Page 19 of 96 Pages
EXHIBIT B
SHARE PURCHASE AGREEMENT
DATED
APRIL 2, 2001
BY AND AMONG
GLOBAL TELESYSTEMS, INC.,
AS SELLER,
AND
ALFA BANK HOLDINGS LIMITED,
CAPITAL INTERNATIONAL GLOBAL EMERGING MARKETS PRIVATE EQUITY FUND, L.P.,
CAVENDISH NOMINEES LIMITED
AND
FIRST NIS REGIONAL FUND SICAV,
AS PURCHASERS
Page 20 of 96 Pages
TABLE OF CONTENTS
-----------------
1. Purchase and Sale of Purchase Shares; Closing and Manner of Payment....1
1.1 Agreement to Purchase and Seller Purchase Shares.............1
1.2 Purchase Price...............................................1
1.3 Manner of Payment of Purchase Price..........................2
1.4 Manner of Delivery of Purchase Shares........................2
1.5 Time and Place of Closing....................................2
2. Representations and Warranties of Purchaser...........................2
2.1 General Statement............................................2
2.2 Representations and Warranties of Purchasers.................2
2.3 Representations and Warranties of Seller.....................4
3. Covenants.............................................................7
3.1 Cooperation..................................................7
3.2 Conduct of Business..........................................8
3.3 Public Announcements.........................................8
3.4 Access.......................................................8
3.5 Certain Intercompany Agreements..............................8
4. Closing Conditions....................................................8
4.1 Conditions Precedent to the Obligations of All Parties.......8
4.2 Additional Conditions to the Obligations of Seller...........9
4.3 Additional Conditions to the Obligations of Purchasers.......9
5. Deliveries at Closing................................................10
6. Survival of Representations and Warranties...........................12
7. Termination rights...................................................12
7.1 Termination.................................................12
7.2 Procedure and Effect of Termination.........................13
7.3 Specific Performance........................................13
7.4 Default of Purchasers.......................................13
8. Miscellaneous........................................................13
8.1 Amendment and Modification..................................13
8.2 Benefit and Assignment......................................13
8.3 No Third-Party Beneficiaries................................14
8.4 Entire Agreement............................................14
8.5 Expenses....................................................14
8.6 Headings....................................................14
8.7 Choice of Law...............................................14
8.8 Notices.....................................................14
i
Page 21 of 96 Pages
8.9 Counterparts.................................................16
8.10 Currency....................................................16
8.11 Waiver of Jury Trial........................................16
8.12 Board Approvals.............................................16
EXHIBITS
--------
EXHIBIT A - Promissory Note
EXHIBIT B - Pledge Agreement
EXHIBIT C - Alfa Stock Option Agreement
EXHIBIT D - CIG Stock Option Agreement
EXHIBIT E - Barings Stock Option Agreement
EXHIBIT F - New Shareholders Agreement
EXHIBIT G - Assignment and Amendment Agreement
EXHIBIT H - Amendment to Shareholders and Registration Rights Agreement
ii
Page 22 of 96 Pages
SHARE PURCHASE AGREEMENT
------------------------
This SHARE PURCHASE AGREEMENT (the "Agreement") is made, executed and
---------
delivered as of April 2, 2001 by and between Global TeleSystems, Inc. (formerly
known as Global TeleSystems Group, Inc.), a Delaware corporation (Global
TeleSystems, Inc. and its permitted successors or assigns hereunder, the
"Seller"), and Alfa Bank Holdings Limited, a company incorporated in the British
------
Virgin Islands ("Alfa"), Capital International Global Emerging Markets Private
----
Equity Fund, L.P., a Delaware limited partnership ("CIG"), and Cavendish
Nominees Limited, a limited liability company organized and registered under the
laws of Guernsey, and First NIS Regional Fund SICAV, a private institutional
fund organized and registered under the laws of Luxembourg (together with
Cavendish, "Barings"; Alfa, CIG and Barings collectively, "Purchasers").
------- ----------
WITNESSETH:
----------
WHEREAS, Seller owns beneficially and of record 15,056,328 shares (the
"GTS Shares") of the common stock, par value $0.01 per share (the "Shares"), of
--- ------ ------
Golden Telecom, Inc., a Delaware corporation ("GTI" or the "Company"),
--- -------
constituting approximately sixty-one and five-tenths percent (61.5%) of the
issued and outstanding Shares;
WHEREAS, Purchasers, severally, desire to purchase 12,195,122 of the
GTS Shares in the aggregate (the "Purchase Shares") from Seller in such amounts
-------- ------
as set forth opposite the name of each Purchaser on Schedule 1.1 hereto, and
Seller desires to sell such Purchase Shares, severally, to Purchasers, on the
terms and subject to the conditions herein contained;
WHEREAS, a special committee of the Board of Directors of the Company
has approved the purchase of the Purchase Shares by the Purchasers and
consummation of the other transactions contemplated hereby for purposes of
Section 203(a)(1) of the Delaware General Corporation Law, subject to the
condition that the Purchasers enter into a Standstill Agreement with the Company
setting forth certain restrictions on the ability of the Purchasers to acquire
additional Shares and to enter into "business combinations" with the Company;
and
WHEREAS, the Purchasers have entered into such a Standstill Agreement
on the date hereof.
AGREEMENTS:
----------
Now, therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and with the intent to be legally
bound, the parties agree as follows:
1. Purchase and Sale of Purchase Shares; Closing and Manner of Payment
-------------------------------------------------------------------
1.1 Agreement to Purchase and Sell Purchase Shares. On the terms and
----------------------------------------------
subject to the conditions contained in this Agreement, each Purchaser shall
purchase from Seller, and Seller shall sell to each Purchaser, the number of
Purchase Shares set forth opposite the name of such Purchaser on Schedule 1.1
------------
hereto, which Purchase Shares shall upon such sale be fully paid and
non-assessable and free and clear of all liens, encumbrances, proxies, voting
trusts, voting agreements, adverse claims, contractual restrictions on transfer
Page 23 of 96 Pages
or any other charges (collectively, the "Claims"), except for the restrictions
------
imposed by the Shareholders Agreement, to be dated as of the Closing Date (as
hereinafter defined), among Purchasers, Seller, and the Company (the "New
---
Shareholders Agreement").
