EXHIBIT 99.7
EXHIBIT F
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SHAREHOLDERS AGREEMENT
----------------------
THIS SHAREHOLDERS AGREEMENT (the "Agreement") is made and entered
into as of April [ ], 2001, by and among Golden Telecom, Inc., a
Delaware corporation (the "Company"), Global TeleSystems, Inc. (formerly
known as Global TeleSystems Group, Inc.), a Delaware corporation ("GTS"),
Alfa Telecom Limited, a British Virgin Islands company ("Alfa"), Capital
International Global Emerging Markets Private Equity Fund, L.P., a Delaware
limited partnership ("CIG") and Cavendish Nominees Limited, a limited
liability company organized and registered under the laws of Guernsey
("Cavendish"), and First NIS Regional Fund SICAV, a private institutional
fund organized and registered under the laws of Luxembourg (together with
Cavendish, "Barings") (each of Alfa, CIG and Barings, an "Investor").
RECITALS
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A. GTS has sold an aggregate of 12,195,122 shares of the
Company's Common Stock (as defined herein) in a private placement to the
Investors pursuant to a Share Purchase Agreement dated April 2, 2001 (the
"Purchase Agreement").
B. In order to induce Alfa, CIG and Barings to enter into the
Purchase Agreement, GTS has granted each of them an option (an "Option") to
purchase additional Shares (as defined herein) of the Company.
C. Pursuant to the terms hereof and certain instruments executed
and delivered by the parties concurrently with the execution and delivery
of this Agreement, the parties intend to terminate the effectiveness of (1)
all of the provisions of that certain Shareholders Agreement dated as of
October 5, 1999 between GTS and the Company (the "Seller Shareholders
Agreement") and (2) the provisions in Sections 9, 10, 11 and 13 of that
certain Shareholders and Registration Rights Agreement dated as of December
24, 1999, by and among the Company, GTS and CIG (the "CIG Shareholders and
Registration Rights Agreement"), and the parties desire to supersede and
replace such provisions with those set forth herein.
D. The Investors desire to set forth the terms and conditions of
certain agreements between them regarding certain rights and restrictions
with respect to the Shares and the management of the Company, and the
Company is willing to be a party to this Agreement to facilitate such
agreements.
E. In consideration of the premises and the mutual agreements
contained herein, the parties hereby agree as follows:
AGREEMENT
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1. DEFINITIONS
-----------
As used in this Agreement, the following capitalized terms shall
have the following meanings:
"COMMON STOCK" means shares of the Company's common stock, par
value $.01 per share, as the same may be constituted from time to time.
"DIRECTOR" means a member of the Board of Directors of the
Company.
"NOTE" means that certain promissory note in principal amount of
U.S.$55,000,000 issued by Alfa as partial consideration for the shares
purchased by Alfa pursuant to the Purchase Agreement.
"ORIGINAL SHARES" means the shares of Common Stock purchased by
the Investors pursuant to the Purchase Agreement and issued or issuable
upon the exercise of outstanding Options.
"PERMITTED TRANSFEREE" of a Person shall mean any other Person
controlled by, under common control with or in control of such Person and
notwithstanding the foregoing, in the case of Cavendish shall also include
each of the following: Baring Vostok Private Equity Fund, L.P.1, Baring
Vostok Private Equity Fund, L.P.2, Baring Vostok Private Equity Fund L.P.3,
the NIS Restructuring Facility and First NIS Regional Fund SICAV.
"PERSON" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"PRO RATA PORTION" with respect to an Investor means a fraction,
the numerator of which is the total number of Original Shares of such
Investor and the denominator of which is the total number of Original
Shares of all Investors.
"SHARES" means shares of Common Stock of the Company, any
securities issued or issuable with respect to such shares of Common Stock
by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, and any other equity interests or any options, warrants or
other securities that are directly or indirectly convertible into, or
exercisable or exchangeable for, Common Stock.
"TRANSFER" means any transfer, in whole or in part, by sale,
pledge, assignment, grant or other means, including, without limitation, by
the grant of an option, of Shares.
"THIRD PARTY" shall mean any Person other than a Permitted
Transferee.
2. TAG-ALONG RIGHTS
----------------
(a) Alfa shall not, in any one transaction or any series of
related transactions, Transfer Shares to any Third Party, who will own,
directly or through affiliates, not less than 9,791,999 Shares (such number
to be appropriately adjusted for Share repurchases, stock splits, stock
dividends, reorganizations, recapitalizations and other similar
transactions) immediately after such purchase (a "Third Party Offer"),
unless the terms and conditions of the Third Party Offer include an offer,
at the same price and on the same terms as the Transfer by Alfa, to
include, at the option of CIG and/or Barings, in the sale or other
disposition to the Third Party, a number of Shares owned by CIG and/or
Barings determined in accordance with this Section 2.
(b) Alfa shall cause the Third Party Offer to be reduced to
writing (which writing shall include an offer to purchase or otherwise
acquire Shares from CIG and Barings as provided in this Section 2) and
shall send written notice of the Third Party Offer together with a copy of
the Third Party Offer (the "Inclusion Notice") to CIG and Barings in the
manner set forth in Section 9(d) hereof. At any time within 15 calendar
days after delivery of the Inclusion Notice, CIG and Barings may accept the
offer included in the Inclusion Notice and by furnishing written notice of
acceptance to Alfa.
(c) Each of CIG and Barings shall have the right (an "Inclusion
Right") to sell pursuant to the Third Party Offer a number of its Shares,
not to exceed the number of its Original Shares, equal to the product of
(x) its Pro Rata Portion and (y) the total number of Shares covered by the
Third Party Offer.
(d) The consideration payable per Share to be Transferred by CIG
and Barings in such sale or other disposition shall be the same in all
respects as the consideration payable to Alfa per Share so Transferred by
Alfa.
(e) This Section 2 does not apply if Alfa Transfers Shares to an
internationally recognized financial institution, a telecommunications
company with market capitalization in excess of $1 billion or an
international investment fund with a majority of capital provided by
reputable institutional or governmental shareholders.
3. NOMINATION AND REMOVAL OF DIRECTORS
-----------------------------------
(a) The Company and each Investor agree that so long as the
voting agreement set forth in this Section 3 remains in effect, each of
them shall take all action necessary from time to time (including, without
limitation, the voting of shares, execution of written consents, the
calling of special meetings, the removal of directors, the filling of
vacancies on the Board, the waiving of notice and attendance at meetings,
the amendment of the Company's by-laws and the like) necessary to maintain
the membership on the Board as follows:
(i) subject to paragraphs (f) and (h) below, three directors
shall be designated by Alfa (the "Alfa Directors") and an
additional fourth director may be designated by Alfa, if
CIG and Barings agree to such designation, as set forth in
clause (iv) or clause (vi) below;
(ii) one director shall be designated by CIG (the "CIG
Director");
(iii) one director shall be designated by Barings (the "Barings
Directors");
(iv) in accordance with paragraph (d) below, one director shall
be designated by GTS (the "GTS Director") or one director
shall be designated jointly by Alfa, CIG and Barings (the
"Jointly Designated GTS Replacement Director");
(v) such additional directors designated by GTS, if any, as
may be required pursuant to paragraph (f) below; and
(vi) in accordance with paragraph (g) below, one director in
addition to the Jointly Designated GTS Replacement
Director may be designated jointly by Alfa, CIG and
Barings;
provided, however, in no event during the term hereof will the total number
of Alfa Directors and/or other Persons who are directors, officers,
employees, shareholders or affiliates of Alfa or any of its affiliates
exceed four.
(b) If any Investor (the "Affected Investor") gives notice at any
time to the Company and the other Investors that any individual then
serving as a director of the Company designated by the Affected Investor is
no longer the Affected Investor's designee, then the Affected Investor, the
Company and the other Investors shall take all such actions as are
necessary to remove the director so designated.
(c) If a director designated by an Affected Investor dies,
resigns or is removed as a director of the Company pursuant to Section 3(b)
above, then the Affected Investor, the Company and the other Investors
shall take such action as is necessary to elect as a director of the
Company an individual subsequently designated by the Affected Investor.
