EXHIBIT 10.2
DATED SEPTEMBER 5, 2002
GOLDEN TELECOM, INC.
AND
OAO ROSTELECOM
FOR
FOUR MILLION TWENTY FOUR THOUSAND SIXTY SEVEN SHARES OF
COMMON STOCK, PAR VALUE $.01 EACH
---------------------------------
SUBSCRIPTION AGREEMENT
---------------------------------
THIS SUBSCRIPTION AGREEMENT is made on September 5, 2002
BETWEEN:
(1) Golden Telecom, Inc., a Delaware corporation (the "COMPANY"); and
(2) OAO Rostelecom, a Russian open joint stock company ("INVESTOR").
WHEREAS:
(A) Investor owns a 50% ownership interest (the "Sovintel Interest") in OOO
EDN Sovintel, a limited liability company duly registered and existing
under the laws of the Russian Federation ("Sovintel");
(B) Investor, OOO TeleRoss, a limited liability company duly registered and
existing under the laws of the Russian Federation ("TeleRoss") and
SFMT-CIS, Inc., a Delaware corporation ("SFMT"), have entered into an
Ownership Interest Purchase Agreement dated as of March 13, 2002 (the
"Ownership Interest Purchase Agreement");
(C) In accordance with the terms of the Ownership Interest Purchase Agreement,
on the Closing Date, the Investor will transfer, in the aggregate,
approximately 57% of the Sovintel Interest to TeleRoss and approximately
43% of the Sovintel Interest to SFMT in exchange for the Xxxx
Consideration, the TeleRoss Promissory Note, and the Company Shares, as
defined herein;
(D) TeleRoss and SFMT are Affiliates (as defined below) of the Company;
(E) As more fully set forth herein, at the Closing, Investor proposes to
acquire, and the Company proposes to issue to Investor, four million
twenty four thousand sixty seven (4,024,067) shares of Common Stock (the
"Company Shares") as the Stock Consideration, being a portion of the
Purchase Price for the Sovintel Interest due by the Buyers in accordance
with the terms of the Ownership Interest Purchase Agreement;
(F) Contemporaneously with the execution of this Subscription Agreement, the
Company and Investor have also executed and delivered the Registration
Rights Agreement and, with certain other shareholders of the Company, the
Standstill Agreement and the New Shareholders' Agreement; and
(G) In accordance with the terms of the Ownership Interest Purchase Agreement
and the Escrow Agreement, the Company Shares will be held in escrow upon
subscription therefor until the Buyers are duly registered as the owners
of the SFMT Interest and the Teleross Interest, respectively, in the
Charter and Foundation Agreement of Sovintel, all in accordance with the
requirements under Russian law and the terms of the Ownership Interest
Purchase Agreement and the Escrow Agreement;
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NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements hereinafter contained, the
Parties agree as follows:
1. INTERPRETATION
In this Agreement (including the Recitals):
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
For purposes of the immediately preceding sentence, the term "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise;
"AGREEMENT" means this Subscription Agreement, as the same may be amended,
modified or supplemented from time to time;
"CLOSING" means the transfer of the Company Shares by the Company to Investor
pursuant to the provisions of Section 3 of this Agreement;
"COMMON STOCK" means common stock of the Company having a par value of US$ 0.01
per share;
"COMPANY" has the meaning given to it in introductory clause (1) of this
Agreement;
"COMPANY SHARES" has the meaning given to it in Recital (E);
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien (including,
without limitation, environmental and tax liens), charge, encumbrance, adverse
claim, preferential arrangement, or restriction of any kind, including, without
limitation, any arrangement, restriction on the use, voting, transfer, receipt
of income or other exercise of any attributes of ownership;
"INVESTOR" has the meaning given to it in introductory clause (2) of this
Agreement;
"NEW SHAREHOLDERS' AGREEMENT" means the Shareholders Agreement, dated as of the
date hereof, by and among the Company, certain shareholders of the Company and
Investor setting forth certain agreements of the parties thereto relating to the
Company Shares;
"OWNERSHIP INTEREST PURCHASE AGREEMENT" has the meaning given to it in
Recital (B);
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated
as of the date hereof, by and between the Company and Investor relating to the
grant by the Company to Investor of certain registration rights in respect of
the Company Shares;
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"REPORTS" has the meaning given to it in Section 6(2).
"SECURITIES ACT OF 1933" means the United States Securities Act of 1933 as
amended, and the rules and regulations thereunder as in effect from time to
time;
"SECURITIES EXCHANGE ACT OF 1934" means the United States Securities Exchange
Act of 1934 as amended, and the rules and regulations thereunder as in effect
from time to time;
"SOVINTEL INTEREST" has the meaning given to it in Recital (A); and
"STANDSTILL AGREEMENT" means the Standstill Agreement, dated as of the date
hereof, by and among the Company, certain shareholders of the Company and
Investor setting forth certain agreements of the parties thereto relating to the
Company Shares.
Terms not otherwise defined herein shall have the meanings set forth in the
Ownership Interest Purchase Agreement.
The headings in this Agreement do not affect its interpretation.
2. SUBSCRIPTION
(1) Subject to the terms and conditions of this Agreement, at the Closing, the
Company, in reliance on the covenants, representations and warranties of
Investor contained herein, shall issue the Company Shares to the Investor
at the Closing, and the Investor, in reliance on the covenants,
representations and warranties of the Company contained herein, shall
acquire the Company Shares from the Company at the Closing. The Company
Shares shall be issued to the Investor by the Company in partial
consideration for the sale by the Investor of the Sovintel Interest to
Teleross and SFMT pursuant to the Ownership Interest Purchase Agreement.
(2) For the purposes of this Agreement, the value of each of the Company
Shares shall be deemed equal to US$ 10.50 and the aggregate value of the
Company Shares shall be deemed equal to US$ 42,252,703.50.
3. CLOSING
(1) At the Closing, which shall take place simultaneously with the closing of
the Interest Transfer Transaction under the Ownership Interest Purchase
Agreement, provided that the conditions precedent set forth in Section 4
have been satisfied in full, the Company shall transfer the Stock
Certificate representing the Company Shares to the Escrow Agent in
definitive form and in such name(s) and in such denomination(s) as
Investor shall request in writing not later than five full Business Days
prior to the Closing.
4. CONDITIONS PRECEDENT TO CLOSING
(1) The Investor shall have delivered to SFMT and the Company a notarized copy
of the CBR License to acquire the Company Shares.
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(2) Any waiting period applicable to the transfer of the Company Shares under
the HSR Act, as amended, and the rules and regulations promulgated
thereunder, shall have expired.
(3) Subject to the terms and conditions of the Ownership Interest Purchase
Agreement, the Buyers shall have delivered the Notice on Conditions
Precedent to the Investor (with a copy to the Company).
(4) The Buyers shall have received all other closing deliveries from the
Investor as specified in Section 3.2 of the Ownership Interest Purchase
Agreement.
