SHAREHOLDERS AGREEMENT
Dated as of August 19, 2003
between and among
Golden Telecom, Inc.,
Alfa Telecom Limited,
Xxx Telenor East Invest AS,
OAO Rostelecom,
Capital International Global Emerging Markets Private Equity Fund, L.P.,
Cavendish Nominees Limited
and
First NIS Regional Fund SICAV
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION..........................................1
1.1 DEFINITIONS........................................................1
1.2 INTERPRETATION.....................................................8
2. REPRESENTATIONS AND WARRANTIES..........................................9
2.1 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.................9
2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................10
3. CERTAIN CORPORATE MATTERS..............................................12
3.1 NOMINATION AND REMOVAL OF DIRECTORS...............................12
3.2 DISCLOSURE OF INTERESTS...........................................16
3.3 SPECIAL TRANSACTION PROCEDURES....................................16
3.4 PURCHASE RIGHTS OF SHAREHOLDERS...................................17
3.5 TENDER OFFERS.....................................................19
3.6 BUSINESS COMBINATION..............................................19
3.7 COMPLIANCE WITH SECURITIES LAWS...................................20
4. TRANSFERS..............................................................20
4.1 GENERAL...........................................................20
4.2 TRANSFERS TO PERMITTED TRANSFEREES................................20
4.3 RIGHT OF FIRST OFFER..............................................20
4.4 TELENOR'S AND ALFA'S TAG ALONG RIGHTS.............................22
4.5 OTHER SHAREHOLDERS' TAG ALONG RIGHTS..............................22
4.6 PURCHASES FROM BARINGS OR CIG.....................................23
4.7 OTHER TRANSFER-RELATED PROVISIONS.................................23
4.8 PLEDGES...........................................................24
5. OTHER ARRANGEMENTS.....................................................26
6. TERM AND TERMINATION...................................................26
7. MISCELLANEOUS..........................................................27
7.1 SPECIFIC PERFORMANCE..............................................27
7.2 WAIVERS; REMEDIES.................................................27
7.3 AMENDMENTS........................................................27
7.4 NO ASSIGNMENT; BINDING EFFECT; NO THIRD PARTY BENEFICIARIES.......28
7.5 SEVERABILITY......................................................28
7.6 FURTHER ASSURANCES................................................28
7.7 ENTIRE AGREEMENT..................................................28
7.8 NOTICES...........................................................28
7.9 GOVERNING LAW.....................................................32
7.10 ARBITRATION; WAIVER OF SOVEREIGN IMMUNITY.........................32
7.11 COUNTERPARTS; LANGUAGE............................................34
SCHEDULES AND EXHIBITS
SCHEDULE 1 - SHARES HELD BY SHAREHOLDERS AS OF EFFECTIVE DATE
SCHEDULE 2.1(d) - CONSENTS AND APPROVALS OF SHAREHOLDERS
SCHEDULE 2.1(h) - LIENS
SCHEDULE 2.1(i) - EXCEPTIONS TO SOLE POWER OF DISPOSITION OF SHAREHOLDERS
SCHEDULE 2.2(e) - CONSENTS AND APPROVALS OF COMPANY
EXHIBIT A - FORM OF ENDORSEMENT
SHAREHOLDERS AGREEMENT dated as of August 19, 2003 (this "AGREEMENT")
between and among Golden Telecom, Inc., a corporation organized under the
laws of the State of Delaware, United States of America (the "COMPANY"),
Alfa Telecom Limited, a company organized under the laws of the British
Virgin Islands ("Alfa"), Xxx Telenor East Invest AS, a company organized
under the laws of Norway ("TELENOR"), OAO Rostelecom, an open joint stock
company organized under the laws of the Russian Federation ("RTK"), Capital
International Global Emerging Markets Private Equity Fund, L.P., a limited
partnership organized under the laws of the State of Delaware, United
States of America ("CIG"), Cavendish Nominees Limited, a limited liability
company organized under the laws of Guernsey ("CAVENDISH"), and First NIS
Regional Fund SICAV, a private institutional fund organized under the laws
of Luxembourg ("FIRST NIS" and together with Cavendish, collectively,
"BARINGS").
WITNESSETH
WHEREAS, Alfa, RTK, CIG and Barings currently hold shares of Common
Stock (as defined below);
WHEREAS, under the Share Exchange Agreement dated as of the date
hereof between Telenor and the Company (the "SHARE EXCHANGE AGREEMENT"),
Telenor will acquire shares of Common Stock;
WHEREAS, a condition to the obligations of Telenor and the Company
under the Share Exchange Agreement is that the Company and the Shareholders
enter into this Agreement; and
WHEREAS, Alfa, Telenor, RTK, CIG, Barings and the Company wish to
enter into this Agreement in respect of certain matters of corporate
governance, including the composition of the board of directors of the
Company and the conduct of the affairs of the Company, and the other
matters described herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties
hereby agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"ACTION" means any legal, administrative, governmental or regulatory
proceeding or other action, suit, proceeding, claim, arbitration,
mediation, alternative dispute resolution procedure, inquiry or
investigation by or before any Governmental or Regulatory Authority.
"ADJUSTMENT PERCENTAGE" means (a) in the case of any Shareholder who,
as at the Effective Date, is entitled to designate three (3) Directors,
thirty percent (30%) of all of the issued and outstanding shares of Voting
Stock and (b) in the case of any Shareholder who, as at the Effective Date,
is entitled to designate two (2) Directors, ten percent (10%) of all of the
issued and outstanding shares of Voting Stock.
"AFFECTED SHAREHOLDER" has the meaning specified in Section 3.1(d).
"AFFILIATE" means, with respect to any Person, any other Person who
directly or indirectly controls, or is under common control with, or is
controlled by, such Person, including, if such Person is an individual, any
relative or spouse of such Person, or any relative of such spouse of such
Person, any one of whom has the same home as such Person, and also
including any trust or estate for which any such Person or Persons
specified herein, directly or indirectly, serves as a trustee, executor or
in a similar capacity (including, without limitation, any protector or
settlor of a trust) or in which any such Person or Persons specified
herein, directly or indirectly, has a substantial beneficial interest, and
any Person who is controlled by any such trust or estate; provided always
that, in the case of CIG, an Affiliate of CIG shall include only those
Affiliates in which Capital International, Inc. holds, directly or
indirectly, through one or more intermediaries, more than a majority of the
outstanding economic ownership interests of that Person. As used in this
definition, "CONTROL" (including, with its correlative meanings,
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means, with respect to any
Person, the possession, directly or indirectly, of power to direct or cause
the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise) of a Person.
"AGREEMENT" has the meaning specified in the preamble hereto.
"ALFA" has the meaning specified in the preamble hereto.
"ARCO" means the Agency for Restructuring of Credit Organizations
(Agenstvo po Restruckturizatzii Kreditnykh Organizaziy) of the Russian
Federation.
"ASSETS AND PROPERTIES" means, with respect to any Person, all assets
and properties of every kind, nature, character and description (whether
real, personal or mixed, whether tangible or intangible, whether absolute,
accrued, contingent, fixed or otherwise and wherever situated), including
the goodwill related thereto, used, operated, owned or leased by such
Person, including, without limitation, cash, cash equivalents, investments,
accounts and notes receivable, chattel paper, documents, instruments,
general intangibles, real estate, equipment, inventory, goods and
intellectual property.
"AUTHORIZATION" means any consent, permission, waiver, allowance,
novation, authorization, declaration, filing, registration, notification,
application, license, permit, certificate, variance, exemption, franchise
or other approval issued, granted, given or otherwise made available by, or
required to be filed with, any Governmental or Regulatory Authority or
pursuant to any law.
"BARINGS" has the meaning specified in the preamble hereto.
"BOARD" means the board of directors of the Company.
"BUSINESS" means fixed mobile, consumer and business Internet access,
CDMA, data, Internet Protocol and other similar telecommunications
businesses, but excluding mobile, mobile Internet and satellite
telecommunications businesses.
"BUSINESS COMBINATION" has, in relation to the Company, the meaning
specified in Section 203(c)(3) of the DGCL.
"BUSINESS DAY" means a day other than a Saturday, a Sunday or any day
on which banks located in Moscow, Russia, Oslo, Norway, London, England or
New York, New York are authorized or obliged to close.
"CAVENDISH" has the meaning specified in the preamble hereto.
"CHANGE OF CONTROL" means, with respect to any Shareholder or any
Controlling Person of such Shareholder, (a) the sale or other disposition
of all or substantially all of such Shareholder's or such Controlling
Person's Assets and Properties, in one or a series of related transactions,
to any Person or Persons (other than a Controlling Person of such
Shareholder or any Controlled Affiliate or Controlled Affiliates of such
Controlling Person), (b) the sale or other disposition of more than fifty
percent (50%) of the securities having ordinary voting power for the
election of directors or other governing body of such Shareholder or
Controlling Person, in one or a series of related transactions, to any
Person or Persons (other than a Controlling Person of such Shareholder or
any Controlled Affiliate or Controlled Affiliates of such Controlling
Person), (c) the merger or consolidation of such Shareholder or Controlling
Person with or into another Person or the merger of another Person into
such Shareholder or Controlling Person with the effect that any Person or
Persons other than the existing shareholders of such Shareholder or
Controlling Person prior to such transaction own or control, directly or
indirectly, more than fifty (50%) of the securities having ordinary voting
power for the election of directors or other governing body of the Person
surviving such merger, or the Person resulting from such consolidation or
(d) the liquidation or dissolution of such Shareholder or Controlling
Person; provided, however, that a Change of Control shall not include (i) a
bona fide underwritten public offering of the capital stock of such
Shareholder or any Controlling Person of such Shareholder, or (ii) for
purposes of Article 4, any of (A) the sale of all or substantially all of
the assets of Telenor ASA, Telenor Communication AS or Telenor Business
Solutions AS, (B) the sale of more than fifty percent (50%) of the
securities having ordinary voting power for the election of directors or
other governing body of Telenor ASA, Telenor Communication AS or Telenor
Business Solutions AS, (C) the liquidation or dissolution of Telenor ASA,
Telenor Communication AS or Telenor Business Solutions AS, (D) any merger,
consolidation, divestiture or de-merger to which Telenor ASA, Telenor
Communication AS or Telenor Business Solutions AS is a party, or (E) the
transfer of more than fifty percent (50%) of the issued and outstanding
shares of OAO Svyazinvest to any Person other than a Shareholder or an
Affiliate of a Shareholder.
"CIG" has the meaning specified in the preamble hereto.
"COMMON STOCK" means the Company's common stock, par value $0.01 per
share, as the same may be constituted from time to time.
"COMPANY" has the meaning specified in this preamble hereto.
"CONTROLLED AFFILIATE" means, with respect to any Person, any
Affiliate of such Person in which such Person owns or controls, directly or
indirectly, more than fifty percent (50%) of the securities having ordinary
voting power for the election of directors or other governing body thereof
or more than fifty percent (50%) of the partnership or other ownership
interests therein (other than as a limited partner).
"CONTROLLING PERSON" means, with respect to any Person, any other
Person which owns or controls, directly or indirectly, more than fifty
percent (50%) of the securities having ordinary voting power for the
election of directors or other governing body of such first Person or more
than fifty percent (50%) of the partnership or other ownership interests
therein (other than as a limited partner of such first Person).
"CO-SALE NOTICE" has the meaning specified in Section 4.4(a).
"DESIGNATION TABLE" means the table set out in Section 3.1(i).
"DGCL" means the General Corporation Law of the State of Delaware.
"DIRECTOR" means a member of the Board.
"DIRECT OR INDIRECT FINANCIAL INTEREST" means, with respect to any
Director, a financial benefit to (a) such Director, (b) any Affiliate of
such Director, (c) such Director's employer or any of its Controlling
Persons or Affiliates or (d) the Shareholder who has designated such
Director as a member of the Board or any of its Controlling Persons or
Affiliates.
"DISINTERESTED DIRECTOR" means (a) for purposes of Sections 3.4 and
4.2(b), any Director who does not have a Direct or Indirect Financial
Interest in the matter subject to consideration by the Board and (b) for
purposes of Section 3.6, any Director who is neither an officer nor an
employee of the Company, nor a Person employed, designated as a member of
the Board or otherwise controlled by or under common control with a
Shareholder or any of its Controlling Persons or Affiliates at the time
such Shareholder or any of its Controlling Persons or Affiliates proposes
to engage in a Business Combination with the Company.
"ENDORSEMENT" means an endorsement to this Agreement in the form of
Exhibit A.
"EFFECTIVE DATE" means the latter to occur of (a) the date on which
the board of directors of RTK has ratified and approved RTK's execution of
this Agreement and the other Principal Agreements to which RTK is a party
and (b) the date on which the Closing under (and as defined in) the Share
Exchange Agreement has occurred.
"ENFORCEMENT ACTION" has the meaning specified in Section 4.8(b)(i).
"ENFORCEMENT NOTICE" has the meaning specified in Section 4.8(b)(i).
"EQUITY PLAN" means the 1999 Equity Plan of the Company, as amended on
June 26, 2001, and as otherwise amended from time to time, and any other
equity participation plan approved by the Company's stockholders.
"EXISTING SHAREHOLDERS AGREEMENT" means the Shareholders Agreement
dated as of September 5, 2002 between and among GTI, Alfa, RTK, CIG and
Barings.
"FAIR MARKET VALUE" means, as of the date of determination thereof,
the average of the Market Prices for the shares of Voting Stock for the
thirty (30) trading days immediately preceding such date of determination.
"FINANCIAL EXPERT" has the meaning specified in the Marketplace Rules
and the relevant rules of the SEC, in each case, as interpreted by the
Board.
"FIRST NIS" has the meaning specified in the preamble hereto.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, arbitral panel or tribunal, legislature, government, ministry,
committee, inspectorate, authority, agency, commission, official or other
competent authority of any country or state, as well as any county, city or
other political subdivision of any of the foregoing.
"INCLUSION NOTICE" has the meaning specified in Section 4.5(b).
"INCLUSION RIGHT" has the meaning specified in Section 4.5(c).
"INDEPENDENT DIRECTOR" has the meaning specified in the Marketplace
Rules and the relevant rules of the SEC, in each case, as interpreted by
the Board.
"INITIAL PERIOD" means the period commencing on the Effective Date and
ending on the second anniversary thereof.
"INITIATING DIRECTORS" has the meaning specified in Section 3.3(a).
"INITIATION NOTIFICATION" has the meaning specified in Section 3.3(b).
"JOINTLY DESIGNATED DIRECTOR" has the meaning specified in Section
3.1(a)(ii).
"LIEN" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind,
or any conditional sale contract, title retention contract or other
contract to grant any of the foregoing.
"MARKET PRICE" means the price of one share of Voting Stock on the
relevant date, determined (a) on the basis of the last reported sale price
regular way on the Nasdaq National Market or (b) if there is no such
reported sale price on such day, on the basis of the average of the
reported closing bid and asked prices regular way on the Nasdaq National
Market.
"MARKETPLACE RULES" means the National Association of Securities
Dealers Marketplace Rules.
"NEW SECURITIES" has the meaning specified in Section 3.4(a).
"NON-PLEDGING SHAREHOLDER" has the meaning specified in Section
4.8(a).
"OFFER" means a bona fide offer (whether or not solicited) to purchase
Shares owned by Alfa or Telenor that Alfa or Telenor, as applicable,
desires to accept.
"OFFER NOTICE" has the meaning specified in Section 4.3(a).
"OFFERED SHARES" has the meaning specified in Section 4.3(a).
"OFFERING SHAREHOLDER " has the meaning specified in Section 4.4(a).
"PARTIES" means the Company, Alfa, Telenor, RTK, CIG, Cavendish and
First NIS.
"PERMITTED TRANSFEREE" means, with respect to any Shareholder, any
Controlling Person of such Shareholder, or any Controlled Affiliate of any
such Controlling Person or Shareholder; provided that, (a) in the case of
Cavendish, Baring Vostok Private Equity Fund, L.P.1, Baring Vostok Private
Equity Fund, L.P.2, Baring Vostok Private Equity Fund L.P.3, Baring Vostok
Fund Co-Investment L.P., the NIS Restructuring Facility and First NIS
Regional Fund SICAV shall also constitute Permitted Transferees and (b) in
the case of RTK, if the conditions specified in Section 4.2(b) have been
satisfied (as determined by a majority of the Disinterested Directors, in
their sole discretion), any RTK Transferee shall also constitute a
Permitted Transferee.
"PERSON" means any natural person, corporation, partnership, limited
liability company, proprietorship, other business organization, trust,
union, association or Governmental or Regulatory Authority, whether
incorporated or unincorporated.
"PLEDGED SHARES" has the meaning specified in Section 4.8(a).
"PLEDGEE" has the meaning specified in Section 4.8.
"PLEDGE CO-SALE NOTICE" has the meaning specified in Section 4.8(c).
"PLEDGE NOTICE" has the meaning specified in Section 4.8(a).
"PLEDGING SHAREHOLDER" has the meaning specified in Section 4.8.
"PRINCIPAL AGREEMENTS" means this Agreement, the Share Exchange
Agreement, the Standstill Agreement and the Registration Rights Agreement.
"PROPOSED RESOLUTION" has the meaning specified in Section 3.3(a).
"PUBLIC SALE" means a non-directed sale of shares effected through a
secondary offering or other transaction on the Nasdaq National Market or
another stock exchange of recognized international standing, including,
without limitation, any sale pursuant to Rule 144 under the United States
Securities Act of 1933, as amended, or any sale or exchange pursuant to a
Tender Offer.
"PURCHASE OFFER" has the meaning specified in Section 4.3(b).
"PURCHASING SHAREHOLDER" has the meaning specified in Section
4.8(b)(ii).
"RECEIVING SHAREHOLDER" has the meaning specified in Section 4.4(a).
"RECONCILIATION PROCEDURE" has the meaning specified in Section
3.3(a).
"RECONCILIATION TERMINATION DATE" has the meaning specified in Section
3.3(c).
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated as of the date hereof between the Company and the
Shareholders.
"RIGHT HOLDERS" means, collectively, Alfa, Telenor and RTK, and,
individually, any of them.
"RTK" has the meaning specified in the preamble hereto.
"RTK TRANSFEREES" means RTC-Leasing OJSC, RosTeleComLeasing (Cyprus)
Limited, RosTeleComLeasing Ltd., Zurich and Russian Telecommunications
Development Corporation.
"SEC" means the United States Securities and Exchange Commission.
"SHARE EXCHANGE AGREEMENT" has the meaning specified in the second
recital hereto.
"SHAREHOLDERS" means Alfa, Telenor, RTK, CIG and Barings and,
following a Transfer to a Permitted Transferee, such Permitted Transferee.
"SHARES" means shares of Common Stock or other capital stock of the
Company, whether or not authorized, or any option, right, subscription,
warrant, phantom stock right or other contract right to receive shares of
Common Stock or such other capital stock, or any bonds, notes, debentures
or other securities of any kind whatsoever, that are, or may become,
convertible into or exchangeable or exercisable for, shares of Common Stock
or other capital stock of the Company.
"SIGNIFICANT SELLING SHAREHOLDER" has the meaning specified in Section
4.3(a).
"SIGNIFICANT SHAREHOLDER" means any Shareholder and its Affiliates,
(or, if a group of Shareholders and their respective Affiliates are selling
to a single purchaser or a group of affiliated purchasers in a transaction
or series of transactions, such group of Shareholders and their respective
Affiliates), who, on the date of delivery of an Offer Notice in accordance
with Section 4.3 (and before giving effect to the Transfer referred to in
such Offer Notice), own(s) ten percent (10%) or more of the issued and
outstanding shares of Voting Stock; provided that no Shareholder, group of
Shareholders and/or their respective Affiliates shall be permitted to avoid
compliance with Section 4.3 through a series of sales to the same purchaser
or one or more purchasers who are Affiliates of one another.
"SPECIAL CONSULTANT" has the meaning specified in Section 3.3(i).
"SPECIAL MEETING" has the meaning specified in Section 3.3(d).
"SPECIAL MEETING NOTIFICATION" has the meaning specified in Section
3.3(d).
"SPECIAL TRANSACTION" has the meaning specified in Section 3.3(h).
"STANDSTILL AGREEMENT" means the Standstill Agreement dated as of the
date hereof between and among the Company and the Shareholders.
"SUBSIDIARY" means, with respect to any Person, any other Person in
which such Person owns or controls, directly or indirectly, more than fifty
percent (50%) of the securities having ordinary voting power for the
election of directors or other governing body thereof or more than fifty
percent (50%) of the partnership or other ownership interests therein
(other than as a limited partner).
"TAG ALONG NOTICE" has the meaning specified in Section 4.4(b).
"TELENOR" has the meaning specified in the preamble hereto.
"TENDER OFFER" means an offer made by a Shareholder or any of its
Affiliates in accordance with Section 14 of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder, to
purchase any and all of the issued and outstanding shares of the Company,
which, subject to Section 3.5(a)(i) and (ii), is accepted by stockholders
holding a simple majority of the issued and outstanding shares of Voting
Stock (excluding any shares of Voting Stock held by such Shareholder and
its Affiliates).
"THIRD PARTY INVESTOR" means (a) for purposes of Section 3.5, any
Person who has made a filing with the SEC on Schedule 13D or Form TO with
respect to the acquisition of shares of capital stock of the Company
(whether actual or proposed), other than (i) a Shareholder or any Affiliate
of any Shareholder or (ii) any Person acting for, on behalf of, for the
benefit of, or together with, any Shareholder or any Affiliate of any
Shareholder and (b) for purposes of Section 4.4(b), any Person other than a
Shareholder or any Affiliate of any Shareholder.
"THIRD PARTY OFFER" has the meaning specified in Section 4.5(a).
"THIRD PARTY PLEDGE AGREEMENT" has the meaning specified in Section
4.8(a).
"THRESHOLD SHAREHOLDER" means, as at any date of determination, any
Shareholder who, on such date, owns fifteen percent (15%) or more of the
issued and outstanding shares of Voting Stock.
"TRANSFER" means any direct or indirect sale, exchange, transfer
(including, without limitation, any transfer by gift or operation of law,
or any transfer of an economic interest in any derivative security of any
Share), assignment, distribution or other disposition, or issuance or
creation of any option or any voting proxy, voting trust or other voting
agreement in respect of any Person or instrument (including, without
limitation, any of the Shares), whether in a single transaction or a series
of related transactions, including, without limitation, (a) the direct or
indirect enforcement or foreclosure of any Lien or (b) any Change of
Control.
"UNCITRAL RULES" has the meaning specified in Section 7.10.
"VOTING STOCK" has, in relation to the Company, the meaning specified
in Section 203(c)(8) of the DGCL, as in effect on the date hereof.
1.2 INTERPRETATION
Unless the context of this Agreement otherwise requires, the following
rules of interpretation shall apply to this Agreement:
(a) the singular shall include the plural, and the plural shall
include the singular;
(b) words of any gender shall include the other gender;
(c) the words "hereof", "herein", "hereby", "hereto" and similar words
refer to this entire Agreement and not to any particular Section or any
other subdivision of this Agreement;
(d) a reference to any "Article ", "Section", "Schedule" or "Exhibit"
is a reference to a specific Article or Section of, or Schedule or Exhibit
to, this Agreement;
(e) a reference to any law, statute, regulation, notification or
statutory provision shall include any amendment, modification or
re-enactment thereof, any regulations promulgated thereunder from time to
time, and any interpretations thereof from time to time by any regulatory
or administrative authority;
(f) a reference to any agreement, instrument, contract or other
document shall include any amendment, amendment and restatement, supplement
or other modification thereto; and
(g) a reference to any Person shall include such Person's successors
and permitted assigns under any agreement, instrument, contract or other
document.
2. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder party hereto on the date hereof hereby represents and
warrants to the Company and the other Shareholders as of the Effective Date
(and each Person who becomes a party to this Agreement after the Effective
Date by executing an Endorsement shall be deemed to have represented and
warranted to the Company and the other Shareholders as of the date on which
such Person executes such Endorsement) that:
(a) Such Shareholder is duly organized and validly existing as a legal
entity under the laws of its jurisdiction of organization, with full power
and authority to execute, deliver and perform its obligations under the
Principal Agreements to which it is a party and to consummate the
transactions contemplated thereby, and is not required to be qualified as a
foreign corporation or other entity authorized to do business in any other
jurisdiction in which its failure to be so qualified would have a material
adverse effect on its ability to execute and deliver or perform its
obligations under such Principal Agreements.
(b) The Principal Agreements to which such Shareholder is a party have
been duly and validly authorized, executed and delivered by such
Shareholder and constitute the legal, valid and binding obligations of such
Shareholder, enforceable against such Shareholder in accordance with their
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights and remedies generally and by general equitable principles (whether
applied by a court of law or equity).
(c) The execution, delivery and performance by such Shareholder of the
Principal Agreements to which it is a party, compliance by such Shareholder
with all of the provisions thereof and the consummation by such Shareholder
of the transactions contemplated thereby will not:
(i) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, such Shareholder's constitutive
documents;
(ii) conflict with or constitute a breach of any covenant,
agreement, understanding or Authorization to which such Shareholder is
a party or by which such Shareholder or any of its Assets and
Properties is bound; or
(iii) violate or conflict with any law applicable to such
Shareholder or any of its Assets and Properties.
(d) Except as specified in Schedule 2.1(d), the execution, delivery
and performance by such Shareholder of the Principal Agreements to which it
is a party, the compliance by such Shareholder with all of the provisions
thereof and the consummation by such Shareholder of the transactions
contemplated thereby will not require any consent, approval, Authorization,
other order or action of, filing with or notice to any Governmental or
Regulatory Authority.
(e) (i) There is no Action pending to which such Shareholder is a
party or to which any of the Shares it owns or controls, beneficially or
otherwise, is subject, which will result in, or could reasonably be
expected to result in, the issuance of an order which (A) questions the
validity of any of the Principal Agreements or any action taken or to be
taken pursuant thereto, (B) restrains, enjoins or otherwise prohibits or
makes illegal consummation of any of the transactions contemplated by any
of the Principal Agreements, or (C) would, or would reasonably be expected
to, result in the issuance of an order which materially adversely affects
the ability of such Shareholder to perform its obligations thereunder, (ii)
to the knowledge of such Shareholder, no such Action is threatened, and
(iii) there are no facts or circumstances known to such Shareholder that
would be expected to give rise to any such Action.
(f) Such Shareholder is the record holder and beneficial owner of the
Shares described opposite such Shareholder's name on Schedule 1 (or in the
Endorsement executed by such Shareholder).
(g) Such Shares constitute the only shares of capital stock of the
Company owned of record or beneficially by such Shareholder.
(h) Except as specified in the Principal Agreements and Schedule
2.1(h), such Shareholder has sole power of disposition and sole voting
power with respect to all such Shares, with no restrictions on such rights,
other than such restrictions on Transfers as arise under applicable United
States federal securities laws and the terms and conditions of the
Principal Agreements.
(i) Except as specified in the Principal Agreements and Schedule
2.1(i), such Shares are held free and clear of all Liens, proxies, voting
trusts or agreements, understandings or arrangements whatsoever, except for
those arising under the Principal Agreements.
(j) Except for the Principal Agreements and the agreements terminated
pursuant to the Termination Agreement, neither such Shareholder nor any of
its Affiliates has entered into any agreement, arrangement or understanding
with (i) any one or more of the Shareholders or any of their respective
Affiliates with respect to matters relating to the Company, its management
or any Shares or (ii) the Company, any of its Affiliates or management.
2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Shareholders as of
the Effective Date that:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, with full power
and authority to execute, deliver and perform its obligations under the
Principal Agreements and to consummate the transactions contemplated
thereby, and is not required to be qualified as a foreign corporation or
other entity authorized to do business in any other jurisdiction in which
its failure to be so qualified would have a material adverse effect on its
ability to execute and deliver or perform its obligations under such
Principal Agreements.
(b) The execution and delivery by the Company of the Principal
Agreements and the consummation of the transactions contemplated thereby
have been duly authorized by all necessary corporate action on the part of
the Company, subject to obtaining the approval of the Company's
stockholders. The Principal Agreements have been duly and validly executed
and delivered by the Company and constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally and by general equitable
principles (whether applied by a court of law or equity).
(c) The Board, by resolutions duly adopted by unanimous vote at a
meeting duly called and held and not subsequently rescinded or modified in
any way, has (i) duly determined that the Principal Agreements are
advisable and fair to and in the best interests of the Company and its
stockholders and (ii) approved the Principal Agreements.
(d) The execution, delivery and performance by the Company of the
Principal Agreements, compliance by the Company with all of the provisions
thereof and the consummation by the Company of the transactions
contemplated thereby will not:
(i) conflict with, or constitute a breach of, any of the terms or
provisions of the Company's certificate of incorporation or by-laws;
(ii) conflict with, or constitute a breach of, any covenant,
agreement, understanding or Authorization to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective Assets and Properties is
bound; or
(iii) violate or conflict with any order or law applicable to the
Company, any of its Subsidiaries or any of their respective Assets and
Properties.
(e) Except as specified in Schedule 2.2(e), the execution, delivery
and performance by the Company of the Principal Agreements, the compliance
by the Company with all of the provisions thereof and the consummation by
the Company of the transactions contemplated thereby will not require any
consent, approval, Authorization or other order of any Governmental or
Regulatory Authority.
(f) (i) There is no Action pending to which the Company is a party, or
to which any of its Assets and Properties is subject, which will result in,
or could reasonably be expected to result in, the issuance of an order
which (A) questions the validity of any of the Principal Agreements or any
action taken or to be taken pursuant thereto, (B) restrains, enjoins or
otherwise prohibits or makes illegal consummation of any of the
transactions contemplated by any of the Principal Agreements, or (C) would,
or would reasonably be expected to, result in the issuance of an order
which materially adversely affects the ability of the Company to perform
its obligations thereunder, (ii) to the knowledge of such the Company, no
such Action is threatened, and (iii) there are no facts or circumstances
known to the Company that would be expected to give rise to any such
Action.
3. CERTAIN CORPORATE MATTERS
3.1 NOMINATION AND REMOVAL OF DIRECTORS
(a) Until such date as the Board shall, in accordance with the
certificate of incorporation and by-laws of the Company, determine
otherwise, the Board shall consist of ten (10) Directors. Subject to
Section 3.1(e) and (f), the Company and each Shareholder agree that each of
them shall take all action necessary from time to time (including, without
limitation, the voting of Shares, the execution of written consents, the
calling of special meetings, the removal of directors, the filling of
vacancies on the Board, the waiving of notice of and attendance at
meetings, the amendment of the Company's by-laws and committee charters and
the like) necessary to:
(i) subject to Section 3.1(k), maintain a sufficient number of
Independent Directors and Independent Directors who are Financial
Experts on the Board to satisfy the standards for audit committees and
Independent Directors and other requirements for board composition as
are set forth in the Marketplace Rules and in any other applicable
law, rule or regulation; and
(ii) commencing on the Effective Date and until the earlier of
(x) the end of the Initial Period and (y) with respect to any
Shareholder, the date on which such Shareholder's Board membership is
adjusted pursuant to Section 3.1(e) through (i) (inclusive), maintain
the membership on the Board of:
(A) three Directors designated by Alfa;
(B) two Directors designated by Telenor;
(C) two Directors designated by RTK (one of whom shall be an
Independent Director);
(D) one Director designated by CIG (who shall be an Independent
Director);
(E) one Director designated by Barings (who shall be an
Independent Director); and
(F) one Director (who shall be an Independent Director and, if at
such time there is no other Director who is a Financial Expert, a
Financial Expert) designated by the Directors sitting on the
Board on the date of the Board meeting at which the Board adopts
the resolutions concerning the annual meeting of stockholders of
the Company, including the resolution in which the Board
nominates individuals to stand for election as Directors for the
year following the annual meeting of stockholders, (the "JOINTLY
DESIGNATED DIRECTOR"); and
(iii) to the extent permitted by the Marketplace Rules and at the
election of each Threshold Shareholder, permit a Person designated by
such Threshold Shareholder (who need not be a Director) to attend all
meetings of the audit committee of the Board as an observer (it being
understood that, notwithstanding the foregoing, such observer(s) shall
have no right to attend any audit committee meeting (or any portion
thereof) if the audit committee has, in its sole discretion, declined
to permit such attendance); provided, however, that any such observer
shall have entered into a confidentiality agreement in form and
substance satisfactory to the Board.
(b) If any Shareholder gives notice at any time to the Company and the
other Shareholders that any individual then serving as a Director
designated by such Shareholder is no longer such Shareholder's designee,
then such Shareholder, the Company and the other Shareholders shall take
all such actions as are necessary to remove such Director.
(c) If any Independent Director or Financial Expert at any time during
his or her term ceases to meet the criteria for an Independent Director or
Financial Expert, as the case may be, as set forth in the Marketplace
Rules, the Company and the Shareholders shall, to the extent requested by
the Board, take all such actions as are necessary to remove such Director.
(d) If a Director designated by a Shareholder (an "AFFECTED
SHAREHOLDER") dies, resigns, or is removed as a Director pursuant to
Section 3.1(b) or (c), then the Company, the Affected Shareholder and the
other Shareholders shall take all such actions as are necessary to elect as
a Director an individual designated by the Affected Shareholder, provided
that, if any Independent Director (or a Person who has ceased to meet the
definition of Independent Director) dies, resigns or is removed, as the
case may be, such Independent Director (or such Person who has ceased to
meet the definition of Independent Director) shall be replaced by another
Independent Director.
