EXHIBIT 10.3
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:
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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.
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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
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(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,
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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
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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
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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
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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. Section 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
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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]
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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: By:
----------------------------- ------------------------------
Name: Name:
Title: Title:
FIRST NIS REGIONAL FUND SICAV OAO ROSTELECOM
By: By:
----------------------------- ------------------------------
Name: Name: Xxxxxx Xxxxxxxxxx
Title: Title: General Director
By: By:
----------------------------- ------------------------------
Name: Name: Xxxxxxxxx Xxxxxx
Title: Title: Chief Accountant
CAPITAL INTERNATIONAL GLOBAL
EMERGING MARKETS PRIVATE EQUITY
FUND, L.P.
By:
-----------------------------
Name:
Title:
GOLDEN TELECOM, INC.
By:
-----------------------------
Name: Xxxxxxxxx Xxxxxxxxxx
Title: President and Chief Executive Officer
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