5. REPRESENTATIONS AND WARRANTIES
(1) The Company represents, warrants and undertakes to Investor as follows:
(a) that the Recitals relating to the Company are in every material
respect true and accurate and not misleading;
(b) 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;
(c) that the execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the Standstill Agreement and the New
Shareholders' Agreement by the Company have been duly authorized by
the Company, and this Agreement, the Standstill Agreement and the
New Shareholders' Agreement and the Registration Rights Agreement
constitute legal, valid and binding obligations of the Company;
(d) that the issuance of the Company Shares has been duly authorized by
the Company;
(e) that the Company 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
Encumbrances and other third party rights other than those
Encumbrances and rights created under the Standstill Agreement, the
Registration Rights Agreement and the New Shareholders' Agreement
and any other Encumbrances or rights created or caused by the
Investor;
(f) the financial statements and Reports of the Company received by the
Investor as indicated in Section 6(2) hereof were prepared in
accordance with U.S. GAAP
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and fairly present in all material respects the financial condition
and results of operations of the Company as of the respective dates
thereof and for the respective periods covered thereby, and such
Reports accurately disclose all material facts relating to the
business and condition of the Company;
(g) except as reflected or reserved against in the balance sheet
included in the latest available audited financial statements or in
the notes thereto, there are no liabilities against, relating to or
affecting the Company or any of the Company's assets and properties,
or any other Encumbrances in respect of such assets and properties,
other than liabilities or Encumbrances incurred or arising in the
ordinary course of business consistent with past practice which in
the aggregate are not material to the business or condition of the
Company;
(h) there are no actions or proceedings material to the business or
condition of the Company pending or threatened against, relating to
or affecting the Company or any of its assets and properties which
(i) could reasonably be expected to result in the issuance of an
order restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by
this Agreement or the Ownership Interest Purchase Agreement or
otherwise result in a material diminution of the benefits
contemplated hereby or thereby, or (ii) if determined adversely to
the Company, could reasonably be expected to result in (x) any
injunction or other equitable relief against the Company that would
interfere in any material respect with its business or operations or
(y) losses by the Company, individually or in the aggregate with
losses in respect of other such actions or proceedings, exceeding
US$ 1,000,000 or its equivalent in any other currency; and
(i) there are no facts or circumstances known to the Company that could
reasonably be expected to give rise to any action or proceeding that
would be required to be disclosed pursuant to paragraph (h) above.
(2) Investor represents, warrants and undertakes to the Company as follows:
(a) that the Recitals relating to Investor and the representations and
warranties relating to the Investor in the Ownership Interest
Purchase Agreement are in every material respect true and accurate
and not misleading;
(b) that Investor has been duly organized and is validly existing and in
good standing under the laws of the Russian Federation with full
power and authority to subscribe for and purchase the Company Shares
as contemplated by this Agreement;
(c) that the execution, delivery and performance of this Agreement, the
Standstill Agreement, the New Shareholders' Agreement and the
Registration Rights Agreement by Investor have been duly authorized
by Investor, and this
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Agreement, the Standstill Agreement, the New Shareholders' Agreement
and the Registration Rights Agreement constitute legal, valid and
binding obligations of Investor; and
(d) that the Investor is aware that it is acquiring the Company Shares
in a transaction exempt from the registration requirements of the
Securities Act of 1933 and is acquiring the Company Shares for its
own account and without a view to the public distribution of the
Company Shares or any interest therein, and will only resell the
Company Shares if they are registered under the Securities Act of
1933 or pursuant to an exemption from registration.
6. ACKNOWLEDGMENTS
The Investor acknowledges and agrees with the Company that:
(1) the Company Shares subscribed for hereunder have not been registered
under the Securities Act of 1933 or any other applicable securities
law and may not, and will not, be offered, sold or otherwise
transferred except pursuant to the registration requirements of the
Securities Act of 1933 or any other applicable securities law, or
pursuant to any other exemption therefrom, and in each case in
compliance with the conditions for transfer set forth in Section 7
below. Hedging transactions involving the Company Shares subscribed
for hereunder may not, and will not, be conducted unless such
transactions are conducted in compliance with the Securities Act of
1933.
(2) the Company or any person representing the Company has not made any
representation to it with respect to the Company or the offering or
sale of any Company Shares other than the representations made in
this Agreement and the Ownership Interest Purchase Agreement. The
Investor has received from the Company and reviewed the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
2000 ("Annual Report") and the Company's Quarterly Report on Form
10-Q for the quarterly periods ended March 31, 2001, June 30, 2001
and September 30, 2001, the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2001, and the Company's Quarterly
Report on Form 10-Q for the quarterly periods ended March 31, 2002
and June 30, 2002, all filed with the United States Securities and
Exchange Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (collectively, the "Reports"). The
Investor further acknowledges it has had access to such financial
and other information concerning the Company and the Company Shares
as it has deemed necessary in connection with its decision to
purchase any of the Company Shares, including an opportunity to ask
questions of and request information from the Company. The Investor
is aware that the trading price of the Company Shares is highly
volatile and that significant risks are associated with the
ownership of the Company Shares and with the
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operations conducted by the Company, as indicated, in part, in the
section of the Annual Report entitled "Certain Considerations
Applicable to Our Operations."
