EXHIBIT 99.5
STANDSTILL AGREEMENT
This STANDSTILL AGREEMENT, dated as of March 31, 2001 (this
"Agreement"), by and among Alfa Telecom Limited, a British Virgin Islands
company ("Alfa"), Global TeleSystems, Inc. (formerly known as Global
TeleSystems Group, Inc.), a Delaware corporation ("GTS"), 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, GTS, Capital and Barings are
collectively referred to herein as the "Stockholders."
RECITALS:
WHEREAS, GTS owns beneficially and of record 15,056,328 shares of
the common stock, $.01 par value per share, of the Company (the "Common
Stock");
WHEREAS, Alfa, Capital and Barings wish to acquire from GTS and
GTS wishes to sell to the Alfa, Capital and Barings an aggregate of
12,195,122 shares of Common Stock pursuant to a Share Purchase Agreement
(the "Share Purchase Agreement") to be executed and delivered as of the
31st day of March 2001 by and among GTS, Alfa, Capital, and Barings (the
"Proposed Transaction");
WHEREAS, Alfa wishes to acquire from GTS and GTS wishes to sell
to Alfa 10,731,707 shares of Common Stock pursuant to the Share Purchase
Agreement;
WHEREAS, Capital wishes to acquire from GTS and GTS wishes to
sell to Capital 487,805 shares of Common Stock pursuant to the Share
Purchase Agreement;
WHEREAS, Barings wishes to acquire from GTS and GTS wishes to
sell to Barings 975,610 shares of Common Stock pursuant to the Share
Purchase Agreement;
WHEREAS, in connection with the consummation of the Share
Purchase Agreement, the Stockholders and the Company are entering into a
Shareholders Agreement (the "Shareholders Agreement") pursuant to which the
Stockholders and the Company would agree to, among other things, certain
procedures with respect to the nomination, appointment and removal of
certain directors of the Company;
WHEREAS, upon the execution of the Share Purchase Agreement, Alfa
would own in excess of 15% of the outstanding Common Stock thereby making
it an Interested Stockholder as defined in Section 2 of this Agreement and,
pursuant to the Shareholders Agreement, Capital and Barings would thereby
also become Interested Stockholders;
WHEREAS, Alfa, Capital and Barings have requested that the Board
of Directors of the Company (the "Board") approve, pursuant to Section
203(a)(1) of the General Corporation Law of the State of Delaware (the
"DGCL"), the Proposed Transaction and Alfa, Capital and Barings becoming
Interested Stockholders;
WHEREAS, the Board established an independent special committee
of the Board pursuant to Section 141 of the DGCL (the "Independent
Committee") to evaluate and determine the propriety of approving the
Proposed Transaction under Section 203(a)(1) of the DGCL;
WHEREAS, the Independent Committee has approved the Proposed
Transaction for purposes of Section 203 of the DGCL and Alfa, Capital and
Barings each becoming an Interested Stockholder as a result of the Proposed
Transaction on the condition that Alfa, Capital and Barings agree to the
terms and conditions set forth in this Agreement (a copy of the resolutions
of the Independent Committee pertaining thereto is attached hereto as
Exhibit A); and
WHEREAS, GTS is not currently subject to the restrictions of
Section 203 of the DGCL, but in furtherance of the Proposed Transaction has
agreed to be bound by certain provisions hereof.
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 as follows:
Section 1. Representations and Warranties. Each of the
Stockholders and the Company represents to the other parties, as to itself,
that all necessary corporate action to authorize the execution and delivery
of this Agreement has been taken by it, that this Agreement has been duly
executed and delivered by it and that this Agreement constitutes a valid
and legally binding obligation by it and is enforceable in accordance with
its terms.
Section 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. A copy of
Section 203 of the DGCL as currently in effect is attached hereto as
Exhibit B.
The term "Disinterested Director" means any member of the Board
who is neither an officer, director nor a person who controls or is under
common control with the Stockholder, or any Affiliate of the Stockholder
that at the time proposes to engage in a Business Combination with 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.
Section 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 as in effect on the date hereof.
Section 4. Board Composition and Board Nominees. The Stockholders
and the Company agree that the Board shall consist of nine (9) members.
Alfa shall be entitled to designate not less than three (3) but no more
than four (4) directors to the Board. 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, Barings or
Capital, respectively) must be made in accordance with Section 9 hereof.
Section 5. Standstill Agreement.
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(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%
GTS 43.00% 49.99%
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 GTS or 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 that Board determines to conduct an
auction of the Company, then each of the Stockholders may participate in
any 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, 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, 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 of the Company in connection with the election of the directors of
the Company (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, nor will
it permit its Affiliates to make or in any way participate in any way 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 a stockholder (or its
designee) to vote any equity security of the Company on such security
holder's behalf or (B) accept from any security holder of the Company a
proxy or other authorization permitting 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.
Section 6. Purchase Rights of the Stockholders. Until the
termination of this Agreement, 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 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,
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, 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.
Section 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) upon termination of the Share
Purchase Agreement prior to the consummation of the purchase of shares
thereby, (iii) the voluntary or involuntary filing of a petition in
bankruptcy by or against the Company, 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 on which the Proposed Transaction is
consummated.
Section 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.
Section 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.
Section 10. Entire Understanding. This Agreement contains the
entire understanding of the parties with respect to the matters covered
hereby.
Section 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.
Section 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.
c/o Representation Office of Golden
TeleServices, Inc.
00 Xxxxxxxx Xx.
0xx Xxxxx
Xxxxxx 000000 Xxxxxx
Facsimile No.:
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.:
Attention: Xxxxx Xxxxxxxx
GTS: Global TeleSystems, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX XX0X 0XX
Facsimile No.: x00 000 000 0000
Attention: General Counsel
Capital: 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
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.
Section 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 Del. C.
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.
Section 14. Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of
Delaware.
IN WITNESS WHEREOF, the Stockholders and the Company have caused
this 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
By /s/
--------------------------------------
Name:
Title:
GLOBAL TELESYSTEMS, INC.
By /s/
--------------------------------------
Name:
Title:
CAPITAL INTERNATIONAL GLOBAL EMERGING
MARKETS PRIVATE EQUITY FUND, L.P.
By CAPITAL INTERNATIONAL INC.
By /s/
--------------------------------------
Name:
Title:
CAVENDISH NOMINEES LIMITED
By /s/
--------------------------------------
Name:
Title:
FIRST NIS REGIONAL FUND SICAV
By /s/
--------------------------------------
Name:
Title:
By /s/
--------------------------------------
Name:
Title:
GOLDEN TELECOM, INC.
By /s/
--------------------------------------
Name:
Title:
