<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 1999
REGISTRATION NO. 333-82791
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 3
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GOLDEN TELECOM, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 4812 51-0391303
(State or Other Jurisdiction of (Primary Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
GOLDEN TELECOM, INC.
12, KRASNOKAZARMENNAYA STR.
MOSCOW, RUSSIA 111250
(011-7-501) 797-9300
(Address and telephone number of Registrant's principal executive offices)
GRIER C. RACLIN
GLOBAL TELESYSTEMS GROUP, INC.
1751 PINNACLE DRIVE
NORTH TOWER -- 12TH FLOOR
MCLEAN, VIRGINIA 22012
(703) 918-4500
(Name, address and telephone number of agent for service)
Copies to:
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DAVID J. BEVERIDGE, ESQ. JEFFREY A. RIDDELL JAMES J. CLARK, ESQ.
SHEARMAN & STERLING GOLDEN TELESERVICES, INC. CAHILL GORDON & REINDEL
199 BISHOPSGATE 1751 PINNACLE DRIVE 80 PINE STREET
LONDON, EC2M 3TY, ENGLAND NORTH TOWER -- 12TH FLOOR NEW YORK, NEW YORK 10005
011-44-171-920-9000 MCLEAN, VIRGINIA 22012 (212) 701-3000
(703) 918-4500
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after the effective date of this registration statement.
---------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED(1) PER SECURITY OFFERING PRICE(2) REGISTRATION FEE(3)
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Common Stock, Par Value
$0.01 Per Share......................... 10,930,000 $18.50 $202,205,000 $56,213
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</TABLE>
(1) Includes (i) shares of common stock to cover the underwriters'
over-allotment option and (ii) shares of common stock which are to be
offered outside the United States but that may be resold from time to time
in the United States during the distribution. The shares of common stock
registered hereby are not being registered for the purpose of sales outside
of the United States.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act.
(3) Previously paid.
---------------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the securities Act of 1933 or until the Registration Statement shall become
effective on such date as the commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 3 to Golden Telecom, Inc.'s Registration Statement on
Form S-1 (File No. 333-82791) (the "Registration Statement") comprises Part II
of the Registration Statement, as amended hereby, and the exhibits to the
Registration Statement.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
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SEC registration fee........................................ $
NASD filing fee.............................................
Nasdaq listing fee..........................................
Blue Sky fees and expenses..................................
Printing and engraving expenses.............................
Attorneys' fees and expenses................................
Accountants' fees and expenses..............................
Transfer agent's and registrar's fees and expenses..........
Miscellaneous...............................................
-------
Total.............................................
=======
</TABLE>
The amounts set forth above are estimates except for the SEC registration
fee and the NASD filing fee.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Golden Telecom Inc.'s Certificate of Incorporation and By-laws provide for
indemnification of its directors and officers to the fullest extent permitted by
the Delaware General Corporate Law, as such law may be amended from time to
time.
Article 8 of the Underwriting Agreement (Exhibit 1.1 hereto) contains
provisions for certain indemnification rights to the directors and officers of
Golden Telecom, Inc.
In addition, Golden Telecom, Inc. maintains liability insurance for its
directors and officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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<C> <S>
1.1 -- Form of Underwriting Agreement.
3.1 -- Amended and Restated Certificate of Incorporation of
Golden Telecom, Inc.
3.2 -- By-laws of Golden Telecom, Inc.
4.1 -- Specimen certificate representing shares of Common Stock.
4.2 -- Form of Registration Rights Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
4.3 -- Form of Warrant Agreement.
5.1 -- Opinion of Shearman & Sterling as to the legality of the
shares of common stock of Golden Telecom, Inc.
10.1 -- Form of Contribution Agreement between Global TeleSystems
Group, Inc. and Golden Telecom, Inc.
</TABLE>
II-1
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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<C> <S>
10.2 -- Form of Shareholders' Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
10.3 -- Form of Administrative Services Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
10.4 -- Form of Trademark Transfer Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
10.5 -- Form of Indemnification Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
10.6 -- Form of Employee Benefits Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
10.7 -- Form of Golden Telecom, Inc. 1999 Equity Participation
Plan.
10.8 -- Agreement No. 26-12/97, dated December 26, 1997, among
TCM, MTU-Inform and VimpelCom.
10.9 -- Agreement No. 08-04/98, dated April 8, 1998, among TCM,
MTU-Inform and VimpelCom.
10.10 -- Agreement No. 01-08/98, dated August 1, 1998, among TCM,
MTU-Inform and KB-Impulse.
21.1 -- List of subsidiaries of Golden Telecom, Inc.
23.1* -- Consent of Ernst & Young (CIS) Limited, Independent
Auditors (Golden Telecom, Inc.)
23.2* -- Consent of Ernst & Young (CIS) Limited, Independent
Auditors (EDN Sovintel LLC).
23.3* -- Consent of Ernst & Young (CIS) Limited, Independent
Auditors (GTS-Vox Limited).
23.4 -- Consent of Shearman & Sterling (included in its opinion
in Exhibit 5.1).
24.1* -- Powers of Attorney.
24.2 -- Power of Attorney.
</TABLE>
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* Previously filed.
(b) Consolidated Financial Statement Schedules.
We have furnished Schedule II -- Valuation and Qualifying Accounts on page
II-5 for Golden Telecom, Inc.
All other schedules are omitted because they are not applicable or not
required, or because the required information is either incorporated herein by
reference or included in the financial statements or notes thereto included in
this report.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the
II-2
<PAGE> 5
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
II-3
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has duly caused this Registration Statement on Form
S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in
Moscow, Russia on September 22, 1999.
GOLDEN TELECOM, INC.
By: /s/ STEWART P. REICH
----------------------------------
Name: Stewart P. Reich
Title: President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
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SIGNATURE TITLE DATE
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/s/ STEWART P. REICH President and Chief September 22, 1999
- ----------------------------------------------------- Executive Officer,
Stewart P. Reich Director (Principal
Executive Officer)
* Chief Financial Officer September 22, 1999
- ----------------------------------------------------- (Principal Financial and
David J. Wisher Accounting Officer)
* Director September 22, 1999
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Grier C. Raclin
* Director September 22, 1999
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Robert A. Schriesheim
* Director September 22, 1999
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William H. Seippel
* Director September 22, 1999
- -----------------------------------------------------
H. Brian Thompson
*By /s/ DAVID J. WISHER
-------------------------------------------------
David J. Wisher
Attorney in Fact
</TABLE>
II-4
<PAGE> 7
EXHIBIT INDEX
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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<C> <S>
1.1 -- Form of Underwriting Agreement.
3.1 -- Amended and Restated Certificate of Incorporation of
Golden Telecom, Inc.
3.2 -- By-laws of Golden Telecom, Inc.
4.1 -- Specimen certificate representing shares of Common Stock.
4.2 -- Form of Registration Rights Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
4.3 -- Form of Warrant Agreement.
5.1 -- Opinion of Shearman & Sterling as to the legality of the
shares of common stock of Golden Telecom, Inc.
10.1 -- Form of Contribution Agreement between Global TeleSystems
Group, Inc. and Golden Telecom, Inc.
10.2 -- Form of Shareholders' Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
10.3 -- Form of Administrative Services Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
10.4 -- Form of Trademark Transfer Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
10.5 -- Form of Indemnification Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
10.6 -- Form of Employee Benefits Agreement between Global
TeleSystems Group, Inc. and Golden Telecom, Inc.
10.7 -- Form of Golden Telecom, Inc. 1999 Equity Participation
Plan.
10.8 -- Agreement No. 26-12/97, dated December 26, 1997, among
TCM, MTU-Inform and VimpelCom.
10.9 -- Agreement No. 08-04/98, dated April 8, 1998, among TCM,
MTU-Inform and VimpelCom.
10.10 -- Agreement No. 01-08/98, dated August 1, 1998, among TCM,
MTU-Inform and KB-Impulse.
21.1 -- List of subsidiaries of Golden Telecom, Inc.
23.1* -- Consent of Ernst & Young (CIS) Limited, Independent
Auditors (Golden Telecom, Inc.)
23.2* -- Consent of Ernst & Young (CIS) Limited, Independent
Auditors (EDN Sovintel LLC).
23.3* -- Consent of Ernst & Young (CIS) Limited, Independent
Auditors (GTS-Vox Limited).
23.4 -- Consent of Shearman & Sterling (included in its opinion
in Exhibit 5.1).
24.1* -- Powers of Attorney.
24.2 -- Power of Attorney.
</TABLE>
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* Previously filed.
<PAGE> 1
EXHIBIT 1.1
DATED , 1999
GOLDEN TELECOM, INC.
4,650,000 SHARES OF PAR VALUE $.01 EACH
COMMON STOCK
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UNDERWRITING AGREEMENT
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<PAGE> 2
CONTENTS
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CLAUSE PAGE
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1. INTERPRETATION..............................................................................................1
2. UNDERWRITING................................................................................................5
3. CLOSING.....................................................................................................6
4. UNDERTAKINGS................................................................................................7
5. COMMISSIONS; TERMS OF THE PUBLIC OFFERING..................................................................10
6. EXPENSES...................................................................................................10
7. REPRESENTATIONS AND WARRANTIES.............................................................................11
8. INDEMNITY..................................................................................................18
9. LISTING....................................................................................................22
10.CONDITIONS PRECEDENT.......................................................................................22
11.TERMINATION................................................................................................35
12.NOTICES....................................................................................................35
13.COUNTERPARTS...............................................................................................36
14.GOVERNING LAW..............................................................................................36
</TABLE>
SCHEDULE
1. The Underwriters
<PAGE> 3
THIS AGREEMENT is made on , 1999 AMONG:
(1) Golden Telecom, Inc., a Delaware corporation (the "COMPANY");
(2) Global TeleSystems Group, Inc., a Delaware corporation (the "PARENT");
and
(3) The Underwriters named in Schedule 1 hereto (the "UNDERWRITERS"), for
whom Deutsche Bank AG London ("DEUTSCHE BANK"), Bear, Stearns & Co.
Inc. and ING Barings Limited as agent for ING Bank N.V., London Branch
shall act as representatives (the "REPRESENTATIVES").
WHEREAS:
(A) The Company proposes to issue 4,650,000 shares of its Common Stock, par
value $.01 per share ("SHARES"), in an international offering in
respect of which Deutsche Bank will act as global co-ordinator and
bookrunner. In addition, the Company proposes to grant Deutsche Bank on
behalf of the Underwriters the option to require the Company to issue
up to an additional 697,500 new Shares.
(B) The Offer Shares are to be purchased by the Underwriters and
distributed under an international offering (the "OFFERING") pursuant
to the terms of this agreement.
(C) The Company has filed with the Commission the Registration Statement,
relating to the Offer Shares.
(D) The issued share capital of the Company is currently $106,000
represented by 10,600,000 shares of Common Stock, par value $.01 each.
Under the Certificate of Incorporation of the Company, the board of
directors of the Company has full power and authority to make available
for sale and to issue up to 5,347,500 Shares without the same requiring
first to be offered to shareholders of the Company. At a meeting of the
board of directors held on , 1999 it was resolved that the Firm Shares
and up to the whole of the Additional Shares should be sold for and
issued on the terms of this Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
(1) In this Agreement (including the Recitals and the Schedule):
"ADDITIONAL SHARES" means up to 697,500 additional Shares, the subject
of the option granted by the Company to the Underwriters under clause
2(b);
"AFFILIATE" has the meaning given to it by Rule 501(b) of Regulation D
under the Securities Act;
<PAGE> 4
"AGREEMENTS AND INSTRUMENTS" has the meaning given to it in subclause
7(n);
"BLUE SKY" has the meaning given to it in subclause 4(3);
"CLOSING" means the First Closing or the Subsequent Closing as the
context requires;
"CLOSING DATE" means the date of the First Closing or the Subsequent
Closing as the context requires;
"COMMISSION" means the U.S. Securities and Exchange Commission;
"COMMISSIONS" means the commissions referred to in clause 5;
"COMPANY" has the meaning given to it in introductory clause (1) of
this Agreement;
"DESIGNATED UNDERWRITER" has the meaning given to it in subclause 2(f);
"DEUTSCHE BANK" has the meaning given to it in introductory clause (3)
of this Agreement;
"DIRECTED SHARE PROGRAM" has the meaning given to it in subclause 2(f);
"DIRECTED SHARES" has the meaning given to it in subclause 2(f);
"ENVIRONMENTAL LAWS" has the meaning given to it in subclause 7(z);
"EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as
amended;
"FIRM SHARES" means 4,650,000 Shares, the subject of the Offering;
"FIRST CLOSING" means the implementation of all the actions described
in subclause 3(1);
"GOVERNMENTAL LICENSES" has the meaning given to it in subclause 7(x);
"GROUP" means the Company and the Ventures, considered as a whole;
"INDEMNIFIED PERSON" means any of the Underwriters, any of their
affiliates or controlling persons (as defined in Section 15 of the
Securities Act or Section 20 of the Exchange Act) or any of their
respective directors, officers, employees or agents;
"INTELLECTUAL PROPERTY RIGHTS" has the meaning given to it in subclause
7(y);
"MATERIAL ADVERSE EFFECT" has the meaning given to it in subclause
7(n);
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<PAGE> 5
"NASDAQ NATIONAL MARKET" means the Nasdaq Stock Market's National
Market;
"OFFERING" has the meaning given to it in Recital (B);
"OFFER PRICE" means $[ ] per Offer Share;
"OFFER SHARES" means the Firm Shares and so many of the Additional
Shares as are required to be issued;
"PARENT" has the meaning given to it in introductory clause (2) of this
Agreement;
"PARTICIPANTS" has the meaning given to it in subclause 2(f);
"PERMITS" has the meaning given to it in subclause 10(1)(b)(D)(v);
"PRELIMINARY PROSPECTUS" means the Prospectus in preliminary form;
"PROSPECTUS" means the Prospectus in the form first used to confirm
sales of Offer Shares; the Prospectus is contained in the registration
statement;
"PURCHASE PRICE" means $[ ] per Offer Share;
"REGISTRATION STATEMENT" means the registration statement (File No.
333-82791) with respect to the Offer Shares as amended at the time it
became effective, including the information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to
Rule 430A under the Securities Act. If the Company has filed an
abbreviated registration statement to register additional Shares
pursuant to Rule 462(b) under the Securities Act, then any reference
herein to the term "Registration Statement" shall be deemed to include
such abbreviated registration statement;
"REPAYMENT EVENT" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Company or any Venture;
"REPRESENTATIVES" has the meaning given to it in introductory clause
(3) of this Agreement;
"RULES AND REGULATIONS" means the rules and regulations of the
Commission;
"RUSSIAN COMPANIES" has the meaning given to it in subclause
10(1)(b)(C)(ii);
"RUSSIAN MATERIAL ADVERSE EFFECT" has the meaning given to it in
subclause 10(1)(b)(C)(v);
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<PAGE> 6
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended;
"SHARES" has the meaning given to it in Recital (A);
"SUBSEQUENT CLOSING" means the implementation of all the actions
described in subclause 3(2);
"TELECOMMUNICATIONS LICENSES" has the meaning given to it in subclause
10(1)(b)(C)(v);
"TELECOMMUNICATIONS PERMITS" has the meaning given to it in subclause
10(1)(b)(C)(v);
"UKRAINIAN MATERIAL ADVERSE EFFECT" has the meaning given to it in
subclause 10(1)(b)(D)(v);
"UNDERWRITERS" has the meaning given to it in introductory clause (3)
of this Agreement;
"VENTURES" means all entities in which the Company has a direct or
indirect greater than 25% equity interest or voting power.
(2) In this Agreement:
(a) references to a person include a body corporate and an
unincorporated association of persons;
(b) references to a party to this agreement include references to
the successors or assigns (immediate or otherwise) of that
party.
(3) Where any statement is qualified by the expression "to the best of the
Company's knowledge" or any similar expression, that statement shall be
deemed to include an additional statement that it has been made after
due enquiry by the appropriate officers of the Company.
(4) subclauses (1) to (3) above apply unless the contrary intention
appears.
(5) The headings in this Agreement do not affect its interpretation.
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<PAGE> 7
2. UNDERWRITING
Subject to the terms and conditions of this Agreement:
(a) the Company agrees to issue and sell the Firm Shares and, upon
exercise of the option described below, the Additional Shares,
to the several Underwriters;
(b) the Company irrevocably grants to the several Underwriters an
option, exercisable at one time only, to require the Company to
issue and sell up to 697,500 Additional Shares solely to cover
over-allotments in connection with the Offering, such option to
be exercisable upon notice to the Company from Deutsche Bank on
behalf of the Underwriters given not later than 5:00 p.m. (New
York time) on , 1999;
(c) each Underwriter severally and not jointly agrees, upon the
basis of the representation and warranties contained herein, and
subject to the conditions stated in clause 10 hereof, to
purchase the number of Firm Shares set out against its name in
Schedule 1, at the Purchase Price, plus the number of Additional
Shares representing such Underwriter's pro rata share
(calculated by reference to the aggregate number of Firm Shares
purchased by such Underwriter and the aggregate number of Firm
Shares purchased by all of the Underwriters) of the number of
Additional Shares required to be issued by the Company;
(d) subject to the terms hereof, the Underwriters shall make a
public offering of the Firm Shares as soon after the
Registration Statement and this Agreement have become effective;
(e) if, at a Closing, any one or more of the Underwriters shall fail
or refuse to purchase Offer Shares that it has or they have
agreed to purchase hereunder on such date, and the aggregate
number of Offer Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not
more than 10% of the aggregate number of the Offer Shares to be
purchased on such date, each of the non-defaulting Underwriters
shall be obligated severally in the proportion that the number
of Firm Shares set forth opposite its names in Schedule 1 bears
to the aggregate number of Firm Shares set forth opposite the
names of all such non-defaulting Underwriters, or in such other
proportion as Deutsche Bank may specify, to purchase the Offer
Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date. If, at the First
Closing, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares
with respect to which such default occurs is more than 10% of
the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to Deutsche Bank and the Company for
the purchase of such Firm Shares are not made
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<PAGE> 8
within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting
Underwriter or the Company. In any such case either Deutsche
Bank or the Company shall have the right to postpone the
Closing, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement
and in the Prospectus or in any other documents or arrangements
may be effected. If, at any Subsequent Closing, any Underwriter
or Underwriters shall fail or refuse to purchase Additional
Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than 10% of the
aggregate number of Additional Shares to be purchased, the
non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional
Shares or (ii) purchase not less than the number of Additional
Shares that such non-defaulting Underwriters would have been
obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
(f) As part of the offering contemplated by this Agreement, [ ] (the
"DESIGNATED UNDERWRITER") has agreed to reserve out of the Offer
Shares purchased by it under this Agreement, up to 150,000
shares, for sale to the Company's directors, officers, employees
and other parties associated with the Company (collectively,
"PARTICIPANTS"), as set forth in the Prospectus (as defined
herein) under the heading "Underwriting" (the "DIRECTED SHARE
PROGRAM"). The Offer Shares to be sold by the Designated
Underwriter pursuant to the Directed Share Program (the
"DIRECTED SHARES") will be sold by the Designated Underwriter
pursuant to this Agreement at the Purchase Price. Any Directed
Shares not orally confirmed for purchase by a Participant by the
end of the business day on which this Agreement is executed will
be offered to the public at the Offer Price by the Designated
Underwriter as set forth in the Prospectus.
3. CLOSING
(1) At 9:00 A.M. (New York time) on , 1999 or at such other time and/or
date as the Company and Deutsche Bank on behalf of the Underwriters may
agree:
(a) the Company shall issue the Firm Shares and shall deliver
certificates, in definitive form and registered in such names
and in such denominations as Deutsche Bank and the
Representatives shall request in writing not later than two full
business days prior to the First Closing, evidencing the Firm
Shares for the respective accounts of the several Underwriters,
with any transfer taxes pay-
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<PAGE> 9
able in connection with the transfer of the Firm Shares to the
Underwriters duly paid, against payment of the purchase money
therefor; and
(b) Deutsche Bank and the Representatives on behalf of the
Underwriters shall pay to the Company the aggregate Purchase
Price in respect of the Firm Shares in Federal (same day) funds.
(2) At 9:00 A.M. (New York time) on whichever is the later of the date of
the First Closing and the third business day after notice to purchase
Additional Shares is given under clause 2(b), or at such other time
and/or date as the Company and Deutsche Bank on behalf of the
Underwriters may agree:
(a) the Company will issue the Additional Shares and deliver
certificates, in definitive form and registered in such names
and in such denominations as Deutsche Bank and the
Representatives shall request in writing not later than two full
business days prior to the Closing for the Additional Shares,
evidencing the Additional Shares for the respective accounts of
the several Underwriters, with any transfer taxes payable in
connection with the transfer of the Additional Shares to the
Underwriters duly paid, against payment of the purchase money
therefor; and
(b) Deutsche Bank and the Representatives on behalf of the
Underwriters shall pay to the Company the aggregate Purchase
Price in respect of the Additional Shares in Federal (same day)
funds.
(3) A certificate or certificates for the Offer Shares to be delivered to
the Underwriters shall be in definitive form and delivered to the
Representatives at the offices of Shearman & Sterling, Washington, DC,
for the accounts of the Underwriters on the respective Closing Date in
accordance with the instructions delivered in accordance with clause
3(1)(a) or clause 3(2)(a) above.
(4) Offer Shares to be held through the Depository Trust Company ("DTC")
shall be registered by [name of Registrar] in the name of DTC's
nominee, Cede & Co., and credited to the accounts of such of its
participants as the Representatives shall request in writing not later
than the applicable date on which Deutsche Bank and the Representatives
shall notify the Company in accordance with clause 3(1)(a) or clause
3(2)(a).
4. UNDERTAKINGS
(1) The Company undertakes with the Underwriters that it will bear and pay
(or, in respect of any duty, tax, commission, fee or the like for which
the Underwriters are initially liable, will promptly reimburse the same
to the Underwriters) any stamp or other duties, taxes, commissions or
fees or charges on or in connection with the issue, sale, pur-
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<PAGE> 10
chase, distribution and/or delivery of the Offer Shares to the
Underwriters and the execution, delivery and performance of this
Agreement and any value added tax payable in connection with the
commissions and other amounts payable or allowable by the Company and
otherwise in connection therewith.
(2) If, at any time when a Prospectus relating to the Offer Shares is
required to be delivered under the Securities Act or in connection with
the initial distribution of the Offer Shares, any event occurs as a
result of which the Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or it shall be
necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Securities Act or the rules thereunder or
applicable law, the Company will promptly, at its own expense: (i)
prepare and file with the Commission an amendment or supplement which
will correct such statement or omission or effect such compliance; and
(ii) supply any amended or supplemented Prospectus to the Underwriters
in such quantities as the Underwriters may reasonably request. Before
making any such amendment, supplement or filing, the Company will
furnish Deutsche Bank with a copy of each such proposed amendment or
supplement, and will not make such proposed amendment, supplement or
filing to which Deutsche Bank, on behalf of the Underwriters,
reasonably objects.
(3) The Company will use all reasonable efforts to qualify the Offer Shares
for offering and sale in each U.S. jurisdiction as Deutsche Bank, on
behalf of the Underwriters, shall designate including, but not limited
to, applicable state ("BLUE SKY") laws of certain states of the United
States of America, and the Company shall maintain such qualifications
in effect for such period as Deutsche Bank, on behalf of the
Underwriters, may reasonably require in order to complete the placement
of the Offer Shares.
(4) The Company will:
(a) prepare the Prospectus in a form approved by the Underwriters
and file the Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business
on the second business day following the execution and delivery
of this Agreement, or, if applicable, such earlier time as may
be required by Rule 430A(a)(3) under the Securities Act;
(b) furnish to each Representative, without charge, one signed copy
of the Registration Statement (including exhibits thereto) and
for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and, during
the period in which the Prospectus is required to be delivered
in connection with sales by an Underwriter or dealer, as many
copies of the Prospectus, and any supplements and amendments
thereto or to the Registration Statement as the Representatives
may reasonably request;
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<PAGE> 11
(c) make no further amendment or any supplement to the Registration
Statement or Prospectus for so long as any Underwriter or dealer
is required to deliver a Prospectus under the Securities Act or
in connection with the initial distribution of the Offer Shares
which shall be disapproved by Deutsche Bank promptly after
reasonable notice thereof; to advise the Underwriters, promptly
after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Underwriters copies
thereof;
(d) advise Deutsche Bank, promptly after it receives notice thereof,
of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the
qualification of the Offer Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or
the Prospectus or for additional information; and
(e) in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus
or the Prospectus or suspending any such qualification, promptly
use its best efforts to obtain the withdrawal of such order.
(5) The Company will make generally available to the Company's security
holders and to Deutsche Bank as soon as practicable an earnings
statement that satisfies the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission
thereunder.
(6) During the period of 2 years hereafter, the Company will furnish to the
Representatives and, upon request, to each of the other Underwriters,
as soon as practicable after the end of each fiscal year, a copy of its
annual report to stockholders for such year; and the Company will
furnish to the Representatives as soon as available, a copy of each
report and any definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to stockholders.
(7) For a period of 180 days after the date of the initial public offering
of the Offer Shares, none of the Company, its directors and its
officers will offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Commission a
registration statement under the Securities Act relating to, any
additional Shares or securities convertible into or exchangeable or
exercisable for any Shares, or publicly disclose the intention to make
any such offer, sale, pledge, disposition or filing, without the prior
written consent of Deutsche Bank, which consent shall not be
unreasonably withheld.
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<PAGE> 12
(8) For a period of 360 days after the date of the initial public offering
of the Offer Shares, the Parent will not offer, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any Shares or
securities convertible into or exchangeable or exercisable for any
Shares, or publicly disclose the intention to make any such offer,
sale, pledge, disposition or filing, without the prior written consent
of Deutsche Bank, which consent shall not be unreasonably withheld.
5. COMMISSIONS; TERMS OF THE PUBLIC OFFERING
The Offer Shares are to be offered to the public initially at the Offer
Price. In consideration of the agreement by the Underwriters to
underwrite and pay for the Offer Shares as provided above, the Company
shall pay to the Underwriters commissions, by way of deduction from the
Offer Price of an amount equal to the difference between the Offer
Price and the Purchase Price per Offer Share. The Company is advised by
Deutsche Bank that the Underwriters initially propose to offer part of
the Offer Shares to be sold in the Offering to certain dealers selected
by the Representatives at a price that represents a concession not in
excess of $[ ] per Offer Share under the Offer Price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not
in excess of $[ ] per Offer Share, to any Underwriter or in the case of
the Underwriters to certain other dealers.
6. EXPENSES
(1) The Company shall bear and pay all costs and expenses incurred in
connection with the Offering, including: fees and expenses of its
lawyers and any reporting accountants, fees and expenses in connection
with the registration of the Offer Shares under the Securities Act and
the preparation and filing of the Registration Statement, the
Prospectus and all amendments and supplements thereto, the printing and
distribution of the Prospectus and any Preliminary Prospectus, the
printing and production of all other documents connected with the issue
and distribution of the Offer Shares (including this Agreement and any
other related agreements), transfer taxes payable in connection with
the transfer of the Offer Shares to the Underwriters, expenses related
to the qualification of the Offer Shares under the state securities or
Blue Sky laws, including filing fees and the fees and disbursements of
counsel for the Underwriters in connection therewith and in connection
with the preparation of any Blue Sky memorandum, the filing fees and
expenses, if any, incurred with respect to any filing with NASD
Regulation, Inc., all expenses arising from the listing of the Offer
Shares on the Nasdaq National Market, listing agents' fees and the
arrangements for signing this Agreement, and the Company's pro rata
costs and expenses of the roadshow (including roadshow consultants,
venues, and travel and accommodation for its directors and employees)
and 50% of the costs and expenses incurred for airplane rental in
connection with the roadshow.
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<PAGE> 13
7. REPRESENTATIONS AND WARRANTIES
(1) As a condition of the obligation of the Underwriters to underwrite and
pay for the Offer Shares, the Company and the Parent jointly and
severally represent, warrant and undertake to the Underwriters as
follows:
RECITALS
(a) that the Recitals are in every material respect true and
accurate and not misleading;
REGISTRATION STATEMENT AND PROSPECTUS
(b) that the Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement
is in effect, and to the Company's knowledge, no proceedings for
such purpose are pending before or threatened by the Commission;
(c) that (i) the Registration Statement, when it became effective,
did not contain, and as amended or supplemented, if applicable,
will not contain, any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii)
the Registration Statement and the Prospectus comply, and, as
amended or supplemented, if applicable, will comply in all
material respects, with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iii) the
Prospectus does not contain, and, as amended or supplemented, if
applicable, will not contain, any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, except that the
representations and warranties set forth in this subclause
7(1)(c) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing
by such Underwriter through Deutsche Bank expressly for use
therein;
(d) that each Preliminary Prospectus filed as part of the
registration statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, complied when so filed in all material respects
with the Securities Act and the applicable rules and regulations
of the Commission thereunder; and each Preliminary Prospectus as
of its date did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made not
misleading; except that the rep-
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<PAGE> 14
resentations and warranties set forth in this subclause 7(1)(d)
do not apply to statements or omissions in the preliminary
prospectus based upon information relating to any Underwriters
furnished to the Company in writing by such Underwriter through
Deutsche Bank expressly for use therein;
(e) that except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and
any person granting such person the right to require the Company
to file a registration statement under the Securities Act with
respect to any securities of the Company or to require the
Company to include such securities with the Shares registered
pursuant to the Registration Statement;
(f) that except as provided in this Agreement or disclosed in the
Prospectus, there are no contracts, agreements or understandings
between the Company and any person that would give rise to a
valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in
connection with this Offering;
LISTING
(g) that all of the Offer Shares have been accepted for quotation on
the Nasdaq National Market subject to official notice of
issuance;
FINANCIAL STATEMENTS
(h) that the audited financial statements appearing in each of the
Registration Statement and the Prospectus were prepared in
accordance with the requirements of law and with generally
accepted accounting principles in the United States consistently
applied and that they present fairly the financial condition of
the Company, EDN Sovintel LLC and GTS-Vox Limited as at the
dates at which they were prepared and the results of operations
of the Company, EDN Sovintel LLC and GTS-Vox Limited in respect
of the periods for which they were prepared;
MATERIAL ADVERSE CHANGE
(i) there has been no material adverse change in the condition
(financial or otherwise) or the earnings or business of the
Group since December 31, 1998 other than as described in the
Prospectus (exclusive of any amendments or supplements thereto)
subsequent to the date of this Agreement;
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<PAGE> 15
CORPORATE POWER AND AUTHORITY
(j) that 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
as described in the Prospectus, is duly qualified to transact
business and, where the concept of good standing is recognized,
is in good standing in each jurisdiction in which its ownership,
leasing or operation of its property or assets or the conduct of
its business requires such qualification and has full power and
authority to execute and perform its obligations under this
Agreement, except where the failure to have such power and
authority, so to qualify or so to be in good standing would not,
singly or in the aggregate, result in a material adverse effect
on the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken
as a whole ("MATERIAL ADVERSE EFFECT"); each "significant
subsidiary" (as such term is defined in Rule 1-02 of Regulation
S-X) and all entities in which the Company has a direct or
indirect majority equity interest or voting power (each, a
"SUBSIDIARY", and collectively the "SUBSIDIARIES") of the
Company has been duly organized (to the extent applicable) and
is validly existing as a corporation, general partnership,
limited partnership, limited liability company, closed joint
stock company, or similar entity and, where the concept of good
standing is recognized, is in good standing under the laws of
its jurisdiction of organization, has full power and authority
to own, lease and operate its properties and conduct its
business as described in the Prospectus and is duly qualified to
transact business and, where the concept of good standing is
recognized, is in good standing in each jurisdiction in which
its ownership, leasing or operation of its property or assets or
the conduct of its business requires such qualification, except
where the failure to have such power and authority, so to
qualify or so to be in good standing would not, singly or in the
aggregate, result in a Material Adverse Effect; all of the
issued and outstanding shares of each such Subsidiary have been
duly authorized and are fully paid and as are shown therein as
being owned directly or indirectly by the Company are owned free
and clear of any liens, encumbrances, equities or claims;
(k) that the execution of this Agreement by the Company has been
duly authorized by the Company and this Agreement constitutes a
legal, valid and binding obligation of the Company;
(l) that neither the Company nor any of its Ventures is in violation
of its charter or by-laws (or equivalent constitutive documents)
or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note,
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<PAGE> 16
lease or other agreement or instrument to which the Company or
any of its Ventures is a party or by which it or any of them may
be bound, or to which any of the property or assets of the
Company or any Venture is subject (collectively, "AGREEMENTS AND
INSTRUMENTS") except for such defaults that would not, singly or
in the aggregate, have a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement
and in the Registration Statement (including the issuance and
sale of the Offer Shares and the use of the proceeds from the
sale of the Offer Shares materially as described in the
Prospectus under the caption "Use of Proceeds") and compliance
by the Company with its obligations under this Agreement have
been duly authorized by all necessary corporate action and do
not and will not, whether with or without the giving of notice
or passage of time or both, conflict with or constitute a breach
of, or default or Repayment Event under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any Venture pursuant
to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter
or by-laws (or equivalent constitutive documents) of the Company
or any Venture or (except for such violations, singly or in the
aggregate, that would not result in a Material Adverse Effect)
any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company
or any Venture or any of their assets, properties or operations;
(m) that except as disclosed in the Prospectus, the Company and the
Ventures have good and marketable title to all real properties
and all other properties and assets owned by them, in each case
free from liens, encumbrances and defects that would affect the
value thereof or interfere with the use made or to be made
thereof by them (except such as would not, singly or in the
aggregate, result in a Material Adverse Effect); and except as
disclosed in the Prospectus, the Company and the Ventures hold
any leased real or personal property under valid and enforceable
leases with no exceptions that would interfere with the use made
or to be made thereof by them (except such as would not, singly
or in the aggregate, result in a Material Adverse Effect);
(n) that all consents, approvals and authorisations of any court,
government department or other regulatory body (including any
stock exchange on which the Company's securities are or are to
be listed) required by the Company for the execution of this
Agreement, the performance of its terms and the issue and
distribution of the Offer Shares have been obtained and are
unconditional and
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<PAGE> 17
in full force and effect (except such as would not, singly or in
the aggregate, result in a Material Adverse Effect);
(o) that the Company is not an "investment company" and, after
giving effect to the offering of the Offer Shares and the
application of the proceeds therefrom, will not be an
"investment company" as such term is defined in the Investment
Company Act of 1940, as amended;
THE OFFER SHARES
(p) that the authorized and issued capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(q) that the Shares outstanding prior to the issuance of the Offer
Shares have been duly authorized and are validly issued, fully
paid and non-assessable;
(r) that the Offer Shares will, on issue and receipt of payment
therefor in accordance with the terms of this Agreement, be
validly issued in accordance with the law and regulations of the
State of Delaware, fully paid and non-assessable and free from
all liens, charges, encumbrances and other third party rights;
DIVIDENDS AND DISTRIBUTIONS
(s) that all dividends and other distributions declared and payable
on the Offer Shares may under the current laws and regulations
of the United States be paid in the United States, may be
converted into foreign currency and may be freely transferred
out of the United States and all such dividends and other
distributions will not be subject to withholding or other taxes
under the laws and regulations of the United States and are
otherwise free and clear of any other tax, withholding or
deduction in the United States and without the necessity of
obtaining any governmental authorization in the United States;
TAXES
(t) that no stamp or other issuance or transfer taxes or duties and
no capital gains, income, withholding or other taxes are payable
by or on behalf of the Underwriters to the United States or any
political subdivision or taxing authority thereof or therein in
connection with the sale and delivery by the Company of the
Offer Shares to or for the respective accounts of the
Underwriters or the sale and delivery outside the United States
by the Underwriters of the Offer Shares to the initial
purchasers thereof;
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<PAGE> 18
LITIGATION
(u) that, except as disclosed in the Prospectus, no member of the
Group is:
(i) involved in any litigation, arbitration or governmental
proceedings relating to claims or amounts which
individually or collectively may have, or have had in the
previous 12 months, a Material Adverse Effect nor, to the
best of the Company's knowledge, is any such litigation,
arbitration or governmental proceeding pending or
threatened or has any event occurred which may give rise to
such litigation, arbitration or governmental proceeding; or
(ii) involved in or the subject of any current or pending
investigation or proceedings (whether administrative,
regulatory or otherwise) that would have a Material Adverse
Effect, whether in the United States, the Russian
Federation, Ukraine or elsewhere;
LICENSES AND CONSENTS
(v) except as otherwise disclosed in the Prospectus, the Company and
the Ventures possess such permits, licenses, approvals, consents
and other authorizations (collectively, "GOVERNMENTAL LICENSES")
issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business
now operated by them, except such as would not, singly or in the
aggregate, result in a Material Adverse Effect; the Company and
the Ventures are in compliance with the terms and conditions of
all such Governmental Licenses, except where the failure so to
comply would not, singly or in the aggregate, result in a
Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity
of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not
have a Material Adverse Effect; and neither the Company nor any
Venture has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses
which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a
Material Adverse Effect;
(w) that the Company and the Ventures own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary to
conduct the business now operated by them, or presently employed
by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any
intellectual property rights that, if determined adversely to
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<PAGE> 19
the Company or any of the Ventures, would individually or in the
aggregate have a Material Adverse Effect;
ENVIRONMENTAL
(x) that except as disclosed in the Prospectus and to the best of
the Company's knowledge, neither the Company nor any Venture is
in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous
or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic
substances (collectively, "ENVIRONMENTAL LAWS"), owns or
operates any real property contaminated with any substance that
is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or
is subject to any claim relating to any environmental laws,
which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect;
and the Company is not aware of any pending investigation which
might lead to such a claim;
MARKET MANIPULATION
(y) that neither the Company nor any of its affiliates nor any
person acting on behalf of any of them will, until Deutsche Bank
shall have notified the Company of the completion of the
distribution of the Offer Shares, do directly or indirectly any
act or engage in any course of conduct (i) which creates a false
or misleading impression as to the market in or the value of the
Offer Shares and any associated securities (including options in
respect of those shares and securities which are convertible
into or exchangeable for those shares and securities); or (ii)
the purpose of which is to create actual, or apparent, active
trading in or to raise the price of the Shares;
MISCELLANEOUS
(z) that no labor dispute with the employees of the Company or any
Venture exists or, to the knowledge of the Company, is imminent
that would, individually or in the aggregate, have a Material
Adverse Effect; and
(aa) that except as disclosed in the Prospectus, neither the Company
nor any Venture is in violation of the Foreign Corrupt Practices
Act, as amended, such that such a violation would individually
or in the aggregate have a Material Adverse Effect; and the
Company is not aware of any pending investigation which might
lead to a claim of such a violation.
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<PAGE> 20
(2) The above representations and warranties shall be deemed to be repeated
at each Closing and such representations and warranties and the
indemnity in clause 8 below shall continue in full force and effect
notwithstanding:
(a) any Underwriter's actual or constructive knowledge with respect
to any of the matters referred to in the representations and
warranties of the Company or any investigation made by or on
behalf of any Underwriter or any person controlling any
Underwriter or by or on behalf of the Company, its officers or
directors or any person controlling the Company;
(b) the completion of the arrangements set out in this Agreement for
the issue and sale of the Offer Shares; or
(c) the termination of this Agreement.
8. INDEMNITY
(1) The Company and the Parent, jointly and severally, hereby undertake to
the Underwriters to indemnify and hold harmless each Indemnified Person
from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred by any Indemnified Person in connection with defending or
investigating any such action or claim) caused by any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any Preliminary
Prospectus or the Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based
upon information relating to any Underwriter furnished to the Company
in writing by such Underwriter through Deutsche Bank expressly for use
therein; provided that the foregoing indemnity with respect to any
Preliminary Prospectus shall not inure to the benefit of the
Underwriters if the Underwriters failed to deliver a copy of the
Prospectus, as then supplemented or amended (so long as the Prospectus
and any amendment or supplement thereto was provided by the Company to
the Underwriters in the requisite quantity and on a timely basis to
permit proper delivery on or prior to the applicable Closing Date), to
the person asserting any losses or other claims caused by any untrue
statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, or caused by any omission or alleged
omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading if such material misstatement or omission or
alleged material misstatement or omission was cured in the Prospectus
as so amended or supplemented.
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<PAGE> 21
(2) Each Underwriter hereby undertakes, severally and not jointly, to
indemnify and hold harmless the Company, any of its affiliates or
controlling persons (as defined in Section 15 of the Securities Act or
Section 20 of the Exchange Act) or any of their respective directors,
officers, employees or agents from and against any and all losses,
claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
Preliminary Prospectus or the Prospectus (as amended or supplemented if
the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading,
but only with reference to information relating to such Underwriter
furnished to the Company in writing by such Underwriter through
Deutsche Bank expressly for use in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendments or supplements
thereto.
(3) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be
sought pursuant to subclause (1) or (2) of this clause 8, such person
(for purposes of this subclause (3), the "INDEMNIFIED PARTY") shall
promptly notify the person against whom such indemnity may be sought
(for purposes of this subclause (3), the "INDEMNIFYING PARTY") in
writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others which the
indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (a) the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons and (b) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the
Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, and that all such fees and expenses shall be reimbursed
as they are incurred. In the case of any such separate firm for
Indemnified
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<PAGE> 22
Persons, such firm shall be designated in writing by Deutsche Bank. In
the case of any such separate firm for the Company, and such directors,
officers and control persons of the Company, such firm shall be
designated in writing by the Company. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its
written consent (which consent shall not be unreasonably withheld), but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder
by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(4) To the extent the indemnification provided for in subclause (1) or (2)
of this clause 8 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities referred to
therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (a) in such proportion as is
appropriate to reflect the relative benefits received by the
indemnifying party or parties, on the one hand, and the indemnified
party or parties, on the other hand, from the offering of the Offer
Shares or (b) if the allocation provided above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in subclause (a) above but also
the relative fault of the indemnifying party or parties on the one hand
and of the indemnified party or parties on the other hand in connection
with the statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other hand in connection with the
offering of the Offer Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the
Offer Shares (before deducting expenses) received by the Company and
the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of
the Prospectus, bear to the aggregate Offer Price of the Offer Shares.
The relative benefits received by the Parent shall be deemed to be in
the same proportion as if the Parent had received the net proceeds from
the offering of Offer Shares (before deducting expenses) that are
received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth on
the table on the cover of the Prospectus bear to the aggregate Offer
Price of the Offer Shares. The relative fault of the Company on the one
hand, the Parent on the second hand and the Underwriters on the third
hand shall be determined by reference to,
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<PAGE> 23
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company, the Parent or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute
pursuant to this clause 8 are several in proportion to the respective
number of Offer Shares they have purchased hereunder, and not joint.
(5) The Company, the Parent and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this clause 8 were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in subclause (4) of this clause 8. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this clause 8,
no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Offer Shares
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. 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. The remedies
provided for in this clause 8 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
(6) Notwithstanding the foregoing indemnity and contribution provisions
contained in this clause 8 the obligation of the Parent to indemnify
the Underwriters and the other Indemnified Persons shall be only
effective after the Underwriters have pursued through an initial
decision of a court or settlement their right of indemnification
against the Company (except that the Underwriters shall not be required
to pursue such a decision or settlement if the Company becomes subject
to a bankruptcy or insolvency proceeding), and the Parent's
indemnification obligation is limited to the amount of net proceeds
received by the Company from the offering of the Offer Shares, plus any
reasonable costs, charges and expenses (including legal fees) incurred
by the Underwriters and the other Indemnified Persons in connection
with investigating, preparing or defending any losses, claims, damages
and liabilities.
(7) The indemnity and contribution provisions contained in this clause 8
shall remain operative and in full force and effect regardless of (a)
any termination of this Agreement,
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<PAGE> 24
(b) any investigation made by or on behalf of any Underwriter or any
person controlling any Underwriter, the Company or the Parent, or their
respective officers or directors or any person controlling them and (c)
acceptance of and payment for any of the Offer Shares.
(8) The provisions of this clause shall not affect any agreement between
the Company and the Parent with respect to indemnification or
contribution.
9. LISTING
The Company shall, if it has not already done so and if it is required
in order to obtain a listing of the Offer Shares as provided below,
make or cause to be made an application for the listing of the Offer
Shares on the Nasdaq National Market. The Company shall endeavour to
obtain the listing as promptly as practicable and the Company shall
furnish any and all documents, instruments, information and
undertakings that may be necessary or advisable in order to obtain or
maintain the listing.
10. CONDITIONS PRECEDENT
The several obligations of the Underwriters to purchase the Offer
Shares are conditional upon the following further considerations:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any
change, or any development involving a prospective change, in
the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement) that, in the reasonable
judgment of Deutsche Bank (following consultation with the
Company and the Parent, when feasible), is material and
adverse and that makes it, in the reasonable judgment of
Deutsche Bank (following consultation with the Company and the
Parent, when feasible), impracticable to market the Offer
Shares on the terms and in the manner contemplated in the
Prospectus.
(b) The following documents shall be delivered to the
Underwriters:
(A) a legal opinion from Shearman & Sterling, counsel for
the Company, dated such Closing Date, to the effect
that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the
laws of the State of Delaware, with corporate
power and authority under such laws
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<PAGE> 25
to own its properties and conduct its business as
described in the Prospectus;
(ii) The Offer Shares delivered on such Closing Date
and all other outstanding shares of the Common
Stock of the Company have been duly authorized
and validly issued, are fully paid and
nonassessable and conform to the description
thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive
rights with respect to the Shares under the
Delaware General Corporate law or the Company's
Certificate of Incorporation or By-laws;
(iii) No consent, approval, authorization or order of,
or filing with, any U.S. federal or New York
state governmental agency or body or any U.S.
federal or New York state court is required for
the consummation by the Company of the
transactions contemplated by this Agreement in
connection with the issuance or sale of the Offer
Shares by the Company, except such as have been
obtained and made under the Securities Act and
such as may be required under state securities
laws or the laws of any jurisdiction outside the
United States;
(iv) The execution and delivery by the Company of this
Agreement and the consummation by the Company of
the transactions contemplated in this Agreement,
and compliance by the Company with the terms
thereof (1) will not result in any violation of
the Certificate of Incorporation or By-laws of
the Company, and (2) will not conflict with, or
constitute default under, or result in the
creation or imposition of any lien, charge or
encumbrance upon any property or assets of the
Company pursuant to (A) any existing applicable
law, rule or regulation which, in each instance
in our experience, are normally applicable to
corporations such as the Company or transactions
of this type, other than the securities or blue
sky laws of the various states, as to which, in
each case, we express no opinion or (B) any
judgment, order or decree of any Federal or New
York court, governmental agency or body or
arbitrator known by us to be applicable to the
Company (except for such conflicts, defaults or
liens, charges or encumbrances, with respect to
clause (2) above, that would not reasonably be
expected to result in a Material Adverse Effect);
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<PAGE> 26
(v) The Registration Statement was declared effective
under the Securities Act as of the date and time
specified in such opinion, the Prospectus either
was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such
opinion on the date specified therein or was
included in the Registration Statement, and, to
the best of the knowledge of such counsel, no
stop order suspending the effectiveness of the
Registration Statement or any part thereof has
been issued and no proceedings for that purpose
have been instituted or are pending or
contemplated under the Securities Act;
(vi) This Agreement has been duly authorized, executed
and delivered by the Company;
(vii) The statements in the Prospectus under the
captions "Description of Capital Stock," "Certain
United States Tax Consequences to Non-U.S.
Holders of Common Stock" and "Underwriting," and
in the Registration Statement under Item 14,
insofar as such statements constitute a summary
of the legal matters, documents or proceedings
referred to therein, fairly summarize the matters
referred to therein;
(viii) The Company is not now, and after giving effect
to the offering and sale of the Offer Shares and
the application of the net proceeds thereof as
described in the Prospectus, will not be,
required to register under the Investment Company
Act of 1940, as amended to date; and
(ix) The form of certificate used to evidence the
Shares complies in all material respects with all
applicable statutory requirements, with any
applicable requirements of the Certificate of
Incorporation and By-laws of the Company and the
requirements of the Nasdaq National Market.
In addition, such counsel shall state that such
counsel has participated in conferences with officers
and other representatives of the Company,
representatives of the Underwriters and counsel for the
Underwriters and representatives of the independent
public accountants of the Company at which the contents
of the Registration Statement and Prospectus and related
matters were discussed and that, (i) in such counsel's
opinion, the Registration Statement and the Prospectus
(other than the financial statements and other financial
and statistical data contained therein or omitted
therefrom, as to which such counsel need
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<PAGE> 27
not comment) appear on their face to be appropriately
responsive in all material respects to the requirements
of the Securities Act and the applicable rules and
regulations of the Commission thereunder; (ii) no facts
came to such counsel's attention which gave such counsel
reason to believe that (a) the Registration Statement
(other than the financial statements and other financial
and statistical data contained therein or omitted
therefrom, as to which such counsel need not comment),
at the time it became effective, contained an untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or necessary
to make the statements therein not misleading, or (b)
the Prospectus (other than the financial statements and
other financial and statistical data contained therein
or omitted therefrom, as to which we have not been
requested to comment), as of its date or the Closing
Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the
light of the circumstances under which they were made,
not misleading; and (iii) such counsel does not know of
any contract or other document of a character required
to be filed as an exhibit to the Registration Statement
that is not so filed.
(B) a legal opinion from Jeff Riddell, General Counsel for
the Company, dated such Closing Date to the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the
laws of the State of Delaware, with corporate
power and authority under such laws to own its
properties and conduct its business as described
in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation
in good standing in each U.S. jurisdiction in
which such qualification is required, except where
the failure so to qualify or to be in good
standing, individually or in the aggregate, would
not have a Material Adverse Effect;
(ii) The Offer Shares delivered on such Closing Date
and all other outstanding shares of the Common
Stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable
and conform to the description thereof contained
in the Prospectus; and the stockholders of the
Company have no preemptive rights with respect to
the Shares;
(iii) To the best of such counsel's knowledge, except as
disclosed in the Prospectus, there are no
contracts, agreements or understandings
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<PAGE> 28
between the Company and any person granting such
person the right to require the Company to file a
registration statement under the Securities Act
with respect to any securities of the Company
owned or to be owned by such person or to require
the Company to include such securities in the
securities registered pursuant to the Registration
Statement or in any securities being registered
pursuant to any other registration statement filed
by the Company under the Securities Act;
(iv) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or
any court is required for the consummation by the
Company of the transactions contemplated by this
Agreement in connection with the issuance or sale
of the Offer Shares by the Company, except such as
have been obtained and made under the Securities
Act and such as may be required under state
securities laws;
(v) The execution and delivery by the Company of this
Agreement and the consummation by the Company of
the transactions contemplated in this Agreement,
and compliance by the Company with the terms
thereof (1) will not result in any violation of
the charter or by-laws of the Company, and (2)
will not conflict with, or constitute default
under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property
or assets of the Company pursuant to (A) any
material agreement of the Company or (B) any
judgment, order or decree of any Federal or New
York court, governmental agency or body or
arbitrator known by such counsel to be applicable
to the Company (except for such conflicts,
defaults, liens, charges or encumbrances, with
respect to clause (2) above, that would not
reasonably be expected to result in a Material
Adverse Effect);
(vi) This Agreement has been duly authorized, executed
and delivered by the Company;
(vii) Each subsidiary of the Company listed on Schedule
I attached thereto has been duly incorporated and
is an existing corporation in good standing under
the laws of the jurisdiction of its incorporation,
with corporate power and authority to own its
properties and conduct its business as described
in the Prospectus; and each subsidiary of the
Company listed on Schedule I attached thereto is
duly qualified to do business as a foreign
corporation in good
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<PAGE> 29
standing in all other jurisdictions in which such
qualification is required, except where the
failure so to qualify or be in good standing,
individually or in the aggregate, would not have
a Material Adverse Effect; all of the issued and
outstanding capital stock of each subsidiary of
the Company listed on Schedule I attached thereto
of the Company has been duly authorized and
validly issued and is fully paid and
nonassessable; and, to the best of such counsel's
knowledge, the capital stock of each subsidiary
owned by the Company listed on Schedule I
attached thereto, directly or through
subsidiaries, is owned free from liens,
encumbrances and defects;
(viii) Except as disclosed in the Prospectus, the
Company and the Ventures have good and marketable
title to all real properties and all other
properties and assets owned by them, in each case
free from liens, encumbrances and defects that
would affect the value thereof or interfere with
the use made or to be made thereof by them,
except such as would not, singly or in the
aggregate, result in a Material Adverse Effect;
and except as disclosed in the Prospectus, the
Company and the Ventures hold any leased real or
personal property under valid and enforceable
leases with no exceptions that would interfere
with the use made or to be made thereof by them,
except such as would not, singly or in the
aggregate, result in a Material Adverse Effect;
(ix) Except as otherwise disclosed in the Prospectus,
the Company and the Ventures possess such
Governmental Licenses issued by the appropriate
federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the
business now operated by them, except such as
would not, singly or in the aggregate, result in
a Material Adverse Effect; the Company and the
Ventures are in compliance with the terms and
conditions of all such Governmental Licenses,
except where the failure so to comply would not,
singly or in the aggregate, result in a Material
Adverse Effect; all of the Governmental Licenses
are valid and in full force and effect, except
when the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to
be in full force and effect would not have a
Material Adverse Effect; and neither the Company
nor any Venture has received any notice of
proceedings relating to the revocation or
modification of any such Governmental Licenses
which, singly or in the aggregate, if
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<PAGE> 30
the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse
Effect; and
(x) To the best of such counsel's knowledge, except as
disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting
the Company, any Venture or any of their
respective properties that, if determined
adversely to the Company or any Venture, would
individually or in the aggregate have a Material
Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its
obligations under this Agreement, or which are
otherwise material in the context of the sale of
the Offer Shares; and no such actions, suits or
proceedings are, to the best of such counsel's
knowledge, threatened or contemplated.
In addition, such counsel shall state that such
counsel has participated in conferences with officers
and other representatives of the Company,
representatives of the Underwriters and counsel for the
Underwriters and representatives of the independent
public accountants of the Company at which the contents
of the Registration Statement and Prospectus and related
matters were discussed and that, (i) in such counsel's
opinion, the Registration Statement and the Prospectus
(other than the financial statements and other financial
and statistical data contained therein or omitted
therefrom, as to which such counsel need not comment)
appear on their face to be appropriately responsive in
all material respects to the requirements of the
Securities Act and the applicable rules and regulations
of the Commission thereunder; (ii) no facts came to such
counsel's attention which gave such counsel reason to
believe that (a) the Registration Statement (other than
the financial statements and other financial and
statistical data contained therein or omitted therefrom,
as to which such counsel need not comment), at the time
it became effective, contained an untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, or (b) the Prospectus
(other than the financial statements and other financial
and statistical data contained therein or omitted
therefrom, as to which we have not been requested to
comment), as of its date or the Closing Date, contained
or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary to
make the statements therein, in the light of the
circumstances under which they were made, not
misleading; and (iii) such counsel does not know of any
contract or
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<PAGE> 31
other document of a character required to be filed as an
exhibit to the Registration Statement that is not so
filed.
(C) a legal opinion from Coudert Brothers, special Russian
counsel for the Company, dated such Closing Date to the
effect that:
(i) The statements relating to the Russian Federation
in the Prospectus under the captions "RISK FACTORS
-- Risks Associated With Doing Business in Russia,
Ukraine and Other Countries of the Commonwealth of
Independent States," "RISK FACTORS -- Risks
Associated with Our Business," "THE POLITICAL,
LEGAL AND ECONOMIC ENVIRONMENTS IN RUSSIA AND
UKRAINE" and "REGULATION," insofar as they purport
to constitute a summary of the matters expressly
referred to therein, fairly describe such matters
in all material respects;
(ii) Each of the Russian companies listed on Schedule B
thereto (the "RUSSIAN COMPANIES") has been duly
organized and is validly existing as a legal
entity registered under the laws of the Russian
Federation and has the corporate power and
authority to carry on its business and to own,
lease and operate its properties as disclosed in
the Prospectus;
(iii) All of the outstanding shares of capital stock or
ownership interests, as applicable, of each of the
Russian Companies have been duly authorized and
validly issued and the issuance of such shares was
properly registered with the appropriate
authorities competent therefor, and, to the best
of such counsel's knowledge, to the extent owned,
directly or indirectly, by the Company, are owned
free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any
nature. The Company owns, directly or indirectly,
that percentage of the issued and outstanding
shares of capital stock or ownership interests of
the Russian Companies set forth on Schedule 1
thereto as being owned by the Company;
(iv) Except as disclosed in the Prospectus, under
current legislation of the Russian Federation, as
applicable, (i) subject to the qualifications
explicitly set forth in such opinion, dividends
and other distributions declared and payable on
the issued and outstanding shares of the Russian
Companies may be paid to the foreign shareholders
in U.S. Dollars and may be transferred by
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<PAGE> 32
such foreign shareholders out of the Russian
Federation, as the case may be; (ii) all such
dividends are, and other distributions may be,
subject to withholding taxes unless an
international treaty provides otherwise and the
procedures set forth in applicable Russian
legislation enabling the foreign shareholders to
avail themselves of such treaty benefits are
followed; and (iii) such dividends and
distributions are otherwise free and clear of any
other tax or deduction in the Russian Federation,
provided that all profits and other taxes have
been paid by the relevant Russian Company prior to
the payment of such dividends and distributions;
(v) Except as disclosed in the Prospectus, each
Russian Company has such telecommunications
permits, licenses and authorizations of
governmental or regulatory authorities, including,
without limitation, licenses issued by the State
Committee of the Russian Federation on
Communications and Information (formerly the
Ministry of Communications) (the
"TELECOMMUNICATIONS LICENSES"), permissions issued
by the State Service for Communications Oversight
(also referred to as Gossviaznadzor), and/or
radio-frequency allocations issued by the State
Commission for Radio Frequencies (all of the
foregoing, without limitation, being the
"TELECOMMUNICATIONS PERMITS"), which are necessary
to own, lease, and operate its respective
properties and to conduct its business as
disclosed in the Prospectus. Such
Telecommunications Permits contain no restriction
that is likely to have a material adverse effect
on the business, condition (financial or other),
properties, net worth, results of operations or
prospects (a "RUSSIAN MATERIAL ADVERSE EFFECT") of
such Russian Company. Except as disclosed in the
Prospectus, to the best of such counsel's
knowledge, each of the Russian Companies has
fulfilled and performed all of its material
obligations with respect to such
Telecommunications Permits and no event has
occurred which creates, or after notice or lapse
of time or both would create, a material
likelihood that such Telecommunications Permits
would be revoked or terminated;
(vi) To the best of such counsel's knowledge, there are
no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, or
commitments of sale entitling any person to
purchase or otherwise acquire from any of the
Russian Companies
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<PAGE> 33
any shares of the capital stock of, or other
ownership interest in, any of such Russian
Companies, with the exception of those arising as
a matter of Russian law and those included in the
foundation documents (including the shareholders'
agreements), and any amendments thereto, of the
Russian Companies; and
(vii) Except as otherwise set forth in the Prospectus,
there are no legal or governmental proceedings
pending or threatened in writing to which any
Russian Company is a party or of which any of its
property is the subject, which could have a
Russian Material Adverse Effect on the Russian
Companies as a whole.
(D) a legal opinion from Shevchenko, Didkovskiy & Partners,
special Ukrainian counsel for the Company, dated such
Closing Date to the effect that:
(i) The statements in the Prospectus relating to
Ukraine under the captions "RISK FACTORS -- Risks
Associated With Doing Business in Russia, Ukraine
and Other Countries of the Commonwealth of
Independent States," "RISK FACTORS -- Risks
Associated with Our Business," "THE POLITICAL,
LEGAL AND ECONOMIC ENVIRONMENTS IN RUSSIA AND
UKRAINE" and "REGULATION," insofar as they purport
to constitute a summary of the matters expressly
referred to therein, fairly describe such matters
in all material respects;
(ii) Golden Telecom (Ukraine) has been duly organized
and is validly existing as a legal entity
registered under the laws of Ukraine and has
corporate power and authority to carry on its
business and to own, lease and operate its
properties as disclosed in the Prospectus;
(iii) All of the ownership interests of Golden Telecom
(Ukraine) have been duly authorized and validly
issued and, to the best of our knowledge, to the
extent indirectly owned by the Company, are owner
free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any
nature. The Company owns indirectly [ ]% of the
ownership interests in Golden Telecom (Ukraine);
(iv) Except as disclosed in the Prospectus, under
current legislation of Ukraine, as applicable, (i)
dividends and other distributions declared and
payable on the ownership interests of Golden
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<PAGE> 34
Telecom (Ukraine) may be paid to the foreign
shareholders in U.S. Dollars and may be
transferred by such foreign shareholders out of
Ukraine, as the case may be; (ii) all such
dividends are, and other distributions may be,
subject to withholding taxes unless an
international treaty provides otherwise and the
procedures set forth in applicable Ukrainian
legislation enabling Golden Telecom (Ukraine) to
avail itself of such treaty benefits are followed,
and (iii) such dividends and distributions are
otherwise free and clear of any other tax or
deduction in Ukraine, provided that all profits
and other taxes have been paid by Golden Telecom
(Ukraine) prior to the payment of such dividends
and distributions;
(v) Except as disclosed in the Prospectus, Golden
Telecom (Ukraine) has such permits, licenses and
authorizations of governmental or regulatory
authorities, including, without limitation,
licenses and permits issued by the State Committee
of Communications of Ukraine (formerly the
Ministry of Communications of Ukraine) and the
former State Inspectorate for Electric
Communications of Ukraine and other appropriate
Ukrainian authorities (all of the foregoing,
without limitation, being the "PERMITS"), which
are necessary to own, lease, and operate its
respective properties and to conduct its business
as disclosed in the Prospectus. Such Permits
contain no restriction that, as a matter of
Ukrainian law and regulation, is likely to have a
material adverse effect on the business, condition
(financial or other), properties, net worth or
results of operations (a "UKRAINIAN MATERIAL
ADVERSE EFFECT") of Golden Telecom (Ukraine).
Except as disclosed in the Prospectus, to the best
of our knowledge, Golden Telecom (Ukraine) has
fulfilled and performed all of its material
obligations with respect to such Permits and no
event has occurred which allows, or after notice
or lapse of time or both would allow, revocation
or termination thereof;
(vi) To the best of our knowledge, there are no
outstanding subscriptions, rights, warrants,
options, calls, convertible securities, or
commitments of sale entitling any person to
purchase or otherwise acquire from Golden Telecom
(Ukraine) any ownership interest in Golden Telecom
(Ukraine); and
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<PAGE> 35
(vii) Except as otherwise set forth in the Prospectus,
there are no legal or governmental proceedings
pending to which Golden Telecom (Ukraine) is a
party or of which any of its property is the
subject, which could have a Ukrainian Material
Adverse Effect on Golden Telecom (Ukraine).
(E) such favorable opinion or opinions from Cahill Gordon &
Reindel, counsel for the Underwriters, dated such
Closing Date as the Underwriters may reasonably require
and the Company shall have furnished to such counsel
such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(F) such favorable opinion or opinions from Clifford Chance,
special Russian counsel for the Underwriters, dated such
Closing Date, as the Underwriters may reasonably require
and the Company shall have furnished to such counsel
such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(G) such favorable opinion or opinions from Baker &
McKenzie, special Ukrainian counsel for the
Underwriters, dated such Closing Date, as the
Underwriters may reasonably require and the Company
shall have furnished to such counsel such documents as
they may reasonably request for the purpose of enabling
them to pass on such matters.
(c) The opinions of the Company's counsel described herein shall
be rendered to the Underwriters at the request of the Company
and shall so state therein.
(d) The Underwriters shall have received certificates, each dated
such Closing Date, of the President or any Vice President and
a principal financial or accounting officer of the Company and
of the Parent in which such officers, to the best of their
knowledge after reasonable investigation, shall state that:
the representations and warranties of the Company or the
Parent, as the case may be, in this Agreement are true and
correct as though made at and as of such Closing Date; the
Company or the Parent, as the case may be, has complied with
all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing
Date; no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to the knowledge of such
officer, are contemplated by the Commission; and, subsequent
to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change, nor any
development or event involving a prospective material adverse
change, in the condition (financial or other), business,
properties or results of operations of the Company and its
subsidiaries taken as a whole, or of
-33-
<PAGE> 36
EDN Sovintel LLC, Sovam Teleport Ukraine and PrimTelefone
taken as a whole, except as set forth in or contemplated by
the Prospectus or as described in such certificate.
(e) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the rules and regulations under
the Securities Act and in accordance with clause 4(4) hereof;
the Registration Statement shall have become effective under
the Securities Act and no stop order suspending the
effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened to the Company
in writing by the Commission; and all requests for additional
information on the part of the Commission shall have been
complied with to the reasonable satisfaction of the
Underwriters.
(f) The delivery to the Underwriters, on each of the date hereof
and the Closing Date, of a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from Ernst & Young (CIS)
Limited, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and
certain financial information contained in the Registration
Statement and the Prospectus.
(g) The Nasdaq National Market shall have admitted the Shares to
listing on or before the First Closing.
(h) The "lock-up" agreements between the Underwriters and the
Company's directors and officers and the Parent relating to
sales and certain other dispositions of Shares or certain
other securities, delivered to the Underwriters on or before
the date hereof, shall be in full force and effect on the
Closing Date.
(2) The Company and the Parent undertake to use all reasonable endeavours
to procure that the conditions set out in this clause 10 are satisfied
on or before the respective Closing Date.
(3) In the event that any of the foregoing conditions is not satisfied on
or before the First Closing Date, this Agreement shall (subject as
mentioned below) terminate and the parties to this Agreement shall
(except for the liability of the Company in relation to expenses as
provided in clause 6, the indemnity provided in clause 8 and any
liability arising before or in relation to such termination) be under
no further liability or obligation arising out of this Agreement,
provided that Deutsche Bank on behalf of the Underwriters may in its
discretion and by notice to the Company waive, or extend the time for,
satisfaction of any of the above conditions or of any part of them.
-34-
<PAGE> 37
11. TERMINATION
This Agreement shall be subject to termination by notice given by the
Underwriters to the Company, if (a) after the execution and delivery of
this Agreement and prior to the date of the Closing (i) trading
generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, Nasdaq National
Market or the American Stock Exchange, (ii) trading of any securities
of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial
banking activities in New York shall have been declared by either
Federal or New York State authorities, (iv) a change in United States,
Russian or Ukrainian taxation materially adversely affecting the
Company, the Shares or a change in currency exchange rates or exchange
controls or (v) there shall have occurred any outbreak or escalation of
hostilities or any change in financial, political, economic or market
conditions or any calamity or crisis that, in the reasonable judgment
of the Underwriters, is material and adverse and (b) in the case of any
of the events specified in clauses (a)(i) through (v), such event,
singly or together with any other such event, makes it, in the
reasonable judgment of the Underwriters (following consultation with
the Company and the Parent, when feasible), impracticable to market the
Offer Shares on the terms and in the manner contemplated in the
Prospectus.
12. NOTICES
Any notice or notification in any form to be given under this Agreement
may be delivered in person or sent by telex, facsimile or telephone
(subject in the case of a communication by telephone to confirmation by
telex or facsimile) addressed to:
IN THE CASE OF THE COMPANY:
Golden Telecom, Inc.
c/o Golden Teleservices, Inc.
1751 Pinnacle Drive
North Tower -- 12th Floor
McLean, VA 22012
Facsimile: (703) 918-0337
Attention: General Counsel
-35-
<PAGE> 38
IN THE CASE OF THE PARENT:
Global Telesystems Group, Inc.
1751 Pinnacle Drive
North Tower -- 12th Floor
McLean, VA 22102
Facsimile: (703) 918-0337
Attention: Chief Financial Officer
IN THE CASE OF THE UNDERWRITERS:
Deutsche Bank AG London
23 Great Winchester Street
London EC2P 2AX
Facsimile: (+44) 0171 826 6301
Attention: Equity Capital Markets Group
Steffan Till
Denzil Jenkins
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.
13. 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.
14. GOVERNING LAW
THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
-36-
<PAGE> 39
IN WITNESS of which this Agreement has been executed on the date written above.
Yours faithfully,
GOLDEN TELECOM, INC.
By:
------------------------------------
Name:
Title:
GLOBAL TELESYSTEMS GROUP, INC.
By:
------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first written above:
DEUTSCHE BANK AG LONDON
BEAR STEARNS & CO. INC.
ING BARINGS LIMITED
AS AGENT FOR ING BANK N.V.,
LONDON BRANCH
By: DEUTSCHE BANK AG LONDON
By:
------------------------------------
Name:
Title:
-37-
<PAGE> 40
SCHEDULE 1
THE UNDERWRITERS
UNDERWRITER UNDERWRITING COMMITMENT
Deutsche Bank AG London [______________]
Bear, Stearns & Co. Inc. [______________]
ING Barings Limited [______________]
------------------------
Total [number of Firm Shares]
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GOLDEN TELECOM, INC.
ARTICLE I
Name
The name of the corporation is Golden Telecom, Inc. (the
"Corporation").
ARTICLE II
Registered Office and Registered Agent
The address of the registered office of the Corporation in the State of
Delaware is National Corporate Research, Ltd., 9 East Loockerman Street, in the
City of Dover, County of Kent. The name of the registered agent of the
Corporation at such address is National Corporate Research, Ltd.
ARTICLE III
Corporate Purpose
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "General Corporation Law").
ARTICLE IV
Capital Stock
The total number of shares of all classes of stock that the Corporation
shall have authority to issue is 50,000,000, all of which shall be shares of
Common Stock, par value $.01 per share.
<PAGE> 2
ARTICLE V
Directors
(1) Elections of directors of the Corporation need not be by written
ballot, except and to the extent provided in the By-laws of the Corporation.
(2) To the fullest extent permitted by the General Corporation Law as
it now exists and as it may hereafter be amended, no director of the Corporation
shall be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
ARTICLE VI
Indemnification of Directors, Officers and Others
(1) The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person seeking
indemnification did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(2) The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged
2
<PAGE> 3
to be liable to the Corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
(3) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections (1) and (2) of this Article
VI, or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
(4) Any indemnification under Sections (1) and (2) of this Article VI
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in such Sections (1) and (2). Such
determination shall be made (a) by the Board of Directors of the Corporation by
a majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (c) by the stockholders of the
Corporation.
(5) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation authorized in this Article VI. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the Board of Directors of the Corporation deems
appropriate.
(6) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other sections of this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any law, by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office.
(7) The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not
3
<PAGE> 4
the Corporation would have the power to indemnify him against such liability
under the provisions of Section 145 of the General Corporation Law.
(8) For purposes of this Article VI, references to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article VI with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(9) For purposes of this Article VI, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves service by, such director, officer, employee or
agent with respect to any employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
VI.
(10) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VI shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE VII
By-Laws
The directors of the Corporation shall have the power to adopt, amend
or repeal by-laws.
ARTICLE VIII
Reorganization
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any
4
<PAGE> 5
class of them, any court of equitable jurisdiction within the State of Delaware
may, on the application in a summary way of this Corporation or of any creditor
or stockholder thereof or on the application of any receiver or receivers
appointed for this Corporation under the provisions of section 291 of Title 8 of
the Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions of
section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
ARTICLE IX
Amendment
The Corporation reserves the right to amend, alter, change or repeal
any provision of this Certificate of Incorporation, in the manner now or
hereafter prescribed by law, and all rights conferred on stockholders in this
Certificate of Incorporation are subject to this reservation.
5
<PAGE> 1
EXHIBIT 3.2
=========================================
BY-LAWS
OF
GOLDEN TELECOM, INC.
=========================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
ARTICLE I
OFFICES
<S> <C>
1.01. Registered Office.....................................................1
1.02. Other Offices.........................................................1
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.01. Annual Meetings.......................................................1
2.02. Special Meetings......................................................1
2.03. Notice of Meetings....................................................2
2.04. Waiver of Notice......................................................2
2.05. Adjournments..........................................................2
2.06. Quorum................................................................3
2.07. Voting................................................................3
2.08. Proxies...............................................................3
2.09. Stockholders' Consent in Lieu of Meeting..............................3
ARTICLE III
BOARD OF DIRECTORS
3.01. General Powers........................................................4
3.02. Number and Term of Office.............................................4
3.03. Resignation...........................................................4
3.04. Removal...............................................................4
3.05. Vacancies.............................................................4
3.06. Meetings..............................................................4
3.07. Committees of the Board...............................................6
3.08. Directors' Consent in Lieu of Meeting.................................7
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
3.09. Action by Means of Telephone or Similar Communications Equipment.......7
3.10. Compensation...........................................................7
ARTICLE IV
OFFICERS
4.01. Officers...............................................................7
4.02. Authority and Duties...................................................7
4.03. Term of Office, Resignation and Removal................................7
4.04. Vacancies..............................................................8
4.05. The Chairman...........................................................8
4.06. The President..........................................................8
4.07. Vice Presidents........................................................8
4.08. The Secretary..........................................................8
4.09. Assistant Secretaries..................................................9
4.10. The Treasurer..........................................................9
4.11. Assistant Treasurers...................................................9
ARTICLE V
CHECKS, DRAFTS, NOTES, AND PROXIES
5.01. Checks, Drafts and Notes..............................................10
5.02. Execution of Proxies..................................................10
ARTICLE VI
SHARES AND TRANSFERS OF SHARES
6.01. Certificates Evidencing Shares........................................10
6.02. Stock Ledger..........................................................10
6.03. Transfers of Shares...................................................10
6.04. Addresses of Stockholders.............................................11
6.05. Lost, Destroyed and Mutilated Certificates............................11
6.06. Regulations...........................................................11
6.07. Fixing Date for Determination of Stockholders of Record...............11
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VII
SEAL
7.01. Seal..................................................................12
ARTICLE VIII
FISCAL YEAR
8.01. Fiscal Year...........................................................12
ARTICLE IX
INDEMNIFICATION AND INSURANCE
9.01. Indemnification.......................................................12
9.02. Insurance for Indemnification.........................................14
ARTICLE X
AMENDMENTS
10.01. Amendments...........................................................15
</TABLE>
(iii)
<PAGE> 5
SECTION PAGE
BY-LAWS
OF
GOLDEN TELECOM, INC.