(d) GTS agrees to cause its remaining designee to resign at the
first to occur of (each, a "Resignation Event"): (i) such time as the
aggregate cash consideration paid to GTS for purchases of Shares pursuant
to the Purchase Agreement and upon the exercise of Options shall equal at
least $150,000,000 and (ii) such time as GTS shall own shares of Common
Stock aggregating fewer than 4% of all of the issued and outstanding shares
of Common Stock. From and after the date on which a Resignation Event
occurs, Alfa, CIG and Barings shall have the right to jointly designate the
Jointly Designated GTS Replacement Director.
(e) If the Jointly Designated GTS Replacement Director dies,
resigns or is removed as a director of the Company pursuant to Section 3(b)
above, then the Company and the Investors shall take such action as is
necessary to elect as a director of the Company any individual subsequently
jointly designated by Alfa, CIG and Barings as a replacement therefor.
(f) If any "Event of Default" (as defined therein) shall occur
under the Note, then Alfa shall cause the directors designated by it to
resign immediately and GTS shall have the right to designate such number of
directors as shall constitute a majority of the Board of Directors, who
shall also be deemed to be GTS Directors hereunder. The Investors and the
Company shall take such action as may be reasonably required to permit GTS
to exercise such right (including without limitation maintaining at least
one vacancy on the Board of Directors until payment in full of the Note,
such that GTS would be able to designate a number of directors as would
constitute a majority of the Board of Directors without increasing the size
of the Board of Directors).
(g) If a vacancy shall arise on the Board other than such vacancy
as would be filled by the Jointly Designated GTS Replacement Director or
pursuant to Section 3(d) above, Alfa may propose a Person to fill the
vacancy and if each of CIG and Barings approve such Person, Alfa, CIG and
Barings shall use their reasonable best efforts to effect the appointment
of such Person to the Board and to vote for his or her election at any
subsequent meeting of stockholders held or other action taken for such
purpose.
(h) From and after such time as Alfa shall own shares of Common
Stock aggregating fewer than 15% of all of the issued and outstanding
shares of Common Stock, the number of Alfa Directors shall be reduced to
two and Alfa shall cause one of the Alfa Directors to resign if there are
more than three such directors serving on the Board.
4. ASSIGNMENT AND TRANSFER OF GTS REGISTRATION RIGHTS AGREEMENT
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(a) In order to induce Alfa to enter into the Purchase Agreement
and the transactions contemplated thereby, GTS hereby irrevocably and
unconditionally assigns and absolutely transfers to Alfa, with effect from
the Closing Date, and with respect to all of Alfa's Original Shares, all of
GTS's present and future rights, title and interest in and under the
Registration Rights Agreement, dated as of October 5, 1999 (the "GTS
Registration Rights Agreement") by and between GTS and the Company (the
"Assignment").
(b) The Company hereby acknowledges and consents in all respects
to the Assignment and confirms the availability of three Demand
Registration rights thereunder (as such term is defined therein).
(c) Alfa shall not be liable to GTS, the Company or any of their
successors, assigns, affiliates, directors, officers, stockholders, agents
or representatives for any losses, liabilities (contingent or otherwise),
damages, and expenses of any nature or kind in connection with the GTS
Registration Rights Agreement that have or may have occurred prior to the
date of the Assignment.
(d) Subject to Section 3(c) above, to the extent of its interests
therein Alfa agrees to be bound by the terms of the GTS Registration Rights
Agreement as if signatory thereto.
(e) The Company hereby acknowledges and agrees that (i) Alfa
shall have the benefit of all rights contained in the GTS Registration
Rights Agreement, including, without limitation, the registration rights
contained in Sections 3, 4 and 5 of the GTS Registration Rights Agreement
with respect to all of Alfa's Original Shares and (ii) GTS shall have the
benefit of all rights contained in Section 5 of the GTS Registration Rights
Agreement with respect to GTS's remaining 2,861,206 shares of Common Stock.
5. NO CONFIDENTIAL AGREEMENTS
--------------------------
Each Investor and GTS agrees that it has not, as of the date
hereof, and will not from and after the date hereof enter into any
agreements, arrangements or understandings with (i) any other Investor or
GTS, as applicable, insofar as concerns the Company, its management or any
Shares or (ii) with the Company, its affiliates or management without
giving prior written notice to the Company, the other Investors and GTS, as
applicable, disclosing all material terms thereof.
6. CONTINGENT CALL EXERCISE
------------------------
In the event that Alfa delivers to GTS a Contingent Call Notice
(as defined in the Stock Option Agreement dated as of [ ], 2000
between Alfa Telecom Limited and Global TeleSystems, Inc.), CIG and Barings
shall have the right to purchase Shares purchased by Alfa thereunder at the
same price on a pro rata basis, based on its respective Pro Rata Portion.
Alfa and GTS shall take all such actions necessary to permit such a
purchase by CIG and/or Barings.
7. TERMINATION
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This Agreement shall terminate on the later of (x) the second
anniversary of the date of the Closing (as defined in the Purchase
Agreement) and (y) the date of the annual meeting of shareholders of the
Company held in calendar year 2003. If earlier, this Agreement will
terminate as to any Investor when it ceases to hold at least 1.5% of the
outstanding Common Stock of the Company; provided, however, that Section 2
of this Agreement shall terminate earlier as to Barings or CIG, as the case
may be, when it ceases to hold at least 2.5% of the outstanding Common
Stock of the Company.
8. AFFILIATE STATUS
----------------
At the date of this Agreement, Alfa represents and warrants that
it is an affiliate of (being under common control with) OAO Alfa Bank, a
Russian open joint stock company.
9. MISCELLANEOUS
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(a) Remedies. Each party shall be entitled to exercise all rights
provided herein or granted by law, including recovery of damages, and each
party hereto will be entitled to specific performance of their rights under
this Agreement. Each of the Company, GTS and the Investors agree that
monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after
the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Investors
in this Agreement or otherwise conflicts with the provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless the Company has obtained the written consent
of each Investor.
(d) Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing
(including telecopier or similar writing) and shall be deemed to have been
given at the time when mailed in any general or branch office of the United
States Postal Service, enclosed in a registered or certified postpaid
envelope, or sent by Federal Express or other similar overnight courier
service, addressed to the address of the parties stated below or to such
changed address as such party may have fixed by notice or, if given by
telecopier, when such telecopy is transmitted and the appropriate
answerback is received.
(i) If to Alfa:
Alfa Telecom Limited
X.X. Xxx 0000
Xxxxxx Xxxxx
0xx Xxxxx
333 Waterfront Drive
Road Town
Tortola, British Virgin Islands
Facsimile No.:
Attention: Xxxxx Xxxxxxxx
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx L.L.P.
Xxxxxx X. Xxxxxxx Building
0000 Xxx Xxxxxxxxx Xxxxxx X.X.
Xxxxxxxxxx, X.X. 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxxx
(ii) If to CIG:
c/o Capital International Global Emerging Markets
Private Equity Fund, L.P.
000 Xxxxx Xxxxx Xxxxxxx Xxxxxxxxx
Xxxx XX 00000-0000
Facsimile No.: x0 (000) 000-0000
Attention: Xxx Xxxxx
with a copy to:
Capital International Limited
00 Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (00) 0000-0000
Attention: Xxx Xxxxxx
and to:
Capital Research International Inc.
00 Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (00) 0000 0000
Attention: Xxxxxx Xxxxxxx
and to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
00 Xxxx Xxxx
Xxxxxx
XX0X 0XX
Facsimile No.: x00 (00) 0000 0000
Attention: Xxxxx Xxxxxxxxx
(iii) If to Cavendish Nominees Limited:
c/o International Private Equity Services
00-00 Xxxxxxxx Xxxx XX Xxx 000
Xx. Xxxxx Xxxx
XX0 0XX, Guernsey
Facsimile No.: 44 (0) 1481 715 219
Attention: Xxx. Xxxxxx Xxxxxx
with a copy to:
Baring Vostok Capital Partners
10 Uspenski Xxxxxxxx
000000 Xxxxxx, Xxxxxx
Facsimile No.: 7095 967 1308
Attention: Xxxxxxx Xxxxxx
and to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
00 Xxxx Xxxx
Xxxxxx
XX0X 0XX
Facsimile No.: x00 (00) 0000 0000
Attention: Xxxxx Xxxxxxxxx
(iv) If to First NIS Regional Fund SICAV:
x/x Xxxx xx Xxxxxxx Xxxxxxxxxx
00 Xxx Xxxxxx
X-0000, Xxxxxxxxxx
Facsimile No.: 00(0)0 00 00 00 1
Attention: Xxxxxxxxx Tourney
with a copy to:
Baring Vostok Capital Partners
10 Uspenski Xxxxxxxx
000000 Xxxxxx, Xxxxxx
Facsimile No.: 7095 967 1308
Attention: Xxxxxxx Xxxxxx
and to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
00 Xxxx Xxxx
Xxxxxx
XX0X 0XX
Facsimile No.: x00 (00) 0000 0000
Attention: Xxxxx Xxxxxxxxx
(v) If to the Company:
Golden Telecom, Inc.
c/o Golden Teleservices, Inc.
