EXHIBIT C
SHAREHOLDERS AGREEMENT
Dated as of August 19, 2003
between and among
Golden Telecom, Inc.,
Alfa Telecom Limited,
Xxx Telenor East Invest AS,
OAO Rostelecom,
Capital International Global Emerging Markets Private Equity Fund, L.P.,
Cavendish Nominees Limited
and
First NIS Regional Fund SICAV
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION........................................................................ 1
1.1 DEFINITIONS..................................................................................... 1
1.2 INTERPRETATION.................................................................................. 8
2. REPRESENTATIONS AND WARRANTIES........................................................................ 9
2.1 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.............................................. 9
2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................... 10
3. CERTAIN CORPORATE MATTERS............................................................................. 12
3.1 NOMINATION AND REMOVAL OF DIRECTORS............................................................. 12
3.2 DISCLOSURE OF INTERESTS......................................................................... 16
3.3 SPECIAL TRANSACTION PROCEDURES.................................................................. 16
3.4 PURCHASE RIGHTS OF SHAREHOLDERS................................................................. 17
3.5 TENDER OFFERS................................................................................... 19
3.6 BUSINESS COMBINATION............................................................................ 19
3.7 COMPLIANCE WITH SECURITIES LAWS................................................................. 20
4. TRANSFERS............................................................................................. 20
4.1 GENERAL......................................................................................... 20
4.2 TRANSFERS TO PERMITTED TRANSFEREES.............................................................. 20
4.3 RIGHT OF FIRST OFFER............................................................................ 20
4.4 TELENOR'S AND ALFA'S TAG ALONG RIGHTS........................................................... 22
4.5 OTHER SHAREHOLDERS' TAG ALONG RIGHTS............................................................ 22
4.6 PURCHASES FROM BARINGS OR CIG................................................................... 23
4.7 OTHER TRANSFER-RELATED PROVISIONS............................................................... 23
4.8 PLEDGES......................................................................................... 24
5. OTHER ARRANGEMENTS.................................................................................... 26
6. TERM AND TERMINATION.................................................................................. 26
7. MISCELLANEOUS......................................................................................... 27
7.1 SPECIFIC PERFORMANCE............................................................................ 27
7.2 WAIVERS; REMEDIES............................................................................... 27
7.3 AMENDMENTS...................................................................................... 27
7.4 NO ASSIGNMENT; BINDING EFFECT; NO THIRD PARTY BENEFICIARIES..................................... 28
7.5 SEVERABILITY.................................................................................... 28
7.6 FURTHER ASSURANCES.............................................................................. 28
7.7 ENTIRE AGREEMENT................................................................................ 28
7.8 NOTICES......................................................................................... 28
7.9 GOVERNING LAW................................................................................... 32
7.10 ARBITRATION; WAIVER OF SOVEREIGN IMMUNITY....................................................... 32
7.11 COUNTERPARTS; LANGUAGE.......................................................................... 34
SCHEDULES AND EXHIBITS
SCHEDULE 1 - SHARES HELD BY SHAREHOLDERS AS OF EFFECTIVE DATE
SCHEDULE 2.1(d) - CONSENTS AND APPROVALS OF SHAREHOLDERS
SCHEDULE 2.1(h) - LIENS
SCHEDULE 2.1(i) - EXCEPTIONS TO SOLE POWER OF DISPOSITION OF SHAREHOLDERS
SCHEDULE 2.2(e) - CONSENTS AND APPROVALS OF COMPANY
EXHIBIT A - FORM OF ENDORSEMENT
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SHAREHOLDERS AGREEMENT dated as of August 19, 2003 (this "AGREEMENT") between
and among Golden Telecom, Inc., a corporation organized under the laws of the
State of Delaware, United States of America (the "COMPANY"), Alfa Telecom
Limited, a company organized under the laws of the British Virgin Islands
("ALFA"), Xxx Telenor East Invest AS, a company organized under the laws of
Norway ("Telenor"), OAO Rostelecom, an open joint stock company organized under
the laws of the Russian Federation ("RTK"), Capital International Global
Emerging Markets Private Equity Fund, L.P., a limited partnership organized
under the laws of the State of Delaware, United States of America ("CIG"),
Cavendish Nominees Limited, a limited liability company organized under the laws
of Guernsey ("CAVENDISH"), and First NIS Regional Fund SICAV, a private
institutional fund organized under the laws of Luxembourg ("FIRST NIS" and
together with Cavendish, collectively, "BARINGS").
WITNESSETH
WHEREAS, Alfa, RTK, CIG and Barings currently hold shares of Common
Stock (as defined below);
WHEREAS, under the Share Exchange Agreement dated as of the date hereof
between Telenor and the Company (the "SHARE EXCHANGE AGREEMENT"), Telenor will
acquire shares of Common Stock;
WHEREAS, a condition to the obligations of Telenor and the Company
under the Share Exchange Agreement is that the Company and the Shareholders
enter into this Agreement; and
WHEREAS, Alfa, Telenor, RTK, CIG, Barings and the Company wish to enter
into this Agreement in respect of certain matters of corporate governance,
including the composition of the board of directors of the Company and the
conduct of the affairs of the Company, and the other matters described herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"ACTION" means any legal, administrative, governmental or regulatory
proceeding or other action, suit, proceeding, claim, arbitration, mediation,
alternative dispute resolution procedure, inquiry or investigation by or before
any Governmental or Regulatory Authority.
"ADJUSTMENT PERCENTAGE" means (a) in the case of any Shareholder who,
as at the Effective Date, is entitled to designate three (3) Directors, thirty
percent (30%) of all of the issued and outstanding shares of Voting Stock and
(b) in the case of any Shareholder who, as at the Effective Date, is entitled to
designate two (2) Directors, ten percent (10%) of all of the issued and
outstanding shares of Voting Stock.
"AFFECTED SHAREHOLDER" has the meaning specified in Section 3.1(d).
"AFFILIATE" means, with respect to any Person, any other Person who
directly or indirectly controls, or is under common control with, or is
controlled by, such Person, including, if such Person is an individual, any
relative or spouse of such Person, or any relative of such spouse of such
Person, any one of whom has the same home as such Person, and also including any
trust or estate for which any such Person or Persons specified herein, directly
or indirectly, serves as a trustee, executor or in a similar capacity
(including, without limitation, any protector or settlor of a trust) or in which
any such Person or Persons specified herein, directly or indirectly, has a
substantial beneficial interest, and any Person who is controlled by any such
trust or estate; provided always that, in the case of CIG, an Affiliate of CIG
shall include only those Affiliates in which Capital International, Inc. holds,
directly or indirectly, through one or more intermediaries, more than a majority
of the outstanding economic ownership interests of that Person. As used in this
definition, "CONTROL" (including, with its correlative meanings, "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH") means, with respect to any Person, the
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise) of a Person.
"AGREEMENT" has the meaning specified in the preamble hereto.
"ALFA" has the meaning specified in the preamble hereto.
"ARCO" means the Agency for Restructuring of Credit Organizations
(Agenstvo po Restruckturizatzii Kreditnykh Organizaziy) of the Russian
Federation.
"ASSETS AND PROPERTIES" means, with respect to any Person, all assets
and properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, used, operated, owned or leased by such Person, including,
without limitation, cash, cash equivalents, investments, accounts and notes
receivable, chattel paper, documents, instruments, general intangibles, real
estate, equipment, inventory, goods and intellectual property.
"AUTHORIZATION" means any consent, permission, waiver, allowance,
novation, authorization, declaration, filing, registration, notification,
application, license, permit, certificate, variance, exemption, franchise or
other approval issued, granted, given or otherwise made available by, or
required to be filed with, any Governmental or Regulatory Authority or pursuant
to any law.
"BARINGS" has the meaning specified in the preamble hereto.
"BOARD" means the board of directors of the Company.
"BUSINESS" means fixed mobile, consumer and business Internet access,
CDMA, data, Internet Protocol and other similar telecommunications businesses,
but excluding mobile, mobile Internet and satellite telecommunications
businesses.
"BUSINESS COMBINATION" has, in relation to the Company, the meaning
specified in Section 203(c)(3) of the DGCL.
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"BUSINESS DAY" means a day other than a Saturday, a Sunday or any day
on which banks located in Moscow, Russia, Oslo, Norway, London, England or New
York, New York are authorized or obliged to close.
"CAVENDISH" has the meaning specified in the preamble hereto.
"CHANGE OF CONTROL" means, with respect to any Shareholder or any
Controlling Person of such Shareholder, (a) the sale or other disposition of all
or substantially all of such Shareholder's or such Controlling Person's Assets
and Properties, in one or a series of related transactions, to any Person or
Persons (other than a Controlling Person of such Shareholder or any Controlled
Affiliate or Controlled Affiliates of such Controlling Person), (b) the sale or
other disposition of more than fifty percent (50%) of the securities having
ordinary voting power for the election of directors or other governing body of
such Shareholder or Controlling Person, in one or a series of related
transactions, to any Person or Persons (other than a Controlling Person of such
Shareholder or any Controlled Affiliate or Controlled Affiliates of such
Controlling Person), (c) the merger or consolidation of such Shareholder or
Controlling Person with or into another Person or the merger of another Person
into such Shareholder or Controlling Person with the effect that any Person or
Persons other than the existing shareholders of such Shareholder or Controlling
Person prior to such transaction own or control, directly or indirectly, more
than fifty (50%) of the securities having ordinary voting power for the election
of directors or other governing body of the Person surviving such merger, or the
Person resulting from such consolidation or (d) the liquidation or dissolution
of such Shareholder or Controlling Person; provided, however, that a Change of
Control shall not include (i) a bona fide underwritten public offering of the
capital stock of such Shareholder or any Controlling Person of such Shareholder,
or (ii) for purposes of Article 4, any of (A) the sale of all or substantially
all of the assets of Telenor ASA, Telenor Communication AS or Telenor Business
Solutions AS, (B) the sale of more than fifty percent (50%) of the securities
having ordinary voting power for the election of directors or other governing
body of Telenor ASA, Telenor Communication AS or Telenor Business Solutions AS,
(C) the liquidation or dissolution of Telenor ASA, Telenor Communication AS or
Telenor Business Solutions AS, (D) any merger, consolidation, divestiture or
de-merger to which Telenor ASA, Telenor Communication AS or Telenor Business
Solutions AS is a party, or (E) the transfer of more than fifty percent (50%) of
the issued and outstanding shares of OAO Svyazinvest to any Person other than a
Shareholder or an Affiliate of a Shareholder.
"CIG" has the meaning specified in the preamble hereto.
"COMMON STOCK" means the Company's common stock, par value $0.01 per
share, as the same may be constituted from time to time.
"COMPANY" has the meaning specified in this preamble hereto.
"CONTROLLED AFFILIATE" means, with respect to any Person, any Affiliate
of such Person in which such Person owns or controls, directly or indirectly,
more than fifty percent (50%) of the securities having ordinary voting power for
the election of directors or other governing body thereof or more than fifty
percent (50%) of the partnership or other ownership interests therein (other
than as a limited partner).
"CONTROLLING PERSON" means, with respect to any Person, any other
Person which owns or controls, directly or indirectly, more than fifty percent
(50%) of the securities having
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ordinary voting power for the election of directors or other governing body of
such first Person or more than fifty percent (50%) of the partnership or other
ownership interests therein (other than as a limited partner of such first
Person).
"CO-SALE NOTICE" has the meaning specified in Section 4.4(a).
"DESIGNATION TABLE" means the table set out in Section 3.1(i).
"DGCL" means the General Corporation Law of the State of Delaware.
"DIRECTOR" means a member of the Board.
"DIRECT OR INDIRECT FINANCIAL INTEREST" means, with respect to any
Director, a financial benefit to (a) such Director, (b) any Affiliate of such
Director, (c) such Director's employer or any of its Controlling Persons or
Affiliates or (d) the Shareholder who has designated such Director as a member
of the Board or any of its Controlling Persons or Affiliates.
"DISINTERESTED DIRECTOR" means (a) for purposes of Sections 3.4 and
4.2(b), any Director who does not have a Direct or Indirect Financial Interest
in the matter subject to consideration by the Board and (b) for purposes of
Section 3.6, any Director who is neither an officer nor an employee of the
Company, nor a Person employed, designated as a member of the Board or otherwise
controlled by or under common control with a Shareholder or any of its
Controlling Persons or Affiliates at the time such Shareholder or any of its
Controlling Persons or Affiliates proposes to engage in a Business Combination
with the Company.
"ENDORSEMENT" means an endorsement to this Agreement in the form of
Exhibit A.
"EFFECTIVE DATE" means the latter to occur of (a) the date on which the
board of directors of RTK has ratified and approved RTK's execution of this
Agreement and the other Principal Agreements to which RTK is a party and (b) the
date on which the Closing under (and as defined in) the Share Exchange Agreement
has occurred.
"ENFORCEMENT ACTION" has the meaning specified in Section 4.8(b)(i).
"ENFORCEMENT NOTICE" has the meaning specified in Section 4.8(b)(i).
"EQUITY PLAN" means the 1999 Equity Plan of the Company, as amended on
June 26, 2001, and as otherwise amended from time to time, and any other equity
participation plan approved by the Company's stockholders.
"EXISTING SHAREHOLDERS AGREEMENT" means the Shareholders Agreement
dated as of September 5, 2002 between and among GTI, Alfa, RTK, CIG and Barings.
"FAIR MARKET VALUE" means, as of the date of determination thereof, the
average of the Market Prices for the shares of Voting Stock for the thirty (30)
trading days immediately preceding such date of determination.
"FINANCIAL EXPERT" has the meaning specified in the Marketplace Rules
and the relevant rules of the SEC, in each case, as interpreted by the Board.
"FIRST NIS" has the meaning specified in the preamble hereto.
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"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, arbitral panel or tribunal, legislature, government, ministry,
committee, inspectorate, authority, agency, commission, official or other
competent authority of any country or state, as well as any county, city or
other political subdivision of any of the foregoing.
"INCLUSION NOTICE" has the meaning specified in Section 4.5(b).
"INCLUSION RIGHT" has the meaning specified in Section 4.5(c).
"INDEPENDENT DIRECTOR" has the meaning specified in the Marketplace
Rules and the relevant rules of the SEC, in each case, as interpreted by the
Board.
"INITIAL PERIOD" means the period commencing on the Effective Date and
ending on the second anniversary thereof.
"INITIATING DIRECTORS" has the meaning specified in Section 3.3(a).
"INITIATION NOTIFICATION" has the meaning specified in Section 3.3(b).
"JOINTLY DESIGNATED DIRECTOR" has the meaning specified in Section
3.1(a)(ii).
"LIEN" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale contract, title retention contract or other contract to
grant any of the foregoing.
"MARKET PRICE" means the price of one share of Voting Stock on the
relevant date, determined (a) on the basis of the last reported sale price
regular way on the Nasdaq National Market or (b) if there is no such reported
sale price on such day, on the basis of the average of the reported closing bid
and asked prices regular way on the Nasdaq National Market.
"MARKETPLACE RULES" means the National Association of Securities
Dealers Marketplace Rules.
"NEW SECURITIES" has the meaning specified in Section 3.4(a).
"NON-PLEDGING SHAREHOLDER" has the meaning specified in Section 4.8(a).
"OFFER" means a bona fide offer (whether or not solicited) to purchase
Shares owned by Alfa or Telenor that Alfa or Telenor, as applicable, desires to
accept.
"OFFER NOTICE" has the meaning specified in Section 4.3(a).
"OFFERED SHARES" has the meaning specified in Section 4.3(a).
"OFFERING SHAREHOLDER " has the meaning specified in Section 4.4(a).
"PARTIES" means the Company, Alfa, Telenor, RTK, CIG, Cavendish and
First NIS.
"PERMITTED TRANSFEREE" means, with respect to any Shareholder, any
Controlling Person of such Shareholder, or any Controlled Affiliate of any such
Controlling Person or Shareholder; provided that, (a) in the case of Cavendish,
Baring Vostok Private Equity Fund, L.P.1, Baring Vostok Private Equity Fund,
L.P.2, Baring Vostok Private Equity Xxxx X.X.0,
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Xxxxxx Xxxxxx Fund Co-Investment L.P., the NIS Restructuring Facility and First
NIS Regional Fund SICAV shall also constitute Permitted Transferees and (b) in
the case of RTK, if the conditions specified in Section 4.2(b) have been
satisfied (as determined by a majority of the Disinterested Directors, in their
sole discretion), any RTK Transferee shall also constitute a Permitted
Transferee.
"PERSON" means any natural person, corporation, partnership, limited
liability company, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority, whether incorporated or
unincorporated.
"PLEDGED SHARES" has the meaning specified in Section 4.8(a).
"PLEDGEE" has the meaning specified in Section 4.8.
"PLEDGE CO-SALE NOTICE" has the meaning specified in Section 4.8(c).
"PLEDGE NOTICE" has the meaning specified in Section 4.8(a).
"PLEDGING SHAREHOLDER" has the meaning specified in Section 4.8.
"PRINCIPAL AGREEMENTS" means this Agreement, the Share Exchange
Agreement, the Standstill Agreement and the Registration Rights Agreement.
"PROPOSED RESOLUTION" has the meaning specified in Section 3.3(a).
"PUBLIC SALE" means a non-directed sale of shares effected through a
secondary offering or other transaction on the Nasdaq National Market or another
stock exchange of recognized international standing, including, without
limitation, any sale pursuant to Rule 144 under the United States Securities Act
of 1933, as amended, or any sale or exchange pursuant to a Tender Offer.
"PURCHASE OFFER" has the meaning specified in Section 4.3(b).
"PURCHASING SHAREHOLDER" has the meaning specified in Section
4.8(b)(ii).
"RECEIVING SHAREHOLDER" has the meaning specified in Section 4.4(a).
"RECONCILIATION PROCEDURE" has the meaning specified in Section 3.3(a).
"RECONCILIATION TERMINATION DATE" has the meaning specified in Section
3.3(c).
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
dated as of the date hereof between the Company and the Shareholders.
"RIGHT HOLDERS" means, collectively, Alfa, Telenor and RTK, and,
individually, any of them.
"RTK" has the meaning specified in the preamble hereto.
"RTK TRANSFEREES" means RTC-Leasing OJSC, RosTeleComLeasing (Cyprus)
Limited, RosTeleComLeasing Ltd., Zurich and Russian Telecommunications
Development Corporation.
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"SEC" means the United States Securities and Exchange Commission.
"SHARE EXCHANGE AGREEMENT" has the meaning specified in the second
recital hereto.
"SHAREHOLDERS" means Alfa, Telenor, RTK, CIG and Barings and, following
a Transfer to a Permitted Transferee, such Permitted Transferee.
"SHARES" means shares of Common Stock or other capital stock of the
Company, whether or not authorized, or any option, right, subscription, warrant,
phantom stock right or other contract right to receive shares of Common Stock or
such other capital stock, or any bonds, notes, debentures or other securities of
any kind whatsoever, that are, or may become, convertible into or exchangeable
or exercisable for, shares of Common Stock or other capital stock of the
Company.
"SIGNIFICANT SELLING SHAREHOLDER" has the meaning specified in Section
4.3(a).
"SIGNIFICANT SHAREHOLDER" means any Shareholder and its Affiliates,
(or, if a group of Shareholders and their respective Affiliates are selling to a
single purchaser or a group of affiliated purchasers in a transaction or series
of transactions, such group of Shareholders and their respective Affiliates),
who, on the date of delivery of an Offer Notice in accordance with Section 4.3
(and before giving effect to the Transfer referred to in such Offer Notice),
own(s) ten percent (10%) or more of the issued and outstanding shares of Voting
Stock; provided that no Shareholder, group of Shareholders and/or their
respective Affiliates shall be permitted to avoid compliance with Section 4.3
through a series of sales to the same purchaser or one or more purchasers who
are Affiliates of one another.
"SPECIAL CONSULTANT" has the meaning specified in Section 3.3(i).
"SPECIAL MEETING" has the meaning specified in Section 3.3(d).
"SPECIAL MEETING NOTIFICATION" has the meaning specified in Section
3.3(d).
"SPECIAL TRANSACTION" has the meaning specified in Section 3.3(h).
"STANDSTILL AGREEMENT" means the Standstill Agreement dated as of the
date hereof between and among the Company and the Shareholders.
"SUBSIDIARY" means, with respect to any Person, any other Person in
which such Person owns or controls, directly or indirectly, more than fifty
percent (50%) of the securities having ordinary voting power for the election of
directors or other governing body thereof or more than fifty percent (50%) of
the partnership or other ownership interests therein (other than as a limited
partner).
"TAG ALONG NOTICE" has the meaning specified in Section 4.4(b).
"TELENOR" has the meaning specified in the preamble hereto.
"TENDER OFFER" means an offer made by a Shareholder or any of its
Affiliates in accordance with Section 14 of the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder, to purchase
any and all of the issued and outstanding shares of the Company, which, subject
to Section 3.5(a)(i) and (ii), is accepted by
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stockholders holding a simple majority of the issued and outstanding shares of
Voting Stock (excluding any shares of Voting Stock held by such Shareholder and
its Affiliates).
"THIRD PARTY INVESTOR" means (a) for purposes of Section 3.5, any
Person who has made a filing with the SEC on Schedule 13D or Form TO with
respect to the acquisition of shares of capital stock of the Company (whether
actual or proposed), other than (i) a Shareholder or any Affiliate of any
Shareholder or (ii) any Person acting for, on behalf of, for the benefit of, or
together with, any Shareholder or any Affiliate of any Shareholder and (b) for
purposes of Section 4.4(b), any Person other than a Shareholder or any Affiliate
of any Shareholder.
"THIRD PARTY OFFER" has the meaning specified in Section 4.5(a).
"THIRD PARTY PLEDGE AGREEMENT" has the meaning specified in Section
4.8(a).
"THRESHOLD SHAREHOLDER" means, as at any date of determination, any
Shareholder who, on such date, owns fifteen percent (15%) or more of the issued
and outstanding shares of Voting Stock.
"TRANSFER" means any direct or indirect sale, exchange, transfer
(including, without limitation, any transfer by gift or operation of law, or any
transfer of an economic interest in any derivative security of any Share),
assignment, distribution or other disposition, or issuance or creation of any
option or any voting proxy, voting trust or other voting agreement in respect of
any Person or instrument (including, without limitation, any of the Shares),
whether in a single transaction or a series of related transactions, including,
without limitation, (a) the direct or indirect enforcement or foreclosure of any
Lien or (b) any Change of Control.
"UNCITRAL RULES" has the meaning specified in Section 7.10.
"VOTING STOCK" has, in relation to the Company, the meaning specified
in Section 203(c)(8) of the DGCL, as in effect on the date hereof.
1.2 INTERPRETATION
Unless the context of this Agreement otherwise requires, the following
rules of interpretation shall apply to this Agreement:
(a) the singular shall include the plural, and the plural shall
include the singular;
(b) words of any gender shall include the other gender;
(c) the words "hereof", "herein", "hereby", "hereto" and similar
words refer to this entire Agreement and not to any particular Section or any
other subdivision of this Agreement;
(d) a reference to any "Article ", "Section", "Schedule" or
"Exhibit" is a reference to a specific Article or Section of, or Schedule or
Exhibit to, this Agreement;
(e) a reference to any law, statute, regulation, notification or
statutory provision shall include any amendment, modification or re-enactment
thereof, any regulations
8
promulgated thereunder from time to time, and any interpretations thereof from
time to time by any regulatory or administrative authority;
(f) a reference to any agreement, instrument, contract or other
document shall include any amendment, amendment and restatement, supplement or
other modification thereto; and
(g) a reference to any Person shall include such Person's
successors and permitted assigns under any agreement, instrument, contract or
other document.
2. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder party hereto on the date hereof hereby represents and
warrants to the Company and the other Shareholders as of the Effective Date (and
each Person who becomes a party to this Agreement after the Effective Date by
executing an Endorsement shall be deemed to have represented and warranted to
the Company and the other Shareholders as of the date on which such Person
executes such Endorsement) that:
(a) Such Shareholder is duly organized and validly existing as a
legal entity under the laws of its jurisdiction of organization, with full power
and authority to execute, deliver and perform its obligations under the
Principal Agreements to which it is a party and to consummate the transactions
contemplated thereby, and is not required to be qualified as a foreign
corporation or other entity authorized to do business in any other jurisdiction
in which its failure to be so qualified would have a material adverse effect on
its ability to execute and deliver or perform its obligations under such
Principal Agreements.
(b) The Principal Agreements to which such Shareholder is a party
have been duly and validly authorized, executed and delivered by such
Shareholder and constitute the legal, valid and binding obligations of such
Shareholder, enforceable against such Shareholder in accordance with their
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and
remedies generally and by general equitable principles (whether applied by a
court of law or equity).
(c) The execution, delivery and performance by such Shareholder of
the Principal Agreements to which it is a party, compliance by such Shareholder
with all of the provisions thereof and the consummation by such Shareholder of
the transactions contemplated thereby will not:
(i) conflict with or constitute a breach of any of the
terms or provisions of, or a default under, such Shareholder's
constitutive documents;
(ii) conflict with or constitute a breach of any covenant,
agreement, understanding or Authorization to which such Shareholder is
a party or by which such Shareholder or any of its Assets and
Properties is bound; or
(iii) violate or conflict with any law applicable to such
Shareholder or any of its Assets and Properties.
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(d) Except as specified in Schedule 2.1(d), the execution,
delivery and performance by such Shareholder of the Principal Agreements to
which it is a party, the compliance by such Shareholder with all of the
provisions thereof and the consummation by such Shareholder of the transactions
contemplated thereby will not require any consent, approval, Authorization,
other order or action of, filing with or notice to any Governmental or
Regulatory Authority.
(e) (i) There is no Action pending to which such Shareholder is a
party or to which any of the Shares it owns or controls, beneficially or
otherwise, is subject, which will result in, or could reasonably be expected to
result in, the issuance of an order which (A) questions the validity of any of
the Principal Agreements or any action taken or to be taken pursuant thereto,
(B) restrains, enjoins or otherwise prohibits or makes illegal consummation of
any of the transactions contemplated by any of the Principal Agreements, or (C)
would, or would reasonably be expected to, result in the issuance of an order
which materially adversely affects the ability of such Shareholder to perform
its obligations thereunder, (ii) to the knowledge of such Shareholder, no such
Action is threatened, and (iii) there are no facts or circumstances known to
such Shareholder that would be expected to give rise to any such Action.
(f) Such Shareholder is the record holder and beneficial owner of
the Shares described opposite such Shareholder's name on Schedule 1 (or in the
Endorsement executed by such Shareholder).
(g) Such Shares constitute the only shares of capital stock of the
Company owned of record or beneficially by such Shareholder.
(h) Except as specified in the Principal Agreements and Schedule
2.1(h), such Shareholder has sole power of disposition and sole voting power
with respect to all such Shares, with no restrictions on such rights, other than
such restrictions on Transfers as arise under applicable United States federal
securities laws and the terms and conditions of the Principal Agreements.
(i) Except as specified in the Principal Agreements and Schedule
2.1(i), such Shares are held free and clear of all Liens, proxies, voting trusts
or agreements, understandings or arrangements whatsoever, except for those
arising under the Principal Agreements.
(j) Except for the Principal Agreements and the agreements
terminated pursuant to the Termination Agreement, neither such Shareholder nor
any of its Affiliates has entered into any agreement, arrangement or
understanding with (i) any one or more of the Shareholders or any of their
respective Affiliates with respect to matters relating to the Company, its
management or any Shares or (ii) the Company, any of its Affiliates or
management.
2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Shareholders as of
the Effective Date that:
10
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, with full power
and authority to execute, deliver and perform its obligations under the
Principal Agreements and to consummate the transactions contemplated thereby,
and is not required to be qualified as a foreign corporation or other entity
authorized to do business in any other jurisdiction in which its failure to be
so qualified would have a material adverse effect on its ability to execute and
deliver or perform its obligations under such Principal Agreements.
(b) The execution and delivery by the Company of the Principal
Agreements and the consummation of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of the
Company, subject to obtaining the approval of the Company's stockholders. The
Principal Agreements have been duly and validly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights and remedies generally
and by general equitable principles (whether applied by a court of law or
equity).
(c) The Board, by resolutions duly adopted by unanimous vote at a
meeting duly called and held and not subsequently rescinded or modified in any
way, has (i) duly determined that the Principal Agreements are advisable and
fair to and in the best interests of the Company and its stockholders and (ii)
approved the Principal Agreements.
(d) The execution, delivery and performance by the Company of the
Principal Agreements, compliance by the Company with all of the provisions
thereof and the consummation by the Company of the transactions contemplated
thereby will not:
(i) conflict with, or constitute a breach of, any of the
terms or provisions of the Company's certificate of incorporation or
bylaws;
(ii) conflict with, or constitute a breach of, any
covenant, agreement, understanding or Authorization to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their respective Assets and
Properties is bound; or
(iii) violate or conflict with any order or law applicable to
the Company, any of its Subsidiaries or any of their respective Assets
and Properties.
(e) Except as specified in Schedule 2.2(e), the execution,
delivery and performance by the Company of the Principal Agreements, the
compliance by the Company with all of the provisions thereof and the
consummation by the Company of the transactions contemplated thereby will not
require any consent, approval, Authorization or other order of any Governmental
or Regulatory Authority.
(f) (i) There is no Action pending to which the Company is a
party, or to which any of its Assets and Properties is subject, which will
result in, or could reasonably be expected to result in, the issuance of an
order which (A) questions the validity of any of the Principal Agreements or any
action taken or to be taken pursuant thereto, (B) restrains, enjoins or
otherwise prohibits or makes illegal consummation of any of the transactions
contemplated by any of the Principal Agreements, or (C) would, or would
reasonably be
11
expected to, result in the issuance of an order which materially adversely
affects the ability of the Company to perform its obligations thereunder, (ii)
to the knowledge of such the Company, no such Action is threatened, and (iii)
there are no facts or circumstances known to the Company that would be expected
to give rise to any such Action.
3. CERTAIN CORPORATE MATTERS
3.1 NOMINATION AND REMOVAL OF DIRECTORS
(a) Until such date as the Board shall, in accordance with the
certificate of incorporation and by-laws of the Company, determine otherwise,
the Board shall consist of ten (10) Directors. Subject to Section 3.1(e) and
(f), the Company and each Shareholder agree that each of them shall take all
action necessary from time to time (including, without limitation, the voting of
Shares, the execution of written consents, the calling of special meetings, the
removal of directors, the filling of vacancies on the Board, the waiving of
notice of and attendance at meetings, the amendment of the Company's by-laws and
committee charters and the like) necessary to:
(i) subject to Section 3.1(k), maintain a sufficient
number of Independent Directors and Independent Directors who are
Financial Experts on the Board to satisfy the standards for audit
committees and Independent Directors and other requirements for board
composition as are set forth in the Marketplace Rules and in any other
applicable law, rule or regulation; and
(ii) commencing on the Effective Date and until the
earlier of (x) the end of the Initial Period and (y) with respect to
any Shareholder, the date on which such Shareholder's Board membership
is adjusted pursuant to Section 3.1(e) through (i) (inclusive),
maintain the membership on the Board of:
(A) three Directors designated by Alfa;
(B) two Directors designated by Telenor;
(C) two Directors designated by RTK (one of whom shall be
an Independent Director);
(D) one Director designated by CIG (who shall be an
Independent Director);
(E) one Director designated by Barings (who shall be an
Independent Director); and
(F) one Director (who shall be an Independent Director
and, if at such time there is no other Director who is a
Financial Expert, a Financial Expert) designated by the
Directors sitting on the Board on the date of the Board
meeting at which the Board adopts the resolutions concerning
the annual meeting of stockholders of the Company, including
the resolution in which the Board nominates individuals to
stand for election as Directors for the year following the
annual meeting of stockholders, (the "JOINTLY DESIGNATED
DIRECTOR"); and
12
(iii) to the extent permitted by the Marketplace Rules and
at the election of each Threshold Shareholder, permit a Person
designated by such Threshold Shareholder (who need not be a Director)
to attend all meetings of the audit committee of the Board as an
observer (it being understood that, notwithstanding the foregoing, such
observer(s) shall have no right to attend any audit committee meeting
(or any portion thereof) if the audit committee has, in its sole
discretion, declined to permit such attendance); provided, however,
that any such observer shall have entered into a confidentiality
agreement in form and substance satisfactory to the Board.
(b) If any Shareholder gives notice at any time to the Company and
the other Shareholders that any individual then serving as a Director designated
by such Shareholder is no longer such Shareholder's designee, then such
Shareholder, the Company and the other Shareholders shall take all such actions
as are necessary to remove such Director.
(c) If any Independent Director or Financial Expert at any time
during his or her term ceases to meet the criteria for an Independent Director
or Financial Expert, as the case may be, as set forth in the Marketplace Rules,
the Company and the Shareholders shall, to the extent requested by the Board,
take all such actions as are necessary to remove such Director.
(d) If a Director designated by a Shareholder (an "AFFECTED
SHAREHOLDER") dies, resigns, or is removed as a Director pursuant to Section
3.1(b) or (c), then the Company, the Affected Shareholder and the other
Shareholders shall take all such actions as are necessary to elect as a Director
an individual designated by the Affected Shareholder, provided that, if any
Independent Director (or a Person who has ceased to meet the definition of
Independent Director) dies, resigns or is removed, as the case may be, such
Independent Director (or such Person who has ceased to meet the definition of
Independent Director) shall be replaced by another Independent Director.
(e) If on any date during the Initial Period (A) Barings or CIG,
as the case may be, owns less than three percent (3%) of all of the issued and
outstanding shares of Voting Stock, the right of Barings or CIG, as the case may
be, to continued Board representation under this Agreement and the obligations
of Barings or CIG, as the case may be, under Section 3.1(a) through (d) and
Section 3.1(k) shall terminate, and, within three (3) Business Days after such
date, Barings or CIG, as the case may be, shall cause its designee to resign as
a Director, or, if such designee does not resign, the Shareholders and the
Company shall take such actions as may be necessary to remove such Director or
(B) the Director designated by Barings or CIG, as the case may be, resigns
and Barings or CIG, as the case may be, shall not have designated a replacement
within ten (10) Business Days following such resignation, the right of
Barings or CIG, as the case may be, to continued Board representation under
this Agreement and obligations of Barings or CIG, as the case may be,
under Section 3.1(a) through (d) and Section 3.1(k) shall terminate.
(f) If on any date during the Initial Period (A) RTK owns less
than ten percent (10%) but more than three percent (3%) of all of the issued and
outstanding shares of Voting Stock, RTK shall be entitled to designate one
Director; provided that if RTK owns less than three percent (3%) of all of the
issued and outstanding shares of Voting Stock, the right of RTK to continued
Board representation under this Agreement and the obligations of RTK under
Section 3.1(a) through (d) and Section 3.1(k) shall terminate, and, within three
(3) Business Days after such date, RTK shall cause its designee to resign as a
Director, or, if such designee does not resign, the Shareholders and the Company
shall take such actions as may
13
be necessary to remove such Director or (B) RTK owns less than ten percent (10%)
but more than three percent (3%) of all of the issued and outstanding shares of
Voting Stock and the Director designated by RTK resigns and RTK shall not have
designated a replacement within thirty (30) Business Days following such
resignation, the right of RTK to continued Board representation under this
Agreement and the obligations of RTK under Section 3.1(a) through (d) and
Section 3.1(k) shall terminate.
(g) The designation rights of any Shareholder (other than Barings,
CIG or RTK) who, as at the Effective Date is entitled to designate more
Directors than it would otherwise be entitled to designate under the Designation
Table (as defined below) shall continue until the earlier of (i) the end of the
Initial Period and (ii) the date on which the ownership by such Shareholder of
shares of Voting Stock falls below the relevant Adjustment Percentage and the
number of Directors designated by such Shareholder shall then be reduced to the
applicable number indicated in the Designation Table, and each such Shareholder
shall within three (3) Business Days after such date cause such number of
Directors designated by it to resign so that it has the number of designees set
forth in the Designation Table opposite the percentage of issued and outstanding
shares of Voting Stock then owned by it or, if such Director(s) do not resign,
the Shareholders and the Company shall take such actions as may be necessary to
remove such Directors.
(h) Except as may be otherwise permitted by Section 3.1(a) through
(g) (inclusive), from and after such time as the ownership by a Shareholder of
issued and outstanding shares of Voting Stock falls below any of the applicable
thresholds specified in the Designation Table, the number of Directors
designated by any such Shareholder shall be reduced to the applicable number
specified in the Designation Table, and each such Shareholder shall within three
(3) Business Days thereafter cause such number of Directors designated by it to
resign so that it has the number of designees set forth in the Designation Table
opposite the percentage of issued and outstanding shares of Voting Stock then
owned by it, or, if such Director(s) do not resign, the Shareholders and the
Company shall take such actions as may be necessary to remove such Director(s).
(i) Subject to the procedures set forth in Section 3.1(h),
following any change in ownership in the issued and outstanding shares of Voting
Stock that causes one or more Shareholders' ownership of shares of Voting Stock
to reach, exceed or fall below the thresholds specified below, the right to
designate Directors shall be allocated among the Shareholders as follows:
PERCENT OF ISSUED AND OUTSTANDING
SHARES OF VOTING STOCK OWNED BY
SHAREHOLDER NUMBER OF DESIGNEES
-------------------------------- -------------------
Ten percent (10%) or less 0
More than ten percent (10%) but less than twenty 1
percent (20%)
Twenty percent (20%) or more but less than or equal 2
to thirty percent (30%)
More than thirty percent (30%) but less than forty 3
percent (40%)
Forty percent (40%) or more 3; plus the right to designate an
Independent Director (who shall be
a Financial Expert and qualified and
willing to serve on the audit committee
of the Board);
14
provided that the size of the Board shall not be increased beyond ten (10)
members, and a Shareholder who would be entitled to designate an additional
Director due to such Shareholder's acquisition of additional shares of Voting
Stock may only exercise such right when another Shareholder loses the right to
designate a Director.
(j) Any vacancies on the Board not addressed by the procedures set
forth in Section 3.1(a) through (i) (inclusive) shall be filled by a vote of a
simple majority of the remaining Directors then in office.
(k) The Parties agree that, if it becomes necessary (as determined
by the Company and Shareholders holding a majority of the issued and outstanding
shares of Voting Stock) to treat the Company as a "controlled company" under the
Marketplace Rules:
(i) the Shareholders shall indicate in their respective
filings on Schedule 13D that they are members of a "group" (as such
term is used in Rule 13d-1 under the Exchange Act) ;
(ii) the Company shall indicate in its annual meeting
proxy on Schedule 14A that it is a "controlled company" (as such term
is used in the Marketplace Rules); and
(iii) the Company and the Shareholders shall take any such
other actions as may be required for the Company to qualify for
treatment as a "controlled company" under the Marketplace Rules.
(l) The Shareholders and the Company agree that they will amend
this Agreement, as necessary, in order for the Company to remain in compliance
with the Marketplace Rules and any other applicable law, rule or regulation;
provided that no such amendment shall adversely affect the rights of any
Shareholder vis a vis the Company or the other Shareholders without the prior
written consent of such affected Shareholder.
15
3.2 DISCLOSURE OF INTERESTS
Directors who have a Direct or Indirect Financial Interest in a matter
subject to consideration by the Board shall disclose the material facts relating
to the relationship giving rise to such Direct or Indirect Financial Interest
and the nature of such Interest and, if requested by a simple majority of the
Disinterested Directors, shall not participate in the Board's discussion of such
matter. Any such matter shall be approved by a simple majority of the
Disinterested Directors, even if such Disinterested Directors are less than a
quorum.
3.3 SPECIAL TRANSACTION PROCEDURES
(a) Subject to the provisions of applicable law and any applicable
securities exchange listing requirements, any two Directors (the "INITIATING
DIRECTORS") shall have the right to subject any proposed resolution of the Board
(a "PROPOSED RESOLUTION") which, if adopted by the Board, would authorize,
direct or instruct management of the Company to negotiate, enter into or
consummate a Special Transaction, to the reconciliation procedure set forth in
this Section 3.3 (the "RECONCILIATION PROCEDURE").
(b) If the agenda for any meeting of the Board contains any item
for review by the Board the subject matter of which may lead the Board to adopt
a Proposed Resolution, then the Company shall identify such agenda item as a
Special Transaction in the materials accompanying the agenda. To initiate the
Reconciliation Procedure, the Initiating Directors must notify the Company and
each of the other Directors (the "INITIATION NOTIFICATION") within five (5)
Business Days of delivery to the Board of the agenda and materials outlining the
subject matter of the Special Transaction in respect of which the Initiating
Directors are exercising their right to initiate the Reconciliation Procedure.
(c) Upon receipt by the Company and each of the Directors (other
than the Initiating Directors) of the Initiation Notification, the Board shall
refrain from adopting any Proposed Resolution which is the subject of the
Reconciliation Procedure until the date that is at least forty-five (45)
calendar days after the delivery by the Company of the agenda containing the
relevant Special Transaction (the "RECONCILIATION TERMINATE DATE"), unless the
Initiating Directors have agreed in writing that the Board may adopt such
Proposed Resolution within a period of less than forty-five calendar days.
(d) At any time after the delivery of the Initiation Notification
and prior to the expiration of the Reconciliation Termination Date, the
Initiating Directors may demand that the Company convene a special meeting of
the Board (a "SPECIAL MEETING") for further consideration of the Special
Transaction by delivering written notification to the Company requesting that
the Company convene such Special Meeting (the "SPECIAL MEETING NOTIFICATION").
The Initiating Directors may, in the Special Meeting Notification, request that
the Company retain a Special Consultant to review the Special Transaction in
accordance with Section 3.3(i).
(e) Upon receipt of a Special Meeting Notification, the Company
shall undertake to (i) convene a Special Meeting as soon as practically possible
and in any event prior to the Reconciliation Termination Date, and (ii) if
requested by the Initiating Directors, retain a Special Consultant to review the
Special Transaction.
(f) At any time after the Reconciliation Termination Date or at
the Special Meeting, any Director may move for the adoption of the Proposed
Resolution that is the
16
subject matter of the Reconciliation Procedure. Such Proposed Resolution must be
approved and adopted by a majority of the Directors voting in favor of the
Proposed Resolution.
(g) With respect to any single Special Transaction, each Director
may initiate the Reconciliation Procedure only once.
(h) For the purposes of this Section 3.3, "SPECIAL TRANSACTION"
shall mean any transaction or series of related transactions involving, directly
or indirectly, a value exceeding five percent (5%) of the total consolidated
assets of the Company and its Subsidiaries.
(i) Upon demand from the Initiating Directors, a special
consultant (a "SPECIAL CONSULTANT") shall be selected and engaged by the Company
to review any Special Transaction. Any such Special Consultant shall be
independent from and in no way affiliated with any Shareholder. The Company
shall determine the scope of work to be performed by the Special Consultant and
the compensation to be paid for the services of the Special Consultant. The
Shareholders hereby agree that the Company shall be responsible for any fees
charged by the Special Consultant, provided that prior to being placed on the
agenda of the Board, the Special Transaction:
(i) was not reviewed by an independent professional
consultant; or
(ii) was reviewed by an independent professional
consultant not previously approved by the Board.
(j) The Shareholders further agree that in all other instances
fifty percent (50%) of the costs related to the review of the Special
Transaction by the Special Consultant shall be reimbursed by the Shareholder(s)
which designated the Initiating Directors initiating the Reconciliation
Procedure and the review of the Special Transaction Proposal by such Special
Consultant.
(k) Notwithstanding the foregoing, the procedures set forth in
this Section 3.3 shall be applicable only to extent that the Board shall have
concluded in good faith that such action is consistent with the discharge of its
fiduciary duties to the stockholders of the Company; provided that, if any
Initiating Director(s) purport(s) to exercise his, her or their rights under
this Section 3.3 in relation to a Special Transaction in which the
Shareholder(s) which designated such Director(s) is or are interested and are
pursuing in competition with the Company (including, but not limited to, an
acquisition of shares or assets of another Person or the acquisition of a
license), any exercise by such Initiating Director(s) of his, her or their
rights under this Section 3.3 in relation to such Special Transaction
automatically will be deemed incompatible with the Board's fiduciary duties to
the stockholders of the Company, and such Initiating Director(s) shall not be
entitled to exercise such rights.
3.4 PURCHASE RIGHTS OF SHAREHOLDERS
Subject to the limitations specified in Section 2 of the Standstill
Agreement, if then in effect:
(a) The Company shall give each Shareholder at least thirty (30)
days (and, when possible, at least ninety (90) days) prior written notice of the
issuance by the Company of any shares of Voting Stock or any other shares of
capital stock of the Company and any options, warrants, convertible securities,
or other rights to acquire Voting Stock or other capital stock
17
of the Company or securities exercisable or convertible for Voting Stock or
other capital stock of the Company (collectively, "NEW SECURITIES") as a result
of which a Shareholder's percentage of beneficial ownership of Voting Stock
would be reduced, either immediately upon issuance of such New Securities or
upon the exercise or conversion thereof.
(b) Such notice must set forth (i) the approximate number and type
of New Securities proposed to be issued and sold and the material terms of such
New Securities, (ii) the proposed price or range of prices at which such New
Securities are proposed to be sold and the terms of payment, and (iii) any other
material feature, term or condition relating to such New Securities or the
proposed sale thereof. Upon receipt of such notice from the Company, each
Shareholder will have the right, but not the obligation, to elect, within thirty
(30) days of receipt of the Company Notice, to purchase up to its pro rata share
of such New Securities (calculated on a fully diluted basis). Such pro rata
share, for purposes of this Section 3.4, for any Shareholder, shall be the ratio
of (x) the sum, without duplication, of the total number of shares of Voting
Stock and any other shares of capital stock of the Company held by such
Shareholder prior to the issuance of New Securities (assuming the full exercise
or conversion of any options, warrants, convertible securities exercisable or
convertible for Voting Stock or other capital stock of the Company) to (y) the
sum, without duplication, of the total number of shares of Voting Stock and any
other shares of capital stock of the Company outstanding immediately prior to
the issuance of New Securities held by all stockholders of the Company,
(assuming the full exercise or conversion of any options, warrants, convertible
securities exercisable or convertible for Voting Stock or other capital stock of
the Company).
(c) Each Shareholder's purchase must be on the same terms and
conditions as the balance of such issuance of New Securities; provided, however,
if the sale price at which the Company proposes to issue, deliver or sell any
New Securities is to be paid with consideration other than cash, then the
purchase price at which a Shareholder may acquire its portion of such New
Securities will be equal in value to such consideration (as determined in good
faith by the Board) but payable entirely in cash.
(d) The closing of each Shareholder's purchase of its portion of
such New Securities will occur simultaneously with the closing of the balance of
the issuance of such New Securities; provided, however, that if as of the date
of such closing all the necessary approvals of Governmental or Regulatory
Authority required in connection with the issuance of such New Securities have
not been obtained by the Company and/or any Shareholder, then (i) such
Shareholder will not be required to effect the purchase of its portion of such
New Securities until all the necessary approvals of any Governmental or
Regulatory Authority are obtained, and (ii) the Company may terminate such
Shareholder's right to purchase its portion of such New Securities if such
Shareholder fails to obtain any necessary approvals of any Governmental or
Regulatory Authority applicable only to such Shareholder within one hundred and
twenty (120) days of the closing of the balance of the issuance of such New
Securities.
(e) If at any time the terms of a proposed issuance of New
Securities are materially changed, altered or modified from those stated in the
Company's notice to the Shareholders of the proposed issuance thereof, then such
proposed issuance will be treated as a new issuance of New Securities, subject
to the notice obligation of the Company set forth in Section 3.4(a) and any
election of a Shareholder to purchase its portion of such New Securities prior
to such change, alteration or modification may, in the sole discretion of such
Shareholder be withdrawn.
18
(f) Notwithstanding the foregoing, if shares of Voting Stock are
issued or options granted pursuant to an Equity Plan, such shares shall not be
considered New Securities, and the purchase rights granted pursuant to this
Section 3.4 shall not be applicable.
3.5 TENDER OFFERS
(a) No Shareholder shall, individually or together with any of its
Affiliates, directly or indirectly, in any manner, acquire beneficial ownership
of any share or shares of Voting Stock (including, without limitation, through
the acquisition of ownership or control of another Shareholder or a Controlling
Person of another Shareholder) if after giving effect thereto, such Shareholder
and its Affiliates would beneficially own, in the aggregate, fifty percent (50%)
or more of the issued and outstanding shares of Voting Stock, unless such share
or shares are acquired by such Shareholder and/or one of its Affiliates pursuant
to a Tender Offer; provided that, if at any time (i) a Third Party Investor
makes a bona fide tender offer to purchase such percentage of the issued and
outstanding shares of Voting Stock that when aggregated with any of the issued
and outstanding shares of Voting Stock then owned by such Third Party Investor
and its Affiliates would equal more than fifty percent (50%) of the issued and
outstanding shares of Voting Stock, and a Shareholder or any of its Affiliates
thereafter makes a Tender Offer during the period in which the tender offer made
by such Third Party Investor is still in effect, or (ii) a Third Party Investor
makes a bona fide tender offer during the period in which a Tender Offer made by
a Shareholder or any of its Affiliates is still in effect, then the requirement
in the definition of "Tender Offer" that the Tender Offer made by such
Shareholder be accepted by stockholders of the Company holding a simple majority
of the issued and outstanding shares of Voting Stock (excluding any shares of
Voting Stock held by such Shareholder and its Affiliates) shall not apply.
(b) If any Person shall, individually or together with any of its
Affiliates, directly or indirectly, acquire beneficial ownership of any share or
shares of Voting Stock from a Shareholder (other than through a Public Sale)
and, after giving effect thereto, such Person and its Affiliates own ten percent
(10%) or more of the issued and outstanding shares of Voting Stock, then such
Person shall be required to execute an Endorsement pursuant to which such Person
shall be bound by this Section 3.5 as if it were a Shareholder. Each Shareholder
hereby undertakes to cause any such Person to which Shares are so transferred to
execute and deliver such an Endorsement to the Company and each of the other
Shareholders.
3.6 BUSINESS COMBINATION
Except with respect to Tender Offers and participation in an auction
pursuant to Section 2(b)(ii) of the Standstill Agreement, each Shareholder
agrees that such Shareholder will not, nor will it permit any of its Affiliates
to, engage in any Business Combination with the Company without the prior
approval of the Board, which approval will be effective only if it includes the
affirmative vote of a majority of the Disinterested Directors. If no
Disinterested Directors are in office, then each Shareholder agrees that such
Shareholder will not, nor will it permit any of its Affiliates to, engage in any
Business Combination with the Company unless such Business Combination is
approved in accordance with Section 203(a)(3) of the DGCL.
19
3.7 COMPLIANCE WITH SECURITIES LAWS
Each Shareholder undertakes and agrees to timely make all such filings
with the SEC in respect of such Shareholder's purchase, ownership and/or
Transfer of any Shares as such Shareholder is required to make under applicable
laws and regulations.
4. TRANSFERS
4.1 GENERAL
The provisions of this Article 4 shall be applicable to all shares of
capital stock of the Company owned, directly or indirectly, by a Shareholder or
hereafter Transferred to a Shareholder in any manner whatsoever. No Shareholder
may Transfer any or all of its Shares to, or create or permit any Lien on any of
its Shares in favor of, any Person other than in accordance with this Article 4.
4.2 TRANSFERS TO PERMITTED TRANSFEREES
(a) Each Shareholder may Transfer any of its Shares (i) to a Permitted
Transferee or (ii) in a Public Sale, in each case, without the need to comply
with Sections 4.3, 4.4, 4.5 or 4.6, as applicable, provided that any such
Permitted Transferee shall execute an Endorsement, in accordance with Section
4.7, at the time of such Transfer.
(b) RTK shall, in connection with any proposed Transfer of any of its
Shares to any RTK Transferee, in addition to complying with the requirements of
Section 4.2(a), prior to the effectiveness of such Transfer, deliver to the
Company, with copies to each of the other Shareholders, (i) any permits required
by applicable Russian law in connection with such Transfer, (ii) an amendment to
RTK's existing license issued by the Central Bank of the Russian Federation or a
new license issued by the Central Bank of the Russian Federation, in each case,
permitting such Transfer, (iii) a certificate executed by a senior officer of
each RTK Transferee to whom any Shares are being transferred, identifying the
shareholders of such RTK Transferee as of the proposed date of effectiveness of
such Transfer and specifying such shareholders' respective percentage ownership
interests in such RTK Transferee, and (iv) if RTK has the ability to elect a
majority of the board of directors of RTC-Leasing OJSC at the time of the
proposed Transfer, a guarantee of RTK in respect of the obligations of such RTK
Transferee under this Agreement, duly executed by an authorized signatory of RTK
and otherwise in form and substance satisfactory to the Company, provided that
such guarantee shall remain in effect only for so long as RTK retains the
ability to elect a majority of the board of directors of RTC-Leasing OJSC.
4.3 RIGHT OF FIRST OFFER
During the period commencing on the Effective Date and ending on the
fifth anniversary thereof:
(a) A Significant Shareholder wishing to effect a Transfer of any
Shares (a "SIGNIFICANT SELLING SHAREHOLDER") shall, before effecting such
Transfer, first give written notice of such proposed Transfer (the "OFFER
NOTICE") to the Right Holders. The Offer Notice shall set forth (i) the number
and type of Shares that such Significant Selling Shareholder wishes to Transfer
(the "OFFERED SHARES") and (ii) the purchase price per share in cash of the
Offered Shares.
20
(b) Upon receipt of the Offer Notice, each Right Holder may offer
to purchase, for cash, in the aggregate, all (but not less than all) of the
Offered Shares, such offer to be made by such Right Holder by written notice
delivered to the Significant Selling Shareholder (a "PURCHASE OFFER") within
thirty (30) days from the date of receipt of the Offer Notice. Failure of any
Right Holder to provide a Purchase Offer within such thirty (30) day period
shall be deemed an election by such Right Holder not to purchase any of the
Offered Shares. A Right Holder's Purchase Offer shall contain the purchase price
for the proposed purchase of all (but not less than all) of the Offered Shares
by such Right Holder. All other terms and conditions contained in a Right
Holder's Purchase Offer shall be the same as those set forth in the Offer
Notice.
(c) If the purchase price contained in a Right Holder's Purchase
Offer is the same (or higher) than the purchase price contained in the Offer
Notice, the Significant Selling Shareholder shall, in accordance with Section
4.3(d), sell the Offered Shares to such Right Holder at the purchase price
contained in such Purchase Offer; provided that, if two or more Right Holders
deliver Purchase Offers and the purchase prices for their proposed purchase of
the Offered Shares contained in such Purchase Offers are the same, then the
Significant Selling Shareholder shall sell to each such Right Holder such number
of the Offered Shares (i) as is equal to the total number of Offered Shares
multiplied by a fraction, the numerator of which is the number of shares of
Voting Stock owned by such Right Holder (prior to the giving of the Offer
Notice) and the denominator of which is the total number of shares of Voting
Stock owned by the Right Holders who have delivered such matching Purchase
Offers (prior to the giving of the Offer Notice) or (ii) as the Right Holders
who have delivered such matching Purchase Offers may agree among themselves.
(d) If the Significant Selling Shareholder is obligated to sell
the Offered Shares to one or more Right Holders in accordance with Section
4.3(c), a single closing for the purchase of the Offered Shares shall be held at
the time and place designated by the Right Holder(s), but in any event no later
than thirty (30) days following receipt of all of the Purchase Offers (or if any
approval of any Governmental or Regulatory Authority is required to be obtained
therefor, within five (5) Business Days after receipt of such approval, if
later). At such closing, the Significant Selling Shareholder shall deliver to
the Right Holder(s), against payment of the purchase price, the Offered Shares,
free and clear of all Liens, and such documents as may be required to cause the
Company's transfer agent to effect the transfer of the Offered Shares to such
Right Holder(s).
(e) If none of the Right Holders submit Purchase Offers or if,
under the terms of Section 4.3(c), the Significant Selling Shareholder is not
obliged to sell the Offered Shares to any Right Holder because the purchase
price contained in the Offer Notice is higher than the purchase price contained
in the Right Holder(s)' Purchase Offer, then the Selling Shareholder (i) shall
not be required to sell any of the Offered Shares to any Right Holder and (ii)
may, within one hundred eighty (180) days following the date of the Offer
Notice, Transfer all (but not less than all) of the Offered Shares to any other
Person for a purchase price payable in cash equal to or greater than the
purchase price specified in the Offer Notice and otherwise on the same terms and
conditions specified in the Offer Notice. If the Significant Selling Shareholder
fails to effect the Transfer of the Offered Shares on such terms and within such
time period, then such proposed Transfer or any other proposed Transfer shall
again become subject to the provisions of this Section 4.3.
21
4.4 TELENOR'S AND ALFA'S TAG ALONG RIGHTS
During the period commencing on the Effective Date and ending on the
third anniversary thereof:
(a) If after compliance with the terms of Section 4.3 (regardless
of whether any Right Holder has submitted a Purchase Offer) (A) Alfa accepts an
Offer from a Person who, together with its Affiliates, is principally engaged
in, and generates a majority of its gross revenues from, the telecommunications
business, or (B) Telenor accepts an Offer from a financial/industrial investor
(other than an investment fund) whose principal investments are in the Russian
Federation, then, at least forty-five (45) days prior to the closing of such
Transfer, Alfa or Telenor, as the case may be (the "OFFERING SHAREHOLDER"),
shall give written notice (a "CO-SALE NOTICE") to Alfa or Telenor, as the case
may be (the "RECEIVING SHAREHOLDER"), offering the Receiving Shareholder the
option to participate in such proposed Transfer pro rata with the Offering
Shareholder and to sell to the proposed transferee up to the number of Shares as
are determined pro rata on the basis of the Receiving Shareholder's and the
Offering Shareholder's respective ownership of shares of Voting Stock (prior to
the giving of the Co-Sale Notice). Such Co-Sale Notice shall set forth the
identity of the proposed transferee and the terms and conditions of the proposed
Transfer (including, without limitation, the number of Shares proposed to be
sold by the Offering Shareholder and the purchase price per share offered for
such Shares).
(b) The Receiving Shareholder may, within thirty (30) days after
receipt of a Co-Sale Notice, give written notice (a "TAG ALONG NOTICE") to the
Offering Shareholder that the Receiving Shareholder wishes to participate in the
proposed Transfer. Such Tag Along Notice shall also specify the number of Shares
that the Receiving Shareholder desires to include in the proposed Transfer.
(c) If the Receiving Shareholder does not give the Offering
Shareholder a timely Tag Along Notice, the Offering Shareholder may thereafter
Transfer the Shares specified in the Co-Sale Notice to the proposed transferee
identified in, and on the same terms and conditions as are set forth in, the
Co-Sale Notice. If the Receiving Shareholder gives the Offering Shareholder a
timely Tag Along Notice, then the Offering Shareholder shall use all reasonable
efforts to cause the proposed transferee to agree to acquire all the Shares
identified in the Co-Sale Notice and the Tag Along Notice, on substantially the
same terms and conditions as are set forth in the Co-Sale Notice. If the
proposed transferee is unwilling or unable to acquire such additional Shares
upon such terms, then the Offering Shareholder may elect either to cancel such
proposed Transfer or to allocate the maximum number of Shares that such
transferee is willing to purchase pro rata between the Offering Shareholder and
the Receiving Shareholder.
4.5 OTHER SHAREHOLDERS' TAG ALONG RIGHTS
(a) Alfa shall not, in any one transaction or series of related
transactions, Transfer Shares to any Third Party Investor, who will own,
directly or through Affiliates, no less than one-third (1/3) of the Shares
(such number to be appropriately adjusted for Share repurchases, stock splits,
stock dividends, reorganizations, recapitalizations and other similar
transactions) immediately after such purchase (a "THIRD PARTY OFFER"), unless
the terms and conditions of the Third Party Offer include an offer, at the same
price and on the same terms as the Transfer by Alfa, to include, at the option
of CIG, RTK and/or
22
Barings, in the sale or other disposition to the Third Party Investor, a number
of Shares owned by CIG, RTK and/or Barings determined in accordance with Section
4.5(c). For the purposes of this Section 4.5(a), a series of transactions in
which Alfa sells any Shares to two or more Persons (whether related or
unrelated) and such Persons subsequently re-sell such Shares to the same Third
Party Investor or two or more affiliated Third Party Investors shall be deemed
as a series of related transactions.
(b) Alfa shall cause the Third Party Offer to be reduced to
writing (which writing shall include an offer to purchase or otherwise acquire
Shares from CIG, RTK and Barings as provided in this Section 4.5) and shall send
written notice of the Third Party Offer together with a copy of the Third Party
Offer (the "INCLUSION NOTICE") to CIG, RTK and Barings in the manner set forth
in Section 7.8. At any time within twenty (20) calendar days after delivery of
the Inclusion Notice, CIT, RTK and Barings may accept the offer included in the
Inclusion Notice by furnishing written notice of acceptance to Alfa.
(c) Each of CIG, RTK and Barings shall have the right (an
"INCLUSION RIGHT") to sell pursuant to the Third Party Offer such number of its
Shares as is equal to the product of (i) its pro rata ownership of shares of
Voting Stock and (ii) the total number of Shares covered by the Third Party
Offer.
(d) Subject to the provisions of Section 4.5(c), the terms and
consideration payable per Share to be Transferred by CIG, RTK and Barings in
such sale or other disposition shall be the same in all respects as the
consideration payable to Alfa per Share so Transferred by Alfa.
(e) This Section 4.5 shall not apply if Alfa Transfers Shares to
an internationally recognized financial institution, a telecommunications
company of the type specified in Section 4.4(a) or an international investment
fund with a majority of capital provided by reputable institutional or
governmental shareholders.
4.6 PURCHASES FROM BARINGS OR CIG
If Alfa, Telenor and/or any of their respective Affiliates enters into
an agreement with Barings or CIG, as the case may be, in respect of the purchase
of any Shares from Barings or CIG, as the case may be, then the purchasing
Shareholder and/or its Affiliate(s), as applicable, shall notify the other
Shareholder of such intention and the price at which it has agreed to acquire
such Shares, and the other Shareholder shall have thirty (30) days from the date
of its receipt of such notice to elect to participate in such purchase. If the
other Shareholder elects to participate in such purchase, it shall so notify the
initiating Shareholder of such election in writing within such thirty (30) day
period, and shall be entitled to purchase up to fifty percent (50%) of the
Shares then being sold by Barings or CIG, as applicable, for the same price per
share as is paid by the initiating Shareholder. The consideration for any such
acquisition shall be cash. For the avoidance of doubt, nothing in this Section
4.6 shall create any obligation on the part of Barings or CIG to offer or
Transfer any of their respective Shares to any Person.
4.7 OTHER TRANSFER-RELATED PROVISIONS
A Shareholder may not Transfer any of its rights and obligations under
this Agreement to any Person other than to a Permitted Transferee. In the event
of any Transfer of Shares by a Shareholder to a Permitted Transferee, such
Permitted Transferee shall receive and hold any and all Shares so transferred
subject to the terms and conditions of this
23
Agreement, the Standstill Agreement and the Registration Rights Agreement and
all of the rights and obligations, if any, of the transferor hereunder and
thereunder, and shall forthwith execute and deliver to the other Shareholders an
Endorsement. Each Shareholder hereby undertakes to cause each of its Permitted
Transferees to which any Shares are so transferred to execute and deliver an
Endorsement to each of the other Shareholders and the Company.
4.8 PLEDGES
Any Shareholder (a "PLEDGING SHAREHOLDER") may pledge Shares to any
Person (a "PLEDGEE") to secure a bona fide obligation; provided that the
following terms and conditions are satisfied:
(a) Within three (3) Business Days of the pledge of any Shares to
a Pledgee or the execution of any agreement with a Pledgee
concerning such a pledge (a "THIRD PARTY PLEDGE AGREEMENT"),
the Pledging Shareholder shall give (i) written notice of the
pledge (a "PLEDGE NOTICE") to each of the non-pledging
Shareholders (each, a "NON-PLEDGING SHAREHOLDER" and,
collectively, the "NON-PLEDGING SHAREHOLDERS"), which Pledge
Notice shall set forth the identity of the Pledgee, the amount
and term of financing being secured by the pledge, and the
number of Shares subject to such pledge (the "PLEDGED
SHARES"), (ii) copies of the relevant pledge agreement and
(iii) a written acknowledgement from the Pledgee (which
acknowledgement and may be included in the Third Party Pledge
Agreement) that the Pledgee agrees to the terms and conditions
of this Section 4.8.
(b) Any such pledge shall be governed by a Third Party Pledge
Agreement, which shall be binding on the Pledgee and shall provide that:
(i) The Pledgee, prior to taking any action to enforce
its rights in or to any of the Pledged Shares (including, but not
limited to, any enforcement upon, sale of, or acceptance of title to,
any of the Pledged Shares) (an "ENFORCEMENT ACTION"), shall give at
least forty-five (45) days prior written notice of such intention (an
"ENFORCEMENT NOTICE") to each of the Non-Pledging Shareholders; and
(ii) Upon receipt of such Enforcement Notice, each of the
Non-Pledging Shareholders shall have the right, at the option of such
Non-Pledging Shareholders to be exercised not later than forty-five
(45) days after receipt of such Enforcement Notice, to purchase from
the Pledgee (pro rata according to the respective percentage of Voting
Stock owned by each Non-Pledging Shareholder exercising its purchase
rights hereunder (each, a "PURCHASING SHAREHOLDER" and, collectively,
the "PURCHASING SHAREHOLDERS") relative to the total number of shares
of Voting Stock owned by all other Purchasing Shareholders, or in such
other proportion as such Purchasing Shareholders may agree among
themselves) the underlying obligation (or portion thereof) at a
purchase price equal to the lesser of (a) the Fair Market Value of the
Pledged Shares being purchased by such Purchasing Shareholder, as
determined as of the date two (2) Business Days prior to such purchase
or (b) the principal amount of the relevant underlying obligation being
purchased by such Purchasing Shareholder, plus any interest, penalties
and other similar payments (if any) accrued and owing thereon up to,
but excluding, the purchase date thereof. For the avoidance of doubt,
if the Purchasing Shareholder(s) exercise their right to purchase the
24
underlying obligation hereunder, the Purchasing Shareholder(s) shall be
obligated to purchase, and the Pledgee shall be obligated to sell, the
underlying obligation in whole and not in part; provided that, if there
is more than one Purchasing Shareholder, the purchase of such
underlying obligation shall be apportioned among the Purchasing
Shareholders in accordance with the immediately preceding sentence. The
Purchasing Shareholder(s)' purchase of the underlying obligation from
the Pledgee shall be effective upon delivery of a purchase notice by
the Purchasing Shareholder(s) to the Pledgee, and such purchase shall
not require the Pledgee's consent. The Transfer of the relevant
underlying obligation to each Purchasing Shareholder shall be effective
upon payment of the relevant purchase price to the Pledgee by each such
Purchasing Shareholder, which payment shall be effected not later than
forty-five (45) calendar days after receipt of the Enforcement Notice.
Concurrently with such purchase of the underlying obligation (or
portion thereof), the Third-Party Pledge Agreement shall be
automatically assigned to the Purchasing Shareholder(s). Thereafter,
the Pledging Shareholder shall Transfer the relevant Pledged Shares to
each such Purchasing Shareholder, free and clear of all Liens, in
exchange for cancellation of the underlying obligation with respect to
such Pledged Shares, without any additional purchase price owed or
payable with respect thereto. For the avoidance of doubt, the Pledged
Shares shall be apportioned among each Purchasing Shareholder based on
the pro rata amount of the underlying obligation purchased by each such
Purchasing Shareholder.
(c) If any Enforcement Action would result in the Transfer of
Shares such that a Person, together with any of its Affiliates, would acquire
more than fifty percent (50%) of the issued and outstanding shares of Voting
Stock, and the Non-Pledging Shareholders do not elect to purchase in the
aggregate all of the Pledged Shares pursuant to Section 4.8(b)(ii), then the
Non-Pledging Shareholders shall each have the right, exercisable by written
notice to the Pledging Shareholder and the Pledgee (a "PLEDGE CO-SALE NOTICE")
within forty-five (45) days from delivery by the Pledgee of the Enforcement
Notice, to elect to sell in the proposed Transfer of Pledged Shares to such
Person, all or any portion of such Non-Pledging Shareholders' Shares, free and
clear of any Liens other than obligations under this Agreement. The Transfer of
Shares by the Non-Pledging Shareholders pursuant to a Pledge Co-Sale Notice
shall be at a price equal to the Fair Market Value thereof determined as of the
date two (2) Business Days prior to the date of such Transfer or, at the
election of such Non-Pledging Shareholders, such other price as may be agreed
between the Pledgee and the Non-Pledging Shareholders electing to Transfer their
Shares hereunder (which shall not be less than the Fair Market Value thereof).
Failure of any Non-Pledging Shareholders to provide a Pledge Co-Sale Notice
within such forty-five (45) day period shall be deemed an election by such
Non-Pledging Shareholder not to participate in the proposed Transfer pursuant to
this Section 4.8(c).
(d) Each Non-Pledging Shareholder shall be an express third-party
beneficiary of the Third-Party Pledge Agreement with respect to each such
Non-Pledging Shareholder's rights set forth under this Agreement.
(e) If any Pledged Shares are Transferred, the transferee which
acquires the Shares agrees to be bound by the terms and conditions of this
Agreement and to execute an Endorsement.
(f) The Pledgee shall be either:
25
(i) A licensed Russian bank with equity capital of at
least US$200,000,000 which is not subject to ARCO administration and in
which ARCO does not possess any controlling or blocking rights; or
(ii) A foreign (i.e., non-Russian) bank with an investment
grade rating from Xxxxx'x Corporation (i.e., Baa or higher) or Standard
& Poor's (i.e., BBB or higher), as such ratings are determined at the
time of the pledge; or
(iii) Any other lender or supplier of vendor financing that
has a long-term debt rating of Baa or higher from Xxxxx'x Corporation
or a rating of BBB or higher from Standard & Poor's, as such ratings
are determined at the time of the pledge.
(g) Pledged Shares shall be pledged to the Pledgee under one
pledge only, and the underlying obligation secured by such pledge shall not be
secured by any collateral other than the Pledged Shares.
(h) Any breach by the Pledgee of any provision set forth in this
Section 4.8 to be observed by the Pledgee shall be deemed a breach of this
Agreement by the Pledging Shareholder.
5. OTHER ARRANGEMENTS
(a) Except for the Principal Agreements, (i) no Shareholder shall
grant any proxy or enter into or agree to be bound by any understanding or any
voting trust, voting proxy or other agreement with respect to any matters
relating to the Company, its management, or any Shares, (ii) nor shall any
Shareholder enter into any shareholders agreement or other arrangement of any
kind (whether written or oral) with any Person with respect to any matters
relating to the Company, its management or any Shares, including, without
limitation, any agreement, understanding or arrangement with respect to the
acquisition, ownership, registration, Transfer or other disposition or voting of
Shares, and (iii) nor shall any Shareholder act, for any reason, as a member of
a group or in concert with any other Person in connection with the acquisition,
Transfer or other disposition or voting of Shares in any manner which is
inconsistent with any obligation of such Shareholder under this Agreement;
provided that each Shareholder shall be permitted to Transfer its Shares in
accordance with the terms of this Agreement.
(b) The Company shall not enter into any agreement or arrangement
of any kind with any Person that is inconsistent with any of the rights granted
to the Shareholders in the Principal Agreements or otherwise conflicts with any
of the provisions thereof.
(c) Without prejudice to any other rights or remedies hereunder of
any Party, if any representation or warranty made by any Shareholder in Article
2 is shown to have been false or misleading when made or confirmed, or if any
Shareholder violates any provision of this Article 5, the rights of such
Shareholder under this Agreement and the Registration Rights Agreement shall
terminate forthwith, but such Shareholder shall continue to be bound by all of
its obligations hereunder and under the other Principal Agreements.
6. TERM AND TERMINATION
This Agreement shall become effective on the Effective Date and remain
in effect until the earlier of:
26
(a) the date on which all of the Parties agree in writing to the
termination of this Agreement; and
(b) the date on which any Person owns, individually or
collectively with its Affiliates, more than fifty percent (50%) of the issued
and outstanding shares of Voting Stock;
provided that (a) any Shareholder who, together with its Affiliates, having once
attained ownership of at least three percent (3%) or more of the issued and
outstanding shares of Voting Stock thereafter ceases to own, together with its
Affiliates, at least three percent (3%) of the issued and outstanding shares of
Voting Stock shall cease to be a party to, or have any rights or obligations
under, this Agreement from and after the date of the relevant Transfer (or
dilution); and (b) no such Transfer, dilution or termination shall be deemed to
relieve any Party of any obligations under this Agreement accruing, or resulting
from, any breach, action or omission of such Party occurring prior to the date
of such Transfer, dilution or termination. Promptly following the date on which
its board of directors has ratified and approved RTK's execution of this
Agreement, RTK shall provide each other Party with a certified copy of an
extract from the protocol of the meeting of RTK's board of directors containing
such ratification and approval.
7. MISCELLANEOUS
7.1 SPECIFIC PERFORMANCE
The Parties hereby declare that it is impossible to measure in money
the damages that will accrue to a Party by reason of a failure by another Party
to perform any of the obligations under this Agreement. Therefore, if any Party
shall, in accordance with Section 7.10, institute any proceeding to enforce
specifically the provisions hereof, any Party against whom such proceeding is
brought hereby waives the claim or defense therein that the Party instituting
such proceeding has an adequate remedy at law or in damages, and the Party
against whom such proceeding is brought shall not urge in any such proceeding
the claim or defense that such remedy at law or in damages exists.
7.2 WAIVERS; REMEDIES
Any term or condition of this Agreement may be waived at any time by
the Party that is entitled to the benefit thereof, but no such waiver shall be
effective unless set forth in a written instrument duly executed by or on behalf
of the Party waiving such term or condition. No waiver by any Party of any term
or condition of this Agreement, in one or more instances, shall be deemed to be
or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this Agreement or
by law or otherwise afforded, will be cumulative and not alternative.
7.3 AMENDMENTS
This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of each Party.
27
7.4 NO ASSIGNMENT; BINDING EFFECT; NO THIRD PARTY BENEFICIARIES
Except as expressly provided in Section 4.2 and Section 4.7, neither
this Agreement nor any right, interest or obligation hereunder may be assigned
by any Party without the prior written consent of the other Parties and any
attempt to do so will be void. Subject to the preceding sentence, this Agreement
is binding upon, inures to the benefit of and is enforceable by the Parties and
their respective successors and assigns. The terms and provisions of this
Agreement are intended solely for the benefit of each Party and their respective
successors or permitted assigns, and it is not the intention of the Parties to
confer third party beneficiary rights upon any other Person.
7.5 SEVERABILITY
If any provision of this Agreement is or shall become invalid, illegal
or unenforceable in any jurisdiction, the invalidity, illegality or
unenforceability of such provision in such jurisdiction shall not affect or
impair the validity, legality or enforceability of (a) any other provision of
this Agreement or any such other document in such jurisdiction or (b) such
provision or any other provision of this Agreement or any such other document in
any other jurisdiction.
7.6 FURTHER ASSURANCES
From time to time, at any Party's reasonable request and without
further consideration, each Party shall execute and deliver such additional
documents and take all such further action as may be reasonably necessary or
desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
7.7 ENTIRE AGREEMENT
This Agreement and the other Principal Agreements will, from and after
the Effective Date, supersede all prior discussions and agreements among the
Parties with respect to the subject matter hereof and thereof and contain the
sole and entire agreement between the Parties with respect to the subject matter
hereof and thereof. For the avoidance of doubt, the Parties acknowledge that the
Existing Shareholders Agreement shall remain in full force and effect until the
Effective Date, whereupon the Existing Shareholders Agreement shall terminate
and be of no further force and effect.
7.8 NOTICES
All notices, requests, demands and other communications provided for by
this Agreement shall be in writing (including telecopier or similar writing) and
shall be deemed to have been duly given only if delivered personally or by
facsimile transmission or sent by courier, addressed to the address of the
relevant Party stated below or to such changed address as such Party may have
fixed by notice or, if given by telecopier, when such telecopy is transmitted
and the appropriate answerback is received:
(i) If to Alfa:
Alfa Telecom Limited
X.X. Xxx 0000
Xxxxxx Xxxxx
00
0xx Xxxxx
000 Xxxxxxxxxx Xxxxx
Xxxx Xxxx
Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx
Facsimile No.: x000 00 000
Attention: Xxxxx Xxxxxxxx
with a copy to:
Squire, Xxxxxxx & Xxxxxxx
2/2 Paveletskaya Square
115054 Moscow, Russian Federation
Facsimile No.: x0 (000) 000-0000
Attention: Xxxxx Xxxx
(ii) If to Telenor:
Xxx Telenor East Invest AS
Xxxxxxxxxxx 00
X-0000 Xxxxxxx
Xxxxxx
Facsimile No.: x00 00 00 00 00
Attention: Kjell Xxxxxx Xxxxxxx
with a copy to:
Advokatene i Xxxxxxx
Xxxxxxxxxxx 00
X-0000 Xxxxxxx
Xxxxxx
Facsimile No.: x00 00 00 0000
Attention: Xxxxx Xxxxxxx
and to:
Coudert Brothers LLP
00 Xxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (00) 0000 0000
Attention: Xxxxx X'Xxxxxxxx
(iii) If to CIG:
c/o Capital International Global Emerging Markets
Private Equity Fund, L.P.
29
000 Xxxxx Xxxxx Xxxxxxx Xxxxxxxxx
Xxxx, XX 00000-0000
Facsimile No.: x0 (000) 000-0000
Attention: Xxx Xxxxx
with a copy to:
Capital International Limited
00 Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (00) 0000-0000
Attention: Xxx Xxxxxx
and to:
Capital Research International Inc.
00 Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (00) 0000 0000
Attention: Xxxxxx Xxxxxxx
and to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
00 Xxxx Xxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (00) 0000 0000
Attention: Xxxxx Xxxxxxxxx
(iv) If to Cavendish Nominees Limited:
c/o International Private Equity Services
00-00 Xxxxxxxx Xxxx
XX Xxx 000
Xx. Xxxxx Xxxx XX0 0XX, Guernsey
Facsimile No.: x00 (0) 0000 000 000
Attention: Xxx. Xxxxxx Xxxxxx
with a copy to:
Baring Vostok Capital Partners
0, Xxxxxxx Xxxxxx
Xxxxx Xxxxx XX, Xxxxx 000
000000 Xxxxxx, Xxxxxx
30
Facsimile No.: x0 (000) 000 0000
Attention: Xxxxxxx Xxxxxx
and to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
00 Xxxx Xxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (00) 0000 0000
Attention: Xxxxx Xxxxxxxxx
(v) If to First NIS Regional Fund SICAV:
x/x Xxxx xx Xxxxxxx Xxxxxxxxxx
00 Xxx Xxxxxx X-0000, Xxxxxxxxxx
Facsimile No.: x00 0 00 00 00 000
Attention: Xxxxxxxxx Tourney
with a copy to:
Baring Vostok Capital Partners
0, Xxxxxxx Xxxxxx
Xxxxx Xxxxx XX, Xxxxx 000
000000 Xxxxxx, Xxxxxx
Facsimile No.: x0 (000) 000 0000
Attention: Xxxxxxx Xxxxxx
and to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
00 Xxxx Xxxx
Xxxxxx XX0X 0XX
Facsimile No.: x00 (00) 0000 0000
Attention: Xxxxx Xxxxxxxxx
(vi) If to the Company:
Golden Telecom, Inc.
0000 XxxXxxxxx Xxxx. XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
X.X.X.
Facsimile No.: x0 (000) 000-0000
Attention: General Counsel
31
with a copy to:
Representation Office of Golden TeleServices, Inc.
1 Xxxxxxxxxxxxxx Xxxxxx,
0xx Xxxxx
000000 Xxxxxx
Xxxxxx
Facsimile No.: x0 (000) 000-0000
Attention: General Counsel
(vii) If to RTK:
OAO Rostelecom Moscow,
xx. 0xx Xxxxxxxxx-Xxxxxxxx, 00
000000 Xxxxxx
Xxxxxx
Facsimile No.: x0 (000) 000-0000
Attention: Xxxxxxxxxx Xxxxxx Ivanovich
with a copy to:
Xxxxxxxx Chance CIS Limited
Xx. Xxxxxxxx-Xxxxxxxxxxxx 00/00
000000 Xxxxxx
Xxxxxxx Federation
Facsimile No.: x0 (000) 000-0000
Attention: Xxxxxx Xxxxxxx
7.9 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, United States of America, without giving
effect to any conflicts of laws principles thereof which would result in the
application of the laws of another jurisdiction.
7.10 ARBITRATION; WAIVER OF SOVEREIGN IMMUNITY
(a) Any and all disputes and controversies arising under, relating
to or in connection with this Agreement shall be settled by arbitration by a
panel of three (3) arbitrators under the United Nations Commission on
International Trade Law (UNCITRAL) Arbitration Rules then in force (the
"UNCITRAL RULES") in accordance with the following terms and conditions:
(i) In the event of any conflict between the UNCITRAL
Rules and the provisions of this Agreement, the provisions of this
Agreement shall prevail.
32
(ii) The place of the arbitration shall be New York, New
York, United States of America.
(iii) Where there is only one claimant party and one
respondent party, each shall appoint one arbitrator in accordance with
the UNCITRAL Rules, and the two arbitrators so appointed shall appoint
the third (and presiding) arbitrator in accordance with the UNCITRAL
Rules within thirty (30) days from the appointment of the second
arbitrator. In the event of an inability to agree on a third
arbitrator, the appointing authority shall be the International Court
of Arbitration of the International Chamber of Commerce, acting in
accordance with such rules as it may adopt for this purpose. Where
there is more than one claimant party, or more than one respondent
party, all claimants and/or all respondents shall attempt to agree on
their respective appointment(s). In the event that all claimants and
all respondents cannot agree upon their respective appointment(s)
within thirty (30) Business Days of the date of the notice of
arbitration, all appointments shall be made by the Chairman of the
International Court of Arbitration of the International Chamber of
Commerce.
(iv) The English language shall be used as the written and
spoken language for the arbitration and all matters connected to the
arbitration.
(v) The arbitrators shall have the power to grant any
remedy or relief that they deem just and equitable and that is in
accordance with the terms of this Agreement, including specific
performance, and including, but not limited to, injunctive relief,
whether interim or final, and any such relief and any interim,
provisional or conservatory measure ordered by the arbitrators may be
specifically enforced by any court of competent jurisdiction. Each
Party retains the right to seek interim, provisional or conservatory
measures from judicial authorities and any such request shall not be
deemed incompatible with the agreement to arbitrate or a waiver of the
right to arbitrate.
(vi) The award of the arbitrators shall be final and
binding on the Parties.
(vii) The award of the arbitrators may be enforced by any
court of competent jurisdiction and may be executed against the person
and assets of the losing party in any competent jurisdiction.
(b) Except for arbitration proceedings pursuant to Section
7.10(a), no action, lawsuit or other proceeding (other than the enforcement of
an arbitration decision, an action to compel arbitration or an application for
injunctive relief or other interim, provisional or conservatory measures in
connection with the arbitration) shall be brought by or between the Parties in
connection with any matter arising out of or in connection with this Agreement.
(c) Each Party other than CIG irrevocably appoints CT Corporation
System, located on the date hereof at 000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, XXX, and CIG irrevocably appoints Capital International
Research, Inc., located on the date hereof at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 10111, USA, Attn: General Counsel, as its true and lawful agent
and attorney to accept and acknowledge service of any and all process against it
in any judicial action, suit or proceeding permitted by this Section 7.10, with
the same effect as if such Party were a resident of the State of New York and
had been lawfully served with such process in such jurisdiction, and waives all
claims of error by reason of such service, provided that the Party effecting
such service shall also deliver a copy
33
thereof on the date of such service to the other Parties by facsimile as
specified in Section 7.8. Each Party will enter into such agreements with such
agent as may be necessary to constitute and continue the appointment of such
agent hereunder. In the event that any such agent and attorney resigns or
otherwise becomes incapable of acting, the affected Party will appoint a
successor agent and attorney in New York reasonably satisfactory to each other
party, with like powers. Each Party hereby irrevocably submits to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in New York City,
in connection with any such action, suit or proceeding, and agrees that any such
action, suit or proceeding may be brought in such court, provided, however, that
such consent to jurisdiction is solely for the purpose referred to in this
Section 7.10 and shall not be deemed to be a general submission to the
jurisdiction of said courts of or in the State of New York other than for such
purpose. Each Party hereby irrevocably waives, to the fullest extent permitted
by law, any objection that it may now or hereafter have to the laying of the
venue of any such action, suit or proceeding brought in such a court and any
claim that any such action, suit or proceeding brought in such a court has been
brought in an inconvenient forum. Nothing herein shall affect the right of any
Party to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any other Party in any other
jurisdiction in a manner not inconsistent with this Section 7.10.
(d) Each Party hereby represents and acknowledges that it is
acting solely in its commercial capacity in executing and delivering this
Agreement and in performing its obligations hereunder, and each such Party
hereby irrevocably waives with respect to all disputes, claims, controversies
and all other matters of any nature whatsoever that may arise under or in
connection with this Agreement and any other document or instrument contemplated
hereby, all immunity it may otherwise have as a sovereign, quasi-sovereign or
state-owned entity (or similar entity) from any and all proceedings (whether
legal, equitable, arbitral, administrative or otherwise), attachment of assets,
and enforceability of judicial or arbitral awards.
7.11 COUNTERPARTS; LANGUAGE
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement is being executed in both an English
language version and a Russian language version. In the event of any discrepancy
between the English language version and the Russian language version of this
Agreement or any disagreement among the Parties as to the meaning or
interpretation of any part of this Agreement, the English language version of
this Agreement shall prevail.
34
IN WITNESS WHEREOF, the Parties have executed this Shareholders
Agreement as of the date first written above.
The Shareholders
ALFA TELECOM LIMITED
By /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Director
XXX TELENOR EAST INVEST AS
By /s/ Kjell Xxxxxx Xxxxxxx
---------------------------------
Kjell Xxxxxx Xxxxxxx
Attorney-in-Fact
OPEN JOINT STOCK COMPANY
ROSTELECOM
By /s/ Xxxxxx Xxxxxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxxx Xxxxxxxxxx
Title: General Director
CAPITAL INTERNATIONAL GLOBAL
EMERGING MARKETS PRIVATE EQUITY
FUND, L.P.
By /s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
35
FIRST NIS REGIONAL FUND SICAV
By /s/ X. Xxxxxx
---------------------------------
Name: X. Xxxxxx
Title: Authorized Signatory
By /s/ X. Xxxxxxx
---------------------------------
Name: X. Xxxxxxx
Title: Authorized Signatory
CAVENDISH NOMINEES LIMITED
By /s/ C A E Helyar
---------------------------------
Name: C A E Helyar
Title: Director
The Company
GOLDEN TELECOM, INC.
By /s/ Xxxxxxxxx Xxxxxxxxxx
---------------------------------
Xxxxxxxxx Xxxxxxxxxx
President and Chief Executive Officer
36
Schedule 1
Shares held by Shareholders as of Effective Date
-----------------------------------------------------------------------------
NAME OF SHAREHOLDER TYPE OF SHARES NO. OF SHARES
-----------------------------------------------------------------------------
Alfa Telecom Limited Common Stock 10,840,647
-----------------------------------------------------------------------------
Xxx Telenor East Invest AS Common Stock Such number of Shares as
are delivered to Telenor
under the Share Exchange
Agreement
-----------------------------------------------------------------------------
OAO Rostelecom Common Stock 4,024,067
-----------------------------------------------------------------------------
Capital International Global Common Stock 2,166,405
Emerging Markets Private
Equity Fund, L.P.
-----------------------------------------------------------------------------
Cavendish Nominees Limited Common Stock 1,845,769
-----------------------------------------------------------------------------
First NIS Regional Fund SICAV Common Stock 723,907
-----------------------------------------------------------------------------
37
Schedule 2.1(d)
Consents and Approvals of Shareholders
As a condition to the consummation of the transactions contemplated by the
Principal Agreements, Telenor must satisfy the requirements of the HSR Act (as
defined in the Share Exchange Agreement).
38
Schedule 2.1(h)
Liens
Alfa has entered into a Pledge Agreement dated September 12, 2001 (the "ALFA
PLEDGE AGREEMENT") between Alfa and OAO "Alfa-Bank", an open joint stock company
organized under the laws of the Russian Federation ("ALFA BANK") in respect of
the Shares owned by Alfa.
39
Schedule 2.1(i)
Exceptions to Sole Power of Disposition of Shareholders
Under the terms of Section 8 of the Alfa Pledge Agreement, Alfa will require the
consent of Alfa Bank in connection with Alfa's execution, delivery and
performance of this Agreement. In addition, pursuant to Section 4.8(a)(iii) of
this Agreement, Alfa must provide to the Shareholders a written acknowledgement
that Alfa Bank agrees to the terms and conditions of Section 4.8.
40
Schedule 2.2(e)
Consents and Approvals of Company
As conditions to the consummation of the transactions contemplated by the
Principal Agreements, the Company must obtain the approval of its stockholders,
satisfy the requirements of the HSR Act (as defined in the Share Exchange
Agreement), obtain the approval of the Ministry for Anti-Monopoly Policy and
Support for Entrepreneurship of the Russian Federation, and notify Nasdaq
concerning the issuance of the GTI Shares (as defined in the Share Exchange
Agreement).
41
Exhibit A
Form of Endorsement
[date]
The undersigned, a transferee of Shares of Golden Telecom, Inc. (the
"COMPANY"), hereby agrees to the terms and conditions of [Section 3.5 (Tender
Offers) of] the Shareholders Agreement dated as of August 19, 2003 (the
"SHAREHOLDERS AGREEMENT", with terms defined in the Shareholders Agreement used
herein as therein defined) between and among the Company, Alfa Telecom Limited,
Xxx Telenor East Invest AS, OAO Rostelecom, Capital International Global
Emerging Markets Private Equity Fund, L.P., Cavendish Nominees Limited and First
NIS Regional Fund SICAV, and [(a)] agrees to be fully bound by the terms and
conditions of [Section 3.5 (Tender Offers) of] the Shareholders Agreement as if
the undersigned were an original signatory thereto[.][, (b) makes as of the date
hereof for the benefit of each of the other Parties to the Shareholders
Agreement, each of the representations and warranties set forth in Section 2.1
of the Shareholders Agreement, (c) represents that it owns the beneficial
interest in the Shares specified below and (d) agrees to deliver to each other
Party to the Shareholders Agreement, as soon as practicable (and in any event
not later than seven (7) days after the date hereof), an original copy of this
Endorsement.]
[Name of Transferee]
By____________________________
Name:
Title:
Type and Number of Shares:
[________ shares of ____________ stock]
42
