SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)*
GOLDEN TELECOM, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
- ------------------------------------------------------------------------------
(Title of Class of Securities)
38122G107
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(CUSIP Number)
GRIER C. RACLIN
GLOBAL TELESYSTEMS GROUP, INC.
4121 WILSON BOULEVARD
STAFFORD PLACE II, 8TH FLOOR
ARLINGTON, VA 22203
(703) 236-3100
- ------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
DECEMBER 24, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of ss. ss. 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. [ ]
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See s. 240.13d-7(b)
for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 38122G107
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CAPITAL INTERNATIONAL GLOBAL EMERGING MARKETS PRIVATE EQUITY FUND, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES NONE
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 16,734,928
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 428,600
10 SHARED DISPOSITIVE POWER
1,250,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,678,600
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [X]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.98%
14 TYPE OF REPORTING PERSON*
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 38122G107
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CAPITAL INTERNATIONAL INVESTMENTS, LLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES NONE
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 16,734,928
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 428,600
10 SHARED DISPOSITIVE POWER
1,250,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,678,600
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [X]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.98%
14 TYPE OF REPORTING PERSON*
00 - limited liability company
<PAGE>
SCHEDULE 13D
CUSIP No. 38122G107
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CAPITAL INTERNATIONAL, INC.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
NUMBER OF 7 SOLE VOTING POWER
SHARES NONE
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 16,734,928
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 428,600
10 SHARED DISPOSITIVE POWER
1,250,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,678,600
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [X]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.98%
14 TYPE OF REPORTING PERSON*
CO; IA
<PAGE>
SCHEDULE 13D
CUSIP No. 38122G107
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CAPITAL GROUP INTERNATIONAL, INC.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
NUMBER OF 7 SOLE VOTING POWER
SHARES NONE
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 16,734,928
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 428,600
10 SHARED DISPOSITIVE POWER
1,250,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,678,600
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [X]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.98%
14 TYPE OF REPORTING PERSON*
HC; CO
<PAGE>
ITEM 1. Security and Issuer
-------------------
This Statement on Schedule 13D (this "Statement") relates to
the shares of common stock, par value $0.01 per share (the "Common Stock"),
of Golden Telecom, Inc., a Delaware corporation (the "Issuer"). The
principal executive offices of the Issuer are located at 12,
Krasnokazarmennaya Str., Moscow, Russia 111250.
ITEM 2. Identity and Background
-----------------------
This Statement is being filed by Capital International
Global Emerging Markets Private Equity Fund, L.P. ("CIPEF"), Capital
International Investments, LLC ("Capital Investments"), Capital
International, Inc. ("Capital International") and Capital Group
International, Inc. ("CGII" and, together with CIPEF, Capital Investments
and Capital International, the "Reporting Parties"). CIPEF, a Delaware
limited partnership, is a private investment partnership. Capital
Investments, a Delaware limited liability company, is a limited liability
company and is the sole general partner of CIPEF. Capital International, a
California corporation, is an investment management company and the
managing member of Capital Investments. CGII is the sole shareholder of
Capital International. CGII, a California corporation, is a holding company
for a group of investment management companies.
The address of the principal office of CIPEF and Capital
Investments is 135 South State College Boulevard, Brea, CA 92821. The
address of the principal office of Capital International and CGII is 11100
Santa Monica Boulevard, Los Angeles, CA 90025.
The name, business address, citizenship, present principal
occupation or employment, and the name and principal business of any
corporation or other organization in which such employment is conducted, of
each executive officer and director of Capital International, Capital
Investments and CGII is set forth on Schedule I hereto, which is
incorporated herein by reference.
During the last five years, none of the Reporting Parties
or, to the knowledge of the Reporting Parties, any of the persons listed on
Schedule I hereto (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) has been a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction which resulted in a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
ITEM 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
The purchase price for the 1,250,000 shares of Common Stock
acquired pursuant to the Subscription Agreement (attached hereto as Exhibit
99.1) was $15,000,000. The aggregate purchase price of the 428,600 shares of
Common Stock acquired in open market purchases was $4,999,662.90. All of
such purchases and sales were made by CIPEF pursuant to the Subscription
Agreement or through open market transactions. The funds for the
acquisition of the shares of Common Stock by CIPEF came from the capital
contributions of the general partner and the limited partners of CIPEF.
ITEM 4. Purpose of Transaction
----------------------
(a) CIPEF has acquired the Common Stock beneficially owned
by it for investment purposes and in the ordinary course of business. None
of the Reporting Parties or, to the knowledge of the Reporting Parties,
none of the persons named in Schedule I hereto has any plans or proposals
which relate to or would result in the types of transactions set forth in
subparagraphs (a) through (j) of Item 4 of Schedule 13D, except as
described in this Item 4. However, the Reporting Parties intend to review
on a continuing basis the investment in the Issuer, including the Issuer's
business, financial condition and operating results and general market and
industry conditions and, based upon such review, may acquire additional
shares of Common Stock or dispose of shares of Common Stock, in the open
market, in privately negotiated transactions or otherwise.
(b) Shareholders and Registration Rights Agreement provides
that the Issuer will appoint one individual designated by CIPEF to the
Board of Directors of the Issuer and GTS will vote its shares in favor of
such individual. During the period of time that GTS is required to vote for
CIPEF's nominee, CIPEF will vote in favor of GTS' nominees.
ITEM 5. Interest in Securities of the Issuer
------------------------------------
(a) Due to their relationship with CIPEF (see Item 2), as of
the date hereof, Capital International, Capital Investments and CGII may be
deemed to beneficially own 1,678,600 shares of Common Stock. Based on an
aggregate of 24,050,125 outstanding shares of Common Stock (the
"Outstanding Shares") (reflecting 22,800,125 shares reported by the Issuer
in its Form 10-Q for the quarterly period ended September 30, 1999 to be
outstanding at November 11, 1999, plus 1,250,000 shares issued to CIPEF
pursuant to the Subscription Agreement) this would represent 6.98% of the
outstanding shares of Common Stock. Each of Capital Investments, Capital
International and CGII disclaims beneficial ownership of all Common Stock
held by CIPEF, except to the extent of its direct or indirect pecuniary
interest in CIPEF.
Due to the Shareholders and Registration Rights Agreement
that CIPEF has entered into with the Issuer and Global TeleSystems Group,
Inc. ("GTS") (see Item 6), as of the date hereof, the Reporting Parties may
be deemed pursuant to Rule 13d - 3 under the Act to share beneficial
ownership of 15,056,328 shares of Common Stock, representing 62.6% of the
Outstanding Shares, which are owned of record by GTS. Each Reporting Party
disclaims beneficial ownership of all shares of Common Stock held by GTS.
As of the date hereof, CIPEF beneficially owns 1,678,600
shares of Common Stock, representing 6.98% of the Outstanding Shares.
Except as set forth herein, to the knowledge of the
Reporting Parties, none of the persons listed on Schedule I hereto
beneficially owns any shares of Common Stock, except to the extent of any
indirect pecuniary interest in CIPEF.
(b) The number of shares of Common Stock with respect to
which CIPEF (i) has sole voting power is zero, (ii) shares voting power is
16,734,928, (iii) has sole dispositive power is 428,600 and (iv) shares
dispositive power is 1,250,000. Due to the Shareholders and Registration
Rights Agreement, (x) CIPEF and GTS may be deemed to share the voting power
(as described in Item 6 below) of all of the shares of Common Stock held by
them and (y) CIPEF may be deemed to share dispositive power with GTS over
the Common Stock it purchased pursuant to the Subscription Agreement. As
noted above, CIPEF disclaims ownership of all shares of Common Stock held
by GTS. Each of Capital International, Capital Investments and CGII
disclaims ownership of all shares beneficially owned by CIPEF, except to
the extent of a direct or indirect pecuniary interest in CIPEF.
GTS, a Delaware corporation, is an independent provider of
telecommunications services to businesses, other high usage customers and
telecommunications carriers in Europe. The principal executive offices of
GTS, Inc. are located at 4121 Wilson Boulevard, 8th Floor, Arlington, VA
22203.
According to the Schedule 13D filed by GTS on October 14,
1999, during the five years prior to that date, GTS has not been (a)
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (b) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or findings any violation with respect to
such laws.
(c) A description of all the transactions of the Reporting
Parties in the shares of Common Stock is attached hereto as Schedule II,
which is incorporated herein by reference. All of these transactions were
effected pursuant to the Subscription Agreement attached hereto as Exhibit
99.1 or on the open market on the Nasdaq Stock Market. Except as set forth
herein, none of the Reporting Parties or, to the knowledge of the Reporting
Parties, none of the persons named in Schedule I hereto beneficially owns
any shares of Common Stock or has effected any transactions in shares of
Common Stock during the preceding 60 days.