ARTICLE I
OFFICES
SECTION 1.01. Registered Office. The registered office of Golden
Telecom, Inc. (the "Corporation") in the State of Delaware shall be at the
principal office of National Corporate Research, Ltd. in the City of Dover,
County of Kent, and the registered agent in charge thereof shall be National
Corporate Research, Ltd.
SECTION 1.02. Other Offices. The Corporation may also have an office
or offices at any other place or places within or without the State of Delaware
as the Board of Directors of the Corporation (the "Board") may from time to
time determine or the business of the Corporation may from time to time
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.01. Annual Meetings. The annual meeting of stockholders of
the Corporation for the election of directors of the Corporation ("Directors"),
and for the transaction of such other business as may properly come before such
meeting, shall be held at such place, date and time as shall be fixed by the
Board and designated in the notice or waiver of notice of such annual meeting;
provided, however, that no annual meeting of stockholders need be held if all
actions, including the election of Directors, required by the General
Corporation Law of the State of Delaware (the "General Corporation Law") to be
taken at such annual meeting are taken by written consent in lieu of meeting
pursuant to Section 2.09 hereof.
SECTION 2.02. Special Meetings. Special meetings of stockholders for
any purpose or purposes may be called by the Board or the Chairman of the
Board, the President or the Secretary of the Corporation or by the
recordholders of at least a majority of the shares of common stock of the
Corporation issued and outstanding ("Shares") and entitled to vote thereat,
1
<PAGE> 6
SECTION PAGE
to be held at such place, date and time as shall be designated in the notice or
waiver of notice thereof.
SECTION 2.03. Notice of Meetings. (a) Except as otherwise provided by
law, written notice of each annual or special meeting of stockholders stating
the place, date and time of such meeting and, in the case of a special meeting,
the purpose or purposes for which such meeting is to be held, shall be given
personally or by first-class mail (airmail in the case of international
communications) to each recordholder of Shares (a "Stockholder") entitled to
vote thereat, not less than 10 nor more than 60 days before the date of such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the Stockholder at such
Stockholder's address as it appears on the records of the Corporation. If,
prior to the time of mailing, the Secretary of the Corporation (the
"Secretary") shall have received from any Stockholder a written request that
notices intended for such Stockholder are to be mailed to some address other
than the address that appears on the records of the Corporation, notices
intended for such Stockholder shall be mailed to the address designated in such
request.
(b) Notice of a special meeting of Stockholders may be given by the
person or persons calling the meeting, or, upon the written request of such
person or persons, such notice shall be given by the Secretary on behalf of
such person or persons. If the person or persons calling a special meeting of
Stockholders give notice thereof, such person or persons shall deliver a copy
of such notice to the Secretary. Each request to the Secretary for the giving
of notice of a special meeting of Stockholders shall state the purpose or
purposes of such meeting.
SECTION 2.04. Waiver of Notice. Notice of any annual or special
meeting of Stockholders need not be given to any Stockholder who files a
written waiver of notice with the Secretary, signed by the person entitled to
notice, whether before or after such meeting. Neither the business to be
transacted at, nor the purpose of, any meeting of Stockholders need be
specified in any written waiver of notice thereof. Attendance of a Stockholder
at a meeting, in person or by proxy, shall constitute a waiver of notice of
such meeting, except when such Stockholder attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of
any business on the grounds that the notice of such meeting was inadequate or
improperly given.
SECTION 2.05. Adjournments. Whenever a meeting of Stockholders, annual
or special, is adjourned to another date, time or place, notice need not be
given of the adjourned meeting if the date, time and place thereof are
announced at the meeting at which the adjournment is taken. If the adjournment
is for more than 30 days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
2
<PAGE> 7
SECTION PAGE
given to each Stockholder entitled to vote thereat. At the adjourned meeting,
any business may be transacted which might have been transacted at the original
meeting.
SECTION 2.06. Quorum. Except as otherwise provided by law or the
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation"), the recordholders of a majority of the Shares entitled to vote
thereat, present in person or by proxy, shall constitute a quorum for the
transaction of business at all meetings of Stockholders, whether annual or
special. If, however, such quorum shall not be present in person or by proxy at
any meeting of Stockholders, the Stockholders entitled to vote thereat may
adjourn the meeting from time to time in accordance with Section 2.05 hereof
until a quorum shall be present in person or by proxy.
SECTION 2.07. Voting. Each Stockholder shall be entitled to one vote
for each Share held of record by such Stockholder. Except as otherwise provided
by law or the Certificate of Incorporation, when a quorum is present at any
meeting of Stockholders, the vote of the recordholders of a majority of the
Shares constituting such quorum shall decide any question brought before such
meeting.
SECTION 2.08. Proxies. Each Stockholder entitled to vote at a meeting
of Stockholders or to express, in writing, consent to or dissent from any
action of Stockholders without a meeting may authorize another person or
persons to act for such Stockholder by proxy. Such proxy shall be filed with
the Secretary before such meeting of Stockholders or such action of
Stockholders without a meeting, at such time as the Board may require. No proxy
shall be voted or acted upon more than three years from its date, unless the
proxy provides for a longer period.
SECTION 2.09. Stockholders' Consent in Lieu of Meeting. Any action
required by the General Corporation Law to be taken at any annual or special
meeting of Stockholders, and any action which may be taken at any annual or
special meeting of Stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the recordholders of Shares having not less than the
minimum number of votes necessary to authorize or take such action at a meeting
at which the recordholders of all Shares entitled to vote thereon were present
and voted.
3
<PAGE> 8
SECTION PAGE
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. General Powers. The business and affairs of the
Corporation shall be managed by the Board, which may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by law,
the Certificate of Incorporation or these By-laws directed or required to be
exercised or done by Stockholders.
SECTION 3.02. Number and Term of Office. The number of Directors shall
be three or such other number as shall be fixed from time to time by the Board.
Directors need not be Stockholders. Directors shall be elected at the annual
meeting of Stockholders or, if, in accordance with Section 2.01 hereof, no such
annual meeting is held, by written consent in lieu of meeting pursuant to
Section 2.09 hereof, and each Director shall hold office until his successor is
elected and qualified, or until his earlier death or resignation or removal in
the manner hereinafter provided.
SECTION 3.03. Resignation. Any Director may resign at any time by
giving written notice to the Board, the Chairman of the Board of the
Corporation (the "Chairman") or the Secretary. Such resignation shall take
effect at the time specified in such notice or, if the time be not specified,
upon receipt thereof by the Board, the Chairman or the Secretary, as the case
may be. Unless otherwise specified therein, acceptance of such resignation
shall not be necessary to make it effective.
SECTION 3.04. Removal. Any or all of the Directors may be removed,
with or without cause, at any time by vote of the recordholders of a majority
of the Shares then entitled to vote at an election of Directors, or by written
consent of the recordholders of Shares pursuant to Section 2.09 hereof.
SECTION 3.05. Vacancies. Vacancies occurring on the Board as a result
of the removal of Directors without cause may be filled only by vote of the
recordholders of a majority of the Shares then entitled to vote at an election
of Directors, or by written consent of such recordholders pursuant to Section
2.09 hereof. Vacancies occurring on the Board for any other reason, including,
without limitation, vacancies occurring as a result of the creation of new
directorships that increase the number of Directors, may be filled by such vote
or written consent or by vote of the Board or by written consent of the
Directors pursuant to Section 3.08 hereof. If the number of Directors then in
office is less than a quorum, such other vacancies may be filled by vote of a
majority of the Directors then in office or by written consent of all such
Directors pursuant to Section 3.08 hereof. Unless earlier removed pursuant to
Section 3.04 hereof, each Director chosen in accordance with this Section 3.05
shall hold office until the next annual election of Directors by the
Stockholders and until his successor shall be elected and qualified.
SECTION 3.06. Meetings. (a) Annual Meetings. As soon as practicable
after each annual election of Directors by the Stockholders, the Board shall
meet for the purpose of
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<PAGE> 9
SECTION PAGE
organization and the transaction of other business, unless it shall have
transacted all such business by written consent pursuant to Section 3.08
hereof.
(b) Other Meetings. Other meetings of the Board shall be held at such
times as the Chairman, the President of the Corporation (the "President"), the
Secretary or a majority of the Board shall from time to time determine.
(c) Notice of Meetings. The Secretary shall give written notice to
each Director of each meeting of the Board, which notice shall state the place,
date, time and purpose of such meeting. Notice of each such meeting shall be
given to each Director, if by mail, addressed to him at his residence or usual
place of business, at least two days before the day on which such meeting is to
be held, or shall be sent to him at such place by telecopy, telegraph, cable,
or other form of recorded communication, or be delivered personally or by
telephone not later than the day before the day on which such meeting is to be
held. A written waiver of notice, signed by the Director entitled to notice,
whether before or after the time of the meeting referred to in such waiver,
shall be deemed equivalent to notice. Neither the business to be transacted at,
nor the purpose of any meeting of the Board need be specified in any written
waiver of notice thereof. Attendance of a Director at a meeting of the Board
shall constitute a waiver of notice of such meeting, except as provided by law.
(d) Place of Meetings. The Board may hold its meetings at such place
or places within or without the State of Delaware as the Board or the Chairman
may from time to time determine, or as shall be designated in the respective
notices or waivers of notice of such meetings.
(e) Quorum and Manner of Acting. One-third of the total number of
Directors then in office (but in no event less than two if the total number of
directorships, including vacancies, is greater than one and in no event a
number less than one-third of the total number of directorships, including
vacancies) shall be present in person at any meeting of the Board in order to
constitute a quorum for the transaction of business at such meeting, and the
vote of a majority of those Directors present at any such meeting at which a
quorum is present shall be necessary for the passage of any resolution or act
of the Board, except as otherwise expressly required by law, the Certificate of
Incorporation or these By-laws. In the absence of a quorum for any such
meeting, a majority of the Directors present thereat may adjourn such meeting
from time to time until a quorum shall be present.
(f) Organization. At each meeting of the Board, one of the following
shall act as chairman of the meeting and preside, in the following order of
precedence:
(i) the Chairman;
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<PAGE> 10
SECTION PAGE
(ii) the President;
(iii) any Director chosen by a majority of the Directors
present.
The Secretary or, in the case of his absence, any person (who shall be an
Assistant Secretary, if an Assistant Secretary is present) whom the chairman of
the meeting shall appoint shall act as secretary of such meeting and keep the
minutes thereof.
SECTION 3.07. Committees of the Board. The Board may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more Directors. The Board may designate one or
more Directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of such committee. In the absence
or disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another Director to act at
the meeting in the place of any such absent or disqualified member. Any
committee of the Board, to the extent provided in the resolution of the Board
designating such committee, shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; provided, however, that no such committee shall
have such power or authority in reference to amending the Certificate of
Incorporation (except that such a committee may, to the extent authorized in
the resolution or resolutions providing for the issuance of shares of stock
adopted by the Board as provided in Section 151(a) of the General Corporation
Law, fix the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes of stock of the Corporation or fix the
number of shares of any series of stock or authorize the increase or decrease
of the shares of any series), adopting an agreement of merger or consolidation
under Section 251 or 252 of the General Corporation Law, recommending to the
Stockholders the sale, lease or exchange of all or substantially all the
Corporation's property and assets, recommending to the Stockholders a
dissolution of the Corporation or the revocation of a dissolution, or amending
these By-laws; provided further, however, that, unless expressly so provided in
the resolution of the Board designating such committee, no such committee shall
have the power or authority to declare a dividend, to authorize the issuance of
stock, or to adopt a certificate of ownership and merger pursuant to Section
253 of the General Corporation Law. Each committee of the Board shall keep
regular minutes of its proceedings and report the same to the Board when so
requested by the Board.
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<PAGE> 11
SECTION PAGE
SECTION 3.08. Directors' Consent in Lieu of Meeting. Any action
required or permitted to be taken at any meeting of the Board or of any
committee thereof may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by all the members of the Board or such committee and such
consent is filed with the minutes of the proceedings of the Board or such
committee.
SECTION 3.09. Action by Means of Telephone or Similar Communications
Equipment. Any one or more members of the Board, or of any committee thereof,
may participate in a meeting of the Board or such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in
a meeting by such means shall constitute presence in person at such meeting.
SECTION 3.10. Compensation. Unless otherwise restricted by the
Certificate of Incorporation, the Board may determine the compensation of
Directors. In addition, as determined by the Board, Directors may be reimbursed
by the Corporation for their expenses, if any, in the performance of their
duties as Directors. No such compensation or reimbursement shall preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor.
ARTICLE IV
OFFICERS
SECTION 4.01. Officers. The officers of the Corporation shall be the
Chairman, the President, the Secretary and a Treasurer and may include one or
more Vice Presidents and one or more Assistant Secretaries and one or more
Assistant Treasurers. Any two or more offices may be held by the same person.
SECTION 4.02. Authority and Duties. All officers shall have such
authority and perform such duties in the management of the Corporation as may
be provided in these By-laws or, to the extent not so provided, by resolution
of the Board.
SECTION 4.03. Term of Office, Resignation and Removal. (a) Each
officer shall be appointed by the Board and shall hold office for such term as
may be determined by the Board. Each officer shall hold office until his
successor has been appointed and qualified or his earlier death or resignation
or removal in the manner hereinafter provided. The Board may require any
officer to give security for the faithful performance of his duties.
7
<PAGE> 12
SECTION PAGE
(b) Any officer may resign at any time by giving written notice to the
Board, the Chairman, the President or the Secretary. Such resignation shall
take effect at the time specified in such notice or, if the time be not
specified, upon receipt thereof by the Board, the Chairman, the President or
the Secretary, as the case may be. Unless otherwise specified therein,
acceptance of such resignation shall not be necessary to make it effective.
(c) All officers and agents appointed by the Board shall be subject to
removal, with or without cause, at any time by the Board or by the action of
the recordholders of a majority of the Shares entitled to vote thereon.
SECTION 4.04. Vacancies. Any vacancy occurring in any office of the
Corporation, for any reason, shall be filled by action of the Board. Unless
earlier removed pursuant to Section 4.03 hereof, any officer appointed by the
Board to fill any such vacancy shall serve only until such time as the
unexpired term of his predecessor expires unless reappointed by the Board.
SECTION 4.05. The Chairman. The Chairman shall have the power to call
special meetings of Stockholders, to call special meetings of the Board and, if
present, to preside at all meetings of Stockholders and all meetings of the
Board. The Chairman shall perform all duties incident to the office of Chairman
of the Board and all such other duties as may from time to time be assigned to
him by the Board or these By-laws.
SECTION 4.06. The President. The President shall be the chief
executive officer of the Corporation and shall have general and active
management and control of the business and affairs of the Corporation, subject
to the control of the Board, and shall see that all orders and resolutions of
the Board are carried into effect. The President shall perform all duties
incident to the office of President and all such other duties as may from time
to time be assigned to him by the Board or these By-laws.
SECTION 4.07. Vice Presidents. Vice Presidents, if any, in order of
their seniority or in any other order determined by the Board, shall generally
assist the President and perform such other duties as the Board or the
President shall prescribe, and in the absence or disability of the President,
shall perform the duties and exercise the powers of the President.
SECTION 4.08. The Secretary. The Secretary shall, to the extent
practicable, attend all meetings of the Board and all meetings of Stockholders
and shall record all votes and the minutes of all proceedings in a book to be
kept for that purpose, and shall perform the same duties for any committee of
the Board when so requested by such committee. He shall give or cause to be
given notice of all meetings of Stockholders and of the Board, shall perform
such other duties as may be prescribed by the Board, the Chairman or the
President and shall act under
8
<PAGE> 13
SECTION PAGE
the supervision of the Chairman. He shall keep in safe custody the seal of the
Corporation and affix the same to any instrument that requires that the seal be
affixed to it and which shall have been duly authorized for signature in the
name of the Corporation and, when so affixed, the seal shall be attested by his
signature or by the signature of the Treasurer of the Corporation (the
"Treasurer") or an Assistant Secretary or Assistant Treasurer of the
Corporation. He shall keep in safe custody the certificate books and
stockholder records and such other books and records of the Corporation as the
Board, the Chairman or the President may direct and shall perform all other
duties incident to the office of Secretary and such other duties as from time
to time may be assigned to him by the Board, the Chairman or the President.
SECTION 4.09. Assistant Secretaries. Assistant Secretaries of the
Corporation ("Assistant Secretaries"), if any, in order of their seniority or
in any other order determined by the Board, shall generally assist the
Secretary and perform such other duties as the Board or the Secretary shall
prescribe, and, in the absence or disability of the Secretary, shall perform
the duties and exercise the powers of the Secretary.
SECTION 4.10. The Treasurer. The Treasurer shall have the care and
custody of all the funds of the Corporation and shall deposit such funds in
such banks or other depositories as the Board, or any officer or officers, or
any officer and agent jointly, duly authorized by the Board, shall, from time
to time, direct or approve. He shall disburse the funds of the Corporation
under the direction of the Board and the President. He shall keep a full and
accurate account of all moneys received and paid on account of the Corporation
and shall render a statement of his accounts whenever the Board, the Chairman
or the President shall so request. He shall perform all other necessary actions
and duties in connection with the administration of the financial affairs of
the Corporation and shall generally perform all the duties usually appertaining
to the office of treasurer of a corporation. When required by the Board, he
shall give bonds for the faithful discharge of his duties in such sums and with
such sureties as the Board shall approve.
SECTION 4.11. Assistant Treasurers. Assistant Treasurers of the
Corporation ("Assistant Treasurers"), if any, in order of their seniority or in
any other order determined by the Board, shall generally assist the Treasurer
and perform such other duties as the Board or the Treasurer shall prescribe,
and, in the absence or disability of the Treasurer, shall perform the duties
and exercise the powers of the Treasurer.
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SECTION PAGE
ARTICLE V
CHECKS, DRAFTS, NOTES, AND PROXIES
SECTION 5.01. Checks, Drafts and Notes. All checks, drafts and other
orders for the payment of money, notes and other evidences of indebtedness
issued in the name of the Corporation shall be signed by such officer or
officers, agent or agents of the Corporation and in such manner as shall be
determined, from time to time, by resolution of the Board.
SECTION 5.02. Execution of Proxies. The Chairman or the President, or,
in the absence or disability of both of them, any Vice President, may
authorize, from time to time, the execution and issuance of proxies to vote
shares of stock or other securities of other corporations held of record by the
Corporation and the execution of consents to action taken or to be taken by any
such corporation. All such proxies and consents, unless otherwise authorized by
the Board, shall be signed in the name of the Corporation by the Chairman, the
President or any Vice President.
ARTICLE VI
SHARES AND TRANSFERS OF SHARES
SECTION 6.01. Certificates Evidencing Shares. Shares shall be
evidenced by certificates in such form or forms as shall be approved by the
Board. Certificates shall be issued in consecutive order and shall be numbered
in the order of their issue, and shall be signed by the Chairman, the President
or any Vice President and by the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer. If such a certificate is manually signed
by one such officer, any other signature on the certificate may be a facsimile.
In the event any such officer who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to hold such office or to be
employed by the Corporation before such certificate is issued, such certificate
may be issued by the Corporation with the same effect as if such officer had
held such office on the date of issue.
SECTION 6.02. Stock Ledger. A stock ledger in one or more counterparts
shall be kept by the Secretary, in which shall be recorded the name and address
of each person, firm or corporation owning the Shares evidenced by each
certificate evidencing Shares issued by the Corporation, the number of Shares
evidenced by each such certificate, the date of issuance thereof and, in the
case of cancellation, the date of cancellation. Except as otherwise expressly
required by law, the person in whose name Shares stand on the stock ledger of
the Corporation shall be deemed the owner and recordholder thereof for all
purposes.
SECTION 6.03. Transfers of Shares. Registration of transfers of Shares
shall be made only in the stock ledger of the Corporation upon request of the
registered holder of such shares, or of his attorney thereunto authorized by
power of attorney duly executed and filed with
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<PAGE> 15
SECTION PAGE
the Secretary, and upon the surrender of the certificate or certificates
evidencing such Shares properly endorsed or accompanied by a stock power duly
executed, together with such proof of the authenticity of signatures as the
Corporation may reasonably require.
SECTION 6.04. Addresses of Stockholders. Each Stockholder shall
designate to the Secretary an address at which notices of meetings and all
other corporate notices may be served or mailed to such Stockholder, and, if
any Stockholder shall fail to so designate such an address, corporate notices
may be served upon such Stockholder by mail directed to the mailing address, if
any, as the same appears in the stock ledger of the Corporation or at the last
known mailing address of such Stockholder.
SECTION 6.05. Lost, Destroyed and Mutilated Certificates. Each
recordholder of Shares shall promptly notify the Corporation of any loss,
destruction or mutilation of any certificate or certificates evidencing any
Share or Shares of which he is the recordholder. The Board may, in its
discretion, cause the Corporation to issue a new certificate in place of any
certificate theretofore issued by it and alleged to have been mutilated, lost,
stolen or destroyed, upon the surrender of the mutilated certificate or, in the
case of loss, theft or destruction of the certificate, upon satisfactory proof
of such loss, theft or destruction, and the Board may, in its discretion,
require the recordholder of the Shares evidenced by the lost, stolen or
destroyed certificate or his legal representative to give the Corporation a
bond sufficient to indemnify the Corporation against any claim made against it
on account of the alleged loss, theft or destruction of any such certificate or
the issuance of such new certificate.
SECTION 6.06. Regulations. The Board may make such other rules and
regulations as it may deem expedient, not inconsistent with these By-laws,
concerning the issue, transfer and registration of certificates evidencing
Shares.
SECTION 6.07. Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the Stockholders entitled to notice
of or to vote at any meeting of Stockholders or any adjournment thereof, or to
express consent to, or to dissent from, corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board may fix, in advance, a record date, which shall not be
more than 60 nor less than 10 days before the date of such meeting, nor more
than 60 days prior to any other such action. A determination of the
Stockholders entitled to notice of or to vote at a meeting of Stockholders
shall apply to any adjournment of such meeting; provided, however, that the
Board may fix a new record date for the adjourned meeting.
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SECTION PAGE
ARTICLE VII
SEAL
SECTION 7.01. Seal. The Board may approve and adopt a corporate seal,
which shall be in the form of a circle and shall bear the full name of the
Corporation, the year of its incorporation and the words "Corporate Seal
Delaware".
ARTICLE VIII
FISCAL YEAR
SECTION 8.01. Fiscal Year. The fiscal year of the Corporation shall
end on the thirty-first day of December of each year unless changed by
resolution of the Board.
ARTICLE IX
INDEMNIFICATION AND INSURANCE
SECTION 9.01. Indemnification. (a) The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person=s conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the
person=s conduct was unlawful.
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SECTION PAGE
(b) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that the person is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by the
person in connection with the defense or settlement of such action or suit if
the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the Corporation and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a present or former director or officer of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 9.01(a) and (b) of these
By-laws, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under Section 9.01(a) and (b) of these By-laws
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the present
or former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
Section 9.01(a) and (b) of these By-laws. Such determination shall be made,
with respect to a person who is a director or officer at the time of such
determination, (i) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (ii) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (iii) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (iv)
by the stockholders of the Corporation.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation pursuant to this Article IX. Such expenses
(including attorneys' fees) incurred by
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SECTION PAGE
former directors and officers or other employees and agents may be so paid upon
such terms and conditions, if any, as the Corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other Sections of this Article IX shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any law, by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
such person=s official capacity and as to action in another capacity while
holding such office.
(g) For purposes of this Article IX, references to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and
employees or agents so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article IX with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued.
(h) For purposes of this Article IX, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves service by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Article IX.
(i) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article IX shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
SECTION 9.02. Insurance for Indemnification. The Corporation may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against such person and incurred by such person
in any
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SECTION PAGE
such capacity, or arising out of such person=s status as such, whether or not
the Corporation would have the power to indemnify such person against such
liability under the provisions of Section 145 of the General Corporation Law.
ARTICLE X
AMENDMENTS
SECTION 10.01. Amendments. Any By-law (including these By-laws) may be
adopted, amended or repealed by the vote of the recordholders of a majority of
the Shares then entitled to vote at an election of Directors or by written
consent of Stockholders pursuant to Section 2.09 hereof, or by vote of the
Board or by a written consent of Directors pursuant to Section 3.08 hereof.
15
<PAGE> 1
EXHIBIT 4.1
GT
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 381226 10 7
GOLDEN TELECOM, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK (PAR VALUE $.01) OF
GOLDEN TELECOM, INC.
(herein called the "Corporation"), transferable on the books of the Corporation
by said owner in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed. This Certificate and the shares of stock
represented hereby are issued and shall be held subject to all of the provisions
of the Certificate of Incorporation and the By-Laws of the Corporation, and any
amendments thereto, copies of which are on file with the Secretary of the
Corporation, and to the laws of the State of Delaware from time to time in
effect, to all of which the holder, by acceptance hereof, assents. This
Certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GENERAL COUNSEL AND SECRETARY
<PAGE> 2
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in common
</TABLE>
UNIF GIFT MIN ACT-.........................Custodian........................
(Cust) (Minor)
under Uniform Gifts to Minors
Act.............................................
(State)
Additional abbreviations may also be used though not in the above list.
For value received, hereby sell, assign and transfer
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
NOTICE:
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed:
<PAGE> 3
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C.
RULE 17Ad-15.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
<PAGE> 1
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
and entered into as of __________, 1999, by and between Golden Telecom, Inc., a
Delaware corporation (the "Company"), and Global TeleSystems Group, Inc., a
Delaware corporation ("GTS").
RECITALS
A. In connection with the initial public offering of shares of
common stock by the Company (the "Initial Public Offering"), the Company desires
to grant to GTS certain registration rights with respect to 10,600,000 shares of
common stock of the Company or other equity securities of the Company acquired
or held directly or indirectly by GTS as of the date hereof.
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 the such shares with the Securities and Exchange Commission and
all applicable state securities agencies.
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 6 hereof.
"Agents" means any Person authorized to act and who acts on
behalf of GTS with respect to the transactions contemplated by this
Agreement.
"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.
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2
"Exchange Act" means The Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder as in effect from
time to time.
"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 10,600,000 shares of
Common Stock currently beneficially owned by GTS 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.
"Registration Expenses" has the meaning set forth in Section 7
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.
"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.
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3
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.
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 September 22,
2000 (the "Twelve Month Lock-Up"), GTS may make written requests 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 10(d) of this Agreement.
(b) Number of, and Limitations on, Registrations. GTS will be
entitled to request up to a total of three Demand Registrations. The Company
will not be obligated to register any Registrable Securities pursuant to such a
Demand Registration (i) unless there is requested to be included in such
registration at least 1,000,000 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, GTS holds less than 1,000,000 shares of
Common Stock, in which case such request must be for such lesser amount) or (ii)
if a prior Demand Registration was declared effective within a period commencing
12 months prior to the date of the written request for such Demand Registration
and such prior Demand Registration was maintained effective for a period of not
less than 180 days, or such shorter period during which all Registrable
Securities covered by such prior Demand Registration were sold or withdrawn.
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4
(c) Effective Registration - Expenses. In any registration
initiated as a Demand Registration, GTS 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 GTS. If GTS disapproves of the terms and conditions of the
underwriting, GTS may elect to withdraw all its Registrable Securities by
written notice to the Company and the managing underwriter.
4. Incidental Registration.
(a) Request for Registration. After the Twelve 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 10(d) of this Agreement to GTS 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 GTS delivered to the
Company within 30 days after such notice shall have been given to GTS (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 GTS, 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 GTS, 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));
(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
<PAGE> 5
5
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 GTS thereof and may require, by
written notice to GTS 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. Additional Registration.
(a) Request for Registration. When GTS owns less than 25% of
the outstanding shares of Common Stock of the Company, GTS may make a written
request that the Company register all of its remaining Registrable Securities in
a shelf registration statement with the SEC under and in accordance with the
provisions of the Securities Act.
(b) Expenses. In a registration initiated under this Section
5, GTS will pay all Registration Expenses.
6. Registration Procedures
Whenever GTS 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:
(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
<PAGE> 6
6
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 GTS a certificate signed by the president or a vice president of
the Company stating that in the good faith opinion of the board of
directors of the Company 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 GTS (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 GTS 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 GTS 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 GTS 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 GTS 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 180 days or such
longer period as is required for the intended method of distribution,
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
<PAGE> 7
7
the intended methods of disposition by GTS thereof set forth in such
Registration Statement or supplement to the Prospectus;
(d) notify GTS 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 GTS and to the
managing underwriters;
(g) provide to GTS 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 GTS 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 GTS and the underwriters, if
<PAGE> 8
8
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 GTS 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 GTS 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 GTS agrees to do so;
(j) cooperate with GTS 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;
(1) 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;
<PAGE> 9
9
(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 GTS or
the managing underwriters, if any;
(n) provide a transfer agent and registrar for all Registrable
Securities;
(o) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith as
GTS 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 GTS 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 GTS and the underwriters, if any, covering
the matters customary in underwritten primary offerings and such other
matters as may be reasonably requested by GTS and underwriters, if any;
(3) obtain "comfort" letters and updates thereof from the Company's
independent certified public accountants addressed to GTS 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 GTS 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 GTS, any underwriter participating in any disposition pursuant to
such registration statement, and any attorney, accountant or other
agent retained by GTS 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 GTS or any such underwriter,
attorney, accountant
<PAGE> 10
10
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 GTS to furnish to the Company such
information and documents regarding GTS and the distribution of the Registrable
Securities as the Company may from time to time reasonably request in writing.
GTS 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 6(d)(6) hereof, GTS will forthwith discontinue
disposition of Registrable Securities until GTS's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 6(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, GTS 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 GTS'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 6(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 6(d)(6) to
and including the date when GTS shall have received the copies of the
supplemented or amended prospectus contemplated by Section 6(l) hereof or the
Advice.
7. 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
<PAGE> 11
11
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, GTS 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 GTS so
requires, the reasonable fees and expenses of any special experts retained by
GTS 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 GTS
(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. GTS 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.
8. Indemnification
(a) Indemnification by Company. The Company will indemnify and
hold harmless, to the full extent permitted by law, GTS, its officers and
directors, their Agents and each Person who controls GTS (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 GTS,
expressly for use therein. Such indemnity shall remain in full force and
<PAGE> 12
12
effect regardless of any investigation made by or on behalf of GTS, GTS's
directors and officers, their Agents or a controlling Person, and shall survive
the transfer of such securities by GTS. 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
GTS of Registrable Securities.
(b) Indemnification by GTS. GTS 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 GTS
specifically for inclusion therein. In no event shall the liability of GTS
hereunder be greater in amount than the dollar amount of the proceeds received
by GTS 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.
(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
<PAGE> 13
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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.
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.
9. Transfer of Registration Rights
The registration rights of GTS under this Agreement with
respect to any Registrable Securities may be transferred to any transferee of
such Registrable Securities, including any affiliate of GTS; provided, however,
that (i) GTS 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
<PAGE> 14
14
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.
10. Miscellaneous
(a) Remedies. GTS shall be entitled to exercise all rights
provided herein or granted by law, including recovery of damages, and each will
be entitled to specific performance of their rights under this Agreement. The
Company 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 GTS in this
Agreement or otherwise conflicts with the provisions hereof. The Company has not
previously entered into any agreement with respect to its securities granting
any registration rights to any Person.
(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 GTS.
(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 Global TeleSystems Group, Inc.:
Global TeleSystems Group, Inc.
1751 Pinnacle Drive
North Tower, 12th Floor
McLean, VA 22101
Attn: Chief Financial Officer
Copy to: General Counsel
<PAGE> 15
15
(ii) If to the Company:
Golden Telecom, Inc.
12 Krasnokazarmennaya Str., 6th Floor
111250 Moscow, Russia
Attn: Chief Financial Officer
Copy to: General Counsel
(e) Assignment. Neither party shall assign or transfer any of
its rights under this Agreement without the prior written consent of the other
party. 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, 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.
(f) Governing Law. This Agreement shall be governed by the
laws of the State of New York.
(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
<PAGE> 16
16
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 10(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> 17
17
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
GOLDEN TELECOM, INC.
By:
-----------------------------------------------
Name:
Title:
GLOBAL TELESYSTEMS GROUP, INC.
By:
-----------------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.3
WARRANT AGREEMENT
WARRANT AGREEMENT (this "Agreement") dated as of __________,
1999, among GOLDEN TELECOM, INC., a Delaware corporation (the "Issuer"), GLOBAL
TELESYSTEMS GROUP, INC., a Delaware corporation ("GTS"), and [_________], or its
designated affiliate, any transferees thereof or subsequent holders of Warrants
("Vendor").
WITNESSETH:
WHEREAS, Vendor is a party to (i) a US$30,650,000 Syndicated
Loan Facility dated September 27, 1996 among Vendor, GTS Mobile Services, Inc.,
("GTS Mobile Services) The Chase Manhattan Bank ("Chase") and the Borrowers, as
defined therein (the "Chase Facility"), (ii) a Guarantee Agreement between
Vendor and Chase dated September 27, 1996 (the "Guarantee Agreement"), and
(iii) a GTS Reimbursement Agreement dated October 27, 1997, between Vendor and
GTS (the "GTS Reimbursement Agreement"); and
WHEREAS, Vendor, GTS and the Issuer have entered into a
settlement agreement dated as of September 9, 1999 (the "Settlement Agreement")
in order to settle and discharge the obligations of Vendor, the Borrowers and
GTS Mobile Services under the Chase Facility, the obligations of Vendor under
the Guarantee Agreement and the obligations of GTS under the GTS Reimbursement
Agreement; and
WHEREAS, in consideration for Vendor's entering into the
Settlement Agreement, the Issuer has agreed to issue to Vendor warrants as
hereinafter described to purchase [_________] Warrant Shares (as hereinafter
defined) of the Issuer, as set forth herein and on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth and for other good and valuable
consideration received which the parties hereby acknowledge, the parties hereto
agree as follows:
Section 1. Certain Definitions. As used in this Warrant Agreement,
unless the context otherwise requires:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Issuer after the date hereof, other than
(i) the Warrant Shares and (ii)
<PAGE> 2
Common Stock issued or issuable pursuant to stock option, stock
incentive or similar plans approved by the board of directors and in
effect on the date hereof.
"Affiliate" shall mean, with respect to a specified Person,
any other Person directly or indirectly controlling or controlled by
or under common control with such specified Person. For purposes of
this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such
Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Appraised Value" shall mean the fair market value of all
equity capital, including all outstanding Common Stock and all
options, warrants and rights to acquire Common Stock or convert into
Common Stock, as determined by a written appraisal (the "Appraisal")
prepared by an appraiser of national reputation chosen by Issuer's
board of directors.
"Business Day" shall mean any day other than a Saturday or
Sunday or any other day on which commercial banks are authorized or
required to close in New York, New York or Moscow, Russia.
"Call Option" shall have the meaning set forth in Section 12.
"Call Period" shall mean any time up to, but not including,
the second anniversary of the date hereof.
"Commission" shall mean the Securities and Exchange
Commission or any other similar or successor agency of the United
States government administering the Securities Act.
"Common Stock" shall mean the Issuer's authorized voting
common stock, par value $.01 per share, irrespective of class unless
otherwise specified, as constituted on the date of this Agreement, and
any stock into which such Common Stock may thereafter be changed or
any other capital stock that is not preferred as to dividends or
distribution of assets over any other class of stock of the Issuer,
and which is not subject to redemption, that may be authorized by the
Issuer.
"Convertible Securities" shall mean evidences of
indebtedness, shares of stock, options, warrants or other securities
which are convertible into or exchangeable for, with or without
payment of additional consideration, Additional Shares of Common
Stock, either immediately or upon the arrival of a specified date or
the happening of a specified event.
"Current Market Price" per share of Common Stock, for the
purposes of any provision of this Warrant Agreement at the date herein
specified, shall be deemed to be the price determined pursuant to the
first applicable of the following methods.
<PAGE> 3
3
(i) If the Common Stock is traded on a national
securities exchange or is traded in the over-the-counter
market, the Current Market Price per share of Common Stock
shall be deemed to be the average of the daily market prices
for 15 consecutive Trading Days commencing 15 Trading Days
before such date. The market price for each such Trading Day
shall be, (a) if the Common Stock is traded on a national
securities exchange, its last sale price on the preceding
Trading Day on such national securities exchange or, if there
was no sale on that day, the last reported sale price on such
national exchange on the next preceding Trading Day on which
there was a sale, or (b) if the principal market for the
Common Stock is the over-the-counter market, and the Common
Stock is quoted on the National Association of Securities
Dealers Automated Quotations System ("NASDAQ"), the last sale
price reported on NASDAQ on the preceding Trading Day or, if
the Common Stock is an issue for which last sale prices are
not reported on NASDAQ, the closing bid quotation on such
day, but, in each of the next preceding two cases, if the
relevant NASDAQ price or quotation did not exist on such day,
then the price or quotation on the next preceding Trading Day
in which there was such a price or quotation.
(ii) If the Current Market Price per share of Common
Stock cannot be ascertained by any of the methods set forth
in paragraph (i) immediately above, the Current Market Price
per share of outstanding Common Stock shall be deemed to be
the price equal to the quotient determined by dividing the
Appraised Value by the number of shares (including any
fractional shares) of Common Stock, on a fully diluted basis
in accordance with GAAP.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and any similar or successor federal statute, and
the rules and regulation of the Commission thereunder, all as the same
shall be in effect at the time.
"Exercise Period" shall mean the period commencing on the
second anniversary of the date hereof and ending on the Expiration
Date.
"Exercise Price" shall be U.S.$.10 per Warrant.
"Expiration Date" shall mean then end of business on the
fifth anniversary of the date hereof.
"Form of Election" shall have the meaning ascribed thereto in
Section 2(a).
"Form of Assignment" shall have the meaning ascribed thereto
in Section 2(a).
<PAGE> 4
4
"GAAP" shall mean U.S. generally accepted accounting
principles, consistently applied.
"Right of First Refusal" shall have the meaning set forth in
Section 10(c).
"Person" shall mean a corporation, an association, a trust, a
partnership, a joint venture, an organization, a business, an
individual, a government or political subdivision thereof or a
governmental body.
"Registrable Stock" shall mean the Common Stock issued on the
exercise of a Warrant. For purposes of this Agreement, any Registrable
Stock shall cease to be Registrable Stock when (a) a registration
statement covering such Registrable Stock has been declared effective
and such Registrable Stock has been disposed of pursuant to such
effective registration statement, (b) such Registrable Stock is sold
by a person in a transaction in which the rights under the provisions
of this Agreement are not assigned, (c) such Registrable Stock may be
sold pursuant to Rule 144, or any successor provision then in force
under the 1933 Act, without registration or (d) it shall have ceased
to be outstanding.
"Restricted Certificate" shall mean a certificate for Common
Stock or a Warrant bearing the restrictive legend set forth in Section
10.
"Restricted Securities" shall mean Restricted Warrant Shares
or Restricted Warrants.
"Restricted Warrant" shall mean a Warrant evidenced by a
Restricted Certificate.
"Restricted Warrant Shares" shall mean Warrant Shares
evidenced by a Restricted Certificate. Without limiting the generality
of the foregoing and for clarification purposes only, a "holder of
Restricted Warrant Shares" shall include, without limitation, a holder
of a Warrant.
"Rule 144" shall mean Rule 144 promulgated under the
Securities Act, as such Rule may be amended from time to time, or any
successor rule or regulation hereafter adopted by the SEC providing
for offers and sales of securities made in compliance therewith
resulting in offers and sales by subsequent holders that are not
affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities
Act.
<PAGE> 5
5
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at
the time.
"Trading Day" shall mean any day on which trading occurs on
the NASDAQ National Market System or, if the Common Stock is no longer
traded on the NASDAQ National Market System and is instead traded on a
national securities exchange, then "Trading Day" shall mean any day on
which trading occurs on such national securities exchange.
"Warrant Certificate" shall have the meaning ascribed thereto
in Section 2(a).
"Warrant Shares" shall mean the shares of Common Stock
purchased or purchasable by the holder of a Warrant upon the exercise
of such Warrant.
"Warrants" shall have the meaning ascribed thereto in Section
2(a).
Section 2. Issuance, Form and Exercise of Warrant.
(a) Issuance and Form of Warrant. On the date hereof, the
Issuer, upon the terms and subject to the conditions hereinafter set forth, has
issued and delivered warrants to purchase [_________] Warrant Shares to Vendor
(the "Warrants") at an Exercise Price of $.10 per Warrant Share. Each Warrant
issued to Vendor, and any additional warrants that may be issued upon partial
exercise, replacement or transfer of any such Warrant is evidenced by and
subject to the terms of, a warrant certificate (including the Form of Election
(the "Form of Election") and the form of assignment ("Form of Assignment")
attached thereto (a "Warrant Certificate")) in the form of Exhibit A hereto,
executed on behalf of the Issuer by the manual or facsimile signature of the
President or a Vice President of the Issuer, under its corporate seal affixed
or in facsimile, and attested by the Secretary or an Assistant Secretary of the
Issuer. A Warrant Certificate evidencing each original Warrant issued to Vendor
has been executed and delivered to Vendor simultaneously with the execution of
this Agreement. The Issuer will pay any documentary stamp taxes attributable to
the initial issuance of any Warrant. A single Warrant Certificate may evidence
the issuance to a holder thereof of more than one Warrant.
(b) Vesting of Warrants. Each Warrant may only be exercised
during the Exercise Period and entitles the holder thereof to receive, for each
Warrant referred to in the Warrant Certificate evidencing such Warrant, one (1)
Warrant Share, subject to adjustment.
(c) Manner of Exercise; Other Provisions Regarding Exercise.
At any time during the Exercise Period, the receipt rights represented by each
Warrant may be exercised by the holder, in whole or in part, by the surrender
to the Issuer at its office maintained for such purpose pursuant to Section 18,
of (i) a written notice of such holder's election to exercise a Warrant, which
<PAGE> 6
6
notice shall be in the Form of Election and (ii) the wire transfer in
immediately available funds on the payment in cash of an amount equal to the
product of the Exercise Price and the number of Warrants to be exercised. Upon
delivery thereof, the Issuer shall cause to be executed and delivered to such
holder within five (5) Business Days a certificate or certificates representing
the aggregate number of fully paid and nonassessable shares of Common Stock
issuable upon such exercise.
The stock certificate or certificates for Warrant Shares so
delivered shall be in such denominations as may be specified in said notice and
shall be registered in the name of such holder or such other name or names as
shall be designated in said notice. Such certificate or certificates shall be
deemed to have been issued and such holder or any other Person so designated to
be named therein shall be deemed to have become a holder of record of such
shares, including to the extent permitted by law the right to vote such shares
or to consent or to receive notice as a stockholder, within two (2) Business
Days of the time said notice is delivered to the Issuer as aforesaid. If a
Warrant shall have been exercised only in part, the Issuer shall, within two
(2) Business Days of delivery of said certificate or certificates, deliver to
such holder a new Warrant dated the date it is issued, evidencing the rights of
such holder to purchase the remaining Warrant Shares called for by such
Warrant, which new Warrant shall in all other respects be identical with the
Warrant, or, at the request of such holder, appropriate notation may be made on
the Warrant exercised in part and shall be returned to such holder.
Except as otherwise provided in Section 8 hereof, the Issuer
shall pay all expenses, transfer taxes and other charges payable in connection
with the preparation, issue and delivery of stock certificates under this
Section 2, except that, if such stock certificates shall be registered in a
name or names other than the name of the holder of the Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
issuance of such stock certificate or certificates shall be paid by the holder
hereof at the time of delivering the notice of exercise mentioned above.
All shares of Common Stock issuable upon the exercise of a
Warrant shall be validly issued, fully paid and nonassessable, and free from
all liens, encumbrances and other charges thereon.
The Issuer will not close its books against the transfer of a
Warrant or of any Warrant Share in any manner which interferes with the timely
exercise of a Warrant.
The Issuer shall pay cash in lieu of fractional shares
determined by the Issuer by multiplying such fraction by the Current Market
Price on the date of exercise.
Section 3. Transfer, Division and Combination. Subject to Section 10,
a Warrant is, and all rights thereunder are, transferable, in whole or in part,
on the books of the Issuer to be maintained for such purpose, upon the
surrender of a Warrant at the office of the Issuer maintained
<PAGE> 7
7
for such purpose pursuant to Section 18, together with the Form of Assignment
duly executed by the holder thereof or its agent or attorney and upon payment
of funds sufficient to pay any stock transfer taxes payable upon the making of
such transfer. Upon such surrender and payment the Issuer shall, subject to
Section 10, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of
assignment, and the original Warrant shall promptly be canceled. A Warrant, if
properly assigned in compliance with Section 10, may be exercised by an
assignee for the purchase of shares of Common Stock without having a new
Warrant issued.
A Warrant may, subject to Section 10, be divided or combined
with other Warrants upon presentation at the aforesaid office of the Issuer,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the holder thereof or its agent or
attorney. Subject to compliance with Section 10, as to any transfer which may
be involved in such division or combination, the Issuer shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice.
Except as otherwise provided in Section 8 hereof, the Issuer
shall pay all expenses, taxes and other charges incurred by the Issuer in the
performance of its obligations in connection with the preparation, issue and
delivery of Warrants under this Section 3.
The Issuer agrees to maintain at its aforesaid office books
for the registration and transfer of the Warrants.
Each transferee of Warrants shall be subject to the Right of
First Refusal set forth in Section 10(c) and the Call Option set forth in
Section 12.
Section 4. Adjustment of Warrant Shares and Exercise Price.
The number of Warrant Shares issuable on the exercise of a Warrant shall be
subject to adjustment from time to time as set forth in this Section 4 and in
Section 5.
(a) Stock Dividends, Subdivisions and Combinations. If at any
time or from time to time the Issuer shall:
(1) pay a dividend to record holders of its Common Stock
payable in Common Stock, or
(2) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
<PAGE> 8
8
(3) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the number of Warrant Shares issuable on the exercise of a Warrant
immediately after the happening of any such event shall be adjusted so as to
equal the number of shares of Common Stock that a record holder of Common Stock
would receive following such dividend, subdivision or combination.
(b) Certain Other Issuances of Common Stock, Dividends and
Distributions. If at any time or from time to time after the date of this
Agreement the Issuer shall:
(1) In the case the Issuer shall issue (i)
Additional Shares of Common Stock at a price per share less than the
greater of the Current Market Price per share of Common Stock or the
Exercise Price or (ii) options, rights or warrants to subscribe for or
purchase shares of Common Stock (or other securities convertible into
Common Stock) at a price per share less than the greater of the
Current Market Price per share of Common Stock or the Exercise Price,
the number of Warrant Shares issuable on the exercise of a Warrant
immediately prior thereto shall be adjusted by multiplying such number
by a fraction, the denominator of which shall be the number of shares
of Common Stock outstanding on such issuance date, plus the number of
shares which the aggregate issue offering price of the total number of
shares of Common Stock so issued (or the aggregate exercise or
conversion price of the options, rights, warrants or convertible
securities so issued) would purchase at such Current Market Price, and
the numerator of which shall be the number of shares of Common Stock
outstanding on such issuance date plus the number of additional shares
of Common Stock issued (or into which the options, rights, warrants or
convertible securities so issued are exercisable or convertible). Such
adjustment shall be made successively whenever any such rights or
warrants are issued, and shall become effective immediately after such
issuance date.
(2) (i) In case the Issuer shall distribute to all
or substantially all holders of its Common Stock any shares of capital
stock of the Issuer (other than Common Stock), evidences of
indebtedness or other non-cash assets (including securities of any
company other than the Issuer), or shall distribute to all or
substantially all holders of its Common Stock rights or warrants to
subscribe for or purchase any of its securities, then in each such
case, the number of Warrant Shares issuable on the exercise of a
Warrant shall be adjusted my multiplying such number in effect
immediately prior to the date of such distribution by a fraction, the
denominator of which shall be the Current Market Price per share of
the Common Stock on the record date mentioned below less the fair
market value on such record date (as determined by the board of
directors of the Issuer, whose determination shall be conclusive
evidence of such fair market value) of the portion of the capital
stock, evidences of indebtedness or other non-cash assets so
distributed or of such rights or warrants applicable to one share of
Common Stock (determined on the basis of
<PAGE> 9
9
the number of shares of Common Stock outstanding on the record date),
and the numerator of which shall be the Current Market Price per share
of the Common Stock on such record date. Such adjustment shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such distribution.
(ii) Notwithstanding the foregoing, in the event
that the Issuer shall distribute rights or warrants (other than those
referred to in subsection (1) above) ("Rights") pro rata to holders of
Common Stock, the Issuer may, in lieu of making any adjustment
pursuant to this Section 3(b), make proper provisions so that each
holder of a Warrant who exercises such Warrant after the record date
for such distribution and prior to the expiration or redemption of the
Rights, shall be entitled to receive, upon such exercise, in addition
to the Warrant Shares issuable upon such exercise, a number of Rights
to be determined as follows: (i) if such exercise occurs on or prior
to the date for the distribution to the holders of Rights of separate
certificates evidencing such Rights (the "Distribution Date"), the
same number of Rights to which a holder of a number of shares of
Common Stock equal to the number of Warrant Shares is entitled at the
time of such exercise in accordance with the terms and provisions of
and applicable to the Rights, or (ii) if such exercise occurs after
the Distribution Date, the same number of Rights to which a holder of
the a number of shares of Common Stock equal to the number of Warrant
Shares into which the Warrants so exercised were exercisable
immediately prior to the Distribution Date would have been entitled on
the Distribution Date in accordance with the terms and provisions of
and applicable to the Rights.
A reclassification of the Common Stock into shares of Common Stock and
shares of any other class of stock shall be deemed a distribution by the Issuer
to the holders of its Common Stock of such shares of such other class of stock
within the meaning of this Section 4(b) and, if the outstanding shares of
Common Stock shall be changed into a larger or smaller number of shares of
Common Stock as a part of such reclassification, shall be deemed a subdivision
or combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4(a).
(c) Other Provisions Applicable to Adjustments Under This
Section. The following provisions shall be applicable to the making of
adjustments of the number of shares of Warrant Shares issuable on the exercise
of a Warrant hereinbefore provided for in this Section 4:
(1) When Adjustments to Be Made. The adjustments required by
the preceding subsections of this Section 4 shall be made whenever and
as often as any specified event requiring an adjustment shall occur.
For the purpose of any adjustment, any specified event shall be deemed
to have occurred at the close of business on the date of its
occurrence.
<PAGE> 10
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(2) Fractional Interests. In computing adjustments under this
Section, fractional interests in Common Stock shall be taken into
account to the nearest one-thousandth of a share.
(3) When Readjustments Made. The number of shares of Common
Stock comprising a Warrant Share that may be purchased upon exercise
of a Warrant shall be readjusted to reflect the expiration of any
warrants, options or other rights, except where no adjustment of the
number of shares of Common Stock comprising a Warrant Share had
previously been made pursuant to this Section 4 with respect to such
expired warrant, option or right.
(d) Merger or Consolidation. If the Issuer shall merge or
consolidate into another corporation and, pursuant to the terms of such merger
or consolidation, shares of common stock of the successor corporation are to be
received by or distributed to the holders of Common Stock of the Issuer, then
the holder of a Warrant shall have the right thereafter to receive, upon
exercise of a Warrant, such number of Warrant Shares equal to the number of
shares of common stock of the successor corporation receivable upon or as a
result of such merger or consolidation by a holder of a like number of shares
of Common Stock immediately prior to such event, plus any cash, shares of stock
or other securities or property of any nature whatsoever (including warrants or
other subscription or purchase rights that the holder would have been entitled
to receive had such holder exercised a Warrant immediately prior to such merger
or consolidation, and had such holder thereafter retained such shares of stock,
securities or other property from the date of such merger or consolidation
through and including the date of exercise of a Warrant, subject to all other
adjustments called for during this period under this Section 4).
In the case of any such merger or consolidation, the
successor corporation shall expressly assume the due and punctual observance
and performance of each and every covenant and condition of a Warrant to be
performed and observed by the Issuer and all of the obligations and liabilities
hereunder, subject to such modification as shall be necessary to provide for
adjustments of Warrant Shares which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4.
The foregoing provisions of this Section 4(d) shall similarly
apply to successive mergers, consolidations or dispositions of assets. In
addition to any other requirements hereunder, the Issuer shall give notice to
each holder of the Warrants of any such merger, consolidation or disposition at
least thirty (30) days before the occurrence thereof.
(e) Without limiting any other exception in this Section 4,
and in addition thereto, no adjustment need be made for:
<PAGE> 11
11
(i) the conversion, exchange or exercise of options to
acquire shares of Common Stock by officers, directors or employees of
the Issuer which are outstanding as of the date hereof or which are
issuable pursuant to stock option, stock incentive or similar plans
approved by the board of directors and in effect on the date hereof;
(ii) options, warrants or other agreements or rights to
purchase capital stock of the Issuer entered into prior to the date
hereof and any issuance of shares of Common Stock in connection
therewith;
(iii) securities outstanding as of the date hereof
convertible into or exchangeable or exercisable for additional shares
of Common Stock;
(iv) rights to purchase shares of Common Stock pursuant to a
plan of the issuer for reinvestment of dividends or interest;
(v) a change in the par value of shares of Common Stock
(including a change from par value to no par value or vice versa); and
(vi) bona fide public or private offerings pursuant to Rule
144A, Section 4(2) or Regulation D of the Securities Act, involving at
least one investment bank of national reputation.
Section 5. Notice to Warrant Holders. Whenever the number of shares of
Common Stock or other share capital or property issuable upon the exercise of
each Warrant or the Exercise Price is adjusted, then and in each such case the
Issuer shall promptly deliver a notice to the registered holder of the
Warrants, which notice shall state the increase or decrease, if any, in the
number of shares of Common Stock or other share capital or property issuable
upon the exercise of each Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.
Section 6. Reservation And Authorization of Common Stock. The Issuer
shall at all times reserve and keep available for issue upon the exercise of
Warrants such number of its authorized but unissued shares of Common Stock as
will be sufficient to permit the exercise in full of all outstanding Warrants.
All shares of Common Stock that shall be issued upon exercise of any Warrant,
shall be duly and validly issued and fully paid and nonassessable.
<PAGE> 12
12
Section 7. Taking of Record; Stock and Warrant Transfer Books. In the
case of all dividends or other distributions by the Issuer to the holders of
its Common Stock with respect to the taking of a record of such holders, the
Issuer will in each such case take such a record and will take such record as
of the close of business on a Business Day. The Issuer will not at any time,
except upon dissolution, liquidation or winding up, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.
Section 8. Transfer Taxes. The Issuer will pay any and all transfer
taxes that may be payable in respect of the issuance or delivery of shares of
Common Stock on exercise of any Warrant. The Issuer shall not, however, be
required to pay any tax that may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that
in which a Warrant is registered, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the Issuer the
amount of any such tax, or has established, to the satisfaction of the Issuer,
that such tax has been paid.
Section 9. No Voting Rights. No Warrant shall entitle the holder
hereof to any voting rights or other rights as a stockholder of the Issuer.
Section 10. Restrictions on Transferability.
(a) Restrictive Legend. Unless and until otherwise permitted
by this Section 10, each certificate for Warrants issued pursuant to the terms
hereof, each certificate for any Warrants issued to any subsequent transferee
of any such certificate, each certificate for Warrant Shares issued upon
exercise of any Warrant and each certificate for Warrant Shares issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION OR
QUALIFICATION UNDER FEDERAL OR STATE SECURITIES LAWS OR
UNLESS THE PROPOSED TRANSACTION IS REGISTERED OR QUALIFIED,
AS SO REQUIRED.
THE TRANSFER OF AND OTHER TERMS OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE
<PAGE> 13
13
GOVERNED BY AND SUBJECT TO CONDITIONS SPECIFIED IN THAT
CERTAIN WARRANT AGREEMENT DATED __________, 1999, AND NO
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED. UNDER CERTAIN CIRCUMSTANCES, THE ISSUER HAS AGREED
TO ISSUE TO THE HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING
THIS LEGEND, FOR THE SECURITIES EVIDENCED HEREBY REGISTERED
IN THE NAME OF SUCH HOLDER. THE HOLDER OF THIS CERTIFICATE,
BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL
OF THE PROVISIONS CONTAINED IN SUCH WARRANT.
(b) Notice of Proposed Transfer. Prior to any transfer or
attempted transfer of any Restricted Securities, the holder thereof shall give
written notice to the Issuer and GTS of such holder's intention to effect such
transfer. Each such notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail and shall be accompanied by an opinion
of counsel of such holder (which counsel shall be reasonably satisfactory to
the Issuer, it being agreed that Linklaters & Alliance shall be satisfactory)
to the effect that such proposed transfer may be effected without registration
of the Restricted Securities under the Securities Act. Within ten (10) Business
Days after receipt by the Issuer of such opinion, and subject to the right
provided in Section 10(c), such holder shall thereupon be entitled to transfer
such Restricted Securities in accordance with the precise terms and conditions
of the notice delivered by such holder to the Issuer. Each certificate
evidencing the Restricted Securities thus to be transferred (and each
certificate evidencing any untransferred balance of the Restricted Securities
evidenced by such Restricted Certificate) shall bear the restrictive legend set
forth above, unless, in the reasonable opinion of the Issuer, pursuant to Rule
144 of the Securities Act such legend is not required in order to insure
compliance with the Securities Act.
(c) Right of First Refusal. In the event that any holder of
Warrants proposes to transfer any Warrants for cash or other consideration, the
Issuer or GTS or their successors and assigns shall have the right to purchase
any or all of such Warrants at such price (the "Right of First Refusal").
Within five (5) business days after the notice provided for in Section 10(b),
each of the Issuer and GTS shall notify such holder as to whether it shall
exercise such right and shall transfer any funds therefor on such date as the
proposed third-party sale.
In the event that both the Issuer and GTS exercise this right
for such number of Warrants that exceeds the number of Warrants offered for
sale, the number of Warrants offered for sale and subject to each right shall
be divided equally except that, in the event that the Issuer and/or GTS
previously exercised this right with respect to any sale, the Warrants subject
to the
<PAGE> 14
14
subsequent sale shall be divided between the Issuer and GTS so as to allow each
entity, as nearly as possible, to receive, in the aggregate, half of the
Warrants which have been sold and with respect to which this right has been
exercised.
Section 11. Registration.
(a) Registration. Prior to the Exercise Period, Issuer shall
use its reasonable best efforts to effect the registration of the Registrable
Stock under the Securities Act on such registration statement as the Issuer
shall deem appropriate such that such registration statement is declared
effective by the commencement of the Exercise Period. The Issuer shall use its
reasonable best efforts to prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective until the Expiration Date or until the distribution contemplated by
the registration statement is completed, whichever occurs first. No Warrant
holder shall have the right to demand or obtain registration of the Warrants.
Notwithstanding anything contained in the first paragraph of
this Section 11(a) to the contrary, the Issuer may postpone registration of the
shares of Registrable Stock if: (i) the Issuer notifies the holders that it is
contemplating filing a registration statement within one hundred and eighty
(180) days after the commencement of the Exercise Period (which shall not
affect the holders' other rights hereunder), or (ii) the Issuer notifies the
holders that a material event has occurred that has not yet been publicly
disclosed and if disclosed would materially adversely affect the Issuer. In the
case of clause (i) of this paragraph, if the Issuer does not file such
contemplated registration statement within such 180-day period, it shall use
its reasonable best efforts, as soon as practical upon the first to occur of
the abandonment of such contemplated registration statement or the expiration
of such 180-day period, to register the shares of the Registrable Stock. In the
case of clause (ii) of this paragraph, the Issuer may not delay the filing of
the requested registration statement for more than ninety (90) days from the
time of the Issuer's notice.
(b) Registration Procedures. In connection with such
registration, Issuer shall also:
(1) furnish to each holder such numbers of copies of a
summary prospectus or other prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
holder may reasonably request in order to facilitate the public sale
or other disposition of the securities owned by such holder;
(2) use its reasonable efforts to register or qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each holder shall
reasonably request, and do any and all other acts and things that may
be
<PAGE> 15
15
necessary or advisable to enable such holder to consummate the public
sale or other disposition in such jurisdictions of the securities
owned by such holder, except that the Issuer shall not for any such
purpose be required to qualify to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified or to file therein
any general consent to service of process or submit to the general
taxation of any such jurisdiction solely for the purpose of such
registration;
(3) in the event of the issuance of any stop order suspending
the effectiveness of any registration statement or of any order
suspending or preventing the use of any prospectus or suspending the
qualification of any Registrable Stock for sale in any jurisdiction,
use its reasonable efforts promptly to obtain its withdrawal;
(4) list such securities on any securities exchange on which
any stock of the Issuer is then listed, if the listing of such
securities is then permitted under the rules of such exchange;
(5) if requested by any holder, the Issuer shall furnish to
such holder certificates representing the Registrable Stock being
offered pursuant to the registration which contain no restrictive
legends, in such numbers and denominations as such holder shall
reasonably request; provided, however, that such holder shall confirm
to the Issuer in writing that any transfer of such Registrable Stock
shall be made only pursuant to such registration and in accordance
with the plan of distribution described therein, and such holder shall
agree in writing to return such certificates to the Issuer (to the
extent that such shares of Registrable Stock are not sold in such
manner) for reapplication of such restrictive legends.
(c) Expenses; Limitations on Registration. All expenses
incident to the Issuer's performance of or compliance with this Agreement and
any relevant stock exchange, fees and expenses of compliance with securities or
Blue Sky laws (including fees and disbursements of counsel in connection with
Blue Sky qualifications of Registrable Stock), printing expenses, messenger and
delivery expenses, fees and disbursements of counsel for the Issuer,
independent public accountants, all the Issuer's internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
expense of any liability insurance referred to above and the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange on which such securities issued by the Issuer are then
listed, the reasonable fees and expenses of any special experts (including
attorneys) retained by the in connection with such registration and fees and
expenses of other persons retained by the Issuer, will be borne by the Issuer.
It shall be a condition precedent to the obligation of the
Issuer to take any action pursuant to this Section 11 in respect of the
securities which are to be registered that the holders shall furnish to the
Issuer such information regarding the securities held by such holder and the
<PAGE> 16
16
intended method of disposition thereof as the Issuer shall reasonably request
and as shall be required in connection with the action to be taken by the
Issuer.
(d) Termination of Restrictions. Notwithstanding the
foregoing provisions of Sections 10 or 11, the restrictions imposed upon the
transferability of the Registrable Stock shall cease and terminate as to any
particular Restricted Security when such Restricted Security shall have been
sold by the holder thereof in accordance with registration under the Securities
Act or an exemption therefrom. Whenever the restrictions imposed shall
terminate as to any Restricted Security, as herein above provided, the holder
thereof shall be entitled to receive from the Issuer, without expense, a new
certificate not bearing the restrictive legend otherwise required to be borne
thereby.
(e) Rule 144. In order to permit the holders of Restricted
Securities to sell the same pursuant to Rule 144 under the Securities Act (or
any successor to such rule), the Issuer will comply with all rules and
regulations of the Commission applicable in connection with use of Rule 144 (or
any successor thereto), including the timely filing of all reports with the
Commission in order to enable such holders, if they so elect, to utilize Rule
144, and the Issuer will cause any restrictive legends to be removed and any
transfer restrictions to be rescinded with respect to any sale of Warrant
Shares which is exempt from registration under the Securities Act pursuant to
Rule 144.
<PAGE> 17
17
(f) Indemnification.
(1) In the event of any registration of any of its securities
under the Securities Act pursuant to this Section 11, the Issuer shall
indemnify and hold harmless the Seller of such Registrable Stock, its directors
and officers, and each other Person, if any, who controls such Seller within
the meaning of the Securities Act ("Controlling Person"), against any losses,
claims, damages or liabilities, joint or several, to which such Seller or any
such director or officer or Controlling Person may become subject under the
Securities Act or any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any alleged untrue statement of any material fact contained
in any registration statement under which such securities were registered under
the Securities Act, or in any final prospectus contained therein, or any
amendment or supplement thereto, (ii) any alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any violation by the Issuer of the Securities
Act or the Exchange Act, or other federal or state law applicable to the Issuer
and relating to any action or inaction required of the Issuer in connection
with such registration; provided, however, that the Issuer shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any alleged untrue statement or alleged omission
made in such registration statement, prospectus, or amendment or supplement
thereto in reliance upon and in conformity with written information furnished
to the Issuer through an instrument duly executed by such Seller or such
director, officer or Controlling Person specifically for use therein. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Seller or such director, officer or Controlling
Person, and shall survive the transfer of such securities by such Seller.
(2) Each holder of any Registrable Stock shall, by acceptance
thereof, jointly and severally, indemnify and hold harmless the Issuer, its
directors and officers and each other Person, if any, who controls the Issuer
against any losses, claims, damages or liabilities, joint or several, to which
the Issuer or any such director or officer or any such Person may become
subject under the Securities Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any alleged untrue statement of any material
fact contained, on the effective date thereof, in any registration statement
under which Registrable Stock was registered under the Securities Act, or in
any final prospectus contained therein, or any amendment or supplement thereto,
(ii) any alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent that such alleged untrue
statement or alleged omission was contained in written information furnished to
the Issuer by a holder, or (iii) any violation by a holder of the Securities
Act or the Exchange Act, or other federal or state law applicable to the such
holder and relating to any action or inaction required of a holder in connection
with such registration, and shall reimburse the Issuer or such director, officer
or Controlling Person for any legal or any other expenses reasonably incurred by
the Issuer or such
<PAGE> 18
18
director, officer or Controlling Person in connection with investigating or
defending any such loss, claim, damage, liability or action and shall reimburse
the Issuer or such director, officer or other Person for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such loss, claim, damage, liability or action.
(3) The indemnity and expense reimbursement obligations of
the Issuer under clauses (1) and (2) of this Section 11(f) shall be in addition
to any liability the Issuer may otherwise have at law, equity or otherwise.
(4) Each Person ("Indemnitor") who under the preceding
provisions of this Section 11(f) agrees to indemnify another Person
("Indemnitee") shall have the right, subject to the provisions hereto, to
designate counsel (reasonably acceptable to the Indemnitee) to defend any case
or proceeding against the Indemnitee arising in respect of any claim of
liability for which such indemnification may be claimed, to the end that
duplication of legal expense may be minimized; provided that, if the Indemnitee
notifies the Indemnitor that the former has been advised by its counsel that
any single counsel in such case or proceeding would have a conflict of interest
in representing both the Indemnitor and the Indemnitee, the Indemnitee may
designate its own counsel in such case or proceeding and, to the extent so
provided above in this Section 11(f), shall be entitled to be reimbursed by
Indemnitor for its legal expenses reasonably incurred in connection with
defending itself in such case or proceeding including the fees and expenses of
counsel and local counsel if retained.
(g) No Impairment of Rights. Following the date hereof, the
Issuer will not enter into any agreement regarding the registration of its
equity securities that impairs or otherwise limits the registration rights
granted to holder hereunder.
Section 12. The Call Option.
(a) The Call Option. GTS and its successors and assigns shall
have an irrevocable option to purchase such number of Warrants as set forth
below from the holders thereof (the "Call Option") at a price of [$___] per
Warrant (the "Purchase Price"), payable by wire transfer in same day funds.
(b) Manner of Exercise. Such option shall be exercisable by
GTS or its successors and assigns at any time during the Call Period by the
delivery of a written notice of exercise (a "Notice of Exercise") to each
Warrant holder. GTS shall have the right to exercise this Call Option in whole
or in part at any time and from time to time during the Call Period.
During the Call Period, GTS will have the right to require
the Warrant holders to transfer, in the aggregate, a percentage of the Warrants
as set forth below to GTS for the Purchase Price, if the following conditions
are met:
<PAGE> 19
19
(1) if the Level of Business (as defined below) equals or
exceeds U.S.$50,000,000 (fifty million dollars), then the Warrant
holders shall transfer, in the aggregate, 50% of the Warrants then
outstanding to GTS;
(2) if the Level of Business equals or exceeds
U.S.$75,000,000 (seventy-five million dollars), then the Warrant
holders shall transfer 100% of the Warrants then outstanding to GTS.
The term "Level of Business" shall mean orders made by GTS
and/or any GTS subsidiary for equipment and other services provided by Vendor
or any Vendor subsidiary in Western and Central Europe, as invoiced by Vendor
or any Vendor subsidiary to GTS and/or any GTS subsidiary.
In the event that the Warrants are held by more than one
holder, any Warrants subject to this Call Option shall be called from the
registered holders thereof, pro rata. Each transferee of Warrants shall be
subject to this Call Option.
Section 13. Limitation of Liability. No provision hereof, in the
absence of affirmative action by the holder of a Warrant hereof to purchase
shares of Common Stock, and no mere enumeration herein of the rights or
privileges of the holder hereof, shall give rise to any liability of such
holder for the purchase price of the Warrant Shares or as a stockholder of the
Issuer, whether such liability is asserted by the Issuer or by creditors of the
Issuer.
Section 14. Loss or Destruction of Warrant Certificates. Upon receipt
of evidence satisfactory to the Issuer of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
(the original Warrant holder's or any other institutional Warrant holder's
indemnity being satisfactory indemnity in the event of loss, theft or
destruction of any Warrant owned by such institutional holder), or, in the case
of any such mutilation, upon surrender and cancellation of such Warrant, the
Issuer will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of like tenor and representing the right to
purchase the same aggregate number of shares of Common Stock.
Section 15. Furnish Information. The Issuer agrees that it shall
deliver to the holders of record of the Warrants within 15 days of their filing
with the Commission all periodic and current reports required to be filed under
the Exchange Act.
Section 16. Tax Treatment. Each of the Issuer, Vendor and each
subsequent holder shall use its reasonable efforts to agree to a consistent
determination of the fair value, if any, of the Warrants and to consistent
treatment of such determination for income tax reporting purposes.
<PAGE> 20
20
Section 17. Office of the Issuer. So long as any of the Warrants
remains outstanding, the Issuer shall maintain an office or a transfer agent
for the Warrants in at its principal executive offices where the Warrants may
be presented for exercise, transfer, division or combination as herein
provided.
Section 18. Notices Generally. Any notice, demand or delivery pursuant
to the provisions hereof shall be telecopied or in writing mailed by overnight
courier, addressed to any holder of a Warrant at its last known address
appearing on the books of the Issuer, or, except as herein otherwise expressly
provided, to the Issuer at its principal executive office, 12
Krasnokazarmennaya Street, Moscow, Russia 111250, attention: General Counsel,
or such other address as shall have been furnished to the party giving or
making such notice, demand or delivery, with a copy to GTS at Global
TeleSystems Group, Inc., 4121 Wilson Blvd, 8th floor, Arlington, VA 22203,
attention: General Counsel. If such notice is to Vendor it shall be addressed
to [ ].
Section 19. Successors And Assigns. This Agreement shall bind and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns, and, without limiting the generality of the
foregoing, shall inure to the benefit of and be enforceable by each person who
shall from time to time be a holder of any of the Warrants.
Section 20. Governing Law. This Warrant Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of laws. Any action or proceeding
arising out of or relating to this Agreement shall be heard in any State or
Federal court sitting in the State of Delaware, City of Wilmington and each of
the parties hereby irrevocably submit to the jurisdiction of such court.
Section 21. Survival; Assignment. This Agreement shall survive the
exercise of the Warrants and shall be binding upon the Issuer and its
successors and assigns and shall be binding upon and inure to the benefit of
the holders and each holder of Warrant Certificates issued upon exercise of the
Warrants; provided, however, that neither this Agreement nor any rights
hereunder may be assigned by any holder unless such Warrant is transferred in
compliance with Sections 3 and 10 and the transferee of such Warrant or Warrant
Shares shall have delivered to the Issuer an acknowledgment that such transfer
shall have been made subject to the provisions of this Agreement.
Section 22. Amendment. No amendment or waiver of any provision of this
Agreement and no consent to any departure by the Issuer therefrom shall in any
event be effective unless the same shall be in writing and signed by all of the
holders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
<PAGE> 21
21
Section 23. Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.
Section 24. Specific Enforcement. Without limiting the remedies
available to the holders of Warrants, Warrant Shares, the Issuer acknowledges
that any failure by it to comply with its obligations under this Agreement may
result in material irreparable injury to the holders of Warrants, Warrant
Shares for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, any holder may obtain such relief as may be required to
specifically enforce the Issuer's obligations under this Agreement.
Section 25. WAIVER TRIAL BY JURY. EACH OF THE ISSUER AND VENDOR HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE ACTIONS OF EITHER PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed as of the day, month and year first above written.
GOLDEN TELECOM, INC.
By:
----------------------------------
Name:
Title:
GLOBAL TELESYSTEMS GROUP, INC.
By:
----------------------------------
Name:
Title:
[ ]
By:
----------------------------------
Name:
Title:
<PAGE> 23
EXHIBIT A
(Form of Warrant Certificate)
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED
TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER FEDERAL OR
STATE SECURITIES LAWS OR UNLESS THE PROPOSED TRANSACTION IS REGISTERED OR
QUALIFIED, AS SO REQUIRED.
THE TRANSFER OF AND OTHER TERMS OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE GOVERNED BY AND SUBJECT TO CONDITIONS SPECIFIED IN THAT CERTAIN
WARRANT AGREEMENT DATED __________, 1999, AND NO TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED. UNDER CERTAIN CIRCUMSTANCES, THE COMPANY HAS
AGREED TO ISSUE TO THE HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING THIS
LEGEND, FOR THE SECURITIES EVIDENCED HEREBY REGISTERED IN THE NAME OF SUCH
HOLDER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE,
AGREES TO BE BOUND BY ALL OF THE PROVISIONS CONTAINED IN SUCH WARRANT.
Warrant No. Warrant(s)
-------------------- ------------------
GOLDEN TELECOM, INC.
Warrant Certificate
THIS CERTIFIES THAT for value received [ ] ("Vendor"), or
registered assigns, is the owner of the number of Warrants set forth above,
each of which entitles the owner thereof to purchase one fully paid and
nonassessable share of the common stock, $.01 par value (the "Common Stock"),
of Golden Telecom, Inc. (each a "Warrant Share"), a Delaware corporation (the
"Company"), at the Exercise Price of $.10 per Warrant Share upon presentation
and surrender of this Warrant Certificate with the Form of Election to Purchase
duly executed. The number of Warrants evidenced by this Warrant Certificate
(and the number of Warrant Shares which may be purchased upon exercise thereof)
set forth above, and the Exercise Price per
<PAGE> 24
A-2
Warrant Share set forth above, are the number and the Exercise Price as of the
date of original issuance of the Warrants, based on the shares of Common Stock
as constituted at such date. As provided in the Warrant Agreement referred to
below, the number or kind of shares which may be purchased upon the exercise of
the Warrants evidenced by this Warrant Certificate are, upon the happening of
certain events, subject to modification and adjustment.
This Warrant Certificate is subject to, and entitled to the
benefits of, all of the terms, provisions and conditions of an agreement dated
as of ____________, 1999 (the "Warrant Agreement") between the Company and,
which Warrant Agreement is hereby incorporated herein by reference and made a
part hereof and to which Warrant Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Company and the holders of the Warrant
Certificates. Copies of the Warrant Agreement are on file at the principal
office of the Company.
This Warrant Certificate, with or without other Warrant
Certificates, upon surrender at the principal office of the Company, may be
exchanged for another Warrant Certificate or Warrant Certificates of like tenor
and date evidencing Warrants entitling the holder to purchase a like aggregate
number of shares of Common Stock. If this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon
surrender hereof another Warrant Certificate or Warrant Certificates for the
number of Warrants not exercised.
The Company will not be required to issue fractional shares
of Common Stock upon the exercise of any Warrant or Warrants evidenced hereby.
In lieu thereof, the Company may make a cash payment, as provided in the
Warrant Agreement.
No holder of this Warrant Certificate shall be entitled to
vote or receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained in the Warrant Agreement
or herein be construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger, conveyance, or
otherwise), or except as provided in the Warrant Agreement to receive notice of
meetings, or to receive dividends or subscription rights or otherwise, until
the Warrant or Warrants evidenced by this Warrant Certificate shall have been
exercised and the Common Stock purchasable upon the exercise thereof shall have
become deliverable as provided in the Warrant Agreement.
Each transferee of Warrants shall be subject to the Right of
First Refusal set forth in Section 10(c) of the Warrant Agreement and the Call
Option set forth in Section 12 of the Warrant Agreement.
<PAGE> 25
A-3
IN WITNESS WHEREOF, GOLDEN TELECOM, INC. has caused the
signature (or facsimile signature) of its President or Vice President,
Secretary or Assistant Secretary to be printed hereon and its corporate seal
(or facsimile) to be printed hereon.
GOLDEN TELECOM, INC.
By:
--------------------------------
<PAGE> 26
B-1
EXHIBIT B
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Warrant Certificates.)
FOR VALUE RECEIVED ______________ hereby sells, assigns and
transfers unto ______________ (_____________) the Warrants, the exact number of
which is specified below, evidenced by the within Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint ________________ to transfer such Warrants on the books
of the within-named Company, with full power of substitution.
Dated: , Number of Warrants Assigned:
------------------ ---- -------
Signature
----------------------------
Signature Guaranteed:
NOTICE
The signature of the foregoing assignment must correspond to
the name as written upon the face of this Warrant Certificate in every
particular, without alteration or enlargement or any change whatsoever.
If such number of Warrants shall not be all the Warrants
evidenced by this Warrant Certificate, a new Warrant Certificate for the
balance remaining of such Warrants shall be registered in the name of and
delivered to:
Please insert social security or other identifying number
(please print name and address)
Dated ,
---------- ----
<PAGE> 27
C-1
EXHIBIT C
FORM OF ELECTION
(To be executed if holder desires to exercise the
Warrants evidenced by the Warrant Certificate.)
TO: GOLDEN TELECOM, INC.
The undersigned hereby irrevocably elects to exercise
Warrants, the exact number of which is specified below, represented by this
Warrant Certificate to purchase the Common Stock issuable upon the exercise of
such Warrants and to deliver the Exercise Price of $.10 per share and requests
that certificates for the shares of Common Stock hereby purchased be issued in
the name of:
Please insert social security or other identifying number
Number of Warrants Exercised:
------------------
Aggregate Exercise Price to Be Paid:
-----------
(please print name and address)
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of
such Warrants shall be registered in the name of and delivered to:
Please insert social security or other identifying number
(please print name and address)
Dated: ,
----------------------------------- ----
<PAGE> 28
C-2
GOLDEN TELECOM, INC.
By:
-----------------------------------
Name:
Title: President
By:
-----------------------------------
Name:
Title: Vice President
[CORPORATE SEAL]
Attest:
Secretary
Dated: ,
---------------------- ----
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Warrant Certificate)
Signature Guaranteed:
<PAGE> 1
EXHIBIT 5.1
[Letterhead of Shearman & Sterling]
September 23, 1999
The Board of Directors
Golden Telecom, Inc.
12, Krasnokazarmennaya Street
Moscow, Russia 111250
Ladies and Gentlemen:
We are acting as counsel for Golden Telecom, Inc., a Delaware corporation
(the "Company"), in connection with the Registration Statement on Form S-1 (the
"Registration Statement") that has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the
proposed offering and sale by the Company of its shares of common stock, par
value $0.01 per share (the "Common Stock").
We are familiar with the corporate proceedings of the Company to date with
respect to the proposed offering and sale of its shares of Common Stock,
including the resolutions of the Board of Directors of the Company authorizing
the issuance, offering and sale of such shares of Common Stock, and we have
examined such corporate records of the Company and such other documents and
certificates as we have deemed necessary as a basis for the opinion hereinafter
expressed.
Based upon the foregoing, and having regard for such legal considerations
as we have deemed relevant, we are of the opinion that the shares of Common
Stock to which the Registration Statement relates, when issued as described in
the Registration Statement, will be legally issued, fully paid and
nonassessable.
Our opinion expressed herein is limited to the General Corporation Law of
the State of Delaware, and we do not express any opinion herein concerning any
other law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the prospectus contained therein.
Very truly yours,
/s/ Shearman & Sterling
<PAGE> 1
EXHIBIT 10.1
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT, dated as of ____________, 1999, among
Global TeleSystems Group, Inc., a Delaware corporation ("GTS"); GTS Equipment
Co., a Delaware corporation ("GTS Equipment"); GT Equipment Co., a Delaware
corporation ("GT Equipment"); GTS Finance, Inc., a Delaware corporation ("GTS
Finance"); ____________, a Delaware corporation ("GTS New Finance"); and Golden
Telecom, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, GTS desires to contribute, transfer and assign to the
Company, and the Company desires to acquire from GTS, all right, title and
interest of GTS in and to the capital stock (the "Stock") of the Contributed
Subsidiaries (as such term is hereinafter defined), upon the terms and subject
to the conditions set forth herein;
WHEREAS, in consideration for the contribution and transfer by
GTS of the Stock to the Company, the Company agrees to issue to GTS 10,599,900
shares of the common stock of the Company (the "Shares");
WHEREAS, GTS Equipment desires to transfer the Russian Assets
and Liabilities to GT Equipment, and GT New Equipment desires to acquire the
Russian Assets and Liabilities;
WHEREAS, GTS Finance desires to transfer the Non-Russian
Assets and Liabilities to GTS New Finance, and GTS New Finance desires to
acquire the Non-Russian Assets and Liabilities; and
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements and covenants contained herein, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. The following terms shall
have the meanings defined for such terms in the Sections of this Agreement set
forth below:
"Action" means any action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
<PAGE> 2
2
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Agreement" means this Contribution Agreement, including any
amendments hereto and each Schedule and Exhibit attached hereto.
"Contributed Subsidiaries" means the corporations, limited
liability companies, partnerships, associations and other entities specified in
Schedule I.
"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.
"Governmental Authority" means any United States federal,
state or local or any foreign government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, requirement or rule of common law.
"Non-Russian Assets and Liabilities" means the assets and
liabilities contained in Schedule III to this Agreement.
"Person" means any individual, partnership, limited liability
company, firm, corporation, association, trust, unincorporated organization or
other entity, as well as any syndicate or group that would be deemed to be a
person under Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended.
"Russian Assets and Liabilities" means the assets and
liabilities contained in Schedule II to this Agreement.
"Securities Act" means the U.S. Securities Act of 1933, as
amended.
SECTION 1.02. Other Defined Terms. The following terms shall
have meanings defined for such terms in the Sections of this Agreement set forth
below:
<PAGE> 3
3
Term Section
---- ---------
Shares Recitals
Stock Recitals
ARTICLE II
CONTRIBUTION OF STOCK; ISSUANCE OF SHARES
SECTION 2.01. Contribution, Transfer and Assignment of Stock.
GTS does hereby sell, assign, transfer, convey, grant, bargain, set over,
release, deliver and confirm unto the Company, its successors and permitted
assigns, as a capital contribution, the entire right, title and interest of GTS
in and to the Stock.
SECTION 2.02. Issuance of Shares. In exchange for the Stock,
the Company shall issue to GTS, effective as of the date hereof, the Shares. The
Company agrees to cause a certificate for such Shares to be issued to GTS upon
consummation of the transactions contemplated by this Agreement. Such Shares,
when issued, will be fully paid and non-assessable.
SECTION 2.03. Transfer of Russian Assets and Liabilities. GTS
Equipment does hereby transfer, assign, convey and deliver to GT Equipment all
the Russian Assets and Liabilities. GT New Equipment does hereby assume, all
rights and obligations relating to the Russian Assets and Liabilities.
SECTION 2.04. Transfer of Non-Russian Assets and Liabilities.
GTS Finance does hereby transfer, assign, convey and deliver to GTS New Finance
all the Non-Russian Assets and Liabilities. GTS New Finance does hereby assume,
all rights and obligations relating to the Non-Russian Assets and Liabilities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GTS
GTS represents and warrants as follows:
SECTION 3.01. Incorporation and Authority. Each of GTS, GTS
Equipment, GTS Finance and GTS New Finance is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
and has all necessary corporate power and authority to enter into this
Agreement, to carry out its respective obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
<PAGE> 4
4
Agreement by each of GTS, GTS Equipment, GTS Finance and GTS New Finance, the
performance by each such company of its respective obligations hereunder and the
consummation by each such company of the transfers contemplated hereby have been
duly authorized by all requisite corporate action on the part of each such
company. This Agreement has been duly executed and delivered by each of GTS, GTS
Equipment, GTS Finance and GTS New Finance, and (assuming due authorization,
execution and delivery by the Company and GT Equipment) this Agreement
constitutes the legal, valid and binding obligation of each such company,
enforceable in accordance with its terms.
SECTION 3.02. Incorporation and Qualification of the
Contributed Subsidiaries. Each Contributed Subsidiary is a corporation duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation.
SECTION 3.03. Stock of the Contributed Subsidiaries. The Stock
has been duly authorized and validly issued and is fully paid and was not issued
in violation of any pre-emptive rights. GTS beneficially owns the Stock free and
clear of Encumbrances, except for Encumbrances arising out of, under or in
connection with this Agreement or created by or through the Company or any of
its subsidiaries. There are no voting trusts, stockholder agreements, proxies or
other agreements in effect with respect to the voting or transfer of the Stock,
except the Shareholders' Agreement, dated as of the date hereof, between GTS and
the Company. Upon payment for the Stock as contemplated by this Agreement, the
Company will acquire from GTS good and marketable title to the Stock, free and
clear of all Encumbrances, except Encumbrances arising by or through the Company
or any of its subsidiaries.
SECTION 3.04. No Conflict. The execution, delivery and
performance of this Agreement by each of GTS, GTS Equipment, GTS Finance and GTS
New Finance does not and will not (a) violate or conflict with the certificate
of incorporation or by-laws of any such company, (b) conflict with or violate
any material Law or Governmental Order applicable to any such company or (c)
result in any breach of, or constitute a default (or event which with the giving
of notice or lapse of time, or both, would become a default) under, or give to
any Person any rights of termination, amendment, acceleration or cancellation,
or give to any Person any additional rights or entitlement to increased,
additional, accelerated or guaranteed payments under, or result in the creation
of any Encumbrance on any Stock pursuant to, any note, bond, contract, license,
permit, franchise or other instrument to which any such company is a party or by
which any of such Stock is bound or affected, except as would not, individually
or in the aggregate impair the ability of each such company to consummate the
contribution and transfer of the Stock to the Company and the Russian Assets and
Liabilities to GT Equipment, each as contemplated by this Agreement.
SECTION 3.05. Consents and Approvals. The execution and
delivery of this Agreement by GTS, GTS Equipment, GTS Finance and GTS New
Finance do not, and the
<PAGE> 5
5
performance of this Agreement by each such company will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority.
SECTION 3.06. Securities Matters. GTS understands that the
issuance and sale of the Shares hereunder is intended to be exempt from the
registration requirements of the Securities Act, pursuant to Section 4(2)
thereof. The Shares are being acquired by GTS for its own account and without a
view to the public distribution of the Shares or any interest therein. GTS has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of its investments in the Shares,
and GTS is capable of bearing the economic risks of such investments, including
a complete loss of its investment in the Shares. In evaluating the suitability
of an investment in the Shares, GTS has relied solely upon the representations,
warranties, covenants and agreements made by the Company herein and not upon any
other representations or other information (whether oral or written and
including any projections or supplemental data) made or supplied by or on behalf
of the Company or any of its Affiliates, employees, agents or other
representatives. GTS understands and agrees that it may not sell or dispose of
any of the Shares other than pursuant to a registered offering or in a
transaction exempt from the registration requirements of the Securities Act.
Notwithstanding the foregoing, GTS and the Company have entered into a
Registration Rights Agreement on the date hereof, relating to registration
rights over the Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
SECTION 4.01. Incorporation and Authority. Each of the Company
and GT Equipment is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has all necessary
corporate power and authority to enter into this Agreement, to carry out its
respective obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by each of the Company and
GT Equipment, the performance by each such company of its respective obligations
hereunder and the consummation by each such company of the transfers
contemplated hereby have been duly authorized by all requisite corporate action
on the part of each such company. This Agreement has been duly executed and
delivered by each of the Company and GT Equipment, and (assuming due
authorization, execution and delivery by GTS, GTS Equipment, GTS Finance and GTS
New Finance) this Agreement constitutes the legal, valid and binding obligation
of each such company, enforceable in accordance with its terms.
SECTION 4.02. No Conflict. The execution, delivery and
performance of this Agreement by each of the Company and GT Equipment does not
and will not (a) violate or
<PAGE> 6
6
conflict with the charter or other constitutive documents or by-laws of any such
company, (b) conflict with or violate any material Law or Governmental Order
applicable to any such company, (c) result in any breach of, or constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to any Person any rights of termination,
amendment, acceleration or cancellation, or give to any Person any additional
rights or entitlement to increased, additional, accelerated or guaranteed
payments under, or result in the creation of any Encumbrance on any Shares
pursuant to, any note, bond, contract, license, permit, franchise or other
instrument to which any such company is a party or by which any such Shares are
bound or affected, except as would not, individually or in the aggregate impair
the ability of each such company to consummate the contribution and transfer of
the Shares to GTS and the Non-Russian Assets and Liabilities to GTS New Finance,
each as contemplated by this Agreement.
SECTION 4.03. Consents and Approvals. The execution and
delivery of this Agreement by each of the Company and GT New Equipment do not,
and the performance of this Agreement by each such company will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority.
SECTION 4.04. Securities Matters. The Company understands that
the offering and sale of the Stock hereunder is intended to be exempt from the
registration requirements of the Securities Act of 1933, as amended, (the
"Securities Act"), pursuant to Section 4(2) thereof. The Stock is being acquired
by the Company for its own account and without a view to the public distribution
of the Stock or any interest therein. The Company has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investments in the Stock, and the Company is capable
of bearing the economic risks of such investments, including a complete loss of
its investment in the Stock. In evaluating the suitability of an investment in
the Stock, the Company has relied solely upon the representations, warranties,
covenants and agreements made by GTS herein and not upon any other
representations or other information (whether oral or written and including any
projections or supplemental data) made or supplied by or on behalf of GTS or any
of its Affiliates, employees, agents or other representatives. The Company
understands and agrees that it may not sell or dispose of any of the Stock other
than pursuant to a registered offering or in a transaction exempt from the
registration requirements of the Securities Act.
ARTICLE V
COVENANTS OF THE PARTIES
SECTION 5.01. Further Assurances. The parties hereto agree to
perform such other acts and to execute, acknowledge and/or deliver such other
instruments, documents and other materials, all at the Company's expense, which
the parties, their successors or assigns, may
<PAGE> 7
7
deem proper for the collection or reduction to possession of collection and
enforcement of any claim or right of any kind hereby sold, conveyed,
transferred, assigned and delivered, or intended so to be.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York,
applicable to contracts executed in and to be performed entirely within that
state.
SECTION 6.02. Currency. Unless otherwise specified in this
Agreement, all references to currency, monetary values and dollars set forth
herein mean United States (U.S.) Dollars and all payments hereunder shall be
made in United States Dollars.
SECTION 6.03. Specific Performance. Each of the parties
acknowledges that money damages would not be a sufficient remedy for any breach
of this Agreement and that irreparable harm would result if this Agreement were
not specifically enforced. Therefore, the rights and obligations of the parties
under this Agreement shall be enforceable by a decree of specific performance
issued by any court of competent jurisdiction, and appropriate injunctive relief
may be applied for and granted in connection therewith. A party's right to
specific performance shall be in addition to all other legal or equitable
remedies available to such party.
SECTION 6.04. Headings. The article and section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 6.05. Entire Agreement. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein and supersede all prior agreements
and understandings between the parties with respect to the subject matter hereof
and thereof.
SECTION 6.06. Severability. If any one or more provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.
SECTION 6.07. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing
<PAGE> 8
8
herein, express or implied, is intended to or shall confer upon any other Person
any legal or equitable right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement.
SECTION 6.08. Dispute Resolution. (a) For the purposes of this
Section, the term "dispute" shall include any difference, dispute, claim or
controversy arising out of or in connection with this Agreement or any other
difference, dispute, claim or controversy arising between the parties.
(b) In an effort to resolve informally and amicably any
dispute without resorting to litigation, each party shall first notify each
other party of any dispute that requires resolution. Notification of a dispute
shall be made to a member of senior management (or other mutually agreed)
representatives of GTS or the Company, as the case may be. GTS and the Company
shall each designate an employee to investigate, discuss and seek to settle the
matter between them.
(c) Any dispute which is not resolved by the two individuals
appointed under the preceding sub-section within thirty 30 days after the
notification of the dispute shall be finally settled under the Rules of
Arbitration of the International Chamber of Commerce by one or three arbitrators
appointed in accordance with the said Rules. The place of the Arbitration shall
be Paris and the language of the arbitral proceedings shall be English.
(d) The Arbitral Tribunal shall have the authority to give
orders requiring either party to produce documents relevant to the dispute or
disputes before the Arbitral Tribunal.
SECTION 6.9. Assignment. This Agreement or any rights or
obligations arising hereunder may not be assigned by operation of Law or
otherwise without the express written consent of the parties (which consent may
be granted or withheld in the sole discretion of the parties); provided,
however, that (i) each of the parties may assign this Agreement, in whole and
not in part, or any of its rights hereunder, to an Affiliate without the consent
of the other party (provided that the assignor shall nevertheless remain
obligated to perform its obligations hereunder following any such assignment),
and (ii) each of the parties may assign this Agreement, in whole and not in
part, to a Person who acquires all or substantially all of the assets and
liabilities of such party, without the consent of the other party.
SECTION 6.10. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument and shall become a
binding Agreement when one or more of the counterparts have been signed by each
of the parties and delivered to the other party.
<PAGE> 9
9
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
GLOBAL TELESYSTEMS GROUP, INC.
By:
------------------------------------------
Name:
Title:
GTS EQUIPMENT CO.
By:
------------------------------------------
Name:
Title:
GT EQUIPMENT CO.
By:
------------------------------------------
Name:
Title:
GTS FINANCE, INC.
By:
------------------------------------------
Name:
Title:
[GTS NEW FINANCE CO.]
By:
------------------------------------------
Name:
Title:
GOLDEN TELECOM, INC.
By:
------------------------------------------
Name:
Title:
<PAGE> 10
SCHEDULE I
CONTRIBUTED SUBSIDIARIES
<TABLE>
<CAPTION>
Jurisdiction of
Name Organization Interest Contributed
- ---- --------------- --------------------
<S> <C> <C>
TeleSystems Services, Inc. Delaware 100% of the outstanding capital
stock
SFMT-CIS, Inc. Delaware 100% of the outstanding capital
stock
GTS Mobile Services, Inc. Delaware 100% of the outstanding capital
stock
GTS Finance, Inc. Delaware 100% of the outstanding capital
stock
GTS Ukrainian TeleSystems LLC Delaware 100% interest in the Delaware LLC
</TABLE>
<PAGE> 11
SCHEDULE II
RUSSIAN ASSETS AND LIABILITIES
All CIS assets and liabilities of GTS Equipment Co.
<PAGE> 12
SCHEDULE III
NON-RUSSIAN ASSETS AND LIABILITIES
All non-CIS assets and liabilities of GTS Finance, Inc.
<PAGE> 1
EXHIBIT 10.2
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement") is made and
entered into as of __________, 1999, by and between Golden Telecom, Inc., a
Delaware corporation (the "Company"), and Global TeleSystems Group, Inc., a
Delaware corporation ("GTS").
RECITALS
A. In connection with the initial public offering of shares
of common stock by the Company, the Company issued to GTS 10,600,000 shares of
common stock of the Company (the "Shares").
B. The Company desires to grant to GTS pre-emptive rights for
any subsequent issuance of New Securities (as defined herein) by the Company.
C. The Company also desires that certain corporate governance
matters be agreed upon with GTS.
D. In consideration of the premises and the mutual agreements
contained herein, the parties hereby agree as follows:
AGREEMENT
1. Definitions
"Affiliates" shall mean, with respect to any Person, any
other Person or entity which directly or indirectly controls, is
controlled by, or is under common control with, such Person. A Person
shall be regarded as in control of another Person if its owns, or
directly or indirectly controls, at least 50% of the voting stock or
other ownership interest of the other Person, or if it directly or
indirectly possesses the power to direct or cause the direction of the
management and policies of the other Person by any means whatsoever.
"Independent Director" means a person other than an officer
or employee of the Company or its subsidiaries or any other individual
having a relationship which, in the opinion of the Company's board of
directors, would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director.
<PAGE> 2
2
"Interested Transaction" means any transaction, or series of
similar transactions, to which the Company or any of its Affiliates is
a party, in which the aggregate amount involved exceeds US $1,000,000,
and in which GTS or any of its Affiliates will have a direct or
indirect material interest.
"New Securities" means any Shares or preferred shares of any
kind of the Company, whether now or hereafter authorized, and rights,
options, or warrants to purchase said Shares or preferred shares, and
securities of any type whatsoever that are, or may become, convertible
into, exercisable for, or exchangeable into said Shares or preferred
shares; provided, however, that "New Securities" shall not include
securities issued pursuant to an employee incentive share option plan
approved by the Company's board of directors.
"Person" shall mean an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint
stock company, joint venture, pool, syndicate, sole proprietorship,
incorporated organization, governmental authority or any other form of
entity.
"Rights Notice" has the meaning as set forth in Section 2.
"Shares" has the meaning as set forth in the Recitals of this
Agreement.
2. Pre-emptive Rights. GTS shall have the right of first refusal to
purchase a pro rata portion of any issue of New Securities that the Company
may, from time to time, propose to sell and issue, provided that such pro rata
amount does not exceed the amount needed to maintain GTS's percentage ownership
in the Company immediately prior to the issuance of the New Securities.
(a) If the Company proposes to issue New Securities, it shall
give GTS written notice (the "Rights Notice") of its intention, describing the
New Securities, the price, the general terms upon which the Company proposes to
issue them, and the number of shares that GTS has the right to purchase. GTS
shall have thirty (30) days from delivery of the Rights Notice to agree to
purchase all or any part of its pro rata portion of the New Securities for the
price and upon the general terms specified in the Rights Notice, by giving
written notice to the Company setting forth the quantity of New Securities to
be purchased.
(b) The pre-emptive rights provided in this Section 2 shall
terminate when GTS owns less than 25% of the outstanding Common Stock of the
Company.
3. Interested Transactions. Any Interested Transaction between the
Company or any of its Affiliates, on the one hand, and GTS or any of its
Affiliates, on the other hand, shall be
<PAGE> 3
3
approved by a majority of the Independent Directors, unless such Interested
Transaction is described in a business plan or a budget that has previously
been separately approved by the Company=s Independent Directors.
4. Assignment. Neither party shall assign or transfer any of its
rights under this Agreement without the prior written consent of the other
party.
5. 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.
If to GTS, Inc.:
Global TeleSystems Group, Inc.
1751 Pinnacle Drive
North Tower, 12th Floor
McLean, VA 22102
Attn: Chief Financial Officer
Copy to: General Counsel
If to the Company:
Golden Telecom, Inc.
12 Krasnokazarmennaya Str.
6th Floor
111250 Moscow, Russia
Attn: Chief Financial Officer
Copy to: General Counsel
6. Further Assurances. GTS and the Company shall execute, acknowledge
and deliver or cause to be executed, acknowledged and delivered such
instruments and take such other action as may be necessary or advisable to
carry out their obligations under this Agreement and under any exhibit,
document or other instruments delivered pursuant hereto.
7. Governing Law. This Agreement shall be governed by the laws of the
State of New York.
<PAGE> 4
4
8. Entire Agreement. This Agreement 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. This Agreement may not be amended or otherwise modified except in
writing duly executed by all of the parties. A waiver by any party of any
breach or violation of this Agreement shall not be deemed or construed as a
waiver of any subsequent breach or violation thereof.
9. 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.
10. 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.
11. 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.
12. Successors and Assigns. Subject to the provisions of Section 4,
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.
13. 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.
<PAGE> 5
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GLOBAL TELESYSTEMS GROUP, INC.
By:
---------------------------------------
Name:
Title:
GOLDEN TELECOM, INC.
By:
---------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.3
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement") is made and
entered into as of __________, 1999 by and between Global TeleSystems Group,
Inc., a Delaware corporation ("GTS"), and Golden Telecom, Inc., a Delaware
corporation (the "Company").
RECITALS
A. GTS has historically provided to its subsidiaries certain
administrative services.
B. GTS and the Company desire that provision of these services by GTS
be continued for the benefit of the Company and further desire to formalize the
provision of certain services.
C. GTS is willing to continue to provide certain services to the
Company and the Company is willing to arrange for the provision of such services
by GTS.
AGREEMENT
The parties therefore agree as follows:
1. Services. GTS will provide to the Company including, without
limitation, those particular accounting and financial, tax, legal and
regulatory, and human resource services required that are listed on Exhibit A
hereto (the "Services"), in consideration of the respective charges described in
Section 3 below; provided, however, that the executive officers of the Company
shall oversee, supervise and approve the provision of such Services.
2. Term. Beginning on __________, 1999 (the "Closing Date"), GTS agrees
to provide the Services on a month-to-month basis unless and until terminated in
whole or in part with respect to particular Services by either party by means of
at least 90 days' prior written notice or until this Agreement is terminated
pursuant to the provisions of Section 7.
3. Charges. For the Services provided by GTS, the Company will pay a
total fee of U.S. $16,000 per month for the Services with U.S. $4,000 being
allocated to each of (i) accounting and financial services, (ii) tax services,
(iii) legal and regulatory services, and (iv) human resources services. GTS
shall submit invoices monthly, describing the Services performed, charges
therefor and other charges provided for hereunder. The Company shall, within 30
days of receipt of invoice, remit payment in full for the invoiced charges. In
<PAGE> 2
2
addition to this fee, the Company shall reimburse GTS on a monthly basis for any
out-of-pocket costs incidental to the delivery of the Services. The parties will
review the Services listed on Exhibit A hereto and such cost and usage data at
least annually, but any change in the Services will be only by mutual agreement.
4. Performance of Services. GTS shall perform the Services with the
same degree of care, skill and prudence customarily exercised for its own
operations.
5. Limitation on Liability; Indemnification. Except as provided in the
following sentence, neither party shall have any liability under this Agreement
to the other party for damage or loss of any type suffered by the other party or
any third party as a result of the performance or non-performance of the
Services provided hereunder, and neither party will be responsible for general,
special, indirect, incidental or consequential damages that the other party or
any third party may incur or experience on account of entering into or relying
on this Agreement. Each party shall indemnify, defend and hold the other party,
its directors, officers and employees harmless from and against all damages,
losses and out-of-pocket expenses (including fees) caused by or arising out of
any willful failure to perform any obligation or agreement herein.
6. Assignment. Neither party shall assign or transfer any of its rights
under this Agreement without the prior written consent of the other party.
7. Termination. This Agreement may be terminated (i) by GTS upon at
least 90 days' written notice, and (ii) by the Company upon at least 90 days'
written notice and with the consent of GTS (which consent may not be
unreasonably withheld). In addition, this Agreement shall terminate upon a
Change of Control.
"Change of Control" means any of the following occurrences: (i) a
majority of the seats on the Company's board of directors shall be occupied by
Persons who are neither nominated by GTS or by its board of directors, nor
appointed by the Company's directors nominated by GTS; and (ii) any Person or
group other than GTS or the companies controlled by GTS shall directly or
indirectly have the power to exercise control over 50% of the voting securities
of the Company.
"Person" means an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, pool, syndicate, sole proprietorship, incorporated organization,
governmental authority or any other form of entity.
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
<PAGE> 3
3
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.
If to GTS:
Global TeleSystems Group, Inc.
1751 Pinnacle Drive
North Tower, 12th Floor
McLean, VA 22102
Attn: Chief Financial Officer
Copy to: General Counsel
If to the Company:
Golden Telecom, Inc.
12 Krasnokazarmennaya Str.
6th Floor
111250 Moscow, Russia
Attn: Chief Financial Officer
Copy to: General Counsel
9. Further Assurances. GTS and the Company shall execute, acknowledge
and deliver or cause to be executed, acknowledged and delivered such instruments
and take such other action as may be necessary or advisable to carry out their
obligations under this Agreement and under any exhibit, document or other
instruments delivered pursuant hereto.
10. Governing Law. This Agreement shall be governed by the laws of the
State of New York.
11. Entire Agreement. This Agreement 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. This Agreement may not be amended or otherwise modified except in
writing duly executed by all of the parties. A waiver by any party of any breach
or violation of this Agreement shall not be deemed or construed as a waiver of
any subsequent breach or violation thereof.
12. 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.
<PAGE> 4
4
13. 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.
14. 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.
15. Successors and Assigns. Subject to the provisions of Section 6,
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.
16. 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.
<PAGE> 5
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GLOBAL TELESYSTEMS GROUP, INC.
By:
------------------------------
Name:
Title:
GOLDEN TELECOM, INC.
By:
------------------------------
Name:
Title:
<PAGE> 6
EXHIBIT A
THE SERVICES
1. Accounting and Financial Services
- Accounting and reporting services (policies & procedures,
billing, internal auditing, etc.)
- Treasury (cash & investment management, banking, corporate
finance, risk management, etc.)
- Financial analysis and planning (forecasting, actuarial services,
acquisition analysis, etc.)
- Assistance with corporate budgeting
2. Tax Services
- Taxes (filing, planing, research, etc.)
3. Legal and Regulatory Services
_ Compliance with United States federal securities laws
_ Delaware and other corporate law issues
_ NASDAQ listing issues
_ Legal issues associated with compensation plans and arrangements
4. Human Resources Services
- The design and administration of employee benefit and
compensation systems
- Administration of corporate employment policies
<PAGE> 1
EXHIBIT 10.4
TRADEMARK TRANSFER AGREEMENT
THIS TRADEMARK TRANSFER AGREEMENT (the "Agreement") dated as
of __________, 1999 by and between Global TeleSystems Group, Inc., a Delaware
corporation ("GTS"), and Golden Telecom, Inc., a Delaware corporation (the
"Company").
RECITALS
WHEREAS, GTS is the owner of the trademarks, service marks,
trademark registrations, and trademark applications set forth in Schedule IA
hereto (the "Trademarks"); and
WHEREAS, GTS wishes to transfer to the Company all the rights,
title and interest in the Trademarks.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the
meanings set forth below:
"Affiliates" shall mean, with respect to any Person, any other
Person or entity which directly or indirectly controls, is controlled by, or is
under common control with, such Person. A Person shall be regarded as in control
of another Person if its owns, or directly or indirectly controls, at least 50%
of the voting stock or other ownership interest of the other Person, or if it
directly or indirectly possesses the power to direct or cause the direction of
the management and policies of the other Person by any means whatsoever.
"Change of Control" shall mean any of the following
occurrences: (i) a majority of the seats on the Company's board of directors
shall be occupied by Persons who are neither nominated by GTS or by its board of
directors, nor appointed by the Company's directors nominated by GTS; and (ii)
any Person or group other than GTS or the companies controlled by GTS shall
directly or indirectly have the power to exercise control over 50% of the voting
securities of the Company.
"Person" shall mean an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship, incorporated
organization, governmental authority or any other form of entity.
<PAGE> 2
2
"Related Trademark" or "Related Trademarks" means the
trademarks, service marks, trademark registrations and trademark applications
set forth in Schedule IB hereto (the "Related Trademarks").
"Trademark" or "Trademarks" has the meaning set forth in the
recitals of this Agreement.
2. Transfer, Governmental Filings and License.
(a) Transfer. GTS hereby transfers and conveys all its right,
title and interest in the Trademarks to the Company for good and valuable
consideration, the receipt of which is hereby acknowledged.
(b) Governmental Filings. At the Company's expense, GTS shall
furnish the Company with such necessary information and reasonable assistance,
including execution of such other required documents, as the Company may
reasonably request in connection with recording its ownership interest in the
Trademarks with any governmental authority.
(c) License. For so long as GTS is the owner of the Related
Trademarks and subject to the provisions set forth in Section 4 hereof, GTS may
require the Company to use, and GTS grants the Company a license to use the
Related Trademarks in the ordinary course of business.
Such license is granted free of charge.
3. Representations and Warranties.
(a) GTS Representations and Warranties. GTS represents and
warrants that it has the right and authority to assign, transfer and convey the
rights granted hereunder to the Company and is authorized to enter into and
perform under this Agreement. GTS makes no representations, warranties or
guaranties of any kind that (i) the Trademarks are duly registered, valid or in
full force and effect; (ii) the use of the Trademarks covered by this Agreement
do not, or will not, infringe any intellectual property right of a third party;
(iii) the Trademarks are not being infringed upon, or have not been infringed
upon, by any third party; (iv) the use of the Trademarks do not, or will not,
require any licenses or consents from, or the making of royalty or similar
payments to, any third party.
(b) Company Representations and Warranties. The Company
represents and warrants that it has the authority to enter into this Agreement,
and that the performance of this Agreement shall not cause a breach of any other
obligation of the Company.
4. Change of Control. Upon a Change of Control, GTS may require, upon
60 days' written notice to the Company, that the Company (i) permanently cease
and desist from all use of
<PAGE> 3
3
the Related Trademarks and (ii) take all other actions which may be appropriate
to release, surrender or return the Trademarks to GTS.
5. Indemnification.
(a) Company Breaches. The Company agrees to defend, indemnify,
and hold GTS and its Affiliates and their respective directors, officers,
employees, and agents harmless from and against any and all claims, demands,
suits, causes of action, losses, damages, judgements, costs and expenses arising
out of or resulting from the breach by the Company of any of its
representations, warranties and agreements contained in this Agreement, or
arising out of the Company's use of any Trademark or Related Trademark, the
carrying on of the Company's business, or the design, manufacture, distribution,
sale, shipment, advertising, marketing, or other exploitation of any Trademarks,
other than those claims, demands, suits, or causes of action which would
constitute a breach of GTS's representations and warranties set forth herein.
(b) GTS Breaches. GTS agrees to defend, indemnify, and hold
the Company and its Affiliates and their respective directors, officers,
employees, and agents harmless from and against any and all claims, demands,
suits, causes of action, losses, damages, judgements, costs and expenses arising
out of or resulting from the breach by GTS of any of its representations,
warranties and agreements contained within this Agreement; provided, however,
that the Company shall provide prompt written notice of such claims to the GTS,
and the GTS shall have the right to control the defense and settlement of such
claims. The Company shall cooperate with and provide reasonable assistance to
the GTS in connection therewith.
6. Assignment. Neither party shall assign or transfer any of its rights
under this Agreement without the prior written consent of the other party.
7. 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.
If to GTS:
Global TeleSystems Group, Inc.
1751 Pinnacle Drive
North Tower, 12th Floor
McLean, VA 22101
Attn: Chief Financial Officer
Copy to: General Counsel
<PAGE> 4
4
If to the Company:
Golden Telecom, Inc.
12 Krasnokazarmennaya Str., 6th Floor
11250 Moscow, Russia
Attn: Chief Financial Officer
Copy to General Counsel
8. Further Assurances. GTS and the Company shall execute, acknowledge
and deliver or cause to be executed, acknowledged and delivered such instruments
and take such other action as may be necessary or advisable to carry out their
obligations under this Agreement and under any exhibit, document or other
instruments delivered pursuant hereto.
9. Governing Law. This Agreement shall be governed by the laws of the
State of New York.
10. 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. This Agreement may not
be amended or otherwise modified except in writing duly executed by all of the
parties. A waiver by any party of any breach or violation of this Agreement
shall not be deemed or construed as a waiver of any subsequent breach or
violation thereof.
11. 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.
12. 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.
13. 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
<PAGE> 5
5
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.
14. Successors and Assigns. Subject to the provisions of Section 5,
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.
15. 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.
<PAGE> 6
6
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by persons duly authorized as of the
date first set forth above.
GLOBAL TELESYSTEMS GROUP, INC.
By:
------------------------------------
Name:
Title:
GOLDEN TELECOM, INC.
By:
------------------------------------
Name:
Title:
<PAGE> 7
SCHEDULE IA
GlasNet
Golden Telecom (Ukraine)
PrimTelefone
Russia-On-Line
Sovam Teleport
Sovintel
TCM
TeleRoss
Unicel Cellular Network
SCHEDULE IB
The GTS logo
The GTS name
<PAGE> 1
EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into as of __________, 1999 by and between Global TeleSystems Group, Inc., a
Delaware corporation (together with its subsidiaries other than Golden Telecom,
Inc. and Golden Telecom, Inc.'s subsidiaries, hereinafter referred to as "GTS"),
and Golden Telecom, Inc., a Delaware corporation (together with its
subsidiaries, hereinafter referred to as the "Company").
RECITALS
A. The Company is a subsidiary of GTS. GTS and the Company desire to
enter into this Agreement to indemnify each other (and provide for contribution
to each other) against liabilities arising from the operation of the parties'
respective businesses.
B. In connection with the initial public offering of the Company, the
Company has prepared a Prospectus, dated __________, 1999 (the "Prospectus") and
has filed with the Securities and Exchange Commission a registration statement
(the "Registration Statement") of which the Prospectus forms a part.
C. In connection with the initial public offering of the Company, the
Company and GTS have agreed to a separation of assets, services and other
responsibilities (the "Separation").
AGREEMENT
The parties therefore agree as follows:
1. Indemnification. (a) The Company agrees to indemnify and hold
harmless GTS, its directors, officers, employees and agents against any and all
claims, losses, damages, liabilities, costs and expenses, joint or several
(including reasonable attorneys' fees and costs of investigation), to which GTS
may become subject insofar as such claims, losses, damages, liabilities, costs
and expenses (or actions in respect thereof) relate to, arise out of, or result
from (i) the Company's failure to pay, perform or otherwise promptly discharge
any of the liabilities arising out of the business, operations or assets of the
Company, on or after __________, 1999 (the "Closing Date"), whether or not
expressly assumed by the Company; (ii) any liabilities attributable to the
Company in connection with any United States federal or state tax audit of GTS;
(iii) any material breach by the Company of this Agreement, the Administrative
Services Agreement, the Trademark Transfer Agreement, the Employee Benefits
Agreement, the Shareholders' Agreement and the Registration Rights Agreement
(collectively, the "Separation Agreements"); and (iv) any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (as
amended or supplemented if the
<PAGE> 2
2
Company shall have furnished any amendments or supplements thereto), or any
omission or alleged omission to state therein a material fact required to be
stated in the Prospectus or necessary to make the statements therein not
misleading, with respect to all information contained in the Prospectus or the
Registration Statement, as amended or supplemented of which it forms a part.
(b) GTS agrees to indemnify and hold harmless the Company, its
directors, officers, employees and agents against any and all claims, losses,
damages, liabilities, costs and expenses, joint or several (including reasonable
attorneys' fees and costs of investigation), to which the Company may become
subject insofar as such claims, losses, damages, liabilities, costs and expenses
(or actions in respect thereof) relate to, arise out of or result from any
material breach by GTS under any of the Separation Agreements.
(c) The Company further agrees to indemnify and hold harmless
GTS against any and all claims, losses, damages, liabilities, costs and
expenses, joint or several (including reasonable attorneys' fees and costs of
investigation), to which GTS may become subject insofar as such claims, losses,
damages, liabilities, costs and expenses (or actions in respect thereof) relate
to, arise out of or result from guarantees made by GTS with respect to the
obligations or liabilities of the Company, and the Company agrees to pay GTS for
its direct costs, if any, of maintaining such guarantees.
(d) Except as set forth in this Agreement, all liabilities
existing or arising on or before the Closing Date, are released and discharged
in their entirety.
2. No Representation or Warranty. Neither the Company nor GTS intends
to make any representation or warranty to one another or to any other person or
party as to (i) the assets, businesses or liabilities transferred or assumed as
part of the Separation, (ii) any consent or liability transferred or assumed as
part of the Separation, (iii) any consent or approval required in connection
therewith, (iv) the value or freedom from any security interests of any of the
assets transferred, (v) the absence of any defense or freedom from counterclaim
with respect to any claim or any part thereof, or (vi) the legal sufficiency of
any assignment, document or instrument delivered to convey title to any asset
transferred.
3. No Transfer of Marketable Title. The Company and GTS understand that
except as expressly set forth in any Separation Agreement, all assets are being
transferred to the Company on an "as is, where is" basis, and the Company and
GTS agree to bear the economic and legal risks that the conveyance is
insufficient to vest in the transferee good and marketable title, free and clear
of any encumbrances.
4. Dispute Resolution. (a) For the purposes of this section, the term
"dispute" shall include any difference, dispute, claim or controversy arising
out of or in connection with this
<PAGE> 3
3
Agreement or any other difference, dispute, claim or controversy arising between
GTS and the Company.
(b) In an effort to resolve informally and amicably any
dispute without resorting to litigation, each party shall first notify the other
of any dispute that requires resolution. Notification of a dispute shall be made
to a member of senior management (or other mutually agreed) representatives of
GTS or the Company, as the case may be. GTS and the Company shall each designate
an employee to investigate, discuss and seek to settle the matter between them.
(c) Any dispute which is not resolved by the two individuals
appointed under the preceding sub-section within thirty 30 days after the
notification of the dispute shall be finally settled under the Rules of
Arbitration of the International Chamber of Commerce by one or three arbitrators
appointed in accordance with the said Rules. The place of the Arbitration shall
be Paris and the language of the arbitral proceedings shall be English.
(d) The Arbitral Tribunal shall have the authority to give
orders requiring either party to produce documents relevant to the dispute or
disputes before the Arbitral Tribunal.
5. Assignment. Neither party shall assign or transfer any of its rights
under this Agreement without the prior written consent of the other party.
6. 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.
If to GTS:
Global TeleSystems Group, Inc.
1751 Pinnacle Drive
North Tower, 12th Floor
McLean, VA 22101
Attn: Chief Financial Officer
Copy to: General Counsel
If to the Company:
<PAGE> 4
4
Golden Telecom, Inc.
12 Krasnokazarmennaya Str., 6th Floor
11250 Moscow, Russia
Attn: Chief Financial Officer
Copy to: General Counsel
7. Further Assurances. GTS and the Company shall execute, acknowledge
and deliver or cause to be executed, acknowledged and delivered such instruments
and take such other action as may be necessary or advisable to carry out their
obligations under this Agreement and under any exhibit, document or other
instruments delivered pursuant hereto.
8. Governing Law. This Agreement shall be governed by the laws of the
State of New York.
9. 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. This Agreement may not
be amended or otherwise modified except in writing duly executed by all of the
parties. A waiver by any party of any breach or violation of this Agreement
shall not be deemed or construed as a waiver of any subsequent breach or
violation thereof.
10. 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.
11. 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.
12. 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.
<PAGE> 5
5
13. Successors and Assigns. Subject to the provisions of Section 5,
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.
14. 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.
<PAGE> 6
6
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
GLOBAL TELESYSTEMS GROUP, INC.
By:
------------------------------
Name:
Title:
GOLDEN TELECOM, INC.
By:
------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.6
EMPLOYEE BENEFITS AGREEMENT
EMPLOYEE BENEFITS AGREEMENT (the "Agreement"), dated as of
_________, 1999, between Global TeleSystems Group, Inc., a Delaware corporation
("GTS"), and Golden Telecom, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, GTS is engaged in the telecommunications business
which, in part, includes telecommunications business in Russia and other
countries of the Commonwealth of Independent States (the "Business");
WHEREAS, GTS has caused the Company to be organized as a new
corporation to operate the Business, and to receive certain assets and
liabilities associated therewith;
WHEREAS, The Company desires and GTS has agreed that GTS shall
provide employee benefits to the employees of the Company until the time that
the Company is prepared to sponsor its own benefits plans and programs;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements and covenants contained herein, the parties hereto agree as
follows:
SECTION 1. Certain Defined Terms. The following terms shall
have the meanings defined for such terms in the Sections of this Agreement set
forth below:
"Separation Date" means such date as is mutually agreed in
writing by the parties hereto which shall be the date as of which GTS ceases to
provide benefits to the Transferred Employees under this Agreement.
"Transferred Employees" means all (a) expatriate employees of
the Business who become employees of the Company as of the Effective Date and
(b) other employees of GTS who become employees of the Company as of the
Effective Date pursuant to the mutual agreement of GTS and the Company.
SECTION 2. General Employment Matters. (a) As of the date of
this Agreement (the "Effective Date"), all Transferred Employees shall become
employed by the Company. Nothing in this Agreement shall give any Transferred
Employee any right to continued employment with the Company or GTS beyond the
Effective Date.
<PAGE> 2
2
(b) As of the Effective Date, the Transferred Employees
will participate in each of the employee benefit plans (including all
retirement plans and welfare benefit plans) which, immediately prior to the
Effective Date, cover the Transferred Employees (collectively, the "GTS Benefit
Plans").
(c) GTS shall take any steps necessary, including
without limitation, the amendment of the GTS Benefit Plans, to ensure that the
terms of this Section 2 may be carried out. In the event that, for any reason,
the Transferred Employees are not eligible to participate in any GTS Benefit
Plan, as of the Effective Date, GTS shall otherwise provide substantially
equivalent benefits to those that are unavailable through such GTS Benefit Plan
to the Transferred Employees.
(d) GTS shall take all necessary action to ensure that
the Company will be designated a "successor employer" for purposes of the GTS
Benefit Plans, in order that the Transferred Employees will not be deemed to
have had a separation of service from GTS or a termination of employment from
GTS merely because they are transferred to the Company.
(e) As of the Separation Date the Transferred Employees
shall cease to participate in the GTS Benefit Plans. Except as otherwise
provided in this Agreement, as of the Separation Date the Company shall
establish "mirror" plans that will provide the same level of benefits (as in
effect immediately prior to the Separation Date) for the Transferred Employees
and their eligible dependents and beneficiaries as those provided under the GTS
Benefit Plans.
(f) Effective as of the Separation Date, Transferred
Employees shall no longer participate in the [name of GTS 401(k) Plan], (the
"401(k) Plan"). Effective as of the Separation Date, the Company shall
establish pursuant to Section 2(e) above a "mirror" defined contribution plan
intended to be qualified under Sections 401(a) and 401(k) of the Internal
Revenue Code of 1986, as amended (the "Code"), and related trusts intended to
be exempt from taxation under Section 501(a) of the Code. As soon as
practicable following the Separation Date, GTS shall cause to be transferred
from the 401(k) Plan to such defined contribution plan and related trust, as
the Company shall direct, assets equal to the account balances as of the
Effective Date of the Transferred Employees who participate in the 401(k) Plan
(with subsequent "true up" adjustment, if necessary). If necessary, GTS shall
amend the 401(k) Plan to fully vest accounts of all Transferred Employees as of
the Separation Date.
(g) In connection with all employee pension benefit plans
and employee welfare benefit plans to be established by the Company pursuant to
this Agreement, the Company shall credit Transferred Employees for all periods
of service with GTS prior to the Effective Date for all purposes, to the same
extent that such service was credited under the applicable GTS Benefit Plan.
In addition, any welfare plan that the Company establishes hereto shall take
account of amounts credited against deductibles for 1999 prior to the
Separation Date under the corresponding GTS Benefit Plan, as well as of
amounts charged against out-of-pocket or other
<PAGE> 3
3
annual or other (including lifetime) limitations under the corresponding GTS
Benefit Plan prior to the Separation Date. The Company will cause the waiver
of any waiting periods or pre-existing condition limitations or exclusions that
otherwise might apply to Transferred Employees (or their eligible dependents or
beneficiaries) under the terms of the "mirror" plans established pursuant to
Section 2(e) or Section 2(f), to the extent that such periods, limitations or
exclusions would not have applied to the Transferred Employees (and their
eligible dependents and beneficiaries) had they continued to participate in the
GTS Benefit Plans after the Separation Date.
(h) From the Effective Date until the Separation Date,
GTS shall provide, or shall cause one or more of its divisions to provide, to
the Company the services related to the provision of benefits to the
Transferred Employees under the GTS Benefit Plans, including, without
limitation, any disclosure, reporting and other administrative requirements.
SECTION 3. Payments to GTS. Beginning on the Effective Date
and continuing until the Separation Date, the Company shall pay to GTS as
consideration for providing the Transferred Employees with the benefits
associated with the GTS Benefit Plans and the Related Services, a management
fee equal to 25% of the aggregate amount of all Transferred Employees' base
salary, as in effect from time to time (the "Management Fee"). The Management
Fee shall be paid to GTS in monthly installments as soon as practicable after
the last pay period for each month.
SECTION 4. General Matters. Except as otherwise expressly
provided herein, the Company shall be responsible for any and all employment,
compensation and benefit liabilities with respect to all Transferred Employees
(including but not limited to Transferred Employees who, as of the Separation
Date, are on leave of absence, long-term disability, short-term disability or
layoff with recall rights) and eligible dependents and beneficiaries of those
persons.
SECTION 5. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
applicable to contracts executed in and to be performed entirely within that
state.
SECTION 6. Headings. The article and section headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 7. Entire Agreement. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein and supersede all prior agreements
and understandings between the parties with respect to the subject matter
hereof and thereof.
<PAGE> 4
SECTION 8. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9. Assignment. This Agreement or any rights or
obligations arising hereunder may not be assigned without the express written
consent of GTS and the Company (which consent may be granted or withheld in the
sole discretion of GTS and the Company).
SECTION 10. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument and shall become a
binding Agreement when one or more of the counterparts have been signed by each
of the parties and delivered to the other party.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
GLOBAL TELESYSTEMS GROUP, INC.
By:
------------------------------------
Name:
Title:
GOLDEN TELECOM, INC.
By:
------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.7
THE 1999 EQUITY PARTICIPATION PLAN
OF
GOLDEN TELECOM, INC.
Golden Telecom, Inc., a Delaware corporation, has adopted The
1999 Equity Participation Plan of Golden Telecom, Inc. (the "Plan"), effective
___________ ___, 1999, for the benefit of its eligible employees, consultants
and directors.
The purposes of the Plan are as follows:
(1) To provide an additional incentive for directors, key
Employees and Consultants (as such terms are defined below) to further the
growth, development and financial success of the Company by personally
benefiting through the ownership of Company stock and/or rights which recognize
such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of
directors, key Employees and Consultants considered essential to the long range
success of the Company by offering them an opportunity to own stock in the
Company and/or rights which will reflect the growth, development and financial
success of the Company.
ARTICLE I.
DEFINITIONS
1.1. General. Wherever the following terms are used in the
Plan they shall have the meanings specified below, unless the context clearly
indicates otherwise.
1.2. Administrator. "Administrator" shall mean the entity that
conducts the general administration of the Plan as provided herein. With
reference to the administration of the Plan with respect to Options granted to
Independent Directors, the term "Administrator" shall refer to the Board or its
delegee. With reference to the administration of the Plan with respect to any
other Award, the term "Administrator" shall refer to the Committee unless the
Board has assumed the authority for administration of the Plan generally as
provided in Section 8.2.
1.3. Affiliate. "Affiliate" shall mean any entity which
directly or indirectly controls, is controlled by, or is under common control
with the Company.
1.4. Award. "Award" shall mean an Option or a Restricted Stock
award which may be awarded or granted under the Plan (collectively, "Awards").
1.5. Award Agreement. "Award Agreement" shall mean a written
agreement executed by an authorized officer of the Company and the Holder which
shall contain such terms and conditions with respect to an Award as the
Administrator shall determine, consistent with the Plan.
<PAGE> 2
1.6. Award Limit. "Award Limit" shall mean _____________
shares of Common Stock, as adjusted pursuant to Section 9.3 of the Plan.
1.7. Board. "Board" shall mean the Board of Directors of the
Company.
1.8. Change in Control. "Change in Control" shall mean, unless
otherwise determined by the Committee:
(a) the dissolution or liquidation of the Company and its
Subsidiaries,
(b) a merger, consolidation or reorganization of the Company
and its Subsidiaries with one or more other corporations (other than a parent,
Subsidiary, or Affiliate of the Company) in which Company is not the surviving
corporation,
(c) a sale of all or substantially all of the assets of the
Company to another corporation (other than a parent, Subsidiary or Affiliate of
the Company), or
(d) any transaction (including, without limitation, a merger
or reorganization in which the Company is the surviving corporation) approved by
the Board which results in any person or entity (other than a parent, Subsidiary
or Affiliate of the Company) owning more than 50% or more of the combined voting
power of all classes of stock of the Company.
1.9. Code. "Code" shall mean the Internal Revenue Code of
1986, as amended.
1.10. Committee. "Committee" shall mean the Compensation
Committee of the Board or another committee or subcommittee of the Board,
appointed as provided in Section 8.1.
1.11. Common Stock. "Common Stock" shall mean the common stock
of the Company, par value $.01 per share, and any equity security of the Company
issued or authorized to be issued in the future, but excluding any preferred
stock and any warrants, options or other rights to purchase Common Stock.
1.12. Company. "Company" shall mean Golden Telecom, Inc., a
Delaware corporation.
1.13. Consultant. "Consultant" shall mean any consultant or
adviser if:
(a) the consultant or adviser renders bona fide services to
the Company;
(b) the services rendered by the consultant or adviser are not
in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
the Company's securities; and
(c) the consultant or adviser is an entity which has
contracted directly with the Company to render such services.
1.14. Director. "Director" shall mean a member of the Board.
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<PAGE> 3
1.15. Disability. "Disability" shall mean the absence of an
Independent Director from the Independent Director's duties to the Company on a
full-time basis for a total of six months during any twelve month period as a
result of incapacity to perform the regular duties of an Independent Director
due to a single or related mental or physical illness which is determined to be
reasonably likely to extend beyond the completion of the Independent Director's
elected term on the Board by a physician selected by the Company and acceptable
to the Optionee (such agreement as to acceptability not to be withheld
unreasonably).
1.16. DRO. "DRO" shall mean a domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or any foreign law determined by the Administrator to be
equivalent, or the rules thereunder.
1.17. Employee. "Employee" shall mean any officer or other
employee of the Company, or of any corporation which is a Subsidiary.
1.18. Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.19. Fair Market Value. "Fair Market Value" of a share of
Common Stock as of a given date shall be (a) the closing price of a share of
Common Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred, as reported in the Wall Street Journal or (b) if
Common Stock is not traded on an exchange but is quoted on NASDAQ or a successor
quotation system, the closing price of the Common Stock on the trading day
previous to such date or if shares were not traded on the trading day previous
to such date, then on the next preceding date on which a trade occurred, as
reported by NASDAQ or such successor quotation system as reported in the Wall
Street Journal; or (c) if Common Stock is not publicly traded on an exchange and
not quoted on NASDAQ or a successor quotation system, the Fair Market Value of a
share of Common Stock as established by the Administrator acting in good faith.
1.20. Holder. "Holder" shall mean a person who has been
granted or awarded an Award.
1.21. Incentive Stock Option. "Incentive Stock Option" shall
mean an option which conforms to the applicable provisions of Section 422 of the
Code and which is designated as an Incentive Stock Option by the Administrator.
1.22. Independent Director. "Independent Director" shall mean
a director that is a "non-employee director" under Rule 16(b)(3) of the Exchange
Act and an "outside director" under Section 162m of the Code.
1.23. Non-Qualified Stock Option. "Non-Qualified Stock Option"
shall mean an Option which is not designated as an Incentive Stock Option by the
Administrator.
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<PAGE> 4
1.24. Option. "Option" shall mean a stock option granted under
Article IV of the Plan. An Option granted under the Plan shall, as determined by
the Administrator, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to Independent Directors and
Consultants shall be Non-Qualified Stock Options.
1.25. Performance Criteria. "Performance Criteria" shall mean
any objective business criterion with respect to the Company, any Subsidiary or
any division or operating unit as determined by the Committee. Such Performance
Criteria may include (a) net income, (b) pre-tax income, (c) operating income,
(d) cash flow, (e) earnings per share, (f) return on equity, (g) return on
invested capital or assets, (h) cost reductions or savings, (i) funds from
operations, (j) appreciation in the fair market value of Common Stock, (k)
earnings before any one or more of the following items: interest, taxes,
depreciation or amortization, (l) profit margin, (m) revenue growth and (n)
comparison of any expense item (e.g. SG&A) to a specific target.
1.26. Plan. "Plan" shall mean The 1999 Equity Participation
Plan of Golden Telecom, Inc.
1.27. Restricted Stock. "Restricted Stock" shall mean Common
Stock awarded under Article VII of the Plan.
1.28. Retirement Date. "Retirement Date" with respect to an
Independent Director shall mean the later of (a) the date such Independent
Director reaches the age of 55 or (b) the date which is five years from such
Independent Director's initial election to the Board.
1.29. Rule 16b-3. "Rule 16b-3" shall mean that certain Rule
16b-3 under the Exchange Act, as such Rule may be amended from time to time.
1.30. Section 162(m) Participant. "Section 162(m) Participant"
shall mean any key Employee designated by the Administrator as a key Employee
whose compensation for the fiscal year in which the key Employee is so
designated or a future fiscal year may be subject to the limit on deductible
compensation imposed by Section 162(m) of the Code.
1.31. Securities Act. "Securities Act" shall mean the
Securities Act of 1933, as amended.
1.32. Subsidiary. "Subsidiary" shall mean any corporation in
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
1.33. Substitute Award. "Substitute Award" shall mean an
Option granted under this Plan upon the assumption of, or in substitution for,
outstanding equity awards previously granted by a company or other entity in
connection with a corporate transaction, such as a merger, combination,
consolidation or acquisition of property or stock; provided, however, that in no
event shall the term "Substitute Award" be construed to refer to an award made
in connection with the cancellation and repricing of an Option.
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<PAGE> 5
1.34. Termination of Consultancy. "Termination of Consultancy"
shall mean the time when the engagement of a Holder as a Consultant to the
Company or a Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, by resignation, discharge, death or
retirement; but excluding terminations where there is a simultaneous
commencement of employment with the Company or any Subsidiary. The
Administrator, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Consultancy, including, but not
by way of limitation, the question of whether a Termination of Consultancy
resulted from a discharge for good cause, and all questions of whether a
particular leave of absence constitutes a Termination of Consultancy.
Notwithstanding any other provision of the Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate a Consultant's service at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.
1.35. Termination of Directorship. "Termination of
Directorship" shall mean the time when a Holder who is an Independent Director
ceases to be a Director for any reason, including, but not by way of limitation,
a termination by resignation, failure to be elected, death or retirement. The
Board, in its sole and absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Directorship with respect to
Independent Directors, including whether a Termination of Directorship shall be
deemed to have occurred with respect to an emeritus Director.
1.36. Termination of Employment. "Termination of Employment"
shall mean the time when the employee-employer relationship between a Holder and
the Company or any Subsidiary is terminated for any reason, with or without
cause, including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (a) terminations where
there is a simultaneous reemployment or continuing employment of a Holder by the
Company or any Subsidiary, (b) at the discretion of the Administrator,
terminations which result in a temporary severance of the employee-employer
relationship, and (c) at the discretion of the Administrator, terminations which
are followed by the simultaneous establishment of a consulting relationship by
the Company or a Subsidiary with the former employee. The Administrator, in its
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question of whether a Termination of Employment resulted from a discharge
for good cause, and all questions of whether a particular leave of absence
constitutes a Termination of Employment; provided, however, that, with respect
to Incentive Stock Options, unless otherwise determined by the Administrator in
its discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section.
ARTICLE II.
SHARES SUBJECT TO PLAN
2.1. Shares Subject to Plan.
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<PAGE> 6
(a) The shares of stock subject to Awards shall be Common
Stock, initially shares of the Company's Common Stock, par value $.01 per share.
The aggregate number of such shares which may be issued upon exercise of such
Options or rights or upon any such Awards under the Plan shall not exceed _____,
of which no more than _________ shares shall be issued with respect to Incentive
Stock Options. The shares of Common Stock issuable upon exercise of such Options
or rights or upon any such Awards may be either previously authorized but
unissued shares or treasury shares.
(b) The maximum number of shares which may be subject to
Awards, granted under the Plan to any individual in any calendar year shall not
exceed the Award Limit. To the extent required by Section 162(m) of the Code,
shares subject to Options which are canceled continue to be counted against the
Award Limit.
2.2. Add-back of Options and Other Rights. If any Option, or
other right to acquire shares of Common Stock under any other Award under the
Plan, expires or is canceled without having been fully exercised, or is
exercised in whole or in part for cash (including pursuant to a broker assisted
cashless exercise) as permitted by the Plan, the number of shares subject to
such Option or other right but as to which such Option or other right was not
exercised prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Furthermore, any shares subject to Awards which are adjusted pursuant to
Section 9.3 and become exercisable with respect to shares of stock of another
corporation shall be considered canceled and may again be optioned, granted or
awarded hereunder, subject to the limitations of Section 2.1. Shares of Common
Stock which are delivered by the Holder or withheld by the Company upon the
exercise of any Award under the Plan, in payment of the exercise price thereof
or tax withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. If any shares of Restricted Stock are
surrendered by the Holder or repurchased by the Company pursuant to Section 7.4
or 7.5 hereof, such shares may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. Notwithstanding the provisions of
this Section 2.2, no shares of Common Stock may again be optioned, granted or
awarded if such action would cause an Incentive Stock Option to fail to qualify
as an incentive stock option under Section 422 of the Code.
ARTICLE III.
GRANTING OF AWARDS
3.1. Award Agreement. Each Award shall be evidenced by an
Award Agreement. Award Agreements evidencing Awards intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code. Award Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 422 of the Code.
3.2. Provisions Applicable to Section 162(m) Participants.
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<PAGE> 7
(a) The Committee, in its discretion, may determine whether an
Award is to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code.
(b) Notwithstanding anything in the Plan to the contrary, the
Committee may grant any Award to a Section 162(m) Participant, including
Restricted Stock the restrictions with respect to which lapse upon the
attainment of performance goals which are related to one or more of the
Performance Criteria and any performance or incentive award described in Article
VIII that vests or becomes exercisable or payable upon the attainment of
performance goals which are related to one or more of the Performance Criteria.
(c) To the extent necessary to comply with any applicable
performance-based compensation requirements of Section 162(m)(4)(C) of the Code,
with respect to any Award granted under Articles VII and VIII which may be
granted to one or more Section 162(m) Participants, no later than ninety (90)
days following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (i) designate one or more Section 162(m) Participants, (ii) select the
Performance Criteria applicable to the fiscal year or other designated fiscal
period or period of service, (iii) establish the various performance targets, in
terms of an objective formula or standard, and amounts of such Awards, as
applicable, which may be earned for such fiscal year or other designated fiscal
period or period of service and (iv) specify the relationship between
Performance Criteria and the performance targets and the amounts of such Awards,
as applicable, to be earned by each Section 162(m) Participant for such fiscal
year or other designated fiscal period or period of service. Following the
completion of each fiscal year or other designated fiscal period or period of
service, the Committee shall certify in writing whether the applicable
performance targets have been achieved for such fiscal year or other designated
fiscal period or period of service. In determining the amount earned by a
Section 162(m) Participant, the Committee shall have the right to reduce (but
not to increase) the amount payable at a given level of performance to take into
account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the fiscal year or other
designated fiscal period or period of service.
(d) Furthermore, notwithstanding any other provision of the
Plan, any Award which is granted to a Section 162(m) Participant and is intended
to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall be subject to any additional limitations set
forth in Section 162(m) of the Code (including any amendment to Section 162(m)
of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the
extent necessary to conform to such requirements.
3.3. Limitations Applicable to Section 16 Persons.
Notwithstanding any other provision of the Plan, the Plan, and any Award granted
or awarded to any individual who is then subject to Section 16 of the Exchange
Act, shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 of the Exchange Act) that are requirements for the application of
such
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exemptive rule. To the extent permitted by applicable law, the Plan and Awards
granted or awarded hereunder shall be deemed amended to the extent necessary to
conform to such applicable exemptive rule.
3.4. At-Will Employment. Nothing in the Plan or in any Award
Agreement hereunder shall confer upon any Holder any right to continue in the
employ of, or as a Consultant for, the Company or any Subsidiary, or as a
Director of the Company, or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Holder at any time for any reason whatsoever, with or without
cause, except to the extent expressly provided otherwise in a written agreement
between the Holder and the Company and any Subsidiary.
3.5. Trust. Notwithstanding any other provision of the Plan to
the contrary, the Administrator may, in its sole discretion for the purposes of
satisfying applicable foreign law, cause any Award hereunder which would
otherwise be made to a Holder to be made instead to a trust for the benefit of
the Holder containing such terms and conditions as the Administrator, in its
sole discretion, deems to be appropriate. All provisions of the Plan and any
Award Agreement shall apply equivalently to any Award made to such trust, except
as the Administrator determines is otherwise contemplated by the trust
arrangement.
ARTICLE IV.
GRANTING OF OPTIONS TO EMPLOYEES,
CONSULTANTS AND INDEPENDENT DIRECTORS
4.1. Eligibility. Any Employee or Consultant selected by the
Committee pursuant to Section 4.4(a)(i) shall be eligible to be granted an
Option. Each Independent Director of the Company shall be eligible to be granted
Options at the times and in the manner set forth in Section 4.5.
4.2. Disqualification for Stock Ownership. No person may be
granted an Incentive Stock Option under the Plan if such person, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any then existing Subsidiary or parent corporation (within the meaning of
Section 422 of the Code) unless such Incentive Stock Option conforms to the
applicable provisions of Section 422 of the Code.
4.3. Qualification of Incentive Stock Options. No Incentive
Stock Option shall be granted to any person who is not an Employee.
4.4. Granting of Options to Employees and Consultants.
(a) The Committee shall from time to time, in its absolute
discretion, and subject to applicable limitations of the Plan:
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(i) Determine which Employees are key Employees and
select from among the key Employees or Consultants (including Employees
or Consultants who have previously received Awards under the Plan) such
of them as in its opinion should be granted Options;
(ii) Subject to the Award Limit, determine the number
of shares to be subject to such Options granted to the selected key
Employees or Consultants;
(iii) Subject to Section 4.3, determine whether such
Options are to be Incentive Stock Options or Non-Qualified Stock
Options and whether such Options are to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such
Options, consistent with the Plan; provided, however, that the terms
and conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the
Code.
(b) Upon the selection of a key Employee or Consultant to be
granted an Option, the Committee shall instruct the appropriate officers of the
Company to issue the Option and may impose such conditions on the grant of the
Option as it deems appropriate.
(c) Any Incentive Stock Option granted under the Plan may be
modified by the Committee, with the consent of the Holder, to disqualify such
Option from treatment as an "incentive stock option" under Section 422 of the
Code.
4.5. Granting of Options to Independent Directors.
During the term of the Plan, each person who is an Independent
Director automatically shall be granted (a) an Option to purchase 10,000 shares
of Common Stock (subject to adjustment as provided in Section 9.3) on the date
of such Independent Director's initial election and (b) an Option to purchase
2,500 shares of Common Stock (subject to adjustment as provided in Section 9.3)
on a date which occurs during the first quarter of each calendar year after such
initial election which date shall be (i) selected by the Administrator prior to
the commencement of each applicable calendar quarter or, if no such date is
selected, (ii) the last day of the applicable calendar quarter. Members of the
Board who are employees of the Company who subsequently retire from the Company
and remain on the Board will not receive an initial Option grant pursuant to
clause (a) of the preceding sentence, but to the extent that they are otherwise
eligible, will receive, after retirement from employment with the Company,
Options as described in clause (b) of the preceding sentence. All the foregoing
Option grants authorized by this Section 4.5 are subject to stockholder approval
of the Plan.
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ARTICLE V.
TERMS OF OPTIONS
5.1. Option Price. The price per share of the shares subject
to each Option granted to Employees and Consultants shall be set by the
Committee; provided, however, that such price shall be no less than the par
value of a share of Common Stock, unless otherwise permitted by applicable state
law, and:
(a) in the case of Options intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
such price shall not be less than 100% of the Fair Market Value of a share of
Common Stock on the date the Option is granted;
(b) in the case of Incentive Stock Options such price shall
not be less than 100% of the Fair Market Value of a share of Common Stock on the
date the Option is granted (or the date the Option is modified, extended or
renewed for purposes of Section 424(h) of the Code);
(c) in the case of Incentive Stock Options granted to an
individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code), such price shall not be less than 110% of the Fair
Market Value of a share of Common Stock on the date the Option is granted (or
the date the Option is modified, extended or renewed for purposes of Section
424(h) of the Code).
5.2. Option Term. The term of an Option granted to an Employee
or consultant shall be set by the Committee in its discretion; provided,
however, that, in the case of Incentive Stock Options, the term shall not be
more than ten years from the date the Incentive Stock Option is granted, or five
years from the date the Incentive Stock Option is granted if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation thereof
(within the meaning of Section 422 of the Code). Except as limited by
requirements of Section 422 of the Code and regulations and rulings thereunder
applicable to Incentive Stock Options, the Committee may extend the term of any
outstanding Option in connection with any Termination of Employment or
Termination of Consultancy of the Holder, or amend any other term or condition
of such Option relating to such a termination. No Option shall be exercisable
after the expiration of its term.
5.3. Option Vesting
(a) The period during which the right to exercise, in whole or
in part, an Option granted to an Employee or a Consultant vests in the Holder
shall be set by the Committee and the Committee may determine that an Option may
not be exercised in whole or in part for a specified period after it is granted;
provided, however, that, unless the Committee otherwise provides in the terms of
the Award Agreement or otherwise, no Option shall be exercisable by any Holder
who is then subject to Section 16 of the Exchange Act within the period ending
six
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months and one day after the date the Option is granted. Unless the Committee
specifically determines otherwise in the Option Agreement, one-third of each
Option shall vest and become exercisable on the first anniversary of the date of
the option grant, and 1/36 of each Option shall vest and become exercisable on
each monthly anniversary of the date of grant thereafter, subject to the
Holder's continuous employment or service. At any time after the grant of an
Option, the Committee may, in its sole and absolute discretion and subject to
whatever terms and conditions it selects, accelerate the period during which an
Option granted to an Employee or Consultant vests.
(b) No portion of an Option granted to an Employee or
Consultant which is unexercisable at Termination of Employment or Termination of
Consultancy, as applicable, shall thereafter become exercisable, except as may
be otherwise provided by the Committee either in the Award Agreement or by
action of the Committee following the grant of the Option.
(c) To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by a Holder during any calendar year (under the
Plan and all other incentive stock option plans of the Company and any parent or
subsidiary corporation, within the meaning of Section 422 of the Code) of the
Company, exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth in
the preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 5.3(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.
5.4. Terms of Options Granted to Independent Directors. The
price per share of the shares subject to each Option granted to an Independent
Director shall equal 100% of the Fair Market Value of a share of Common Stock on
the date the Option is granted. Options granted to Independent Directors shall
become exercisable on the first anniversary of the date of Option grant and,
subject to Section 6.6, the term of each Option granted to an Independent
Director shall be ten years from the date the Option is granted, except that any
Option granted to an Independent Director shall become immediately exercisable
in full upon the Retirement Date, Disability, or death of the Independent
Director or upon a Change in Control. No portion of an Option which is
unexercisable at Termination of Directorship shall thereafter become
exercisable.
5.5. Substitute Awards. Notwithstanding the foregoing
provisions of this Article V to the contrary, in the case of an Option that is a
Substitute Award, the price per share of the shares subject to such Option may
be less than the Fair Market Value per share on the date of grant, provided,
that the excess of:
(a) the aggregate Fair Market Value (as of the date such
Substitute Award is granted) of the shares subject to the Substitute Award; over
(b) the aggregate exercise price thereof; does not exceed the
excess of;
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(c) the aggregate fair market value (as of the time
immediately preceding the transaction giving rise to the Substitute Award, such
fair market value to be determined by the Committee) of the shares of the
predecessor entity that were subject to the grant assumed or substituted for by
the Company; over
(d) the aggregate exercise price of such shares.
ARTICLE VI.
EXERCISE OF OPTIONS
6.1. Partial Exercise. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and each partial exercise must be with respect to a minimum
number of 10 shares.
6.2. Manner of Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company (or his designee) or his office:
(a) A written notice complying with the applicable rules
established by the Administrator stating that the Option, or a portion thereof,
is exercised. The notice shall be signed by the Holder or other person then
entitled to exercise the Option or such portion of the Option;
(b) Such representations and documents as the Administrator,
in its absolute discretion, deems necessary or advisable to effect compliance
with all applicable provisions of the Securities Act and any other federal or
state securities laws or regulations. The Administrator may, in its absolute
discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant
to Section 9.1 by any person or persons other than the Holder, appropriate proof
of the right of such person or persons to exercise the Option; and
(d) Full payment to the Company for the shares with respect to
which the Option, or portion thereof, is exercised:
(i) in cash or cash equivalents;
(ii) through the delivery of shares of Common Stock
which have been owned by the Holder for at least six months, duly
endorsed for transfer to the Company with a Fair Market Value on the
date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof;
(iii) by delivering a written direction to the
Company that the Option be exercised pursuant to a "cashless"
exercise/sale procedure (pursuant to which funds to pay for
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exercise of the Option are delivered to the Company by a broker upon
receipt of stock certificates from the Company (pursuant to which the
Holder would obtain a margin loan from a broker to fund the exercise)
through a licensed broker acceptable to the Company whereby the stock
certificate or certificates for the shares for which the Option is
exercised will be delivered to such broker as the agent for the person
exercising the Option and the broker will deliver to the Company cash
(or cash equivalents acceptable to the Company) equal to the option
price for the Shares purchased pursuant to the exercise of the Option,
plus the amount (if any) of Federal and other taxes that the Company
may, in its judgment, be required to withhold with respect to the
exercise of the Option; or
(iv) by a combination of the methods described in
(i), (ii) and (iii).
6.3. Conditions to Issuance of Stock Certificates. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;
(b) The completion of any registration or other qualification
of such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Administrator shall, in its absolute discretion, deem
necessary or advisable;
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Administrator shall, in its
absolute discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may establish from time to time for
reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.
6.4. Rights as Stockholders. Holders shall not be, nor have
any of the rights or privileges of, stockholders of the Company in respect of
any shares purchasable upon the exercise of any part of an Option unless and
until certificates representing such shares have been issued by the Company to
such Holders.
6.5. Ownership and Transfer Restrictions. The Administrator,
in its absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Award Agreement and may be referred to on the certificates evidencing such
shares. The Holder shall give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(a) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of
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Section 424(h) of the Code) such Option to such Holder or (b) one year after the
transfer of such shares to such Holder.
6.6. Limitations on Exercise of Options Granted to Independent
Directors. No Option granted to an Independent Director may be exercised to any
extent by anyone after the first to occur of the following events:
(a) The expiration of twelve months from the date of the
Holder's death;
(b) The expiration of twelve months from the date of the
Holder's Termination of Directorship by reason of his permanent and total
disability (within the meaning of Section 22(e)(3) of the Code);
(c) The expiration of three months from the date of the
Holder's Termination of Directorship for any reason other than such Holder's
death or his permanent and total disability, unless the Holder dies within said
three-month period; or
(d) The expiration of ten years from the date the Option was
granted; or
(e) The effective date of a Change in Control, unless the
Board provides otherwise pursuant to Section 9.3(b).
6.7. Additional Limitations on Exercise of Options. Holders
may be required to comply with any timing or other restrictions with respect to
the settlement or exercise of an Option, including a window-period limitation,
as may be imposed in the discretion of the Administrator.
ARTICLE VII.
AWARD OF RESTRICTED STOCK
7.1. Eligibility. Subject to the Award Limit, Restricted Stock
may be awarded to any Employee who the Committee determines is a key Employee or
any Director or Consultant who the Committee determines should receive such an
Award.
7.2. Award of Restricted Stock.
(a) The Committee may from time to time, in its absolute
discretion:
(i) Determine which Employees are key Employees and
select from among the key Employees, Directors, or Consultants
(including Employees, Directors, or Consultants who have previously
received other awards under the Plan) such of them as in its opinion
should be awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and other
terms and conditions applicable to such Restricted Stock, consistent
with the Plan.
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(b) The Committee shall establish the purchase price, if any,
and form of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of the Common Stock to be purchased,
unless otherwise permitted by applicable state law. In all cases, legal
consideration shall be required for each issuance of Restricted Stock.
(c) Upon the selection of a key Employee, Director or
Consultant to be awarded Restricted Stock, the Committee shall instruct the
Secretary of the Company to issue such Restricted Stock and may impose such
conditions on the issuance of such Restricted Stock as it deems appropriate.
7.3. Rights as Stockholders. Subject to Section 7.4, upon
delivery of the shares of Restricted Stock to the escrow holder pursuant to
Section 7.6, the Holder shall have, unless otherwise provided by the Committee,
all the rights of a stockholder with respect to said shares, subject to the
restrictions in his Award Agreement, including the right to receive all
dividends and other distributions paid or made with respect to the shares;
provided, however, that in the discretion of the Committee, any extraordinary
distributions with respect to the Common Stock shall be subject to the
restrictions set forth in Section 7.4.
7.4. Restriction. All shares of Restricted Stock issued under
the Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall, in the terms of each individual Award
Agreement, be subject to such restrictions as the Committee shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
that, unless the Committee otherwise provides in the terms of the Award
Agreement or otherwise, no share of Restricted Stock granted to a person subject
to Section 16 of the Exchange Act shall be sold, assigned or otherwise
transferred until at least six months and one day have elapsed from the date on
which the Restricted Stock was issued, and provided, further, that, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants, by
action taken after the Restricted Stock is issued, the Committee may, on such
terms and conditions as it may determine to be appropriate, remove any or all of
the restrictions imposed by the terms of the Award Agreement. Restricted Stock
may not be sold or encumbered until all restrictions are terminated or expire.
If no consideration was paid by the Holder upon issuance, a Holder's rights in
unvested Restricted Stock shall lapse, and such Restricted Stock shall be
surrendered to the Company without consideration, upon Termination of Employment
or, if applicable, upon Termination of Consultancy with the Company; provided,
however, that the Committee in its sole and absolute discretion may provide that
such rights shall not lapse in the event of a Termination of Employment
following a "change of ownership or control" (within the meaning of Treasury
Regulation Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the
Company or because of the Holder's death or disability; provided, further,
except with respect to shares of Restricted Stock granted to Section 162(m)
Participants, the Committee in its sole and absolute discretion may provide that
no such lapse or surrender shall occur in the event of a Termination of
Employment, or a Termination of Consultancy, without cause or following any
Change in Control of the Company or because of the Holder's retirement, or
otherwise.
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7.5. Repurchase of Restricted Stock. The Committee shall
provide in the terms of each individual Award Agreement that the Company shall
have the right to repurchase from the Holder the Restricted Stock then subject
to restrictions under the Award Agreement immediately upon a Termination of
Employment or, if applicable, upon a Termination of Consultancy between the
Holder and the Company, at a cash price per share equal to the price paid by the
Holder for such Restricted Stock; provided, however, that the Committee in its
sole and absolute discretion may provide that no such right of repurchase shall
exist in the event of a Termination of Employment following a "change of
ownership or control" (within the meaning of Treasury Regulation Section
1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or because
of the Holder's death or disability; provided, further, that, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants,
the Committee in its sole and absolute discretion may provide that no such right
of repurchase shall exist in the event of a Termination of Employment or a
Termination of Consultancy without cause or following any Change in Control of
the Company or because of the Holder's retirement, or otherwise.
7.6. Escrow. The Secretary of the Company or such other escrow
holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock (but not any cash dividends or other
distributions paid thereon which dividends or distributions shall be paid by the
escrow holder, as soon as practicable, to the Holder of the applicable
Restricted Stock) until all of the restrictions imposed under the Award
Agreement with respect to the shares evidenced by such certificate expire or
shall have been removed.
7.7. Legend. In order to enforce the restrictions imposed upon
shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all shares of Restricted Stock
that are still subject to restrictions under Award Agreements, which legend or
legends shall make appropriate reference to the conditions imposed thereby.
7.8. Section 83(b) Election. If a Holder makes an election
under Section 83(b) of the Code, or any successor section thereto, to be taxed
with respect to the Restricted Stock as of the date of transfer of the
Restricted Stock rather than as of the date or dates upon which the Holder would
otherwise be taxable under Section 83(a) of the Code, the Holder shall deliver a
copy of such election to the Company immediately after filing such election with
the Internal Revenue Service.
ARTICLE VIII.
ADMINISTRATION
8.1. Compensation Committee. The Compensation Committee (or
another committee or a subcommittee of the Board assuming the functions of the
Committee under the Plan) shall consist solely of two or more Independent
Directors appointed by and holding office at the pleasure of the Board, each of
whom is both a "non-employee director" as defined by Rule 16b-3 and an "outside
director" for purposes of Section 162(m) of the Code. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. From time to time,
the Board
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may increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, and fill vacancies, however caused.
8.2. Duties and Powers of Committee. It shall be the duty of
the Committee to conduct the general administration of the Plan in accordance
with its provisions. The Committee shall have the power to interpret the Plan
and the Award Agreements, and to adopt such rules for the administration,
interpretation, and application of the Plan as are consistent therewith, to
interpret, amend or revoke any such rules and to amend any Award Agreement
provided that the rights or obligations of the Holder of the Award that is the
subject of any such Award Agreement are not affected adversely. Any such grant
or award under the Plan need not be the same with respect to each Holder. Any
such interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan except with respect to matters
which under Rule 16b-3 or Section 162(m) of the Code, or any regulations or
rules issued thereunder, are required to be determined in the sole discretion of
the Committee. Notwithstanding the foregoing, the full Board, acting by a
majority of its members in office, shall conduct the general administration of
the Plan with respect to Options granted to Independent Directors.
8.3. Majority Rule; Unanimous Written Consent. The Committee
shall act by a majority of its members in attendance at a meeting at which a
quorum is present or by a memorandum or other written instrument signed by all
members of the Committee.
8.4. Compensation; Professional Assistance; Good Faith
Actions. Members of the Committee shall receive such compensation, if any, for
their services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Holders, the Company and all other
interested persons. No members of the Committee or Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or Awards, and all members of the Committee and the Board
shall be fully protected by the Company in respect of any such action,
determination or interpretation. All decisions, determinations and
interpretations of the Committee shall be final and binding on all potential or
actual Holders, any other holder of an Option or other equity security of the
Company and all other persons. In any controversy regarding the administration
of the Plan, any arbitrator or court reviewing any decision, determination or
interpretation by the Committee shall not set aside or modify such decision,
determination or interpretation unless it is arbitrary, capricious or clearly
contrary to the terms of the Plan.
8.5. Delegation of Authority to Grant Awards. The Committee
may, but need not, delegate from time to time some or all of its authority to
grant Awards under the Plan to a
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committee consisting of one or more members of the Committee or of one or more
officers of the Company; provided, however, that the Committee may not delegate
its authority to grant Awards to individuals (i) who are subject on the date of
the grant to the reporting rules under Section 16(a) of the Exchange Act, (ii)
who are Section 162(m) Participants or (iii) who are officers of the Company who
are delegated authority by the Committee hereunder. Any delegation hereunder
shall be subject to the restrictions and limits that the Committee specifies at
the time of such delegation of authority and may be rescinded at any time by the
Committee. At all times, any committee appointed under this Section 8.5 shall
serve in such capacity at the pleasure of the Committee.
ARTICLE IX.
MISCELLANEOUS PROVISIONS
9.1. Not Transferable. No Award under the Plan may be sold,
pledged, assigned or transferred in any manner other than by will or the laws of
descent and distribution or, subject to the consent of the Administrator,
pursuant to a DRO, unless and until such Award has been exercised, or the shares
underlying such Award have been issued, and all restrictions applicable to such
shares have lapsed. No Award or interest or right therein shall be liable for
the debts, contracts or engagements of the Holder or his successors in interest
or shall be subject to disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect,
except to the extent that such disposition is permitted by the preceding
sentence.
During the lifetime of the Holder, only he may exercise an
Option or other Award (or any portion thereof) granted to him under the Plan,
unless it has been disposed of with the consent of the Administrator pursuant to
a DRO. After the death of the Holder, any exercisable portion of an Option or
other Award may, prior to the time when such portion becomes unexercisable under
the Plan or the applicable Award Agreement, be exercised by his personal
representative or by any person empowered to do so under the deceased Holder's
will or under the then applicable laws of descent and distribution.
9.2. Amendment, Suspension or Termination of the Plan. Except
as otherwise provided in this Section 9.2, the Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Administrator. However, without approval of the Company's
stockholders given within twelve months before or after the action by the
Administrator, no action of the Administrator may, except as provided in Section
9.3, increase the limits imposed in Section 2.1 on the maximum number of shares
which may be issued under the Plan. No amendment, suspension or termination of
the Plan shall, without the consent of the Holder, alter or impair any rights or
obligations under any Award theretofore granted or awarded, unless the Award
itself otherwise expressly so provides. No Awards may be granted or awarded
during any period of suspension or after termination of the Plan, and in no
event may any Incentive Stock Option be granted under the Plan after the first
to occur of the following events:
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(a) The expiration of ten years from the date the Plan is
adopted by the Board; or
(b) The expiration of ten years from the date the Plan is
approved by the Company's stockholders under Section 9.4.
9.3. Changes in Common Stock or Assets of the Company,
Acquisition or Liquidation of the Company and Other Corporate Events.
(a) Subject to Section 9.3(d), in the event that the
Administrator determines that any dividend or other distribution (whether in the
form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Administrator's
sole discretion, affects the Common Stock such that an adjustment is determined
by the Administrator to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to an Award, then the Administrator shall, in
such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Common Stock (or
other securities or property) with respect to which Awards may be
granted or awarded (including, but not limited to, adjustments of the
limitations in Section 2.1 on the maximum number and kind of shares
which may be issued and adjustments of the Award Limit),
(ii) the number and kind of shares of Common Stock
(or other securities or property) subject to outstanding Awards, and
(iii) the grant or exercise price with respect to any
Award.
(b) Subject to Sections 9.3(b)(vii) and 9.3(d), in the event
of any transaction or event described in Section 9.3(a) or any unusual or
nonrecurring transactions or events affecting the Company, any Affiliate of the
Company, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, the
Administrator, in its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, either by the terms of the Award or by
action taken prior to the occurrence of such transaction or event and either
automatically or upon the Holder's request, is hereby authorized to take any one
or more of the following actions whenever the Administrator determines that such
action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to any Award under the Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or principles:
19
<PAGE> 20
(i) To provide for either the purchase of any such
Award for an amount of cash equal to the amount that could have been
attained upon the exercise of such Award or realization of the Holder's
rights had such Award been currently exercisable or payable or fully
vested or the replacement of such Award with other rights or property
selected by the Administrator in its sole discretion;
(ii) To provide that the Award cannot vest, be
exercised or become payable after such event;
(iii) To provide that such Award shall be exercisable
as to all shares covered thereby, notwithstanding anything to the
contrary in Section 5.3 or 5.4 or the provisions of such Award;
(iv) To provide that such Award be assumed by the
successor or survivor corporation, or a parent or subsidiary thereof,
or shall be substituted for by similar options, rights or awards
covering the stock of the successor or survivor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices; and
(v) To make adjustments in the number and type of
shares of Common Stock (or other securities or property) subject to
outstanding Awards, and in the number and kind of outstanding
Restricted Stock or Deferred Stock and/or in the terms and conditions
of (including the grant or exercise price), and the criteria included
in, outstanding options, rights and awards and options, rights and
awards which may be granted in the future.
(vi) To provide that, for a specified period of time
prior to such event, the restrictions imposed under an Award Agreement
upon some or all shares of Restricted Stock or Deferred Stock may be
terminated, and, in the case of Restricted Stock, some or all shares of
such Restricted Stock may cease to be subject to repurchase under
Section 7.5 or forfeiture under Section 7.4 after such event.
(vii) Notwithstanding any other provision of the
Plan, in the event of a Change in Control, the Administrator will
provide that the Plan and all Options outstanding hereunder shall
terminate, except to the extent provision is made in writing in
connection with such transaction or in an Award Agreement for the
Administrator to take one or more of the optional actions described in
this Section 9.3(b), and, provided that, in the event of a Change in
Control, Section 5.4 of this Plan will govern with respect to Options
granted to Independent Directors.
(c) Subject to Sections 9.3(d), 3.2 and 3.3, the Administrator
may, in its discretion, include such further provisions and limitations in any
Award, agreement or certificate, as it may deem equitable and in the best
interests of the Company.
(d) With respect to Awards which are granted to Section 162(m)
Participants and are intended to qualify as performance-based compensation under
Section 162(m)(4)(C), no adjustment or action described in this Section 9.3 or
in any other provision of the Plan shall be
20
<PAGE> 21
authorized to the extent that such adjustment or action would cause such Award
to fail to so qualify under Section 162(m)(4)(C), or any successor provisions
thereto. No adjustment or action described in this Section 9.3 or in any other
provision of the Plan shall be authorized to the extent that such adjustment or
action would cause the Plan to violate Section 422(b)(1) of the Code.
Furthermore, no such adjustment or action shall be authorized to the extent such
adjustment or action would result in short-swing profits liability under Section
16 or violate the exemptive conditions of Rule 16b-3 unless the Administrator
determines that the Award is not to comply with such exemptive conditions. The
number of shares of Common Stock subject to any Award shall always be rounded to
the next whole number.
(e) Notwithstanding the foregoing, in the event that the
Company becomes a party to a transaction that is intended to qualify for
"pooling of interests" accounting treatment and, but for one or more of the
provisions of this Plan or any Award Agreement would so qualify, then this Plan
and any Award Agreement shall be interpreted so as to preserve such accounting
treatment, and to the extent that any provision of the Plan or any Award
Agreement would disqualify the transaction from pooling of interests accounting
treatment (including, if applicable, an entire Award Agreement), then such
provision shall be null and void. All determinations to be made in connection
with the preceding sentence shall be made by the independent accounting firm
whose opinion with respect to "pooling of interests" treatment is required as a
condition to the Company's consummation of such transaction.
(f) The existence of the Plan, the Award Agreement and the
Awards granted hereunder shall not affect or restrict in any way the right or
power of the Company or the shareholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the Company,
any issue of stock or of options, warrants or rights to purchase stock or of
bonds, debentures, preferred or prior preference stocks whose rights are
superior to or affect the Common Stock or the rights thereof or which are
convertible into or exchangeable for Common Stock, or the dissolution or
liquidation of the company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
9.4. Approval of Plan by Stockholders. The Plan will be
submitted for the approval of the Company's stockholders within twelve months
after the date of the Board's initial adoption of the Plan. Awards may be
granted or awarded prior to such stockholder approval, provided that such Awards
shall not be exercisable nor shall such Awards vest prior to the time when the
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Awards
previously granted or awarded under the Plan shall thereupon be canceled and
become null and void. In addition, if the Board determines that Awards other
than Options which may be granted to Section 162(m) Participants should continue
to be eligible to qualify as performance-based compensation under Section
162(m)(4)(C) of the Code, the Performance Criteria must be disclosed to and
approved by the Company's stockholders no later than the first stockholder
meeting that occurs in the fifth year following the year in which the Company's
stockholders previously approved the Performance Criteria.
21
<PAGE> 22
9.5. Tax Withholding. No later than the date as of which an
amount first becomes includable in the gross income of the Holder for applicable
income tax purposes with respect to any Award under the Plan, the Participant
shall pay to the Company or make arrangements satisfactory to the Committee
regarding the payment of any federal, state or local (or applicable foreign)
taxes of any kind required by law to be withheld with respect to such amount.
Unless otherwise determined by the Committee, the minimum required withholding
obligations may be settled with Common Stock (held with no restrictions),
including Common Stock that is part of the Award that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall be
conditional upon such payment or arrangements and the Company shall to the
extent permitted by law have the right to deduct any such taxes from any payment
of any kind otherwise due to the Participant.
9.6. Forfeiture Provisions. Pursuant to its general authority
to determine the terms and conditions applicable to Awards under the Plan, the
Administrator shall have the right to provide, in the terms of Awards made under
the Plan, or to require a Holder to agree by separate written instrument, that
(a) (i) any proceeds, gains or other economic benefit actually or constructively
received by the Holder upon any receipt or exercise of the Award, or upon the
receipt or resale of any Common Stock underlying the Award, must be paid to the
Company, and (ii) the Award shall terminate and any unexercised portion of the
Award (whether or not vested) shall be forfeited, if (b) (i) a Termination of
Employment, Termination of Consultancy or Termination of Directorship occurs
prior to a specified date, or within a specified time period following receipt
or exercise of the Award, or (ii) the Holder at any time, or during a specified
time period, engages in any activity in competition with the Company, or which
is inimical, contrary or harmful to the interests of the Company, as further
defined by the Administrator or (iii) the Holder incurs a Termination of
Employment, Termination of Consultancy or Termination of Directorship for cause.
9.7. Effect of Plan Upon Options and Compensation Plans. The
adoption of the Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Subsidiary. Nothing in the Plan shall be
construed to limit the right of the Company (a) to establish any other forms of
incentives or compensation for Employees, Directors or Consultants of the
Company or any Subsidiary or (b) to grant or assume options or other rights or
awards otherwise than under the Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any corporation,
partnership, limited liability company, firm or association.
9.8. Compliance with Laws. The Plan, the granting and vesting
of Awards under the Plan and the issuance and delivery of shares of Common Stock
and the payment of money under the Plan or under Awards granted or awarded
hereunder are subject to compliance with all applicable federal, state, and
applicable foreign laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under the Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
22
<PAGE> 23
Company may deem necessary or desirable to assure compliance with all applicable
legal requirements. To the extent permitted by applicable law, the Plan and
Awards granted or awarded hereunder shall be deemed amended to the extent
necessary to conform to such laws, rules and regulations.
9.9. Parachute Payments. If the gross amount of any payment or
benefit under the Plan, either separately or in combination with any other
payment or benefit payable by the Company or pursuant to a plan of the Company
would constitute a parachute payment within the meaning of Code Section 280G,
then the total payments and benefits accrued and payable under this Plan shall
not exceed the amount necessary to maximize the amount received by the Holder
after payment of all employment, income and excise taxes imposed on the Holder
with respect to such payments and benefits. The Holder may elect, by written
notice to the Committee, which items of compensation, if any, shall be reduced
so as to meet the requirements of the preceding sentence. If there is a dispute
between the Company and the Holder regarding (i) the extent, if any, to which
any payments or benefits to the Holder are parachute payments or excess
parachute payments, under Code Section 280G, (ii) the base amount of such
Holder's compensation, under Code Section 280G, or (iii) the status of such
Holder as a disqualified individual, under Code Section 280G, such dispute shall
be resolved as provided in Section 9.13 below. Within 30 days of the Holder's
receiving notice of (a) a change in control of the Company within the meaning of
Section 280G or (b) the Holder's termination of service following a Change in
Control with the Company or the Company's receiving notice of such termination,
either the Holder or the Company may request, in accordance with Section 9.13
below, (a) a determination of the amount of any parachute payment, excess
parachute payment, or base amount of compensation, or (b) a determination of the
reduction necessary to maximize the amount receivable by the Holder as described
above. Any fees, costs or expenses incurred by the Holder in connection with
such determinations shall be paid by the Holder.
9.10. Time of Granting Options. Unless otherwise specified by
the Committee or as may be required by applicable law, regulation or rule
(including rules of stock exchanges or other self-regulatory organizations), the
date of grant of an Option under the Plan shall be the date on which the
Committee makes the determination to grant such Option or, if later, the date on
which are satisfied any conditions precedent to such grant. As soon as feasible
after the Committee makes its determination regarding the grant of an Option,
the Committee shall notify the person or class of persons who are the recipients
of the grant.
9.11. Reservation of Shares. During the term of this Plan, the
Company will at all times reserve and keep available the number of shares as
shall be sufficient to satisfy the requirements of the Plan. Inability of the
Company to obtain from any regulatory body having jurisdiction and authority
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any shares hereunder shall relieve the Company of any liability in respect to
the nonissuance or sale of such shares as to which such requisite authority
shall not have been obtained.
9.12. Information to Holder. During the term of any Option
granted under the Plan, the Company shall provide or otherwise make available to
each Holder a copy of its annual
23
<PAGE> 24
report to shareholders and financial information which is provided to its
shareholders in accordance with the provisions of the Company's bylaws and
applicable law.
9.13. Mandatory Arbitration. Any dispute arising out of or
relating to this Plan or any Option Agreement shall be resolved solely by
arbitration before one arbitrator in accordance with the Employee Benefit Plan
Claim Rules of the American Arbitration Association. The location of the
arbitration proceeding shall be in McLean, Virginia. Judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction. Each
party to any dispute regarding the Plan or an Option Agreement shall pay the
costs and fees (including attorneys' fees) of presenting his, her or its case in
arbitration. All other costs of arbitration, including the costs of any
transcript of the proceedings, administrative fees and the arbitrator's fees,
shall be borne equally by the parties. All statutes of limitation which would
otherwise be applicable shall apply to any arbitration proceeding. The
provisions of this Section 9.13 are exclusive for all purposes and applicable to
any and all disputes arising out of or relating to the Plan or any Option
Agreement. The arbitrator who hears and decides any dispute shall have
jurisdiction and authority to award only compensatory damages to make whole a
person or entity sustaining foreseeable economic loss, and shall not have
jurisdiction or authority to make any other award of any type, including,
without limitation, punitive damages, unforeseeable economic damages, adverse
tax consequences, damages for pain, suffering or emotional distress, or any
other kind or form of damages. The remedy, if any, awarded by the arbitrator
shall be the sole and exclusive remedy for any dispute which is subject to
arbitration under this Plan.
9.14. Titles. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of the Plan.
9.15. Governing Law. The Plan and any agreements hereunder
shall be administered, interpreted and enforced under the internal laws of the
State of Delaware without regard to conflicts of laws thereof.
24
<PAGE> 25
* * *
I hereby certify that the foregoing Plan was duly adopted by
the Board of Directors of Golden Telecom, Inc. on ____________, 1999.
Executed on this ____ day of _______________, 1999.
---------------------------------------
Secretary
25
<PAGE> 1
EXHIBIT 10.8
AGREEMENT NO. 26-12/97
This Agreement ("the Agreement") is made and entered into this 26th day of
December, 1997 in Moscow
between
Telecommunications of Moscow, a closed joint-stock company duly organized under
the laws of the Russian Federation, with its legal address being 27/29 str. 2
Smolenskaya-Sennaya Square, Moscow, 119121, Russian Federation ("TCM") and
Company MTU-Inform, a limited partnership duly organized under the laws of the
Russian Federation, with its legal address being 27/29 str. 2
Smolenskaya-Sennaya Square, Moscow, 119121, Russian Federation ("MTU-Inform"),
collectively referred to as "the Seller," on the one part,
and
Vympel-Communications, an open joint-stock company duly organized under the laws
of the Russian Federation, with its legal address being 10-12 8-go Marta St.,
Moscow, 125083, Russian Federation ("VympelCom"), referred to as "the Buyer," on
the other part,
collectively referred to as "the Parties" and individually as "the Party."
WHEREAS VympelCom acting on the basis of License No. 1600 of the Ministry of
Telecommunications of the Russian Federation for the provision of mobile
telephone communication services desires to receive for use the
telecommunications products and services of the modern digital network
("Products and Services") to provide them to its clients;
WHEREAS TCM and MTU-Inform acting on the basis of respective Licenses No. 5846
and 5840 of the Ministry of Telecommunications of the Russian Federation for the
provision of local telephone communication services offer the said
telecommunications products and services of the modern digital network and
desire to provide them to the Buyer;
WHEREAS on December 4, 1995 the Parties signed General Agreement No. S/41295 on
the terms and conditions for the provision of the Products and Services and the
corresponding agreements for the provision of services in 1996 and 1997;
NOW, THEREFORE, in consideration of the mutual covenants and premises contained
herein the Parties hereto agree as follows:
ARTICLE 1. SUBJECT OF THE AGREEMENT AND OBLIGATIONS OF THE PARTIES
SUBJECT:
1.1. Provision of local, long-distance and international communication services
to the Buyer's clients through operation of a system which includes the access
means for the Buyer's subscribers and the means for the provision of the
Products and Services as set forth herein, including Annex 1 hereto.
OBLIGATIONS OF THE PARTIES:
1.2. The Seller shall:
<PAGE> 2
2
1.2.1. Provide seventy thousand (70,000) numbers of the Moscow telephone network
to the Buyer in 1998. At the Buyer's request the Seller shall provide to the
Buyer an additional ten thousand (10,000) numbers of the Moscow telephone
network. Upon receipt of the request the Seller shall in advance inform the
Buyer in writing about concrete numbers and the date when the corresponding
groups of the number capacity are to be connected to the Moscow telephone
network.
1.2.2. Ensure for the telephone numbers allocated to the Buyer the possibility
of outgoing and incoming long-distance and international communication through
the network of Sovintel (code 501) and Rostelecom (code 095).
1.2.3. Provide the Products and Services indicated in Annex 1 to the subscribers
of the Buyer's network.
1.3. The Buyer shall:
1.3.1. Provide to its clients the entire range of the Products and Services
envisaged hereunder and make these services accessible through its switch.
1.3.2. Make full and prompt payments in respect of the Products and Services
provided for the telephone numbers received by the Buyer hereunder.
1.4. On a mutual basis the Parties shall:
1.4.1. Carry on their activity in accordance with the Federal Law on the
Telecommunications, "Rules for Connection of Departmental and Dedicated
Telecommunications Networks to the Public Telecommunications Network" approved
by Resolution of the Russian Federation Government No. 1254 of October 19, 1996,
other applicable regulatory documents in the field of telecommunications.
1.4.2. Bear individual responsibility to the State Committee for
Telecommunications and Informatization of the Russian Federation, Gossvyaznadzor
of the Russian Federation and other government agencies for the operation of
their own communication facilities within the framework of their licenses,
including responsibility for prompt execution of operational documents.
1.4.3. Comply with all statutory acts relating hereto.
1.4.4. Notify each other about the performance of all kinds of maintenance or
repair operations and about emergencies that may affect the communications
Services provided to the subscribers hereunder.
ARTICLE 2. TERM OF THE AGREEMENT AND PROVISION OF PRODUCTS AND SERVICES
The Agreement shall come into force from the date on which it is signed. The
term of the Agreement is indicated in Annex 1 hereto.
ARTICLE 3. ORDER FOR THE PRODUCTS AND SERVICES
The Seller shall provide to the Buyer the Products and Services listed in Annex
1 and additional Products and Services on the Buyer's requests in accordance
with the Addenda hereto.
<PAGE> 3
3
ARTICLE 4. TERMS AND CONDITIONS FOR PROVISION OF THE PRODUCTS AND SERVICES
4.1. The Seller hereby appoints the Buyer and the Buyer accepts the appointment,
in accordance with the provisions hereof, to act as the Seller's agent for
further provision of the Products and Services.
On the basis on an agreement with the Seller the Buyer shall have the right to
transfer the Products and Services to its subsidiaries in an established
procedure.
4.2. The Seller shall be an exclusive operator in the provision of long-distance
and international communication services for the numbers provided by the Seller
hereunder. The Buyer shall make arrangements to allow its clients access to the
services of the long-distance and international network provided by the Seller.
In any case, the Buyer shall not offer its clients the terms and prices for the
Buyer's services more advantageous for the client than the terms and prices for
the Buyer's services using the Seller's numbers in respect of the outgoing
long-distance and international communication services, and the breach of this
provision shall be regarded as a material breach in the meaning of Article 11
hereof.
4.3. Throughout the term of this Agreement the Buyer shall buy Moscow telephone
numbers only from the Seller and hereby undertakes to transfer numbers to the
Buyer in a quantity sufficiently large for sale to all Buyer's clients who
desire to purchase cellular communication services from the Buyer in accordance
with Clause 1.2.1 hereof. This provision may be changed only on the basis of a
written agreement between the Parties. The breach of the Buyer's obligation set
forth in this Clause 4.3 hereof shall constitute a material breach in the
meaning of Article 11 hereof.
On the basis of an agreement between the Parties a part of the number capacity
indicated in Clause 1.2.1 hereof may be allocated to another subsidiary of
MTU-Inform under a separate agreement with VympelCom, which shall be signed on
the same terms and conditions as this Agreement.
ARTICLE 5. PRICES, TARIFFS, TERMS OF SETTLEMENTS
The current prices and tariffs for the provided Products and Services and the
terms of settlements between the Parties are set forth in Annex 1 hereto.
ARTICLE 6. CONFIDENTIALITY
6.1. Throughout the term of this Agreement and for a period of five (5) years
after its expiry, unless the disclosing Party agrees otherwise in writing, the
release of, access to or use of the proprietary information disclosed by the
disclosing Party to the receiving Party shall be restricted to those employees
and officials of the receiving Party's organization who must know the
proprietary information in order to allow the receiving Party property to
perform its obligations hereunder. The receiving Party shall keep the received
proprietary information confidential using the same degree of care as it uses to
protect its own proprietary information but in no case any less degree than
reasonable care. Without a prior written consent of the disclosing Party the
receiving Party shall not disclose any proprietary information to any third
party and shall not use such proprietary information for its own benefit or for
the benefit of any third party.
6.2. The obligations imposed by Clause 6.1 hereof shall not apply to the
proprietary information:
(1) which has become public knowledge through no fault of the receiving Party;
<PAGE> 4
4
(2) which has already been lawfully received by the receiving Party and to which
Confidentiality Clause 6.1 is not applied;
(3) which is released pursuant to the binding order of a government agency or a
court, provided that prior to such release the receiving party shall inform the
disclosing Party to this effect in the maximum degree possible under these
circumstances.
6.3. All proprietary information disclosed hereunder shall be provided
temporarily, exclusively for use by the Parties in the performance of their
obligations.
6.4. The Party which has received proprietary information from the other Party
in writing shall, upon a written request of the other Party, promptly return the
original and all copies of the received information to its proprietor.
6.5. All public reports, including press releases relating to the Agreement or
its performance shall be agreed upon by the Parties before they are submitted
for publication.
ARTICLE 7. LIABILITY OF THE PARTIES
The Parties shall be held liable for the breach of the provisions of this
Agreement and Annexes thereto subject to the provisions of applicable laws of
the Russian Federation and this Agreement.
ARTICLE 8. WARRANTIES, CROSS INDEMNIFICATION, LIMITATION OF LIABILITY
8.1. Neither the Seller nor any third party providing the Products and Services
make any warranty, explicit or implicit, including but not limited to the
warranties for suitability or fitness for a particular application or purpose,
other than the warranties clearly set forth herein. The Parties understand that
this section concerns the Buyer and its buyers of the Products and Services.
8.2. The Seller shall not be held liable for any damages, losses, claims and
other expenses which the Buyer or any third party may suffer because of the acts
or omissions for which the Buyer, its employees, agents, other representatives
or guests are responsible and the Buyer agrees to indemnify and hold the Seller
harmless from and against any and all such damages, losses, claims and other
expenses. Likewise, the Buyer shall not be held liable for any damages, losses,
claims and other expenses which the Seller or any third party may suffer because
of the acts or omissions for which the Seller, its employees, agents, other
representatives or guests are responsible and the Seller agrees to indemnify and
hold the Buyer harmless from and against any such damages, losses, claims and
other expenses. These cross indemnifications shall survive the expiration or
earlier termination of the Agreement.
8.3. Neither Party shall be held liable to the other Party for any lost profit
and other indirect losses claimed or suffered by the other Party hereto or any
third party, which are due to or result from the first Party's performance or
failure to perform hereunder.
8.4. The Buyer shall be fully responsible for the use of the Products and
Services provided by the Seller and shall indemnify the Seller from and against
any claims arising from the improper use of the Products and Services by the
Buyer.
ARTICLE 9. FORCE MAJEURE
9.1. The Parties shall not be held liable for any delays in the performance of
or for any failure to perform their obligations hereunder if the delays or
failures were caused by circumstances or
<PAGE> 5
5
factors beyond the control of the Parties, such as a war (including civil war);
riots; sabotage; embargoes; fires; floods or other acts of God; explosions; acts
or omissions of the government of Russia or other governments; strikes. All such
circumstances shall be regarded as Force Majeure. Immediately upon receipt of
information about occurrence of a Force Majeure event which delays or affects
otherwise the performance of this Agreement the Parties shall inform each other
to this effect in writing.
9.2. The Parties shall not be held liable for any damages, losses, claims or
other expenses which they may suffer as a result of any of such Force Majeure
events.
9.3. If a material breaches of or default under this Agreement due to Force
Majeure lasts longer than one hundred and eighty (180) days, either Party may
terminate this Agreement by serving a thirty days' written notice of termination
on the other Party.
ARTICLE 10. ARBITRATION
10.1. If any differences arise between the Seller and the Buyer out of or in
connection with this Agreement or the performance by a Party of or its failure
to perform the obligations hereunder the Parties shall use their best efforts to
settle these differences amicably by negotiation to be held by their general
directors or authorized representatives.
10.2. If the differences cannot be resolved by negotiation, the dispute shall be
submitted to the International Commercial Arbitration Court at the Chamber of
Commerce and Industry of the Russian Federation subject to applicable laws of
the Russian Federation.
ARTICLE 11. TERMINATION OF THE AGREEMENT
11.1. Should either Party commit a material breach of its obligations or other
provisions hereof, the other Party hereto shall have the right to terminate this
Agreement if this breach or non-performance is not remedied within thirty (30)
days upon receipt of a written notice of the breach or non-performance and if
all possibilities for the settlement have been exhausted.
Upon termination of this Agreement the Seller shall cease provision of the
Products and Services to the Buyer and the Buyer shall cease to use the Products
and Services.
11.2. If one of the Parties terminates this Agreement because the other Party
commits a material breach of its obligations, the Buyer shall pay the Seller the
sums due to the Seller for the use of the Products and Services up to the date
of termination of the Agreement and the Seller shall accept its property, if
any, from the Buyer.
11.3. If the Buyer intends to terminate this Agreement fully or partially on its
own initiative before expiration of the term of the Agreement indicated in Annex
1 hereto, the Buyer shall notify the Seller in writing of its intent to
partially or fully suspend or to terminate this Agreement at least twelve (12)
months prior to the planned date of suspension or termination. Upon receipt of
such notice the Parties shall agree and sign an appropriate Addendum hereto
setting forth the procedure for the return of the Seller's number capacity which
is the subject hereof from the Buyer to the Seller and for compensation of the
Seller for financial losses resulting from the partial or full termination of
the Agreement, particularly, the losses due to the non-use of such numbers
during a definite period.
ARTICLE 12. NOTICES
Except as otherwise provided herein all notices required or permitted to be
given hereunder shall be in writing addressed as follows:
<PAGE> 6
6
FOR ZAO TCM:
27-29 str. 4 Smolenskaya-Sennaya Square, Moscow, 119121
Attention: General Director
Telephone: 967-33-00
Fax: 967-33-66.
FOR COMPANY MTU-INFORM:
27-29 str. 2 Smolenskaya-Sennaya Square, Moscow, 119121
Attention: General Director
Telephone: 258-78-78
Fax: 258-78-50.
FOR VYMPELCOM:
10-12 8-go Marta St., Moscow, 125083, Russian Federation
Attention: General Director
Telephone: 212-05-12
Fax: 214-09-62
Either Party shall inform the other Party of changes in its address in the
manner set forth above.
ARTICLE 13. WAIVER. SEVERABILITY
If any provision hereof is held to be invalid or contrary to applicable laws of
the Russian Federation the remainder hereof shall remain legally valid.
ARTICLE 14. GOVERNING LAW
This Agreement shall be construed and performed by the Parties in accordance
with applicable laws of the Russian Federation.
ARTICLE 15. ASSIGNMENT OF RIGHTS AND OBLIGATIONS
Except as otherwise provided herein neither the Seller nor the Buyer shall
assign, transfer or dispose otherwise of this Agreement or any rights and
obligations thereunder without a prior written consent of the other Party
hereto.
ARTICLE 16. TRADE NAME AND TRADEMARK REQUIREMENTS
16.1. The Buyer shall recognize all trade names, trade marks and service marks
used in connection with the Products and Services. The Buyer's right to use the
Seller's trade name and/or trademark shall be subject to the Seller's consent.
16.2. In advertising, contracting or dealing with third parties the Buyer shall
not refer to the Products and Services by any trade names, trademarks or service
marks other than those approved by the Seller.
16.3. Upon termination of the Agreement the Buyer shall discontinue all such
uses or any representations in respect of the Services, which suggest that the
Buyer is still using the Services.
16.4. The obligations assumed by the Buyer under this Clause 16 shall survive
expiration or early termination of the Agreement.
<PAGE> 7
7
ARTICLE 17. ENTIRETY
17.1. This Agreement, including annexes and addenda hereto, shall constitute the
entire agreement between the Seller and the Buyer in respect of the subject
matter hereof and shall supersede and replace all prior understandings, whether
written or oral, relating to the subject matter hereof, with the exception of
General Agreement No. S/41295 of December 4, 1995 insofar as it does not
contradict the provisions hereof.
All modifications hereto shall be in writing and shall be signed by all Parties
hereto.
17.2. Simultaneously with or subsequent to the signing of this Agreement the
Parties may accept and sign Addenda hereto indicating all terms and conditions
that may supplement, amend, change or replace the terms and conditions hereof.
In such cases, the Addenda shall be regarded as an integral part hereof and the
terms and provisions of the Addenda shall prevail.
IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to execute this Agreement in the Russian language in 3 copies,
one copy for each Party.
ZAO TCM Company MTU-Inform AO VympelCom
(Signed) (Signed) (Signed)
General Director 1st Deputy General Director General Director
Round seal
Round seal Round seal
<PAGE> 1
EXHIBIT 10.9
AGREEMENT NO. 08-04/98
This Agreement ("the Agreement") is made and entered into this 8th day of April,
1998 in Moscow
between
Telecommunications of Moscow, a closed joint-stock company duly organized under
the laws of the Russian Federation, with its legal address being 27/29 str. 2
Smolenskaya-Sennaya Square, Moscow, 119121, Russian Federation ("TCM") and
Company MTU-Inform, a limited partnership duly organized under the laws of the
Russian Federation, with its legal address being 27/29 str. 2
Smolenskaya-Sennaya Square, Moscow, 119121, Russian Federation ("MTU-Inform"),
collectively referred to as "the Seller," on the one part,
and
KB Impulse, an open joint-stock company duly organized under the laws of the
Russian Federation, with its legal address being 10-12 8-go Marta St., Moscow,
125083, Russian Federation ("KB Impulse"), referred to as "the Buyer," on the
other part,
collectively referred to as "the Parties" and individually as "the Party."
WHEREAS KB Impulse acting on the basis of License No. 4000 of the Ministry of
Telecommunications of the Russian Federation for the provision of mobile
telephone communication services desires to receive for use the
telecommunications products and services of the modern digital network
("Products and Services") to provide them to its clients;
WHEREAS TCM and MTU-Inform acting on the basis of respective Licenses No. 5846
and 5840 of the Ministry of Telecommunications of the Russian Federation for the
provision of local telephone communication services offer the said
telecommunications products and services of the modern digital network and
desire to provide them to the Buyer;
NOW, THEREFORE, in consideration of the mutual covenants and premises contained
herein the Parties hereto agree as follows:
ARTICLE 1. SUBJECT OF THE AGREEMENT AND OBLIGATIONS OF THE PARTIES
SUBJECT:
1.1. Provision of local, long-distance and international communication services
to the Buyer's clients through operation of a system which includes the access
means for the Buyer's subscribers and the means for the provision of the
Products and Services as set forth herein, including Annex 1 hereto.
OBLIGATIONS OF THE PARTIES:
1.2. The Seller shall:
1.2.1. Provide ten thousand (10,000) numbers of the Moscow telephone network to
the Buyer in 1998. The Seller guarantees allocation of the number capacity to
the Buyer in the 7th million zone of the Moscow telephone network upon receipt
of a written request from the Buyer and shall in advance inform the Buyer in
writing about concrete numbers and the date when the
<PAGE> 2
2
corresponding groups of the number capacity are to be connected to the Moscow
telephone network.
1.2.2. Ensure for the telephone numbers allocated to the Buyer the possibility
of outgoing and incoming long-distance and international communication through
the network of Sovintel (code 501) and Rostelecom (code 095).
1.2.3. Provide the Products and Services indicated in Annex 1 to the subscribers
of the Buyer's network.
1.3. The Buyer shall:
1.3.1. Provide to its clients the entire range of the Products and Services
envisaged hereunder and make these services accessible through its switch.
1.3.2. Make full and prompt payments in respect of the Products and Services
provided for the telephone numbers received by the Buyer hereunder.
1.4. On a mutual basis the Parties shall:
1.4.1. Carry on their activity in accordance with the Federal Law on the
Telecommunications, "Rules for Connection of Departmental and Dedicated
Telecommunications Networks to the Public Telecommunications Network" approved
by Resolution of the Russian Federation Government No. 1254 of October 19, 1996,
other applicable regulatory documents in the field of telecommunications.
1.4.2. Bear individual responsibility to the State Committee for
Telecommunications and Informatization of the Russian Federation, Gossvyaznadzor
of the Russian Federation and other government agencies for the operation of
their own communication facilities within the framework of their licenses,
including responsibility for prompt execution of operational documents.
1.4.3. Comply with all statutory acts relating hereto.
1.4.4. Notify each other about the performance of all kinds of maintenance or
repair operations and about emergencies that may affect the communications
Services provided to the subscribers hereunder.
ARTICLE 2. TERM OF THE AGREEMENT AND PROVISION OF PRODUCTS AND SERVICES
The Agreement shall come into force from the date on which it is signed. The
term of the Agreement is indicated in Annex 1 hereto.
ARTICLE 3. ORDER FOR THE PRODUCTS AND SERVICES
The Seller shall provide to the Buyer the Products and Services listed in Annex
1 and additional Products and Services on the Buyer's requests in accordance
with the Addenda hereto.
<PAGE> 3
3
ARTICLE 4. TERMS AND CONDITIONS FOR PROVISION OF THE PRODUCTS AND SERVICES
4.1. The Seller hereby appoints the Buyer and the Buyer accepts the appointment,
in accordance with the provisions hereof, to act as the Seller's agent for
further provision of the Products and Services.
4.2. The Seller shall be an exclusive operator in the provision of long-distance
and international communication services for the numbers provided by the Seller
hereunder. The Buyer shall make arrangements to allow its clients access to the
services of the long-distance and international network provided by the Seller.
In any case, the Buyer shall not offer its clients the terms and prices for the
Buyer's services more advantageous for the client than the terms and prices for
the Buyer's services using the Seller's numbers in respect of the outgoing
long-distance and international communication services, and the breach of this
provision shall be regarded as a material breach in the meaning of Article 11
hereof.
4.3. Throughout the term of this Agreement the Buyer shall buy Moscow telephone
numbers only from the Seller and hereby undertakes to transfer numbers to the
Buyer in a quantity sufficiently large for sale to all Buyer's clients who
desire to purchase cellular communication services from the Buyer in accordance
with Clause 1.2.1 hereof. This provision may be changed only on the basis of a
written agreement between the Parties. The breach of the Buyer's obligation set
forth in this Clause 4.3 hereof shall constitute a material breach in the
meaning of Article 11 hereof.
ARTICLE 5. PRICES, TARIFFS, TERMS OF SETTLEMENTS
The current prices and tariffs for the provided Products and Services and the
terms of settlements between the Parties are set forth in Annex 1 hereto.
ARTICLE 6. CONFIDENTIALITY
6.1. Throughout the term of this Agreement and for a period of five (5) years
after its expiry, unless the disclosing Party agrees otherwise in writing, the
release of, access to or use of the proprietary information disclosed by the
disclosing Party to the receiving Party shall be restricted to those employees
and officials of the receiving Party's organization who must know the
proprietary information in order to allow the receiving Party property to
perform its obligations hereunder. The receiving Party shall keep the received
proprietary information confidential using the same degree of care as it uses to
protect its own proprietary information but in no case any less degree than
reasonable care. Without a prior written consent of the disclosing Party the
receiving Party shall not disclose any proprietary information to any third
party and shall not use such proprietary information for its own benefit or for
the benefit of any third party.
6.2. The obligations imposed by Clause 6.1 hereof shall not apply to the
proprietary information: (1) which has become public knowledge through no fault
of the receiving Party; (2) which has already been lawfully received by the
receiving Party and to which Confidentiality Clause 6.1 is not applied; (3)
which is released pursuant to the binding order of a government agency or a
court, provided that prior to such release the receiving party shall inform the
disclosing Party to this effect in the maximum degree possible under these
circumstances.
6.3. All proprietary information disclosed hereunder shall be provided
temporarily, exclusively for use by the Parties in the performance of their
obligations.
<PAGE> 4
4
6.4. The Party which has received proprietary information from the other Party
in writing shall, upon a written request of the other Party, promptly return the
original and all copies of the received information to its proprietor.
6.5. All public reports, including press releases relating to the Agreement or
its performance shall be agreed upon by the Parties before they are submitted
for publication.
ARTICLE 7. LIABILITY OF THE PARTIES
The Parties shall be held liable for the breach of the provisions of this
Agreement and Annexes thereto subject to the provisions of applicable laws of
the Russian Federation and this Agreement.
ARTICLE 8. WARRANTIES, CROSS INDEMNIFICATION, LIMITATION OF LIABILITY
8.1. Neither the Seller nor any third party providing the Products and Services
make any warranty, explicit or implicit, including but not limited to the
warranties for suitability or fitness for a particular application or purpose,
other than the warranties clearly set forth herein. The Parties understand that
this section concerns the Buyer and its buyers of the Products and Services.
8.2. The Seller shall not be held liable for any damages, losses, claims and
other expenses which the Buyer or any third party may suffer because of the acts
or omissions for which the Buyer, its employees, agents, other representatives
or guests are responsible and the Buyer agrees to indemnify and hold the Seller
harmless from and against any and all such damages, losses, claims and other
expenses. Likewise, the Buyer shall not be held liable for any damages, losses,
claims and other expenses which the Seller or any third party may suffer because
of the acts or omissions for which the Seller, its employees, agents, other
representatives or guests are responsible and the Seller agrees to indemnify and
hold the Buyer harmless from and against any such damages, losses, claims and
other expenses. These cross indemnifications shall survive the expiration or
earlier termination of the Agreement.
8.3. Neither Party shall be held liable to the other Party for any lost profit
and other indirect losses claimed or suffered by the other Party hereto or any
third party, which are due to or result from the first Party's performance or
failure to perform hereunder.
8.4. The Buyer shall be fully responsible for the use of the Products and
Services provided by the Seller and shall indemnify the Seller from and against
any claims arising from the improper use of the Products and Services by the
Buyer.
ARTICLE 9. FORCE MAJEURE
9.1. The Parties shall not be held liable for any delays in the performance of
or for any failure to perform their obligations hereunder if the delays or
failures were caused by circumstances or factors beyond the control of the
Parties, such as a war (including civil war); riots; sabotage; embargoes; fires;
floods or other acts of God; explosions; acts or omissions of the government of
Russia or other governments; strikes. All such circumstances shall be regarded
as Force Majeure. Immediately upon receipt of information about occurrence of a
Force Majeure event which delays or affects otherwise the performance of this
Agreement the Parties shall inform each other to this effect in writing.
9.2. The Parties shall not be held liable for any damages, losses, claims or
other expenses which they may suffer as a result of any of such Force Majeure
events.
<PAGE> 5
5
9.3. If a material breaches of or default under this Agreement due to Force
Majeure lasts longer than one hundred and eighty (180) days, either Party may
terminate this Agreement by serving a thirty days' written notice of termination
on the other Party.
ARTICLE 10. ARBITRATION
10.1. If any differences arise between the Seller and the Buyer out of or in
connection with this Agreement or the performance by a Party of or its failure
to perform the obligations hereunder the Parties shall use their best efforts to
settle these differences amicably by negotiation to be held by their general
directors or authorized representatives.
10.2. If the differences cannot be resolved by negotiation, the dispute shall be
submitted to the International Commercial Arbitration Court at the Chamber of
Commerce and Industry of the Russian Federation subject to applicable laws of
the Russian Federation.
ARTICLE 11. TERMINATION OF THE AGREEMENT
11.1. Should either Party commit a material breach of its obligations or other
provisions hereof, the other Party hereto shall have the right to terminate this
Agreement if this breach or non-performance is not remedied within thirty (30)
days upon receipt of a written notice of the breach or non-performance and if
all possibilities for the settlement have been exhausted.
Upon termination of this Agreement the Seller shall cease provision of the
Products and Services to the Buyer and the Buyer shall cease to use the Products
and Services.
11.2. If one of the Parties terminates this Agreement because the other Party
commits a material breach of its obligations, the Buyer shall pay the Seller the
sums due to the Seller for the use of the Products and Services up to the date
of termination of the Agreement and the Seller shall accept its property, if
any, from the Buyer.
11.3. If the Buyer intends to terminate this Agreement fully or partially on its
own initiative before expiration of the term of the Agreement indicated in Annex
1 hereto, the Buyer shall notify the Seller in writing of its intent to
partially or fully suspend or to terminate this Agreement at least twelve (12)
months prior to the planned date of suspension or termination. Upon receipt of
such notice the Parties shall agree and sign an appropriate Addendum hereto
setting forth the procedure for the return of the Seller's number capacity which
is the subject hereof from the Buyer to the Seller and for compensation of the
Seller for financial losses resulting from the partial or full termination of
the Agreement, particularly, the losses due to the non-use of such numbers
during a definite period.
ARTICLE 12. NOTICES
Except as otherwise provided herein all notices required or permitted to be
given hereunder shall be in writing addressed as follows:
FOR ZAO TCM:
27-29 str. 4 Smolenskaya-Sennaya Square, Moscow, 119121
Attention: General Director
Telephone: (095) 967-33-00
Fax: (095) 967-33-66.
FOR COMPANY MTU-INFORM:
27-29 str. 2 Smolenskaya-Sennaya Square, Moscow, 119121
<PAGE> 6
6
Attention: General Director
Telephone: (095) 258-78-78
Fax: (095) 258-78-50.
FOR OAO KB IMPULSE:
18 Lesnoryadsky per., Moscow,107140
Attention: Managing Director
Telephone: (095) 743-00-08
Fax: (095) 747-99-97
Either Party shall inform the other Party of changes in its address in the
manner set forth above.
ARTICLE 13. WAIVER. SEVERABILITY
If any provision hereof is held to be invalid or contrary to applicable laws of
the Russian Federation the remainder hereof shall remain legally valid.
ARTICLE 14. GOVERNING LAW
This Agreement shall be construed and performed by the Parties in accordance
with applicable laws of the Russian Federation.
ARTICLE 15. ASSIGNMENT OF RIGHTS AND OBLIGATIONS
Except as otherwise provided herein neither the Seller nor the Buyer shall
assign, transfer or dispose otherwise of this Agreement or any rights and
obligations thereunder without a prior written consent of the other Party
hereto.
ARTICLE 16. TRADE NAME AND TRADEMARK REQUIREMENTS
16.1. The Buyer shall recognize all trade names, trade marks and service marks
used in connection with the Products and Services. The Buyer's right to use the
Seller's trade name and/or trademark shall be subject to the Seller's consent.
16.2. In advertising, contracting or dealing with third parties the Buyer shall
not refer to the Products and Services by any trade names, trademarks or service
marks other than those approved by the Seller.
16.3. Upon termination of the Agreement the Buyer shall discontinue all such
uses or any representations in respect of the Services, which suggest that the
Buyer is still using the Services.
16.4. The obligations assumed by the Buyer under this Clause 16 shall survive
expiration or early termination of the Agreement.
ARTICLE 17. ENTIRETY
17.1. This Agreement, including annexes and addenda hereto, shall constitute the
entire agreement between the Seller and the Buyer in respect of the subject
matter hereof and shall supersede and replace all prior understandings, whether
written or oral, relating to the subject matter hereof, with the exception of
General Agreement No. S/41295 of December 4, 1995 insofar as it does not
contradict the provisions hereof.
All modifications hereto shall be in writing and shall be signed by all Parties
hereto.
<PAGE> 7
7
17.2. Simultaneously with or subsequent to the signing of this Agreement the
Parties may accept and sign Addenda hereto indicating all terms and conditions
that may supplement, amend, change or replace the terms and conditions hereof.
In such cases, the Addenda shall be regarded as an integral part hereof and the
terms and provisions of the Addenda shall prevail.
IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to execute this Agreement in the Russian language in 3 copies,
one copy for each Party.
ZAO TCM Company MTU-Inform OAO KB Impulse
(Signed) (Signed) (Signed)
General Director 1st Deputy General Director Director
Round seal
Round seal Round seal
<PAGE> 1
EXHIBIT 10.10
AGREEMENT NO. 01-08/98
This Agreement ("the Agreement") is made and entered into this 1st day of
August, 1998 in Moscow
between
Telecommunications of Moscow, a closed joint-stock company duly organized under
the laws of the Russian Federation, with its legal address being 27/29 str. 2
Smolenskaya-Sennaya Square, Moscow, 119121, Russian Federation ("TCM") and
Company MTU-Inform, a limited partnership duly organized under the laws of the
Russian Federation, with its legal address being 27/29 str. 2
Smolenskaya-Sennaya Square, Moscow, 119121, Russian Federation ("MTU-Inform"),
collectively referred to as "the Seller," on the one part,
and
KB Impulse, an open joint-stock company duly organized under the laws of the
Russian Federation, with its legal address being 10-12 8-go Marta St., Moscow,
125083, Russian Federation ("KB Impulse"), referred to as "the Buyer," on the
other part,
collectively referred to as "the Parties" and individually as "the Party."
WHEREAS KB Impulse acting on the basis of License No. 10005 of the Ministry of
Telecommunications of the Russian Federation for the provision of cellular
radiotelephone communication services in the 1800-MHz band desires to receive
for use the telecommunications products and services of the modern digital
network to provide them to its clients;
WHEREAS TCM and MTU-Inform acting on the basis of respective Licenses No. 5846
and 5840 of the Ministry of Telecommunications of the Russian Federation for
the provision of local telephone communication services offer the said
telecommunications products and services of the modern digital network and
desire to provide them to the Buyer;
NOW, THEREFORE, in consideration of the mutual covenants and premises contained
herein the Parties hereto agree as follows:
ARTICLE 1. SUBJECT OF THE AGREEMENT AND OBLIGATIONS OF THE PARTIES
SUBJECT:
1.1. Connection of the Buyer's network to the Seller's network and further to
the public telephone network, provision of local, long-distance and
international communication services (hereafter "the Services") to the Buyer
through operation of a system including the access means of the Buyer's
subscribers and the means for the provision of the Services as set forth
herein, including Annex 1 hereto
OBLIGATIONS OF THE PARTIES:
1.2. The Seller shall:
1.2.1. Provide technical facilities and structures for connection of the
Buyer's network to the Seller's network for the purpose of providing, in 1998,
twenty thousand (20,000) numbers of the Moscow telephone network and local,
long-distance and international communication services in
<PAGE> 2
2
accordance with the terms and conditions of Annex 1 hereto. The Seller
guarantees allocation of the number capacity to the Buyer in the 7th million
zone of the Moscow telephone network upon receipt of a written request from the
Buyer and shall in advance inform the Buyer in writing about concrete numbers
and the date when the corresponding groups of the number capacity are to be
connected to the Moscow telephone network.
1.2.2. Ensure for the telephone numbers allocated to the Buyer the possibility
of outgoing and incoming long-distance and international communication through
the network of OAO Rostelecom (code 095).Sovintel's network (code 501).
1.2.3. Ensure round-the-clock operation of the switching nodes in which a
number capacity has been allocated to the Buyer.
1.2.4. Ensure the quality of the services provided to the Buyer hereunder in
accordance with the Rules for Provision of Services by Local Telephone Networks
approved by the Ministry of Telecommunications of the Russian Federation on May
24, 1994.
1.2.5. Invoice the Buyer for the provided Services in due time.
1.3. The Buyer shall:
1.3.1. In 1998, acquire from the Seller the Seller's number capacity in the
quantity of not less than fifteen thousand (15,000) Moscow telephone numbers.
1.3.2.. Provide to its subscribers the entire range of the Services envisaged
hereunder and make these services accessible through its switch.
1.3.3. Make full and prompt payments in respect of the Services provided to the
Buyer hereunder.
1.3.4. Prevent the use of equipment that has not been registered and certified
by the State Committee of the Russian Federation for Telecommunications and
Informatization.
1.3.5. Independently make settlements with its subscribers for the provided
Services.
1.4. On a mutual basis the Parties shall:
1.4.1. Carry on their activity in accordance with the Federal Law on the
Telecommunications, "Rules for Connection of Departmental and Dedicated
Telecommunications Networks to the Public Telecommunications Network" approved
by Resolution of the Russian Federation Government No. 1254 of October 19,
1996, other applicable regulatory documents in the field of telecommunications.
1.4.2. Bear individual responsibility to the State Committee for
Telecommunications and Informatization of the Russian Federation,
Gossvyaznadzor of the Russian Federation and other government agencies for the
operation of their own communication facilities within the framework of their
licenses, including responsibility for prompt execution of operational
documents.
1.4.3. Notify each other about the performance of all kinds of maintenance or
repair operations and about emergencies that may affect the Services provided
to the subscribers hereunder.
<PAGE> 3
3
ARTICLE 2. TERM OF THE AGREEMENT AND PROVISION OF SERVICES
The Agreement shall come into force from the date on which it is signed. The
term of the Agreement is indicated in Annex 1 hereto.
ARTICLE 3. ORDER FOR THE SERVICES
The Seller shall provide to the Buyer the Services listed in Annex 1 and
additional Services on the Buyer's requests in accordance with the Addenda
hereto.
ARTICLE 4. TERMS AND CONDITIONS FOR PROVISION OF THE SERVICES
4.1. The Seller hereby appoints the Buyer and the Buyer accepts the
appointment, in accordance with the provisions hereof, to act as the Seller's
agent for further provision of the Services.
4.2. The Seller shall be an exclusive operator in the provision of
long-distance and international communication services for the numbers provided
by the Seller hereunder. The Buyer shall make arrangements to allow its clients
access to the services of the long-distance and international network provided
by the Seller.
4.3. Throughout the term of this Agreement the Buyer shall buy Moscow telephone
numbers only from the Seller and hereby undertakes to transfer numbers to the
Buyer in a quantity sufficiently large for sale to all Buyer's clients who
desire to purchase cellular communication services from the Buyer in accordance
with Clause 1.2.1 hereof. This provision may be changed only on the basis of a
written agreement between the Parties. The breach of the Buyer's obligation set
forth in this Clause 4.3 hereof shall constitute a material breach in the
meaning of Article 11 hereof.
ARTICLE 5. PRICES, TARIFFS, TERMS OF SETTLEMENTS
The current prices and tariffs for the provided Services and the terms of
settlements between the Parties are set forth in Annex 1 hereto.
ARTICLE 6. CONFIDENTIALITY
6.1. Throughout the term of this Agreement and for a period of five (5) years
after its expiry, unless the disclosing Party agrees otherwise in writing, the
release of, access to or use of the proprietary information disclosed by the
disclosing Party to the receiving Party shall be restricted to those employees
and officials of the receiving Party's organization who must know the
proprietary information in order to allow the receiving Party property to
perform its obligations hereunder. The receiving Party shall keep the received
proprietary information confidential using the same degree of care as it uses
to protect its own proprietary information but in no case any less degree than
reasonable care. Without a prior written consent of the disclosing Party the
receiving Party shall not disclose any proprietary information to any third
party and shall not use such proprietary information for its own benefit or for
the benefit of any third party.
6.2. The obligations imposed by Clause 6.1 hereof shall not apply to the
proprietary information:
(1) which has become public knowledge through no fault of the receiving Party;
(2) which has already been lawfully received by the receiving Party and to which
Confidentiality Clause 6.1 is not applied;
(3) which is released pursuant to the binding order of a government agency or a
court, provided that prior to such release the receiving party shall inform the
disclosing Party to this effect in the maximum degree possible under these
circumstances.
6.3. All proprietary information disclosed hereunder shall be provided
temporarily, exclusively for use by the Parties in the performance of their
obligations.
<PAGE> 4
4
6.4. The Party which has received proprietary information from the other Party
in writing shall, upon a written request of the other Party, promptly return
the original and all copies of the received information to its proprietor.
6.5. All public reports, including press releases relating to the Agreement or
its performance shall be agreed upon by the Parties before they are submitted
for publication.
ARTICLE 7. LIABILITY OF THE PARTIES
The Parties shall be held liable for the breach of the provisions of this
Agreement and Annexes thereto subject to the provisions of applicable laws of
the Russian Federation and this Agreement.
ARTICLE 8. WARRANTIES, CROSS INDEMNIFICATION, LIMITATION OF LIABILITY
8.1. Neither the Seller nor any third party providing the Services make any
warranty, explicit or implicit, including but not limited to the warranties for
suitability or fitness for a particular application or purpose, other than the
warranties clearly set forth herein. The Parties understand that this section
concerns the Buyer and its buyers of the Services.
8.2. The Seller shall not be held liable for any damages, losses, claims and
other expenses which the Buyer or any third party may suffer because of the
acts or omissions for which the Buyer, its employees, agents, other
representatives or guests are responsible and the Buyer agrees to indemnify and
hold the Seller harmless from and against any and all such damages, losses,
claims and other expenses. Likewise, the Buyer shall not be held liable for any
damages, losses, claims and other expenses which the Seller or any third party
may suffer because of the acts or omissions for which the Seller, its
employees, agents, other representatives or guests are responsible and the
Seller agrees to indemnify and hold the Buyer harmless from and against any
such damages, losses, claims and other expenses. These cross indemnifications
shall survive the expiration or earlier termination of the Agreement.
8.3. Neither Party shall be held liable to the other Party for any lost profit
and other indirect losses claimed or suffered by the other Party hereto or any
third party, which are due to or result from the first Party's performance or
failure to perform hereunder.
8.4. The Buyer shall be fully responsible for the use of the Services provided
by the Seller and shall indemnify the Seller from and against any claims
arising from the improper use of the Services by the Buyer.
ARTICLE 9. FORCE MAJEURE
9.1. The Parties shall not be held liable for any delays in the performance of
or for any failure to perform their obligations hereunder if the delays or
failures were caused by circumstances or factors beyond the control of the
Parties, such as a war (including civil war); riots; sabotage; embargoes;
fires; floods or other acts of God; explosions; acts or omissions of the
government of Russia or other governments; strikes. All such circumstances
shall be regarded as Force Majeure. Immediately upon receipt of information
about occurrence of a Force Majeure event which delays or affects otherwise the
performance of this Agreement the Parties shall inform each other to this
effect in writing.
9.2. The Parties shall not be held liable for any damages, losses, claims or
other expenses which they may suffer as a result of any of such Force Majeure
events.
<PAGE> 5
5
9.3. If a material breaches of or default under this Agreement due to Force
Majeure lasts longer than one hundred and eighty (180) days, either Party may
terminate this Agreement by serving a thirty days' written notice of
termination on the other Party.
ARTICLE 10. ARBITRATION
10.1. If any differences arise between the Seller and the Buyer out of or in
connection with this Agreement or the performance by a Party of or its failure
to perform the obligations hereunder the Parties shall use their best efforts
to settle these differences amicably by negotiation to be held by their general
directors or authorized representatives.
10.2. If the differences cannot be resolved by negotiation, the dispute shall
be submitted to the International Commercial Arbitration Court at the Chamber
of Commerce and Industry of the Russian Federation subject to applicable laws
of the Russian Federation.
ARTICLE 11. TERMINATION OF THE AGREEMENT
11.1. Should either Party commit a material breach of its obligations or other
provisions hereof, the other Party hereto shall have the right to terminate
this Agreement if this breach or non-performance is not remedied within thirty
(30) days upon receipt of a written notice of the breach or non-performance and
if all possibilities for the settlement have been exhausted.
Upon termination of this Agreement the Seller shall cease provision of the
Services to the Buyer and the Buyer shall cease to use the Services.
11.2. If one of the Parties terminates this Agreement because the other Party
commits a material breach of its obligations, the Buyer shall pay the Seller
the sums due to the Seller for the use of the Services up to the date of
termination of the Agreement and the Seller shall accept its property, if any,
from the Buyer.
11.3. If the Buyer intends to terminate this Agreement fully or partially on
its own initiative before expiration of the term of the Agreement indicated in
Annex 1 hereto, the Buyer shall notify the Seller in writing of its intent to
partially or fully suspend or to terminate this Agreement at least twelve (12)
months prior to the planned date of suspension or termination. Upon receipt of
such notice the Parties shall agree and sign an appropriate Addendum hereto
setting forth the procedure for the return of the Seller's number capacity
which is the subject hereof from the Buyer to the Seller and for compensation
of the Seller for financial losses resulting from the partial or full
termination of the Agreement, particularly, the losses due to the non-use of
such numbers during a definite period.
ARTICLE 12. NOTICES
Except as otherwise provided herein all notices required or permitted to be
given hereunder shall be in writing addressed as follows:
FOR ZAO TCM:
27-29 str. 4 Smolenskaya-Sennaya Square, Moscow, 119121
Attention: General Director
Telephone: (095) 967-33-00
Fax: (095) 967-33-66.
<PAGE> 6
6
FOR COMPANY MTU-INFORM:
27-29 str. 2 Smolenskaya-Sennaya Square, Moscow, 119121
Attention: General Director
Telephone: (095) 258-78-78
Fax: (095) 258-78-50.
FOR OAO KB IMPULSE:
18 Lesnoryadsky per., Moscow,107140
Attention: Managing Director
Telephone: (095) 743-00-08
Fax: (095) 747-99-97
Any Party shall inform the other Parties of changes in its address in the
manner set forth above.
ARTICLE 13. WAIVER, SEVERABILITY
If any provision hereof is held to be invalid or contrary to applicable laws of
the Russian Federation the remainder hereof shall remain legally valid.
ARTICLE 14. GOVERNING LAW
This Agreement shall be construed and performed by the Parties in accordance
with applicable laws of the Russian Federation.
ARTICLE 15. ASSIGNMENT OF RIGHTS AND OBLIGATIONS
Except as otherwise provided herein neither the Seller nor the Buyer shall
assign, transfer or dispose otherwise of this Agreement or any rights and
obligations thereunder without a prior written consent of the other Party
hereto.
ARTICLE 16. TRADE NAME AND TRADEMARK REQUIREMENTS
16.1. The Buyer shall recognize all Seller's rights to all trade names, trade
marks and service marks used in connection with the Services. The Buyer's right
to use the Seller's trade name and/or trademark shall be subject to the
Seller's consent.
16.2. Upon termination of the Agreement the Buyer shall discontinue all such
uses or any representations in respect of the Services, which suggest that the
Buyer is still using the Services.
16.3. The obligations assumed by the Buyer under this Clause 16 shall survive
expiration or early termination of the Agreement.
ARTICLE 17. ENTIRETY
17.1. This Agreement, including annexes and addenda hereto, shall constitute
the entire agreement between the Seller and the Buyer in respect of the subject
matter hereof and shall supersede and replace all prior understandings, whether
written or oral, relating to the subject matter hereof, with the exception of
General Agreement No. S/41295 of December 4, 1995 insofar as it does not
contradict the provisions hereof.
All modifications hereto shall be in writing and shall be signed by all Parties
hereto.
17.2. Simultaneously with or subsequent to the signing of this Agreement the
Parties may accept and sign Addenda hereto indicating all terms and conditions
that may supplement, amend,
<PAGE> 7
7
change or replace the terms and conditions hereof. In such cases, the Addenda
shall be regarded as an integral part hereof and the terms and provisions of
the Addenda shall prevail.
IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to execute this Agreement in the Russian language in 3 copies,
one copy for each Party.
ZAO TCM Company MTU-Inform OAO KB Impulse
(Signed) (Signed) (Signed)
General Director 1st Deputy General Director Managing Director
Round seal
Round seal Round seal
<PAGE> 1
EXHIBIT 21.1
COMPANY JURISDICTION
- ------- ------------
SFMT-CIS, Inc. Delaware
GTS Finance, Inc. Delaware
GTS Ukraininan TeleSystems Delaware
GTS Mobile Services, Inc. Delaware
TeleSystems Services, Inc. Delaware
Telecom Consulting & Advisory Services, Inc. Delaware
GTS Equipment, Inc. Delaware
GTS Management Services, Inc. Delaware
Sovinet Inc. Delaware
SFMT-Datacom, Inc. Delaware
GTS-Vox, Ltd. Delaware
SFMT-Rusnet, Inc. Delaware
CellUkraine Ltd. Delaware
Vostok Mobile, B.V. Netherlands
Sovintel Russia
Sovintel, St.Petersburg Branch Russia
Sovam Teleport Ukraine
Sovam Teleport, Kiev Division Ukraine
Sovam Teleport, St.Petersburg Branch Russia
SA-Telcom Kazakhstan
TCM Russia
TeleRoss Russia
Vostok Mobile Trade Russia
Golden Telecom, LLC Ukraine
Invest Holding Ukraine
TeleRoss-Vladivostok Russia
TeleRoss-Novosibirsk Russia
TeleRoss-Irkutsk Russia
TeleRoss-Tiumen Russia
TeleRoss-Ufa Russia
TeleRoss-Kubanelectrosvyaz Russia
TeleRoss-Ekaterinburg Russia
TeleRoss-Komi Russia
<PAGE> 2
TeleRoss-Nizhnyi Novgorod Russia
TeleRoss-Arkhangelsk Russia
TeleRoss-Khabarovsk Russia
TeRoss-Voronezh Russia
TeleRoss-Volgograd Russia
TeleRoss-Samara Russia
Penza Mobile Russia
Astrakhan Mobile Russia
Votec Mobile Russia
Chuvashiya Mobile Russia
Lipetsk Mobile Russia
Mar Mobile Russia
Arkhangelsk Mobile Networks Russia
Saratov Mobile Russia
Volgograd Mobile Russia
Murmansk Mobile Network Russia
Parma Mobile Russia
PrimTelefone Russia
Unicel Kostroma Russia
AltaiSviaz Russia
Unicel Orel Russia
Unicel Bryansk Russia
BashUnicel Russia
Novotel Russia
Unicel Yaroslavl Russia
Unicel Ivanovo Russia
<PAGE> 1
EXHIBIT 24.2
POWER OF ATTORNEY
The undersigned members of the Board of Directors of Golden Telecom, Inc.
hereby constitute and appoint David J. Wisher and Jeffrey A. Riddell and each of
them acting singly, as true and lawful attorneys-in-fact for the undersigned,
with full power of substitution and resubstitution, for and in the name, place
and stead of the undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act of 1933 any and all amendments (including
post-effective amendments) and exhibits to the registration statement on Form
S-1 of Golden Telecom, Inc. (File No. 333-82791), any related registration
statement and its amendments and exhibits filed pursuant to Rule 462(b) under
the Securities Act and any and all applications and other documents to be filed
with the Securities and Exchange Commission pertaining to the registration of
the securities covered thereby or under any related registration statement or
any amendment thereto, with full power and authority to do and perform each and
every act and thing requisite and necessary or desirable, hereby ratifying and
confirming all that each of such attorneys-in-fact or its substitute shall
lawfully do or cause to be done by virtue hereof.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ H. Brian Thompson Director September 22, 1999
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/s/ Robert A. Schriesheim Director September 22, 1999
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