0000 Xxxxxx Xxxxxxxxx
0xx Xxxxx Xxxxxxxxx, XX 00000
Facsimile No.: x0 (000) 000-0000
Attention: General Counsel
(vi) If to GTS:
GTS Group
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx, 00xx Xxxxx
XxXxxx, XX 00000
Facsimile No.: x0 (000) 000-0000
Attention: General Counsel
(e) Assignment. Except upon transfers of Shares subject hereto to
Permitted Transferees which agree to accept such Shares subject to the
terms hereof and to be bound hereby, no party shall assign or transfer any
of its rights under this Agreement without the prior written consent of the
other parties.
(f) Governing Law. This Agreement shall be governed by the laws
of the State of New York. The jurisdiction and venue in any action brought
by any party hereto pursuant to this Agreement shall lie exclusively in any
federal or state court located in the City of New York, New York. The
parties irrevocably agree that venue would be proper in any such court, and
hereby waive any objection that any such court is an improper or
inconvenient forum for the resolution of such action. The parties agree
that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdiction by suit on the judgment or in any
other manner provided by applicable law.
(g) Entire Agreement. This Agreement, together with any other
agreements between the parties (including without limitation the GTS
Registration Rights Agreement), constitutes the entire understanding
between the parties and supersedes all proposals, commitments, writings,
negotiations and understandings, oral and written, and all other
communications between the parties relating to the subject matter of this
Agreement and all prior agreements, including, all the provisions of the
Seller Shareholders Agreement and the provisions in Sections 9, 10, 11 and
13 of the CIG Shareholders and Registration Rights Agreement.
(h) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
(i) Severability. Should any part, term or condition hereof be
declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions of this Agreement shall
not be affected thereby, and the illegal or unenforceable portions of this
Agreement shall be and hereby are redrafted to conform with applicable law,
while leaving the remaining portions of this Agreement intact.
(j) Force Majeure. No party shall be deemed to have breached this
Agreement or be held liable for any failure or delay in the performance of
all or any portion of its obligations under this Agreement if prevented
from doing so by a cause or causes beyond its control. Without limiting the
generality of the foregoing, such causes include acts of God or the public
enemy, fires, floods, storms, earthquakes, riots, strikes, lock-outs, wars
and war-operations, restraints of government power or communication line
failure or other circumstances beyond such party's control, or by reason of
the judgment, ruling or order of any court or agency of competent
jurisdiction or change of law or regulation subsequent to the execution of
this Agreement.
(k) Successors and Assigns Subject to the provisions of Section
8(e), this Agreement is solely for the benefit of the parties and their
respective permitted successors and assigns. Nothing herein shall be
construed to provide any rights to any other entity or individual.
(l) Headings. Section headings are for convenience only and do
not control or affect the meaning or interpretation of any terms or
provisions of this Agreement.
(m) Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof or
thereof is validly asserted as a defense, the successful party shall be
entitled to recover reasonable attorneys, fees in addition to any other
available remedy.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
ALFA TELECOM LIMITED
By:
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Name:
Title:
CAPITAL INTERNATIONAL GLOBAL EMERGING
MARKETS PRIVATE EQUITY FUND, L.P.
By CAPITAL INTERNATIONAL INC., General Partner
By:
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Name:
Title:
CAVENDISH NOMINEES LIMITED
By:
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Name:
Title:
FIRST NIS REGIONAL FUND SICAV
By:
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Name:
Title:
By:
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Name:
Title:
GOLDEN TELECOM, INC.
By:
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Name:
Title:
GLOBAL TELESYSTEMS GROUP, INC.
By:
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Name:
Title:
