STANDSTILL AGREEMENT
This STANDSTILL AGREEMENT, is made and entered into as of September 5, 2002
(this "Agreement"), by and among Alfa Telecom Limited, a British Virgin
Islands company ("Alfa"), OAO Rostelecom, a company incorporated in the
Russian Federation ("RTK"), Capital International Global Emerging Markets
Private Equity Fund, L.P., a Delaware limited partnership ("Capital"),
Cavendish Nominees Limited, a limited liability company organized and
registered under the laws of Guernsey ("Cavendish"), First NIS Regional
Fund SICAV, a private institutional fund organized and registered under the
laws of Luxembourg ("NIS", and together with Cavendish, "Barings"), and
Golden Telecom, Inc., a Delaware corporation (the "Company"). Alfa, RTK,
Capital and Barings are collectively referred to herein as the
"Stockholders."
RECITALS:
WHEREAS, the Company has outstanding 22,803,048 shares of the common stock,
$.01 par value per share (the "Common Stock");
WHEREAS, Alfa currently holds 10,731,707 shares of the Company's Common
Stock (as defined herein); CIG currently holds 2,166,405 shares of the
Company's Common Stock; and Barings currently holds 2,568,376 shares of the
Company's Common Stock;
WHEREAS,the Company, Global TeleSystems, Inc. ("GTS"), Alfa, Capital and
Barings entered into a shareholders agreement, dated May 11, 2001 (the "May
Shareholders Agreement") pursuant to which Alfa, GTS, Capital, Barings and
the Company agreed to, among other things, certain procedures with respect
to the nomination, appointment and removal of certain directors of the
Company;
WHEREAS, the Company Alfa, GTS, Capital and Barings entered into a
standstill agreement, dated April 2, 2001 (the "April Standstill
Agreement") pursuant to which Alfa, GTS, Capital, Barings and the Company
agreed, among other things, to limit their respective ownership of Common
Stock to certain percentages set out therein;
WHEREAS, GTS has ceased to be a shareholder in the Company;
WHEREAS, pursuant to an Ownership Interest Purchase Agreement (the "OIPA")
between SFMT-CIS, Inc., OOO Teleross (together, the "Buyers") and RTK dated
as of March 13, 2002 RTK has sold to the Buyers a 50% ownership interest in
OOO EDN Sovintel, a limited liability company organized and existing under
the laws of the Russian Federation;
WHEREAS, in partial consideration for the sale of OOO EDN Sovintel to the
Buyers, the OIPA provides RTK with a right to acquire approximately
4,024,067 shares of Common Stock, constituting approximately 15% of the
Common Stock on the terms and conditions set out therein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Stockholders and the Company agree to amend and restate
the April Standstill Agreement as follows:
1. REPRESENTATIONS AND WARRANTIES
Each of the Stockholders and the Company respectively represents to the
other parties, as to itself, that (i) all necessary corporate actions to
authorize the execution and delivery of this Agreement has been taken by
it, (ii) this Agreement has been duly executed and delivered by it and
(iii) this Agreement constitutes a valid and legally binding obligation by
it and is enforceable in accordance with its terms.
2. CERTAIN DEFINED TERMS
As used in this Agreement, the terms "Affiliate," "Business Combination,"
"Interested Stockholder," and "Voting Stock" have the meanings ascribed to
them in Section 203(c) of the DGCL in effect on the date hereof. For the
purposes of this Agreement, the Company is not deemed to be an Affiliate of
the Stockholders.
The term "Board" shall mean the Board of Directors of the Company.
The term "DGCL" shall mean the General Corporation Law of the State of
Delaware, as amended from time to time.
The term "Disinterested Director" means any member of the Board of
Directors of the Company who is neither an officer, director nor a person
who controls or is under common control with any Stockholder, or any
Affiliate of such Stockholder at the time such Stockholder proposes to
engage in a Business Combination with the Company.
The term "Shareholders' Agreement" shall mean the shareholders' agreement
dated on or about the date hereof between the Stockholders and the Company.
The term "fully diluted basis" means all outstanding Voting Stock or other
shares of capital stock of the Company taking into account any options,
warrants, convertible securities, or other rights to acquire Voting Stock.
3. BUSINESS COMBINATION
Subject to the requirements of Section 4 of this Agreement, each of the
Stockholders agrees that it will not engage and shall not 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 of the
Stockholders agrees that it will not engage and will not permit any of its
Affiliates to engage, in any Business Combination with the Company or its
Affiliates unless such Business Combination is approved in accordance with
Section 203(a)(3) of the DGCL.
4. BOARD COMPOSITION AND BOARD NOMINEES
The Stockholders and the Company agree that the Board shall consist of nine
(9) members. The Stockholders and the Company agree further that the
nomination and removal of directors to the Board shall be governed by
Section 3 of the Shareholders Agreement. Any amendment to the terms set
forth in this Section 4 (including, but not limited to, any increase in the
total number of directors on the Board or any increase in the number of
nominees designated to the Board by Alfa, RTK, Barings or Capital,
respectively) must be made in accordance with Section 9 hereof, provided
that a corresponding amendment to the Shareholders Agreement be made on or
about the same date.
5. STANDSTILL AGREEMENT
(a) Each of the Stockholders agrees that, from and after the date hereof,
unless this Agreement is earlier terminated, it will not, nor will it
permit its respective Affiliates to, directly or indirectly, in any manner
acquire, or agree to acquire, any Voting Stock of the Company, to the
extent that the acquisition of such Voting Stock would increase the
ownership of such Stockholder and its Affiliates to more than (i) the
percentage of the Voting Stock then outstanding (calculated on a
fully-diluted basis) as set forth opposite each such Stockholder's name in
the first column below, or (ii) the percentage of the Voting Stock then
outstanding (calculated on a non-fully diluted basis) set forth opposite
such Stockholder's name in the second column below.
Alfa 43.00% 49.99%
RTK 30.00% 35.00%
Capital 17.20% 20.00%
Barings 17.20% 20.00%
(b) The limitations in Section 5(a) hereof shall not apply to the following
acquisitions or circumstances:
(i) Common Stock acquired from other stockholders of the Company
with a view toward distribution and which are in fact resold,
placed or otherwise distributed within six months of acquisition;
provided, however, that no Common Stock acquired in reliance on
this Section 5 (b)(i) shall be voted by a Stockholder that holds
Voting Stock in excess of the limitation in Section 5 (a) above;
and
(ii) In the event that the Board determines to conduct an auction
of the Company, then each of the Stockholders may participate in
such auction on the same terms as all other bidders,
notwithstanding any provisions in this Agreement to the contrary;
and
(iii) In the event that any person other than Alfa, RTK, the
European Bank of Reconstruction and Development, Capital or
Barings or any of their respective Affiliates acquires, or
proposes to acquire beneficial ownership of greater than 15% of
the outstanding Voting Stock of the Company.
(c) Each of the Stockholders agrees that, from and after the date hereof,
unless this Agreement is earlier terminated, it will not make, nor will it
permit its respective Affiliates to make, or in any way participate in, any
"solicitation" of "proxies" (as such terms are used in the proxy rules of
the United States Securities and Exchange Commission) to vote any Voting
Stock in connection with the election of the members of the Board (other
than proxies to vote any Voting Stock beneficially owned by such
Stockholders and/or its respective Affiliates).
(d) Each of the Stockholders agrees that, from and after the date hereof,
unless this Agreement is earlier terminated, it will not make, nor will it
permit its respective Affiliates to make, or in any way participate in any
"solicitation" of "proxies" (as such terms are used in the proxy rules of
the United States Securities and Exchange Commission) to vote any Voting
Stock, with respect to any matter, other than the election of directors of
the Company (which is governed by Section 4 hereof) (a "Non-Election
Issue"), which may be submitted to a vote of the stockholders of the
Company (other than proxies to vote any Voting Stock beneficially owned by
such Stockholders and/or its respective Affiliates) with respect to any
such Non-Election Issue.
(e) Each of the Stockholders agrees that from and after the date hereof, it
will not amend the voting provisions of the Shareholders Agreement or enter
into any other agreement, arrangement or understanding with respect to
voting its shares of Common Stock 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.
(f) Notwithstanding anything to the contrary contained in Section 5(a)
through 5(d), nothing contained in this Agreement shall be construed to
prevent any of the Stockholders or any of their respective Affiliates from:
(i) making a tender offer for the Common Stock so long as such tender offer
is made on an any and all basis; or (ii) communicating with any other
holder or holders of the Company's outstanding securities, including,
without limitation, the expression of the opinion of the Stockholders with
respect to any third-party solicitation of proxies, provided that such
Stockholder does not (A) provide to any security holder of the Company a
form of proxy or other authorization permitting such security holder (or
its designee) to vote any equity security of the Company on behalf of such
Stockholder or (B) accept from any security holder of the Company a proxy
or other authorization permitting such security holder the Stockholders (or
its designee) to vote any equity security of the Company on such security
holder's behalf, provided that clauses (A) and (B) above shall not be
deemed to prevent the solicitation of proxies to vote Company securities
beneficially owned by such Stockholders, as contemplated by Sections 5(b)
and 5(c) above.
6. PURCHASE RIGHTS OF THE STOCKHOLDERS
Until the termination of this Agreement pursuant to Section 7 hereof, the
Company will give the Stockholders at least 30 days (and, when possible at
least 90 days) prior written notice of the issuance by the Company of any
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 ("New Securities") as a result of which a Stockholder's percentage
of beneficial ownership of the Company would be reduced, either immediately
upon issuance of such New Securities or upon the exercise or conversion
thereof. Such notice must set forth (a) the approximate number and type of
New Securities proposed to be issued and sold and the material terms of
such New Securities, (b) the proposed price or range of prices at which
such New Securities are proposed to be sold and the terms of payment, (c)
the number of such New Securities to be offered for sale and (d) 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
Stockholder will have the right, but not the obligation, to elect to
purchase up to its pro-rata share of such New Securities on a fully diluted
basis. Such pro-rata share, for purposes of this Section 6 for any a
Stockholder is the ratio of (x) the sum, without duplication, of the total
number of shares of Voting Stock or any other shares of capital stock of
the Company held by such Stockholder 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 or 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. Each Stockholder'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 Alfa, RTK,
Capital or Barings may acquire its portion of such New Securities will be
equal in value (as determined in good faith by the Board) but payable
entirely in cash. The closing of each Stockholder'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, if as of
the date of said closing all necessary approvals of governmental
authorities required in connection with the issuance of such New Securities
have not been obtained by the Company and/or a Stockholder then (i) such
Stockholder will not be required to effect purchase of its portion of such
New Securities until all necessary governmental authority approvals are
obtained and (ii) the Company may terminate such Stockholder's right to
purchase its portion of such New Securities if such Stockholder fails to
obtain any necessary approvals of governmental authority applicable only to
such Stockholder within 120 days of the closing of the balance of the
issuance of such New Securities. 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 Stockholders 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 above and any election of a Stockholder to purchase its portion
of such New Securities prior to such change, alteration or modification
may, in the sole discretion of such Stockholder be withdrawn.
Notwithstanding any provision herein to the contrary, in no event shall a
Stockholder be permitted to exercise its rights under this Section 6, to
the extent such exercise would cause it to exceed the limitations set forth
in Section 5 hereof.
Notwithstanding the foregoing, if shares of Voting Stock are issued or
options granted pursuant to the 1999 Equity Plan of the Company, as amended
on June 26, 2001, as amended from time to time, or any other shareholder
approved equity participation plan that may be adopted by the Company such
shares shall not be considered New Securities and the purchase rights
granted pursuant to this Section 6 shall not be applicable.
7. TERM
This Agreement will terminate and the provisions of this Agreement will be
of no further force or effect upon the occurrence of any of the following:
(i) the mutual agreement of the parties in accordance with Section 9
hereof, (ii) the voluntary or involuntary filing of a petition in
bankruptcy by or against the Company, (iii) an event of insolvency
affecting the Company, or the appointment of a receiver for the Company or
(iv) on the second anniversary of the date hereof.
8. REMEDIES
The Stockholders, on the one hand, and the Company, on the other,
acknowledge and agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly
agreed that the parties are entitled to an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, this being in addition to
any other remedy to which they may be entitled at law or equity.
9. AMENDMENTS AND TERMINATION
This Agreement may not be amended or terminated except pursuant to a
writing signed by all parties hereto. Notwithstanding anything to the
contrary contained herein, the Stockholders are not entitled to amend the
provisions hereof or terminate this Agreement unless: (i) the holders of a
majority of the Voting Stock (calculated without reference to any Voting
Stock held by the Stockholders or their respective Affiliates) approve a
proposal submitted by the Board authorizing such amendment or (ii) a
majority of the Disinterested Directors shall approve a resolution
authorizing such amendment.
10. ENTIRE UNDERSTANDING
This Agreement contains the entire understanding of the parties with
respect to the matters covered hereby. The April Standstill Agreement is
hereby terminated and shall no longer be in effect.
11. COUNTERPARTS
This Agreement may be executed by the parties hereto in counterparts and
each such executed counterpart shall be an original instrument. This
Agreement will be deemed to have been executed and delivered by the parties
so long as each of the Company and the Stockholders have duly executed and
delivered a counterpart of this Agreement even if no single counterpart has
been executed by both parties.
12. NOTICES
All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto
will be deemed to be validly given, made or served, if in writing and
delivered personally by facsimile (except for legal process) or sent by
registered or certified mail, postage prepaid, if to:
The Company: Golden Telecom, Inc.
0000 XxxXxxxxx Xxxx. X.X., Xxxxx 000
Xxxxxxxxxx, XX
00000
Facsimile No.:0-000-000-0000
Attn: General Counsel
and to:
Representation Office of Golden
TeleServices, Inc.
00 Xxxxxxxx Xx.
0xx Xxxxx
Xxxxxx 000000 Xxxxxx
Facsimile No.: 7-095-797-9306
Attention: General Counsel
Alfa: Alfa Telecom Limited
X.X. Xxx 0000
Xxxxxx Xxxxx
0xx Xxxxx
333 Waterfront Drive
Road Town
Tortola, British Virgin Islands
Facsimile No.: 000-00-000
Attention: Xxxxx Xxxxxxxx
RTK: OAO Rostelecom
Russian Federation, 125047
Moscow, xx 0xx Xxxxxxxxx-Xxxxxxxx, 00
Xxxxxxxxx: Xxxxxxxxxx Xxxxxx Ivanovich
Facsimile No.:x0-000-000-0000
and c/o Clifford Chance Punder CIS Ltd.
Xx. Xxxxxxxx-Xxxxxxxxxxxx, 00/00
000000 Xxxxxx
Russian Federation
Capital: c/o Capital International Global Emerging
Markets Private Equity Fund, L.P
000 Xxxxx Xxxxx Xxxxxxx Xxxxxxxxx
Xxxx, XX, XXX, 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
Barings: If to Cavendish Nominees Limited:
c/o International Private Equity Services
00-00 Xxxxxxxx Xxxx
P. O. Xxx 000
Xx. Xxxxx Xxxx
XX0 0XX, Xxxxxxxx
Xxxxxxxxx No.: 44(0) 1481 715 219
Attention: Xxx. Xxxxxx Xxxxxx
With a copy to:
Baring Vostock Capital Partners
10 Uspenski Xxxxxxxx
000000 Xxxxxx, Xxxxxx
Facsimile No.: 7095 967 1308
Attention: Xxxxxxx Xxxxxx
If to First NIS Regional Fund SICAV:
x/x Xxxx xx Xxxxxxx Xxxxxxxxxx
00 Xxx Xxxxxx
X-0000, Xxxxxxxxxx
Facsimile No.: 00(0)0 00 00 00 1
Attention: Xxxxxxxxx Tourney
With a copy to:
Baring Vostock Capital Partners
10 Uspenski Xxxxxxxx
000000 Xxxxxx, Xxxxxx
Facsimile No.: 7095 967 1308
Attention: Xxxxxxx Xxxxxx
or to such other address or facsimile number as any party may, from time to
time, designate in a written notice given a like manner.
13. CONSENT TO PERSONAL JURISDICTION
Each of the parties hereto agrees that this Agreement involves at least
$100,000.00 and that this Agreement has been entered into in express
reliance upon 6 Delaware Code. ss. 2708. Each of the parties hereto
irrevocably and unconditionally agrees (i) to be subject to the
jurisdiction of the courts of the State of Delaware and of the federal
courts sitting in the State of Delaware, (ii) that, to the extent such
party is not otherwise subject to service of process in the State of
Delaware, it will appoint (and maintain an agreement with respect to) an
agent in the State of Delaware as such party's agent for acceptance of
legal process, (iii) that service of process may also be made on such party
by prepaid certified mail with a validated proof of mailing receipt
constituting evidence of valid service, and (iv) that service made pursuant
to (ii) or (iii) above, will, to the fullest extent permitted by applicable
law, have the same legal force and effect as if served upon such party
personally within the State of Delaware. For purposes of implementing the
parties' agreement to appoint and maintain an agent for service of process
in the State of Delaware, each party that has not as of the date hereof
already duly appointed such an agent does hereby appoint Corporation
Service Company, 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx
00000, a such agent.
14. GOVERNING LAW
This Agreement shall be governed by, construed and enforced in accordance
with the laws of the State of Delaware.
[signature page follows]
IN WITNESS WHEREOF, the Stockholders and the Company have caused this
Standstill Agreement to be duly executed by their respective officers, each
of whom is duly authorized, all as of the day and year first above written.
ALFA TELECOM LIMITED CAVENDISH NOMINEES LIMITED
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxx X.X. Xxxxxx
--------------------------- -------------------------------
Name: Xxxxx Xxxxxxxx Name: Xxxxxx X.X. Xxxxxx
Title: Director Title: Director
FIRST NIS REGIONAL FUND SICAV OAO ROSTELECOM
By: /s/ X. Xxxxxx By: /s/ Xxxxxx Xxxxxxxxxx
--------------------------- -------------------------------
Name: X. Xxxxxx Name: Xxxxxx Xxxxxxxxxx
Title: Authorized Signatory Title: General Director
By: /s/ Xxxxxx Xxxx Xxxxxxx By: /s/ Xxxxxxxxx Xxxxxx
--------------------------- -------------------------------
Name: Xxxxxx Xxxx Xxxxxxx Name: Xxxxxxxxx Xxxxxx
Title: Authorized Signatory Title: Chief Accountant
CAPITAL INTERNATIONAL GLOBAL
EMERGING MARKETS PRIVATE EQUITY
FUND, L.P.
By: /s/ Xxxxxx Xxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
GOLDEN TELECOM, INC.
By: /s/ Xxxxxxxxx Xxxxxxxxxx
---------------------------
Name: Xxxxxxxxx Xxxxxxxxxx
Title: President and Chief Executive Officer