------------ ---------
1.2 Purchase Price. The purchase price of the Purchase Shares (the
---------------
"Purchase Price") shall be $10.25 per Share.
--------------
1.3 Manner of Payment of Purchase Price. The Purchase Price shall be
-----------------------------------
paid or satisfied at the Closing (as herein after defined) by wire transfer of
immediately available funds to such bank account or accounts as Seller shall
designate by written notice delivered to Purchasers not later than two (2)
business days prior to the Closing; provided, however, that Alfa shall satisfy
-------- -------
its obligation to pay the portion of the Purchase Price payable by it by
delivery of 50% of such amount in cash and delivery of its promissory note in a
principal amount equal to 50% of such amount due May 31, 2001 in the form
attached hereto as Exhibit A, with blanks appropriately filled in (and with the
---------
maker's name corrected if the Assignment (as such term is defined in Section
3.7) has not occurred) (the "Note"), which shall be secured by a pledge of
----
Alfa's Purchase Shares pursuant to a Pledge Agreement in the form attached
hereto as Exhibit B, with blanks appropriately filled in (and with the pledgor's
---------
name corrected if such Assignment has not occurred) (the "Pledge Agreement").
-----------------
Notwithstanding the foregoing, Alfa shall have the right to pay the entire
portion of the Purchase Price payable by it in cash. The aggregate amount of the
Purchase Price due from each Purchaser on the Closing is set forth opposite the
name of such Purchaser on Schedule 1.1 hereto.
------------
1.4 Manner of Delivery of Purchase Shares. At the Closing, the
----------------------------------------
Seller shall deliver to each Purchaser certificates evidencing the Purchase
Shares in such amounts as set forth on Schedule 1.1 hereto duly endorsed in
-------------
blank, or accompanied by valid stock powers duly executed in blank, in proper
form for transfer.
1.5 Time and Place of Closing. The transactions contemplated by this
-------------------------
Agreement, including, without limitation, the sale and purchase of the Purchase
Shares, shall be consummated (the "Closing") at 10:00 a.m. London time, at the
-------
offices of Akin, Gump, Strauss, Xxxxx & Xxxx, One Xxxxx Xxxxx, Xxxxxx XX0X 0XX,
Xxxxxx Xxxxxxx, at the later to occur of: (i) April 20, 2001 and (ii) within two
(2) days after satisfaction of the conditions precedent set forth in Section 4
hereof, or on such other date, and at such time or place, as shall be mutually
agreed upon in writing by Seller and Purchasers. The date on which the Closing
occurs in accordance with this Agreement is referred to in this Agreement as the
"Closing Date".
------------
2. Representations and Warranties
------------------------------
2.1 General Statement. Except as expressly set forth in this
------------------
Agreement, the parties are only making the representations and warranties to
each other which are set forth in this Section 2 and no others with respect to
the matters contained herein. The representations and warranties made by each
Purchaser hereby are made solely as to itself and not jointly or jointly and
severally. All such representations and warranties are made as of the date
hereof (or, in the case of Alfa Telecom, on the date it accepts the Assignment,
as such term is defined in Section 3.7) and as of the date of Closing (the
"Closing Date"). All representations and warranties of Seller are made subject
------------
to the exceptions in the schedules attached hereto (the "Schedules").
---------
2
Page 24 of 96 Pages
2.2 Representations and Warranties of Purchasers. Each Purchaser,
---------------------------------------------
severally, represents and warrants to Seller as to itself as follows:
(a) Such Purchaser is a corporation, partnership or other
organization, as the case may be, duly organized or formed,
validly existing and in good standing under the laws of the
state or other jurisdiction of its organization or formation and
has the power and authority to carry on its business as
presently conducted.
(b) Such Purchaser has full corporate, partnership or other
organizational power, as the case may be, and authority to enter
into and perform (i) this Agreement; (ii), as applicable (1) the
Stock Option Agreement, by and between Seller and Alfa, to be
dated as of the Closing Date, in the form attached hereto as
Exhibit C, with blanks appropriately filled in (and with the
----------
Alfa party's name corrected if the Assignment (as such term is
defined in Section 3.7) has not occurred) (the "Alfa Stock
-----------
Option Agreement"); (2) the Stock Option Agreement, by and
-----------------
between Seller and CIG, to be dated as of the Closing Date, in
the form attached hereto as Exhibit D, with blanks appropriately
filled in (the "CIG Stock Option Agreement"); and (3) the Stock
--------------------------
Option Agreement, by and between Seller and Barings, to be dated
as of the Closing Date, in the form attached hereto as Exhibit
E, with blanks appropriately filled in (the "Barings Stock
--------------
Option Agreement"); (iii) the New Shareholders Agreement, to be
----------------
dated as of the Closing Date, in the form attached hereto as
Exhibit F, with blanks appropriately filled in; and (iv) with
---------
respect to Alfa, each of the Note and the Pledge Agreement
(collectively, "Purchaser's Ancillary Agreements"). The
------------------------------------
execution and delivery by such Purchaser of this Agreement and
such Purchaser's Ancillary Agreements and the performance by
such Purchaser of its obligations hereunder and thereunder have
been duly authorized and approved by all requisite corporate,
partnership or other organizational action, as the case may be.
This Agreement constitutes and such Purchaser's Ancillary
Agreements will constitute the valid and binding obligation of
such Purchaser, enforceable against such Purchaser in accordance
with its and their terms except as may be limited by applicable
laws relating to bankruptcy, insolvency, reorganization,
moratorium or similar creditors' rights generally and by general
principles of equity.
(c) Except for filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), no
--------
consent, authorization, order or approval of, or filing or
registration with, any governmental authority or other person is
required for the execution and delivery by such Purchaser of
this Agreement or such Purchaser's Ancillary Agreements and the
consummation by such Purchaser of the transactions contemplated
hereby and thereby.
(d) Neither the execution and delivery of this Agreement or
such Purchaser's Ancillary Agreements by such Purchaser, nor the
consummation by such Purchaser of the transactions contemplated
hereby or thereby, will (i) conflict with or result in a
material breach of any of the terms, conditions or provisions
(A) of any organizational documents of such Purchaser, or (B) of
any statute or administrative regulation typically applicable to
transactions of this type, or of any order, writ, injunction,
judgment or decree of any court or governmental authority or of
any arbitration award to which such Purchaser is a party or by
3
Page 25 of 96 Pages
which Purchaser is bound; (ii) constitute a material default
under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of such Purchaser or to
a loss of any material benefit to which Purchaser is entitled
under any provision of any unexpired, undischarged or
unsatisfied written or oral agreement, contract, indenture,
mortgage, debenture, note or other instrument binding such
Purchaser or any material license, franchise, permit or other
similar authorization held by such Purchaser, except with
respect to clauses (i)(B) and (ii) for such conflicts, defaults,
or other occurrences that would not have a material adverse
effect on such Purchaser's ability to perform its obligations
hereunder or thereunder.
(e) Except for arrangements by or on behalf of such
Purchaser previously disclosed to Seller, the fees with respect
to which shall be borne by such Purchaser, such Purchaser has
not dealt with any person or entity who is or may be entitled to
a broker's commission, finder's fee, investment banker's fee or
similar payment from Seller for arranging the transactions
contemplated hereby or introducing the parties to each other.
(f) There is no claim, litigation, proceeding or
investigation pending or, to the best of such Purchaser's
knowledge, threatened, which seeks to enjoin or prohibit, or
otherwise question the validity of, any action taken or to be
taken by such Purchaser in connection with this Agreement or
Purchaser's Ancillary Agreements or which would have an adverse
effect on such Purchaser's ability to perform its obligations
hereunder or thereunder.
(g) Such Purchaser has sufficient cash on hand or
enforceable financial commitments from credible sources to allow
it to pay the Purchase Price of its Purchase Shares, consummate
the transactions contemplated hereby, and pay all related fees
and expenses as set forth herein.
(h) Alfa Telecom Limited, a company incorporated in the
British Virgin Islands ("Alfa Telecom") is an affiliate of
-------------
(being under common control with) Alfa.
(i) Alfa has delivered to Seller its unaudited financial
statements as of December 31, 2000, which financial statements
were prepared in conformity with International Accounting
Standards, and which fairly present, in all material respects
(subject to normal, recurring, year-end adjustments which are
not material, individually or in the aggregate) Alfa's financial
condition as of the dates thereof and Alfa's results of
operations for the periods presented.
(j) The organizational chart of each of Alfa and Alfa
Telecom delivered to Seller by Alfa is true and correct.
2.3 Representations and Warranties of Seller. Seller represents and
----------------------------------------
warrants to Purchasers that:
(a) Seller is a corporation validly existing and in good
standing under the laws of the State of Delaware and has the
power and authority to carry on its business as presently
conducted.
4
Page 26 of 96 Pages
(b) Except for filings under the HSR Act and consents
authorizations, orders, approvals, filings and registrations
required to be made by any Purchaser, no consent, authorization,
order or approval of, or filing or registration with, any
governmental authority or other person (including without
limitation the stockholders of Seller) is required for or in
connection with the execution and delivery by Seller of (i) this
Agreement; (ii) the Alfa Stock Option Agreement; (iii) the CIG
Stock Option Agreement; (iv) the Barings Stock Option Agreement;
and (v) the New Shareholders Agreement; (collectively, "Seller's
--------
Ancillary Agreements") and the consummation by Seller of the
---------------------
transactions contemplated hereby and thereby.
(c) Except as set forth on Schedule 2.3(c) hereof, neither
----------------
the execution and delivery of this Agreement or Seller's
Ancillary Agreements by Seller, nor the consummation by Seller
of the transactions contemplated hereby or thereby, will (i)
conflict with or result in a breach of any of the terms,
conditions or provisions of (A) any organizational documents of
Seller, the Company or any Subsidiary (as defined below) of the
Company, or (B) of any statute or administrative regulation
typically applicable to transactions of this type, or of any
order, writ, injunction, judgment or decree or any court or
governmental authority or of any arbitration award to which
Seller, the Company or any Subsidiary is a party or by which
Seller, the Company or any Subsidiary is bound; (ii) constitute
a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of the
Company or any of its Subsidiaries or to a loss of any benefit
to which the Company or any of its Subsidiaries is entitled
under any provision of any unexpired, undischarged or
unsatisfied written or oral agreement, contract, indenture,
mortgage, debenture, note or other instrument binding the
Company or any of its Subsidiaries or any license, franchise,
permit or other similar authorization held by the Company or any
of its Subsidiaries, or (iii) result in the creation or
imposition of any lien or encumbrance on any asset of the
Company or any of its Subsidiaries, except with respect to
clauses (i)(B), (ii) and (iii), for any conflicts, defaults or
other occurrences which would not have a Material Adverse Effect
(as defined hereinafter). For purposes of this Agreement, a
"Subsidiary" shall mean any corporation, partnership or other
----------
entity that is directly or indirectly wholly-owned by the
Company.
(d) Seller has full corporate power and authority to enter
into and perform this Agreement and Seller's Ancillary
Agreements. The execution and delivery of this Agreement and
Seller's Ancillary Agreements and the performance by Seller of
its obligations hereunder and thereunder have been duly
authorized by all requisite corporate action. This Agreement
constitutes and Seller's Ancillary Agreements will constitute
the valid and binding obligation of Seller, enforceable against
Seller in accordance with its and their terms, except as maybe
limited by applicable laws relating to bankruptcy, insolvency,
reorganization, moratorium or similar rights of creditors
generally and by general principles of equity.