(3) any offer or sale of the Company Shares by the Investor shall be
made in accordance with all applicable securities laws of the United
States, the states of the United States or any other applicable
jurisdiction.
(4) the Company Shares certificate to be issued to the Investor will
contain a legend substantially to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. HEDGING TRANSACTIONS
INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS SUCH TRANSACTIONS
ARE CONDUCTED IN COMPLIANCE WITH THE SECURITIES ACT. THESE SECURITIES ARE
ALSO SUBJECT TO THE TERMS AND CONDITIONS OF A SHAREHOLDERS' AGREEMENT AND
A STANDSTILL AGREEMENT.
(5) the Company is relying upon the truth and accuracy of the foregoing
acknowledgements, representations, warranties and agreements and
agrees that, if any of the acknowledgements, representations,
warranties and agreements made in connection with the Investor's
acquisition of Company Shares are no longer accurate, it shall
promptly notify the Company.
7. UNDERTAKINGS
For a period of six (6) months after the date on which the Closing occurs,
Investor will not offer, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any of the Company Shares or securities
convertible into or exchangeable or exercisable for any of the Company
Shares, or publicly disclose the intention to make any such offer, sale,
pledge, disposition or filing, without the prior written consent of the
Company, provided that the Company may transfer the Company Shares to an
Affiliate where such transfer is permitted under the Securities Act of
1933.
8. 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:
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IN THE CASE OF THE COMPANY:
Golden Telecom, Inc.
0000 XxxXxxxxx Xxxxxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: General Counsel
WITH A COPY TO:
Representative Office of Golden TeleServices, Inc.
00 Xxxxxxxx Xx., 0xx Xxxxx
Xxxxxx, Xxxxxx
000000
Telephone: 0-000-000-0000
Facsimile: 7-095-797-9332
Attention: General Counsel
IN THE CASE OF INVESTOR:
OAO Rostelecom
Russian Federation, 125047,
Moscow, xx. 0xx Xxxxxxxxx-Xxxxxxxx, 00
Telephone: 0-000-000-0000
Facsimile: 7-095-787-2850
Attention: General Director
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 dispatch.
9. 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. This
Agreement is executed in Russian and in English, with 1 (one) copy in each
language for each Party hereto. In the event of any discrepancies between
the English and Russian versions, the English shall prevail.
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10. TERMINATION
This Agreement shall automatically terminate without any further notice
and be of no further force and effect if the Escrow Release Date does not
occur, as provided in the Ownership Interest Purchase Agreement or the
Ownership Interest Purchase Agreement is terminated by the Buyers pursuant
to Section 4.2(b) of the Ownership Interest Purchase Agreement.
11. GOVERNING LAW
THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, USA.
12. DISPUTE RESOLUTION
Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach, termination or validity thereof, shall be
referred to and finally resolved by arbitration in accordance with the
Arbitration Rules of the American Arbitration Association as in force and
effect on the date of this Agreement which are deemed to be incorporated
by reference into this article. The appointing authority shall be the
American Arbitration Association. There shall be three (3) arbitrators
appointed in accordance with said Rules. Where the Arbitration Rules of
the American Arbitration Association do not provide for a particular
situation, the arbitrators shall determine what course of action should be
followed. The place of arbitration shall be New York, New York and the
English language shall be used throughout the arbitral proceeding.
[Signature Page Follows]
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IN WITNESS WHEREOF this Agreement has been executed on the date first
written above.
GOLDEN TELECOM, INC.
By:
-----------------------------------
Name: Xxxxxxxxx Xxxxxxxxxx
Title: President and Chief
Executive Officer
OAO ROSTELECOM
By:
-----------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: General Director
By:
-----------------------------------
Name: Xxxxxxxxx Xxxxxx
Title: Chief Accountant
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