(e) If on any date during the Initial Period (A) Barings or CIG, as
the case may be, owns less than three percent (3%) of all of the issued and
outstanding shares of Voting Stock, the right of Barings or CIG, as the
case may be, to continued Board representation under this Agreement and the
obligations of Barings or CIG, as the case may be, under Section 3.1(a)
through (d) and Section 3.1(k) shall terminate, and, within three (3)
Business Days after such date, Barings or CIG, as the case may be, shall
cause its designee to resign as a Director, or, if such designee does not
resign, the Shareholders and the Company shall take such actions as may be
necessary to remove such Director or (B) the Director designated by Barings
or CIG, as the case may be, resigns and Barings or CIG, as the case may be,
shall not have designated a replacement within ten (10) Business Days
following such resignation, the right of Barings or CIG, as the case may
be, to continued Board representation under this Agreement and obligations
of Barings or CIG, as the case may be, under Section 3.1(a) through (d) and
Section 3.1(k) shall terminate.
(f) If on any date during the Initial Period (A) RTK owns less than
ten percent (10%) but more than three percent (3%) of all of the issued and
outstanding shares of Voting Stock, RTK shall be entitled to designate one
Director; provided that if RTK owns less than three percent (3%) of all of
the issued and outstanding shares of Voting Stock, the right of RTK to
continued Board representation under this Agreement and the obligations of
RTK under Section 3.1(a) through (d) and Section 3.1(k) shall terminate,
and, within three (3) Business Days after such date, RTK shall cause its
designee to resign as a Director, or, if such designee does not resign, the
Shareholders and the Company shall take such actions as may be necessary to
remove such Director or (B) RTK owns less than ten percent (10%) but more
than three percent (3%) of all of the issued and outstanding shares of
Voting Stock and the Director designated by RTK resigns and RTK shall not
have designated a replacement within thirty (30) Business Days following
such resignation, the right of RTK to continued Board representation under
this Agreement and the obligations of RTK under Section 3.1(a) through (d)
and Section 3.1(k) shall terminate.
(g) The designation rights of any Shareholder (other than Barings, CIG
or RTK) who, as at the Effective Date is entitled to designate more
Directors than it would otherwise be entitled to designate under the
Designation Table (as defined below) shall continue until the earlier of
(i) the end of the Initial Period and (ii) the date on which the ownership
by such Shareholder of shares of Voting Stock falls below the relevant
Adjustment Percentage and the number of Directors designated by such
Shareholder shall then be reduced to the applicable number indicated in the
Designation Table, and each such Shareholder shall within three (3)
Business Days after such date cause such number of Directors designated by
it to resign so that it has the number of designees set forth in the
Designation Table opposite the percentage of issued and outstanding shares
of Voting Stock then owned by it or, if such Director(s) do not resign, the
Shareholders and the Company shall take such actions as may be necessary to
remove such Directors.
(h) Except as may be otherwise permitted by Section 3.1(a) through (g)
(inclusive), from and after such time as the ownership by a Shareholder of
issued and outstanding shares of Voting Stock falls below any of the
applicable thresholds specified in the Designation Table, the number of
Directors designated by any such Shareholder shall be reduced to the
applicable number specified in the Designation Table, and each such
Shareholder shall within three (3) Business Days thereafter cause such
number of Directors designated by it to resign so that it has the number of
designees set forth in the Designation Table opposite the percentage of
issued and outstanding shares of Voting Stock then owned by it, or, if such
Director(s) do not resign, the Shareholders and the Company shall take such
actions as may be necessary to remove such Director(s).
(i) Subject to the procedures set forth in Section 3.1(h), following
any change in ownership in the issued and outstanding shares of Voting
Stock that causes one or more Shareholders' ownership of shares of Voting
Stock to reach, exceed or fall below the thresholds specified below, the
right to designate Directors shall be allocated among the Shareholders as
follows:
PERCENT OF ISSUED AND OUTSTANDING NUMBER OF DESIGNEES
SHARES OF VOTING STOCK OWNED BY
SHAREHOLDER
--------------------------------- ---------------------------------------
Ten percent (10%) or less 0
More than ten percent (10%) but 1
less than twenty percent (20%)
Twenty percent (20%) or more but 2
less than or equal to thirty
percent (30%)
3
More than thirty percent (30%)
but less than forty percent (40%)
Forty percent (40%) or more 3; plus the right to designate an
Independent Director (who shall be a
Financial Expert and qualified and
willing to serve on the audit
committee of the Board);
provided that the size of the Board shall not be increased beyond ten (10)
members, and a Shareholder who would be entitled to designate an additional
Director due to such Shareholder's acquisition of additional shares of
Voting Stock may only exercise such right when another Shareholder loses
the right to designate a Director.
(j) Any vacancies on the Board not addressed by the procedures set
forth in Section 3.1(a) through (i) (inclusive) shall be filled by a vote
of a simple majority of the remaining Directors then in office.
(k) The Parties agree that, if it becomes necessary (as determined by
the Company and Shareholders holding a majority of the issued and
outstanding shares of Voting Stock) to treat the Company as a "controlled
company" under the Marketplace Rules:
(i) the Shareholders shall indicate in their respective filings
on Schedule 13D that they are members of a "group" (as such term is
used in Rule 13d-1 under the Exchange Act) ;
(ii) the Company shall indicate in its annual meeting proxy on
Schedule 14A that it is a "controlled company" (as such term is used
in the Marketplace Rules); and
(iii) the Company and the Shareholders shall take any such other
actions as may be required for the Company to qualify for treatment as
a "controlled company" under the Marketplace Rules.
(l) The Shareholders and the Company agree that they will amend this
Agreement, as necessary, in order for the Company to remain in compliance
with the Marketplace Rules and any other applicable law, rule or
regulation; provided that no such amendment shall adversely affect the
rights of any Shareholder vis a vis the Company or the other Shareholders
without the prior written consent of such affected Shareholder.
3.2 DISCLOSURE OF INTERESTS
Directors who have a Direct or Indirect Financial Interest in a matter
subject to consideration by the Board shall disclose the material facts
relating to the relationship giving rise to such Direct or Indirect
Financial Interest and the nature of such Interest and, if requested by a
simple majority of the Disinterested Directors, shall not participate in
the Board's discussion of such matter. Any such matter shall be approved by
a simple majority of the Disinterested Directors, even if such
Disinterested Directors are less than a quorum.
3.3 SPECIAL TRANSACTION PROCEDURES
(a) Subject to the provisions of applicable law and any applicable
securities exchange listing requirements, any two Directors (the
"INITIATING DIRECTORS") shall have the right to subject any proposed
resolution of the Board (a "PROPOSED RESOLUTION") which, if adopted by the
Board, would authorize, direct or instruct management of the Company to
negotiate, enter into or consummate a Special Transaction, to the
reconciliation procedure set forth in this Section 3.3 (the "RECONCILIATION
PROCEDURE").
(b) If the agenda for any meeting of the Board contains any item for
review by the Board the subject matter of which may lead the Board to adopt
a Proposed Resolution, then the Company shall identify such agenda item as
a Special Transaction in the materials accompanying the agenda. To initiate
the Reconciliation Procedure, the Initiating Directors must notify the
Company and each of the other Directors (the "INITIATION NOTIFICATION")
within five (5) Business Days of delivery to the Board of the agenda and
materials outlining the subject matter of the Special Transaction in
respect of which the Initiating Directors are exercising their right to
initiate the Reconciliation Procedure.
(c) Upon receipt by the Company and each of the Directors (other than
the Initiating Directors) of the Initiation Notification, the Board shall
refrain from adopting any Proposed Resolution which is the subject of the
Reconciliation Procedure until the date that is at least forty-five (45)
calendar days after the delivery by the Company of the agenda containing
the relevant Special Transaction (the "RECONCILIATION TERMINATE DATE"),
unless the Initiating Directors have agreed in writing that the Board may
adopt such Proposed Resolution within a period of less than forty-five
calendar days.
(d) At any time after the delivery of the Initiation Notification and
prior to the expiration of the Reconciliation Termination Date, the
Initiating Directors may demand that the Company convene a special meeting
of the Board (a "SPECIAL MEETING") for further consideration of the Special
Transaction by delivering written notification to the Company requesting
that the Company convene such Special Meeting (the "SPECIAL MEETING
NOTIFICATION"). The Initiating Directors may, in the Special Meeting
Notification, request that the Company retain a Special Consultant to
review the Special Transaction in accordance with Section 3.3(i).
(e) Upon receipt of a Special Meeting Notification, the Company shall
undertake to (i) convene a Special Meeting as soon as practically possible
and in any event prior to the Reconciliation Termination Date, and (ii) if
requested by the Initiating Directors, retain a Special Consultant to
review the Special Transaction.
(f) At any time after the Reconciliation Termination Date or at the
Special Meeting, any Director may move for the adoption of the Proposed
Resolution that is the subject matter of the Reconciliation Procedure. Such
Proposed Resolution must be approved and adopted by a majority of the
Directors voting in favor of the Proposed Resolution.
(g) With respect to any single Special Transaction, each Director may
initiate the Reconciliation Procedure only once.
(h) For the purposes of this Section 3.3, "SPECIAL TRANSACTION" shall
mean any transaction or series of related transactions involving, directly
or indirectly, a value exceeding five percent (5%) of the total
consolidated assets of the Company and its Subsidiaries.
(i) Upon demand from the Initiating Directors, a special consultant (a
"SPECIAL CONSULTANT") shall be selected and engaged by the Company to
review any Special Transaction. Any such Special Consultant shall be
independent from and in no way affiliated with any Shareholder. The Company
shall determine the scope of work to be performed by the Special Consultant
and the compensation to be paid for the services of the Special Consultant.
The Shareholders hereby agree that the Company shall be responsible for any
fees charged by the Special Consultant, provided that prior to being placed
on the agenda of the Board, the Special Transaction:
(i) was not reviewed by an independent professional consultant;
or
(ii) was reviewed by an independent professional consultant not
previously approved by the Board.
(j) The Shareholders further agree that in all other instances fifty
percent (50%) of the costs related to the review of the Special Transaction
by the Special Consultant shall be reimbursed by the Shareholder(s) which
designated the Initiating Directors initiating the Reconciliation Procedure
and the review of the Special Transaction Proposal by such Special
Consultant.
(k) Notwithstanding the foregoing, the procedures set forth in this
Section 3.3 shall be applicable only to extent that the Board shall have
concluded in good faith that such action is consistent with the discharge
of its fiduciary duties to the stockholders of the Company; provided that,
if any Initiating Director(s) purport(s) to exercise his, her or their
rights under this Section 3.3 in relation to a Special Transaction in which
the Shareholder(s) which designated such Director(s) is or are interested
and are pursuing in competition with the Company (including, but not
limited to, an acquisition of shares or assets of another Person or the
acquisition of a license), any exercise by such Initiating Director(s) of
his, her or their rights under this Section 3.3 in relation to such Special
Transaction automatically will be deemed incompatible with the Board's
fiduciary duties to the stockholders of the Company, and such Initiating
Director(s) shall not be entitled to exercise such rights.
3.4 PURCHASE RIGHTS OF SHAREHOLDERS
Subject to the limitations specified in Section 2 of the Standstill
Agreement, if then in effect:
(a) The Company shall give each Shareholder at least thirty (30) days
(and, when possible, at least ninety (90) days) prior written notice of the
issuance by the Company of any shares of Voting Stock or any other shares
of capital stock of the Company and any options, warrants, convertible
securities, or other rights to acquire Voting Stock or other capital stock
of the Company or securities exercisable or convertible for Voting Stock or
other capital stock of the Company (collectively, "NEW SECURITIES") as a
result of which a Shareholder's percentage of beneficial ownership of
Voting Stock would be reduced, either immediately upon issuance of such New
Securities or upon the exercise or conversion thereof.
(b) Such notice must set forth (i) the approximate number and type of
New Securities proposed to be issued and sold and the material terms of
such New Securities, (ii) the proposed price or range of prices at which
such New Securities are proposed to be sold and the terms of payment, and
(iii) any other material feature, term or condition relating to such New
Securities or the proposed sale thereof. Upon receipt of such notice from
the Company, each Shareholder will have the right, but not the obligation,
to elect, within thirty (30) days of receipt of the Company Notice, to
purchase up to its pro rata share of such New Securities (calculated on a
fully diluted basis). Such pro rata share, for purposes of this Section
3.4, for any Shareholder, shall be the ratio of (x) the sum, without
duplication, of the total number of shares of Voting Stock and any other
shares of capital stock of the Company held by such Shareholder prior to
the issuance of New Securities (assuming the full exercise or conversion of
any options, warrants, convertible securities exercisable or convertible
for Voting Stock or other capital stock of the Company) to (y) the sum,
without duplication, of the total number of shares of Voting Stock and any
other shares of capital stock of the Company outstanding immediately prior
to the issuance of New Securities held by all stockholders of the Company,
(assuming the full exercise or conversion of any options, warrants,
convertible securities exercisable or convertible for Voting Stock or other
capital stock of the Company).
(c) Each Shareholder's purchase must be on the same terms and
conditions as the balance of such issuance of New Securities; provided,
however, if the sale price at which the Company proposes to issue, deliver
or sell any New Securities is to be paid with consideration other than
cash, then the purchase price at which a Shareholder may acquire its
portion of such New Securities will be equal in value to such consideration
(as determined in good faith by the Board) but payable entirely in cash.
(d) The closing of each Shareholder's purchase of its portion of such
New Securities will occur simultaneously with the closing of the balance of
the issuance of such New Securities; provided, however, that if as of the
date of such closing all the necessary approvals of Governmental or
Regulatory Authority required in connection with the issuance of such New
Securities have not been obtained by the Company and/or any Shareholder,
then (i) such Shareholder will not be required to effect the purchase of
its portion of such New Securities until all the necessary approvals of any
Governmental or Regulatory Authority are obtained, and (ii) the Company may
terminate such Shareholder's right to purchase its portion of such New
Securities if such Shareholder fails to obtain any necessary approvals of
any Governmental or Regulatory Authority applicable only to such
Shareholder within one hundred and twenty (120) days of the closing of the
balance of the issuance of such New Securities.
(e) If at any time the terms of a proposed issuance of New Securities
are materially changed, altered or modified from those stated in the
Company's notice to the Shareholders of the proposed issuance thereof, then
such proposed issuance will be treated as a new issuance of New Securities,
subject to the notice obligation of the Company set forth in Section 3.4(a)
and any election of a Shareholder to purchase its portion of such New
Securities prior to such change, alteration or modification may, in the
sole discretion of such Shareholder be withdrawn.
(f) Notwithstanding the foregoing, if shares of Voting Stock are
issued or options granted pursuant to an Equity Plan, such shares shall not
be considered New Securities, and the purchase rights granted pursuant to
this Section 3.4 shall not be applicable.
3.5 TENDER OFFERS
(a) No Shareholder shall, individually or together with any of its
Affiliates, directly or indirectly, in any manner, acquire beneficial
ownership of any share or shares of Voting Stock (including, without
limitation, through the acquisition of ownership or control of another
Shareholder or a Controlling Person of another Shareholder) if after giving
effect thereto, such Shareholder and its Affiliates would beneficially own,
in the aggregate, fifty percent (50%) or more of the issued and outstanding
shares of Voting Stock, unless such share or shares are acquired by such
Shareholder and/or one of its Affiliates pursuant to a Tender Offer;
provided that, if at any time (i) a Third Party Investor makes a bona fide
tender offer to purchase such percentage of the issued and outstanding
shares of Voting Stock that when aggregated with any of the issued and
outstanding shares of Voting Stock then owned by such Third Party Investor
and its Affiliates would equal more than fifty percent (50%) of the issued
and outstanding shares of Voting Stock, and a Shareholder or any of its
Affiliates thereafter makes a Tender Offer during the period in which the
tender offer made by such Third Party Investor is still in effect, or (ii)
a Third Party Investor makes a bona fide tender offer during the period in
which a Tender Offer made by a Shareholder or any of its Affiliates is
still in effect, then the requirement in the definition of "Tender Offer"
that the Tender Offer made by such Shareholder be accepted by stockholders
of the Company holding a simple majority of the issued and outstanding
shares of Voting Stock (excluding any shares of Voting Stock held by such
Shareholder and its Affiliates) shall not apply.
(b) If any Person shall, individually or together with any of its
Affiliates, directly or indirectly, acquire beneficial ownership of any
share or shares of Voting Stock from a Shareholder (other than through a
Public Sale) and, after giving effect thereto, such Person and its
Affiliates own ten percent (10%) or more of the issued and outstanding
shares of Voting Stock, then such Person shall be required to execute an
Endorsement pursuant to which such Person shall be bound by this Section
3.5 as if it were a Shareholder. Each Shareholder hereby undertakes to
cause any such Person to which Shares are so transferred to execute and
deliver such an Endorsement to the Company and each of the other
Shareholders.
3.6 BUSINESS COMBINATION
Except with respect to Tender Offers and participation in an auction
pursuant to Section 2(b)(ii) of the Standstill Agreement, each Shareholder
agrees that such Shareholder will not, nor will it permit any of its
Affiliates to, engage in any Business Combination with the Company without
the prior approval of the Board, which approval will be effective only if
it includes the affirmative vote of a majority of the Disinterested
Directors. If no Disinterested Directors are in office, then each
Shareholder agrees that such Shareholder will not, nor will it permit any
of its Affiliates to, engage in any Business Combination with the Company
unless such Business Combination is approved in accordance with Section
203(a)(3) of the DGCL.
3.7 COMPLIANCE WITH SECURITIES LAWS
Each Shareholder undertakes and agrees to timely make all such filings
with the SEC in respect of such Shareholder's purchase, ownership and/or
Transfer of any Shares as such Shareholder is required to make under
applicable laws and regulations.
4. TRANSFERS
4.1 GENERAL
The provisions of this Article 4 shall be applicable to all shares of
capital stock of the Company owned, directly or indirectly, by a
Shareholder or hereafter Transferred to a Shareholder in any manner
whatsoever. No Shareholder may Transfer any or all of its Shares to, or
create or permit any Lien on any of its Shares in favor of, any Person
other than in accordance with this Article 4.
4.2 TRANSFERS TO PERMITTED TRANSFEREES
(a) Each Shareholder may Transfer any of its Shares (i) to a Permitted
Transferee or (ii) in a Public Sale, in each case, without the need to
comply with Sections 4.3, 4.4, 4.5 or 4.6, as applicable, provided that any
such Permitted Transferee shall execute an Endorsement, in accordance with
Section 4.7, at the time of such Transfer.
(b) RTK shall, in connection with any proposed Transfer of any of its
Shares to any RTK Transferee, in addition to complying with the
requirements of Section 4.2(a), prior to the effectiveness of such
Transfer, deliver to the Company, with copies to each of the other
Shareholders, (i) any permits required by applicable Russian law in
connection with such Transfer, (ii) an amendment to RTK's existing license
issued by the Central Bank of the Russian Federation or a new license
issued by the Central Bank of the Russian Federation, in each case,
permitting such Transfer, (iii) a certificate executed by a senior officer
of each RTK Transferee to whom any Shares are being transferred,
identifying the shareholders of such RTK Transferee as of the proposed date
of effectiveness of such Transfer and specifying such shareholders'
respective percentage ownership interests in such RTK Transferee, and (iv)
if RTK has the ability to elect a majority of the board of directors of
RTC-Leasing OJSC at the time of the proposed Transfer, a guarantee of RTK
in respect of the obligations of such RTK Transferee under this Agreement,
duly executed by an authorized signatory of RTK and otherwise in form and
substance satisfactory to the Company, provided that such guarantee shall
remain in effect only for so long as RTK retains the ability to elect a
majority of the board of directors of RTC-Leasing OJSC.
4.3 RIGHT OF FIRST OFFER
During the period commencing on the Effective Date and ending on the
fifth anniversary thereof:
(a) A Significant Shareholder wishing to effect a Transfer of any
Shares (a "SIGNIFICANT SELLING SHAREHOLDER") shall, before effecting such
Transfer, first give written notice of such proposed Transfer (the "OFFER
NOTICE") to the Right Holders. The Offer Notice shall set forth (i) the
number and type of Shares that such Significant Selling Shareholder wishes
to Transfer (the "OFFERED SHARES") and (ii) the purchase price per share in
cash of the Offered Shares.
(b) Upon receipt of the Offer Notice, each Right Holder may offer to
purchase, for cash, in the aggregate, all (but not less than all) of the
Offered Shares, such offer to be made by such Right Holder by written
notice delivered to the Significant Selling Shareholder (a "PURCHASE
OFFER") within thirty (30) days from the date of receipt of the Offer
Notice. Failure of any Right Holder to provide a Purchase Offer within such
thirty (30) day period shall be deemed an election by such Right Holder not
to purchase any of the Offered Shares. A Right Holder's Purchase Offer
shall contain the purchase price for the proposed purchase of all (but not
less than all) of the Offered Shares by such Right Holder. All other terms
and conditions contained in a Right Holder's Purchase Offer shall be the
same as those set forth in the Offer Notice.
(c) If the purchase price contained in a Right Holder's Purchase Offer
is the same (or higher) than the purchase price contained in the Offer
Notice, the Significant Selling Shareholder shall, in accordance with
Section 4.3(d), sell the Offered Shares to such Right Holder at the
purchase price contained in such Purchase Offer; provided that, if two or
more Right Holders deliver Purchase Offers and the purchase prices for
their proposed purchase of the Offered Shares contained in such Purchase
Offers are the same, then the Significant Selling Shareholder shall sell to
each such Right Holder such number of the Offered Shares (i) as is equal to
the total number of Offered Shares multiplied by a fraction, the numerator
of which is the number of shares of Voting Stock owned by such Right Holder
(prior to the giving of the Offer Notice) and the denominator of which is
the total number of shares of Voting Stock owned by the Right Holders who
have delivered such matching Purchase Offers (prior to the giving of the
Offer Notice) or (ii) as the Right Holders who have delivered such matching
Purchase Offers may agree among themselves.
(d) If the Significant Selling Shareholder is obligated to sell the
Offered Shares to one or more Right Holders in accordance with Section
4.3(c), a single closing for the purchase of the Offered Shares shall be
held at the time and place designated by the Right Holder(s), but in any
event no later than thirty (30) days following receipt of all of the
Purchase Offers (or if any approval of any Governmental or Regulatory
Authority is required to be obtained therefor, within five (5) Business
Days after receipt of such approval, if later). At such closing, the
Significant Selling Shareholder shall deliver to the Right Holder(s),
against payment of the purchase price, the Offered Shares, free and clear
of all Liens, and such documents as may be required to cause the Company's
transfer agent to effect the transfer of the Offered Shares to such Right
Holder(s).
(e) If none of the Right Holders submit Purchase Offers or if, under
the terms of Section 4.3(c), the Significant Selling Shareholder is not
obliged to sell the Offered Shares to any Right Holder because the purchase
price contained in the Offer Notice is higher than the purchase price
contained in the Right Holder(s)' Purchase Offer, then the Selling
Shareholder (i) shall not be required to sell any of the Offered Shares to
any Right Holder and (ii) may, within one hundred eighty (180) days
following the date of the Offer Notice, Transfer all (but not less than
all) of the Offered Shares to any other Person for a purchase price payable
in cash equal to or greater than the purchase price specified in the Offer
Notice and otherwise on the same terms and conditions specified in the
Offer Notice. If the Significant Selling Shareholder fails to effect the
Transfer of the Offered Shares on such terms and within such time period,
then such proposed Transfer or any other proposed Transfer shall again
become subject to the provisions of this Section 4.3.
4.4 TELENOR'S AND ALFA'S TAG ALONG RIGHTS
During the period commencing on the Effective Date and ending on the
third anniversary thereof:
(a) If after compliance with the terms of Section 4.3 (regardless of
whether any Right Holder has submitted a Purchase Offer) (A) Alfa accepts
an Offer from a Person who, together with its Affiliates, is principally
engaged in, and generates a majority of its gross revenues from, the
telecommunications business, or (B) Telenor accepts an Offer from a
financial/industrial investor (other than an investment fund) whose
principal investments are in the Russian Federation, then, at least
forty-five (45) days prior to the closing of such Transfer, Alfa or
Telenor, as the case may be (the "OFFERING SHAREHOLDER"), shall give
written notice (a "CO-SALE NOTICE") to Alfa or Telenor, as the case may be
(the "RECEIVING SHAREHOLDER"), offering the Receiving Shareholder the
option to participate in such proposed Transfer pro rata with the Offering
Shareholder and to sell to the proposed transferee up to the number of
Shares as are determined pro rata on the basis of the Receiving
Shareholder's and the Offering Shareholder's respective ownership of shares
of Voting Stock (prior to the giving of the Co-Sale Notice). Such Co-Sale
Notice shall set forth the identity of the proposed transferee and the
terms and conditions of the proposed Transfer (including, without
limitation, the number of Shares proposed to be sold by the Offering
Shareholder and the purchase price per share offered for such Shares).
(b) The Receiving Shareholder may, within thirty (30) days after
receipt of a Co-Sale Notice, give written notice (a "TAG ALONG NOTICE") to
the Offering Shareholder that the Receiving Shareholder wishes to
participate in the proposed Transfer. Such Tag Along Notice shall also
specify the number of Shares that the Receiving Shareholder desires to
include in the proposed Transfer.
(c) If the Receiving Shareholder does not give the Offering
Shareholder a timely Tag Along Notice, the Offering Shareholder may
thereafter Transfer the Shares specified in the Co-Sale Notice to the
proposed transferee identified in, and on the same terms and conditions as
are set forth in, the Co-Sale Notice. If the Receiving Shareholder gives
the Offering Shareholder a timely Tag Along Notice, then the Offering
Shareholder shall use all reasonable efforts to cause the proposed
transferee to agree to acquire all the Shares identified in the Co-Sale
Notice and the Tag Along Notice, on substantially the same terms and
conditions as are set forth in the Co-Sale Notice. If the proposed
transferee is unwilling or unable to acquire such additional Shares upon
such terms, then the Offering Shareholder may elect either to cancel such
proposed Transfer or to allocate the maximum number of Shares that such
transferee is willing to purchase pro rata between the Offering Shareholder
and the Receiving Shareholder.
4.5 OTHER SHAREHOLDERS' TAG ALONG RIGHTS
(a) Alfa shall not, in any one transaction or series of related
transactions, Transfer Shares to any Third Party Investor, who will own,
directly or through Affiliates, no less than one-third (1/3) of the 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, RTK and/or Barings, in the sale or other
disposition to the Third Party Investor, a number of Shares owned by CIG,
RTK and/or Barings determined in accordance with Section 4.5(c). For the
purposes of this Section 4.5(a), a series of transactions in which Alfa
sells any Shares to two or more Persons (whether related or unrelated) and
such Persons subsequently re-sell such Shares to the same Third Party
Investor or two or more affiliated Third Party Investors shall be deemed as
a series of related transactions.
(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, RTK and Barings as provided in this Section 4.5) and shall
send written notice of the Third Party Offer together with a copy of the
Third Party Offer (the "INCLUSION NOTICE") to CIG, RTK and Barings in the
manner set forth in Section 7.8. At any time within twenty (20) calendar
days after delivery of the Inclusion Notice, CIT, RTK and Barings may
accept the offer included in the Inclusion Notice by furnishing written
notice of acceptance to Alfa.
(c) Each of CIG, RTK and Barings shall have the right (an "INCLUSION
RIGHT") to sell pursuant to the Third Party Offer such number of its Shares
as is equal to the product of (i) its pro rata ownership of shares of
Voting Stock and (ii) the total number of Shares covered by the Third Party
Offer.
(d) Subject to the provisions of Section 4.5(c), the terms and
consideration payable per Share to be Transferred by CIG, RTK 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 4.5 shall not apply if Alfa Transfers Shares to an
internationally recognized financial institution, a telecommunications
company of the type specified in Section 4.4(a) or an international
investment fund with a majority of capital provided by reputable
institutional or governmental shareholders.
4.6 PURCHASES FROM BARINGS OR CIG
If Alfa, Telenor and/or any of their respective Affiliates enters into
an agreement with Barings or CIG, as the case may be, in respect of the
purchase of any Shares from Barings or CIG, as the case may be, then the
purchasing Shareholder and/or its Affiliate(s), as applicable, shall notify
the other Shareholder of such intention and the price at which it has
agreed to acquire such Shares, and the other Shareholder shall have thirty
(30) days from the date of its receipt of such notice to elect to
participate in such purchase. If the other Shareholder elects to
participate in such purchase, it shall so notify the initiating Shareholder
of such election in writing within such thirty (30) day period, and shall
be entitled to purchase up to fifty percent (50%) of the Shares then being
sold by Barings or CIG, as applicable, for the same price per share as is
paid by the initiating Shareholder. The consideration for any such
acquisition shall be cash. For the avoidance of doubt, nothing in this
Section 4.6 shall create any obligation on the part of Barings or CIG to
offer or Transfer any of their respective Shares to any Person.
4.7 OTHER TRANSFER-RELATED PROVISIONS
A Shareholder may not Transfer any of its rights and obligations under
this Agreement to any Person other than to a Permitted Transferee. In the
event of any Transfer of Shares by a Shareholder to a Permitted Transferee,
such Permitted Transferee shall receive and hold any and all Shares so
transferred subject to the terms and conditions of this Agreement, the
Standstill Agreement and the Registration Rights Agreement and all of the
rights and obligations, if any, of the transferor hereunder and thereunder,
and shall forthwith execute and deliver to the other Shareholders an
Endorsement. Each Shareholder hereby undertakes to cause each of its
Permitted Transferees to which any Shares are so transferred to execute and
deliver an Endorsement to each of the other Shareholders and the Company.
4.8 PLEDGES
Any Shareholder (a "PLEDGING SHAREHOLDER") may pledge Shares to any
Person (a "PLEDGEE") to secure a bona fide obligation; provided that the
following terms and conditions are satisfied:
(a) Within three (3) Business Days of the pledge of any Shares to a
Pledgee or the execution of any agreement with a Pledgee concerning such a
pledge (a "THIRD PARTY PLEDGE AGREEMENT"), the Pledging Shareholder shall
give (i) written notice of the pledge (a "PLEDGE NOTICE") to each of the
non-pledging Shareholders (each, a "NON-PLEDGING SHAREHOLDER" and,
collectively, the "NON-PLEDGING SHAREHOLDERS"), which Pledge Notice shall
set forth the identity of the Pledgee, the amount and term of financing
being secured by the pledge, and the number of Shares subject to such
pledge (the "PLEDGED SHARES"), (ii) copies of the relevant pledge agreement
and (iii) a written acknowledgement from the Pledgee (which acknowledgement
and may be included in the Third Party Pledge Agreement) that the Pledgee
agrees to the terms and conditions of this Section 4.8.
(b) Any such pledge shall be governed by a Third Party Pledge
Agreement, which shall be binding on the Pledgee and shall provide that:
(i) The Pledgee, prior to taking any action to enforce its rights
in or to any of the Pledged Shares (including, but not limited to, any
enforcement upon, sale of, or acceptance of title to, any of the
Pledged Shares) (an "ENFORCEMENT ACTION"), shall give at least
forty-five (45) days' prior written notice of such intention (an
"ENFORCEMENT NOTICE") to each of the Non-Pledging Shareholders; and
(ii) Upon receipt of such Enforcement Notice, each of the
Non-Pledging Shareholders shall have the right, at the option of such
Non-Pledging Shareholders to be exercised not later than forty-five
(45) days after receipt of such Enforcement Notice, to purchase from
the Pledgee (pro rata according to the respective percentage of Voting
Stock owned by each Non-Pledging Shareholder exercising its purchase
rights hereunder (each, a "PURCHASING SHAREHOLDER" and, collectively,
the "PURCHASING SHAREHOLDERS") relative to the total number of shares
of Voting Stock owned by all other Purchasing Shareholders, or in such
other proportion as such Purchasing Shareholders may agree among
themselves) the underlying obligation (or portion thereof) at a
purchase price equal to the lesser of (a) the Fair Market Value of the
Pledged Shares being purchased by such Purchasing Shareholder, as
determined as of the date two (2) Business Days prior to such purchase
or (b) the principal amount of the relevant underlying obligation
being purchased by such Purchasing Shareholder, plus any interest,
penalties and other similar payments (if any) accrued and owing
thereon up to, but excluding, the purchase date thereof. For the
avoidance of doubt, if the Purchasing Shareholder(s) exercise their
right to purchase the underlying obligation hereunder, the Purchasing
Shareholder(s) shall be obligated to purchase, and the Pledgee shall
be obligated to sell, the underlying obligation in whole and not in
part; provided that, if there is more than one Purchasing Shareholder,
the purchase of such underlying obligation shall be apportioned among
the Purchasing Shareholders in accordance with the immediately
preceding sentence. The Purchasing Shareholder(s)' purchase of the
underlying obligation from the Pledgee shall be effective upon
delivery of a purchase notice by the Purchasing Shareholder(s) to the
Pledgee, and such purchase shall not require the Pledgee's consent.
The Transfer of the relevant underlying obligation to each Purchasing
Shareholder shall be effective upon payment of the relevant purchase
price to the Pledgee by each such Purchasing Shareholder, which
payment shall be effected not later than forty-five (45) calendar days
after receipt of the Enforcement Notice. Concurrently with such
purchase of the underlying obligation (or portion thereof), the
Third Party Pledge Agreement shall be automatically assigned to the
Purchasing Shareholder(s). Thereafter, the Pledging Shareholder shall
Transfer the relevant Pledged Shares to each such Purchasing
Shareholder, free and clear of all Liens, in exchange for cancellation
of the underlying obligation with respect to such Pledged Shares,
without any additional purchase price owed or payable with respect
thereto. For the avoidance of doubt, the Pledged Shares shall be
apportioned among each Purchasing Shareholder based on the pro rata
amount of the underlying obligation purchased by each such Purchasing
Shareholder.
(c) If any Enforcement Action would result in the Transfer of Shares
such that a Person, together with any of its Affiliates, would acquire more
than fifty percent (50%) of the issued and outstanding shares of Voting
Stock, and the Non-Pledging Shareholders do not elect to purchase in the
aggregate all of the Pledged Shares pursuant to Section 4.8(b)(ii), then
the Non-Pledging Shareholders shall each have the right, exercisable by
written notice to the Pledging Shareholder and the Pledgee (a "PLEDGE
CO-SALE NOTICE") within forty-five (45) days from delivery by the Pledgee
of the Enforcement Notice, to elect to sell in the proposed Transfer of
Pledged Shares to such Person, all or any portion of such Non-Pledging
Shareholders' Shares, free and clear of any Liens other than obligations
under this Agreement. The Transfer of Shares by the Non-Pledging
Shareholders pursuant to a Pledge Co-Sale Notice shall be at a price equal
to the Fair Market Value thereof determined as of the date two (2) Business
Days prior to the date of such Transfer or, at the election of such
Non-Pledging Shareholders, such other price as may be agreed between the
Pledgee and the Non-Pledging Shareholders electing to Transfer their Shares
hereunder (which shall not be less than the Fair Market Value thereof).
Failure of any Non-Pledging Shareholders to provide a Pledge Co-Sale Notice
within such forty-five (45) day period shall be deemed an election by such
Non-Pledging Shareholder not to participate in the proposed Transfer
pursuant to this Section 4.8(c).
(d) Each Non-Pledging Shareholder shall be an express third-party
beneficiary of the Third Party Pledge Agreement with respect to each such
Non-Pledging Shareholder's rights set forth under this Agreement.
(e) If any Pledged Shares are Transferred, the transferee which
acquires the Shares agrees to be bound by the terms and conditions of this
Agreement and to execute an Endorsement.
(f) The Pledgee shall be either:
(i) A licensed Russian bank with equity capital of at least
US$200,000,000 which is not subject to ARCO administration and in
which ARCO does not possess any controlling or blocking rights; or
(ii) A foreign (i.e., non-Russian) bank with an investment grade
rating from Xxxxx'x Corporation (i.e., Baa or higher) or Standard &
Poor's (i.e., BBB or higher), as such ratings are determined at the
time of the pledge; or
(iii) Any other lender or supplier of vendor financing that has a
long-term debt rating of Baa or higher from Xxxxx'x Corporation or a
rating of BBB or higher from Standard & Poor's, as such ratings are
determined at the time of the pledge.
(g) Pledged Shares shall be pledged to the Pledgee under one pledge
only, and the underlying obligation secured by such pledge shall not be
secured by any collateral other than the Pledged Shares.
(h) Any breach by the Pledgee of any provision set forth in this
Section 4.8 to be observed by the Pledgee shall be deemed a breach of this
Agreement by the Pledging Shareholder.
5. OTHER ARRANGEMENTS
(a) Except for the Principal Agreements, (i) no Shareholder shall
grant any proxy or enter into or agree to be bound by any understanding or
any voting trust, voting proxy or other agreement with respect to any
matters relating to the Company, its management, or any Shares, (ii) nor
shall any Shareholder enter into any shareholders agreement or other
arrangement of any kind (whether written or oral) with any Person with
respect to any matters relating to the Company, its management or any
Shares, including, without limitation, any agreement, understanding or
arrangement with respect to the acquisition, ownership, registration,
Transfer or other disposition or voting of Shares, and (iii) nor shall any
Shareholder act, for any reason, as a member of a group or in concert with
any other Person in connection with the acquisition, Transfer or other
disposition or voting of Shares in any manner which is inconsistent with
any obligation of such Shareholder under this Agreement; provided that each
Shareholder shall be permitted to Transfer its Shares in accordance with
the terms of this Agreement.
(b) The Company shall not enter into any agreement or arrangement of
any kind with any Person that is inconsistent with any of the rights
granted to the Shareholders in the Principal Agreements or otherwise
conflicts with any of the provisions thereof.
(c) Without prejudice to any other rights or remedies hereunder of any
Party, if any representation or warranty made by any Shareholder in Article
2 is shown to have been false or misleading when made or confirmed, or if
any Shareholder violates any provision of this Article 5, the rights of
such Shareholder under this Agreement and the Registration Rights Agreement
shall terminate forthwith, but such Shareholder shall continue to be bound
by all of its obligations hereunder and under the other Principal
Agreements.
6. TERM AND TERMINATION
This Agreement shall become effective on the Effective Date and remain
in effect until the earlier of:
(a) the date on which all of the Parties agree in writing to the
termination of this Agreement; and
(b) the date on which any Person owns, individually or collectively
with its Affiliates, more than fifty percent (50%) of the issued and
outstanding shares of Voting Stock;
provided that (a) any Shareholder who, together with its Affiliates, having
once attained ownership of at least three percent (3%) or more of the
issued and outstanding shares of Voting Stock thereafter ceases to own,
together with its Affiliates, at least three percent (3%) of the issued and
outstanding shares of Voting Stock shall cease to be a party to, or have
any rights or obligations under, this Agreement from and after the date of
the relevant Transfer (or dilution); and (b) no such Transfer, dilution or
termination shall be deemed to relieve any Party of any obligations under
this Agreement accruing, or resulting, from any breach, action or omission
of such Party occurring prior to the date of such Transfer, dilution or
termination. Promptly following the date on which its board of directors
has ratified and approved RTK's execution of this Agreement, RTK shall
provide each other Party with a certified copy of an extract from the
protocol of the meeting of RTK's board of directors containing such
ratification and approval.
7. MISCELLANEOUS
7.1 SPECIFIC PERFORMANCE
The Parties hereby declare that it is impossible to measure in money
the damages that will accrue to a Party by reason of a failure by another
Party to perform any of the obligations under this Agreement. Therefore, if
any Party shall, in accordance with Section 7.10, institute any proceeding
to enforce specifically the provisions hereof, any Party against whom such
proceeding is brought hereby waives the claim or defense therein that the
Party instituting such proceeding has an adequate remedy at law or in
damages, and the Party against whom such proceeding is brought shall not
urge in any such proceeding the claim or defense that such remedy at law or
in damages exists.
7.2 WAIVERS; REMEDIES
Any term or condition of this Agreement may be waived at any time by
the Party that is entitled to the benefit thereof, but no such waiver shall
be effective unless set forth in a written instrument duly executed by or
on behalf of the Party waiving such term or condition. No waiver by any
Party of any term or condition of this Agreement, in one or more instances,
shall be deemed to be or construed as a waiver of the same or any other
term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by law or otherwise afforded, will be
cumulative and not alternative.
7.3 AMENDMENTS
This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of each Party.
7.4 NO ASSIGNMENT; BINDING EFFECT; NO THIRD PARTY BENEFICIARIES
Except as expressly provided in Section 4.2 and Section 4.7, neither
this Agreement nor any right, interest or obligation hereunder may be
assigned by any Party without the prior written consent of the other
Parties and any attempt to do so will be void. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the Parties and their respective successors and assigns. The
terms and provisions of this Agreement are intended solely for the benefit
of each Party and their respective successors or permitted assigns, and it
is not the intention of the Parties to confer third party beneficiary
rights upon any other Person.
7.5 SEVERABILITY
If any provision of this Agreement is or shall become invalid, illegal
or unenforceable in any jurisdiction, the invalidity, illegality or
unenforceability of such provision in such jurisdiction shall not affect or
impair the validity, legality or enforceability of (a) any other provision
of this Agreement or any such other document in such jurisdiction or (b)
such provision or any other provision of this Agreement or any such other
document in any other jurisdiction.
7.6 FURTHER ASSURANCES
From time to time, at any Party's reasonable request and without
further consideration, each Party shall execute and deliver such additional
documents and take all such further action as may be reasonably necessary
or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
7.7 ENTIRE AGREEMENT
This Agreement and the other Principal Agreements will, from and after
the Effective Date, supersede all prior discussions and agreements among
the Parties with respect to the subject matter hereof and thereof and
contain the sole and entire agreement between the Parties with respect to
the subject matter hereof and thereof. For the avoidance of doubt, the
Parties acknowledge that the Existing Shareholders Agreement shall remain
in full force and effect until the Effective Date, whereupon the Existing
Shareholders Agreement shall terminate and be of no further force and
effect.
7.8 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 duly given only if delivered
personally or by facsimile transmission or sent by courier, addressed to
the address of the relevant Party 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
000 Xxxxxxxxxx Xxxxx
Xxxx Xxxx
Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx
Facsimile No.: x000 00 000
Attention: Xxxxx Xxxxxxxx
with a copy to:
Squire, Xxxxxxx & Xxxxxxx
2/2 Paveletskaya Square
115054 Moscow, Russian Federation
Facsimile No.: x0 (000) 000-0000
Attention: Xxxxx Xxxx
(ii) If to Telenor:
Xxx Telenor East Invest AS
Xxxx0xxxxxx 00
X-0000 Xxxxxxx
Xxxxxx
Facsimile No.: x00 00 00 00 00
Attention: Kjell Xxxxxx Xxxxxxx
with a copy to:
Advokatene i Telenor
Xxxx0xxxxxx 00
X-0000 Xxxxxxx
Xxxxxx
Facsimile No.: x00 00 00 0000
Attention: Bj0rn Xxxxxxx
and to:
Coudert Brothers LLP
00 Xxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (00) 0000 0000
Attention: Xxxxx X'Xxxxxxxx
(iii) 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
(iv) 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.: x00 (0) 0000 000 000
Attention: Xxx. Xxxxxx Xxxxxx
with a copy to:
Baring Vostok Capital Partners
0, Xxxxxxx Xxxxxx
Xxxxx Xxxxx XX, Xxxxx 000
000000 Xxxxxx, Xxxxxx
Facsimile No.: x0 (000) 000 0000
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 First NIS Regional Fund SICAV:
x/x Xxxx xx Xxxxxxx Xxxxxxxxxx
00 Xxx Xxxxxx X-0000, Xxxxxxxxxx
Facsimile No.: x00 0 00 00 00 000
Attention: Xxxxxxxxx Tourney
with a copy to:
Baring Vostok Capital Partners
0, Xxxxxxx Xxxxxx
Xxxxx Xxxxx XX, Xxxxx 000
000000 Xxxxxx, Xxxxxx
Facsimile No.: x0 (000) 000 0000
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
(vi) If to the Company:
Golden Telecom, Inc.
0000 XxxXxxxxx Xxxx. XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
X.X.X.
Facsimile No.: x0 (000) 000-0000
Attention: General Counsel
with a copy to:
Representation Office of Golden TeleServices, Inc.
1 Xxxxxxxxxxxxxx Xxxxxx,
0xx Xxxxx
000000 Xxxxxx
Xxxxxx
Facsimile No.: x0 (000) 000-0000
Attention: General Counsel
(vii) If to RTK:
OAO Rostelecom Moscow,
xx. 0xx Xxxxxxxxx-Xxxxxxxx, 00
000000 Xxxxxx
Xxxxxx
Facsimile No.: x0 (000) 000-0000
Attention: Xxxxxxxxxx Xxxxxx Ivanovich
with a copy to:
Xxxxxxxx Chance CIS Limited
Xx. Xxxxxxxx-Xxxxxxxxxxxx 00/00
000000 Xxxxxx
Xxxxxxx Federation
Facsimile No.: x0 (000) 000-0000
Attention: Xxxxxx Xxxxxxx
7.9 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, United States of America, without giving
effect to any conflicts of laws principles thereof which would result in
the application of the laws of another jurisdiction.
7.10 ARBITRATION; WAIVER OF SOVEREIGN IMMUNITY
(a) Any and all disputes and controversies arising under, relating to
or in connection with this Agreement shall be settled by arbitration by a
panel of three (3) arbitrators under the United Nations Commission on
International Trade Law (UNCITRAL) Arbitration Rules then in force (the
"UNCITRAL RULES") in accordance with the following terms and conditions:
(i) In the event of any conflict between the UNCITRAL Rules and
the provisions of this Agreement, the provisions of this Agreement
shall prevail.
(ii) The place of the arbitration shall be New York, New York,
United States of America.
(iii) Where there is only one claimant party and one respondent
party, each shall appoint one arbitrator in accordance with the
UNCITRAL Rules, and the two arbitrators so appointed shall appoint the
third (and presiding) arbitrator in accordance with the UNCITRAL Rules
within thirty (30) days from the appointment of the second arbitrator.
In the event of an inability to agree on a third arbitrator, the
appointing authority shall be the International Court of Arbitration
of the International Chamber of Commerce, acting in accordance with
such rules as it may adopt for this purpose. Where there is more than
one claimant party, or more than one respondent party, all claimants
and/or all respondents shall attempt to agree on their respective
appointment(s). In the event that all claimants and all respondents
cannot agree upon their respective appointment(s) within thirty (30)
Business Days of the date of the notice of arbitration, all
appointments shall be made by the Chairman of the International Court
of Arbitration of the International Chamber of Commerce.
(iv) The English language shall be used as the written and spoken
language for the arbitration and all matters connected to the
arbitration.
(v) The arbitrators shall have the power to grant any remedy or
relief that they deem just and equitable and that is in accordance
with the terms of this Agreement, including specific performance, and
including, but not limited to, injunctive relief, whether interim or
final, and any such relief and any interim, provisional or
conservatory measure ordered by the arbitrators may be specifically
enforced by any court of competent jurisdiction. Each Party retains
the right to seek interim, provisional or conservatory measures from
judicial authorities and any such request shall not be deemed
incompatible with the agreement to arbitrate or a waiver of the right
to arbitrate.
(vi) The award of the arbitrators shall be final and binding on
the Parties.
(vii) The award of the arbitrators may be enforced by any court
of competent jurisdiction and may be executed against the person and
assets of the losing party in any competent jurisdiction.
(b) Except for arbitration proceedings pursuant to Section 7.10(a), no
action, lawsuit or other proceeding (other than the enforcement of an
arbitration decision, an action to compel arbitration or an application for
injunctive relief or other interim, provisional or conservatory measures in
connection with the arbitration) shall be brought by or between the Parties
in connection with any matter arising out of or in connection with this
Agreement.
(c) Each Party other than CIG irrevocably appoints CT Corporation
System, located on the date hereof at 000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, XXX, and CIG irrevocably appoints Capital
International Research, Inc., located on the date hereof at 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 10111, USA, Attn: General Counsel,
as its true and lawful agent and attorney to accept and acknowledge service
of any and all process against it in any judicial action, suit or
proceeding permitted by this Section 7.10, with the same effect as if such
Party were a resident of the State of New York and had been lawfully served
with such process in such jurisdiction, and waives all claims of error by
reason of such service, provided that the Party effecting such service
shall also deliver a copy thereof on the date of such service to the other
Parties by facsimile as specified in Section 7.8. Each Party will enter
into such agreements with such agent as may be necessary to constitute and
continue the appointment of such agent hereunder. In the event that any
such agent and attorney resigns or otherwise becomes incapable of acting,
the affected Party will appoint a successor agent and attorney in New York
reasonably satisfactory to each other party, with like powers. Each Party
hereby irrevocably submits to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New
York state court sitting in New York City, in connection with any such
action, suit or proceeding, and agrees that any such action, suit or
proceeding may be brought in such court, provided, however, that such
consent to jurisdiction is solely for the purpose referred to in this
Section 7.10 and shall not be deemed to be a general submission to the
jurisdiction of said courts of or in the State of New York other than for
such purpose. Each Party hereby irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such action, suit or proceeding brought in such
a court and any claim that any such action, suit or proceeding brought in
such a court has been brought in an inconvenient forum. Nothing herein
shall affect the right of any Party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed
against any other Party in any other jurisdiction in a manner not
inconsistent with this Section 7.10.
(d) Each Party hereby represents and acknowledges that it is acting
solely in its commercial capacity in executing and delivering this
Agreement and in performing its obligations hereunder, and each such Party
hereby irrevocably waives with respect to all disputes, claims,
controversies and all other matters of any nature whatsoever that may arise
under or in connection with this Agreement and any other document or
instrument contemplated hereby, all immunity it may otherwise have as a
sovereign, quasi-sovereign or state-owned entity (or similar entity) from
any and all proceedings (whether legal, equitable, arbitral, administrative
or otherwise), attachment of assets, and enforceability of judicial or
arbitral awards.
7.11 COUNTERPARTS; LANGUAGE
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement is being executed in
both an English language version and a Russian language version. In the
event of any discrepancy between the English language version and the
Russian language version of this Agreement or any disagreement among the
Parties as to the meaning or interpretation of any part of this Agreement,
the English language version of this Agreement shall prevail.
IN WITNESS WHEREOF, the Parties have executed this Shareholders
Agreement as of the date first written above.
The Shareholders
----------------
ALFA TELECOM LIMITED
By
-------------------------------
Name:
Title:
XXX TELENOR EAST INVEST AS
By
-------------------------------
Kjell Xxxxxx Xxxxxxx
Attorney-in-Fact
OPEN JOINT STOCK COMPANY
ROSTELECOM
By
-------------------------------
Name:
Title:
CAPITAL INTERNATIONAL GLOBAL
EMERGING MARKETS PRIVATE EQUITY
FUND, L.P.
By
-------------------------------
Name:
Title:
FIRST NIS REGIONAL FUND SICAV
By
-------------------------------
Name:
Title:
By
-------------------------------
Name:
Title:
CAVENDISH NOMINEES LIMITED
By
-------------------------------
Name:
Title:
The Company
-----------
GOLDEN TELECOM, INC.
By
-------------------------------
Xxxxxxxxx Xxxxxxxxxx
President and Chief Executive
Officer
Schedule 1
Shares held by Shareholders as of Effective Date
---------------------------------------- ---------------------------- ------------------------
NAME OF SHAREHOLDER TYPE OF SHARES NO. OF SHARES
---------------------------------------- ---------------------------- ------------------------
Alfa Telecom Limited Common Stock 10,840,647
---------------------------------------- ---------------------------- ------------------------
Xxx Telenor East Invest AS Common Stock Such number of Shares
as are delivered to
Telenor under the
Share Exchange
Agreement
---------------------------------------- ---------------------------- ------------------------
OAO Rostelecom Common Stock 4,024,067
---------------------------------------- ---------------------------- ------------------------
Capital International Global Emerging Common Stock 2,166,405
Markets Private Equity Fund, L.P.
---------------------------------------- ---------------------------- ------------------------
Cavendish Nominees Limited Common Stock 1,845,769
---------------------------------------- ---------------------------- ------------------------
First NIS Regional Fund SICAV Common Stock 723,907
---------------------------------------- ---------------------------- ------------------------
Schedule 2.1(d)
Consents and Approvals of Shareholders
As a condition to the consummation of the transactions contemplated by the
Principal Agreements, Telenor must satisfy the requirements of the HSR Act
(as defined in the Share Exchange Agreement).
Schedule 2.1(h)
Liens
Alfa has entered into a Pledge Agreement dated September 12, 2001 (the
"ALFA PLEDGE AGREEMENT") between Alfa and OAO "Alfa-Bank", an open joint
stock company organized under the laws of the Russian Federation ("ALFA
BANK") in respect of the Shares owned by Alfa.
Schedule 2.1(i)
Exceptions to Sole Power of Disposition of Shareholders
Under the terms of Section 8 of the Alfa Pledge Agreement, Alfa will
require the consent of Alfa Bank in connection with Alfa's execution,
delivery and performance of this Agreement. In addition, pursuant to
Section 4.8(a)(iii) of this Agreement, Alfa must provide to the
Shareholders a written acknowledgement that Alfa Bank agrees to the terms
and conditions of Section 4.8.
Schedule 2.2(e)
Consents and Approvals of Company
As conditions to the consummation of the transactions contemplated by the
Principal Agreements, the Company must obtain the approval of its
stockholders, satisfy the requirements of the HSR Act (as defined in the
Share Exchange Agreement), obtain the approval of the Ministry for
Anti-Monopoly Policy and Support for Entrepreneurship of the Russian
Federation, and notify Nasdaq concerning the issuance of the GTI Shares (as
defined in the Share Exchange Agreement).
Exhibit A
Form of Endorsement
[date]
The undersigned, a transferee of Shares of Golden Telecom, Inc. (the
"COMPANY"), hereby agrees to the terms and conditions of [Section 3.5
(Tender Offers) of] the Shareholders Agreement dated as of August 19, 2003
(the "SHAREHOLDERS AGREEMENT", with terms defined in the Shareholders
Agreement used herein as therein defined) between and among the Company,
Alfa Telecom Limited, Xxx Telenor East Invest AS, OAO Rostelecom, Capital
International Global Emerging Markets Private Equity Fund, L.P., Cavendish
Nominees Limited and First NIS Regional Fund SICAV, and [(a)] agrees to be
fully bound by the terms and conditions of [Section 3.5 (Tender Offers) of]
the Shareholders Agreement as if the undersigned were an original signatory
thereto[.][, (b) makes as of the date hereof for the benefit of each of the
other Parties to the Shareholders Agreement, each of the representations
and warranties set forth in Section 2.1 of the Shareholders Agreement, (c)
represents that it owns the beneficial interest in the Shares specified
below and (d) agrees to deliver to each other Party to the Shareholders
Agreement, as soon as practicable (and in any event not later than seven
(7) days after the date hereof), an original copy of this Endorsement.]
[Name of Transferee]
By
-------------------------------
Name:
Title:
Type and Number of Shares:
[________ shares of ____________ stock]