(e) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
5
Page 27 of 00 Xxxxx
Xxxxxxxx, Xxxxxx Xxxxxx, and has all requisite corporate power
and authority to carry out its business as now being conducted
or proposed to be conducted by it.
(f) Except for the restrictions imposed by the Shareholders
and Registration Rights Agreement, dated as of December 24, 1999
among the Company, the Seller, and CIG (the "CIG Shareholders
-----------------
Agreement") and the Seller Shareholders Agreement, Seller owns
---------
of record and beneficially all Purchase Shares, free and clear
of any Claims.
(g) The Company has filed all forms, reports and documents
("SEC Documents") required to be filed by it with the SEC since
-------------
September 30, 1999. As of its filing date (and, with respect to
any registration statement, the date on which it or any
post-effective amendment was declared effective), each SEC
Document was in compliance, in all material respects, with the
applicable requirements of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended,
contained no untrue statement of a material fact and did not
omit any statement of a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The financial statements of the Company included in the SEC
Documents were prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the
periods involved (subject, in the case of unaudited statements,
to the omission of certain footnotes and except as may be
indicated in the notes thereto) and fairly present, in all
material respects (subject, in the case of the unaudited
statements, to normal, recurring year-end audit adjustments
which are not material, individually or in the aggregate, to the
financial position, results of operations or cash flows of the
Company) the consolidated financial position of the Company as
of the dates thereof and the consolidated results of its
operations for the periods presented. Since December 31, 2000,
there has not been any change in the business, assets, financial
condition or results of operation of the Company or any of its
Subsidiaries, which in any case would have a material adverse
effect on or with respect to the business, assets, financial
condition or results of operation of the Company and its
Subsidiaries, taken as a whole, except for (i) changes that are
generally applicable to (A) the telecommunications industry in
Russia, (B) the Russian economy or (C) the United States
securities markets and (ii) any material adverse effect to the
extent directly attributable to the execution and announcement
of this Agreement or to the transactions contemplated hereby
("Material Adverse Effect").
-----------------------
(h) Except as set forth in the SEC Documents, to the
Seller's knowledge (for purposes of this Agreement "Seller's
knowledge" and "knowledge of the Seller" shall mean the actual
knowledge after due inquiry of the executive officers of Seller
and the designees of Seller who sit on the Board of Directors of
the Company), the businesses of the Company and its Subsidiaries
have been conducted in compliance with all applicable laws,
ordinances and regulations of all governmental entities
(including, without limitation, those relating to licenses and
permits for the ownership, occupancy and operation of their
properties), except for violations that individually or in the
aggregate would not reasonably be expected to have a Material
Adverse Effect. Except for any investigation or review that
would not reasonably be expected to have a Material Adverse
6
Page 28 of 96 Pages
Effect, as of the date of this Agreement, to the knowledge of
the Seller no investigation or review by any governmental entity
(including without limitation any audit or similar review by any
U.S., Russian or Ukrainian federal, state or local taxing
authority) with respect to the Company or any of its
Subsidiaries or any of their respective properties is pending
or, to the knowledge of Seller, threatened in writing.
(i) The Board of Directors of the Company has approved all
transactions contemplated hereby pursuant to Section 203 of the
Delaware General Corporation Law, and otherwise has taken the
necessary actions to make inapplicable any other applicable
anti-takeover statute or similar statute or regulation to the
transactions contemplated by this Agreement, including the
acquisition of the Purchase Shares.
(j) The authorized capital stock of the Company consists of
110,000,000 Shares and 10,000,000 shares of preferred stock, par
value $.01 per share ("Preferred Stock"). As of March 26, 2001,
-----------------
(i) 24,479,997 Shares were issued and outstanding, (ii) no
Shares were held in the treasury of the Company, (iii) no Shares
were held by the Subsidiaries, and (iv) 4,320,000 Shares were
reserved for future issuance pursuant to outstanding employee
stock options or stock incentive rights granted pursuant to
stock option plans of which 1,307,023 options had vested as of
March 26, 2001. No shares of Preferred Stock are outstanding.
Except as set forth in this Section or in Schedule 2.3(j), there
---------------
are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or any
Subsidiary obligating the Company or any Subsidiary to issue or
sell any shares of capital stock of, or other equity interests
in, the Company.
(k) Except as set forth on Schedule 2.3(k) hereof, to the
----------------
knowledge of Seller there are no liabilities of the Company and
its Subsidiaries of any kind whatsoever, whether or not accrued
and whether or not contingent or absolute, determined or
otherwise, other than (i) liabilities reflected on the balance
sheets contained in the SEC Documents or any schedule to this
Agreement, and (ii) liabilities that in the aggregate would not
reasonably be expected to have a Material Adverse Effect.
(l) Except for a Deutsche Bank affiliate, whose fee shall be
exclusively borne by Seller, Seller has not employed nor is
subject to the valid claim of, any broker, finder or other
financial intermediary in connection with the transactions
contemplated by this Agreement or the transactions contemplated
hereby, who might be entitled to a fee or commission in
connection herewith or therewith.
(m) The Indemnification Agreement, dated October 5, 1999
between Seller and the Company, is in full force and effect and
constitutes the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except
as may be limited by applicable laws relating to bankruptcy,
insolvency, reorganization, moratorium or similar rights of
creditors generally and by general principles of equity. Neither
Seller nor any of its affiliates (excluding the Company) has any
outstanding claims for indemnification under the Indemnification
7
Page 29 of 96 Pages
Agreement and Seller has not received any written
indemnification claims from the Company thereunder.
3. Covenants
---------
3.1 Cooperation. Upon the terms and subject to the conditions
-----------
hereof, each of the parties hereto shall (i) make promptly its respective
filings, and thereafter make any other reasonable submissions, under the HSR Act
with respect to the transactions contemplated by this Agreement; provided,
however, the parties shall have no obligation to make any filing under the HSR
Act unless and until the condition precedent to Purchasers' obligations
hereunder set forth in Section 4.3(e) shall have been satisfied; and provided,
-------------
further, that the parties shall make such filing within seven (7) business days
after the satisfaction of such condition precedent, and (ii) use its reasonable
best efforts to take, or cause to be taken, all appropriate action, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Purchasers' Ancillary Agreements.
Concurrently with the filing of notifications under the HSR Act or as soon
thereafter as practicable, the parties shall each request early termination of
the HSR Act waiting period.
3.2 Conduct of Business. During the period from the date hereof to
--------------------
the Closing Date, Seller covenants and agrees that it will use reasonable
efforts to cause the Company and its Subsidiaries to carry on their material
businesses in the ordinary course of business, in substantially the same manner
as heretofore conducted, and will use all reasonable efforts consistent with
past practices and policies to preserve intact the Companies and Subsidiaries'
present corporate formation, keep available the services of their respective
officers and key employees, and preserve their relationships with material
customers and suppliers and others having business dealings with them.
3.3 Public Announcements. The parties will consult with one another
--------------------
before issuing any press release or otherwise making any public statement with
respect to this Agreement, and shall not issue any such press release or make
any such public statement absent mutual agreement thereon except, based on the
advice of counsel, as required by applicable law or exchange requirement.
3.4 Access. Seller agrees to provide and use all reasonable efforts
------
to cause the Company and Subsidiaries to provide reasonable access by each
Purchaser for its respective due diligence review of the books, records,
personnel and facilities of its material businesses during normal business
hours, subject at all times to the Confidentiality Agreement, dated as of March
17, 2001, between the Seller and Alfa Bank, Inc. (the "Confidentiality
---------------
Agreement"). Purchasers agree to cooperate with Seller and to conduct such due
---------
diligence review in a manner to minimize any disruption to its material
businesses.
3.5 Trademark Transfer Agreement. Seller hereby waives any rights
------------------------------
that it may have under Section 4(i) of the Trademark Transfer Agreement, dated
as of October 5, 1999, by and between the Seller and the Company in the event of
a Change of Control (as defined in such Trademark Transfer Agreement).
3.6 CIG Shareholders Agreement. CIG, on behalf of itself, and each
---------------------------
of its affiliates, hereby irrevocably waives any rights, including any tag-along
right, arising under the CIG Shareholders Agreement that it may have with
8
Page 30 of 96 Pages
respect to the transactions contemplated by this Agreement and the Alfa Stock
Option Agreement, the CIG Stock Option Agreement and the Barings Stock Option
Agreement.
3.7 Mandatory Assignment and Guarantee. Alfa may assign its rights
-----------------------------------
and obligations under this Agreement to Alfa Telecom at any time prior to the
Closing Date but no such assignment shall relieve Alfa of any of its obligations
hereunder (the "Assignment"). If the Assignment is made, then (i) at the Closing
----------
Alfa, as the Guarantor, will execute and deliver the guaranty appended to the
form of the Note attached hereto as Exhibit A, with blanks appropriately filled
in and (ii) all references to "Alfa" in this Agreement and the Purchaser's
Ancillary Agreements will be deemed references to "Alfa Telecom".
4. Closing Conditions
------------------
4.1 Conditions Precedent to the Obligations of All Parties. The
----------------------------------------------------------
respective obligations of each party shall be subject to the fulfillment or
written waiver at or prior to the Closing of each of the following conditions:
(a) Any waiting period (and any extension thereof)
applicable under the HSR Act shall have expired or been
terminated.
(b) No preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or
by an applicable governmental, regulatory or administrative
agency or commission nor any applicable statute, rule,
regulation or executive order promulgated or enacted by any
applicable governmental authority shall be in effect which would
prevent the consummation of the transactions provided for in
this Agreement.
4.2 Additional Conditions to the Obligations of Seller. The
---------------------------------------------------------
obligations of Seller hereunder are also subject to the fulfillment or written
waiver at or prior to the Closing of the following additional conditions:
(a) Each Purchaser shall have performed in all material
respects each of its obligations under this Agreement, including
without limitation delivery of the items described in Section
5(a) required to be delivered by such Purchaser.
(b) The representations and warranties of each Purchaser
contained in this Agreement shall be true and correct in all
material respects, in each case when made and, unless such
representation and warranty is made as of a specific date, at
and as of the Closing Date as if made at and as of such time.
(c) Seller shall have received a certificate, dated the
Closing Date, of the appropriate officer or partner of each of
the Purchasers, to the effect that the conditions specified in
paragraphs (a) and (b) of this Section 4.2 have been fulfilled.
(d) Each Purchaser shall have duly executed and delivered
the New Shareholders Agreement (and with the Alfa party's name
corrected if the Assignment has not occurred).
9
Page 31 of 96 Pages
4.3 Additional Conditions to the Obligations of Purchasers. The
----------------------------------------------------------
obligations of each of the Purchasers are also subject to the fulfillment or
written waiver at or prior to the Closing of all of the following additional
conditions:
(a) Seller shall have performed in all material respects
each of its obligations under this Agreement, including without
limitation delivery of the items described in Section 5(b)
required to be delivered by Seller.
(b) The representations and warranties of Seller contained
in this Agreement shall be true and correct when made and,
unless such representation or warranty is made as of a specified
date, at and as of the Closing Date as if made at and as of such
time, except for (i) changes contemplated by this Agreement and
(ii) any failure to be so true and correct which, individually
or with all such other failures, would not have a Material
Adverse Effect.
(c) The two separate promissory notes of the Company held by
Seller in the respective principal amounts of $4.8 million and
$1.5 million shall each have been amended to reflect that the
final maturity date shall be one year after the Closing Date and
that no payments shall be required under such notes until such
final maturity date.
(d) Purchasers shall have received a certificate dated the
Closing Date, of a duly qualified Officer of Seller, to the
effect that the conditions specified in paragraphs (a) and (b)
of this Section 4.3 have been fulfilled.
(e) Ernst & Young, the independent auditors of Seller, shall
have delivered their audit report and opinion on the financial
statements of Seller as of and for the year ended December 31,
2000, which opinion shall contain no "going concern" or other
qualification, and which opinion shall have been included in
Seller's Annual Report on Form 10-K for the year ended December
31, 2000, and such financial statements shall have been prepared
in accordance with United States generally accepted accounting
principles applied on a consistent basis and shall fairly
present, in all material respects, the consolidated financial
position of Seller as of the dates thereof and the consolidated
results of its operations for the periods presented.
(f) Each other Purchaser shall have duly executed and
delivered the New Shareholders Agreement.
5. Deliveries at Closing
---------------------
(a) Documents to be Delivered by the Seller. At the Closing,
---------------------------------------
the Seller will deliver or cause to be delivered to each of the
Purchasers (or only to such specific Purchaser if so indicated):
(i) Certificates representing the Purchase Shares, duly
endorsed (or accompanied by duly executed stock powers), shall
be validly delivered and transferred to each Purchaser, in the
amounts set forth on Schedule 1.1 hereto, free and clear of any
------------
and all Claims, except for restrictions imposed by the New
Shareholders Agreement and, in the case of the Purchase Shares
10
Page 32 of 96 Pages
to be delivered to Alfa, the Pledge Agreement;
(ii) Copies of the resolutions of the respective Board of
Directors of Seller and the Company authorizing and approving
this Agreement, the Seller's Ancillary Agreements and the
transactions and other agreements contemplated hereby and
thereby, certified by a duly authorized officer of Seller and
the Company, as applicable, to be true, correct and in full
force and effect and unmodified as of the Closing Date;
(iii) Good standing certificate for each of Seller and the
Company from the Secretary of State of the State of Delaware,
dated not more than ten (10) days prior to the Closing;
(iv) A certified copy of the Certificate of Incorporation of
Seller from the Secretary of State of the State of Delaware,
dated not more than ten (10) days prior to the Closing;
(v) A certified copy of the Bylaws of Seller from the
Secretary of Seller, dated not more than ten (10) days prior to
the Closing;
(vi) Letters of resignation, effective as of the Closing
Date, of four of the five Seller nominees to the Company's Board
of Directors, which shall not include one of the following
Seller nominees: Xxxxxx X. Xxxxx or Xxxxx X. Xxxxxx;
(vii) A certificate of a duly authorized officer of Seller
pursuant to Section 4.3(d) hereof;
(viii) Delivery to Alfa of the Alfa Stock Option Agreement duly
executed by Seller;
(ix) Delivery to CIG of the CIG Stock Option Agreement duly
executed by Seller;
(x) Delivery to Barings of the Baring Stock Option Agreement
duly executed by Seller;
(xi) The New Shareholders Agreement duly executed by Seller
and the Company;
(xii) Delivery to Baring Vostok Private Equity Fund LP
("Baring Vostok") and Barings of the Assignment and Amendment
--------------
Agreement by and among Baring Vostok, the Company and others,
dated the Closing Date, duly executed by the Company, in the
form attached hereto as Exhibit G with blanks appropriately
---------
filled in; and
(xiii) Delivery to CIG of the Amendment to Shareholders and
Registration Rights Agreement by and between CIG and the
Company, dated the Closing Date, duly executed by the Company,
in the form attached hereto as Exhibit H with blanks
----------
appropriately filled in.
11
Page 33 of 96 Pages
(b) Documents to be Delivered by Purchasers. At the Closing,
---------------------------------------
Purchasers (or such individual Purchaser as specified) will deliver to the
Seller:
(i) Their respective portion of the Purchase Price, in
accordance with Sections 1.2 and 1.3 hereof;
(ii) Alfa shall deliver to Seller a duly executed copy of the
Note;
(iii) Alfa shall deliver to Seller a duly executed copy of the
Pledge Agreement;
(iv) A copy of the resolutions of the Board of Directors or
similar governing body of Alfa authorizing and approving this
Agreement and all other transactions and agreements contemplated
hereby certified by a duly authorized officer of Alfa to be
true, correct and in full force and effect and unmodified as of
the Closing Date;
(v) A certified copy of the Certificate of Incorporation of
Alfa from the Registrar of Companies of the British Virgin
Islands, dated not more than ten (10) days prior to the Closing;
(vi) A certificated copy of the Memorandum of Association of
Alfa from the Registrar of Companies of the British Virgin
Islands, dated not more than ten (10) days prior to the Closing;
(vii) A certificate of a duly authorized officer or other
signatory of each Purchaser pursuant to Section 4.2(c) hereof;
(viii) Alfa will deliver to Seller the Alfa Stock Option
Agreement duly executed by Alfa;
(ix) CIG will deliver to Seller the CIG Stock Option
Agreement duly executed by CIG;
(x) Barings will deliver to Seller the Barings Stock Option
Agreement duly executed by Barings; and
(xi) The New Shareholders Agreement duly executed by each of
the Purchasers.
6. Survival of Representations and Warranties. Except as set forth in the
------------------------------------------
following sentence, all of the representations and warranties contained in this
Agreement or any representations and warranties contained in any certificate,
document or instrument delivered pursuant to this Agreement shall survive the
Closing. The representations and warranties contained in Sections 2.2(i),
2.3(b), (c), (g), (h), (i), (j) and (k) of this Agreement shall survive for a
period of one year from the Closing Date.
12
Page 34 of 96 Pages
7. Termination Rights
------------------
7.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Closing Date:
(a) by mutual written consent of the parties;
(b) by any Purchaser (other than Alfa) as to itself only and
Alfa as to the entire Agreement, (i) if Seller shall have
materially breached any of its material covenants herein or if
Seller shall have made a material misrepresentation and not
cured such breach or misrepresentation within thirty (30) days
of notice of such breach or misrepresentation given by such
Purchaser; provided, however, that if an inaccuracy in any of
Seller's representations and warranties as of the date
subsequent to the date of this Agreement or a breach of a
covenant by Seller is curable and Seller is continuing to
exercise all reasonable efforts to cure such inaccuracy or
breach, then such Purchaser may not terminate this Agreement
under this Section 7.1(b) on account of such inaccuracy or
breach for a period ending 30 days after serving a notice of
such inaccuracy of breach on Seller, or (ii) if Ernst & Young
LLP shall have delivered their audit report and opinion on the
financial statements of Seller as of and for the year ended
December 31, 2000 and such opinion shall contain a "going
concern" or other qualification;
(c) by Seller, subject to Section 7.4 hereof, as to any
particular Purchaser and to the entire Agreement if Alfa is the
breaching Purchaser, if such Purchaser shall have materially
breached any of its covenants herein or if such Purchaser shall
have made a material misrepresentation herein and not cured such
breach or misrepresentation within thirty (30) days of notice of
such breach or misrepresentation given by Seller; provided,
however, that if any inaccuracy in any of such Purchaser's
representations and warranties as of a date subsequent to the
date of this Agreement or a breach of a covenant by such
Purchaser is curable by such Purchaser and such Purchaser is
continuing to exercise all reasonable efforts to cure such
inaccuracy or breach, then Seller may not terminate this
Agreement under this Section 7.1(c) as to such Purchaser on
account of such inaccuracy or breach for a period ending 30 days
after serving a notice of such inaccuracy of breach on such
Purchaser;
(d) by either Purchasers or Seller, if any court of
competent jurisdiction or other governmental agency of competent
jurisdiction shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become
final and non-appealable;
(e) by either CIG or Barings, as to itself, pursuant to
Section 7.4 hereof; or
(f) by any Purchaser (other than Alfa) as to itself only and
Alfa as to the entire Agreement or Seller, if the Closing has
not occurred by July 31, 2001.
7.2 Procedure and Effect of Termination. In the event of termination
-----------------------------------
pursuant to Section 7.1 hereof, notice thereof shall forthwith be given to the
other parties hereto and this Agreement shall terminate without further action
by any of the parties hereto. If this Agreement is terminated as provided
herein, no party hereto shall have any liability or further obligation to any
13
Page 35 of 96 Pages
other party to this Agreement except pursuant to the Confidentiality Agreement;
provided, however, nothing herein will relieve any party from liability for any
breach of this Agreement, and the non-breaching party or parties will have the
right to enforce all available remedies, at law or in equity, including without
limitation as set forth in Section 7.3 below.
7.3 Specific Performance. The parties agree that the Purchasers
---------------------
would be irreparably damaged if for any reason Seller failed to sell the
Purchase Shares to the Purchasers or to perform any of its other obligations
under this Agreement, and that the Purchasers would not have an adequate remedy
at law for money damages in such event. Accordingly, the Purchasers shall be
entitled to specific performance and injunctive and other equitable relief to
enforce the performance of this Agreement by Seller. Accordingly, if any
Purchaser should institute an action or proceeding seeking specific enforcement
of the provision hereof, Seller hereby waives the claim or defense that such
Purchaser has an adequate remedy at law and hereby agrees not to assert in any
such action or proceeding the claim or defense that such a remedy at law exists.
Seller further agrees to waive any requirements for the securing or posting of
any bond in connection with obtaining any such equitable relief. This provision
is without prejudice to any other rights that the Purchasers may have against
Seller for any failure to perform its obligations under this Agreement.
7.4 Default of Purchasers. If either or both of CIG or Barings
-----------------------
defaults in its obligations to purchase its respective portion of the Purchase
Shares on the Closing Date, then each of the non-defaulting Purchasers shall
have the option, in their sole discretion, to purchase the defaulting
Purchaser's Purchase Shares for cash, in proportion to the respective amounts of
Purchase Shares that they have agreed to purchase hereunder. If Alfa defaults in
its obligations to purchase its portion of the Purchase Shares on the Closing
Date, then each of CIG and Barings shall also have the option, in its sole
discretion, to terminate its respective obligations hereunder, without any
liability on the part of CIG or Barings. In the event that such defaulting party
shall be CIG and/or Barings, Alfa shall not have the right to terminate its
obligation to purchase its portion of the Purchase Shares hereunder. Nothing
herein will relieve the defaulting Purchaser from liability for its default.
8. Miscellaneous
-------------
8.1 Amendment and Modification. This Agreement may be amended,
----------------------------
modified or supplemented only by mutual written agreement of the parties hereto.
8.2 Benefit and Assignment. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective heirs,
successors and assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party to this
Agreement without the prior written consent of the other parties hereto;
provided, however, that (i) Global TeleSystems, Inc. may, with the prior written
consent of the other parties hereto (such consent not to be unreasonably
withheld or unreasonably delayed), assign its rights and obligations hereunder
but only to any direct or indirect subsidiary of Global TeleSystems, Inc. to
which Global TeleSystems, Inc. proposes to transfer the Purchase Shares, which
assignment shall not relieve Global TeleSystems, Inc. of its obligations
hereunder and (ii) the Assignment as permitted by Section 3.7 hereof shall not
require the consent of any other party hereto.
14
Page 36 of 96 Pages
8.3 No Third-Party Beneficiaries. Nothing in this Agreement shall
-----------------------------
confer any rights upon any person or entity other than the parties hereto and
their respective heirs, successors and permitted assigns.
