(b) Deutsche Bank and the Representatives on behalf of the
Underwriters shall pay to the Company the aggregate Purchase
Price in respect of the Firm Shares in Federal (same day) funds.
(2) At 9:00 A.M. (New York time) on whichever is the later of the date of
the First Closing and the third business day after notice to purchase
Additional Shares is given under clause 2(b), or at such other time
and/or date as the Company and Deutsche Bank on behalf of the
Underwriters may agree:
(a) the Company will issue the Additional Shares and deliver
certificates, in definitive form and registered in such names
and in such denominations as Deutsche Bank and the
Representatives shall request in writing not later than two full
business days prior to the Closing for the Additional Shares,
evidencing the Additional Shares for the respective accounts of
the several Underwriters, with any transfer taxes payable in
connection with the transfer of the Additional Shares to the
Underwriters duly paid, against payment of the purchase money
therefor; and
(b) Deutsche Bank and the Representatives on behalf of the
Underwriters shall pay to the Company the aggregate Purchase
Price in respect of the Additional Shares in Federal (same day)
funds.
(3) A certificate or certificates for the Offer Shares to be delivered to
the Underwriters shall be in definitive form and delivered to the
Representatives at the offices of Shearman & Sterling, Washington, DC,
for the accounts of the Underwriters on the respective Closing Date in
accordance with the instructions delivered in accordance with clause
3(1)(a) or clause 3(2)(a) above.
(4) Offer Shares to be held through the Depository Trust Company ("DTC")
shall be registered by [name of Registrar] in the name of DTC's
nominee, Cede & Co., and credited to the accounts of such of its
participants as the Representatives shall request in writing not later
than the applicable date on which Deutsche Bank and the Representatives
shall notify the Company in accordance with clause 3(1)(a) or clause
3(2)(a).
4. UNDERTAKINGS
(1) The Company undertakes with the Underwriters that it will bear and pay
(or, in respect of any duty, tax, commission, fee or the like for which
the Underwriters are initially liable, will promptly reimburse the same
to the Underwriters) any stamp or other duties, taxes, commissions or
fees or charges on or in connection with the issue, sale, pur-
-7-
10
chase, distribution and/or delivery of the Offer Shares to the
Underwriters and the execution, delivery and performance of this
Agreement and any value added tax payable in connection with the
commissions and other amounts payable or allowable by the Company and
otherwise in connection therewith.
(2) If, at any time when a Prospectus relating to the Offer Shares is
required to be delivered under the Securities Act or in connection with
the initial distribution of the Offer Shares, any event occurs as a
result of which the Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or it shall be
necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Securities Act or the rules thereunder or
applicable law, the Company will promptly, at its own expense: (i)
prepare and file with the Commission an amendment or supplement which
will correct such statement or omission or effect such compliance; and
(ii) supply any amended or supplemented Prospectus to the Underwriters
in such quantities as the Underwriters may reasonably request. Before
making any such amendment, supplement or filing, the Company will
furnish Deutsche Bank with a copy of each such proposed amendment or
supplement, and will not make such proposed amendment, supplement or
filing to which Deutsche Bank, on behalf of the Underwriters,
reasonably objects.
(3) The Company will use all reasonable efforts to qualify the Offer Shares
for offering and sale in each U.S. jurisdiction as Deutsche Bank, on
behalf of the Underwriters, shall designate including, but not limited
to, applicable state ("BLUE SKY") laws of certain states of the United
States of America, and the Company shall maintain such qualifications
in effect for such period as Deutsche Bank, on behalf of the
Underwriters, may reasonably require in order to complete the placement
of the Offer Shares.
(4) The Company will:
(a) prepare the Prospectus in a form approved by the Underwriters
and file the Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business
on the second business day following the execution and delivery
of this Agreement, or, if applicable, such earlier time as may
be required by Rule 430A(a)(3) under the Securities Act;
(b) furnish to each Representative, without charge, one signed copy
of the Registration Statement (including exhibits thereto) and
for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and, during
the period in which the Prospectus is required to be delivered
in connection with sales by an Underwriter or dealer, as many
copies of the Prospectus, and any supplements and amendments
thereto or to the Registration Statement as the Representatives
may reasonably request;
-8-
11
(c) make no further amendment or any supplement to the Registration
Statement or Prospectus for so long as any Underwriter or dealer
is required to deliver a Prospectus under the Securities Act or
in connection with the initial distribution of the Offer Shares
which shall be disapproved by Deutsche Bank promptly after
reasonable notice thereof; to advise the Underwriters, promptly
after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Underwriters copies
thereof;
(d) advise Deutsche Bank, promptly after it receives notice thereof,
of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the
qualification of the Offer Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or
the Prospectus or for additional information; and
(e) in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus
or the Prospectus or suspending any such qualification, promptly
use its best efforts to obtain the withdrawal of such order.
(5) The Company will make generally available to the Company's security
holders and to Deutsche Bank as soon as practicable an earnings
statement that satisfies the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission
thereunder.
(6) During the period of 2 years hereafter, the Company will furnish to the
Representatives and, upon request, to each of the other Underwriters,
as soon as practicable after the end of each fiscal year, a copy of its
annual report to stockholders for such year; and the Company will
furnish to the Representatives as soon as available, a copy of each
report and any definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to stockholders.
(7) For a period of 180 days after the date of the initial public offering
of the Offer Shares, none of the Company, its directors and its
officers will offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Commission a
registration statement under the Securities Act relating to, any
additional Shares or securities convertible into or exchangeable or
exercisable for any Shares, or publicly disclose the intention to make
any such offer, sale, pledge, disposition or filing, without the prior
written consent of Deutsche Bank, which consent shall not be
unreasonably withheld.
-9-
12
(8) For a period of 360 days after the date of the initial public offering
of the Offer Shares, the Parent will not offer, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any Shares or
securities convertible into or exchangeable or exercisable for any
Shares, or publicly disclose the intention to make any such offer,
sale, pledge, disposition or filing, without the prior written consent
of Deutsche Bank, which consent shall not be unreasonably withheld.
5. COMMISSIONS; TERMS OF THE PUBLIC OFFERING
The Offer Shares are to be offered to the public initially at the Offer
Price. In consideration of the agreement by the Underwriters to
underwrite and pay for the Offer Shares as provided above, the Company
shall pay to the Underwriters commissions, by way of deduction from the
Offer Price of an amount equal to the difference between the Offer
Price and the Purchase Price per Offer Share. The Company is advised by
Deutsche Bank that the Underwriters initially propose to offer part of
the Offer Shares to be sold in the Offering to certain dealers selected
by the Representatives at a price that represents a concession not in
excess of $[ ] per Offer Share under the Offer Price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not
in excess of $[ ] per Offer Share, to any Underwriter or in the case of
the Underwriters to certain other dealers.
6. EXPENSES
(1) The Company shall bear and pay all costs and expenses incurred in
connection with the Offering, including: fees and expenses of its
lawyers and any reporting accountants, fees and expenses in connection
with the registration of the Offer Shares under the Securities Act and
the preparation and filing of the Registration Statement, the
Prospectus and all amendments and supplements thereto, the printing and
distribution of the Prospectus and any Preliminary Prospectus, the
printing and production of all other documents connected with the issue
and distribution of the Offer Shares (including this Agreement and any
other related agreements), transfer taxes payable in connection with
the transfer of the Offer Shares to the Underwriters, expenses related
to the qualification of the Offer Shares under the state securities or
Blue Sky laws, including filing fees and the fees and disbursements of
counsel for the Underwriters in connection therewith and in connection
with the preparation of any Blue Sky memorandum, the filing fees and
expenses, if any, incurred with respect to any filing with NASD
Regulation, Inc., all expenses arising from the listing of the Offer
Shares on the Nasdaq National Market, listing agents' fees and the
arrangements for signing this Agreement, and the Company's pro rata
costs and expenses of the roadshow (including roadshow consultants,
venues, and travel and accommodation for its directors and employees)
and 50% of the costs and expenses incurred for airplane rental in
connection with the roadshow.
-10-
13
7. REPRESENTATIONS AND WARRANTIES
(1) As a condition of the obligation of the Underwriters to underwrite and
pay for the Offer Shares, the Company and the Parent jointly and
severally represent, warrant and undertake to the Underwriters as
follows:
RECITALS
(a) that the Recitals are in every material respect true and
accurate and not misleading;
REGISTRATION STATEMENT AND PROSPECTUS
(b) that the Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement
is in effect, and to the Company's knowledge, no proceedings for
such purpose are pending before or threatened by the Commission;
(c) that (i) the Registration Statement, when it became effective,
did not contain, and as amended or supplemented, if applicable,
will not contain, any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii)
the Registration Statement and the Prospectus comply, and, as
amended or supplemented, if applicable, will comply in all
material respects, with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iii) the
Prospectus does not contain, and, as amended or supplemented, if
applicable, will not contain, any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, except that the
representations and warranties set forth in this subclause
7(1)(c) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing
by such Underwriter through Deutsche Bank expressly for use
therein;
(d) that each Preliminary Prospectus filed as part of the
registration statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, complied when so filed in all material respects
with the Securities Act and the applicable rules and regulations
of the Commission thereunder; and each Preliminary Prospectus as
of its date did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made not
misleading; except that the rep-
-11-
14
resentations and warranties set forth in this subclause 7(1)(d)
do not apply to statements or omissions in the preliminary
prospectus based upon information relating to any Underwriters
furnished to the Company in writing by such Underwriter through
Deutsche Bank expressly for use therein;
(e) that except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and
any person granting such person the right to require the Company
to file a registration statement under the Securities Act with
respect to any securities of the Company or to require the
Company to include such securities with the Shares registered
pursuant to the Registration Statement;
(f) that except as provided in this Agreement or disclosed in the
Prospectus, there are no contracts, agreements or understandings
between the Company and any person that would give rise to a
valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in
connection with this Offering;
LISTING
(g) that all of the Offer Shares have been accepted for quotation on
the Nasdaq National Market subject to official notice of
issuance;
FINANCIAL STATEMENTS
(h) that the audited financial statements appearing in each of the
Registration Statement and the Prospectus were prepared in
accordance with the requirements of law and with generally
accepted accounting principles in the United States consistently
applied and that they present fairly the financial condition of
the Company, EDN Sovintel LLC and GTS-Vox Limited as at the
dates at which they were prepared and the results of operations
of the Company, EDN Sovintel LLC and GTS-Vox Limited in respect
of the periods for which they were prepared;
MATERIAL ADVERSE CHANGE
(i) there has been no material adverse change in the condition
(financial or otherwise) or the earnings or business of the
Group since December 31, 1998 other than as described in the
Prospectus (exclusive of any amendments or supplements thereto)
subsequent to the date of this Agreement;
-12-
15
CORPORATE POWER AND AUTHORITY
(j) that the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware with full power and authority to own, lease
and operate its properties and assets and conduct its business
as described in the Prospectus, is duly qualified to transact
business and, where the concept of good standing is recognized,
is in good standing in each jurisdiction in which its ownership,
leasing or operation of its property or assets or the conduct of
its business requires such qualification and has full power and
authority to execute and perform its obligations under this
Agreement, except where the failure to have such power and
authority, so to qualify or so to be in good standing would not,
singly or in the aggregate, result in a material adverse effect
on the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken
as a whole ("MATERIAL ADVERSE EFFECT"); each "significant
subsidiary" (as such term is defined in Rule 1-02 of Regulation
S-X) and all entities in which the Company has a direct or
indirect majority equity interest or voting power (each, a
"SUBSIDIARY", and collectively the "SUBSIDIARIES") of the
Company has been duly organized (to the extent applicable) and
is validly existing as a corporation, general partnership,
limited partnership, limited liability company, closed joint
stock company, or similar entity and, where the concept of good
standing is recognized, is in good standing under the laws of
its jurisdiction of organization, has full power and authority
to own, lease and operate its properties and conduct its
business as described in the Prospectus and is duly qualified to
transact business and, where the concept of good standing is
recognized, is in good standing in each jurisdiction in which
its ownership, leasing or operation of its property or assets or
the conduct of its business requires such qualification, except
where the failure to have such power and authority, so to
qualify or so to be in good standing would not, singly or in the
aggregate, result in a Material Adverse Effect; all of the
issued and outstanding shares of each such Subsidiary have been
duly authorized and are fully paid and as are shown therein as
being owned directly or indirectly by the Company are owned free
and clear of any liens, encumbrances, equities or claims;
(k) that the execution of this Agreement by the Company has been
duly authorized by the Company and this Agreement constitutes a
legal, valid and binding obligation of the Company;
(l) that neither the Company nor any of its Ventures is in violation
of its charter or by-laws (or equivalent constitutive documents)
or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note,
-13-
16
lease or other agreement or instrument to which the Company or
any of its Ventures is a party or by which it or any of them may
be bound, or to which any of the property or assets of the
Company or any Venture is subject (collectively, "AGREEMENTS AND
INSTRUMENTS") except for such defaults that would not, singly or
in the aggregate, have a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement
and in the Registration Statement (including the issuance and
sale of the Offer Shares and the use of the proceeds from the
sale of the Offer Shares materially as described in the
Prospectus under the caption "Use of Proceeds") and compliance
by the Company with its obligations under this Agreement have
been duly authorized by all necessary corporate action and do
not and will not, whether with or without the giving of notice
or passage of time or both, conflict with or constitute a breach
of, or default or Repayment Event under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any Venture pursuant
to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter
or by-laws (or equivalent constitutive documents) of the Company
or any Venture or (except for such violations, singly or in the
aggregate, that would not result in a Material Adverse Effect)
any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company
or any Venture or any of their assets, properties or operations;
(m) that except as disclosed in the Prospectus, the Company and the
Ventures have good and marketable title to all real properties
and all other properties and assets owned by them, in each case
free from liens, encumbrances and defects that would affect the
value thereof or interfere with the use made or to be made
thereof by them (except such as would not, singly or in the
aggregate, result in a Material Adverse Effect); and except as
disclosed in the Prospectus, the Company and the Ventures hold
any leased real or personal property under valid and enforceable
leases with no exceptions that would interfere with the use made
or to be made thereof by them (except such as would not, singly
or in the aggregate, result in a Material Adverse Effect);
(n) that all consents, approvals and authorisations of any court,
government department or other regulatory body (including any
stock exchange on which the Company's securities are or are to
be listed) required by the Company for the execution of this
Agreement, the performance of its terms and the issue and
distribution of the Offer Shares have been obtained and are
unconditional and
-14-
17
in full force and effect (except such as would not, singly or in
the aggregate, result in a Material Adverse Effect);
(o) that the Company is not an "investment company" and, after
giving effect to the offering of the Offer Shares and the
application of the proceeds therefrom, will not be an
"investment company" as such term is defined in the Investment
Company Act of 1940, as amended;
THE OFFER SHARES
(p) that the authorized and issued capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(q) that the Shares outstanding prior to the issuance of the Offer
Shares have been duly authorized and are validly issued, fully
paid and non-assessable;
(r) that the Offer Shares will, on issue and receipt of payment
therefor in accordance with the terms of this Agreement, be
validly issued in accordance with the law and regulations of the
State of Delaware, fully paid and non-assessable and free from
all liens, charges, encumbrances and other third party rights;
DIVIDENDS AND DISTRIBUTIONS
(s) that all dividends and other distributions declared and payable
on the Offer Shares may under the current laws and regulations
of the United States be paid in the United States, may be
converted into foreign currency and may be freely transferred
out of the United States and all such dividends and other
distributions will not be subject to withholding or other taxes
under the laws and regulations of the United States and are
otherwise free and clear of any other tax, withholding or
deduction in the United States and without the necessity of
obtaining any governmental authorization in the United States;
TAXES
(t) that no stamp or other issuance or transfer taxes or duties and
no capital gains, income, withholding or other taxes are payable
by or on behalf of the Underwriters to the United States or any
political subdivision or taxing authority thereof or therein in
connection with the sale and delivery by the Company of the
Offer Shares to or for the respective accounts of the
Underwriters or the sale and delivery outside the United States
by the Underwriters of the Offer Shares to the initial
purchasers thereof;
-15-
18
LITIGATION
(u) that, except as disclosed in the Prospectus, no member of the
Group is:
(i) involved in any litigation, arbitration or governmental
proceedings relating to claims or amounts which
individually or collectively may have, or have had in the
previous 12 months, a Material Adverse Effect nor, to the
best of the Company's knowledge, is any such litigation,
arbitration or governmental proceeding pending or
threatened or has any event occurred which may give rise to
such litigation, arbitration or governmental proceeding; or
(ii) involved in or the subject of any current or pending
investigation or proceedings (whether administrative,
regulatory or otherwise) that would have a Material Adverse
Effect, whether in the United States, the Russian
Federation, Ukraine or elsewhere;
LICENSES AND CONSENTS
(v) except as otherwise disclosed in the Prospectus, the Company and
the Ventures possess such permits, licenses, approvals, consents
and other authorizations (collectively, "GOVERNMENTAL LICENSES")
issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business
now operated by them, except such as would not, singly or in the
aggregate, result in a Material Adverse Effect; the Company and
the Ventures are in compliance with the terms and conditions of
all such Governmental Licenses, except where the failure so to
comply would not, singly or in the aggregate, result in a
Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity
of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not
have a Material Adverse Effect; and neither the Company nor any
Venture has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses
which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a
Material Adverse Effect;
(w) that the Company and the Ventures own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary to
conduct the business now operated by them, or presently employed
by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any
intellectual property rights that, if determined adversely to
-16-
19
the Company or any of the Ventures, would individually or in the
aggregate have a Material Adverse Effect;
ENVIRONMENTAL
(x) that except as disclosed in the Prospectus and to the best of
the Company's knowledge, neither the Company nor any Venture is
in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous
or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic
substances (collectively, "ENVIRONMENTAL LAWS"), owns or
operates any real property contaminated with any substance that
is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or
is subject to any claim relating to any environmental laws,
which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect;
and the Company is not aware of any pending investigation which
might lead to such a claim;
MARKET MANIPULATION
(y) that neither the Company nor any of its affiliates nor any
person acting on behalf of any of them will, until Deutsche Bank
shall have notified the Company of the completion of the
distribution of the Offer Shares, do directly or indirectly any
act or engage in any course of conduct (i) which creates a false
or misleading impression as to the market in or the value of the
Offer Shares and any associated securities (including options in
respect of those shares and securities which are convertible
into or exchangeable for those shares and securities); or (ii)
the purpose of which is to create actual, or apparent, active
trading in or to raise the price of the Shares;
MISCELLANEOUS
(z) that no labor dispute with the employees of the Company or any
Venture exists or, to the knowledge of the Company, is imminent
that would, individually or in the aggregate, have a Material
Adverse Effect; and
(aa) that except as disclosed in the Prospectus, neither the Company
nor any Venture is in violation of the Foreign Corrupt Practices
Act, as amended, such that such a violation would individually
or in the aggregate have a Material Adverse Effect; and the
Company is not aware of any pending investigation which might
lead to a claim of such a violation.
-17-
20
(2) The above representations and warranties shall be deemed to be repeated
at each Closing and such representations and warranties and the
indemnity in clause 8 below shall continue in full force and effect
notwithstanding:
(a) any Underwriter's actual or constructive knowledge with respect
to any of the matters referred to in the representations and
warranties of the Company or any investigation made by or on
behalf of any Underwriter or any person controlling any
Underwriter or by or on behalf of the Company, its officers or
directors or any person controlling the Company;
(b) the completion of the arrangements set out in this Agreement for
the issue and sale of the Offer Shares; or
(c) the termination of this Agreement.
8. INDEMNITY
(1) The Company and the Parent, jointly and severally, hereby undertake to
the Underwriters to indemnify and hold harmless each Indemnified Person
from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred by any Indemnified Person in connection with defending or
investigating any such action or claim) caused by any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any Preliminary
Prospectus or the Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based
upon information relating to any Underwriter furnished to the Company
in writing by such Underwriter through Deutsche Bank expressly for use
therein; provided that the foregoing indemnity with respect to any
Preliminary Prospectus shall not inure to the benefit of the
Underwriters if the Underwriters failed to deliver a copy of the
Prospectus, as then supplemented or amended (so long as the Prospectus
and any amendment or supplement thereto was provided by the Company to
the Underwriters in the requisite quantity and on a timely basis to
permit proper delivery on or prior to the applicable Closing Date), to
the person asserting any losses or other claims caused by any untrue
statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, or caused by any omission or alleged
omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading if such material misstatement or omission or
alleged material misstatement or omission was cured in the Prospectus
as so amended or supplemented.
-18-
21
(2) Each Underwriter hereby undertakes, severally and not jointly, to
indemnify and hold harmless the Company, any of its affiliates or
controlling persons (as defined in Section 15 of the Securities Act or
Section 20 of the Exchange Act) or any of their respective directors,
officers, employees or agents from and against any and all losses,
claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
Preliminary Prospectus or the Prospectus (as amended or supplemented if
the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading,
but only with reference to information relating to such Underwriter
furnished to the Company in writing by such Underwriter through
Deutsche Bank expressly for use in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendments or supplements
thereto.
(3) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be
sought pursuant to subclause (1) or (2) of this clause 8, such person
(for purposes of this subclause (3), the "INDEMNIFIED PARTY") shall
promptly notify the person against whom such indemnity may be sought
(for purposes of this subclause (3), the "INDEMNIFYING PARTY") in
writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others which the
indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (a) the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons and (b) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the
Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, and that all such fees and expenses shall be reimbursed
as they are incurred. In the case of any such separate firm for
Indemnified
-19-
22
Persons, such firm shall be designated in writing by Deutsche Bank. In
the case of any such separate firm for the Company, and such directors,
officers and control persons of the Company, such firm shall be
designated in writing by the Company. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its
written consent (which consent shall not be unreasonably withheld), but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder
by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(4) To the extent the indemnification provided for in subclause (1) or (2)
of this clause 8 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities referred to
therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (a) in such proportion as is
appropriate to reflect the relative benefits received by the
indemnifying party or parties, on the one hand, and the indemnified
party or parties, on the other hand, from the offering of the Offer
Shares or (b) if the allocation provided above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in subclause (a) above but also
the relative fault of the indemnifying party or parties on the one hand
and of the indemnified party or parties on the other hand in connection
with the statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other hand in connection with the
offering of the Offer Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the
Offer Shares (before deducting expenses) received by the Company and
the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of
the Prospectus, bear to the aggregate Offer Price of the Offer Shares.
The relative benefits received by the Parent shall be deemed to be in
the same proportion as if the Parent had received the net proceeds from
the offering of Offer Shares (before deducting expenses) that are
received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth on
the table on the cover of the Prospectus bear to the aggregate Offer
Price of the Offer Shares. The relative fault of the Company on the one
hand, the Parent on the second hand and the Underwriters on the third
hand shall be determined by reference to,
-20-
23
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company, the Parent or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute
pursuant to this clause 8 are several in proportion to the respective
number of Offer Shares they have purchased hereunder, and not joint.
(5) The Company, the Parent and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this clause 8 were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in subclause (4) of this clause 8. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this clause 8,
no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Offer Shares
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this clause 8 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
(6) Notwithstanding the foregoing indemnity and contribution provisions
contained in this clause 8 the obligation of the Parent to indemnify
the Underwriters and the other Indemnified Persons shall be only
effective after the Underwriters have pursued through an initial
decision of a court or settlement their right of indemnification
against the Company (except that the Underwriters shall not be required
to pursue such a decision or settlement if the Company becomes subject
to a bankruptcy or insolvency proceeding), and the Parent's
indemnification obligation is limited to the amount of net proceeds
received by the Company from the offering of the Offer Shares, plus any
reasonable costs, charges and expenses (including legal fees) incurred
by the Underwriters and the other Indemnified Persons in connection
with investigating, preparing or defending any losses, claims, damages
and liabilities.
(7) The indemnity and contribution provisions contained in this clause 8
shall remain operative and in full force and effect regardless of (a)
any termination of this Agreement,
-21-
24
(b) any investigation made by or on behalf of any Underwriter or any
person controlling any Underwriter, the Company or the Parent, or their
respective officers or directors or any person controlling them and (c)
acceptance of and payment for any of the Offer Shares.
(8) The provisions of this clause shall not affect any agreement between
the Company and the Parent with respect to indemnification or
contribution.
9. LISTING
The Company shall, if it has not already done so and if it is required
in order to obtain a listing of the Offer Shares as provided below,
make or cause to be made an application for the listing of the Offer
Shares on the Nasdaq National Market. The Company shall endeavour to
obtain the listing as promptly as practicable and the Company shall
furnish any and all documents, instruments, information and
undertakings that may be necessary or advisable in order to obtain or
maintain the listing.
10. CONDITIONS PRECEDENT
The several obligations of the Underwriters to purchase the Offer
Shares are conditional upon the following further considerations:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any
change, or any development involving a prospective change, in
the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement) that, in the reasonable
judgment of Deutsche Bank (following consultation with the
Company and the Parent, when feasible), is material and
adverse and that makes it, in the reasonable judgment of
Deutsche Bank (following consultation with the Company and the
Parent, when feasible), impracticable to market the Offer
Shares on the terms and in the manner contemplated in the
Prospectus.
(b) The following documents shall be delivered to the
Underwriters:
(A) a legal opinion from Shearman & Sterling, counsel for
the Company, dated such Closing Date, to the effect
that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the
laws of the State of Delaware, with corporate
power and authority under such laws
-22-
25
to own its properties and conduct its business as
described in the Prospectus;
(ii) The Offer Shares delivered on such Closing Date
and all other outstanding shares of the Common
Stock of the Company have been duly authorized
and validly issued, are fully paid and
nonassessable and conform to the description
thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive
rights with respect to the Shares under the
Delaware General Corporate law or the Company's
Certificate of Incorporation or By-laws;
(iii) No consent, approval, authorization or order of,
or filing with, any U.S. federal or New York
state governmental agency or body or any U.S.
federal or New York state court is required for
the consummation by the Company of the
transactions contemplated by this Agreement in
connection with the issuance or sale of the Offer
Shares by the Company, except such as have been
obtained and made under the Securities Act and
such as may be required under state securities
laws or the laws of any jurisdiction outside the
United States;
(iv) The execution and delivery by the Company of this
Agreement and the consummation by the Company of
the transactions contemplated in this Agreement,
and compliance by the Company with the terms
thereof (1) will not result in any violation of
the Certificate of Incorporation or By-laws of
the Company, and (2) will not conflict with, or
constitute default under, or result in the
creation or imposition of any lien, charge or
encumbrance upon any property or assets of the
Company pursuant to (A) any existing applicable
law, rule or regulation which, in each instance
in our experience, are normally applicable to
corporations such as the Company or transactions
of this type, other than the securities or blue
sky laws of the various states, as to which, in
each case, we express no opinion or (B) any
judgment, order or decree of any Federal or New
York court, governmental agency or body or
arbitrator known by us to be applicable to the
Company (except for such conflicts, defaults or
liens, charges or encumbrances, with respect to
clause (2) above, that would not reasonably be
expected to result in a Material Adverse Effect);
-23-
26
(v) The Registration Statement was declared effective
under the Securities Act as of the date and time
specified in such opinion, the Prospectus either
was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such
opinion on the date specified therein or was
included in the Registration Statement, and, to
the best of the knowledge of such counsel, no
stop order suspending the effectiveness of the
Registration Statement or any part thereof has
been issued and no proceedings for that purpose
have been instituted or are pending or
contemplated under the Securities Act;
(vi) This Agreement has been duly authorized, executed
and delivered by the Company;
(vii) The statements in the Prospectus under the
captions "Description of Capital Stock," "Certain
United States Tax Consequences to Non-U.S.
Holders of Common Stock" and "Underwriting," and
in the Registration Statement under Item 14,
insofar as such statements constitute a summary
of the legal matters, documents or proceedings
referred to therein, fairly summarize the matters
referred to therein;
(viii) The Company is not now, and after giving effect
to the offering and sale of the Offer Shares and
the application of the net proceeds thereof as
described in the Prospectus, will not be,
required to register under the Investment Company
Act of 1940, as amended to date; and
(ix) The form of certificate used to evidence the
Shares complies in all material respects with all
applicable statutory requirements, with any
applicable requirements of the Certificate of
Incorporation and By-laws of the Company and the
requirements of the Nasdaq National Market.
In addition, such counsel shall state that such
counsel has participated in conferences with officers
and other representatives of the Company,
representatives of the Underwriters and counsel for the
Underwriters and representatives of the independent
public accountants of the Company at which the contents
of the Registration Statement and Prospectus and related
matters were discussed and that, (i) in such counsel's
opinion, the Registration Statement and the Prospectus
(other than the financial statements and other financial
and statistical data contained therein or omitted
therefrom, as to which such counsel need
-24-
27
not comment) appear on their face to be appropriately
responsive in all material respects to the requirements
of the Securities Act and the applicable rules and
regulations of the Commission thereunder; (ii) no facts
came to such counsel's attention which gave such counsel
reason to believe that (a) the Registration Statement
(other than the financial statements and other financial
and statistical data contained therein or omitted
therefrom, as to which such counsel need not comment),
at the time it became effective, contained an untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or necessary
to make the statements therein not misleading, or (b)
the Prospectus (other than the financial statements and
other financial and statistical data contained therein
or omitted therefrom, as to which we have not been
requested to comment), as of its date or the Closing
Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the
light of the circumstances under which they were made,
not misleading; and (iii) such counsel does not know of
any contract or other document of a character required
to be filed as an exhibit to the Registration Statement
that is not so filed.
(B) a legal opinion from Xxxx Xxxxxxx, General Counsel for
the Company, dated such Closing Date to the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the
laws of the State of Delaware, with corporate
power and authority under such laws to own its
properties and conduct its business as described
in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation
in good standing in each U.S. jurisdiction in
which such qualification is required, except where
the failure so to qualify or to be in good
standing, individually or in the aggregate, would
not have a Material Adverse Effect;
(ii) The Offer Shares delivered on such Closing Date
and all other outstanding shares of the Common
Stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable
and conform to the description thereof contained
in the Prospectus; and the stockholders of the
Company have no preemptive rights with respect to
the Shares;
(iii) To the best of such counsel's knowledge, except as
disclosed in the Prospectus, there are no
contracts, agreements or understandings
-25-
28
between the Company and any person granting such
person the right to require the Company to file a
registration statement under the Securities Act
with respect to any securities of the Company
owned or to be owned by such person or to require
the Company to include such securities in the
securities registered pursuant to the Registration
Statement or in any securities being registered
pursuant to any other registration statement filed
by the Company under the Securities Act;
(iv) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or
any court is required for the consummation by the
Company of the transactions contemplated by this
Agreement in connection with the issuance or sale
of the Offer Shares by the Company, except such as
have been obtained and made under the Securities
Act and such as may be required under state
securities laws;
(v) The execution and delivery by the Company of this
Agreement and the consummation by the Company of
the transactions contemplated in this Agreement,
and compliance by the Company with the terms
thereof (1) will not result in any violation of
the charter or by-laws of the Company, and (2)
will not conflict with, or constitute default
under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property
or assets of the Company pursuant to (A) any
material agreement of the Company or (B) any
judgment, order or decree of any Federal or New
York court, governmental agency or body or
arbitrator known by such counsel to be applicable
to the Company (except for such conflicts,
defaults, liens, charges or encumbrances, with
respect to clause (2) above, that would not
reasonably be expected to result in a Material
Adverse Effect);
(vi) This Agreement has been duly authorized, executed
and delivered by the Company;
(vii) Each subsidiary of the Company listed on Schedule
I attached thereto has been duly incorporated and
is an existing corporation in good standing under
the laws of the jurisdiction of its incorporation,
with corporate power and authority to own its
properties and conduct its business as described
in the Prospectus; and each subsidiary of the
Company listed on Schedule I attached thereto is
duly qualified to do business as a foreign
corporation in good
-26-
29
standing in all other jurisdictions in which such
qualification is required, except where the
failure so to qualify or be in good standing,
individually or in the aggregate, would not have
a Material Adverse Effect; all of the issued and
outstanding capital stock of each subsidiary of
the Company listed on Schedule I attached thereto
of the Company has been duly authorized and
validly issued and is fully paid and
nonassessable; and, to the best of such counsel's
knowledge, the capital stock of each subsidiary
owned by the Company listed on Schedule I
attached thereto, directly or through
subsidiaries, is owned free from liens,
encumbrances and defects;
(viii) Except as disclosed in the Prospectus, the
Company and the Ventures have good and marketable
title to all real properties and all other
properties and assets owned by them, in each case
free from liens, encumbrances and defects that
would affect the value thereof or interfere with
the use made or to be made thereof by them,
except such as would not, singly or in the
aggregate, result in a Material Adverse Effect;
and except as disclosed in the Prospectus, the
Company and the Ventures hold any leased real or
personal property under valid and enforceable
leases with no exceptions that would interfere
with the use made or to be made thereof by them,
except such as would not, singly or in the
aggregate, result in a Material Adverse Effect;
(ix) Except as otherwise disclosed in the Prospectus,
the Company and the Ventures possess such
Governmental Licenses issued by the appropriate
federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the
business now operated by them, except such as
would not, singly or in the aggregate, result in
a Material Adverse Effect; the Company and the
Ventures are in compliance with the terms and
conditions of all such Governmental Licenses,
except where the failure so to comply would not,
singly or in the aggregate, result in a Material
Adverse Effect; all of the Governmental Licenses
are valid and in full force and effect, except
when the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to
be in full force and effect would not have a
Material Adverse Effect; and neither the Company
nor any Venture has received any notice of
proceedings relating to the revocation or
modification of any such Governmental Licenses
which, singly or in the aggregate, if
-27-
30
the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse
Effect; and
(x) To the best of such counsel's knowledge, except as
disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting
the Company, any Venture or any of their
respective properties that, if determined
adversely to the Company or any Venture, would
individually or in the aggregate have a Material
Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its
obligations under this Agreement, or which are
otherwise material in the context of the sale of
the Offer Shares; and no such actions, suits or
proceedings are, to the best of such counsel's
knowledge, threatened or contemplated.
In addition, such counsel shall state that such
counsel has participated in conferences with officers
and other representatives of the Company,
representatives of the Underwriters and counsel for the
Underwriters and representatives of the independent
public accountants of the Company at which the contents
of the Registration Statement and Prospectus and related
matters were discussed and that, (i) in such counsel's
opinion, the Registration Statement and the Prospectus
(other than the financial statements and other financial
and statistical data contained therein or omitted
therefrom, as to which such counsel need not comment)
appear on their face to be appropriately responsive in
all material respects to the requirements of the
Securities Act and the applicable rules and regulations
of the Commission thereunder; (ii) no facts came to such
counsel's attention which gave such counsel reason to
believe that (a) the Registration Statement (other than
the financial statements and other financial and
statistical data contained therein or omitted therefrom,
as to which such counsel need not comment), at the time
it became effective, contained an untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, or (b) the Prospectus
(other than the financial statements and other financial
and statistical data contained therein or omitted
therefrom, as to which we have not been requested to
comment), as of its date or the Closing Date, contained
or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary to
make the statements therein, in the light of the
circumstances under which they were made, not
misleading; and (iii) such counsel does not know of any
contract or
-28-
31
other document of a character required to be filed as an
exhibit to the Registration Statement that is not so
filed.
(C) a legal opinion from Coudert Brothers, special Russian
counsel for the Company, dated such Closing Date to the
effect that:
(i) The statements relating to the Russian Federation
in the Prospectus under the captions "RISK FACTORS
-- Risks Associated With Doing Business in Russia,
Ukraine and Other Countries of the Commonwealth of
Independent States," "RISK FACTORS -- Risks
Associated with Our Business," "THE POLITICAL,
LEGAL AND ECONOMIC ENVIRONMENTS IN RUSSIA AND
UKRAINE" and "REGULATION," insofar as they purport
to constitute a summary of the matters expressly
referred to therein, fairly describe such matters
in all material respects;
(ii) Each of the Russian companies listed on Schedule B
thereto (the "RUSSIAN COMPANIES") has been duly
organized and is validly existing as a legal
entity registered under the laws of the Russian
Federation and has the corporate power and
authority to carry on its business and to own,
lease and operate its properties as disclosed in
the Prospectus;
(iii) All of the outstanding shares of capital stock or
ownership interests, as applicable, of each of the
Russian Companies have been duly authorized and
validly issued and the issuance of such shares was
properly registered with the appropriate
authorities competent therefor, and, to the best
of such counsel's knowledge, to the extent owned,
directly or indirectly, by the Company, are owned
free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any
nature. The Company owns, directly or indirectly,
that percentage of the issued and outstanding
shares of capital stock or ownership interests of
the Russian Companies set forth on Schedule 1
thereto as being owned by the Company;
(iv) Except as disclosed in the Prospectus, under
current legislation of the Russian Federation, as
applicable, (i) subject to the qualifications
explicitly set forth in such opinion, dividends
and other distributions declared and payable on
the issued and outstanding shares of the Russian
Companies may be paid to the foreign shareholders
in U.S. Dollars and may be transferred by
-29-
32
such foreign shareholders out of the Russian
Federation, as the case may be; (ii) all such
dividends are, and other distributions may be,
subject to withholding taxes unless an
international treaty provides otherwise and the
procedures set forth in applicable Russian
legislation enabling the foreign shareholders to
avail themselves of such treaty benefits are
followed; and (iii) such dividends and
distributions are otherwise free and clear of any
other tax or deduction in the Russian Federation,
provided that all profits and other taxes have
been paid by the relevant Russian Company prior to
the payment of such dividends and distributions;
(v) Except as disclosed in the Prospectus, each
Russian Company has such telecommunications
permits, licenses and authorizations of
governmental or regulatory authorities, including,
without limitation, licenses issued by the State
Committee of the Russian Federation on
Communications and Information (formerly the
Ministry of Communications) (the
"TELECOMMUNICATIONS LICENSES"), permissions issued
by the State Service for Communications Oversight
(also referred to as Gossviaznadzor), and/or
radio-frequency allocations issued by the State
Commission for Radio Frequencies (all of the
foregoing, without limitation, being the
"TELECOMMUNICATIONS PERMITS"), which are necessary
to own, lease, and operate its respective
properties and to conduct its business as
disclosed in the Prospectus. Such
Telecommunications Permits contain no restriction
that is likely to have a material adverse effect
on the business, condition (financial or other),
properties, net worth, results of operations or
prospects (a "RUSSIAN MATERIAL ADVERSE EFFECT") of
such Russian Company. Except as disclosed in the
Prospectus, to the best of such counsel's
knowledge, each of the Russian Companies has
fulfilled and performed all of its material
obligations with respect to such
Telecommunications Permits and no event has
occurred which creates, or after notice or lapse
of time or both would create, a material
likelihood that such Telecommunications Permits
would be revoked or terminated;
(vi) To the best of such counsel's knowledge, there are
no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, or
commitments of sale entitling any person to
purchase or otherwise acquire from any of the
Russian Companies
-30-
33
any shares of the capital stock of, or other
ownership interest in, any of such Russian
Companies, with the exception of those arising as
a matter of Russian law and those included in the
foundation documents (including the shareholders'
agreements), and any amendments thereto, of the
Russian Companies; and
(vii) Except as otherwise set forth in the Prospectus,
there are no legal or governmental proceedings
pending or threatened in writing to which any
Russian Company is a party or of which any of its
property is the subject, which could have a
Russian Material Adverse Effect on the Russian
Companies as a whole.
(D) a legal opinion from Shevchenko, Didkovskiy & Partners,
special Ukrainian counsel for the Company, dated such
Closing Date to the effect that:
(i) The statements in the Prospectus relating to
Ukraine under the captions "RISK FACTORS -- Risks
Associated With Doing Business in Russia, Ukraine
and Other Countries of the Commonwealth of
Independent States," "RISK FACTORS -- Risks
Associated with Our Business," "THE POLITICAL,
LEGAL AND ECONOMIC ENVIRONMENTS IN RUSSIA AND
UKRAINE" and "REGULATION," insofar as they purport
to constitute a summary of the matters expressly
referred to therein, fairly describe such matters
in all material respects;
(ii) Golden Telecom (Ukraine) has been duly organized
and is validly existing as a legal entity
registered under the laws of Ukraine and has
corporate power and authority to carry on its
business and to own, lease and operate its
properties as disclosed in the Prospectus;
(iii) All of the ownership interests of Golden Telecom
(Ukraine) have been duly authorized and validly
issued and, to the best of our knowledge, to the
extent indirectly owned by the Company, are owner
free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any
nature. The Company owns indirectly [ ]% of the
ownership interests in Golden Telecom (Ukraine);
(iv) Except as disclosed in the Prospectus, under
current legislation of Ukraine, as applicable, (i)
dividends and other distributions declared and
payable on the ownership interests of Golden
-31-
34
Telecom (Ukraine) may be paid to the foreign
shareholders in U.S. Dollars and may be
transferred by such foreign shareholders out of
Ukraine, as the case may be; (ii) all such
dividends are, and other distributions may be,
subject to withholding taxes unless an
international treaty provides otherwise and the
procedures set forth in applicable Ukrainian
legislation enabling Golden Telecom (Ukraine) to
avail itself of such treaty benefits are followed,
and (iii) such dividends and distributions are
otherwise free and clear of any other tax or
deduction in Ukraine, provided that all profits
and other taxes have been paid by Golden Telecom
(Ukraine) prior to the payment of such dividends
and distributions;
(v) Except as disclosed in the Prospectus, Golden
Telecom (Ukraine) has such permits, licenses and
authorizations of governmental or regulatory
authorities, including, without limitation,
licenses and permits issued by the State Committee
of Communications of Ukraine (formerly the
Ministry of Communications of Ukraine) and the
former State Inspectorate for Electric
Communications of Ukraine and other appropriate
Ukrainian authorities (all of the foregoing,
without limitation, being the "PERMITS"), which
are necessary to own, lease, and operate its
respective properties and to conduct its business
as disclosed in the Prospectus. Such Permits
contain no restriction that, as a matter of
Ukrainian law and regulation, is likely to have a
material adverse effect on the business, condition
(financial or other), properties, net worth or
results of operations (a "UKRAINIAN MATERIAL
ADVERSE EFFECT") of Golden Telecom (Ukraine).
Except as disclosed in the Prospectus, to the best
of our knowledge, Golden Telecom (Ukraine) has
fulfilled and performed all of its material
obligations with respect to such Permits and no
event has occurred which allows, or after notice
or lapse of time or both would allow, revocation
or termination thereof;
(vi) To the best of our knowledge, there are no
outstanding subscriptions, rights, warrants,
options, calls, convertible securities, or
commitments of sale entitling any person to
purchase or otherwise acquire from Golden Telecom
(Ukraine) any ownership interest in Golden Telecom
(Ukraine); and
-32-
35
(vii) Except as otherwise set forth in the Prospectus,
there are no legal or governmental proceedings
pending to which Golden Telecom (Ukraine) is a
party or of which any of its property is the
subject, which could have a Ukrainian Material
Adverse Effect on Golden Telecom (Ukraine).
(E) such favorable opinion or opinions from Xxxxxx Xxxxxx &
Xxxxxxx, counsel for the Underwriters, dated such
Closing Date as the Underwriters may reasonably require
and the Company shall have furnished to such counsel
such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(F) such favorable opinion or opinions from Xxxxxxxx Chance,
special Russian counsel for the Underwriters, dated such
Closing Date, as the Underwriters may reasonably require
and the Company shall have furnished to such counsel
such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(G) such favorable opinion or opinions from Xxxxx &
XxXxxxxx, special Ukrainian counsel for the
Underwriters, dated such Closing Date, as the
Underwriters may reasonably require and the Company
shall have furnished to such counsel such documents as
they may reasonably request for the purpose of enabling
them to pass on such matters.
(c) The opinions of the Company's counsel described herein shall
be rendered to the Underwriters at the request of the Company
and shall so state therein.
(d) The Underwriters shall have received certificates, each dated
such Closing Date, of the President or any Vice President and
a principal financial or accounting officer of the Company and
of the Parent in which such officers, to the best of their
knowledge after reasonable investigation, shall state that:
the representations and warranties of the Company or the
Parent, as the case may be, in this Agreement are true and
correct as though made at and as of such Closing Date; the
Company or the Parent, as the case may be, has complied with
all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing
Date; no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to the knowledge of such
officer, are contemplated by the Commission; and, subsequent
to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change, nor any
development or event involving a prospective material adverse
change, in the condition (financial or other), business,
properties or results of operations of the Company and its
subsidiaries taken as a whole, or of
-33-
36
EDN Sovintel LLC, Sovam Teleport Ukraine and PrimTelefone
taken as a whole, except as set forth in or contemplated by
the Prospectus or as described in such certificate.
(e) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the rules and regulations under
the Securities Act and in accordance with clause 4(4) hereof;
the Registration Statement shall have become effective under
the Securities Act and no stop order suspending the
effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened to the Company
in writing by the Commission; and all requests for additional
information on the part of the Commission shall have been
complied with to the reasonable satisfaction of the
Underwriters.
(f) The delivery to the Underwriters, on each of the date hereof
and the Closing Date, of a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from Ernst & Young (CIS)
Limited, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and
certain financial information contained in the Registration
Statement and the Prospectus.
(g) The Nasdaq National Market shall have admitted the Shares to
listing on or before the First Closing.
(h) The "lock-up" agreements between the Underwriters and the
Company's directors and officers and the Parent relating to
sales and certain other dispositions of Shares or certain
other securities, delivered to the Underwriters on or before
the date hereof, shall be in full force and effect on the
Closing Date.
(2) The Company and the Parent undertake to use all reasonable endeavours
to procure that the conditions set out in this clause 10 are satisfied
on or before the respective Closing Date.
(3) In the event that any of the foregoing conditions is not satisfied on
or before the First Closing Date, this Agreement shall (subject as
mentioned below) terminate and the parties to this Agreement shall
(except for the liability of the Company in relation to expenses as
provided in clause 6, the indemnity provided in clause 8 and any
liability arising before or in relation to such termination) be under
no further liability or obligation arising out of this Agreement,
provided that Deutsche Bank on behalf of the Underwriters may in its
discretion and by notice to the Company waive, or extend the time for,
satisfaction of any of the above conditions or of any part of them.
-34-
37
11. TERMINATION
This Agreement shall be subject to termination by notice given by the
Underwriters to the Company, if (a) after the execution and delivery of
this Agreement and prior to the date of the Closing (i) trading
generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, Nasdaq National
Market or the American Stock Exchange, (ii) trading of any securities
of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial
banking activities in New York shall have been declared by either
Federal or New York State authorities, (iv) a change in United States,
Russian or Ukrainian taxation materially adversely affecting the
Company, the Shares or a change in currency exchange rates or exchange
controls or (v) there shall have occurred any outbreak or escalation of
hostilities or any change in financial, political, economic or market
conditions or any calamity or crisis that, in the reasonable judgment
of the Underwriters, is material and adverse and (b) in the case of any
of the events specified in clauses (a)(i) through (v), such event,
singly or together with any other such event, makes it, in the
reasonable judgment of the Underwriters (following consultation with
the Company and the Parent, when feasible), impracticable to market the
Offer Shares on the terms and in the manner contemplated in the
Prospectus.
12. NOTICES
Any notice or notification in any form to be given under this Agreement
may be delivered in person or sent by telex, facsimile or telephone
(subject in the case of a communication by telephone to confirmation by
telex or facsimile) addressed to:
IN THE CASE OF THE COMPANY:
Golden Telecom, Inc.
c/o Golden Teleservices, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx -- 00xx Xxxxx
XxXxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
-35-
38
IN THE CASE OF THE PARENT:
Global Telesystems Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx -- 00xx Xxxxx
XxXxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
IN THE CASE OF THE UNDERWRITERS:
Deutsche Bank AG London
00 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile: (x00) 0000 000 0000
Attention: Equity Capital Markets Group
Xxxxxxx Till
Xxxxxx Xxxxxxx
Any such notice shall take effect, in the case of delivery, at the time
of delivery and, in the case of telex or facsimile, at the time of
despatch.
13. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same agreement and
any party may enter into this Agreement by executing a counterpart.
14. GOVERNING LAW
THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
-36-
39
IN WITNESS of which this Agreement has been executed on the date written above.
Yours faithfully,
GOLDEN TELECOM, INC.
By:
------------------------------------
Name:
Title:
GLOBAL TELESYSTEMS GROUP, INC.
By:
------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first written above:
DEUTSCHE BANK AG LONDON
BEAR XXXXXXX & CO. INC.
ING BARINGS LIMITED
AS AGENT FOR ING BANK N.V.,
LONDON BRANCH
By: DEUTSCHE BANK AG LONDON
By:
------------------------------------
Name:
Title:
-37-
40
SCHEDULE 1
THE UNDERWRITERS
UNDERWRITER UNDERWRITING COMMITMENT
Deutsche Bank AG London [______________]
Bear, Xxxxxxx & Co. Inc. [______________]
ING Barings Limited [______________]
------------------------
Total [number of Firm Shares]