(d) The partners of CIPEF have the right to receive the
proceeds from the sale of all the shares of Common Stock owned of record by
CIPEF.
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
-------------------------------------------------------------
CIPEF entered into the Subscription Agreement attached
hereto as Exhibit 99.1 with the Issuer. The Subscription Agreement relates to
1,250,000 shares of Common Stock of the Issuer. The Issuer made standard
warranties regarding the valid issuance of the shares of Common Stock sold
to CIPEF, the transfer to CIPEF of such Common Stock free of encumbrances,
and its authority to effect the sale of such shares. The Issuer also made a
warranty regarding the accuracy of certain information provided to CIPEF
which information related to the Issuer. CIPEF warranted that it acquired
the shares of Common Stock for its own account and without a view to the
public distribution of such shares or any interest therein. In addition,
CIPEF agreed not to sell or otherwise dispose of the shares of Common Stock
it purchased pursuant to the Subscription Agreement for a period of six
months after the purchase of such Common Stock.
The Shareholders and Registration Rights Agreement, entered
into by CIPEF, the Issuer and GTS, provides that after the six month
lock-up period CIPEF may exercise certain registration rights. The
Shareholders and Registration Rights Agreement also provides that if GTS
plans to sell shares of Common Stock to a third party and that sale would
result in (x) such third party owning more than one-third plus one share of
the outstanding Common Stock and (y) GTS holding less than such amount,
then (i) CIPEF may require that a percentage of its shares of Common Stock
be included in the sale to the third party or (ii) subject to certain
conditions, GTS may require CIPEF to sell to the third party a percentage
of the shares of Common Stock CIPEF purchased pursuant to the Subscription
Agreement.
In addition, the Shareholders and Registration Rights
Agreement provides that the Issuer will appoint one individual designated
by CIPEF to the Board of Directors of the Issuer and GTS will vote its
shares in favor of such individual. During the period of time that GTS is
required to vote for CIPEF's nominee, CIPEF will vote in favor of GTS'
nominees.
Except as described above, none of the Reporting Parties or,
to the knowledge of the Reporting Parties, any of the persons listed on
Schedule I hereto is a party to any contract, arrangement, understanding or
relationship (legal or otherwise) with respect to any securities of the
Issuer, including but not limited to transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements, put
or calls, guarantees of profits, division of profits or loss, or the giving
or withholding of proxies.
ITEM 7. Material to be Filed as Exhibits
--------------------------------
Exhibit 99.1: Subscription Agreement.
Exhibit 99.2: Shareholders and Registration
Rights Agreement.
<PAGE>
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: December 27, 1999
CAPITAL GROUP INTERNATIONAL, INC.
By: /s/ Philip de Toledo
------------------------------
Name: Philip de Toledo
Title: Senior Vice President
& PFO
CAPITAL INTERNATIONAL, INC.
By: /s/ Peter C. Kelly
------------------------------
Name: Peter C. Kelly
Title: Senior Vice President
CAPITAL INTERNATIONAL INVESTMENTS, LLC
By: Capital International, Inc.
Its: Managing Member
By: /s/ Peter C. Kelly
------------------------------
Name: Peter C. Kelly
Title: Senior Vice President
CAPITAL INTERNATIONAL GLOBAL EMERGING
MARKETS PRIVATE EQUITY FUND, L.P.
By: Capital International Investments, LLC
Its: General Partner
By: Capital International, Inc.
Its: Managing Member
By: /s/ Peter C. Kelly
------------------------------
Name: Peter C. Kelly
Title: Senior Vice President
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
CAPITAL INTERNATIONAL, INC.,
CAPITAL GROUP INTERNATIONAL, INC. AND
CAPITAL INTERNATIONAL INVESTMENTS, LLC
The name, present principal occupation or employment, the
business address and citizenship for each director and executive officer of
Capital International, Inc. ("Capital International"), Capital Group
International, Inc. ("CGII") and Capital International Investments, LLC
("Capital Investments") is set forth below.
<TABLE>
<CAPTION>
Present Principal Occupation or
Name and Business Employment Business Address Citizenship
------------------ ----------- ----------------- -----------
Capital International
- ---------------------
<S> <C> <C> <C>
Walter P. Stern Senior Management 630 5th Avenue, 36th Fl U.S.A.
New York, New York 10111-0121
David I. Fisher Portfolio Manager 11100 Santa Monica Boulevard, U.S.A.
15th Floor
Los Angeles, CA 90025-3384
Shaw B. Wagener Portfolio Manager 333 South Hope Street U.S.A.
Los Angeles, CA 90071-1447
Philip de Toledo Principal Financial Officer 11100 Santa Monica Boulevard, U.S.A.
15th Floor
Los Angeles, CA 90025-3384
Koenraad C. A. Foulon Portfolio Manager 25 Bedford Street Belgium
London, England WC2E 9HN
Hartmut Giesecke Portfolio Manager 1 Raffles Place Germany
#24-00 OUB Centre
Singapore 0104
Peter C. Kelly Attorney 11100 Santa Monica Boulevard, U.S.A.
15th Floor
Los Angeles, CA 90025-3384
Victor D. Kohn Portfolio Manager 11100 Santa Monica Boulevard, Chile
15th Floor
Los Angeles, CA 90025-3384
Lam Nguyen-Phuong Private Equity Research Director 1 Raffles Place U.S.A.
#24-00 OUB Centre
Singapore 0104
Darcy B. Kopcho Research Analyst 333 South Hope Street U.S.A.
Los Angeles, CA 90071-1447
CGII
- ----
David I. Fisher Portfolio Manager 11100 Santa Monica Boulevard, U.S.A.
15th Floor
Los Angeles, CA 90025-3384
Richard C. Barker Portfolio Manager One Market, Steuart Tower, U.S.A.
Suite 1800
San Francisco, CA 94105-1409
Walter P. Stern Senior Management 630 5th Avenue, 36th Fl U.S.A.
New York, New York 10111-0121
Nilly Sikorsky Portfolio Manager 3 Place des Bergues Switzerland
1201 Geneva, Switzerland
Robert Ronus Portfolio Manager 333 South Hope Street U.S.A.
Los Angeles, CA 90071-1447
Capital Investments
- -------------------
Koenraad C. A. Foulon Portfolio Manager 25 Bedford Street Belgium
London, England WC2E 9HN
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
TRANSACTIONS IN SHARES OF COMMON STOCK ($0.01 PAR VALUE)
OF GOLDEN TELECOM, INC. (CUSIP # 38122G107)
Name of Purchaser/Seller Trade Date Price Per Share # of Shares Purchased/(Sold)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CIPEF 11/16/99 12.00 150,000
CIPEF 11/18/99 12.00 75,000
CIPEF 11/19/99 11.00 20,000
CIPEF 11/29/99 11.50 75,000
CIPEF 11/30/99 11.6875 10,000
CIPEF 12/1/99 11.625 30,000
CIPEF 12/2/99 11.5625 20,000
CIPEF 12/3/99 11.50 7,500
CIPEF 12/7/99 10.5625 10,000
CIPEF 12/8/99 10.375 2,600
CIPEF 12/10/99 10.6326 16,500
CIPEF 12/13/99 10.50 12,000
</TABLE>
EXHIBIT 99.1
DATED NOVEMBER 13, 1999
GOLDEN TELECOM, INC.
1,250,000 SHARES OF COMMON STOCK, PAR VALUE $.01 EACH
---------------------------------
SUBSCRIPTION AGREEMENT
---------------------------------
<PAGE>
THIS AGREEMENT (the "Agreement") is made on November 13, 1999 BETWEEN:
(1) Golden Telecom, Inc., a Delaware corporation (the "COMPANY"); and
(2) Capital International Global Emerging Markets Private Equity Fund,
L.P., a Delaware limited partnership ("INVESTOR").
WHEREAS:
(A) In connection with this Agreement, Investor proposes to subscribe for,
and the Company proposes to issue to Investor, 1,250,000 shares (the
"Shares") of its common stock, par value $.01 per share (the "Common
Stock");
(B) Investor intends to pay $15,000,000 in cash for the Shares purchased
from the Company; and
(C) Investor (i) acknowledges that the Shares have not been registered
under the U.S. Securities Act of 1933, as amended (the "Securities
Act") and are being offered and sold in reliance on an exemption from
registration under the Securities Act and (ii) confirms that it has
received a copy of the private placement memorandum, dated November
13, 1999 (the "Private Placement Memorandum"), relating to the Company
and Investor's intention to subscribe for the Shares.
IT IS AGREED as follows:
1. INTERPRETATION
(1) In this Agreement (including the Recitals):
"CLOSING" means the sale of the Shares by the Company to Investor
pursuant to the provisions of Section 3 of this Agreement;
"CLOSING DATE" has the meaning given to it in Section 3 of this
Agreement;
"COMMON STOCK" has the meaning given to it in Recital (A);
"COMPANY" has the meaning given to it in introductory clause (1) of
this Agreement;
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement, or restriction
of any kind, including, without limitation, any arrangement,
restriction on the use, voting, transfer, receipt of income or other
exercise of any attributes of ownership;
"INVESTOR" has the meaning given to it in introductory clause (2) of
this Agreement;
"PERSON" shall have the meaning given to it in Section 5 of this
Agreement;
<PAGE>
"PRIVATE PLACEMENT MEMORANDUM" has the meaning given to it in Recital
(C);
"PURCHASE PRICE" means $15,000,000 in cash;
"SHARES" has the meaning given to it in Recital (A); and
"SHAREHOLDERS AND REGISTRATION RIGHTS AGREEMENT" has the meaning given
to it in Section 4(2) of this Agreement.
(2) The headings in this Agreement do not affect its interpretation.
2. SUBSCRIPTION
(a) Subject to the terms and conditions of this Agreement and the
Private Placement Memorandum, Investor agrees to subscribe for
the Shares, and the Company agrees to issue and sell the Shares
to Investor.
(b) The Investor understands that the Shares are being offered in a
transaction not involving any public offering within the United
States within the meaning of the Securities Act of 1933 (the
"Securities Act") and that the Shares have not been and will not
be registered under the Securities Act, except if requested by
the Investor in accordance with the Shareholders and Registration
Rights Agreement described in Section 4(2) hereof among the
Investor, Global TeleSystems Group, Inc. ("GTS") and the Company,
and agrees that if in the future the Investor decides to resell,
pledge or otherwise transfer such Shares, such Shares may be
offered, resold, pledged or otherwise transferred only (i) in the
United States to a person who we reasonably believe is a
"qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in a transaction meeting the requirements of
Rule 144A, (ii) outside the United States in a transaction in
accordance with Rule 904 under the Securities Act, (iii) pursuant
to an exemption from registration under the Securities Act (such
as that provided by Rule 144 thereunder, if available) or (iv)
pursuant to an effective registration statement under the
Securities Act, in each of cases (i) through (iv) in accordance
with any applicable securities laws of any State of the United
States or any other applicable jurisdiction. The Investor
understands that the registrar and transfer agent for the Shares
will not be required to accept for registration of transfer any
of the Investor's Shares, except upon presentation of evidence
satisfactory to the Company and the transfer agent, which may
include an opinion of counsel, that the foregoing restrictions on
transfer have been complied with. The Investor further
understands that any Shares acquired by it will be in the form of
definitive physical certificates and that such certificates will
bear a legend reflecting the substance of this paragraph.
<PAGE>
3. CLOSING
(1) Subject to the satisfaction of all conditions set forth in
Section 4 below, at 9:00 A.M. (New York time) on December 31,
1999 or at such earlier time and/or date when such conditions
precedent have been satisfied (the "CLOSING DATE"):
(a) the Company shall issue the Shares and shall deliver a
certificate, in definitive form and registered in such
name(s) and in such denomination(s) as Investor shall
request in writing not later than two full business days
prior to the Closing, evidencing the Shares for the
account(s) of Investor, against payment of the Purchase
Price;
(b) Investor shall pay to the Company the Purchase Price in
respect of the Shares in Federal (same day) funds; and
(c) Subject to subclauses (a) and (b) of this Section (3)(1),
the Shares to be issued on such Closing date will be fully
paid, and Investor's commitment to subscribe for the Shares
will be fully satisfied to the extent that all the Shares
are so issued to Investor.
(2) A certificate or certificates for the Shares to be delivered to
Investor shall be in definitive form and delivered to Investor at
the offices of Fried, Frank, Harris, Shriver & Jacobson, New
York, New York for the account of Investor on the date of the
Closing in accordance with the instructions delivered in
accordance with Section 3(1)(a) above.
(3) Each certificate representing Shares shall be stamped or
otherwise imprinted with a legend substantially in the following
form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE."
A certificate shall not bear such legend if in the opinion of
counsel satisfactory to the Company (it being agreed that
Shearman & Sterling and Fried, Frank, Harris, Shriver & Jacobson
shall be satisfactory) the securities being sold thereby may be
publicly sold without registration under the Securities Act.
4. CONDITIONS PRECEDENT TO THE CLOSING
(1) HSR Clearance. The Company and Investor shall have taken all
actions necessary to make the filings required of each of them
under the Hart-Scott Rodino Act (the "HSR Act") and clearance
from the Federal Trade Commission or the Antitrust Division of
the Department of Justice shall have been obtained.
(2) Execution of Shareholders and Registration Rights Agreement.
Before or as of the Closing Date, the Company, GTS and the
Investor shall have entered into a Shareholders and Registration
Rights Agreement substantially in the form of Exhibit A hereto
(the "SHAREHOLDERS AND REGISTRATION RIGHTS AGREEMENT").
<PAGE>
(3) Representations and Warranties. Each of the representations and
warranties made by the Company and the Investor in this Agreement
(other than those made as of a specified date earlier than the
Closing Date) shall be true and correct in all material respects
on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date, and any
representation or warranty made as of a specified date earlier
than the Closing Date shall have been true and correct in all
material respects on and as of such earlier date.
(4) Opinion of Counsel to the Company and GTS. The Investor shall
have received the opinion of Shearman & Sterling, counsel to the
Company and GTS, in form and substance reasonably satisfactory to
Investor.
(5) Waiver of Right of First Refusal by GTS. GTS shall have waived
the right of first refusal it holds pursuant to the Shareholders'
Agreement entered into as of October 5, 1999 by and between GTS
and the Company to purchase a pro rata portion of any issue of
new shares of Common Stock by the Company.
5. REPRESENTATIONS AND WARRANTIES
(1) The Company represents, warrants and undertakes to Investor as
follows:
(a) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of Delaware with full power and authority to own,
lease and operate its properties and assets and conduct its
business materially as described in the Private Placement
Memorandum;
(b) the execution of this Agreement and the Shareholders and
Registration Rights Agreement by the Company has been duly
authorized by the Company, and this Agreement constitutes,
and the Shareholders and Registration Rights Agreement will
constitute, a legal, valid and binding obligation of the
Company, enforceable in accordance with their respective
terms;
(c) the authorized and issued capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Private Placement Memorandum;
(d) the shares of Common Stock outstanding prior to the issuance
of the Shares have been duly authorized and are validly
issued, fully paid and non-assessable;
(e) the Shares have been duly authorized by the Company;
(f) the Shares will, on issue and receipt of payment therefor in
accordance with the terms of this Agreement, be validly
issued in accordance with the laws and regulations of the
State of Delaware, fully paid and non-assessable and free
from all Encumbrances and other third party rights;
<PAGE>
(g) all consents, approvals, orders, registrations and filings
or other action required to be obtained by the Company for
the execution and delivery of this Agreement and the
offering and sale of the Shares as contemplated by the
Private Placement Memorandum and the performance of the
terms of this Agreement by the Company, have been obtained
or made and are in full force and effect; no filing with, or
authorization, approval, consent, license, order,
registration, qualification or decree of, any court or
governmental authority or agency (other than under the
securities or "blue sky" laws of the various states) is
necessary or required for the performance by the Company of
its obligations hereunder;
(h) the Shares conform in all material respects to the
statements relating thereto contained in the Private
Placement Memorandum;
(i) subject to the accuracy of the Investor's representations
and covenants contained herein, it is not necessary in
connection with the offer, sale and delivery of the Shares
in the manner contemplated in the Agreement and the Private
Placing Memorandum to register the Shares under the
Securities Act;
(j) as of its date and as of the Closing date, the Private
Placement Memorandum does not and will not include an untrue
statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading; and
(k) the audited financial statements appearing in the Private
Placement Memorandum were prepared in accordance with the
requirements of law and with generally accepted accounting
principles of the United States consistently applied and
they present fairly the financial condition of the Company
as at the dates at which they were prepared and the results
of operations of the Company in respect of the periods for
which they were prepared.
(l) The execution and delivery by the Company of this Agreement
and of the Shareholders and Registration Rights Agreement,
its consummation of the transactions contemplated thereby,
and its compliance with the provisions thereof, will not (i)
violate or conflict with the Company's Articles of
Incorporation or By-laws, (ii) violate, conflict with, or
give rise to any right of termination, cancellation, or
acceleration under any agreement, lease, security agreement,
licence, permit, or instrument to which the Company is a
party, or to which it or any of its assets is subject, (iii)
result in the imposition of any Encumbrance on any asset of
the Company, (iv) violate or conflict with any laws, or (v)
require any consent, approval or other action of, notice to,
or filing with any entity or person (governmental or
private) (collectively, "PERSON"), except for those that
have been obtained or made.
(2) Investor represents, warrants and undertakes to the Company as
follows:
<PAGE>
(a) the Investor has been duly organized and is validly existing
as a Delaware limited partnership in good standing under the
laws of Delaware with full power and authority to subscribe
for the Shares as contemplated by this Agreement;
(b) the execution of this Agreement by Investor has been duly
authorized by Investor, and this Agreement constitutes a
legal, valid and binding obligation of Investor;
(c) the Investor is acquiring the Shares for its own account and
without a view to the public distribution of the Shares or
any interest therein;
(d) the Investor understands that no action has been or will be
taken in any jurisdiction by the Company that would permit a
public offering of the Shares, or possession or distribution
of the Private Placement Memorandum or any other offering or
publicity material relating to the Shares, in any country or
jurisdiction where action for that purpose is required,
other than as contemplated by the Shareholders and
Registration Rights Agreement;
(e) the Investor will comply with all applicable laws and
regulations in each jurisdiction in which it acquires Shares
or has in its possession the Private Placement Memorandum or
any such other material, in all cases at its own expense;
(f) in connection with the private placement of Shares
contemplated by this Agreement, the Investor has not
solicited offers for, or offered, the Shares by any form of
general solicitation or general advertising (as those terms
are defined in Regulation D under the Securities Act)
including, without limitation, by any form of electronic
media;
(g) the Investor has such knowledge and experience in financial
and business matters that it is capable of evaluating the
merits and risks of purchasing Shares; and
(h) the Investor has received a copy of the Private Placement
Memorandum relating to the offering of the Shares and
acknowledges that it has had access to such financial and
other information, and has been afforded the opportunity to
ask such questions of representatives of the Company and
receive answers thereto, as it deems necessary in connection
with its decision to purchase the Shares.
6. UNDERTAKINGS
(1) For a period of 180 days after the Closing Date, the Investor
will not offer, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any Shares or publicly disclose the
intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of the Deutsche Bank AG
London, which consent shall not be unreasonably withheld.
<PAGE>
(2) Except as set forth herein, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such cost or expense,
except that the expenses incurred in connection with all actions
necessary to make the filings required of the Company and the
Investor under the Hart-Scott Rodino Act, as well as any filing
fee relating thereto, shall be paid by the Company.
7. REPRESENTATIONS TO SURVIVE DELIVERY
All representations, warranties and agreements contained in this
Agreement shall remain operative and in full force and effect for
one year after the date of this Agreement, regardless of any
investigation made by or on behalf of the Investor, and shall
survive delivery of the Shares for such period.
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 given at the
time when mailed in any general or branch office of the United
States Postal Service, enclosed in a registered or certified
postpaid envelope, or sent by Federal Express or other similar
overnight courier service, addressed to the address of the
parties 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,
IN THE CASE OF THE COMPANY:
Golden Telecom, Inc.
12, Krasnokazarmennaya
Moscow, Russia 111250
Facsimile: +7 (095) 797-9331
Attention: General Counsel
WITH A COPY TO:
Global TeleSystems Group, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
<PAGE>
Facsimile: +1 (703) 236-3101
Attention: General Counsel
IN THE CASE OF INVESTOR:
Capital International Global Emerging Markets Private Equity
Fund, LP
135 South State College Boulevard
Brea, CA 90071-1447
Facsmile: +1 (714) 671-7080
Attention: Jim Brown
WITH A COPY TO:
Capital International Limited
25 Bedford Street
London
WC2E 9HN
Facsmile: +44 (171) 864-5768
Attention: Ida Levine
and a copy to:
Capital Research International Limited
25 Bedford Street
London
WC2E 9HN
Facsmile: +44 (171) 864-5814
Attention: Ashley Dunster
Any such notice shall take effect, in the case of delivery, at
the time of delivery and, in the case of telex or facsimile, at
the time of despatch.
8. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all
of which, taken together, shall constitute one and the same
agreement and any party may enter into this Agreement by
executing a counterpart.
<PAGE>
9. GOVERNING LAW
THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE
JURISDICTION AND VENUE IN ANY ACTION BROUGHT BY ANY PARTY HERETO
PURSUANT TO THIS AGREEMENT SHALL LIE EXCLUSIVELY IN ANY FEDERAL
OR STATE COURT LOCATED IN THE CITY OF NEW YORK, NEW YORK. THE
PARTIES IRREVOCABLY AGREE THAT VENUE WOULD BE PROPER IN ANY SUCH
COURT, AND HEREBY WAIVE ANY OBJECTION THAT ANY SUCH COURT IS AN
IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH ACTION.
THE PARTIES AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY APPLICABLE LAW.
<PAGE>
IN WITNESS of which this Agreement has been executed on the date
written above.
GOLDEN TELECOM, INC.
By: /s/ Jeff Kiddell
---------------------------------
Name: Jeff Kiddell
Title: Senior Vice President,
General Counsel &
Corporate Secretary
CAPITAL INTERNATIONAL GLOBAL EMERGING
MARKETS PRIVATE EQUITY FUND, L.P.
By: Capital International Inc.,
General Partner
By: /s/ Ashley Dunster
---------------------------------
Name: Ashley Dunster
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF SHAREHOLDERS AND REGISTRATION
RIGHTS AGREEMENT
EXHIBIT 99.2
SHAREHOLDERS AND REGISTRATION RIGHTS AGREEMENT
----------------------------------------------
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of December 24, 1999, by and among Golden Telecom, Inc., a
Delaware corporation (the "Company"), Global TeleSystems Group, Inc., a
Delaware corporation (together with its Permitted Transferees hereunder,
"GTS") and Capital International Global Emerging Markets Private Equity
Fund, L.P., a Delaware limited partnership ("Investor").
RECITALS
--------
A. In connection with the issuance and sale by the Company of an
aggregate of 1,250,000 shares of common stock of the Company (including any
securities issued or issuable with respect to such shares: the "Shares") in
a private placement to the Investor (the "Private Placement") pursuant to a
Subscription Agreement dated November 13, 1999, the Company desires to
grant to Investor certain registration rights with respect to such Shares.
B. The parties hereto desire to set forth the terms and
conditions of the Company's covenants and agreements in respect of the
registration of such Shares with the Securities and Exchange Commission and
all applicable state securities agencies.
C. GTS and the Investor desire to set forth the terms and
conditions of certain agreements between them regarding certain rights and
restrictions with respect to the Shares and the management of the Company.
D. In consideration of the premises and the mutual agreements
contained herein, the parties hereby agree as follows:
AGREEMENT
---------
1. Definitions
-----------
As used in this Agreement, the following capitalized terms shall
have the following meanings:
"ADVICE" has the meaning set forth in the last paragraph of
Section 5 hereof.
"AGENTS" means any Person authorized to act and who acts on
behalf of Investor with respect to the transactions contemplated by this
Agreement.
<PAGE>
"CLOSING DATE" means the date on which the purchase and sale of
the Shares pursuant to the Private Placement is consummated.
"COMMON STOCK" means shares of the Company's common stock, par
value $.01 per share, as the same may be constituted from time to time.
"DEMAND REGISTRATION" has the meaning set forth in Section 3(a)
hereof.
"DIRECTOR" means a member of the Board of Directors of the
Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder as in effect from time to
time.
"INCLUSION NOTICE" shall have the meaning set forth in Section 9
hereof.
"INCLUSION RIGHT" shall have the meaning set forth in Section 9
hereof.
"PERMITTED TRANSFEREE" shall mean any subsidiary of GTS or any
other person controlled by, under common control with, or in control of
GTS, provided that any Transfer to a Permitted Transferee may only occur in
connection with an internal reorganization of the GTS group as a whole, and
further provided that such Permitted Transferee shall agree to be bound by
the terms of this Agreement on the same basis as GTS.
"PERSON" means an individual, partnership, corporation trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"PROSPECTUS" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement and all other amendments
and supplements to the Prospectus, including post-effective amendments and
all material incorporated by reference in such Prospectus.
"REGISTRABLE SECURITIES" means (i) the 1,250,000 Shares purchased
by Investor in connection with the Private Placement and (ii) any
securities issued or issuable with respect to such shares of Common Stock
by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, until such shares of Common Stock or other securities are
not Restricted Securities as defined in Section 2, provided, however, that
Registrable Securities shall not include such securities as may be
transferred pursuant to an exemption from the registration requirements of
the Securities Act provided by Rule 144 under the Securities Act.
<PAGE>
"REGISTRATION EXPENSES" has the meaning set forth in Section 6
hereof.
"REGISTRATION STATEMENT" means any registration statement of the
Company which covers Registrable Securities pursuant to the provisions of
this Agreement, including (i) the Prospectus, (ii) amendments and
supplements to such Registration Statement, (iii) post-effective
amendments, (iv) all exhibits and all material incorporated by reference in
such Registration Statement and (v) any registration statement pursuant to
a Demand Registration.
"RESTRICTED SECURITIES" means the Registrable Securities upon
original issuance thereof, subject to the provisions of Section 2 hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SEC" means The Securities and Exchange Commission.
"SIX- MONTH LOCK-UP" shall have the meaning specified in Section 3.
"TRANSFER" means any transfer, in whole or in part, by sale,
pledge, assignment, grant or other means, including, without limitation, by
the grant of an option, of shares of Common Stock.
"THIRD PARTY" shall mean any Person other than a Permitted
Transferee and shall include, with respect to any Person, its affiliates
and members of any group of which such Person is a member for the purpose
of acquiring, holding or disposing of shares of Common Stock of the
Company.
"THIRD PARTY OFFER" shall have the meaning specified in Section
9.
"UNDERWRITTEN OFFERING" means the offering and sale of securities
of the Company covered by any Registration Statement pursuant to a firm
commitment underwriting to an underwriter at a fixed price for reoffering
or pursuant to agency or best efforts arrangements with an underwriter.
Unless the context otherwise requires: (i) "or" is not exclusive; and (ii)
words in the singular include the plural and in the plural include the
singular.
<PAGE>
2. SECURITIES SUBJECT TO THIS AGREEMENT
------------------------------------
Registrable Securities. The securities entitled to the benefits
of this Agreement are the Registrable Securities but, with respect to any
particular Registrable Security, only so long as such security continues to
be a Restricted Security. A Registrable Security ceases to be a Restricted
Security when (i) it has been effectively registered under the Securities
Act and disposed of in accordance with the Registration Statement covering
it, (ii) it has been distributed pursuant to Rules 144 or 144A under the
Securities Act (or any similar provision then in force) or (iii) it has
otherwise been transferred and a new certificate or other evidence of
ownership for it not bearing a legend restricting transfer under the
Securities Act and not subject to any stop transfer order has been
delivered by or on behalf of the Company and no other restriction on
transfer exists.
3. DEMAND REGISTRATION
-------------------
(a) Requests for Registration. At any time after June 24, 2000
(the "SIX-MONTH Lock-Up"), Investor may make a written request for
registration with the SEC under and in accordance with the provisions of
the Securities Act of all or part of its Registrable Securities (a "Demand
Registration"). All requests made pursuant to this Section 3(a) shall
specify the number of Registrable Securities to be registered and the
intended methods of disposition thereof. All such requests shall be
delivered to the Company in accordance with the provisions of Section 14(d)
of this Agreement.
(b) Number of, and Limitations on, Registrations. Investor will
be entitled to request one Demand Registration. The Company will not be
obligated to register any Registrable Securities pursuant to such a Demand
Registration unless there is requested to be included in such registration
at least 250,000 shares of Common Stock (subject to such adjustments as may
be necessary by reason of the occurrence of an event contemplated by clause
(ii) of the definition of Registrable Securities) (unless, at the time of
such request, Investor holds less than 250,000 shares of Common Stock, in
which case such request must be for such entire lesser amount).
(c) Expenses. In any registration initiated as the Demand
Registration, the Company will pay all Registration Expenses, whether or
not the Registration Statement has become effective.
(d) Selection of Underwriters. If any of the Registrable
Securities covered by a Demand Registration are to be sold in an
underwritten offering, or in a best efforts underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by Investor. If Investor
disapproves of the terms and conditions of the underwriting, Investor may
elect to withdraw all its Registrable Securities by written notice to the
Company and the managing underwriter and, at its election, either (i) pay
the costs and expenses associated therewith (in which case such withdrawn
registration shall not constitute a Demand Registration) or (ii) permit the
Company to pay the same (in which case the Investor shall have no further
right to request a Demand Registration hereunder), provided that, in the
event the Company has already filed a Registration Statement pursuant to
such demand by the Investor, the Investor's withdrawn registration will
nevertheless constitute a Demand Registration pursuant to this Agreement.
<PAGE>
(e) Deferral of Demand Registration. In the event the Company or
GTS is actively contemplating filing a Registration Statement for any of
its shares of Common Stock on its own behalf at the time the Investor
presents its Demand Registration, the Company or GTS, as the case may be,
shall be entitled to defer such Demand Registration for a period of up to
60 days while it evaluates whether to proceed with its own contemplated
registration, with no prejudice to any right the Investor may hold pursuant
to Section 4 of this Agreement.
4. INCIDENTAL REGISTRATION.
-----------------------
(a) Request for Registration. After the Six-Month Lock-Up, if the
Company at any time proposes to register any of its authorized but unissued
shares of Common Stock on its own behalf or any of its unregistered and
issued shares of Common Stock on behalf of other stockholders, under the
Securities Act on a form and in a manner that would permit registration of
Registrable Securities under the Securities Act for sale to the public
under the Securities Act, it will each such time give prompt notice in
accordance with the provisions of Section 14(d) of this Agreement to
Investor of its intention to do so, specifying the form and manner and the
other relevant facts involved in such proposed registration (including,
without limitation, the identity of the managing underwriter, if any). Upon
the written request of Investor delivered to the Company within 30 days
after such notice shall have been given to Investor (which request shall
specify the Registrable Securities intended to be disposed of by such
holder and the intended method of disposition thereof), the Company will
use its reasonable best efforts to effect the registration under the
Securities Act, as expeditiously as is reasonable, of all Registrable
Securities that the Company has been so requested to register by Investor,
to the extent requisite to permit the sale of the Registrable Securities to
be so registered; provided, however, that:
(i) if, at any time after giving such written notice of its
intention to register any Common Stock proposed to be registered by
the Company and prior to the effective date of the registration
statement filed in connection with such registration, the Company
shall determine for any reason not to register such Common Stock, the
Company shall, at its election, give written notice of such
determination to Investor, and thereupon the Company shall be relieved
of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith to the extent provided
in Section 4(b));
<PAGE>
(ii) if the managing underwriter of such offering shall advise
the Company that, in its judgment, the number of Common Stock proposed
to be included in such offering should be limited because the
inclusion of Registrable Securities is likely to adversely impact the
purchase price obtained for the Common Stock proposed to be included
in such offering, then the Company will promptly advise Investor
thereof and may require, by written notice to Investor accompanying
such advice, that, to the extent necessary to meet such limitation,
all holders of Registrable Securities and of other shares of Common
Stock proposing to sell Common Stock in such offering shall share pro
rata in the number of Common Stock to be excluded from such offering,
such sharing to be based on the respective numbers of Registrable
Securities and other shares of Common Stock as to which registration
has been requested by such holders, and that the distribution of such
Registrable Securities and other shares of Common Stock as are so
excluded be deferred (in case of a deferral as to a portion of such
Registrable Securities and other shares of Common Stock, such portion
to be allocated among such holders in proportion to the respective
numbers of Common Stock so requested to be registered by such holders)
until the completion of the distribution of such Common Stock and any
other securities by such underwriters; and
(b) Expenses. In any registration initiated pursuant to this
Section 4, the Company will pay all Registration Expenses, whether or not
the Registration Statement has become effective.
5. REGISTRATION PROCEDURES
-----------------------
Whenever Investor has requested that any Registrable Securities
be registered pursuant to this Agreement, the Company will promptly take
all such actions as may be necessary or desirable to permit the sale of
such Registrable Securities in accordance with the intended method or
methods of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
<PAGE>
(a) with respect to a request to file a Registration Statement
covering Registrable Securities made pursuant to Section 3, use its
reasonable best efforts to prepare and file with the SEC not later
than 60 days after receipt of such request (which 60-day period may be
extended by the Company for up to an additional 60 days if at the time
of such request the Company is engaged in negotiations in anticipation
of its participation in a material merger, acquisition or other form
of business combination or, if by reason of such transaction, the
Company is not in a position to timely prepare and file the
Registration Statement and the Company furnishes to Investor a
certificate signed by the Chief Executive Officer of the Company
stating that in his or her good faith opinion such registration would
interfere with such transaction then being pursued by the Company) a
Registration Statement on a form for which the Company then qualifies
which is satisfactory to the Company and Investor (unless the offering
is made on an underwritten basis, including on a best efforts
underwriting basis, in which event the managing underwriter or
underwriters may determine the form to be used) and which form shall
be available for the sale of the Registrable Securities in accordance
with the intended method or methods of distribution thereof, and use
its reasonable best efforts to cause such Registration Statement to
become effective; the Company shall not file any Registration
Statement pursuant to Section 3 or any amendment thereto or any
Prospectus or any supplement thereto (including such documents
incorporated by reference) to which Investor or the underwriters, if
any, shall reasonably object in light of the requirements of the
Securities Act or any other applicable laws or regulations;
(b) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto (excluding documents to be
incorporated by reference therein, except in the case of the
preparation of the initial Registration Statement), the Company shall,
within five days of filing, furnish to Investor and the underwriters,
if any, copies of all such documents in substantially the form
proposed to be filed (including documents incorporated therein by
reference), to enable Investor and the underwriters, if any, to review
such documents prior to the filing thereof, and the Company shall make
such reasonable changes thereto (including changes to, or the filing
of amendments reflecting such changes to, documents incorporated by
reference) as may be reasonably requested by Investor and the managing
underwriter or underwriters, if any;
(c) subject to paragraph (b) above, prepare and file with the SEC
such amendments and post-effective amendments to the Registration
Statement as may be necessary to keep the Registration Statement
continuously effective for a period of not less than 18 months, or
such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold or
withdrawn; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended methods of disposition by Investor
thereof set forth in such Registration Statement or supplement to the
Prospectus;
<PAGE>
(d) notify Investor and the managing underwriters, if any,
promptly, and (if requested by any such Person) confirm such advice in
writing, (1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective, (2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information, (3) of the issuance by the SEC of any stop
order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose, (4) if at any time
the representations and warranties of the Company contemplated by
paragraph (o) below cease to be true and correct, (5) of the receipt
by the Company of any notification with respect to the suspension of
the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose, and (6) of the happening of any event which makes any
statement made in the Registration Statement, the Prospectus or any
document incorporated therein by reference untrue or which requires
the making of any changes in the Registration Statement, the
Prospectus or any document incorporated therein by reference in order
to make the statements therein not misleading;
(e) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at
the earliest possible moment;
(f) as promptly as practicable after filing with the SEC of any
document which is incorporated by reference into the Registration
Statement or the Prospectus (after initial filing of the Registration
Statement) provide copies of such document to counsel to Investor and
to the managing underwriters;
(g) provide to Investor and each managing underwriter, without
charge, at least one signed copy of the Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits (including those incorporated by reference) and a reasonable
number of conformed copies of all such documents;
(h) deliver to Investor and the underwriters, if any, as many
copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons may reasonably
request; the Company consents to the use of the Prospectus or any
amendment or supplement thereto by Investor and the underwriters, if
any, in connection with the offering and sale of the Registrable
Securities covered by the Prospectus or any amendment or supplement
thereto;
(i) prior to the date on which the Registration Statement is
declared effective, use its reasonable best efforts to register or
qualify, or cooperate with Investor and the underwriters, if any, and
their respective counsel in connection with the registration or
qualification of, such Registrable Securities for offer and sale under
the securities or blue sky laws of such jurisdictions as any seller or
underwriter reasonably requests in writing and do any and all other
acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by the
Registration Statement; provided that the Company will not be required
to qualify generally to do business in any jurisdiction where it is
not then so qualified or to take any action which would subject it to
general service of process in any such jurisdiction where it is not
then so subject; provided, further, that the Company will not be
required to qualify such Registrable Securities in any jurisdiction in
which the securities regulatory authority requires that Investor
submit any shares of its Registrable Securities to the terms,
provisions and restrictions of any escrow, lock-up or similar
agreement(s) for consent to sell Registrable Securities in such
jurisdiction unless Investor agrees to do so;
<PAGE>
(j) cooperate with Investor and the managing underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale
of Registrable Securities to the underwriters;
(k) use its reasonable best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with
or approved by such other governmental agencies or authorities within
the United States as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of
such Registrable Securities;
(l) upon the occurrence of any event contemplated by paragraph
(d)(6) above, prepare a supplement or post-effective Amendment to the
Registration Statement or the Prospectus or any document incorporated
therein by reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Securities,
the Prospectus will not contain an untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein not misleading;
(m) use its reasonable best efforts to cause all Registrable
Securities covered by the Registration Statement to be listed on each
securities exchange or the Nasdaq National Market on which similar
securities issued by the Company are then listed if requested by
Investor or the managing underwriters, if any;
(n) provide a transfer agent and registrar for all Registrable
Securities;
<PAGE>
(o) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith as
Investor or the managing underwriters, if any, reasonably request in
order to expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration (1) make such representations and warranties
to Investor and the underwriters, if any, in form, substance and scope
as are customarily made by issuers to underwriters in primary
underwritten offerings (including, without limitation, an agreement to
not sell equity securities during a customary lock-up period) and
confirm the accuracy of the same if and when requested, and matters
relating to the compliance of the Registration Statement and the
Prospectus with the Securities Act; (2) obtain opinions of counsel to
the Company, and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the managing
underwriters) addressed to Investor and the underwriters, if any,
covering the matters customary in underwritten primary offerings and
such other matters as may be reasonably requested by Investor and
underwriters, if any; (3) obtain "comfort" letters and updates thereof
from the Company's independent certified public accountants addressed
to Investor and the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in
"comfort" letters by underwriters in connection with primary
underwritten offerings; (4) if an underwriting agreement is entered
into, the same shall set forth in full the indemnification provisions
and procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and (5) the Company shall
deliver such documents and certificates as may be requested by
Investor and the managing underwriters, if any, to evidence compliance
with clause (1) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the
Company. The above shall be done at each closing under such
underwriting or similar agreement or as and to the extent required
thereunder;
(p) make available for inspection during normal business hours by
Investor, any underwriter participating in any disposition pursuant to
such registration statement, and any attorney, accountant or other
agent retained by Investor or any such underwriter, all financial and
other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to
supply all information reasonably requested by Investor or any such
underwriter, attorney, accountant or agent in connection with such
registration statement; provided that any records, information or
documents that are designated by the Company in writing as
confidential shall be kept confidential by such Persons;
(q) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to its security holders, earnings statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than 45
days after the end of any 12-month period (1) commencing at the end of
any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm or best efforts underwriting offering, and (2)
beginning with the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration Statement,
which statements shall cover said 12-month periods; and
(r) take such other reasonable steps that are necessary or
advisable to permit the sale of such Registrable Securities.
The Company may require Investor to furnish to the Company such
information and documents regarding Investor and the distribution of the
Registrable Securities as the Company may from time to time reasonably
request in writing.
<PAGE>
Investor agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 5(d)(6) hereof, Investor will
forthwith discontinue disposition of Registrable Securities until
Investor's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(l) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and
has received copies of any additional or supplemental filings which are
incorporated by reference in the Prospectus, and, if so directed by the
Company, Investor will, or will request the underwriters to, deliver to the
Company (at the Company's expense) all copies, other than permanent file
copies then in Investor's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. If
the Company shall give such notice, the time periods mentioned in Section
5(c) hereof shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
5(d)(6) to and including the date when Investor shall have received the
copies of the supplemented or amended prospectus contemplated by Section
5(l) hereof or the Advice.
6. EXPENSES
--------
Except as otherwise provided herein, all expenses incident to the
Company's performance of or compliance with this Agreement including
without limitation all registration and filing fees, including with respect
to filings required to be made with the National Association of Securities
Dealers, fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities and determination of their eligibility for investment under the
laws of such jurisdictions as the managing underwriters or holders of a
majority of the Registrable Securities being sold may designate), printing
expenses, messenger, telephone and delivery expenses, and fees and
disbursements of counsel for the Company, Investor and of all independent
certified public accountants (including the expenses of any special audit
and "comfort" letters required by or incident to such performance), the
fees and expenses incurred in connection with the listing of the securities
to be registered on each securities exchange on which similar securities
issued by the Company are then listed, rating agency fees, securities acts
liability insurance if Investor so requires, the reasonable fees and
expenses of any special experts retained by Investor or by the Company at
the request of the managing underwriters in connection with such
registration and fees and expenses of other Persons retained by Investor
(all such expenses being herein called "Registration Expenses") will be
borne by the Company. The Company shall, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties) and the
expense of any annual audit which are not "Registration Expenses" for
purposes of this Agreement. In no event shall the Company be liable for the
payment of any discounts, commissions or fees of underwriters, selling
brokers, dealer managers or similar industry professionals relating to the
distribution of the Registrable Securities. Investor shall be liable for
the cost and expense of the time spent by its officers, employees and
Agents incurred in connection with the registration of Registrable
Securities owned by it.
<PAGE>
7. INDEMNIFICATION
---------------
(a) Indemnification by Company. The Company will indemnify and
hold harmless, to the full extent permitted by law, Investor, its officers
and directors, their Agents and each Person who controls Investor (within
the meaning of the Securities Act) against all losses, claims, damages,
liabilities (or actions in respect thereto) and expenses to which any such
Person may be subject, under the Securities Act or otherwise, and reimburse
all such Persons for any legal or other expenses incurred with
investigating or defending against any such losses, claims, damages or
liabilities, insofar as such losses, claims, damages or liabilities arise
out of or are based upon any untrue or alleged untrue statement of a
material fact contained in a Registration Statement, Prospectus or
preliminary prospectus or any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same arise out of
or are based upon an untrue statement of a material fact or omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, which statement or omission is made
therein in reliance upon and in conformity with information furnished in
writing to the Company by Investor, expressly for use therein. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of Investor, Investor's directors and
officers, their Agents or a controlling Person, and shall survive the
transfer of such securities by Investor. The Company will also indemnify
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, their officers
and directors and each Person who controls such Persons (with the meaning
of the Securities Act) to the same extent as provided above with respect to
the indemnification of Investor of Registrable Securities.
(b) Indemnification by Investor. Investor will indemnify and hold
harmless, to the full extent permitted by law, the Company, its directors
and officers and each Person who controls the Company (within the meaning
of the Securities Act) against any losses, claims, damages, liabilities (or
actions in respect thereto) and expenses to which any such Person may be
subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon any untrue or
alleged untrue statement of a material fact contained in a Registration
Statement or Prospectus or preliminary prospectus or any omission or
alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but
only if and to the extent, that such untrue or alleged untrue statement or
omission or alleged omission is made therein in reliance upon and in
conformity with the information furnished in writing by Investor
specifically for inclusion therein. In no event shall the liability of
Investor hereunder be greater in amount than the dollar amount of the
proceeds received by Investor upon the sale of the Registrable Securities
giving rise to such indemnification obligation. The Company shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above with respect to
information so furnished in writing by such Persons.
<PAGE>
(c) Conduct of Indemnification Proceedings. Any Person entitled
to indemnification hereunder will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such indemnifying
party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party and in that case the indemnified
party shall have the right to participate in the conduct of such defense
provided that it will pay for the fees of its own counsel. Whether or not
such defense is assumed by the indemnifying party, the indemnifying party
will not be subject to any liability for any settlement made without its
consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving of the claimant or plaintiff to such indemnified party of a release
from all liability in respect to such claim or litigation. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a
claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect
to such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other
of such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels. The failure to notify an indemnifying party
promptly of the commencement of any such action, if and to the extent
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section, but the omission so to notify the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under this Section.
(d) Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and indemnified
party in connection with the actions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of material fact or omission or alleged omission to state a
material fact, has been made, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages or liabilities referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
<PAGE>
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. TRANSFER OF REGISTRATION RIGHTS
-------------------------------
The registration rights of Investor under this Agreement with
respect to any Registrable Securities may be transferred to any transferee
of such Registrable Securities, including any affiliate of Investor;
provided, however, that (i) Investor shall give the Company written notice
at or prior to the time of such transfer stating the name and address of
the transferee and identifying the securities with respect to which the
rights under this Agreement are being transferred and (ii) such transferee
shall agree in writing, in form and substance reasonably satisfactory to
the Company, to be bound by the provisions of this Agreement (other than
Sections 9, 10 and 11 hereof).
9. TAG-ALONG RIGHTS
----------------
(a) Until the termination of this Agreement (as provided by
Section 12 below), GTS shall not, in any one transaction or any series of
related transactions, Transfer shares of Common Stock to any Third Party (a
"Third Party Offer") if such Third Party would as a result own more than
one-third plus one share of the Company's outstanding Common Stock and GTS
would hold less than such amount, 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 GTS, to include, at the option of the Investor, in the
sale or other disposition to the Third Party, a number of Shares owned by
the Investor determined in accordance with this Section 9. For the
avoidance of doubt, the provisions of this Section 9 will not be triggered
by the dilution created by the issuance of additional shares of Common
Stock by the Company to any Third Party.
(b) GTS shall cause the Third Party Offer to be reduced to
writing (which writing shall include an offer to purchase or otherwise
acquire Shares from the Investor as provided in this Section 9) and shall
send written notice of the Third Partys Offer together with a copy of the
Third Party Offer (the "Inclusion Notice") to the Investor in the manner
set forth in Section 14(d) hereof. At any time within 20 calender days
after delivery of the Inclusion Notice, the Investor may accept the offer
included in the Inclusion Notice and by furnishing written notice of
acceptance to GTS.
<PAGE>
(c) The Investor shall have the right (an "Inclusion Right") to
sell pursuant to the Third Party Offer a number of the Investor's Shares
equal to the product of (x) the number of Shares held by the Investor and
(y) a fraction, the numerator of which is the total number of shares of
Common Stock covered by the Third Party Offer and the denominator of which
is the total number of shares of Common Stock then owned by GTS (provided
that the Investor shall not have the right to sell any more shares of
Common Stock other than the Shares it owns). In all cases, the number of
shares sold by GTS shall equal the number of shares covered by the Third
Party Offer less the number of Shares the Investor has elected to sell.
(d) (i) The consideration payable per Share to be Transferred by
Investor in such sale or other disposition shall be the same in all
respects as the consideration payable to GTS per share of Common Stock so
Transferred by GTS; provided that if the value of such consideration
(determined as provided below) shall be greater than the average closing
price of the Common Stock on the principal exchange or other stock market
on which it then trades for the fifteen trading day period ended the day
before the public announcement of the Third Party Offer, then the amount of
such excess shall be for the account of GTS and Investor shall (whether
through transfer of proceeds, transfer of Shares or some other means, in
each case, as acceptable to GTS) take such actions as are required to
ensure that such excess is paid to GTS.
(ii) The consideration payable per Share to be Transferred,
to the extent that it does not consist of cash, shall be valued as
follows:
(1) securities listed or accepted for trading on any
internationally recognized securities exchange shall be valued at
the average closing price for such security on the principal such
exchange for the fifteen trading day period immediately preceding
the consummation of such sale or other disposition; and
(2) other assets shall be valued as agreed by GTS and
Investor in the period between the issuance of the Inclusion
Notice and Investor's issuing a notice of acceptance thereof;
provided that if they cannot then agree, such valuation will be
as determined prior to the consummation of such sale or other
disposition by an internationally recognized accounting firm,
whose valuation shall finally and conclusively bind the parties
and whose fees shall be borne equally by each party.
(iii) If the consideration payable is to be paid in more
than one form (e.g., in a combination of cash and securities or in a
combination of different securities), then any excess amount payable
to GTS under paragraph (i) above shall be paid pro rata in each form
of consideration, to the extent practicable.
<PAGE>
10. DRAG-ALONG RIGHTS
-----------------
(a) Until the termination of this Agreement (as provided by
Section 12 below), in the event that GTS proposes to Transfer Common Stock
to a Third Party pursuant to a Third Party Offer so that such Third Party
as a result of such sale would own more than one-third plus one share of
the Company's outstanding Common Stock and GTS would hold less than such
amount, and if GTS so requests, the Investor shall Transfer a number of the
Shares held by it, determined as provided below, on the same terms as the
Transfer, provided that Investor shall be under no obligation to effect
such Transfer unless the cash component of the contemplated sale price for
such Transfer would yield an internal rate of return to the Investor of at
least 32.5% on its investment in the Shares (based on actual "cash in" of
the actual purchase price of the Shares ($15 million) and "cash out" of
total cash proceeds received by Investor upon the sale of the Shares, and
360-day years of twelve 30-day months).
(b) The Investor shall be required to sell a number of its Shares
equal to the the product of (x) the number of Shares held by the Investor
and (y) a fraction, the numerator of which is the total number of Common
Stock covered by the Third Party Offer and the denominator of which is the
total number of shares of Common Stock then owned by GTS (provided the
Investor shall not be required to sell any more shares of Common Stock
other than the Shares it owns). In all cases, the number of shares sold by
GTS shall equal the number of shares covered by the Third Party Offer less
the number of Shares the Investor is required to sell pursuant to this
Section 10(b).
(c) Such demand for Transfer by GTS shall be given in writing no
later than 30 days prior to the proposed consummation of such Transfer
pursuant to Section 14(d) of this Agreement, and shall be accompanied by a
copy of the Third Party Offer. Following receipt of such notice, the
Investor shall no longer be entitled to otherwise dispose of the Shares
until after the consummation or termination of the Third Party Offer. For
the avoidance of doubt, the provisions of this Section 10 will not be
triggered by the dilution created by the issuance of additional shares of
Common Stock by the Company to any Third Party.
11. NOMINATION AND REMOVAL OF DIRECTORS
-----------------------------------
(a) The Company shall take all actions necessary to cause the
Board of Directors to appoint one individual designated by the Investor to
serve on the Board of Directors not later than 15 days following the
Investor's request. For as long as the Investor holds 5% or more of the
Company's outstanding Common Stock, GTS shall vote, at any regular or
special meeting of the stockholders of the Company at which Directors will
be elected or in any written consent executed in lieu of such a meeting of
stockholders, all of its shares of Common Stock in favor of (and shall
cause all of its Directors on the Board of Directors to vote in favor of),
one person nominated by the Investor to be a Director of the Company, it
being understood and agreed upon by the parties that (i) such nominee shall
initially be Mr. Ashley Dunster and (ii) the Company will have the right to
reasonably approve of the nomination of any candidate other than Mr. Ashley
Dunster.
<PAGE>
(b) For so long as GTS votes its shares of Common Stock in favor
of such nominees as Investor may nominate pursuant to Section 11(a) above,
the Investor shall vote its shares of Common Stock in favor of (and shall
cause all of its Directors on the Board of Directors to vote in favor of)
all of the persons that GTS may nominate to be Directors of the Company, at
any regular or special meeting of the stockholders of the Company at which
Directors will be elected or in any written consent executed in lieu of
such a meeting of stockholders.
(c) Upon the written request of the Investor, GTS shall consent
in writing to the removal (whether or not for cause) of any Director who
was nominated by the Investor and shall take or cause to be taken all
actions necessary to remove such Director, and any replacement for such
removed Director shall be nominated and elected as provided in Section
11(a) above. GTS shall not take any action to cause the removal without
cause of any Director nominated by the Investor, unless so requested by the
Investor.
(d) At any time that no individual designated by Investor is
serving as a member of the Board of Directors, Investor shall have the
right, from time to time on reasonable notice, to consult with management
regarding the business and affairs of the Company, subject to (i) the
parties having entered into a suitable confidentiality agreement and (ii)
the Company's right not to disclose to Investor any information it may deem
confidential.
12. TERMINATION
-----------
This Agreement shall expire at the earlier of (i) three and a
half years (42 months) from the Closing Date; (ii) the date on which the
Registrable Securities are no longer Restricted Securities or (iii) the
date on which the Investor owns, directly or indirectly, less than 5% of
the Common Stock outstanding except that the Investor's right provided by
Section 11(d) hereof shall survive for as long as the Investor holds at
least 3% of the Common Stock outstanding.
13. WAIVER OF RIGHT OF FIRST REFUSAL BY GTS
---------------------------------------
GTS hereby expressly waives the right of first refusal it holds
pursuant to the shareholders agreement entered into as of October 5, 1999
by and between GTS and the Company to purchase a pro rata portion of any
issue by the Company of new shares of Common Stock, provided that the
parties hereto understand that such right is waived with respect to the
issuance of the Shares only.
<PAGE>
14. MISCELLANEOUS
-------------
(a) Remedies. Investor shall be entitled to exercise all rights
provided herein or granted by law, including recovery of damages, and each
party hereto will be entitled to specific performance of their rights under
this Agreement. Each of the Company and GTS agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive
the defense in any action for specific performance that a remedy at law
would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after
the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to Investor in
this Agreement or otherwise conflicts with the provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless the Company has obtained the written consent
of Investor.
(d) 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
given at the time when mailed in any general or branch office of the United
States Postal Service, enclosed in a registered or certified postpaid
envelope, or sent by Federal Express or other similar overnight courier
service, addressed to the address of the parties 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 Investor:
c/o Capital International Global Emerging Markets
Private Equity Fund, L.P.
135 South State College Boulevard
Brea CA 90071-1447
Facsimile: +1 (714) 671-7080
Attention: Jim Brown
with a copy to:
Capital International Limited
25 Bedford Street
London WC2E 9HN
Facsimile: +44 (171) 864-5768
Attention: Ida Levine
<PAGE>
and to:
Capital Research International Inc.
25 Bedford Street
London WC2E 9HN
Facsimile: +44 (171) 864 5814
Attention: Ashley Dunster
(ii) If to the Company:
Golden Telecom, Inc.
c/o Golden Teleservices, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
Facsimile: +1 (703) 236-3101
Attn: General Counsel
(iii) If to GTS:
GTS Group
1751 Pinnacle Drive
North Tower, 12th Floor
McLean, VA 22102
Facsimile: +1 (703) 236-3101
Attn: General Counsel
(e) Assignment. No party shall assign or transfer any of its
rights under this Agreement without the prior written consent of the other
parties. If any transferee of a holder of Registrable Securities shall
acquire Registrable Securities, in any manner, whether by operation of law
or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement (other than Sections 9, 10 and 11 hereof) and
by taking and holding such Registrable Securities such transferee shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement) and such transferee shall be
entitled to receive the benefits hereof. The provisions of Section 9, 10
and 11 of this Agreement shall also not be binding upon any Third Party who
has acquired shares of Common Stock from GTS.
<PAGE>
(f) Governing Law. This Agreement shall be governed by the laws
of the State of New York. The jurisdiction and venue in any action brought
by any party hereto pursuant to this Agreement shall lie exclusively in any
federal or state court located in the City of New York, New York. The
parties irrevocably agree that venue would be proper in any such court, and
hereby waive any objection that any such court is an improper or
inconvenient forum for the resolution of such action. The parties agree
that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdiction by suit on the judgment or in any
other manner provided by applicable law.
(g) Entire Agreement. This Agreement, together with any other
agreements between the parties, constitutes the entire understanding
between the parties and supersedes all proposals, commitments, writings,
negotiations and understandings, oral and written, and all other
communications between the parties relating to the subject matter of this
Agreement.
(h) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
(i) Severability. Should any part, term or condition hereof be
declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions of this Agreement shall
not be affected thereby, and the illegal or unenforceable portions of this
Agreement shall be and hereby are redrafted to conform with applicable law,
while leaving the remaining portions of this Agreement intact.
(j) Force Majeure. No party shall be deemed to have breached this
Agreement or be held liable for any failure or delay in the performance of
all or any portion of its obligations under this Agreement if prevented
from doing so by a cause or causes beyond its control. Without limiting the
generality of the foregoing, such causes include acts of God or the public
enemy, fires, floods, storms, earthquakes, riots, strikes, lock-outs, wars
and war-operations, restraints of government power or communication line
failure or other circumstances beyond such party's control, or by reason of
the judgment, ruling or order of any court or agency of competent
jurisdiction or change of law or regulation subsequent to the execution of
this Agreement.
(k) Successors and Assigns. Subject to the provisions of Section
13(e), this Agreement is solely for the benefit of the parties and their
respective successors and assigns. Nothing herein shall be construed to
provide any rights to any other entity or individual.
(l) Headings. Section headings are for convenience only and do
not control or affect the meaning or interpretation of any terms or
provisions of this Agreement.
(m) Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof or
thereof is validly asserted as a defense, the successful party shall be
entitled to recover reasonable attorneys, fees in addition to any other
available remedy.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
CAPITAL INTERNATIONAL GLOBAL
EMERGING MARKETS PRIVATE
EQUITY FUND, L.P.
By CAPITAL INTERNATIONAL Inc., General Partner
By: /s/ Ashley Dunster
------------------------------------
Name: Ashley Dunster
Title: Vice-President
GOLDEN TELECOM, INC.
By: /s/ Jeff Riddell
------------------------------------
Name: Jeff Riddell
Title: Junior Vice President,
General Counsel &
Corporate Secretary
GLOBAL TELESYSTEMS GROUP, INC.
By: /s/ Grier Raclin
------------------------------------
Name: Grier Raclin
Title: Jr. VP & Gen. Cnsl.