8.4 Entire Agreement. This Agreement, the Purchaser's Ancillary
-----------------
Agreements, the Seller's Ancillary Agreements, the Confidentiality Agreement,
and the exhibits and schedules hereto and thereto, embody the entire agreement
and understanding of the parties hereto and supersede any and all prior
agreements, arrangements and understandings relating to the matters provided for
herein and therein. No amendment, waiver of compliance with any provision of
condition hereof or consent pursuant to this Agreement shall be effective unless
evidenced by an instrument in writing signed by the party against whom
enforcement of any amendment, waiver or consent is sought. Seller is not making
any representation or warranty whatsoever, express or implied, except the
representations and warranties of Seller contained in Section 2.3 of this
Agreement, and each Purchaser acknowledges and agrees that it has not relied on
or been induced to enter into this Agreement by any representation or warranty
other than those expressly set forth herein.
8.5 Expenses. The parties shall be responsible for the payment of
--------
their respective expenses, including legal and accounting fees, in connection
with the preparation, negotiation and closing of this Agreement and the
transactions contemplated hereby. For the avoidance of doubt, none of Seller's
or Purchasers' expenses shall be allocated to or paid by the Company, directly
or indirectly.
8.6 Headings. The headings set forth in this Agreement are for
--------
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
8.7 Choice of Law; Arbitration. This Agreement shall be governed by
--------------------------
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of law. All claims or other disputes arising
out of or in connection with this Agreement will be referred to and finally
settled by arbitration under the Rules of Arbitration of the International
Chamber of Commerce (the "Rules") as follows: (i) the number of arbitrators
-----
shall be three (to be appointed in accordance with the Rules); (ii) the place of
arbitration shall be London, England; (iii) the language of the arbitration
shall be English; and (iv) any award of the arbitrator shall be final and
binding and the parties hereby waive any right to refer any question of law and
any right of appeal on the law and/or merits to any court.
8.8 Notices. All notices, requests, demands, letters, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
sent by next-day or overnight mail or delivery, or (d) sent by fax, as follows:
(a) if to Alfa, at:
--------------
P.O. Xxx 0000
Xxxxxx Xxxxx
0xx Xxxxx
000 Xxxxxxxxxx Xxxxx
Xxxx Xxxx
15
Page 37 of 96 Pages
Tortola, British Virgin Islands
Facsimile No.: (350) 52065
Attn: Xxxxx Xxxxxxxx
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx L.L.P.
Xxxxxx X. Xxxxxxx Building
0000 Xxx Xxxxxxxxx Xxxxxx X.X.
Xxxxxxxxxx, X.X. 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxx Xxxxxxxx
(b) if to CIG, at:
-------------
00 Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (0)00 0000-0000
Attn.: Xxxxxx Xxxxxxx
--and--
00 Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (0)00 0000-0000
Attn.: Xxx Xxxxxx
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
00 Xxxx Xxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (0)00 0000-0000
Attn.: Xxxxx X. Xxxxxxxxx
(c) If to Cavendish Nominees Limited:
--------------------------------
c/o International Private Equity Services
00-00 Xxxxxxxx Xxxx XX Xxx 000
Xx. Xxxxx Xxxx
XX0 0XX, Guernsey
Facsimile No.: 44 (0) 1481 715 219
Attn.: Xxx. Xxxxxx Xxxxxx
with a copy to:
Baring Vostok Capital Partners
10 Uspenski Xxxxxxxx
000000 Xxxxxx, Xxxxxx
Facsimile No.: 7095 967 1308
16
Page 38 of 96 Pages
Attn.: Xxxxxxx Xxxxxx
and to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
00 Xxxx Xxxx
Xxxxxx
XX0X 0XX
Facsimile: x00 (00) 0000 0000
Attn.: Xxxxx Xxxxxxxxx
(d) 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
Attn.: Xxxxxxxxx Tourney
with a copy to:
Baring Vostok Capital Partners
10 Uspenski Xxxxxxxx
000000 Xxxxxx, Xxxxxx
Facsimile No.: 7095 967 1308
Attn.: Xxxxxxx Xxxxxx
and to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
00 Xxxx Xxxx
Xxxxxx
XX0X 0XX
Facsimile: x00 (00) 0000 0000
Attn.: Xxxxx Xxxxxxxxx
(e) if to Seller, at:
Global TeleSytems, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx XX0X 0XX
Facsimile No.: x00 (0)00 0000 0000
Attn: General Counsel
with a copy to:
Shearman & Sterling
0 Xxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (0)00 0000 0000
Attention: Xxxxxxx Xxxxxxxxx
00
Page 39 of 96 Pages
or to such other person or entity or address as any party shall specify by
notice in writing to the party entitled to notice. All such notices, requests,
demands, letters, waivers and other communications shall be deemed to have been
received (w) if by personal delivery on the day after such delivery, (x) if by
certified or registered mail, on the fifth Business Day after the mailing
thereof, (y) if by next-day or overnight mail or delivery, on the day delivered
or (z) if by fax, on the next day following the day on which such fax was sent,
provided that a copy is also sent by certified or registered mail.
8.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument. This Agreement may be executed by
facsimile signatures and such signatures shall be deemed binding for all
purposes hereof, without delivery of an original signature being thereafter
required.
8.10 Currency. Unless otherwise specified in this Agreement, all
--------
references to currency, monetary values and dollars set forth herein shall mean
United States (U.S.) dollars and all payments hereunder shall be made in United
States dollars.
18
Page 40 of 96 Pages
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
SELLER:
Global TeleSystems, Inc.
By:
----------------------------------------
Its:
----------------------------------------
PURCHASERS:
Alfa Bank Holdings Limited
By:
----------------------------------------
Its:
----------------------------------------
Capital International Global Emerging Markets
Private Equity Fund, L.P.
By: Capital International, Inc.,
General Partner
By:
------------------------------------
Its:
------------------------------------
Cavendish Nominees Limited
By:
----------------------------------------
Its:
----------------------------------------
First NIS Regional Fund SICAV
By:
----------------------------------------
Its:
----------------------------------------
By:
----------------------------------------
Its:
----------------------------------------
19
